Commonwealth v. Dew (Lawyers Weekly No. 10-174-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.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-12225

COMMONWEALTH  vs.  DASHEEM DEW.

 

 

Essex.     May 1, 2017. – November 6, 2017.

Present:  Gants, C.J., Lenk, Hines, Gaziano, Lowy, Budd, & Cypher, JJ.[1]

Robbery.  Identification.  Constitutional Law, Identification.  Due Process of Law, Identification.  Evidence, Identification.  Practice, Criminal, Identification of defendant in courtroom.

Indictment found and returned in the Superior Court Department on February 20, 2014.

A pretrial motion to suppress evidence was heard by Timothy Q. Feeley, J., and the case was tried before him. read more

Posted by Stephen Sandberg - November 7, 2017 at 4:33 am

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Commonwealth v. Moffat (Lawyers Weekly No. 10-175-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.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-08733

COMMONWEALTH  vs.  SHANE MOFFAT.

 

 

 

Hampden.     April 3, 2017. – November 6, 2017.

Present:  Gants, C.J., Lenk, Hines, Gaziano, Lowy, Budd, & Cypher, JJ.[1]

Deoxyribonucleic Acid.  Evidence, Scientific test, Relevancy and materiality.  Practice, Criminal, Postconviction relief, Assistance of counsel.

Indictment found and returned in the Superior Court Department on February 17, 2000.

The case was tried before Tina S. Page, J., and a postconviction motion for deoxyribonucleic acid testing, filed on July 8, 2013, was heard by her. read more

Posted by Stephen Sandberg - November 7, 2017 at 12:54 am

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Lawyers Committee for Civil Rights and Economic Justice v. Court Administrator of the Trial Court, et al. (Lawyers Weekly No. 10-176-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.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-12379

LAWYERS’ COMMITTEE FOR CIVIL RIGHTS AND ECONOMIC JUSTICE  vs.  court administrator of the Trial Court & others.[1]

November 6, 2017.

Moot Question.  Practice, Civil, Moot case.  Trial Court.  Public Records.

The Lawyers’ Committee for Civil Rights and Economic Justice (Lawyers’ Committee) appeals from a judgment of the county court dismissing as moot its petition seeking declaratory and injunctive relief requiring the respondents, who are the court administrator, office of court management, and executive office of the Trial Court, to produce certain records pursuant to the public records law.  G. L. c. 66, § 10.  We directed the parties to file memoranda addressing whether the single justice erred or abused his discretion in dismissing the case as moot.  After reviewing the parties’ submissions, we affirm the judgment. read more

Posted by Stephen Sandberg - November 6, 2017 at 9:21 pm

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Leavitt v. Phillips, et al. (Lawyers Weekly No. 10-177-17)

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-12122

ALLAN M. LEAVITT  vs.  CYNTHIA A. PHILLIPS & others.[1]

November 6, 2017.

MandamusPractice, Civil, Action in nature of mandamus.

Allan M. Leavitt appeals from a judgment of the county court denying, without a hearing, his petition for relief in the nature of mandamus.  We affirm.

Leavitt, the plaintiff in a civil action in the Superior Court arising from an automobile accident, sought an order directing the clerk of the Superior Court to assemble the record for appeal.  At that time, Leavitt’s claims had been tried to a jury, but final judgment had not yet entered, and certain posttrial motions were pending.  The single justice rightly denied relief on the ground that the request was premature.[2] read more

Posted by Stephen Sandberg - November 6, 2017 at 5:45 pm

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Beninati, et al. v. Borghi, et al. (Lawyers Weekly No. 09-032-17)

1
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
NO. 12-1985 BLS2
Consolidated with
NO. 13-1772 BLS2
ELIZABETH BENINATI and JOSEPH MASOTTA,
Plaintiffs,
Vs.
STEVEN BORGHI, et al.
Defendants
MEMORANDUM OF DECISION AND ORDER
REGARDING PROPOSED FORM OF JUDGMENT
On June 30, 2017, this Court determined that defendants Harold Dixon and the Blast entities had violated G.L.c. 93A and were liable for double the amount of compensatory damages that this Court had already awarded to the plaintiff WOW New England on common law claims asserted against Dixon, Blast and defendants Linda and Steven Borghi. In that same decision, this Court agreed with Dixon that Steven Borghi, as a shareholder of WOW New England, should not be able to benefit from that 93A damages award, given his equal culpability in the events giving rise to liability. For that reason, I reduced the amount that WOW was to receive in damages over and above compensatory damages by that percentage of Steven Borghi’s membership interest (37.93 percent). In the motion now before me, Dixon asks that I do the same with respect to the attorney’s fees that he is required to pay as a result of the 93A violation. He also asks that I exclude from any fee award about $ 170,000 in attorney’s fees incurred before this litigation began. As this Court already stated following the hearing on these issues, this Court declines to reduce the fee award but does exclude the $ 170,000.
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Unlike an award of damages, the amount of attorney’s fees that are assessed in connection with a 93A finding does not turn on the defendant’s culpability. Rather, the focus of the inquiry is on the reasonableness of the fee request. Any fees that are awarded are not part of the damages but rather a reimbursement of the costs already incurred by the prevailing party—here WOW New England. Thus, if this Court were to reduce the amount that Dixon was required to pay, that would also have the effect of penalizing WOW New England, which has been required to compensate the plaintiff Elizabeth Beninati for her attorney’s fees in bring this derivative action out of the damages already awarded to it by this Court. Although it is true that Borghi as a shareholder in WOW would get some benefit from this, the benefit is quite different from the windfall he would receive from sharing in the 93A multiple of damages assessed against Dixon.
As to the $ 170,000, this was described in the original fee petition as relating to “extensive settlement discussions” that predated the filing of this action. Following jury waived trial in this matter, this Court had made that part of the fee award to plaintiff when it allowed plaintiff’s motion for attorney’s fees and costs pursuant to G.L.c. 156 §57. See Memorandum of Decision and order dated December 12, 2014. At that juncture in the case, there was no finding under G.L.c. 93A, this Court having determined that neither Borghi nor Dixon was subject to that statute. The Appeals Court reversed as to Dixon, who is now in a position to contest any fee award made pursuant to 93A. His objection to the $ 170,000 is therefore timely.
It is also well founded. This Court is aware of no authority that permits the award of fees incurred before the litigation began and that do not bear directly on its preparation, which
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these fees clearly did not. Accordingly, this amount is exempted from the fees that Dixon is required to pay WOW New England pursuant to G.L.c. 93A.
SO ORDERED.
__________________________________
Janet L. Sanders
Justice of the Superior Court
Dated: October 5, 2017 read more

