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Committee for Public Counsel Services, et al. v. Attorney General of Massachusetts, et al. (Lawyers Weekly No. 10-051-18)

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SUFFOLK, ss.
COMMONWEALTH OF MASSACHUSETTS
SUPREME JUDICIAL COURT
FOR SUFFOLK COUNTY
No. SJ-2017-347
COMMITTEE FOR PUBLIC COUNSEL SERVICES, HAMPDEN COUNTY LAWYERS FOR
JUSTICE, INC., HERSCHELLE REAVES, and NICOLE WESTCOTT
vs.
ATTORNEY GENERAL of MASSACHUSETTS, DISTRICT ATTORNEY for BERKSHIRE
COUNTY, DISTRICT ATTORNEY for BRISTOL COUNTY, DISTRICT ATTORNEY for the
CAPE and ISLANDS, DISTRICT ATTORNEY for ESSEX COUNTY, DISTRICT ATTORNEY
for HAMPDEN COUNTY, DISTRICT ATTORNEY for MIDDLESEX COUNTY, DISTRICT
ATTORNEY for NORFOLK COUNTY, DISTRICT ATTORNEY for the NORTHWESTERN
DISTRICT, DISTRICT ATTORNEY for PLYMOUTH COUNTY, DISTRICT ATTORNEY for
SUFFOLK COUNTY, and DISTRICT ATTORNEY for WORCESTER COUNTY
DECLARATORY JUDGMENT
This matter came before the court, Gaziano, J., on a petition pursuant to G L. c. 211, § 3,
seeking relief for defendants affected by the misconduct of state chemist Sonja Farak. As an
initial matter, the respondents — the Attorney General and the offices of the Massachusetts
District Attorneys — have agreed to vacate certain convictions obtained using drug certificates
signed by Sonja Farak. The respondents have filed with the court, and served on the petitioners,
formatted interim lists identifying the defendants and their convictions, delinquency or youthful
offender adjudications, or other adverse dispositions that the respondents agree should be vacated
and dismissed with prejudice. The convictions, adjudications, or other dispositions of those
cases are addressed in this orcler. Final lists are to be provided by the respondents and filed with
this court no later than April 30, 2018. Those lists may result in additional dismissals.
Accordingly, it is ORDERED that the convictions of drug offenses under G. L. 94C that
have been so identified by the respondents in the interim lists filed with this court on or before
March 30,2018, shall be and are hereby VACATED AND DISMISSED WITH PREJUDICE,
and any outstanding warrants associated with those convictions are recalled.
The clerk shall provide copies of the formatted lists to the Judicial Information Services
Department of the trial comi fmihwith in order to effectuate the dismissals.
Entered: April 5, 2018
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Posted by Massachusetts Legal Resources - April 6, 2018 at 12:09 am

Categories: News   Tags: , , , , , , , , ,

Silva v. Todisco Services, Inc. (Lawyers Weekly No. 09-027-18)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1684CV02778-BLS2
____________________
CHRISTOPHER SILVA, on behalf of himself and all others similarly situated
v.
TODISCO SERVICES, INC. d/b/a Todisco Towing
____________________
MEMORANDUM AND ORDER ON PLAINTIFF’S MOTION FOR CLASS CERTIFICATION
Todisco Services, Inc., towed Christopher Silva’s motor vehicle without his consent from a private parking lot. This was a “trespass tow,” made at the request of the property owner or manager pursuant to G.L. c. 266, § 120D. Silva alleges that the mileage charge and fuel surcharge imposed by Todisco were illegal because the invoice or tow slip did not include information required by 220 C.M.R. § 272.03, a Department of Public Utilities (“DPU”) regulation that establishes maximum rates for involuntary tows. Silva asserts claims for violation of G.L. c. 93A, declaratory relief, negligent misrepresentation, intentional fraud, and unjust enrichment.
