Despite the existence of policy statements setting forth the correct coverage amount, the Supreme Judicial Court affirmed the trial court’s finding that the plaintiff had relied on the oral misrepresentation. Further, it found that it was not unreasonable as a matter of law for the plaintiff to have done so. Based on these misrepresentations, the Court affirmed a judgment against the agent for misrepresentation and for violations of Chapter 93A, the Massachusetts Consumer Protection Act, including an award of punitive damages and attorney’s fees, and reinstated Chapter 93A claims against the insurer.

The decision is of obvious importance to insurance agencies and insurance companies, who must use the utmost care to fully and accurately describe the programs and policies they sell. However, the Court’s rationale is equally applicable to a wide category of business-to-consumer transactions. Banks, lenders and mortgage brokers, for example, may be liable for misrepresenting loan terms, such as prepayment penalties, no matter what the signed documents say. A contractor bidding on a project who orally promises to do certain work could be liable to a homeowner for failing to do that work even if the written contract and specifications they eventually sign do not include it. In short, businesses of all types must use the utmost care to ensure that their words and deeds match.

While the use of independent contractors certainly has its advantages, it also can create legal hazards, particularly if the designation is misused by classifying as independent contractors workers that the law says are really employees. While there are undoubtedly many cases where employers have intentionally misclassified workers, more often misclassification is the result of an honest mistake or genuine confusion about the law. Unfortunately, it is not always easy to determine whether or not an individual qualifies as an independent contractor.

In Massachusetts, whether an individual is an employee or independent contractor is determined by statute. Massachusetts General Laws Chapter 149, Section 148B provides that an individual providing any service to another “shall be considered an employee” unless (1) the individual is “free from control and direction” in performing the work, (2) the services being provided are “outside the usual course of the business of the employer,” and (3) the individual is customarily engaged in a trade, occupation or business “of the same nature as that involved in the service performed.” Though the definition is fairly clear, it still leaves significant questions in the application of the definition to each particular case.

For example, was the work that was performed “free from control or direction?” Obviously, a business must be able to give a worker some direction as to the basic work that is to be done, so what amount of direction is too much? Similarly, if the work being performed must be “outside the usual course of business” of the employer, just how far outside must it be? Rarely will the answers to these questions result in 100% certainty that the classification of a worker as an independent contractor is correct.

Moreover, the penalties for a mistake can be severe. The misuse of the independent contractor label can result in IRS fines and state law penalties for each misclassified worker. In addition, an employee misclassified as an independent contractor may assert claims under state wage and hour laws. In Massachusetts, that means that a misclassified employee may be entitled to recover unpaid wages and benefits, and may also recover attorney’s fees and treble damages.

One result of the growing use of independent contractors is that both state and federal law enforcement agencies have increased their scrutiny of these practices, with the IRS, Department of Labor and Massachusetts Attorney General’s office increasing audits and investigations of companies for the misuse of the independent contractor designation. If you are an employer, employee or an independent contractor with questions or concerns about this area of law, please feel free to contact our office to speak with someone today.

The Suffolk Superior Court Business Litigation Session, for example, recently denied a lender and mortgage broker summary judgment on claims brought by a borrower alleging unfair and deceptive practices in violation of Chapter 93A, civil conspiracy, and breach of the covenant of good faith and fair dealing. In particular, the plaintiff had alleged that they had not reviewed loan documents prior to signing under the pains and penalties of perjury, and were not aware of inflated income figures in the documents, allegedly placed there by the mortgage broker. They asserted that they had only signed the documents and entered into the loan agreement based on assurances from the mortgage broker that they would be able to refinance after six months.

The Court rejected the lenders’ arguments that since the plaintiffs had signed the loan documents, they were bound by its terms and by the representations they made in the documents. The Court noted that “the problem with this argument is that a party is not bound by the terms of a document signed in reliance upon a fraudulent misrepresentation…Taking the evidence in the light most favorable to the plaintiffs, the court concludes that a reasonable jury could find that representation fraudulent and conclude that the [plaintiffs] relied upon it in entering into the loan transaction to their detriment.” Thelemaque v. Fremont Investment & Loan, C.A. No. 08-5179-BLS1.

Numerous investigations have found that, in the middle of the real estate bubble, oral representations by lenders and brokers concerning loan terms, refinancing options, prepayment penalties, and similar issues were common. Increasingly, Courts have taken a strong line against many questionable practices within the mortgage industry. The Thelemaque decision, like a number of other court decisions, indicates that the Courts will, in the appropriate situation, ignore the terms of the written loan contract and hold lenders to the oral promises made by their agents. Such a possibility, of course, greatly increases the uncertainty facing lenders and means that homeowners facing possible foreclosure may have options available to them.

These changes are driven by many factors, including changes in technology and in the experience and knowledge of the general public. Konowitz & Greenberg was recently involved in a case in the Massachusetts Superior Court that illustrates how these changes can occur. In that case, the attorney for the opposing party in a case sent an e-mail to Konowitz & Greenberg and blind copied his client on the e-mail. The client then responded to his attorney’s e-mail—with a response that included arguably damaging admissions—and inadvertently copied Konowitz & Greenberg by mistakenly using the “reply all” function.

