Berkowitz v. Berkowitz

Filing 118

Judge Denise J. Casper: ORDER entered. MEMORANDUM AND ORDER - Bonnie's motions for a new trial, D. 106, and for judgment as a matter of law, D. 79, 89, 107, are DENIED.(Hourihan, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
__________________________________________
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SAMUEL BERKOWITZ,
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Plaintiff,
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v.
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BONNIE BERKOWITZ,
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Defendant.
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__________________________________________)

Civil Action No. 11-10483-DJC

MEMORANDUM AND ORDER
CASPER, J.
I.

March 30, 2015

Introduction
Defendant Bonnie1 Berkowitz (“Bonnie”) has moved for judgment as a matter of law

pursuant to Fed. R. Civ. P. 50, D. 79, 89, 107, or in the alternative, for a new trial pursuant to
Fed. R. Civ. P. 59, D. 106. Following a trial, a jury returned a verdict in favor of Plaintiff
Samuel Berkowitz (“Samuel”). D. 92. Bonnie alleges she was prejudiced by Samuel’s trial
strategy, D. 106 at 1-2, and also that Samuel’s case was legally deficient and barred by a number
of affirmative defenses. D. 107 at 2. For the reasons discussed below, Bonnie’s motions are
DENIED.

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Bonnie’s counsel notes the correct spelling of her name is “Bonni” but continues with
the spelling used in earlier pleadings. D. 106 at 1. The Court continues with the previous
spelling for consistency.
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II.

Standard of Review
Fed. R. Civ. P. 59(a)(1)(A) allows a court to “grant a new trial on all or some of the

issues—and to any party” following a jury trial, “for any reason for which a new trial has
heretofore been granted in an action at law in federal court.” Fed. R. Civ. P. 59(a)(1)(A).
Generally, a district court may order a new trial “only if the verdict is against the law, against the
weight of the credible evidence, or tantamount to a miscarriage of justice.” Crowe v. Marchand,
506 F.3d 13, 19 (1st Cir. 2007) (quoting Casillas–Díaz v. Palau, 463 F.3d 77, 81 (1st Cir. 2006)).
“[A] district court has the power and duty to order a new trial whenever, in its judgment, the
action is required in order to prevent injustice,” and the Court may independently weigh the
evidence presented at trial. Jennings v. Jones, 587 F.3d 430, 436 (1st Cir. 2009) (quoting Kearns
v. Keystone Shipping Co., 863 F.2d 177, 181 (1st Cir. 1988)). “[T]he trial judge's discretion,
although great, must be exercised with due regard to the rights of both parties to have questions
which are fairly open resolved finally by the jury at a single trial.” Ahern v. Scholz, 85 F.3d 774,
780 (1st Cir. 1996) (quoting Coffran v. Hitchcock Clinic, Inc., 683 F.2d 5, 6 (1st Cir. 1982)).
That is, a judge “cannot displace a jury’s verdict merely because he disagrees with it or would
have found otherwise in a bench trial.” Id. (quoting Milone v. Moceri Family, Inc., 847 F.2d 35,
37 (1st Cir. 1988).
Fed. R. Civ. P. 50 provides that a party may file for judgment as a matter of law when “a
reasonable jury would not have a legally sufficient evidentiary basis” to find in favor of the nonmoving party. Fed. R. Civ. P. 50(a)(1); Barkan v. Dunkin' Donuts, Inc., 627 F.3d 34, 39 (1st Cir.
2010). A movant faces an “uphill battle,” as “[c]ourts may only grant a judgment contravening a
jury’s determination when the evidence points so strongly and overwhelmingly in favor of the
moving party that no reasonable jury could have returned a verdict adverse to that party.” T G
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Plastics Trading Co., Inc. v. Toray Plastics (Am.), Inc., 775 F.3d 31, 38 (1st Cir. 2014)
(alteration in original) (citation omitted). Conversely, “if instead fair-minded person could draw
different inferences from the evidence presented at trial, the matter is for the jury.” Espada v.
Lugo, 312 F.3d 1, 2 (1st Cir. 2002). Accordingly, the “court ‘may not consider the credibility of
witnesses, resolve conflicts in testimony or evaluate the weight of the evidence.’” Barkan, 627
F.3d at 39. A non-moving party with the burden of proof, however, must “present ‘more than a
mere scintilla’ of evidence and may not rely on conjecture or speculation” to defeat a motion for
judgment as a matter of law. Id. (quoting Katz v. City Metal Co., 87 F.3d 26, 28 (1st Cir. 1996)).
III.