Silva has moved to certify a class of plaintiffs whose passenger vehicles were towed without their consent by Todisco, either as a trespass tow or as a “police tow” made at the request of a local police department, and who were assessed similar surcharges without being provided information required by the DPU regulation.
Todisco asserts that this action is moot because Todisco tendered payment of the full treble damages Silva seeks for himself under G.L. c. 93A. In the alternative Todisco urges the Court either to deny class certification completely or to certify a narrower class consisting only of people subjected to trespass tows.
The Court concludes that Todisco’s attempt to “pick off” the named plaintiff did not moot Silva’s individual claims or the class action. It will allow the class certification motion in part and, in the exercise of its discretion, will certify a class of “trespass tow” plaintiffs for the purposes of the claims asserted under c. 93A and for declaratory relief. But it will deny the motion to the extent that Silva seeks to include “police tow” plaintiffs in the class, and to the extent that he seeks to certify a class with respect to the misrepresentation, fraud, and unjust enrichment claims.
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1. Effect of Tender to Named Plaintiff. Todisco argues that Silva’s individual claims are moot, and that therefore class certification is inappropriate,1 because Todisco has already tendered the maximum amount of compensation that Silva himself could possibly recover in this action. Silva (or his son acting on his behalf) paid Todisco $ 169.00 to regain his vehicle after Todisco had towed it. In May 2017, almost 20 months after Silva filed this suit, Todisco sent Silva a check for three times that amount ($ 507.00). Todisco said in its cover letter that it tendered this payment “without any conditions and/or restrictions.” Silva responded by saying that he “rejected” Todisco’s “offer.” He returned the check to Todisco.
The Court concludes that Todisco’s unilateral tender of payment in full does not moot Silva’s individual claims and does not bar a class action, for several reasons.
1.1. The Complaint Seeks Additional Relief. Silva seeks more than monetary compensation. His complaint also asks for a class-wide permanent injunction and declaration of rights.
The tender of payment of the full amount of damages to Silva individually cannot moot claims for injunctive and declaratory relief either on behalf of Silva or, more importantly, on behalf of the putative class. See, e.g., Juliand v. Stanley Services, Inc., Suffolk Sup. Ct. civ. no. 1784CV01570-BLS2, 2018 WL 1041319 (Mass. Super. Ct. 2018) (Sanders, J.) (denying motion to dismiss similar class action); Johansen v. Liberty Mutual Group, Inc., no. 1:15-cv-12920-ADB, 2016 WL 7173753, at *3-*7 (D.Mass. 2016) (Burroughs, J.) (denying motion to dismiss).
“If the underlying controversy continues, a court will not allow a defendant’s voluntary cessation of his allegedly wrongful conduct with respect to named plaintiffs to moot the case for the entire plaintiff class.” Cantell v. Comm’r of Correction,
1 As a general matter, “[i]f an individual ‘may not maintain the action on [his or her] own behalf, he or she may not seek relief on behalf of a class.’ ” Barbara F. v. Bristol Div. of Juvenile Court Dept., 432 Mass. 1024 (2000) (rescript), quoting Doe v. The Governor, 381 Mass. 702, 704-705 (1980); but see Weld v. Glaxo Wellcome, 434 Mass. at 88 (holding that named plaintiff could represent class in suit against three defendant manufacturers even though he only had an individual claim against one of them); School Comm. of Brockton v. Massachusetts Comm’n Against Discrim., 423 Mass. 7, 14-15 (1996) (union was proper class representative of teachers, even though union itself suffered no injury).
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475 Mass. 745, 753 (2016) (lawsuit seeking injunctive and declaratory relief limiting segregation of proposed class of prisoners not mooted by release of four named plaintiffs from segregation), quoting Wolf v. Comm’r of Public Welfare, 367 Mass. 293, 299 (1975) (lawsuit seeking injunction ordering prompt replacement of unreceived public assistance checks for proposed class of beneficiaries not mooted by named plaintiff’s receipt of check).
