Posts tagged "Associates"

Barton & Associates, Inc. v. Matarese, et al. (Lawyers Weekly No. 09-021-18)

On December 1, 2005, this court (van Gestel, J.) entered a Final Judgment concluding this case based upon a settlement agreement reached by the parties. The Final Judgment contained a number of elements, among them cash payments from the defendants, Joseph Matarese and Medicus Staffing LLC (Medicus),1 to the plaintiff, Barton & Associates, Inc. (Barton), and a permanent injunction precluding Medicus from hiring anyone previously employed by Barton. Medicus has filed the pending motion under M.R.Civ.P. 60(b)(5) requesting relief from the permanent injunction. For the reasons that follow, the motion is DENIED.
1 As noted in the caption Medicus has changed its name since the Final Judgment entered. The defendants will be referred to collectively as Medicus, unless it is necessary to distinguish between them.
Barton and Medicus are both in the “locum tenens staffing” business. “Locum tenens” is a Latin term apparently originating in the Seventeenth Century generally meaning “a temporary substitute, especially for a doctor or member of the clergy.” It has more recently been used to refer to the business of temporarily placing physicians or other medical professionals with employers. See Wikipedia, locum tenens, last edited January 31, 2018. Barton was first established in 2001, and Matarese was among its first employees, serving as its Director of Operations. Barton maintains that Matarese was the author of its first business plan. In January, 2004, Matarese left Barton and formed Medicus, which began to compete with Barton and solicit its customers. In February, 2004, Barton sued Matarese asserting a number of claims all predicated on his having founded a competing business; in September, 2004, it added Medicus as a defendant.
On September 22, 2005, just prior to trial, the parties reported to the court that the case had settled. That day the court ordered the parties to submit to the court a sealed letter that accurately described the parties’ settlement agreement. The order went on to explain that if the parties had not submitted an agreement for judgment within 45 days, it would open the letter and, if it believed it appropriate, enter a final judgment based upon the terms described in the letter. The parties submitted the letter, but were unable themselves to agree upon and execute the documents concluding the case. The court then opened the letter and entered a Final Judgment incorporating its terms. Medicus filed a notice of appeal from the entry of the judgment, but soon thereafter dismissed the appeal. The Final Judgment included the following provision which is the subject of the pending motion.
Further, with the exception of Stephanie Chinchillo and Julie Hansen, the Defendants, Joseph Matarese and Medicus Staffing, LLC are restrained and enjoined from hiring any employees who have been employed at Baron & Associates, Inc. in their medical/healthcare business provided that any such restraint shall not apply if Barton & Associates, Inc., on or before one year from the date hereof hires any current or former employee of Medicus Staffing, LLC.
Barton did not hire any Medicus employee, and the injunction therefore became permanent.
Medicus maintains that in 2004 it had only 9 employees, all of whom worked in Salem, New Hampshire, and Barton had only 8 employees. Today, Medicus has approximately 250 employees, most of whom work in Windham, New Hampshire. It recruits and places physicians and other health care providers who work in a broad variety of health care fields. Medicus points out that Barton’s corporate offices are in Massachusetts, but, according to Barton’s website, it also has offices in Connecticut, Florida, Texas, New Hampshire (Keene), Arizona, and Nevada. Industry reports suggest that Barton has between 500 and 1000 employees.
Medicus also avers that the locum tenens staffing business is far different than it was in 2005, in part, because potential employees post so much information about themselves and their experience on-line making recruitment much different. Nonetheless, a tight labor market has made it difficult for Medicus to hire additional employees.
Medicus explains that a former employee of Barton, who left Barton in June, 2016 to work in other areas (a beauty salon and a Wholefoods), responded to a Medicus job posting that it placed on LinkedIn for a locum tenens recruiter. It agreed to hire this candidate effective one year after the date she left her position with Barton. However, when Barton learned of this, it filed a complaint for contempt based upon the provision in the Final Judgment quoted above. This led Medicus to let this employee go and to file this motion for relief from the permanent injunction entered in 2005.
Mass.R.Civ.P. 60(b), as relevant to the issue presented by this motion, reads as follows:
On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: . . . (5) . . . it is no longer equitable that the judgment should have prospective application. . . .
The Reporter’s Notes to this section provide: “The third clause of Rule 60(b)(5) only applies to judgments having a prospective effect, as, for example, an injunction, . . . . Specifically, the clause allows relief from a judgment which was valid and equitable when rendered but whose prospective application has, because of change conditions become inequitable. This power to grant relief from the prospective features of a judgment has always been clearly recognized in equity.”
There is substantially more Federal case law reflecting on the standards that should be applied in determining when a permanent injunction should be modified under Fed.R.Civ.P. 60(b)(5), in particular when the injunction has been entered by consent of the parties, than exists in Massachusetts jurisprudence. For many years, the Federal Courts applied the standard articulated by the United States Supreme Court in United States v. Swift & Co. 286 U.S. 106, 119 (1932): “The injunction, whether right or wrong, is not subject to impeachment in its application to the conditions that existed at its making . . . . Nothing less than a clear showing of grievous wrong evoked by new and unforeseen conditions should lead us to change what was decreed after years of litigation with the consent of all concerned.” However, more recently, in Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367 (1992), the Supreme Court adopted a more flexible standard holding that “the ‘grievous wrong’ language in Swift was not intended to take on a talismanic quality, warding off virtually all efforts to modify consent decrees.” Id. at 379. It explained that “[a] party seeking modification of a consent decree may meet its initial burden by
showing either a significant change in factual conditions or in law. Modification of a consent decree may be warranted when changed factual conditions make compliance with the decree substantially more onerous. . . . Modification is also appropriate when a decree proves to be unworkable because of unforeseen obstacles. Id. at 384.
In Rufo, the Supreme Court based its analysis, in part, on an “upsurge in institutional reform litigation since Brown v. Board of Education, 347 U.S. 483 (1954),” and its concern that “because such decrees often remain in place for extended period of time, the likelihood of significant changes occurring during the life of the decrees is increased.” Id. at 380. This led some courts to question whether the more flexible approach suggested by Rufo should be applied to consent decrees entered in commercial litigation between private parties, as well decrees entered in institutional reform litigation. In Alexis Lichine & Cie v. Sach A. Lichine Estate Seletins, Ltd., 45 F.3d 582,586 (1st Cir. 1994), the First Circuit applied the teaching of Swift and Rufo to such a commercial case. It reasoned:
In our view, Rule 60(b)(5) sets forth the umbrella concept of “equitable” that both Swift and Rufo apply to particular, widely disparate fact situations.
Indeed, the Rufo Court quoted the basic distinction drawn in Swift between decrees protecting “rights fully accrued upon facts so nearly permanent as to be substantially impervious to change” and decrees involving “the supervision of changing conduct or conditions and are thus provisional and tentative.” Id. 502 U.S. at 379, 112 S.Ct. at 758 (quoting from 286 U.S. at 114-15, 52 S.Ct. at 462-63). Swift illustrates the former and Rufo the latter. We view this not as a limited dualism but as polar opposites of a continuum in which we must locate the instant case.
We therefore agree with cases like In re Hendrix, 986 F.2d 195, 198 (7th Cir.1993), viewing Rufo’s flexible standard as “no less suitable to other types of equitable case[s],” but also share the concerns voiced in cases like W.L. Gore & Assocs. v. C.R. Bard, Inc., 977 F.2d 558, 560-62 (Fed.Cir.1992), about the importance of finality when a decree is based on a negotiated bargain in a commercial case between private parties. Thus, rather than saying either that there is an “institutional reform” exception to Swift or a “private commercial party” exception to Rufo, we apply Rule 60(b)(5) having in mind that we are dealing with a decree arising from a commercial dispute and based on a bargain voluntarily entered into by businessmen represented by lawyers.
Such a decree is shielded from facile modification by a rather formidable carapace. The public interest noted in Rufo is not a factor, see 502 U.S. at 379-83, 112 S.Ct. at 758-59, other than the interest of the public in general and the business community in particular in the stability of final agreements. Nor is it persuasive that “it is no longer convenient to live with the terms of a consent decree.” Id. at 383, 112 S.Ct. at 760. Therefore, in considering whether a decree arising out of commercial litigation between two private parties should be modified, a court should look to such factors as the circumstances leading to the decree (including the nature of a party’s initial wrongdoing), the quantum of hardship on the burdened party, the duration of the burden thus far and the prospect of its continuing, and the benefitted party’s need for a continuation of the decree.
In Mitchell v. Mitchell, 62 Mass. App. Ct. 769, 779-780 (2005), the Appeals Court cited Alexis Lichine & Cie as providing a useful approach to considering a request to modify a restraining order issued under G.L. c. 209A; and in Great Woods, Inc. v. Clemmey, 89 Mass. App. Ct. 788, 794-795 (2016) it applied these concepts in the context of a private dispute between neighbors. Relying on MacDonald v. Caruso, 467 Mass 382, 388-389 (2014) (another case involving a request to modify a chapter 209A restraining order), the Great Woods court went on to explain that the “significant change in circumstances must involve more than the mere passage of time” and if there is such a change, it is important to consider if it was “not foreseen when the last order issued.” With these concepts in mind, we turn to Medicus’ motion to modify the permanent injunction to which it consented in 2005.
Alexis Lichine & Cie suggests that the court look to the circumstances leading to the agreement that the Final Judgment issue, including the nature of Medicus’ wrongdoing. Frankly, the court is not able to assess the parties’ respective wrongdoing. Barton of course avers that Matarese was a faithless servant who breached his fiduciary obligations to his beneficent employer. The court is unable to make such a finding. The parties entered into their settlement agreement to avoid a trial which was about to begin. Clearly, however, the permanent injunction
on hiring former employees of Barton was part of a settlement agreement with a number of elements, which included substantial cash payments from Medicus to Barton. Both parties were represented by counsel, and it is impossible today to determine what other benefits, financial or otherwise, Medicus may have bargained for in return for that permanent injunction. Indeed, the permanent injunction may well have been equitable relief that exceeded what a court would have entered if the case had been tried, but it is also possible that monetary damages might have been awarded that were substantially greater than Barton agreed to accept under the terms of the settlement. This court can now determine only that the many provisions of the settlement were undoubtedly interrelated, and the court should be cautious in undoing a settlement, which is in effect simply a contract, entered into by sophisticated parties each represented by counsel.
The obvious changed circumstance is the size of these businesses today compared to what they were 13 years ago. Although Barton is much larger than Medicus, it appears that both companies have succeeded economically. While Medicus may be constrained in recruiting new employees because it cannot hire anyone who previously worked for Barton, this has not prevented it growing to the point that it has nearly 40 times the number of employees that it did in 2005. While there may not be many additional companies in this part of New England engaged in locum tenens staffing, the court notes that the marketplace for companies providing temporary employment for a wide variety of professionals is highly competitive. The fact that Medicus may not have access to a handful of potential employees that have worked in this specific type of temporary placement does not appear to have been an obstacle to its growth and success.
The court is not convinced that Barton actually has substantial business need for the continued enforcement of this very broad permanent injunction—at least in the scope that it
issued in 2005. Apparently, Barton has its employees execute non-compete agreements that prohibit them from working for a competitor, such as Medicus, for a year after leaving Barton. Further, Medicus has conceded that any modification of the injunction should expressly continue to prevent Medicus from employing any former Barton employee, where that employment would violate the terms of a non-compete agreement that the employee had signed. The court has substantial doubt that, with respect to many modestly paid recruiters, like the young woman who Medicus sought to employ last year, these individuals have trade secrets that might be revealed to Barton’s irreparable injury, if they went to work for Medicus after leaving Barton’s employ.
However, the question before the court is not whether it would enter the injunctive relief today in a contested litigation between the parties, but rather whether Medicus should be relieved of a term of the agreement that it negotiated in 2005. The court finds that on the continuum of cases described in Alexis Lichine & Cie, this case is more like Swift than Rufo. Neither the commercial success of the parties in the intervening years, nor changes in the market place, have been so dramatic to warrant a modification of the injunction that Medicus agreed would be permanent in 2005.
The court offers one further observation. Courts asked to grant injunctive relief (an equitable remedy) must, under appropriate circumstances, consider the “risk of harm to the public interest.” Brookline v. Goldstein, 388 Mass. 443, 447 (1983). The effect of non-competition agreements restricting the ability of employees, particularly moderately paid employees, to change jobs and the potential of such covenants to affect wages has been much in the news. See, e.g., “Corporate America is Suppressing Wages for Many Workers,” New York Times, Feb. 28, 2018. The Massachusetts legislature has been considering legislation restricting, to some extent, the use of non-competition clauses in employment contracts for some time. See,
e.g., “Noncompete contracts in Massachusetts? Lawmakers are near a deal,” Boston Globe, Jan. 15, 2018. The single, anecdotal reference in Medicus’ pleadings to one worker who had previously worked for Barton and was unable to accept employment at Medicus is insufficient to lead the court to modify the parties’ negotiated settlement agreement. However, future changes in the law reflecting new public policy regarding broad non-competes, like that incorporated in the Final Judgment, may be significant.
For the foregoing reasons, Medicus’ motion to modify the Final Judgment is DENIED.
Mitchell H. Kaplan
Justice of the Superior Court
Dated: February 28, 2018 read more


