Dear Friends and Colleagues,

     In the spirit of hopeful endeavors during this incredibly challenging time, I am writing to update you on some of our recent successful matters.  As some of you may know, while the Courts are not hearing civil matters in person, cases are still being heard, albeit remotely, and the wheels of justice are continuing to turn, although understandably somewhat slower.     

     Recently, I represented a European company which was the distributor for a U.S. manufacturing company.  The manufacturer cancelled the written distribution contract two years before it was scheduled to expire, thus causing considerable harm to my client, which had worked hard and successfully to develop the manufacturer’s business in Europe.  After engaging the other party and its lawyer in negotiations, we reached agreement on most of the terms of a settlement by early March, just before the pandemic shut down businesses both here and in Europe.  The manufacturer, although having agreed to the most important terms of the settlement (e.g, amount to be paid to my client), was faced with the dilemma of whether it would be able to survive the pandemic to continue manufacturing, selling and delivering its products to its customers here and abroad who were themselves shut down.

     I am sure that this scenario has been repeated many times in other contexts around this country and the world during the pandemic.  In our case, we persevered and continued to press for resolution.  We had the advantage of an arbitration clause which we could have invoked to begin proceedings before the American Arbitration Association.  The AAA continued to operate by remote means and I am sure we could have precipitated a prompt hearing on the merits of our claim.  Using that as incentive, we were able to reach a revised settlement agreement which provided for a longer payout period.  This allowed the U.S. manufacturer to marshal its financial resources during the worst of the pandemic’s early stages, while relieving both sides of the cost which would have been spent on arbitration proceedings.  So far, the settlement has withstood the test of time and has benefitted our client during a very unpredictable business environment.

“A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.”

     This case is the latest example of will contests I have handled over the course of my career.  My first experience with this kind of litigation was in the early 1970’s, when I was a young associate at the firm where I worked after law school.  The Levowich case was a dispute between the family members of the deceased Mr. Levowich.  The case had languished for many years.  When I was instructed by one of my firm’s senior partners to sit in and monitor the court-appointed Master’s hearings, I reviewed the pleadings on file in the Probate Court.  There were at that time well over one hundred pleadings in the court file.  We met in a conference room of the “Old Courthouse,” now the elegantly refurbished John Adams Courthouse in Boston.  As a matter of historical perspective, it was called the Old Courthouse to distinguish it from the adjacent “New Courthouse” that was built in the 1930’s.  They were both old enough to still make use of elevator operators with semi-circular levers in both buildings, rather than push buttons.

     Back in the early 1970’s the Old Courthouse exuded a darker, murkier atmosphere, especially in some of the side rooms like our Master’s hearing conference room.  It conjured up memories of the novel, Bleak House by Charles Dickens, which described in lugubrious language the courtroom setting and seemingly endless will and estate proceedings of Jarndyce v. Jarndyce in the English Court of Chancery during the 19th century.  

     By the time I decided to move to another firm in the mid-1970’s, the Levowich estate’s financial coffer was essentially empty after years of litigation.  This taught me an important lesson for a budding litigator: settling a case expeditiously can benefit all parties even though they cannot then see what will happen to the fund or company they are fighting over.  In fact, it is precisely because we cannot foresee the future that a settlement can be most beneficial.  I do not know what eventually happened in the Levowich case and which side eventually prevailed, but I perceived it as a long road with scant ultimate financial benefits to the client.  I have tried to avoid that result wherever possible, while acknowledging that it is not always possible to secure reasonable settlements.  The latter situations comprise the few cases where a trial must ultimately be held.

     In the field of real estate, an out-of-state client of mine had a very substantial summer home on Cape Cod.  We were concerned that a large, expensive property like this would have trouble being sold, especially when the pandemic hit.  However, this past Spring, stories began to appear in the press – The Wall Street Journal and New York Times, for instance – which indicated that many people who had flocked to the cities some years ago were now looking for more remote locations, including the Hamptons in outer Long Island, New York and the Cape and other vacation areas in Massachusetts.  We persevered on the sales efforts with the assistance of a very capable broker on the Cape and my client’s home was sold at a substantial price despite – and perhaps because of – the Covid-19 crisis.

     In addition, I am now representing a company based in China which obtained a commercial arbitration award of over $1.4 Million Dollars issued by an arbitration tribunal in China against a Massachusetts company.  The two commercial entities had agreed in their contract to binding arbitration in China.  The losing party never paid any part of the award and instead, voluntarily dissolved the company shortly after the award was issued.  We are involved in Federal Court litigation to confirm and enforce that arbitration ward.  We also learned that the businessman who owned the dissolved company soon thereafter set up new companies to engage in the same business as the old one – hoping to carry on business without the pesky annoyance of a $1.4 Million debt obligation.  There are fortunately a number of legal principles upon which to recover the funds from the owner and his new companies.  One of them is breach of fiduciary responsibility.  The law in Massachusetts is that shareholders and investors in a dissolved company cannot take or distribute its assets until the company’s creditors have been paid.  Our courts have held that the shareholders/owners of a company, whether a corporation or a limited liability company (LLC), are deemed to be fiduciaries, in other words trustees, of the company’s assets for the benefit of its creditors.  Interestingly enough, the same theory of recovery described by Judge Cardozo in the 1928 Meinhard case, which was applicable to my client who was the designee of the testamentary trust bequest discussed above, also applies to my Chinese client who is a creditor of the dissolved corporation, resulting in its being entitled to recover from the individual businessman and his new companies.

     Where typically we would have news and photographs of recent events I attended or am involved with, sadly that section of our newsletter will remain vacant until the pandemic subsides and it is safe for all concerned to resume those activities.

     Until then, our thoughts and prayers go out to all of you, your families, and your colleagues both here and abroad.  I sincerely hope that we all get through this period safely and successfully.

     As always, I look forward to hearing from you.

     Kindest personal regards,
     Marc Redlich