Sears, Roebuck & Co. v. Goldstone & Sudalter, P.C.

United States Court of Appeals
United States Court of Appeals
For the First Circuit
For the First Circuit

No. 97-1216

SEARS, ROEBUCK & CO.,

Plaintiff, Appellee,

v.

GOLDSTONE & SUDALTER, P.C.,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Richard G. Stearns, U.S. District Judge]

Before

Stahl, Circuit Judge,

Bownes, Senior Circuit Judge,

and Lynch, Circuit Judge.

David G. Hanrahan, with whom Ross D. Ginsberg and

Gilman, McLaughlin & Hanrahan, LLP, were on brief, for

appellant.
Allan E. Taylor, with whom Elizabeth C. Sackett and

Taylor, Duane, Barton & Gilman, LLP, were on brief, for

appellee.

October 22, 1997

LYNCH, Circuit Judge. This case raises issues of
LYNCH, Circuit Judge.

Massachusetts law concerning the obligations that attorneys

owe clients in their billing practices.

Attorney Daniel Goldstone formed Goldstone &

Sudalter, P.C. to purchase the practice of the late Eldon

Sudalter, a collection attorney. Goldstone & Sudalter then

billed Sears, Roebuck & Co. in excess of one million dollars

for past work Goldstone said Attorney Sudalter had performed

on Sears's cases. Sears at first paid most of the bills, but

eventually sued Goldstone & Sudalter for an accounting,

asking for a judicial determination of its total liability,

if any, for the past work. Goldstone & Sudalter, in turn,

counterclaimed for the unpaid balance.

Following Goldstone's admission that he had no

personal knowledge concerning Sudalter's billing practices to

support his interpretation of the records which formed the

basis for his bills, Sears amended its complaint to include

common-law claims for breach of contract and breach of

fiduciary duty, and a statutory claim of "unfair and

deceptive trade practices" under Mass. Gen. Laws ch. 93A.

Sears sought reimbursement for bills it had previously paid

and an award of attorney's fees. The district court granted

Sears's motion for summary judgment, and awarded it $833,409

-- the entire amount of Sears's payments on the disputed

bills -- and $112,000 in attorney's fees.

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Although our analysis varies from that of the

district court, the summary judgment record reveals that

Goldstone & Sudalter has not met its burden of substantiating

its bills under Massachusetts law and that Sears has met its

burden of showing unfair and deceptive practices. We affirm.

I. The Facts.

We state the facts in the light most favorable to

Goldstone & Sudalter, the party opposing summary judgment.

Swain v. Spinney, 117 F.3d 1, 2 (1st Cir. 1997).

In 1991, Daniel Goldstone, then a lawyer with three

years of experience, began negotiations with Mrs. Janice

Sudalter to purchase the law practice of her late husband

Eldon Sudalter. Eldon Sudalter was a solo practitioner and

had been the primary collection attorney for Sears in eastern

Massachusetts for the previous fifteen years. Mrs. Sudalter

had worked in her husband's office for most of that time and

her regular duties included preparing the monthly billings

for Sears and other clients.

In mid-1991, Goldstone and Mrs. Sudalter signed a

letter of intent, and Goldstone formed Goldstone & Sudalter

to purchase the assets of the practice and continue the

business. In late 1991, the relationship broke down amid

mutual recriminations, and Goldstone sued Mrs. Sudalter in

state court over the terms of their agreement.

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By early 1992, Goldstone was in possession of the

files of the Eldon Sudalter practice and was servicing its

clients, although Goldstone and Mrs. Sudalter did not

finally settle the state court litigation until January 1993.

The settlement provided for a total purchase price of

$150,000 for all of the assets, tangible and intangible, of

the Eldon Sudalter practice. Goldstone had not actually

worked with Attorney Sudalter, and had not discussed with him

the firm's billing practices. Goldstone had no personal

knowledge of whether particular cases in Sudalter's files had

been billed or were uncollectible, or had been formally

closed, whether or not billed or uncollectible.

Like many collection attorneys, the late Eldon

Sudalter operated on a contingency fee basis. Before 1987,

Sears paid Attorney Sudalter one-third of his recovery and

reimbursed him for all court costs. That changed. On

September 8, 1987, Attorney Sudalter executed a form

"Attorney Retention Agreement" prepared by Sears for its

collection attorneys throughout the United States.

