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NTV Management, Inc. v. Lightship Global Ventures, LLC, et al. (Lawyers Weekly No. 12-080-17)

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COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss SUPERIOR COURT
CIVIL ACTION
NO. 2016-0327-BLS1
NTV MANAGEMENT, INC.
vs.
LIGHTSHIP GLOBAL VENTURES, LLC and KENT PLUNKETT
MEMORANDUM OF DECISION AND ORDER ON
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT DISMISSING THE COMPLAINT AND PLAINTIFF’S CROSS-MOTION FOR SUMMARY JUDGMENT ON COUNT I OF ITS COMPLAINT
This case arises out of a Consulting and Advisory Services Agreement (the Agreement) between the plaintiff, NTV Management, Inc. (NTV) and the defendant Lightship Global Ventures, LLC (Lightship). The defendant, Kent Plunkett, founded a company, Salary.Com, Inc., which, following a series of acquisitions, became a division of IBM. Plunkett and a colleague formed Lightship for the purpose of reacquiring Salary.Com from IBM. The Agreement, while containing some one-off terms, was in effect a non-exclusive brokerage agreement pursuant to which NTV would be due a commission if it found financing for the acquisition and a lesser fixed sum for introducing “at least ten qualified sources of capital.” Lightship did acquire Salary.com, but not with equity or debt partners introduced to the deal by NTV. NTV, nonetheless, alleges that it is due fees under the Agreement and damages for a variety of other wrongful conduct on the part of the defendants. It has pled its complaint in seven counts: breach of contract, breach of the covenant of good faith and fair dealing, promissory estoppel, unjust enrichment, deceit, a violation of Chapter 93A, violations of the Uniform Fraudulent Transfer Act, and a count to reach and apply stock or assets of Salary.com (although curiously it has not
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named Salary.com, or the entity that presently owns it, as a defendant).
Apparently, concerned about matching NTV’s imaginative pleading measure for measure, the defendants have asserted five counterclaims against NTV: breach of a duty of confidentiality, breach of contract, defamation, misrepresentation, and tortious interference with contractual or business relations. These counterclaims are not the subject of a motion now before the court.
The case is before the court on the defendants’ motion for summary judgment dismissing all the claims asserted against them, and NTV’s cross-motion for summary judgment on part of its breach of contract claim. For the reasons that follow, the defendants’ motion is Allowed, in part, and Denied, in part, and NTV’s motion is Denied.
FACTS
Based on the summary judgment record, the following facts are undisputed or viewed in the light most favorable to the non-moving party.
Salary.com was founded by Plunkett in 1999. It became a public company in 2007, and then was acquired by a firm called Kenexa, Inc. in 2010. In 2012, Kenexa was acquired by IBM, after which Salary.com was operated as a division of that company or an IBM affiliate. In 2014, IBM informed Plunkett that it was interested in selling Salary.com. Also, in 2014, Plunkett and another former colleague at Salary.com formed Lightship for the purpose of attempting to acquire Salary.com from IBM. Lightship signed a Non-Disclosure Agreement with IBM which limited Lightship’s ability to disclose confidential information concerning Salary.com to others, including that IBM was actively seeking to dispose of this asset. As is typical in these kinds of potential transactions, IBM set up a data room where confidential information concerning
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Salary.com could be reviewed by Lightship and potential investors who would finance the acquisition. The information available to potential investors did not include financial statements specific to Salary.com because it was operated by IBM as division of a larger enterprise. In February, 2015, Lightship and IBM entered into an agreement that gave Lightship the exclusive right, for a period of time, to negotiate a purchase agreement for Salary.com. Lightship had previously entered into an investment banking relationship with the firm Stifel Nicolaus & Co. (Stifel) to assist it in the proposed acquisition.
Through Stifel, a number of potential investors were identified who signed NDAs with Lightship, were informed of the acquisition target, and given access to the data room. A number of potential investors presented Lightship with term sheets for an acquisition of Salary.com. In early 2015, a private equity firm called Genstar Capital signed an agreement with Lightship that gave it an exclusive right to try and negotiate a transaction with IBM. Genstar retained a firm, Alvarez and Marsal, to analyze Salary.com’s earnings and prepare a report. This report was Genstar’s property. Genstar, however, failed to reach terms acceptable to IBM. Thereafter, a firm called Symphony Technology Group (Symphony) entered a similar agreement with Lightship, but it also failed to reach agreement with IBM. In July, 2015, Stifel informed Lightship that it would no longer represent it in connection with a Salary.com transaction.
In July, 2015, a mutual acquaintance, Steven Sandler, introduced Plunkett to a principal of NTV. NTV was then a newly formed organization which was planning to raise a venture capital fund, although it did not yet have any investors. After discussions, Lightship and NTV agreed to enter into an investment banking relationship in which NTV would seek to find investors willing to finance the acquisition of Salary.com. After some negotiations, their relationship was memorialized in the Agreement which was executed on August 5, 2015. As
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relevant to this case, the Agreement contained the following provisions.
The term of the Agreement was six months, but it could be terminated by either party on 14 days notice. Section 4 of the agreement had standard confidentiality terms. It also provided that: “NTV further agrees to abide by all terms and conditions of the NDA entered into between IBM and Lightship.” This meant that NTV should not disclose the name of the target, Salary.com, or any of its data, to a potential investor identified by NTV until the investor had signed an NDA.
Most of provisions of the Agreement relevant to this case are found in a document entitled Scope of Work (SOW) that was an exhibit to the Agreement and made a part of it. The SOW described the services that NTV was going to provide Lightship as follows:
NTV will endeavor to source capital and structure financing transactions from agreed-upon target investors and/or lenders. NTV will facilitate and participate in meetings and due diligence with capital sources, structuring and negotiating terms, and closing financing for the Acquisitions as [Lightship’s] advisor.
With respect to fees potentially due NTV, the SOW provided:
[Lightship] will pay to NTV as transaction fees (collectively, “Fees”) at closing in cash the a [sic] success fee (the Success Fee”) equal to the greater of 3% of the value of the capital that NTV introduces to the project that is invested or $ 330,000. In the event a deal is consummated by management with investment or financial sponsorship other than parties introduced by NTV, but not including sources contacted and/or introduced by NTV, (ie: not a strategic buyer acquiring substantially all of the business other than incentive interests for and direct investment by management where such strategic partner and not management controls) and no success fee is earned, then NTV shall be entitled to a $ 330,000 advisory fee in consideration of its team’s effort, services, time, and opportunity costs associated with working with management, preparing materials, communication with potential sources of capital, and other services, provided NTV shall have introduced at least 10 qualified sources of capital and remained engaged with [Lightship] and available to provide advice and support. It is understood and agreed by the parties that: . . . (ii) NTV expects to introduce and facilitate investment from third party sources collectively able to finance all levels of the transactions (i.e., both equity and debt) and [Lightship] has agreed as to each level of the capital structure for which NTV has one or more sources of capital willing and able to provide financing that [Lightship] has agreed that the Company will close with such investor(s) introduced and facilitated by NTV and not with other investors who might offer such financing on
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substantially the same terms; provided that if [Lightship] determines reasonably and in good faith that accepting financing from one or more of such investors would not be in the best interests of the Company and its management and shareholders (but specifically excluding as an interest of the Company avoidance of fees otherwise payable), [Lightship] shall not be required to close with such investor(s). If third parties not introduced by NTV shall offer better terms than parties introduced by NTV, then NTV will have the opportunity, within five days after notification to match such terms.
As is evident from the terms quoted above, NTV’s agreement with Lightship was not exclusive. If Lightship purchased Salary.com with investors that NTV had not introduced to the deal, it would not be due a Success Fee. NTV might still, however, be due an advisory fee of $ 330,000, if it met the preconditions to the award of that fee described in the SOW.
NTV sent a brief email to 28 potential sources of capital describing the transaction in very general terms. While the parties dispute whether Plunkett approved all of these possible investors as qualified sources of capital before the email was sent, for the purposes of this motion, the court assumes that he did. Of these 28 email recipients, 12 expressed interest in looking more closely at the deal. NTV sent these potential investors a 12 page power point presentation that provided additional information about the proposed transaction, but did not identify the target, although a recipient might have been able to deduce its identity. Lightship admits that NTV scheduled meetings or calls between 7 of these responders and Plunkett. NTV asserts that it had three others ready to speak with Plunkett: Vector Capital, Princeton Capital and Silicon Valley Bank, but the meetings did not take place. These three investors will be addressed further in the “Discussion” section of this memorandum.
Of the potential investors contacted by NTV, only 4 executed NDAs. None of the potential investors contacted by NTV presented Lightship with a proposed term sheet for a Salary.com transaction. NTV’s representatives testified at deposition that all of the investors it approached wanted audited or detailed financial statements for Salary.com, which did not exist
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because it was operated as a division of a larger group.
In August, 2015, Plunkett also began discussions with other investment banking firms, including Moorgate Capital Partners (Moorgate), with a view to finding investors to finance a Salary.com acquisition. Several potential investors signed NDAs, performed due diligence in the IBM data room, and submitted term sheets. In October, Lightship began to focus on two potential investors, one of which—H.I.G. Capital (HIG)—was introduced by Moorgate. On November 3, 2015, Lighthouse and HIG entered into an Agreement providing HIG with a period of exclusivity in which to try and negotiate a purchase with IBM, as had been the case with Genstar and Symphony. HIG was offering to provide only the equity layer of financing, so the debt component would still be necessary even if HIG were more successful than Genstar or Symphony in reaching an agreement with IBM for the purchase of Salary.com. The terms of the debt financing would, of course, have to be acceptable to HIG, which would be contributing the equity at risk in the independent Salary.com enterprise.
Lightship did not provide a copy of the November 3rd letter to NTV; nor was it required to do so. It is, however, undisputed that not long thereafter NTV was aware that HIG was negotiating with IBM for the purchase of Salary.com. In a November 22-23, 2015 email exchange between representatives of a potential debt investor, Ares Management (Ares), introduced to the deal by NTV, and NTV, Ares wrote to NTV: “We were potentially interested at 2-3X EBITDA leverage, but that was so far below HIG’s ask that we didn’t do much work. If that’s interesting, let us know.” In fact, by November 17, 2015, NTV was threatening to sue Lightship for having entered into the agreement with HIG. On December 14, 2015, Lightship sent NTV a letter stating that it was terminating the Agreement on 14 days notice.
HIG was still negotiating with IBM on December 29, 2015. It closed the transaction on
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December 31, 2015, the last day that IBM was willing to move forward at HIG’s offering price. The debt was provided by Prudential. The financing included $ 17 million of equity from HIG and $ 55 million of debt from Prudential, which included $ 10 million of operating capital. The actual terms of the acquisition are not provided in the summary judgment record, but it appears that the acquirer was a new company (the proverbial Newco) owned in undisclosed percentages by HIG, Plunkett, and other members of Salary.com management. At one time, spread sheets showing the sources and uses of funds to be provided HIG and a still unidentified debt financier included a $ 330,000 fee going to NTV, although that fee was not included in the final closing documents and no fee was paid to NTV.
DISCUSSION
Standard for Review
Summary judgment will be granted when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Mass. R. Civ. P. 56(c); Cassesso v. Commissioner of Corr., 390 Mass. 419, 422 (1983). To prevail on its summary judgment motion, the moving party must affirmatively demonstrate the absence of a triable issue, and that the summary judgment record entitles it to a judgment as a matter of law. Pederson v. Time, Inc., 404 Mass. 14, 16-17 (1989). “[A]ll evidentiary inferences must be resolved in favor of the [nonmoving party].” Boyd v. National R.R. Passenger Corp., 446 Mass. 540, 544 (2006).
