Boston Business Litigation Blog

Conclusory Allegations, Even When Admitted by the Opposing Party, Deemed Insufficient to Defeat Summary Judgment in FLSA Dispute

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Recently in Costello v. Molari, Inc. (Memo and Order, November 20, 2019), the United States District Court for the District of Massachusetts granted an employer summary judgment because the employee failed to show that the Fair Labor Standards Act ("FLSA") applied to the employer. The employee did not identify evidence that would create a dispute of material fact as to whether the employer was engaged in interstate commerce. 

CFPB Now Claims Its Structure Is Unconstitutional

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A few short months ago, I wrote a blog post about the Consumer Financial Protection Bureau surviving an attack on its constitutionality in the United States Court of Appeals for the Ninth Circuit. In that case, the plaintiff alleged that the CFPB's structure was unconstitutional because it had a single director who did not serve at the pleasure of the President. The CFPB argued that its structure was, in fact, constitutional, and it won the argument. The plaintiff sought to have the case heard by the U.S. Supreme Court. 

New Appeals Court Decision Clarifies Residency Requirement For Filing For Divorce

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In Massachusetts, the durational residency requirement for a plaintiff to file for divorce is one year G.L. c. 208, § 5 (meaning, one must be a Massachusetts resident for a year before Massachusetts has jurisdiction over their divorce), but until recently, appellate courts had yet to define the parameters of that one-year residency requirement. Earlier this month, the Massachusetts Appeals Court provided clarification in its decision in Rose v. Rose.

CFPB Now Claims Its Structure Is Unconstitutional

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A few short months ago, I wrote this blog post about the Consumer Financial Protection Bureau surviving an attack on its constitutionality in the United States Court of Appeals for the Ninth Circuit. In that case, the plaintiff alleged that the CFPB's structure was unconstitutional because it had a single director who did not serve at the pleasure of the President. The CFPB argued that its structure was, in fact, constitutional, and it won the argument. The plaintiff sought to have the case heard by the U.S. Supreme Court. 

On What Grounds Can an International Arbitration Award Be Vacated?

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Your U.S. company and a commercial partner from a foreign nation had the foresight to designate international arbitration as the dispute resolution mechanism in your joint venture agreement. A dispute arose and you both diligently presented your claims to the arbitral panel. The arbitral panel has issued its award. What now?

Lost opportunity for considering alimony after child support is established: Appeals Court decision leaves us in the dark

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By Amber Turner

In Casey v. Sweeney, a recent decision of the Appeals Court of Massachusetts, the court declined to provide clarification on the meaning of a statutory provision that has puzzled commentators and practitioners since it came into effect on March 1st 2012. The provision at issue is M.G.L. c 208 s 53(c)(2), which reads:

What is dissipation of the marital estate and why does it matter?

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By Amber Turner

One of the most contentious issues arising in divorce proceedings will often be the division of the parties' assets. In Massachusetts, the courts follow an equitable system of division, meaning they seek to divide property "fairly," not necessarily "equally." There are cases in which the marital estate seems to have been reduced by the irresponsible or intentional conduct of one party (party A), which ostensibly has the result of diminishing the eventual share of the marital estate that each party will retain.

When will the court order a party to pay the other's attorney's fees in a family law case?

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By Amber Turner

In civil litigation, which includes cases in the Probate and Family Courts, the American rule generally dictates that each party is responsible for its own attorney's fees and expenses. However, there are some exceptions to this, and in Massachusetts some 'fee-shifting' statutes provide for one party to cover the other's legal costs, particularly in domestic relations or family proceedings.

Massachusetts Superior Court Concludes Lender Properly Foreclosed and Seized Borrower's Personal Property Following Loan Default

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A recent Massachusetts Superior Court case, Germinara v. Bakis, et al. (decided May 13, 2019), involved a plaintiff borrower who obtained a commercial loan in order to fund the purchase and operation of a gas station/convenience store, which was owned by an LLC formed by the plaintiff. The loan was secured by both the gas station property and contents and a second property that was owned by the borrower in trust. Further, the lender and the funder of the loan were granted mortgages and deeds-in-lieu of foreclosure to secure the interest on both properties owned by the borrower. When the plaintiff defaulted on the loan, the lender and the funder took title to the two properties by exercising the deeds-in-lieu of foreclosure. They sold both properties and, additionally, seized some items of the borrower's personal property that had been located at the properties, such as trucks and vehicles. Some of these items were owned by the plaintiff in his individual capacity, and not by the LLC that held title to the gas station; however, the lender held other security obligations which included the vehicles.

