-: SJC-13175,
Michael J. Bassichis v. Michael I. Flores.
-: Attorney Farber, we're ready for you.
-: Yes, can the court hear me?
-: Yes.
Yes, okay.
May it please the court,
my name is Peter Farber,
and I represent the plaintiffs in this action.
First of all,
I would like to thank the court for taking this appeal.
Sua sponte, if I am correct,
The last time the court addressed the doctrine
known as the litigation privilege was in 1991.
In the case of Correllas versus Viveiros.
That case had been decided on rule 56 motion
that the statements were absolutely privileged statements
to the police.
And this court confirmed affirmed that.
The instant case requires the court
to analyze the privilege as it relates to attorneys
conducting litigation in the courts of the common wealth.
This brings into focus,
not only the policies supporting the doctrine
of absolute immunity based on communicative acts,
but also the standards which govern the conduct of lawyers
as officers of the court.
My presentation will address three major points.
First an observer may say that there's a collision here
of two rock solid principles of law.
One being the document of the litigation privilege,
which is said to be as old as the adversary system itself.
The other principle,
which is of equal pedigree is that the courts
do not tolerate the manipulation of legal proceedings
by an attorney or anyone else
to accomplish illegitimate or illegal acts.
The plaintiffs see no collision in this case,
much less a collision that results
in the litigation privilege carrying the day.
The gravamen of this complaint
is that the defendant attorney
in conjunction with his client and her husband
employed the legal, the court system to perpetrate a fraud
on the husband's creditors.
And then attempted to hide this fact between,
behind 203 findings of facts,
which were drafted by the defendant
and presented to the court as agree upon findings.
There was little, if anything,
in the testimony at the trial,
or in the 21 uncontested exhibits
that support any of these findings.
-: Although the lawyer was pretty explicit
about what he was doing.
He goes into court and says,
I mean, I don't know what he was thinking,
but he goes into court and says,
hey, I need, I need, I can't do this by consent.
I need to have a hearing here,
and you need to you know,
basically give, take a hundred percent of the,
you know take, give the wife a hundred percent
of the assets, right?
He states what he's doing.
It seems like that may be an abuse of process
in and of itself,
but he is expressly stating that right upfront,
isn't he?
-: He certainly is your honor.
And if I were a fly in the courtroom,
I would suggest that judge Ghandour probably says
well, the creditors aren't involved in this proceeding,
and there's nothing I'm gonna do in this proceeding
is gonna affect their rights.
So go ahead Mr. Flores and proceed.
But obviously I was not in the courtroom
and could not understand why that judge Ghandour
did not respond to that.
-: So then, I mean,
although it's not quite as an abusive process,
it's, that's the best theory for it.
Isn't it that the process,
the divorce proceedings are being manipulated
to provide bankruptcy protection.
Is that essentially your argument?
-: Well, both bankruptcy protection
and protection in the suits
that were already ongoing in the superior court.
Certainly the defendant was aware of those suits.
And in fact, the judgment,
there was a proposed judgments filed by the defendant
on the day of the trial or certainly the morning afterwards,
but proceedings in the superior court,
when it was evident they were throwing into contest
or challenging the ability of the (indistinct)
to pain relief from those judgments or those suits.
The defendant went back into court
with his proposed 203 findings of fact.
These were filed after the judgment entered.
If you look at the docket just attached
to one of the amicus briefs,
they were filed.
I think in late August or in September.
The judgment had already entered in July.
So literally what attorney Flores was seeking to do
was cover his tracks and get some findings into the record.
So that as to mislead others,
certainly a judge of the superior court being one,
that this was a fully contested case.
And the judge had made these 203 findings
when it was obvious,
it was a consent judgment.
It was not an adversarial case at all.
And it was essentially a manipulation
of the divorce proceeding.
-: What do we make of the, go ahead, go ahead.
-: I guess I'm trying to figure out you know,
if we adopt the appeals court led decision,
and make a differentiation between conduct and statements,
what is the conduct that attorney Flores engaged in
separate and apart from his statements,
that you're basing your allegations on?
And the reason I asked that is because
my understanding of the privilege is that
even if statements are made in bad faith and unsupported,
those are privileged, absolutely privileged.