The nonmoving party, however, cannot defeat a motion for summary judgment by merely asserting that facts are disputed. Mass. R. Civ. P. 56(e); LaLonde v. Eissner, 405 Mass. 207, 209 (1989). Rather, to defeat summary judgment, the nonmoving party must “go beyond the pleadings and by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.”
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Kourouvacilis v. General Motors Corp., 410 Mass. 706, 714 (1991). “Conclusory statements, general denials, and factual allegations not based on personal knowledge [are] insufficient.” Cullen Enters., Inc. v. Massachusetts Prop. Ins. Underwriting Ass’n, 399 Mass. 886, 890 (1987), quoting Madsen v. Erwin, 395 Mass. 715, 721 (1985).
Breach of Contract and Breach of the Covenant of Good Faith and Fair Dealing
NTV asserts that Salary.com breached the Agreement by failing to pay the 3% commission, or alternatively failing to pay the $ 330,000 advisory fee. The court will first address the claims asserting a breach for failure to pay the commission.
NTV argues that Lightship breached the Agreement by failing to tell NTV that it was talking to other investment banking firms. However, the Agreement was clearly not exclusive. Indeed, it contemplated what might happen if the transaction closed with investors not introduced by NTV. Lightship was under no obligation to inform NTV concerning other firms it was using to raise capital. NTV also complains that Lightship began focusing on HIG in October and signed an exclusivity arrangement with HIG on November 3, 2015. Never having introduced a potential investor that even submitted a term sheet to Lightship, NTV could not have been surprised that Lightship focused on a potential equity investor that did its due diligence, met with management, and submitted terms on which it would attempt to close a transaction with IBM. NTV also complains that HIG received a copy of the Alvarez and Marsal report; however, it paid Genstar for it. There is no evidence in the summary judgment record that Lighthouse would not have entered into negotiations with an investor generated by NTV, if any such investor presented a term sheet for a proposed transaction.
More specifically, NTV contends that there exists a triable issue of fact concerning whether MTV is due the 3% fee “under the lost opportunity doctrine.” This doctrine, however,
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addresses the question of how lost profits may be proven when they are the consequence of a breach of contract or business tort. It is not a separate means of establishing a breach of contract or a tort. This doctrine simply has no application to this case. See, e.g., Herbert A. Sullivan, Inc. v. Utica Mutual Ins. Co., 439 Mass. 387, 413 (2003) (“An element of uncertainty is permitted in calculating damages . . . This is particularly the case in business torts, where the critical focus is on the defendant’s conduct.”) (emphasis supplied).
NTV argues that an investor that it introduced to the deal, Ares, “might” have “matched the terms that Prudential eventually offered on December 18, 2015.” There are two problems with this argument: one legal and one factual.
First, the Agreement provides: “If third parties not introduced by NTV shall offer better terms than parties introduced by NTV, then NTV will have the opportunity, within five days after notification to match such terms.” NTV never introduced a party to Lightship that offered to enter into a transaction, debt or equity, on any terms, and that includes Ares. Clearly, the contract envisions that a qualified investor introduced by NTV who had made an offer would be given a brief period to attempt to match or exceed a better offer made by another investor. It does not mean that NTV had the right to find a third-party that had never presented an offer sheet who might, on five days-notice, decide to invest more than $ 50 million on terms better than those offered by an investor prepared to close. There is no way to determine if an investor’s terms are better than those produced by an NTV introduced party, where the NTV party never submitted anything to compare.
Additionally, there is no evidence that Ares could possibly close on financing by December 31, 2015, the date by which IBM required the transaction be complete. The December 17, 2015 email from Ares to which NTV points expresses only a vague willingness to
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talk to NTV about the deal. A previous November 23, 2015 email exchange between Ares and NTV shows that Ares had direct contact with HIG about this transaction, but HIG was looking for debt on terms that were of no interest to Ares. There is no evidence that HIG’s position ever changed. Indeed, Lightship submitted an affidavit from a managing director at Ares who attested that he had a good working relationship with HIG from other deals, he looked at material sent to him by HIG and spoke to HIG about it, and then told HIG that Ares would pass. NTV offers no evidence to contradict this affidavit. The summary judgment record contains no evidence creating a triable issue on the question of whether Ares would have presented matching or better terms than Prudential, if offered the opportunity to do so in late December, 2015. NTV’s speculation that this might have happened is insufficient.
NTV’s claims for breach of the implied covenant of good faith and fair dealing as it relates to the claim for the commission fails for similar reasons. There is simply no evidence that NTV brought the Salary.com transaction to the attention of any potential investor who might have provided financing for this transaction on better terms than HIG and Prudential. Even assuming that there is evidence in the summary judgment record that Plunkett was not responsive to requests to meet with an NTV sourced investor, a debatable proposition, there is no evidence that any such investor was actually prepared to invest.1
Turning to the advisory fee, the Agreement states: “In the event a deal is consummated by management with investment or financial sponsorship other than parties introduced by NTV, . . .
1 A brief reference to Silicon Valley Bank is made in the opposition in this regard; however, again defendants have submitted an affidavit from a Managing Director of this firm in which he points out that Silicon Valley was Salarly.com’s banker when it was an independent company, and he knew about the proposed transaction, but never met with Plunkett or anyone else associated with the Salary.com deal and never proposed any terms on which Silicon Valley would invest. NTV has not offered any deposition testimony or other evidence from Silicon Valley suggesting that it was ready to close on a Salary.com transaction by December 31, 2015. For these reasons, there can be no 93A claim premised on a refusal to pay the 3% commission because there is no evidence that NTV generated a potential investor actually interested in financing the acquisition.
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then NTV shall be entitled to a $ 330,000 advisory fee in consideration of its team’s effort, services, time, and opportunity costs associated with working with management, preparing materials, communication with potential sources of capital, and other services, provided NTV shall have introduced at least 10 qualified sources of capital and remained engaged with [Lightship] and available to provide advice and support.” With respect to this fee, Lightship maintains that NTV failed to “introduce[] at least 10 qualified sources of capital and remained engaged with [Lightship] and available to provide advice and support.” It concedes, for purposes of its motion for summary judgment, an introduction to 7 potential investors, but contends that there is no evidence in the record supporting the last 3, viz: Vector Capital, Princeton Capital and Silicon Valley Bank (SVB).
In response, NTV first argues that the Agreement could be read to mean that all NTV had to do was “introduce” potential investors to the deal, i.e., let them know it was out there; it did not have to actually introduce them to Lightship. On this proposed interpretation, sending a brief email very broadly describing the deal to 28 firms fulfilled its obligation. The court does not find that this is a reasonable interpretation of the Agreement. The Agreement contemplated that NTV would find at least 10 qualified sources of capital sufficiently interested in the opportunity that they would want to meet with the principals of Lightship, i.e., be introduced to Lightship. Clearly, sending a cold email to investors, most of whom did not even respond, was not what the parties understood would be sufficient to earn $ 330,000. Moreover, sending a follow-up email that attached a power point providing some additional information, but still without identifying Salary.com as the target, was also inadequate.
As to the three investors, in dispute: Vector, Princeton, and SVB, Lightship argues that: (i) Stifel had already contacted Vector when it was still acting as Lightship’s investment banker;
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(ii) Princeton was not an acceptable source of capital because one if its managers had sought to oust Plunkett as CEO of Salary.com a decade earlier; and (iii) SVB could not be introduced to this transaction because SVB was Salary.com’s banker when it was an independent company and Plunkett had already discussed the deal with SVB. The court finds these arguments insufficient to support dismissal of this claim by summary judgment. If Vector and SVB had previously passed on the Salary.com/Lightship transaction, but were willing to re-engage because of NTV’s efforts, a jury could find that they were introduced, or at least ready and willing to be introduced, to Lighthouse regarding their possible participation in the acquisition within the meaning of the Agreement. As to Princeton, there is evidence in the summary judgment record that Plunkett approved either directly or by inference this firm as an acceptable source of capital when it reviewed the original list of 28 firms to which NTV sent its initial email describing the transaction. The jury could also choose not to believe Plunkett regarding his reason for not meeting with Princeton or find that reason insufficient under the Agreement. While it may be that the literal terms of the Agreement have not been fulfilled if Plunkett or other members of Salary.com team never met with these three firms; however, a breach of the covenant of good faith and fair dealing might be might be demonstrated with evidence that Plunkett avoided meeting with potential investors who NTV had contacted and developed to the point that they wanted to engage with the Salary.com team to discuss the acquisition.
Additionally, there is evidence that at one point the $ 330,000 advisory fee was included in a spread sheet generated by Lighthouse as a transaction expense to be paid at closing. This is certainly not conclusive evidence that the fee was due, as there are other explanations as to why it might be included in an early draft of a closing document. It is, nonetheless, some evidence that Lighthouse believed that NTV had earned this fee.
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Accordingly, summary judgment is denied with respect to so much of Counts I, II and VI as are based on a failure to pay the advisory fee.2 NTV’s motion for summary judgment on this claim is also denied, as NTV has only shown that there are disputed issues of fact material to the claim, not that it is entitled to judgment as a matter of law.
Deceit
NTV alleges a claim for Deceit/Negligent Misrepresentation in Count V. The only allegedly false statement identified in the complaint with any specificity is that Lighthouse represented to NTV that it had an agreement with IBM that gave it an exclusive right to negotiate a purchase of Salary.com, but failed to tell NTV that the agreement had expired. Even if this allegation were true, the summary judgment record establishes that IBM continued to negotiate the terms of the Salary.com purchase with Lighthouse and its equity partner HIG through the end of 2015, closing the transaction on December 31, 2015. This is not a case in which NTV was misled into expending substantial resources in assisting Lighthouse only to have IBM sell to another buyer. A necessary element of a claim of deceit is damages, and NTV has not alleged that it suffered any damage in reliance on this allegedly material misrepresentation. See Kilroy v. Barron, 326 Mass. 464, 465 (1950) (plaintiff must have relied upon the representation as true and “acted upon it to its damage.”)
Remaining Claims
In its opposition to the defendant’s motion for summary judgment, NTV raises no argument in support of its claims for promissory estoppel, unjust enrichment, fraudulent transfer, or its claims to reach and apply debt or other interests due either defendant from some other
2 Count VI alleges the violation of Chapter 93A. The court finds this claim to be quite weak. Nonetheless, there exist circumstances in which a breach of the covenant of good faith and fair dealing will support a Chapter 93A claim and it therefore declines to dismiss this Count to the extent it is related to the advisory fee. See, e.g., Massachusetts Employers Ins. Exchange v. Propac-Mass., Inc., 420 Mass. 39 (1995).
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third-party, not named as a defendant in this action, nor could it. Those claims are dismissed.
ORDER
For the foregoing reasons, the defendants’ motion for summary judgment is ALLOWED, in part, and DENIED, in part, as follows: all Counts of the complaint are dismissed except so much of Counts I, II and VI as allege claims based upon Lighthouse’s refusal to pay the advisory fee. Plaintiff’s motion for summary judgment is DENIED.
____________________
Mitchell H. Kaplan
Justice of the Superior Court
Dated: May 31, 2017

