993 N.E.2d 350
Mass. App. Ct.2013Background
- Investors in two feeder hedge funds (Dutchess L.P. and Dutchess Ltd.) sued managers, advisors, auditors (Sullivan Bille), and administrator (Dundee Leeds) alleging misrepresentations, breach of fiduciary duty, unjust enrichment and professional malpractice tied to bad investments in Challenger and Siena and a later freeze of redemptions.
- Plaintiffs initially filed in Delaware Court of Chancery (timely), four defendants moved to dismiss for lack of personal jurisdiction, plaintiffs voluntarily moved to dismiss the Delaware action with court approval, then refiled substantially similar claims in Massachusetts within a year.
- Massachusetts defendants moved to dismiss in Superior Court as time-barred; plaintiffs invoked Massachusetts savings statute, G. L. c. 260, § 32, arguing the Delaware dismissal was "for any matter of form" (lack of jurisdiction).
- The Superior Court dismissed most claims as untimely, ruling voluntary dismissals are excluded from the savings statute and finding other failures (standing under Cayman law; jurisdiction over Dundee Leeds).
- On appeal, the court considered (1) whether voluntary dismissals can qualify under the savings statute, (2) whether the Delaware dismissal here was for a matter of form, and (3) standing, malpractice pleading, and Massachusetts jurisdiction over Dundee Leeds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether voluntary dismissals are covered by Massachusetts savings statute | Savings statute text is neutral; prior cases allow relief where first suit was "duly commenced" even if voluntarily not pursued | Statute contemplates court dismissal or other court determination; voluntary dismissals excluded | Voluntary dismissals are not per se excluded; inquiry looks to whether termination was "for a matter of form" |
| Whether the Delaware voluntary dismissal here was "for a matter of form" (so § 32 applies) | Plaintiffs dismissed after adverse jurisdictional discovery order and before opposition due; objectively reasonable expectation that Delaware court would dismiss for lack of personal jurisdiction | Dismissal was voluntary and record lacks reasons; plaintiffs must plead saving facts | Mixed question of law/fact: pleadings and limited record let certain claims survive at pleading stage where dismissal plausibly resulted from objectively reasonable expectation of involuntary dismissal (claims vs. defendants who moved to dismiss for jurisdiction survive) |
| Derivative standing under Cayman law to sue on behalf of Dutchess Ltd. | Allegations show DCM and individual defendants had de facto control and personally benefited (fraud on minority exception) | Plaintiffs fail to allege control/benefit adequately | Complaint sufficiently alleges control and benefit for pleading-stage derivative standing under Cayman law |
| Sufficiency of malpractice pleading against Sullivan Bille; personal jurisdiction over Dundee Leeds | Auditor breached GAAP/GAAS; causation and reliance are factual; Dundee Leeds transacted business/ purposefully availed via ongoing administration and NAV calculations for Massachusetts-based feeder funds | Auditor owed no duty to enforce investment strategy; in pari delicto/no reliance; Dundee Leeds lacks sufficient Massachusetts contacts | Claims against Sullivan Bille survive pleading-stage: duty and causation require factual development; prima facie personal jurisdiction over Dundee Leeds is plausible under G. L. c. 223A and due process |
Key Cases Cited
- Cumming v. Jacobs, 130 Mass. 419 (Mass. 1881) (explaining savings statute purpose to allow refiling where plaintiff defeated by defect of form)
- Loomer v. Dionne, 338 Mass. 348 (Mass. 1959) (savings statute can apply where first action was improperly brought in wrong court but was "duly commenced")
- Duff v. Zonis, 327 Mass. 347 (Mass. 1951) (liberal construction of savings statute where technical defect prevented service)
- Boutiette v. Dickinson, 54 Mass. App. Ct. 817 (Mass. App. Ct. 2002) (§ 32 construed liberally to decide rights on the merits)
- Rodi v. Southern New England Sch. of Law, 389 F.3d 5 (1st Cir. 2004) (a dismissal for lack of personal jurisdiction is a paradigmatic example of a non-merits dismissal curable by refiling)
- International Shoe Co. v. Washington, 326 U.S. 310 (U.S. 1945) (due process standard for personal jurisdiction)
- Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102 (U.S. 1987) (purposeful availment analysis for jurisdiction)