So how do we, you know, unlike Gillette,
which apparently threatened suit and filed suit
in order to obtain a business advantage.
What is your theory that you know,
Mr. Flores here, that's separate and apart
from his statement.
-: I think the court in the number of decisions
the courts have said,
it's not always easy to determine
the difference between conduct and statements.
-: Right, and so that's the problem with your position,
because we want lawyers to be able to advocate
on behalf of their clients.
Here, the lawyer was very open
in what he was trying to obtain,
and not hiding the ball and not using the system secretly
to obtain an advantage like Gillette was doing.
And so I'm wondering you know,
how we avoid that slippery slope.
We want lawyers to be able to advocate strongly
on behalf of their clients in judicial proceedings.
We don't even have a quasi judicial proceeding.
We actually have one.
So yeah, what is the limiting principle here
that wouldn't, you know chill effective advocacy?
-: I would say your honor, that if the litigation privilege,
if you take it to its real core,
it's to protect the content of statements
originating with defamatory statements.
There are no, there's nothing in the content
of the 203 findings of fact,
it is in any way defamatory.
This case would not have provoked retaliatory lawsuit
by the participants themselves,
any witnesses of the parties.
So when you look at the policies
that are behind the litigation privilege,
none of them applied in this case,
and I think that's the important thing.
-: Well I guess I quarrel with that
because aren't you chilling effective advocacy
if suddenly statements that attorneys make
on behalf of their clients can be used against the attorney
in a suit just like this one
in order to reach a deeper pocket
that's now available under your new theory.
I guess you know, I understand the Gillette case,
which was you know, Gillette trying
to quash startup companies
by forcing a disclosure of baseless litigation
and scaring away investors.
That's a different theory than what you're suggesting here.
Here, you're actually saying
yes, the attorney was quite candid
with the probate court in what he was trying to obtain
and how he was trying to protect the assets for the wife.
And he needed an adversarial judgment.
You know, these are things that maybe you know,
yeah, I guess I'm searching for the principal
and I get it's facts specific.
But if we have, if we adopt your position,
isn't that really gonna chill advocacy,
because it's an unknown.
Anytime I can front of a tribunal
and I say something that might benefit
my client financially,
I may be subject to a lawsuit someday
that maybe on summary judgment,
maybe I win, but I get to you know,
get dragged in litigation for some time.
-: Your honor I think the behavior of the conduct
of the lawyer in this question in this case
is so far beyond what would
after 35 years I find acceptable in a court.
I don't think this is a hard case.
-: It's unacceptable for a lawyer
to define a legal strategy to preserve client's assets.
-: I think certainly.
Any between the parties themselves,
the attorneys accorded,
you know, the full benefits of the litigation privilege.
I think though that when it involves a manipulation
of the legal process and I will be very candid,
I think that's exactly what occurred here,
and over, it was an effort to disguise
a what was essentially an agreed upon case
of consent judgment
to make it look to the world
like it had been the result of a judge
actually rendering a decision after hearing
competing facts, whatever.
There were no, there was nothing for the judge
to decide here and review of the transcript,
which I know this court doesn't have
is clear that he was just saying,
so you agree with this, Mr. Von Thaden,
absolutely, your honor, absolutely, absolutely.
There was nothing for the judge to do.
-: Besides Gillette,
'cause I mean, this is tricky
because lawyers are officers of the court too.
They don't get to lie to the court.
They don't get the defraud the court.
So I'm trying to understand sort of
just what Justice Wendlandt probing is.
Where are the boundaries,
although I suspect, I think there are greater boundaries
maybe than Justice Wendlandt thinks.
'Cause I are there other cases besides Gillette
where we've thought okay, we've got abusive process,
and we're holding the lawyers
as opposed to the clients accountable
for the abuse of process.
That's, you have some good examples there
'cause that would be useful.
-: I think, I cited the major cases is in my brief.
I think the, if I were to go further,
I would identify the cases under chapter 109A
which clearly is a policy long recognized
in the commonwealth, not countrywide.
I decided the Northborough National Bank case versus Risley.