The 1987 Agreement increased Attorney Sudalter's

fee to forty-five percent, but he was now to be responsible

for all costs that were not reimbursed by debtors. According

to Mrs. Sudalter, under the new agreement, "[W]e take 45

percent of what we collect. If we can recover the costs

[from debtors], great. If we can't recover the costs, that's

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just part of the agreement; that's why they're [Sears] paying

us the 45 percent." Goldstone offered no evidence to

contradict Mrs. Sudalter's testimony that the forty-five

percent contingency fee was intended to take into account all

court costs.

According to the 1987 Agreement, the collection

attorney was to send all monies collected to Sears on a

monthly basis, accompanied by a report; Sears would then pay

the attorney's contingency fee. The 1987 Agreement provided:

"Attorney will be accountable for all monies collected on any

of the accounts and will submit at least monthly a report to

Sears listing the accounts on which collections were made and

amount collected, together with a check payable to Sears for

all monies collected." (emphasis supplied). The 1987

Agreement also states, "Attorney waives any attorney's lien

on Sears accounts and agrees not to assert such lien against

Sears."

Sears did not send individual checks to the

Sudalter firm for the particular matters for which they paid

Attorney Sudalter his legal fees or costs over the years.

Likewise, Attorney Sudalter did not customarily record his

receipt of the contingency fee or costs from Sears on each

debtor's file. Rather, Attorney Sudalter regularly

deposited money from debtors in a Sears client trust account

and remitted a single check each month to Sears from the

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account for the total amount of that month's collections.

Sears then remitted the contingency fee for that amount and

for any amounts that debtors sent directly to Sears. Before

1987, Sears would reimburse court costs in a single monthly

check if Sudalter could not collect them from debtors. After

1987, Sears was not responsible for those costs, although it

would still occasionally send Sudalter costs that debtors had

sent to Sears instead of Sudalter, again in a single check

for that month.

The agreement set forth a separate compensation

arrangement if Sears terminated the agreement or withdrew

customer accounts. In that event, Sears would pay Sudalter

$60 per hour for his time and reimburse his court costs,

although it would pay no such fees if Sudalter terminated the

agreement or was in breach of the agreement. According to an

employee for a collection agency that Sears uses, withdrawing

accounts is seen as a "drastic" step because of these fees

and costs and for that reason is rarely employed in the

collection industry.

In early 1992, Goldstone called Karen D'Angelo, a

special accounts manager at Sears, to ask why Sears had

stopped sending cases to the Sudalter firm, now operating as

Goldstone & Sudalter. D'Angelo was a low-level Sears

employee who had been in her present job in Massachusetts for

two years and had first spoken to Attorney Sudalter only

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shortly before he died in 1991. D'Angelo informed Goldstone

that Sears rated its collection attorneys by comparing the

amounts the attorneys collected monthly as a percentage of

their total portfolios. According to Goldstone, D'Angelo

informed him that the law practice had "never closed a file

in fifteen years," and urged the firm to close these accounts

to make its percentage appear more competitive.

Goldstone began "closing" the old files, informing

Sears that he would attempt no more collections on such

cases. At the same time, he implemented the billing

practices at issue in this lawsuit. Goldstone began by

reviewing thousands of old files contained in "dead storage"

in the basement of the late Eldon Sudalter's former office,

most of which had red stickers on them. Some file folders

contained handwritten notations of court costs paid by

Sudalter and some indicated whether those costs had been

reimbursed by debtors or Sears. Goldstone prepared a letter

for signature by a Sears representative, "acknowledg[ing] the

assignment to Goldstone & Sudalter, P.C. of the contract

executed by Eldon B. Sudalter, P.C." in 1987. The letter

also referred to that contract, stating, "Specifically, with

regard to the 'pre-1992 closed cases,' Sears will be

responsible for costs expended and attorneys' fees at the

rate of $60.00 per hour in accordance with Exhibit 'B'

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annexed to the 1987 contract." Emma Scott, an in-house

attorney for Sears, signed the letter.

