PROVIDING OUTSOURCED LEGAL SERVICES TO MASSACHUSETTS ATTORNEYS

When water began dripping from the ceiling of her unit in the Desert Pines Condominium, Amy immediately contacted the condominium’s board of trustees.  The board, in turn, called Fixit, Inc., a company employed by the board to manage the condominium.  An inspection revealed that a portion of the condominium’s roof had deteriorated, allowing water to pool above the ceiling of Amy’s unit.  Pursuant to its contract with the condominium, Fixit repaired the roof and declared the problem solved.  Amy was overjoyed, until her kitchen ceiling collapsed and mold blossomed on walls throughout her unit.

Amy sued Fixit for breach of its contract with the condominium, which required that all repairs be completed in a workmanlike manner. Although she was not a party to the contract, Amy claimed to be a third-party beneficiary of the agreement because she would have benefited if the repairs had been done properly.  On these facts, a Massachusetts court would very likely dismiss her contract claim.

Massachusetts courts have adopted Restatement (second) of Contracts, §302 and related sections, governing the rights of third-party beneficiaries.  James Family Charitable Foundation v. State Street Bank & Trust Co., 80 Mass. App. Ct. 720, 723 (2011), citing Rae v. Air–Speed, Inc. 386 Mass. 187, 195–196 (1982).  Section 302 states,

(1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either

(a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or

(b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.

Restatement (Second) of Contracts § 302.  As Amy was not a creditor of either party to the management contract, she must satisfy subsection (b) by establishing that the contracting parties intended the contract to benefit her.  “In order to recover as a third-party beneficiary, the plaintiffs must show that they were intended beneficiaries of the contract….” Cumis Ins. Society, Inc. v. BJ’s Wholesale Club, Inc., 455 Mass. 458, 464 (2009), quoting Spinner v. Nutt, 417 Mass. 549, 555 (1994).

“Under Massachusetts law, a contract does not confer third-party beneficiary status unless the ‘language and circumstances of the contract’ show that the parties to the contract ‘clear[ly] and definite[ly]’ intended the beneficiary to benefit from the promised performance.”  Cumis, 455 Mass. at 466, quoting Anderson v. Fox Hill Village Homeowners Corp., 424 Mass. 365, 366–367 (1997).  See also Go-Best Assets, Ltd. v. Citizens Bank of Massachusetts, 463 Mass. 50, 61 n.12 (2012); Alford v. Capitol Realty Group, Inc., 88 Mass. App. Ct. 1106, 2015 WL 5602608, * 2 (9/24/15); Try Switch. Ltd. v. Endurance Intern. Group, 83 Mass. App. Ct. 1131, 2013 WL 2096605, *1 (5/16/13) (unpublished Rule 1:28 opinion); James Family, 80 Mass. App. Ct. at 724.

It is not enough that the plaintiff receives an incidental benefit from the contract.  The parties to the contract must have intended such benefit.  “That the plaintiffs derive a benefit from a contract between others does not make them intended third-party beneficiaries and does not give them the right to enforce that agreement.”  Cumis, 455 Mass. at 464.  See also James Family, 80 Mass. App. Ct. at 724 (“In contrast to an intended beneficiary, an incidental beneficiary obtains no right to enforce the contract.”); Restatement (second) of Contracts, §315.

As there is no evidence that either the condominium or Fixit intended their contract to benefit Amy or other unit owners, Amy is not a third-party beneficiary and cannot enforce the contract.

When litigation involves a claim of title to real estate, the claimant may obtain judicial approval to record a lis pendens against the property, notifying potential purchasers that litigation affecting the property is pending.  See Massachusetts G.L. c. 184, §15.  Real estate subject to a lis pendens may be virtually unmarketable.  While a lis pendens serves an important purpose when there is a genuine dispute as to title, when the underlying claim is weak or frivolous the recording of a lis pendens unjustly restricts the owner’s right to sell the property.  To protect owners from lis pendens based on frivolous claims, G.L. c. 184, §15(c) allows an owner to file a special motion to dismiss the underlying action, thereby also dissolving the lis pendens.

Under section 15(c), a special motion to dismiss,

shall be granted if the court finds that the action or claim is frivolous because (1) it is devoid of any reasonable factual support; or (2) it is devoid of any arguable basis in law; or (3) the action or claim is subject to dismissal based on a valid legal defense such as the statute of frauds. In ruling on the special motion to dismiss the court shall consider verified pleadings and affidavits, if any, meeting the requirements of the Massachusetts rules of civil procedure.

(Emphasis added).  See also Galipault v. Wash Rock Investments, LLC, 65 Mass. App. Ct. 73, 81 (2005).  As the statute’s use of the disjunctive “or” indicates, a court must grant the special motion and dismiss the plaintiff’s complaint if it is frivolous for any of the three listed reasons.

A court hearing a special motion to dismiss applies essentially the same standard as governs summary judgment.  Donius v. Milligan, 2016 WL 3926577, *3 (Mass. Land Ct. 7/25/16); St. John’s Holdings, LLC v. Two Electronics, LLC, 2016 WL 1460477, *2 (Mass. Land Ct. 4/14/16); Gould v. Lancaster Technology Park Limited Partnership, 2006 WL 700884, *1 (Mass. Super. 2/17/06), aff’d 69 Mass. App. Ct. 1109 (2007); Waters v. Cook, 2005 WL 2864806, *3 (Mass. Land Ct. 11/2/05).  In St. John’s, the Court stated,

The standard of review for a special motion to dismiss is the functional equivalent of a motion for summary judgment; it requires the court to assess the plaintiff’s claim in light of the record before the court. The court does not weigh evidence, assess credibility, or find facts; it may only consider undisputed material facts and apply them to the law. In viewing the factual record presented as part of the motion, the court is to draw “all logically permissible inferences” from the facts in favor of the non-moving party. The judge must consider the verified pleadings and affidavits in ruling on the special motion and, if the motion is granted, award costs and attorney’s fees to the aggrieved party.

2016 WL 1460477, at *2 (citations omitted).  In accordance with the summary judgment standard, a party filing a special motion to dismiss, “in a case in which the opposing party will have the burden of proof at trial is entitled to [dismissal] if he demonstrates … by reference to material described in Mass.R.Civ.P. 56(c), unmet by countervailing materials, that the party opposing the motion has no reasonable expectation of proving an essential element of that party’s case.” Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716 (1991).

Even without concluding that the underlying claim lacks reasonable factual support, arguable basis in law or is subject to a valid legal defense, a court may grant a special motion to dismiss where the plaintiff’s complaint does not, “include a certification by the claimant made under the penalties of perjury that the complainant has read the complaint, that the facts stated therein are true and that no material facts have been omitted therefrom.” G.L. c. 184, §15(b) (emphasis added).  In DeCroteau v. DeCroteau, 90 Mass. App. Ct. 903 (2016), the Massachusetts Appeals Court stated,

The complaint must include a certification by the claimant made under the penalties of perjury that “no material facts have been omitted therefrom.” No such certification was made in the instant case. This requirement is not one of mere form. In view of the serious consequences that may arise from the recording of a memorandum of lis pendens, strict compliance with the statutory prerequisites is required. The omission of the certification constituted a material deficiency. Accordingly, the orders denying the plaintiff’s motion for a preliminary injunction and motion for approval of a memorandum of lis pendens are affirmed.

Id. at 906. (Emphasis added, citations omitted).  See also Haley v. Welch, 84 Mass. App. Ct. 1104, 2013 WL 3820680, *2 (7/25/13) (unpublished Rule 1:28 opinion) (affirming trial judge’s refusal to allow late or retroactive verification where complaint, as filed, failed to certify that no material facts had been omitted).

Moreover, even where the required certification is made, a court should grant a special motion to dismiss where the complaint actually omits material facts. “A party’s failure to include all material facts may result in the dismissal of that party’s claims where the omitted facts establish that those claims are devoid of reasonable factual support or arguable basis in law.” McMann v. McGowan, 71 Mass. App. Ct. 513, 519-20 (2008).  “A material fact is one that is ‘significant or essential to the issue of matter at hand.’ ” Id. at 520, quoting Black’s Law Dictionary 629 (8th ed. 2004).  This makes sense because the lis pendens statute assumes that a court endorsing a lis pendens has considered all relevant and material facts.

Accordingly, where a lis pendens is recorded in connection with claims which arguably are frivolous, or where the compliant fails to certify that it contains all material facts or in fact omits material facts, the property owner should consider filing a special motion to dismiss.

In a tragic accident, a doctor negligently administers radiation treatments to his patient’s leg, resulting in serious burns.  The patient is immediately aware of the burns, but does not know that her doctor was negligent.  The doctor continues to treat the patient for four more years, making various unsuccessful attempts to heal the burn.  Throughout this time, the patient never learns of her doctor’s negligence.  Eventually, the patient’s leg must be amputated.  After the amputation, the negligent doctor plays no further role in caring for the patient, who is treated by others.

Six years after her injury, having learned from her new physicians that her burns were caused by her former doctor’s negligent administration of the radiation treatments, the patient sues the negligent doctor for malpractice.  Is her claim barred by the three-year statute of limitations applicable to medical malpractice actions?  Probably not.

In Parr v. Rosenthal, 475 Mass. 368 (2016), the Massachusetts Supreme Judicial Court adopted the continuing treatment doctrine, under which the statute of limitations for a medical malpractice claim does not begin to run while the patient continues to be treated by the allegedly negligent doctor, unless the patient obtains actual knowledge not just that she has been injured by the doctor’s treatment but that the doctor’s conduct was negligent.

The statute of limitations and statute of repose.

Massachusetts G.L. c. 231, § 60D, provides that a claim for medical malpractice, “shall be commenced within three years from the date the cause of action accrues …, but in no event shall such action be commenced more than seven years after occurrence of the act or omission which is the alleged cause of the injury upon which such action is based ….”  Thus, an action for medical malpractice is subject to a three year statute of limitations and a seven year statute of repose.  In the factual scenario described above, the patient commences her action within seven years, so the statute of repose does not bar her claim.  The question is whether the patient’s claim is barred by the three-year statute of limitations.

The discovery rule.

“A statute of limitations typically prescribes the time period when an action must be commenced after the cause of action ‘accrues.’ ”  Parr, 475 Mass. at 377.  “Under the discovery rule, medical malpractice claims accrue when the plaintiff learns, or reasonably should have learned, that he has been harmed by the defendant’s conduct.”  Id. at 377-78.  (Internal quotation marks omitted).  However, the plaintiff need not know that the defendant was negligent.  “[U]nder our common law, once a patient knows or reasonably should know that he or she has suffered harm and that the harm was caused by the physician’s conduct, the statute of limitations clock starts to run, and the patient then has three years to discover whether the physician committed a breach of the standard of care and whether the theory of causation is supported by the evidence, and, if so, to commence a civil suit.”  Id. at 378.

The continuing treatment doctrine.