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Posted by Stephen Sandberg - July 4, 2017 at 8:51 am

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CareOne Management, LLC, et al. v. NaviSite, Inc. (Lawyers Weekly No. 12-043-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1484CV00378-BLS2
1484CV00858-BLS2
____________________
CAREONE MANAGEMENT, LLC and PARTNERS PHARMACY SERVICES, LLC
v.
NAVISITE, INC
CONSOLIDATED WITH
NAVISITE, INC
v.
CAREONE MANAGEMENT, LLC and PARTNERS PHARMACY SERVICES
____________________
MEMORANDUM AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT
These consolidated lawsuits arise from the agreement by NaviSite, Inc., to develop and provide information technology services to CareOne Management, LLC and its affiliate Partners Pharmacy Services, LLC. NaviSite first contracted to provide an array of computerized services to CareOne. Several months later NaviSite contracted to provide a much more limited set of information technology services to Partners. After difficulties and disputes regarding implementation of its contract with CareOne, NaviSite threatened to and then did terminate both contracts.
CareOne and Partners asserted various claims against NaviSite, which in turn sued CareOne. (NaviSite also sued Partners, but Judge Sanders dismissed those claims.) NaviSite and CareOne both move for summary judgment; NaviSite does so on all claims while CareOne’s motion is limited to NaviSite’s claims against it.
The Court concludes that CareOne is entitled to summary judgment on the claims asserted against it by NaviSite, and that NaviSite is entitled to summary judgment on all claims asserted against it by CareOne and Partners. Final judgment will enter declaring the rights of the parties, with respect to the issues in controversy that CareOne and Partners identified in their claim for declaratory judgment, and dismissing all other claims with prejudice.
1. Background.
1.1. Undisputed Material Facts. The following are undisputed facts, as demonstrated in the evidentiary materials submitted by the parties or reasonable
inferences that one could draw from those facts. The Court “must … draw all reasonable inferences” from the evidence presented “in favor of the nonmoving party,” as a jury or judicial fact finder would be free to do at trial. Godfrey v. Globe Newspaper Co., Inc., 457 Mass. 113, 119 (2010). It has done so.
CareOne manages dozens of nursing homes. Partners operates commercial pharmacies that serve patients at more than 500 nursing homes, including those run by CareOne. These two companies are separate legal entities, though both were founded and are run by the same person.
CareOne retained NaviSite in September 2012 to develop, implement, host, and operate new computing services to be used at all of CareOne’s nursing facilities. The system design was to include “virtual desktops” through which CareOne employees could access programs, applications, and data that NaviSite would host on servers located at its facilities. It also included other computer services that would be implemented and hosted by NaviSite. NaviSite agreed that it would transition CareOne from its current IT vendor and begin providing the agreed upon services using NaviSite’s servers no later than January 1, 2013. The parties also agreed that CareOne would pay NaviSite certain upfront fees, but that the majority of the fees were to be billed and paid on a monthly basis for each component service after CareOne accepted delivery of that service. CareOne paid NaviSite roughly $ 580,000 in upfront charges upon signing of the parties’ contract.
The contract between CareOne and NaviSite consists of a number of interrelated documents that were executed at the same time. These parties executed a Master Statement of Work (“SOW”) that described many of the services that NaviSite agreed to provide through a “Third Party Provider.” They also executed a Master Services Agreement” (“MSA”). The SOW provided that it “is governed by and incorporates by reference, the terms and conditions of the” MSA. And these parties executed three detailed “Schedules” providing that NaviSite would provide CareOne with managed hosting services, managed messaging services, and cloud-enabled desktop as a service. These Schedules state that they are incorporated into and part of the MSA. Finally, at the same time these parties executed two sales orders in which
CareOne agreed to pay certain one-time and monthly fees for the managed hosting services. The sales orders state that they are subject to the terms of the MSA.
In November 2012 and December 2012 CareOne and NaviSite executed three more sales orders for email services and for the migration of CareOne’s existing email and SharePoint systems to NaviSite’s servers. These sales orders all state that they are subject to the terms of the MSA.
Separately, in November 2012 Partners and NaviSite executed a sales order for a Citrix production environment. This sales order originally designated CareOne as the purchaser, but it was revised by hand to change the purchaser to Partners. This sales order contains the same language as the others stating that it is subject to the terms and conditions of the MSA between CareOne and NaviSite. Partners admits, in the statement of facts regarding Partners’ claims, that by executing this sales order Partners “consented to the standard terms and conditions in the NaviSite/CareOne Master Services Agreement … as they pertained to Partners … as the ‘Customer’ .”
NaviSite’s work for Partners went fine. NaviSite delivered the implemented the promised services. Partners paid all required up-front fees and was paying all the agreed upon monthly fees.
In contrast, NaviSite’s work for CareOne went poorly. The SOW between these parties provided that NaviSite was to begin hosting and providing CareOne’s computer services no later than January 1, 2013. That did not happen. Implementation of the promised services was repeatedly delayed. Who caused or was responsible for the delays is in dispute. NaviSite blames CareOne and vice versa.
On January 31, 2013—one month after the due date—NaviSite sent an email asking CareOne to accept four of the promised systems. CareOne responded immediately, stating it “cannot accept this environment in its current state” because the computer systems were purportedly incomplete, had not been fully tested, and could not be used by CareOne. As a result CareOne refused to pay NaviSite’s first monthly invoice for January 2013.
NaviSite never sent CareOne any other notice stating that any part of the project was complete and ready for acceptance by CareOne. In April, June, and
August 2013 NaviSite made available test versions of many but not all of the services it had contracted to provide. CareOne informed NaviSite that it had discovered material problems with all of them. CareOne never accepted any of those services and never used them for any purpose other than acceptance testing.
After CareOne refused to pay the January 2013 invoice and rejected the first four services, the parties had further discussions about what it would take for NaviSite to finish implementing the project. CareOne and NaviSite negotiated the only amendment to their contract, which they executed on February 28, 2013. The amendment was called Amendment Number One to the MSA.
The Amendment provided as follows. CareOne agreed to pay NaviSite’s first monthly invoice, for the month of January 2013, by March 31, 2013. In turn, NaviSite agreed that CareOne would receive a credit of twice that amount that would be applied against CareOne’s monthly invoices in months 34, 35, and 36 of the MSA’s term. NaviSite also agreed to deliver an Active Directory Synchronization solution to CareOne by March 3, 2013. The Amendment stated that all terms and conditions of the MSA remained in effect except as otherwise provided in the Amendment.
CareOne paid NaviSite’s monthly invoice for January 2013 as agreed in Amendment Number One; that payment was in the amount of $ 365,169.30. CareOne also paid NaviSite’s invoices for February, March, and April 2013; the payments for those three invoices totaled just over $ 2 million,1 which means that CareOne paid some $ 2.4 million to NaviSite for these four monthly invoices. Thus, including the roughly $ 580,000 in upfront payments made when the contract was first executed, CareOne has paid NaviSite almost $ 3 million.
NaviSite submitted invoices for later months, but CareOne did not pay them. NaviSite was aware that CareOne refused to pay and was disputing the invoices issued after April 2013 because CareOne had still not received or accepted the services that CareOne was billing for.2
1 The summary judgment record shows that CareOne paid $ 587,894 on March 7, 2013, $ 725,438.60 on June 10, 2013, and $ 730,338.60 on June 21, 2013. This is more than what CareOne alleged in ¶ 102 of its amended complaint.
2 NaviSite’s understanding of these facts is confirmed in an internal email circulated within NaviSite on September 5, 2013.
In November 2013 CareOne informed NaviSite that it intended to terminate their Agreement for non-performance and sought to negotiate an orderly transition. NaviSite responded five days later by demanding $ 2.2 million as payment for its monthly invoices for April through September 2013. NaviSite said that if it did not receive payment of that amount within five days it would terminate all services it was providing to Partners.
After Partners successfully migrated its services from NaviSite to another provider, NaviSite finally terminated the contract and stopped providing any services to CareOne or Partners on January 24, 2014.
1.2. Relevant Contract Terms. The Court must construe the parties’ written contracts. Neither side appears to claim that any of the relevant contract documents is ambiguous. “If a contract … is unambiguous, its interpretation is a question of law that is appropriate for a judge to decide on summary judgment.” Seaco Ins. Co. v. Barbosa, 435 Mass. 772, 779 (2002). “Whether a contract is ambiguous is also a question of law.” Eigerman v. Putnam Investments, Inc., 450 Mass. 281, 287 (2007). The Court concludes that the contract documents are unambiguous.
1.2.1. The Original Contract Documents. The parties agreed to allocate the risk of non-performance by NaviSite in several ways that are relevant to the pending claims and counterclaims. This allocation of risk is reflected in terms of the MSA that was executed by CareOne and NaviSite and accepted by Partners when it executed its sales order.
NaviSite agreed to bear much of the risk that it may not be able to deliver systems acceptable to CareOne, by agreeing to accept most of its compensation in the form of monthly recurring payments that would not be due for any service until it was accepted. The contract provides (in MSA §§ 3.1 and 3.3) that NaviSite was not entitled to invoice, and CareOne had no obligation to pay, monthly recurring fees for any service provided by NaviSite until after CareOne had accepted that particular service. NaviSite was required to send CareOne a “Completion Notice” as to each service once it had been fully implemented and was ready for use by CareOne. CareOne would then have ten days to test the service to determine whether it conformed to the agreed-upon specifications. If CareOne notified NaviSite that the