Goldstone states that he regarded this letter as

"completely consistent with the earlier Attorney Retention

Agreement" and that he did not believe that Scott's signing

of the letter was intended to alter the terms of the 1987

Agreement in any way. According to Goldstone's

interpretation of the agreement, his "closing" of cases,

which he did after his conversation with D'Angelo, triggered

Sears's obligation to pay for court costs and work performed

on an hourly basis under the contract's provisions regarding

cases "withdrawn" by Sears. There is some evidence that

Sears's in-house attorneys, at least initially, agreed with

Goldstone's interpretation.

From February 1, 1992 until February 23, 1996,

Goldstone billed Sears for costs and attorney's fees on each

of over 15,000 files. He derived his cost figures from the

handwritten notations on the outside of the folders. He

assumed that Sudalter had not been reimbursed by Sears or

debtors unless there was a handwritten note to that effect on

the folder. He derived his figures for attorney's fees by

estimating the amount of time that Sudalter had spent on each

file by examining the tasks that the file reflected had been

performed, or by having non-attorney employees perform such

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estimates to his specifications.1 These bills for "closed

cases" totaled over $1.1 million dollars; Sears paid $833,409

before bringing the present litigation.

During this time, Goldstone also submitted monthly

the money he had collected for Sears on active files, and

Sears paid the forty-five percent contingency fee. Despite

the 1987 Agreement and without Sears's knowledge, Goldstone

also pocketed a portion of the money he collected from Sears

debtors as reimbursement for court costs before sending the

balance to Sears each month.2

1. In each case, the amount of attorney time that
Goldstone estimated was minimal, almost always less than an
hour.

2. According to Goldstone, the firm's practice of skimming
reimbursement for costs off the top of collections from Sears
debtors was dictated by the law of champerty, which generally
requires that clients remain liable for expenses even in
contingency fee arrangements. According to Goldstone, a non-
attorney Sears employee agreed with his interpretation. In
fact, however, S.J.C. Rule 3:05, governing contingent fees
for Massachusetts attorneys, provides, "Contingent fee
arrangements concerning the collection of commercial accounts
. . . made in accordance with usual practices in respect of
such cases shall not be regarded as champertous and shall not
be subject to," inter alia, the requirement that "the client,

in any event, is to be liable for expenses and
disbursements." Regardless, the 1987 Agreement and DR 9-102
absolutely forbid Goldstone's unilateral reimbursement of
costs from client funds without the client's knowledge or
consent, even if he were entitled to such reimbursement.
Under the Massachusetts Rules of Professional
Conduct, effective January 1, 1998, which repeal former
S.J.C. Rule 3:05 and the disciplinary rules, attorneys may
make payment of costs and expenses contingent on success for
all clients. See Rule 1.8(e)(1). Naturally, the requirement

to keep client funds separate remains in effect. See Rule

1.15.

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In mid-1992, Sears employees began to question Mr.

Goldstone's billings when they noticed that his bills

exceeded the amount he had collected for Sears for several

months. Goldstone explained that many of the bills were not

for ongoing cases, but for closed cases from the Sudalter

firm. He represented that Sears had not previously paid for

these cases. At a meeting in the summer of 1992, Goldstone

showed a box of files to Karen D'Angelo, the Sears special

accounts manager with whom he had spoken earlier, explaining

that the markings meant that Sears had not paid for these

cases. D'Angelo confirmed that the account numbers on the

files represented genuine Sears collection accounts that had

been placed with the Sudalter firm, but did not challenge

Goldstone on the meaning of the file folder markings.

Goldstone did not say that this was just his interpretation

of the file folder markings, or that the markings could be

interpreted differently.

Later that year, higher-ranking Sears executives

inquired about the increase in expenses for attorney's fees

that Goldstone's "closed cases" bills represented, asking the

office to "stop" Goldstone's bills. Renee Matta, D'Angelo's

supervisor, wrote an e-mail explaining her understanding of

the situation.

This is not something that I can "stop." Attorney
Goldstone is charging for fees and costs that were
never billed to us over an extended period of time
for services rendered by Attorney Sudalter. . . .

