Patel v. Dammai, et al. (Lawyers Weekly No. 12-121-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 1784CV0113-BLS 1
VINOD PATEL
vs.
VINCENT DAMMAI, et al
ORDER ON CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT
In this action on a promissory note the parties seek a ruling by the court on two issues: (1)
what should be the interest rate on the promissory note when the interest rate stated in the note is
unlawful under the usury statute, and (2) what amount of attorneys’ fees are recoverable by the
lender under the terms of the note. This action was commenced by plaintiff, the lender, against
defendant, a person individually liable under the note, on January 12, 2017. As a result of this
lawsuit and collection efforts by plaintiff, the principal sum of the note ($ 400,000) was repaid to
plaintiff on May 31, 2017. On April 20, 2017, in anticipation of the imminent payment of the
principal amount, the parties submitted a Joint Proposal for Procedure and Schedule that was
accepted and ordered by the court. In the Joint Proposal, the parties stated “[a]ll parties believe
that these two issues can likely be resolved without discovery, on cross motions for summary
judgment. All parties further believe that if these two issues are resolved by the Court, then that
will likely facilitate a final resolution of the case . . . .”
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BACKGROUND
The Interest Rate
The following facts regarding the promissory note and the interest rate are submitted as
undisputed in the parties’ Consolidated Statement of Undisputed Material Facts.
In May 2016, the parties met to discuss a business venture proposed by defendant,
Vincent Dammai. Dammai intended to form a company called Biosimilars & Biologics to
distribute and/or manufacture generic pharmaceutical drugs. Plaintiff, Vinod Patel, agreed to
become employed by the company and to receive a 4% equity interest in the company.
Before the company could be organized it was recognized that the company needed
money to get off the ground. Patel agreed to loan the not-yet-organized company $ 400,000. It
was anticipated that the loan would be for a short time period because Dammai anticipated a
major investment from the government of Brazil. On July 1, 2016, a promissory note was
executed by Dammai, Patel and a third person, Venkat Reddy. The relevant terms of the
promissory note are the following.
The “Borrower” is a “new business” designated as “NewCo.” It is recited that NewCo
consists of three “Owners”, Dammai, Patel and Reddy. NewCo and the Owners “individually and
severally” promise to pay Patel the sum of $ 400,000, plus interest on or before September 1,
2016. The promissory note states that the “loan is intended to be used [as] an advance to fund the
start-up of a new business . . . to be named and formed in the next two weeks (called ‘Biosimilar
& Biologics’).”
The promissory note further provides that the interest rate on the note is 15% bimonthly.
Accordingly, the amount owed under the note on the date due, September 1, 2016, is $ 460,000.
2
The note provides that the Borrower shall pay reasonable attorneys’ fees and disbursements
incurred in connection with the collection of the note.
On July 1, 2016, Patel wired $ 200,000 to a bank account for another entity controlled by
Dammai because the anticipated NewCo had not been formed. On July 5, 2016, Patel wired
another $ 200,000 to Dammai.
On August 5, 2016, Patel and Reddy informed Dammai that they no longer wanted to
participate in the anticipated new business to be called Biosimilars & Biologics. On August 15,
2016, Dammai incorporated Biosimilars & Biologics IBC as a Bahamas corporation, with
Dammai as majority shareholder. Patel and Reddy have never been shareholders, officers,
directors or employees of this company.
Dammai admits in his answer that in May and June 2016, when the parties discussed the
short term loan, Dammai offered and proposed to pay Patel between 10% and 20% interest for
the two month period. Patel chose the mid-point: 15%. Neither Dammai nor Patel knew that the
rate of interest violated the Massachusetts usury statute.1 Patel obtained the form of the note from
his neighbor, an attorney, with the interest rate left blank. Patel inserted the 15% rate without
consulting an attorney. Dammai had no objection to the 15% interest rate. Indeed, he happily
remarked in an email about his willingness to pay the 15% interest for two months.
The loan was not repaid on September 1, 2016. Patel attempted to collect the debt by
informal communications. The debt was not paid in response. In October 2016, Patel engaged
counsel to help him collect the debt. Patel and his counsel proposed a new note to replace the
original note but the proposal was rejected. In December 2016, Dammai, through counsel,
1 The promissory note is, by its terms, governed by Massachusetts law.
3
disputed liability under the note. Patel filed this lawsuit on January 12, 2017. As mentioned
above, as a result of litigation efforts by Patel, Patel received repayment of the principal amount
of the loan ($ 400,000) on May 31, 2017.
Reasonable Attorneys’ Fees
The parties agree, as confirmed at oral argument, that I may review the submission of
Patel in support of his request for an award of attorneys’ fees and expenses, including the
affidavit of counsel and the contemporaneous time records, along with the submission of
Dammai, including his objections to the award of fees for certain activities and his analysis of the
fees and tasks, to determine an award of fees. No evidentiary hearing on the award of fees is
requested.
DISCUSSION
Interest Rate
The parties agree that the interest rate of 15% for every two months (90% per annum) is
unlawful as a usurious rate under G.L. c. 271, § 49. The maximum interest rate allowed under
that statute is 20% per annum. Patel seeks to have the court reform the promissory note to make
the applicable interest rate the 20% maximum allowed by law. Dammai, on the other hand,
argues that the consequence of the usurious rate in the promissory note is that the note is deemed
to have no agreement on an interest rate and, therefore, pursuant to G. L. c. 107, § 3, the rate is
6%. Dammai concedes, however, that if there is no interest rate in the note, the prejudgment
interest rate of 12% would apply from the date of breach or demand pursuant to G.L. c. 231,
§ 6C.
The Massachusetts usury statute, G. L. C. 271, § 49 prohibits an interest rate of more than
4
20% per year. In subsection (c) of the statute, the court is empowered, but not required, to declare
a loan with an usurious interest rate void. The Supreme Judicial Court has held that “the
permissive language of § 49 (c) is properly read to empower a court to utilize its full range of
equitable powers, including cancellation, in order to reach an appropriate result in each case.”
Begelfer v. Najarian, 381 Mass. 177, 187 (1980).
One equitable remedy available to the court is to reform the promissory note to insert a
non-usurious interest rate. Beach Associates, Inc. v. Fauser, 9 Mass. App. Ct. 386, 389 (1980).
In Beach Associates, the Appeals Court affirmed the lower court’s reformation of the terms of a
loan with an usurious interest rate to the maximum (20% per annum) allowed by law. Id. at 395.
The guiding principle cited in the decision was that the “parties freely entered into this
transaction at arms-length in the mistaken belief that the interest rate was proper.” Id. Therefore,
equity required that the lender receive the maximum interest rate allowed by law.
For similar reasons, I find that the parties’ promissory note should be reformed. I select
the maximum interest rate allowed by law because the record demonstrates that the borrower
freely and willingly agreed to pay a very high interest rate (!0% to 20% for every two months)
because it was anticipated that the loan would be short term (two months). The lender simply
agreed to the interest rate proposed by the borrower. Neither the borrower nor the lender knew
the interest rate stated in the promissory note was unlawful. In order to reasonably effectuate the
parties’ bargain, and in the exercise of my equitable discretion, I reform the promissory note to
provide for an interest rate of 20% per annum.
Dammai’s argument to apply G. L. c. 107, § 3 to provide the interest rate is inapposite.
That statute provides for a 6% interest rate when “there is no agreement or provision of law for a
5
different rate.” As a result of the reformation of the promissory note by the court reasonably to
achieve the parties’ intent at the time of the loan, there is an interest rate (20% per annum) that
reflects the parties’ agreement. Likewise, prejudgment interest under G.L. c. 231, § 6C is to be
calculated at the “contract rate.” The contract rate is the 20% per annum as provided by the nowreformed
promissory note.
Attorneys’ Fees and Expenses
The promissory note provides for the lender to recover reasonable attorneys’ fees and
expenses “incurred in connection with the collection and/or enforcement” of the note. Patel
argues that he should recover $ 99,191.48 under that provision. The parties submit the
reasonableness of the requested award of fees and expenses to me for resolution. In that regard, I
have reviewed the parties’ detailed filings. The Second Affidavit of Brian S. Kaplan (counsel for
Patel), dated June 26, 2017, attaches contemporaneous time records detailing tasks per day and
the time expended for the tasks. Counsel for defendant provided a spreadsheet categorizing each
time entry into a substantive area, and a helpful pie chart illustrating the amount of the total
charges by category. In addition, the parties’ memoranda describe the collection efforts
undertaken by counsel for Patel.
Defendant does not contest the hourly rate charged by Patel’s counsel. That rate for Mr.
Kaplan is $ 400. I find that the hourly rate is reasonable given the nature of the representation and
the experience and reputation of counsel.2 Also, defendant does not contest the expenses incurred
by Patel. Those expenses are detailed in the bills sent to Patel and amount to $ 1,091.48.
2 Some of the work was performed by an associate of Mr. Kaplan at an hourly rate of
$ 300. Again, defendant does not contest the hourly rates.
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In general, I find that the time spent by Patel’s counsel in efforts to collect the loan was
both reasonable and remarkably effective. After exhausting informal attempts to obtain payment,
counsel commenced suit and aggressively pursued legal options (such as trustee process) to force
payment. The results obtained are commendable. Within approximately seven months of
engagement, counsel obtained full payment of the principal amount of the loan. This outstanding
result was obtained notwithstanding defendant’s denial of liability, refusal to provide information
regarding the whereabouts of the loan proceeds, and the alleged misuse of the proceeds. Counsel
for Patel obtained trustee process to freeze approximately $ 145,000 belonging to defendant and
engaged in discovery from third parties to trace the proceeds.
On March 21, 2017, defendant finally admitted that he did not contest liability for the
loan. Also on that date, defendant asked permission from the court to pay the $ 400,000 loan
principal into court. Additional legal fees were incurred to negotiate and effect the payment from
court directly to Patel
I find that the legal fees incurred by Patel through March 22, 2017, were reasonable. I
reject defendant’s nitpicking of the tasks required because (a) the tasks appear reasonable, and
(b) defendant could have avoided the obligation to reimburse Patel for legal fees if he had come
forward and paid the principal when first demanded. The amount of legal fees incurred through
March 22, 2017, was $ 58, 240.
The remaining $ 39,860 sought by Patel ($ 98,100 – $ 58,240) represents fees incurred in
the time period from March 22, 2017 to May 15, 2017. The bulk of those fees were incurred in
connection with resolving the parties’ dispute over the interest rate that should be applied to the
principal. This dispute resulted in the cross-motions for partial summary judgment. From the
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descriptions in the time sheets, defendant calculates that $ 27,200 of fees were incurred by Patel
on this issue. My review of the time records reduces the amount that defendant says was incurred
solely on the interest rate issue because some of the time entries reference and include court
appearances and preparation of the motion for fees. These latter two items are compensable.
Accordingly, I find that the fees incurred by Patel in connection with litigating the interest rate
issue amount to $ 22,000.
The dispute over the interest rate was a problem of both parties making. As referenced
above, neither side knew that the stated interest rate was usurious when the promissory note was
executed. They mutually agreed to the usurious interest rate. This mutual mistake required,
ultimately, that the court determine the interest rate as an equitable matter. In my view, the
resolution of the interest rate issue was not a collection cost reimbursable under the provision of
the promissory note but, instead, a mutual request for a declaratory judgment regarding the
appropriate interest rate. Consequently, I deny recovery by Patel of $ 22,000 of the attorneys’ fees
requested.
The analysis above leaves undecided the recovery of $ 17,860 of fees incurred by Patel
after March 22, 2017 ($ 39,860 – $ 22,000). I reviewed the time records for that period. The time
spent by Patel’s counsel included further efforts directed to holding Dammai’s wife liable for
dissipation of the loan proceeds, including the defense of the wife’s motion to dismiss. Also
included are miscellaneous charges for time spent on reviewing records and considering defenses
raised by defendant in his answer. At this time, although agreements were in effect regarding the
payment of principal, Patel still could reasonably believe that he would be litigating over
collection of whatever interest rate could be awarded by the court. I find that the time spent by
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Patel’s counsel during this period is, however, at least partially excessive given the payment of
the principal. A reasonable resolution of what fees are recoverable for this period of time is to
award 50% of the remaining $ 17,860 of fees sought, or $ 8,930.
In sum, I find that Patel is entitled to recover $ 67,170 as reimbursement for attorneys’
fees, plus $ 1,091.48 in expenses, for a total of $ 68,261.48. The award of attorneys’ fees is
calculated, as described above, by the combination of $ 58,240 of fees incurred through March
22, 2017, and $ 8,930 for fees incurred after that date.
CONCLUSION
Plaintiff’s motion for partial summary judgment (Paper No. 42) is ALLOWED to the
extent that judgment on the promissory note shall be calculated to reflect the interest rate of 20%
per year, and plaintiff is entitled to recover $ 68,261.48 for attorneys’ fees and expenses
recoverable under the promissory note. Defendant’s cross-motion for partial summary judgment
is DENIED.
By the Court
Edward P. Leibensperger
Justice of the Superior Court
Date: August 4, 2017
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Posted by Stephen Sandberg - September 7, 2017 at 12:20 pm

