Rosen Construction Ventures, Inc. v. Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C.

United States Court of Appeals
For the First Circuit

No. 03-1758

ROSEN CONSTRUCTION VENTURES, INC., a Florida corporation, and
ACROPOLIS VENTURES, INC., a Florida corporation,

Plaintiff, Appellants,

v.

MINTZ, LEVIN, COHN, FERRIS, GLOVSKY and POPEO, P.C.,
a Massachusetts corporation,
STEPHEN M. LEONARD, individually, and
STEPHEN T. LANGER, individually,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Reginald C. Lindsay, U.S. District Judge]

Before
Selya, Circuit Judge,
Coffin, Senior Circuit Judge, and
Lipez, Circuit Judge.

Alan J. Kluger, with whom Steve I. Silverman and Kluger,
Peretz, Kaplan & Berlin, P.L., were on brief, for appellants.
Robert S. Frank, Jr., with whom John R. Baraniak, Jr.,
Kathleen A. Burdette, and Choate, Hall and Stewart, were on brief,
for appellees.

April 16, 2004
 LIPEZ, Circuit Judge. Plaintiffs Rosen Construction

Ventures, Inc. and Acropolis Ventures, Inc., owned by Clifford

Rosen, (collectively, "Rosen") filed a legal malpractice action

against Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., and

two members of that firm, Stephen Leonard and Stephen Langer

(collectively, "Mintz Levin"). Rosen alleges that Mintz Levin was

negligent in drafting a contract between Rosen and O'Donnell Sand

& Gravel, owned by Mary O'Donnell (collectively, "O'Donnell" or

"ODSG"), and in failing to properly advise Rosen about certain

easements it required on the O'Donnell property.

Mintz Levin moved for summary judgment in August 2000,

arguing that Rosen's claims were barred by the three-year statute

of limitations for legal malpractice actions. Mass. G. L. ch. 260,

§ 4 (2003). In March 2001, the district court denied that motion,

holding that there was a disputed issue of fact about the duration

of Mintz Levin's representation of Rosen. One year later, while

discovery was ongoing, the Massachusetts Supreme Judicial Court

decided Lyons v. Nutt, 436 Mass. 244 (2002), a case that clarified

the continuing representation doctrine applicable to legal

malpractice actions.

In February 2002, Mintz Levin again moved for summary

judgment, citing the Lyons decision and evidence procured during

discovery. In response, the district court held that "[t]he issue

is not . . . when Rosen thought that it might have a malpractice

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claim against Mintz Levin, but rather when it knew it was harmed as

a result of Mintz Levin's conduct." The district court then

granted Mintz Levin's second summary judgment motion, holding that

Rosen actually knew that its harm was the result of Mintz Levin's

conduct more than three years before it filed its malpractice

action against Mintz Levin.

In evaluating Rosen's appeal from this summary judgment

ruling, we must determine whether there is a genuine issue of fact

regarding when Rosen's malpractice claim accrued -- that is, when

Rosen knew, or should have known, that Mintz Levin's alleged

malpractice was the source of Rosen's injuries. After reviewing

the summary judgment record, we affirm in part and vacate in part

the district court's decision.

I.

We set forth the background facts here, reserving some of

the details until the discussion of the issues on appeal. In

August of 1994, Rosen Associates, a non-party to this case and a

separate entity controlled by Clifford Rosen, the owner of Rosen

Construction Ventures, Inc., agreed to purchase a parcel of land in

Everett, Massachusetts from Monsanto Chemical Company and another

related entity. Rosen intended to build a shopping center on this

site, referenced by the parties as the "Development Site." The

Development Site was contaminated, and the remediation plan called

for a six-foot deep layer of clean fill to be spread over the

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property. Because Rosen contracted for this remediation

responsibility, it needed to obtain and store clean fill until it

could be used on the Development Site.

O'Donnell, who had access to significant quantities of

clean fill, owned land close to the Development Site. It had

purchased this property from Boston Edison Co. (the "Edison Site")

for $100,000 in cash and a $1.9 million note (the "Edison Note").

In early 1995, Rosen and O'Donnell negotiated an agreement relating

to both the fill and certain aspects of the Edison Site. Rosen

retained Mintz Levin to draft a contract that memorialized the

arrangement between Rosen and O'Donnell. That written contract,

which came to be known as the Fill Agreement, was dated April 19,

1995.

Among other things, the Fill Agreement provided that (1)

O'Donnell would grant Rosen a three year 51% interest in the Edison

Site as tenants in common, (2) Rosen could convert that temporary

51% interest into a maximum 50% permanent partial interest,

depending on the extent to which Rosen negotiated a reduction in

the principal of the Edison Note, and (3) O'Donnell would grant to

Rosen, upon Rosen's request, a perpetual easement on the Edison

Site to allow Rosen to construct road access to the Development

Site. The portion of the Fill Agreement relevant to Rosen's rights

to secure a permanent interest in the Edison Site -- Section 6(b)

-- reads as follows:

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 [I]f Rosen, in its sole discretion, is able to
negotiate with Edison a forgiveness of, or a
reduction in, the principal amount due in order
to obtain a discharge of the Edison Mortgage,
below $1,900,000, then Rosen may retain, and
shall not be required to reconvey to
[O'Donnell], that undivided percentage interest
(not to exceed 50%) in the Edison Site which is
equal to (x) the amount of such principal
forgiveness or reduction, divided by (y) Two
Million Dollars ($2,000,000). For example, if
Rosen were to negotiate a principal reduction
of $250,000, then Rosen would be able to retain
a 12.5% undivided interest, and if Rosen were
to negotiate a principal reduction of
$1,250,000, then Rosen would be entitled to
retain a 50% undivided interest.