Posted by Stephen Sandberg - November 4, 2017 at 12:05 pm

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Trematerra, et al. v. Major League Lacrosse, LLC, et al. (Lawyers Weekly No. 09-033-17)

COMMONWEALTH OF MASSACHUSETTS

SUFFOLK, ss SUPERIOR COURT

CIVIL ACTION

  1. 2017-01140-BLS2

PETER TREMATERRA &

ATLANTA LACROSSE CLUB, LLC,

Plaintiffs

vs.

MAJOR LEAGUE LACROSSE, LLC, LAX UNITED MARKETING, LLC,

MLL FOUNDING MEMBERS LLC, NEW BALANCE ATHLETICS, INC.,

DAVID GROSS and JAMES DAVIS,

Defendants

MEMORANDUMOF DECISIONAND ORDER

ON DEFENDANTS’MOTION TO DISMISS

Major League Lacrosse, LLC (MLL or the League) operates a professional outdoor lacrosse sportsleague.  In 2014, Peter Trematerra entered into negotiations with MLL and its commissioner David Gross tointroducean Atlanta-basedteaminto the League.  After a year of negotiations, Trematerra formed Atlanta Lacrosse Club, LLC (Atlanta Lacrosse), which purchased an equity interest in MLL and began to operate a team known as the Atlanta Blaze.  In the instant action, Trematerra and Atlanta Lacrosse as the named plaintiffs allege that during these negotiations, Gross made several misrepresentations regarding MLL’s profitability and that he also failed to disclose, among other things, that the League had sold its broadcast and sponsorship rightsat far below market valueto companies owned or controlled by other MLL equity holders.  Plaintiffsfurther allege that, after Atlanta Lacrosse became a MLL member, theLeague’sBoard of Managers and Grossbreached numerousfiduciary and contractualobligations.  The defendants, which include Gross, MLL, and other individuals and entities, now 2 read more

Posted by Stephen Sandberg - November 4, 2017 at 8:31 am

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Wildlands Trust of Southeastern Massachusetts, Inc., et al. v. Cedar Hill Retreat Center, Inc., et al. (Lawyers Weekly No. 09-034-17)