Background
A.

Factual Background

The following facts are as drawn from the trial testimony. Samuel was diagnosed with
cancer in 1994 and underwent a life-saving operation at the end of that year. D. 107-3 at 103.
Following his operation, Samuel was bedridden for twelve to sixteen hours per day. Id. Shortly
thereafter, Samuel decided to move to Florida to focus on his health. Id. On or about May 13,
1999, he conveyed his interest in three parcels of real estate in Chelsea, Massachusetts (the
“Chelsea Properties”) to his wife, Barbara, and to his daughter, Bonnie, so that they could
manage the properties while he was away. Id. at 106; 111-112. On June 5, 1998, Samuel gave a
general power of attorney to Bonnie, as he trusted her to handle his affairs while he was ill. Id.
at 104-111.
Barbara testified that on November 14, 2000, she and Bonnie sold the Chelsea properties
for $1.7 million, each receiving 50 percent of the sales proceeds. Id. at 43-46. Samuel testified
that Barbara and Bonnie engaged in a series of financial transactions in 1999-2000, the effect of
which was to remove securities of approximately $1 million from his control. D. 107-4 at 20.
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Specifically, Samuel testified that Bonnie forged his signature on a document transferring the
securities to an account she held with her mother. Id. at 11; D. 109-5. Samuel also testified that
Bonnie never accounted for the securities, D. 107-4 at 22, or told him that the securities were
hers. D. 107-3 at 114-115.
B.

Procedural History

Samuel commenced this action on March 22, 2011. D. 1. Bonnie moved to dismiss the
complaint on April 25, 2011, D. 6, and the Court denied the motion. D. 12. The parties
proceeded with discovery. On February 11, 2013, Bonnie moved for summary judgment,
alleging Samuel’s claims were barred by: (1) the statute of frauds; (2) the statute of limitations;
(3) judicial estoppel; and (4) the doctrine of laches, D. 25, which the Court denied, D. 34.
Following a trial, a jury returned a verdict in Samuel’s favor, finding that (1) Bonnie owed
Samuel a fiduciary duty and the fiduciary duty arose from a resulting or constructive trust, (2)
Bonnie breached that duty, (3) Samuel suffered damages, (4) Bonnie’s breach caused Samuel
damages, (5) Samuel did not unreasonably delay in instituting the action and that there was no
injury or delay and prejudice to the Bonnie, (6) Bonnie had not shown that she repudiated any
trust prior to March 22, 2008 and (7) Samuel suffered damages for breach of fiduciary duty in
the amount of $540,770.50. D. 92. At the close of Samuel’s case, Bonnie moved for judgment
as a matter of law, D. 79, and again at the close of evidence. D. 89. Following the verdict,
Bonnie moved for a new trial, D. 106, and renewed her prior motions for judgment as a matter of
law, D. 107. The Court heard the parties on the motions on February 24, 2015 and took the
matter under advisement. D. 116.

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IV.

Discussion
A.