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I merely asked him to get the bloodletting over
with in 92 if possible. He was in today and
brought in the "last" of the culling process. It
should peak out at $605,000 for the year! All of
these cases should have (at some time) been billed
to Sears -- but were not. Mrs. Sudalter has said
that she had intended to bill Sears -- but didn't.
. . . I have reviewed many of the accounts and find
the bookkeeping to be in order. Mr. Goldstone
merely followed the intent of the contract when he
was told that accounts that have not been "paid"
should not remain in his portfolio. . . .

Although the e-mail states that Matta "reviewed many of the

accounts," the record reveals that such review was only to

determine whether the account numbers accurately referred to

Sears debtors. As Matta explained,

[O]n some invoices it was difficult for us to
determine what we were paying for. The accounts
were very, very old . . . . I recall [my
employees] getting some clarification [from
Goldstone] on some account numbers. . . . I do
recall them getting some clarification on account
names to substantiate the name that we had been
billed for.

Other than the review to see if the account numbers matched

those of Sears's debtors, Matta relied on Goldstone for her

information. Apart from reviewing the account numbers, Sears

employees did not independently review the law firm's records

to determine whether the amounts Goldstone billed for

attorney time or costs were accurate; they trusted that

Goldstone, as their attorney, had a basis for those figures.

Believing that Goldstone had a basis for his bills

and that the contract required the payments, Sears employees

did not question Goldstone again until the bills continued to

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arrive throughout 1993 and early 1994 without any apparent

end in sight. When Sears again began to question the bills

and to delay its payments to Goldstone, he took action.

Goldstone threatened to deduct his fees from money collected

from Sears's debtors. He also noted in a letter that he and

the firm felt "restrained from acting in our client's best

interest because of" Sears's failure to pay. In 1994, Sears

finally terminated its relationship with Goldstone & Sudalter

and brought the present action for an accounting to determine

whether Goldstone's bills were in order. Goldstone

counterclaimed for the unpaid balance.

At deposition, Mrs. Sudalter testified that she

performed bookkeeping duties for her husband's firm and was

intimately familiar with its billing practices. She

testified that Sears did not owe anything on the old files,

i.e. files in dead storage of whatever year, and that it was

impossible to determine from the outside of a folder whether

Sears had paid a fee for the file. Although he had never

discussed with Attorney Sudalter the system for determining

whether Sears had paid a fee or reimbursed costs for a

particular case, Goldstone's position was that the costs were

self-evident from a review of the case jacket. Likewise,

Goldstone contends, the fee could be reliably estimated by

reviewing the work performed and determining, based on his

experience, how much time each task ordinarily required.

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Mrs. Sudalter noted that, after 1987, Sears was not

obligated to reimburse for costs, and that she did not record

Sears's payment of the forty-five percent contingency fee on

the outside of each file folder because it would have been

time-consuming. Mrs. Sudalter also testified that the red

stickers that many of the file folders contained marked those

cases as "closed," that the firm's "closed" cases were either

fully paid up or uncollectible, and that the law practice

never intended to submit any further bills to Sears on

"closed" cases. A preliminary review of a mere fourteen case

files demonstrated that Sears had already paid legal fees for

work performed on some substantial portion of the cases, a

fact which Goldstone admitted at his deposition.

Following these depositions, Sears amended its

complaint, alleging a fraudulent double-billing scheme by

Goldstone. Sears asked for damages of $833,409 to recover

all the fees it had paid for old cases, and also demanded

attorney's fees under Mass. Gen. Laws ch. 93A for "unfair or

deceptive trade practices." On cross-motions for summary

judgment, the district court ruled for Sears, finding

Goldstone in breach of his contract and fiduciary duty as an

attorney and in violation of Mass. Gen. Laws ch. 93A, 2.

The district court awarded the full $833,409 in damages and

$112,000 in attorney's fees.

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Our review of the district court's grant of summary

judgment is de novo. Swain, 117 F.3d at 5.

II. Goldstone's Obligations In Billing Sears

The attorney-client relationship is "highly

fiduciary" in Massachusetts. Hendrickson v. Sears, 310

N.E.2d 131, 135 (Mass. 1974); Dunne v. Cunningham, 125 N.E.