“A case becomes moot ‘only when it is impossible for a court to grant any effectual relief whatever to the prevailing party’ ” (emphasis added.) Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663, 669 (2016), quoting Knox v. Service Employees, 132 S.Ct. 2277, 2287 (2012). “As long as the parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot.” Id., quoting Chafin v. Chafin, 133 S.Ct. 1017, 1023 (2013).
1.2. Unaccepted Tenders Do Not Moot Claims for Damages. In any case, Todisco’s tender of full payment to Silva would not moot the class claims even if Silva were only seeking monetary compensation on behalf of the proposed class members.
Where a plaintiff brings a “case as a putative class action, … the class action allegations contained in the amended complaint remain operative until a judge has considered and rejected them on their merits,” even if the defendant has “voluntarily … cease[d] the allegedly wrongful conduct with respect to [the] named plaintiff….” Cantell, 475 Mass. at 753. After all, “[i]n class actions … the class itself is the real party in interest” (emphasis in original). Weld v. Glaxo Wellcome Inc., 434 Mass. 81, 88 (2001), quoting Cedar Crest Funeral Home, Inc. v. Lashley, 889 S.W.2d 325, 329 (Tex. Ct. App. 1993).
For this reason, an unaccepted offer of judgment in the full amount sought by the named plaintiff cannot moot a putative class action. Campbell-Ewald, 136 S.Ct. at 670; see also Reniere v. Alpha Mgmt. Corp., MICV2013-00560, 32 Mass. L. Rptr. 410, 2014 WL 7009753 (Mass. Super. Ct. 2013) (Salinger, J.) (collecting cases decided before Campbell-Ewald). As the Supreme Court has explained, “[w]hen a plaintiff rejects such an offer—however good the terms—her interest in the lawsuit remains just what it was before. And so too does the court’s ability to grant her relief. An unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity,
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with no operative effect.” Campbell-Ewald, supra, quoting Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523, 1533 (2013) (Kagan, J., dissenting). “Nothing in Rule 68 alters that basic principle; to the contrary, that rule specifies that ‘[a]n unaccepted offer is considered withdrawn.’ ” Id., quoting Genesis Healthcare, supra, quoting in turn Fed. R. Civ. P. 68. The same is true under Massachusetts law. See Mass. R. Civ. P. 68; Baghdady v. Lubin & Meyer, P.C., 55 Mass. App. Ct. 316, 324 (2002).
Todisco tries to distinguish Campbell-Ewald on the ground that it involved an offer of judgment, whereas in this case Todisco tendered payment of the full amount of treble damages without requiring Silva to agree to the entry of judgment and without any other conditions or restrictions.
The Court is not convinced that this distinction makes any difference. If a defendant cannot moot a putative class action by offering to pay the named plaintiff the full amount of her claimed damages, it similarly cannot do so by actually tendering payment of the same amount. “[T]here is no principled difference between a plaintiff rejecting a tender of payment and an offer of payment”; “in either case, the plaintiff ends up in the exact same place he occupied before his rejection.” Ung v. Universal Acceptance Corp., 180 F.Supp.3d 855, 860-863 (D.Minn. 2016).