Whether A New Trial is Warranted

Fed. R. Civ. P. 59 “provides a means of relief in cases in which a party has been unfairly
made the victim of surprise. The surprise, however, must be ‘inconsistent with substantial
justice ‘in order to justify a grant of a new trial.’” Perez-Perez v. Popular Leasing Rental, Inc.,
993 F.2d 281, 287-88 (1st Cir. 1993) (quoting Conway v. Chem. Leaman Tank Lines, Inc., 687
F.2d 108, 111-12 (5th Cir. 1982)). This application of the rule is generally limited “to situations
where a completely new issue is suddenly raised or a previously unidentified expert witness is
suddenly called to testify.” Id.
Bonnie seeks a new trial based on unfair surprise because, she contends, “only during
trial did the plaintiff’s stock securities claim ‘morph’ into a forgery/conversion claim.” D. 106 at
8. Specifically, Bonnie alleges the complaint “did not allege that the defendant forged or
converted the plaintiff’s stock securities” and that “at no time was she ever put on notice that the
plaintiff was going to opine that she forged his name to stock transfer documents.” Id. (emphasis
in original). Bonnie points to several sections of Samuel’s deposition in which he attributed his
signature on the transfer documents to his ex-wife, Barbara. D. 106-3 at 3-4. Bonnie concludes
she was prejudiced at trial because, despite the Court’s refusal to allow an amendment to add a
forgery claim at the conclusion of Samuel’s case, Samuel’s counsel argued that Bonnie had
forged his signature on the transfer documents. Id.
The Court cannot conclude Bonnie lacked notice of the forgery allegations or that she
was prejudiced by Samuel’s trial strategy. Samuel alleged in his complaint that his name was
forged on the transfer documents and did not confine the allegations to Barbara, Bonnie’s
mother. D. 1 ¶¶ 9-13 (providing that “Plaintiff’s ex-wife signed her name and allowed Plaintiff’s
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name to be forged to an account transfer document. . .”). In deposition, Samuel testified that he
thought Barbara forged the documents, but that he was not sure, explaining in one deposition
“yeah, I have a feeling. I will know for sure, if I call the writing experts in,” D. 106-3 at 4, and
in another, when asked whether Barbara signed his name to the documents, he replied: “I
wouldn’t swear to it, but I certainly think so.” Id. at 8.

Bonnie was asked multiple times in

deposition whether she forged her name to the transfer documents and testified “not that I recall”
to many of these inquiries, indicating that the issue could reoccur at trial. D. 108-6 at 2-10.
Counsel for Bonnie had an opportunity to cross examine Samuel as to his familiarity with her
handwriting and did so, which the jury could freely evaluate. D. 108-3 at 56-58. Further,
Bonnie herself did not testify that she had not forged his name.
Samuel’s counsel thus did not present a “completely new issue” rendering the resulting
judgment “inconsistent with substantial justice.” See Incase Inc. v. Timex Corp., 488 F.3d 46,
59 (1st Cir. 2007) (affirming denial of judgment as a matter of law based and finding no surprise
“inconsistent with substantial justice” when defendant had ample opportunity to cross-examine
and present argument to the jury); Perez-Perez, 993 F.2d at 287-88. Although unfair surprise
may warrant an application of Rule 59, such application is triggered when a party advances a
“novel theory of liability,” which the opposing party then lacks the opportunity to properly
address.

See Perez-Perez, 993 F.2d at 287 (holding a party was prejudiced by expert’s

introduction of novel theory of liability such that defense counsel was denied the opportunity to
effectively cross-examine, review records, investigate the party’s physical condition, speak to
primary care physician or arrange for a rebuttal expert); Rivera-Adams v. Wyeth, No. 03-1713
JAF, 2011 WL 346556, at *4 (D.P.R. Feb. 4, 2011) (finding no unfair surprise when plaintiff
allegedly falsely testified because defense counsel “fully explored the alleged inconsistencies
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during cross-examination” and the “jury heard and understood the conflict with the medical
records, and was entitled to decide the weight and credibility” of the testimony).
B.

Judgment as a Matter of Law
1.

