48 Mass. App. Ct. 266 | Mass. App. Ct. | 1999
First Albany Corporation (defendant) is a broker-dealer in the securities business with its headquarters in Albany, New York, and a branch office in Boston. From April, 1988, through August, 1989, Edward Accomando, see note 1, was employed by the defendant as a registered representative
The complaint, which was filed on November 28, 1995, alleges that Accomando, in the course of buying and selling securities for the plaintiff’s account, but without the knowledge or approval of the plaintiff, withdrew from the plaintiff’s account more than $1,600,000 to pay for Accomando’s gambling debts and other personal adventures. Claims were asserted against the defendant for conversion, breach of fiduciary duty, breach of contract, lack of good faith, negligent supervision, and violation of c. 93A.
The defendant filed an answer and counterclaim on December 18, 1995. The answer, duly signed by defendant’s counsel, denied that there was any conversion of funds by Accomando.
We follow an established path in approaching the question whether there is any genuine issue of any material fact presented by the record before us. “[W]e view the facts in the light most favorable to the party opposing summary judgment . . . [and] we assume that all of the facts set forth in the [opposing party’s] affidavit [are] true.” Graham v. Quincy Food Serv. Employees Assn. & Hosp., Library & Pub. Employees Union, 407 Mass. 601, 603 (1990) (citation omitted). Further, the nonmoving party is entitled to the benefit of any favorable inferences. O’Gorman v. Rubinaccio & Sons, Inc., 408 Mass. 758, 759 (1990). Willits v. Roman Catholic Archbishop of Boston, 411
At the commencement of the plaintiff’s relationship with Accomando, the plaintiff told Accomando that he had no experience in buying or selling securities and that he would rely on Accomando and the defendant to make all investment decisions using the funds that the plaintiff transferred to the defendant. The plaintiff’s affidavit states that he “completely trusted Edward Accomando and the financial advice he was giving me. Throughout 1988 and 1989 Edward Accomando had virtually complete control over my account and I relied on him to purchase the securities he assured me he was purchasing on my behalf.” The plaintiff received monthly statements from the defendant, but he told Accomando that he did not understand the statements. Accomando told him “not to worry.”
Various monthly statements sent by the defendant to the plaintiff in 1988 and 1989 showed the entry, “issued by Boston.” The statement described the entry as a “check,” and the statement showed the dollar amount of the “check.” The statements did not include any explanation of the phrase “issued by Boston.” These entries for “checks” were debits to the plaintiff’s account. The plaintiff never understood what the entry “issued by Boston” meant, and he never received from the defendant copies of the checks to which the statements referred, nor was he ever told whose signature appeared on the checks.
Either in late December, 1994, or early in January, 1995, the
On January 24, 1995, plaintiff’s counsel wrote the defendant asserting that the plaintiff’s funds had been wrongfully withdrawn and converted to the personal use of the defendant’s agents, and he made demand upon the defendant for all of the plaintiff’s records. By letter dated February 6, 1995, defendant’s counsel replied, rejecting all claims, and threatened to resist “vigorously” any action against the defendant.
According to the plaintiff’s affidavit, the interview by the FBI took place either in late December, 1994, or in early January, 1995. The inferences favorable to the plaintiff, which we draw, are that it was highly likely that the defendant in fact was aware of the alleged embezzlement by February 6, 1995, and, if so, the defendant’s February 6 letter was another act in the continuing concealment.
This case, as it now stands, presents material questions of fact. If the defendant’s denial of wrong-doing by it or by Accomando can be substantiated by credible and admissible evidence, it may appear that the plaintiff’s suit has no merit. On the other hand, if the allegations of the complaint and the plaintiff’s af
Discussion. We arrive at the underlying and dispositive legal issue of this appeal — whether, in the factual context described above, the plaintiff’s action is barred by the six-year statute of limitations, the longest of the statutes of limitation that bear on the plaintiff’s claims.
The plaintiff responds that G. L. c. 260, § 12, is available to him. That section reads, “If a person liable to a personal action fraudulently conceals the cause of such action from the knowledge of the person entitled to bring it, the period prior to the discovery of his cause of action by the person so entitled shall be excluded in determining the time limited for the commencement of the action.” The defendant’s rejoinder, citing Lynch v. Signal Fin. Co., 367 Mass. 503, 507 (1975), is that § 12 is not available since the defendant has been merely “silent” following the issuance of its monthly statements to the plaintiff. The defendant adds that there was no fiduciary relationship between the parties, but even if there was such a relationship, the argument continues, the defendant’s monthly statements constituted “timely disclosure” of all material information, and the defendant is entitled to judgment as matter of law.
Whether a broker-principal relationship was seen as a
The court held that the conduct of the parties revealed that “the full relation of principal and broker ha[d] come into existence . . . [and] there ha[d] come into existence with it a confidential and fiduciary relation.” Berenson v. Nirenstein, supra at 289. The decrees sustaining the demurrers were reversed. See Vogelaar v. H.L. Robbins & Co., 348 Mass. 787, 788 (1965) (demurrer sustained in a case against a stockbroker and a securities firm, but the case was remanded to the Superior Court in order to allow an amendment to the bill stating a case of a fiduciary relationship, it “not [being] clear that the plaintiff cannot state a case good against demurrer”).
