O’Connor Constructors, Inc. v. HVAC Compensation Corporation, et al. (Lawyers Weekly No. 12-099-17)

1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION NO. 15-0205-BLS1 O’CONNOR CONSTRUCTORS, INC. vs. HVAC COMPENSATION CORPORATION and others1 MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT In this action, the plaintiff, O’Connor Constructors, Inc. (O’Connor), seeks to recover sums paid by the defendant HVAC Compensation Corporation (HVAC), a non-profit corporation established as a workers compensation self-insurance group or SIG, to purchase a loss portfolio transfer (LPT) insurance policy. O’Connor withdrew from HVAC at the end of 2009. It asserts that a substantial portion of the surplus that HVAC used to purchase the LPT policy should have been distributed to it as dividend. O’Connor also seeks to set aside an assessment that HVAC issued against O’Connor for additional funds to cover a liquidity deficit created by the purchase of the LPT policy. The additional defendants are the trustee/directors of HVAC (hereafter referred to as the Directors), each of whom are representatives of the companies that comprise the SIG, as well as the member companies themselves. While O’Connor’s complaint initially pled seven counts, four were previously dismissed. Three counts remain: breach of contract (Count I), breach of fiduciary duty (Count VI), and violation of G.L. c. 93A (Count VII). The 1 (i) Richardd Donohoe, William J. Lynch, Kevin R. Gill, James Morgan, Paul M. Level, Jr., and Shane B. Hamel, each sued individually and as Trustee/Director of HVAC, and (ii) Harrington Bros. Corporation, William V. Lynch Co., Inc., McCusker-Gill co., Inc., Worcester Air Conditioning, LLC, Le Bel, Inc., and Hamel & McAlister, Inc. 2 case is now before the court on the defendants’ motion for summary judgment. For the following reasons, the motion is DENIED as to Counts I and VI and ALLOWED as to Count VII. FACTS The following facts are either undisputed or viewed in the light most favorable to O’Connor, the non-moving party. In 1992, HVAC was organized to operate as a workers’ compensation SIG pursuant to G.L. c. 152, §§25E – 25U. Its members were companies principally engaged in the heating, ventilation, and air conditioning trades in Massachusetts. While a SIG is permitted to organize itself in various forms, HVAC was organized as a not-for-profit corporation under G.L. c. 180, § 4(n). Each HVAC member is required to enter into an Application and Indemnity Agreement (Indemnity Agreement) and is bound by HVAC’s by laws. Material to this case is a provision in G.L. c. 180, § 3 which provides that not-for-profit corporations, like HVAC, may not through their articles of organization or bylaws eliminate the personal liability of its directors “ (i) for any breach of the . . . director’s duty of loyalty to the corporation or its members, (ii) for […]

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