There Was Sufficient Evidence To Find a Fiduciary Duty and a Breach

Bonnie contends no reasonable jury could have found a resulting or constructive trust as
to the securities at issue in this case, because the “only exhibit admitted into evidence regarding
the alleged fiduciary relationship between the plaintiff and the defendant was the Power of
Attorney given by the plaintiff to the defendant,” “[t]here was no evidence at trial of the Power
of Attorney being utilized in any capacity by the defendant,” and “[t]he only other evidence of a
fiduciary relationship existing between the plaintiff and defendant as regarding the stock
securities would be that the defendant forged the plaintiff's name to a Legg Mason stock transfer
form.” D. 107 at 8. Bonnie contends Samuel “undoubtedly created his testimony for trial and
although normally the credibility of a witness is for the jury to determine in this instance the
testimony of the plaintiff was so plainly false as to warrant same to be disregarded by the Court.”
Id.
As to the Rule 50 motion, the Court must look at whether there was a legally sufficient
basis for the verdict, Barkan, 627 F.3d at 39, and must view the evidence, and draw all
reasonable inferences, “in the light most favorable to the party against whom the motion for
directed verdict is made.” Cochrane v. Quattrocci, 949 F.2d 11, 12 n. 1 (1st Cir. 1991). Here,
there was evidence upon which the jury could conclude Bonnie owed Samuel a fiduciary duty
and that she breached that duty, particularly given that Samuel, as the non-moving party, is
entitled to “‘the benefit of all inferences which the evidence fairly supports, even though

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contrary inferences might reasonably be drawn.’” Id. (quoting Continental Ore Co. v. Union
Carbide & Carbon Corp., 370 U.S. 690, 696 (1962)).
A resulting trust is created when a party transfers property absent an intention to make an
outright gift, In re Valente, 360 F.3d 256, 263 (1st Cir. 2004) (citing Restatement (Second)
Trusts §404), whereas a constructive trust may be imposed to avoid unjust enrichment in the case
of fraud or violation of a fiduciary duty. Kelly v. Kelly, 358 Mass. 154, 156 (1970). As to the
fiduciary relationship and the utilization of the power of attorney, Samuel testified that he gave
Bonnie the power of attorney while he was ill because he trusted her to handle his affairs. D.
107-3 at 104-111. Bonnie testified that she received the power of attorney, D. 108-2 at 61-63,
and that she previously used it at least on one occasion, to obtain a duplicate copy of the title to
Samuel’s car in connection with her parents’ divorce. Id. at 63-65. The jury heard Samuel’s
testimony that Bonnie forged the signature on the form to transfer the securities to herself and
her mother, D. 107-4 at 11-12, and also examined the transfer form itself.

D. 109-5.

Additionally, the jury also heard a portion of Bonnie’s previous deposition in which she
explained that she later decided, without her mother, to transfer the securities from a Legg
Mason account into a Morgan Stanley account. D. 107-3 at 98. The jury also heard Samuel’s
testimony that Bonnie never accounted for the securities, D. 107-4 at 22, or told him that
securities were hers. D. 107-3 at 114-115. Additionally, the jury was able to consider Bonnie’s
testimony, particularly her repeated failure to recall whether she forged Samuel’s signature on
several financial documents. Id. at 79-93.
“Credibility determinations, the weighing of the evidence, and the drawing of legitimate
inferences from the facts are jury functions, not those of a judge, whether he is ruling on a
motion for summary judgment or for a directed verdict.” Anderson v. Liberty Lobby, Inc., 477
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U.S. 242, 255 (1986). A jury could have determined from the evidence at trial that Bonnie either
had knowledge of or improperly transferred the securities into her name in violation of her duties
under the power of attorney. The power of attorney created a fiduciary relationship requiring
Bonnie to act in furtherance of Samuel’s fiduciary interests and also to notify him of material
facts relevant to these interests. See Spritz, 305 Mass. at 172; Gagnon, 39 Mass. App. Ct. at 154.
As Samuel contends, that “both as attorney-in-fact and as constructive or resulting trustee,” the
jury could have found, based on the evidence at trial, that Bonnie “breached her fiduciary duty to
Samuel by conveying the securities at issue in this case to herself and failing to account.” D. 109
at 13.
2.

