Frederick Petersen v. Chad Wall.

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28,
as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties
and, therefore, may not fully address the facts of the case or the panel's
decisional rationale. Moreover, such decisions are not circulated to the entire
court and, therefore, represent only the views of the panel that decided the case.
A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25,
2008, may be cited for its persuasive value but, because of the limitations noted
above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260
n.4 (2008).

COMMONWEALTH OF MASSACHUSETTS

APPEALS COURT

25-P-46

FREDERICK PETERSEN

vs.

CHAD WALL.1

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

Mary Petersen (Mary), the niece of the plaintiff, Frederick

Petersen (Frederick), appeals from a Superior Court judge's

order denying her motion to substitute as a party in interest,

and from a judgment allowing the cross-motion of the defendant,

Chad Wall (Wall), to dismiss Frederick's claims. For the

reasons stated herein, we vacate the judgment and reverse the

order denying Mary's motion to substitute as a party in interest

and remand for further orders consistent with this memorandum

and order, including a new judgment of dismissal.

1Crystal Clear Sewer & Drain, LLC (Crystal Clear), was a
party to this action but has since been legally dissolved.
1. Background. Frederick and Wall formed Crystal Clear

Sewer & Drain, LLC (Crystal Clear) in 2006. Crystal Clear's

operating agreement provided, in relevant part, that Frederick

and Wall each owned fifty-percent membership interests in

Crystal Clear, and that "[a]ny dispute arising out of or in

connection with [the operating agreement] would be settled by

arbitration . . . and any decision rendered in such arbitration

shall have the same effect as if made by a court having proper

jurisdiction."

In April of 2020, Frederick filed the present action

against Crystal Clear and Wall in the Superior Court asserting,

inter alia, (1) that Wall breached Crystal Clear's operating

agreement by failing to pay Frederick a share of the company's

profits, and (2) that Wall breached his fiduciary duty to

Frederick by failing to pay dividends or "give [Frederick] any

benefit of his ownership" in the company. On July 21, 2020,

Crystal Clear and Wall jointly answered Frederick's complaint,

wherein they raised twenty-one affirmative defenses and demanded

a jury trial. In particular, the defendants asserted that

Frederick "ha[d] no standing to pursue said cause of action in

this forum pursuant to the express terms and conditions of the

[a]rbitration [c]lause contained in the subject [o]perating

[a]greement."

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In August of 2020, Frederick served Crystal Clear and Wall

with written discovery requests, to which neither responded. In

December of 2020, Mary acting under a limited power of attorney,

filed a motion to compel discovery on Frederick's behalf. This

motion, to which the defendants again did not respond, was

allowed in January of 2021.

In March of 2021, Crystal Clear filed for Chapter 7

bankruptcy protection and an automatic stay entered in the

litigation in the Superior Court. On December 26, 2022,

Frederick executed a notarized document titled "Assignment of

Legal Interest" assigning Mary "all right, title, and interest

that [he] ever had or may hereafter have in and to" the ongoing

litigation in the Superior Court. The document further provided

Frederick's "express intention that . . . Mary Petersen have the

full right and authority to prosecute the [a]ction in her own

name and to be entitled to receive for her benefit any monetary

award . . . that may be ordered by the court in the

action. . . ."

On January 12, 2023, the bankruptcy matter closed, and

Crystal Clear was dissolved as a legal entity. In March of

2023, Frederick died in Florida, and Frederick's son was

appointed as personal representative of Frederick's estate.

Shortly after Frederick's death, Mary filed a motion in the

Superior Court action to substitute herself as the real party of

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interest, incorporating the December 2022 assignment document

signed by Frederick. In response, Wall submitted a motion in

opposition and a cross-motion to dismiss the complaint, arguing

that the claims were moot, and in any event, barred by the

arbitration clause in Crystal Clear's operating agreement. The

judge concluded that Frederick's estate "should have the

opportunity to challenge the assignment and substitute itself as

plaintiff if it wish[ed]." No action was taken on Wall's cross-

motion to dismiss pending a ruling on the motion to substitute .

A hearing on the motion to substitute was held in August of

2023, but the estate's personal representative failed to appear.

Frederick's estate was closed in February of 2024.

On May 14, 2024, a Superior Court judge denied Mary's

motion to substitute as a party in interest, concluding that

Frederick's assignment transferring his interest in the

litigation was invalid for lack of consideration. The judge,

however, declined to rule on Wall's cross-motion to dismiss. On

July 24, 2024, Mary filed a motion for reconsideration. A

different judge held a status conference on August 1, 2024, and

on August 12, 2024, the docket reflects that the second judge

allowed the cross motion to dismiss on the grounds that "there

is no party with standing to pursue the claims and oppose the

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Motion."2 Judgment entered on August 23, 2023 stating that the

matter would be resolved pursuant to the arbitration clause in

the LLC operating agreement. A notice of appeal was filed on

October 11, 2024.3

2. Motion to substitute as a party in interest. We review

the denial of a motion to substitute for abuse of discretion.

See Bay Colony Const. Co. v. Town of Norwell, 5 Mass. App. Ct.

801, 801 (1977). "[A] judge's discretionary decision

constitutes an abuse of discretion where we conclude the judge

made 'a clear error of judgment in weighing' the factors

relevant to the decision . . . such that the decision falls

outside the range of reasonable alternatives." L.L. v.

Commonwealth, 470 Mass. 169, 185 n.27 (2014). As noted above,

2 The record contains a written order dated July 26, 2024
granting the motion to dismiss for the same reasons, but the
docket does not reflect that order. Both the July 26, 2024
written order, the docket entry on August 12, 2024, and the
judgment entered on August 23, 2024 are consistent.