Most federal courts facing the issue have rejected similar efforts to circumvent Campbell-Ewald, holding that tender of full payment to a named plaintiff does not moot a putative class action.2 Although these cases were all decided under the federal
2 It appears that the majority view among federal courts is that a tender of full payment to the named plaintiff in a putative class action does not moot the named plaintiff’s individual claims, and therefore cannot moot the class claims. See, e.g., Fulton Dental, LLC v. Bisco, Inc., 860 F.3d 541, 545-546 (7th Cir. 2017); Chen v. Allstate Ins. Co., 819 F.3d 1136, 1144-1146 (9th Cir. 2016); Bennett v. Office of Federal Employee’s Group Life Ins., 683 Fed.Appx. 186, 188 (4th Cir. 2017) (unpublished); Family Medicine Pharmacy, LLC v. Perfumania Holding, Inc., c.a. 15-0563-WS-C, 2016 WL 3676601, at *6-*8 (S.D. Ala. 2016); Bell v. Survey Sampling Int’l, LLC, 3:15-CV-1666 (MPS), 2017 WL 1013294, at *5-*6 (D.Conn. 2017); Heather McCombs, D.P.M, L.L.C. v. Cayan LLC, c.a. 15 C 10843, 2017 WL 1022013, at *4 (N.D.Ill. 2017); Thelma Jean Lambert Living Trust v. Chevron U.S.A., Inc., no. 14-1220-JAR-TJJ, 2016 WL 6610898, at *21 (D.Kan. 2016); Machesney v. Lar-Bev of Howell, Inc., no. 10-10085, 2016 WL 1394648, at *7 (E.D. Mich. 2016); Ung, supra (D.Minn.); Getchman v. Pyramid Consulting, Inc., 4:16 CV 1208 CDP, 2017 WL 713034, at *3 (E.D.Mo. 2017); Brady v. Basic Research, L.L.C., no. 13-cv-7169, 2016 WL 1735856, at *2 (E.D.N.Y. 2016); Bais Yaakov of Spring Valley v. Graduation
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rules of civil procedure, the same principles apply to class actions brought under Mass. R. Civ. P. 23. See generally Smaland Beach Ass’n, Inc. v. Genova, 461 Mass. 214, 228 (2012) (judicial construction of federal rules of civil procedure applies to parallel Massachusetts rules, “absent compelling reasons to the contrary or significant differences in content” (quoting Strom v. American Honda Motor Co., 423 Mass. 330, 335 (1996), and Rollins Envtl. Servs., Inc., v. Superior Court, 368 Mass. 174, 180 (1975)).
The principle that a defendant cannot evade a viable class claim by paying the named plaintiff’s personal claim is of particular importance in the context of class actions brought on behalf of individual consumers under G.L. c. 93A, § 9(2). The Legislature enacted that law to provide an effective remedy for people who are harmed by an unfair or deceptive business practice, even if each consumer suffers such a small injury that none of them could reasonably seek compensation on an individual basis. “[W]hen the judge is deciding a [class] certification request under § 9(2), the judge must bear in mind [that there is] ‘ “a pressing need for an effective private remedy” for consumers, and that “traditional technicalities are not to be read into the statute in such a way as to impede the accomplishment of substantial justice.” ’ ” Aspinall v. Philip Morris Cos. Inc., 442 Mass. 381, 391-392 (2004), quoting Fletcher v. Cape Cod Gas Co., 394 Mass. 595, 605 (1985). “The right to a class action in a consumer protection case is of particular importance where, as here, aggregation of small claims is likely the only realistic option for pursuing a claim.” Feeney v. Dell Inc., 454 Mass. 192, 202 (2009).
Source, LLC, 167 F.Supp.3d 582, 584 (S.D.N.Y. 2016); Maddox v. Bank of New York Mellon Trust Co., 2016 WL 4541587, at *3-*4 (W.D.N.Y. 2016); Pankowski v. Bluenrgy Group Ltd., c.a. H-15-1668, 2016 WL 7179122, at *3 (S.D.Tex. 2016)
Several federal judges sitting in the District of Massachusetts have held that such a tender may moot the named plaintiff’s claims, but that under the so-called “inherently transitory” exception to mootness such a tender will not bar the plaintiff from seeking class certification. See South Orange Chiropractic Center, LLC v. Cayan LLC, no. 15-13069-PBS, 2016 WL 1441791, at *4-*8 (D.Mass. 2016) (Saris, C.J.) (collecting federal appellate cases); Bais Yaakov of Spring Valley v. ACT, Inc., 221 F.Supp.3d 183, 187-189 (D.Mass. 2016) (Hillman, J.) (following South Orange Chiropractic).
The Court respectfully disagrees with the contrary ruling in Demmler v. ACH Food Cos., Inc.¸ c.a. 15-13556-LTS, 2016 WL 4703875 (D.Mass. 2016) (Sorokin, J.).