560, 561 (Mass. 1920). To state that elastic truism does not

answer the question of the level of duty which is imposed on

a lawyer in billing clients. The district court found that a

particularly high level of duty was required here,

analogizing this case to situations where the attorney has a

separate business relationship with a person while

simultaneously representing that person as counsel. See

Goldman v. Kane, 329 N.E.2d 770 (Mass. App. Ct. 1975). To

the extent that the district court's opinion might be

misunderstood to suggest that the separate "business

transaction" rules in Goldman apply to ordinary billing

arrangements between a lawyer and client when the lawyer's

sole relationship with the person who is the client is as

counsel, we clarify that this is not the law.

To the extent that the district court was ruling

that the more stringent Goldman business transaction rules

apply when an attorney purchases a practice and subsequently

bills for services rendered earlier by that practice, we need

not and do not reach that issue. We leave that issue more

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appropriately to the Massachusetts courts to decide in some

future case.3 We affirm on the basis that the summary

judgment record shows no dispute of material fact that

Goldstone violated the usual duties owed by Massachusetts

lawyers when billing clients and that he did so in a manner

which was in breach of his contract and in violation of Mass.

Gen. Laws ch. 93A.

In Goldman, an attorney sued his client to enforce

a loan agreement whose terms greatly favored the attorney.

The loan agreement was an independent business transaction

between the two. In this context, the court declined to

enforce the agreement: "When an attorney bargains with his

client in a business transaction in a manner which is

advantageous to himself, and if that transaction is later

called into question, the court will subject it to close

scrutiny." Id. at 773. When there are such business

transactions, the fiduciary relationship requires a series of

heightened duties in light of the heightened risks.

Specifically, these heightened duties require the lawyer to

meet the burden of showing that (1) the transaction "was in

all respects fairly and equitably conducted" and that (2) the

3. The new Massachusetts Rules of Professional Conduct,
effective January 1, 1998, do not expressly address whether
the business transaction rules should be applied to such a
situation. See Rule 1.8 (governing attorney-client business

transactions); Rule 1.17 (governing the sale of a law
practice).

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client had received "independent advice in the matter or else

receive[d] from the attorney such advice as the latter would

have been expected to give had the transaction been one

between his client and a stranger." Id.4 The Goldman rule

has been adopted by the Supreme Judicial Court. See In re

Stern, 682 N.E.2d 867, 871 (Mass. 1997) (finding an

attorney's entering into a business transaction with a client

without urging an independent legal opinion a violation of DR

5-104 and DR 1-102); Israel v. Sommer, 197 N.E. 442 (Mass.

1935) (holding a trust agreement favoring an attorney invalid

for failure to obtain disinterested advice); Hill v. Hall, 77

N.E. 831 (Mass. 1906) (holding a sale invalid for failure to

obtain disinterested advice). The new Massachusetts Rules of

Professional Conduct restate the Goldman requirements as a

separate rule, see Rule 1.8,5 and essentially the same rule

4. Under Goldman, a prudent attorney would refrain from

attempting personally to give the required disinterested
advice. The attorney in Goldman had advised his client not

to enter into the loan agreement, yet the court found that
"in the circumstances of this case, [the attorney's] full
disclosure and his advice were not sufficient to immunize him
from liability." Id.

5. Rule 1.8(a) provides:
"A lawyer shall not enter into a business
transaction with a client or knowingly acquire an
ownership, possessory, security, or other pecuniary
interest adverse to a client unless:
"(1) the transaction and terms on which the
lawyer acquires the interest are fair and
reasonable to the client and are fully
disclosed and transmitted in writing to the
client in a manner which can be reasonably
understood by the client;

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has been proposed by the ALI, see Restatement (Third) of the

Law Governing Lawyers 207 (Proposed Final Draft No. 1,

March 29, 1996) (relying on Goldman and similar cases to

require independent legal advice for business transactions

between lawyers and clients).6

Business transactions other than fee agreements

between lawyers and clients create special conflicts of

interest that require the precaution of independent advice.

However, attorneys, like fiduciaries generally, are entitled

to receive compensation for their services, and may pursue

their legitimate interests in receiving payment in the

ordinary fashion. Thus, seeking to enforce a valid fee

contract is an exception to the general requirement that

"(2) the client is given a reasonable
opportunity to seek the advice of independent
counsel in the transaction; and
"(3) the client consents in writing thereto."