After signing the Fill Agreement in April, Rosen began

negotiating with Boston Edison for a reduction in the principal

amount of the Edison Note. At that time, the principal payment

schedule for the Edison Note called for $100,000 monthly payments

from May to September 1995, $200,000 payments in December 1995 and

March and June 1996, and a final $800,000 payment in March 1998.

Rosen attempted to secure at least partial forgiveness of the

Edison Note in exchange for agreeing to purchase the electricity

for the planned shopping center on the Development Site from Boston

Edison. At one point, Boston Edison offered a $640,000 reduction

in the Edison Note, which Rosen did not accept. In the end, Rosen

and Boston Edison never finalized a reduction in the outstanding

Edison Note balance.

On April 2, 1996, almost one year after the Fill

Agreement was signed, O'Donnell paid off the outstanding balance of

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the Edison Note and obtained a discharge of the mortgage on the

Edison Site. The next day, O'Donnell verbally informed Rosen of

its actions. During the following week, O'Donnell advised Rosen

that, in its view, the full payment of the note terminated Rosen's

right to acquire a permanent interest in the Edison Site under the

Fill Agreement.

Rosen disagreed with O'Donnell's interpretation of the

Fill Agreement, claiming that its right to obtain a permanent

interest in the Edison Site had not been terminated and that

O'Donnell's prepayment of the note and its position on the issue

were "calculated to interfere with a right [Rosen] had bargained

for in good faith." O'Donnell responded that Rosen's position was

"preposterous" and that O'Donnell's decision to satisfy its

obligations on the Edison Note at that time was permitted by the

Fill Agreement. O'Donnell also wrote that "[n]owhere is it stated

that O'Donnell is prohibited from early satisfaction of our

financial obligations." During April and June of 1996, Rosen and

O'Donnell exchanged increasingly heated letters setting forth their

respective positions, and eventually they reached an impasse.

In June 1996, Rosen asked Mintz Levin to draft a

complaint for use in an impending civil action against O'Donnell,

and Mintz Levin complied. When Mintz Levin would not agree to

handle the case on a contingency fee basis, Rosen consulted with

Boston attorney Albert Farrah, who agreed to take the case on

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contingency. Rosen filed suit in Massachusetts state court in

November 1996, alleging that O'Donnell's pre-payment of the Edison

Note breached the Fill Agreement. In April 1998, the state court

granted O'Donnell's motion for summary judgment. Two months later,

the Massachusetts Appeals Court affirmed the summary judgment

ruling.

Following this adverse decision in its suit against

O'Donnell, Rosen claimed that Mintz Levin had been negligent (1) in

failing to draft the Fill Agreement to protect Rosen's right to

secure a permanent interest in the Edison Site and (2) in failing

to timely secure an easement for Rosen and perform sufficient due

diligence regarding the status of an existing easement on the

property. On October 14, 1999, Rosen and Mintz Levin entered into

a "tolling and standstill" agreement that tolled the statute of

limitations for any claim of Rosen's against Mintz Levin that

accrued after September 2, 1996. If Rosen's claims accrued prior

to that date, they would be barred by the applicable Massachusetts

statute of limitations.

On January 25, 2000, Rosen filed this legal malpractice

action against Mintz Levin. In granting Mintz Levin's summary

judgment motion, the district court found that O'Donnell's letters

to Rosen in April and June of 1996 "were sufficient to apprise

Rosen, an experienced real estate developer, that conduct of Mintz

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Levin had caused Rosen harm." Further, the district court found

that

quite apart from Mary O'Donnell's April and
June 1996 letters, and at least by September
20, 1995[,] Rosen was aware that the O'Donnell
interests could pay the balance of the Edison
Note at any time. . . . The [letters] were
merely a reminder to Rosen of what it actually
knew on September 20, 1995: Rosen did not have
an exclusive option to acquire a 50% interest
in the Edison Site, because the Fill Agreement
did not grant Rosen the exclusive right to pay
the balance of the Edison Note.

Finally, the district court also held that even though "neither

party devoted much argument to the easement question," "[t]o the

extent that there was appreciable harm as a result of the easement

problems, the record demonstrates that Rosen had actual knowledge

of that harm prior to September 2, 1996."

Rosen now appeals the district court's grant of summary

judgment for Mintz Levin. In Rosen's view, the summary judgment

record does not compel a finding that it knew or should have known

that Mintz Levin's drafting of the Fill Agreement was the cause of

its harm until at least the Massachusetts state court rejected its

lawsuit against O'Donnell.

II.

We review the grant of summary judgment de novo. LeBlanc

v. Great Am. Ins. Co., 6 F.3d 836, 841 (1st Cir. 1993). Summary

judgment is proper when the record shows that "the pleadings,

depositions, answers to interrogatories and admissions on file

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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 judgment as matter of law." Fed. R. Civ. P. 56(c). An issue is

"genuine" if "the evidence is such that a reasonable [factfinder]

could return a verdict for the nonmoving party," and "material

facts" are those that "might affect the outcome of the suit under

governing law." Hayes v. Douglas Dynamics, Inc., 8 F.3d 88, 90

(1st Cir. 1993)(quoting Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 248 (1986)). In assessing the summary judgment record, the

facts, as well as the reasonable inferences that may be drawn from

them, must be viewed in the light most favorable to the non-moving

party. See, e.g., Cooperman v. Individual, Inc., 171 F.3d 43, 46

(1st Cir. 1999).

