Jarosz v. Palmer

436 Mass. 526 (2002)

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Nature of the Case

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Facts

P and three business partners agreed to acquire a company known as Union Products. P hired D, an attorney, to assist in the acquisition and financing of the business. P and his partners successfully acquired the business, and each became twenty-five percent owners. The relationship between P and his partners eventually soured, and the partners terminated P from his position as employee and officer of Union Products. P filed suit against both the partners and the Union Products corporation, alleging wrongful termination and breach of fiduciary duty. D represented the three partners and the corporation in this suit. P moved to disqualify D from serving as the partners' attorney in the Union Products case on the basis that D had represented P individually in his acquisition of Union Products, and therefore his continued representation of the partners and the corporation created a conflict of interest. The judge found that P did not meet the threshold burden of establishing that an attorney-client relationship existed between himself and D during the acquisition dealings. P's motion was denied. P then filed this suit against D, alleging breach of contract, breach of fiduciary duty, legal malpractice, and violations of G. L. c. 93A. D defended the suit on the ground, inter alia, that he had not represented P individually. D filed a motion for judgment on the pleadings, claiming that the judge's ruling on P's motion for disqualification in the Union Products case precluded D from relitigating the issue of representation. The judge agreed and granted the motion, but P appealed; the issue had not been actually litigated, was not the subject of a final judgment, and was not essential to the decision. P also claimed that the motion judge erred in considering evidence outside the pleadings, namely, a copy of the judge's order denying P's motion for disqualification in the Union Products case. Eventually, the case against his partners was settled. The Appeals Court reversed the judgment on the basis that the judge's determination in the Union Products case did not constitute a final judgment for the purposes of issue preclusion. A motion to disqualify is an interlocutory order subject only to discretionary review by a single justice of the Appeals Court, the court concluded that the decision was not subject to appeal and therefore issue preclusion could not apply. The Appeals Court apparently did not consider the stipulation of dismissal in the Union Products case relevant to its determination.