The continuing treatment doctrine is an exception to the discovery rule.  While under the discovery rule, the patient’s cause of action accrues, and the limitation period begins to run, as soon as the patient learns that she has been injured as a result of the physician’s conduct, under the continuing treatment doctrine, while the negligent doctor continues to treat the patient, the limitation period begins to run only when the plaintiff learns not just that she has been injured by the doctor’s conduct, but also that the doctor was negligent.

In Parr the Supreme Judicial Court explained,

We … hold that the statute of limitations for a medical malpractice claim generally does not begin to run while the plaintiff and the defendant physician continue to have a doctor-patient relationship and the plaintiff continues to receive treatment from the physician for the same or a related condition. We also hold that the continuing treatment exception to the discovery rule terminates once a patient … learns that the physician’s negligence was the cause of his or her injury.

475 Mass. at 369.  According to the Court,

[W]hile [a] physician continues to treat the patient for the same or related injury or illness, the physician’s patient, like an attorney’s client, “realistically cannot be expected to question and assess the techniques employed or the manner in which the services are rendered.” Just as we recognize that a represented party is entitled to retain confidence in his or her legal counsel’s “ability and good faith” while the representation continues, so, too, do we recognize that a patient is entitled to retain confidence in his or her physician’s ability and good faith while continuing treatment with that physician. The legal client is disadvantaged in learning whether his or her attorney has committed a breach of the standard of care while that attorney continues to represent the client, and so, too, is a patient disadvantaged in learning whether a physician has committed a breach of the standard of care while the physician continues to treat the patient. And just as a wronged client is permitted to benefit from his or her attorney’s efforts to correct a problem without the disruption of exploring the viability of a legal malpractice action, so, too, is a patient permitted that same benefit without the disruption of exploring the viability of a medical malpractice action.

***

Effect of actual knowledge on continuing treatment doctrine. … Thus, we conclude that the continuing treatment exception to the discovery rule terminates only when the plaintiff has actual knowledge that his or her treating physician’s negligence has caused the patient’s appreciable harm, because it is only then that there can no longer be the kind of “innocent reliance” that the continuing treatment doctrine seeks to protect. Once a patient learns that the physician’s negligence was the cause of his or her injury, the patient has acquired sufficient information to initiate litigation, and there is no longer adequate reason to continue to toll the statute of limitations.

Id. at 383-84.  (Emphasis in original, citations and footnote references omitted).

In this case.

In the scenario outlined above, the patient commences her malpractice action six years after her injury, rendering her claim potentially untimely under the three-year statute of limitations.  The discovery rule offers no assistance to the patient because she knew from the beginning that her injury was caused by the defendant doctor’s conduct (enough to start the clock running under the discovery rule).

However, the continuing treatment doctrine should apply.  The doctor-patient relationship between the patient and the negligent doctor continued for four years after the injury.  While that relationship continued, the malpractice claim could accrue, and the limitations period could begin to run, only if the patient obtained actual knowledge that her doctor had acted negligently.  As she never knew of her doctor’s negligence while their relationship continued, the limitations period was tolled during the entire four years of the relationship and began to run only after the patient’s leg was amputated and the defendant doctor ceased to be involved in her treatment.  She brought suit six years after her injury, but only two years after the end of her doctor-patient relationship with the defendant.  Therefore, the three-year statute of limitations does not bar the patient’s malpractice action.

 

After years of work, and in total disregard of the laws of physics, Buoyant, Inc. has invented “Floatzar,” a material stronger than steel but lighter than air.  An object of any size made from Floatzar effortlessly rises skyward.   Aware of the potential value of this discovery, Buoyant’s officers and employees treat all information about the development of Floatzar as a trade secret.   Buoyant intends to market Floatzar to military and aerospace clients.

Unfortunately, across town, Jimmy Jo Bob, CEO of Bob’s Big Balloons, Inc., hears of the new miracle material and envisions limitless balloon-related opportunities.  A former NSA operative and direct mail marketer, Bob hacks Buoyant’s computers and steals Floatzar’s secret formula.  Buoyant executives suspect a security breach when they see a child holding a string tethered to a large, very solid, floating taxi cab.

Buoyant successfully sues Bob’s Big Balloons for misappropriation of trade secrets, obtaining a $10 million judgment against the company.  Unfortunately, Bob’s Big Balloons is “judgment proof,” having only $12.50 in assets.  Bob, on the other hand, has significant personal wealth, as does the company’s other shareholder, Peggy Sue Rob, a chemical engineer who also heads the company’s balloon animal division.  But Buoyant failed to name Bob or Peggy, individually, as a defendants in its lawsuit, even though their personal involvement in the trade secret theft would have made them individually liable for the corporation’s misdeeds.  Buoyant can’t file a new, separate action against Bob or Peggy because the statute of limitations for a trade secret claim has long since expired.

In a last ditch effort, Buoyant brings a second lawsuit, this time against Bob and Peggy, personally.  In this case, Buoyant does not seek a new judgment against Bob or Peggy for theft of trade secrets.  Instead, it seeks to hold them personally liable on the judgment already obtained against Bob’s Big Balloons, arguing that the court should disregard the company’s corporate identity and “pierce the corporate veil” so as to rule that a judgment against the company is really a judgment against Bob and Peggy, individually.

In support of its effort to pierce the veil, Buoyant argues that it would be inequitable to allow Bob and Peggy to escape liability for company misconduct which they orchestrated.  Buoyant claims that the court should ignore the corporate structure of Bob’s Big Balloons because: (1) Bob and Peggy were in total control of the company; (2) the company was insolvent when Buoyant sued it for theft of trade secrets, (3) Bob and Peggy under-capitalized Bob’s Big Balloons because their initial investments in the company were not enough to cover both operating expenses and any judgment Bob’s Big Balloons was likely to have to pay after stealing Buoyant’s trade secrets, and (4) they used the company to promote fraud (i.e., to steal trade secrets).  Can Buoyant recover its judgment against Bob’s Big Balloons from Bob and Peggy, personally?  Probably not.

Factors relevant to piercing the corporate veil under Massachusetts law.

Generally, a corporation is a separate legal entity from its shareholder and the shareholder is not liable for corporate debts, including judgments against the corporation.  However, under Massachusetts law, a court may disregard the corporate form only in very limited circumstances.  Evans v. Multicon Const. Corp., 30 Mass. App. Ct. 728, 732 (1991).  A plaintiff seeking to pierce the veil “must meet a very high standard.”  The George Hyman Construction Company v. Gateman, 16 F.Supp.2d 129, 157 (D. Mass. 1998).  Such piercing of the corporate veil,

arises when (1) there is active and pervasive control of related business entities by the same controlling persons and there is a fraudulent or injurious consequence by reason of the relationship among those business entities; or (2) there is “a confused intermingling of activity of two or more corporations engaged in a common enterprise with substantial disregard of the separate nature of the corporate entities, or serious ambiguity about the manner and capacity in which the various corporations and their respective representatives are acting.”

Id. at 732-33, quoting My Bread Baking Co. v. Cumberland Farms, Inc., 353 Mass. 614, 620 (1968) (Emphasis in original).  See also Lipsitt v. Plaud, 466 Mass. 240, 252-53 (2013).

In Pepsi–Cola Metropolitan Bottling Co. v. Checkers, Inc., 754 F.2d 10 (1st Cir. 1985), the United States Court of Appeals for the First Circuit used the rules stated in My Bread to derive twelve factors which should be considered in deciding whether to pierce the corporate veil:

(1) common ownership; (2) pervasive control; (3) confused intermingling of business activity assets, or management; (4) thin capitalization; (5) nonobservance of corporate formalities; (6) absence of corporate records; (7) no payment of dividends; (8) insolvency at the time of the litigated transaction; (9) siphoning away of corporate assets by the dominant shareholders; (10) nonfunctioning of officers and directors; (11) use of the corporation for transactions of the dominant shareholders; (12) use of the corporation in promoting fraud.

Id. at 14–16.  (Emphasis added).  The Massachusetts Appeals Court in Evans adopted the Pepsi-Cola factors as Massachusetts law.  Massachusetts courts apply a more stringent standard for veil piercing than is applied by federal courts and those of many other states.  Newman v. European Aeronautic Defence and Space Company EADS N.V., 70 F.Supp.2d 156, 166 (D. Mass. 2010) (Massachusetts standard more stringent than federal).  Platten v. HG Bermuda Exempted Ltd., 437 F.3d 118, 127 (1st Cir. 2006) (“Massachusetts Courts have been somewhat more ‘strict’ than other jurisdictions in respecting the separate entities of different corporations”); Noonan v. The Winston Company, 135 F.3d 85, 94 (1st Cir. 1998) (describing Massachusetts standard as “stringent”); Salvail v. Relocation Advisors, Inc., 2011 WL 1883861, *1 (D. Mass. 5/17/11) (“especially strict”); Rondout Valley Central School District v. Coneco Corp., 339 F.Supp.2d 425, 441 (N.D.N.Y. 2004) (evidence must be “compelling” to pierce veil under Massachusetts law).

Although the 12 Pepsi-Cola factors need not all be satisfied in order to justify piercing the corporate veil, Buoyant is unlikely to succeed in its action against Bob and Peggy because it bases its claim on only four factors and will have difficulty proving even those.

Pervasive control.

With regard to the second factor, while Buoyant may be able to show that Bob and Peggy had full control over Bob’s Big Balloon’s, “control, even pervasive control, without more, is not a sufficient basis for a court to ignore corporate formalities.” OMV Associates, L.P. v. Clearway Acquisition, Inc., 82 Mass. App. Ct. 561, 566 (2012), citing Scott v. NG U.S. 1, Inc., 450 Mass. 760, 768, (2008).  Further, “The ownership of all the stock and the absolute control of the affairs of a corporation do not make that corporation and the individual owner identical, in the absence of a fraudulent purpose in the organization of the corporation.”  Gordon Chem. Co. v. Aetna Cas. & Sur. Co., 358 Mass. 632, 638 (1971).  Although Buoyant might claim that Bob’s Big Balloons was formed for the fraudulent purpose of stealing trade secrets, Bob and Peggy can convincingly refute this contention by showing that their company existed, and provided real services to real clients, for many years.

Thin capitalization.

The fourth factor, “thin capitalization,” also is not present in this case.  Buoyant acknowledges that Bob and Peggy funded Bob’s Big Balloons sufficiently to cover the company’s relatively low everyday operating expenses.  Buoyant contends, however, that Bob and Peggy were also required to capitalize Bob’s Big Balloons to the extent required to defend a lawsuit and pay a judgment for theft of trade secrets, because Bob and Peggy should have anticipated that Bob’s Big Balloons would be sued if it stole trade secrets.

However, even if Bob and Peggy had reason when they first capitalized their company to expect it to be sued for theft of trade secrets, itself a debatable proposition, Buoyant’s argument will likely fail because, as a matter of law, the incorporators of a business are not required to capitalize it sufficiently to cover any potential litigation and adverse judgment.  So long as a business is provided sufficient capital so that it can meet the ordinary expenses which arise in the normal operation of its business, it is not undercapitalized.  According to one commentator:

Are the risks to be perceived only those that are normal for a business, or do they include a highly unusual tort claim that greatly exceeds the firm’s liability insurance? Does the test demand that the total amount the shareholders invest must literally equal the present value of all future liabilities of the firm or does it entail some lesser amount that is simply necessary to launch the firm such that its future cash flows will meet its normal operating expenses? The former is clearly an unreasonable demand because no company can be expected to endow its future operating expenses and liabilities as a precondition to opening its doors. …It would therefore appear that inadequate capitalization has correctly assumed a limited role in veil-piercing cases, that of being a surrogate for the probable bad faith of the firm’s promoters.