Rosen, the non-moving party here, pressed two legal

malpractice claims against Mintz Levin. First, Rosen claims that

Mintz Levin negligently failed to draft the Fill Agreement to

protect Rosen's right to secure a permanent interest in the Edison

Site. Second, Rosen urges that Mintz Levin negligently advised

Rosen regarding its desire to obtain an easement on the Edison Site

from O'Donnell. The parties agree correctly that the substantive

law of Massachusetts provides the rules of decision in this

diversity case, Pitts v. Aerolite SPE Corp., 673 F.Supp. 1123, 1127

(D. Mass. 1987), and that Massachusetts specifies a three-year

statute of limitations for legal malpractice claims. Mass. Gen. L.

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ch. 260, § 4. Under Massachusetts law, the limitations period

begins to run "[o]nce a client or former client knows or reasonably

should know that he or she has sustained appreciable harm as a

result of the lawyer's conduct . . . ." Williams v. Ely, 423 Mass.

467, 473 (1996). "[A] plaintiff [must] have (1) knowledge or

sufficient notice that she was harmed, and (2) knowledge or

sufficient notice of what the cause of the harm was." Bowen v. Eli

Lilly Co., 408 Mass. 204, 208 (1990)(cited with approval in

Williams, 423 Mass. at 473).

A. Rosen's Malpractice Allegation Regarding Its Right
to Secure a Permanent Interest in the Edison Site

1. The Continuing Representation Doctrine

At least by March 1996, when Mintz Levin sent a letter to

O'Donnell's counsel asserting that Rosen's option to secure a

permanent interest in the Edison Site survived O'Donnell's

prepayment of the Edison Note, Rosen began spending time and money

disputing O'Donnell's interpretation of the Fill Agreement. Rosen

continued expending time and money to defend its claim under

Section 6(b), which it now alleges was negligently drafted by Mintz

Levin, throughout the summer and fall of 1996. More letters were

sent from counsel to O'Donnell, and Rosen and its attorneys

prepared to sue O'Donnell in state court.

For purposes of accrual of a legal malpractice claim,

"harm" occurs when a client expends "additional legal fees to

ameliorate the harm caused by [his original attorney's] error."

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Levin v. Berley, 728 F.2d 551, 554 (1st Cir. 1984)(interpreting

Mass. G. L. c. 260, § 4). See also Cantu v. St. Paul Cos., 401

Mass. 53, 57 (1987); Massachusetts Elec. Co. v. Fletcher, Tilton &

Whipple, 394 Mass. 265, 268-269 (1985). On these facts, there is

no question that Rosen suffered harm related to its rights under

Section 6(b) prior to September 2, 1996, the cutoff date under the

"tolling and standstill" agreement. Accordingly, we turn now to

the causation component of the accrual analysis.

The critical inquiry here is when Rosen knew, or

reasonably should have known, that Mintz Levin's alleged

malpractice, and not O'Donnell's purported breach, was the cause of

Rosen's harm. Williams, 423 Mass. at 473. Rosen claims that it

should not reasonably have known at any time outside the three-year

statute of limitations period that Mintz Levin caused the harm

because, in part, Mintz Levin itself led Rosen to believe that it

would prevail in its suit against O'Donnell. As evidence of this

claim, Rosen points to a letter Mintz Levin drafted in July 1996 to

send to O'Donnell's counsel, which included the following passage:

Our client feels very strongly that he
negotiated a valid agreement and that he
deserves to reap the benefits of that
negotiation. If need be, we are prepared to
initiate and prosecute an action against
O'Donnell . . . for breach of the [Fill
Agreement] and other related claims. We are
confident that we will obtain the following
preliminary and permanent relief: . . .
Rosen's right to continued ownership, up to an
undivided 50% interest, in the Boston Edison
Site, with all attendant rights,

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 notwithstanding O'Donnell's payoff of the
Edison Mortgage. . . .

Even though this letter ultimately was not sent to O'Donnell, it is

probative of Mintz Levin's representations to Rosen regarding the

strength of its case against O'Donnell. Mintz Levin supported

Rosen's interpretation that O'Donnell had breached the Fill

Agreement and Rosen's belief that O'Donnell, not Mintz Levin, was

the source of its harm.

Furthermore, defendant Leonard, one of Rosen's primary

lawyers at Mintz Levin, testified during his deposition that

although the firm did not represent Rosen in the litigation

commenced against O'Donnell in state court in November 1996, "[w]e

worked both with that other counsel [Farrah] and with Mr. Rosen

directly in trying to resolve [the dispute with O'Donnell]."

Leonard further testified that during the fall of 1996, Mintz Levin

attorneys "were [Rosen's] lawyers for the purpose of seeing whether

we could memorialize a resolution of [his dispute with O'Donnell]."

These facts implicate the doctrine of continuing

representation, which tolls the statute of limitations "while the

defendant attorney continues to represent the plaintiff . . . ."

Cantu, 401 Mass. at 58. The continuing representation doctrine

"recognizes that a person seeking professional assistance has a

right to repose confidence in the professional's ability and good

faith, and realistically cannot be expected to question and assess

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the techniques employed or the manner in which the services are

rendered." Murphy v. Smith, 411 Mass. 133, 137 (1991). Thus

explained, the continuing representation doctrine affirms the

relevance of ongoing legal representation to the critical cause of

action accrual question--whether Rosen should have known that Mintz

Levin's alleged malpractice, and not O'Donnell's purported breach,

was the cause of Rosen's harm. Mintz Levin's assurances that Rosen

would prevail in its suit against O'Donnell, and Mintz Levin's

participation in the preparation for that suit, are consistent with

the innocent reliance that the continuing representation doctrine

protects.

