Mullins v. Corcoran, et al. (Lawyers Weekly No. 09-032-18)
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1484CV02302-BLS2
____________________
JOSEPH R. MULLINS
v.
JOSEPH E. CORCORAN and GARY A. JENNISON
____________________
MEMORANDUM AND ORDER ON PLAINTIFF’S MOTION TO BIFURCATE AND DEFENDANTS’ MOTIONS IN LIMINE
This lawsuit concerns failed attempts to develop certain property in Somerville, Massachusetts. The parties jointly own the property through a closely-held company known as Cobble Hill Center LLC. They agreed to develop it together in a 1987 contract that divided up many of their other real estate interests.
Joseph Mullins has asserted claims against Joseph Corcoran and Gary Jennison for breach of contract and breach of fiduciary duty. Corcoran and Jennison, in turn, assert similar counterclaims against Mullins for breach of contract and breach of fiduciary duty. The case is scheduled to be tried before a jury starting on May 14, 2018.
The Court rules as follows on three motions in limine that were filed by Corcoran and Jennison and a motion to bifurcate trial into separate liability and damages phases that was filed by Mullins.
1. Measure of Damages. The Court will ALLOW the request by Corcoran and Jennison within Motion in Limine No. 1 for leave to present evidence of alleged damages calculated as the future profits Defendants claim to have lost as a result of Mullins’ alleged breaches of contract and fiduciary duty.
The general measure of damages is the same for breach of contract as for breach of fiduciary duty; under either theory, a prevailing claimant is entitled to be put in the position they would have been in if there had been no breach of duty. See, e.g., Mailman’s Steam Carpet Cleaning Corp. v. Lizotte, 415 Mass. 865, 869 (1993) (breach of contract); Berish v. Bornstein, 437 Mass. 242, 270 (2002) (breach of fiduciary duty)
In an appropriate case, lost profits can be the appropriate measure of damages either for breach of contract or breach of fiduciary duty, assuming that the claimant
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can meet its burden of proving that the alleged breach proximately caused a future loss of profits. See, e.g., Situation Management Systems, Inc. v. Malouf, Inc., 430 Mass. 875, 880 (2000) (breach of contract); O’Brien v. Pearson, 449 Mass. 377, 387 (2007) (breach of fiduciary duty).
Defendants’ proposed methodology for calculating lost profits is permissible in concept. They intend to present evidence calculating their counterclaim damages as the future market value of the building they had wished to contract, minus the development costs that would have been incurred to construct the building, minus the residual value of the property in its current state. If the jury were to credit Defendants’ evidence, that would be a permissible way to value damages. See, e.g., Neal v. Jefferson, 212 Mass. 517, 522-423 (1912) (plaintiff deprived of leasehold interest in land on which he planned to build and operate a hotel was entitled to “such prospective profits as it was fairly proved that he would have realized”).
Mullins’ assertion that Defendants cannot seek future lost profits because damages must always be sought as of the date of the alleged breach of duty is without merit, for the reasons already discussed. However, Mullins will be entitled to an instruction that if the jury awards damages for future lost profits it must reduce the amount award to an equivalent economic value as of the date that Corcoran and Jennison first asserted their counterclaims. See Griffin v. General Motors Corp., 380 Mass. 362, 367 (1980).
Mullins also argues that Defendants should be barred from presenting such lost profit evidence because the claimed counterclaim damages were not foreseeable in 1987 when the parties entered into their contract. This argument is unavailing. It was certainly foreseeable when the parties agreed to a framework for developing this property that a breach of contract or breach of fiduciary duty could result in the loss of a valuable development opportunity, and thus in a loss of profits. To the extent there is a factual dispute regarding the foreseeability of damages that dispute must be resolved by the jury.
2. Mitigation Evidence. The Court will DENY Defendants’ request within Motion in Limine No. 1 to bar Mullins from presenting evidence and argument regarding his 2016 and 2017 development proposals, in support of his assertion that Defendants failed to mitigate their claimed damages, because it is up to the jury to
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determine whether Defendants failed to take reasonable steps to mitigate their alleged loss of profits by not pursuing those proposals.1
If the jury were to found that Mullins breached his contractual or fiduciary obligations, then the burden would be on Mullins to prove that Corcoran and Jennison failed “to make reasonable efforts” to mitigate their damages. Kiribati Seafood Co., LLC v. Dechert LLP, 478 Mass. 111, 123 (2017).
Corcoran and Jennison correctly note that since a claimant need only take reasonable steps to mitigate their damages, they had no obligation to take steps involving “undue risk [or] burden” in an attempt to reduce their claimed losses. See Restatement (Second) of Contracts § 350(1) (1981).