1
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
SUCV2016-01432-BLS2
WILDLANDS TRUST OF SOUTHEASTERN MASSACHUSETTS, INC. &
JOHN AND CYNTHIA REED FOUNDATION,
Plaintiffs
vs.
CEDAR HILL RETREAT CENTER, INC. &
BALLOU CHANNING DISTRICT UNITARIAN UNIVERSALIST ASSOCIATION, INC.,
Defendants
MEMORANDUM OF DECISION ON PLAINTIFFS’ MOTION
FOR RECONSIDERATION OR CLARIFICATION
On July 13, 2017, the parties were before this Court on the Plaintiffs’ Motion to Compel Discovery and the Defendants’ Motion for a Protective Order. Defendants argued that the discovery sought was beyond the scope of what was at issue in this lawsuit and that the plaintiffs’ requests were unduly burdensome and amounted to harassment. This Court denied the motion from the bench, with only a brief explanation of its reasons by way of a margin note. Plaintiffs now move to reconsider and/or clarify this Court’s earlier ruling.
Although initially skeptical of this request, this Court is now convinced that clarification is indeed required. Although plaintiffs are not entitled to the broad discovery they had originally sought (which was unnecessary and unduly burdensome), this Court was wrong to deny any discovery sought by their Motion to Compel. It is also apparent that the parties may have interpreted that earlier order almost as if it were a dispositive motion and that the discovery ruling meant that certain parts of plaintiffs’ Complaint were not properly before this Court. This Court did not anticipate or intend that and now wishes to correct that misimpression. The
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Motion to Reconsider is therefore ALLOWED, with the following offered by way of explanation.
This is an action seeking to enforce a Conservation Restriction (CR) imposed on real property located in Duxbury, Massachusetts (the Premises). The parties to the CR are the plaintiffs Wildlands Trust of Southeastern Massachusetts, Inc. (Wildlands Trust) and the defendant Cedar Hill Retreat Center Inc., (Cedar Hill). In its Amended Complaint, 1 Wildlands Trust alleges that Cedar Hill is engaging in “commercial revenue generating activities…as well as other activities that are violative of the Conservation Restriction.” ¶ 7 of Amended Complaint; see also ¶48-50. In its Motion for a Protective Order (and again in opposing the Motion to Reconsider), Cedar Hill took the position that Wildlands Trust’s ability to complain of Cedar Hill’s activities on the Premises is far narrower – that is, that it is limited to a single event in September 8, 2012 when there was a wedding reception on the Premises. This did not involve a complaint that the Premises were being used to generate revenue.
In denying the plaintiffs’ Motion to Compel, this Court was of the view that a single violation was enough to entitle the plaintiffs to the equitable relief they sought, so that discovery that went beyond the September 8, 2012 incident was unnecessary. Because that violation was more narrowly drawn, however, the relief would not extend to revenue generating activities even if plaintiffs could prove that such activity violated the CR. Thus, to proceed simply on the basis of the September 2012 violation would not settle the dispute among the parties.
Cedar Hill argues that there is a legal impediment to Wildlands Trust seeking broader relief. It relies on Section IVA and IVF of the CR. Those provisions require that Wildlands Trust give notice to Cedar Hill of any claimed violation and that before resorting to court to seek
1 Although there is currently pending a motion to dismiss some counts in this Amended Complaint, the claim alleging breach of the Conservation Restriction is not the target.
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equitable relief, the parties must mediate the dispute. Following the September 8, 2012 incident, Wildland notified Cedar Hill of the alleged violation, and (as required by the CR) mediation of the dispute began and continued over the next couple of years. During that time period, additional notices were sent by plaintiffs’ counsel that did raise complaints about the Premises being used for revenue generating activities, thus going beyond that which was at issue in the September 2012 event. Throughout this time period, a mediator was available to the parties, but his efforts were unsuccessful. On February 26, 2016, Wildlands Trust counsel sent a letter to counsel for Cedar Hill that cited the failed mediation and outlined the various violations that it alleges had taken place on the Property. See Exhibit F to Amended Complaint. Cedar Hill takes the position that only the September 8, 2012 is properly before the Court, since the other alleged violations have not been subject to mediation. This Court disagrees.
Clearly, the defendants were put on notice of the other activities that Wildlands Trust regards as a violation, including those activities that generated revenues. This Court understands that, strictly speaking, each and every event did not generate a notice and a separate and distinct mediation. However, activities that post-dated the original notice in 2012 occurred at a time when mediation was ongoing and was the subject of correspondence between the parties and their lawyers. The purpose of the mediation was to encourage the parties to try first to resolve their differences among themselves before they resorted to litigation. That purpose has been fulfilled.
Returning then to the discovery dispute, this Court now agrees with Wildlands Trust that it is entitled to find out more about what happened on the Premises, but also concludes that such discovery should be strictly circumscribed. Events occurring before September 8, 2012 would not seem to be particularly relevant nor could they be the basis for equitable relief, since the
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mediation triggered by the September 2012 event had not yet begun. Apparently there have been over 300 events on the premises since 2012. The cost of third party discovery, including depositions of those involved in those events, would be quite expensive, harassing and in this Court’s view, entirely unnecessary, since there are other more efficient ways of determining the type of activity that occurred. Moreover, plaintiffs will be entitled to equitable relief provided that they show that the activity violates the terms of the CR; that there were a dozen violations of a similar nature or a hundred of them would seem to be largely irrelevant.
At the end of the hearing on the Motion to Reconsider, plaintiffs’ counsel made a proposal that in this Court’s view makes sense and that it now adopts: Cedar Hill shall produce for deposition a 30(b)(6) witness who has most familiarity with activities at the Premises since September 2012. This Court imposes an eight hour time limit on this deposition. In addition, Cedar Hill should be required to produce the spreadsheet of activities that it has maintained in the ordinary course of its business; although a partial spreadsheet has been produced, it was apparently incomplete and not a business record.
This Court does not envision any discovery beyond that. In particular, Wildlands Trust may not use contact information related to users of the Premises to notice any individual’s deposition without leave of court. This Court also does not see the need at this point for any third party discovery. As already stated, the number of violations is far less important than the nature of the activity conducted at the Premises. Plaintiffs should proceed with discovery with that in mind.
_______________________________ Janet L. Sanders
Justice of the Superior Court
Dated: October 16, 2017
5 read more

Posted by Stephen Sandberg - November 4, 2017 at 4:56 am

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Schiefer, et al. v. Bain Capital, LP (Lawyers Weekly No. 09-036-17)

