The Massachusetts Appeals Court today reinstated a Connecticut finance company's defamation and conspiracy lawsuit against a Newton lawyer for a man who owes it more than $20 million, ruling the lawyer is not protected by Massachusetts case law that bars suits against lawyers for statements they make involving lawsuits they're involved in.
The ruling, the latest chapter of an ongoing legal saga involving a Revere Beach condo project that failed in 2008, means that John Howe and his Patriot Group of Darien can attempt to make their case before a jury that attorney Bruce Edmands defamed them in a 2014 letter demanding Patriot stop trying to collect on its debt and conspired with developer Steven Fustolo to spread maliciously false claims about the company through blog posts and press releases.
Fustolo is himself now serving a nine-month jail sentence after pleading guilty this past July to criminal harassment charges for blog posts and press releases he paid a Florida Web developer to post that made fraud allegations against Howe.
At issue in the defamation part of the Patriot lawsuit is a 2014 letter Edmands sent to Patriot's lawyer, demanding Patriot back away from his client because it had committed tax fraud and because Fustolo was pursuing whistleblower complaints against Patriot with both the IRS and the SEC.
A lower-court judge had dismissed Patriot's case by citing Massachusetts case law known as "litigation privilege," aimed at protecting lawyers involved in litigation from spurious lawsuits, by barring legal actions over statements they make about lititgation in which they are involved.
But the state's second highest court ruled that in this case, Edmands was not protected because he was not, in fact, writing while involved in any judicial or quasi-judicial procedings involving Fustolo.
The court concluded that Patriot made a credible case it had not committed any fraud or even been investigated for it and that:
[T]here is nothing to suggest that any whistleblower proceeding was filed with either the IRS or the SEC, and there is nothing in the record to indicate that Edmands was counsel for Fustolo in any such hypothetical proceeding.
Now, Fustolo was involved in extensive actions in federal bankruptcy court - both through his own efforts to reorganize so he could restart his 242-unit Revere Beach project and through efforts by Patriot and another creditor to force him into involuntary bankruptcy in an attempt to get a judge to make him begin to repay his debts.
But that's of no help to Edmands's case, either, because Fustolo used a different lawyer to handle his bankruptcy cases and so Edmands can't claim any sort of litigation privilege related to those procedings, the court ruled.
The court continued that Patriot could also pursue a conspiracy claim against Edmands because it had provided sufficient proof to suggest that Edmands not only knew about Fustolo's blog activities - which involved repeating the potentially defamatory statements online repeatedly - but advised him on them, and because the letter Edmands sent to Patriot's lawyers was initially drafted by Fustolo and that Edmands further got involved by "editing, signing, and sending" the letter.