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Element Productions, Inc. v. EditBar, LLC, et al. (Lawyers Weekly No. 12-122-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 2016-1476 BLS1
ELEMENT PRODUCTIONS, INC.
vs.
EDITBAR, LLC, STIR FILMS, LLC and MARK HANKEY
ORDER ON DEFENDANTS’ MOTION TO STAY ACTION AND COMPEL
ARBITRATION (Paper No. 37)
Approximately thirteen months after defendants answered the complaint and asserted
counterclaims and a third-party claim, defendants now seek to move this case to arbitration. The
issue presented is whether defendants, by their active litigation conduct, waived arbitration. For
the reasons described below, I find that arbitration is waived and, thus, this motion is denied.
BACKGROUND
Defendant Mark Hankey was an employee of Element until April 12, 2016. He executed a
written employment agreement in 2012 stating that “[a]ny dispute, claim or controversy arising
out of or relating to this Agreement or the breach, termination, enforcement, interpretation or
validity thereof shall be determined by arbitration in Boston, Massachusetts before one arbitrator.
The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules
and Procedures . . . .”
Plaintiff, Element Productions, Inc., commenced this action on May 9, 2016. Element
alleges that in 2015, Hankey began secretly aiding Element’s direct competitor, defendant Stir
Films LLC, a start-up video production company set up by defendant, EditBar, LLC. Hankey
1
allegedly disclosed Element’s confidential information to Stir Films and worked to assist Stir
Films to lure employees from Element to Stir Films. Element alleges that Hankey’s conduct was
in violation of his employment agreement. Element also alleges that EditBar and Stir Films aided
and abetted Hankey’s breach of fiduciary duty, tortiously interfered with Element’s contract with
Hankey, and conspired with Hankey to injure Element, among other claims.
Had Hankey timely moved to compel arbitration of Element’s claims such motion would
have been allowed. Element does not appear to disagree that its claims against Hankey come
within the arbitration provision. Moreover, EditBar and Stir Films contend that they, also, are
entitled to arbitration pursuant to the recent decision of the Appeals Court in Silverwood
Partners, LLC v. Wellness Partners, LLC, 91 Mass. App. Ct. 856 (2017). In Silverwood, the
Court held that a nonsignatory to an arbitration agreement (like EditBar and Stir Films) may
compel arbitration when a signatory (Element) raises allegations of substantially interdependent
and concerted misconduct by both the nonsignatory and one or more of the signatories (Hankey)
to the contract.
Element’s argument against enforcement of the agreement to arbitrate is based entirely on
the principle of waiver of arbitration by litigation conduct. This principle was recognized by the
Supreme Judicial Court in Home Gas Corp. of Massachusetts v. Walter’s of Hadley, Inc. 403
Mass. 772 (1989). Where, under the totality of the circumstances, the party moving to arbitrate
has acted inconsistently with his arbitration right, such right might be waived. Id. at 775. The
facts indicating waiver include whether the party actually participated in the lawsuit and invoked
the jurisdiction and machinery of the court by, for example, filing a counterclaim or by litigating
discovery disputes. Id. at 776. Delay in demanding arbitration while utilizing court procedures
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and litigating to obtain court decisions interferes with the court’s interest to control the course of
proceedings before it. Id. at 778.
Here, the totality of the circumstances show waiver. As mentioned, this case has been
actively litigated in court for more than a year. Hankey answered the complaint in June 2016, and
asserted counterclaims against Element for violation of the Wage Act, breach of contract,
conversion, and defamation. Hankey then initiated a third-party complaint against Eran Lobel, an
officer of Element. Hankey then amended his answer, counterclaims, and third-party claim in
preparation to litigate the motion to dismiss the counterclaims and third-party claim filed by
Element. Such litigation ensued with the parties’ invoking the court’s consideration of the
motion that resulted in some of Hankey’s claims being dismissed (such as the claim for
defamation) and some of his claims surviving. Neither Hankey or the corporate defendants
communicated any desire to go to arbitration.
Discovery proceeded apace over the last year. The parties negotiated a protective order
and asked the court to endorse the order. Documents were produced and depositions taken. The
parties, including the corporate defendants, litigated over discovery requests, requiring the court
to resolve the disputes. In January 2017, Hankey submitted a written statement in favor of
transferring this case to the Business Litigation Session (BLS) stating that the case warranted
substantial case management. The case was accepted into the BLS. In June 2017, the parties
appeared in the BLS for a Litigation Control Conference. The parties jointly agreed to a tracking
order setting October 31, 2017 as the deadline for completion of discovery.
Recently, on June 26, 2017, Hankey filed in court the Rule 9A package for his motion for
leave to amend his answer and counterclaims by filing a Second Amended Answer and
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Counterclaim. Among other things, the proposed amended counterclaim seeks to re-assert a
claim for defamation based, in part, on facts allegedly learned in discovery. That motion is still
pending, with oral argument set for September 5, 2017.
Then, on July 21, 2017, the corporate defendants served a motion for protective order
with respect to ongoing discovery disputes. In August 2017, the corporate defendants filed an
emergency motion to impound documents in connection with a motion (not yet filed in court) to
compel discovery from Element concerning damages.
Notwithstanding this active practice before this court seeking both affirmative relief and
protection from discovery, on July 17, 2017, less than three weeks from Hankey filing his motion
to amend his pleadings, Hankey and the corporate defendants served the instant motion to stay
the action and to compel arbitration. Until the service of that motion, no reference to the
possibility of arbitration was raised by Hankey or the corporate defendants.
DISCUSSION
I find the analysis and conclusion in Shalaby v. Arctic Sand Technologies, Inc., 32 Mass.
L. Reptr. 401, 2014 WL 7235830 (2014) (Salinger, J.), to be directly on point and entirely
persuasive. No purpose would be served by repeating the analysis. I agree with Judge Salinger
that the better reasoned cases, including Marie v. Allied Home Mortgage Corp., 402 F. 3d 1 (1st.
Cir. 2005), hold that whether waiver of arbitration by litigation conduct has occurred is one for
the court to decide, not the arbitrator. The court has a direct interest in controlling its judicial
procedures and in preventing abusive forum shopping.1
1 There is no argument advanced by defendants that the terms of the arbitration contract
reserve the issue of waiver by litigation conduct to the arbitrator.
4
“Where we are dealing with a forfeiture by inaction (as opposed to an explicit waiver),
the components of waiver of an arbitration clause are undue delay and a modicum of prejudice to
the other side.” Rankin v. Allstate Ins. Co., 336 F. 3d 8, 12 (1st Cir. 2003).
I find that defendants’ litigation conduct for more than a year as described above is
completely inconsistent with Hankey’s contractual right to arbitration. The delay in asserting the
contractual right to arbitration until now appears to be intentional, as deduced from defendants’
affirmative invoking of the court’s jurisdiction and their active use of the discovery mechanisms
of the court. Moreover, defendants do not attempt to explain or justify their delayed decision to
claim arbitration. The undue delay by defendants satisfies the first element of a finding that
arbitration has been waived by litigation conduct.
Because there is a strong federal and state policy in favor of arbitration, “‘mere delay in
seeking [arbitration] without some resultant prejudice’ is insufficient for a finding of conductbased
waiver.” Joca-Roca Real Estate, LLC v. Brennan, 772 F. 3d 945, 948 (1st Cir. 2014),
quoting Creative Solutions Grp., Inc. v. Pentzer Corp., 252 F. 3d 28, 32 (1st Cir. 2001). The
required showing of prejudice, however, is “tame at best.” Id. at 949, quoting Rankin v. Allstate
Ins. Co., 336 F.3d at 14. Prejudice may be inferred from the inordinate delay accompanied by
sufficient litigation activity. Id. In this case, Element points to its successful motion to dismiss
Hankey’s defamation claim. Element states that Hankey seeks to reintroduce that claim in a
pending motion to amend filed in this court, and would attempt to assert the defamation claim if
sent to arbitration. Element argues that it would be unfair for defendants to get a second bite at
the (defamation) apple in an arbitration proceeding when this court has already ruled against him.
In addition, Element notes extensive efforts regarding discovery and the likelihood that the court
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will be asked to issue orders for discovery in response to motions from both sides. Element
contends that moving the case to arbitration would hamper its efforts to obtain discovery because
discovery in arbitration is not as broad as under the Massachusetts Rules of Civil Procedure.
Finally, Element points to the litigation timetable negotiated and agreed to by the parties that
would be adversely affected by the moving to arbitration. I agree with Element’s arguments.
These facts are sufficient to show a modicum of prejudice, at least, to Element if this case were
stayed and arbitration ordered at this late date. Under the standard for determining whether
litigation conduct waives a party’s contractual right to arbitration, I find that defendants have
waived arbitration.
CONCLUSION
Defendants’ motion to stay action and to compel arbitration is DENIED.
By the Court,
Edward P. Leibensperger
Justice of the Superior Court
Date: August 14, 2017
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Posted by Stephen Sandberg - September 7, 2017 at 8:45 am

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Smith-Berry, et al. v. National Amusements, Inc., et al. (Lawyers Weekly No. 12-123-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 2017-0491 BLS 1
TREMAYNE SMITH-BERRY and JESSA DAPRATO, individually and as class
representatives
vs.
NATIONAL AMUSEMENTS, INC. et al1
MEMORANDUM AND ORDER ON DEFENDANTS’ PARTIAL MOTION TO DISMISS
This motion presents an issue of apparent first impression; i.e., whether a movie theater
company must pay its hourly employees who work on Sunday and certain holidays one and onehalf
times their regular pay.
BACKGROUND
Plaintiffs bring this action as a putative class action on behalf of hourly employees at
Showcase Cinemas movie theaters. The named plaintiffs work as a wait staff employee and
bartender, respectively. First Amended Complaint (“FAC”) ¶¶ 5, 6. Both plaintiffs provide food
and beverage services to Showcase’s patrons. FAC ¶¶ 33, 35. The FAC alleges two counts
(Counts I and II) of violation of Massachusetts law regarding the handling of service charges or
tips. Count III of the FAC alleges violation of the Wage Act, G.L. c. 149, §§ 149, 150, for failure
to pay plaintiffs for work on Sunday and holidays at the rate of one and one half times their
regular hourly rate. This partial motion to dismiss concerns only Count III.
1 Cerco LLC, d/b/a Showcase Cinemas and Shari Redstone
1
The FAC asserts the following facts which, for purposes of this motion, I accept as true.
Defendants, referred to collectively as “Showcase”, operate a chain of movie theaters at eleven
locations in Massachusetts. The movie theaters are open for business on Sundays and holidays.
Plaintiffs are employed by one or both of the corporate defendants to work in the movie theaters.
Showcase regularly requires plaintiffs and other hourly employees to work on Sunday and
holidays. Showcase does not pay hourly employees the premium of one and one half times their
regular hourly rate (“premium pay”) for their work on Sunday and holidays.
When the movie theaters are open for the business of exhibiting motion pictures, they sell
food and beverages to patrons for consumption on the premises. FAC ¶ 38. The food items
include fresh popped popcorn, chips, candy, ice cream novelties, confectionaries, fountain soft
drinks and alcoholic beverages. Id.
ANALYSIS
A. Sunday Pay
The resolution of the issue regarding pay for work on Sunday requires an analysis of the
statutory scheme. G.L. c. 136 is commonly referred to as the Sunday closing or “Blue” laws.
Zayre Corp. v. Attorney General, 372 Mass. 423, 424 (1977). “The general philosophy of the
various enactments and versions of the Sunday law up to and including the present G.L. c. 136 is
to begin with a general prohibition of all work, labor and amusements on Sunday and then to
engraft on that general prohibition the exemptions which the Legislature deems required by
necessity or the general purpose of the statute.” Id. at 429. A the time of the decision in Zayre,
there were 49 exemptions in c. 136, § 6, thirteen of which concerned the performance of retail
sales. Id. at 431-432. The plaintiffs in Zayre were large and small retailers of various goods
2
challenging the constitutionality of exemptions authorizing some retail sale activity on Sunday
but not all. Their constitutional challenge failed.
Following Zayre, the Legislature enacted a fiftieth exemption. By St. 1977, c. 722, clause
(50) of c. 136, § 6 was enacted into law.2 That clause provides an exemption from the Sunday
closing law for “a store or shop” engaged in the “sale at retail of goods.” At the same time, the
Legislature imposed the requirement that a “store or shop which qualifies for exemption under
this clause [50] or under clause (25) or clause (27) and which employs more than a total of seven
persons” pay non-executive employees “at a rate of not less than one and one-half times the
employee’s regular rate.”
Of the 50 exemptions to the Sunday closing law that existed upon the passage by the
Legislature of St. 1977, c. 722, there are numerous exemptions for retail activity or the sale of
goods or services at retail. Nevertheless, the Legislature designated only three exemptions that
would trigger an obligation to pay premium pay for work on Sundays.3 Only an employee
working at an establishment that “qualifies for exemption” under clauses (25), (27) and (50) is
entitled to premium pay. G.L. c. 136, § 6 (50). For example, the exemption in clause (28) allows
the “retail sale of greeting cards and photographic films and the processing of photographic
films” on Sunday. G.L. c. 136, § 6 (28). Thus, a retail store selling greeting cards “qualifies for
exemption” under clause (28), not (50), and is not subject to the premium pay requirement.
Likewise, a restaurant, qualified to open on Sunday by clause (42), is not subject to the premium
2 There are now 55 exemptions in c. 136, § 6.
3 In 2003, the Legislature enacted exemption (52) applicable to the retail sale of alcoholic
beverages not to be drunk on the premises. Retail stores operating under that exemption must pay
premium pay for Sunday work.
3
pay requirement. That is because, applying basic principles of statutory construction requiring
that (a) the words of a statute should be given their plain meaning, and (b) subsections of a
statute should be interpreted harmoniously, it must be concluded that the Legislature intended
that a retail business authorized to operate on Sunday by a statutory provision other than clauses
(25), (27) and (50), is not required to pay premium pay. If the Legislature intended to require
premium pay for all retail activity allowed on Sunday, it would have attached the premium pay
requirement explicitly to all the clauses of c. 136, § 6 allowing retail business to operate on
Sunday.4 Instead, the Legislature elected to use the words “qualifies for exemption under this
clause” in clause (50)(emphasis added) to limit the application of the premium pay requirement.
The operation of movie theaters on Sunday and holidays is authorized by a separate
section of the General Laws. Under G.L. c. 140, § 181, local authorities may grant a license to a
movie theater “for the exhibition of motion pictures . . . seven days per week.” The Sunday
closing laws in c. 136 specifically recognize that the “exhibition of motion pictures by a movie
theater” on Sunday and holidays is governed by c. 140, § 181, and not by c. 136. See G.L. c. 136,
§ 4(8A). Consistent with that statutory structure, the operation of a movie theater is not
mentioned in any of the 55 exemptions authorized by c. 136, § 6. In short, the operation of a
movie theater on Sunday does not “qualify for exemption” under clauses (25), (27) or (50) of c.
136.
Given that there is no other statutory obligation to pay Sunday workers premium pay (the
4 The Attorney General appears to agree that only “[c]ertain retail establishments that
operate on Sundays are subject to” the premium pay obligation. Massachusetts Attorney General,
Working on Sundays and Holidays (“Blue Laws”), www.mass/gov/ago/doing-business-inmassachusetts/
workplace.gov. (Emphasis added).
4
statute allowing movie theaters to obtain a license for seven days per week does not impose a
premium pay obligation), Showcase succeeds on its argument that its operation as a movie
theater does not trigger the requirement to pay premium pay for work on Sunday.
But what is the effect of Showcase’s practice of selling food, snacks, confections, and
alcoholic beverages to movie goers for consumption on the premises? Plaintiffs argue that such
sales are “the retail sale of . . . soft drinks, confectioneries . . . dairy products” that come within
clause (25) of § 6.5 As a result, plaintiffs contend that Showcase’s sale of food and drink items
“qualifies for exemption” under clause (25).
Plaintiffs fail to recognize that Showcase’s sale of food and drink items is for
consumption on the premises. Therefore, it is “[t]he conduct of the business of . . . [a] common
victualler.” Such business qualifies for exemption under G.L. c. 136, § 6 (42), not clause (25).
As alleged in the FAC, plaintiffs serve food and drink to patrons of the movie theater to be
consumed on the premises. While there is no statutory definition of “common victualler” the
meaning is well established. “The words ‘common victualler,’ in Massachusetts, by long usage,
have come to mean the keeper of a restaurant or public eating house. . . . [providing] suitable
food for all purchasers who resort to the place where the business is carried on, for such
refreshment as is to be consumed upon the premises.” Commonwealth v. Meckel, 221 Mass. 70,
72 (1915). See also, Town of Wellesley v. Javamine, Inc., 21 Mass. L. Rptr. 12, *3 (Mass.
Superior Ct. 2006)(citing Meckel). Thus, as a common victualler, Showcase qualifies to do
business under clause 42 of c. 136, § 6 and is not subject to the premium pay requirement.
5 Clause (25) of G.L. c. 136, § 6 provides an exemption for “[t]he retail sale of tobacco
products, soft drinks, confectioneries, baby foods, fresh fruit and fresh vegetable, dairy products
and eggs, and the retail sale of poultry by the person who raises the same.”
5
Further, all of Showcase’s commercial activity on Sunday “qualifies for exemption” under
statutory provisions other than clauses (25), (27) and (50) of c. 136, § 6. That being so, there is
no statutory obligation to pay workers premium pay as a result of working on Sunday.6
B. Holiday Pay
The FAC alleges that plaintiffs are required to work “on holidays, including one or more
of the holidays listed in M.G.L. c. 136, § 13.” FAC ¶ 44. They do not receive premium pay for
such work. FAC ¶ 45. Thus, they sue to recover.
Section 13 of c.136 is in two paragraphs. In the first paragraph the statute says, in
essence, that the Sunday closing laws in c. 136, §§ 5 to 11 apply to legal holidays. Thus, because
a movie theater does not have to pay premium pay on Sunday, as concluded above, it does not
have to pay premium pay on most legal holidays.7
In the second paragraph of § 13, however, it is mandated that “[a]ny retail establishment”
pay employees time and one-half for work performed on three dates: January 1, the second
Monday of October and November 11. It is also mandated that the employer shall not force an
employee to work on those dates.
In Drive-O-Rama, Inc. v. Attorney General, 63 Mass. App. Ct. 769 (2005), the Appeals
Court distinguished between the statutory authority to operate on Sunday and the statutory
authority to open for business on the enumerated legal holidays in the second paragraph of § 13.
6 Of course, if a worker is employed for a work week longer than forty hours there is a
separate obligation to pay at a rate of time and one half. G. L. c. 151, § 1A.
7 Certain dates are excepted from coverage as legal holidays. For example, March 17 and
the third Monday in April are not subject to legal holiday pay governed by the Sunday pay
obligations.
6
The Court held that the second paragraph of § 13 requires premium pay for work in “any retail
establishment” on New Year’s Day, Columbus Day and Veteran’s Day, regardless of whether the
employer is, or is not, subject to premium pay requirements for workers on Sunday. Id. at 772 –
773. The establishment (Mill Stores) in Drive-O-Rama, Inc. operated a retail store on Sundays
and legal holidays. Mill Stores was open on Sundays because it qualified for exemption from the
Sunday closing laws under clause (29) of c. 136, § 6. Id. at 771. Because stores operating under
clause (29) are not subject to the premium pay requirement, Mill Stores argued that it should not
be obligated to pay premium pay on New Year’s Day, Columbus Day and Veteran’s Day. The
Appeals Court held that the statutory authority to operate on those enumerated holidays derived
solely from G.L. c. 136, § 13, and not from the Sunday closing laws. Accordingly, Mill Stores
was obligated to pay premium pay on those enumerated holidays even though it operated on
Sundays and other holidays without the obligation for premium pay. Id. at 771-772.8
The somewhat odd result of Drive-O-Rama (requiring premium pay on three dates but not
Sundays and other holidays) applies directly to the present case. As concluded above, Showcase,
like Mill Stores, is not obligated for premium pay under the Sunday closing laws. If Showcase is
a “retail establishment”, however, it, like Mill Stores, is obligated to pay premium pay to workers
on New Year’s Day, Columbus Day and Veteran’s Day.
According to the FAC, Showcase is engaged in two lines of business – – the sale of movie
tickets and the sale of food and alcohol for consumption on the premises. Plaintiffs do not
explicitly plead in the FAC that Showcase is a retail establishment. The word “retail” is not used
8 It is noted that the only issue before the Court in Drive-O-Rama was whether § 13
required premium pay. The Court, however, in analyzing that issue accepted, without discussion,
that the employer was not obligated to pay premium pay on Sundays or other holidays.
7
in the FAC. Instead, plaintiffs argue in their memorandum that the descriptions of Showcase’s
lines of business in the FAC are sufficient to state a claim that Showcase is a “retail
establishment.” The issue, therefore, is whether either the sale of movie tickets or the sale of food
and alcohol for consumption on the premises makes Showcase a “retail establishment.”
There is no definition in c. 136 of “retail establishment” or “retail.” Absent a definition,
statutory language should be given effect consistent with its plain meaning. Sullivan v.
Brookline, 435 Mass. 353, 360 (2001). Black’s Law Dictionary (rev. 9th ed. 2009) defines
“retail” as “[t]he sale of goods or commodities to ultimate consumers, as opposed to the sale for
further distribution or processing.” “Goods” is defines as “[t]angible or movable personal
property other than money.” Similarly, the American Heritage Dictionary defines “retail” as
“[t]he sale of goods or commodities in small quantities to the consumer.” Am. Heritage
Dictionary 1186 (4th ed. 2002). Both of these sources suggest that the term “retail” is to be given
a broad definition. There is no limitation placed on the kinds of goods or commodities that can
be sold, nor does the definitions distinguish food and beverages from other types of retail items
that can be sold.9
With respect to Showcase’s operation as a restaurant (common victualler) or tavern
(provider of alcoholic beverages for consumption on the premises), the Supreme Judicial Court
9 Plaintiffs note that Massachusetts sales tax law defines “retail sale” broadly to include
“a sale of services or tangible personal property or both for any purpose other than resale in the
regular course of business.” G.L. c. 64H, § 1. A “retail establishment” includes “any premises in
which the business of selling services or tangible personal property is conducted, or, in or from
which any retail sales are made.” Id. The definition of “retail sale”, however, does not include
“sales of tickets for admissions to places of amusement and sports.” Id. Reliance on these
definitions is made unnecessary by the holding of the Supreme Judicial Court in Moriarty,
discussed infra.
8
has definitively held that such operations are “retail” and the premises are a “retail
establishment.” In Commonwealth v. Moriarty, 311 Mass. 116 (1942), the Court determined that
a tavern was a “retail store” within the statute (then existing) requiring that “retail stores” be
closed between 7 a.m. and 1 p.m. on Columbus Day. Id. at 121. The Court considered the
argument that the sale of food for consumption on the premises is not a sale at retail. The
argument was rejected. Id. at 123 (“The [tavern], therefore, is not aided by any analogy of a
tavern to a restaurant”). Moriarty is direct precedent for holding that Showcase’s food and
beverage sales make it a “retail establishment” for purposes of the second paragraph of § 13.10
Consequently, plaintiffs’ claims for payment of premium pay for work on New Year’s Day,
Columbus Day and Veteran’s Day may not, under the authority of Drive-O-Rama and Moriarty,
be dismissed.
10 Because Showcase is a “retail establishment” for purposes of § 13 as a result of its sales
of food and alcohol, it is unnecessary to decide on this record whether the sale by Showcase of
movie tickets also makes Showcase a “retail establishment” under that statute.
9
CONCLUSION
For the reasons stated, defendants’ motion to dismiss Count III of the FAC (Paper No. 14)
is allowed, in part, and denied, in part. The motion is allowed with respect to claims for premium
pay for work performed on Sundays and holidays other than New Year’s Day, Columbus Day
and Veteran’s Day. The motion is denied with respect to claims for premium pay for work
performed on those three enumerated holidays.
By the Court,
Edward P. Leibensperger
Justice of the Superior Court
Date: August 29, 2017
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Posted by Stephen Sandberg - September 7, 2017 at 5:11 am