1
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
Civ. No. 2015-3599 BLS 2
ASHLEY SCHIEFER, COLLEEN MCPHERSON,
ELIZABETH BURNHAM, and REBECCA SHAAL
on behalf of themselves and all others similarly situated,
Plaintiffs
vs.
BAIN CAPITAL, LP, f/k/a BAIN CAPITAL, LLC
,
Defendants
MEMORANDUM OF DECISION AND ORDER ON
PLAINTIFF ASHLEY SCHIEFER’S APPLICATION FOR ATTORNEY’S FEES
On August 21, 2017, Ashley Schiefer, one of four plaintiffs in this putative class action suit alleging failure to pay overtime wages, accepted a Rule 68 Offer of Judgment made by defendant Bain Capital LP (Bain). In addition to an $ 80,000 payment to Schiefer, the Offer of Judgment provided for “reasonable costs and attorney’s fees” together with interest “as awarded by the Court.” Schiefer now asks that this Court award her attorney’s fees and costs in the amount of $ 125,488.13. 1 The defendant asks that I reduce the award to $ 26,225.50. After careful review of the materials submitted in support of the application, this Court allows fees and costs in the amount requested by plaintiff.
The Amended Complaint asserts both common law claims and statutory ones. Bain first argues that it should not have to pay any attorney’s fees since, after the Offer of Judgment was extended, Schiefer took the position that she was waiving her statutory claim because of a
1 The application originally requested $ 122,788.13. Counsel filed a $ 2,700 supplement to that request for work performed in connection with the hearing on the application.
2
statute of limitations problem, proceeding instead on a common law theory of breach of contract. Certainly, had Schiefer prevailed on her common law claim after trial, she would not have been entitled to recover her litigation expenses. But the Offer expressly included an award of fees, and attached no conditions to that except that the fees be reasonable. In a supplemental pleading filed after the hearing on this Motion, Bain appears to suggest that it was misled about the basis of Schiefer’s claims. But Bain had to have known about the statute of limitations problem. Moreover, Schiefer’s answers to interrogatories about the damages she was seeking describe damages that are of the type that would be recoverable on a common law claim, not on the statutory claim. In short, there was no unfair surprise.
This Court also is not persuaded that counsel had some obligation to segregate out what work was spent on Schiefer’s common law claim and what work was attributable to her statutory claim. As plaintiff spells out in her Reply Memorandum, Scheifer’s breach of contract claim was based on the same core of facts as her statutory claim and indeed required that she prove she was “eligible” for overtime – an inquiry that implicated G.L.c. 151 §1A. These two sets of claims are sufficiently connected to excuse counsel from the near impossible task of segregating his hours based on the type of claim asserted. Indeed, had there been no Offer of Judgment and had Schiefer prevailed both on her common law and statutory claims after trial (thus entitling her to request attorney’s fees on the statutory claim), this Court would not have required counsel to allocate his time among the different claims, given the substantial overlap among them. See Killeen v. Westban Hotel Venture, LP, 69 Mass.App.Ct. 784, 792 (2007), citing Hensley v. Eckerhart, 461 U.S. 424, 435 (1983). There is no reason to proceed any differently where the award is pursuant to the terms of an Offer of Judgment.
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Bain argues more generally that plaintiff’s counsel’s approach in taking the total amount of fees attributable to all four plaintiffs and then allocating one-quarter of that amount to Schiefer is fundamentally flawed. This Court disagrees. From its inception, this case has been prosecuted as a class action, with plaintiff’s counsel representing all four plaintiffs, including Schiefer, collectively in pursuit of a class wide remedy. Counsel’s approach in calculating fees is consistent with the fact that this a collective action. Moreover, the named plaintiffs necessarily had to have substantially similar claims in order for there to be a chance at class certification. Such similarity in claims among these named plaintiffs did in fact exist, with each of them complaining about a failure to pay overtime wages. Discovery and legal research conducted on behalf of any one of them assists the others. Thus, although Schiefer did not join the case as a plaintiff until after the lawsuit commenced, work performed on behalf of the other three plaintiffs benefitted her as well. Bain contends that at least the work related to class certification issues should be excluded from any award since the Offer of Judgment was made before any motion was filed or class certified. It was clearly work that was necessary to the case, however, with Schiefer as a named plaintiff being one of the representatives for the putative class. Counsel is no less entitled to be compensated for that work simply because Bain made the Offer of Judgment before the class certification issue could be decided.
Bain makes more specific objections to certain parts of the fee request, arguing that plaintiff’s counsel spent excessive number of hours on certain matters. Plaintiff’s counsel responds that the large number of hours required for certain tasks was in part due to the way that Bain conducted the litigation. For example, Bain has been slow to comply with plaintiffs’ discovery requests, requiring multiple Rule 9C conferences and the service of a Motion to Compel. Indeed, it only recently began its first round of document production even though the
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case was filed in 2015. During this same time period, Bain served 250 document requests and 75 interrogatories on plaintiffs; responding to these requests took time. Bain served subpoenas on plaintiff’s McPherson’s post-Bain employers, necessitating a motion to quash and a motion for protective order from plaintiffs. Success on those motions was important to all named plaintiffs including Scheifer. Even this fee application has been vigorously opposed, with Bain supplementing its opposition after the hearing. Certainly, Bain is entitled to be zealously represented, but then such representation requires more of plaintiffs’ counsel, who must be prepared to respond just as vigorously.
This Court reviews an application for an award of attorney’s fees by using the “lodestar” approach, which requires calculating the number of hours reasonably expended to litigate the claims and multiplying that number by an hourly rate that is reasonable under the circumstances. Fontaine v. Ebtec Corp., 4156 Mass. 309, 325-326 (1993). The Fee Application here contemplates an hourly rate of $ 450; both plaintiff’s counsel are experienced and based on what this Court has seen, have done a commendable job on this matter. The records presented in support of the Application are quite complete and include detailed descriptions of the work performed. Ultimately, the question of what amount of fees is reasonable is addressed to the sound discretion of this Court. In the exercise of that discretion, the Application for Attorney’s Fees is APPROVED in the amount of $ 125,488.13.
______________________________
Janet L. Sanders
Justice of the Superior Court
Dated; October 24, 2017
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Posted by Stephen Sandberg - November 4, 2017 at 1:21 am

