Reardon v. Boylan, 2014 Mass. App. Unpub. LEXIS 331 (Mass. Ct. App. Mar. 17, 2014):

This is a legal malpractice action in which the plaintiff, Robert M. Reardon, alleged that he suffered significant damages by relying on advice that his former counsel, Paul G. Boylan, had provided. After a seven-day trial in Superior Court, a jury ruled in Boylan's favor, finding on special questions that he was not negligent in his representation of Reardon and that he had not committed any contractual breach. On appeal, Reardon challenges three specific rulings that the trial judge made, and he generally argues that the judge exhibited bias toward him throughout the trial. We affirm.

Background. Reardon's failed efforts to establish a competing business. Together with John Addonizio, Reardon coowned the SMERK Holding Company Business Trust (SMERK). SMERK was a holding entity that in turn owned Boston Medical Evaluation/Examination, Inc. and two related businesses (collectively, BME). Addonizio served as BME's chief executive officer, and Reardon as its chief operating officer.  [*2] Although BME enjoyed significant success, the relationship between the principals soured. On August 17, 2007, the two men agreed that Reardon would buy out Addonizio's interests for $10 million total, with Addonizio agreeing not to compete with BME for a period of five years. However, by September 10, 2007, the buyout plan had fallen apart. Reardon then decided to open a new company to compete directly with BME, while retaining his ownership interest in SMERK (and hence BME).

Over the next two weeks, Reardon moved quickly to bring the plan to fruition, incorporating the new firm (which he named TrueVision, Inc.), leasing office space, recruiting employees, and so forth. On the morning of September 24, 2007, Reardon launched his plan by resigning from BME and immediately opening TrueVision's offices about a mile away. Seventeen other BME employees also came to work for TrueVision. Key among them  [*3] was John Wolf, a senior vice president of BME, who was subject to a noncompete agreement with BME.

Reardon's efforts to open a competing business proved disastrous for him. The day after TrueVision opened, BME filed an action against TrueVision, Reardon, Wolf, and Paul McMorrow (who had been BME's chief information technology employee). On September 28, 2007, a Superior Court judge entered a preliminary injunction "against Reardon and Wolf barring them from competing with BME, soliciting its customers and employees, and using its trade secrets and confidential information." In explaining her reasons for issuing the order, the judge focused on the fiduciary obligations that both Reardon and Wolf owed to BME and how their conduct violated those duties.

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Although the injunction technically did not bar TrueVision itself from operating in competition with BME, its practical effect was to put TrueVision out of business.

After resigning from BME and after TrueVision was shut down, Reardon found himself in a disadvantageous position. Addonizio and Reardon eventually resolved the underlying dispute. Addonizio paid Reardon $2 million for his interest in SMERK and his agreement not to compete with BME for three years.

The malpractice action. Alleging that his decisions and actions in trying to establish TrueVision were based on the advice that Boylan had provided him, Reardon brought a legal malpractice action against Boylan and his firm. Reardon claimed he had not thought of trying to set up a competing  [*5] entity until Boylan proposed the option on September 11, 2007, that Boylan never advised him that he was prohibited from competing with BME while he retained his ownership interest in SMERK, and that to the extent he solicited key employees away from BME and otherwise took actions to set up TrueVision, he followed a specific "game plan" that Boylan had developed.

Boylan presented a very different version of his role. He stated that Reardon had already decided to set up TrueVision before they discussed such plans on September 11, 2007, that he advised Reardon about the risks of setting up a competing entity while retaining his ownership interests, and that he strongly advised Reardon not to solicit BME employees while he was still an officer there, not to solicit any BME employees at any time if they were subject to a noncompete agreement with BME, and not to take from BME  [*6] any confidential business information.

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Admission of e-mail. After Reardon fired Boylan, Reardon hired attorneys Alexander Furey and Harry Manion (among others). In the context of new counsels' seeking to assess their client's predicament, Furey sent Manion an electronic mail message (e-mail) on October 10, 2007, that purports to detail what Reardon had told him about some of the underlying facts. In pertinent part, that e-mail states:

   "Bob has explained to me that before McMorrow left BME he made a copy of BME proprietary software along with customer and doctor lists. This information was then uploaded onto the TrueVision server. After McMorrow learned of the Court's order he shut down the server, deleted the information, and destroyed the memory stick that he used to copy the information from BME. Although Bob admits that he had knowledge of the information taken from BME, McMorrow unilaterally  [*11] decided to destroy the information."

At a pretrial hearing on Boylan's motion in limine, counsel vigorously debated the admissibility of the e-mail, and the judge took the issue under advisement (promising to study the relevant case law). At trial, the e-mail was admitted over Reardon's objection. Reardon made no claim -- below or on appeal -- that the e-mail was privileged. His objection was only that it is inadmissible hearsay.

We begin by noting that had Furey been called as a witness, any damaging statements that Reardon made to him could have been admitted as admissions of a party against interest (again, privilege issues aside). However, Furey -- who continued to represent Reardon at trial and on appeal -- was not called by either side. Instead, Boylan sought to introduce the out-of-court admissions that Reardon allegedly made to Furey through Furey's out-of-court written statements to Manion, thus implicating more than one level of potential hearsay problems.

Both below and on appeal, the parties analyzed the admissibility of the e-mail as governed by Ruszcyk v. Secretary of Pub. Safety, 401 Mass. 418, 420-423 (1988) (adopting proposed Mass.R.Evid. 801[d][2][D] with regard to vicarious  [*12] admissions). Ruszcyk mandates a two-step inquiry. The first step is whether the declarant (here, Furey) was an agent or servant of Reardon's who was authorized to act on the matter about which he spoke. This step was plainly satisfied, because there can be little doubt that in making his statements in order to brief co-counsel, Furey was an agent or servant of a party (Reardon) and was acting within the scope of his employment.

The second inquiry goes to "whether the probative value of the evidence is substantially outweighed by its potential for unfair prejudice." Id. at 422. "[D]iscretion is vested in the judge" to make that determination. Ibid. Reardon cannot demonstrate an abuse of that discretion here. The probative value of the e-mail was strong, e.g., in its potential to undercut Reardon's claims as to the proximate cause of his injuries. On the other side of the scale, although Reardon is correct that the potential for prejudice from the admission of the e-mail was great, he is hard pressed to argue how there was a potential for "unfair" prejudice (the relevant consideration under the rule). The context in which the e-mail was generated suggests its reliability.⁹ While neither  [*13] side attempted to call Furey as a witness,¹⁰ Reardon had the opportunity to try to rebut the e-mail through his own testimony and others', including that of McMorrow (who attempted to address the actions attributed to him in the e-mail) and Manion (who testified, inter alia, that after he and Reardon's other lawyers conducted further investigation following the sending of the e-mail, they concluded that Reardon had not taken proprietary information). No error has been shown.

9   Reardon in fact conceded that he used a "memory stick" to take some client contact information with him to TrueVision, while claiming that BME's corporate counsel specifically authorized this (something corporate counsel denied).

10   Reardon highlights that Boylan did not seek to call Furey as a witness. However, Reardon had been aware that Boylan had the damaging e-mail ever since he turned it over in discovery, and he could have planned to call Furey as a witness (albeit with the presumed result that Furey would be disqualified from representing Reardon at trial).