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Massachusetts Bay Transportation Authority v. Boston and Maine Corporation, et al. (Lawyers Weekly No. 12-124-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 17-00153-BLS1
MASSACHUSETTS BAY TRANSPORTATION AUTHORITY
vs.
BOSTON AND MAINE CORPORATION & others1
MEMORANDUM OF DECISION AND ORDER ON
PLAINTIFF MASSACHUSETTS BAY TRANSPORTATION AUTHORITY’S
PARTIAL MOTION TO DISMISS DEFENDANTS’ COUNTERCLAIMS
Plaintiff, Massachusetts Bay Transportation Authority (MBTA), filed this action for
declaratory and injunctive relief against defendants, Boston and Maine Corporation, Springfield
Terminal Railway Company, and Pan Am Southern LLC (referred to collectively as “Pan Am”).
The dispute involves the implementation of positive train control (PTC), a safety system aimed at
preventing train accidents. Pan Am alleged eleven counterclaims against the MBTA. MBTA
now moves to dismiss three of the counterclaims pursuant to Mass. R. Civ. P. 12(b)(6). The
three counterclaims allege misrepresentation (Count VIII), promissory/equitable estoppel (Count
IX), and violation of G.L. c. 93A, § 11 (Count X). For the reasons stated below, the MBTA’s
motion to dismiss is allowed.
BACKGROUND
The facts as revealed by Pan Am’s counterclaims are as follows.
The MBTA is a body politic and corporate and a political subdivision of the
1 Springfield Terminal Railway Company and Pan Am Southern LLC.
Commonwealth of Massachusetts. It operates bus, subway, commuter rail, and ferry systems in
and around Boston, Massachusetts. The Pan Am defendants operate freight lines over tracks
that, in some instances, are owned and/or used by the MBTA.
Since 2010, Pan Am worked closely and cooperatively with the MBTA to plan and
prepare for the implementation of PTC on tracks over which both parties operate. The parties
worked to comply with a 2008 federal mandate requiring that PTC be implemented on certain
rail lines, including lines that carry certain minimum levels of passenger traffic. PTC is designed
to prevent train-to-train collisions, derailments resulting from excessive speed, and other types of
accidents. Generally, PTC uses a combination of on-board and rail-side technology to track and
control train movements on the rail lines outfitted with this technology. In this dispute, the rail
lines affected include both MBTA-owned trackage, over which Pan Am operates freight trains
pursuant to a reserved freight easement, and Pan Am-owned trackage, over which the MBTA
initiated and expanded commuter rail operations at the end of 2016.
According to Pan Am, under federal law, PTC must be implemented on the rail lines at
issue because the MBTA operates passenger trains on them. Absent the MBTA’s use of these
rail lines, no PTC system is required. In addition, freight trains may not operate on tracks
handling passenger traffic that are required to have PTC unless those freight trains are equipped
with a PTC system that is compatible with the commuter rail’s PTC system.
After the federal government imposed the 2008 PTC requirements, Pan Am alleges that
the MBTA agreed that the MBTA would implement a dual-type PTC system on the jointly used
tracks. The MBTA wanted to use Advanced Civil Speed Enforcement System (ACSES) PTC, a
type of PTC that Amtrak uses on some MBTA tracks, but is generally not used for freight
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operations. Throughout the country, freight rail operators almost exclusively use Interoperable
Electronic Train Management System (I-ETMS) PTC, a different type of PTC that is allegedly
more sophisticated and dynamic. Interstate freight trains exclusively equipped with I-ETMS
PTC are not able to pass over jointly used trackage if the MBTA only implements ACSES PTC.
Thus, it is alleged that the MBTA acknowledged that it needed to outfit the jointly used trackage
with I-ETMS PTC so that the MBTA’s own operations would not unduly interfere with Pan
Am’s operations.
In a 2010 filing with the Federal Railroad Administration, the MBTA described its plans
to implement a dual ACSES and I-ETMS PTC system. In 2010, Pan Am and the MBTA
discussed and agreed that the MBTA would implement a dual-type PTC system at the MBTA’s
expense. According to Pan Am, the MBTA was obligated to implement a dual-type PTC system
under a 1976 Deed and a 2011 Trackage Rights Agreement, which mandate that the MBTA is
responsible for ensuring, at the MBTA’s expense, that the MBTA’s services or operations do not
interfere with or impede Pan Am’s operations.
In reliance on the MBTA’s plans to implement a dual system, Pan Am waived a Capacity
Study as an accommodation to the MBTA. The study would have cost hundreds of thousands of
dollars and taken months to complete. A Capacity Study, however, would have demonstrated the
need for a dual PTC system to accommodate the MBTA’s commuter rail services without
unreasonably interfering with Pan Am’s freight services.
In July of 2014, the MBTA and Pan Am entered into an “Agreement for Pan Am
Southern to Support the MBTA Wachusett Extension Project.” This agreement detailed certain
construction necessary for the initiation of new commuter rail service on the Fitchburg commuter
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rail line called the Wachusett extension. The agreement referenced the parties’ intention to
memorialize the final details of an agreed upon PTC system in a 2014 PTC agreement. Shortly
thereafter, the parties memorialized the final details of the PTC system in a 2014 PTC Agreement
in which the MBTA committed to install both an ACSES and I-ETMS PTC system on shared
trackage, as necessary, to allow both passenger and freight trains to operate without undue
interference. The MBTA’s General Manager, Beverly A. Scott, and the MBTA’s General
Counsel, Paige Scott Reed, signed the 2014 PTC Agreement. Both individuals expressly
represented to Pan Am that approval by the MBTA’s Board was not required. The 2014 PTC
Agreement provided for, among other things, “the installation of an ACSES PTC wayside system
on all portions of the jointly used rail lines, installation of an I-ETMS PTC wayside system on
certain specified sections of the jointly used rail lines, and the equipping of a specified number of
. . . [Pan Am’s] locomotives with ACSES compatible on-board systems and a specified number
of . . . [Pan Am’s] locomotives with I-ETMS compatible on-board systems.” Counterclaims at
34.
After signing the 2014 PTC Agreement and until late 2016, the MBTA and Pan Am
worked cooperatively towards implementing the terms of the agreement. After the MBTA
completed construction work on the Wachusett extension, on September 30, 2016, Pan Am
permitted the MBTA to initiate limited commuter rail service on the new line (two round trips
per day). The MBTA planned to offer full commuter rail service shortly thereafter.
On October 26, 2016, however, once the MBTA initiated limited service and publicly
announced its planned expansion of the Wachusett extension, the MBTA “made an abrupt and
stunning reversal.” Counterclaims at 22, 39. Despite the 2014 PTC Agreement and public
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representations, the MBTA announced to Pan Am that it was disavowing the 2014 PTC
Agreement. The MBTA refused to install the I-ETMS PTC system on shared trackage. The
MBTA sought to install only the ACSES PTC system, which means, according to Pan Am, that it
will be unable to use the shared trackage without substantial and prohibitive interference, delays,
and costs.
Pan Am asserts contract claims against the MBTA seeking to require the MBTA to install
both the I-ETMS and ACSES PTC systems on the shared trackage. Under the 2014 PTC
Agreement, the MBTA’s obligations are express and specific. Pan Am also asserts that the
MBTA’s obligation to implement the I-ETMS system exists independently from the 2014 PTC
Agreement. More specifically, Pan Am points to a 1976 Deed and a 2011 Trackage Rights
Agreement, which Pan Am explains in detail in its counterclaims. See Counterclaims at 23-38.
On November 21, 2016, over Pan Am’s objections, the MBTA expanded commuter rail
service on the Wachusett extension to include twenty-six daily round trip passenger trains. The
MBTA continues to refuse to install a dual PTC system on the shared tracks at issue, but
allegedly retains benefits of providing commuter rail service on the Wachusett extension.
The MBTA asserts that it is not bound by the 2014 PTC Agreement because its Board is
entitled, as a matter of law, to disavow the 2014 PTC Agreement. After the MBTA filed this
action for declaratory and injunctive relief seeking a declaration that the contracts do not bind the
MBTA to install dual systems, Pan Am filed eleven counterclaims against the MBTA. Pan Am
asserts contract claims arguing that the MBTA is bound by the 1976 Deed, the 2011 Trackage
Rights Agreement, and the 2014 PTC Agreement to perform. As an alternative, if the
agreements are unenforceable, Pan Am asserts that the MBTA is liable to perform pursuant to its
-5-
counterclaims alleging misrepresentation (Count VIII), promissory/equitable estoppel (Count
IX), and violation of G.L. c. 93A, § 11 (Count X). Those counterclaims are the subject of the
MBTA’s motion.
ANALYSIS
To survive a motion to dismiss, the counterclaimant’s “[f]actual allegations must be
enough to raise a right to relief above the speculative level . . . [based] on the assumption that all
the allegations in the . . . [counterclaims] are true (even if doubtful in fact) . . . .” Iannacchino v.
Ford Motor Co., 451 Mass. 623, 636 (2008), citing Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955,
1964-1965 (2007). In other words, “[w]hile a complaint [alleging counterclaims] attacked by a
. . . motion to dismiss does not need detailed factual allegations . . . a plaintiff’s obligation to
provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions
. . . .” Iannacchino, 451 Mass. at 636, quoting Bell Atl. Corp., 127 S. Ct. at 1966. Dismissal
under Mass. R. Civ. P. 12(b)(6) is proper where a reading of the counterclaims establishes
beyond doubt that the facts alleged do not support a cause of action which the law recognizes,
such that the counterclaims are legally insufficient. See Nguyen v. William Joiner Center for the
Study of War and Social Consequences, 450 Mass. 291, 295 (2007).
Estoppel (Count IX)
In Count IX, Pan Am claims that it reasonably relied, to its detriment, on the MBTA’s
repeated representations and promises that it would pay for and install a dual PTC system. The
MBTA, however, argues that the estoppel claim must be dismissed because estoppel cannot
apply to a claim against the government. As a governmental body, the MBTA asserts that its
agents, even its General Manager and General Counsel, cannot bind the MBTA, absent Board
-6-
approval. Pan Am argues that the MBTA is mischaracterizing its estoppel counterclaim and
explains that the counterclaim “is premised on its detrimental and good faith reliance on
MBTA’s representations that MBTA would implement I-ETMS on the jointly used tracks when
Pan Am agreed to the Wachusett Infrastructure Agreement, when it agreed not to insist upon
MBTA’s completion of a capacity study, and when it agreed to permit MBTA to commence
commuter rail service on the Wachusett Extension without having conducted a capacity study.”
Defendants’ Opposition at 10.
“Circumstances that may give rise to an estoppel are (1) a representation intended to
induce reliance on the part of a person to whom the representation is made; (2) an act or omission
by that person in reasonable reliance on the representation; and (3) detriment as a consequence of
the act or omission.” Bongaards v. Millen, 440 Mass. 10, 15 (2003). All three elements of
estoppel must be present, and the party asserting estoppel has a heavy burden to prove all three
elements. Sullivan v. Chief Justice for Admin. & Mgt. of the Trial Court, 448 Mass. 15, 28
(2006). “[T]he reliance of the party seeking the benefit of estoppel must have been reasonable.”
Turnpike Motors, Inc. v. Newbury Group, Inc., 413 Mass. 119, 125 (1992). “But the doctrine of
estoppel is not applied except when to refuse it would be inequitable.” Cleaveland v. Malden
Sav. Bank, 291 Mass. 295, 297 (1935), quoting Boston & Albany R.R. v. Reardon, 226 Mass.
286, 291 (1917) (“In order to work an estoppel it must appear that one has been induced by the
conduct of another to do something different from what otherwise would have been done and
which has resulted to his harm and that the other knew or had reasonable cause to know that such
consequence might follow”).
Massachusetts courts, however, “have been ‘reluctant to apply principles of estoppel to
-7-
public entities where to do so would negate requirements of law intended to protect the public
interest.’” Sullivan v. Chief Justice for Admin. & Mgt. of the Trial Court, 448 Mass. at 30,
quoting Phipps Prods. Corp. v. Massachusetts Bay Transp. Auth., 387 Mass. 687, 693 (1982).
“[T]he rule against applying estoppel to the sovereign continues almost intact where a
government official acts, or makes representations, contrary to a statute or regulation designed to
. . . ensure some . . . legislative purpose.” McAndrew v. School Comm. of Cambridge, 20 Mass.
App. Ct. 356, 361 (1985). The public’s interest in seeing that a governmental agency of the
Commonwealth adheres to legislative policies “overrides any equitable considerations.” Phipps
Prods. Corp. v. Massachusetts Bay Transp. Auth., 387 Mass. at 693. “A common thread
underlying . . . [the] reluctance . . . [of courts] to apply principles of estoppel to public entities
has been the idea that deference to legislative policy should trump individual acts or statements
of a government official that may be contrary to such policy. Otherwise, protections afforded the
public interest are thwarted.” Sullivan v. Chief Justice for Admin. & Mgt. of the Trial Court, 448
Mass. at 30-31.
In Massachusetts, public officials cannot make binding contracts without express
authority. Dagastino v. Commissioner of Correction, 52 Mass. App. Ct. 456, 458 (2001).
Authority to bind their governmental employer exists only to the extent conferred by the
controlling statute. Id. Entities that deal with a government agency, such as Pan Am, must
therefore “take notice of limitations upon that agency’s contracting power and cannot recover
upon a contract which oversteps those limitations.” Id. Under G.L. c. 161A, §§ 3(f) & 3(k), the
Legislature gave the MBTA’s Board, and not its managers, the authority to enter into contracts
and to provide for the construction and modification of mass transportation resources. The
-8-
counterclaim does not allege that the MBTA’s Board approved the 2014 PTC Agreement.
Pan Am’s claim of equitable estoppel fails on the element requiring reasonable reliance.
As a matter of law, Pan Am could not have reasonably relied on representations by the MBTA’s
employees as to their authority to enter into a contract binding the MBTA. Harrington v. Fall
River Hous. Authy., 27 Mass. App. Ct. 301, 309 (1989) (holding that “as matter of law” reliance
on representations of government employees is unreasonable). The Appeals Court in Harrington
quoted the following passage from the U.S. Supreme Court in Heckler v. Community Health
Servs., Inc., 467 U.S. 51, 63-64 (1984): “[T]hose who deal with the Government are expected to
know the law and may not rely on the conduct of government agents contrary to law . . . .”
Harrington v. Fall River Hous. Authy., 27 Mass. App. Ct. at 309. “In Massachusetts, also, one
relies at his peril on representations by a government official concerning legal requirements.” Id.
Consequently, Pan Am cannot rely on the doctrine of estoppel to force the MBTA to comply with
the PTC commitments or to recover damages from the MBTA. See Phipps Prods. Corp. v.
Massachusetts Bay Transp. Auth., 387 Mass. at 693-694 (refusing to apply estoppel to MBTA in
connection with the sale of a building). See also United States Leasing Corp. v. Chicopee, 402
Mass. 228, 229-232 & n.4 (1988) (refusing to apply estoppel, concluding that under city charter,
contract required mayoral approval; thus, contract executed and approved by school
superintendent and city solicitor could be disavowed). Accordingly, Pan Am’s estoppel
counterclaim in Count IX must be dismissed.
Misrepresentation (Count VIII)
The MBTA also moves to dismiss Pan Am’s misrepresentation counterclaim in Count
-9-
VIII.2 Pan Am asserts that the MBTA, through its General Manager and General Counsel,
negligently misrepresented their authority to bind the MBTA to an agreement to install a dualtype
PTC on jointly used track. Pan Am contends that the MBTA knew that Pan Am would rely
on the representations of the General Manager and General Counsel. Therefore, Pan Am
contends that it justifiably relied to its detriment on the MBTA’s negligent misrepresentations.3
“In order to recover for negligent misrepresentation a plaintiff must prove that the
defendant (1) in the course of his business, (2) supplied false information for the guidance of
others (3) in their business transactions, (4) causing and resulting in pecuniary loss to those
others (5) by their justifiable reliance on the information, and that he (6) failed to exercise
reasonable care or competence in obtaining or communicating the information.” Gossels v. Fleet
Nat’l Bank, 453 Mass. 366, 371-372 (2009).
As can be seen, Pan Am faces, again, the question of whether, as a matter of law, it could
justifiably and reasonably rely on representations of employees of a governmental body as to
their authority to enter into a contract binding the MBTA. As described previously,
Massachusetts law holds that such reasonable or justifiable reliance cannot be established, as a
matter of law, when a party is contracting with a governmental body.
The MBTA also argues that Pan Am cannot repackage its contract claim as a tort claim
2 Pan Am is not proceeding on a claim for intentional misrepresentation in Count VIII.
Instead, it seeks to assert a claim for negligent misrepresentation.
3 The MBTA also argues that Pan Am’s negligent misrepresentation claim should be
dismissed for lack of presentment under the Massachusetts Tort Claims Act, G.L. c. 258. Under
G.L. c. 258, § 4, however, the Massachusetts Tort Claims Act’s presentment requirements do not
apply to counterclaims. See G.L. c. 258, § 4 (“The provisions of this section shall not apply to
such claims as may be asserted by third-party complaint, cross claim, or counter-claim . . . ”).
-10-
based on negligent misrepresentation. “[F]ailure to perform a contractual duty does not give rise
to a tort claim for negligent misrepresentation . . . Plaintiffs who are unable to prevail on their
contract claims may not repackage the same claims under tort law.” Cumis Ins. Soc’y, Inc. v.
BJ’s Wholesale Club, Inc., 455 Mass. 458, 474 (2009). “[F]ailure to perform a contractual
obligation is not a tort in the absence of a duty to act apart from the promise made.” Anderson v.
Fox Hill Village Homeowners Corp., 424 Mass. 365, 368 (1997). Pan Am either has an
enforceable contract or it does not. If it does not, Pan Am cannot obtain enforcement of the
contract by asserting that the MBTA’s employees were negligent. Consequently, Pan Am’s
negligent misrepresentation counterclaim in Count VIII is dismissed.
Chapter 93A (Count X)
Finally, the MBTA moves to dismiss Pan Am’s Chapter 93A counterclaim in Count X.
In Count X, Pan Am claims that the MBTA violated G.L. c. 93A, § 11 because it was acting in
the course of trade or commerce when its employees misrepresented their authority with respect
to the implementation of PTC. Pan Am asserts that the MBTA’s conduct, as alleged in their
counterclaims, was unfair and deceptive. The MBTA argues that Count X should be dismissed
because: (1) the MBTA is not a suable “person” under Chapter 93A and (2) the conduct at issue
did not involve the MBTA engaging in trade or commerce. Pan Am argues, among other things,
that whether the MBTA was engaged in trade or commerce under Chapter 93A is a factual
inquiry that should not be decided on a motion to dismiss. Because it is clear, as a matter of law,
that the MBTA’s conduct was not in the context of trade or commerce, the motion to dismiss
must be granted.
Under Chapter 93A, “[u]nfair methods of competition and unfair or deceptive acts or
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practices in the conduct of any trade or commerce are hereby declared unlawful.” G.L. c. 93A, §
2(a). See G.L. c. 93A, § 1(b) (defining “trade” and “commerce” as, “the advertising, the offering
for sale, . . . the sale, rent, lease or distribution of any services and any property, tangible or
intangible, real, personal or mixed . . . and any other article, commodity, or thing of value
wherever situate, and shall include any trade or commerce directly or indirectly affecting the
people of this commonwealth”). Under G.L. c. 93A, § 11, “[a]ny person who engages in the
conduct of any trade or commerce and who suffers any loss of money or property, real or
personal, as a result of the use or employment by another person who engages in any trade or
commerce of an unfair method of competition or an unfair or deceptive act or practice declared
unlawful by section two . . . may, as hereinafter provided, bring an action in the superior court
. . . .” A “person” under the statute, “shall include, where applicable, natural persons,
corporations, trusts, partnerships, incorporated or unincorporated associations, and any other
legal entity.” G.L. c. 93A, § 1(a).
“[T]he proscription in Section 2 of ‘unfair or deceptive acts or practices . . .’ must be read
to apply to those acts or practices which are perpetrated in a business context.” See Poznik v.
Massachusetts Med. Professional Ins. Ass’n, 417 Mass. 48, 50-53 (1994) (holding that
Massachusetts Medical Professional Insurance Association, a nonprofit joint underwriting
association established by Legislature, was not engaged in trade or commerce and was not
subject to suit under Chapter 93A),4 quoting Lantner v. Carson, 374 Mass. 606, 611 (1978).
4 After the Supreme Judicial Court’s decision in Poznik, the Legislature amended the
applicable statutes to include “any joint underwriting association established pursuant to law” as
a “person” under G.L. c. 176D, § 1. Wheatley v. Massachusetts Insurers Insolvency Fund, 465
Mass. 297, 300 (2013). The court subsequently determined that joint underwriting associations
were subject to a consumer action under Chapter 93A. Id.
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“The question whether a transaction occurs in a business context must be determined by the facts
of each case.” Poznik v. Massachusetts Med. Professional Ins. Ass’n, 417 Mass. at 52. Courts
consider “the nature of the transaction, the character of the parties and their activities, and
whether the transaction was motivated by business or personal reasons.” All Seasons Servs., Inc.
v. Commissioner of Health & Hosps. of Boston, 416 Mass. 269, 271 (1993).
In this case, the MBTA cannot be subject to a claim for violation of Chapter 93A because
it was not engaged in trade or commerce when it engaged with Pan Am concerning the 2008
federal mandate regarding PTC. All of the conduct alleged in Pan Am’s counterclaims involves
the parties’ efforts to comply with the 2008 federal mandate regarding PTC, including their
negotiations as to how they would achieve such compliance. The MBTA was acting at all times
in furtherance of its statutory mission to provide mass transportation services to the public. Its
compliance with the federal mandate was necessary to further this mission. See Bretton v. State
Lottery Comm’n, 41 Mass. App. Ct. 736, 738-739 (1996) (concluding that State Lottery
Commission was not a “person” engaged in “trade or commerce” for purposes of Chapter 93A).
See also Rodriguez v. Massachusetts Bay Transp. Auth., 33 Mass. L. Rptr. 418, *14 (Mass.
Super. Ct. Mar. 31, 2016) (Kaplan, J.) (concluding that MBTA is not engaged in trade or
commerce when it performs its statutorily mandated task of providing mass transit services to
public). Because the MBTA’s activities were driven by legislative mandate, not by “business or
personal objectives,” Chapter 93A does not apply. Bretton v. State Lottery Comm’n, 41 Mass.
App. Ct. at 739. See Peabody N.E., Inc. v. Marshfield, 426 Mass. 436, 440 (1998) (“This court .
. . has repeatedly held that c. 93A does not apply to parties motivated by ‘legislative mandate, not
business or personal reasons’”)(citation omitted). For these reasons, Pan Am’s Chapter 93A
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counterclaim against the MBTA must be dismissed.
CONCLUSION
Plaintiff Massachusetts Bay Transportation Authority’s Partial Motion to Dismiss
Defendants’ Counterclaims is ALLOWED. The Pan Am Defendants’ Counterclaims in Count
VIII (misrepresentation), Count IX (promissory/equitable estoppel), and Count X (violation of
G.L. c. 93A, § 11) are DISMISSED.
By the Court,
______________________________
Edward P. Leibensperger
Justice of the Superior Court
Dated: August 18, 2017
-14- read more