Posted by Massachusetts Legal Resources - March 8, 2018 at 11:32 pm

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Anesthesia Associates of Massachusetts, PC v. Plexus Anesthesia Services of Massachusetts, PC (Lawyers Weekly No. 09-016-18)

Anaesthesia Associates of Massachusetts, PC (“AAM”) claims that defendant Plexus Anesthesia Services of Massachusetts, PC (“PASM”) owes it at least $ 2.0 million for past anesthesia services. AAM asks the Court to enter a preliminary injunction that would PASM from transferring or encumbering any assets, or from making any payments of any funds except for paying wages to its employees, paying its attorneys, or paying rent, utilities, and taxes. AAM asserts that it will suffer irreparable harm without the requested injunction because PASM has been making and would continue to make preferential payments to entities other than AAM, thereby preventing from receiving money it is still owed for past services rendered.
“A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). To the contrary, “the significant remedy of a preliminary injunction should not be granted unless the plaintiffs had made a clear showing of entitlement thereto.” Student No. 9 v. Board of Educ., 440 Mass. 752, 762 (2004). “Trial judges have broad discretion to grant or deny injunctive relief.” Lightlab Imaging, Inc. v. Axsun Technologies, Inc., 469 Mass. 181, 194 (2014).
The Court will DENY this motion for a preliminary injunction for two reasons: AAM has not met its burden of proving irreparable harm, and the broad relief it seeks is not permitted without a judgment under Massachusetts law.1
1 At the close of the oral argument, the Court stated that it was also persuaded that granting the preliminary injunction sought by AAM would be against the public interest because it would materially interfere with PASM’s ability to provide anesthesiology services to its hospital clients. However, the Massachusetts Appeals Court has held that it is reversible error for a trial court to consider harm to the public interest as a factor in granting or denying a preliminary injunction in a case like this
– 2 –
1. Failure to Prove Irreparable Harm. As the moving party, AAM has the “burden of showing it would suffer an irreparable harm absent an injunction.” GTE Products Corp. v. Stewart, 414 Mass. 721, 726 (1993).
AAM asserts that it will suffer irreparable harm without the proposed preliminary injunction because PASM has been making preferential payments to another entity. The sole evidence supporting that assertion is a statement made “upon information and belief” by AAM’s chief operating officer. But assertions in an affidavit or verified complaint made on “information and belief” that are not supported by any other evidence do “not supply an adequate factual basis for the granting of a preliminary injunction.” Eaton v. Federal Nat’l Mortgage Ass’n, 462 Mass. 569, 590 (2012); accord Alexander & Alexander, Inc. v. Danahy, 21 Mass. App. Ct. 488, 494 (1986).
Since AAM has made no factual showing of likely irreparable harm other than assertions made solely on “information and belief,” it has failed to meet its burden of proving that it will suffer irreparable harm without the proposed injunction. It is therefore not entitled to obtain preliminary injunctive relief. See, e.g., American Grain Products Processing Institute v. Department of Pub. Health, 392 Mass. 309, 326-329 (1984) (vacating preliminary injunction because plaintiff did not prove it would suffer irreparable harm without relief); Nolan v. Police Comm’r of Boston, 383 Mass. 625, 630 (1981) (same).
2. Failure to Justify a Creditor’s Bill Attachment. AAM would not be entitled to the requested preliminary injunction even if it had met its burden of proving irreparable harm. AAM is seeking incredibly broad relief. Rather than seek a real estate attachment or some other kind of pre-judgment security that is authorized by rule or statute, AAM asks the Court to tie up freeze all of PASM’s assets and to bar it from spending any many except to pay its employees, lawyers, or its rent, utility, and tax bills. AAM has not met its burden of proving that such preliminary injunctive relief can or should be granted.
that involves a dispute between a private debtor and a private creditor. See Bank of New England, N.A. v. Mortgage Corp. of New England, 30 Mass. App. Ct. 238, 246-248, rev. denied, 409 Mass. 1105 (1991). The Court has therefore not considered the public interest in deciding AAM’s motion.
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AAM’s request to tie up PASM funds and other assets is essentially a “nonstatutory action[] to reach and apply” that used to be known as a “creditor’s bill.” See Cavadi v. DeYeso, 458 Mass. 615, 625 (2011). “Traditionally, a creditor’s bill could be brought (i) by a judgment creditor, (ii) who had attempted to obtain satisfaction at law, and (iii) who sued in equity for the purpose of reaching property that could not be taken on execution at law.” Id. The “true rule in equity is that under usual circumstances a creditor’s bill may not be brought except by a judgment creditor after a return of ‘nulla bona’ on execution.” First Nat. Bank of Boston v. Nichols, 294 Mass. 173, 182 (1936), quoting Harkin v. Brundage, 276 U.S. 36, 52 (1928). In cases involving fraudulent conveyances that leave a judgment debtor insolvent, the judgment creditor need not prove a fruitless attempt at execution, but still must show that it has obtained a final and enforceable judgment before obtaining equitable relief in the nature of a creditor’s bill. See Foster v. Evans, 384 Mass. 687, 693-694(1981).
Since Plaintiffs are not yet judgment creditors of PASM, the Court may not exercise its general equity jurisdiction to temporarily grant injunctive relief in the nature of creditors’ bill attachment.2 See First Nat. Bank, 294 Mass. at 182-183; Consolidated Ordnance Co. v. Marsh, 227 Mass. 15, 23 (1917); In re Rare Coin Galleries of America, Inc., 862 F.2d 896, 904-905 (1st Cir. 1988) (applying Massachusetts law); Hunter v. Youthstream Media Networks, 241 F.Supp.2d 52, 55-57 (2002) (Collings, M.J.) (applying Massachusetts law). The Court notes that the United States Supreme Court has reached the same result under federal law, holding that federal courts have “no authority to issue a preliminary injunction preventing” parties “from disposing of their assets pending adjudication of [a] claim for money damages,” where the plaintiff does not claim any lien upon or other equitable interest in the assets. Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 310, 333 (1999).
2 PASM did not argue that AAM is seeking equitable relief that the Court lacks the power to grant. Nonetheless, since the scope of a court’s general equitable powers is matter of public interest, the Court concludes that it is appropriate to raise and resolve the issue sua sponte. Cf. Quincy Trust Co. v. Taylor, 317 Mass. 195, 198 (1944) (“Where a court has once taken jurisdiction and has become responsible to the public for the exercise of its judicial power so as to do justice, it is sometimes the right and even the duty of the court to act in some particular sua sponte.”).
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The one published appellate Massachusetts decision cited by AAM for the proposition that trial courts may freeze a defendant’s assets is not to the contrary. The Boston Athletic Ass’n appeal did not involve a creditor’s bill attachment, but instead involved an injunction to prevent the dispersal of particular, contested funds generated by a contract the validity of which was in dispute. See Boston Athletic Ass’n v. International Marathons, Inc., 392 Mass. 356, 362 (1984). The Court recognizes that it would have the power to enjoin the dissipation of particular funds in which a plaintiff has a demonstrated equitable interest, as in the BAA case. See also, e.g., Gucci America, Inc. v. Weixing Li, 768 F.3d 122, 130-131 (2d Cir. 2014) (distinguishing Grupo Mexicano on ground that plaintiff asserted equitable interest in defendant’s profits under federal trademark act). But AAM only asserts a legal claim for damages, not an equitable claim in particular funds.
Plaintiff’s motion for a preliminary injunction is DENIED.
February 20, 2018
Kenneth W. Salinger
Justice of the Superior Court read more


Posted by Massachusetts Legal Resources - February 28, 2018 at 10:20 pm

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Braintree Property Associates, LP v. Marzouki, et al. (Lawyers Weekly No. 09-038-17)