6. As proposed by the ALI, Restatement 207 provides:

"A lawyer may not participate in a business or
financial transaction with a client, except a
standard commercial transaction in which the lawyer
does not render legal services, unless
"(1) the client has adequate information about
the terms of the transaction and the risks
presented by the lawyer's involvement in it;
"(2) the terms and circumstances of the
transaction are fair and reasonable to the
client; and
"(3) the client consents to the lawyer's role
in the transaction under the limitations and
conditions provided in 202 [concerning
client consent to conflicts of interest] after
being encouraged, and given a reasonable
opportunity, to seek independent legal advice
concerning the transaction."

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fiduciaries subordinate their interests to those of their

clients. See generally Restatement (Second) of Agency

441, 463 (1957) (providing that a principal has a duty to

compensate his or her agent and that an agent may take action

in the case of breach); Restatement (Third) of the Law

Governing Lawyers 29, 29A (P.F.D. No. 1, March 29, 1996)

(providing that a client has an obligation to compensate his

or her lawyer and that a lawyer may enforce a valid fee

contract).

Massachusetts law does not regard the ordinary fee

contract as a "business transaction between lawyer and

client" subject to the special requirements of Goldman. See

Coupounas v. Madden, 514 N.E.2d 1316 (Mass. 1987) (affirming

a client's duty to pay a lawyer-accountant and refusing to

hold invalid notes that client signed for failure to obtain

independent legal advice); see also Restatement (Third) of

the Law Governing Lawyers 207 cmt. a (P.F.D. No. 1, March

29, 1996) ("The requirements [for business transactions] do

not apply to ordinary client-lawyer fee agreements . . . .").

It would make little sense to require an attorney, embarking

on representation of a client and entering into an ordinary

fee agreement, to advise the client to hire another attorney

to give "independent legal advice" concerning that fee

agreement.

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Nevertheless, this case still turns on the rules

for the regulation of attorney's fees which Massachusetts has

established to protect clients and to preserve the integrity

of the bar. Massachusetts has established that a lawyer

always bears the burden of proof in any proceeding to resolve

a billing dispute, whether the lawyer appears as a plaintiff

seeking to recover a fee or as a defendant in a suit for a

refund. First National Bank of Boston v. Brink, 361 N.E.2d

406, 410 (Mass. 1977) (suit for an accounting and refund of a

large fee for tax advice); Smith v. Binder, 477 N.E.2d 606

(Mass. App. Ct. 1985) (suit for an accounting and refund of a

portion of large retainer fee); see also Restatement (Third)

of the Law Governing Lawyers 56(2) (P.F.D. No. 1, March 29,

1996) (following the Brink rule). As the Restatement notes,

"A lawyer . . . will usually have better access than a client

to evidence about the lawyer's own services . . . ." Id. at

56 cmt. c. That concern is particularly salient in this

case, where the items of evidence that Goldstone presents

consist of cryptic handwritten notations on several thousand

old file folders.

To satisfy an attorney's burden of proof under

Massachusetts law, he or she must provide more than purely

speculative evidence to support a claim that a client owes a

particular charge in order to defeat a properly supported

motion for summary judgment. See Beatty v. NP Corp., 581

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N.E.2d 1311, 1314-16 (Mass. App. Ct. 1991) (finding evidence

of an agreement by a client to pay a performance bonus too

"isolated" to support attorney's claim); accord Davis v.

Glenville Haldi, P.C., 253 S.E.2d 207, 208 (Ga. Ct. App.

1979) (rejecting attorney's claim where he introduced "no

evidence indicating the amount of time spent on the case or

the amount of work he performed," but only the attorney's own

opinion that a prospective contingency fee would be $25,000).

Scanty or speculative evidence concerning the value of legal

services is insufficient to create a genuine issue for the

trier of fact. See Beatty, 581 N.E.2d at 1315-16 (summary

judgment appropriate); accord Davis, 253 S.E.2d at 208

(directed verdict appropriate). Placing the burden of proof

on the attorney is sensible in light of the difficulty of

monitoring the attorney's services.