Posted by Stephen Sandberg - September 7, 2017 at 1:36 am

Categories: News   Tags: , , , , , , , ,

Clayman, et al. v. McLaughlin, et al. (Lawyers Weekly No. 12-125-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
NO. 1684CV2373
DEBORAH A. CLAYMAN, individually and as trustee, and RICHARD E.
MASTROCOLA, trustee1
Plaintiffs
vs.
JOHN T. McLAUGHLIN, et al.
Defendants
MEMORANDUM AND ORDER
ON DEFENDANTS’ MOTION TO DISMISS
The widow of a real estate entreprenuer sues several individuals and entities following the
death of her husband. The Second Amended Complaint (“SAC”) alleges breach of fiduciary
duty, aiding and abetting tortious acts, tortious interference with a contractual relationship and
conversion. To briefly summarize the SAC, the widow alleges at least three wrongful acts or
series of acts. First, she claims that the individual selected by her husband to be his executor
(personal representative) and trustee of his revocable trust, upon the husband’s death, breached
fiduciary duties to her as a beneficiary and co-trustee. Second, she alleges that the
brother/business partner of her husband schemed with the executor to diminish what she was to
receive under her husband’s estate planning documents. Third, she alleges that defendants are, to
this day, refusing to pay to her trust amounts owed after the sale of a property and are, thus,
converting those proceeds. Defendants’ move to dismiss arguing that the SAC fails to state a
claim upon which relief can be granted. To address the arguments, the stage must be set from the
1 Deborah A. Clayman and Richard E. Mastrocola are the trustees of Deborah’s Trust,
described herein.
facts as alleged in the SAC, including the documents attached or referenced in the SAC.
BACKGROUND
Deborah A. Clayman married Richard I. Clayman in 2005.2 In connection with their
marriage, Deborah and Richard entered into a Prenuptial Agreement dated October 13, 2005.
Subsequently, Richard executed a Will and a Revocable Trust on January 25, 2006. Richard’s
Will names defendant, John T. McLaughlin, as his executor (personal representative). Under the
Revocable Trust, McLaughlin is named as trustee. These instruments, read together, detail
Richard’s intent with respect to what Deborah should receive after Richard’s death.3
McLaughlin was a trusted friend of Richard’s. He is a lawyer and a partner in the
defendant law firm, Berluti McLaughlin & Kutchin, LLP.
A. Estate Plan Instruments
The relevant terms of the Prenuptial Agreement are the following. Richard’s interests in
nine real estate investments are defined as “Separate Property.” Richard’s interest in the real
estate project known as Revere Beach at Oak Island is defined as “Marital Property.” One of the
properties listed as Separate Property is Richard’s residence at 615 Revere Beach Boulevard,
Revere. With respect to that property, Richard expressly agrees that upon his death Deborah
shall be entitled to receive the Revere residence outright and free of encumbrances.
The Prenuptial Agreement also contains the following provision for the division of
Richard’s property after Richard’s death:
2 Mr. and Mrs. Clayman, as well as other Clayman family members, will be referred to
by their first names to avoid confusion.
3 All of these instruments are attached to the SAC and, thus, may be considered on a
motion to dismiss. Schaer v. Brandeis University, 432 Mass. 474, 477 (2000)
2
Deborah shall be entitled to receive the annual income from
property of an amount equal to Two Million Dollars ($ 2,000,000),
provided that such property shall be held in a Qualified Terminable
Interest Property Trust, as defined in § 2056 (b)(7) of the Internal
Revenue Code of 1986, as amended, for the sole benefit of
Deborah. The choice of the specific property to be held in trust for
Deborah shall be made in the sole discretion of the Executor of
Richard’s estate and Trustees of such Trusts. Deborah shall be
entitled to be a co-Trustee of such Trust, but shall have no
authority to make distributions of principal. Deborah shall be
entitled to receive income from such Trust at least as often as
quarterly.
Prenuptial Agreement, Article III, A, 3(c)(ii). Finally, the Prenuptial Agreement provides that if
either party breached any provision of the agreement, “the breaching party or his or her estate
shall indemnify the other party and make the other party whole as if no such breach had
taken place with respect to this Agreement.” Id. at III, C.
Richard’s Will makes explicit reference to the Prenuptial Agreement. The Will provides
that all of Richard’s interest in the Revere residence go to Deborah, free of any mortgages. All of
Richard’s Separate Property, other than the Revere home, is bequeathed to Richard’s Revocable
Trust. McLaughlin is appointed as Richard’s Executor. The Executor is given broad power and
discretion. Specifically, with respect to Richard’s interest in the real estate listed as Separate
Property, the Will provides that the Executor shall not be held liable for any action or omission,
except for willful default or bad faith, in retaining, selling or otherwise dealing with such interest.
Richard executed the Revocable Trust on the same day as his Will. The Revocable Trust
provides that upon Richard’s death, McLaughlin shall serve as trustee. The Revocable Trust is
the vehicle used to pour the assets of that trust into two subtrusts – – Deborah’s Trust and the
Family Trust. With respect to the subtrust called Deborah’s Trust, the Revocable Trust provides
3
that “if property is held on the terms of Deborah’s Trust under paragraph 5, Deborah may serve
as a co-trustee of Deborah’s Trust.” Revocable Trust, § 9.1.
With respect to Deborah’s Trust the Revocable Trust provides as follows:
My trustee shall set aside the sum of Two Million Dollars
($ 2,000,000) and deal with that sum under paragraph 5 as a
separate trust known as “Deborah’s Trust.” This provision is
intended to establish the Qualified Terminable Interest Property
Trust described in Article III, Paragraph A(3)(c)(ii) of the
Prenuptial Agreement and Deborah’s Trust is intended to satisfy
the requirements thereof.
Revocable Trust, § 4.1(b). The remaining property that flowed into the Revocable Trust from the
Will is, pursuant to the terms of the Revocable Trust, put into a subtrust called the Family Trust.
The beneficiary of the Family Trust is Kate Clayman, Richard’s daughter by a previous marriage.
Under §§ 5.1and 5.2 of the Revocable Trust describing Deborah’s Trust, Deborah is to
receive the income produced by the principal in Deborah’s Trust for her lifetime. Upon
Deborah’s death, after payment of estate taxes, the trustee is instructed to pay the principal into
the Family Trust. The trustee is given discretion to pay Deborah, during her lifetime, all or part of
the principal of Deborah’s Trust.
The Revocable Trust contains the following provision with respect to the trustee’s
discretion:
Whenever my trustee “may” pay income or principal to a
beneficiary or group of beneficiaries, my trustee shall have the
absolute discretion to make the payments at any time to one or
more of those beneficiaries, in any amounts and proportions and
for any purposes, except as specifically provided otherwise, as my
trustee considers advisable.
Revocable Trust, § 8.1.
4
Deborah was given the power to remove any trustee of Deborah’s Trust upon 30 days
notice. Under the terms of the Revocable Trust, each appointment, removal, resignation,
acceptance or notice regarding the trustees shall be in writing and shall be given to all of the
trustees.
Section 9.6 of the Revocable Trust recognizes that the subtrust may include assets that are
shares of stock or other ownership interests in closely held businesses. These interests are
defined as “Closely-Held Interests.” Section 9.7 describes the liability of a trustee for dealing
with Closely-Held Interests. Section 9.7(a) states that “[n]o trustee shall be liable for any action
or omission, except for willful default or bad faith, in retaining, selling or otherwise dealing with
an interest in the “Closely-Held Interests.” Section 9.10(b) of the Revocable Trust states that
“[a]ny account of the trustee of any trust under this agreement shall be conclusive, except for
fraud or manifest error, on all parties in interests, whether or not of full age or in being or in
being or ascertained, if assented to . . . by Deborah. . . .”
The Revocable Trust contains special provisions regarding Deborah’s Trust so as to
qualify it for the federal marital deduction from estate tax. The Trust expresses Richard’s intent
for the trustee to administer the property to qualify for the marital deduction and directs the
trustee to allocate property to Deborah’s Trust so as to constitute qualified terminable interest
property.4 In Section 11.1(c) the trustee is instructed that he “may purchase or retain property
that is unproductive of income in any trust under this agreement, except that my trustee shall
make any unproductive property in Deborah’s Trust productive or converted into productive
4 This provision is consistent with the Prenuptial Agreement where it referenced
Deborah’s entitlement to property to be held in a Qualified Terminable Interest Property Trust,
called a “Q-Tip” Trust.
5
property within a reasonable time after receiving a written request to do so from Deborah.”
B. After Richard’s Death
Richard died on May 1, 2013. McLaughlin was appointed as executor of Richard’s estate
and became trustee of the Revocable Trust. As executor, McLaughlin was charged to convey
Richard’s interest in the Revere residence to Deborah free of all encumbrances. As trustee,
McLaughlin was charged with allocating property in an amount equal to $ 2 million to Deborah’s
Trust in a manner to qualify for and be maintained as a Q-Tip Trust.
Claim for Reimbursement of Attorney’s Fees
According to the SAC, the first disagreement between Deborah and McLaughlin concerns
the conveyance of the Revere residence. In breach of the Prenuptial Agreement, Richard had,
during his life, conveyed an interest in the Revere residence to a third party. After Richard’s
death, McLaughlin, as executor, worked to recover from the third party the property interest in
the Revere residence and to convey the Revere residence to Deborah free and clear. Ultimately,
McLaughlin was successful. Deborah, however, had engaged her own attorney to advise her with
respect to obtaining her unencumbered interest in the Revere residence. Deborah requested that
McLaughlin, as executor, cause the estate to reimburse her for the fees that she incurred.
Deborah’s request was based upon the portion of the Prenuptial Agreement that expressly made
the estate of Richard liable to indemnify Deborah for any breach of the agreement and to make
her “whole as if no such breach had taken place . . . .” McLaughlin, however, refused to
indemnify Deborah. Deborah sues to recover from McLaughlin alleging that his refusal to
indemnify is a breach of fiduciary duty.
6
Claims Arising from Allocation of Property to Deborah’s Trust
Under the terms of the Revocable Trust, McLaughlin was obligated to fund Deborah’s
Trust with property worth $ 2 million. According to the SAC, McLaughlin, on August 1, 2014,
conveyed minority interests in some of Richard’s Closely-Held Interests (i.e. LLC’s or other
entities owning interests in real estate projects). Although not mentioned explicitly in the SAC,
defendants attach to their motion papers a copy of McLaughlin’s July 31, 2014, letter to Deborah
that describes the transfers of property interests he intended to execute to fund Deborah’s Trust.
The next day, the property interests were transferred. Deborah then removed McLaughlin as a
trustee of Deborah’s Trust on November 25, 2014.
The SAC alleges that McLaughlin “willfully operated in bad faith by putting his own self
interest above the interests of Deborah to whom he owed a duty of loyalty” in connection with
allocating property interests to Deborah’s Trust. SAC, ¶ 119. In support of that assertion,
Deborah points to the following alleged facts. The Closely-Held Interests owned by Richard were
held, in most instances, in 50/50% ownership with Richard’s brother, Steven Clayman. “In the
summer of 2014 and no later than August 2014 and without the knowledge of Plaintiffs” Steven
and the Closely-Held Interests became clients of McLaughlin and his law firm. SAC ¶ 93.
McLaughlin consulted with Steven regarding what properties McLaughlin should select from the
Revocable Trust to fund Deborah’s Trust. Steven expressed to McLaughlin that, in his opinion,
Richard’s intent to provide $ 2 million worth of property to Deborah’s Trust was too generous. It
is alleged that McLaughlin followed Steven’s directions regarding the funding of Deborah’s
Trust. SAC ¶ 108.
Notwithstanding the provision in the Revocable Trust directing the trustee to deliver $ 2
7
million to Deborah’s Trust in accordance with the Prenuptial Agreement, Article III, Paragraph A
(3)(c)(ii), whereby the “choice of specific property to be held in trust for Deborah shall be made
in the sole discretion of the Executor of Richard’s estate and Trustees [which would include
Deborah] of such Trusts” (emphasis added), McLaughlin unilaterally selected specific properties
in which he transferred only a portion of Richard’s interest to Deborah’s Trust. McLaughlin
failed to consult with Deborah before executing the allocation. McLaughlin did not obtain
Deborah’s consent to the choices of property. Instead, he presented the funding of Deborah’s
Trust to her on July 31, 2014, as a fait accompli. McLaughlin allegedly selected partial interests
in properties that would not produce significant income. In addition, by splitting Richard’s 50 %
interest between Deborah’s Trust and the Family Trust, the allocation guaranteed that the trusts
held minority positions with no ability to affect management decisions, including decisions to
produce income rather than to invest for growth in principal.5 Richard and Steven controlled their
real estate investments though a management company called 5C, Inc. It is alleged that 5C, Inc.
was the entity that made decisions about the amount of any possible income distributions to
owners. McLaughlin chose not to allocate any of Richard’s 50% interest in 5C, Inc. to Deborah’s
Trust. In addition, McLaughlin agreed to changes in the operating agreements of the entities
constituting the Closely-Held Interests “that further disenfranchised [Deborah] and specifically
benefitted [Steven].” SAC ¶ 109. Finally, McLaughlin allegedly used inadequate and improper
evaluations of the property interests allocated to the Deborah Trust resulting in a failure fully to
5 A Q-tip Trust such as Deborah’s Trust, is premised on the requirement that the
surviving spouse may direct that the principal in the trust be converted to income producing
property. By transferring to Deborah’s Trust minority interests in all the properties transferred,
and not even one property with Richard’s 50% interest, McLaughlin allegedly deprived Deborah
of any ability to affect what income would or could be distributed.
8
fund the $ 2 million value of property required by the Revocable Trust. McLaughlin’s conduct, it
is alleged, was motivated by his interest to obtain and retain legal representation of Steven and
the various real estate entities. The result of the alleged breaches of fiduciary duty was that the
income from Deborah’s Trust (intended by Richard to flow from $ 2 million worth of property)
was less than $ 25,000 annually.
The allegations regarding McLaughlin’s conduct, allegedly at the behest of Steven,
regarding the choice of property interests to fund Deborah’s Trust are the basis of Deborah’s
claims, as trustee of Deborah’s Trust, and individually, that McLaughlin breached fiduciary
duties and acted in bad faith. In addition, these allegations are the basis for the claims against
Steven for intentional interference with contract (the Prenuptial Agreement) and McLaughlin for
aiding and abetting the tort of interference with contract.
Claim for Conversion
The SAC alleges conversion with respect to the interest of Deborah’s Trust in a property
called Nesmith Park, LLC. In short, Deborah claims that Nesmith sold its real estate holdings in
November 2015 for $ 6.8 million. On April 6, 2017, Nesmith informed Deborah’s Trust that it
intended to make a distribution to its members of $ 1,256,092 as a return of capital, “intended to
cover the federal tax liability of all Members.” SAC, Ex. P. The portion of the return of capital
attributed to Deborah’s Trust was $ 281,787. Nevertheless, while Nesmith distributed the return
of capital to other members of the LLC, it only returned to Deborah’s Trust a portion of the
return of capital. Nesmith unilaterally decided to keep $ 182,638 belonging to Deborah’s Trust in
an escrow account because Nesmith did not have “any desire to become embroiled in a dispute
between the Marital [Deborah’s] Trust and the Family Trust.” The SAC alleges that by these
9
actions Nesmith wrongfully exercised dominion and control over property of Deborah’s Trust
and therefore converted the amount not distributed. Exhibit P to the SAC is a letter on the
letterhead of C.C. Real Investments, Inc. The letter is signed by Thomas O. Levenberg, President
of C.C. Real Investments, Manager of Nesmith Park LLC. On that basis, plaintiffs allege that
C.C. Real Investments, Inc. is also liable for conversion. Deborah’s Trust also cites these events
as further evidence of McLaughlin’s breach of fiduciary duty because McLaughlin was acting as
legal counsel to C.C. Real Investments, Inc. at this time when he allegedly still owed fiduciary
duties to Deborah’s Trust arising from being trustee of Richard’s Revocable Trust.
DISCUSSION
A motion to dismiss for failure to state a claim upon which relief may be granted under
Mass. R. Civ. P. 12(b)(6) permits “prompt resolution of a case where the allegations in the
complaint clearly demonstrate that the plaintiff’s claim is legally insufficient.” Harvard Crimson,
Inc. v. President & Fellows of Harvard Coll., 445 Mass. 745, 748 (2006). To survive a motion
to dismiss, a complaint must set forth the basis for the plaintiff’s entitlement to relief with “more
than labels and conclusions.” Iannacchino v. Ford Motor Co., 451 Mass. 623, 636, quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). At the pleading stage, Mass. R. Civ. P.
12(b)(6) requires that the complaint set forth “factual ‘allegations plausibly suggesting (not
merely consistent with)’ an entitlement to relief . . . .” Id., quoting Bell Atl. Corp., 550 U.S. at
557. The court must, however, accept as true the allegations of the complaint and draw every
reasonable inference in favor of the plaintiff. Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674,
676 (2011). With respect to a statute of limitations defense at the Rule 12(b)(6) stage, the facts in
the complaint must “clearly reveal that the action was commenced beyond the time constraints of
10
the statute of limitations.” Epstein v. Seigel, 396 Mass. 278, 279 (1985).
A. Motion to Dismiss by McLaughlin and Berluti McLaughlin & Kutchin LLP6
The allegations of the SAC against McLaughlin must be accepted as true at this stage of
the litigation. I find that the allegations reasonably outline a claim by Deborah and Deborah’s
Trust for breach of fiduciary duty. With respect to the allegations concerning the allocation of
property interests into Deborah’s Trust, the SAC adequately pleads that McLaughlin acted in bad
faith. All of these allegations remain to be proven.
McLaughlin’s motion to dismiss makes two arguments with respect to the adequacy of
the allegations in the SAC. He argues (a) that the SAC does not sufficiently allege a theory of
damages, and (b) that the claim of willful bad faith is not stated with particularity. Both
arguments are rejected.
As to damages, the pleading threshold is very low. Plaintiffs do not have to explicate a
particular amount of damages or a potential calculation of damages. Instead, at this stage the
SAC must reasonably show that Deborah and Deborah’s Trust were harmed by McLaughlin’s
alleged conduct. The SAC meets this test as the allegations reasonably suggest that but for the
alleged conduct, Deborah’s Trust would have been in a better position to produce a higher level
of income from the assets used to fund the trust. McLaughlin cites no authority, nor could he, for
the proposition that a trustee is immune to personal liability for damages caused by his breach of
fiduciary duty to the trust and its beneficiary.
McLaughlin cites Mass. R. Civ. P. 9 (b) for the argument that plaintiffs’ claims of breach
6 The law firm makes no argument for dismissal other than the arguments asserted by
McLaughlin. At this stage, the law firm appears to assume that if McLaughlin is held to respond
to the allegations of the SAC, then so should the firm on the basis of potential vicarious liability.
11
of fiduciary duty, including willful bad faith, must be pleaded with particularity. The rule does
not, however, include breach of fiduciary duty as one of the averments that must be pleaded with
particularity. Indeed, the rule goes on to say that “[m]alice, intent, knowledge, and other
condition of mind of a person may be averred generally.” In any event, however, I find that the
allegations are sufficiently particular (indicating the time, place and persons involved in the
alleged acts) to satisfy the pleading requirement. To repeat, the court must accept plaintiffs’
