Beninati, et al. v. Borghi, et al. (Lawyers Weekly No. 12-086-17)
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 ON VARIOUS MOTIONS This is an action primarily derivative in nature brought on behalf of fourteen limited liability companies that operate health clubs under the trade name “Work out World” in the New England area (collectively, WOW New England or WOW). Following a jury waived trial, this Court on July 9, 2014 issued findings and rulings that ultimately resulted in a $ 4.1 million award of damages to the plaintiffs on those counts against the defendants alleging breach of fiduciary duty (the July 2014 Decision). As to the count against the defendant Harold Dixon alleging a violation of G.L.c. 93A §11, this Court ruled that he could not be held liable under that statute as a matter of law. The plaintiffs appealed from that ruling. In a rescript opinion dated October 24, 2016, the Appeals Court affirmed the judgment in all respects except for this Court’s ruling on the 93A claim against Dixon. Beninati v. Borghi, 90 Mass.App.Ct. 556 (2016). It remanded the case for further proceedings. The case is now before the Court on two sets of motions. The first set of motions addresses the question of Dixon’s liability under G.L.c. 93A. As to that issue, plaintiffs have 2 moved for further findings and more specifically ask this Court to conclude that the 93A violation was willful and knowing, warranting multiple damages. Dixon has filed an opposition and has further asked to supplement the trial record. The second set of motions concerns the extent to which the defendants Steven and Linda Borghi should be required to contribute to the damages award on the non-93A claims. These motions also raise the question of whether and to what extent this Court can or should take steps to prevent the Borghis, as members of WOW England, from sharing in the award of 93A damages. This Court will discuss each set of motions in turn. A. Liability of Dixon under G.L.c. 93A The fact findings underlying this Court’s July 2014 Decision were extensive. They detailed a course of conduct whereby Dixon, a businessman with no prior experience in the fitness industry, allied himself with the defendants Steven and Linda Borghi, both members of WOW New England, to open a chain of competing health clubs in the same geographic area operated through Dixon-controlled entities (collectively, Blast). Dixon accomplished this, with the Borghis’ assistance, by misappropriating WOW’s confidential information, using WOW’s resources, and engaging in other activity that promoted the interest of Blast at the expense of WOW New England. […]