service did not conform to the specifications, then NaviSite would have to use commercially reasonable efforts to fix the problem and submit a new Completion Notice when the service was ready for use. CareOne only had to begin paying the monthly charge for a service if it accepted the service after having received a Completion Notice, or if was deemed to have done so because it did not respond to a Completion Notice within ten days or used the service for purposes other than acceptance testing after receiving a Completion Notice.
CareOne and Partners, in turn, agreed to bear most of the remaining risk that NaviSite might breach its contractual obligations. The MSA placed clear limits on CareOne’s and Partners’ remedies and NaviSite’s liability for any breach of contract.
The contract limits the remedies available to CareOne and Partners for any breach of contract by NaviSite. As relevant here, § 6.4 of the MSA provides that if NaviSite were to breach the contract then CareOne’s or Partners’ “sole and exclusive remedy, and NaviSite’s sole and exclusive liability,” would be as follows: (1) CareOne or Partners could give NaviSite notice of the breach, which would trigger a contractual obligation by NaviSite to work diligently to cure the breach at its expense; (2) CareOne or Partners could obtain a credit against monthly recurring fees for any services affected by the breach of contract; or (3) CareOne or Partners could terminate the contract for any uncured material breach, which would cut off any further obligations by CareOne and Partners to make any payments or doing anything else under the contract.3 The right to terminate the contract for an uncured material breach by the other side is spelled out in MSA § 7.4, which provides that a party could only terminate for an uncured material breach after giving the other side written notice of the claimed breach and at least thirty days to cure the breach.
The contract further limits NaviSite’s potential liabilities in several ways. Section 6.3 bars any claim that NaviSite breached any kind of implied warranty, by specifying that NaviSite did not make and expressly disclaimed any implied warranty of any kind. And § 9.1 provides that neither NaviSite, CareOne, nor Partners shall
3 CareOne and Partners also had the right to seek indemnification of any liability owed to a third-party, to the extent provided under the MSA. No third-party liability is at issue here.
be liable “for any indirect, consequential incidental, special or punitive damages—including, without limitation, loss of use, interruption of business, loss of data or loss of profits—arising out of, or in any way connected with” the parties’ contract.
In addition, the parties agreed to an allocation of the risk that CareOne or Partners might commit a material breach of the contract. Section 7.4 specifies that the failure by CareOne or Partners to pay amounts owed when due would be a material breach, and that NaviSite could terminate the contract if CareOne or Partners failed to make payment after being asked or failed to cure any other material breach. This section also contains an acceleration clause providing that if NaviSite were to terminate a schedule or the whole contract because of an uncured material breach by CareOne or Partners, then the Customer (CareOne or Partners) would have to pay all monthly fees that would have been due through the end of the contract term. The same right to accelerated payment of all monies owed under the contract would also apply if CareOne or Partners terminated the contract in a manner not expressly permitted (e.g., if it terminated for a non-material breach by NaviSite or terminated without giving NaviSite thirty days to cure any material breach). NaviSite has the right (per MSA § 3.2) to be reimbursed for any fees and costs it incurs to collect amounts owed to it under the contrary.
The parties also agreed in MSA § 10.14 that neither side would waive any right under the contract by failing to enforce any provision of it, and that contractual waivers would only be effective if made in writing.
1.2.2. Amendment Number One. The one contract amendment modified the “Completion Notice” requirement and process of the MSA only with respect to NaviSite’s first monthly invoice, which was for January 2013. CareOne agreed to pay that invoice, in exchange for receiving a credit of twice that amount that it could redeem later, even though it had not yet accepted the relevant services.
Nothing in the Amendment eliminated the Completion Notice requirements as a condition precedent to receiving any later monthly payments. That is the only reasonable interpretation of the plain language of Amendment Number One. The Amendment says nothing about eliminating the Completion Notice provisions of the MSA with respect to any monthly invoice for periods after January 2013, or about
CareOne agreeing to pay any other monthly invoices. And the Amendment specifies that, “[e]xcept as provided in this Amendment No. 1, all of the terms and conditions of the Agreement shall remain in full force and effect.”
If the Amendment were ambiguous in this regard, which it is not, then undisputed parol evidence regarding the parties’ negotiations would confirm that the Amendment was not intended to eliminate the condition that CareOne accept each service before having to pay monthly fees for it. In negotiating a possible contract amendment, NaviSite had asked CareOne to commit to timely payment of all future monthly invoices. In response, CareOne’s CTO informed NaviSite that CareOne would not sign the proposed amendment if that meant that CareOne was accepting delivery.4 Five days later NaviSite responded by agreeing to revise the proposed amendment to specify that it did not supersede the MSA.
2. NaviSite’s Claims against CareOne. The Court concludes that CareOne is entitled to summary judgment in its favor on NaviSite’s claims and identical counterclaims for breach of contract and violation of G.L. c. 93A.
2.1. NaviSite’s Contract Claim against CareOne. NaviSite claims that CareOne committed a material breach of the parties’ contract by refusing to pay any monthly invoice for periods after April 2013, that NaviSite had the right under MSA § 7.5 to terminate its contract with CareOne because of this uncured material breach, and that NaviSite is therefore entitled under MSA §§ 3.2 and 7.5 to collect all unpaid amounts owed by CareOne through the effective date of the termination, plus all fees that would have been due under the contract through the end of the contract term, plus all legal fees and costs incurred by NaviSite to collect what it is owed.
CareOne is entitled to summary judgment in its favor on this claim because the undisputed facts indicate that NaviSite never complied with a contractual condition precedent to being able to bill and get paid for the disputed monthly fees. Parties to a contract are free to agree that certain events must occur before one of the parties must carry out some contractual obligation; in law-speak such provisions are
4 The email states: “Please give me a call. Tying the deal of accept delivery now in order to begin invoicing to timely payments is not going to work for us. We will probably have to go back to leaving it as the original then.”
called “conditions precedent.” See generally Massachusetts Mun. Wholesale Elec. Co. v. Town of Danvers, 411 Mass. 39, 45 (1991) (“MMWEC”).
The contract expressly provided (in MSA § 3.1) that NaviSite was not entitled to bill CareOne monthly fees for any service provided by NaviSite until after “Acceptance” of that service by CareOne. Section 3.3 defines a specific process for NaviSite to seek and obtain Acceptance of a service: it had to send a “Completion Notice” informing CareOne in writing that a service has been implemented and is ready for use, and give CareOne ten days to test the service and decide whether to accept or reject it. The summary judgment record shows that NaviSite only sent one Completion Notice, in January 2013, which CareOne promptly rejected. NaviSite never sent another Completion Notice and never obtained Acceptance from NaviSite as that term is define in the contract.
CareOne has no contractual obligation to pay past or future monthly invoice amounts because NaviSite never sought or obtained Acceptance of the services that NaviSite had agreed to provide. Since NaviSite had no contractual right to start billing for those services, it cannot compel CareOne to pay any amount for those services. And, of course, since NaviSite is not entitled to collect any unpaid amounts from CareOne it is also not entitled to collect any legal fees or costs.
NaviSite argues that the MSA did not make Acceptance by CareOne a condition precedent because the contract does not expressly refer to Acceptance as a “condition precedent” or use other sufficiently “emphatic” language to do so. This argument is without merit.
A contract imposes a condition precedent if the contract as a whole makes clear that was the parties’ intent; no particular wording or emphasis is required. MMWEC, supra, at 46 (“[E]mphatic or precise words are not absolutely necessary to create a condition. … In the absence of the usual words, a condition precedent may nonetheless be found to exist if the intent of the parties to create one is clearly manifested in the contract as a whole.”).
Here, the parties agreed (in MSA § 3.1) that NaviSite could only send invoices for monthly fees “beginning on Acceptance of the applicable Services.” That made acceptance a condition precedent to CareOne’s obligation to pay for a service.
Where a contract provides that a party must make payment for services or goods that are accepted or approved, either by the party or by an agreed-upon third-party like an architect, the acceptance or approval is a condition precedent to any duty to make the payment. See F&W Welding Service, Inc. v. ADL Contracting Corp., 587 A.2d 92, 97-98 (1991) (acceptance was condition precedent in contract providing that payment was due within thirty days of acceptance of work); Restatement (Second) of Contracts § 226, illustration 2 (1981) (“A, a tenant of B, promises to pay $ 1,000 for ‘such repairs as an architect appointed by B shall approve.’ The appointment by B of an architect and the architect’s approval of repairs are conditions of A’s duty to pay for repairs.”)
NaviSite also argues that CareOne agreed in the contract amendment to begin paying monthly recurring fees. As discussed above in § 1.2.2 of this decision, that assertion is incorrect. What CareOne agreed to do in the Amendment was to pay the “first monthly recurring invoice for January 2013.” Nothing in the Amendment says that Care Once was agreeing to pay any subsequent monthly recurring fees on services it had not yet accepted. To the contrary, the Amendment specifies that all terms and conditions of the MSA—which necessarily includes the condition precedent of Acceptance—remain in effect except as provided in the Amendment.
Finally, NaviSite asserts that CareOne waived the condition precedent by paying the February, March, and April 2013 invoices without waiting for a Completion Notice and without any Acceptance of the relevant services by CareOne. This argument also fails. The parties agreed by contract (in MSA § 10.14) that “[no failure to … enforce any provision” of the contract “shall be construed as a future waiver” of that provision. Such a “no waiver” provision is enforceable. See Amerada Hess Corp. v. Garabedian, 416 Mass. 149, 154-155 (1993).