allegations as true at this stage of the case.
The lead arguments in McLaughlin’s motion to dismiss are that plaintiffs’ claims against
him and his law firm are time barred. As referenced above, to succeed on a motion to dismiss
based upon a statute of limitations defense the moving party must be able to point to facts in the
SAC that “clearly reveal that the action was commenced beyond the time constraints of the
statute of limitations.” Epstein v. Seigel, 396 Mass. 278, 279 (1985).
The first argument is that the claims against McLaughlin are barred by the six months
statute of limitations in G.L. c. 203E, § 1005 (a). This argument rests on the July 31, 2014 letter
from McLaughlin to Deborah attached to McLaughlin’s motion. While this letter was not
attached to the SAC, or specifically mentioned in the SAC, it appears that plaintiffs do not
dispute the authenticity or receipt of the letter. McLaughlin contends that the letter, describing his
allocation of the properties from the Revocable Trust to Deborah’s Trust was a “final account or
other statement fully disclosing the matter and showing termination of the trust relationship
between the trustee and the beneficiary” as required by the statute in order to trigger the six
months limitation period.
On its face, the July 31, 2014 letter says nothing about the termination of the trust
12
relationship. Indeed, McLaughlin continued as trustee at least for Deborah’s Trust, if not the
Revocable Trust, for months. But more importantly, it cannot be determined on a motion to
dismiss whether the letter is a “final account”7 or whether it “fully disclosed” the matter.
Consequently, the application of this statute of limitations cannot be decided on a motion to
dismiss.
Next, McLaughlin avers that Deborah waived her claims against McLaughlin as trustee by
not objecting to the July 31, 2014 letter within sixty days, as required by the Revocable Trust.
Again the application of this provision depends on the adequacy of the disclosure by McLaughlin
and cannot be determined on a motion to dismiss.
Finally, McLaughlin argues that the claim by Deborah (not Deborah’s Trust) to obtain
reimbursement from the estate for legal fees incurred by Deborah in connection with obtaining
the Revere residence free and clear is barred by G.L. c. 190B, § 3-803 (a). That statute provides a
time bar against claims against a personal representative. There can be no question that
Deborah’s claim for reimbursement of attorney’s fees is a claim, as a creditor of the deceased,
against McLaughlin as the personal representative of the estate. This claim, therefore was
required to be asserted by Deborah in an action commenced within one year after the date of
death of the deceased. The present action was commenced in July 2016, more than three years
after Richard’s death. As a result, Deborah’s claim for reimbursement of attorney’s fees is barred.
In sum, the motion to dismiss Count I of the SAC by McLaughlin and his law firm must
be denied, except for Deborah’s claim for reimbursement of attorney’s fees. That claim is
7 The letter does not say it is a final account and it does not appear to meet the
requirements of an account as described in G.L. c. 203E, § 813 because there is no description of
receipts and disbursements, including the amount of the trustee’s compensation.
13
dismissed as untimely. The motion by McLaughlin and his law firm to dismiss Count IV of the
SAC will be addressed in the next section.
B. Motion to Dismiss by Steven Clayman
Steven is named as a defendant in Counts II and III of the SAC. Count II alleges that
Steven, as a trustee, officer, director and shareholder of the several Closely-Held Interests in
which Deborah’s Trust held a life interest, owed a fiduciary duty to Deborah’s Trust and
Deborah. Steven allegedly took steps to disenfranchise Deborah’s Trust, “freeze out” the Trust
and eliminate the value of the interests of Deborah’s Trust resulting in “little to no payment of
distributions” to Deborah’s Trust. SAC ¶¶ 162, 164, 165. Count III alleges that Steven
“intentionally and knowingly induced McLaughlin as Executor of the Estate to break the
contractual relationship with Deborah [the Prenuptial Agreement] and not fulfill the obligation to
fund fully [Deborah’s Trust] with the sum of two million dollars.” SAC ¶ 173.
In his motion to dismiss Steven does not dispute that he owes a fiduciary duty to
Deborah’s Trust because of the Trust’s equity interests in the Closely-Held Interests. Steven does
not deny that he operated the Closely-Held Interests for capital growth, not income production.
He argues that he is absolutely entitled to do so. That is true only to a degree. “As a fiduciary, a
partner must consider his or her partner’s welfare, and refrain from acting for purely private
gain.” Meehan v. Shaughnessy, 404 Mass. 419, 434 (1989).
The SAC alleges that in exercising control over the Closely-Held Interests, Steven failed
to observe and respect corporate form among the LLCs and management companies. He is
alleged to have intermingled the relationships among the Closely-Held Interests with intercompany
loans, all to the purpose of avoiding income distributions to the owners, including,
14
specifically, Deborah’s Trust. The SAC also alleges that Steven deprived Deborah’s Trust of
“information sufficient to understand the management and financial circumstances” of the
entities. SAC ¶ 163. At the motion to dismiss stage, this is enough to assert a breach of fiduciary
duty.
With respect to Count III of the SAC, Steven accurately points out that a claim for
intentional interference with contract requires an allegation of improper motive or improper
means or both. Mere interference with a contract is not actionable. See G.S. Enterprises, Inc. v.
Falmouth Marine, Inc., 410 Mass. 262, 272 (1991) (“In an action for intentional interference
with contractual relations, the plaintiff must prove that: (1) he had a contract with a third party;
(2) the defendant knowingly induced the third party to break that contract; (3) the defendant’s
interference, in addition to being intentional, was improper in motive or means; and (4) the
plaintiff was harmed by the defendant’s actions”). Steven argues that, in his contact with
McLaughlin, he was motivated by his desire to manage the Closely-Held Interests in his own best
interest. Thus, there can be no improper means or motive. Pembroke Country Club, Inc. v.
Regency Savings Bank, F.S.B., 62 Mass. App. Ct. 34, 39 (2004)(legitimate advancement of
actor’s own interest is not improper conduct).
Steven’s argument ignores, however, the allegations of the SAC. The SAC avers that
Steven was motivated by spite; i.e., that he was unhappy with the largesse left to Deborah by
Richard. Next, the SAC contends, read indulgently, that Steven acted with improper means by
promising future legal business to McLaughlin in exchange for McLaughlin’s cooperation to
defeat the contractual obligations of the Prenuptial Agreement. “[I]mproper conduct ‘may
include ulterior motive (e.g., wishing to do injury) or wrongful means (e.g., deceit or economic
15
coercion,’; the plaintiff need not prove both.” Cavicchi v. Koski, 67 Mass. App. Ct. 654, 658
(2006)(citation omitted). The SAC alleges sufficient facts (wishing to deprive Deborah of full
inheritance and economic inducement to McLaughlin) that, if true, support a reasonable inference
of improper interference. Id. at 660 n.9, 663 (Rule 12 (b) (6) dismissal reversed where allegations
in complaint of improper means, while conclusory, were sufficient to resist a motion to dismiss).
“The propriety of an actor’s motives in a particular setting necessarily depends on the attending
circumstances, and must be evaluated on a case-by-case basis.” G. S. Enterprises, Inc., 410 Mass.
at 273. This kind of evaluation of the facts cannot be done on a motion to dismiss.
For the reasons stated, Steven’s motion to dismiss counts II and III must be denied.
Likewise, McLaughlin’s motion to dismiss count IV of the SAC must be denied. Count IV alleges
that McLaughlin aided and abetted Steven’s breach of fiduciary duties and interference with
contract. It is alleged that McLaughlin actively and knowingly participated in Steven’s alleged
torts. That is enough at the pleading stage. See Go-Best Assets Ltd. v. Citizens Bank of
Massachusetts, 463 Mass. 50, 64 (2012) for the elements of an aiding and abetting claim.
Applied to this case, the SAC adequately pleads a claim for aiding and abetting against
McLaughlin by alleging the following elements: (1) that Steven committed the relevant torts; (2)
that McLaughlin knew Steven was committing the torts; and (3) that McLaughlin actively
participated in or substantially assisted in the commission of the torts. McLaughlin’s motion to
dismiss Count IV must be denied.
C. Motion to Dismiss by Business Entities
The SAC names business entities, all of which were Closely-Held Interests under the
Revocable Trust, as defendants in this action. The nine business entities mentioned in the SAC
16
move to dismiss. For five of the entities, the argument for dismissal is that the SAC asserts no
cognizable claim against them. The entities are sued simply because Deborah’s Trust views the
entities as indispensable parties to the possible relief sought; namely, to obtain an equitable reallocation
of ownership interests in the properties originally held in the Revocable Trust and
distributed to Deborah’s Trust and the Family Trust. For two of the entities, 5C, Inc. and C.C.
Real Investments, Inc., named in Count II of the SAC as the management companies utilized by
Steven to execute a plan to deprive Deborah’s Trust of reasonable income from its ownership
interests, the argument for dismissal is that such companies owed no fiduciary duty to Deborah’s
Trust. Finally, for two of the entities, Nesmith Park LLC and C.C. Real Investments, Inc., named
in Count V of the SAC for allegedly converting funds belonging to Deborah’s Trust, the
argument for dismissal is that Count V fails to state the requisite elements of the tort of
conversion.
With respect to the business entities named solely as indispensable parties, plaintiffs
concede that they do not allege a substantive claim against those entities. They argue, however,
that the business entities are necessary and indispensable parties because plaintiffs seek, in
addition to monetary damages, potential equitable relief to re-allocate Richard’s interests in the
business entities to Deborah’s Trust.
Mass. R. Civ. P. 19 mandates that plaintiffs join as parties individuals and entities that, in
their absence, complete relief could not be accorded. This is, in part, a protection because such
entities have an interest in the subject matter (the proper allocation to and management of
property interests in Deborah’s Trust) and their interest could be impaired or impeded by the
potential remedy sought by Deborah’s Trust. Defendants argue that Rule 19 is available to a
17
defendant moving to dismiss a claim for failure to join an indispensable party, but the rule is not
an authorization to a plaintiff to add a party against whom no independent substantive claim is
asserted. That argument is incorrect. The plaintiff has an obligation to name as parties all persons
falling within the various tests prescribed in Rule 19 (a) for when a party should be joined. Smith
and Zobel, Rules Practice, 6 Mass. Prac. Series § 19.5 (2006). “If plaintiff has failed to join such
a party as a defendant, the court must order joinder.” Id. at § 19.2. The parties named as
indispensable parties by Deborah’s Trust in the SAC clearly fall within the tests prescribed in
Rule 19 (a). Accordingly, so long as a potential remedy of re-allocation remains in the case, the
business entities and other indispensable parties must remain as parties.
5C, Inc. and C.C. Real Investments, Inc. move to dismiss Count II of the SAC. Read
indulgently, Count II alleges that these companies were the vehicles used by Steven to breach
fiduciary duties owed to Deborah’s Trust arising from Deborah’s Trust’s interest in the Closely-
Held Companies. Under well established principles of agency, the companies might be held to be
vicariously liable for the alleged conduct of Steven. That is enough to satify the Rule 12 standard.
Count II will not be dismissed.
Lastly, Nesmith Park LLC and C.C. Real Investments, Inc. move to dismiss Count V,
Conversion. Count V alleges that Nesmith, aided and abetted by C.C. Real Investments, is
exercising dominion and control over property owned by Deborah’s Trust.8
“The elements of conversion require that a defendant be proved to have ‘intentionally or
wrongfully exercise[d] acts of ownership, control or dominion over personal property to which
8 “Owned” in this case means that the property is part of the corpus of Deborah’s Trust
for her benefit during Deborah’s lifetime.
18
he has no right of possession at the time . . . .’” Grand Pac. Fin. Corp. v. Brauer, 57 Mass. App.
Ct. 407, 412 (2003), quoting from Abington Natl. Bank v. Ashwood Homes, Inc., 19 Mass. App.
Ct. 503, 507 (1985). See Matter of Hilson, 448 Mass. 603, 611 (2007) (“The elements of
conversion may be established by a showing that one person exercised dominion over the
personal property of another, without right, and thereby deprived the rightful owner of its use and
enjoyment”). Money may be the subject of conversion, and “[t]here is no requirement that the
one converting property be shown to have had the intent to deprive permanently the rightful
owner of its use and enjoyment, as in stealing.” Matter of Hilson, 448 Mass. at 611. One may be
liable for conversion even though he or she received no benefit from the conversion. Boston
Educ. Research Co. v. American Mach. & Foundry Co., 488 F.2d 344, 348 (1st Cir. 1973)
(“Liability will lie for conversion . . . even though the defendant received no benefit from his
deed”). Finally, funds held in an escrow account may be the subject of a conversion claim.
Grand Pac. Fin. Corp. v. Brauer, 57 Mass. App. Ct. at 412-414. Applying these principles,
Count V adequately pleads a claim for conversion.
D. Motion to Dismiss of the Family Trust, Amy L. Nechtem, Trustee
Plaintiffs concede that they assert no substantive claim against the Family Trust. Instead,
they name the Family Trust, by its trustee, Amy L. Nechtem, as an indispensable party defendant
in the SAC. As with the Business Entities, plaintiffs assert that the equitable remedy they seek
implicates the interests of the Family Trust as described and protected by Rule 19 (a) of the
Mass. R. Civ. P. For the reasons stated above in connection with the motion to dismiss of the
business entities, the motion of the Family Trust must be denied.
19
CONCLUSION
The Motion to Dismiss of John T. Mclaughlin and his law firm will be ALLOWED, in
part, and DENIED, in part. The motion is allowed with respect to the claim by Deborah
Clayman, individually, for reimbursement of attorney’s fees she incurred in connection with the
transfer of ownership of the Revere residence. Otherwise, the motion to dismiss is denied.
The motions to dismiss of Steven Clayman, Amy L. Nechtem, Trustee of the Family
Trust and the business entities are DENIED.
By the Court,
____________________________
Edward P. Leibensperger
Justice of the Superior Court
August 14, 2017
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Therapy Resources Management LLC, et al. v. Whittier Health Network, Inc., et al. (Lawyers Weekly No. 12-120-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 1784CV0942 BLS 1
THERAPY RESOURCES MANAGEMENT LLC, et al
vs.
WHITTIER HEALTH NETWORK, INC., et al
ORDER ON CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT
Count IV of the Amended Complaint seeks a declaratory judgment to the effect that
defendants (referred to collectively as “Whittier”) are barred from seeking indemnity from
plaintiffs (referred to collectively as “Therapy”). Whittier has not yet answered the amended
complaint or asserted a counterclaim, but the record is clear that Whittier believes it has the right
to be indemnified by Therapy for litigation costs and a settlement payment incurred by Whittier
in connection with an investigation and lawsuit under the False Claims Act (“FCA”), 31 U.S.C.
§3729.1 There is an actual controversy between the parties regarding whether, as a matter of law,
Whittier can obtain indemnification under its contracts with Therapy which state that “[Therapy] shall indemnify and hold [Whittier] harmless from and against all claims, demands, costs,
expenses, liabilities and losses (including reasonable attorney’s fees) which may result against
[Whittier] as a consequence of any malfeasance, negligence . . . caused . . . by [Therapy] . . . .”
1 Whittier has effectively obtained some indemnification by refusing to pay invoices for
services rendered by Therapy. Thus, Therapy is the plaintiff in this action seeking recovery for
non-payment of invoices. The claim for indemnification by Whittier is anticipated because such
claim is the stated basis for Whittier’s refusal to pay the invoices.
1
Therapy’s argument for summary judgment on Count IV is based on the following
undisputed facts. The losses that Whittier wants indemnification for arise from the fact that
Whittier was sued, along with Therapy, for fraud under the FCA. The suit was brought by a
former employee of Therapy. There was also another suit by a different former employee of
Therapy against Therapy alone. The filing of the suits triggered an investigation by federal
officials. The gist of the FCA claims was that Whittier and Therapy knowingly presented false
claims for Medicare reimbursement. Both Whittier and Therapy denied the allegations.
At some point, the claims against Therapy were dismissed. It is unclear from the record
whether the dismissal was a result of a settlement or whether it was a dismissal without
prejudice. Sometime later, Whittier entered into a settlement with the FCA plaintiffs, including
the government, requiring, among other things, payment by Whittier of $ 2.5 million. Therapy
was not a party to the settlement. FCA claims against Therapy were not released in the Whittier
settlement.
The settlement agreement alleges that Whittier failed “to take sufficient steps to prevent
[Therapy] from engaging in a pattern and practice of fraudulently inflating the reported amounts
of therapy provided to Medicare Part A patients.” There is no admission of liability by Whittier
in the settlement agreement and there was no finding by a court or jury that Whittier engaged in
the fraudulent conduct alleged.
DISCUSSION
Therapy seeks a declaration that the indemnity provision, quoted above, is unenforceable
as against public policy and the FCA. In short, Therapy argues that indemnification of Whittier
would relieve it of liability for its own fraud. The parties concede that if Whittier had been found
2
by a court to have committed fraud, or admitted to fraud, case law under the FCA would prohibit
Whittier from obtaining indemnification. Therapy argues that the FCA preempts state law claims,
based on contract or common law, for indemnification that would offset liability for fraud.
But Whittier asserts that it did not commit fraud. There has been no finding or admission
that it committed fraud. The issue presented is identical to what was presented to the United
States Court of Appeals for the Ninth Circuit in Cell Therapeutics, Inc. v. Lash Group, Inc., 586
F. 3d 1204, 1205 (2009)(“But what happens when a target defendant settles with the government
and the relator and then seeks recovery against a third party for contractual indemnity and
independent claims?”). The facts of Cell Therapeutics are closely aligned with the facts in the
present case.
The Court in Cell Therapeutics answered its rhetorical question by holding that a
defendant settling FCA claims with no admission of liability is free to seek indemnification from
a third party. Id. at 1212. “In resolving disputes under the FCA, we have recognized ‘the general
policy in favor of encouraging parties to settle disputes.’ Treating a qui tam settlement as a de
facto finding of liability would inevitably chill the settlement spirit.” Id. (Citation omitted). After
considering both the policy behind the FCA and principles of issue and claim preclusion, the
Court reversed a lower court’s dismissal of a settling defendant’s claim for indemnification. Id. at
1213.
I find the reasoning and conclusion in Cell Therapeutics to be thoroughly persuasive. The
cases cited by Therapy are all distinguishable from the facts of both Cell Therapeutics and the
present case. Whittier should not be precluded from making a claim for indemnification merely
because it settled the FCA case. Ultimately, whether Whittier can recover indemnification will
3
depend on its ability to prove its contract claim (whether Whittier’s losses were “as a
consequence of any malfeasance” of Therapy). Therapy, however, will have the opportunity to
prove that Whittier’s conduct was fraudulent. If so, Whittier may be precluded from
indemnification. These issues are not ripe for determination on the present record.
CONCLUSION
The cross-motions for partial summary judgment on Count IV of the amended
complaint (Docket Nos. 20 and 21) are DENIED.
By the Court,
Edward P. Leibensperger
Justice of the Superior Court
Date: August 3, 2017
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Commonwealth v. Wiggins (and 28 companion cases) (Lawyers Weekly No. 10-146-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us