The factually apposite case of Eck v. Kellem, 51 Mass.

App. Ct. 850 (2001), demonstrates the importance of the continuing

representation doctrine to the outcome here.1 In Eck, plaintiffs

brought a legal malpractice suit against Kellem, the attorney who

prepared the purchase and sale agreement in a real estate

transaction in which the purchaser successfully sued Eck for

misrepresentations regarding the property. Eck had instructed

1
Mintz Levin attempts to distinguish Eck by claiming that the
facts are "significantly different from those of the case at bar"
and that the Eck court "was careful to limit its holding to the
specific facts of that case[.]" We do not think that the language
from Eck cited by Mintz Levin--"[w]e conclude that on this record
the statute of limitations did not begin to run upon the
commencement of the [third party's] suit . . ."--means that the
case only has precedential value on identical facts. Eck, 51 Mass.
App. Ct. at 856 (emphasis added). Also, as we explain, we find the
facts of Eck sufficiently similar to the case at bar to be
persuasive on the accrual issue.

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Kellem to draft the purchase and sale agreement to protect Eck from

future claims by the purchaser for liability for hazardous waste

contamination on the property. However, the purchaser did sue Eck

for the contamination, and Eck chose another attorney to represent

him because Kellem would be a witness in the litigation. Kellem,

however, reassured both Eck and his new attorney that Eck would

prevail at trial. This prediction did not prove prescient--Eck

lost at trial and then sued Kellem for legal malpractice. Kellem

moved for summary judgment, arguing Eck's malpractice claim against

him was time barred.

The Massachusetts Appeals Court noted that "[t]hese facts

bring the case close to the doctrine of continuing representation."

Eck, 51 Mass. App. Ct. at 855. It framed the question as "whether

it was the commencement of the [purchaser's] suit, or the judgment

therein, that was the first event reasonably likely to put Eck on

notice that Kellem's sale agreement may have caused his injury . .

. ." Id. at 853. In finding that the statute of limitations began

to run from the time of judgment, the Eck court relied on Kellem's

reassurances to Eck that the purchase and sale agreement would

protect him and that "[w]hether, in fact, Kellem was negligent in

the preparation of the sale agreement had to await the outcome of

the [purchaser's] suit . . . ." Id. at 855. Accord Spilios v.

Cohen, 38 Mass. App. Ct. 338, 339-40 (1995)(holding that since it

was only possible to determine whether there was legal malpractice

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after a verdict on the underlying dispute was rendered, the statute

of limitations did not begin to run until that time).

Rosen's situation is similar to Eck's. Mintz Levin

continued to assure Rosen that it would prevail in its action

against O'Donnell and that the Fill Agreement protected Rosen's

rights. Furthermore, Rosen engaged another attorney, as did Eck,

for reasons unrelated to any dissatisfaction with Mintz Levin.

Until the Massachusetts state court ruled that O'Donnell did not

breach the Fill Agreement, Rosen reasonably believed that

O'Donnell, not Mintz Levin, was the cause of its harm.2

To start the statute of limitations running, "[t]here

must be notice of a causal relationship between the harmful event

attributed to the defendant . . . and the harm suffered by the

plaintiff." Eck, 51 Mass. App. Ct. at 853 (internal citations

omitted)(emphasis added). See also Int'l Mobiles Corp. v. Corroon

& Black/Fairfield & Ellis, Inc., 29 Mass. App. Ct. 215, 218 (1990)

2
The Massachusetts Superior Court wrote that

[t]here is no evidence in the summary judgment
record to show or support the plaintiff's
claims of an exclusive right to acquire an
ownership interest in the [Edison Site], or to
preclude the defendants from paying off that
mortgage and securing title to that property
free and clear of any permanent interest or
ownership right in the plaintiffs.

Rosen Constr. Ventures v. O'Donnell Sand and Gravel, Inc., No. 96-
6583E, Order of Court, (Suffolk Superior Court, April 29,
1998)(emphasis in original).

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("Notice here refers . . . to discovery of the plaintiff's injury

as causally connected to the defendant's negligence.") (emphasis

added). The judgment of the Massachusetts court provided Rosen

with notice of that causal relationship between Mintz Levin's

drafting of the Fill Agreement and the harm Rosen suffered when

O'Donnell prepaid the Edison Note.

2. Knowledge of Actual Harm

Mintz Levin argues that Rosen is not protected by the

continuing representation doctrine because Rosen actually knew that

it suffered appreciable harm because of Mintz Levin's conduct.

Lyons v. Nutt 436 Mass. 244, 250 (2002)(the "doctrine has no

application . . . where the client actually knows that he suffers

appreciable harm as a result of his attorney's conduct."). The

district court held that Rosen indeed had actual knowledge that

Mintz Levin caused its harm because O'Donnell's letters in April

and June of 1996, setting forth its position regarding the

interpretation of the Fill Agreement, "at the very least called to

Rosen's attention that the exclusivity provision it had desired was

missing from the Fill Agreement" and put Rosen on notice "that the

conduct of Mintz Levin had caused Rosen harm."

The district court further found that Clifford Rosen's

September 20, 1995, memorandum to file, stating that he understood

"that as with most loan[s], she could prepay at anytime," indicates

that Rosen knew that it lacked the exclusive option to acquire a

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50% interest in the Edison Site because it lacked the exclusive

option to reduce the Edison Note. On appeal, Mintz Levin seeks to

bolster the district court's grounds for the summary judgment

ruling in its favor by drawing attention to four other items in the

summary judgment record that, in its view, support the finding that

Rosen had actual knowledge of being harmed as well as of the cause

of that harm.

