Mooney, et al. v. Diversified Business Communications, et al. (Lawyers Weekly No. 09-030-18)
COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT. 1684CV03726-BLS2 1784CV03423-BLS2 ____________________ JOHN J. MOONEY and MORGAN D. WHEELOCK and JOHN SQUIRE and MACGREGOR INVESTMENTS CORPORATION v. DIVERSIFIED BUSINESS COMMUNICATIONS; DBC PRI-MED, LLC; THEODORE WIRTH; KATHY WILLING; and OAKLEY DYER ____________________ MEMORANDUM AND ORDER ON DEFENDANTS’ MOTIONS TO DISMISS FIVE OF SIX CLAIMS IN EACH ACTION The four Plaintiffs are former minority members of a closely-held Delaware company called DBC Pri-Med, LLC. The majority member is and was defendant Diversified Business Communications. The three individual defendants are all managers of Pri-Med; none of them has any ownership interest in the company.1 In January 2017 Pri-Med called Plaintiffs’ shares, as expressly permitted in Pri-Med’s operating agreement. This LLC Agreement provides that an appraisal firm to be selected by the parties shall determine the value of any called (or put) shares, based on a valuation of Pri-Med as a going concern and without discounting that value for the illiquidity or minority nature of any shares. Plaintiffs allege that Defendants carried out a scheme to artificially deflate the value of Pri-Med in order to avoid paying Plaintiffs a fair and proper price for redeeming their shares. According to Plaintiffs, this scheme involved artificially decreasing Pri-Med’s assets by selling off its major subsidiary (a company called Amazing Charts) and artificially increasing the company’s liabilities by inflating its expenses and debt. 1 The ownership of Pri-Med was divided into three classes of shares. The Series A shares were voting shares. The Series B-1 and B-2 shares were not. Diversified controlled the company because it held roughly 93 percent of the Series A shares. Each of the Plaintiffs held roughly 1.7 percent of the Series A shares. The four Plaintiffs each held one-fourth of the Series B-1 shares, which gave them certain approval rights. Four other individuals held the Series B-2 shares, which had no approval rights. – 2 – Each set of Plaintiffs asserts six claims.2 Count One seeks a declaratory judgment that the sale of Amazing Charts violated the LLC Agreement, and therefore is null and void, because Defendants did not obtain Plaintiffs’ approval. The other claims are for breach of the LLC Agreement, breach of the implied covenant of good faith and fair dealing in the same contract, breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, and certain equitable relief. Defendants have moved to dismiss all of the claims under Mass. R. Civ. P. 12(b)(6) except for the claims in Count Two for breach of contract. The Court will order that declaratory judgment enter in Defendants’ favor on Count One of each complaint, deny the motions with respect to the claim for breach of the implied covenant of good faith and […]
Categories: News Tags: 0903018, Business, Communications, Diversified, Lawyers, Mooney, Weekly
Mooney, et al. v. Diversified Business Communications, et al. (Lawyers Weekly No. 09-014-18)
COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT. 1684CV03726-BLS2 1784CV03423-BLS2 ____________________ JOHN J. MOONEY, MORGAN WHEELOCK, JOHN SQUIRE, and MACGREGOR INVESTMENTS CORPORATION v. DIVERSIFIED BUSINESS COMMUNICATIONS; DBC PRI-MED, LLC; THEODORE WIRTH; KATHY WILLING; and OAKLEY DYER ____________________ MEMORANDUM AND ORDER ALLOWING CERTAIN DEFENDANTS’ MOTION TO COMPEL APPRAISAL The four plaintiffs were minority owners of defendant DBC Pri-Med LLC, which is a Delaware limited liability company. Defendant Diversified Business Communications is the majority member of Pri-Med. In January 2017 Pri-Med called all of Plaintiffs’ membership shares, as expressly permitted in § 13.1(a) of Pri-Med’s operating agreement. This LLC Agreement provided for an appraisal firm to be by the parties to determine the value of any called (or put) shares. That appraisal process has not yet begun because Plaintiffs have refused to agree upon an appraisal firm. Pri-Med and Diversified have moved for specific performance of the third-party appraisal provision. Plaintiffs John Mooney and Morgan Wheelock filed a written response stating that they “have no objection to an independent appraisal,” but asking the Court to establish a new process under which a special master would select the appraiser and schedule (and perhaps conduct) evidentiary hearings before the appraiser. Plaintiffs John Squire and Macgregor Investments Corporation filed a written response joining in the arguments by the Mooney Plaintiffs. At oral argument, however, the Squire Plaintiffs suddenly reversed course and asserted for the first time that no appraisal should be conducted, either ever or for now. Defendants have the better of these arguments. Under Delaware law Defendants are entitled to enforce the contractual appraisal process, subject only to limited judicial review of the appraiser’s final decision. It would be inappropriate for the Court to arrogate to a special master the power to select the appraisal firm or to schedule or conduct hearings. The Court will ALLOW the motion to compel. – 2 – The Court must apply Delaware law in deciding this motion. The parties agreed in § 15.5 of the LLC Agreement that this contract “shall be construed and enforced in accordance with the laws … of the State of Delaware.” The provision is enforceable. See Hodas v. Morin, 442 Mass. 544, 549–550 (2004) (“As a rule, ‘[w]here the parties have expressed a specific intent as to the governing law, Massachusetts courts will uphold the parties’ choice as long as the result is not contrary to public policy.’ ”) (quoting Steranko v. Inforex, Inc., 5 Mass. App. Ct. 253, 260 (1977). The appraisal provision of the LLC Agreement that Pri-Med and Diversified seek to enforce states as follows: In the event that the Company [i.e., DBC Pri-Med LLC] and the selling Employee Member fail to agree on a price for the selling Employee Member’s […]
Categories: News Tags: 0901418, Business, Communications, Diversified, Lawyers, Mooney, Weekly
Mooney, et al. v. Diversified Business Communications, et al. (Lawyers Weekly No. 09-015-17)
1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT SUCV2016-3726-BLS2 JOHN J. MOONEY and MORGAN D. WHEELOCK, Plaintiffs vs. DIVERSIFIED BUSINESS COMMUNICATIONS, DBC PRI-MED, LLC, THEODORE WIRTH, KATHY WILLING, and OAKLEY DYER Defendants MEMORANDUM OF DECISION ON PLAINTIFF’S MOTION TO DISQUALIFY THE FIRM REPRESENTING THE DEFENDANTS IN THIS ACTION This lawsuit was instituted in December 2016. Sullivan and Worcester, LLP (S&W), long-time counsel for the defendant Diversified Business Communications (Diversified) and its subsidiary Pri-Med, LLC (Pri-Med), filed an appearance on behalf of Diversified, Pri-Med and the three individual defendants. Seven months later and well into discovery in this case, the plaintiff John Mooney filed a Motion to Disqualify S&W on the grounds that he has been and remains an S&W client, so that the firm’s representation of the defendants in this litigation violates Rule 1.7 of the Massachusetts Rules of Professional Conduct. S&W denies any ethical violation and contends that the Motion is a “transparent and unacceptable litigation tactic.” After hearing, this Court concluded that there was no reason to disqualify S&W and on September 13, 2017, entered a margin endorsement on the Motion stating that it was denied. This Memorandum sets forth the reasons for that decision. 2 BACKGROUND In reaching its decision, this Court considered affidavits, with attached exhibits, submitted by both parties. Those submissions reflect the following facts that this Court views as material to resolution of the Motion before it. In 1999, Mooney’s business partner Jack Connors suggested that Mooney should engage in sophisticated estate planning and recommended that Mooney work with Lisa Mingolla, an attorney in S&W’s trusts and estates department. Mooney took this suggestion and in 2002, retained the firm to represent him in connection with preparing a prenuptial agreement and estate planning documents. An August 29, 2002 engagement letter signed by both Mingolla and Mooney reflects the limited nature of that representation. Mingolla was paid a flat fee of $ 10,000 for Mingolla’s services. The letter stated that S&W would discard certain items from the file once work was completed but would retain Mooney’s estate planning documents in its vault for Mooney’s convenience. Three years later in 2005, Mooney asked Mingolla if she would update his will and his estate plan, which she did. Mooney paid her approximately $ 20,000 for her work, which concluded in 2006. Mingolla did not perform any additional work for Mooney until September 2010, when she again updated Mooney’s estate planning documents at his request. Since July 2014, Mooney has not sought any legal advice from Mingolla. Over the twelve year period (2002-2014), Mooney paid Mingolla a total of $ 75,000. During this same period of time, Carol Wolff, an S&W partner, was providing legal representation to Diversified. When […]
Categories: News Tags: 0901517, Business, Communications, Diversified, Lawyers, Mooney, Weekly
Mooney, et al. v. Diversified Business Communications, et al. (Lawyers Weekly No. 12-116-17)
COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT SUCV2016-3726-BLS2 JOHNJ. MOONEY and MORGAN D. WHEELOCK, Plaintiffs vs. DIVERSIFIED BUSINESS COMMUNICATIONS, DBC PRI-MED, LLC, THEODORE WIRTH, KATHY WILLING, and OAKLEY DYER Defendants MEMORANDUM OF DECISION AND ORDER ON REMAING ISSUES RELATED TO PLAINTIFFS’ MOTION TO COMPEL After a hearing on July 11, 2017, this Court allowed that part of the plaintiffs’ Motion to Compel which concerned the production of certain Board of Directors minutes of the defendant Diversified Communications. See Memorandum of Decision and Order on Plaintiffs’ Motion to Compel, dated July 20, 2017. As to the remainder of the motion, this Court concluded that the defendants could withhold certain documents based on a claim of privilege, provided that the privilege had been properly asserted as to those documents actually withheld (represented by both sides to be a couple of dozen); that determination would be made by the Court after it reviewed those documents in