Dismissal of suit doesn’t shield co. from sanctions

Massachusetts Superior Court judge has found that a plaintiff nursing home must pay attorneys’ fees and costs for filing a frivolous lawsuit, even though the underlying complaint was withdrawn before the judge reached a ruling on the defendant’s anti-SLAPP motion to dismiss.

The plaintiffs argued that Judge Carol S. Ball did not have the authority to impose sanctions under G.L.c. 231, §6F, since she only had taken the anti-SLAPP motion under advisement when the nursing home exercised its unconditional right to dismiss the negligence complaint against the defendant, a former employee.

But the judge, in an issue of first impression, disagreed and found that justice required her to award the defendant his costs and fees.

“Although there seems to be no definitive precedent either permitting or precluding the award of G.L.c. 231, §6F damages after dismissal, … the court finds that it would be manifestly unfair in the circumstances of this case not to award [the defendant] his attorneys’ fees and costs in defending the plaintiffs’ wholly insubstantial, frivolous and not advanced in good faith action,” she wrote.

‘End run’

In addition to the anti-SLAPP motion, defense lawyer Jeffrey D. Clements sought dismissal under Rule 12(b)(6) of the Massachusetts Rules of Civil Procedure for failure to state a claim upon which relief can be granted.

The Concord, Mass. lawyer, who handled the case with colleague Pamela S. Kogut, said he filed both motions to prevent the plaintiffs from doing an “end-run” around the anti-SLAPP statute, which does not award fees and costs unless and until a judge grants a defendant’s special motion to dismiss.

“The anti-SLAPP statute may have an unintended escape hatch that plaintiffs who bring bad-faith litigation can take advantage of by filing a notice of dismissal before the judge gets a chance to rule,” he said. “If that happens, in one sense you are happy because the case is dismissed, but it deprives the defendant of its rights under the anti-SLAPP statute to recover costs and attorneys’ fees.”

By filing under Rule 12(b)(6), defendants can move for sanctions under G.L.c. 231, §6F, Clements said.

“What this decision means is that in circumstances where there is bad faith, frivolous litigation, and the anti-SLAPP statute either doesn’t apply or is evaded by filing a notice of dismissal, lawyers should look seriously at using [G.L.c. 231, §6F] to seek the fees and sanctions that are appropriate.”

Although there was no precedent directly on point, Clements said, the Appeals Court recently addressed a related issue in Connolly v. Sullivan, a case in which the court ultimately concluded that once the complaint was dismissed, the anti-SLAPP motion was moot and the plaintiff could not be sanctioned.

Unlike Cogan, the motion to dismiss in Connolly had not yet been filed, Clements said.

“In our case, the anti-SLAPP was vigorously opposed, argued and was under advisement by Judge Ball, which made it a much different analysis,” he said.

Paul F. Cavanaugh of Daly Cavanaugh in Wellesley, Mass. who represented the plaintiff in Connolly, agreed that the procedural posture of the case was not the same as Cogan.

In Connolly, he said, the defendant did not have grounds to bring a 12(b)(6) motion and had merely served an anti-SLAPP motion to dismiss on the plaintiff when the underlying suit was voluntarily dismissed under M.R.C.P. 41(a)(1)(I).

“There had been no argument on the special motion, and the complaint had already been withdrawn before the anti-SLAPP motion had even being filed with the court,” Cavanaugh said.

The nursing home’s Boston lawyer, Sanford F. Remz of Yurko, Salvesen & Remz, declined to discuss the details of the ruling.

“We disagree with the decision,” he said. “We are reviewing it with the client in terms of our next steps.”

Shut down

The plaintiffs owned and operated the Governor Winthrop Nursing Home in Winthrop, Mass.

The defendant, Kevin Cogan, became the administrator of the nursing home in September 2006. Three months later, the attorney general filed suit in Superior Court alleging that the nursing home was not providing adequate care to its residents.

That same month, Judge Charles T. Spurlock appointed a temporary receiver to preserve the health, safety and well being of the home’s residents.

In February 2007, Spurlock authorized the receiver to close the nursing home.

The plaintiffs responded in December 2009 with a complaint against Cogan for negligence, breach of contract and breach of the duty of loyalty. The nursing home claimed its losses were caused by Cogan’s mismanagement and false reports to the Department of Public Health.

Cogan brought a special motion to dismiss pursuant to the anti-SLAPP statute.

Then, the AG’s Office provided notice that it was intervening in the case.

The following month, Cogan moved to dismiss the plaintiffs’ suit under Rule 12(b)(6) and requested attorneys’ fees and costs pursuant to G.L.c. 231, §6F.

Eight days after Ball took the matter under advisement, the nursing home sought to file a notice of dismissal of its suit, but the Clerk’s Office in Superior Court rejected the request. When the nursing home re-filed the motion directly with the judge, Cogan opposed.

Bad-faith filing

In ruling against the plaintiffs, Ball said it was clear they filed suit to retaliate against Cogan for reporting the nursing home’s deplorable conditions to the DPH and other state officials.

“After examining the record in the case against Governor Winthrop, the court cannot imagine that any reasonable person would believe the plaintiffs’ claims against Cogan were valid or made in good faith,” she said. “In fact, the plaintiffs’ quick filing of a Notice of Dismissal after the September 22, 2010 hearing casts further doubt on the plaintiffs’ good faith as it was an obvious attempt to avoid attorneys’ fees and costs under the anti-SLAPP statute.”

If the plaintiffs had not moved to dismiss, the judge wrote, she would have found for Cogan on his anti-SLAPP motion and awarded him attorneys’ fees and costs.

In a footnote, Ball characterized the plaintiffs’ suit as harassment and retaliation for Cogan’s earlier cooperation.

“In the present situation, where the plaintiffs, frivolously and in bad faith, filed a complaint and then opposed Cogan’s anti-SLAPP motion, the court finds that justice requires an award of attorneys’ fees and costs for Cogan’s defense of the action,” she wrote.