James D. Cox and Thomas Lee Hazen, Inadequate Capitalization as a Factor for Piercing the Veil, 1 Treatise on the law of Corporations §7.11 (3d) (2011) (Emphasis added).

In Gottlin v. Herzig, 40 Mass App. Ct. 163 (1996), the Appeals Court noted that it would be unreasonable to require a business to capitalize to the extent necessary to cover potential tort judgments:

In their reply brief, the plaintiffs, without citation to any authority, argue that the corporation “had a duty either to maintain adequate capitalization or in the alternative to maintain liquor liability insurance.” In this case, the corporation-a neighborhood tavern-would have had to maintain an unlikely net worth in the range of three million dollars to cover the judgment rendered against the corporation, and continue in business. Thus the question comes down to the issue of the absence of insurance coverage.

Id. at 169 n.11.  The court went on to rule that failure to maintain adequate liability insurance was not grounds for piercing the corporate veil.

Courts from other jurisdictions agree that the incorporators of a business need not consider potential tort judgments when determining the adequacy of capitalization.  In In re: Hydroxycut Marketing and Sales Practices Litigation, 810 F.Supp.2d 1100 (S.D. Cal. 2011), the court stated:

The Court also does not find that Iovate USA was inadequately capitalized…. Although Iovate USA’s capital may not have been enough to satisfy multimillion dollar judgments, the capital was sufficient for Iovate USA to operate its normal business. See Laborers Clean–Up Contract Admin. Trust Fund. v. Uriarte Clean–Up Service, Inc., 736 F.2d 516, 524 (9th Cir.1984) (explaining that a corporation is undercapitalized when it is unable to meet debts that may reasonably be expected to arise in the normal course of business); Sheppard v. River Valley Fitness One, L.P., 2002 WL 197976, at *12 (D.N.H.2002) (“But the proper measure of the sufficiency of a corporate entity’s capitalization is not whether it can pay a potential judgment in a lawsuit but, rather, whether it had sufficient assets to meet the obligations incurred by conducting ordinary business in the industry in which it operates.”).

Id. at 1122-23.  (Footnote reference omitted).

In like manner, the court in Arch v. American Tobacco Co., Inc., 984 F.Supp. 830 (E.D.Pa. 1997), said:

[T]he possibility that a plaintiff may have difficulty enforcing a judgment against a defendant is not enough to justify piercing the corporate veil. Courts do not pierce the corporate veil unless the corporation is so undercapitalized that it is unable to meet debts that may reasonably be expected to arise in the normal course of business.

Id. at 840.  (Citations and internal quotation marks omitted).  See also Laborers Clean-Up Contract Admin. Trust Fund v. Uriarte Clean-Up Service, 736 F.2d 516, 524 (9th Cir. 1984); Sheppard v. River Valley Fitness One, L.P., 2002 WL 197976, at *12 (D.N.H.2002); ___ Assist LLC v. East Coast Lot & Pavement Maintenance Corp., 913 F.supp.2d 612, 631 (N.D. Ill. 2012); Bank of Montreal v. S.K. Foods, LLC, 476 B.R. 588, 598-99 (N.D. Cal. 2012).

Thus, a court will probably not be convinced that Bob’s Big Balloons was undercapitalized.

Bob’s Big Balloons was not insolvent at the time of the litigated transaction.

The eighth Pepsi-Cola factor focuses on whether the corporation was insolvent “at the time of the litigated transaction.”  In Buoyant’s case against Bob and Peggy, the “litigated transaction” must be Bob’s Big Balloons’ theft of trade secrets.  However Buoyant has only asserted that Bob’s Big Balloons was insolvent when it, Buoyant, obtained its judgment in the trade secrets case.  Buoyant cannot prove that Bob’s Big Balloons was insolvent at the time of the theft.  In fact, as discussed above, Bob’s Big Balloons was adequately capitalized to meet its normal operating expenses.

Was Bob’s Big Balloons used “in promoting fraud?”

Buoyant contends that by causing Bob’s Big Balloons to steal trade secrets, Bob and Peggy used Bob’s Big Balloons “in promoting fraud” for purposes of the veil piercing analysis.  However, the mere fact that Bob’s Big Balloons acted wrongfully under Bob and Peggy’s direction does not, by itself, establish that it was used “in promoting fraud.”  The twelve factors identified by the First Circuit in Pepsi Cola, and adopted by the Massachusetts courts in Evans and Lipsitt, are considered in order,

to form an opinion whether the overall structure and operation misleads.  There is present in the cases which have looked through the corporate form an element of dubious manipulation and contrivance, finagling, such that corporate identities are confused and third parties cannot be quite certain with what they are dealing.

Evans, 30 Mass. App. Ct. at 736.  Thus, the focus of the twelve factors is on the misleading or confusing nature of the corporate form or structure, not on whether the corporation itself has committed a fraud or wrong.  In Evans, the court found that piercing the corporate veil was not appropriate because the corporation, “did not masquerade as something it was not” and there was no evidence that the corporation was established or operated “so as to misrepresent or divert assets.”  Id.  See also Lothian v. Mumford, 2006 WL 1745064, *7 (Mass. Super. 6/9/06) (“This doctrine was devised to assist those who are confused about which corporation they are dealing with”).

Consistent with the focus on use of the corporate form to deceive, misrepresent or confuse, courts have made clear that in order to have “use[d] the corporation to promote fraud” or to satisfy the first prong of the My Bread formulation (“active and pervasive control of related business entities by the same controlling persons and there is a fraudulent or injurious consequence by reason of the relationship among those business entities”), it is not enough that the corporation commit a fraud.  That fraud must be accomplished by using the corporate form; the confusing or deceptive inter-corporate relationship must be an essential part of the fraud.

In Adelphia Agios Demetrios LLC v. Arista Dev., LLC, 2013 WL 936608 (D. Mass. 3/12/13), the court explained:

Adelphia argues that disregarding the corporate form is appropriate here because the Members used Arista to commit a fraud. See Att’y Gen. v. M.C.K., Inc., 432 Mass. 546, 736 N.E.2d 373, 380 n. 19 (Mass.2000) (listing “use of the corporation in promoting fraud” as one of twelve factors that favor piercing the corporate veil).  But the mere fact that Arista is a corporate person accused of fraud does not justify piercing the veil. Adelphia does not allege any facts showing that the Members fraudulently abused Arista’s corporate form or its limited liability.

Id. at *3.  (Emphasis added).

Similarly, in Tech Target, Inc. v. Spark Design, LLC, 746 F.Supp.2d 353 (D. Mass. 2010), the court declined to pierce the corporate veil because the plaintiff did not allege any “fraudulent or improper use of Spark Design’s corporate form relevant to the contractual relationship at issue here.”  Id. at 357.  The court noted that the only fraud alleged was Spark Design’s issuance of a check drawn on an account with insufficient funds.  “This fraud, however, was not related to any corporate manipulation.  Moreover, Tech Target has not – and cannot – allege that it was deceived or misled about Spark Design’s corporate posture at the time it entered into the contract.”  Id.  (Emphasis added).

In The George Hyman Construction Company v. Gateman, 16 F.Supp.2d 129 (D. Mass. 1998), the court also declined to disregard the corporate form.  In that case, the plaintiff construction company brought suit against two corporations, Jackson and Calvesco, and their principals, Gateman and Moretto.  The court held that “use of the corporation in promoting fraud” meant that a corporation “was established or operated so as to misrepresent or divert assets.”  Id. at 156.  (Emphasis on “or operated” removed).  The court found no evidence that the corporation was established or operated as a fraudulent enterprise, or was “the kind of inherent sham suggested by the cases.  [It] did not masquerade as something it was not….”  Id.  Notably, the court added that “the fact that something went wrong with this deal, and even the fact that Gateman and Moretto may have caused it, does not mean that Jackson was a fraudulent enterprise for the purposes of the law of corporate veil piercing.”

Cases interpreting the fraud aspect of the first prong of the My Bread formulation also require that the fraud be accomplished by, or flow from, the corporate form.  In Birbara v. Locke, 99 F.3d 1233 (1st Cir. 1996), the Court of Appeals held that even if statements by a corporation’s management constituted fraud, that was not sufficient to justify piercing the corporate veil where the fraud did not involve the corporate form.  The court stated:

Moreover, plaintiffs have failed to show any “fraudulent or injurious consequence of the intercorporate relationship.” Plaintiffs argue that the settlement offers were misleading and fraudulent, because defendants attributed the decision to retain investment returns to TFG’s prior management, when it had been the decision of the new management to continue the policy of violating investment contracts.

Even assuming this misrepresentation might have supported fraud or unfair practices claims against the defendants (claims the jury and court here rejected), we think plaintiffs’ argument misses the point of the corporate disregard doctrine. The phrase “fraudulent or injurious consequence” is limited in My Bread by the phrase “of the intercorporate relationship.” There was no failure to “make clear which corporation [was] taking action” or “to observe with care” the corporate form. My Bread, 233 N.E.2d at 752. The Massachusetts Appeals Court has put this point well: “There is present in the cases which have looked through the corporate form an element of dubious manipulation and contrivance, finagling, such that corporate identities are confused and third parties cannot be quite certain with what they are dealing.” Evans, 574 N.E.2d at 400; cf. Oman Int’l Fin. Ltd. v. Hoiyong Gems Corp., 616 F.Supp. 351, 364 (D.R.I.1985) (noting that the better reasoned cases under Rhode Island law only pierce the corporate veil when the injurious consequences are a direct result of the misuse of the corporate form). Plaintiffs were never misled about which corporate entity-CRI or TFG-was obligated to them or was dealing with them.

Id. at 1240.  (Emphasis added).

To the same effect is Hiller Cranberry Products, Inc. v. Koplovsky Foods, Inc., 2 F.Supp.2d 157 (D. Mass. 1998), where the court, applying the first prong of the My Bread formulation, said:

Plaintiff contends that Edward M. Koplovsky’s statements to plaintiff with respect to KFI’s intention to pay its outstanding invoices constituted misrepresentation and unfair trade practices. The alleged fraud must pertain to the intercorporate relationship, however, Birbara, 99 F.3d at 1240.

Id. at 162.  (Emphasis added).  In like manner, the court in Giuliano v. Nations Title, Inc., 938 F.Supp. 78, 82 (D. Mass. 1996), a case in which the plaintiff sought to hold a corporate parent liable for the debts of its subsidiary, held that the first prong of the My Bread formulation is not satisfied simply by the occurrence of fraud.  Rather, the relationship between the two corporations (the corporate form or structure) must be an integral part of accomplishing the fraud.