A Disloyal Corporate Officer, Ordered to Forfeit His Compensation To His Employer, Fails in His Attempt to Reduce The Amount of Restitution Under the Joint Tortfeasors Act

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In a case of first impression, the Business Litigation Session (Davis, J.) recently declined to reduce the amount of restitution a disloyal corporate officer had been ordered to pay to his employer in connection with a judgment against the corporate officer. In so holding, the court held that a settlement payment, received by the plaintiff employer from two co-defendants (the former employee and a competitor business), did not fall within the scope of the Joint Tortfeasors Act and, therefore, the Act could not be applied to offset any damages the former corporate officer was ordered to pay. See Element Productions, Inc. v. Editbar, LLC et al. (Suffolk Sup.Ct.).

Banking and Finance Use of International Arbitration Continues to Grow

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International arbitration has many benefits for banking and finance disputes, and parties to those disputes are increasingly recognizing those advantages. While banks and financial institutions have traditionally used courts and other judicial forums to resolve disputes, including international disputes, increasing numbers of cases are being litigated and resolved through international arbitration.

Can Student Loan Debt be Categorized as a Marital Debt?

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In Massachusetts, a judge has broad discretion with respect to the equitable division of the marital estate and may consider both economic and noneconomic contributions to the marital estate. A prenuptial agreement can clarify the responsibility for debts incurred during the marriage, as well as how payments made toward individual, pre-marital debts during a marriage, including student loans, are to be treated in the event of a divorce. Generally speaking, debt incurred during the marriage, including student loan debt, will be presumptively marital. The party challenging that presumption will typically have to present evidence that the debt at issue was intended to be an individual debt. The analysis is entirely dependent on the circumstances of the case and the determining factor will not rest on whether the challenging party's signature is on the underlying promissory note securing the original debt. In a vacuum, student loan debt incurred by one party prior to the marriage will typically be categorized as individual debt, especially in marriages of a shorter duration. However, the issue becomes more complicated where one spouse significantly pays down the other's pre-marital student loan debt. While the Court may certainly look to the intent of the parties at the time of the incurrence of the debt - in highly contested matters - evidence to that effect may be limited to the now at-odds testimony of the parties.

When Income Attribution is Appropriate

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In a recent case, Macri v. Macri, the Massachusetts Appeals Court recently cemented a trial court decision to, among other things, attribute income to Husband, who was unemployed at the time of trial. Attribution of income is often a contested topic in the Probate and Family Courts of Massachusetts, and this case provides further guidance on the issue.

Is the Non-Compete Clause in My Employment Contract Enforceable?

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Perhaps you are considering finding employment at a new company or already have a new job offer and remember that the employment agreement you have with your current or recent employer includes a non-compete clause. What is a non-compete agreement? Does this mean you cannot take the new job? Is the non-compete clause enforceable?

Alimony modification requires a showing of a material change in circumstances

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In a recent summary decision, Casey v. Sweeney, a panel of the Massachusetts Appeals Court reaffirmed that a payor's alimony obligation determined prior to the enactment of the Alimony Reform Act in March 2012 cannot be modified without a showing of a material change in circumstances (i.e., a material change affecting either the recipient's need or the payor's ability to pay.

The Singapore Mediation Convention & Its Impact on Enforcement of International Mediation Agreements

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The New York Convention has made it much easier for parties in international arbitration to seek enforcement of arbitral awards. The United Nations Convention on International Settlement Agreements Resulting from Mediation, also known as the Singapore Mediation Convention, is poised to do the same for settlement agreements arising out of international mediation.

Declaratory Judgment Is Necessary Where Guaranty Does Not Address Certain Uses of Proceeds from a Foreclosure Sale.

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In most commercial lending transactions, it is a common practice for lenders to secure the loan with a mortgage on the business property, which would permit the lender to foreclose on the mortgage securing the property if the borrower were to default on the. For closely held businesses, many lenders also require the business owners to secure the loan with a personal guaranty. A guaranty is an agreement made by a third party to secure the debt of a borrower to a lender in the event that the borrower defaults on the loan.

Zoning and the Dover Amendment: When is education the primary purpose of a residential facility?

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In a recent decision, The McLean Hospital Corporation v. Town of Lincoln & Others, the Massachusetts Supreme Judicial Court (SJC) held that a proposed residential program for adolescents is exempt from local zoning laws under the Dover Amendment.

Is a Former Spouse a "Creditor" Under the Massachusetts Uniform Fraudulent Transfer Act?

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In Foisie v. Worcester Polytechnic, Institute (September 30, 2019), the United States District Court for the District of Massachusetts allowed a Motion to Dismiss where a former wife brought claims of fraudulent transfer and/or constructive fraudulent transfer against Worcester Polytechnic Institute ("WPI") located in Massachusetts under Connecticut law. The former wife alleged that the assets donated to WPI by her former husband were hidden from her during their divorce, and that the donation was intended to defraud her.

