Beninati, et al. v. Borghi, et al. (Lawyers Weekly No. 09-032-17)
1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION NO. 12-1985 BLS2 Consolidated with NO. 13-1772 BLS2 ELIZABETH BENINATI and JOSEPH MASOTTA, Plaintiffs, Vs. STEVEN BORGHI, et al. Defendants MEMORANDUM OF DECISION AND ORDER REGARDING PROPOSED FORM OF JUDGMENT On June 30, 2017, this Court determined that defendants Harold Dixon and the Blast entities had violated G.L.c. 93A and were liable for double the amount of compensatory damages that this Court had already awarded to the plaintiff WOW New England on common law claims asserted against Dixon, Blast and defendants Linda and Steven Borghi. In that same decision, this Court agreed with Dixon that Steven Borghi, as a shareholder of WOW New England, should not be able to benefit from that 93A damages award, given his equal culpability in the events giving rise to liability. For that reason, I reduced the amount that WOW was to receive in damages over and above compensatory damages by that percentage of Steven Borghi’s membership interest (37.93 percent). In the motion now before me, Dixon asks that I do the same with respect to the attorney’s fees that he is required to pay as a result of the 93A violation. He also asks that I exclude from any fee award about $ 170,000 in attorney’s fees incurred before this litigation began. As this Court already stated following the hearing on these issues, this Court declines to reduce the fee award but does exclude the $ 170,000. 2 Unlike an award of damages, the amount of attorney’s fees that are assessed in connection with a 93A finding does not turn on the defendant’s culpability. Rather, the focus of the inquiry is on the reasonableness of the fee request. Any fees that are awarded are not part of the damages but rather a reimbursement of the costs already incurred by the prevailing party—here WOW New England. Thus, if this Court were to reduce the amount that Dixon was required to pay, that would also have the effect of penalizing WOW New England, which has been required to compensate the plaintiff Elizabeth Beninati for her attorney’s fees in bring this derivative action out of the damages already awarded to it by this Court. Although it is true that Borghi as a shareholder in WOW would get some benefit from this, the benefit is quite different from the windfall he would receive from sharing in the 93A multiple of damages assessed against Dixon. As to the $ 170,000, this was described in the original fee petition as relating to “extensive settlement discussions” that predated the filing of this action. Following jury waived trial in this matter, this Court had made that part of the fee award to […]
Beninati, et al. v. Borghi, et al. (Lawyers Weekly No. 12-086-17)
1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION NO. 12-1985 BLS2 Consolidated with NO. 13-1772 BLS2 ELIZABETH BENINATI and JOSEPH MASOTTA, Plaintiffs, vs. STEVEN BORGHI, et al. Defendants MEMORANDUM OF DECISION AND ORDER ON VARIOUS MOTIONS This is an action primarily derivative in nature brought on behalf of fourteen limited liability companies that operate health clubs under the trade name “Work out World” in the New England area (collectively, WOW New England or WOW). Following a jury waived trial, this Court on July 9, 2014 issued findings and rulings that ultimately resulted in a $ 4.1 million award of damages to the plaintiffs on those counts against the defendants alleging breach of fiduciary duty (the July 2014 Decision). As to the count against the defendant Harold Dixon alleging a violation of G.L.c. 93A §11, this Court ruled that he could not be held liable under that statute as a matter of law. The plaintiffs appealed from that ruling. In a rescript opinion dated October 24, 2016, the Appeals Court affirmed the judgment in all respects except for this Court’s ruling on the 93A claim against Dixon. Beninati v. Borghi, 90 Mass.App.Ct. 556 (2016). It remanded the case for further proceedings. The case is now before the Court on two sets of motions. The first set of motions addresses the question of Dixon’s liability under G.L.c. 93A. As to that issue, plaintiffs have 2 moved for further findings and more specifically ask this Court to conclude that the 93A violation was willful and knowing, warranting multiple damages. Dixon has filed an opposition and has further asked to supplement the trial record. The second set of motions concerns the extent to which the defendants Steven and Linda Borghi should be required to contribute to the damages award on the non-93A claims. These motions also raise the question of whether and to what extent this Court can or should take steps to prevent the Borghis, as members of WOW England, from sharing in the award of 93A damages. This Court will discuss each set of motions in turn. A. Liability of Dixon under G.L.c. 93A The fact findings underlying this Court’s July 2014 Decision were extensive. They detailed a course of conduct whereby Dixon, a businessman with no prior experience in the fitness industry, allied himself with the defendants Steven and Linda Borghi, both members of WOW New England, to open a chain of competing health clubs in the same geographic area operated through Dixon-controlled entities (collectively, Blast). Dixon accomplished this, with the Borghis’ assistance, by misappropriating WOW’s confidential information, using WOW’s resources, and engaging in other activity that promoted the interest of Blast at the expense of WOW New England. […]
Beninati, et al. v. Borghi, et al. (and a companion case) (Lawyers Weekly No. 11-155-16)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us 15-P-953 Appeals Court ELIZABETH BENINATI & another[1] vs. STEVEN BORGHI & others[2] (and a consolidated case[3]). No. 15-P-953. Suffolk. May 16, 2016. – October 24, 2016. Present: Agnes, Massing, & Kinder, JJ. Contract, Construction of contract, Modification. Consumer Protection Act, Availability of remedy. Practice, Civil, Attorney’s fees. Damages, Attorney’s fees. Civil actions commenced in the Superior Court Department on May 24, 2012, and May 14, 2013. After consolidation, the case was heard by Janet L. Sanders, J.; a motion for attorney’s fees and costs was heard by her; and entry of final judgment was ordered by her. John W. Moran (Michael T. Grant with him) for Elizabeth Beninati. Charles R. Bennett, Jr., for Steven Borghi. Max D. Stern for Harold Dixon & others. Michael S. Marino, for Joseph Masotta & others, was present but did not argue. MASSING, J. The plaintiffs, Elizabeth Beninati and Joseph Masotta, together with defendants Steven Borghi and Linda Borghi, owned and operated a chain of fitness clubs licensing the “Work Out World” (WOW) trade name (collectively, WOW New England).[4] While actively involved in the management of WOW New England, Steven, working with an outside partner, defendant Harold Dixon, and using WOW New England’s inside information and resources, formed Blast Fitness Group, LLC (Blast), and opened a chain of similar clubs in the same geographic area, some using the WOW name, others using the name “Blast Fitness.” (We refer to the defendant clubs that Dixon and Steven controlled as the Blast clubs or, together with Blast, as the Blast defendants). After a jury-waived trial on two consolidated complaints,[5] a Superior Court judge found the Borghis and Dixon liable to Elizabeth, Masotta, and the other WOW New England owners for breach of fiduciary duty on the plaintiffs’ derivative claims and awarded approximately $ 4 million in damages. The judge held as a matter of law, however, that Dixon and the Blast defendants could not be liable for unfair competition under G. L. c. 93A because their misconduct involved only aiding and abetting Steven in the breach of his fiduciary duties. The judge also upheld corporate votes of the WOW New England companies removing the Borghis from management, and awarded attorney’s fees to Elizabeth under G. L. c. 156C, § 57, but not Masotta. On Elizabeth and Masotta’s appeal from the judge’s […]