For the sake of clarity in our explanation, we discuss

these items in a slightly different order than Mintz Levin

presented them. First, according to Mintz Levin, its draft

complaint against O'Donnell did not include a cause of action for

breach of Section 6(b) of the Fill Agreement. Second, Mintz Levin

urges that the plain language of the Fill Agreement itself was

sufficient to put Rosen on notice that it lacked an exclusive

option to secure a reduction in the Edison Note. Third, Donald

Anastasia, Boston Edison's attorney who negotiated with Rosen

regarding the Edison Note, memorialized their May 17, 1995,

conversation in handwritten notes that stated "[Rosen's] concern:

O'D[onnell] pays off note soon, little left to discount." Fourth,

Michael Northrup, Rosen's in-house counsel, stated in his

deposition that he was concerned about ambiguities in the Fill

Agreement and that Mintz Levin's drafting of the Fill Agreement was

"sloppy."

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 We assess these four contentions in turn, keeping in mind

our obligation to consider the facts, and their reasonable

inferences, in the light most favorable to Rosen, the non-moving

party. We will then consider the grounds explicitly relied upon by

the district court.

a. The draft complaint

Mintz Levin points to its draft complaint against

O'Donnell, which it discussed with Rosen, and the draft's omission

of a cause of action against O'Donnell for breach of Section 6(b).

Mintz Levin argues that this omission is significant because it

shows that Rosen understood at that time that O'Donnell did not

breach its obligations under Section 6(b). Reading the draft

complaint as a whole, we find Mintz Levin's argument unpersuasive.

Although Count I of the draft complaint, titled "Breach of Contract

and Action for Specific Performance," does not specifically allege

breach of Section 6(b), the draft complaint contains several

passages regarding Section 6(b) that could reasonably lead a client

to believe that his allegations of breach were addressed in the

complaint.

For example, the draft complaint states that "[o]n or

about April 2, 1996, notwithstanding Section 6(b) of the Rosen-ODSG

Fill Agreement, and without any notice to Rosen, ODSG paid off the

outstanding balance due on the ODSG-Edison Note and Mortgage two

years in advance of the scheduled final payment date of March 6,

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1998. . . ." Count II of the draft complaint, alleging breach of

the covenant of good faith and fair dealing, alleges that

ODSG's actions, namely paying down the entire
Note and Mortgage on the Edison Site in May,
1996 rather than March, 1998, as contemplated
by the parties and according to the express
schedule in the Secured Promissory Note, and
without the consent of or notice to Rosen, the
51% owner of the property as a tenant in
common, with knowledge that Rosen was actively
negotiating a reduction or discount in the
outstanding principal due on the mortgage with
Boston Edison, has purportedly eliminated
Rosen's right to retain an ownership interest
in the Edison Site under the Rosen-ODSG Fill
Agreement.

By such conduct, ODSG has breached the
covenant of good faith and fair dealing.

Similarly, Count III of the draft complaint, alleging

intentional interference with advantageous business relations,

characterized O'Donnell's prepayment of the Edison Note as

interfering with Rosen's right under Section 6(b) to obtain a

permanent interest in the Edison Site. Count VI, seeking

declaratory relief, asserts that "Rosen is entitled to retain an

ownership interest in the Edison Site at the time reconveyance of

its 51% interest is triggered pursuant to the Rosen-ODSG Fill

Agreement on account of ODSG's breach of contract and breach of

covenant of good faith and fair dealing in paying down the Boston

Edison mortgage thereby purportedly preventing Rosen from securing

a reduced or discounted mortgage." Finally, the draft complaint's

Prayer for Relief urges that "Rosen is entitled to retain an

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ownership interest in the Edison Site, in an amount to be

determined at trial, on account of ODSG's breach of contract and

breach of covenant of good faith and tortious interference with

Rosen's business relationship in paying down the Boston Edison

mortgage thereby preventing Rosen from securing a reduced or

discounted mortgage."

On the whole, Mintz Levin's draft complaint characterizes

O'Donnell's prepayment of the Edison Note as a breach of

O'Donnell's duties to Rosen imposed on it by Section 6(b). The

absence of this language in the specific count alleging breach of

contract is not sufficient to charge Rosen with knowledge of Mintz

Levin's alleged malpractice in drafting Section 6(b). This is

especially true since the affidavit of one of the defendants,

Stephen Leonard, is the only statement in the record alleging that

Rosen discussed with Mintz Levin whether a count for breach of

Section 6(b) could be included in the draft complaint.3 Reading

these facts and drawing inferences in the light most favorable to

Rosen, we find that the absence in the draft complaint of a

specific count of breach of contract under Section 6(b) is

3
Clifford Rosen was asked during his deposition if he
discussed the complaint with any of three people: Mr. Northrup, his
in-house counsel; Mr. Farrah, the attorney who represented Rosen in
his state court litigation against O'Donnell; and Mr. Carey, an
employee of Rosen's whose role is unidentified in the materials
before this court. Rosen replied that he did not recall discussing
the complaint with any of these individuals. Mintz Levin has not
directed our attention to any questions to Rosen about
conversations he might have had with Leonard about the complaint.

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insufficient to charge Rosen with actual knowledge that Mintz

Levin's alleged drafting error caused its harm, particularly

because the draft complaint amply referenced O'Donnell's

obligations to Rosen under Section 6(b).

b. Language in the Fill Agreement

We also are unpersuaded that the language in the Fill

Agreement was sufficient to apprise Rosen that it lacked the

exclusive option to secure a permanent interest in the Edison Site

by reducing the principal balance of the Edison Note. The relevant

portion of Section 6(b) states that "if Rosen, in its sole

discretion, is able to negotiate with Edison a forgiveness of, or

a reduction in, the principal amount due in order to obtain a

discharge of the Edison Mortgage . . . ." It is a reasonable

inference that a lay person, even an experienced real estate

developer, may not have realized that this language failed to

protect Rosen's right to secure a permanent interest in the Edison

Site.