If buoyant could establish that Bob and Peggy used Bob’s Big Balloons to promote fraud simply because they caused the company to steal trade secrets, then the promoting fraud factor of the veil piercing analysis could be established in almost any case, because cases where veil piercing is an issue commonly involve wrongful conduct of the corporation for which the plaintiff seeks to hold an individual shareholder liable.

Because any alleged wrongdoing on the part of Bob’s Big Balloons or Bob and Peggy did not rely upon, and was not facilitated or made more successful by, any misuse of the company’s corporate form, Buoyant will not be able to establish that Bob and Peggy used Bob’s Big Balloons in promoting fraud.

Bob and Peggy’s personal wrongdoing is irrelevant to piercing the corporate veil.

While Bob and Peggy’s personal wrongdoing, in causing Bob’s Big Balloons to steal Buoyant’s trade secrets, would have been enough to render them liable had they been named defendants in Buoyant’s original lawsuit against Bob’s Big Balloons, it is not relevant to the veil piercing analysis.  There are two entirely separate approaches to holding a corporate officer individually liable for wrongs committed by his or her corporation.  One such approach is to pierce the corporate veil.  Separate and apart from piercing, a corporate officer may sometimes be held personally liable for corporate torts in which the officer was personally involved.  Townsends, Inc. v. Beaupre, 47 Mass. App. Ct. 747, 751-52 (1999).

However, a claim against Bob and Peggy based on their personal participation in their company’s theft of trade secrets should have been asserted in Buoyant’s earlier action against Bob’s Big Balloons.  Such a claim cannot be made in Buoyant’s second lawsuit seeking to pierce the corporate veil. The only issue in that case is whether Bob and Peggy, individually, should be held responsible for the corporate judgment debt of Bob’s Big Balloons.  The courts have made clear that the piercing and personal involvement approaches to imposing personal liability on a corporate officer are separate.  In Alves v. Daly, the court pointed out that a “plaintiff does not need to pierce the corporate veil to hold an officer of a corporation personally liable for a tort committed by the corporation that employs him, if he personally participated in the tort ….”  2013 WL 1330010, *8 (D. Mass. 3/29/13).  (Internal quotation marks omitted).  See also Ray-Tek Services, Inc. v. Parker, 64 Mass. App. Ct. 165, 177-78 (2005) (holding that plaintiff has not satisfied requirements for piercing the veil but could still hold corporate officer liable due to his personal involvement in tortious conduct); Townsends, 47 Mass. App. Ct. at 751-52 (similar to Ray-Tek); McCarthy v. Slade Assoc., Inc., 24 Mass. L. Rptr. 603, 2004 WL 4739775, *4 (Mass. Super. 8/21/08) (citing Cash Energy, Inc. v. Weiner, 768 F.Supp. 892, 895 (D. Mass. 1991), for the proposition that personal liability is usually precluded unless “grounds are shown either for piercing the corporate veil or finding active personal involvement in a tortious act.”).

Piercing the veil is highly fact-dependent.

As the foregoing discussion indicates, a Massachusetts court will pierce the corporate veil only in rare cases.  The 12 factor analysis is highly fact-dependent and requires a detailed examination of the evidence.

In Iannacchino v. Ford Motor Company, 451 Mass. 623 (2008), the Massachusetts Supreme Judicial Court, refined the standard for granting a motion to dismiss.  It retired the familiar directive that “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief,” Nader v. Citron, 372 Mass. 96, 98 (1977) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)), instead adopting a new federal approach under which a complaint must contain, “factual ‘allegations plausibly suggesting (not merely consistent with)’ an entitlement to relief.” Iannacchino, 451 Mass. at 636, quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557, 127 S.Ct. 1955, 1966, 167 L.Ed.2d 929 (2007).  See also Galiastro v. Mortgage Electronic Registration Systems, Inc., 467 Mass. 160, 165 (2014); Lopez v. Com., 463 Mass. 696, 700-01 (2012).

While the “plausibility” requirement is easily stated, its practical application is less obvious than the prior “prove no set of facts” standard.  Indeed, “the precise parameters of the plausibility standard are still a work in progress.”  Gianfrancesco v. Town of Wrentham, 712 F.3d 634, 638-39 (1st Cir. 2013) (internal quotation marks omitted).  Just how much factual detail is required to make a claim plausible?  What separates a valid factual allegation from a mere legal conclusion insufficient to withstand a motion to dismiss?  This article considers those questions, among others.  Because Iannacchino adopted the federal standard, and because Massachusetts courts interpreting the Massachusetts Rules of Civil Procedure routinely look to, “the construction given to the cognate Federal rules,” Chavoor v. Lewis, 383 Mass. 801, 806 n.5 (1981), I refer to both federal and Massachusetts case law.

In order to determine whether a complaint states a plausible claim for relief, which will survive a motion to dismiss, a court must apply a two-stage test.  First, although all factual allegations contained in the complaint must be assumed to be true for purposes of a motion to dismiss, this tenet does not apply to legal conclusions.  Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).  Therefore, the court must begin by, “identifying the allegations of the complaint that are not entitled to the assumption of truth” because they are merely legal conclusions.  Id. at 1951.  Second, the court must, “consider the [remaining] factual allegations in [the] complaint to determine if they plausibly suggest an entitlement to relief.”  Id.  See also Cardigan Mountain School v. New Hampshire Ins. Co., 787 F.3d 82, 84 (1st Cir. 2015).

Distinguishing factual allegations from mere legal conclusions.

A court determining whether a complaint states a plausible claim to relief must ignore allegations which are not factual but, instead, amount to mere legal conclusions.  Such conclusory allegations include both rote recitation of the elements of a cause of action and allegations which, while clothed as factual statements, are really just unsupported speculation by the plaintiff.  In A.G. ex rel. Maddox v. v. Elsevier, Inc., 732 F.3d 77 (1st Cir. 2013), the Court of Appeals for the First Circuit explained,

We follow this unbroken line of cases and hold that the rote recital of the elements of a cause of action is not enough, by itself, to nudge a case past the plausibility threshold.

This remains true even where, as here, plaintiffs attempt to camouflage conclusory statements as allegations of fact. When allegations, though disguised as factual, are so threadbare that they omit any meaningful factual content, we will treat them as what they are: naked conclusions.

Id. at 80-81, citing Iqbal, 129 S.Ct. at 1949; Artuso v. Vertex Pharm., Inc., 637 F.3d 1, 9 (1st Cir.2011) (explaining that even though an averment may be couched as a factual allegation, it can be “so subjective that it fails to cross ‘the line between the conclusory and the factual’ ”).  Similarly the court in Rodriguez-Vives v. Puerto Rico Firefighters Corps of Puerto Rico, 743 F.3d 278, 286 (1st Cir. 2014) stated,

A conclusory allegation, however, is one which simply asserts a legal conclusion, such as “I was retaliated against,” not a specific factual allegation, such as “my supervisor threw a book at me,” that merely lacks some surrounding context. We have held that some factual allegations may be so “threadbare” that they are in essence conclusory even if they include more than an assertion that an element of a cause of action was satisfied. But this is only the case where the bareness of the factual allegations makes clear that the plaintiff is merely speculating about the fact alleged and therefore has not shown that it is plausible that the allegation is true.

Id. at 286. (Internal citations omitted).

The distinction between factual allegations and legal conclusions was discussed in detail in Cardigan Mountain School, where the issue was whether the plaintiff had alleged a plausible claim that the defendant insurer had issued an insurance policy to the plaintiff school.  The court looked to the Supreme Court’s opinions in Twombly and Iqbal for guidance.  In Iqbal, the plaintiff, who had been arrested and detained after the 9/11 attacks but was eventually released, brought civil rights claims against federal officials including John Ashcroft, who had been the United States Attorney General at the time, and Robert Mueller, then the Director of the FBI.  The court found that although the complaint contained some factual assertions which were entitled to an assumption of truth, it was also rife with legal conclusions.

The Supreme Court explained that the complaint’s “bald allegations” that Ashcroft and Mueller were personally involved in unconstitutional conduct were “conclusory” and thus should have been disregarded by the district court. Id. at 681, 129 S.Ct. 1937. In particular, the Supreme Court held that statements that Ashcroft and Mueller “ ‘knew of, condoned, and willfully and maliciously agreed to subject [the plaintiff]’ to harsh conditions of confinement” based on his “ ‘religion, race, and/or national origin’ ” were not factual allegations that must be taken as true. Id. at 680, 129 S.Ct. 1937. And the Court ruled the same with respect to Iqbal’s allegations that “Ashcroft was the ‘principal architect’ ” of the policy and that “Mueller was ‘instrumental’ in adopting and executing it.” Id. at 680–81, 129 S.Ct. 1937.

These sorts of allegations, the Court explained, were “nothing more than a ‘formulaic recitation of the elements’ of a constitutional discrimination claim.” Id. at 681, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). In contrast, Iqbal did credit as factual those allegations in the complaint that made reference to specific events. See id. (crediting allegations including “that ‘the [FBI], under the direction of Defendant MUELLER, arrested and detained thousands of Arab Muslim men’ ”).

Cardigan Mountain School, 787 F.3d at 86, quoting Iqbal.

In Twombly, an antitrust case alleging price fixing, the Supreme Court held that allegations that the defendants had engaged in parallel conduct were factual and entitled to an assumption of truth, while also ruling that the portions of the complaint which directly alleged a conspiratorial agreement among the defendants were nothing more than legal conclusions.

In particular, the allegation that the defendants “have entered into a contract, combination or conspiracy … and have agreed not to compete with one another” was, the Supreme Court held, no more than a legal conclusion based on the allegations of parallel conduct. Id. at 564–65, 127 S.Ct. 1955. And thus, the Supreme Court held that this direct allegation of agreement did not need to be taken as true. See id.

Cardigan Mountain School, 787 F.3d at 86, quoting Twombly.

Based on its reading of Iqbal and Twombly, the Cardigan Mountain School court held that the school’s complaint set forth valid factual allegations concerning the existence of the insurance policy and was not based solely on legal conclusions.  It stressed that the complaint alleged specific events based on the personal knowledge of specific individuals, who plausibly could have known of those events.  According to the court,

The allegations in the school’s complaint described above are specific and factual. The complaint refers to individuals with relevant knowledge who are recalling facts plausibly known to them. Those allegations are thus like the allegations of actual events in Iqbal and of parallel conduct in Twombly that the Supreme Court took as true; they are specific and appear to be based on the knowledge of particular individuals. They are not bare recitations of the legal conclusion the suit seeks to prove. We thus conclude that the school’s allegations set forth above are entitled to the presumption of truth at the motion to dismiss stage.

Cardigan Mountain School, 787 F.3d at 87.  See also Rodriguez-Vives, 743 F.3d at 286 (“Here, in contrast, Rodríguez–Vives’s complaint described actions of which she had personal knowledge in sufficient detail to make them plausible.”).

Do the factual allegations suggest a plausible entitlement to relief?