While Sears is the moving party, it has supported

its summary judgment motion by pointing to undisputed

material facts in the record. Now, the burden of proof rests

with Goldstone to present clear evidence that the bills are

owed by Sears. "Once the moving party has properly supported

her motion for summary judgment, the burden shifts to the

nonmoving party, with respect to each issue on which he has

the burden of proof, to demonstrate that a trier of fact

could reasonably find in his favor." DeNovellis v. Shalala,

1997 WL 527912, at *5 (1st Cir. Sept. 2, 1997). Goldstone

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has failed to demonstrate that a trier of fact could find in

his favor. The evidence he presented to substantiate the

bills he submitted for over 15,000 files consists entirely of

his own interpretation of the handwritten markings contained

on the outside of the files and his own estimates of the

amount of time that Sudalter spent on cases stretching over

fifteen years. He lacks personal knowledge that Sudalter had

not already billed Sears on these accounts or had determined

that they were not to be billed.

On the summary judgment record, Mrs. Sudalter is

the only competent witness to her late husband's bookkeeping

practices; Goldstone has no personal knowledge regarding the

firm's records and never even met Attorney Sudalter.7 See

F.R.C.P. 56(e) ("Supporting and opposing affidavits shall be

made on personal knowledge . . . and shall show affirmatively

that the affiant is competent to testify to the matters

stated therein."). Mrs. Sudalter has testified that it is

impossible to determine from the old file folders whether

7. Goldstone also calls our attention to the affidavit of
Frederick Casson, which was stricken by the district court.
Goldstone failed to disclose Casson's identity pursuant to
F.R.C.P. 26(a) at the outset of the litigation. The district
court ordered the affidavit stricken, the sanction
established by F.R.C.P. 37(c)(1). The district court's
decision was well within its discretion. See Rivera-Flores

v. Bristol-Myers Squibb Caribbean, 112 F.3d 9, 14 (1st Cir.

1997) ("Our review of the district court's discovery-related
decisions is for abuse of discretion, and we will intervene
in such matters only upon a clear showing of manifest
injustice.").

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Sears owed any money for attorney's fees and costs, that the

Sudalter firm never intended to submit further bills to Sears

for files in "dead storage" and that the red stickers on old

files indicate that the matters were considered "closed."

Goldstone's only response is to say that Mrs. Sudalter is

biased against him. But that does not satisfy his burden to

"set forth specific facts showing that there is a genuine

issue" for trial. Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 248 (1986); DeNovellis, 1997 WL 527912, at *5. A party

cannot create an issue for the trier of fact "'by relying on

the hope that the jury will not trust the credibility of

witnesses. . . . There must be some affirmative evidence . .

. .'" Dragon v. Rhode Island Dep't of Mental Health,

Retardation and Hospitals, 936 F.2d 32, 35 (1st Cir. 1991)

(quoting Wright and Miller, Federal Practice and Procedure:

Civil 2d 2527 (1st ed. 1971) (misquoted as 2528 in

Dragon)).

Goldstone nonetheless urges us to vacate the

summary judgment for Sears and remand the case in order to

require Sears to establish its injury by showing the

impropriety of his bills for each of over 15,000 files. As

the district judge noted, "[i]t would be perverse for the

court to hold Sears . . . to a standard the [defendant]

himself could never achieve." This case illustrates the

reasons for the Commonwealth's rule that a lawyer always

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bears the burden to prove that he is owed compensation under

a valid fee agreement. The burden of proof was not on Sears;

it was on Goldstone. He has had his opportunity to satisfy

his burden. While Sears's record keeping practices were

sloppy at best and Sears does not evoke much sympathy, it is

the lawyer's burden to justify amounts billed.8 Because

Goldstone has failed to produce evidence that Sears actually

owed Sudalter any of the $833,409 that represents Sears's

payment on the closed files, the district court's damage

award was proper.9

8. Goldstone argues that a ruling for Sears means that no
attorney can recover for his work in the absence of
contemporaneous time records. The issue is not whether an
attorney may charge fees in the absence of contemporary time
records. It is whether a lawyer without personal knowledge
that a bill is owed has produced sufficient admissible
evidence to survive summary judgment that the obligation in
fact exists. We also note that in the purchase of a law
practice, the lack of adequate billing records to support
accounts receivable can, of course, be reflected in the
purchase price.