Seeking US Discovery for Foreign Proceedings: The Second Circuit Opens US Style Discovery to the World

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Earlier this month, the Second Circuit issued a decision in In re Application of Antonio Del Valle that significantly expands the ability of parties to foreign legal proceedings to obtain discovery through United States courts. In Antonio Del Valle, the Second Circuit reached two key conclusions that work to expand the reach of discovery by U.S. courts under 28 U.S.C. § 1782. 

What Happens if the House is Sold During the Divorce?

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It is the unfortunate case that, in many divorces, the marital home is sold as part of the divorce proceedings. Sometimes, the decision is made for non-financial issues - the house is tied to too many memories and both parties decide that they are better off starting anew. More often than not, however, the financial circumstances are such that the house is simply unaffordable. Perhaps the party who wants to stay will no longer be able to afford the carrying costs; an unfortunate corollary of most divorces is that oftentimes one income or even two are insufficient to maintain two different households. Whatever the reason, often by agreement and sometimes by court order, the marital home is just ordered to be sold either during or after the divorce.

Supreme Court Holds That Federal Arbitration Act Permits Litigation of Disputes By Workers Bound by Independent Contractor Agreements

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The United States Supreme Court held in the unanimous decision of New Prime Inc. v. Oliveira earlier this year that the Federal Arbitration Act's exclusion as to contracts of employment necessitated that the parties' arbitration clause be overridden and the plaintiff be allowed to pursue his lawsuit in the Massachusetts federal courts.

Viable Retaliation Claim For An Employee Terminated Several Months After He Complained About Discrimination By His Supervisor

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In a recent unpublished decision, Bakhtiar v. Infineon Technologies Americas Corp.the Superior Court in Worcester County (Yarashus, J.) found that an employee could establish a prima facie case of retaliation under Massachusetts law (G.L.c. 151B, § 1) even though eight months passed between his complaint of discriminatory treatment by his supervisor and his termination.

Gimmick Check Not Accord and Satisfaction Under UCC Section 3-311

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The United States District Court for the Eastern District of Virginia has held that, where a debtor in bad faith tenders a check or money order for substantially less than the amount owed on a loan, the receipt and deposit of that check will not constitute an "accord and satisfaction" under the Uniform Commercial Code ("UCC"), Section 3-311. Miffin v. Selene Finance LP.

What "Counts" as Income for the Purposes of a Child Support Order?

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In Massachusetts, the amount of weekly child support to be paid by a parent is calculated by relying on the Massachusetts Child Support Guidelines, which are published by the Executive Office of the Massachusetts Trial Court and updated every three years. Although it is a simple proposition to say that child support orders are largely based on the parents' respective incomes, it is important to understand what is included as "income" by the Probate and Family Court in determining a child support obligation.  The Guidelines themselves take the broadest possible approach to defining income, stating that "income is defined as gross income from whatever source, regardless of whether that income is recognized by the Internal Revenue Code or reported to the Internal Revenue Service or state Department of Revenue or other taxing authority."  The Guidelines go on to list 29 different types of income which are presumptively included in a parent's income for child support purposes, including, among other items, salaries, wages, overtime, tips, commissions, severance pay, royalties, interest and dividends, bonuses, certain government benefits, workers' compensation, distributions from trusts, pension and annuity income, capital gains, lottery or gambling winnings, prizes and awards, and rental income.

Bankruptcy Sale of Beneficiary's Interest in Nominee Trust Sufficient to Trigger Tenant's Right of First Refusal

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"A nominee trust is 'an entity created for the purpose of holding legal title to property.'" Goodwill Enterprises, Inc. v. Kavanagh. Record title for the property held in a nominee trust is in the name of the nominee trust's trustee (not its beneficiaries), but such trustees "are often viewed as agents for the convenience of the principals (i.e., the beneficiaries)." Id. But what is the nature of a beneficial interest in a nominee trust? Is it more like an ownership share of a corporation or does it constitute a real property interest in the property held by the nominee trust?

Are Employees Paid Solely by Way of Commissions Entitled to Separate Payments for Overtime Work or Work on Sundays Under the Massachusetts Overtime and Sunday Wage Statutes?

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In Sullivan v. Sleepy's LLC, the Massachusetts Supreme Judicial Court (SJC) answered this question in the affirmative. In Sullivan, the SJC considered whether an employer satisfied its obligations to its employees under Massachusetts Overtime and Sunday wage laws, where its employees' wages were comprised entirely of commission (or draws against commission), if their total weekly income met or exceeded one and a half times their regular hourly rate or at least one and a half times the minimum wage for each hour they worked over forty. The Court concluded that those employees were entitled to a separate payment - in addition to their draws or commissions - of one and a half times their regular rate or at least one and a half times minimum wage for every hour they worked over forty. With regard to Sunday pay, the SJC affirmed that a plain reading of that statute requires a separate and distinct time and a half payment for hours worked on a Sunday pay even when an employee received commission payments in the first instance that equaled or exceeded what the employee would be entitled to per the Sunday pay statute.