2.2. NaviSite’s Chapter 93A Claim against CareOne. NaviSite also claims that CareOne refused to pay what it owed under the contract, tried to “leverage” this breach to pressure NaviSite to renegotiate the terms of the deal, and thereby committed an unfair trade practice in violation of G.L. c. 93A, § 11.
Since NaviSite’s claim under c. 93A is based solely on and thus “is wholly derivative of” its claims for breach of contract, and the summary judgment record
shows that NaviSite’s contract claim is “legally unsupportable,” CareOne is entitled to summary judgment on the c. 93A claim as well. See Frohberg v. Merrimack Mut. Fire Ins. Co., 34 Mass. App. Ct 462, 465 (1993); accord Private Lending & Purchasing, Inc. v. First American Title Ins. Co., 54 Mass. App. Ct. 532, 539-540 (2002).
3. CareOne’s Claims against NaviSite. The Court concludes that NaviSite is entitled to summary judgment in its favor on all of CareOne’s claims against it.
3.1. Breach of Contract Claims. CareOne claims in Counts 1 and 6 of its amended complaint that NaviSite breached its express contractual obligations by terminating the contract instead of curing its non-performance, and that NaviSite breached the implied covenant of good faith and fair dealing by threatening to terminate its services to Partners in an attempt to pressure CareOne into paying money NaviSite had not earned. CareOne seeks actual damages (apparently meaning repayment of all amounts CareOne had paid to NaviSite) and consequential damages.
NaviSite is entitled to summary judgment on these claims because they are barred by the express contractual limitations on CareOne’s remedies and NaviSite’s liability.5 As explained above in § 1.2.1, CareOne agreed that its remedies for a breach of contract by NaviSite would be limited to seeking a cure of any breach, obtaining a credit against future monthly payments owed under the contract, or terminating the contract and thereby cutting off any further liability to NaviSite. Since CareOne expressly waived any right to seek actual or consequential damages from NaviSite for any breach of contract, NaviSite is entitled to judgment in its favor on these contract claims as a matter of law.
CareOne’s insistence that NaviSite was not ready, willing, and able to perform its obligations under the contract is beside the point. True, NaviSite could not prevail on a claim that CareOne breached the contract if NaviSite were unable to demonstrate that it was ready, willing, and able to perform its parts of the contract. Bulwer v. Mount Auburn Hosp., 473 Mass. 672, 690 (2016); Singarella v. City of Boston, 342 Mss. 385, 387 (1961). But, in the absence of a claim and proof of fraud in
5 The Court reads NaviSite’s legal memoranda as arguing that both of CareOne’s contract claims are barred by the contractual limitations on remedies and liability, and arguing in the alternative that there are additional reasons why CareOne’s implied covenant claim fails as a matter of law.
the inducement that would render the whole contract voidable—which have not been made or proffered in this case—the contractual limitations on CareOne’s remedies and NaviSite’s liability would be enforceable even if NaviSite’s alleged breach of contract came about because it was not able to perform. See Canal Elec. Co. v. Westinghouse Elec. Corp., 406 Mass. 369, 372-375 (1990) (limitation of liability provision in contract between sophisticated commercial entities held enforceable even if exclusive remedy of cure failed of its essential purpose, as parties apparently stipulated); S.M. Wilson & Co. v. Smith Int’l, Inc., 587 F.2d 1363, 1372-1375 (9th Cir. 1978) (limitation of liability provision enforceable even though defendant could not repair machine and thus was unable to perform) (applying California law). The whole point of MSA §§ 6.4 and 9.1 was to limit NaviSite’s liability should it be unable to perform. CareOne cannot avoid the bite of terms it voluntarily agreed to on the ground that NaviSite was indeed unable to perform.
Nor may CareOne avoid the contractual limitations on remedies and liability on the ground that they are unconscionable. A contract is unconscionable only if no honest and fair person in their right mind would agree to it. Waters v. MIN Ltd., 412 Mass. 64, 69 (1992) (“an unconscionable contract is ‘such as no man in his senses and not under delusion would make on the one hand, and no honest and fair man would accept on the other’ ” (quoting Hume v. United States, 132 U.S. 406, 411 (1889), quoting in turn Earl of Chesterfield v. Janssen, 38 Eng. Rep. 82, 100 (Ch. 1750)). There was nothing crazy about allocating the risk of non-performance in the manner agreed to by CareOne.
To demonstrate that a contract provision is unconscionable and therefore unenforceable, a party must demonstrate that, as of “the time of the execution of the agreement, the contract provision could result in unfair surprise and was oppressive to the allegedly disadvantaged party.” Miller v. Cotter, 448 Mass. 671, 680 (2007), quoting Zapatha v. Dairy Mart, Inc., 381 Mass. 284, 293 (1980).
As a sophisticated business entity, CareOne cannot demonstrate that it did not understand and for that reason is now surprised by the reach of MSA §§ 6.4 and 9.1. Cf. Zapatha, supra, at 294 (person with business experience and education cannot claim unfair surprise as to meaning of straightforward contract provision). Although
CareOne claims it was surprised to learn that NaviSite itself did not possess all of the technical expertise needed to supply the services for which CareOne had contracted, that assertion cannot be squared with the plain language of the contract itself. CareOne expressly agreed in the Statement of Work that the services would be provided by “NaviSite through its Third Party Provider.”
Nor can CareOne demonstrate that the limitation of remedy and liability provisions were oppressive as of the time the contract was executed. There is nothing unconscionable about a contract in which “two commercially sophisticated parties” have agreed to limit potential liabilities in order to allocate among themselves the risks of non-performance. Canal Elec., 406 Mass. at 374.
3.2. UCC Claims. CareOne claims in Count 8 that it is entitled to remedies for NaviSite’s alleged breach of contractual obligations either under art. 2 of the Uniform Commercial Code (which governs sales of goods) or under art. 2A of the UCC (which governs leases of goods). See G.L. c. 106, §§ 2-711 through 2-713, 2A-508, and 2A-518 through 2A-520. And CareOne claims in Counts 11 and 12 that it is entitled under art. 2 or art. 2A to remedies for NaviSite’s alleged breach of implied warranties of merchantability and fitness for a particular purpose. See G.L. c. 106, §§ 2-314, 2-315, 2A-212, and 2A-213.
NaviSite is entitled to summary judgment on these claims because the parties’ contract did not involve a sale or lease of goods and thus was not subject to UCC art. 2 or art. 2A. These UCC articles only apply to the sale or lease of “goods,” meaning things that “are movable at the time of identification to the” contract for sale or lease. See G.L. c. 106, §§ 2-102 and 2-105(1), and §§ 2A-102 and 2A-103(1)(h). Contracts to provide services are not covered by art. 2 or art. 2A. See White v. Peabody Constr. Co., 386 Mass. 121, 132 (1982).
Where a contract calls for the provision of services as well as the sale or lease of moveable goods, “the test is whether the predominant factor, thrust, or purpose of the contract” is to provide services (in which case the UCC does not apply) or to sell or lease goods (in which case it does). Cumberland Farms, Inc. v. Drehmann Paving & Flooring Co., 25 Mass. App. Ct. 530, 534 (1988); accord White, supra.
The summary judgment record makes clear that the predominant thrust of this contract was the rendition of services by NaviSite and its subcontractors. The parties said so in their Master Statement of Work, which provides that “NaviSite through its Third Party Provider will provide” a number of specified “services.” Similarly, MSA § 3.1 provides that CareOne’s obligation to make monthly payments would begin on “Acceptance of the applicable Services.” The MSA defines “Services” to mean “the services (including all associated NaviSite-Supplied Software and NaviSite-Supplied Hardware) purchased by” CareOne. Obviously, when a company like CareOne buys information technology services the provider must use computer hardware to provide the services. But CareOne was not purchasing computers that it would then operate on its own; this was not a contract to provide that kind of “turnkey” system.6 Rather, it hired NaviSite to develop, implement, host, and operate sophisticated computing services that would run on computer hardware located at NaviSite’s facilities.
Since the undisputed facts make clear that the predominant thrust of this contract was the provision of services, the UCC is inapplicable. See Mattoon v. City of Pittsfield, 56 Mass. App. Ct. 124, 141-142 (2002).
3.3. Unjust Enrichment Claim. CareOne claims in Count 9 that NaviSite has been unjustly enriched by the roughly $ 2.4 million it received from CareOne for the four monthly invoices for January through April 2013. CareOne correctly concedes in its summary judgment memorandum that this is a claim in the alternative that is only viable if the Court were to “find that the contract is unenforceable, or that it should be rescinded.”
NaviSite is entitled to summary judgment on this claim because the parties’ relationship was established and defined by an enforceable written contract. “Ordinarily, a claim of unjust enrichment will not lie ‘where there is a valid contract that defines the obligations of the parties.’ ”Metropolitan Life Ins. Co. v. Cotter, 464 Mass. 623, 641 (2013), quoting Boston Med. Ctr. Corp. v. Secretary of Executive Office of Health & Human Servs., 463 Mass. 447, 467 (2012). That is because “[a] valid contract defines the obligations of the parties as to matters within its scope,
6 USM Corp. v. Arthur D. Little Systems, Inc., 28 Mass. App. Ct. 108 (1989), which involved the provision of a turnkey system, is therefore inapplicable here.
displacing to that extent any inquiry into unjust enrichment.” Boston Med. Ctr. Corp., 463 Mass. at 467, quoting Restatement (Third) of Restitution and Unjust Enrichment § 2 (2011).
3.4. G.L. c. 93A, § 11. CareOne claims in Count 4 that NaviSite committed an unfair trade practice in violation of G.L. c. 93A, §§ 2 and 11, by threatening to discontinue service to Partners if CareOne did not pay NaviSite an additional $ 2.2 million under the parties’ contract.
NaviSite is entitled to summary judgment on this claim because CareOne has been unable to muster any evidence that it “suffered a ‘loss of money or property’ within the meaning of G.L. c. 93A, § 11,” which is a required element of any business-to-business claim under c. 93A. Lumbermens Mut. Cas. Co. v. Offices Unlimited, Inc., 419 Mass. 462, 468 (1995) (ordering summary judgment for counterclaim defendant), quoting G.L. c. 93A, § 11; accord Frullo v. Landenberger, 61 Mass. App. Ct. 814, 822-823 (affirming summary judgment for defendant), rev. denied, 442 Mass. 1111 (2004).
