A Gloucester woman says an effort to recover $180,000 ended with an attack, chemical injuries and a recorded admission.
GLOUCESTER, Mass. — A Gloucester woman has sued a lifelong friend, alleging that a dispute over a six-figure loan ended when the friend pressed a chemical-soaked rag over her face and described a plan to kill them both.
Marianna DiMercurio filed the civil complaint against Phyllis Palazzola in Essex Superior Court, where she is seeking damages for injuries and emotional distress tied to the alleged Jan. 3, 2024, attack. The dispute has also produced a criminal case. An Essex County grand jury indicted Palazzola on attempted murder, assault and witness intimidation charges. She is scheduled to be arraigned July 21 in Salem.
The civil complaint traces the conflict to money DiMercurio says she provided to Palazzola between October 2021 and February 2022. According to the filing, DiMercurio loaned her longtime friend and neighbor a total of $160,000. The women also agreed that Palazzola would pay an additional $20,000 in interest, bringing the claimed debt to $180,000. The lawsuit says the money was intended to help Palazzola pay legal expenses connected to an insurance fraud case. DiMercurio later made repeated efforts to collect the debt, the complaint says. On Jan. 3, 2024, Palazzola offered to drive DiMercurio to a local bank, where DiMercurio believed she would receive repayment. Instead, the filing alleges, Palazzola drove to her own home on Washington Street. The lawsuit says the trip became the setting for the alleged attack.
After arriving at the Washington Street property, Palazzola went inside the house and returned to the vehicle carrying a rag soaked in WD-40, according to the complaint. DiMercurio alleges Palazzola forced the rag against her face in an attempt to make her unconscious. The complaint says DiMercurio escaped from the vehicle and fell to the ground. Her eyes began burning, and her vision became blurry. She then ran into Palazzola’s home to wash her eyes before trying to flee again. The lawsuit alleges that Palazzola continued pursuing her during the struggle. Attorney Joseph Orlando, who represents DiMercurio, said his client suffered chemical burns to her eyes as well as lasting emotional trauma. Palazzola has not publicly answered the allegations described in the complaint, and an attorney contacted on her behalf did not provide a comment to NBC Boston.
The lawsuit says DiMercurio reached her own vehicle and began recording on her phone because she feared for her life. A conversation lasting about 14 minutes followed, according to the filing. The complaint alleges that Palazzola said she had tried to sedate DiMercurio and had planned to drive the vehicle off a bridge. “Just sedate you so we could go together,” Palazzola allegedly said during the recording. When DiMercurio asked where they would go, Palazzola allegedly described making their deaths appear to be an accident. The filing also quotes her as saying, “I was gonna kill us both.” Orlando said the recording could become important evidence in both the civil dispute and the criminal prosecution. He has not publicly released the audio, and its full contents have not been independently reviewed.
DiMercurio’s complaint includes claims of assault and battery, intentional infliction of emotional distress and negligence. She alleges that the encounter caused chemical eye burns, scratches, sleep problems and continuing fear about leaving her home. The filing also describes a meeting held Jan. 7, 2024, four days after the alleged attack. Relatives of both women attended, according to the lawsuit. DiMercurio alleges that Palazzola again admitted during that meeting that she had tried to kill her. The complaint does not resolve why the women met after the encounter or describe every statement made by the relatives. The civil case will require DiMercurio to prove her claims under the standards used in civil court, a process separate from the state’s criminal prosecution.
The dispute developed against the background of an earlier insurance fraud case involving Palazzola. State officials charged her and her Gloucester insurance agency in 2023 with offenses that included larceny by embezzlement, forgery and unlicensed insurance activity. Authorities alleged that insurance customers paid money for policies but that some premiums were not forwarded to insurance carriers. Palazzola had previously lost her authority to conduct insurance business in Massachusetts. The new civil complaint says DiMercurio’s loan was intended to cover legal costs related to that matter. The filing does not state that DiMercurio participated in any alleged insurance misconduct. Her role, as described in the lawsuit, was that of a friend who provided money and later sought repayment.
The civil and criminal proceedings carry different burdens of proof and may move on separate schedules. In the civil case, DiMercurio is asking the court to award money for physical injuries, emotional harm and other alleged losses. The publicly reported complaint does not identify a final damages figure. In the criminal case, prosecutors must prove the charges beyond a reasonable doubt. The grand jury returned five counts connected to the Jan. 3 encounter: attempted murder, assault and battery with a dangerous weapon, assault and battery with a dangerous weapon causing serious bodily injury, and two counts of witness intimidation. An indictment is a formal accusation and does not establish guilt. Palazzola will have the opportunity to enter pleas and challenge the state’s evidence.
The case centers on two women described in the complaint as lifelong friends and neighbors, making the allegations especially personal. Their relationship included enough trust for DiMercurio to transfer large sums over several months, according to the filing. By early 2024, that relationship had become a dispute over repayment and, DiMercurio alleges, a threat to her life. Orlando said the encounter left his client with both physical injuries and emotional trauma. No additional eyewitness account of the alleged attack has been made public. The most detailed narrative now available comes from DiMercurio’s lawsuit, while the criminal indictment states the charges in shorter legal terms. Palazzola’s account of the encounter remains unknown because she has not publicly responded.
Palazzola’s arraignment is scheduled for July 21 in Essex Superior Court in Salem. The civil lawsuit remains pending, and no trial dates or final rulings have been announced in either case.
Author note: Last updated July 10, 2026.