NO. 15-00144
This action arises out of a lease agreement between the property owner, plaintiff, Braintree Property Associates, LP (“Braintree”), the lease holder, defendant Dr. Wu, LLC, d/b/a Emack & Bolios (“Wu”), for which Robert Rook is the sole owner and manager. Defendants Rook and Franco Marzouki guaranteed Wu’s obligations to Braintree. There is no dispute that Wu breached its lease by vacating the property it leased from Braintree before its lease was up. Plaintiff moves for summary judgment on its claims against Wu, Rook and Marzouki. All defendants oppose. Wu and Rook cross-move for summary judgment against Braintree, improbably claiming that Braintree is entitled to no lost rent at all under the terms of Braintree’s own Lease, which Braintree opposes. Marzouki moves for summary judgment on his cross-claim for indemnification from Rook, which Rook opposes.
The issue at the core of this case is a straight-forward dispute about the measure of damages arising from Wu’s undisputed breach of its lease with Braintree. Based on the lease
and the undisputed facts, in consideration of the parties’ memoranda of law and oral arguments, and for the reasons that follow, plaintiff’s motion for summary judgment is ALLOWED. Wu’s cross-motion for summary judgment is DENIED.
For other reasons, Marzuki’s motion for summary judgment on his cross-claim against Rook is DENIED.
In reviewing a motion for summary judgment, the Court views the evidence in the light most favorable to the non-moving party and draws all reasonable inferences in his favor. Jupin v. Kask, 447 Mass. 141, 143 (2006), citing Coveney v. President & Trustees of the College of the Holy Cross, 388 Mass. 16, 17 (1983).
Braintree operates the South Shore Plaza, a shopping mall in Braintree. Rook is the sole owner and manager of Wu, which does business as Emack & Bolios, an ice cream seller.
On or about July 25, 2011, Wu, as tenant, entered into a lease (“Lease”) with Braintree for commercial space at the South Shore Plaza. The lease had a five-year term and required Wu to pay rent and fees. The lease term was to commence May 1, 2011 and end May 1, 2016.
On or about July 25, 2011, defendants Marzouki and Rook each executed a joint and several guaranty of Wu’s lease obligations.
Beginning in June, 2014, Wu stopped paying rent, and did not pay any rent thereafter. Neither Rook nor Marzouki made good on the rent Wu failed to pay to Braintree. On October 22, 2014, Wu ceased business, and on October 30, 2014, vacated the premises.
Braintree sent a demand letter to Wu dated November 26, 2014, which was copied to Marzouki and Rook and guarantors. That letter did not terminate the Lease but demanded all rental payments due under it, discounted to present value as permitted under the Lease and as
reflected in a spreadsheet enclosed with the letter. The alleged damages totaled $ 126,773.55. The letter stated that Braintree “will assume the debt is valid unless the undersigned receives notice from Tenant within thirty (30) days after its receipt of this letter that Tenant disputes the validity of the debt, or any portion thereof,” in which event “the undersigned will obtain verification of the debt and mail a copy of such verification to the Tenant, upon request by the Tenant” but that “[i]f the total sum is not paid within thirty (30) days from the date of this letter, the undersigned will attempt to obtain a judgment” against Wu. In response, Wu did not pay the rent demanded. Instead, Wu wrote back by letter dated December 5, 2014 and claimed that the debt was disputed and demanded verification of it and noted that Braintree’s letter did not terminate the Lease. Braintree did not respond, but filed suit.
The Lease stated that Wu would be in default if it abandoned or vacated the Premises, as it did. Lease, §18.1(f). Among Braintree’s remedies were to collect the full rent due, terminate the Lease by giving such notice to Wu or re-enter and take possession of the Premises. If Braintree re-entered or took possession of the premises, Braintree could terminate the lease and demand that Wu pay all of the rent due under the Lease immediately or it could allow the Lease to continue and deduct from the rent owed any rent Braintree was able to collect on re-letting on an ongoing basis:
If Landlord re-enters the Premises … or if it takes possession pursuant to legal proceedings or otherwise, it may either terminate this Lease, but Tenant shall remain liable for all obligations arising during the balance of the original stated term as hereafter provided as if this Lease had remained in full force and effect, or it may, from time to time, without terminating this Lease, make such alternations and repairs as it deems advisable to relet the Premises, and relet the Premises … for such term … and at such rentals and upon other terms and conditions as Landlord in its sole discretion deems advisable; upon each such reletting all rental received by Landlord therefrom shall be applied, first, to any indebtedness other than rent due hereunder from Tenant to Landlord; second, to pay any costs and expenses of reletting, including broker’s and attorney’s fees and costs of
alterations and repairs; third, to rent due hereunder, and the residue, if any, shall be held by Landlord and applied in payment of future rent as it becomes due hereunder.
If rental received from such reletting during any month are less than that to be paid during that month by Tenant hereunder, Tenant shall immediately pay any such deficiency to Landlord.
See §18.1.
Braintree eventually re-let the Premises on or about November, 2015, and the replacement tenant began paying rent in or about December 2015. Wu made no payments of any difference between the rent Wu owed and rent Braintree collected. Neither did Rook or Marzouki.
Under the Lease, a re-letting of the Premises was not a termination of the Lease in the absence of written notice. Id. (“No re-entry of taking possession of the Premises by landlord shall be construed as election to terminate this Lease unless a written notice of such termination is given by Landlord.”). Braintree gave no written notice of termination. Even where the Lease was not terminated but Braintree “takes action” because of Wu’s breach, Braintree could, as a remedy in addition to others it had, demand prospective damages according to a formula included in the Lease:
Notwithstanding any such reletting without termination, Landlord may at any time terminate this Lease for any prior breach or default. If Landlord terminates this Lease for any breach, or otherwise takes action on account of Tenant’s breach or default hereunder, in addition to any other remedies it may have, it may recover from Tenant all damages incurred by reason of such breach or default, including … an amount equal to the difference between the Minimum Rent1 and all items of additional rents reserved hereunder for the period which would otherwise would have constituted the balance of the Lease Term and the present rental value of the Premises for such period, both discounted in accordance with accepted financial practices to the then present worth … all of which shall immediately be due and payable from tenant to Landlord. In determining the rental value
1 Minimum Rent is defined in Sections 1.1(f) and 4.1 as the rent due under the lease for each year for the five-year period of the leasehold, with adjustments not relevant here.
of the Premises, the rental realized by any reletting, if such reletting is accomplished by Landlord within a reasonable time after the termination of the Lease, shall be deemed prima facie to be the rental value, but if Landlord shall not undertake to relet or having undertaken to relet, has not accomplished reletting, then it will be conclusively presumed that the Minimum Rent and all items of additional rent reserved under this Lease represent the rental value of the Premises for the purposes herein (in which event the Landlord may recover from the Tenant, the full total of all Minimum Rent and all items of additional rent due hereunder, discounted to present value as hereinbefore provided). Landlord shall, however, account to Tenant for the Minimum Rent and additional rent received from persons using or occupying the Premises during the period representing that which would have constituted the balance of the Lease Term, but only at the end of said period, and only if Tenant shall have paid to Landlord its damages as provided herein, and only to the extent of sums received from Tenant as Landlord’s damages, Tenant waiving any claim to any surplus.
Section 18.2.
Under Mass. R. Civ. P. 56(c), either the plaintiffs or the defendants will be entitled to summary judgment if they can show that no dispute exists as to any material fact and they are entitled to judgment as a matter of law. Cassesso v. Commissioner of Corr., 390 Mass. 419, 422 (1983). Either party may satisfy its burden of demonstrating the absence of triable issues by submitting affirmative evidence demonstrating entitlement to relief (or the opposing party’s lack of entitlement), or by demonstrating that the opposing party has no reasonable expectation of proving an essential element of their case. Flesner v. Tech. Comm. Corp., 410 Mass. 805, 809 (1991). If one party establishes the absence of a triable issue, the other party must demonstrate, through admissible evidence, an issue of material fact to defeat summary judgment. Godbout v. Cousens, 396 Mass. 254, 261 (1985).
Braintree is correct that the undisputed facts show that each of the defendants breached their agreements – Wu by vacating the premises and not making good on the rent, and Marzouki
and Rook for not stepping in and making Wu’s payments to Braintree on Wu’s behalf pursuant to their guaranty.
As to Braintree’s damages, Wu’s claim that there is a material dispute as to the extent of Braintree’s mitigation efforts is meritless. While a landlord is generally required to mitigate damages by taking reasonable steps to find another tenant, Krasne v. Tedeschi & Grasso, 436 Mass. 103, 109 (2002), commercial parties can agree otherwise, and here, the lease did not obligate Braintree to mitigate at all. The Lease says this in two places. In §18.1, the Lease states that “[i]n determining the rental value of the Premises, the rental realized by any reletting, if such reletting is accomplished by Landlord within a reasonable time after the termination of the Lease, shall be deemed prima facie to be the rental value, but if Landlord shall not undertake to relet or having undertaken to relet, has not accomplished reletting, then it will be conclusively presumed that the Minimum Rent and all items of additional rent reserved under this Lease represent the rental value of the Premises for the purposes herein (in which event the Landlord may recover from the Tenant, the full total of all Minimum Rent and all items of additional rent due hereunder, discounted to present value as hereinbefore provided”). Id. (emphasis added). It says it again in §18.2 – “Tenant waives and releases any claim arising out of or related to the payment of percentage of rent by any successor tenant in the Premises, to whom Landlord may relet the Premises, but nothing contained herein shall obligate Landlord to relet if Tenant shall default hereunder.” Id. (emphasis added). Since Wu expressly agreed that Braintree had no obligation to mitigate it damages arising from Wu’s breach, Wu cannot create a material issue about Braintree’s level of mitigation.
In the same vein, the argument advanced by Wu and Rook that under the Lease, the calculation set forth in Braintree’s own Lease means that Braintree is entitled to zero damages is
nonsensical. While the Lease provides alternative methods of calculating damages, it consistently and clearly entitles Braintree to the full value of the rental payment due from Wu. The parties dispute how one of those methods was to work – the provision in §18.2 which is to be used to calculate the present value of future rent payments in the event Wu did not pay them as required – but the Court concludes that it need not consider this issue at all, as it is irrelevant to this dispute. The mechanism outlined in §18.2 was designed to reduce Braintree’s future expected damages to a present value, which Wu was required to pay immediately, prior to the expiration of the Lease in May, 2016. The undisputed facts show that Wu paid nothing after it vacated the premises, and the Lease terminated in May, 2016, under its terms. At this point, then, there is no need to calculate the present value of expected damages; Braintree’s damages are all historical, they can and should be calculated mathematically.
Since Braintree did not terminate the Lease, the Lease sets as the minimum rent Braintree is to recover each month as the amount Wu agreed to pay. Braintree’s damages can be calculated as a simple subtraction of the minimum rent the Lease required Wu to pay from any amount Braintree actually received, with any surplus going to Braintree, as per the terms of the Lease. In addition, the Lease permits Braintree to recover attorney’s fees and costs under §18.2. Braintree is also entitled to statutory interest.
Wu’s motion for summary judgment – that Braintree violated Chapter 93A by failing to validate its debt as suggested in the November 26, 2014 letter – is meritless. Wu waived any notice requirements in the Lease. See Lease, §18.1 (describing the landlord’s remedies in the event of default, “without grace period, demand or notice (the same being waived by Tenant”)); §18.2 (“Except as otherwise specifically required by this Lease, Tenant waives any and all
statutory and legal notice requirements”). It thus cannot bring a Chapter 93A claim for Braintree’s failing to follow-up on a notice to which Wu was not entitled.
Marzouki’s claim for summary judgment against Rook for indemnity is denied, and emphatically so. No such claim is valid under the terms of Marzouki’s Guaranty. “The liability of the defendants as guarantors is to be ascertained from the terms of the written contract construed according to the usual rules of interpretation read in connection with the subject matter, the relations of the parties to the transaction, and the well understood usages of business.” Schneider v. Armour & Co., 323 Mass. 28, 30 (1948) (citation omitted). In the guaranty, Marzouki and Rook “jointly and severally, do hereby absolutely and unconditionally guarantee to Landlord, its successors and assigns, the full and prompt payment when due, of all rents, charges and additional sums coming due under said Lease” as well as all attorney’s fees and expenses incurred by Braintree. It added that “[t]his Guaranty shall be an absolute and unconditional guaranty and shall remain in full force and effect as to Guarantors during the demised term of said Lease, any renewal or extension thereof, and thereafter so long as any liability remains due and payable even though the demised term or any renewal or extension thereof shall have expired.” In short, Marzouki and Rook promised they would both stand behind Wu if Wu defaulted. Marzouki cannot escape that responsibility by asserting that Rook undertook to indemnify him, which would violate the guaranty he signed.
Accordingly, Wu, Marzouki and Rook are jointly and severally liable for the total damages incurred by Braintree. See 275 Washington St. Corp. v. Hudson River Int’l, LLC, 465 Mass. 16, 30 (2013) (“[w]hen one guarantees the contract of another, the guarantor is bound by the terms of the contract guaranteed. … [and] [h]is obligations are co-extensive of the principal obligor”) (citation omitted).
For the foregoing reasons, plaintiff’s motion for summary judgment is ALLOWED. Wu’s cross-motion for summary judgment is DENIED. Marzuki’s motion for summary judgment on his cross-claim against Rook is DENIED.
Plaintiff shall submit a calculation of damages, along with evidence of attorney’s fees and statutory interest, within ten days of this Order.
Michael D. Ricciuti
Justice of the Superior Court
Date: September 26, 2017 read more