Opposing counsel filed a motion to prevent any use of the e-mail in the case, arguing that the disclosure of the attorney-client privileged communication was inadvertent and that reasonable care had been used to protect the privilege. While the court ultimately allowed the motion, it noted the foreseeability of the type of mistake made by the client, and emphasized that attorneys should avoid using the “bcc” function on e-mails, particularly when sending an e-mail to clients. The Court noted that any further “accidents” would result in a waiver of the privilege.

The Court’s decision illustrates how changing technology, knowledge and experience can result in changes in laws and rules that, though basically procedural, can have wide-ranging impacts. Fifteen years ago, it would have been inconceivable that a court would expect attorneys and their clients to recognize the risks of e-mail and “reply all” buttons. In 2010, at least one Court found that these risks were generally known and that whether a waiver of privilege had occurred was a close question. It is certainly conceivable that in another few years a court will find that not only are the risks of “bcc’s” and “reply all” known and foreseeable, but that parties and their attorneys have an affirmative duty to adopt procedures that prevent the type of inadvertent disclosure that occurred in this case.

Both federal and state law strongly favor the enforcement of agreements to arbitrate. The Federal Arbitration Act, 9 U.S.C. § 1, et seq., creates “a body of federal substantive law of arbitrability” and represents “a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary.” Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 941 (1983). “[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation or waiver, delay, or a like defense to arbitrability.” Id. “[A court] may not deny a party’s request to arbitrate an issue ‘unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.’” Mehler v. Terminex Int’l Co. L.P., 205 F.3d 44, 49 (2d Cir. 2000).

Though many states have similar laws, even those that do not generally must enforce arbitration agreements since the federal act preempts contrary state law. The preemption is broad; any state arbitration act that treats contracts to arbitrate specially or differently from contracts generally is pre-empted if, as applied, such law is inconsistent with the federal law. Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681 (1996).

However, while arbitration agreements generally will be enforced, they are not necessarily appropriate in all types of cases. Cases that raise difficult or complex questions of law, for example, may be better suited to the courts, where the possibility of appeal exists if legal errors are made. Generally, an arbitrator’s decision is not appealable, even if the arbitrator applies the wrong legal standard to a case. Conversely, where the law unambiguously favors one party, for example where a company obtained a release of liability from a consumer as a condition of the provision of a good or service, the courts may be preferable to arbitration since the company may be able to obtain a quick dismissal of a claim against it through a motion to dismiss or for summary judgment.

Given the potential benefits, an agreement to arbitrate will often be a smart choice when entering into a contract. However, such an agreement should not be automatic, and you should always consider the circumstances and the types of disputes that may arise with respect to a contract before demanding or agreeing to arbitrate future disputes.

While some of the costs of litigation cannot be avoided, and unexpected and unavoidable expenses may arise inevitably as a result of the actions of an opposing party, often higher than anticipated costs of litigation are a direct result of strategic and tactical decisions made by the party and its attorneys. Decisions made at the start of a case, for example, may significantly impact the cost of litigation. In a case for breach of contract between businesses, for example, a decision to name the defendant company’s president as a party, and to assert claims of fraud against him or her, while possibly made in the hope of impressing the defendants with the seriousness of the claims against them, also is likely to result in significantly higher litigation costs when the defendants vigorously fight those claims.

Similarly, when, in the course of litigation, a party faced with a request to produce documents decides to resist providing documents despite the fact that there is only a small chance it’s opposition will succeed, or when it opposes a reasonable position taken by the other party to avoid looking “weak,” the party is making a tactical decision that directly increases its costs. Those types of decisions, repeated over the course of a case, can dramatically increase the cost of the litigation.

At Konowitz & Greenberg, we encourage our clients to consider these factors both at the outset and throughout the course of litigation. We work with our clients to ensure that they understand the implications of their decisions; the impact of these decisions on the litigation and on their bottom line. It is our goal to have a client that not only is happy with the results of litigation, but satisfied with the manner in which the result was achieved.

In the case, Karen Greenberg, who was named Executrix by the decedent’s Will, asked the Probate Court to approve the Will, which had been prepared and signed in 1990. The Will left the bulk of the decedent’s multi-million dollar estate to several charities. The decedent’s children objected to the Will, arguing that the decedent had revoked her Will prior to her death and that the decedent should be found to have died intestate, or without a Will. Under the intestacy rules, the Estate would then have passed to the children.

In support of their claims, the children asserted that the decedent had told them on various occasions that she had revoked her Will, that she was planning to make a new Will, and that she had made a new Will. While no new Will was ever found, the original 1990 Will had “X” marks written in pencil through numerous paragraphs in the Will, including the paragraphs leaving the majority of the Estate to the charities. In addition, a post-it note was found by one of the children which read: “This Will is null and void. It is too old and no longer applies.” The child, however, could not recall where or when she found the note, or if it was with the Will.