And in that case cites various other cases
where the participant in a fraudulent
or alleged fraudulent transfer of assets
is found to be equally, equally liable and must return,
or certainly is subject to the disgorgement of any assets
that he or she receives.
So I think I.
-: We're dealing with here,
the tricky issue is the lawyers, right?
I mean, the things that seems similar to this
are the anti-slap cases and process cases,
but I'm just trying,
I'm looking for examples where you get to sue the lawyer.
That's what,
because this isn't, this seems to fit comfortably
within an abusive process potentially,
or even you know, something worse.
But again, the lawyer it's,
it's when we deal with the lawyer, it's just,
I'd like more examples.
What, you know, where we hope lawyer accountable.
-: I think it's you have,
the court has to focus on their problem and the complaint.
If you review the complaint that was filed in this action,
it has, it focuses on the attorney's conduct
and the statements
and certainly the content of those statements
is just evidence of how he carried out
the manipulation.
-: The one thing that came struck me is
I don't understand, does he take the money in escrow?
-: Yes, yes.
-: I mean, I don't know exactly,
so he's holding an escrow.
Isn't that, that's kind of cute, you know.
He's not getting the money,
he's just holding it in escrow, right.
There's nothing wrong with that.
Right?
-: Well, certainly nothing wrong with that particular act.
I think the discovery, if it goes on
will show that he kept a good portion of that
as his fee and 109A does not separate out distinguish
between what the transferee does with his money
or the property that he received.
So it may be that the case is allowed to proceed.
The judge in the superior court will order
the disgorgement of that.
if it be found that those proceeds should be used
to satisfy the credit,
but certainly the going back to your original question.
-: Counselor, can you go back to that original question?
So you, in response to Justice Kafker,
gave a litany of cases as examples,
which one of those were against the lawyer involved?
-: It seems as though they're non judged that I know of.
In many respects, this is a case of first impression
in the sense that if you review the whole history
of the litigation involving that judicial,
the litigation privilege,
you don't find any cases that address the lawyers.
-: That's a problem for you then isn't it?
I mean, I just,
I mean, even Gillette,
is Gillette a lawyer case
or is Gillette a corporation case?
You know, so that's not so helpful either.
I mean, is the remedy the board of bar overseers here
and not you know,
is that really where we should be looking
as opposed to trying to you know,
gut the litigation privilege?
I mean, it would really help if you got a case
involving a lawyer.
Any case in the country would be useful.
-: Well, I would say judge, in the bankruptcy,
there's a huge amount of cases in the bankruptcy realm
that address the, what the parties themselves are doing.
But again, they don't address it
from the view of the lawyer,
what his or her responsibility is.
So again.
-: Again, Mr. Farber, I'm not meaning to be difficult,
I'm just looking for support.
Do you have any case in the country
like the one you're asking us to define here,
where a lawyer is, the lawyer is found,
the lawyers conduct creates a separate cause of action.
-: I think, I mean in every, in every case,
in every area of the law,
there has to be a decision that,
of the type that you're thinking of.
You see.
-: We do, and we spend our days when we're not in court
dealing with bar discipline.
So we have plenty of cases where lawyers get in trouble
and we have to deal with that.
But I'm just, this seems somewhat,
this seems novel in a way
that I hadn't really appreciated until now.
-: And I, if I could your honor,
we certainly, I'm well aware of the bar discipline route.
That course wouldn't satisfy my clients
because you know, a violation of a disciplinary goal
doesn't result in any judgment in a civil court
involving another party that I'm aware of.
But what I would say here is
the focus should be on the gravamen of the complaint,
and the fact that this was active participation
in a fraudulent transfer,
or should I say that's what's alleged in the complaint.
Certainly rule 12(b)(6) in my view
should not be the avenue to dismiss this case.
The judge did not address any of the facts
and just accepted that this is not applicable.
And I think that the policies
that support the litigation privilege
do not apply here.
Absolutely do not apply.
And certainly the defendant's counsel in this brief
has not alleged that any of those policies
are spoken to any of those policies.
In my view, when the litigation privilege is,
is put aside as being not applicable,
then what's left is a check, is a 109A case.
And then you look to the participants,
and lawyers are not exempt under 109A,
if they participate in the fraud,
carried out on against third parties.