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Butts, et al. v. Freedman, et al. (Lawyers Weekly No. 09-037-17)

1
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
1584CV03652-BLS 2
MARK BUTTS and
BOSTON EQUITY ADVISORS, LLC
Plaintiffs
vs.
ARNOLD E. FREEDMAN, ODED BEN-JOSEPH, and
OUTCOME CAPITAL, LLC
Defendants
MEMORANDUM OF DECISION AND ORDER
ON DEFENDANTS’MOTION FOR SUMMARY JUDGMENT
In 1999, the plaintiff Mark Butts and the defendant Arnold Freedman joined together to form Boston Equity Advisors, LLC (BEA), a limited liability company in the business of providing advice on matters of corporate finance, particularly in connection with the medical device business. Freedman and Butts each held a fifty percent interest. The defendant Oded Ben-Joseph worked for BEA beginning in 2010. In July 2012, Freedman and Ben-Joseph left BEA and joined the defendant Outcome Capital, LLC (Outcome), a BEA competitor. This lawsuit alleges various claims against the defendants, the primary ones being a breach of their fiduciary obligations and breach of contract. Specifically, the Complaint alleges that the defendants took with them certain confidential information of BEA and engaged in other actions harmful to BEA and to Butts, the sole member of BEA after Freedman departed.
The case is now before the Court on the defendants’ Motion for Summary Judgment. In essence, the defendants argue that the plaintiffs have no reasonable expectation of proving any of their claims. See Kourouvacilis v. General Motors Corp., 410 Mass. 706, 711 (1991). After
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review of a voluminous summary judgment record, this Court concludes that there are genuine disputes of material fact that make summary judgment inappropriate.
BACKGROUND
Without detailing all the facts (both disputed and undisputed) in the parties’ submissions, this Court would highlight the following evidence which, if believed, could provide a basis for plaintiffs to recover on one or more of their claims.1
BEA was a closely held boutique investment banking firm that operated for many years with good success. Freedman focused on sales and business generation whereas Butts handled the legal and financial end of the business. In 2010, Freedman recruited Ben-Joseph to assist him on the sales end. Ben-Joseph joined the firm with the expectation of becoming a member. Although he never obtained an equity interest in BEA, he did receive an interest in receiving a percentage of the profits and was negotiating with Butts to become an equity member of BEA into 2012. Ben-Joseph worked closely with Freedman until his departure from BEA.
Around this same time period (August 2011 into early 2012), Freedman and Ben-Joseph were engaged in secret discussions with a BEA competitor, WWC Securities, LLC (WWC) to merge the two companies. Freedman and Ben-Joseph did not inform Butts about these negotiations. These discussions were extensive and are supported in the summary judgment record by defendants’ own interrogatory answers as well as numerous emails and other documents. A merger did not take place, but shortly after these discussions, both Freedman and Ben-Joseph left BEA and joined WWC, which then changed its name to Outcome Capital, LLC (Outcome). On March 13, 2012 and March 19, 2012, respectively, Ben-Joseph and Freedman
1 Defendants dispute much of this evidence. On a motion for summary judgment, however, this Court must resolve those disputes in favor of the plaintiff and draw all reasonable inferences in plaintiff’s favor.
3
each informed Butts that they would be leaving the firm. Both continued to work at BEA until July 2012.
The plaintiffs allege that during these secret negotiations and while both Freedman and Ben-Joseph still worked at BEA, they stopped seeking new business for BEA and started directing prospective clients away from BEA to Outcome (then WWC). In particular, Ben-Joseph, with Freedman’s knowledge and assistance, commenced discussions in February 2012 with Sirius Implantable Systems, Ltd., which was developing a medical device that fell directly in line with the types of investments that BEA promoted within the health care industry. In June 2012, Sirius became a client of Outcome. Freedman also had some dealings with Leading Indicator Systems in April 2012 but instead of soliciting the company as a client of BEA, he referred it to Outcome. Finally, the summary judgment record contains evidence regarding a third potential client, Nano MR. A reasonable inference can be drawn from this evidence that, while they were still working for BEA, the defendants diverted these prospective clients away from BEA to Outcome, precisely because they intended to leave BEA and join Outcome and wished to reap the benefit of that business.
Plaintiffs also allege that the defendants took confidential and proprietary information from BEA, including its client databases, business files and contacts (including deal history, financing and investing sources), marketing materials and other information. Here, the summary judgment record is much thinner. There is evidence, however, that the defendants did take certain information from BEA’s “Goldmine” database for their use at Outcome. They also provided Outcome with a list of BEA past transactions and when the two joined Outcome, Outcome promoted these in marketing materials as deals that Outcome, not BEA, had performed.
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Freedman took certain other BEA files, which BEA maintains contained confidential client information.
DISCUSSION