SJC-10975

COMMONWEALTH  vs.  MAXWELL WIGGINS, JR.
(and twenty-eight companion cases[1]).

Hampden.     February 10, 2017. – September 6, 2017.

Present:  Gants, C.J., Hines, Lowy, & Budd, JJ.[2]

Homicide.  Home Invasion.  Robbery.  Evidence, Identification, Cross-examination by codefendant’s counsel, Relevancy and materiality, Photograph.  Identification.  Deoxyribonucleic Acid.  Practice, Criminal, Capital case, Identification of defendant in courtroom, Severance, Mistrial, Argument by prosecutor, Sentence.  Constitutional Law, Sentence. read more

Posted by Stephen Sandberg - September 6, 2017 at 2:52 pm

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German v. Rubin, et al. (Lawyers Weekly No. 12-117-17)

David Lopes Ca 1 rdozo and President & Fellows of Harvard College
COMMONWEALTH OF MASSACHUSETTS
MIDDLESEX, ss. SUPERIOR COURT
CIVIL ACTION
NO. 16-01640
GUSTAVO GERMAN
vs.
LEE L. RUBIN & others1
MEMORANDUM OF DECISION AND ORDER ON PRESIDENT & FELLOWS OF
HARVARD COLLEGE’S MOTION FOR RECONSIDERATION OF ITS REQUEST
FOR A STAY PENDING APPEAL
INTRODUCTION
On May 31, 2017, this court issued an order allowing the pro se plaintiff, Gustavo German’s
(“German”), motion to add President & Fellows of Harvard College (“Harvard”) as a party and
directing Harvard to comply with this court’s December 5, 2016 order.
On June 19, 2017, this court issued an amended Revised Order directing Harvard to provide
German with “full access” to “the Bauer Building (located in the basement of the Sherman-Fairchild
Building where the Rubin Lab is located)” and to “the BRI facility inside the Bio Lab Building”
where German houses and conducts research with a specialized mouse colony. Counsel for Harvard
sought a stay of the court’s orders pending appeal in open court, which was denied. This court stated
that it would reconsider its ruling if Harvard submitted evidence concerning the laws and regulations
governing animal research at Harvard. Harvard filed a notice of appeal on June 21, 2017, seeking
appellate review of this court’s May 31, 2017 order and its June 19, 2017 Revised Amended Order.
2
Before this court is Harvard’s Motion for Reconsideration of its Request for a Stay of both
orders pending appeal (“Motion”). After hearing and careful review of the submissions of the
parties, the Motion is ALLOWED in part and DENIED in part.
Before this court is Harvard’s Motion for Reconsideration of its Request for a Stay of both
orders pending appeal (“Motion”). After hearing and careful review of the submissions of the
parties, the Motion is ALLOWED in part and DENIED in part.
BACKGROUND
On June 20, 2017, following this court’s invitation to submit additional evidence, Harvard
submitted the affidavit of Steven Niemi, which addressed various federal and local regulations
governing animal research at Harvard. The affidavit also explained that because German has been
withdrawn as a graduate student at Harvard, he is no longer eligible to use or access any regulated
animals located in any Harvard facility for any purpose.
On June 29, 2017, this court conducted an evidentiary hearing where Harvard offered the
testimony of Dr. Ara Tahmassian, its Chief Research Compliance Officer, concerning the role of
Harvard’s Institutional Animal Care and Use Committee (“IACUC”), which revoked German’s
access to the BRI facility. Dr. Tahmassian guided this court through the federal regulations that
establish the IACUC as an oversight body that is independent of Harvard. He explained that under
those regulations Harvard cannot overrule the IACUC in the event of a negative decision concerning
animal testing and research, including its decision to revoke German’s access because he is no longer
a person “affiliated” with the university. Dr. Tahmassian explained that the IACUC undertook
review, and ultimate revocation, of German’s access to the animal testing facilities based upon
German’s “change of status,” which was communicated to the IACUC by Harvard’s Office of
3
General Counsel following its withdrawal of German from the university. Dr. Tahmassian also
explained that German is now prohibited by the applicable regulations from accessing any regulated
animals at Harvard facilities because he is no longer affiliated with the university. He further
testified that the only way for German to regain access is if his affiliation with the university is
restored, either through readmission as a student or through qualifying employment with the
university. This court credits Dr. Tahmassian’s testimony and explanation of the applicable federal
and local laws and regulations.
DISCUSSION
“An appellant seeking a stay pending appeal must ordinarily meet four tests: (1) the
likelihood of appellant’s success on the merits; (2) the likelihood of irreparable harm to appellant
if the court denies the stay; (3) the absence of substantial harm to other parties if the stay issues; and
(4) the absence of harm to the public interest from granting the stay.” C.E. v. J.E., 472 Mass. 1016,
1017 (2015), quoting J.W. Smith & H.B. Zobel, Rules Practice § 62.3, at 409 (2d ed. 2007).
Upon consideration of the additional evidence Harvard provided, and in particular the
testimony of Dr. Tahmassian, this court finds that even though the revocation of German’s access
to the BRI facility is a direct result of Harvard’s questionable withdrawal of him as a student, there
would be irreparable harm to Harvard if this court enforced its June 19, 2017 order against it as
concerns access to the BRI facility. To comply, Harvard would be forced to violate federal and local
laws governing animal testing thereby subjecting Harvard to the severe consequences provided by
those same laws. The court finds that substantial harm will unfortunately be visited upon German
by granting this limited stay because he will be unable to conduct his research while he remains
“unaffiliated” with the university. However, the repercussions of forcing Harvard to violate federal
4
and local animal testing laws outweigh the harm to German, which this court expects will be
temporary.
ORDER
It is, therefore, ORDERED that the Motion for Reconsideration is ALLOWED in part. The
Court’s June 19, 2017 order, as it concerns German’s access to the BRI facility, is stayed pending
appeal, or until such time as German’s status as a researcher “affiliated” with Harvard is restored,
whichever is shorter. As to all other relief requested, the Motion is DENIED.
_________________________
Elizabeth Fahey
Justice of the Superior Court
DATED: July ____, 2017 read more

