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Bailey v. Buskey

United States District Court, D. New Hampshire

May 19, 2015

Chase Bailey, Individually, Plaintiff/Counter-Defendant
v.
Lynn Buskey, Shawn McCarthy, and Buskey & McCarthy, LLP, Defendants/Counter-Claimants/Third-Party Plaintiffs.
v.
Michael E. Chubrich, and Michael E. Chubrich, P.A., Third-Party Defendants. Opinion No. 2015 DNH 103

ORDER

STEVEN J. McAULIFFE, District Judge.

This litigation arises out of a somewhat complicated insurance premium financing transaction gone wrong. Plaintiff, Chase Bailey, seeks damages from defendants (his former attorneys and their law firm), asserting that they provided him with negligent legal advice and representation. In response, defendants advance two counterclaims against Bailey: breach of contract and quantum meruit, both of which arise out of Bailey's alleged failure to pay legal fees defendants say they are owed. Additionally, defendants advance a third-party claim against Bailey's successor legal counsel, Michael Chubrich, and his law firm. Defendants assert that, to the extent they are found liable on Bailey's negligence/malpractice claims, Chubrich and his law firm are liable to them for contribution.

The third-party defendant, Attorney Chubrich, moves for summary judgment on the sole claim advanced against him - that is, his alleged liability under New Hampshire's contribution statute. For the reasons discussed, that motion is denied.

Standard of Review

When ruling on a motion for summary judgment, the court must "constru[e] the record in the light most favorable to the nonmoving party and resolv[e] all reasonable inferences in that party's favor." Pierce v. Cotuit Fire Dist., 741 F.3d 295, 301 (1st Cir. 2014). Summary judgment is appropriate when the record reveals "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In this context, "a fact is material' if it potentially affects the outcome of the suit and a dispute over it is genuine' if the parties' positions on the issue are supported by conflicting evidence." Int'l Ass'n of Machinists & Aerospace Workers v. Winship Green Nursing Ctr., 103 F.3d 196, 199-200 (1st Cir. 1996) (citations omitted). See also Nolan v. CN8, 656 F.3d 71, 76 (1st Cir. 2011). Nevertheless, if the non-moving party's "evidence is merely colorable, or is not significantly probative, " no genuine dispute as to a material fact has been proved, and "summary judgment may be granted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986) (citations omitted).

The key, then, to defeating a properly supported motion for summary judgment is the non-movant's ability to support his or her claims concerning disputed material facts with evidence that conflicts with that proffered by the moving party. See generally Fed.R.Civ.P. 56(c). It naturally follows that while a reviewing court must take into account all properly documented facts, it may ignore a party's bald assertions, speculation, and unsupported conclusions. See Serapion v. Martinez, 119 F.3d 982, 987 (1st Cir. 1997). See also Scott v. Harris, 550 U.S. 372, 380 (2007) ("When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment.").

Background

The relevant factual background has been set forth at length in the parties' memoranda and this court's prior order. It need not be detailed again. It is sufficient to note that in 2008, Bailey retained defendants, Lynn Buskey, Shawn McCarthy, and their law firm (collectively, "B&M"), to create a life insurance trust, for which they then acted as trustees. That trust subsequently acquired a $20 million life insurance policy from AIG. In 2009, a replacement policy was sought from Security Life of Denver (also known as "ING"), with premiums to be financed through the sale of bonds, which would be issued by the trust. The new financing closed on January 28, 2010. As part of that transaction, Bailey agreed to act as guarantor and was obligated to provide $1.7 million in collateral to Compass Bank. In turn, Compass Bank was obligated to issue a letter of credit. Things did not, however, go according to plan. Bailey refused to provide the required collateral to Compass Bank.

Instead, approximately one week after the closing, Bailey contacted Attorney Michael Chubrich to review the entire transaction. That initial meeting lasted about an hour. Bailey explained to Chubrich that he had been informed by his insurance agent that the collateral he was to provide to Compass Bank would be available for him to use as he saw fit and that the purchase of the life insurance policy would not cost him anything out of pocket. While he did not need a $20 million life insurance policy, Bailey said he agreed to proceed with the transaction because he thought he would recognize some sort of financial benefit from it.

Bailey also explained that he needed access to (and use of) the money in his investment account to address a number of personal financial issues and could not afford to pay $1.7 million to Compass Bank. Accordingly, he asked Chubrich whether he could transfer a substantial sum of money (perhaps the entire $1.7 million) to a bank in France. Part of B&M's claim that Chubrich acted negligently includes the assertion that Chubrich advised Bailey on that issue before familiarizing himself with the complexities of the financing transaction and Bailey's obligations under it. Because Chubrich's advice to Bailey on that issue is central to B&M's contribution claim, it is, perhaps, best to quote directly from Chubrich's deposition testimony. Chubrich testified that:

My best recollection was that [I advised Bailey that] he should not purchase any real estate in France; that as long as the money would be safe, not subject to any currency restrictions or whatever else, that he could transfer it when he received it to France, but it should be protected, kept liquid, because it sounded like he was in the middle of a difficult situation and that it would be expensive to get out.

Deposition of Michael Chubrich (document no. 77-3) at 14. Bailey testified in a similar manner, stating that Chubrich advised him that he could transfer the money out of the country, as long as it remained safe and liquid. See Deposition of Chase Bailey (document no. 77-4) at 82-83. Plainly, then, as early as one week after the closing, Bailey was considering breaching his financial obligations to Compass Bank.

Eventually (the precise timing is unclear), Bailey decided not to provide the required capital to Compass Bank and asked Chubrich to take the steps necessary to "unwind" the transaction. Chubrich began by filing suit in New Hampshire state court, seeking to rescind the life insurance policy on grounds that Bailey agreed to purchase it in reliance upon fraudulent statements made by his insurance agent, James Archibald. And, as part of his efforts to understand the complex premium financing transaction in which Bailey was involved, Chubrich sought advice from another attorney, as well as an insurance expert. See Chubrich deposition at 21-22 and 24-26.

In September of 2010, after Bailey refused to provide the $1.7 million as collateral to Compass Bank, the bank sued him in Alabama. Attorney Chubrich assisted Bailey in obtaining counsel to represent him in that litigation. And, subsequently, Bailey retained new counsel in New Hampshire to replace Chubrich, due to the complexity of the multiple suits in which he was involved. Ultimately, the litigation with ...


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