ZVI Construction Co., LLC v. Levy
90 Mass. App. Ct. 412
| Mass. App. Ct. | 2016Background
- ZVI Construction sued attorney Franklin Levy and law firm Lawson & Weitzen (L & W) alleging misrepresentation, conversion, breach of fiduciary/escrow duties, and related claims arising from a mediated settlement between ZVI and The Upper Crust/its principals.
- Tobins agreed in a separate MOU to pay $250,000 to The Upper Crust; at ZVI's mediation the parties agreed The Upper Crust would pay $250,000 to ZVI if Tobins paid. No escrow or obligation for Levy/L & W to hold funds for ZVI was in the settlement.
- Tobins (through Ditmars, Ltd.) wired $250,000 to L & W's IOLTA account; The Upper Crust’s CFO instructed disbursements, and L & W sent payments to several payees including $21,417.28 to L & W and $154,692.46 to the client payroll account. ZVI was not paid.
- ZVI filed suit against Levy and L & W; the first judge struck allegations about a statement allegedly made at mediation (confidentiality) and dismissed many counts; remaining claims limited to the $21,417.28. After discovery, a second judge granted summary judgment for Levy/L & W, dismissing all remaining claims; ZVI appealed.
- The Appeals Court treated a technically premature notice of appeal as properly before it, addressed the merits, and affirmed the trial rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Premature notice of appeal | ZVI filed notice before entry of final Rule 54(b) judgment but seeks review | Defendants noted procedural defect | Court exercised discretion to reach merits because issues fully briefed and final judgment later entered; appeal considered timely for review purposes |
| Conversion (whether L & W converted funds by disbursing $21,417.28) | ZVI: the $250k was effectively its property under settlement; Levy/L & W wrongfully exercised control | Levy/L & W: funds in IOLTA were client funds of The Upper Crust; disbursement followed client instructions | Summary judgment for defendants: no conversion because funds belonged to client in IOLTA and were disbursed per client directions |
| Mediation confidentiality / fraud exception (whether alleged in-mediation statement could be used) | ZVI: Levy told parties he would pay ZVI — fraud exception should allow use despite confidentiality clause | Defendants: mediation agreement and statutory scheme bar use of mediation communications; no fraud exception here | Court enforced confidentiality clause and statutory policy; no recognized fraud exception under these facts and even on merits the alleged statement would not support fraud claim |
| Attorney-client privilege / common interest & waiver (whether waivers by principals waived privilege) | ZVI: Higgins and Huggard waived privilege, so communications must be produced; trustee’s inaction implied waiver | Defendants: communications protected by common-interest/joint-defense doctrine; waiver by some co-clients does not waive privilege for others; trustee did not waive | Court held privilege applies; waiver by some co-clients does not destroy protection for others absent consent of all joint clients; no implied waiver by trustee |
Key Cases Cited
- Grand Pac. Fin. Corp. v. Brauer, 57 Mass. App. Ct. 407 (conversion elements) (defines conversion elements)
- Abington Natl. Bank v. Ashwood Homes, Inc., 19 Mass. App. Ct. 503 (attorney-client/conflict contexts) (authoritative statement on conversion standard)
- Matter of Sharif, 459 Mass. 558 (2011) (IOLTA/client funds) (funds in IOLTA belong to client)
- Phillips v. Washington Legal Found., 524 U.S. 156 (IOLTA treatment) (IOLTA funds are clients' property)
- Facebook, Inc. v. Pacific N.W. Software, Inc., 640 F.3d 1034 (9th Cir.) (mediation confidentiality) (refused to allow mediation evidence for fraud where parties were sophisticated and agreement barred use)
- In re Teleglobe Commc'ns Corp., 493 F.3d 345 (joint-client privilege) (waiver of joint-client privilege requires consent of all joint clients)
- United States v. BDO Seidman, LLP, 492 F.3d 806 (7th Cir.) (common interest waiver) (common-interest protections cannot be waived without consent of all parties)
- John Morrell & Co. v. Local Union 304A, 913 F.2d 544 (8th Cir.) (joint defense rule) (joint defense privilege cannot be waived without consent of all joint clients)