Professional Negligence Law Reporter

A Massachusetts appellate court held that a company founder’s deposition testimony about the company’s ability to pay a potential legal judgment constituted admissible lay opinion testimony in a legal negligence suit.

Halawi Investment Trust, S.A.L. (HIT), a foreign joint stock organization, entered into a broker agreement with Boston Merchant Financial, Ltd. After the U.S. Department of Treasury concluded that Halawi Exchange and its subsidiaries had engaged in illicit financial activity, Boston Merchant froze HIT’s account and refused to return approximately $1.2 million in deposited funds. HIT retained attorneys James Bacon and Carlo Cellai and their law firms to recover the funds held by Boston Merchant. Boston Merchant refused to return the funds, and HIT’s arbitration failed as time-barred. HIT sued Bacon, Cellai, and the firms, alleging legal malpractice.

The defense moved for summary judgment. The trial court granted the motion, holding that the plaintiff had failed to establish Boston Merchant would have been able to satisfy a damages judgment for any amount.

Reversing, the appellate court noted that in a legal malpractice action, a plaintiff must establish that an attorney failed to exercise reasonable care and skill, that the plaintiff suffered a loss, and that the attorney’s negligence was the proximate cause of that loss. Citing case law, the court added that where the alleged loss is in the form of a lost judgment, the plaintiff is not required to prove that the entire judgment would have been recovered absent the alleged negligence. The plaintiff need only prove that something could have been collected, the court said.

Applying these principles, the court cited the deposition testimony of Boston Merchant founder Paul Belogour, who testified that although he was unaware of Boston Merchant’s assets during the relevant years, he believed Boston Merchant would have been able to satisfy a potential judgment of $1.2 million and that this reflected the company’s equity in assets minus liabilities. The court found that the opinion testimony of Belogour, an experienced accountant, was sufficiently based on his personal knowledge of Boston Merchant’s inner workings and therefore constituted admissible evidence. The court concluded that even evidence that is admittedly thin is sufficient to defeat summary judgment. Accordingly, the court remanded.

Citation: Halawi Investment Trust, S.A.L. v. Bacon, 240 N.E.3d 258 (Mass. App. Ct. 2024).

Plaintiff counsel: Neil Goldman, Alexandria, Va.