Professional Negligence

Case Name: Hill Financial Company v. Murphy, et al., v. Lamond

County: Norfolk Superior Court/C.A. NO: 09-01986

Tried before judge or jury: Jury

Amount of Settlement: $1.1 million

Type of Action: Professional Negligence; Violation of M.G.L. c. 93A

Counsel for Plaintiff: Dino M. Colucci Colucci, Colucci, Marcus & Flavin, P.C., Milton, MA

Date: March 12, 2013

In late 2003, the defendant/crossclaim plaintiff, Sean Murphy, planned to purchase and develop 8 contiguous parcels of property located in Wareham, Massachusetts. To this end, he retained the legal services of the defendant, John Lamond III, Esquire. Murphy claimed that he acted on his attorney’s advice in forming and utilizing numerous limited liability corporations to both acquire and develop the land. Murphy procured the financing for the project from Hill Financial Services Company, a private lender that he had previously used for other development projects.

Despite the fact that Murphy had never personally visited the property that he proposed to purchase, Hill loaned to Seamur Enterprises, LLC, (one of the corporations created by Murphy in 2003), the sum of $500,000.00 to close on two of the eight parcels in Wareham. An additional $390,000 was loaned by Hill to a separate Murphy controlled entity several months later for the purchase of two additional parcels. Not all of the four parcels purchased by Murphy were contiguous, however. Hill had planned to extend an additional $1,000,000 in financing to Murphy on a rolling basis once construction got underway. This money was never loaned, however, because Murphy never developed the property. Neither did he ever purchase the remaining four parcels that were necessary to complete the assemblage.

In addition to the funds loaned to Murphy by Hill, he spent his own capital on the project. Despite this fact, the necessary permits were never obtained and a vital easement issue concerning NStar was never resolved. Absolutely no development occurred during Murphy’s ownership. Over the course of two and one-half years, Murphy repaid to Hill the sum of $241,000 in interest only payments. Because Murphy had simultaneously borrowed money from Hill to finance other unrelated projects in several other towns, however, it was unclear as to which repayments were tendered to specifically pay down the Wareham indebtedness. Frustrated with a lack of progress at the Wareham site and running short on funds, Murphy defaulted and Hill foreclosed on the property in 2007. In undertaking their due diligence in preparing to auction the property, Hill made a startling discovery. Several months prior to Murphy’s original purchase of the Wareham property, Lamond had been sent a letter from the Commonwealth of Massachusetts Department of Historical Preservation seeking to notify him that an ancient Native American grave was unearthed at the back corner of one of the Wareham parcels. The letter also purported to memorialize a telephone conversation between a state archeologist and Lamond whereby the suggested remedy of a “preservation restriction” around the grave was supposedly discussed. When subsequently confronted with the existence of this letter, Lamond denied receiving the letter, denied engaging in the phone conversation referenced in the letter and denied any foreknowledge of the grave. A copy of the Massachusetts Department of Historic Preservation’s phone bill obtained through discovery revealed that a call lasting 1 minute and 26 seconds had been placed to Lamond’s office in December of 2003. There was no additional evidence that an actual conversation in fact took place, however.

Hill filed suit against Murphy for the deficiency and Murphy brought a third party complaint against Lamond for, inter alia, negligence and violation of M.G.L. c. 93A. Murphy maintained that had he known about the Native American grave, he would never have purchased the property. He also asserted that the discovery of the grave “tainted” the property thereby depriving Hill of mitigating its damages and selling the property for an advantageous price. Lamond countered with a number of defenses including the allegations that (1) Murphy lost the property to foreclosure due to his own mismanagement and inaction (Lamond insisted that Murphy was merely seizing upon the discovery of the Native American grave as a convenient excuse); (2) the Massachusetts’ Unmarked Burial Law does not prohibit or even restrict a developer from undertaking to build on a property that contains a Native American grave; (3) the implementation of a common “preservation restriction” would have ensured that the presence of a single Native America grave (in a remote corner on the property), was not an impediment to the development of the larger property; (4) Murphy had failed to make an effort to acquire the remaining 4 parcels which would have been an indispensable prerequisite to the ultimate development of the property; (5) extensive wetlands located on the property rendered an exceedingly large portion of the whole undevelopable anyway; and, (6) the general downturn in the economy was responsible for the diminished value suffered by the property, if any. The parties engaged in a failed mediation.

After seven days of trial, the jury found for Murphy in the amount of $20,000 on the negligence claim (the same amount of money Lamond had been paid for legal representation), and, $397,000 for violation of M.G.L. c. 93A. The jury then doubled the total award having found Lamond acted willfully. When added to statutory interests and attorneys fees provided by M.G.L. c. 93A, the total award exceeded $1,100,000.

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