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Alder Street Properties, LLC v. Jewell & Boutin, P.A.

Superior Court of Maine, Cumberland

May 12, 2016


          PL: James Clouier, Esq.

          DEF: Martica Douglas, Esq.



         Before the court is Defendants Jewell & Boutin, P.A. and Thomas Jewell, Esq.'s motion for summary judgment on Plaintiff Alder Street Properties, LLC's claims for legal malpractice. Based on the following, Defendants' motion for summary judgment is denied.

         I. BACKGROUND

         Plaintiff Alder Street Properties, LLC is owed and operated by David O'Donnell and Rudy Ferrante. (Defs. Supp. S.M.F. ¶ 1; Pl. Opp. S.M.F. ¶ 1.) O'Donnell and Ferrante are real estate developers who acquire real estate through limited liability companies. (Id. ¶ 2.) O'Donnell and Ferrante had previously acquired real estate through "bond for deed" transactions. (Id. ¶ 3.)

         In 2007, an agent of William Simpson, an owner and operator of commercial real estate, offered to sell O'Donnell certain rental real estate in Portland's Bayside neighborhood controlled by an entity owed by Simpson (the "Alder Street Properties"). (Am. Compl. ¶ 10.) Under the terms of the proposed transaction, Simpson required a $350, 000.00 down payment. (Defs. Add'l S.M.F. ¶ 11; Pl. Resp. S.M.F. ¶ 11.) At the suggestion of Ferrante, O'Donnell contacted Kevin Smith at Lender's Network, Inc. to help finance the transaction. (Am. Compl. ¶ 13.) Smith prepared personal financial statements concerning O'Donnell's finances, which Smith then submitted to Thomas Toye for the purpose of inducing Toye to finance Plaintiffs acquisition of the Alder Street Properties. (Id. ¶ 14.) Toye agreed to extend Plaintiff a "bridge loan" to finance the down payment, which O'Donnell and Ferrante personally guarantied. (Defs. Add'l S.M.F. ¶ 13.)

         Though the parties dispute the actual details, at some time in late 2007, O'Donnell, Ferrante, and/or Simpson asked Defendant Thomas Jewell, Esq. to draft the necessary documents to transfer the Alder Street Properties through a "bond of deed" transactions. (Defs. Supp. S.M.F. ¶¶ 8-10; PL Opp. S.M.F. ¶¶ 8-10.) Jewell had previously represented Simpson in a "bond for deed" transaction with another entity owned by O'Donnell and Ferrante. (Id. ¶¶ 4-5.) Jewell had also represented a third entity owned by O'Donnell and Ferrante in another real estate transaction. (Id. ¶ 7.) Despite the conflict of interest, Jewell agreed to prepare the documents for the "bond of deed" transaction. (Id. ¶ 9.) The closing for the transaction occurred on January 3, 2008.

         Simpson filed for bankruptcy in 2009. (Defs. Add'l S.M.F. ¶ 17; Pl. Resp. S.M.F. ¶ 17.) The bankruptcy court held that "bond for deed" and "lease to purchase" contracts governing the Alder Street Properties transaction were "executory contracts, " subject to termination at the election of the bankruptcy trustee. (Id. ¶ 18.) Accordingly, the bankruptcy trustee terminated Plaintiffs right to the Alder Street Properties. (Id. ¶ 19.)

         Plaintiff was unable to obtain refinancing in order to pay-off the "bridge loan" from Toye, and Plaintiff defaulted on the loan. (Id. ¶¶ 14-16.) Toye sued O'Donnell on his personal guaranty of the "bridge loan" and obtained a judgment of $417, 974.00. In re O'Donnell, 728 F.3d 41, 44 (1st Cir. 2013). O'Donnell and Ferrante subsequently filed for bankruptcy. (Defs. Add'l S.M.F. ¶ 20; Pl. Resp. S.M.F. ¶ 20.) The bankruptcy court determined that O'Donnell's debt to Toye was non-dischargeable because O'Donnell's personal financial statements contained material misrepresentations. (Id. ¶¶ 22-23.)

         On December 30, 2013, Plaintiff filed a complaint against Lender's Network, Inc., Kevin Smith, Thomas Jewell, Esq., Jewell's firm, Jewell & Boutin, P.A., and Jewell's partner in the firm, Daniel Boutin, Esq. Plaintiff amended its complaint on March 9, 2014. Plaintiffs amended complaint asserted counts of negligence, liability for professional conduct, negligent misrepresent and/or failure to disclose material facts, and breach of contract against all defendants. (Am. Compl. ¶¶ 23-33.) The amended complaint also asserted counts of failure to disclose a conflict of interest, failure to withdraw representation due to irreconcilable conflict, and breach of professional and fiduciary duty against Jewell, Boutin, and their firm. (Id. ¶¶ 34-44.) Lender's Network, Inc., Smith, and Boutin were subsequently dismissed from this action. Jewell and Jewell & Boutin, P.A. are the only remaining defendants.

         Jewell and Jewell & Boutin, P.A. initially filed this motion for summary judgment on September 2, 2014. After an extension of time, Plaintiff filed its initial opposition to the motion on October 10, 2014. This action was stayed in June 2015 because of a family medical situation involving Plaintiffs counsel. A November 2015 hearing on the motion for summary judgment was also continued because Plaintiffs counsel had been hospitalized. A hearing on the motion for summary judgment was held in January 2016. On February 2, 2016, for good cause shown, the court permitted the parties to amend and supplement their filings regarding the pending motion for summary judgment. Plaintiff filed an amended opposition, an amended opposing statement of material facts, and supporting documents on February 12, 2016.[1] Defendants filed a supplemental brief, a response to Plaintiffs additional statements of facts, and it own additional statement of material facts on March 14, 2016. Plaintiff filed a reply memorandum of law and a responsive statement of material facts on March 21, 2016.[2]


         Summary judgment is appropriate if, based on the parties' statements of material fact and the cited record, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. M.R. Civ. P. 56(c); Dyer v. Dep 't of Tramp.,2008 ME 106, ¶ 14, 951 A.2d 821. "A material fact is one that can affect the outcome of the case. A genuine issue of material fact exists when the fact finder must choose between competing versions of the truth." Dyer, 2008 ME 106, ¶ 14, 951 A.2d 821 (internal citation and quotation ...

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