Kaufman v. Southwestern Bell Mobile Systems LLC
1:16-cv-11961
D. Mass.Jun 1, 2017Background
- Kaufman was controlling officer of Harvard Cellular, which entered an agency agreement (2002) with New Cingular/AT&T; Harvard Cellular closed NYC stores without authorization and failed to repay a $350,000 advance. Arbitration followed, and the arbitrator awarded New Cingular $1.2 million.
- New Cingular (via Drinker Biddle & Reath and attorney Andrew Joseph) represented itself in the arbitration and subsequent confirmation/enforcement proceedings.
- New Cingular obtained judicial confirmation of the arbitration award in New York (2006). New Cingular later obtained summary judgment in a Florida action enforcing personal guarantees signed by Kaufman; parties entered a 2009 settlement that conditioned execution of the judgment on Kaufman’s net worth.
- Kaufman (pro se) sent letters in 2010 and 2016 threatening disparagement; DBR sent a cease-and-desist invoking the 2009 settlement. Kaufman filed this suit in Massachusetts Superior Court in 2016 asserting: breach of the covenant of good faith and fair dealing (against DBR/Joseph), fraud upon the court, and fraudulent misrepresentations (against all defendants). Defendants removed and moved to dismiss.
- The District Court dismissed all claims: (1) covenant-breach claim failed for lack of contract and no private right under NY ethical rules; (2) fraud-upon-the-court claim was barred by res judicata based on the New York and Florida proceedings; (3) fraudulent misrepresentation was time‑barred and not equitably tolled.
- The Court denied leave to amend as futile and dismissed the complaint with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of covenant of good faith and fair dealing (DBR/Joseph) | Responses to Kaufman’s 2010/2016 letters violated the covenant and NY disciplinary rules | No contractual relationship with Kaufman; no private cause of action under NY professional rules | Dismissed: no contract between Kaufman and DBR/Joseph; NY ethical rules do not create private right of action |
| Fraud upon the court (bribery of arbitrator) | Defendants bribed the arbitrator; fraud excused prior finality and supports this suit | Claim could and should have been raised earlier; barred by res judicata from NY and FL judgments | Dismissed: claim precluded by res judicata (NY and FL actions); alleged evidence not new/clear and convincing |
| Fraudulent misrepresentation | Misrepresentations during arbitration/settlement negotiations give rise to fraud claim | Claim is time‑barred under applicable statutes of limitations | Dismissed: accrual no later than confirmation (April 2006); claim filed well past limitations; equitable tolling not shown |
| Dismissal with prejudice / leave to amend | (Implied) would amend to add facts | Defendants request dismissal with prejudice as amendment would be futile | Dismissed with prejudice: prior adjudications and futile amendment justify denial of leave to amend |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading plausibility standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must allege sufficient factual matter)
- Ocasio-Hernandez v. Fortuno Burset, 640 F.3d 1 (First Circuit on pleading plausibility)
- Haley v. City of Boston, 657 F.3d 39 (consideration of incorporated documents and judicially noticeable facts at dismissal)
- Epstein v. C.R. Bard, Inc., 460 F.3d 183 (leave to amend should be freely given unless futile)
- Jacobson v. Fireman’s Fund Ins. Co., 111 F.3d 261 (confirmation of arbitration award is adjudication on the merits)
- Duration Mun. Fund, L.P. v. J.P. Morgan Sec., Inc., 908 N.Y.S.2d 684 (breach of covenant must arise from contract)
- Allstate Ins. Co. v. GEICO, 955 N.Y.S.2d 100 (newly discovered evidence/standard for setting aside confirmation)