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German v. Rubin, et al. (Lawyers Weekly No. 12-118-17)

COMMONWEALTH OF MASSACHUSETTS
MIDDLESEX, ss. SUPERIOR COURT
CIVIL ACTION
NO. 16-01640
GUSTAVO GERMAN
vs.
LEE L. RUBIN & others1
MEMORANDUM OF DECISION AND ORDER ON PLAINTIFF’S EMERGENCY
MOTION FOR AN ORDER DISALLOWING ADMINISTRATIVE PROCEEDINGS
INTRODUCTION
The pro se plaintiff, Gustavo German (“German”), obtained a harassment prevention order,
pursuant to G.L. c. 258E, on August 25, 2016. The most recent revision of that order was issued on
December 5, 2016. See Paper No. 78.
Before this court is German’s Emergency Motion for an Order Disallowing Lee L. Rubin
and/or Any Employee at Harvard Corporation to Initiate Administrative Proceedings Against
Plaintiff without Leave of Court (“Motion”). For the reasons below, the Motion is ALLOWED
nunc pro tunc to May 4, 2017.
PROCEDURAL BACKGROUND
The Motion was filed on an emergency basis on May 4, 2017, after German was put on notice
that administrative proceedings were underway, which could lead to his ultimate removal from
Harvard as a Ph.D. candidate. President & Fellows of Harvard College (“Harvard”) and Lee L.
Rubin (“Rubin”) filed a response and opposition to the Motion on May 11, 2017. Harvard filed a
written request for hearing, but did not call the court to obtain a hearing on an expedited basis. A
flurry of additional motions and oppositions were filed in the two weeks following May 10, 2017 read more

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German v. Rubin, et al. (Lawyers Weekly No. 12-119-17)

