Zabin v. Picciotto

12 Mass. L. Rptr. 212
CourtMassachusetts Superior Court
DecidedJune 6, 2000
DocketNo. 991594A
StatusPublished

This text of 12 Mass. L. Rptr. 212 (Zabin v. Picciotto) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Zabin v. Picciotto, 12 Mass. L. Rptr. 212 (Mass. Ct. App. 2000).

Opinion

SlKORA, J.

INTRODUCTION

The plaintiff lienholder attorneys and law firms (“the attorneys” or “the lienholders” pursuant to G.L.c. 221, §§50 and 50B) are suing the defendants Stefano Picciotto, Judith Picciotto, Melita Picciotto, Athena Picciotto, Juan Nunez, and Foreign Car Center, Inc. (Collectively the “Picciotto parties”) for collection of substantial fees and costs allegedly earned and incurred in longrunning antecedent litigation. The Picciottos have counterclaimed against the attorneys upon allegations of legal malpractice and violations of G.L.c. 93A. At this juncture the Picciottos have moved to file a third-party complaint against two new parties: attorney Jeffrey A. Schreiber (“Schreiber”) and Rich International Inc. (“Rich”). Rich and Schreiber oppose the motion to implead them. For the reasons developed below, the court DENIES the Picciottos’ motion to bring third-party claims against these parties.

BACKGROUND

In the proposed third-party complaint the Picciottos allege that Schreiber and Rich are liable to the Picciottos for all or part of the fees and costs claimed by lienholder attorneys. The allegations focus upon the conduct of Schreiber and Rich in the Chapter 11 Bankruptcy Reorganization Procedure of Salem Suede, Inc. (“Salem Suede”), a company against whom the Picciottos had obtained a substantial judgment for toxic tort liability. In the proposed complaint the Picciottos content that Schreiber and Rich committed [213]*213certain tortious or inequitable conduct; and that, as a proximate result, they had to hire the plaintiff attorneys and to incur the claimed fees and costs.

Specifically, the Picciottos say that Schreiber served as counsel to an unsecured creditors’ committee in a Chapter 11 Bankruptcy Reorganization of the judgment debtor Salem Suede; and that Rich was a member of that committee. In Counts One, Three, Four, and Five the Picciottos charge Schreiber respectively with (1) breach of fiduciary duty; (2) negligence; (3) intentional infliction of emotional distress; and (4) violation of c.93Aby reasons of unfair or deceptive acts or practices. In Count Two they charge Rich with violation of a fiduciary duty. We will address the claims in turn.

DISCUSSION

1. Claims Against Schreiber (1)Count One: Breach of Fiduciary Duty

The Picciottos assert that they had sought to participate in the unsecured creditors committee and that the Office of the Trustees denied them that opportunity at the insistence of Schreiber. Schreiber has responded that, even if those allegations were accurate, they fail to comprise a cause of action because counsel to the creditors committee owed a duty only to members of the committee. Schreiber argues that he owed no duty to the Picciottos because they were not members of the unsecured creditors committee. The controlling law supports Schreiber’s position.

Counsel to the creditors committee owes a fiduciary duty only to the members of the committee. DiSteJano v. Stern, et al. 223 B.R. 610, 623-24 (D. Mass. 1996). The court in DiSteJano stated: “(O)nly the (creditors) committee itself and (perhaps) individual committee members have standing to sue committee counsel; other parties in the case, even unsecured creditors, do not” (emphasis supplied). The Bankruptcy Court relied explicitly upon Collier on Bankruptcy [id. at 623). The treatise writer explained the practical purpose of the rule (citations omitted):

The professionals represent the committee itself and not the entire class represented by the committee. Some cases have alluded to the concept that a committee professional has a broader duty than simply a duty to the committee. Such statements are misplaced. The committee itself represents the members of the class and the professionals follow the instructions of the committee. The professionals should not be place in position whe[re] they are expected or encouraged to second guess the committee as to how best to further the interests of the committee’s constituency.

At oral argument counsel for the Picciottos argued that bankruptcy courts from other federal districts had held that counsel to a creditors committee does have fiduciary duty to the creditors whom the committee is to represent. The DiSteJano court acknowledged this split among the Circuits and stated, “Some courts have gone a step further and held that counsel to a committee owes a fiduciary duty to ’’the creditors whom that committee was to represent . . . Nevertheless, this Court believes that characterizing committee counsel as a Jiduciary of all unsecured creditors is unwarranted" (emphasis added).

As a matter of authority, comity, and consistency within the Massachusetts jurisdiction, we should and will follow the prevailing rule.

(2)Count Three: Negligence

The Picciottos aver that Schreiber negligently performed duties owed to them. However, as a matter of law, he appears not to have owed any duty of diligence beyond his obligation to the committee. In DiSteJano, the court observed that “the tort of negligence . . . assumed the existence of some duty which has been breached.” 223 B.R. at 625, n. 20. The reason for the negation of a duty of diligence appears logically identical to the reasons for the rejection of a duty of loyalty to constituents of the committee: the attorney can feasibly serve only one client. The committee and its constituents may, amid the complexities and choices of the bankruptcy process, experience tensions and differences. The attorney cannot be expected to please them both. In the absence of a duty of care between clients and constituents, no claim of negligence can arise.

(3)Count Four: Intentional Tortious Conduct

The Picciottos allege a series of intentional wrongdoing resulting in financial harm and emotional distress. They plead (1) that Schreiber improperly influenced the Office of the Trustee to exclude them from the creditor committee, and to include Rich in it; (2) that Schreiber improperly induced his representation of the committee and sought payment for noncompensable activity; and (3) that he failed to conduct' a competent investigation of the debtor Salem Suede as ordered by the Bankruptcy Court.

Four elements are necessary to establish a claim of intentional infliction of emotional distress. The claimant must show (1) that the actor intended to inflict emotional distress or that he knew or should have known that emotional distress was the likely result of his conduct; (2) that the conduct was extreme and outrageous and beyond all possible bounds of decency so as to become utterly intolerable in a civilized community; (3) that the actions of the defendant were the cause of the plaintiffs distress; and (4) that the emotional distress sustained by the plaintiff was severe and of a nature that no reasonable person could be expected to endure. Agis v. Howard Johnson Co. ,371 Mass. 140, 144-45 (1976). These requirements are designed to eliminate frivolous claims generated by mere bad manners and bruised feelings. They furnish a practical limitation against false or spiteful litigation. Id. at 145.

[214]*214The principal deterrent against invalid claims is the requirement that the defendant must have engaged in extreme and outrageous conduct. Foley v. Polaroid Corp., 400 Mass. 82, 98-100 (1987). The test of outrage is meaningful.

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Bluebook (online)
12 Mass. L. Rptr. 212, Counsel Stack Legal Research, https://law.counselstack.com/opinion/zabin-v-picciotto-masssuperct-2000.