Recent Cases (or, Lawyers Behaving Badly)

by Lee Gesmer on October 25, 2006

Don’t get me wrong, I have nothing, nothing, against leasing companies. But it seems that some people do, so it grabs my attention when a leasing company sues for breach of a lease and not only loses its case but gets hit with a counterclaim that results in a judgment for violation of M.G.L. c. 93A (the Massachusetts “unfair and deceptive acts and practices” statute). This was the outcome in General Electric Capital v. MHPG, Inc. Following default on the lease GE sued not only its lessee, MHPG, but (since MHPG was insolvent), the next best thing, the company’s stockholders and directors. After all, you’ve got to go where the money is, right?

After Massachusetts Superior Court Judge Ernest B. Murphy (no stranger to controversy himself) rejected GE’s attempt to “pierce the corporate veil” he ruled that GE’s suit against the shareholders/directors was a violation of c. 93A (the Massachusetts statute prohibiting “unfair or deceptive acts or practices”). To quote:

As the case progressed . . . GE learned there was no personal guaranty from either of the [directors] and that both had left MHPG almost two years prior to the default under the lease.

Even after having been alerted to the absence of any personal guarantees, GE . . . vigorously prosecuted the case against [the directors]. This Court finds this continued litigation inexcusable, and well parametrized within a pattern of behavior which was “immoral, unethical, oppressive, [and] unscrupulous.” The pursuit of satisfaction under the lease may not be legitimately furthered through oppressive legal action against clearly legally disinterested parties. Therefore, this Court grants summary judgment in favor of defendants London and Miller’s counterclaims, as to liability.

Lawyers are trained to be zealous in the representation of their clients, but there’s a fine line between zealousness and abuse, and it looks like GE’s lawyers may have gone a bit too far on this one. However, it’s a safe bet that GE will take this case to the Appeals Court before paying on this counterclaim.

Lawyer beware!

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