Posted by Massachusetts Legal Resources - November 14, 2017 at 1:04 am

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Spinazola v. Mass. Environmental Associates, Inc., et al. (Lawyers Weekly No. 12-078-17)

NO. 0684CV00949BLS1
ROSEMARY SPINAZOLA, as Executrix of the Estate of Clarence Spinazola and as Co-Trustee of the Clarence Spinazola 1994 Revocable Trust
This case was filed on March 6, 2006. On March 8, 2007, a Final Judgment by Default Upon Assessment of Damages by the Court entered in favor of the plaintiff, Rosemary Spinazola, as Executrix of the Estate of Clarence Spinazola and as Co-Trustee of the Clarence Spinazola 1994 Revocable Trust (the Judgment)1, in the amount of $ 982,316, with interest from the date of filing. On August 20, 2007, the defendants filed a “Motion to Vacate Judgment by Default for Failure to Produce Discovery and for Failure to Comply with Court Orders.” On September 18, 2007, that motion was denied. Then, nearly ten years later, the motion now before the court was filed. It is styled: “Motion to Substitute Assignee, King Root Capital, LLC, as Plaintiff and Request for Execution” (the Motion). In that motion, King Root Capital, LLC (King Root) alleges that: (1) Spinazola assigned her interest in the Judgment to ABCD Holdings, LLC (ABCD Holdings or, simply, ABCD); (2) ABCD, thereafter, assigned its interest to King Root; (3) after accounting for payments by the defendants and the further accrual of post-
1 It is not clear to the court whether the judgment is in favor of Rosemary Spinazola, individually, or the Estate or a Trust. The court will simply use the term “plaintiff.”
judgment interest, as of October 18, 2016 the Judgment balance is $ 2,055,540.59, with interest accruing from that date; and (4) the court should “substitute it as the plaintiff in this case and issue an execution in its name [in that amount].”
The defendants appeared by counsel and opposed the motion. The principal grounds for their opposition was that the sole member of ABCD is attorney George A. McLaughlin, III, whose brother is the sole member of King Root. McLaughlin represented defendant Hannon for a number of years, and, in particular, in connection with the negotiation and execution of a Settlement Agreement between the plaintiff and Hannon pursuant to which the Judgment would be satisfied in full by payment to plaintiff of $ 400,000 according to a payment schedule (the Agreement).2 The defendants also alleged that McLaughlin diverted funds available to pay the balance of the $ 400,000 due under the Settlement Agreement to other entities.3 Based on these allegations, the defendants assert that the assignments “are void against public policy, fatally infected by McLaughlin’s misuse of confidential client information and self-dealing.”4
At an initial hearing on the Motion, the court ruled that an evidentiary hearing was necessary to consider the defendants’ public policy arguments and scheduled an evidentiary hearing for May 1, 2017. A hearing was convened on that day. Three witnesses testified: the plaintiff’s lawyer, McLaughlin, and his brother; 23 exhibits were entered in evidence.
2 It appears undisputed that Hannon did not fulfill his obligations under the Agreement.
3 The defendants also generally assert questions concerning the validity of the terms of the assignment.
4 McLaughlin’s numerous disputes with Hannon over the last five years are recounted in at least three written decisions: Hannon v ABCD Holdings, LLC, First Circuit Court of Appeals, No. 15-2269 (Oct. 7, 2016) (the “Bankruptcy Case,” in which the First Circuit affirmed the dismissal of Hannon’s bankruptcy petition and denial of discharge based on his making false statements in financial reports filed in the bankruptcy court); ABCD Holdings, LLC v. ABC&D Recycling, Inc., Hampshire Sup. Ct. No. 12-0171 (Jan. 9, 2013) (“the Loan and Warrants Case,” in which the Superior Court (Carey, J.) found that loans to Hannon controlled entities from McLaughlin controlled entities were enforceable because Hannon was represented by competent, independent counsel when the loans were made and warrants which were issued in connection with the loans properly exercised); and ABCD Holdings, LLC v. Patrick J. Hannon, Suffolk Sup.Ct. No. 16-1840 (June 24, 2016) (the “Collection Case,” in which the Superior Court (Salinger, J.) found that ABCD was likely to succeed in obtaining a judgment on Hannon’s guarantees of loans to entities he controlled, but denying preliminary injunctive relief freezing Hannon’s assets because the relief requested could only be granted to a judgment creditor).
Based on the testimony of the witnesses, the exhibits, decisions entered in other cases, and reasonable inferences drawn therefrom, the court makes the following findings of fact, by a preponderance of the evidence.
McLaughlin has been a member of the bar of the Massachusetts Supreme Judicial Court since 1985. He is a principal in the firm, McLaughlin Brothers P.C. He represented Hannon and various businesses that Hannon controlled on a variety of matters from 2006 until 2012, but did not represent the defendants in this case (Hannon and Mass. Environmental Associates, Inc. (MEA)) prior to the time judgment entered against them. However, he did represent them in the negotiation of the Settlement Agreement with the plaintiff’s counsel, Peter Sutton, a partner in the Boston firm, Reimer & Braunstein. The Agreement was executed on November 16, 2007. As relevant to this case, it provided that if Hannon made periodic payments (in the aggregate $ 400,000) according to a schedule set out in the Agreement (the last of which was due on November 1, 2008), he and MEA would be released from any claims under the Judgment. If he breached the Agreement, the plaintiff would be entitled to enforce the Judgment, and the defendants would be credited with any payments made pursuant the Agreement.
McLaughlin also represented Hannon in connection with another substantial judgment that had been entered against him. He was similarly able to negotiate with that judgment creditor an arrangement in which the total amount of the judgment would be reduced if periodic payments were made on an agreed schedule. Apparently, for reasons not explained at the hearing, Hannon was due payments from an entity called: Casella Waste Systems (Casella). This judgment creditor required that these Casella payments be made to McLaughlin, who would then
be responsible for paying the creditor. McLaughlin described the arrangement, pursuant to which he received all payments due Hannon from Casella and then made distributions to creditors, Hannon and McLaughlin’s own law firm for legal fees, as an escrow agreement. There is, however, no evidence that a written escrow agreement was ever prepared. A schedule showing receipts from Casella and payments made to various payees, over the period January 21, 2010 to March 20, 2012, was offered in evidence. It reflects approximately $ 572,000 in receipts from Casella and 570,500 of payments made to various payees (of which $ 146,502 went to Hannon) over that period. Hannon did not challenge the accuracy of the schedule at the hearing. The court credits McLaughlin’s testimony that he only made payments out of the Casella account after clearing them with Hannon, at least to the point that McLaughlin received notice of Hannon’s bankruptcy petition.
Hannon defaulted on his payments under the Agreement. At some point, McLaughlin negotiated a reinstatement of the Agreement in return for a $ 25,000 payment, not to be counted toward the $ 400,000 settlement amount. In an email from Sutton to McLaughlin dated June 14, 2011, Sutton confirmed that Agreement was “reinstated,” but if Hannon failed to make monthly payments of $ 5,000 “the full amount of the judgment will become due.” According to the email, $ 140,500 then remained outstanding. The Casella account suggests that Hannon stopped making payments to Reimer & Braunstein, for the benefit of the plaintiff, in January, 2012. The court credits McLaughlin’s testimony that he never redirected payments from this account to other creditors that Hannon had instructed him to pay to Reimer & Braunstein.
In July, 2011, through an entity controlled by him (Bright Horizon Finance, LLC), McLaughlin loaned Hannon $ 219,759 to purchase an interest in a company called ABC&D Recycling. The details surrounding the loan and Hannon’s default on it are described in the Loan
and Warrants Case. See n. 4, supra.
In May, 2012, Hannon and his wife filed a bankruptcy petition under Chapter 11 of the Bankruptcy Code (later converted to a Chapter 7 petition). McLaughlin and ABCD Holdings filed proofs of claim in the bankruptcy proceeding, as did the plaintiff. Sutton, as attorney for the plaintiff, examined Hannon concerning the Judgment, Agreement and his assets in the course of those proceeding. McLaughlin caused ABCD Holdings and other companies he then controlled to file an adversary complaint challenging Hannon’s right to a discharge in the bankruptcy proceeding based upon allegedly false income statements filed with the Bankruptcy Court. The Bankruptcy Court found for ABCD Holdings and dismissed the petition, denying Hannon a discharge. This ruling was affirmed by the District Court and by the First Circuit Court of Appeals in the Bankruptcy Case.
On June 10, 2016, McLaughlin caused ABCD Holdings, Inc. and another entity he controlled to file the Collection Case in the Suffolk Superior Court against Hannon and a number of other individuals and entities (some of which were reach and apply defendants); it was assigned to BLS 2. ABCD Holdings moved for a preliminary injunction against Hannon enjoining him from encumbering or disposing of any of his assets or income, except to satisfy ordinary living or business expenses. In a written opinion dated June 24, 2016, the court (Salinger, J.) denied ABCD Holdings’ motion finding that: “Since Plaintiffs are not yet judgment creditors of Hannon, the Court may not exercise its general equity jurisdiction to temporarily grant injunctive relief in the nature of a creditors’ bill attachment.”
Sutton read an article describing the June 24th decision in the July 8, 2016 edition of Lawyers Weekly. He telephoned McLaughlin offering to sell him the Judgment entered in this case. On July 11, 2016, McLaughlin emailed Sutton: “Hi Peter-Please send me the Assignment
of the Spinazola matter for collection or whatever you were going to send, as I want to spend some time this summer trying to get some money out of Mr. Hannon.” Thereafter, Sutton and McLaughlin negotiated over the terms of the assignment of the Judgment. Sutton demanded $ 10,000 plus 50% of whatever McLaughlin recovered, after McLaughlin was reimbursed the $ 10,000 and costs of collection, and McLaughlin agreed. McLaughlin sent Sutton drafts of the documents to memorialize their agreement. Dissatisfied with his draft, Sutton had a member of his firm prepare the transactional documents. They consisted of an “Agreement Pursuant to a Non-Recourse Assignment of Judgment and Indemnification Dated as of the 14th Day of September, 2016” and a “Non-Recourse Assignment of Judgment and Indemnification Agreement” also dated as of September 14, 2016. Under these documents, the plaintiff assigned to ABCD Holdings her rights under the Judgment. On September 15, 2015, another entity controlled by McLaughlin (Rising Tides LLC) provided Reimer & Braunstein with a check for $ 10,000.
On December 8, 2016, ABCD Holdings sold the Assignment of Judgment to King Root under exactly the same terms as ABCH Holdings purchased it from the plaintiff. In fact, McLaughlin appears to have used the same two transactional documents drafted by Reimer & Braunstein that Sutton used to sell him the Assignment, just changing the names of the parties and the dates. King Root attempted to pay ABCH Holdings for the Judgment on December 8, 2016, but that check was returned for insufficient funds as King Root then had only $ 751.14 in its checking account. Thereafter, $ 10,000 was deposited in the King Root account, and another check issued to ABCD Holdings on December 15, 2016. Also on December 15, 2016, King Root’s attorney served Hannon with the motion now before the court.
Mass.R.Civ.P. 25(c) provides: “In case of any transfer of interest, the action may be continued by or against the original party, unless the court upon motion directs the person to whom the interest is transferred to be substituted in the action or joined with the original party.” The court has found no Massachusetts case, nor any reference in the Massachusetts Practice Series, addressing the right of an assignee of a judgment to bring a motion, long after the entry of final judgment, seeking to be substituted as the party plaintiff and then to have an execution issued in its name. There are, however, federal cases in which a court has done this under the federal version of Rule 25(c), although it appears that this generally occurs when a corporate judgment creditor becomes the successor to another corporate entity by merger or other acquisition. See Vision Bank v. Algernon Land Co., L.L.C., 2012 WL 827011 (S.D. Al., March 12, 2012) and cases collected there. Whether Massachusetts would follow the federal approach, especially when a judgment is sold ten years after its entry, is not clear. However, as neither party has addressed this issue, the court will assume that it has this authority.
Hannon’s first argument in opposition to the Motion is factual. Hannon notes that in February and March of 2012, $ 131,667.02 was paid from the Casella account to McLaughlin’s company, Bright Horizon, in partial repayment of its loan to Hannon’s companies. According to Hannon, this money should have been used to pay the Judgment. However, as noted above, the court credited McLaughlin’s testimony that he did not make any payments from the Casella account that Hannon had not cleared. Additionally, on January 26, 2012, $ 55,000 was paid from the Casella account to Hannon, who apparently chose not to pay any of that sum to the plaintiff.5
5 The court notes that Hannon did not testify at the hearing and did not offer any evidence to rebut McLaughlin’s assertion that he pre-cleared payments from the account or to explain why Hannon did not make monthly payments to Reimer & Braunstein when he received such a substantial payment himself.
Hannon next argues that the assignment is void because it violates public policy. In support of this proposition he cites New Hampshire Ins. Co., Inc. v. McCann, 429 Mass. 202 (1999) in which the Supreme Judicial Court stated: “We think the [legal malpractice] claim should be assignable unless some clear rule of law of professional responsibility, or some matter of public policy, necessitates that the assignment should not be enforced.” Id. at 210. In seeking to establish that a clear rule of professional responsibility is violated by the assignment in this case, Hannon directs the court to Otis v. Arbella Mut. Ins. Co., No. CA 99-2907-F, 2003 WL 21385792 (Mass. Super. Apr. 18, 2003), aff’d 443 Mass. 634. Otis, however, is another case involving the assignment of a legal malpractice claim (not a judgment), and the assignment there at issue bears no resemblance to the assignment in this case.
In Otis, the plaintiff/assignee of a legal malpractice claim was also the plaintiff in a personal injury case in which the defendant sought to avoid liability by asserting that Otis was comparatively negligent. When a judgment far in excess of the limits of the defendant’s policy entered after trial, Otis obtained an assignment of the defendant’s putative legal malpractice claim against his defense counsel, premised on the theory that defense counsel had done an inadequate job of proving that Otis’ own negligence caused the accident. Otis, using the same trial counsel that prevailed in the personal injury action, now as the assignee of the legal malpractice claim, intended to prove that he was the principal cause of his own injuries and the assignor’s defense lawyers were negligent. The Superior Court properly concluded that under these circumstances, Otis and his lawyer were both engaging in “disreputable public role reversal” that should not be permitted.
In this case, McLaughlin did not represent Hannon until after a judgment of default
entered against him. Moreover, and more importantly, McLaughlin (as de facto assignee)6 does not have to prove anything. He is not the assignee of a claim against Hannon, he is the assignee of a final judgment. In particular, McLaughlin does not have to prove facts contrary to those proved to obtain the judgment, and, therefore, there is no “public role reversal.”
Next Hannon argues that under the Massachusetts Rules of Professional Conduct, the assignment is void as a matter of public policy. Hannon first directs the court to Rule 19(c) which states, as relevant to this case:
A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:
(1) Use confidential information relating to the representation to the disadvantage of the former client or for the lawyer’s advantage or the advantage of a third person . . . .
“Confidential information” is not specifically defined in the Rules, but Comment 3A to the Editor’s Notes to Rule 16 explains, as relevant to this case:
“Confidential information” consists of information gained during or relating to the representation of a client, whatever its source, that is . . . (b) likely to be embarrassing or detrimental to the client if disclosed, or (c) information that the lawyer has agreed to keep confidential. “Confidential information” does not ordinarily include . . . (ii) information that is generally known in the local community or in the trade, field or profession to which the information relates. . . . Information that is “generally known in the local community or in the trade, field or profession to which the information relates” includes information that is widely known. Information about a client contained in a public record that has received widespread publicity would fall within this category. On the other hand, a client’s disclosure of conviction of a crime in a different state a long time ago or disclosure of a secret marriage would be protected even if a matter of public record because such information was not “generally known in the local community.”
In this case, the court finds that McLaughlin did not use confidential information gained through his representation of Hannon to obtain an assignment of the Judgment. One can imagine
6 The court recognizes that the actual assignee was ABCD Holdings, which then transferred the assignment to McLaughlin’s brother’s firm, King Root. For reasons that are discussed, infra, the court disregards these corporate entities in addressing the validity of the assignment.
a set of circumstances in which a lawyer who previously represented a client in negotiating an agreement with a judgement creditor, like the one at issue here, would violate Rule 9(c) by purchasing the judgment. For example, if, as a result of a prior representation, the lawyer knew that the full amount of the judgment was still outstanding because the former client/debtor had breached the payment agreement and then sought out the judgment creditor some time later for purpose of purchasing it, this might well constitute a misuse of confidential client information. That is not what happened in this case.
Here, Hannon first accepted the possibility that his lawyer could become his creditor in 2011, when he borrowed money from McLaughlin7. In 2012, he unavoidably and permanently altered his relationship with McLaughlin when he filed for bankruptcy, defaulted on the loans, and thereby caused McLaughlin to be adverse to him in the bankruptcy proceedings. Indeed, McLaughlin was forced to pay Hannon’s bankruptcy estate some of the loan repayments because they were held to be preferences. The Judgment, the Agreement, and the McLaughlin loans all became a matter of public record in this community when they became the subject of the bankruptcy proceedings. Sutton even examined Hannon with respect to the Judgment and the Agreement during those proceedings. Finally, McLaughlin did not use confidential information to seek out the holder of the Judgment. It was Sutton who believed that he might be able to recover something for his client when he read the decision in the Collection Case which specifically explained that McLaughlin could not obtain a freeze order against Hannon’s assets because he was not yet a judgment creditor.
Hannon also argues that McLaughlin would have learned confidential information concerning Hannon’s assets when he represented him in negotiating deals with Hannon’s
7 Again, the court recognizes that the loans went from McLaughlin controlled entities to Hannon controlled entities, but, for purposes of this professional responsibility analysis the court disregards the LLCs.
creditors. The court finds no evidence that McLaughlin presently has any confidential information concerning Hannon’s assets. In denying, McLaughlin preliminary relief in the Collection Case, Judge Salinger specifically pointed-out that McLaughlin’s allegations concerning Hannon’s assets were based on “information and belief.” Moreover, McLaughlin has already engaged in litigation adverse to Hannon concerning Hannon’s assets—not only in the Collection Case, but also in the adversary proceeding which McLaughlin filed against Hannon in the Bankruptcy Case.
Hannon also bases his public policy arguments on Rule of Professional Conduct 19(a) which states:
A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.
Hannon argues that the enforcement of the Judgment is a matter substantially related to the negotiation of the Agreement ten years ago. Perhaps, although Hannon stopped making payments under the Agreement many years ago, and it is obviously no longer in force. In any event, McLaughlin is not representing any party adverse to Hannon. Rather, in purchasing the Judgment, he was acting as a principal not an attorney or agent. The Rule does not address this circumstance. Rather, under many situations, McLaughlin’s actions would run afoul of Rule 19(c). In this case, for the reasons discussed above, they do not. McLaughlin was already a creditor of Hannon and adverse to him in many actions when he purchased the Judgment.
In the end, the court finds that there is something unseemly about McLaughlin purchasing a judgment against Hannon where he previously represented Hannon in negotiating an arrangement for its payment with the original judgment creditor. Furthermore, the court finds
that the transfer of the assignment from ABCD Holdings to King Root did not ameliorate the optics of the situation, it made them worse. ABCD Holdings is a limited liability company with one member and manager—McLaughlin. King Root is a limited liability company with one member and manager—McLaughlin’s brother. The transaction between ABCD Holdings and King Root was not an arm’s length commercial sale. ABCD Holdings simply transferred the Judgment to King Root on exactly the same terms as ABCD Holdings purchased it from the plaintiff. In fact, McLaughlin used the transactional documents prepared by Reimer & Braunstein; he just changed the names and date. If the assignment was void as against public policy when held by McLaughlin’s LLC, it was also void when owned by his brother’s LLC.
While too much should not be read into the SJC’s decision in New Hampshire Ins. Co., Inc. v. McCann, which was case in which the SJC was addressing the broad question of whether legal malpractice claims should be assignable, there the Court stated: “We think the claim should be assignable unless some clear rule of law of professional responsibility, or some matter of public policy, necessitates that the assignment should not be enforced.” As discussed above this is not a case in which a clear rule of law or professional responsibility prevents assignment. With respect to the public policy concern raised by this assignment, McLaughlin and Hannon have been adverse to one another in a number of cases over the last five years. McLaughlin’s testimony at the evidentiary hearing suggested that their animosity has spilled-over into personal matters that have been addressed in District Courts. Under these unique circumstances, the court finds that there are no prevailing public policy reasons that prevent McLaughlin from purchasing the right to enforce an unsatisfied judgment entered ten years ago in a case in which he did not represent Hannon.
For the foregoing reasons, King Root’s motion to substitute it as the plaintiff in this action and for the issuance of an execution pursuant to G.L. c. 235, § 19 is ALLOWED. King Root shall however submit a sworn statement calculating the amount of the execution that the clerk shall issue. This statement shall credit Hannon with all payments made to plaintiff, including the $ 25,000 paid to reinstate the Agreement.
Mitchell H. Kaplan
Justice of the Superior Court
Dated: May 9, 2017 read more


Posted by Massachusetts Legal Resources - June 30, 2017 at 10:33 pm

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Rauhaus Freedenfeld & Associates LLP v. Prince (Lawyers Weekly No. 12-075-17)