camera. The Court also allowed the defendants time to respond to a last-minute assertion by the plaintiffs that any claim of privilege had been waived. After a flurry of additional briefing and after conducting an in camera review, this Court concludes that the defendants need not to produce any additional documents and that the plaintiffs must return to the defendants those documents that had been produced inadvertently. In reaching this decision, the Court has reviewed the 28 documents listed on the defendants’ privilege log as being withheld in their entirety. That review showed that — notwithstanding the plaintiffs’ arguments to the contrary – every document involved or discussed communications between and among corporate representatives of the defendant Pri-Med and Pri-Med’s counsel in connection with litigation threatened by a former Pri-Med employee Lynn Long. After the July 11 hearing, the plaintiffs submitted an additional brief that largely reargued their position that the privilege should not, as a matter of law, prevent plaintiffs from obtaining the documents. Plaintiffs also argued — for the first time — that this Court should also review in camera documents that had been produced by defendants but in redacted form. There being no suggestion that defendants are asserting a privilege without any factual basis for doing so, this Court sees no need to expand its review to these additional documents. Defendants have produced thousands of documents in a fairly short time frame and have appeared to have worked in good faith and with due diligence to fulfill their discovery obligations. Continuing judicial oversight of the discovery process is neither a wise use of judicial resources nor necessary under the circumstances. Just as plaintiffs have sought to expand the number of documents subject to in […]
Categories: News Tags: 1211617, Business, Communications, Diversified, Lawyers, Mooney, Weekly
Mooney, et al. v. Diversified Business Communications, et al. (Lawyers Weekly No. 12-102-17)
COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT SUCV2016-3726-BLS2 JOHN J. MOONEY and MORGAN D. WHEELOCK, Plaintiffs vs. DIVERSIFIED BUSINESS COMMUNICATIONS, DBC PRI-MED, LLC, THEODORE WIRTH, KATHY WILLING, and OAKLEY DYER Defendants MEMORANDUM OF DECISION AND ORDER ON PLAINTIFFS’ MOTION TO COMPEL This case involves a dispute among members of a limited liability company. Plaintiffs, who own a minority interest in the company, are suing (among others) the entity holding a majority interest. Also named as a defendant is the company itself. The case is now before the Court on plaintiffs’ Motion to compel certain discovery. Part of the motion raises routine issues regarding the relevance of materials sought; this Court’s resolution of those issues is contained in Part One of this opinion. The motion also raises difficult questions concerning attorney client privilege—specifically, whether a former officer of a company can obtain communications between corporate counsel and the corporation exchanged when he still worked for the company but where he is now adverse to the corporation itself. This Court concludes that neither plaintiff can claim to be a holder of the privilege so as to gain access to these communications. The reasons for that conclusion are spelled out in Part Two of this opinion. BACKGROUND Defendant Pri-Med LLC is a Delaware limited liability company that provides in-person and digital continuing medical education to medical practitioners, in part through the use of electronic health records software and data analytics tools. The defendant Diversified Business Communications (Diversified) owns approximately 75 percent of Pri-Med. The individual defendants are Diversified officers and serve on Pri-Med’s Board of Managers. Plaintiff John Wheelock and John Mooney each hold a five percent interest in Pri-Med. Up until the end of 2016, both plaintiffs were part of Pri-Med’s senior management: Wheelock was a senior Vice President in charge of Sales and plaintiff John Mooney was Pri-Med’s CEO. At issue in this lawsuit is the plaintiffs’ right to require Diversified to buy out their interest in Pri-Med after January 1, 2017. That right is laid out in an LLC agreement among the parties. The amount that Diversified is required to pay is based on the appraised value of Pri-Med as of December 31, 2016. Plaintiffs contend that, leading up to that date, the defendants took steps to depress Pri-Med’s value so as to decrease the amount that Diversified would have to pay to the minority shareholders in a buy-out of their interests. One of those steps was a decision by Diversified to sell off one of Pri-Med’s most valuable assets, Amazing Charts (AC), an electronic health records company. As alleged by plaintiffs, Diversified and its Board had concluded in […]
Categories: News Tags: 1210217, Business, Communications, Diversified, Lawyers, Mooney, Weekly
Mooney, et al. v. Diversified Business Communications, et al. (Lawyers Weekly No. 12-101-17)
COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT SUCV2016-3726-BLS2 JOHN J. MOONEY and MORGAN D. WHEELOCK, Plaintiffs vs. DIVERSIFIED BUSINESS COMMUNICATIONS, DBC PRI-MED, LLC, THEODORE WIRTH, KATHY WILLING, and OAKLEY DYER Defendants MEMORANDUM OF DECISION ON NON-PARTY SULLIVAN & WORCESTER LLP’S MOTION TO PRECLUDE MINTZ LEVIN FROM PROSECUTING PLAINTIFF JOHN MOONEY’S MOTION TO DISQUALIFY SULLIVAN &WORCESTER In the instant case, Mintz Levin (Mintz) represents plaintiff John Mooney; it also represents the law firm of Sullivan & Worcester (S&W) — which is counsel for defendant Diversified — in unrelated immigration matters. Mintz has served upon S&W a motion to disqualify it from this lawsuit based on its prior representation of plaintiff Mooney on personal matters. S&W now asserts that Mintz is itself disqualified from prosecuting such a motion because that would run afoul of Rule 1.7 of the Rules of Professional Conduct. This Court disagrees. Rule 1.7(a) prevents a lawyer who represents one client from representing another client if that representation would be “directly adverse” to the first client. [“T]he representation of a client adverse to another person ordinarily is not ‘directly adverse’ to the lawyer for the other person” within the meaning of Rule 1.7(a). ABA Formal Opinion 97-406 (1997) (emphasis added). Thus, Mintz is not prevented from representing plaintiffs simply because S&W (its own client) represents the defendants in this case: S&W’s and Mintz’s interests are not “directly adverse.” That same ABA Opinion carves out an exception to this general rule, however: “if providing competent and diligent representation requires the representing lawyer to attack the credibility or integrity of its opponent in the third party matter, when the opponent is also his client, then the representing lawyer has a conflict under Rule 1.7(a), because his representation of the third party would be directly adverse to another client.” See fn. 4 of ABA Opinion 97-406. In support of that proposition, the opinion cites ABA Formal Opinion 92-367 (1992), which deals with the situation where a lawyer, in the course of representing one client, is placed in the position of cross examining another client. In that situation, disqualification would be required. Applying this reasoning to the instant case, S&W contends that Mintz cannot prosecute the motion to disqualify S&W from this case because that would amount to an attack on the integrity of its client S&W. The circumstances before this Court appear to be different, however. Mintz is not placing itself in a position of having to cross examine its own client. Nor does it seem to be questioning S&W’s credibility by raising the issue of disqualification. Rather, it questions whether S&W can (because of S&W’s prior relationship with Mooney) continue to […]
Categories: News Tags: 1210117, Business, Communications, Diversified, Lawyers, Mooney, Weekly
Mooney v. Warren (Lawyers Weekly No. 11-020-15)
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-523 Appeals Court JEANNE SWEENEY MOONEY vs. SETTI D. WARREN. No. 14-P-523. Middlesex. December 4, 2014. – March 5, 2015. Present: Cohen, Fecteau, & Massing, JJ. Practice, Civil, Interlocutory appeal. Civil action commenced in the Superior Court Department on September 6, 2013. A motion to dismiss was heard by Dennis J. Curran, J. Angela Buchanan Smagula, Assistant City Solicitor, for the defendant. Cary Gianoulis for the plaintiff. FECTEAU, J. The defendant, Setti D. Warren, appeals from an order of a judge of the Superior Court that denied his motion, filed pursuant to Mass.R.Civ.P. 12(b)(6) and (9), 365 Mass. 754 (1974), to dismiss the plaintiff’s complaint. His motion claimed that a prior order in the Federal court that denied the plaintiff’s motion to amend her complaint to add claims there against the defendant in his individual capacity barred the plaintiff’s claims here as res judicata. Because we consider his appeal premature, we dismiss it. Background. In brief, on or about March 15, 2013, the plaintiff, Jeanne Sweeney Mooney, brought a multiple count complaint in the United States District Court for the District of Massachusetts against Warren, in his official capacity as the mayor of the city of Newton, and others, in which she alleged conspiracy and deprivation of civil rights pursuant to 42 U.S.C. §§ 1983 and 1985, as well as numerous pendent State law claims, all in connection with certain events alleged while Mooney worked with the Newton police department. Mooney moved to amend her complaint to include counts against Warren in his personal capacity on August 19, 2013; this motion, opposed by the defendants in that action, was denied on September 4, 2013.[1] On September 6, 2013, Mooney filed her complaint in Superior Court alleging the same claims she had sought to add to the Federal complaint. On October 4, 2013, Warren filed a motion to dismiss on res judicata grounds, which was heard on January 9, 2014. On January 30, 2014, a judge of the Superior Court issued a memorandum of decision and order, denying the motion in its entirety. This appeal followed. Discussion. We need not reach the merits of the appeal because Warren has improperly filed an appeal from an interlocutory order. See Brum v. Dartmouth, 428 Mass. 684, 687 (1999) (denial of motion to dismiss is an […]