CareOne has admitted that it did not incur any costs to migrate its users to another information technology vendor after NaviSite threatened to terminate its contract and then carried out that threat.
Although CareOne argues that its employees had to spend time dealing with NaviSite’s threats to terminate its contract, this alleged loss of employee time does not constitute a “loss of money” within the meaning of the statute. Under § 11, “ ‘Money’ means money, not time, and … ‘property’ means the kind of property that is purchased or leased, not such intangibles as a right to a sense of security, to peace of mind, or to personal liberty.” Tech Plus, Inc. v. Ansel, 59 Mass. App. Ct. 12, 20, rev. denied, 440 Mass. 1108 (2003), quoting Baldassari v. Public Fin. Trust, 369 Mass. 33, 45 (1975). A mere loss of time in having to respond to and deal with any consequences of an alleged unfair trade practice is not a “loss of money” within the meaning of § 11. Halper v. Demeter, 34 Mass. App. Ct. 299, 303-304 (1993) (vacating judgment for plaintiff on claim under c. 93A, § 11).
The two Appeals Court decisions cited by CareOne do not hold that loss of time that results in no loss of money is compensable under G.L. c. 93A, § 11. VMark held only that damages for tortious misrepresentation can include compensation for
“hours fruitlessly spent by … employees trying to make the defective computer system work.” See VMark Software, Inc. v. EMC Corp., 37 Mass. App. Ct. 610, 620-621 (1994). The court never reached the issue of whether similar compensation is available under § 11 because it held that awarding such damages would be cumulative and that the plaintiff was not entitled to double or treble damages. Id. In Bump, the plaintiff was a business broker who charged clients for his time; the Appeals Court held that the plaintiff could recover for futile time spent trying to sell a company as a result of defendant’s unfair trade practices was compensable under § 11 because plaintiff’s inability to charge that time to other clients or projects was a loss of money. See Bump v. Robbins, 24 Mass. App. Ct. 296, 312 (1987). CareOne has presented no evidence that it lost money because it was unable to charge employees’ time to other projects.
3.5. Declaratory Judgment. In Count 10, CareOne seeks declaratory judgment regarding whether CareOne is liable to make accelerated payments under the contract now that NaviSite has terminated the contract and whether the contractual limitations on remedies and liability are unconscionable and.
The Court disagrees with NaviSite’s assertion that this claim is moot. NaviSite points that the contract has been terminated and the parties have no ongoing contractual relationship. But there nonetheless remains an actual controversy regarding the enforceability of the disputed contractual provisions and whether NaviSite is entitled to collect any more money from CareOne under the contract. The mere fact that there is no uncertainty regarding future relations among the parties does not moot the actual controversy regarding claims of past liability. See FMR Corp. v. Boston Edison Co., 415 Mass. 393, 396 (1993) (grant of summary judgment on plaintiff’s claims ended any obligation by defendant’s insurer to provide a defense, but did not moot defendant’s claims against insurer for past defense costs).
Since CareOne has standing and there is an actual controversy between the parties regarding their rights and obligations under their contract, the Court is obligated to declare the rights of the parties rather than dismiss this claim. See, e.g., Attorney General v. Kenco Optics, Inc., 369 Mass. 412, 418 (1976); Gennari v. City of Revere, 23 Mass. App. Ct. 979 (1987) (rescript). The Court will order the entry of
declaratory judgment consistent with its legal rulings regarding the failure of NaviSite’s contract claims against CareOne and the enforceability of the contractual limitations on remedies and liability.
4. Partners’ Claims against NaviSite. Finally, the Court concludes that NaviSite is also entitled to summary judgment in its favor on all of Partners’ claims. Although the claims asserted by Partners are in many respects quite similar to those by CareOne, the Court addresses them separately to make clear its resolution of NaviSite’s separate motion for summary judgment against Partners’ claims.
4.1. Breach of Contract. In Counts 1 and 5 of its amended complaint, Partners asserts claims for breach of express contractual obligations and breach of the implied covenant of good faith and fair dealing. These claims fail as a matter of law for the same reasons that CareOne’s very similar claims fail, as discussed above in § 3.1 of this decision. Even assuming that Partners had mustered any evidence that it suffered any compensable damages, which NaviSite contests, these claims would be barred by the contractual limitations on remedies and liability set forth in MSA §§ 6.4 and 9.1. 7
4.2. UCC Contract Remedies. Partners’ claim under the UCC in Count 7 fails as a matter of law because the party did not contract for the sale or lease of goods, as discussed above in § 3.2 of this decision.
The sales order signed by Partners establishes that the predominant thrust of this contract was the rendition of services by NaviSite and its subcontractors. Partners agreed to pay a one-time fee of $ 39,867.60 to cover hardware and software installation costs. It also agreed to pay $ 74,711.72 every month throughout the life of the contract for NaviSite to monitor and manage specified information technology “services.” The contract did not call for NaviSite to deliver a “turnkey” system that Partners would run on its own. To the contrary, Partners was hiring NaviSite to provide information technology services. The UCC does not apply to such a contract
7 The Court reads NaviSite’s legal memoranda as arguing that both of Partners contract claims are barred by the contractual limitations on remedies and liability, and arguing in the alternative that there are additional reasons why CareOne’s implied covenant claim fails as a matter of law.
because it is not predominantly for the sale or lease of goods. See, e.g., White, 386 Mass. at 132; Mattoon, 56 Mass. App. Ct. at 141-142.
4.3. G.L. c. 93A, § 11. Partners’ claim under c. 93A, § 11, in Count 3 fails for the reasons discussed above in § 3.4 of this decision: Partners has no evidence that it suffered any loss of money as a result of any alleged unfair trade practices. NaviSite has convincingly demonstrated that Partners ended up saving money as a result of NaviSite’s termination of the contract because Partners incurred no out-of-pocket cost to migrate to a new vendor and the total amount charged by the new vendor was less than what Partners would have owed NaviSite under their contract. In its memorandum in opposition, Partners does not even argue that it suffered a “loss of money” within the meaning of c. 93A, § 11.
4.4. Tortious Interference. Partners claims in Count 2 that NaviSite intentionally interfered with Partners’ contractual relationships with more than 500 long term care facilities by threating to stop providing service to Partners in an attempt to pressure CareOne into paying more.
NaviSite is entitled to summary judgment on this claim because there is no evidence that it actually interfered with a contract or other advantageous relationship. There is no evidence that NaviSite conduct other caused one or more of Partners’ clients to breach their contract with Partners, or that NaviSite did anything that prevented Partners from continuing to service any of its customers.
To make out its claim for tortious interference with contractual relations, Partners must prove that: (1) Partners had a contract with a third party; (2) NaviSite knowingly interfered with that contract either by inducing the third party to break the contract or by preventing Partners from performing its contractual obligations; (3) NaviSite’s interference with the contract was improper in motive or means; and (4) Partners was harmed as a result. See Weiler v. PortfolioScope, Inc., 469 Mass. 75, 84 (2014); Shafir v. Steele, 431 Mass. 365, 369 (2000).
Partners argues that, under Shafir, it can prove the second or “interference” element of this claim by proving that NaviSite “caused the performance of Partners’ contract with its customers … to be more expensive and more burdensome,” even if it
has no evidence that the claimed additional burden caused either Partners or its customer to stop performing the contract. That is incorrect. Partners misreads Shafir.
In Shafir, the Supreme Judicial Court broadened the tort of interference with contracts under Massachusetts law, but not in a way that helps Partners. Prior cases held, consistent with Restatement (Second) of Torts § 766, that to prove this tort the plaintiff must show that “the defendant knowingly induced” a third party “to break” its contract with the plaintiff. See, e.g., G.S. Enters., Inc. v. Falmouth Marine, Inc., 410 Mass. 262, 272 (1991). Shafir adopted § 766A of the Restatement, and held that it is just as tortious to interfere with a contract by making the plaintiff’s own performance more expensive or burdensome and thereby “preventing the plaintiff from performing” his contractual obligations. 431 Mass. at 369. But the SJC did not eliminate the element of interference that caused some party to the contract not to perform its obligations. Id. at 369-370.
If a defendant deliberately makes it more burdensome and difficult to carry out a contract, but that attempted interference never causes any party not to perform their contractual obligations, then the defendant has not committed the tort of intentionally interfering with contractual relations. See Anzalone v. Massachusetts Bay Transp. Auth., 403 Mass. 119, 123 (1988) (supervisor’s deliberate mistreatment of employee, including forcing him to suffer noxious fumes and work in a close room hotter than 100 degrees Fahrenheit, held not to constitute tortious interference because employment contract obligations were fully performed).
4.5. Declaratory Judgment. In Count 10, Partners seeks the same declaration of rights as CareOne. For the reasons stated above in § 3.5 of this decision, Partners is entitled to a declaration of the parties’ rights on the topics identified in this claim.
ORDER
CareOne Management, LLC’s motion for summary judgment on the claims and counterclaims against it by NaviSite, Inc. is ALLOWED.
NaviSite’s for summary judgment in its favor on the claims against or by CareOne is DENIED IN PART with respect to NaviSite’s claims against CareOne and ALLOWED IN PART with respect to CareOne’s claims against NaviSite.
The motion by NaviSite for summary judgment in its favor on the claims against it by Partners Pharmacy Services, LLC is ALLOWED.
Final judgment shall enter (1) declaring that neither CareOne Management, LLC, nor Partners Pharmacy Services, LLC, has any obligation to further perform or to make any accelerated payments under their contracts with NaviSite, Inc., the parties’ Master Services Agreement is not voidable, and the limitation on liability and exclusive remedies provisions in the parties’ contracts are valid and enforceable; and (2) dismissing all other claims and counterclaims with prejudice.
April 24, 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court