In support of their motion, the defendants makes two principal arguments. First, they contend that the plaintiffs will be unable to show that the defendants did anything wrong. Neither defendant was bound by any noncompete agreement. Indeed, Ben-Joseph was not even a member of BEA and thus (it is argued) had no fiduciary obligation to Butts or the company. As to confidential information, defendants maintain that the plaintiffs cannot specifically identify what was taken, much less prove that it was entitled to legal protection; at most, defendants took with them their own skills and experience, which they were free to do. Second, defendants argue that there is no causal connection between any alleged wrongdoing by the defendants and any harm to the plaintiffs. Even if there were discussions regarding a merger, no merger occurred. As to clients, the only existing client BEA had at the time the defendants left the firm was Histogenics. As to Leading Indicators, Sirius, and Nano MR, defendants assert that these entities would not have become clients of BEA. According to defendants, BEA failed as a business following the defendants’ departure because Butts himself abandoned it.
The problem with both of these arguments is that they are fact-intensive and do not lend themselves well to resolution by way of summary judgment. In determining whether information is entitled to protection as confidential or proprietary, for example, this Court applies the multi-factored test set forth in Jet Spray Cooler v. Crampton, 361 Mass. 835, 840 (1972). Those factors include, among other things: a) the extent to which plaintiff took steps to keep the information confidential; b) the value of the information to plaintiff and its competitors; and c) the extent to which the information is already in the public domain. That is a factual inquiry
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which is extremely difficult to decide based simply on affidavits and deposition testimony. The same is true with regard to whether there is a causal connection between the acts that the plaintiffs have identified as unlawful and the harm for which they seek compensation. Determining why BEA failed and why certain clients went to Outcome requires an assessment regarding the credibility of certain testimony, for example, and then a determination as to what weight to accord that evidence if it is believed. Plaintiffs may very well be unable to prove that BEA would have gotten certain business that ultimately went to Outcome, but the fact that defendants were engaged in discussions with Outcome at the same time that they were in contact with these prospective clients, coupled with the fact that these entities ultimately did go to Outcome (and thus benefited the defendants), provides some basis to infer such a causal connection. In short, plaintiffs may have very weak case, but that is not the test on a motion for summary judgment.
Although it was not emphasized at the hearing on this motion, one of the arguments that the defendants make is less fact specific, concerning whether either defendant owed any fiduciary or contractual duty to BEA or Butts. As to Freedman, defendants contend that BEA’s Operating Agreement (OA) specifically renounces the existence of any fiduciary duties. This Court disagrees. A limited liability company is like a close corporation: the relationship among its members must be one of trust, confidence and absolute loyalty if the enterprise is to succeed. See Donahue v. Rodd Electrotype Co., 367 Mass. 578, 592-593 (1975). It is true that a contract (like an operating agreement) can limit or even eliminate these fiduciary obligations. See, e.g., Chokel v. Genzyme Corp., 449 Mass. 272, 278 (2007) (“When a director’s contested action falls entirely within the scope of a contract between the director and the shareholders, it is not subject to question under fiduciary duty principles”) (italics supplied); see also Blank v. Chelmsford
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Ob/Gyn, P.C., 404 Mass. 408 (1995). On the other hand, the SJC has made it clear that “the presence of a contract will not always supplant a shareholder’s fiduciary duty, “ see Merriam v. Demoulas Super Mkts., Inc., 464 Mass. 721, 727-728 (2013), and that, “unless the contract clearly and expressly indicates a departure from those obligations, general fiduciary principles apply.” Selmark Associates, Inc. v. Ehrlich, 467 Mass. 525, 537-538 (2014). Here, the OA provided that the LLC “is not intended to be a general partnership, limited partnership or joint venture, and no Member shall be considered to be a partner or joint venture of any other Member for any purposes other than foreign, domestic, federal and provincial local income tax purposes, and this Agreement shall not be construed to suggest otherwise.” Section 1.07 of OA, Exhibit 3 of Appendix. This Court does not regard this provision as a clear and unequivocal elimination of one member’s fiduciary responsibility to another. As to Ben-Joseph, he was not a member of BEA and the evidence in the summary judgment record does not support the conclusion that he exercised sufficient control over the affairs of the LLC so as to owe to the plaintiffs a similar duty of loyalty and utmost good faith. There is evidence that he aided and abetted Freedman in breaching his fiduciary obligations, however. Thus, although the other claims against Ben-Joseph (like breach of contract) are dubious, there is enough to keep him in this case.2
CONCLUSION AND ORDER
For all the foregoing reasons, the defendant’s Motion for Summary Judgment is DENIED. This matter is scheduled for a Final Pretrial Conference on December 5, 2017 at 2:00 p.m.
___________________________
Dated: October 26, 2017 Janet L. Sanders
Justice of the Superior Court
2 The contract claims against Freedman also appear to be questionable. Freedman had no employment agreement with BEA and, like Ben-Joseph, was free to leave at any time and even “engage in and possess interests in other business ventures” even where those business ventures are similar to BEA. See 4.09 of OA.
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Posted by Stephen Sandberg - November 3, 2017 at 9:46 pm