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Consumers do not lose the chance to seek an effective private remedy through a c. 93A class action merely because the defendant chooses to pay the entire amount of the named plaintiff’s individual claim. Although the Massachusetts appellate courts have not addressed this issue, other trial judges have reached the same conclusion. See Meaney v. OneBeacon Ins. Co., SUCV2007-01294-BLS2, 2007 WL 5112809, *2 (Mass. Super. Ct. 2007) (Gants, J.); Hermida v. Archstone, 950 F.Supp.2d 298, 309 (D.Mass. 2013) (Young, J.) (citing Meaney); Chang v. Wozo LLC, no. 11-cv-10245-DJC, 2012 WL 1067643, *9 (D.Mass. 2012) (Casper, J.) (citing Meaney); accord Reniere v. Alpha Mgmt. Corp., MICV2013-00560, 32 Mass. L. Rptr. 410, 2014 WL 7009753 (Mass. Super. Ct. 2013) (Salinger, J.).
In sum, neither Silva’s individual claims nor his class claims are moot. The Court must therefore address the merits of his motion for class certification.
2. Legal Background.
2.1. Standards for Class Certification. To obtain certification of a class with respect to the for misrepresentation, fraud, and unjust enrichment, Silva must demonstrate that “(1) the class is so numerous that joinder of all members is impracticable” [numerosity], “(2) there are questions of law or fact common to the class” [commonality], “(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class” [typicality], and “(4) the representative parties will fairly and adequately protect the interests of the class” [adequacy of representation]. See Mass. R. Civ. P. 23(a). If these requirements are met, Silva must also show “that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members,” [predominance] and “that a class action is superior to other available members for the fair and efficient adjudication of the controversy” [superiority]. See Mass. R. Civ. P. 23(b).
Certification of a class action with respect to claims under G.L. c. 93A may be appropriate if the named plaintiff can “show that the putative class members suffered ‘similar,’ although not necessarily identical, injuries as a result of the defendant’s unfair or deceptive conduct.” Bellermann v. Fitchburg Gas & Elec. Light Co., 470 Mass. 43, 53 (2014), quoting G.L. c. 93A, §§ 9(2), 11. Furthermore, “Section 9(2) requires satisfaction of the same elements of numerosity, commonality, typicality,
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and adequacy of representation as are required by Mass. R. Civ. P. 23(a).” Moelis v. Berkshire Life Inc. Co., 451 Mass. 483, 489 (2008). “Unlike rule 23, however, § 9(2) does not require that common issues predominate over individual ones, or that a class action be superior to other methods of litigation.” Id. at 489-490. A court nonetheless “has discretion to consider issues of predominance and superiority” in deciding whether to certify a class claim under c. 93A. Id. at 490.
“[A] party moving for class certification need only provide ‘information sufficient to enable the motion judge to form a reasonable judgment’ that certification requirements are met.” Aspinall, 442 Mass. at 391-392, quoting Weld, 434 Mass. at 87. “[N]either the possibility that a plaintiff will be unable to prove his allegations, nor the possibility that the later course of the suit might unforeseeably prove the original decision to certify the class wrong, is a basis for declining to certify a class which apparently satisfies the Rule.” Salvas v. Wal-Mart Stores, Inc., 452 Mass. 337, 363 (2008), quoting Weld, 434 Mass. at 87, and Blackie v. Barrack, 524 F.2d 891, 901 (9th Cir. 1975), cert. denied, 429 U.S. 816 (1976).
A judge has broad discretion to grant or deny a motion to certify a class, both under Rule 23 and under c. 93A, § 9(2). See Weld, 434 Mass. at 84-85 (Rule 23); Moelis, 451 Mass. at 489 (c. 93A).
2.2. No Expression of Class Interest Is Required. Todisco’s assertion that Silva must also prove that other potential class members have expressed some interest in pursuing similar claims against Todisco is without merit.