After separating the true factual allegations from mere legal conclusions, the court must determine whether those allegations suggest a plausible claim to relief.  In conducting this “context specific” inquiry, “the reviewing court [must] draw on its judicial experience and common sense.” Garcia-Catalan v. United States, 734 F.3d 100, 103 (1st Cir. 2013), quoting Iqbal,129 S.Ct. 1940.  See also Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012).  “In performing [its] review, [the court] … can consider (a) implications from documents attached to or fairly incorporated into the complaint, (b) facts susceptible to judicial notice, and (c) concessions in plaintiff’s response to the motion to dismiss.”  Schatz, 669 F.3d at 55-56.  (Internal quotation marks and footnotes omitted).

“Plausible … means something more than merely possible.”  Schatz, 669 F.3d at 55.  See also Carrero-Ojeda v. Autoridad de Energia Electrica, 755 F.3d 711, 717 (1st Cir. 2014).  “And a complaint that ‘pleads facts that are “merely consistent with” a defendant’s liability … “stops short of the line between possibility and plausibility.” ’ ” Ocasio–Hernández, 640 F.3d at 12, quoting Iqbal, 129 S.Ct. at 1949.  “The factual allegations must ‘raise a right to relief above the speculative level … [based] on the assumption that all the allegations in the complaint are true….’ ” Galiastro, 467 Mass. at 165.

However, although the plausibility standard is more demanding than the former “prove no set of facts” approach, the bar remains fairly low.  All that is required is that the, “plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S. Ct. at 1949.  Even if such an inference is “plausible but inconclusive,” the claim survives.  Rodriguez-Vives, 743 F.3d at 286.  See also Decotiis v. Whittemore, 635 F.3d 22, 35 (1st Cir. 2011).

The plausibility standard “does not demand a high degree of factual specificity.”  Garcia-Catalan, 734 F.3d 100, 103 (1st Cir. 2013).  The “plaintiff need not show that its allegations … are more likely than not true.”  Evergreen Partnering Grp., Inc. v. Pactiv Corp., 720 F.3d 33, 46 (1st Cir. 2013).  See also Sepulveda-Villarini v. Dep’t of Educ. of Puerto Rico, 628 F.3d 25, 30 (1st Cir. 2010) (“Twombly cautioned against thinking of plausibility as a standard of likely success on the merits”).

The plaintiff also need not establish a prima facie case.  According to the court in Carrero-Ojeda,

[A] complaint need not plead facts sufficient to establish a prima facie case or “allege every fact necessary to win at trial to make out a plausible claim. The prima facie standard is an evidentiary standard, not a pleading standard, and there is no need to set forth a detailed evidentiary proffer in a complaint.

755 F.3d at 718.  (Internal quotation marks and citations omitted).  However, the “elements of a prima face case remain relevant to [the] plausibility assessment, as [those] elements are part of the background against which a plausibility determination should be made.” Id.  (Internal quotation marks omitted).  “[R]eference to the prima facie elements can help a court determine whether the “cumulative effect of the complaint’s factual allegations” is a plausible claim for relief. Id.

Nor may the court disregard a properly pled factual allegation merely because the court disbelieves it, finds it doubtful or unlikely to be supported by evidence at trial.  The court must assume factual allegations to be true “even if doubtful in fact” Galiastro, 467 Mass. at 165.  “[T]he court may not disregard properly pled factual allegations, even if it strikes a savvy judge that actual proof of those facts is improbable.  Indeed, a well-pleaded complaint may proceed even if … a recovery is very remote and unlikely. Ultimately, [t]he relevant inquiry focuses on the reasonableness of the inference of liability that the plaintiff is asking the court to draw from the facts alleged in the complaint.  Medina-Velazquez v. Hernandez-Gregorat, 767 F.3d 103, 109 (1st Cir. 2014).  (Internal quotation marks and citations omitted).  See also Twombly, 127 S.Ct. at 1965 (“Rule 12(b)(6) does not countenance … dismissals based on a judge’s disbelief of a complaint’s factual allegations.” (Internal quotation marks omitted)); Evergreen, 720 F.3d 33, 45 (1st Cir. 2013).

Moreover, the court may not conclude that a plaintiff’s factual allegations fail to establish a plausible claim simply because the court deems a different factual scenario more plausible.

The question at the pleading stage is not whether there is a plausible alternative to the plaintiff’s theory; the question is whether there are sufficient factual allegations to make the complaint’s claim plausible…. [T]here may … be more than one plausible interpretation of the defendant’s words, gestures, or conduct. Consequently, although an innocuous interpretation of the defendants’ conduct may be plausible, that does not mean that the plaintiff’s allegation that that conduct was culpable is not also plausible…. [O]n a Rule 12(b)(6) motion it is not the province of the court to dismiss the complaint on the basis of the court’s choice among plausible alternatives. Assuming that [plaintiff] can adduce sufficient evidence to support its factual allegations, the choice between or among plausible interpretations of the evidence will be a task for the factfinder.

Evergreen, 720 F.3d at 45-46, quoting  Anderson News, LLC v. American Media, Inc., 680 F.3d 162, 189-90 (2d Cir.2012).

Also relevant is whether, in the court’s view, any factual shortcomings of the complaint are reasonably likely to be remedied through discovery.  An important purpose of a motion to dismiss is to save the defendant from incurring the costs of discovery before being able to dispose of the matter.  The plausibility test “helps keep defendants from wasting time and money in discovery on largely groundless claims.” Schatz, 669 F.3d at 56.  (Internal quotation marks omitted).

“[T]he plausibility inquiry properly takes into account whether discovery can reasonably be expected to fill any holes in the pleader’s case.” García–Catalán v. United States, 734 F.3d 100, 104 (1st Cir.2013). To clear the plausibility hurdle, a complaint must contain “enough fact[s] to raise a reasonable expectation that discovery will reveal evidence” sufficient to flesh out a viable claim. Twombly, 550 U.S. at 556, 127 S.Ct. 1955.

Butler v. Balolia, 736 F.3d 609, 617-18 (1st Cir. 2013).  Accordingly, the plausibility test may be applied less rigorously in certain cases where, “a material part of the information needed is likely to be within the defendant’s control” and can therefore be obtained only via discovery.  Garcia-Catalan, 734 F.3d 100, 104 (1st Cir. 2013).

While the plausibility standard undoubtedly requires plaintiffs to offer greater factual support for their claims than was necessary under the prior standard, and while the concept of “plausibility” continues to evolve, it is clear that the bar remains relatively low.  Nevertheless, plaintiffs would be well advised to state their claims with as much factual detail as possible and to avoid reliance on conclusory legal allegations.

In reviewing a motion for summary judgment, the Superior Court must construe all evidence in the light most favorable to the non-moving party and draw all reasonable inferences in favor of the opposing party.  Moreover, any doubt about the existence of a genuine issue of material fact must be resolved against the movant.

The court does not pass upon the credibility of witnesses or the weight of the evidence or make its own findings of facts.  A court should not grant a party’s motion for summary judgment merely because the facts he offers appear more plausible than those tendered in the opposition, or because it appears that the adversary is unlikely to prevail at trial.  Instead, the court should only determine whether a genuine issue of material fact exists.  The moving party’s failure to establish the absence of a genuine issue of material fact must, without more from his opponent, defeat his motion.

Under Massachusetts Rule of Civil Procedure 56(c), summary judgment, “may be rendered on the issue of liability alone although there is a genuine issue as to the amount of damages.” In addition, summary judgment need not resolve all claims against all parties in the case.  Rule 56(d) provides,

If on motion under this rule judgment is not rendered upon the whole case or for all the relief asked and a trial is necessary, the court at the hearing of the motion, by examining the pleadings and the evidence before it and by interrogating counsel, shall if practicable ascertain what material facts exist without substantial controversy and what material facts are actually and in good faith controverted. It shall thereupon make an order specifying the facts that appear without substantial controversy, including the extent to which the amount of damages or other relief is not in controversy, and directing such further proceedings in the action as are just. Upon the trial of the action the facts so specified shall be deemed established, and the trial shall be conducted accordingly.

Note, however, that the Massachusetts Superior Court’s Business Litigation Session (“BLS”) has issued a procedural order limiting the use of partial dispositive motions, including partial summary judgment.

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A motion for summary judgment in the Massachusetts Superior Court is governed by Superior Court Rule 9A.  A party seeking summary judgment must file at least the following documents:

  • The motion for summary judgment;
  • A separate memorandum stating the reasons, including supporting authorities, why the motion should be granted. Rule 9A(a)(1);
  • A statement of material facts as to which the moving party contends there is no genuine issue to be tried (“Statement of Facts”). Rule 9A(b)(5)(ii – iv);
  • A joint appendix of exhibits (“Joint Appendix”) supporting the motion and any opposition. Rule 9A(b)(5)(vi);
  • An affidavit authenticating the exhibits in the Joint Appendix on which the moving party is relying;
  • Certificates of service should appear on the last page of each document. Rule 9B;
  • Any documents served on the moving party by the opposing party;
  • Rule 9A Notice of Filing Documents;
  • Rule 9A Listing of Documents;
  • Rule 9A Affidavit of Counsel (but only if the party opposing the motion fails to serve an opposition on the moving party).

A party opposing a motion for summary judgment may serve on the moving party:

  • A memorandum in opposition to the motion;
  • Responses to the moving party’s Statement of Facts;
  • A statement of additional undisputed material facts, added as a continuation of the Statement of Facts;
  • Any additional exhibits referred to in the opposing party’s papers, and an index thereto, for inclusion in the parties’ Joint Appendix.

Either party may file Motion to Strike and the opposing party may file a cross-motion with the opposition.

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Massachusetts Superior Court Rule 9A sets forth detailed requirements governing the format of summary judgment documents.

Separate memorandum.  A motion for summary judgment must be accompanied by a separate memorandum of law “stating the reasons, including supporting authorities, why the motion should be granted.”  Rule 9A(a)(1).

Format.  All summary judgment papers (motions, memoranda, oppositions, etc.), except for exhibits, must be filed on 8.5″ x 11″ paper, must be typed in at least 12-point type and must be double spaced.  Although the title of the case, footnotes and quotations may be single spaced, they still must be in 12-point type.

Titles.  The title of each document must appear on the first page thereof.

Length.  Memoranda of law supporting or opposing the motion are limited to 20 pages unless leave of court is obtained.  Reply memoranda are limited to 10 pages.  Note, however, that a reply memorandum, filed pursuant to Rule 9A(a)(3) without leave of court, is limited to five pages.  The length limits do not apply to either the parties’ consolidated Statement of Material Facts or the Joint Appendix of Exhibits.  Leave of court to exceed length limits may be obtained as provided in Rule 9A(a)(5), and any expanded page limit allowed by the court will apply to all parties.

Email addresses.  A party or attorney who has an email address must include the address on all papers filed.  Rule 9A(a)(6).

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How soon a motion for summary judgment may be filed depends on whether the plaintiff or defendant is the moving party.  The plaintiff may not move for summary judgment until after: (1) 20 days have elapsed after the commencement of the action or (2) service of a motion summary judgment by the defendant.  Mass. R. civ. P. 56(a).

The Defendant may file a motion for summary judgment at any time, as may any defendant-in-counterclaim or defendant-in-crossclaim.  Mass. R. Civ. P. 56(b).