The Claim Is Not Barred By the Statute of Limitations

Bonnie contends Samuel’s claim is barred by the three-year statute of limitations applicable
to Massachusetts tort actions pursuant to Mass. Gen. L. c. 260, § 2A. D. 107 at 13-14. The
statute of limitations in a breach of fiduciary duty action does not toll “until the trustee repudiates
the trust and the beneficiary has actual knowledge of that repudiation.” Demoulas v. Demoulas
Super Markets, Inc., 424 Mass. 501, 518 (1997) (emphasis omitted). The Court previously
denied summary judgment to Bonnie on this issue, D. 34 at 8-10, because it could not conclude
Bonnie engaged in the necessary “open and notorious” repudiation of the trust, Stuck v.
Schumm, 290 Mass. 159, 163 (1935), “manifested by ‘a definitive expression’ of an ‘absolute
and unconditional repudiation.’” March v. March, No. 03-P-1428, 2004 WL 2452705, at *2
(Mass. App. Ct. Nov. 2, 2004) (quoting Lattuca v. Robsham, 442 Mass. 205, 214 (2004)).
Because it was “possible that Samuel could have inferred from Bonnie’s actions that she was
merely consolidating or liquidating the Chelsea Properties and securities in furtherance of the

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express purposes of the trust, i.e., to generate funds to take care of Samuel’s family,” there
remained an issue of material fact before the trial. D. 34 at 10.
At trial, Samuel testified that he added Barbara’s name to all of his securities as a result of
his health, D. 107-3 at 104, that he gave Bonnie a power of attorney so that she could handle his
affairs while he was in Florida recuperating from his illness, id. at 106, that he was aware of
“some stocks and securities being transferred to Bonnie through her mother” but that Bonnie had
never laid claim to the securities “outright.” id. at 114-15. Although Bonnie contends Samuel’s
actual knowledge of repudiation may be inferred from the documents provided in conjunction
with his divorce, this argument was previously rejected by the Court in its summary judgment
order, because Bonnie failed to identify a specific repudiation prior to 2008 when her counsel
provided Samuel with a letter indicating she would not provide an accounting. D. 34 at 8-10.
At trial, the jury heard that Samuel filed for divorce from Barbara in 2003. D. 107-3 at
47. As part of these proceedings, Samuel signed and filed with the Massachusetts Probate and
Family Court financial statements wherein Samuel neither asserted interests in the Chelsea
Properties nor the securities. D. 107-4 at 95-96. Samuel testified that the securities were listed in
Barbara and Bonnie’s names at the time of the divorce, id. at 87, and his attorney testified that
while he was aware Samuel had an interest in the securities, he did not believe he was obligated
to list them on the financial disclosure forms because Samuel’s interest was in Bonnie’s name at
the time. Id. at 104-05. Although Bonnie contends Samuel knew no later than 2003 that a
repudiation occurred, she did not testify as to a specific act of repudiation, and the jury could
have concluded that that the financial disclosures were filed in accordance with the testimony
cited above. Based on the evidence presented at trial, the jury could have found that she had not

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repudiated any trust prior to March 22, 2008, three years prior to the filing of this lawsuit, and
the Court cannot conclude the claim is barred by the statute of limitations.
3.

