Posts tagged "kelly"

Kelly v. Waters Corporation, et al. (Lawyers Weekly No. 09-013-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 17-00064-BLS1
DOUGLAS M. KELLY
vs.
WATERS CORPORATION & another1
MEMORANDUM OF DECISION AND ORDER ON
DEFENDANTS’ MOTION TO DISMISS
Plaintiff, Douglas M. Kelly, filed this action against defendants, Waters Corporation and
NuGenesis Technologies Corporation (referred to collectively as “NuGenesis”). The dispute
involves Kelly’s claim that NuGenesis owes him millions of dollars in compensation related to
software he created, developed, and later sold to NuGenesis. Kelly asserts the following five
claims against NuGenesis in his Complaint: fraud (Count I), breach of contract (Count II),
violation of Chapter 93A (Count III), audit and accounting (Count IV), and piercing the corporate
veil (Count V). NuGenesis now moves to dismiss all claims pursuant to Mass. R. Civ. P.
12(b)(6). For the reasons stated below, NuGenesis’s motion to dismiss is allowed.
BACKGROUND
The facts as revealed by Kelly’s Complaint and the documents referenced in the
Complaint are as follows.
Kelly, a professional computer software developer and distributor, is a resident of Spring
Lake, New Jersey. Waters is a Delaware corporation with a principal place of business in
1 NuGenesis Technologies Corporation.
Milford, Massachusetts. In February 2004, Waters acquired NuGenesis and assumed all of
NuGenesis’s liabilities and contractual obligations to Kelly. Complaint at para. 2. NuGenesis is
a Delaware corporation with a principal place of business in Milford. It has operated as a wholly
owned subsidiary of Waters since February of 2004.
From 1987 to 1999, Kelly developed the computer software product lines called
TriRidian, also known as Archive, and VP Office. Kelly designed Archive to meet the needs of
companies obligated to comply with regulations promulgated by the Food and Drug
Administration (FDA) in 1997, that specified the criteria that had to be met for the FDA to accept
electronic records/signatures as the equivalent of paper records/signatures from drug makers and
other FDA-regulated industries. Archive also allows users to collect and store raw data from
laboratory instruments and retrieve the data on demand by FDA inspection teams. VP Office
allows lab users to work directly with data from laboratory instruments using Microsoft Office’s
Word and Excel products.
NuGenesis was founded in 1997. In 1999, NuGenesis was still a start-up company that
had one viable product, UNIFY & VISION (UV), an efficiency tool that performed the same
function as VP Office. NuGenesis executives wanted to present the company to underwriters and
potential investors as a two-product software company. They approached Kelly about
developing and selling Archive and VP Office. NuGenesis represented to Kelly that it was well
qualified and had sufficient financial, personnel, sales, and technical resources. Kelly asserts in
his Complaint that NuGenesis lacked these resources to develop and sell Archive or VP Office.
NuGenesis, known as Mantra Software Corporation in 1999, entered into an Asset
Purchase Agreement (Agreement), dated February 23, 1999, with Kelly. Under the Agreement,
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NuGenesis purchased all rights, title, and interest in the Archive and VP Office products. Kelly
was not represented by counsel in any of his negotiations with NuGenesis or in the closing of his
sale of the software to NuGenesis. Until 2004, NuGenesis enjoyed a market essentially free of
competing products to Archive.
The Agreement required NuGenesis to pay Kelly sixty percent of all Archive sales
revenue from certain customers, thirty percent of all Archive revenue from other customers or
resellers, and twenty percent of Archive revenue for maintenance licenses for the Archive
products. The Agreement also contained certain revenue caps on royalty payments for Archive
and VP Office products.
In addition, Article 9.13 of the Agreement contains the following language:
GOVERNING LAW. THIS AGREEMENT, INCLUDING THE VALIDITY
HEREOF AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER, SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY IN SUCH STATE (WITHOUT GIVING EFFECT
TO THE CONFLICTS OF LAWS PROVISIONS THEREOF). EACH OF THE
PARTIES HERETO AGREES THAT ANY ACTION OR PROCEEDING
BROUGHT TO ENFORCE THE RIGHTS OR OBLIGATIONS OF ANY
PARTY HERETO UNDER THIS AGREEMENT MAY BE COMMENCED
AND MAINTAINED IN ANY COURT OF COMPETENT JURISDICTION
LOCATED IN MASSACHUSETTS, AND THAT THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS SHALL
HAVE EXCLUSIVE JURISDICTION OVER ANY SUCH ACTION, SUIT
OR PROCEEDING BROUGHT BY ANY OF THE PARTIES HERETO.
EACH OF THE PARTIES HERETO FURTHER AGREES THAT PROCESS
MAY BE SERVED UPON IT IN ANY MANNER PRESCRIBED IN SUCH
JURISDICTION, BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
ADDRESSED AS MORE GENERALLY PROVIDED IN SECTION 9.3