Supreme Judicial Court signals that it may become more difficult for primary custodial parents to move children out of the Commonwealth

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In Massachusetts, petitions for the removal or relocation of a child from the Commonwealth are evaluated under one of two legal analyses, depending on whether one parent has sole/primary custody or the parents share physical custody. Where one parent has primary physical custody of the child(ren) a judge will determine whether there is cause shown to permit relocation by applying the "real advantage" analysis first set forth in the case of Yannas v. Frondistou-Yannas.The interests of the custodial parent weigh heavily in the real advantage test, as a custodial parent will be permitted to relocate if the move offers a genuine, recognizable advantage to that parent and is consistent with the child's best interests.

Arbitrating Technology Transfer Disputes

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Technology transfer is a critical way for innovation companies to enter into new markets and profit from the hard work that they have done in developing new technology. These agreements can take many forms, from an assignment of the intellectual property rights to a licensing agreement, to a joint venture. And unlike the sale of physical assets, with the sale or licensing of IP, there are numerous complicated issues involving exactly what is being transferred, adaptations or further development of the technology, and competition between the technology owner and the transferee.

During the heady moments when reaching a deal, everyone always seems on the same page. But months or years down the road, disputes can often arise, particularly where there are substantial royalty payments in the balance.

Federal National Mortgage Association Cannot Be Held Vicariously Liable for Acts of Agent Without Actual Authority

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The United States Court of Appeals for the First Circuit has held, in a matter of first impression, that the Federal National Mortgage Association, commonly known as Fannie Mae, cannot be held vicariously liable for the acts of its agent absent actual authority from Fannie Mae for the agent's actions. Faiella v. Federal National Mortgage Association.

Taking the Fifth: No Longer an Option When it Comes to Adultery in Massachusetts

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Pursuant to 2018 Session Laws Chapter 155, Section 2 (An Act Relative to Reproductive Health), Massachusetts's outdated law criminalizing adultery was repealed. The Governor approved the law on July 27, 2018.

2018 Session Laws Chapter 155, Section 2 specifically repealed Massachusetts General Laws Chapter 272, Section 14 (Adultery), which read:

Summer Internship Reflection: The Psychology of Law

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By Alina C. Hachigian

This summer I had the opportunity to intern with Fitch Law Partners. In addition to assisting attorneys with research and deposition preparations, over the course of the summer I was able to experience law outside the office as well. I traveled to different courts around the city and sat in on various matters ranging from criminal to family law. With each visit I began to better understand the in-court portion of litigation and the amount of intricacies that must come together within the courtroom in order to win a case. Exposure to this aspect of litigation provided me a more detailed view of the process as a whole and I found myself becoming more critical of the system itself. I questioned the purpose and effect of each dynamic I discovered in the courtroom and how such aspects affect different individuals. Overall, these experiences gave me a more nuanced view of litigation and allowed me to better consider how this type of work plays out within the framework of our society today.  

Is the knowledge of a closing attorney imputed to the mortgage company?

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This issue arose in the recent Massachusetts Appellate case Salem Five Mortgage Company, LLC v. Lester. In that case, a mortgage company lent a borrower $300,000 for the purchase of a home on Nantucket. After the mortgage company approved the loan, but before the closing date, the borrower requested that his wife be added to the deed as a tenant by the entirety. However, the wife's name was not added to the mortgage, which remained solely in the name of the borrower. As a result, the mortgage company received a security interest only in the borrower's undivided interest in the property. The closing attorney, who represented both the mortgage company and the borrower, was aware of way in which the title was worded and told the seller of the property that the borrower and his wife would take title as tenants by the entirety. The mortgage eventually went into default, at which time the mortgage company discovered the mistake and sued for reformation of either the deed or the mortgage.

The New Judgments Convention

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One of the main reasons that we at FITCH recommend that the vast majority of cross-border contracts contain international arbitration clauses is because of the New York Convention. More formally called the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the New York Convention was ratified in 1959 and currently has 159 parties. It requires states to honor and enforce arbitral awards issued in any of the other member states, and means that by selecting international arbitration as the dispute resolution mechanism, parties can get their awards enforced virtually anywhere on the planet.

What Happens at a Pre-Trial Hearing?