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ABCD Holdings, LLC v. Hannon, et al. (Lawyers Weekly No. 09-035-17)

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COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
SUCV2016-1840-BLS2
ABCD HOLDINGS, LLC,
Plaintiff
vs.
PATRICK HANNON and SOFIA GAGUA
Defendants
And
J.DERENZO CO., SOFIA GAGUA,
SIMILAR SOILS, INC., IMMANUEL CORP., AGRITECH INC., and L-5 INC.,
Reach and Apply Defendants
MEMORANDUM OF DECISION AND ORDER
ON PLAINTIFF’S MOTION FOR A REAL ESTATE ATTACHMENT
This is an action seeking to collect on a personal guaranty and to recover for other allegedly wrongful conduct following the execution of that document. The guaranty was executed by defendant Patrick Hannon who, pursuant to the terms of the guaranty, was required to pay $ 109,879 plus attorney’s fees and collection costs in the event the borrower defaulted. The borrower did indeed default and plaintiff, the assignee of the original lender’s rights under the guaranty, now seeks to collect on the guaranty and asserts other claims, including a claim under Chapter 93A. This Court (Salinger, J.) has already determined that there is a reasonable likelihood that plaintiff will recover against Hannon on the guaranty. There is also ample
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evidence that plaintiff will recover an additional $ 45,000 that Hannon had paid on another loan but that had to be disgorged to Hannon’s bankruptcy trustee as a preference. 1
The case is now before the Court on plaintiff’s Motion to Attach property located at 34 Highview Drive in Uxbridge, Massachusetts (the Uxbridge House). Hannon lives there with his girlfriend, Sofia Gagua, named in this case both as a defendant and a reach and apply defendant. Title to the property is in Gagua’s name. According to the Amended Verified Complaint, the Uxbridge House was purchased with funds from Hannon, giving rise to a claim against Gagua under the Uniform Fraudulent Transfer Act, G.L.c.109A §2. After careful review of the documentation and affidavits submitted by the parties — both in connection with this motion and earlier in this litigation — this Court concludes that plaintiff is entitled to an attachment in the amount of $ 258,226.22.2 The Motion is therefore ALLOWED.
This is the third time that plaintiff has requested such an attachment. The first time was shortly after this lawsuit began. This Court (Salinger, J.) denied the request because the allegations that Gagua had used funds fraudulently conveyed to her by Hannon were all made on information and belief. See Memorandum of Decision dated June 24, 2016. The second time was in a related lawsuit, King Root Capital, LLC v. Hannon et al., Civ. No. 2017-02307-BLS 2, which is a suit on a judgment against Hannon.3 This Court denied plaintiff’s request in that case,
1 Hannon and his wife Elizabeth Hannon filed for Chapter 11 bankruptcy in 2012, after the loans that are the subject of the instant litigation became due. In June 2014, the bankruptcy court denied his request for discharge in bankruptcy because Hannon had made material misstatements in his bankruptcy filings.
2 This was the amount requested in plaintiff’s motion filed on October 11, 2017. On the afternoon of October 16, one day before hearing on the motion, plaintiff filed a supplemental memorandum that asked for an attachment in the amount of $ 471,789.72. Because defendants did not have a fair chance to respond to that higher amount and because Hannon’s liability for that higher amount is less certain, this Court allowed the attachment in the amount originally requested.
3 Although King Root was the entity that obtained the judgment against Hannon, that judgment was ultimately assigned to the plaintiff in this case.
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in part because Gagua was the owner of the house and because the funds used to purchase the property appeared to have come not from Hannon but from two other corporate entities, RHR, LLC (RHR) and Agritech, Inc. (Agritech). See Memorandum of Decision dated August 25, 2017 (the August 2017 Decision). RHR is owned by Hannon’s son. Plaintiff alleged that RHR and Agritech were the alter egos of Hannon and offered supporting documentation which did indeed raise a serious question as to whether these entities had adhered to corporate formalities. Still, plaintiff’s request seemed to be based on the novel theory of “reverse veil piercing.” Moreover, there was evidence that Gagua was making arrangements to repay RHR the $ 423,124.77 it had contributed to the purchase price. This Court denied this second request for an attachment without prejudice.
This third attempt is not exclusively premised on a theory of reverse veil piercing and is supported by additional information. That information shows that Hannon himself did indeed make a substantial payment toward the purchase price and that funds used to renovate the Uxbridge House following the purchase were drawn from an entity wholly owned by Hannon. Moreover, the circumstances leading up to and surrounding the purchase of the Uxbridge House support the conclusion that plaintiff will indeed be able to prevail on its claim against Gagua. Of particular relevance to this Court’s ruling is the following evidence, all of which concern events that occurred when Hannon had incurred the debt to plaintiff and was effectively insolvent.
The Uxbridge House was originally owned by an individual by the name of Amanda Fresh, who has submitted an affidavit in this matter. In that affidavit, Fresh states that Hannon approached her in 2014 about renting the Uxbridge House for six months, after which time he would purchase it. Hannon executed both a Lease Agreement and an Offer to Purchase. See
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Exhibit A and B to Fresh Affidavit. He made an initial deposit of $ 5,000 toward the $ 458,950 purchase price. See Exhibit C to Fresh Affidavit. He also made rent payments.