Indeed, Mintz Levin's draft complaint against O'Donnell

supports Rosen's argument that it reasonably thought that Section

6(b) of the Fill Agreement, as drafted, protected its right to

secure a permanent interest in the Edison Site by negotiating a

forgiveness of or a reduction in the principal amount of the Edison

Note, even though the express language of Section 6(b) does not

prohibit O'Donnell from prepaying the balance of the Edison Note.

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In Rosen's view, its right to negotiate a reduction in the Edison

Note in exchange for a permanent interest in the Edison Site

implied that O'Donnell could not terminate that right at any time

simply by paying off the principal balance with no warning to

Rosen. Otherwise, Rosen's right to secure a permanent interest

through the negotiations with Edison would have little value.

Mintz Levin articulated that view of the meaning of Section 6(b)

when it alleged in the draft complaint that the covenant of good

faith and fair dealing precluded O'Donnell from paying off the

Edison Note almost two years early.

On these facts, it is not enough to argue, as Mintz Levin

does, that the express language of Section 6(b) was sufficient to

apprise Rosen that it lacked the rights Rosen thought it had

negotiated, and that Mintz Levin's drafting was the source of that

exposure. Rosen relied on Mintz Levin's expertise to draft an

agreement that would protect its ability to secure a permanent

interest in the Edison Site. "The attorney . . . is an expert, and

much of his work is done out of the client's view. The client is

not an expert; he cannot be expected to recognize professional

negligence if he sees it, and he should not be expected to watch

over the professional or to retain a second professional to do so."

Hendrickson v. Sears, 365 Mass. 83, 90 (1974). Until the

Massachusetts state court told Rosen that the express language of

Section 6(b) did not protect its right to secure a permanent

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interest in the Edison Site, Rosen reasonably thought it was

protected. In consequence, we decline to hold that the plain

language of Section 6(b) is enough to apprise Rosen of Mintz

Levin's alleged negligence in drafting the agreement.

c. Anastasia's note

Donald Anastasia's note of May 17, 1995, a month after

the Fill Agreement was executed, mentions "His [Rosen's] concern:

O'D[onnell] pays off note soon, little left to discount." This

notation also does not carry the import that Mintz Levin seeks.

The notation is set forth on a sheet of paper covered with informal

handwritten commentary by Boston Edison's attorney about an array

of subjects discussed during a phone conversation with Rosen, all

apparently related to the status of the shopping center project.

The topics include an upcoming commission meeting, barging in the

required fill, a physical tie-in on the railroad crossing, and

Rosen's needs for meeting "DPU criteria," which presumably refers

to the Massachusetts Department of Public Utilities. On the top

right hand corner of the page, inserted at an angle, is the note:

"Give him status report -- early June? His concern: O'D[onnell]

pays off note soon, little left to discount."

The language Mintz Levin cites is ambiguous. On one

view, it could simply refer to the payment schedule of O'Donnell's

Edison Note. If O'Donnell continued making payments on the note

according to schedule, the balance on the note would be reduced to

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a million dollars by June 1996, just over a year into the future.

At that point, Rosen would be precluded from obtaining the full 50%

ownership interest in the Edison site it sought because there would

be less than a million dollars to discount.4 Although other

readings of Anastasia's note are possible, we decline to hold that

a third party's brief, ambiguous note recorded during a phone

conversation with Rosen proves that Rosen had actual knowledge that

Mintz Levin allegedly was negligent in drafting the Fill Agreement.

d. Northrup's testimony

Mintz Levin claims that

Rosen's in-house counsel, Michael Northrup,
analyzed Section 6(b) of the Fill Agreement.
He warned Clifford Rosen that the provision
was inconsistent with the terms that Clifford
Rosen had told Northrup had been negotiated
with O'Donnell. He told Rosen that he thought
that Mintz, Levin's drafting of this part of
the Fill Agreement had been 'sloppy.'

Although Mintz Levin cites primarily to Northrup's deposition

testimony for these propositions, Northrup's testimony does not

fully substantiate this characterization. During his deposition,

when questioned about a proposed amendment to Section 6(b) that he

had drafted, Northrup replied that

4
Section 6(b) provides that Rosen's permanent interest in the
Edison Site, not to exceed 50%, would be calculated by dividing the
amount it reduced the principal owed on the Edison Note by the
purchase price of $2,000,000. Accordingly, to obtain the full 50%
permanent interest it sought, Rosen would have to reduce the
principal owed by $1,000,000. In consequence, once the outstanding
principal was reduced below $1,000,000, Rosen could only obtain a
less than 50% permanent interest in the site.

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 my primary concern is, when I first saw
[Section 6(b)] and prepared the second
amendment it was the fact that Clifford had
always told me his deal was that he had an
ability to come in and get his half-interest
in almost any scenario. When I read it I
didn't think it expressly or clearly stated
that. I don't remember if prepayment was in
my mind. I just generally didn't think it was
fully developed as it should be to protect
him. I don't recall at this time all of the
various concerns I might have had in
particular.