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If a divorce or 209C case is pending, the court, sooner or later, will schedule what is known as a pre-trial hearing. Sometimes this is also referred to as a pre-trial conference. This will happen either on the court's own initiative once a complaint has been on file long enough, or following a case management conference. At a case management conference, the parties and judge will address a timeline for the case - the appropriate timeline for a discovery deadline and a pre-trial hearing, among other matters. The parties can, by stipulation, avoid appearing at a pre-trial hearing by submitting a written agreement that specifies the specific dates for the case timeline.

When is Joint Legal Custody Inappropriate?

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Massachusetts courts recognize two distinct types of custody of children. The first, physical custody, is what most litigants mean when they refer to having "joint custody" or "primary custody" of their child. Physical custody is a term that describes the amount of time the child spends in the care of each parent. Although physical custody is often the aspect of divorce or custody litigation that is most contentious, the second type of custody - legal custody - is also a fundamental element of parental authority. Legal custody refers to the parents' rights to make "major decisions regarding the child's welfare including matters of education, medical care and emotional, moral and religious development." M. G. L. c. 208, § 31. Legal custody can be either joint, in which the parties must confer with each other and reach shared decisions on these types of matters, or sole, in which one parent has the ability to make decisions about the child's health, education, or religion, even if the other parent disagrees. Joint legal custody, at a minimum, requires "two capable parents with some degree of respect for one another's abilities as parents, together with a willingness and ability to work together to reach results on major decisions in a manner similar to the way married couples make decisions." Rolde v. Rolde

First Circuit Finds That A Notice Of Default Is Potentially Deceptive, Rendering The Foreclosure Invalid

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In Thompson v. JPMorgan Chase Bank (1st Cir. 2019), the First Circuit reversed the District Court's dismissal of the borrowers' claims against the mortgagee, finding that the notice of default did not strictly comply with the terms of the mortgage and Massachusetts law. 

Supreme Court Rules that Double Jeopardy Does Not Prevent State and Federal Prosecutions

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The Double Jeopardy Clause of the Fifth Amendment provides that "No person shall...be subject for the same offence to be twice put in jeopardy of life or limb." That clause means that no person can be prosecuted twice for the same crime. Historically, the Double Jeopardy Clause had not been held to bar separate sovereign governments from trying an individual for the same crime, a doctrine known as the separate-sovereigns doctrine. Because the federal and state governments are separate sovereignties, the Double Jeopardy Clause had historically been held not to prohibit the Federal government from prosecuting an individual for an offense for which that individual had already been tried in state court.

Practical Considerations on Electronic Disclosures in International Arbitration

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Electronically stored information ("ESI") has connected businesses in ways that were not previously possible. ESI has also become a major source of evidence in all forms of commercial disputes. Arbitration generally limits discovery in order to promote its underlying goal as a cost-effective alternative to litigation. Nonetheless, parties often request documents from each other in disputes and the prevalence of ESI makes it inevitable that these documents will continue to impact the nature of international arbitrations. 

To Be or Not to Be . . . a Debt Collector

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In Obduskey v. McCarthy & Holthus L.L.P., the Supreme Court examined whether an entity engaged in the limited purpose of enforcing a security interest in a nonjudicial foreclosure proceeding fit the definition a "debt collector," thereby subjecting it to all of the provisions of the Fair Debt Collectors Practices Act ("FDCPA"). The Supreme Court unanimously ruled that the Respondent, McCarthy & Holthus LLP ("McCarthy"), hired by Wells Fargo to enforce its security interest by acting as its agent to foreclose on a defaulting, Colorado debtor's home, in that narrow instance, was not a "debt collector" within the meaning under the FDCPA, except with regard to the confines of §1692f(6). In order to reach its decision, the Court partitioned the FDCPA's definition of a "debt collector" into two parts: (1) a 'primary' debt collector defined as "any person . . . in any business the principal purpose of which is the collection of any debt, or who regularly collects or attempts to collect, directly or in-directly, debts[;]" and (2) for the purposes of §1692f(6) of the FDCPA, a 'limited-purpose' debt collector defined as also including "any person . . . in any business the principal purpose of which is the enforcement of security interests."

Uncontested Actions To Modify A Judgment Or Order By Agreement: Supplemental Probate And Family Court Rule 412

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Since its amendment in 2013, Supplemental Probate and Family Court Rule 412 has provided litigants/parties with the ability to jointly request that the Court modify an existing judgment or order administratively and without the need for a formal hearing. While such administrative modifications can cover a myriad of provisions, including child support, actions pending under M.G.L. 209A (abuse prevention orders) are specifically excluded from the modification procedures set forth in Rule 412.

Are trust interests part of the marital estate?