Such a requirement would be inconsistent with the very that the law permits class actions. “One of the primary purposes of the class action mechanism is ‘to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually an attorney’s) labor.’ ” Hazel’s Cup & Saucer, LLC v. Around The Globe Travel, Inc., 86 Mass. App. Ct. 164, 166 (2014), quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997). This may be especially true with respect to class actions under c. 93A, which reflects “a strong public policy in favor of
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the aggregation of small consumer protection claims” that no individual consumer would rationally pursue on their own. Feeney, 454 Mass. at 201-203.
In making the argument that Silva should be required to show some demonstrated interest among the proposed class members, Todisco relies on several federal decisions that denied conditional certification under the Fair Labor Standards Act (“FLSA”) because of a lack of such interest. See O’Donnell v. Robert Half Int’l, Inc., 429 F.Supp.2d 246, 250-251 (D.Mass. 2006) (Gorton, J.); Horne v. United Servs. Auto. Ass’n, 279 F.Supp.2d 1231, 1236-1237 (M.D. Ala. 2003).
“This argument fails to recognize, however, that Rule 23 [and c. 93A] class actions and FLSA class actions are materially different. FLSA class actions require potential plaintiffs to opt-in.” Garcia v. E.J. Amusements of New Hampshire, Inc., 98 F. Supp. 3d 277, 289–90 (D. Mass. 2015) (Saris, C.J.). Indeed, by statute no one may be made a plaintiff to an FLSA action unless the “consent in writing … and such consent is filed” with the court. See 29 U.S.C. § 216(b). “As a result, courts have recognized that it makes no sense to grant conditional certification under the FLSA if no putative class members are interested in joining the suit.” Garcia, supra. In contrast, “Massachusetts law does not allow,” never mind require, “an ‘opt in’ class any more than it allows an ‘opt out’ class.” Sullivan v. First Massachusetts Fin. Corp., 409 Mass. 783, 790 (1991). The “expression of interest” requirement to obtain conditional certification in FLSA cases is irrelevant here.3
3. Rulings on Class Certification.
3.1. Negligent Misrepresentation, Intentional Fraud, and Unjust Enrichment Claims. The Court agrees with Todisco that it would not be appropriate to certify a plaintiff class with respect to the claims asserted in Counts I-III of the amended complaint. Even assuming that the Rule 23(a) requirements of numerosity, commonality, typicality, and adequacy of representation are satisfied, the Court is
3 Todisco’s reliance on Andrews v. Bechtel Power Corp., 780 F.2d 124, 131 (1st Cir. 1985), is also misplaced. In that case the First Circuit held that the district court did not abuse its discretion in determining that the proposed class did not satisfy the numerosity requirement in Fed. R. Civ. P. 23(a)(1) because joinder of all potential class members was feasible. The sentence mentioning “lack of interest” merely summarizes part of the district court’s decision; it is not a holding by the First Circuit.
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not convinced that common questions of law or fact predominate over individualized issues that must be resolved separately for each class member. Since this requirement of Rule 23(b) is not satisfied, the Court will deny class certification as to these three claims. See generally Bellermann, 470 Mass. at 58 (“a judge retains discretion to deny certification” based on extent to which “individualized inquiries” will be needed to resolve class claims); accord, e.g., Fletcher, 394 Mass. at 603-604; Dane v. Board of Reg. of Voters of Concord, 374 Mass. 152, 160 (1978).
Reasonable or justifiable reliance is an element of the negligent misrepresentation and intentional fraud claims. See DeWolfe v. Hingham Centre, Ltd., 464 mass. 795, (2013) (“justifiable reliance” on information supplied is element of tort of negligent misrepresentation); Passatempo v. McMenimen, 461 Mass. 279, 301 (2012) (“reasonable reliance” is “a necessary element of fraud”). It is something that must be proved, not merely assumed. Even if Silva could readily establish that Todisco made the same kind of misrepresentation, or omission of material facts that Todisco had a duty to disclose,4 resolution of these claims would still require an individualized determination of how each class member relied on the statement or omission and whether that reliance was reasonable under the circumstances. Under these circumstances the Court is not convinced that common issues predominate over individual ones. Cf. Fletcher, 394 Mass. at 603 (affirming similar ruling).