3 Wall asserts that the present appeal should be dismissed
on procedural grounds because the notice of appeal's caption
designates only Frederick as a party, and thus, purportedly
fails to provide "fair notice" of Mary's intent to appeal the
superior court's judgment. We disagree. Under Mass. R. A. P. 3
(c) (3), 491 Mass. 1602 (2023), "[a]n appeal should not be
dismissed for minor defects, such as . . . failure to name a
party whose intent to appeal is otherwise clear from the notice
. . . ." Here, the notice of appeal is signed "Mary Petersen,
Under Assignment of claim from Frederick Petersen." We
therefore conclude that Mary's intent to appeal was clear from
the notice, despite the omission of her name in the notice's
caption.

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the judge denied Mary's motion to substitute, reasoning that

because Frederick's assignment contained "no language suggesting

that Frederick received anything from Mary in exchange for his

interest in [the] case," the assignment was invalid for lack of

consideration.

Mary argues that Frederick's assignment of his interest in

the litigation constituted a gift, and thus, did not require

consideration to be valid. Accordingly, Mary argues that it was

an abuse of discretion to deny the motion to substitute on such

grounds. We agree.

In Cosmopolitan Trust Co. v. Leonard Watch Co., 249 Mass.

14, 19 (1924), the Supreme Judicial Court concluded that "no

consideration is required to constitute a valid assignment . . .

in cases of gifts . . . ." "A valid assignment may be made by

any words or acts which fairly indicate an intention to make the

assignee the owner of a claim." Id. See also Graustein v.

Boston & Me. R. R., 304 Mass. 23, 26 (1939). Here, Frederick

unambiguously intended to make Mary the assignee of "all right,

title, and interest . . . in and to the lawsuit," for his

"estate [to] have no claim whatsoever," and for Mary to have

"the full right and authority to prosecute the Action in her own

name . . . ." Based on this plain language, the assignment

constituted a gift, and we conclude that consideration was not

required for the assignment to be valid. Accordingly, we

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conclude that the judge abused his discretion and we reverse the

order denying Mary's motion to substitute.

3. Motion to dismiss. The judge allowed Wall's cross-

motion to dismiss the complaint pursuant Crystal Clear's

arbitration clause. In most circumstances "[w]e review the

allowance of a motion to dismiss de novo." Curtis v. Herb

Chambers I-95, Inc., 458 Mass. 674, 676 (2011). However, where,

as here, the judge's allowance of a motion to dismiss was based

on a determination of whether a party waived its right to

arbitration, we review such determination for abuse of

discretion. See Martin v. Norwood, 395 Mass. 159, 162 (1985).

There is no bright-line rule to determine whether a party

has waived its right to arbitration; rather, "[t]he essential

question is whether, under the totality of the circumstances,

the . . . party acted '"inconsistently" with the arbitration

right.'" Martin, supra at 162, quoting Dickinson v. Heinold

Sec., Inc., 661 F.2d 638, 641 (7th Cir. 1981). To make this

determination, courts look to the following factors:

"[W]hether the litigation machinery has been substantially
invoked and the parties were well into preparation of a
lawsuit by the time an intention to arbitrate was
communicated [,] . . . whether there has been a long delay
in seeking a stay or whether the enforcement of arbitration
was brought up when trial was near at hand [,] . . .
whether the defendants have invoked the jurisdiction of the
court by filing a counterclaim[,] . . . [and] whether
important intervening steps (e.g., taking advantage of
judicial discovery procedures not available in arbitration

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. . .) [have] taken place. . . " (quotations and citations
omitted).

Home Gas Corp. of Massachusetts, Inc. v. Walter's of Hadley,

Inc., 403 Mass. 772, 776 (1989).

Mary contends that Wall "engaged in the litigation process"

in a manner that was "inconsistent with any purported intent to

arbitrate," and thus, waived his right to arbitration. We

disagree. First, the record reflects that Wall asserted his

right to arbitration well before "the litigation machinery was

substantially invoked," when he, along with Crystal Clear,

raised it as an affirmative defense. See Home Gas Corp. of

Massachusetts, Inc, 403 Mass. at 776. Second, although

approximately three years elapsed between the filing of the

complaint and Wall's cross-motion to dismiss the complaint on

arbitration grounds, much of the delay can be attributed to the

automatic stay brought upon by Crystal Clear's bankruptcy

filing. See Carpenter v. Pomerantz, 36 Mass. App. Ct. 627, 632

(1994) (delay alone does not support waiver). The litigation

had not progressed beyond the pleading stage when Wall filed his

cross-motion to dismiss the complaint, as noted by the judge in

a preliminary order: "little litigation ha[d] occurred in [the]

matter." Lastly, as evidenced by the defendants' inaction in

response to Frederick's discovery request and motion to compel,

we are not persuaded that Wall "invoke[d] the jurisdiction of

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the court" at any point in the litigation. Relevantly, at no

point during the litigation did Wall file a counterclaim or seek

discovery. Viewing Wall's actions under a totality of the

circumstances, we conclude that the judge acted within her

discretion in determining that Wall had not waived his right to

arbitration.

4. Conclusion. We vacate the judgment and reverse the

order denying the motion to substitute. We remand for entry of

a new order allowing the motion and substituting Mary Petersen

as plaintiff. A new judgment shall thereafter enter dismissing

the case brought by Mary, the substituted plaintiff.

So ordered.

By the Court (Neyman,
D'Angelo & Allen, JJ.4),

Clerk

Entered: January 21, 2026.

4 The panelists are listed in order of seniority.

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