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The inclusion - or non-inclusion - of beneficial trust interests in the marital estate for purposes of an asset division incident to a divorce is quite often a hotly contested issue. How does one account for a trust interest in a divorce? Did the trustee make any distributions during the marriage? Is the trust terminating anytime soon? If so, for what reason? And if it terminates, what happens to the principal? Is it - or its potential future acquisition - considered property?

United States District Courts Reach Differing Conclusions on Definition of Automated Telephone Dialing System

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The United States District Courts for the District of Massachusetts and the Northern District of Illinois recently reached different conclusions on the definition of an Automated Telephone Dialing System ("ADTS"), reinforcing a split of authority among courts across the country on the definition of such a system under the Telephone Consumer Protection Act ("TCPA), 47 U.S.C. § 227(a)(1).  The TCPA's definition of an ADTS is "Equipment that has the capacity - (A) to store or produce telephone numbers to be called, using a random or sequential number generator, and (B) to dial such numbers."

Terminating a Nominee Trust to Advance its Purposes through the MUTC

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Nominee trusts are common vehicles "for holding title to real property in which one or more persons or corporations, pursuant to a declaration of trust, declare that they will hold any property that they acquire as trustees for the benefit of one or more undisclosed beneficiaries." Berish v. Bornstein The trust is the record owner of the property, with the trustee(s) (but not the beneficiaries) named on the deed, thereby offering privacy to those beneficiaries. Nominee trusts also streamline ownership among multiple parties because the trustee(s) can act on behalf of all beneficiaries for matters concerning the property. Additionally, nominee trusts simplify transfers of ownership among beneficiaries, both by avoiding the recording process and also by excluding the subject property from probate. 

Consumer Financial Protection Bureau Survives Attack on Constitutionality...For Now?

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The Consumer Financial Protection Bureau (CFPB), established with the purpose of "ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive,"has been in the news quite a bit of late.  The Trump administration is considering an overhaul of the rules limiting bank overdraft fees, the head of enforcement at the CFPB, Eric Blankenstein, resigned amid scandal, and the United States House of Representatives passed a bill to reverse certain actions undertaken by the current administration to loosen bank oversight, to name just a few matters in the press.  Amid all that activity, the CFPB quietly defeated a challenge to its constitutionality in the courts...for now.

Serving Process on Chinese Companies in US Litigation

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Hundreds of billions of dollars' worth of goods and services flow between the United States and China every year, and all of that commerce gives rise to disputes.  While we at FITCH usually recommend entering into International Arbitration agreements when contracting with parties in Chinasometimes that is not an option, such as when Chinese companies creates knock-off products and sell them online to U.S. consumers.  While U.S. courts will have jurisdiction over these disputes, just serving process on Chinese companies or individuals can be bedeviling. 

Court Grants Summary Judgment to Employer on Former Employee's Claim of Gender-Based Associational Discrimination and Retaliation

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In Baer v. Montachusett Regional Technical School District (D. Mass. May 17, 2019), the United States District Court for the District of Massachusetts granted summary judgment to an employer on a former employee's claim that he was discriminated and retaliated against because of his association with his wife, who was also a former employee. 

Business Litigation Section Holds That Director In Professional Corporation Owes Fiduciary Duty To Fellow Shareholders

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In a fascinating decision, the Business Litigation Section of the Superior Court of Massachusetts recently held that a terminated doctor/shareholder could bring a breach of fiduciary duty action against the controlling director.  

The New York Convention Preempts State Law Regulating The Business of Insurance - Fifth Circuit Affirms Dismissal In Favor of Arbitration

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In McDonnel Group, LLC v. Great Lakes Insurance SE, UK Branch (5th Cir. 2019)the Fifth Circuit recently held that the New York Convention trumps state insurance law.  When its insurance claim was denied, McDonnel Group, LLC ("McDonnel") sued the insurers seeking a declaratory judgment that it was entitled to coverage.  The insurers moved to dismiss arguing that the policy contained a provision to arbitrate all disputes between the parties.  The policy, however, also contained a conformity to statute provision, meaning that if any term of the policy conflicts with a state statute, then "the terms are amended to conform to such statutes."  Invoking that provision, McDonnel argued that it had no obligation to arbitrate because the arbitration clause was void as it conflicted with a Louisiana statute forbidding arbitration in insurance contracts.  

When The Price Isn't Right: Mortgagees Must Ascertain The Fair Market Value Of A Property Before Conducting A Foreclosure Auction

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The foreclosure process varies across the United States, but the process traditionally occurs in one of two ways:  judicial or  non-judicial foreclosures.  Residential foreclosures in Massachusetts are non-judicial, which means that the foreclosure process happens outside of the courtroom.  Non-judicial foreclosures, also known as power of sale foreclosures, allow the mortgagee to sell the property if the mortgagor defaults on their loan provided the mortgagee complies with the statutory requirements under G.L.c. 244 §§ 11-17B.  In addition to the requirements under the statute, mortgagees owe mortgagors a duty of good faith and reasonable diligence to protect their interest in the property. 