Both plaintiffs and defendants must also file their motions not later than 10 days before the date on which the motion will be heard.  The Tracking Order applicable to a Superior Court case will also specify the date by which motions for summary judgment must be filed.

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Massachusetts Rule of Civil Procedure 56(c) lists the type of evidence on which a party seeking summary judgment may rely:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and responses to requests for admission under Rule 36, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

With regard to pleadings, the moving party may not rely on the allegations of his or her own pleadings.  However a party seeking summary judgment may rely on allegations contained in the opposing party’s pleadings G.L. c. 231, § 87 (“In any civil action pleadings shall not be evidence on the trial, but the allegations therein shall bind the party making them.”).  A motion for summary judgment may also be based on facts set forth in the moving party’s pleadings and conceded in the opposing party’s pleadings.  In the Superior Court, the court will also take as admitted facts which are set forth in the moving party’s statement of material facts (“Statement of Facts”) and which the opposing party has not adequately denied.

The court may also consider matters subject to judicial notice, concessions made by counsel on the record, testimony received in court (whether in the case at issue or in a former trial), and, if appropriate, facts gleaned from the documents relied on by the parties.  This list is not exhaustive.

Mass. R. Civ. P. 56(e) sets forth the requirements for affidavits:

Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.

Bare assertions of belief are inadequate for summary judgment purposes. So are bare assertions, conclusions, and assumptions of unobserved facts.  Expressions of belief do not rise to the personal knowledge required by Rule 56(e).  Accordingly, affidavits or portions thereof made on information and belief, as opposed to personal knowledge, are to be disregarded in considering a motion for summary judgment.

Affidavit information must embody admissible evidence.  Therefore, affidavits are not competent evidence to prove the truth of the hearsay statements they contain unless they come within some established exception to the hearsay rule or come within some statutory provision.  Any documents attached to and incorporated in an affidavit must also be admissible.

If an affidavit refers to another document or some portion thereof, sworn or certified copies of the document must be submitted with the affidavit.  Rule 56(e).

A motion to strike is the proper procedural device for raising the insufficiency in an affidavit submitted in opposition to a motion for summary judgment. Where no such motion is filed, the court retains discretion to ignore any deficiency and consider the affidavit.

It should be noted that a party cannot defeat a motion for summary judgment by submitting an affidavit which contradicts that party’s own earlier sworn statements (e.g. at a deposition).

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A memorandum in support of, or in opposition to, a motion for summary judgment should be drafted to convey to a busy judge, in the most efficient and convincing way possible, why the motion should be granted or denied.

Know your audience

A motion for summary judgment is directed to a special audience (the judge) and must present both the facts and the law in a manner calculated to satisfy the needs and expectations of that audience.

Keep in mind that the judge may know relatively little about the facts of your case until he or she reads your memorandum and related summary judgment papers.  This is especially true where the judge has not had occasion to make other substantive rulings in the case (e.g. on a motion to dismiss) before the motion for summary judgment is filed.  In any case, the judge certainly knows less about the case than you do.

Similarly, because most judges deal with cases of many kinds, they are often generalists, rather than experts in the applicable law.   Your summary judgment memorandum must educate the judge about both the facts and the law.

Judges are also overworked.  As a result, the judge may have little patience with a memorandum that makes his or her job more difficult or wastes precious time.  Your memorandum, and each argument within it, should be as clear and concise as possible and should “get to the point” quickly, rather than forcing the judge to wade through irrelevant facts or boilerplate law.  You must do everything possible to make your memorandum easy to read and your arguments easily understood.  This places a premium on careful organization and the use of “roadmap” paragraphs.

Throughout your memorandum, focus on the primary question before the court on summary judgment: whether there exists any genuine issue of material fact.  The judge will be most interested in whether such a factual issue exists. Therefore, whether seeking or opposing summary judgment, your memorandum should stress the facts.  Keep in mind the court’s limited function when deciding a motion for summary judgment.  The court does not weigh the evidence or decide disputed issues.  Accordingly, there is little point in the moving party arguing, as one might at trial, that one version of the facts is more plausible than another.  The motion can be granted only if there is no dispute as to any material fact.

A judge is more likely to grant summary judgment in a case with common facts and established law, than in a case with complex or unusual facts and unfamiliar or undecided law.  Thus, if you are moving for summary judgment, emphasize the simplicity and everyday nature of the case.  Conversely, the opposing party should cast the case as a complex situation requiring the application of new or uncertain legal principals.

Before drafting the memorandum.

In order to draft an effective summary judgment memorandum, you must become intimately familiar with the case, mastering both the facts and the applicable law.  At least the following steps should be completed before drafting the memorandum.

Structure discovery with summary judgment in mind.  Your summary judgment memorandum can only be as effective as the evidence you have to work with.  Accordingly, have the need to seek or oppose a motion for summary judgment firmly in mind when taking depositions, drafting interrogatories or requests for admissions, conducting other discovery and obtaining expert opinions.

Study the record.  Review the entire record in detail, including all of the relevant documentary evidence, deposition transcripts, answers to interrogatories, affidavits and other summary judgment material.

Obviously, parties seeking or opposing summary judgment cannot intelligently decide which arguments to make in their memoranda, unless both have become familiar with the record.

While reviewing the record, summarize the relevant facts, noting any legal issues raised by those facts.  Omit from your summary any facts which are clearly irrelevant.  Your summary of the record can serve as a draft of the Rule 9A(b)(5) statement of material facts (“Statement of Facts”).

Be sure to include in your summary detailed citations to record, as every paragraph of the Statement of Facts must be supported by citations to the record.

Research.  Research all of the legal issues.  A thorough understanding of the law will help determine which facts in the record are material.

Outline your argument.  Based on your research, create an outline of the headings and sub-headings for your argument on each legal issue.  This outline will later help you organize the argument section of your memorandum.

Choosing your issues

Serious thought should be given to which arguments should be included in your memorandum seeking or opposing summary judgment.  You should limit your arguments to those that offer your client a realistic chance of success.

Be selective.  Consider the strength of your argument on each issue, both factually and legally.  Including too many arguments can be detrimental.  You should not waste the limited pages of a summary judgment memorandum making arguments which are predestined to fail.  Further, pursuing weak arguments undermines your credibility and may reduce the effectiveness of an otherwise strong memorandum.

The facts

How you present the facts in your summary judgment memorandum can be at least as important as your legal analysis.  A skillfully drafted factual section will both establish your credibility in the eyes of the court and tell a compelling story, leading the judge to view the case from the perspective most favorable to your client and be more receptive to your legal arguments.

Citations to the record.  Every factual statement in your facts section, and throughout your summary judgment memorandum, should be followed by a citation to the paragraph of the Statement of Facts which, in turn, cites to the portion of the record which supports the factual proposition.  Thus, if the fact is that plaintiff was an employee of the defendant, the relevant paragraph of the Statement of Facts would cite directly to the record (e.g. to an employment contract or affidavit) while the citation in the memorandum would simply cite to “SOF ¶__.”

State the general nature of the case.  Start with the general nature of the case, just one or two paragraphs, offering the judge a very short, general description of the dispute between the parties and your view of why summary judgment is/is not appropriate.  This background provides the necessary context for the more detailed facts which follow.  There is no need to give any detailed procedural background, unless such a background is relevant to one or more of your arguments.

Base the fact section of your memorandum on the Statement of Facts.  Drafting the Statement of Facts and drafting the factual section of the memorandum are highly interrelated.  You might have a first draft of a Statement of Facts based on the summary of the record you prepared.  The same facts, with the paragraph numbers and some of the paragraph breaks removed, provide a good starting point for the factual section of the memorandum.  However, as you draft the memorandum’s legal arguments, it will likely become apparent that certain additional facts are necessary to support those arguments.  These should then be added not only to the memorandum’s fact section, but also to the Statement of Facts.  Conversely, it may become clear that certain facts are not relevant to any of your arguments.  These might be removed from both the memorandum and the Statement of Facts, although some facts which are not technically relevant will still contribute to the “story” you are trying to tell.

Your fact section should achieve two goals.  In the facts section of your memorandum, you should present, in a neutral, non-argumentative tone, all of the facts relevant to your arguments.  Your facts section has two primary goals: (1) to develop and maintain your credibility; and (2) to present the facts in such a way that the judge finishes reading them with the sense, if you represent the moving party, that there are no disputed material facts and that the undisputed facts entitle your client to judgment as a matter of law.  If you represent the opposing party, your memorandum should convince the judge either that the material facts are genuinely disputed or that, even if the facts are clear, they do not warrant a judgment for the moving party.  In the latter instance, the court may, in fact, enter summary judgment for the opposing party.

Maintaining credibility.  If the judge concludes that your presentation of the facts cannot be trusted, he or she will also be much less likely to trust the law you present and the arguments you make.  To build credibility in your facts section:

  • Maintain a neutral tone and avoid presenting the facts in an overtly argumentative manner;
  • Include only facts that are in the record and cite meticulously to the record. Every factual statement in your memorandum should be followed by a citation to the Statement of Facts and the cited paragraph of the Statement of Facts must cite to a portion of the record which truly supports the facts asserted. A judge who is convinced that your citations are reliable is more likely to use your memorandum as a reference document and, accordingly, to view the facts in a manner favorable to your client;
  • If you represent the party seeking summary judgment, include only facts that are undisputed. Relying on facts as to which there is a genuine dispute can harm your case by allowing the opposing party to point out a genuine issue of material fact, thereby defeating summary judgment.
  • Be honest and complete. Include all relevant facts, whether they help your case or damage it.  In addition to ethical concerns, omitting negative facts is counterproductive as it offers the opposing party an opportunity to attack your honesty.

Structure you factual presentation so as to persuade judge.  The second purpose of your fact section is to persuade the judge to rule in your client’s favor.  Use this section to tell the judge a story, explaining the case from your client’s perspective and personalizing your client where possible.  Usually, a chronological structure will work best for this narrative.

While maintaining a neutral tone, you should craft the facts section of your summary judgment memorandum to stress facts favorable to your case and diminish facts which harm it.   Ways in which this can be accomplished include:

  • Placing positive facts near the beginning or end of paragraphs and sentences within paragraphs, while burying negative facts in the middle of paragraphs and sentences;
  • Linking any negative facts to the circumstances which explain them;
  • Placing paragraphs containing negative facts between paragraphs containing positive facts;
  • Using active voice for positive facts (“Jones applied the brakes”) and passive voice for negative facts (“the brakes were applied by Jones”);
  • Placing negative facts in subordinate clauses of sentences.

I sometimes use the following additional techniques:

  • Use specific dates only where they are relevant (e.g. to a statute of limitations issue). Unnecessary dates distract the reader;
  • Use subheadings within your facts section. They help the reader navigate complex facts.  In addition, the judge may review the headings in your memorandum before (or occasionally instead of) reading it in detail.  Detailed subheadings serve as a summary of the facts and argument;
  • Do not refer to the parties as plaintiff and defendant. Instead, use names that help the reader remember who is who (e.g. “Employee” and “the Company”);
  • Use short quotations from the record, but avoid long quotes that will lose the reader’s attention;
  • Revisit your facts section after you finish drafting the argument section of your summary judgment memorandum. Often, as the Argument section becomes more developed, it may come to rely on facts which you did not initially include.

