Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—DMass: Author Cornwell’s Consumer Claims Dismissed After Choice of Law Analysis, (May 31, 2013)

By Jody Coultas, J.D.

An author, Patricia Cornwell, was unable to state Massachusetts Consumer Protection Act (CPA) or New York General Business Law (GBL) claims against accounting firm Anchin, Block & Anchin LLP for mismanagement of investment accounts and renovations to her property, the federal district court in Boston has held (Cornwell Entertainment, Inc. v. Anchin, Block & Anchin LLP, May 28, 2013, O’Toole, G.). The jury awarded Cornwell actual damages of $3,479,045 for negligent performance of professional services, $22,405,400 for breach of fiduciary duty, and $2,677,955 for breach of contract.

Cornwell alleged that Anchin had mismanaged investment accounts and the renovations of a piece of property, which caused Cornwell to miss a book deadline.

Although Cornwell initially plead consumer protection claims under both Massachusetts and New York law, the New York claim was later abandoned. The court noted this was advantageous, as it avoided a “curious” choice of law issue to furnish redundant relief for the alleged harm, and that the GBL claim would have failed on the merits for lack of evidence. Cornwell would not have been able to show that the allegedly harmful conduct was consumer-oriented.

The CPA did not apply to the claims because New York had the most significant interest in the outcome, according to the court. First, the court noted that it was inconsistent for Cornwell to agree that New York law governed common law claims in the suit, but then contend that Massachusetts statutory law should also apply to those same acts or omissions. Cornwell’s claims that sounded more in contract than tort were clearly governed by New York law as the contract at issue was negotiated and executed in New York, and the performance of the contract was centered in New York.

For those claims that sounded more in tort, the court used the most significant relations test to determine jurisdiction. The most significant relations test considers where the injury occurred, where the conduct causing the injury occurred, the domicile, residence, nationality, place of incorporation and place of business of the parties, and where the relationship between the parties was centered. Although it was difficult to determine where the injury concerning the mismanagement of money occurred, the conduct that caused the alleged injury obviously occurred in New York at the Anchin offices. The injury concerning the renovation project obviously occurred in Massachusetts, at the site of the property, but the parties relationship was centered in New York. The court concluded based on all the fact that the claims involved alleged misconduct by a New York based accounting firm that occurred primarily in New York, and New York had the more significant interest in the outcome of this case.

Even if the CPA did apply, the court would have found that Cornwell failed to present sufficient evidence to support the claim. Cornwell claimed that Anchin failed to properly and effective manage renovations on a piece of property. Although Anchin may have been negligent by failing to diligently oversee the property, there was no evidence of any unethical or deceptive acts with respect to the renovation project. Cornwell was very aware of the state of the project and actively involved in decision-making.

The jury found in favor of Cornwall on the negligent performance of professional services, breach of fiduciary duty, and breach of contract claims. Claims for conversion and intentional interference with advantageous relations were dismissed. The jury found for Anchin on the equitable forfeiture and intentional interference with advantageous relations claims.

The case is No. 09-11708-GAO.

Attorneys: Dan Krockmalnic (Ropes & Gray) for Cornwell Entertainment, Inc. Carter G. Phillips (Sidley Austin LLP) for Anchin, Block & Anchin LLP.

Companies: Anchin, Block & Anchin LLP

Cases: StateUnfairTradePractices MassachusettsNews