So yes, it's very much a case of first impression.
You know, there always is one in the law.
-: Can I ask one last question?
Did you look in 93A?
-: Yes.
-: And were there cases where the lawyers
end up as defendants in 93A actions
based on behavior like this?
That seems to be 109A,
is that's a fraudulent transfer provision?
-: Yes your honor.
-: The lawyer here is not getting any of the money
except for he's getting his legal fee.
But so were there any 93A cases where they found liability
Impose liability on the lawyers
for sort of unfair and deceptive when in practices?
-: Well, I would say this your honor,
that the 93A cases,
and I believe I cited a couple there,
are, they look at whether the attorney's conduct
is simply what the course referred to
as traditional function,
traditional aspects of representation of a client,
but when the attorney steps away from that
and conducts him or herself in a manner,
injects himself into the marketplace,
which I believe the attorney did here,
then he or she could be found liable under 93A.
And when, again, when you look beyond just the content
of the statements,
that sort of hits you in the face,
like the bath of cold water,
that's exactly what he did.
He, with his, in conjunction with his client
and the client's husband,
they had one common objective,
and that was to take this money aside
for the benefit of the divorcing spouse,
that was the client,
and that effected the marketplace.
It was conducted outside traditional notions
of representation.
So I'm not sure if the Kurker v. Hill was the case
that I cited in my brief,
whether that was,
but there are certainly cases in here.
And I do refer to them in my brief.
I believe I did.
-: Alright, thank you.
If no one has any further questions.
We will, thanks.
We'll move on to attorney Chamberlain.
-: Good morning, Bill Chamberlain
for attorney Michael Flores.
I would just like to start with attorney Farber.
When he was asked,
what were the claims of the plaintiffs based on
reference to his complaint?
The allegations of the complaint
said that reflected and laid out the conduct,
but then he referenced the statements
and the content of the statements.
And I think even if this honorable court
does not adopt the reasoning and the principles set forth
in Gillette v. Provost concerning statements.
The conduct, the Supreme judicial court
has a long history dating back to at least 1841,
of applying the litigation privilege
to statements made by an attorney prior to,
and during litigation.
-: If we want to take you at your word,
I take it you're quoting the Windmill Shaw 1841 stuff,
is that right?
He uses the word good faith in that.
We've sort of, I mean.
-: He does your honor.
-: What happens when we've got
a classic abuse of process case,
but the lawyer's the instrument of it.
The clients didn't figure this out.
The lawyer figured it out.
Are we, what do we do?
-: Well, one your honor,
I would suggest that according to the allegations
in the complaint,
the client did figure it out.
The plaintiff's alleged they already had this agreement
before they came to.
-: The client figured out that they needed,
they couldn't do a stipulated, hundred percent judgment,
rather they needed a court to have a hearing
and make findings.
That sounds like lawyer stuff to me.
-: I would, in paragraph 29 of the complaint, your honor,
the plaintiffs alleged that after obtaining
a commitment from Mr. Von Thaden,
Mrs. Von Thaden, attorney Flores' client,
came to him for purposes of the divorce action.
The allegation against attorney Flores
is that he orchestrated the scheme
to allegedly implement that collusive divorce.
-: Right, well that's what I mean.
He, I'm not saying this is all true.
I'm just saying,
but we've got a motion to dismiss here.
is part, I haven't read the complaint carefully,
is part of it is this is a fake divorce,
that they actually aren't divorced,
or is that not a component of this?
-: That's not a component of it.
I don't, and in fact,
it's alleged that the divorce was caused
by an irretrievable breakdown in the marriage.
-: Say, let me pose a hypothetical then.
Say a lawyer basically comes up with a whole scheme.
Pretend like you're divorced.
We're gonna have a hundred percent.
You're gonna take all of this.
And the lawyer helps them do that.
And those were the factual allegations.
Could you bring a case?
Would that be a case that's actionable
as opposed to this one,
if the lawyer basically structures a fake divorce,
a hundred percent to one client,
and basically leaves all the creditors out of luck.
Is that actionable under this?
Or is that also not actionables,
even that's protected?
-: Well, what one,
I think it may be protected in terms
of the attorney owes no duty to the creditors.