"Merged" Versus "Surviving" Provisions of a Separation Agreement

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The vast majority of divorce cases are resolved not by trial, but by the parties agreeing upon and submitting a Separation Agreement to the Probate and Family Court for approval.  One of the more confusing elements of a Separation Agreement for many clients is the fact that certain provisions of the agreement are deemed to "merge" with the Judgment of Divorce and other provisions are deemed to "survive."  Although these terms may be unfamiliar to non-attorneys, the distinction between the two is not particularly complex.  

Fitch Arguments Prevail as Supreme Court Rules on How Foreign Governments May Be Served with Process

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On March 26, 2019, the Supreme Court reversed the Second Circuit in the case of Sudan v. Harrison, which involved how foreign states may be served under the Foreign Sovereigns Immunities Act ("FSIA").  28 USC § 1608 governs service of process on foreign states, and explains that a foreign state may be served (1) "in accordance with any special arrangement," (2) "in accordance with an applicable international convention on service of judicial documents," (3) "by sending a copy of the summons and complaint and a notice of suit ... by any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the head of the ministry of foreign affairs of the foreign state concerned," or (4) by requesting the State Department to make service on the foreign state.  In Sudan v. Harrison, the plaintiffs mailed service of process to the head of the ministry of foreign affairs care of Sudan's US embassy.  When Sudan did not answer the complaint, a $314 million default judgment entered, which Sudan then challenged asserting that the mailing should have gone to the head of the ministry of foreign affairs at the actual ministry of foreign affairs, where that official works.

Can the Judge Give "Decisive Weight" to a Child's Preference?

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Recently in Jouret v.  Buteau, Docket-18-P-68 (Mass. App. Ct. April 11, 2019) (Memo and Order Pursuant to Rule 1:28), the Appeals Court of Massachusetts vacated those parts of a modification judgment that eliminated Father's parenting time and prohibited his contact with the children, holding that the trial court should not have given the children's preference "decisive weight."

Business Valuation in Divorce Cases

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Business valuation arises in divorce cases where one or both spouses have an ownership interest in a closely held corporation - that is, a corporation which has a limited number of shareholders. This ownership interest is usually considered a marital asset, just like real property or a bank account, and is thus subject to equitable division in a divorce. Valuing a spouse's interest in this type of business can be a complex process due to the fact that there is no market on which a spouse could readily liquidate his or her shares. Accordingly, in many cases, the divorcing parties will retain a business valuator to determine the value of the spouse's ownership interest in the company.

School district fails to establish that full-time work is an essential function of a teacher's position in summary judgment proceeding

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Last month in Incutto v. Newton Public Schools, et al., the United States District Court - District of Massachusetts denied a Newton Public Schools' motion for summary judgment regarding a former kindergarten teacher's claim for disability discrimination, despite the school district's assertion that the teacher's ability to work full-time was an essential function of her job as a full-time teacher. 

Nonjudicial Foreclosures are not Subject to the FDCPA, says the Supreme Court

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Until the Supreme Court's recent decision in Obduskey v. McCarthy & Holthus LLP, 139 S. Ct. 1029 (2019), if you were an entity engaged solely in the enforcement of security interests on loans, such as through nonjudicial foreclosure proceedings, the federal Fair Debt Collection Practices Act (the "FDCPA") would have been applied to you in some states but not others.  That is because the United States Courts of Appeals were divided on the issue, with the Ninth and Tenth Circuits finding that the Act did not apply, and the Third, Fourth, and Sixth Circuits finding that it did apply.  The Supreme Court resolved that Circuit split last month when it found that businesses engaged solely in security-interest enforcement do not qualify as "debt collectors" under the FDCPA.  

First Circuit Interprets the Rights of Receivers under 12 U.S.C. § 1821(d)(2)(A) in the Federal Deposit Insurance Corporation's Favor

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In Zucker v. Rodriguez, No. 17-1749 (1st Cir. 2019), the First Circuit interpreted the rights of Receivers under 12 U.S.C. § 1821(d)(2)(A) in the Federal Deposit Insurance Corporation's favor.

United States Supreme Court to Consider Whether Fair Debt Collection Practices Act Subject to the Discovery Rule

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The United States Supreme Court has agreed to consider a case that could resolve a split among the United States Courts of Appeals as to whether the discovery rule applies to the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq. ("FDCPA").  Rotkiske v. Klemm, et al., No. 18-328 (U.S., certiorari granted Feb. 25, 2019).

Does The Wage Act Apply To Employment In A Foreign Country?