The Court recognizes that the SJC has held that class-wide claims for invasion of privacy can be maintained without the need to prove the “precise reaction” of each class member to the alleged invasion where “the alleged injuries were the result of [a] single course of conduct.” Weld, 434 Mass. at 92. But it does not follow that the claims of fraud in this case can be maintained on a class basis without having to prove individual reliance. The putative class members did not ask to have their vehicles towed. They had no say in the matter. As a result Silva cannot show that other class members relied upon alleged misrepresentations in agreeing to have their vehicles towed, because the proposed class members never gave any such consent.
4 Cf. Sahin v. Sahin, 435 Mass. 396, 402 n.9 (2001) (“Fraud by omission requires both concealment of material information and a duty requiring disclosure.”).
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Under these circumstances, proof of the other elements of fraud or misrepresentation would not suffice to establish reasonable or justifiable reliance.
Much the same is true of the claim that Todisco was unjustly enriched by retaining charges for involuntary tows. “Unjust enrichment occurs when a party retains the property of another ‘against the fundamental principles of justice or equity and good conscience.’ ” Bonina v. Sheppard, 91 Mass. App. Ct. 622, 625, review denied, 477 Mass. 1109 (2017), quoting Santagate v. Tower, 64 Mass. App. Ct. 324, 329 (2005). Whether retention of money or some other benefit is unjust “turns on the reasonable expectations of the parties.” Id., quoting Metropolitan Life Ins. Co. v. Cotter, 464 Mass. 623, 644 (2013).
Since Todisco made a lawful tow of each putative class member’s vehicle, it would not be unjust to allow Todisco to assess and retain a reasonable charge for each tow. A highly individualized determination would be needed to determine the subjective expectations of each proposed class member, in order to decide whether Todisco was unjustly enriched by retaining what they paid to retrieve their vehicle. Class certification would be inappropriate on the unjust enrichment claim because Silva has not shown that common issues predominate.
3.2. Chapter 93A and Declaratory Relief Claims. In contrast, the Court is convinced that Silva has made an adequate showing as to all of the class certification requirements under G.L. c. 93A, § 9(2). It concludes that certification of a class—albeit a class that only includes “trespass tow” plaintiffs, and does not also include “police tow” plaintiffs as proposed by Silva—is appropriate with respect to the c. 93A claims and so much of the declaratory judgment claim that seeks declaratory relief as to the alleged violations of c. 93A. The Court agrees with Todisco that the class definition should including a time limit consistent with the four-year statute of limitations that applies to claims asserted under c. 93A. See G.L. c. 260, § 5A.5
3.2.1. Similarity of Injury. Silva has adequately shown for class certification purposes that “the putative class members suffered ‘similar,’ although
5 In addition to the issues addressed below, Todisco repeats in its opposition many of the arguments that it made in support of its unsuccessful motion to dismiss. The Court addressed those arguments in its memorandum and order dated January 23, 2017. It will not reiterate its prior rulings.
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not necessarily identical, injuries as a result of the defendant’s [allegedly] unfair or deceptive conduct.” Bellermann, 470 Mass. at 53. The putative class members were all subjected to involuntary tows and compelled by Todisco to pay mileage charges and fuel surcharges without receiving information that Todisco was required to disclose by a regulation designed to protect individual consumers. Silva has asserted a plausible claim that Todisco has violated a regulation that requires towing companies to disclose mileage and fuel surcharge information when charging someone for an involuntary tow (whether a trespass tow or a police tow), see 220 C.M.R. § 272.03, that this DPU regulation was intended to protect consumers, and that Todisco’s violation of this regulation, if proved, would therefore constitute a per se violation of G.L. c. 93A. See 940 C.M.R. § 3.16(3); Klairmont v. Gainsboro Restaurant, Inc., 465 Mass. 165, 174-175 (2013). The proposed class members all suffered a similar injury; they were compelled to pay allegedly unlawful mileage and fuel surcharges to Todisco as a condition of getting their vehicle back.
