38 Mass. App. Ct. 37 | Mass. App. Ct. | 1995
The primary question raised by this appeal is whether the defendant-accountant, chosen under a court approved settlement agreement to make an appraisal of stock
In settlement of a petition for an accounting brought in the Probate Court by the mother, as guardian of her daughter, Chloe,
Less than a year after the signing of the agreement, the mother brought ■ the present action in the Superior Court against the defendant-accountant alleging that he was negligent in a number of respects, including that, in making the appraisal, he failed to follow, as required by the Stock Purchase Agreement, standards and practices of the American Institute of Certified Public Accountants. After filing an answer, the defendant moved for judgment on the pleadings, claiming that he was an “arbitrator” entitled to absolute im
1. Quasi judicial immunity. As stated by Chief Justice Shaw, and as rooted in the common law, “The general principle, which excepts judges from answering in a private action, as for a tort, for any judgment given in the due course of the administration of justice, seems to be too well settled to require discussion.” Pratt v. Gardner, 2 Cushing 63, 70 (1849).
The defendant is neither an arbitrator exercising “quasi judicial” functions nor an expert rendering expert services to the court. Although the terms “appraisal” and arbitration may in some instances overlap, for example where one of the functions of an arbitrator may be the appraisal or valuation of property, 6A Corbin, Contracts § 1442 at 426 (1962 & Supp. 1993), what is relevant for purposes of immunity is whether the parties have substituted for the court a private tribunal with power to render a final judgment on the issues submitted. Id. at 427. While an arbitration may be less formal than court proceedings, the parties contemplate that an arbitrator will hold hearings and will take evidence in the presence of the parties. Eliot v. Coulter, 322 Mass. 86, 90 (1947). Corbin, Contracts, supra at 427-428. See also Note, Arbitration or Appraisement?, 8 Syracuse L. Rev. 205, 205-206 (1957).
“There is a clearly recognized distinction between the arbitration of a controversy and a contract one term of which calls for the ascertainment by designated persons of values, quantities, losses or similar facts.” Franks v. Franks, 294 Mass. 262, 266 (1936). Eliot v. Coulter, 322 Mass. at 90. Appraisers may act without a hearing, Palmer v. Clark, 106 Mass. 373, 389 (1871), and may “reject, if they [see] fit, evidence [submitted to them formally in the presence of the parties] and inform themselves from any source, as experts who [are] ... to act upon their own judgment.” Eliot v. Coulter, supra at 90, quoting from Omaha v. Omaha Water Co., 218 U.S. 180, 198 (1910).
The Stock Purchase Agreement referred to the defendant as an “appraiser” and contained some explicit instructions. The report had to be in writing, a draft report was required, and the appraiser was to “speak with, but not be bound by the opinions of’ the father, the mother, and two other named persons. “To the extent accounting work is required or inter
Under the agreement, the defendant was expected to use his professional accountancy skills to determine the valuation of Clo, rather than to make his decision based on evidence received in the presence of or on notice to the parties. He was not to act as a private tribunal in place of a judge. What was reserved to him was simply a method of ascertaining one item, as an expert accountant-appraiser, in an agreement settling the action,brought by the mother against the father in the Probate Court.
As an expert, charged with furnishing skilled services for compensation, he is subject to the standards of reasonable care applicable to accountants. If he failed to meet those standards, he is not entitled to be relieved from liability for any such failure on the ground of quasi judicial immunity.
In similar circumstances, cases elsewhere have not accorded appraisers immunity despite their claims to be arbitrators. See, e.g., Horsell Graphic Indus, v. Valuation Counselors, Inc., 639 F. Supp. 1117, 1119-1120 (N.D. Ill. 1986); Gammel v. Ernst & Ernst, 245 Minn. 249, 255-256 (1955); Levine v. Wiss & Co., 97 N.J. 242, 248-253 (1984). See also 16 Williston, Contracts § 1920 at 227 (3d ed. 1976) (Immunity does not extend to those who are only appraisers). The case to the contrary cited by the defendant, Wasyl, Inc. v. First Boston Corp., 813 F.2d 1579 (9th Cir. 1987), is inapposite because it is based on a California statute (Cal. Civ. Proc. Code § 1280 [West 1982]) which provides that “agreements providing for valuation [and] appraisals” are included within the definition of arbitration. See Coopers & Lybrand v. Schwartz, 212 Cal. App. 3d 524, 532-534 (1989), discussing the history of that statute which “erased the judicial distinction between agreements to arbitrate disputes and
That the probate judge approved the Stock Purchase Agreement does not bring the defendant within the principles of immunity set forth in the LaLonde case discussed earlier. The appraiser was not appointed to render expert services to the court. Even a “court-appointment is not a talisman for immunity.” Levine v. Wiss & Co., 97 N.J. at 252. It does not alter the critical fact that the defendant “was not conducting any hearing or performing any other judicial function.” Commonwealth v. O’Neil, 418 Mass. at 767. Levine v. Wiss & Co., supra at 252.