Rauhaus Freedenfeld & Associates LLP is an architectural firm based in Boston, Massachusetts, that specializes in designing animal hospitals. It is suing Todd Prince for not paying Plaintiff in full for designing renovations for an animal hospital owned by Prince in Deerfield, Illinois. Prince asserts various counterclaims.
Plaintiff has moved to dismiss four of the five the counterclaims; it does not seek dismissal of the counterclaim for breach of contract (Count I). The Court will allow the motion in part and deny it in part. Specifically, it will dismiss the claim for negligent misrepresentation but otherwise deny the motion to dismiss.
1. Fraud Claim. Plaintiff argues that the counterclaim for fraud (Count II) is not pleaded with the particularity required by Mass. R. Civ. P. 9(b). Under this rule, a claimant must “at a minimum” support their claim for fraud by specifically alleging “the identity of the person(s) making the” allegedly fraudulent “representation, the contents of the misrepresentation, and where and when it took place,” and must also “specify the materiality of the misrepresentation, [his] reliance thereon, and resulting harm.” Equipment & Systems for Industry, Inc. v. NorthMeadows Constr. Co., Inc., 59 Mass. App. Ct. 931, 931-932 (2003) (rescript).
Prince has stated his fraud claim with sufficient particularity. The allegations in the counterclaim plausibly suggest that Plaintiff’s agent made specific and false statements of fact to Prince at a meeting in September 2015, Plaintiff made specific and false promises in the parties’ contract that Plaintiff never intended to perform, Plaintiff made these false statements and promises to induce Prince to sign the contract, Prince did so to his detriment, and as a result Prince was damaged in that he paid $ 126,098.56 for draft drawings that he cannot use. These allegations state a claim for fraud. See Masingill v. EMC Corp., 449 Mass. 532, 540 (2007) (elements of
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fraud); McCarthy v. Brockton Natl. Bank, 314 Mass. 318, 325 (1943) (“A principal is liable for the fraud committed by his agent or servant acting within the scope of his employment.”); Cumis Ins. Society v. BJ’s Wholesale Club, Inc., 455 Mass. 458, 474 (2009) (fraud claim may be based on false promise if “the promisor had no intention to perform the promise at the time it was made”) (quoting Yerid v. Mason, 341 Mass. 527, 530 (1960)).
The Court reminds the parties, however, that an “intention not to perform a promise” cannot be inferred merely from later “nonperformance of the promise.” Galotti v. United States Trust Co., 335 Mass. 496, 501 (1957); accord McCartin v. Westlake, 36 Mass. App. Ct. 221, 230 n.11 (1994); see also Backman v. Smirnov, 751 F. Supp. 2d 304, 316 n.13 (D. Mass. 2010) (“Changing one’s mind is not proof that an earlier statement was false.”) (Stearns, J.) (applying Massachusetts law).
2. Chapter 93A Claim. Plaintiffs’ arguments for dismissing the counterclaim under G.L. c. 93A, § 11 (in Count III) are also without merit.
The plausible allegations of intentional fraud suffice to state a claim that Plaintiff engaged in deceptive conduct that violates c. 93A. See, e.g., Brewster Wallcovering Co. v. Blue Mountain Wallcoverings, Inc., 68 Mass. App. Ct. 582, 605 (2007) (“the finding of intentional misrepresentation (or common law fraud or deceit) … is sufficient foundation for a finding of a c. 93A violation in a business context”); The Community Builders, Inc. v. Indian Motorcycle Assocs., Inc., 44 Mass. App. Ct. 537, 557 (1998) (false promise with no intention to perform would violate c. 93A).
And the allegation that Plaintiff is located in Boston, and presumably did most of its work for Prince in its own offices, is sufficient at this stage to suggest that Plaintiffs’ alleged misconduct occurred “primarily and substantially” within Massachusetts, as required by G.L. c. 93A, § 11. Whether the center of gravity of the parties’ interactions and Plaintiff’s alleged fraud is in Illinois rather than Massachusetts is not an issue that can be resolved on a motion to dismiss, at least not in light of the facts alleged by Prince in his counterclaim. See Resolute Management, Inc. v. Transatlantic Reins. Co., 87 Mass. App. Ct. 296, 300-301 (2015).
3. Negligent Misrepresentation Claim. In contrast, the Court is convinced that Prince has not stated a viable claim for negligent misrepresentation in Count IV.
– 3 –
Prince alleges (in paragraph 38) that Plaintiff failed to do everything it had promised in its contract. Those allegations support the counterclaim for breach of contract in Count I. But a promise is not a tortious misrepresentation unless the promising party never intended to perform, in which case the injured party has a claim for intentional misrepresentation. “[P]romises to perform an act cannot sustain a claim for negligent misrepresentation[.]” Cumis Ins. Society, 455 Mass. at 474.
4. Negligence Claim. Finally, the Court will deny Plaintiff’s request to dismiss Prince’s counterclaim for professional malpractice or negligence. Prince alleges that Plaintiff had a duty to ensure that its design met local zoning requirements and that it negligently breached that duty. Plaintiff contends that this claim should be dismissed because it had no duty to ensure compliance with zoning requirements absent a contractual agreement to do so. 1
Whether the standard of care that a reasonably competent architect should follow in this country includes a duty to ensure compliance with zoning requirements is a mixed question of law and fact that cannot be resolved on a motion to dismiss.
“Whether a duty of care exists” at all “is a question of law” and is therefore often “an appropriate subject of a motion to dismiss pursuant to rule 12(b)(6).” Leavitt v. Brockton Hosp., Inc., 454 Mass. 37, 40 (2009) (affirming dismissal of negligence claim because defendant owed no duty of care to plaintiff as a matter of law); accord O’Meara v. New England Life Flight, Inc., 65 Mass. App. Ct. 543, 544 (2006) (same).
1 Plaintiff does not argue that the counterclaim for negligence is barred by the “economic loss doctrine,” which generally provides that “purely economic losses are unrecoverable in tort and strict liability actions in the absence of personal injury or property damage.” Aldrich v. ADD Inc., 437 Mass. 213, 222 (2002), quoting FMR Corp. v. Boston Edison Co., 415 Mass. 393, 395 (1993). This rule “was developed in part to prevent the progression of tort concepts from undermining contract expectations,” on the theory that contracting parties are free to allocate the risk of economic loss as they see fit. Wyman v. Ayer Properties, LLC, 469 Mass. 64, 70 (2014); accord, e.g., Hunt Const. Group, Inc. v. Brennan Beer Gorman/Architects, P.C., 607 F.3d 10, 14 (2d Cir. 2010) (economic loss doctrine “serves to maintain the boundary between contract law, which is designed to enforce parties’ contractual expectations, and tort law, which is designed to protect citizens and their property” from physical harm) (quoting Hamill v. Pawtucket Mut. Ins. Co., 179 Vt. 250, 254, 892 A.2d 226 (2005)). Since Plaintiff has not raised the issue in support of its motion to dismiss Prince’s counterclaims, the Court will not consider it at this stage of the case.
– 4 –
But whether Plaintiff’s duty of care required it to design a building that would comply with local zoning requirements is a question of fact. The standard of care owed by architects is a duty to do as good a job as one should expect from professionals in the same field in similar circumstances. “Architects, like other professionals, do not have a duty to be perfect in their work, but rather are expected to exercise ‘that skill and judgment which can be reasonably expected from similarly situated professionals.’ ” LeBlanc v. Logan Hilton Joint Venture, 463 Mass. 316, 329 (2012), quoting Klein v. Catalano, 386 Mass. 701, 718 (1982). “Establishing the applicable standard of care” owed by a member of some specialized profession “typically requires expert testimony” by someone with “sufficient knowledge of the practices” of professionals in the same field “to assert that the average qualified practitioner would, or would not, take a particular course of action in the relevant circumstances.” Palandjian v. Foster, 446 Mass. 100, 1045-106 (2006); accord LeBlanc, supra (same as to standard of care applicable to architects).
The counterclaim expressly alleges that Plaintiff “was under a duty to ensure [that] the design met the local zoning requirements,” Plaintiff breached that duty of care, and Prince was injured as a result. Nothing more is needed to state a claim for negligence. Cf. Adams v. Congress Auto Ins. Agency, Inc., 90 Mass. App. Ct. 761, 765 (2016) (elements of claim for negligence are “(1) duty; (2) breach of duty; (3) a causal connection between the breach of duty and damages; and (4) damages”).
Plaintiff’s motion to dismiss part of Defendants counterclaims is ALLOWED IN PART with respect to the counterclaim for negligent misrepresentation and DENIED IN PART with respect to Defendants’ other counterclaims.
June 14, 2017
Kenneth W. Salinger
Justice of the Superior Court read more


Posted by Massachusetts Legal Resources - June 15, 2017 at 9:12 pm

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Copley Place Associates, LLC v. Téllez-Bortoni (Lawyers Weekly No. 11-029-17)

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;

16-P-165                                        Appeals Court


No. 16-P-165.

Suffolk.     December 9, 2016. – March 16, 2017.

Present:  Milkey, Massing, & Sacks, JJ.

Fraud.  Deceit.  Real Property, Lease.  Contract, Lease of real estate.  Practice, Civil, Summary judgment, Judgment notwithstanding verdict.

Civil action commenced in the Superior Court Department on April 24, 2012. read more


Posted by Massachusetts Legal Resources - March 16, 2017 at 3:36 pm

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Columbia Plaza Associates, et al. v. Northeastern University (Lawyers Weekly No. 12-175-16)