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Posted by Stephen Sandberg - April 26, 2017 at 3:29 pm

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CMJ Management Company v. Wilkerson (Lawyers Weekly No. 11-038-17)

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; SJCReporter@sjc.state.ma.us

16-P-426                                        Appeals Court

CMJ MANAGEMENT COMPANY[1]  vs.  PATRICIA WILKERSON.

No. 16-P-426.

Suffolk.     December 1, 2016. – March 31, 2017.

 

Present:  Cypher, Maldonado, & Blake, JJ.

HousingLandlord and Tenant, Termination of lease.  Summary ProcessPractice, Civil, Summary process, Jury trial.

Summary process.  Complaint filed in the Boston Division of the Housing Court Department on September 15, 2014.

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Posted by Stephen Sandberg - March 31, 2017 at 4:57 pm

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Tam, et al. v. Federal Management Co., Inc., et al. (Lawyers Weekly No. 12-154-16)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 2013-2347 BLS 1
SIEW-MEY TAM, on behalf of herself and others similarly situated, and MARY JANE
RAYMOND
vs.
FEDERAL MANAGEMENT CO., INC., RICHARD HENKEN, DAVID FLAD AND
PETER LEWIS
MEMORANDUM AND ORDER ON DEFENDANTS’ MOTION FOR
DECERTIFICATION OF CLASS ACTION
On December 16, 2015, this court (Brieger, J.) allowed a motion to certify a class of
current and former employees of Federal Management Co., Inc. (“Federal”) alleging the failure
of Federal to pay them for overtime hours worked. The class of employees certified was “all
current and former Property Managers” employed by Federal from January 1, 2005, to the
present.1 The Court carefully reviewed each of the prerequisites for class certification under
Mass. R. Civ. P. 23 and found that they were satisfied. Among other findings, the Court
concluded that on the pre-discovery record plaintiffs, Siew-Mey Tam and Mary Jane Raymond,
were adequate representatives of a class of approximately 40 current or former property
1 Memorandum of Decision and Order on Plaintiffs’ Motion to Certify a Class (“Class
Cert Order”). The Class Cert Order did not expressly address the dates inclusive for the putative
class. Instead, the court stated that plaintiffs’ motion for class certification is “ALLOWED.” In
plaintiffs’ motion for class certification, the time period for the class sought by plaintiffs was
“March 1, 2000, to the present.” However, in plaintiffs’ Opposition to the present motion for
decertification, plaintiffs assert that the certified class time period is from “January 1, 2005, to
the present.” Opposition, p. 2. Accordingly, I adopt plaintiffs’ assertion and find that the
presently certified class period is from January 1, 2005 to the present.
1
managers. Defendants took an interlocutory appeal of the class certification order. The Appeals
Court affirmed. Following the certification, discovery by both sides ensued, including the
depositions of the named plaintiffs.
Federal, and the individual defendants, now move to decertify the class based, principally,
on the ground that discovery has shown that Tam and Raymond are not adequate class
representatives. Defendants also take the opportunity to ask the Court to re-visit all of the other
criteria for class certification. For the reasons stated below, the motion will be allowed.
BACKGROUND
In the Class Cert Order, Judge Brieger noted that the facts of this case are relatively
straightforward and undisputed. Federal manages seventeen residential, commercial and retail
properties, providing building operations, financial administration, leasing and regulatory
compliance services. For each property Federal employs a property manager who may have
anywhere from two to seventeen employees reporting to her/him. Raymond was employed by
Federal as a property manager from February 1990 to March 2011. Tam was employed by
Federal as a property manager from May 2005 to May 2012.
Tam and Raymond allege that they were paid a salary and an annual bonus, but no
additional amount for overtime hours worked. According to the Class Cert Order, Tam and
Raymond acknowledge that upon inquiring to Federal about overtime pay, Federal informed
them that, as property managers, they were exempt from the legal requirement to pay overtime.
That is because they were allegedly employed, as described in the pertinent statute, G. L. C. 151,
§ 1A, “as a bona fide executive, or administrative or professional person earning more than
eighty dollars per week.” Plaintiffs now contest that categorization. They assert that they should
2
proceed as a class consisting of all persons employed by Federal as property managers to
challenge Federal’s position that they are exempt employees.
In the Class Cert Order, the court rejected plaintiffs’ argument that they were entitled to
class treatment under a “similarly situated” theory based on the language in G.L. c. 149, § 150
and c. 151, § 1B. Instead, the court analyzed whether plaintiffs met the requirements for a class
action under Mass. R. Civ. P. 23. The court discussed each element required for class
certification and concluded that class certification was appropriate. The court also noted that
discovery might affect the class certification calculus. For example, defendants’ argument that
some putative class members may be barred by the statute of limitations was deferred for
consideration “[i]n light of ongoing discovery.” Class Cert Order, p7 n.7. Also, with respect to
the “commonality” requirement, the court noted that “Federal contends that Plaintiffs’ common
law claims fail to satisfy the ‘commonality’ requirement because not all of the individual
Property Managers seeking to be joined to the potential class performed the exact same duties as
the other property managers. In light of ongoing discovery such arguments are better addressed at
the summary judgment stage. Here, the court assesses only whether Plaintiffs have made the
baseline showing for class certification under Rule 23.” Class Cert Order, p.8 n. 8.
Defendants appealed the certification of the class. On February 9, 2016, the Appeals
Court denied defendants’ petition. The court wrote “I discern no error in the judge’s careful
exercise of her ‘broad discretion to certify or decertify a class.’ The factual bases alleged by the
defendants to support decertification are appropriate subjects for continued discovery, properly
consigned to the judge’s superintendence of the case, and may provide the basis for additional
motions at an appropriate time.” (Citation omitted).
3
On June 21, 2016, the parties appeared before the court (Ames, J.). The purpose of the
hearing was to determine the substance of class notice and process. Defendants used the occasion
to bring before the court the deposition of Tam that had been taken on May 26, 2016. Defendants
alleged that Tam’s deposition testimony was grossly and materially inconsistent with her
affidavit that had been submitted to the court in connection with plaintiffs’ motion to certify the
class. The court agreed that the deposition testimony “calls into credibility essential issues that
were considered by the court in certification.” Transcript, June 21, 2016, p. 1-32. As a result, the
court stayed the issue of class notice and gave leave to defendants to serve and file a motion to
decertify the class.
Subsequently, this action was transferred to the Business Litigation Session. On
September 23, 2016, defendants filed their motion for decertification. Oral argument was heard
on the motion on October 26, 2016.
Defendants provided as Exhibit F to the Affidavit of Michael C. Birch a copy of the
Affidavit of Siew-Mey Tam, dated September 5, 2014, submitted by plaintiffs in support of their
motion to certify the class. Next to the paragraphs of the Affidavit, defendants inserted citations
to Tam’s deposition testimony that contradict or concede as error or as unsupported, key portions
of the Affidavit. I have reviewed the deposition testimony cited by defendants.2
In her Affidavit, Tam stated that she did not interview, select, train or supervise any
2 In response to the motion to decertify, plaintiffs moved to strike Tam’s certified
deposition testimony. Their argument amounts to a claim that the deposition is incomplete and
subject to change by subsequent testimony or by an errata sheet. Counsel for Tam submitted what
only can be called a lawyer’s draft of an errata sheet because Tam, herself, did not sign it. The
motion to strike is denied because, regardless of any later testimony, the deposition testimony of
May 26, 2016, stands and is available for impeachment of Tam. Smaland Beach Ass’n v.
Genova, 461 Mass. 214, 230 (2012).
4
employees. In her deposition, however, she testified that she did interview potential employees,
and supervise and evaluate the performance of employees. When confronted with her Affidavit,
she admitted that her statements in the Affidavit were not true. In her Affidavit, Tam stated that
she was not responsible for preparing and/or planning the budget for her property. In her
deposition, however, she testified that she did prepare budgets. She admitted in her deposition
that her Affidavit was “wrong” and “incorrect.” These are two significant examples of numerous
other inconsistencies in her Affidavit as compared to her deposition.
For class certification, it was also important to know whether other property managers
employed by Federal were similarly situated with Tam such that their factual presentation would
be common to all property managers. In her Affidavit, Tam averred that “all” property managers
regularly worked more than 40 hours per week and their duties did not include the exercise of
discretion and independent judgment. Specifically, she stated that property managers did not
carry out major assignments, formulate, affect, interpret or implement policies or operating
practices and were not involved in planning long or short-term business objectives. In her
deposition, however, Tam admitted that she had no significant information about other property
managers’ work schedule and lacked a basis for concluding what job duties “all” property
managers performed.
Tam’s Affidavit, submitted, under oath, to the court in support of her motion for class
certification, was materially false and misleading. I reasonably infer that Tam intended to mislead
the court or recklessly signed the Affidavit without caring whether her statements in the Affidavit
were true. At minimum, the inconsistencies and false statements in her Affidavit cast substantial
doubt on Tam’s credibility.
5
Defendants provided as Exhibit G to the Affidavit of Michael C. Birch a copy of the
Affidavit of Mary Jane Raymond, dated September 3, 2014, submitted by plaintiffs in support of
their motion to certify the class. Next to the paragraphs of the Affidavit, defendants inserted
citations to Raymond’s deposition testimony that they assert contradict, or concede as
unsupported, key portions of Raymond’s Affidavit. I have reviewed the deposition testimony
cited by defendants.
Unlike Tam, Raymond did not admit in her deposition to blatant falsehoods in her
Affidavit. While her answers in the deposition admitted to certain qualifications of the statements
in her Affidavit, the admissions do not evidence an intent to deceive or reckless disregard. Like
Tam, Raymond averred in her Affidavit that “all” property managers regularly worked more than
40 hours per week and that property managers, in general, did not have authority to formulate,
affect, interpret, or implement management policies or operating practices. In her deposition,
when asked for the basis of her knowledge, she candidly admitted that “it would be my belief that
they would have to do the same thing that I did, but I don’t know, because I didn’t walk in their
shoes.” In other words, her statements about other property managers’ work hours and duties
were based on her “belief” based on her own experience and some conversations with others, but
not on first-hand knowledge of specific facts. I do not find that Raymond engaged in intentional
misstatements or reckless disregard of her obligations under oath.
It is uncontested that Raymond’s employment with Federal ended in March 2011, more
than two years before the filing of this action on June 27, 2013. Finally, both Tam and Raymond
conceded by their deposition testimony that they had no basis in fact to support a claim that
Federal fraudulently concealed from them or a putative class that property managers could have a
6
claim for overtime pay.
DISCUSSION
Rule 23 (d) of the Massachusetts Rules of Civil Procedure empowers the court
“[w]henever the representation appears to the court inadequate fairly to protect the interests of
absent parties” to take action, including the decertification of the class. Similarly Fed. R. Civ. P.
23(c)(1)(C) provides that “[a]n order that grants or denies class certification may be altered or
amended before final judgment.” Decertification, however, must be justified by post-certification
developments such as the discovery of new facts or changes in the law. Donovan v. Philip
Morris USA, Inc., 2012 WL 957633 (U.S.D.C., D. Mass. 2012). A judge has broad discretion to
certify or decertify a class action. Salvas v. Wal-Mart Stores, Inc., 452 Mass. 337, 361 (2008).
I find that both Tam and Raymond are inadequate class representatives, for different
reasons. Because they are inadequate class representatives, the class must be decertified.
“Adequacy of representation relates not only to the competence of counsel but also to the
integrity and interest of the named parties.” Smith and Zobel, Rules Practice, 6 Mass. Pract.
Series 2d, § 23.7, p.340 (2006). It is the duty of the court to protect the interests of the class who,
if the case were to proceed to trial as a class action, would be bound by the result. It is apparent
to the court that Tam, as a class representative, is so impaired by her admitted falsehoods and
recklessness with respect to her sworn statements that the credibility of the claims by the putative
class would be adversely affected. Moreover, Tam’s conduct before the court is sanctionable.
Pruell v. Carita Christi, 2013 WL 5647398 (U.S.D.C., D. Mass. (O’Toole, J.) (2013). An
appropriate sanction is that she is disqualified as a class representative. Id. at *1.
Raymond is an inadequate representative for a different reason – – her claim under Mass.
7
G. L. c. 151, §§ 1A and 1B is likely barred by the applicable two year statute of limitations.
Raymond’s employment with Federal ended more than two years before the commencement of
this action. Accordingly, her claim under the statute is barred unless she can demonstrate
fraudulent concealment or application of the discovery rule. Defendants state that they intend to
move for summary judgment on the basis of the statute of limitations.
While I do not decide at this time, without a pending motion under Mass. R. Civ. P. 56
and Rule 9A, that Raymond’s claim under the statute is barred, it seems only logical that the
statute of limitations issue should be resolved before a class is certified and notice is sent to
putative class members. Raymond’s adequacy as a class representative turns on the resolution of
that motion. At the present time, she does not adequately represent the class of property managers
who were employed by Federal from the period beginning two years before the commencement
of this action to the present.
The existence of the two year statute of limitations has another effect on the analysis of
whether to decertify the class. In the Class Cert Order of December 16, 2015, the court noted that
plaintiffs “allege a class of approximately forty (40) current and former Property Managers of
Federal whom they assert would constitute the class.” Class Cert Order, pp. 6-7. At that prediscovery
stage, the court found that the numerosity prong of Rule 23 had been satisfied. The
court noted that whether some of the alleged class members would be barred by the applicable
statute of limitation awaited discovery and a possible motion for summary judgment.
In support of their motion to decertify the class, defendants submit the Affidavit of David
Flad, the Chief Operating Officer of Federal. Flad lists forty individuals who have been
employed by Federal as property managers since 2005. Of those, only eighteen (18) have been
8
employed since June 27, 2011, the date two years before this action was commenced.
The resolution of whether Raymond’s claim under G.L. c. 151, §§ 1A and 1B is barred by
the two year statute of limitations will determine the potential size of the class. A putative class
of eighteen, or a number close to that, is not, in my opinion, sufficient to satisfy the numerosity
requirement of Rule 23. The benefit of the class action device is mitigated when the number of
potential class members is manageable as a consolidated action of those property managers who
affirmatively join the litigation as named plaintiffs. Counting property managers whose claim is
potentially barred in order to reach a numerosity threshold is, at this stage after discovery, putting
the cart before the horse. If Raymond’s claim survives, and she is found to be an adequate class
representative, certification of a class may be reconsidered. To proceed with the expense and
possible confusion of class notice when there are issues pending that would be dispositive of
whether the case is properly certified as a class action, is backwards.
CONCLUSION
For the reasons stated, defendants’ Motion for Decertification of Class Action is
ALLOWED.
By the Court,
Edward P. Leibensperger
Justice of the Superior Court
Date: November 30, 2016
9