9. Goldstone's attorney contended in oral argument that some
of the $833,409 in bills that Sears paid were not for closed
files, but for new work that Goldstone performed. However,
the district court had ordered Goldstone to make an
accounting of invoices he submitted for fees and costs that
he claimed were owing to his deceased partner, Eldon B.
Sudalter, and according to the district court, "[t]he parties
agree[d] that the relevant sum charged to and paid by Sears
[was] $833,409. Goldstone & Sudalter's own accountant
provided that figure as "an accounting of all charges . . .
for 'closed accounts' . . . ." Goldstone's attorney did not
dispute that figure at the damages hearing, but instead
contended that Sears had not shown that all the files had
previously been billed. Given Goldstone's burden, that fact
is not material to the damages issue. Goldstone has not
sustained his argument that part of the $833,409 judgment
covers bills for work that he himself performed, rather than

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III. Chapter 93A

The district court found that the undisputed facts

established that Goldstone's conduct was "unfair or

deceptive," in violation of Chapter 93A. This Chapter 93A

finding, and the finding that Sears suffered harm from that

violation, entitled Sears to an award of attorney's fees.

Mass. Gen. Laws ch. 93A, 11; NASCO v. Public Storage, Inc.,

1997 WL 610055, at *1 (1st Cir. Oct. 8, 1997).

Chapter 93A applies to attorneys, and unlawful

billing or other unethical conduct can constitute a Chapter

93A violation. See Guenard v. Burke, 443 N.E.2d 892, 896

(Mass. 1982) (reliance on an illegal contingent fee agreement

to collect a fee violates Chapter 93A); Brown v. Gerstein,

460 N.E.2d 1043, 1051-52 (Mass. App. Ct. 1984) (lawyer's

unethical deceit toward his clients concerning the status of

litigation violated Chapter 93A). To establish that no

genuine issue of material fact existed on the Chapter 93A

claim, Sears is required to show that the undisputed facts

reveal that Goldstone's conduct "falls 'within at least the

penumbra of some common-law, statutory, or other established

concept of unfairness' or is 'immoral, unethical, oppressive

or unscrupulous.'" Cambridge Plating Co. v. NAPCO, Inc., 85

F.3d 752, 769 (1st Cir. 1996) (quoting PMP Assoc., Inc. v.

Globe Newspaper Co., 321 N.E.2d 915, 917 (Mass. 1975)).

bills for Sudalter's work.

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Goldstone's breach of his obligations in these

circumstances is sufficient to establish a Chapter 93A

violation. Cambridge Plating, 85 F.3d at 769; Doucette v.

Kwiat, 467 N.E.2d 1374 (Mass. 1984) (finding that an

attorney's collection of a fee to which he was not entitled

under his fee agreement violated Chapter 93A). Furthermore,

Goldstone admitted to conduct which constitutes unethical

behavior in skimming his costs off the top of Sears

collections without Sears's knowledge or consent and in

violation of his contract. See DR 9-102. Violations of the

rules governing the legal profession are evidence of legal

malpractice, and are also relevant in Chapter 93A

determinations. See Fanaras Enterprises, Inc. v. Doane, 666

N.E.2d 1003, 1006 (Mass. 1996); Brown, 460 N.E.2d at 1050,

1052 n.22.

The district court's finding of a Chapter 93A

violation does not depend on whether Goldstone knowingly

devised a scheme to defraud Sears or was merely opportunistic

and reckless in making the assumptions he did regarding the

files. Whether or not Goldstone's conduct was knowingly

fraudulent, the record clearly shows that his conduct fell

"within at least the penumbra of some common-law, statutory,

or other established concept of unfairness." Cambridge

Plating, 85 F.3d at 769 (citation and internal quotation

marks omitted). Sears did not seek the double or treble

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damages that are available for knowing violations of Chapter

93A, see Mass. Gen. Laws ch. 93A, 11, so the issue of

Goldstone's knowledge is not a "genuine issue of material

fact" that would defeat summary judgment. The district

court's award of attorney's fees of $112,000 was warranted.

Goldstone does not dispute the amount of attorney's fees

awarded.

The district court's grant of summary judgment,

damages and attorney's fees is affirmed.

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