SUCV2013-2392-BLS 2
This case arises from a series of agreements between the defendant Northeastern University (Northeastern) and the plaintiff Columbia Plaza Associates (CPA), a minority owned general partnership. The agreements related to the development of land known as Parcel 18 adjacent to Northeastern’s main campus. Northeastern owned the parcel, and plaintiffs held certain development rights. Plaintiffs allege that that Northeastern reaped unbargained for benefits in developing the parcel without adequately compensating them, and also convinced the Boston Redevelopment Authority (BRA) to approve plans needed to allow that development by misrepresenting to the BRA that it had the plaintiffs’ participation. This matter came before the Court in October 2016 for jury-waived trial on the sole remaining count of the Verified Complaint, Count VII, alleging a violation of Chapter 93A. This Court concludes that judgment should enter for the defendant.
Parcel 18 is located in the Roxbury neighborhood of Boston next to Northeastern’s main campus. It consists of five sub parcels: 18-1A, 18-1B, 18-2, 18-3A and 18-3B. The BRA designated Parcel 18 as a Planned Development Area (PDA), specifically PDA 34. A PDA is a zoning overlay district and is one of the tools used by the BRA to impose certain controls on commercial development. Those tools include Cooperation Agreements, Sales and Construction Agreements, Master Plans and Development Plans.
In June 1989, the BRA adopted a Master Plan and a Development Plan for Parcel 18. The Master Plan provided for the development of multiple buildings on four of the sub parcels, 18-1A, 18-1B, 18-3A, and 18-3B (collectively the “Development Parcels”). The remaining sub parcel, 18-2, was to be the site of a parking garage (the “Garage Parcel”). At the time, Parcel 18 was owned by various government entities, although Northeastern would ultimately become the owner of all of Parcel 18.
CPA was formed for the purpose of participating in Boston’s “linkage plan,” a program created to promote development in areas of Boston in need of revitalization by linking together a commercial developer with a minority partner. CPA held certain development rights on Parcel 18. The commercial developer with whom CPA was paired was Metropolitan Structures, an Illinois-based general partnership.
From its inception until December 2008, CPA had two general partners: plaintiff Ruggles-Bedford Associates Limited Partnership, (Ruggles-Bedford LP) comprised primarily of
1 In ruling on a motion for summary judgment in this case, another Superior Court judge outlined in the “Background” section of his decision certain facts contained in the summary judgment record, with all inferences drawn in favor of the non-movant, CPA. Many of those same facts are set forth herein. To the extent that those facts differ from those contained in the earlier opinion, this Court’s findings are controlling.
investors from the Roxbury neighborhood; and Chinese Investment Limited Partnership (Chinese Investment LP) which consisted of investors from Boston’s Chinese community. Ruggles Bedford LP held a sixty percent interest in CPA, whereas Chinese Investment LP held a forty percent interest. Ruggles Bedford LP had 25 limited partners and one general partner, plaintiff Ruggles Bedford Associates Inc. (Ruggles Bedford, Inc.) The fourth plaintiff in this case is Columbia Ruggles Associates (CRA), a limited liability corporation created by CPA to participate in the development of the parking garage. 2 In 2008, Ruggles Bedford LP bought out Chinese Investment LP’s interest.
The identity of those who held positions in CPA or purported to act on its behalf is important to the resolution of many of the issues in this case. Chief among them was Kenneth Guscott, a businessman who was the chairman of Ruggles Bedford LP. William Chin served as CPA’s legal counsel; Robert Gunderson, a Boston attorney, also provided legal advice to CPA. CPA’s President was John Cruz, the founder of a company that develops real estate and oversees constructions projects. Beginning in 1994 or 1995, Kevin Cohee, Chief Executive Officer of One United Bank, served as CPA’s treasurer. Up until 2007, Northeastern dealt exclusively with Guscott, Chin, and Gunderson from the Ruggles Bedford wing of CPA; neither Cruz nor Cohee had any communications with Northeastern before then. Paul Chan, the treasurer of Chinese Investment LP, acted on behalf of that group and was also in regular communication with Northeastern until it was bought out by the Ruggles Bedford group.
In 1991, CPA and Metropolitan Structures formed the Ruggles Center Joint Venture for the purpose of building on the Development Parcels. Guscott, Chin and Chan represented CPA in connection with that joint venture. An office building was constructed on sub parcel 18-1B
2 Because the interests of these four plaintiffs are essentially identical, the Court will refer to them collectively simply as CPA.
which briefly became the home for the Registry of Motor Vehicles. Sometime in the mid-1990s, the building was condemned, and the bank that had financed the construction foreclosed on the property, acquiring all four Development Parcels. In November 1997, Northeastern acquired the Development Parcels from the entity that had held title to them following the foreclosure.
Around that same time, Northeastern entered into discussions with CPA and the BRA about developing Parcel 18. Guscott and Chan represented CPA in these discussions. On November 12, 1997, both Guscott and Chan, on behalf of CPA, signed a Letter of Intent with Northeastern setting forth a framework for an agreement among the parties regarding that development. In late June 1999, Northeastern, CPA and the BRA (whose approval was needed for any development) formally entered into the arrangement contemplated by that Letter of Intent. The arrangement was memorialized in several contemporaneous agreements.
Three of those agreements related to acquisition and development of the Garage Parcel and are not directly relevant to the issues presented at trial. A fourth agreement dated June 29, 1999 (the Master Agreement) set forth the obligations of the parties with respect to both the Garage Parcel and future development on the Development Parcels. See Trial Exhibit 1. A fifth agreement (the Cooperation Agreement) documented the parties’ plan to develop the Garage Parcel and further stated that “Northeastern, individually and/or in partnership with CPA” planned to develop the remaining parcels. See Trial Exhibit 15. CPA was represented in the negotiation of these agreements by two attorneys, Chin and Gunderson. The agreements were all signed by Guscott and Chan on behalf of CPA and were approved by CPA’s board of directors.
Together, these agreements provided the following. Northeastern and CPA would form a limited liability company, Renaissance Park Garage LLC (the Garage LLC), with Northeastern
as its manager. Northeastern would make an initial contribution of $ 380,000 to the Garage LLC, which funds would be used to acquire Parcel 18-2 (the Garage Parcel) from the BRA after the BRA acquired the parcel from the MBTA. Northeastern would pay CPA $ 320,000 in cash in return for what the Master Agreement described as CPA’s “Personal Property.” That was defined to include “Garage Plans” and certain “Intangible Property” consisting of “all contract rights, licenses, permits and warranties” related to Parcel 18-2. Northeastern would make an additional payment of $ 100,000 as CPA’s capital contribution toward any joint venture formed between Northeastern and CPA to develop a building on Parcel 18-3A. Section 6.3 of the Master Agreement describes that contemplated joint venture and lies at the heart of the dispute now before the Court.
Significantly, neither Section 6.3 nor any other provision in the Master Agreement actually created a joint venture, nor did the Master Agreement require that either party actually enter into one. It did require that the parties work “diligently and in good faith” to negotiate terms “mutually satisfactory to both parties.” See Section 6.3.1 of Master Agreement. The Master Agreement also set forth a list of issues that any joint venture agreement should include. See Section 6.3.3 of Master Agreement. For example, although it was contemplated that Parcel 18-3A would be developed as a hotel or office building, the joint venture could decide to develop it for the “institutional purposes” of Northeastern, provided that Northeastern pay the joint venture the fair rental value of the building. Negotiations regarding the terms of any joint venture agreement was to commence within six months of the Closing Date on the Master Agreement, although that date could be extended by either party. Finally, the Master Agreement provided that Section 6.3 was to survive the Closing “until full execution of the Joint Venture
Agreement.” Any notices to CPA in relation to the Master Agreement were to be sent to Chin, CPA’s legal counsel.
As it turned out, no joint venture agreement was ever entered into among the parties. Indeed, neither Northeastern nor CPA submitted a draft proposal for such an arrangement. Over the next six years, however, Northeastern did explore the possibility of developing a hotel on Parcel 18-3A, even hiring an outside development firm, Newcastle, to look into its economic feasibility. Northeastern directed Newcastle to work with CPA as a partner in that development. Both Newcastle and Mel Shuman, outside counsel for Northeastern, discussed these plans with Guscott and Chin of CPA. Gunderson, CPA’s outside legal counsel, was also included in these discussions.
Around this same time period (1999-2005), there was growing concern in the surrounding community regarding Northeastern’s use of private housing to meet its institutional needs. In response to those concerns, discussions among the parties shifted away from using Parcel 18-3A as the site for a hotel and using it instead for a dormitory, with the hotel to be built on Parcel 18-1A instead. Northeastern consulted with various community groups, state legislators and city councilors as well as the BRA, whose approval was required for any change in plans. Northeastern also spearheaded the formation of a Community Task Force to broaden its outreach. Ultimately, the consensus in the community was that more dormitories were needed and that Parcel 18-1A was a better site for a hotel than Parcel 18-3A because it had greater visibility, bordering as it did on Melnea Cass Boulevard.
Guscott and Chin were not only aware of these public meetings but had numerous discussions with Vincent Lembo, Northeastern’s legal counsel, about the possibility of moving the hotel to Parcel 18-1A; there is no evidence that either of them expressed any reservations
about it. As late as August 2006, however, Northeastern was still exploring the possibility of building a hotel on Parcel 18-3A as originally contemplated. Newcastle drew up a letter outlining the basic terms of such an arrangement, which would have included CPA, and Newcastle representatives came to Boston to meet with both Gunderson and Chin, but no agreement could be reached as to the financial terms of CPA’s participation. At no time did Northeastern suggest that it would not participate with CPA in the development of a hotel; indeed, it was quite the opposite.
Ultimately Northeastern, in consultation with both Gunderson and Chin, decided to proceed with the proposal to use Parcel 18-3A for a dormitory and to place any hotel that would be constructed on Parcel 18-1A. To do that, however, it had to seek an amendment to the Master Plan and the Development Plan and to the related Cooperation Agreement for PDA 34. It also had to seek an amendment to its Institutional Plan or IMP. Both Guscott and Chin of CPA were fully informed as to the amendments that Northeastern was proposing.
These amendments required the approval of the BRA and the Zoning Commission. Before that could be obtained, Northeastern had to participate in an extensive public hearing process. Between December 2005 and December 2006, more than 40 public meetings were held, some of which were the subject of newspaper articles. In the summer of 2006, the BRA placed a public notice of Northeastern’s proposal to amend its IMP in local newspapers and invited public comment. On January 11, 2007, the BRA formally approved the Amended and Restated Development Plan so as to permit construction of a hotel on Parcel 18-1A. That Plan made it clear that Northeastern would construct that a building on that parcel “in partnership” with CPA, expressly identified in that document as the “Developer” together with Northeastern. At the same time, the BRA approved Northeastern’s application to add Parcels 18-3A and 18-3B to its
Institutional Plan. On October 2, 2007, the BRA approved an amendment to the Cooperation Agreement for PDA 34. That document confirmed that, as a result of the removal of Parcels 18-3A and 18-3B from the PDA, “CPA is neither an owner [n]nor a developer nor has a beneficial interest as owner or developer of any portion of the removed parcels.”