But the Court is not convinced by Defendants’ further argument that Mullins should not be able to present evidence of his additional development proposals on the issue of mitigation because those proposals involved undue risk and burden, in part because they were not permitted under the City of Somerville’s existing zoning ordinance and because they would have required a substantial investment with no guarantee of success.
Mullins counters that he is prepared to present evidence that the City has often modified its zoning rules in order to permit a greater density of residential housing and that as a result his further development proposals were really no more risky or burdensome than the Corcoran and Jennison plan that he vetoed.
The Court concludes that these issues must be resolved by the jury. The question of whether a plaintiff has exercised reasonable care and diligence in avoiding injury is “generally a question for the jury to decide.” Soederberg v. Concord Greene Condominium Ass’n, 76 Mass. App. Ct. 333, 337 (2010); accord Baldassari v. Produce Terminal Realty Corp., 361 Mass. 738, 744-745 (1972) (trial judge committed reversible error in granting directed verdict in favor of defendant on ground that plaintiff had been comparatively negligent, as issue was not question of law but instead had to be resolved by jury). The same principle applies where a defendant raises a defense of failure to mitigate damages, rather than a defense of comparative
1 Defendants’ assertion that Judge Kaplan resolved this issue when he denied Mullins’ motion to amend his complaint to assert affirmative claims for damages regarding the 2016 and 2017 proposals is without merit.
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negligence. The issue of whether a claimant failed to take reasonable steps to mitigate their claimed damages generally cannot be decided by the trial judge as a matter of law but instead is a question of fact to be decided by the jury. Noyes v. Whiting, 289 Mass. 270, 272-273 (1935).
The fact that Mullins’ later development proposals could not have been implemented without a change in the local zoning ordinance does not make his proposed mitigation evidence inadmissible. Of course, “[e]xisting zoning restrictions or special permit requirements limit available uses and may affect the fair market value of property. … However, the fact that a potential use is prohibited or restricted by law at the time of the taking does not preclude its consideration if there was a reasonable prospect of rezoning or acquiring a special permit.” Douglas Envtl. Assocs., Inc. v. Department of Envtl. Protection, 429 Mass. 71, 76 (1999). If Mullins can show it was “reasonable likely” that the City would have made the required zoning changes, then he is entitled to present this mitigation defense to the jury. Cf. Boston Edison Co. v. Massachusetts Water Resources Auth., 459 Mass. 724, 731-732 (2011) (same in eminent domain case).
Whether Mullins will succeed in presenting a sufficient evidentiary basis for this mitigation defense cannot be resolved in advance of trial. Defendants did not move for partial summary judgment on this issue, and it is too late for them to do so on the eve of trial.
3. Admissibility of Communications regarding Development Proposals. Finally, the Court will ALLOW Defendants’ motion in limine number 2 to admit communications regarding the 157-unit development proposal (other than communications during or about the parties’ formal mediation before JAMS, which both sides agree are inadmissible), but will DENY Defendant’s motion in limine number 3 to the extent that Defendants seek to exclude subsequent communications after September 2015 regarding Mullins’ alternative proposals.
Mullins has indicated that he has no opposition to the admission of the communications addressed in motion in limine number 2, so long as (1) there is no date restriction on the admissibility of communications regarding possible development proposals, (2) neither side’s lawyers will be required to testify or be subject to disqualification, and (3) information regarding the JAMS mediation is not
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admitted. He opposes the request in motion in limine number 3 to bar communications regarding additional development proposals made by Mullins after September 2015.
The Court’s ruling above regarding the permissible scope of Mullins’ evidence regarding mitigation of damages resolves issue (1), which is the real point of contention on these motions. The Court has determined that the later communications that Defendants seek to exclude are admissible. The Court sees no reason to instruct the jury that they may only consider that evidence for certain purposes but not others. There does not appear to be any dispute as to—and thus no need for the Court to address—issues (2) and (3).
4. Order of Presentation. Corcoran and Jennison argue, again in Motion in Limine No. 1, that they should be treated as the plaintiffs for the purposes of trial—and allowed to open and present evidence first, and then close last—because their counterclaims outweigh Mullins’ initial claims. Corcoran and Jennison seek damages of roughly $ 35 million against Mullins. That is orders of magnitude higher than the roughly $ 200,000 in damages sought by Mullins.
If the Court were certain that it had the discretion to treat the plaintiffs-in-counterclaim as the plaintiffs and all them to open first and close last it would do so. But since there is considerable doubt as to whether that is permissible under Massachusetts law, even where a defendant’s counterclaims dwarf the plaintiff’s own claims, the Court will DENY this request.