The law in Massachusetts is very clear on the ways a Will may be cancelled or revoked. “Revocation is an act of the mind, which must be demonstrated by some outward and visible sign or symbol of revocation.” Worcester Bank & Trust Co. v. Ellis, 292 Mass. 88, 91 (1935). Specifically, revocation of a Will may be accomplished “by burning, tearing, cancelling or obliterating it with the intention of revoking it, by the testator himself or by a person in his presence and by his direction.” Id. Thus, two elements must be proved by the party challenging a Will’s validity: (1) an appropriate outward act by the testator, and (2) a simultaneous intent to revoke.

In asking the Court to grant a summary judgment dismissing the challenges to the Will, Konowitz & Greenberg argued that, even assuming the “X” marks were made by the Decedent and that the Decedent had written the post-it note, there was no evidence when the marks and note were written, why they were written or what the decedent’s intention was in making the writings. The Decedent had conversations with her attorneys over the years, including in 2001 and 2004, in which they had discussed the Will and the Decedent had expressly stated that she did not wish to make any changes to it. Given these facts, Konowitz & Greenberg argued that the children could not satisfy their burden at trial of proving that either the marks on the Will or the note were made by the Decedent with the intent of revoking her Will, or that the Decedent would have wanted to die intestate.

The Probate Court agreed, and entered summary judgment in favor of the Executrix, striking the objections to the Will filed by the decedent’s children, and finding that the provisions of the Will would be enforced.

The case is now on appeal. Stay tuned.

While many people believe that the attorney appointed by the insurance company to defend the case is protecting their interests in the lawsuit, that is not always the case. Insurance counsel must follow the directions of the insurance company and, depending on the value of the claim and the amount of insurance you have purchased, a judgment easily could exceed the policy limits of the coverage, leaving you or your business exposed to liability for any excess judgment. In such cases, businesses should have independent counsel, in addition to counsel appointed by the insurance company, to monitor and help resolve the case in a manner beneficial to the insured, not the insurance company.

Independent counsel can serve this role in a variety of ways. For example, in the course of litigation where the amount of coverage available on a claim may not be sufficient to cover a judgment, the insurer may have the opportunity to settle the case for the policy limits. In such situations, independent counsel can play a crucial role in airing the insured’s view of the case and encouraging the insurance company to accept the settlement, thereby avoiding any potential personal liability to the individual or business.

Without such active involvement by independent counsel, the insurance company may choose to reject such a settlement demand and roll the dice at trial, leaving the insured on the hook for any judgment in excess of the policy limits. Having independent counsel in place to watch your back and protect your interests and those of your family or business is a valuable tool to have in your arsenal when dealing with insurance litigation.

While the courts continue to flesh out the types of business-to-business conduct prohibited by the statute, one established category of prohibited activity is so-called “coercive or extortionate tactics” engaged in to obtain advantages or concessions from another business. The Massachusetts Appeals Court’s recent decision in the Renovator’s Supply case represents the latest example of the type of “coercive tactics” prohibited by Chapter 93A. In that case, the plaintiff had an existing line of credit with Sovereign Bank, which it had renewed annually for a number of years, often after the expiration of the preceding year’s agreement. During those periods, the bank routinely kept the credit line open for the plaintiff until a new agreement was signed.

In 2002, the bank began to have concerns about the terms of the credit line and began internal discussions on the need to modify the terms of the credit agreement to require additional collateral and a higher interest rate. However, it did not communicate these concerns to the plaintiff or tell the plaintiff of the proposed new terms, but told the plaintiff that it would write up a renewal agreement. The day after the expiration of the old agreement, the bank notified the plaintiff that its credit line would only be renewed if it agreed to pay a higher interest rate and provide additional collateral. The plaintiff refused the new terms and, as a result of the loss of its line of credit, was forced to scale back business activities, for which it suffered losses.

The court concluded that, based upon historical practice and the promises made by the bank concerning a new agreement, the bank was estopped from terminating the credit line without reasonable notice. Despite finding that the bank had no contractual obligation to give notice or to continue the line of credit after its expiration, however, the Court also found that the Bank’s conduct was an attempt to exploit the timing of its notice to force additional terms on the plaintiff. The Court concluded that the use of such leverage represented coercive conduct by the Bank that violated Chapter 93A. It affirmed a judgment doubling the plaintiff’s actual damages and awarding attorney’s fees and costs.

Representing the defendant partners, Konowitz & Greenberg moved to dismiss the case on the grounds of forum non conveniens, arguing that Maine, despite being the location of the property, was an inconvenient and improper forum since all of the partners were located in Massachusetts, all documents and witnesses were in Massachusetts, and the claims were intertwined with other business ventures between the partners that had been pursued in Massachusetts. Simultaneously, Konowitz & Greenberg filed suit in Massachusetts on behalf of our clients and against the plaintiff in the Maine litigation, asserting claims related to those other business ventures between the partners as well as to the Maine property.

The Maine court granted the motion to dismiss, ruling that Maine was “a seriously inconvenient forum for the trial of the matter.” The court held that “because the partners are also parties to litigation in Massachusetts, which litigation in part includes the subject matter of this action, dismissal of this action would further the ends of justice and promote convenience of the suit for the parties.”