Northeastern continued to have sporadic communications with CPA (specifically Gunderson) about CPA’s participation in a hotel development into the fall of 2007. At some point thereafter, however, Lembo of Northeastern was informed that Cruz was taking over a representative role. Up until then, no one at Northeastern had had any dealings with either Cruz or Cohee.
On March 26, 2008, Lembo sent a letter to Cruz stating that he had recently learned that Cruz was taking a leadership position in CPA and that he looked forward to working with him “as we continue the long term partnership between CPA and Northeastern University.” He also noted in the letter, however, that several months had passed without any contact with CPA and that, if the project to develop the hotel was to go forward, it was important they get together “at the earliest possible moment.” Cruz responded in a letter dated April 2, 1008 in which he remarked that “there have been so many meetings and interactions concerning these two land holdings that I have difficulty keeping them orderly in my mind.” He stated that he understood that CPA had certain agreements with Northeastern concerning Parcel 18 and that members of CPA intended to review the “appropriate documents” in an expeditious fashion so that they could have an “informed dialogue.” Cruz signed the letter as president of Ruggles Bedford Inc. and copied Guscott and Cohee.
Before those letters were exchanged, Cruz was aware that Northeastern had already begun the construction of a dormitory on Parcel 18-3A. He knew this because his business office
was near the site and sometime in 2007, he saw that excavation had begun there. When Cruz noticed this, he realized that Northeastern was constructing a dormitory there and that CPA was not part of that project. Thus, by the time he wrote to Lembo, Cruz by his own admission knew that CPA, to the extent it had any development rights to Parcel 18-3A, was being harmed.
In May 2008, Lembo sent another letter to Cruz, noting that, although Northeastern had worked closely with Chin and Guscott concerning the hotel development, Northeastern had heard nothing from CPA since Cruz’s last communication with Lembo in April. The letter explained that Northeastern had paid for three studies regarding the hotel project and had selected Newcastle as the developer. Newcastle had in turn engaged a design firm and was working to put together financing. Lembo stated that Northeastern’s inability to have any substantive discussion with CPA, however, was placing the project in jeopardy. He received no reply. Lembo sent a third letter on March 18, 2009 describing a time limited opportunity regarding funding for the proposed hotel project but this too went nowhere.
On April 13, 2009, the law firm of Goodwin Procter, on behalf of CPA, sent a Chapter 93A demand letter to Northeastern. The letter complained that Northeastern’s development of the dormitory on Parcel 18-3A without the involvement of CPA violated the parties’ 1999 agreements, specifically Section 6.3.1 of the Master Agreement. The letter also accused Northeastern of falsely representing to the BRA that it was acting in “partnership” with the CPA in order to obtain the necessary BRA approvals for the dormitory project. CPA paid Goodwin Procter for these legal services.
The instant case was filed on July 1, 2013.
Northeastern makes several arguments as to why plaintiffs’ claim fails – either as a matter of law or as a matter of fact. This Court finds that at least two of those arguments support the conclusion that judgment should enter in favor of Northeastern. Although either is dispositive of the case, this Court will discuss both.
A. Plaintiffs have not proved that Northeastern engaged in any unfair or deceptive practice
Count VII alleges a violation of G.L.c. 93A §11, which requires proof, by a preponderance of the evidence, that the defendant, while engaged in the conduct of trade or commerce, committed an unfair or deceptive act or practice. In determining whether an act or practice violates Chapter 93A, courts consider: “(1) whether the practice…is within at least the penumbra of some common-law, statutory or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive or unscrupulous [and] (3) whether it causes substantial injury to consumers (or competitors or other businessmen).” PMP Assoc.’s Inc. v. Globe Newspaper Co., 366 Mass. 593, 596 (1975) (quoting a definition adopted by the Federal Trade Commission). “The objectionable conduct must attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce.” Levings v. Forbes & Wallace, Inc. 8 Mass.App.Ct. 498 504 (1979). As to the conduct at issue here, CPA contends that Section 6.3.1 of the Master Agreement compelled Northeastern to act together with CPA in any development of Parcel 18-3A and that Northeastern’s decision to build the dormitory on its own wrongfully deprived CPA of certain valuable development rights. Northeastern accomplished this (it is argued) by not only keeping CPA in the dark as to its intentions but also by falsely representing to the BRA that it remained in a partnership with
the CPA so as to obtain necessary BRA approvals. CPA’s position, however, is simply not supported by the facts as found by this Court.
First, Northeastern kept CPA fully informed about its plans following the execution of the 1999 Agreements right up until the time that it began building the dormitory on Parcel 18-3A. Northeastern representatives were in regular contact with Chan (representing the Chinese investors), Chin and Guscott, all of whom played central roles in representing CPA’s interests in connection with Parcel 18. Plaintiffs’ arguments notwithstanding, all of these individuals had actual authority to represent CPA. Guscott as chairman of Ruggles Bedford LP and Chan as treasurer of Chinese Investment LP (the two general partners in CPA) signed the 1997 Letter of Intent as well as the 1999 agreements on behalf of CPA. The Master Agreement designated Chin, CPA’s legal counsel, as the person to whom any notices had be sent in order to keep CPA informed. In addition to Guscott and Chan, Northeastern also consulted regularly with Gunderson, who acted as CPA’s outside legal counsel.3 When Limbo learned that Cruz was taking on some leadership role at CPA in 2007, he immediately wrote Cruz requesting that they meet to discuss the hotel project, which by that time, with CPA’s full knowledge, had been moved to Parcel 18-1A.
That Northeastern kept CPA fully apprised about Parcel 18 also highlights a second flaw in plaintiffs’ position. CPA claims that it was wrongfully deprived of certain bargained for benefits in connection with Parcel 18-3A. Even assuming that it had such rights, however, this Court concludes that CPA’s complete failure to do anything to exercise those rights or to respond to Northeastern’s invitation to work with it in connection with the construction of a
3 Significantly, none of these individuals were called by the plaintiffs to testify, so that the testimony offered by Northeastern’s witnesses as to their communications with Guscott, Chan, Chin and Gunderson is uncontradicted.
hotel meant that they lost whatever rights they had had. As McCann from the BRA described these development rights, they were not much better than a fishing license: they essentially gave CPA the opportunity to become a developer on a project provided that it met the BRA’s rigorous prerequisites, which included a demonstration that it had a specific and economically feasible development plan. There was no evidence that CPA presented such a plan, much less that it was ready and willing to enter into one with Northeastern. Certainly, Northeastern did not in any way attempt to hinder CPA in exercising those development rights: indeed, it specifically directed Newcastle to work with CPA when it was still exploring the possibility of locating the hotel on Parcel 18-3A. CPA not only failed to take Northeastern up on its invitation but did not offer any proposal of its own to participate in the development. And when Northeastern sought amendments to various plans which had the effect of extinguishing whatever inchoate rights CPA had in connection with Parcel 18-3A, CPA representatives (through Guscott and Chin) were not only aware of those proposed amendments but also, with that knowledge, voiced no objection to anyone, seemingly content with the prospect of still becoming a development partner for a hotel on Parcel 18-1A.
As to the claim that Northeastern misrepresented that it was in partnership with CPA, this too is not supported by the facts. In connection with proposed amendments to the Master Plan that were necessary to allow for construction of a dormitory on Parcel 18-3A, Northeastern stated that both CPA and Northeastern would be the “Developer” for any hotel located on Parcel 18-1A. This was a true statement. Northeastern agrees, even today, that CPA has certain rights in connection with development of that parcel and does not seek any order that would extinguish them.
As to plaintiffs’ assertion that Northeastern’s conduct was in violation of the 1999 Agreements that is not supported by the language of the agreements themselves. The Master Agreement did not compel either party to actually enter into a joint venture agreement if Parcel 18-3A were to be developed. Rather, it required Northeastern to negotiate in good faith in an effort to reach an agreement, placing a time period upon the length of that negotiation, subject to mutually agreed upon extensions. If a joint venture was formed, then Northeastern would make a $ 100,000 payment as a credit toward CPA’s capital contribution. Similarly, if the joint venture that was formed decided to use Parcel 18-3A for a dormitory, then Northeastern was required to pay the joint venture fair rental value of the building. But no joint venture was ever entered into. Therefore, Northeastern had no contractual obligation to pay CPA anything. 4
B. Plaintiffs ‘Claim is Time-Barred
An action arising under Chapter 93A must be filed within four years after the cause of action
accrues. G.L.c. 260 §5A. A cause of action accrues for purposes of the statute of limitations when “the plaintiff knows or reasonably should have known that it sustained appreciable harm” as a result of the defendant’s conduct. Int’l Mobiles Corp. v. Corroon & Black/Fairfield & Ellis, Inc. 29 Mass.App.Ct 215, 217-218 (1990). “Reasonable notice that …a particular act of another person may have been a cause of harm to a plaintiff creates a duty of inquiry and starts the running of the statute of limitations.” Bowen v. Eli Lilly & Co., 408 Mass. 204, 210 (1990). It is not necessary that the plaintiff know the full extent of harm or loss or know precisely in what manner and what harmful after-effects flow from the defendant’s wrongful conduct. Frankston
4 Indeed, another Superior Court judge (Connors, J.) using similar reasoning, already dismissed the breach of contract claims from this case that were based on these allegations. See Memorandum of Decision on Defendants’ Motion to Dismiss, dated January 28, 2014. Their legal viability is no better simply because they have been recast as a 93A violation.
v. Denniston, 74 Mass. App. Ct. 366, 374, rev. den., 455 Mass. 1102 (2009). Appreciable harm encompasses the incurring of legal expenses. Id.
In order for the instant case to fall within the statute of limitations, it must not have “accrued” before July 1, 2009, four years before this case was filed. As this Court’s fact findings make clear, however, CPA knew well before that date about the claim now before the Court. As a result of Northeastern’s discussions with Guscott and Chan in 2005 and 2006, CPA was well aware of Northeastern’s plan to develop a dormitory on Parcel 18-3A without CPA’s involvement. Sometime in the fall of 2007, Cruz saw that excavation for the dormitory was occurring on that site and knew that CPA was not part of that; to the extent that CPA clams it was deprived of valuable development rights, Cruz knew as of that date that CPA had suffered some appreciable harm. It is not necessary that he know the full extent of that harm or that the harm be fully realized in order for the limitations period to begin running.
With regard to proceedings before the BRA, the evidence is uncontradicted that Guscott and Chin were aware of Northeastern’s filings. Indeed, the BRA’s approval of Northeastern’s proposal was preceded by extensive public hearings and a broad public outreach to leaders in the Roxbury community. It strains credulity to believe that CPA members had no knowledge that the topic of discussion at those hearings and meetings was Northeastern’s plan to build a dormitory on Parcel 18-3A, and in connection therewith, to filed amendments to PDA 34 which would extinguish CPA’s rights to that parcel. At the very least, CPA had reason to know. Certainly, plaintiffs had full knowledge of all the details of their claim when Goodwin Procter sent the Chapter 93A demand letter to Northeastern. The date of that letter was April 3, 2009, more than four years before this action was filed.
For all the foregoing reasons, it is hereby ORDERED that judgment enter in favor of the defendant Northeastern University and that Count VII, the sole remaining count in this case, be DISMISSED with prejudice.
Janet L. Sanders
Justice of the Superior Court
Dated: December 15, 2016 read more


