RFF Family Partnership, LP v. Ross Ex Rel. BD Lending Trust
2016 U.S. App. LEXIS 2789
| 1st Cir. | 2016Background
- In 2006 disbarred lawyer Sojcher, without authorization, executed a BD mortgage on Link's 22‑acre Saugus property; BD foreclosed after Sojcher absconded and later recorded the BD Mortgage.
- Link later borrowed $1.4M from RFF in 2007, represented the RFF mortgage would be a "good first mortgage"; RFF foreclosed in 2010 and bought the property.
- Link and BD settled in June 2012 (Link waived challenges to the BD Mortgage; BD gave an assignment in escrow); RFF and BD settled in Nov. 2012 (BD agreed to discharge the BD Mortgage for $140,000).
- RFF sued Link and BD in 2014 seeking (inter alia) declaratory relief that the BD Mortgage is invalid, damages for BD's breach of the RFF/BD settlement, slander of title, and Chapter 93A relief.
- The district court granted summary judgment for Link on RFF’s claims attacking the BD Mortgage based on judicial estoppel, found BD breached the RFF/BD settlement, excluded attorneys’ fees from contract damages, and awarded RFF nominal damages plus a reduced Chapter 93A fee award.
- First Circuit vacated the summary judgment on the BD Mortgage validity (judicial estoppel improper), affirmed exclusion of attorneys’ fees from contract damages and the denial of judgment as a matter of law for $866,000, and affirmed the reduced Chapter 93A fee award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RFF is judicially estopped from challenging BD Mortgage validity | RFF contends prior statements in state malpractice pleadings and its settlement/enforcement conduct do not preclude its present challenge | Link argues RFF previously asserted the BD Mortgage was valid and court acceptance of those statements bars relitigation | Vacated district court judgment: judicial estoppel improperly applied because prior positions were not clearly inconsistent nor judicially adopted; settlement/enforcement did not establish judicial acceptance |
| Whether RFF’s declaratory judgment and slander of title claims are time‑barred | RFF: claims timely (accrual tied to post‑settlement events) | Link: claims accrued when BD Mortgage was recorded (2006) or at latest when RFF foreclosed (2010) | Claims timely: slander accrues when defamatory act (assignment recording) occurred; declaratory claim likewise not barred |
| Whether attorneys’ fees are recoverable as contract damages for BD’s breach of the settlement | RFF: fees were consequential damages directly caused by BD’s breach and recoverable (American Rule inapplicable to compensatory fees) | BD: Massachusetts law follows the American Rule; no MA authority allows recovery here absent statute or contract; third‑party fee exception inapplicable | Affirmed exclusion of attorneys’ fees from contract damages under Massachusetts law; third‑party exception inapplicable because RFF was not forced to sue a third party to protect rights |
| Whether RFF was entitled to JMOL for $866,000 (amount Link demanded to discharge BD Mortgage) | RFF: no reasonable juror could award less than $866,000 given evidence | BD/Link: factual dispute; RFF failed to preserve specific JMOL argument at trial | Affirmed: RFF’s Rule 50(a) motion was not specific as to the $866,000 figure and was not properly preserved for appeal |
| Whether the RFF/BD settlement has preclusive (res judicata) effect barring RFF from litigating BD Mortgage validity | RFF: settlement did not preclude relitigation | Link: settlement dismissal and enforcement/contumacious proceedings show finality and preclusion | Rejected: settlement lacked court approval and there was no dismissal with prejudice; thus claim preclusion does not apply |
| Whether district court abused discretion in awarding reduced Chapter 93A attorneys’ fees | RFF: requested full fees incurred ($191,029.65) given statutory entitlement | BD: district court should exercise discretion based on results and documentation | Affirmed: district court permissibly reduced fee to 25% due to nominal recovery, poor documentation, redactions, and difficulty segregating compensable work |
Key Cases Cited
- New Hampshire v. Maine, 532 U.S. 742 (U.S. 2001) (purpose and contours of judicial estoppel)
- Perry v. Blum, 629 F.3d 1 (1st Cir. 2010) (three‑part judicial estoppel framework)
- Alt. Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23 (1st Cir. 2004) (review standard for judicial estoppel in summary judgment context)
- In re Medomak Canning Co., 922 F.2d 895 (1st Cir. 1990) (court‑approved settlements may have preclusive effect)
- United States v. Cunan, 156 F.3d 110 (1st Cir. 1998) (dismissal with prejudice treated as final judgment for res judicata)
- Langton v. Hogan, 71 F.3d 930 (1st Cir. 1995) (settlement plus judgment with prejudice has claim‑preclusive effect)
- Twin Fires Inv., LLC v. Morgan Stanley Dean Witter & Co., 837 N.E.2d 1121 (Mass. 2005) (factors for Chapter 93A fee awards)
- M.F. Roach Co. v. Town of Provincetown, 247 N.E.2d 377 (Mass. 1969) (third‑party attorney‑fee exception where victim must sue third party to protect rights)
- Preferred Mut. Ins. Co. v. Gamache, 686 N.E.2d 989 (Mass. 1997) (Massachusetts adherence to American Rule for attorneys’ fees)
- Wilkinson v. Citation Ins. Co., 856 N.E.2d 829 (Mass. 2006) (distinguishing contract recovery from attorneys’ fees incurred to establish breach)