Hannon moved into the house with Gagua, whom he falsely identified as his wife. See fn. 1. Hannon made three additional payments toward the purchase price of $ 10,000 each. These payments were made in cash in November and December 2014: Hannon met Fresh at a local Dunkin Donuts and delivered the cash in a bag. In July 2015, Hannon signed a Purchase and Sale Agreement with Fresh, who agreed to credit $ 41,500 Hannon had already paid her toward the purchase price. One day before the scheduled closing, Fresh received an email from an attorney who she understood represented Hannon. That email stated: “I have spoken to the Buyer, and his wife Sofia Gagua will be taking title to the property.” See Exhibit G to Fresh Affidavit.
The closing went through as scheduled and Gagua took title, recording a Declaration of Homestead on the Uxbridge House. In the Declaration, signed under the pains and penalties of perjury, she identifies herself (falsely) as Hannon’s wife. In an earlier deposition, Gagua testified that she made $ 600 per week and had virtually no assets. In her affidavit submitted in the instant case, Gagua admits that she could not qualify for a “traditional” loan and that she obtained the money to buy the house from RHR, which gave her what she described as a “bridge loan.” There is no documentation related to that loan and RHR obtained no security for it. As described in this Court’s August 2017 Decision, RHR has no payroll or other operating expenses, has transferred most of the funds it receives to Agritech, and has never filed an annual report with the Secretary of State. Agritech has also failed to file annual reports. Agritech is wholly owned by Hannon, who is its president and sole shareholder.
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Since the purchase of the Uxbridge House, substantial payments have been made to contractors performing renovations at the property. Bank records obtained in the King Root litigation show that $ 217,226.22 in payments were made to Thomas LaFlamme Construction, Inc. between July and December 2015. Deposition testimony shows that this was in connection with the construction of a deck and a pool cabana at the Uxbridge House and for work on the kitchen. Copies of the checks written to LaFlamme show that all payments were made by Agritech. Since the filing of the Motion, plaintiff has come up with additional evidence showing that Agritech paid a landscaping business, Perreault Nursery, an additional $ 227,274.56 in 2016 to do work in and around the Uxbridge House. Documents produced by Perrreault show that this was for fencing, a fire pit, stairs to a “backyard,” installation of a garden and patio, and drainage work at the Uxbridge address.
To obtain an attachment, a plaintiff must demonstrate: “that there is a reasonable likelihood that [it] will recover judgment, including interest and costs, in an amount equal to or greater than the amount of the attachment over and above any liability insurance shown by the defendant to be available to satisfy the judgment.” Mass. R. Civ. P. 4.1(c). This Court concludes that plaintiff has satisfied its burden. Plaintiff is reasonably likely to obtain a judgment against Hannon in an amount that exceeds $ 200,000. As to its claim against Gagua based on the Uxbridge House, there is a reasonable likelihood that plaintiff will be able to show that investments in that house came from Hannon’s funds and that the purpose was to place those funds out of reach of his creditors, among them the plaintiff. Plaintiff also has a reasonable likelihood of prevailing on its direct claim against Gagua, who appears to have aided and abetted Hannon in an attempt to defraud his creditors, including plaintiff.
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A “transfer” is defined by the Uniform Fraudulent Transfer Act “disposing of or parting with an asset or an interest in an asset, and includes payment of money…” G.L.c. 109A §2. The evidence before this Court supports a finding that Hannon transferred money to Gagua when he contributed $ 41,500 toward the purchase price and that the purpose of this transfer was to place it out of reach of creditors, including the plaintiff. As to the money coming from Agritech, this Court does not have to conclude that Agritech is Hannon’s alterego. Rather (as plaintiff argued), an attachment can be supported by viewing Agritech as an asset of Hannon. Hannon as its sole shareholder has the exclusive right to monies in Agritech’s bank account, which essentially represents Hannon’s equity interest in the company. Hannon used that bank account as his own personal piggy bank, drawing down funds to improve on the Uxbridge House. Title to the house was placed in the name of Gagua in an effort to keep this asset out of the hands of creditors.
This Court is also more inclined than it had been previously to conclude that there is no real distinction between Agritech and Hannon. Although it had previously dismissed Agritech from the case, it is becoming more and more apparent to this Court that Hannon is using the corporate structure as a way to place his assets out of reach. In essence, the company appears to serve as a repository for monies that, if they went to Hannon directly, would be subject to a trustee process attachment. Hannon then uses these monies to pay personal expenses and to enhance the value of an asset ( Uxbridge House) which he effectively controls, at the same time that he arranges to have title to this asset placed in the name of his girlfriend Gagua. Gagua appears only too willing to assist Hannon in this apparent fraud, exposing herself to direct liability in this case as a defendant. At this point, this Court has reason to question the
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credibility of both Hannon and Gagua. Their denials of any wrongdoing are thus becoming increasingly hard to swallow.
__________________________________
Janet L. Sanders
Justice of the Superior Court
Dated: October 20, 2017 read more

Posted by Stephen Sandberg - November 3, 2017 at 6:12 pm

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