Posted by Massachusetts Legal Resources - December 31, 2016 at 5:14 am

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Russell Block Associates v. Board of Assessors of Worcester (Lawyers Weekly No. 11-145-15)

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;

14-P-283                                        Appeals Court


No. 14-P-283.

Suffolk.     November 10, 2014. – September 16, 2015.

Present:  Rubin, Brown, & Maldonado, JJ.

Taxation, Real estate tax:  abatement, classification of property.  Real Property, Tax.

Appeal from a decision of the Appellate Tax Board.

John F. O’Day, Jr., Assistant City Solicitor, for board of assessors of Worcester. read more


Posted by Massachusetts Legal Resources - September 16, 2015 at 8:20 pm

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Navy Yard Four Associates, LLC v. Department of Environmental Protection, et al. (Lawyers Weekly No. 11-130-15)

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;

14-P-607                                        Appeals Court


No. 14-P-607.

Suffolk.     April 2, 2015. – September 4, 2015.

Present:  Kafker, C.J., Kantrowitz, & Hanlon, JJ.


HarborsReal Property, Harbors, Restrictions, Littoral property, License.  Trust, Public trust.  LicenseDepartment of Environmental ProtectionAdministrative Law, Agency’s authority, Regulations, Agency’s interpretation of statute, Agency’s interpretation of regulation.  RegulationStatute, Construction.  Words, “Tidelands.” read more


Posted by Massachusetts Legal Resources - September 4, 2015 at 2:56 pm

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Wessell v. Mink Brook Associates, Inc., et al. (Lawyers Weekly No. 11-089-15)

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;

14-P-1120                                       Appeals Court


No. 14-P-1120.

Worcester.     April 7, 2015. – August 5, 2015.

Present:  Kantrowitz, Kafker, & Hanlon, JJ.

Massachusetts Wage Act.  Attorney at Law, Disqualification, Attorney-client relationship, Conflict of interest.  Employment, Retaliation, Termination.  Damages, Wrongful discharge of employee, Back pay.  Practice, Civil, Instructions to jury, Damages. read more


Posted by Massachusetts Legal Resources - August 5, 2015 at 3:48 pm

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