Bird v. Capital Site Management Co.

423 Mass. 172
CourtMassachusetts Supreme Judicial Court
DecidedJuly 15, 1996
StatusPublished
Cited by9 cases

This text of 423 Mass. 172 (Bird v. Capital Site Management Co.) is published on Counsel Stack Legal Research, covering Massachusetts Supreme Judicial Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bird v. Capital Site Management Co., 423 Mass. 172 (Mass. 1996).

Opinion

Wilkins, J.

We have before us the defendants’ appeal from a judgment entered against them in the Superior Court awarding the plaintiff more than $1,180,000, and attorneys’ fees and costs, and cross appeals arising out of a finding of contempt entered against the defendant John P. Panagako, from which he appeals. The judge did not find his wife, Janice A. Panagako, in contempt, and the defendant trustee BayBank Norfolk (BayBank) has appealed from that ruling. We transferred the appeals here on our own motion.

The appeals raise different issues, which we shall treat separately. The underlying judgment was entered following a jury trial in which the jury, in answer to special questions, found that the defendant corporations had been in breach of their management contracts with the plaintiff; each of the three defendants had violated a fiduciary duty owed to the plaintiff; each defendant had intentionally or wrongfully converted the plaintiff’s property and had intentionally made false representations of material fact to the plaintiff; and each defendant had received money that in fairness and good conscience should be paid to the plaintiff. The trial judge reserved the plaintiff’s claim under G. L. c. 93 A (1994 ed.) for decision by himself.

The management contracts were in a standard United States Department of Housing and Urban Development (HUD) format and concerned the management of apartment complexes owned by the fifteen limited partnerships of which the plaintiff is the general partner. Each of these facilities qualified for HUD rental subsidies. The jury verdict concerned (a) excessive management fees, (b) the wrongful use of identity-of-interest suppliers and contractors, and (c) the wrongful charging of salaries to various housing projects. One of the defendants’ contentions is that the plaintiff was not harmed by their wrongdoing because HUD allowed rent [174]*174increases to cover the increased costs of operating the apartment facilities. One of the two issues presented on appeal from the underlying judgment concerns the judge’s exclusion of evidence offered on this issue. The other issue arises from the defendants’ claim that the court lacked jurisdiction of the case. We shall decide these two issues before considering th¿ issues presented by the cross appeals from the judgment in the contempt proceeding.

The Appeals from the Underlying Judgment

1. There is no merit in the defendants’ argument that the court lacked jurisdiction of the case. After filing his complaint, the plaintiff sought and obtained judicial approval to make an attachment by trustee process, but he did not, as required by G. L. c. 246, § 1 (1994 ed.), file a bond in an amount established by the judge who approved the trustee process. Two years ago, in a most carefully considered opinion, the Appeals Court rejected a similar jurisdictional argument in Big D Carpets, Inc. v. Welch Group, Inc., 37 Mass. App. Ct. 312, 313-315 (1994). The Appeals Court pointed out that the authority on which the defendant relied in that case had no continuing force in view of the changes that had been made by the adoption of the Massachusetts Rules of Civil Procedure and by amendments made to conform G. L. c. 246, § 1, to rule changes. Id. See also St. 1973, c. 1114, § 259, and St. 1986, c. 708, § 8. The defendants’ claim that the absence of a bond denied them due process of law has no substance. The attachment was authorized by a judge.

Arguments made belatedly in the defendants’ reply brief, seeking to distinguish the Big D Carpets case, also lack merit. The record in the Big D Carpets case shows that the case did not fall within any statutory exception to the bond requirement, nor did the Appeals Court’s opinion even imply that the bond requirement was inapplicable in the circumstances. It is of no significance that the appeal in the Big D Carpets case was taken from a default judgment.

In short, as Justice Kaplan stated in Schulte v. Director of the Div. of Employment Sec., 369 Mass. 74 (1975), in the modern view of the function of litigation procedure, “a distinction is taken between serious missteps and relatively innocuous ones.” Id. at 79. The plaintiff’s misstep was not a [175]*175serious one. The defendants, who could have moved for the filing of a bond but, as we shall later note, instead stipulated to the holding of the funds reached by trustee process, have not shown that they were in any respect prejudiced by the plaintiff’s omission. See id. at 80; Big D Carpets, supra at 315-316.

2. The judge did not err in excluding evidence offered to show that HUD reimbursed the plaintiff for any losses he sustained due to the defendants’ excessive fees. The defendants’ assertion that their wrongdoing caused no harm to the plaintiff assumes that HUD would have no interest in, or claim against, the plaintiff for reimbursement arising from the defendants’ misconduct. The defendants made no attempt to demonstrate that HUD could not, or would not, seek to recoup any overpayment. Moreover, as between the defendant wrongdoers and the innocent plaintiff, if either is to obtain a windfall, it should not be the defendants. Cf. Jones v. Wayland, 374 Mass. 249, 262 (1978).

The Appeals from the Contempt Judgment

The contempt order was entered against the defendant Panagako (but not against his wife) because Panagako had violated an attachment order and a stipulation concerning trusteed funds held by BayBank. One month after this action was commenced, a judge allowed a motion for approval of an attachment by trustee process of Panagako’s property held by BayBank. Among the funds that were thereupon attached were two certificates of deposit, each in the amount of $70,000, that were about to mature. The parties entered into a stipulation that the funds held by BayBank “shall be rolled over into new certificates of deposit, with such funds remaining subject to the attachment until further order of this Court.” A judgment in the underlying action was entered in favor of the plaintiff on April 20, 1990, and the defendants filed a timely notice of appeal. Final judgment was entered in November, 1990.

We paraphrase the judge’s findings in passing on BayBank’s complaint for a finding of civil contempt against both Panagakos. On May 21, 1991, John Panagako went to the Wellesley branch of BayBank where he spoke with an assistant manager regarding the certificates of deposit. Panagako learned that there was no “hold” on the account, and he [176]*176withdrew the interest in the amount of $26,573.65. Panagako testified that he was “surprised” that the. funds were released and that he believed that he was permitted to withdraw the interest because either there had been a bank “mistake” or the “lien” had lapsed.

On August 6, 1991, John and Janice Panagako went to the Wellesley branch of BayBank and spoke with the assistant manager about redeeming the two certificates of deposit. Presumably through a data-entry error on BayBank’s part, the assistant manager was not informed that the funds were subject to trustee process. The Panagakos requested and received from BayBank three checks made payable to Janice Panagako, two in the amount of $50,000, and one in the amount of $41,067.92. Janice Panagako endorsed the checks and initially deposited $91,067.92 in her personal checking account and the remaining $50,000 in another account. Proceeds from the three checks were used to pay the family’s living expenses.

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423 Mass. 172, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bird-v-capital-site-management-co-mass-1996.