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A case that the Massachusetts state appeals court contends was tossed out of superior court too quickly will get a second trial, based on a 1989 Supreme Judicial Court decision finding that a lawyer representing a partnership has a fiduciary duty to each member of the partnership. The case, Cacciola, executrix v. Howard Nellhaus, No. 97-P-448, revolves around issues related to a family-owned real estate investment partnership. It will be re-heard in Middlesex Superior Court at a date to be determined. Ms. Cacciola, on behalf of her late husband Salvatore’s estate, sued Boston attorney Howard Nellhaus on a number of counts, including legal malpractice, interference with a contractual relationship, and violation of consumer protection laws. The appeals court upheld Superior Court Judge Julian T. Houston’s dismissal of the consumer protection and legal malpractice claims but “concluded it was too early in the proceedings to dispense with the plaintiff’s complaint.” FIDUCIARY BREACH As a result, the appeals court reversed part of Houston’s decision by letting stand a claim for breach of fiduciary duty and allowing Cacciola to amend her complaint to possibly include other partnership members in a new trial. “The decision very clearly establishes an attorney has a fiduciary duty to all the partners,” says Cacciola’s attorney, Ieuan G. Mahony, of the Boston office of Holland & Knight. Nonetheless, the defendant’s counsel, George A. Berman of Boston’s Posternak, Blankstein & Lund predicts a victory in the second trial. “The appeals court wanted to see more of the record developed before the superior court ruled,” says Berman. “But as a practical matter, as the facts play out, I’m fairly confident we’ll win the case.” WITHOUT THEIR KNOWLEDGE In her suit, Ms. Cacciola charged that her brother-in-law, Edward Cacciola, bought shares of the real estate partnership from the heirs of a deceased brother without the knowledge of her husband. Nellhaus served as legal counsel to the partnership from 1985 until at least 1995. Salvatore Cacciola’s father, Antonio, had acquired considerable residential and commercial real estate in his lifetime. On Jan. 1, 1985, the elder Mr. Cacciola set up a partnership called Cacciola Associates as part of his estate plan. The partnership had five members: Antonio and his four sons, Edward, David, Anthony, and Salvatore. Two years later, the father died. His four sons each assumed a 25 percent interest in the partnership. Anthony died in January 1988. In August 1993, Salvatore received a financial statement from the partnership’s accountant showing that Edward had a 50 percent interest. It was then that Salvatore learned that two months before, Edward had purchased Anthony’s share from Anthony’s heirs. According to testimony, Edward had falsely represented to Anthony’s heirs that Salvatore was not interested in buying Anthony’s share. Several months after learning of Edward’s purchase, Salvatore discovered that Nellhaus had served as Edward’s lawyer in the transaction. “When Salvatore sought information about the transaction, the defendant refused to provide any details, claiming the information was confidential and that as an attorney he could not disclose it,” states the appellate decision, written by Appeals Court Judge Susan S. Beck. SUPPORTING CASES The decision cites two cases that support the notion that Mr. Cacciola’s fiduciary rights may have been violated: a state Supreme Judicial Court decision, Schaeffer v. Cohen, Rosenthal, Price, Mirkin, Jennings & Berg P.C., 405 Mass. (1989), and Fassihi v. Sommers, Schwartz, Silver, Schwartz & Tyler P.C., 107 Mich. App. 509 (1981). “Fassihi held that even in the absence of an attorney-client relationship, a shareholder in a closely held corporation may have a cause of action for breach of fiduciary duty against the lawyer for the corporation,” Beck wrote. “The defendant’s advice to Edward … led directly to Salvatore’s loss of opportunity to buy [the deceased's] share of the partnership if the partnership did not exercise its right to do so.” Mahony says that he doesn’t know yet whether other family members may join the suit through an amended complaint.

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