Devote the time necessary to drafting an effective facts section.  As noted above, a judge considering a motion for summary judgment will be primarily interested in whether any material fact is disputed.  By presenting the judge with a compelling story, and offering facts in the form most favorable to your client, you increase the likelihood that the judge will be receptive to your legal arguments.

Argument

It is in the argument section that the party moving for summary judgment explains the law and shows how that law, applied to the undisputed material facts, entitles that party to judgment.  The opposing party may agree that the facts asserted by the moving party are undisputed but argue that the applicable law is different from that relied upon by the moving party and does not entitle the moving party to judgment.  The opposing party may file a cross-motion for summary judgment based on the same facts asserted by the moving party but a different interpretation of the applicable law.  Or the opposing party may agree as to the applicable law, but argue that the facts relied upon by the moving party are disputed.  In addition, the opposing party, having stated additional undisputed material facts in the Statement of Facts, may argue that the applicable law warrants entry of summary judgment in its own favor based on those additional facts.

Be methodical and organized.  In determining how to draft the argument section, keep in mind that your audience is a judge who does not know the facts of your case as well as you do.  Further, because the judge may be a generalist, you should not assume that he or she has expertise in the legal subject matter of your case.  Do not skip steps in your legal analysis, assuming that the judge will follow along.  If your argument has multiple conceptual steps, clearly lay out every one leading to your ultimate conclusion.

Because you need to methodically lay out your legal analysis, your memorandum’s argument section should be highly structured.  Each major argument within the argument section should have its own roadmap paragraph.

Use headings and sub-headings.  You should also use headings and sub-headings to help the reader keep track of complex arguments.  Each major heading in your argument section should state one reason why the court should rule in your client’s favor.  A major heading might read,

Jones is liable to Brown for negligently entrusting her vehicle to Smith because: (1) Jones gave Smith specific or general permission to drive the vehicle; (2) Smith was incompetent or unfit to drive the vehicle; (3) that unfitness was the proximate cause of Brown’s injuries; and (4) Jones had actual knowledge of Smith’s incompetence or unfitness to drive the vehicle.

Sub-headings should track the subsidiary propositions which, together, lead to the conclusions stated in each major heading in your argument section.  Under the negligent entrustment heading, sub-headings might include: “Jones gave Smith specific or general permission to drive the vehicle,” “Smith was incompetent or unfit to drive the vehicle,” “Smith’s unfitness was the proximate cause of Brown’s injuries,” and “Jones had actual knowledge of Smith’s incompetence or unfitness to drive the vehicle.”

Because a judge may first read only the headings and sub-headings, they should be written to provide a stand-alone explanation of your argument.  It follows that instead of simply stating legal conclusions, your headings and sub-headings should contain sufficient facts to support the conclusion.  Compare, for example, “Jones gave Smith specific or general permission to drive the vehicle” with “By handing her car keys to Smith, Jones gave Smith specific or general permission to drive the vehicle.”

Order your arguments for maximum effect.  Keeping in mind your overall objective (to convince the judge to rule for your client) also helps determine the order in which to present your arguments.  If there is a natural, logical order in which the arguments should appear, use it.  For example, a threshold argument, such as lack of standing, that will enable the judge to rule in your client’s favor without considering the other potential issues, should be addressed first.  I find that there is often a logical order in which even non-threshold issues should appear.

In the absence of a logical order, present your best argument first. You must do this because the judge will probably assume that your strongest argument appears first (absent some logical order as discussed above).  There are two ways to deal with weaker arguments.   You might place your arguments in order of strength, leaving the weakest for last.  This approach takes into account that judges are very busy and want to see your best arguments as soon as possible.  This approach may also be consistent with the judge’s assumption that your arguments appear in order of strength.  On the other hand, just as you can minimize weak facts by burying them in the middle of paragraphs, between stronger facts, you might profit from burying weaker arguments in the middle of your memorandum.

If you represent the party opposing summary judgment, you must decide whether to follow the order of argument in the moving party’s memorandum.  Doing so makes it easier for the judge to compare your arguments with the moving party’s arguments on the same issue.  However, following the order of argument in the moving party’s memorandum may result in your strongest argument not appearing first.  I recommend using the most effective order for the arguments in your memorandum, even if it differs from the order used by the moving party.

The order of arguments is also an issue when there are cross-motions for summary judgment.  Although the initial opposing party must file a separate “Cross-Motion for Summary Judgment,” the arguments opposing the moving party’s motion and in support of the cross-motion should appear in the same memorandum.  It makes sense to divide the argument into major sections, the first containing arguments opposing the motion and the second setting forth arguments in favor of the cross-motion.  Within each section, however, you can order the arguments based on the considerations outlined above.

Keep the focus on your client’s arguments.  Within each division of the argument section and within individual paragraphs and sentences, maintain a focus on your client’s position and view of the case.  Refer to your opponent’s position in subordinate clauses or buried in the middle of sentences and paragraphs.

Keep your arguments short.  Keep arguments as short as possible.  Each legal argument should focus on the specific issue in controversy.  Avoid wasting precious space, and losing the reader’s attention, by including pages of boilerplate law on undisputed background issues.

Be honest and do not ignore opposing arguments.  Be honest and accurate about the law.  Don’t ignore contrary authority (aside from the ethical implications of doing so, the court or your opponent will find it, anyway).  Be sure that the cases you rely on fully support the legal propositions for which you cite them.  Your credibility and the persuasiveness of your memorandum will be seriously damaged if the judge concludes that your version of the law cannot be trusted.

Similarly, do not ignore the opposing party’s arguments, even if you represent the moving party and the opposing party has yet to file a memorandum.  If the opposing party made an argument earlier in the same case (e.g. at the preliminary injunction stage), the same argument will likely be made again in opposition to summary judgment.  Even if the opposing party has not discovered the best argument against your position, the court probably will.  It is best to deal with the opposing party’s likely arguments as best you can in your primary brief, especially since Rule 9A(a)(3) allows reply briefs without leave of court only, “where the opposition raises matters that were not and could not reasonably have been addressed in the moving party’s initial memorandum.”

Choose your authority carefully.  As part of keeping your arguments simple and short, carefully consider your use of citations.

  • Stress binding authority. Absent that, look for the most authoritative, persuasive authority (e.g. cite to a persuasive federal case from the First Circuit instead of one from a different circuit);
  • Choose authority in which the court was applying the same standard of review or was deciding the same or similar procedural motion (e.g., prefer cases deciding motions for summary judgment to cases involving motions to dismiss);
  • Unless it is absolutely clear, use parentheticals to show the reader why you are citing to a particular case;
  • Limit string cites. The judge does not want to read ten cases when one or two would prove your point.  String cites are proper, however, when the number of courts on each side of an issue is actually relevant, as in a split of authority or when asking the court to rule on an issue of first impression.
  • Citing trial court opinions. Trial court opinions have become much more accessible in recent years via Westlaw, Lexis and similar resources.  However such opinions are, at most, persuasive.  Nevertheless, I believe that it is useful to cite trial court opinions when no other authority is available, when they present your position particularly forcefully, or when they involve facts very similar to your case.

Maintain the reader’s interest.

Your brief will be more effective if it holds the judge’s interest.  Simple steps you can take to hold the reader’s interest include:

  • Avoiding long quotations. Short quotations, on the other hand, enhance the power of your argument.  Introduce any quotation by explaining why you are including it and what legal proposition it supports.  Doing so ensures that the reader understands your argument even if he or she skips over the quoted material;
  • Using short paragraphs;
  • Varying sentence length. A paragraph will also flow better if the sentences differ in length.  In addition, although short sentences are powerful, they lose their effectiveness if overused;
  • Repeating words and sentence structure to increase effect. We’ve all heard this technique used in speeches.  It also works in briefs.

In addition to the foregoing, you should also consider the following when drafting your argument section:

  • Because any judge worries about the wider implications of a ruling, and no judge likes being reversed on appeal, try to show that the result you seek can be accomplished by applying a rule with limits. If you are opposing the application of such a rule, argue that it will lead to unforeseen, highly detrimental consequences;
  • Judges want to reach decisions which are just, not merely technically correct. Your argument should not only identify the rule of law you want the court to apply, but also explain why the purposes and policies underlying the law support its application to the facts of the present case;
  • Avoid emotional presentation and attacks on the opposing party or counsel. For example, while asserting that your opponent’s reliance on a case is “misplaced” is acceptable, you should avoid stating that your opponent is “misrepresenting” the law;
  • Do not use jargon. Use simple, clear language.  A busy judge will not appreciate your making an argument any more complicated than necessary;
  • Avoid excessive use of bold print, underlining or italics. Used sparingly, emphasis stresses your most important points.  However it quickly loses its effect if overused;
  • Avoid using footnotes for substantive content. As a general rule, if an argument is important enough to appear in your brief, put it in the text. You might consider placing all of your citations in footnotes, however.  Doing so will improve the readability of your brief.

The argument section of your summary judgment memorandum is your best opportunity to persuade the judge to rule in your client’s favor.  A well-crafted argument will frame the facts and legal issues of a case in the manner most favorable to your client, will educate the justices about the relevant facts and law, and will lead them, inexorably, step by step, to the desired result.  The foregoing suggestions should help you take advantage of this golden opportunity.

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Superior Court Rule 9A(b)(5) requires that any motion for summary judgment be accompanied by a “statement of the material facts as to which the moving party contends there is no genuine issue to be tried” (“Statement of Facts”).  Failure to provide a Statement of Facts constitutes grounds for denial of the motion.

The Statement of Facts consists of consecutively numbered paragraphs, each of which asserts such a material fact.  Rule 9A(b)(5)(i). Each such statement must be supported by citations to the record (“pleadings, depositions, answers to interrogatories, responses to requests for admissions, affidavits or other evidentiary documents”).  Id.  There is no page limit for the Statement of Facts.  Rule 9A(b)(5)(iii).

The moving party must serve the Statement of Facts on the opposing party with the motion papers.  In addition, the moving party must, contemporaneously with service, email a copy of the Statement of Facts to the opposing party, in Rich Text Format (RTF), unless the parties otherwise agree on another word processing format.  The Rule excuses email service in limited circumstances.  Rule 9A(b)(5)(i).

The opposing party is required to respond to each of the facts stated in the moving party’s Statement of Facts.  Rule 9A(b)(5)(ii). The responses must be inserted into the Statement of Facts so that each of the moving party’s statements is followed directly by the opposing party’s response.  Id.  Each such response must either admit the fact stated or dispute it.  For each fact disputed, the opposing party must provide citations to the record.  Id.  It should be noted that any fact which the opposing party does not dispute will be deemed admitted for purposes of the motion for summary judgment.  Id.