HEREOF, AND CONSENTS TO THE EXERCISE OF JURISDICTION OVER
IT AND ITS PROPERTIES WITH RESPECT TO ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
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THE ENFORCEMENT OF ANY RIGHTS UNDER THIS AGREEMENT.
Agreement at 23-24 (emphasis added).
On November 19, 2001, the parties executed an amendment to the Agreement (the “2001
Amendment”). Under Section 5(b) of the 2001 Amendment, “[t]he provisions of Article IX of
the Agreement are incorporated by this reference and made a part hereof.” Thus, the forum
selection clause language contained in Article 9.13 of the Agreement, quoted above, was
incorporated in the amended agreement.
In addition, the 2001 Amendment reduced the percentage of revenue payable to Kelly on
all sales of Archive, VP Office, and maintenance licenses to five percent. Also, the 2001
Amendment capped the aggregate amount payable to Kelly at $ 1 million per year, beginning with
the 2002 calendar year. According to NuGenesis executives, Archive sales were falling well
below the expected amounts, and most of NuGenesis’s sales were of UV, not Archive.
NuGenesis executives implied that NuGenesis would develop an alternative to Archive and pay
Kelly nothing unless he cooperated by reducing his royalties under the 2001 Amendment.
Following the 2001 Amendment, NuGenesis’s royalty payments to Kelly continued at a low
level, indicating that its Archive sales remained relatively low and that it was making no VP
Office sales at all.
In 2003, NuGenesis and Waters announced that Waters planned to acquire NuGenesis.
Soon after this announcement, Kelly began to receive reports from various NuGenesis employees
indicating that NuGenesis might have engaged in malfeasance in the administration of the
Agreement. Kelly sent an e-mail to Waters and others about this possible malfeasance. More
specifically, Kelly inquired about Archive maintenance license sales that NuGenesis never
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invoiced to its customers.
On January 28, 2004, Waters announced the closing of its acquisition of NuGenesis.
Thereafter, Kelly sent a letter dated February 17, 2004 to Jonathan Karis, then counsel to
NuGenesis, about the allegations he previously raised in the e-mail discussed above.2 Karis
responded that Waters would honor the Agreement.
From April 2004 through January or February of 2005, Waters failed to report Archive
sales or pay royalties to Kelly. In numerous e-mails and phone calls, Kelly contacted Judy
Jackman in Waters’s accounting department about this failure. Jackman responded that the
reports and payments were merely delayed as a result of the acquisition and that Waters fully
intended to honor the Agreement. In early 2005, Jackman provided Kelly with the late royalty
payments and reports. Waters reported low levels of sales of Archive and maintenance licenses.
Kelly asked Jackman for an explanation, but she did not provide a substantive explanation.
In the following years, until the end of December, 2007, Kelly and Waters were engaged
in a dispute as to whether Waters was properly reporting and paying Kelly royalties under the
Agreement. Waters conducted an internal investigation of the sales practices of NuGenesis and
concluded that: (a) NuGenesis used various tactics to boost revenue numbers for UV relative to
Archive; (b) numerous customers did not use UV and had no interest in purchasing maintenance
licenses for UV; and (c) Waters would need to greatly change its own sales procedures and
2 NuGenesis attached a copy of this letter to its Reply Memorandum. This Court may
properly consider the letter, which is referenced in Kelly’s Complaint, and any other documents
referenced in the Complaint. See Harhen v. Brown, 431 Mass. 838, 839-840 (2000) (recognizing
that on a motion to dismiss, court may consider documents incorporated or referenced in
complaint). See also Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43, 45 n.4 (2004). At
the hearing on NuGenesis’s motion, the parties did not dispute the authenticity of any of the
documents attached to the pleadings or memoranda.
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royalty reporting and payment practices to Kelly in order to comply with the Agreement.
The dispute between Kelly and Waters continued. On October 31, 2008, Kelly and
Waters entered into an agreement tolling the statute of limitations (the “Tolling Agreement”).
The Tolling Agreement applied to “Claims,” defined as “any and all claims and/or causes of
action, if any, known or unknown, of Kelly against the Waters Parties arising from the
Agreement.” The “Tolling Period,” is defined as “the period from and including the Effective
Date of this Agreement until and including the Expiration Date . . . .” The Effective Date of the
Tolling Agreement is October 31, 2008.
Shortly after entering into the Tolling Agreement, Waters provided Kelly with 4,000