That's a, that's a separate issue.
It's clear that he only owes a duty of care to his client,
but in terms of, at least as the litigation privileges.
-: If the attorney wove this whole thing together,
basically came up with a way of getting a hundred percent
of the assets protected from the creditors
and to the wife.
But it's really, the whole things of fake.
Is he still protected by the attorney,
the litigation privilege?
-: I would suggest that perhaps he is.
And if the claim is based on conduct
as opposed to statements
So, which is which isn't the case we have here.
-: So this conduct statement distinction is a good one then?
-: I believe it is.
I believe it's clear.
Even putting aside Gillette,
that that statements made by an attorney
during litigation are absolutely protected.
So does Gillette raise issue about
well, it's not quite statements, but it's conduct.
So could it be liable?
Perhaps, but the only conduct we have.
-: Compartmentalize the silo of those two you know,
We have another area of law.
We have verbal act, where even though words are used,
they're considered acts.
So the dichotomy, it's not fool-proof.
Sometimes people act through words.
-: That's true your honor.
And I know other states,
I know there's a, in preparing for the oral argument,
I came across the 2006 California Supreme court case
that draws a distinction between communicative acts
and non-communicative acts
similar to the Gillette v Provost distinction.
In that case,
the allegation against the attorney
was that he submitted a false declaration of service
in a legal proceeding in order to obtain a default judgment
and then executed on that default judgment.
And the California Supreme court held
that the gravamen of the claim against the attorney
was the filing of that false declaration.
And given that that's a communicative act
in that attorney statements and litigation
are absolutely privileged.
It was held that the litigation privilege applied
in that case.
-: If an attorney engaged in fraud on the court
to benefit his client,
but all the fraudulent statements are done in court,
is that actionable?
I mean, I just-
-: I would submit that it might be subject to discipline
or sanctions from the court,
certainly perhaps from the BBL,
but I don't believe that it suffices
to create a cause of action,
and nor do I think that if it did
that the litigation privilege would not operate
to preclude civil liability.
There could be other forms of liability,
but not similar to that.
-: No matter how extreme wrongful conviction,
the you know, the prosecutors using the court
to frame somebody.
It doesn't matter how influent the behavior is,
if you are using the courts as an instrument
to commit a fraud,
what you say in court
is a hundred percent absolutely privileged.
-: Under existing Massachusetts law your honor.
What you say in court is 100% absolutely privileged,
in terms of civil liability.
I don't think there's any decisional law
that provides otherwise.
-: So if the lawyer,
but the lawyer leaves an email,
or he had, he leaves some statement on the client's phone
saying we're gonna fool the court.
We're gonna pretend like you're divorced.
You're not gonna be divorced.
We're gonna give all the money to your wife.
Is that severable, because the conduct isn't,
there's some evidence of conduct outside of the courtroom
or statements outside of the courtroom?
-: I don't believe so your honor,
because again, I would submit that that's not conduct
and it's the litigation privilege applies
to statements preliminary to
in connection with, and during litigation.
-: What is the appeals court saying then
when it's talking about conduct in Gillette,
and there's another case too,
they're two cases where they draw this conduct.
-: Well, certainly in Gillette,
it's the conduct of filing an allegedly baseless complaint,
which caused damage to shave logic
because it had to disclose that to its investors.
It didn't matter what was in the complaint.
It wasn't based on the contents of the complaint.
In our case,
it's the content of the argument
in representations made by attorney Flores
to the probate court
that formed the basis of the plaintiff's claims.
It's not the mere filing of suit,
and it's not even the alleged collusive agreement.
That didn't damage the plaintiffs.
As Justice Gillday in my opinion, correctly determined.
But for these alleged misrepresentations for court,
this divorce judgment would never have issued.
And the plaintiff creditors would never have been damaged.
So it's based on the content of statements.
It's not mere conduct of filing the divorce.
Nobody's saying the divorce couldn't be filed.
It's again, the allegations of the complaint
where it explains what the plaintiff's mean
by orchestrated a scheme.
It talks about or relies upon,
sorry, go ahead your honor.
-: I just, and again, then I'm looking at millennium,
the abuse of process cases.