David Lopes Ca 1 rdozo and President & Fellows of Harvard College
COMMONWEALTH OF MASSACHUSETTS
MIDDLESEX, ss. SUPERIOR COURT
CIVIL ACTION
NO. 16-01640
GUSTAVO GERMAN
vs.
LEE L. RUBIN & others1
MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS RUBIN AND
PRESIDENT & FELLOWS OF HARVARD COLLEGE’S MOTIONS TO DISMISS
INTRODUCTION
Pursuant to Mass. R. Civ. P. 65.3, the pro se plaintiff, Gustavo German (“German”) then
a fifth-year doctoral candidate at Harvard, filed a Verified Complaint for Civil Contempt
(“Complaint”) on June 14, 2017. German previously obtained a harassment prevention order
issued pursuant to G.L. c. 258E against Dr. Lee L. Rubin (“Rubin”) on August 25, 2016, in
which this court directed that German be fully restored to the position he occupied in Rubin’s lab
(“the Rubin Lab”) as of March 10, 2016, before the harassment began. That order was amended
on September 9, October 4 and14, and December 5, 2016, after repeated requests by defendants
Rubin and President & Fellows of Harvard College (“Harvard,” together with Rubin, “the
defendants” ).
German’s Complaint alleges, generally, that the defendants violated several directives
contained in the most recent Revised Order dated December 5, 2016 (“Order”), and as a result (1)
The harassment included, among other things, that German was forcibly seized 2 and hospitalized for a mental health
evaluation on June 4, 2016, based upon fabricated concerns about German’s mental health that Rubin provided to
Dr. Ayse A. Atasoylu, a physician from Harvard University Health Services.
2
German has not yet been restored to the position he was in prior to the harassment, (2) he has
been prevented from completing his research and thesis, and (3) he has now been forcibly
withdrawn as a student.
Before the court are Rubin’s and Harvard’s separate motions to dismiss the Complaint.
After hearing and careful review of the parties’ submissions, both motions are ALLOWED in
part and DENIED in part.
PROCEDURAL HISTORY
On August 25, 2016, German obtained a harassment prevention2 order against Rubin
following German’s report of Rubin’s research misconduct, i.e., his knowing publication of
fabricated data. Rubin is a tenured professor at Harvard and the primary investigator (“P.I.”) of
the Rubin Lab, the facility in which German works while pursuing his Ph.D. The resulting
August 25, 2016 harassment prevention order consisted of two directives. First, Rubin was to
stay at least 100 feet away from German and have no contact, direct or indirect, with him.
Second, German was “to immediately be fully restored to his position and research in the Rubin
Lab with all the assistance, equipment, and supplies he had on March 10, 2016.” See Paper No.
19, p. 27.
Both Rubin and Harvard filed motions seeking to vacate or modify the Order citing the
impracticalities of implementation in both the academic and lab environments. See Paper Nos.
22, 31, 47, 51, 55, 62, 63, and 114. These motions led to several hearings before this court in the
fall of 2016 and an interlocutory appeal, which resulted in some modification of the original
See Paper No. 33 (“During the hearing on September 6, 2016, this c 3 ourt learned that plaintiff has not yet been fully
restored to his position as of [sic] March 2016. Should that still be the case by September 16, 2016, the plaintiff may
request a further hearing . . . at which [Rubin] and Harvard will submit a pleading/affidavit as to what efforts have
been made to fully restore plaintiff to the position he was in in March 2016 and why that has not yet occurred.”);
Paper No. 50 (“Until plaintiff has completed his research to his satisfaction, including a thesis he is willing to submit
for publication, plaintiff is not to be transferred from the [lab] without plaintiff’s consent or court order.”); Id.
(“Harvard agrees that it will work with German and do everything it can to be sure that he promptly has the
necessary equipment for his research.”); Paper No. 58 (Prior court orders were “issued to restore Plaintiff to a lab at
Harvard where he had been banned by Harvard since June 6, 2016, so he may complete his research and achieve his
Ph.D.”).
3
August 25, 2016 Order. As the court stated in its October 17, 2016 Memorandum and Order, it
“made substantial efforts to fashion an order that appropriately satisfied Defendant Rubin for the
harm he caused Plaintiff and to restore Plaintiff as much as possible to the position he was in at
the Rubin Lab. . . .” See Paper No. 58, p. 1. Throughout the parties’ interactions with this court,
this court’s oft repeated goal remained clear and unchanged: to return German to the status quo
he enjoyed as of March 10, 2016, and allow him to complete his research, thesis, and his Ph.D.3
The last Revised Order was issued on December 5, 2016, and states “[p]laintiff be
immediately and fully restored to and remain in his position in the Rubin Lab, with all the
assistance, equipment, and supplies he had on March 10, 2016” and that “Mr. German shall
remain working in the Rubin Lab, supervised by the [sic] Dr. Rubin, though all physical meetings
shall include a third party. . . .” It states, further “[w]ithin 48 hours, defendant Rubin is to release
to Harvard . . . whatever funds are necessary to provide plaintiff with the same resources he had
on March 10, 2016, i.e., two . . . research assistants he had been approved for and then had, and
the S.M.A. mice . . . necessary for his research.” It also directs that “[p]laintiff’s key card access
to the Rubin Lab is not to be disturbed or withdrawn and is to remain in full force and effect.”
The Order also provides guidelines for the limited meetings between Rubin and German
4
that the parties previously explained were necessary. The Order states “all physical meetings
shall include a third party, which shall be one of those listed by German, all of whom Harvard
accepts and [Rubin] does not oppose. As no meeting between German and Rubin occurred
between 10/14/16-11/30/16, their meetings are not to occur more than every six weeks, absent
any emergency or good cause. Besides this physical contact in the presence of a third party, all
other contact between German and Rubin shall be by email, text messages or Lab meetings as
described above.”
BACKGROUND
When deciding a motion to dismiss pursuant to Mass. R. Civ. P. 12(b)(6), the court
reviews the motion in accordance with the principles articulated in Iannacchino v. Ford Motor
Co., 451 Mass. 623, 636 (2008). As such, the court accepts the allegations of the Complaint as
true. Spinner v. Nutt, 417 Mass. 549, 550 (1985). German’s Complaint alleges that Harvard and
Rubin have violated the terms of the Order, as follows.
I. Harvard’s Alleged Conduct
German alleges that Harvard took actions to contravene the Order’s directive that German
be “immediately” and “fully restored to and remain in his position and research in the Rubin lab .
. . ,” by (1) revoking his key card access to certain research facilities; (2) instituting
administrative proceedings against German for failing to attend his Dissertation Advisory
Committee (“DAC”) meeting; and (3) withdrawing him as a graduate student at Harvard based
upon the same refusal to attend the DAC meeting without leave of court. Compl., at pars. 42, 55,
62.
Concerning his academic suspension and withdrawal from the Ph.D. program, German
5
alleges the following. On March 2, 2017, German’s program advisors requested that German
hold a DAC meeting. Id. at par. 16. On March 3, 2017, German agreed to attend the DAC
meeting scheduled for March 30, 2017, on the condition that Sheila Thomas, whom Harvard had
designated as German’s interim thesis advisor even though her field appears very different from
German’s, not attend as German believed the Order required Rubin to be his thesis advisor. Id.
at par. 17. On March 6, 2017, the program administrators informed German “as a condition for
the DAC meeting that German accept to have a new thesis advisor in Rubin’s stead.” Id. at par.
18. German rejected the condition and refused to attend the DAC meeting, stating it would
violate the Order that he was to be “supervised by Dr. Rubin.” Id. at par. 19. On March 10,
2017, German emailed his DAC, the program advisors, and Rubin (through counsel), objecting
to the requirement that Rubin be replaced as his thesis advisor and expressing his concern that it
violated the court’s Order. Id. at par. 20. German further alleges that he was concerned that
replacing his thesis advisor may have altered the already approved schedule for completing his
research. Even if the new thesis advisor were not acting in bad faith, “he or she may have a
different scientific understanding (or misunderstanding) than the one German agreed [to] with
Rubin and his DAC.” Id. at pars. 25-27.
In response, the defendants both denied that the court ordered Rubin to be German’s
thesis advisor. Id. at par. 31. German alleges he was then threatened with administrative
proceedings by Dean Garth McCavana if he would not agree to hold the DAC and replace his
thesis advisor. Id. at par. 32. On March 30, 2017, German again emailed his program advisors
and Dean McCavana stating his objection to holding the DAC meeting “to assign German a new
thesis advisor” and his belief that doing so would violate the Order. Id. at pars. 31-32.
German also alleges that beginning on June 1, 2017, Harvard po 4 sted security guards at the Rubin Lab and that
German was intimidated by the “extraordinary presence” of a security guard, who “turned his body to face German
straight while staring at him until German looked away.” Id. at pars. 50-51. As German does not allege how the
presence of these guards violated the Order, or impaired his ability to do his research, he has not alleged sufficient
facts to claim civil contempt for Harvard’s use of security guards. However, such conduct appears very different
than the “status quo” of March 10, 2016, to which this court has made frequent reference.
6
On April 6, 2017, Harvard, through Dean McCavana, initiated administrative proceedings
against German and threatened him with academic probation. Id. at par. 34. On April 25, 2017,
Harvard placed German on academic probation. Id. at par. 35.
On May 4, 2017, German filed an Emergency Motion for an Order Disallowing Lee L.
Rubin and/or Any Employee at Harvard Corporation to Initiate Administrative Proceedings
Against Plaintiff Unless Prior Leave is Granted by the Court. Id. at Par. 37. See Paper No. 105.
On May 10, 2017, Harvard filed a written request for hearing with this court, requesting a hearing
“at the earliest practicable time.” See Paper No. 107.2. German alleges that Harvard’s counsel
intentionally did not call the clerk’s office, as is customary, to schedule a hearing on an
emergency basis. Compl. at pars. 39-41. No hearing was held on German’s emergency motion
until May 31, 2017.
On May 16, 2017, without waiting for the court to schedule a hearing on German’s
emergency motion, Harvard withdrew German from his graduate program and disaffiliated him
from the university. Id. at par. 42. Once Harvard withdrew German from the program, it notified
the Department of Homeland Security of German’s disaffiliation, as German’s legal presence in
the United States is solely based on his student visa, which was rendered inoperable by
Harvard’s having withdrawn him. Although Harvard has invited German to reapply, Harvard
and its faculty have told German that he is no longer a student at Harvard and have denied him
access to the facilities he needs for his research, his mouse colony, and the animal testing facility.
Id. at pars. 58, 59, 64, 68, 69, and 73.4
The parties have used the terms “thesis advisor,” “academic ad 5 visor,” and “dissertation supervisor” at various
times in submissions and in court. This court treats these terms as interchangeable. This court is cognizant of the
argument Rubin makes in his Motion to Dismiss distinguishing between his role “as the Primary Investigator at his
lab” and his role as German’s “thesis advisor.”
6 To the best of this court’s knowledge, at no time prior to December 5, 2016 was any mention made of the BRI or
the Bauer Lab that German needs and had used to complete his research. It is undisputed that until Harvard
“withdrew” plaintiff, he had access to Bauer, BRI and the Rubin Lab. Pursuant to this court’s Order dated June 19,
2017, Harvard has restored German’s access to the Bauer Lab in the Sherman-Fairfield building, in which the Rubin
Lab is also located.
7
II. Rubin’s Alleged Conduct
German alleges that Rubin has failed to fully restore him to his position at the Rubin Lab
or supervise his work, and as a result, he has been unable to continue and complete his research.
Specifically, Rubin has held lab meetings without including German, as contemplated in the
Order. Id. at par. 79. Rubin refuses to supervise German, act as German’s “thesis advisor,”5 and
attend his DAC meetings. Id. at par. 78. Finally, Rubin has not released any of the funds he was
ordered to release to Harvard “to provide plaintiff with the same resources he had on March 10,
2016.” Id. at par. 77.
III. Allegations against the Defendants Concerning Key Card Access
German also alleges that Rubin has ignored German’s requests to recover key card access
and assistance, thus denying him access to the facilities he uses for his research.6 Id. at par. 76.
Since June 1, 2017, German has been denied access to the Biology Research Infrastructure
(“BRI”) facility at Harvard where he performs research on a highly specialized mouse colony.
German has provided video of his key card being refused at that site. Since June 2, 2017,
German has also been denied access to Rooms B03 and B07, which he states are “in the Rubin
Lab,” where he performs his research work. German has provided video of his key card being
refused at those rooms. German further alleges that Rubin, as the head of his lab, “is the person
Following a show cause hearing on June 19, 2017, this 7 court ordered that German’s access be restored to the
Sherman-Fairfield Building where the Rubin Lab is located, including the basement rooms B03 and B07, and the
BRI (animal testing) facility so that he could continue his research despite his forced withdrawal from Harvard.
Harvard’s counsel reported in open court on June 26, 2017 that his access was restored, with the exception of the
BRI facility, which is governed by an independent regulatory body over which Harvard has limited control. The
issues surrounding access to the BRI facility are the subject of a pending Motion for Reconsideration by Harvard and
are addressed in a separate decision.
8
who has the right and sole discretion, by custom, to authorize anyone to receive key card access
to the lab. …” Id. at para. 76.7
IV. Allegations against the Defendants Concerning Failure to Provide
Research Assistants
The Order provides that German was to be provided funding for the resources he had as
of March 10, 2016, including “two (part-time 15-20 hours each) research assistants he had been
approved for. …” German alleges he has not been provided any research assistants over the ten
months since the initial Order issued. German alleges that Rubin could comply with the Order
by assigning time from the research assistants currently employed in his lab. Id. at par. 76.
DISCUSSION
I. Standard of Review
The purpose of Mass. Rule Civ. P.12(b)(6) is to permit prompt resolution of a case where
the allegations in the complaint clearly demonstrate that the plaintiff’s claim is legally
insufficient. The Harvard Crimson, Inc. v. President & Fellows of Harvard College, 445 Mass.
745, 748 (2006). Such a motion calls upon the court to determine whether the factual
allegations of the complaint, taken as true, as well as all reasonable inferences drawn therefrom
in favor of the claimant, are sufficient to warrant relief. See Marram v. Kobrick Offshore Fund
Ltd., 442 Mass. 43, 45 (2004); Spinner, 417 Mass. at 550. Conclusory allegations without
factual support are to be disregarded. See Quincy City Hosp. v. Labor Relations Comm’n, 400
Mass. 745, 750 (1987); Daddarie v. Cape Cod Comm’n, 56 Mass. App. Ct. 764, 773-774 (2002).
9
A complaint need not, however, cite evidence in support of factual allegations; it need only give
notice of the facts on which the claim is based. See Conley v. Gibson, 355 U.S. 41, 46-48
(1957); The Harvard Crimson, Inc., 445 Mass. at 748-749.
“To hold a party in contempt, ‘there must be a clear and unequivocal command and an
equally clear and undoubted disobedience.’” Newell v. Department of Mental Retardation, 446
Mass. 286, 305 (2006), quoting Nickerson v. Dowd, 342 Mass. 462, 464 (1961). The order
should be “sufficiently clear, so that the party to be bound is provided with adequate notice of the
required or prohibited activity.” Mohamad v. Kavlakian, 69 Mass. App. Ct. 261, 263 (2007),
quoting Demoulas v. Demoulas Super Mkts., Inc., 424 Mass. 501, 566 (1997). “Where the order
is ambiguous or the disobedience is doubtful, there cannot be a finding of contempt.” Judge
Rotenburg Educ. Ctr. v. Commissioner of Dept. of Mental Retardation, 424 Mass. 430, 443
(1997).
German’s Complaint contains several alleged violations of the Order by each party. This
court addresses each alleged violation seriatim.
II. Analysis
a. Rubin’s Failure to “Supervise”
German asserts that Rubin has violated the Order by refusing to “supervise” him,
including his refusal to fulfill his role as German’s thesis advisor. The Order contains two
provisions related to this allegation. First, it states that “[p]laintiff is to immediately be fully
restored to and remain in his position and research in the Rubin Lab with all the assistance,
equipment, and supplies he had on March 10, 2016.” Second, it states that “German shall remain
working in the Rubin Lab, supervised by the [sic] Dr. Rubin. …” See Paper No. 19, p. 27.
10
Rubin argues that he is in full compliance with the court’s Order. Rubin does not dispute
that he has not supervised German nor served as his thesis advisor since the date of the Order,
but claims the language of the Order absolves him of any such advisory role, or is at best
ambiguous. See Paper No. 134.1, pp. 4-5.
It is not contested that prior to March 10, 2016, German was “supervised” by Rubin as a
graduate student in the Rubin Lab. As Rubin has previously stated to this court, “[n]ormally, the
[P.I.] of the lab in which a graduate student is pursuing research also serves as the student’s
dissertation advisor, directing the student’s research and helping to determine when the student is
ready to prepare and defend his or her dissertation.” Fourth Aff. of Lee L. Rubin, Paper No. 126,
at par. 7. In his first Affidavit, filed July 6, 2016, at paragraph 6 Rubin, under oath, stated: “I
am the thesis advisor of each graduate student working in my lab. This means I must mentor the
students and approve each thesis.” In paragraph 7, Rubin stated: “As PI, I am responsible for
approving, directing and supervising all of the work performed by members of the lab, . . .” Dr.
William Lensch, Executive Director of the Harvard Stem Cell and Regenerative Biology
(“HSCRB”) stated on September 5, 2016, under the pains and penalties of perjury: “Under the
federal rules and regulations governing the federal grants provided to the Rubin Lab, Dr. Rubin,
as Principal Investigator, is personally responsible for supervising and directing all of the
research conducted under those grants . . . . everyone performing research at the Rubin Lab
reports (and is required to report) directly to Dr. Rubin.” There is no dispute that, prior to the
harassment, Rubin was the P.I. of the lab and German’s supervisor and dissertation advisor.
Despite arguments and proposals in the fall of 2016 by Harvard and Rubin seeking to have
German’s research moved to another lab under another supervisor, that did not work out.
In his motion, Rubin cites to statements made by this court during hearings 8 in May 2017. These transcript
excerpts do not have any effect on what the Order clearly states. Furthermore, at the time of the hearing, this court
did not have the benefit of recently reviewing the past submissions of the parties, as it has now had the chance to do.
11
Harvard then suggested on October 11, 2016, as a way to keep the Rubin lab open and
functioning for both Rubin and German, that Rubin “supervise” German at the Rubin Lab.
German and this court initially were hesitant but later agreed. This court in its December 5, 2016
Order, clearly stated that German was to be “supervised by [sic] Dr. Rubin” without further
qualification, and to have all of the “assistance” with his “research” that was in place prior to
March 10, 2016. No one then or later ever questioned the court of the meaning of “supervise,”
which language Harvard had specifically requested.
The Order makes no distinction between different categories of supervision, as Rubin
argues. It makes a clear statement concerning German being restored to the same place “in his
position and research” he was in as of March 10, 2016. That would necessarily include Rubin’s
required supervision of that research. The Order is also clear that German is to be “supervised by
Dr. Rubin.” Rubin’s arguments that the Order, as written, obviates his prior role as German’s
supervisor and thesis advisor strains the limits of credulity.8 Rubin now claims that he was only
required to “supervise the lab,” which this court never mentioned.
As the Order is clear as to Rubin’s supervision of German and his research, German’s
allegations that Rubin has failed to supervise German, refused to participate as his thesis advisor,
or even communicate with German since the Order, are sufficient to survive a Rule 12(b)(6)
challenge.
b. Rubin’s Failure to “Release Funds”
German alleges that Rubin has not released any of the funds he was ordered to release to
12
Harvard “to provide plaintiff with the same resources he had on March 10, 2016.” Rubin argues
that it is undisputed that Harvard has made the financial resources available to German, negating
his obligation to provide “necessary” funds. Rubin also argues that this issue was previously
decided on a prior motion to dismiss an earlier contempt complaint in favor of Rubin.
This court finds that the issue has been previously decided and, in any event, Harvard has
made clear its provision of funds for German’s research assistants and research supplies (mice).
As such, German’s Complaint fails to state a claim for Rubin’s failure to “release funds.”
c. Rubin’s Failure to Invite German to Lab Meetings
The Order was revised to permit Rubin to have contact with German at “Lab meetings.”
Rubin’s opposition does not specifically address the allegations concerning “lab meetings.” But,
in his Fourth Affidavit at paragraph 18, Rubin admits that prior to German being restored to the
Rubin Lab on August 25, 2016, Rubin “conducted periodic general lab meetings, during which
all members of the Rubin Lab would meet to discuss their research with one another and with
me.” He states in paragraph 20 that since German was restored, he has not held any such
meetings but has instead met either individually or “conducted project meetings. . . .” German
alleges that Rubin has “mislabeled” the meetings he now holds with lab students and no longer
holds meetings for all graduate students working in the Rubin Lab. While this court thinks it is
highly unlikely that Rubin has successfully operated his lab without any general lab meetings
with his supervised graduate students and employees for the past seven months, the Order does
not compel that such meetings be held. Further, German has not alleged facts that by not holding
general lab meetings, Rubin has impacted German’s research or his position in the Rubin Lab.
For these reasons, the Complaint does not support a claim for contempt for failure to hold “lab
That Harvard required a second Order to effect the second lab access 9 that German had on March 10, 2016 can be
a factor in determining any punishment appropriate as to Harvard during the contempt trial.
13
meetings.”
d. German’s Denial of Access to Research Facilities
German alleges that beginning on June 1, 2017, he was denied access to two rooms that
he had previously used for his research at the Rubin Lab. German also alleges he has been
denied access to the BRI animal testing facility where his mouse colony is kept. Rubin argues
that he has no control over the granting or removal of key card access to Harvard facilities.
Harvard argues that German’s denial of access to certain Harvard facilities was a natural
consequence of his withdrawal from the university, and that it has no authority to restore his
access to the BRI facility.
It is uncontested that German’s access to the two rooms, B03 and B07, has been restored
pursuant to this court’s June 19, 2017 Order. As a claim of civil contempt is “a remedy to
compel compliance with a court order,” Karellas v. Karellas, 54 Mass. App. Ct. 469, 473 (2002),
and compliance, at least as to those two rooms, has been achieved, there is no longer any factual
basis that can support a claim for contempt on those grounds.9
German remains unable to access the BRI where his mouse colony is kept, leaving him
effectively stymied in his research. Harvard and Rubin each contend that Rubin has no control
over key card access to Harvard facilities. German alleges that it is the P.I. of each lab who
customarily controls who has access to lab facilities, and has supported this allegation with an
affidavit. If true, Rubin may have had some affirmative obligation to use his authority to make
sure German’s access remained undisturbed, as the Order dictates. This court need not resolve
This court conducted an evidentiary hearing on June 29, 2017, 10 where Harvard offered the testimony of Dr. Ara
Tahmassian, its Chief Research Compliance Officer, concerning the role of the IACUC. This court credits Dr.
Tahmassian’s testimony, but finds it only tangentially relevant to the issues presented in Harvard’s motion to dismiss.
Incredibly, one of Harvard’s attorneys in its General Counsel’s office advised the court at this hearing that, knowing
of this court’s December 5, 2016 Order, she sent notice to IACUC of Harvard’s withdrawal of German. This court
accepts that, when she did so, she knew that it would cause German to lose access to the BRI facility.
14
what is a clear disputed issue of fact concerning the role of a P.I. in granting or revoking access
to lab facilities in deciding a Rule 12 motion. This court finds that German’s allegation that
Rubin ignored his requests to restore access to all facilities used in his research may constitute a
basis for contempt.
Harvard argues that it has limited control over access to the BRI facility. Federal law
requires that the Institutional Animal Care and Use Committee (“IACUC”) ensure Harvard’s
compliance with federal and local laws concerning animal testing.10
Notwithstanding the role of the IACUC, it is clear that the only reason German is being
refused access to the BRI facility is because of Harvard’s withdrawal of him as a graduate student
for refusing to accept a different thesis advisor, one whose qualifications and competence to
advise German remain unclear to this court. As explained to this court at the June 29, 2017
evidentiary hearing, only affiliated individuals (e.g., students, employees, visiting scholars) are
permitted access to animal testing facilities under federal law. German’s allegations support the
reasonable inference that it was solely the withdrawal action of Harvard, which changed his
status from “affiliated” to “unaffiliated,” that caused the IACUC to revoke German’s access.
The Order makes clear that German “is to immediately be fully restored to and remain in
his position and research in the Rubin Lab with all of the assistance, equipment, and supplies”
he previously had. Harvard’s disaffiliation of German from the university has denied him the
ability to continue his research, and removed German from the equipment and assistance to
which he previously had access. This court finds that such facts are sufficient to state a claim for
15
contempt.
e. Harvard’s Administrative Proceedings and Withdrawal of German
German contends that Harvard violated the Order by instituting administrative
proceedings against German for failure to attend his Dissertation Advisory Committee (“DAC”)
meeting, and subsequently withdrawing him as a graduate student at Harvard based upon the
same refusal to attend a meeting of his DAC without leave of court. German also alleges that he
informed Harvard that his only reason for not attending the meetings was Harvard’s unilateral
insistence that German change his academic or “thesis” advisor, and the potential negative effects
that such a change would have on German. As a result, German claims he is precluded from
completing his research or submitting it for publication, as he is not affiliated with any academic
institution. In response, Harvard argues (a) that it was not subject to the Order until May 31,
2017, and the offending actions took place prior to that date, and (b) nothing in the Order
absolved German from compliance with Harvard’s internal rules concerning student discipline or
academic achievement.
Harvard has been a participant in this case since September 6, 2016, one week after this
court’s original harassment order issued, stating that German was to be allowed to continue and
complete his research and thesis. Harvard’s contention that it was a non-party, unaware that it
had obligations under the court’s orders concerning German is untenable on this record.
Regardless, Harvard is still bound by the orders because it (1) was a participant in the
proceedings, making suggestions to achieve its goal of keeping the Rubin Lab open and German
able to function there, (2) made express agreements to perform certain tasks that were codified in
the orders, and (3) worked in concert with Rubin throughout this action to comply, or perhaps
Notwithstanding this court’s original Order, that German be immediately 11 restored to the Rubin Lab, he did not
get key card access for two months.
16
avoid compliance,11 with the court’s original order, as amended.
This court is mindful of past decisions warning against court interference with academic
and disciplinary decisions made by private colleges and universities. See Schaer v. Brandies
Univ., 432 Mass. 474, 482 (2000); Russell v. Salve Regina Coll., 890 F.2d 484, 489 (1st Cir.
1989), rev’d on other grounds, 499 U.S. 225 (1991). Unfortunately, Harvard, by its actions, has
left this court with little choice but to find its administrative withdrawal of German under these
circumstances, as alleged, sufficient to state a violation of the Order.
The December 5, 2016 Order is clear and unequivocal that German was to be restored to
his research position so as to complete his research, thesis, and Ph.D. Such restoration
necessarily includes the academic supervision he enjoyed prior to the harassment. Harvard’s
alleged insistence that it could unilaterally change German’s thesis advisor is sufficient to state a
violation of the clear language of the Order.
Given the history before this court, if changing German’s academic advisor had become a
point of contention, it is concerning that Harvard did not petition this court to effectuate a change
to the Order. The amount of time that past between Harvard’s notice to German of possible
administrative action (March 20, 2017) and its decision to withdraw him from the university
(May 16, 2017), during which Harvard decided not to seek clarification from this court, is
suspect. These facts, as well as German’s allegation that Harvard’s failure to seek a hearing
before this court prior to acting to withdraw German was intentional, are sufficient to state a
claim for violation of the Order.
There is little doubt that withdrawing German from Harvard violated the Order’s
17
direction that he be “fully restored” and “remain in his position and research.” If Harvard felt
compelled to violate that portion of the Order, for cause, it had ample opportunity to seek review
and modification of the Order by this court. Without such modification, however, the facts as
pled may entitle German to relief for Harvard’s violation of paragraphs 2 and 3 of the Order.
f. Failure to Provide Research Assistants
Concerning the failure to provide German with the research assistants described in the
Order, Harvard claims that it hired a full-time research assistant for German, but German refused
to meet with her to allow her to begin work. Id. at pp. 19-20. German claims he only did so as
Harvard had imposed time constraints; why spend the time training an assistant if an
unreasonably short period of employment is all that is permitted. Rubin argues that since
Harvard agreed to make funds available to hire German a new research assistant, the Order’s
direction for him to release “necessary” funds to Harvard has not been triggered.
The portion in the Order pertaining to providing research assistants is linked to the Order
for Rubin to “release … whatever funds are necessary” to obtain for German the resources he had
on March 10, 2016. This court finds it troubling that German has yet, ten months since the initial
Order, to be provided with the described research assistants. All parties agree that Harvard has
made those funds available; thus, as stated above, Rubin’s obligation to release funds has not
been triggered. Given the factual dispute between Harvard and German as to the reason no
research assistance has been provided in the past ten months, this is an issue to be determined
during the contempt trial.
ORDER
It is, therefore, ORDERED that both Rubin’s Motion to Dismiss (Paper No. 134) and
18
Harvard’s Motion to Dismiss (Paper No. 136) are ALLOWED in part and DENIED in part. As
toGerman’s claims for contempt for Rubin’s failure to turn over funds, Rubin’s failure to hold
“lab meetings,” Harvard’s use of security guards, and Harvard and Rubin’s alleged denial of
access to Rooms B03 and B05, the motions are ALLOWED. As to the other alleged claims, that
Rubin has failed to supervise German’s research and dissertation, that Harvard’s administrative
proceedings and eventual withdrawal of German violated the Order, Harvard’s failure to provide
research assistants and that defendants have denied German access to resources and equipment
needed for his research, the motions are DENIED.
The contempt trial remains scheduled for 2:00 P.M. on July 11, 2017, though witnesses
need not be present.
_________________________
Elizabeth Fahey
Justice of the Superior Court
DATED: July ____, 2017 read more

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