pages of sales records from 1999 through 2004 regarding seven of its most significant customers.
Kelly, with the assistance of forensic accountants, examined and analyzed the sample of
customer data.
Through his examination and analysis of the records and after communicating with
NuGenesis system engineers and salesmen, Kelly determined that NuGenesis engaged in
fraudulent sales and accounting tactics, which Kelly details in his Complaint. See Complaint at
paras. 49-76. Kelly asserts, among other things, that NuGenesis fabricated UV sales and gave
away free or unlicensed copies of Archive. NuGenesis fraudulently recorded its customers as
having paid for purchases of UV that the customers did not want or need. NuGenesis also sold
copies of Archive to numerous customers, but falsely designated those as sales of UV. In
addition, NuGenesis inflated UV’s sales to fabricate demand for UV and deprive Kelly of sales
royalties from Archive. Moreover, NuGenesis failed and refused to develop or sell VP Office.
Waters continued these same sales and reporting practices after it acquired NuGenesis, which
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deprived Kelly of his share of Archive and VP Office sales revenue.
ANALYSIS
To survive a motion to dismiss, the plaintiff’s “[f]actual allegations must be enough to
raise a right to relief above the speculative level . . . [based] on the assumption that all the
allegations in the complaint are true (even if doubtful in fact) . . . .” Iannacchino v. Ford Motor
Co., 451 Mass. 623, 636 (2008), citing Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964-1965
(2007). In other words, “[w]hile a complaint attacked by a . . . motion to dismiss does not need
detailed factual allegations . . . a plaintiff’s obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’ requires more than labels and conclusions . . . .” Iannacchino, 451 Mass.
at 636, quoting Bell Atl. Corp., 127 S. Ct. at 1966. Dismissal under Mass. R. Civ. P. 12(b)(6) is
proper where a reading of the complaint establishes beyond doubt that the facts alleged do not
support a cause of action which the law recognizes, such that the plaintiff’s claim is legally
insufficient. Nguyen v. William Joiner Center for the Study of War and Social Consequences,
450 Mass. 291, 295 (2007).
NuGenesis asserts two grounds for dismissal of the Complaint. With respect to the fraud
and c. 93A claims, NuGenesis contends that the claims are barred by the applicable statutes of
limitation. With respect to the breach of contract and audit claims, NuGenesis points to the
parties’ forum selection provision in the Agreement and argues that the claims should be
dismissed without prejudice in favor of being recommenced in federal court.
I. Statute of Limitations
NuGenesis moves to dismiss the fraud claim in Count I on the basis of the applicable
statute of limitations. The Complaint, however, alleges fraud in two different time periods. Kelly
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alleges in Count I that NuGenesis fraudulently induced him to sell Archive and VP Office to
NuGenesis in 1999, and then fraudulently induced him to amend the Agreement in 2001.3 In
addition, Kelly alleges that the fraud continued post-Agreement. NuGenesis allegedly continued
to misrepresent the true amount of revenues from the sales of Archive licenses and maintenance
agreements and fraudulently provided him with false and misleading sales and royalty reports.
These two periods of alleged fraud must be analyzed separately.
A. Count I (Fraud in the Inducement)
A claim of fraudulent inducement requires a plaintiff to provide evidence of
“misrepresentation of a material fact, made to induce action, and reasonable reliance on the false
statement to the detriment of the person relying.” Okoli v. Okoli, 81 Mass. App. Ct. 381, 391
(2012), quoting Hogan v. Riemer, 35 Mass. App. Ct. 360, 365 (1993). See Commerce Bank &
Trust Co. v. Hayeck, 46 Mass. App. Ct. 687, 692 (1999) (noting that to establish fraudulent
inducement, plaintiff is required to establish elements of common law deceit).
In Massachusetts, fraud claims “shall be commenced only within three years next after
the cause of action accrues.” G.L. c. 260, § 2A. In general, a cause of action accrues on the date
a person suffers a loss or injury. A “discovery rule”, however, operates to toll a limitations period
until a prospective plaintiff learns or should have learned that he has been injured, and “may arise
3 Paragraph seventy-eight of the Complaint states that: “As set forth above, NuGenesis
fraudulently induced Kelly to sell both Archive and VP Office to NuGenesis by knowingly and
intentionally misrepresenting material facts respecting its willingness and ability to develop and
market the software and maintenance agreements, and respecting its intentions fairly and