So the three elements of the cause of the action
in abusive process,
fact-finder must find the process was used
to accomplish some ulterior purpose
for which it was not designed or intended,
or which was not the legitimate purpose
of the particular process employed.
So even if we find the lawyer is orchestrating
an abuse of the legal system.
I'm not saying your client's doing that here.
-: I understood.
-: There's no, the lawyer is protected in that regard.
As long as,
I'm trying to understand that.
'Cause then are we wiping out the abusive process
torque for lawyers.
'Cause lawyers are part of I mean, maybe we are.
I don't know.
-: I don't think affirming the judgment in this case
would result in that draw.
Again, one, abusive process has not been pled in this case.
So to me, it's not an issue
in terms of the plaintiff's claims.
-: 12(b)(6).
So we sort of take the facts.
They don't need to characterize their theory.
They just need to put the facts in.
-: Sure.
And I don't know,
I don't know, and I'll candidly admit
I haven't researched it enough.
I don't know that the plaintiffs would have standing
to assert an abusive process claim.
This process certainly wasn't used against them.
And also the purpose of a divorce action
is to obtain a divorce.
That's the exact purpose for what it was used.
Again, if it's not based on the content of the arguments
in presentation made by an attorney to the court,
then I would suggest that the litigation privilege
has no applicability,
but where it's the argument is,
you misrepresented to the court,
the husband's conduct,
and whether he engaged in dissipates,
the dissipation of assets,
which resulted in this allegedly
improper collusive judgment.
That is protected by it.
Because to rule otherwise,
would chill the complete freedom
that the Supreme judicial court has said,
an attorney should have in advocating
on behalf of his client.
If it's something that's not based
upon the attorney's argument,
the attorneys strategy and attorney's filings
with the court,
then certainly the abuse of process claim would survive.
Like it would have under the Gillette v. Provost standard
that's adopted.
-: And the good faith.
-: I'm Sorry.
-: No that's okay.
Go ahead.
-: What can we rely on to police attorneys
engaged in this kind of conduct then,
if we can't have an abusive process claim
or claim by a third party?
-: Well, the appeals court,
in the Sullivan V Birmingham decision,
stated that we do have built in controls
instead of providing private causes of action
based upon statements made during litigation.
And that's the judge himself.
We do have judicial controls to police this.
And as has been noted and stated,
judge Scandurra was fully aware
of what attorney Flores' strategy was.
So, you know, I mean he's not named as a party,
but there was nothing hidden here.
If judge Scandurra had, you know,
felt that there was anything untoward going on,
certainly it's in within his power and ability
to either issue sanctions, report it to the BBO
so that disciplinary action can be pursued and assessed,
but that didn't happen.
But it, just to go back to one thing you said, Justice Kafka
in terms of Hoar v. Wood and the good faith.
I believe the subsequent SJC decisions
in think it was Missoula and Aborn clarified
that it doesn't have,
the statements don't have to be uttered in good faith.
The litigation privilege is absolute,
and it applies whether the statements are issued
or spoken maliciously or in bad faith.
-: I know we did that.
I'm just trying to figure out what we mean.
It's basically where I'm trying to reconcile
this conduct versus statement stuff with the fact
that we're giving it absolute protection.
The lawyers, and lawyers act through their words,
you know, they're not construction workers,
you know, this is how they communicate
and how they do their job.
-: Understood.
Could I provide,
I didn't cite it in my brief,
didn't come to my attention
until I was preparing for oral argument.
Could I provide the citation
for that 2006 California Supreme court case?
-: Sure.
-: It's 128 P.3rd 713 Cal 2006.
And it does have an exhaustive discussion
of statements we conduct.
And the litigation privilege under California law
is very similar to ours under Massachusetts law.
-: And so just to summarize,
where do they draw the line,
and apply their line here?
That you say they do,
they do allow certain conduct to be actionable.
Do they define what something useful that's relevant here?
-: They do your honor.
And they give examples of what is considered
non-communicative and what is considered communicative.
-: And this is a case involving a lawyer?
-: It is.
A lawyer who allegedly submitted
a false statement of service,
which resulted in issuance of a default judgment,
and then a subsequent levying on the judgment.