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The answer is: it depends.  A Superior Court recently addressed that issue in Lockley v. Studentcity.com (Suffolk Superior Court, No.201801293-BLS2). Ms. Lockley, a resident of Colorado, brought a putative class action lawsuit alleging violation of the Wage Act against Studentcity.com, Inc. ("Student City"), a foreign corporation doing business in Massachusetts.

Massachusetts Federal Court Finds Mediation Privilege Waivable, Applies "Manifest Disregard" Standard In Med-Arb Case

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Last month, one defendant's application to vacate a med-arb award brought about two important developments in ADR case law in Massachusetts.

Business Litigation Session Holds That Memorized Information Derived From Employment Can Violate Confidential Information And Non-Solicitation Clauses

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In a novel recent decision, the Business Litigation Session of the Superior Court of Massachusetts held that a financial consultant who had left his job and then allegedly prepared a list of his old firm's clients entirely from memory on his first day with his new employer had violated the non-solicitation and confidential information provisions in his employment agreement with the former employer.  

Giving clarity - and teeth - to a surviving spouse's elective share of the decedent's estate.

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Described by the Supreme Judicial Court as "unwieldly and perplexing to apply in most instances," the Massachusetts spousal elective share statute, "is intended to prevent spousal disinheritance, either by inadvertence or design," through allowing "a dissatisfied surviving spouse" to "waive the provisions of a deceased spouse's will and take a statutorily prescribed share of the decedent's estate." Ciani v. MacGrath, 481 Mass. 174, 175, 186 n12 (2019). In Ciani, the SJC attempted both to clarify and fortify the statute, holding in part that it allows a dissatisfied surviving spouse to bring an action to realize the value of his or her share of the decedent's real estate. Where the decedent has left issue (i.e., offspring or lineal descendants), the statute entitles a dissatisfied surviving spouse to elect - in lieu of his or her formal bequest (or lack thereof) - to receive a share of the decedent's estate comprising one-third of the decedent's personal property and one third of the decedent's real property. The SJC focused its analysis on situations in which that share exceeds $25,000 in value, reading the elective share statute to allow a dissatisfied surviving spouse to receive (1) the first $25,000 from the decedent's personal property or, if necessary, from the decedent's real property as well; (2) income from the a trust containing the remaining third of the personal property for life; and (3) an ownership interest the remaining third of the decedent's real estate, for life. 

What Happens if Nothing is Happening in my Divorce Case?

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Although it may be difficult to imagine for someone going through the difficult process of a divorce, on occasion divorce cases can linger for months, if not years, with little to no activity on the docket. The parties may have filed divorce papers, but never got around to following through with the divorce process. Or, the parties may have separated and then settled into new lives, never actually filing divorce papers or finalizing the divorce. The parties may have even reconciled. It is not unusual to have a client who has been separated for five, ten, sometimes fifteen years without having formalized his or her divorce.

Top Five Reasons to Include International Arbitration Provisions in Cross-Border Contracts

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In our modern, globally interconnected world companies from different nations frequently enter into business agreements with one another. While such joint ventures can create exciting opportunities, they can also run into challenges, or sour altogether. Thus, it is important to consider dispute resolution mechanisms at the outset of a contract or joint venture between international partners. International arbitration is the dispute mechanism best suited to resolving cross-border disputes. As the following five reasons show, international arbitration should be selected as the dispute resolution method between international partners for virtually any international contract:

SJC Expands What Constitutes an Adverse Employment Action for Employment Discrimination

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The Massachusetts Supreme Judicial Court (the "SJC") recently held that an employer's failure to approve a lateral transfer request of an employee can qualify as an adverse employment action in the context of employment discrimination.

What Qualifies As An Educational Use Under The Dover Amendment?

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The Superior Court of Massachusetts recently annulled the decision of a local zoning board that had permitted construction of an outdoor aerial adventure park pursuant to what is commonly referred to as the "Dover Amendment" - i.e., G.L. c. 40A, § 3. In Sullivan v. Heritage Plantation of Sandwich, Inc., 35 Mass. L. Rptr. 281 (2018) ("Heritage Plantation"), the Court found that the particular outdoor adventure park at issue did not have a primary goal of educational significance and did not involve a nonprofit organization using its land for educational purposes, and, therefore, could not take advantage of the significant zoning exemptions offered by the Dover Amendment. 

Alimony based on "bonus income" is not available when income is determined to be payment for stock options

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In a recent summary decision, a panel of the Massachusetts Appeals Court considered whether or not certain payments that a former husband received in addition to his base salary constituted "bonus income," of which husband would then be obligated to pay his former wife a percentage as alimony.  (See Dunbar v. Dunbar, 2019 WL 993330) (Pursuant to Rule 1:28).