properly to allocate revenues from the sales of software licenses and maintenance agreements and
to compensate Kelly in accordance with the terms of the Agreement.” Kelly further claims that,
“NuGenesis, through its CEO, fraudulently misrepresented the sales revenues for Archive
licenses and maintenance agreements in order to induce Kelly to amend the Agreement.”
Complaint at para. 80.
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in three circumstances: where a misrepresentation concerns a fact that was ‘inherently
unknowable’ to the injured party, where a wrongdoer breached some duty of disclosure, or where
a wrongdoer concealed the existence of a cause of action through some affirmative act done with
the intent to deceive.” Patsos v. First Albany Corp., 433 Mass. 323, 328 (2001), citing
Protective Life Ins. Co. v. Sullivan, 425 Mass. 615, 631-632 (1997). See Albrecht v. Clifford,
436 Mass. 706, 714-716 (2002) (discussing “inherent unknowability” and application of statute
of limitations to fraud claim on a motion for summary judgment). See also Creative Playthings
Franchising, Corp. v. Reiser, 463 Mass. 758, 764 (2012) (discussing discovery rule and inherent
unknowability). “Inherent unknowability is not a fact, but rather a conclusion to be drawn from
the facts.” Melrose Hous. Auth. v. New Hampshire Ins. Co., 402 Mass. 27, 31-32 n.4 (1988).
Under the discovery rule, the limitation period accrues when the plaintiff has “sufficient notice of
two related facts: (1) that [he] was harmed; and (2) that [the] harm was caused by the defendant’s
conduct.” Harrington v. Costello, 467 Mass.720, 725 (2014). A plaintiff may be put on “inquiry
notice” where he is informed of facts that would suggest to a reasonably prudent person in the
same position that an injury has been suffered as a result of the defendant’s conduct. Szymanski v.
Boston Mutual Life Ins. Co., 56 Mass. App. Ct. 367, 371 (2002). Inquiry notice triggers the
obligation of a reasonable person to investigate the possible claim and assert a cause of action
within the period provided by the statute of limitations. This is especially true when the facts of
the potential claim are not inherently unknowable. Id.
Kelly’s fraud in the inducement claim is time barred. Kelly sent a lengthy letter dated
February 17, 2004 to Jonathan Karis, then counsel to NuGenesis, detailing information he
obtained about NuGenesis and its management that was “deeply troubling” to him. See
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Complaint at para. 30. See also NuGenesis’s Reply Brief at Exhibit 1. Kelly states that “a great
deal of new information has come to my attention–from a wide variety of sources–over the past
four to five weeks.” The information included that the company had employed a large number of
techniques to reduce the amounts to be paid to Kelly under the Agreement. Moreover, Kelly
alleged that NuGenesis was aware that pharma-centered companies wanted “little to do with the
NuGenesis sales organization” and that this was “hidden from me during my due diligence.” The
letter included a calculation of damages that Kelly alleged he had suffered as a result of conduct
by NuGenesis. The letter invited NuGenesis to enter into negotiations to resolve Kelly’s claims
as to “all issues past, present, and future.” Otherwise, Kelly threatened litigation.
The February 17, 2004 letter unquestionably shows that Kelly was on inquiry notice of a
fraud by NuGenesis. Kelly knew that he was harmed and knew that NuGenesis’s conduct caused
this harm. By that date, Kelly knew that the harm stemmed from the Agreement and the 2001
Amendment. Consequently, Kelly was required to file his claim for fraudulent inducement
against NuGenesis within three years of February 17, 2004, or by February 17, 2007. Because no
claim was filed, Kelly’s claim for fraudulent inducement is barred.
B. Count I (Continuing Fraud)
Kelly alleges that NuGenesis concealed the true amount of revenues from the sales of
Archive licenses and maintenance agreements and fraudulently provided him with false and
misleading sales and royalty reports. Complaint at para. 79. Thus, Kelly contends that
NuGenesis engaged in a continuing fraud.
Kelly and NuGenesis entered into a Tolling Agreement on October 31, 2008. Under the
Tolling Agreement, the “Tolling Period,” is defined as “the period from and including the
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Effective Date of this Agreement until and including the Expiration Date . . . .” The Effective
Date of the Tolling Agreement is October 31, 2008. The Tolling Agreement applied to “Claims,”
defined as “any and all claims and/or causes of action, if any, known or unknown, of Kelly
against the Waters Parties arising from the Agreement.” This language is broad enough to
include a fraud claim arising from the parties conduct under the Agreement. As a result, Kelly’s
claim for the continuing fraud by NuGenesis for the three years before the Tolling Agreement