When asked if he brought those concerns to Rosen's

attention, Northrup replied that "I certainly engaged him in

conversation about them, depending upon his patience and listening

ability as to how many of them got to him, but I know -- whether I

emphasized one or two, I don't remember for sure, but I would have

tried to have a thorough discussion." When asked if he recalled

having "a particular conversation with Mr. Rosen about Paragraph

6(b) to the fill agreement as it related to Mary O'Donnell's

ability to prepay the Edison note and extinguish any right he had

to obtain the interest in the Edison site," Northrup responded that

he did not recall specifically that point. Northrup testified that

he characterized Mintz Levin's drafting of Section 6(b) as "sloppy

or that kind of language," and that he "tried to deal with it in a

letter [to Mintz Levin], that is the particular issue of what if he

negotiated a reduction in the note, but it didn't go into effect

prior to such time as she started getting the note down below the

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million dollars, and how could it be that she still would have to

pay and that he could retain his interest."

Reading this testimony in the light most favorable to

Rosen, Northrup testified that he had concerns about the drafting

of Section 6(b), that he thought it was sloppy, and that he tried

to address with Mintz Levin the specific issue of what would happen

if Rosen negotiated a reduction in the Edison Note that did not go

into effect until after O'Donnell had paid down the outstanding

balance to less than a million dollars. This concern could have

been motivated by the quick pace of the regular payment schedule

between O'Donnell and Edison, which provided that the balance would

fall below a million dollars in June 1996, giving Rosen little more

than a year to achieve its 50% permanent interest in the Edison

Site through negotiating with Edison. Most importantly, however,

Northrup testified that he did not recall having a conversation

with Rosen about Section 6(b) "as it related to Mary O'Donnell's

ability to prepay the Edison note and extinguish any right he had

to obtain the interest in the Edison site." This testimony, then,

read in the light most favorable to Rosen, establishes that

Northrup did not recall a discussion with Rosen about O'Donnell's

potential prepayment of the Edison Note and that Northrup was

unsure to what degree Rosen heard and understood any of Northrup's

general concerns about Section 6(b). This testimony is not enough

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to charge Rosen with actual knowledge of Mintz Levin's alleged

malpractice.

e. The grounds cited by the district court

Finally, we turn to the two grounds relied upon by the

district court for granting summary judgment in favor of Mintz

Levin: Clifford Rosen's September 1995 memo to file, stating that

he was "under the understanding that as with most loan[s],

[O'Donnell] could prepay at anytime," and O'Donnell's letters to

Rosen in April and June 1996 setting forth its interpretation of

the Fill Agreement. The district court found that the letters were

"sufficient to apprise Rosen . . . that conduct of Mintz Levin had

caused Rosen harm" and that they "at the very least called to

Rosen's attention that the exclusivity provision it had desired was

missing from the Fill Agreement." The district court also found

that O'Donnell's letters were "merely a reminder to Rosen of what

it actually knew on September 20, 1995: Rosen did not have an

exclusive option to acquire a 50% interest in the Edison Site,

because the Fill Agreement did not grant Rosen the exclusive right

to pay the balance of or reduce the Edison Note." We disagree with

the assessment of the significance of the file memo and the

letters.

i. The memorandum to file

The September 1995 memorandum in question, prepared

approximately five months after the execution of the Fill

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Agreement, includes a short recitation of O'Donnell's past payments

on the Edison Note, the due dates of the scheduled future payments,

and two sentences at the end: "It is understood that O'Donnell is

currently negotiating to have a new payment schedule. Also, I am

under the understanding that as with most loan[s], she could prepay

at anytime." On its face, this language in the memorandum is the

strongest piece of evidence available to Mintz Levin. Viewed

through the summary judgment prism, however, it is not substantial

enough to carry the summary judgment burden.

Rosen argues that this memorandum pertained to its

understanding of the terms between O'Donnell and Boston Edison as

set forth in the Edison Note, not the terms of the Fill Agreement.

This claim is substantiated by the context of that notation, with

its detailed elaboration of the payment schedule. In other words,

this memorandum to file summarizes Rosen's understanding of the key

terms of the Edison Note, rather than its understanding of the

absence of limitations imposed on O'Donnell by the terms of the

Fill Agreement. Indeed, it is entirely plausible that a mortgagor

may be permitted to prepay the principal balance on an outstanding

note under the terms of the note, but be prohibited from doing so

by an agreement with a third party. Furthermore, the terms of the

Edison Note, the arguable focus of the memorandum, would be

important to Rosen in its attempt to negotiate a reduction in that

note with Boston Edison. Again, Rosen is entitled to these

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reasonable inferences in its favor as the non-moving party on

summary judgment. Therefore, Rosen's memorandum to file regarding

the terms of the Edison Note does not suffice to show that Rosen

actually knew that Mintz Levin allegedly caused Rosen's harm by

drafting Section 6(b) in a way that permitted O'Donnell to

extinguish Rosen's right to secure a permanent interest in the

Edison Site by prepaying the Edison Note.

ii. The O'Donnell letters

O'Donnell's letters notifying Rosen of its interpretation

of the Fill Agreement did not put Rosen on notice that Mintz Levin

negligently drafted the contract. Instead, the letters served only

to notify Rosen that O'Donnell's interpretation of the Fill

Agreement differed from Rosen's. Rosen claims that it believed

that O'Donnell breached contractual obligations under the Fill

Agreement by prepaying the Edison Note. Accordingly, taking the

facts and their reasonable inferences in the light most favorable

to Rosen, it believed that the cause of its harm was O'Donnell

breaching its contractual obligations under the Fill Agreement, not

Mintz Levin's alleged negligent drafting. As confirmation of this

view, Rosen sued O'Donnell for breach and sought Mintz Levin's

representation in the action, turning to Farrah to try the case

only when Mintz Levin refused to take the case on contingency.