In addition to responding to the moving party’s statements of fact, the opposing party may “assert an additional statement of material facts with respect to the claims on which the moving party seeks summary judgment.”  Rule 9A(b)(5)(iv). The opposing party’s additional statement of facts should be added to the Statement of Facts, following the moving party’s facts and the opposing party’s responses thereto, with an appropriate heading such as “Opposing Party’s Additional Statement of Undisputed Material Facts.” Id.  The additional facts should appear in consecutively numbered paragraphs, with numbers starting where the moving party’s statement ended.  Id.  Like the moving party’s facts, the opposing party’s additional facts must be supported by citations to the record.  Id.  Where the opposing party states additional facts, the opposing party must, in addition to serving the Statement of Facts on the moving party, contemporaneously email it to the opposing party, in Rich Text Format (RTF), unless the parties otherwise agree on another word processing format. Id.

The moving party then has an opportunity to respond to the additional facts stated by the opposing party.   Rule 9A(b)(5)(iv).  The moving party’s responses must be inserted into the Statement of Facts so that each of the opposing party’s statements of additional fact is followed directly by the moving party’s response.  Id.  Each such response must either admit the fact stated or dispute it.  For each fact disputed, the moving party must provide citations to the record.  Id.  Any fact which the moving party does not controvert will be deemed admitted for purposes of the motion for summary judgment.  Id.

The foregoing rules apply equally to cross-motions for summary judgment.  Rule 9A(b)(5)(v).  When there are cross-motions, the party who serves a motion for summary judgment first is regarded as the moving party, while the other party is regarded as the opposing party.  That opposing party should respond to the moving party’s facts, as described above, and then, as a continuation of the Statement of Facts, state additional facts both in opposition to the moving party’s motion and in support of the opposing party’s cross-motion.

Ultimately, the moving party files the consolidated Statements of Facts with the court as part of the Rule 9A package.  Any earlier statement of facts made by the moving party or response made by the opposing party, which has been incorporated into the final, consolidated Statement of Facts, should not be filed.  Rule 9A(b)(5)(ii).

For suggestions concerning the drafting of an effective Statement of Facts, click here.

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Superior Court Rule 9A(b)(5) requires that a motion for summary judgment be accompanied by a “statement of the material facts as to which the moving party contends there is no genuine issue to be tried” (“Statement of Facts”).  The purpose of the Statement of Facts is to assist the judge in determining whether there exist any genuinely disputed material facts.

With that purpose in mind, consider the following suggestions when drafting your next Statement of Facts:

  • State only facts supported by the record and for each fact provide a citation to the record;
  • Ensure that the portions of the record cited are admissible (e.g. do not contain inadmissible hearsay);
  • Do not include argument in the Statement of Facts. In other words, do not state conclusions based on the facts;
  • Because the opposing party is required to respond to each paragraph of the Statement of Facts, try to state only one fact per paragraph;
  • Make the stated facts simple, such that they force the opposing party to admit or deny the fact. For example, when attempting to get the other party to admit that a contract contains a certain provision, simply quote the provision.  Do not attempt to summarize, paraphrase or otherwise characterize the provision, as doing so will give the opposing party an opportunity to dispute the characterization;
  • The response to a factual statement in a Statement of Facts should be “undisputed” or “disputed.” If the fact is disputed, the responding party must provide a citation to the record or state that the portion of the record cited by the moving party does not support the stated fact.
  • Sometimes, because a paragraph of the Statement of Facts contains multiple facts or has multiple possible implications, the responding party may need to provide a more detailed response. For example, if the statement is that “on Sunday the defendant drove the plaintiff and another employee to the job site,” the defendant might respond, “UNDISPUTED that defendant drove plaintiff and one of defendant’s employees to the job site.  DISPUTED to the extent the statement asserts that plaintiff was an employee of defendant.”

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A motion for summary judgment, opposition, or cross-motion must be accompanied by a Joint Appendix containing, as exhibits, all documents referred to in the motion, opposition, cross-motion, or memoranda supporting or opposing summary judgment. Rule 9A(b)(5)(vi). The moving party is responsible for assembling the Joint Appendix, with cooperation from the opposing party. Id.

The Joint Appendix must begin with an index of exhibits. Id. The index is followed by consecutively numbered (not lettered) exhibits, which must be separated by a numbered tab divider unless the pages of the Appendix are consecutively numbered. Id.

The moving party, when serving the motion and related papers on the opposing party, must also serve copies of the exhibits on which the moving party relies. Id. If the opposing party relies on the same exhibits, the opposing party must refer to those exhibits using the exhibit numbers assigned by the moving party. Id. Any additional documents relied upon by the opposing party must be added to the Appendix, using exhibit numbers beginning with the next consecutive number following the last exhibit number used by the moving party. Id. The opposing party must serve any additional exhibits, and an index thereto, on the moving party when the opposing party serves opposition or cross–motion papers. Id.

The moving party must certify that the Joint Appendix includes any exhibits served by the opposing party. Id. That certification should be included at the end of the Appendix index.

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An amendment to Massachusetts Superior Court Rule 9A(a)(3), effective January 1, 2016, allows litigants to file certain reply memoranda without first obtaining the court’s permission, and changes the procedure for obtaining leave of court where permission is still required.

Under the former Rule 9A, a party seeking to file a reply memorandum was required to seek leave of court to do so, “within 5 days of service of a memorandum in opposition” by sending, “a letter to the Session Judge setting forth the grounds to support the request” and serving that letter on all other parties.  Any such reply had to, “be limited to addressing matters raised in the opposition that were not and could not reasonably have been addressed in the moving party’s initial memorandum.”

The current Rule 9A(a)(3) no longer requires a party to obtain the court’s permission before filing a reply memorandum if: (1) “the opposition raises matters that were not and could not reasonably have been addressed in the moving party’s initial memorandum”; (2) the reply is “limited to addressing such matters”; and (3) the reply does not, “exceed five typed double-spaced pages.”  “No other reply or surreply shall be allowed without leave of court, which is strongly disfavored.”

The 2016 amendment also changed the procedure for requesting such leave.  First, a request for leave is no longer in the form of a letter but must, instead, be captioned as a pleading.  Second, the length of the request is limited to, “not more than one double-spaced page.”  Finally, the request must be addressed to “Session Clerk, ATTN: Session Judge,” rather than directly to the judge.

Reply memoranda should not be filed a matter of course.  Nor should a reply merely repeat arguments made in the moving party’s primary memorandum.  An effective reply is brief and targeted, focusing only on answering an unexpected argument or, perhaps, on correcting important misstatements of law or fact in the opposition.

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Summary judgment is appropriate when the summary judgment record shows that “there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Mass. R. Civ. P. 56(c).  A fact is “material” if it would affect the outcome of the suit. An issue is “genuine” where a reasonable finder of fact could return a verdict for the non-moving party.

The moving party bears the initial burden of demonstrating the absence of a triable issue and that the summary judgment record entitles him to judgment as a matter of law. The moving party may satisfy its burden by submitting affirmative evidence that negates an essential element of the opposing party’s case or by demonstrating that the non-moving party has no reasonable expectation of proving an essential element of his case at trial.

Once the moving party establishes the absence of a triable issue, the party opposing the motion must respond and allege specific facts establishing the existence of a genuine issue of material fact.  The opposing party cannot rest on his or her pleadings and mere assertions of disputed facts to defeat the motion.  Moreover, the non-moving party cannot create a material issue of fact and defeat summary judgment simply by submitting affidavits that contradict its previously sworn statements.

If the moving party has carried its burden, and the opposing party has not responded with specific facts to establish a genuine, triable issue, the court grants the motion for summary judgment.

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Massachusetts Rule of Civil Procedure 56(f) provides,

When Affidavits Are Unavailable. Should it appear from the affidavits of a party opposing the motion that he cannot for reasons stated present by affidavit facts essential to justify his opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

Thus, a party opposing a motion for summary judgment may ask the court to defer ruling on the motion until further discovery is conducted.   Particularly where a motion for summary judgment is filed long before the scheduled close of discovery, a court may be inclined to allow further discovery by a party opposing the motion.

The court faced with a Rule 56(f) motion should consider authoritativeness, timeliness, good cause, utility, and materiality.

Although a Rule 56(f) motion is committed to the court’s discretion, and the court may grant such a motion even when all five criteria are not established, when all five requirements are satisfied, a strong presumption arises in favor of relief.

A Rule 56(f) motion must be filed in a timely manner (as soon as possible after service of a motion for summary judgment is advisable), and must be supported by an “authoritative” affidavit based on the affiant’s personal knowledge.

With respect to good cause, the party seeking additional discovery must show that it has diligently pursued discovery but has not been able to obtain the discovery it now seeks.  Possible justifications might be that the party seeking relief under Rule 56(f) propounded discovery but the motion for summary judgment was filed before answers were received, or that the party seeking summary judgment has refused to produce requested discovery.

The utility factor is satisfied by showing that there is a plausible basis for believing that the discoverable facts specified in the Rule 56(f) motion probably exist.

Materiality is established where the discovery sought by the Rule 56(f) motion, if obtained, will influence the outcome of the pending summary judgment motion.  The threshold of materiality is necessarily low.  The facts that the party invoking Rule 56(f) seeks to discover must be foreseeably capable of breathing life into his claim or defense.

Rule 56(f) should be liberally applied where the interests of justice would be served, and relief under Rule 56(f) is strongly supported where the party moving for summary judgment has sole possession of the facts needed to oppose the motion.  Moreover, the Rule 56(f) motion need not be based on evidence admissible at trial, so long as it rises sufficiently above mere speculation.

However, a party may not use Rule 56(f) to “fish” for evidence in hopes of finding something helpful to that party’s in the course of the discovery procedure.

Notably, a court deciding a Rule 56(f) motion must separately analyze each claim as to which additional discovery is sought.  The legal elements of each claim or defense define the facts which a party must prove.  They therefore circumscribe the evidence which, if discovered, would be material to those claims and defenses and would potentially influence the outcome of the pending summary judgment motion.  A court may grant a Rule 56(f) motion as to discovery on some claims but deny it as to other claims.

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Under Massachusetts Rule of Civil Procedure 56(g), the court may impose sanctions on a party who files an affidavit in support of or in opposition to a motion for summary judgment, where the court concludes that “any of the affidavits presented pursuant to this rule are presented in bad faith or solely for the purpose of delay.” In such a case, the court “shall forthwith order the party employing them to pay to the other party the amount of the reasonable expenses which the filing of the affidavits caused him to incur, including reasonable attorney’s fees, and any offending party or attorney may be adjudged guilty of contempt.”

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The Business Litigation Session (“BLS”) of the Massachusetts Superior Court has adopted its own procedural order governing partial dispositive motion, including motions for partial summary judgment. That order requires parties to confer with each other and with the judge before they file any motions that will be only partially dispositive of the case. According to the BLS, some such motions “consume substantial amounts of the court’s and the parties’ time and resources but often do not substantially reduce the length of the litigation or trial.”

Under the procedural order, a party moving for partial summary judgment is required to confer with the opposing party and with the judge before filing any motions that will be only partially dispositive of the case. The moving party must file a Certificate of Compliance with the motion package that details the steps taken by the parties to comply with this procedural order.

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