(and thereafter) appear to be saved from the running of the statute of limitations by the Tolling
Agreement. In any event, such claims of continuing fraud are not subject to dismissal by this
court at this time.
C. Count III (Violation of Chapter 93A)
Chapter 93A claims are subject to a four-year statute of limitations. G.L. c. 260, § 5A.
NuGenesis argues that: Kelly’s c. 93A claim is time barred; the Tolling Agreement does not
apply to the c. 93A claim because it does not arise from the Agreement; and that the intraenterprise
dispute doctrine bars the claim as a matter of law to the extent that it relates to conduct
after the parties entered into the Agreement. See Selmark Assocs., Inc. v. Ehrlich, 467 Mass.
525, 549-551 (2014) (explaining that Chapter 93A does not cover internal employment or intraenterprise
disputes). See also Szalla v. Locke, 421 Mass. 448, 451 (1995) (“It is well established
that disputes between parties in the same venture do not fall within the scope of G.L. c. 93A, §
11”).
To the extent that Kelly’s c. 93A claim is based on his allegations of fraud in the
inducement of Kelly to enter into the Agreement and the 2001 Amendment, the claim is barred
by the applicable statute of limitations. As described, the statute of limitations clock began to run
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on the fraud in the inducement claim by no later than February 17, 2004. Thus, the c. 93A claim
based on alleged fraud in the inducement was required to be filed by February 17, 2008. The
Tolling Agreement, effective October 31, 2008, does not save the c.93A claim based on fraud in
the inducement.
Also as described above, Kelly alleges that NuGenesis engaged in unfair or deceptive acts
or practices in violation of c. 93A on a continuing basis. To the extent that such claims for
continuing violations occurred four years before the Tolling Agreement (and thereafter), the
Tolling Agreement appears to save the claims for continuing violations from the running of the
statute of limitations. The c. 93A claims come within the broad scope of the Tolling Agreement.
Finally, NuGenesis asks that the c. 93A claims be dismissed because the dispute comes
within the intra-enterprise dispute doctrine. Whether the doctrine applies is particularly fact
dependent. Because, as described in the next section, Kelly’s claims must be dismissed pursuant
to the parties’ forum selection agreement, it is more appropriate for the federal court to resolve
the applicability of the intra-enterprise dispute doctrine to the c. 93A claims based on the alleged
continuing unfair and deceitful acts.
II. Forum Selection
Having dismissed Kelly’s claims of fraud and c. 93A violations based on pre-Agreement
conduct by NuGenesis, the next issue is whether all claims based on post-Agreement conduct
must be resolved in federal court because of the forum selection provision in the Agreement.4
NuGenesis argues that the U.S. District Court for the District of Massachusetts has exclusive
4 Had Kelly’s fraud in the inducement claim, and the related c. 93A claim, survived the
statute of limitations bar, such claims would arguably not be subject to the forum selection
provision in the Agreement.
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jurisdiction over the claims. Article 9.13 of the Agreement states, in part:
EACH OF THE PARTIES HERETO AGREES THAT ANY ACTION OR
PROCEEDING BROUGHT TO ENFORCE THE RIGHTS OR OBLIGATIONS
OF ANY PARTY HERETO UNDER THIS AGREEMENT MAY BE
COMMENCED AND MAINTAINED IN ANY COURT OF COMPETENT
JURISDICTION LOCATED IN MASSACHUSETTS, AND THAT THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS SHALL HAVE EXCLUSIVE JURISDICTION OVER
ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT BY ANY OF THE
PARTIES HERETO.
NuGenesis contends that any action or proceeding brought to enforce the rights or obligations of
any party under the Agreement is required to be file in federal court in Massachusetts.
Kelly, however, argues that the forum selection clause is internally inconsistent. The
forum selection clause states that an action to enforce rights under the Agreement “may be
commenced and maintained in any court of competent jurisdiction located in Massachusetts.”
Kelly contends that the second part of the forum selection clause regarding the exclusive
jurisdiction of the U.S. District Court for the District of Massachusetts contradicts, or nullifies,
the first part of the clause. Kelly argues that the forum selection clause is ambiguous and should
not be enforced by this Court. He also argues, for various reasons, that it would be unreasonable
to enforce the forum selection clause under the circumstances of this case.
“Massachusetts courts enforce forum selection clauses so long as they are fair and
reasonable.” Melia v. Zenhire, Inc., 462 Mass. 164, 182 (2012). See Jacobson v. Mailboxes Etc.