When Rosen lost the case, it finally knew that the cause of its

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harm was Mintz Levin's alleged drafting error, not O'Donnell's

purported breach.

3. The Importance of the State Court Decision

In reaching this conclusion about the importance of the

state court decision, we are not adopting the general proposition

that the claims of potential plaintiffs in legal malpractice

actions do not accrue until a court ruling reveals the inadequacies

of their lawyer's work. However, as the facts of this case

demonstrate, if a lawsuit has been filed that implicates the work

of their lawyer, the outcome of that lawsuit may be highly relevant

to a critical question in the accrual analysis--whether the clients

should have known that their lawyers, rather than their

adversaries, were responsible for the harm caused by the legal

problem at issue in the lawsuit.

When Rosen first suffered harm--that is, when its right

to secure a permanent interest in the Edison Site was arguably

extinguished by O'Donnell's prepayment of the Edison Note--Rosen

immediately took action. Rosen consulted its lawyers at Mintz

Levin who assured it that the Fill Agreement protected its rights

and that O'Donnell was in breach. After Mintz Levin drafted a

complaint against O'Donnell but declined to take the case on a

contingency fee basis, Rosen consulted another lawyer about its

claim against O'Donnell. That lawyer, Farrah, filed suit on behalf

of Rosen. Far from sleeping on its rights, as Rosen reasonably

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understood them, Rosen sought promptly to vindicate them.

Moreover, to hold that an adverse party's alleged breach of a

contract is necessarily sufficient to put a client on notice that

his attorney negligently drafted the contract would create a rule

requiring the client in any contract dispute to immediately begin

malpractice proceedings against his attorney. We decline to adopt

such an untenable rule.

Instead, viewing all of the facts and their reasonable

inferences in the light most favorable to Rosen, we find that a

reasonable factfinder could conclude that the earliest Rosen knew,

or should have known, that Mintz Levin's alleged negligence in

drafting Section 6(b) caused it harm was the date the Massachusetts

trial court granted summary judgment to O'Donnell--April 29, 1999--

which is well after the operative date of September 2, 1996 set

forth in the standstill agreement. Because the date of the trial

court decision is within the statute of limitations, we need not

decide in this case whether the state trial court decision or the

state appellate affirmance of that decision put Rosen on notice

that Mintz Levin, and not O'Donnell, was the source of its harm.

B. Rosen's Malpractice Allegation Regarding The
Easement

Rosen raises two complaints regarding easement issues.

As the district court noted, the parties did not "devote[] much

argument to the easement question," and

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 Rosen does not assert in this case that it was
ultimately unable to secure an easement over
the Edison Site. There is also no evidence
that the problems that arose in securing the
easement over the Edison Site would not have
occurred had Mintz Levin advised Rosen to
secure the easement earlier. As to the MBTA
easement, Rosen does not suggest that it could
have avoided a problem with the MBTA had it
known (presumably at the time the Development
Site was purchased) of the MBTA's easement
rights.

Rosen has not remedied these shortcomings in its briefs to this

court. Like the district court, we are hampered by Rosen's brevity

in developing the facts and arguments on the easement issues.

Indeed, the first easement claim is almost

incomprehensible as stated in the brief. In the spring of 1996,

Rosen apparently requested that O'Donnell grant an easement under

the provisions of Section 3(c), which states that O'Donnell "agrees

that it will, upon request by Rosen, grant to Rosen . . . a

perpetual easement across the Edison Site. . . ." O'Donnell

resisted the request, and Rosen incurred some expenses in

attempting to secure the easement. As best we can determine, Rosen

is making one of two arguments in relation to Section 3(c) of the

Fill Agreement.

First, Rosen might be arguing that Mintz Levin was

negligent in failing to draft Section 3(c) to convey an easement

outright. If so, this claim fails because Rosen could not have

given Mintz Levin the information necessary for such drafting.

Mintz Levin notes that in April 1995, when the Fill Agreement was

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signed, "Rosen did not want O'Donnell immediately to grant an

easement because at that time, Rosen did not know precisely where

he wished to locate that easement." Rosen does not dispute this

contention in its reply brief, and Mintz Levin supports the claim

by citing to the May 1996 letter to O'Donnell requesting the

easement, which explains that "the layout of the proposed easement

is not currently complete," even more than a year after the Fill

Agreement was signed. Since Rosen apparently did not know where it

wanted the easement even in May 1996, Mintz Levin could hardly have

drafted the Fill Agreement in April 1995 to convey an undefined

easement.

In the alternative, Rosen might be claiming that Mintz

Levin was negligent for failing to advise it to request the

easement immediately after the Fill Agreement was executed. If so,

Rosen's inability to define the easement it needed as late as May

1996 again defeats any claim that Mintz Levin was negligent in not

advising it to secure the easement earlier.

A similar result befalls the MBTA easement issue. Rosen

claims that Mintz Levin was negligent in failing to inform it that

the easement on the MBTA property was for emergency use only.

However, Rosen testified at his deposition that Langer informed

Rosen in a May 24, 1996 letter that the MBTA easement was

designated for emergency use only. Rosen also apparently incurred

expenses in the spring of 1996 while attempting to resolve this

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issue. Therefore, "the necessary coalescence of discovery and

appreciable harm" had occurred prior to the statutory bar date of

September 2, 1996, agreed to by the parties in their stipulation,

Cantu, 401 Mass. at 57, and the easement claim must fail.

III.

For the forgoing reasons, the judgment of the district

court is AFFIRMED in part and VACATED in part. We REMAND for

proceedings consistent with this opinion.

So ordered. Each party shall bear its own costs.

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