Bailey v. Astra Tech, Inc., et al. v. Stockard, et al. (Lawyers Weekly No. 11-142-13)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.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 12‑P‑478 Appeals Court DOUGLAS G. BAILEY[1] vs. ASTRA TECH, INC., & others[2]; ROBERT G. STOCKARD,[3] & others,[4] third-party defendants. Suffolk. October 10, 2012. ‑ December 4, 2013. Present: Kafker, Cohen, & Trainor, JJ. Agency, Agent’s contract, Scope of authority or employment. Contract, Settlement agreement, Construction of contract, Contract clause, Merger. Escrow. Civil action commenced in the Superior Court Department on January 13, 2009. A motion for approval of a settlement agreement was heard by Judith Fabricant, J., and entry of a separate and final judgment was ordered by her. Steven M. Cowley for the plaintiff. Harvey E. Bines for CID Equity Capital VIII, LP, & others. Richard D. Batchelder, Jr., for Astra Tech, Inc. TRAINOR, J. Douglas G. Bailey, as shareholders’ agent (shareholders’ agent) of the shareholders of Atlantis Components, Inc. (Atlantis), appeals from a judgment of the Superior Court that (1) approved the settlement between Astra Tech, Inc. (Astra Tech), and a group of former shareholders of Atlantis (settling shareholders), and (2) ordered distribution of the settling shareholders’ proportional share of an escrow fund. The only issue before us is whether the settling shareholders had the power to negotiate this settlement with Astra Tech. Claiming that they do not have this authority, the shareholders’ agent makes three arguments: first, that there is no procedural mechanism that allows the settling shareholders to settle with Astra Tech; second, that under the merger agreement, he has the exclusive right to negotiate with Astra Tech; and third, that his agency is irrevocable because he has a power coupled with an interest. We reject these arguments and affirm the judgment of the Superior Court. Background. In October of 2007, Astra Tech acquired Atlantis by a stock purchase merger for $ 71 million.[5] As is common, the parties placed a portion ($ 6.3 million) of the purchase price into an escrow fund, which would be disbursed to the former Atlantis shareholders on a pro rata basis on December 31, 2008, the release date. The escrow fund’s purpose was to indemnify Astra Tech if it paid any claims asserted against Atlantis after the closing date but before the release date. The merger agreement designated a shareholders’ agent to serve as the representative of the former Atlantis shareholders.[6] It was the shareholders’ agent’s […]