USA, Inc., 419 Mass. 572, 574-575 (1995). A party opposing a forum selection clause bears the
substantial burden of showing that enforcement of a forum selection clause would be unfair and
unreasonable. Melia v. Zenhire, Inc., 462 Mass. at 182; Cambridge Biotech Corp. v. Pasteur
Sanofi Diagnostics, 433 Mass. 122, 133 (2000).
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“A threshold question in interpreting a forum selection clause is whether the clause at
issue is permissive or mandatory.” Boland v. George S. May International Co., 81 Mass. App.
Ct. 817, 824 (2012) (citation omitted). “Permissive forum selection clauses, often described as
‘consent to jurisdiction’ clauses, authorize jurisdiction and venue in a designated forum, but do
not prohibit litigation elsewhere . . . . In contrast, mandatory forum selection clauses contain clear
language indicating that jurisdiction and venue are appropriate exclusively in the designated
forum.” Id. (citation and internal quotation marks omitted). “[W]hen the parties expressly state
in their contract that a court or the courts of one or more specific jurisdictions (State or Federal,
domestic or international) shall have exclusive jurisdiction over any disputes arising out of the
contract . . . courts will enforce such choices.” Id. at 826.
Here, Article 9.13 of the Agreement arguably contains both a permissive and mandatory
forum selection clause. That said, the mandatory, and more specific, forum selection clause
controls. Cf. Morey v. Martha’s Vineyard Comm’n, 409 Mass. 813, 819 (1991) (noting that
general language must yield to more precise language); Hennessey v. Berger, 403 Mass. 648, 651
(1988) (explaining that where “a general statute and a specific statute cannot be reconciled, the
general statute must yield to the specific statute”) (citation omitted); Boston Housing Auth. v.
Labor Relations Comm’n, 398 Mass. 715, 718 (1986) (observing that “in the case of conflicting
statutes, normally the more specific statute will prevail over the more general statute”). As
quoted above, the second portion of the forum selection clause in Article 9.13 states, “THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS SHALL
HAVE EXCLUSIVE JURISDICTION OVER ANY SUCH ACTION, SUIT OR
PROCEEDING BROUGHT BY ANY OF THE PARTIES . . . .” Agreement at Article 9.13
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(emphasis added). Under the plain and more specific language of the forum selection clause that
Kelly and NuGenesis agreed to, the U.S. District Court for the District of Massachusetts has
exclusive jurisdiction over the claims “BROUGHT TO ENFORCE THE RIGHTS OR
OBLIGATIONS OF ANY PARTY HERETO UNDER THIS AGREEMENT.” All of Kelly’s
claims based on conduct by NuGenesis after entering into the Agreement, whether alleged as
contract, tort or c. 93A claims, are “brought to enforce the rights or obligations of [the parties] under” the Agreement.
The next issue is whether it would be fair and reasonable to enforce the forum selection
clause in the Agreement. Kelly argues that it would be unreasonable to dismiss this case and
require him to refile his claims in federal court because the claims might be time barred as a
result of the termination of the Tolling Agreement. Kelly also contends that “there is absolutely
no legitimate reason” to enforce the forum selection clause; he notes that the case involves
exclusively state law questions and that the forum Kelly selected in filing this action is one mile
from the federal court.
NuGenesis concedes that “[t]he Massachusetts savings statute ensures that Kelly will
suffer no prejudice from dismissal of his contract claims on procedural grounds.” NuGenesis’s
Reply Brief at 5. See G.L. c. 260, § 32 (“If an action duly commenced within the time limited in
this chapter . . . is dismissed . . . for any matter of form, . . . the plaintiff or any person claiming
under him may commence a new action for the same cause within one year after the dismissal or
other determination of the original action . . . .”). Moreover, there is simply nothing unfair about
requiring Kelly to proceed in the court which he specifically agreed to in the Agreement.
Accordingly, the forum selection provision in the Agreement shall be enforced and this action
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shall be dismissed, without prejudice to Kelly re-asserting in federal court his claims based on
conduct by NuGenesis after the Agreement was entered into.
CONCLUSION
Kelly’s claims in Count I and Count III based on alleged fraud in the inducement of Kelly
to enter into the Agreement and the 2001 Amendment are dismissed with prejudice because they
are barred by the applicable statute of limitations. All remaining claims are dismissed without
prejudice.
By the Court,
___________________________
Edward P. Leibensperger
Justice of the Superior Court
September 26, 2017
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-17- read more

