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Choate, Hall & Stewart v. SCA Services
Massachusetts Supreme Judicial Court
392 N.E.2d 1045, 378 Mass. 535 (1979)
Berton Steir was the president and chairman of the board of directors of SCA Services, Inc. (SCA) (defendant). Allegations arose that Steir was involved in another SCA officer’s embezzlement, and the Securities and Exchange Commission (SEC) began investigating the matter. In response, Steir and SCA contractually agreed that Steir would voluntarily resign from his positions at SCA. In exchange, SCA agreed to continue to indemnify Steir for any acts he had taken on SCA’s behalf, including making direct payments to an attorney to represent Steir in the SEC matter. Steir hired the law firm of Choate, Hall & Stewart (law firm) (plaintiff) to represent him. The law firm submitted its bills for Steir’s work to SCA, and SCA paid the first two bills. However, SCA then stopped paying, claiming that it would not pay anything further for Steir’s legal expenses until Steir either proved his innocence or returned money that he had allegedly taken unlawfully from SCA. The law firm sued SCA, seeking a declaration that the contract between SCA and Steir required SCA to pay the law firm’s bills. The trial court ruled that the law firm could not sue to enforce the contract because it was not a party to the contract. The trial court granted summary judgment to SCA, and the law firm appealed.
Rule of Law
Holding and Reasoning (Kaplan, J.)
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