2. Waiver. As indicated earlier, the motion judge, based on an admission of the mother (or her counsel) at the hearing on the defendant’s motion for judgment on the pleadings, held that she had “acquiesced in the valuation and [had] waived any objections” to the defendant’s methods in arriving at his appraisal. There are a number of difficulties with this conclusion. Waiver is primarily a question of fact. It appears that the mother was not given notice that the motion for judgment on the pleadings was converted to a motion for summary judgment under Mass.R.Civ.P. 56, 365 Mass. 824 (1974), and was not given an opportunity to present the materials pertinent to such a motion. See Stop & Shop Cos. v. Fisher, 387 Mass. 889, 892 (1983). Thus the procedural niceties for the judgment were not met. Moreover, since “[acquiescence is conduct from which may be inferred assent with a consequent estoppel or quasi estoppel,” Uccello v. Gold’n Foods, Inc., 325 Mass. 319, 328 (1950), crucial, but
There is here no waiver as matter of law merely by virtue of the mother’s not challenging the valuation in an action against the father. The claims the mother would be able to assert against the father based on the appraisal are more limited, see Eliot v. Coulter, 322 Mass, at 91; Cambridge St. Metal Co. v. Corrao, 30 Mass. App. Ct. 150, 155-156 (1991), than those she may assert against the defendant. Thus, even if the mother had raised objections to the appraisal in the Probate Court by reinstituting the action which had been dismissed against the father, any decision by that court as to whether the mother was bound by the defendant’s appraisal would not, under the principles of claim preclusion, be a bar to an action against the defendant unless he had been named as a party in those proceedings and the claims against the father were the same as those against him.
3. Reimbursement of the defendant’s legal fees and costs. The Stock Purchase Agreement provided that if “a party . . . attempts to litigate over any part of this agreement (other than to enforce this agreement)” that party shall be responsible for the other party’s reasonable legal fees. The defendant is not protected under that provision. The agreement listed who were the parties — mother, as guardian and individually, father, and Clo; the defendant was not included. He signed the agreement, below the jurats of the other three, under a provision entitled “Acceptance of Appraiser” which,
Contrary to his contentions, there is nothing in the agreement to suggest that the defendant is a third-party beneficiary of the Stock Purchase Agreement. The defendant’s counterclaim was properly dismissed.
4. Conclusion. The defendant, not having a quasi judicial function under the agreement, is not entitled to immunity. On this record, the determination that the mother waived her objections to the appraisal vis-á-vis the defendant is not warranted. Further proceedings are necessary. Other questions which require consideration include, whether (on admissible evidence) it was intended that the appraiser be free from liability, and if not, whether he performed his obligations under the contract or acted negligently.
Accordingly, the judgment for the defendant is reversed and the matter is remanded for further proceedings consistent with this opinion.
So ordered.
When we refer to the mother in this opinion, we do so in her capacity as guardian of her daughter, Chloe Comins. The father, Kenneth Comins, was the mother’s former husband.
included, inter alia, were provisions releasing the parties from further liability, determining the father’s reasonable compensation from Clo, and setting forth that payments for Clo’s stock purchase were to be made solely by Clo, and not by the father personally, that a guardianship account would be established for Chloe, and that the mother would not engage in competition with Clo for a period of three years after the last payment to Chloe.
Shaw nevertheless cogently expressed the policy considerations underlying the principle of judicial immunity. Pratt v. Gardner, supra at 69-70. See also Allard v. Estes, 292 Mass. 187, 189-190 (1935).
The statute was enacted to change the rule of Bewick v. Mecham, 26 Cal. 2d 92, 97-98 (1945), which was in accord with the other cases cited in this opinion, namely, “Submissions to determine values are of two kinds — first, where the valuers are to examine the property and fix the value in accordance with their own opinion or judgment; second, where they are to afford the parties a hearing, and an opportunity to offer evidence, and are to adjudge the value upon a consideration of the evidence, as well as their own opinion. In cases of the first class, it is usually held that the agreement is not properly a submission to arbitration and is not subject to the rules which govern arbitrators.” Id. at 97, quoting from Dore v. Southern Pac. Co., 163 Cal. 182, 189 (1912).
Even if any litigated claims against the father decided adversely to the mother could be asserted defensively as a bar by the defendant, see Gammel v. Ernst & Ernst, 245 Minn. at 257; see also Home Owners Fed. Sav. & Loan Assn. v. Northwestern Fire & Marine Ins. Co., 354 Mass. 448, 455 (1968); Restatement (Second) of Judgments § 29 (1982), this is not a reason to require the mother to bring an action against the father.
The defendant undertook certain obligations by his acceptance, and the present action, in part at least, seeks to enforce those obligations.
Although the mother’s complaint charged the defendant with bad faith, her memorandum before the motion judge only discussed claims of negligence.