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Posted by Stephen Sandberg - December 5, 2016 at 5:27 pm

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Vitali v. Reit Management & Research, LLC (Lawyers Weekly No. 11-119-15)

Posted by Stephen Sandberg - August 21, 2015 at 6:13 pm

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First Bostonview Management, LLC v. Bostonview Corporation, et al. (Lawyers Weekly No. 11-118-15)

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

13-P-1237                                       Appeals Court

FIRST BOSTONVIEW MANAGEMENT, LLC  vs.  BOSTONVIEW CORPORATION & others.[1]

No. 13-P-1237.

Norfolk.     October 1, 2014. – August 19, 2015.

Present:  Berry, Hanlon, & Carhart, JJ.

Charity.  Corporation, Charitable corporation, Religious, Sale of assets, Officers and agents, Board of directors.  Sale, Of corporate property, Real estate.  Contract, Sale of real estate, Ratification.  Real Property, Purchase and sale agreement.  Agency, Ratification.

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Posted by Stephen Sandberg - August 19, 2015 at 7:41 pm

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Resolute Management Inc., et al. v. Transatlantic Reinsurance Company, et al. (Lawyers Weekly No. 11-040-15)

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

14-P-573                                        Appeals Court

RESOLUTE MANAGEMENT INC. & another[1]  vs.  TRANSATLANTIC REINSURANCE COMPANY & another.[2]

No. 14-P-573.

Suffolk.     November 13, 2014. – April 29, 2015.

Present:  Green, Wolohojian, & Blake, JJ.

Practice, Civil, Motion to dismiss.  Consumer Protection Act, Businessman’s claim.  Contract, Reinsurance agreement, Interference with contractual relations.  Conflict of Laws.

Civil action commenced in the Superior Court Department on April 30, 2013.

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Posted by Stephen Sandberg - April 29, 2015 at 8:47 pm

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Mello Construction, Inc. v. Division of Capital Asset Management (Lawyers Weekly No. 11-147-13)

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

12‑P‑1429                                                                             Appeals Court

MELLO CONSTRUCTION, INC.,  vs.  DIVISION OF CAPITAL ASSET MANAGEMENT.

No. 12‑P‑1429.

Bristol.     June 4, 2013.  ‑  December 18, 2013.

Present:  Cypher, Graham, & Agnes, JJ.

Public Works, General contractor.  LicenseGovernmental ImmunityDamagesPractice, Civil, Action in nature of certiorari.

Civil action commenced in the Superior Court Department on July 25, 2007.

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Posted by Stephen Sandberg - December 18, 2013 at 4:54 pm

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Cannonball Fund, Ltd., et al. v. Dutchess Capital Management, LLC, et al. (Lawyers Weekly No. 11-094-13)

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

12‑P‑876                                   Appeals Court

CANNONBALL FUND, LTD., & others[1]  vs.  DUTCHESS CAPITAL MANAGEMENT, LLC, & others.[2]

No. 12‑P‑876.

Suffolk.     January 17, 2013.  ‑  August 2, 2013.

Present:  Cypher, Rubin, & Wolohojian, JJ.

Limitations, Statute ofPractice, Civil, Statute of limitations, Dismissal, Standing.  Jurisdiction, Personal, Long‑arm statute, Nonresident.  Corporation, Derivative action.  FiduciaryPartnership, Fiduciary duty.  Negligence, Causation.  Due Process of Law, Jurisdiction over nonresident.  Contract, Implied covenant of good faith and fair dealing, Performance and breach.

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Posted by Stephen Sandberg - August 2, 2013 at 3:52 pm

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Hugenberger, et al. v. Alpha Management Corp. (Lawyers Weekly No. 11-087-13)

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

12‑P‑1788                                       Appeals Court

CHRIS HUGENBERGER & another[1]  vs.  ALPHA MANAGEMENT CORP.

No. 12‑P‑1788.      June 28, 2013.

Consumer Protection Act, Demand letter.

The plaintiffs appeal from a decision of the Appellate Division of the Boston Municipal Court Department (BMC) affirming the trial judge’s allowing the defendant’s motion for reconsideration and ordering the entry of judgment for the defendant.  The trial judge concluded that “the failure to offer the [G. L. c.] 93A demand letter, proof of a required element in the plaintiffs’ case, was a fatal mistake.”  The plaintiffs claim error in this ruling on the ground that they were not required, in the circumstances, to offer the demand letter in evidence and that the failure to do so was not manifestly wrong so as to allow the judge to reconsider his earlier denial of the defendant’s motion for a directed finding.  As we disagree, we affirm.

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Posted by Stephen Sandberg - June 28, 2013 at 3:06 pm

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