Posted by Stephen Sandberg - October 4, 2017 at 7:04 pm

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Commonwealth of Massachusetts ex rel. Kelly, et al. v. Novartis Pharmaceuticals Corporation, et al. (Lawyers Weekly No. 12-098-17)

COMMONWEALTH OF MASSACHUSETTS

SUFFOLK, ss SUPERIOR COURT

CIVIL ACTION

  1. 2016-03107-BLS1

COMMONWEALTH OF MASSACHUSETTS,

EX REL., ALLISON KELLY AND FRANK GARCIA

vs.

NOVARTIS PHARMACEUTICALS CORPORATION & Others1

1 Novartis Corporation and Genentech, Inc.

2 The District Court’s order actually dismissed the state claims with prejudice, notwithstanding its declination of jurisdiction over them. The First Circuit reversed that part of the District Court’s decision.  It observed that while the District Court could have dismissed the state claims based on the same reasoning applied to the federal claims had it retainedjurisdiction, once it declined jurisdiction, it was required to dismiss the state claims

MEMORANDUM OF DECISION AND ORDER ON

DEFENDANT’S MOTION TO DISMISS

RELATORS’ FIRST AMENDED COMPLAINT

Allison Kelly and Frank Garcia (Relators) brought qui tam actions against Genentech, Inc. (Genentech) and Novartis Pharmaceuticals Corporation (Novartis) in federal district court in Massachuesetts under the Federal False Claims Act (FCA), 31 U.S.C. § 3729 et seq., the Massachusetts False Claims Act (MFCA), G. L. c. 12, § 5B(a)(1)-(10), and several other analogous state statutes.  The federal claims asserted in their complaints were dismissed by the District Court for failure to plead the alleged fraud with the specificity required by Fed. R. Civ. P. 9(b).  See U.S. ex rel. Garcia v. Novartis  Pharm. Corp.,91 F. Supp. 3d 87 (D. Mass. 2015).  The dismissal was affirmed by the First Circuit Court of Appeals.  See U.S. ex. rel. Kelly v. Novartis Pharm. Corp.,827 F. 3d 5 (1stCir. 2016) (Kelly).  While the Relators’ FCA claims were dismissed with prejudice, their state claims were dismissed without prejudice because the District Court declined to exercise supplemental jurisdiction over them.2 The Relators then filed read more

Posted by Stephen Sandberg - August 4, 2017 at 9:01 am

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Commonwealth v. Kelly (and 11 companion cases) (Lawyers Weekly No. 10-026-15)

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; SJCReporter@sjc.state.ma.us

SJC-11616

COMMONWEALTH  vs.  AMANDA KELLY

(and eleven companion cases[1]).

Plymouth.     October 7, 2014. – February 20, 2015.

Present:  Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & Hines, JJ.

 

Assault or Battery for the Purpose of Intimidation.  Civil Rights.  Practice, Criminal, Instructions to jury, Duplicative convictions, Lesser included offense.

Indictments found and returned in the Superior Court Department on August 14, 2008.

The cases were tried before Paul E. Troy, J. read more

Posted by Stephen Sandberg - February 20, 2015 at 5:44 pm

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Mass. mayors meet to discuss gun laws – WWLP 22News

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Posted by Stephen Sandberg - February 1, 2013 at 9:22 pm

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