The Claim Is Not Barred By Judicial Estoppel

“Judicial estoppel is an equitable doctrine that precludes a party from asserting a position in
one legal proceeding that is contrary to a position it had previously asserted in another
proceeding.” Otis v. Arbella Mut. Ins. Co., 443 Mass. 634, 639-40 (2005) (quoting Blanchette v.
School Comm. of Westwood, 427 Mass. 176, 184 (1998)). While “there is no mechanical test,”
for judicial estoppel to apply, generally, the position asserted in the previous litigation must be
“directly inconsistent” with that asserted in the subsequent litigation, and secondly, “the
responsible party must have succeeded in persuading a court to accept its prior position.”
Alternative Sys. Concepts, Inc. v. Synopsis, Inc., 374 F.3d 23, 33 (1st Cir. 2004) (citations
omitted); see E. Cambridge Sav. Bank v. Wheeler, 422 Mass. 621, 623 (1996) (“declin[ing] to
identify a settlement as representing success for the purposes of judicial estoppel”).
Bonnie notes that financial records from Samuel and Barbara’s divorce were entered into
evidence at trial, documents in which Samuel did not mention of the securities. D. 107 at 16.
Bonnie concludes that because the probate court accepted Samuel's “sworn declaration that he
did not have any interest in the subject Securities as of 2003, 2004, and 2005,” his claim here is
barred by judicial estoppel. Id. at 16-17 The Court previously considered and rejected this
argument in its prior order denying summary judgment, noting that while it was perhaps
inconsistent that Samuel did not list the securities in his divorce proceedings, he was not
“successful” in that action in applying the position he asserts here, as the matter was settled. D.
34 at 11. Further, the Court also explained that judicial estopped is inappropriate when based
upon inadvertence or mistake. Id. (quoting Otis, 443 Mass. at 642). At trial, there was testimony
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from Samuel and his attorney that the securities were listed in Barbara and Bonnie’s names at the
time of the divorce, D. 107-4 at 91, 96, and the attorney, who was responsible for preparing the
documents relating to the divorce, testified that he was aware Samuel had an interest in the
securities, but that he did not believe he was obligated to list the securities on the financial
disclosure forms because his interest at that time was in Bonnie’s name.

Id. at 104-05.

Accordingly, applying judicial estoppel remains inappropriate here.
4.

The Claim Is Not Barred By Laches

Finally, Bonnie contends this action is barred by laches, D. 107 at 18-19, “an equitable
defense consisting of unreasonable delay in instituting an action which results in some injury or
prejudice to the defendant.” Case of Wadsworth, 461 Mass. 675, 690 (2012) (quoting Yetman v.
Cambridge, 7 Mass. App. Ct. 700, 707 (1979)). To establish the defense in the context of a
breach, “the asserting party must establish both actual knowledge and prejudice.”

The

Woodward Sch. For Girls, Inc. v. City Of Quincy, 469 Mass. 151, 179 (2014) (internal citations
omitted). Whether a party has engaged in unreasonable delay causing injury to the defendant is a
question of fact. W. Broadway Task Force v. Boston Hous. Auth., 414 Mass. 394, 400 (1993).
While Bonnie argues Samuel had actual knowledge based on the divorce proceedings,
“[c]onstructive knowledge is insufficient, as is [m]ere suspicion or mere knowledge that the
fiduciary has acted improperly.” The Woodward Sch. For Girls, Inc., 469 Mass. at 179 (internal
citation omitted). “[A] plaintiff is not required to conduct “an independent investigation” to
determine if a breach of fiduciary duty has occurred.” Id. (citation omitted). At trial, Bonnie
testified that she and Samuel had not spoken following the divorce proceedings. D. 107-5 at 35.
While this raises the inference that Samuel had knowledge, Bonnie’s laches defense fails as to
the demonstration of unreasonable delay causing injury. Bonnie provides, “[d]uring the trial of
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the matter it became abundantly clear that records had been lost or destroyed, memories had
faded, and the gist and nature of the action wasn't able to be properly ascertained, all to the
detriment of the defendant.” D. 107 at 18. Yet at trial the only individuals who repeatedly failed
to recall material events were Bonnie and her mother. As to prejudice, Bonnie provides “she
“was not able to obtain the trial transcript (recording) of the divorce trial proceeding between the
plaintiff and Barbara Berkowitz as same had been destroyed, several old divorce deposition
transcripts could not be located, and numerous business records regarding the stock securities
were lost or destroyed.” Id. There was no evidence demonstrating as such, and the jury
supportably found that Samuel did not engage in prejudicial delay causing injury to Bonnie.
V.

Conclusion
For the foregoing reasons, Bonnie’s motions for a new trial, D. 106, and for judgment as

a matter of law, D. 79, 89, 107, are DENIED.
So Ordered.
/s/ Denise J. Casper
United States District Judge

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