A Burning Issue Of Privilege

A fire that destroyed the historic Masonic Temple in Quincy has resulted in a privilege issue remanded by the Massachusetts Supreme Judicial Court.

WBZ4NBC covered the fire

A raging fire has destroyed an iconic Quincy landmark.

The Masonic Temple on Hancock street is now just a shell, after flames tore through the building Monday. Firefighters tried to get inside to douse the flames, but were driven back.

“It’s really sad,” said Jim Bennette, a local Mason, “because this building meant so much to so many people and not just because of the art-deco architecture. At its peak, it was home to 4,000 masons.”

The Masons had arranged to sell the building to a trust

Pursuant to a rider to the purchase and sale agreement, the agreement could not be assigned by the trustee without the prior written consent of the Masons. In a separate agreement executed in April 2013, the trustee assigned the rights to the property under the purchase and sale agreement to Jay Patel in return for $100,000; Patel intended to develop a hotel on the property.

The fire intervened.

Shortly thereafter, the Masons claimed that they had never consented to the assignment, refused to recognize it, and received over $6 million from an insurance claim arising from the fire.

Patel sued the trustees, claiming damages from the failure to secure the consent.

During the course of discovery, the developer plaintiffs noticed the deposition of David Levin, the attorney who represented the Masons with respect to the sale of the property and who had also routinely represented the trust defendants on real estate legal matters for over twenty years. The trust defendants moved for a protective order to bar Levin from disclosing his confidential attorney-client communications with them, claiming that Levin represented them as well as the Masons in the real estate transaction concerning the property, even though Levin took the position that he had represented only the Masons.

After an evidentiary hearing, the motion judge found that there was an attorney-client relationship between Levin and the trust defendants after the fire regarding insurance claims and third-party claims arising from the fire, but that, with respect to the purchase and sale of the property, Levin represented the Masons, not the trust defendants. He therefore ruled that communications between Levin and the trust defendants before the fire were not protected by the attorney-client privilege.

The trust defendants appealed. 

The court considered the matter a discovery dispute and unlike an order disqualifying counsel for appeal purposes

We...conclude that orders requiring the disclosure of privileged material, such as the order in this case, are not categorically irremediable, and therefore are not appealable under the doctrine of present execution...

Ultimately, the doctrine of present execution represents a balancing act that weighs the harm to cost-effective litigation arising from piecemeal interlocutory appeals against the harm that a litigant may suffer from a trial court order that is irremediable on post judgment appeal. We conclude that the sheer volume of potential appeals that would be permitted by including privilege-related discovery orders within the doctrine of present execution, and the inevitable adverse impact on judicial efficiency, outweighs the intrinsic harm that potentially might be suffered by an aggrieved party who is denied an immediate right to appeal.

The court nonetheless considered the merits

we conclude that the motion judge's order cannot stand based on the limited findings that he made. We therefore vacate his order and remand the matter to the motion judge for further factual findings and reconsideration of the motion in light of those additional findings. We express no view as to how the motion should ultimately be decided.

If and when the case returns

A judge's ultimate conclusion as to whether an attorney-client relationship existed is a mixed question of law and fact, which we review de novo.

While Levin represented the trustees in many real estate matters, here the Masons were is client but

The trust defendants and Levin agreed that, because he was representing the Masons as the sellers, the trust defendants would identify Miriam Marcus as their attorney of record in the agreement. Levin admitted that he never communicated with Miriam Marcus, and instead communicated directly with the trust defendants because he knew that Martin always negotiated real estate transactions personally. Levin sent draft documents to the trust defendants for review, prepared a power of attorney form for Martin so that he could sign the purchase and sale agreement on behalf of the Grossman Munroe Trust, and acknowledged having "many conversations" with Martin concerning the transaction after the agreement was signed in September 2012, particularly about deadlines in the agreement and seeking an extension to perform due diligence obligations.  Levin also testified that he discussed with the trust defendants their concerns about financing, construction, and permits related to the division of condominium units on the property; those issues were incorporated into a rider to the purchase and sale agreement. Levin billed the Masons and the trust defendants each one-half of his fee in connection with the purchase and sale transaction.

While Levin denied he also represented the trustees

The trust defendants disputed Levin's testimony. Seymour Marcus testified that Levin had explicitly told him that Levin was going to represent both sides, and that Levin had represented opposing parties to a transaction with them before, in the context of lenders and borrowers and also buyers and sellers. Marcus stated that Levin offered particularized legal advice in meetings -- without the Masons present -- on permitting and construction issues regarding the property and on what "[his] liabilities are to the Masons." He said that Levin instructed them to list Miriam Marcus as their attorney solely as a formality.

No wonder Levin denied it.

the judge first found that there was an attorney-client relationship between Levin and the trust defendants after the fire. With respect to the matters involving the purchase and sale agreement before the fire, the judge found that the Masons and the trust defendants shared a common interest in the sale, transfer, and development of the property, but not a common interest in the sense "that their interests were aligned with regard to this transaction."

But

The judge...found that there was no attorney-client relationship between the trust defendants and Levin with respect to the purchase and sale transaction before the fire.

Conclusion

The judge's findings raise issues both of law and of fact, none of which can be resolved without remand to the motion judge for further findings. The issue of law is that the judge, after finding that the interests of the buyer and seller in this purchase and sale transaction were "antagonistic" to each other, stated that "in a transaction of this complexity, it seems  impossible that a single attorney could represent both sides in a very complex and sophisticated real estate transaction." It is not clear from the record precisely what the judge meant by this statement, especially where the judge found that Levin represented both the trust defendants and the Masons after the fire, when their interests remained adverse.

It is not ethically impossible for an attorney to represent clients with adverse interests.

...Where we cannot be sure what the motion judge meant by his finding that it seems "impossible" for Levin, who was already representing the Masons with respect to the sale of its property, also to represent the trust defendants with respect to that transaction, we believe it prudent to remand the matter to the judge for clarifying findings on this issue.

And

Importantly, the judge did not address the undisputed fact that Levin billed both the Masons and the trust defendants for his legal work regarding this transaction, splitting his fee equally between them. Where, as here, an attorney bills an existing client for legal services, and where the client pays for those services, it is reasonable to infer that they had an attorney-client relationship with regard to those services.

The court also noted that an attorney-client relationship can be implied. (Mike Frisch)