Returning to this case, on the facts alleged in the plaintiff’s affidavit, and favorable inferences therefrom, we conclude that the plaintiff has made a forceful showing that a jury would be justified in finding that as a result of the defendant’s representative, Accomando, having informed the plaintiff that he would at all times act as agent and broker for the plaintiff in the purchase and sale of securities with funds supplied by the plaintiff, and the plaintiff’s complete reliance on the representations of Accomando, a “full relation of principal and broker” came into existence, and with it a fiduciary relationship between the defendant and the plaintiff. Berenson v. Nirenstein, supra. On that basis, the conversion of the plaintiff’s funds by Accomando to his own use would result in the defendant’s liability for the
If a fiduciary relationship is found to exist, a jury would also be justified in finding that the defendant’s monthly statements with the legend “issued by Boston” constituted a failure adequately to disclose Accomando’s embezzlement, where (i) the defendant’s “headquarters,” as stated above, was in Albany, New York, (ii) stock purchases would in the ordinary course of business be paid from the defendant’s account, and (iii) Acecinando told the plaintiff “not to worry” when the plaintiff said that he did not understand the defendant’s monthly statements. Massachusetts follows the rule of the majority of jurisdictions that “factual disputes concerning when a plaintiff knew or should have known of his cause of action are to be resolved by the jury.” Riley v. Presnell, 409 Mass. 239, 247-248 (1991). Such a finding would make available the tolling provisions of § 12, see Demoulas v. Demoulas Super Markets, Inc., 424 Mass. 501, 519 (1997) (“[w]here a fiduciary relationship exists, the failure adequately to disclose the facts that would give rise to knowledge of a cause of action constitutes fraudulent conduct and is equivalent to fraudulent concealment for purposes of applying § 12”), and the defense of the statute of limitations would fall away. “An actual knowledge standard applies to a plaintiff who argues that a breach of fiduciary duty of disclosure constitutes fraudulent concealment under G. L. c. 260, § 12.” Ibid.
The defendant argues that the plaintiff made no complaint regarding the statements he had received until his counsel’s letter dated January 24, 1995. If we assume, as we must, that the plaintiff’s funds on deposit with the defendant were secretly converted to the personal use of Accomando and that the plaintiff had no knowledge of the embezzlement until the FBI interview early in 1995, then the plaintiff’s failure to object within ten days of each of the defendant’s statements in 1988 and 1989 was the direct result of the defendant’s alleged fraudulent concealment of the embezzlement, and the ten-day notice provision would not bar the plaintiff’s action. The defendant’s allegedly fraudulent concealment cannot be asserted to defeat what may be legitimate claims for substantial damages.
The judgment is reversed, and the case remanded to the Superior Court for further proceedings consistent with this opinion.
So ordered.
The complaint alleges that the plaintiff invested in his own name and in the names of various nominees. We treat the plaintiff, then, as the only party in interest in this litigation.
The eighth affirmative defense asserts that the plaintiff has no standing to maintain this action because of his pending bankruptcy proceeding filed in the Eastern Division of the District of Massachusetts. However, there is no suggestion of bankruptcy filed in this case, and there is no appearance of any counsel representing the bankrupt estate, if there is one.
There are portions of the affidavit which might have been excludable upon the defendant’s motion to strike, but so far as appears in this record, there was no motion to strike below, and there is no claim in this court that we should not consider portions of the plaintiff’s affidavit. There being no objection either below or here, we exercise our discretion and consider the entire affidavit. See Madsen v. Erwin, 395 Mass. 715, 721 (1985). The plaintiffs affidavit presented the fact of the embezzlement by describing the plaintiffs interview with the Federal Bureau of Investigation and a Justice Department task force. In its answer to the complaint, the defendant has denied that there was any embezzlement, but according to plaintiff s affidavit — based on a letter to the defendant from the plaintiffs attorney demanding to see the checks and other material documentation regarding the plaintiff s account, as well as the reply letter from defendant’s counsel, both of which are reproduced in the record appendix — the defendant has refused to turn over the checks and other documentation which could, it would seem, prove or disprove the embezzlement. We regard this undisputed exchange of letters between attorneys as entirely reliable. In sum, we consider the plaintiffs affidavit in full.
A copy of counsel’s letter of February 6, 1995, was sent to the defendant’s vice-president and general counsel.
The plaintiff’s claims for breach of contract and implied covenant of good faith and fair dealing must be brought within “six years next after the cause of action accrues,” see G. L. c. 260, § 2; his claims for conversion, breach of fiduciary duty, and negligent supervision must be brought within “three years next after the cause of action accrues,” see G. L. c. 260, § 2A; and his claim under c. 93A must be brought “within four years next after the cause of action accrues,” see G. L. c. 260, § 5A.
The plaintiff acknowledges that some of the checks may have been authorized to pay for the purchase of securities for the plaintiff’s account.
The affidavit of the defendant’s general counsel and vice-president filed in support of the defendant’s motion for summary judgment states that the