The Supreme Judicial Court has repeatedly emphasized that a trial judge “must be ‘the directing and controlling mind at the trial, and not a mere functionary to preserve order and lend ceremonial dignity to the proceedings.” Commonwealth v. Carter, 475 Mass. 512, 526 (2016), quoting Commonwealth v. Lewis, 346 Mass. 373, 379 (1963), cert. denied, 376 U.S. 933 (1964), quoting in turn Whitney v. Wellesley & Boston St. Ry., 197 Mass. 495, 502 (1908). This includes a duty to ensure that the jury is not “diverted from the real issue in the case.” Commonwealth v. Haley, 363 Mass. 513, 519 (1973), quoting Lummus, The Trial Judge 19-20 (1937).
For a time, the SJC took the position that although a civil plaintiff generally has the right to open and close the case, a trial judge had the discretion—consistent with the judge’s obligation to ensure that the trial is presented in a manner that is
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most helpful to the jury—to allow a defendant to open and close where the defendant had the burden of proof. Ayer v. Austin, 23 Mass. (6 Pick.) 225, 226 (1828); see also Robinson v. Hitchcock, 49 Mass. (8 Metc.) 64, 65 (1844).
More recently, however, the SJC held that the plaintiff always has the right to open and close before a jury, and that it is reversible error to allow the defendant to exercise that right even where the defendant has asserted an affirmative claim and therefore has the burden of proof. Bigelow Carpet Co. v. Wiggin, 209 Mass. 542, 551 (1911). In Bigelow Carpet, the plaintiff filed a petition to register title to land. Wiggin and other abutters claimed that they had easements by prescription over the property. Id. at 547. The trial judge let the abutters open first and close last, even though they were not the plaintiffs. The jury rendered a verdict in favor of Wiggin and the other respondents. Bigelow Carpet appealed. The SJC held that “there was no error in the admission of evidence, or in the rulings and instructions” challenged on appeal. Id. at 551. But it nonetheless reversed the verdict on the ground that the trial judge committed reversible error by allowing the abutters to open and close. The SJC explained that a civil plaintiff “has the right to open and close before the jury, irrespective of the form of the pleadings, or whether from the nature of the defense, or of an affirmative claim, or issue, the burden has shifted to the adversary party. … The practice should be uniform, and there is no reason why the case at bar should be taken out of this general and salutary rule.” Id. (citation omitted); accord Mottau v. Mottau, 243 Mass. 147, 148 (1922) (proponent of will properly allowed to open and close, even though only contested issue at trial was whether opponent could prove will was invalid due to fraud or undue influence).
One could argue that the modern rules of civil procedure have effectively negated Bigelow Carpet. In a case like this we have two sets of plaintiffs, the original plaintiff (Mullins) and several plaintiffs-in-counterclaim (Corcoran and Jennison). It is not obvious why a plaintiff should always have the right to open and close, even whether the plaintiff’s affirmative claims are overshadowed by counterclaims.
But Bigelow Carpet has never been distinguished, limited, or overturned by any reported appellate decision. Trial in this case is likely to take roughly three weeks. It does not make sense to risk reversal of a jury verdict, as in Bigelow Carpet,
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by treating Corcoran and Jennison as the plaintiffs for the purpose of deciding who gets to open first and close last.
5. Bifurcation of Evidence. Finally, Mullins asks the Court to bifurcate trial of liability issues from trial of damages issues. The Court will DENY this request because it is not convinced that doing so will result in a more efficient trial or materially assist the jury in any other way. Although Mullins insists that it will take at least a week to try the damages part of the counterclaims, Corcoran and Jennison disagree. They estimate that it will take only two to three days to try their damages claims. More importantly, it would be difficult to divide the evidence cleanly between liability and damages issues. Many of the same witnesses would have to testify during both phases of trial. And bifurcation would inevitably lead to fights over whether particular evidence should be admitted on liability issues of bad faith or reserved until the damages phase of trial if one were necessary. On balance, and in the exercise of its discretion, the Court concludes that a single trial of all issues is likely to be the most efficient and least confusing way to present this case to a jury.
ORDER
Defendants’ Motion in Limine No. 1 is ALLOWED IN PART with respect to the permissible measure of Defendants’ damages and DENIED IN PART with respect to the scope of Plaintiff’s mitigation evidence and the order of presentation of evidence at trial. Defendants’ Motion in Limine No. 2 is ALLOWED. Defendants’ Motion in Limine No. 3 is ALLOWED IN PART to the extent that it seeks the admission of certain communications between the parties and DENIED IN PART to the extent that it seeks to bar all communications between the parties after September 2015. Plaintiff’s motion to bifurcate trial of liability and damages is DENIED.
26 March 2018
___________________________
Kenneth W. Salinger
Justice of the Superior Court