3.2.2. Commonality. For the same reasons, “there are questions of law or fact common to the class,” and Silva has therefore satisfied the commonality requirement. See Mass. R. Civ. P. 23(a)(2).
Todisco argues that class certification is inappropriate because any damages would have to be calculated on an individual basis. The Court disagrees.
Although some “individualized inquiry” and calculations would be needed to determine damages if the class were to prevail on the merits, “such necessity at the damages stage does not preclude class certification where all other requirements are met.” Weld, 434 Mass. at 92; accord Salvas, 452 Mass. at 364 (“Class certification may be appropriate where common issues of law and fact are shown to form the nucleus of a liability claim, even though the appropriateness of class action treatment in the damages phase is an open question.”).
3.2.3. Numerosity. The element of numerosity is easily satisfied here. Silva has presented evidence, based on Todisco’s own reports to the DPU, that there are thousands of putative class members based on trespass tows alone.
Todisco quibbles with this evidence, arguing that the DPU regulation only requires that mileage information be provided for involuntary tows in excess of five
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miles, and that some of its trespass tows may have been shorter than that. But even assuming that many of Todisco’s involuntary tows were for less than five miles, that would still mean that there are hundreds or even thousands of class members who may be entitled to damages with respect to unlawful mileage charges. And it appears that all putative class members have claims with respect to the fuel surcharges, even if their vehicle was towed less than five miles.
The Court concludes that joining all class members as individual plaintiffs would add significant expense and complexity to this lawsuit without any offsetting advantage, and that such joinder is therefore impracticable. Joinder of all class members as individual plaintiffs is “impracticable” within the meaning of Rule 23 if doing so would be “impractical, unwise or imprudent;” plaintiffs need not show that joiner is “impossible or incapable of being performed.” Brophy v. School Comm. of Worcester, 6 Mass. App. Ct. 731, 735 (1978).
3.2.4. Typicality. The Court concludes that Silva has satisfied the typicality requirement with respect to proposed class members who were subjected to trespass tows. “Typicality is established when there is ‘a sufficient relationship … between the injury to the named plaintiff and the conduct affecting the class,” and the claims of the named plaintiff and those of the class “are based on the same legal theory.’ ” Weld, 434 Mass. at 87, quoting 1 H. Newberg, Class Actions § 3.13, at 3-76 (3d ed. 1992)). As discussed above, all claims on behalf of trespass tow class members are based on the same legal theory and concern similar injuries.
The Court agrees with Todisco, however, that Silva has not satisfied the typicality claim with respect to people whose vehicles were transported because of a police tow. Determining which police-requested tows are involuntary tows conducted pursuant to G.L. c 159B, § 6B, involves legal and factual issues that are not raised by Silva’s personal claims, because he was subjected to a trespass tow. The Court therefore concludes, in the exercise of its discretion, that it will redefine the proposed class to include only people who were subjected to trespass tows. Cf. Bellermann, 470 Mass. at 58 (“Where a natural alternative class or set of subclasses would address a judge’s concerns about certifying a class as initially proposed, the judge should redefine the original class or certify subclasses as appropriate.”).
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3.2.5. Adequacy of Representation. Finally, the Court concludes that Silva and his counsel will fairly and adequately protect the interests of the class. Silva’s interests are aligned with the interests of the other class members. And Silva’s counsel is experienced and competent in conducting consumer class action litigation.
ORDER
Plaintiff’s motion for class certification is ALLOWED IN PART with respect to the claims for relief under G.L. c. 93A and for declaratory judgment, and DENIED IN PART with respect to the claims for negligent misrepresentation, intentional fraud, and unjust enrichment in Counts I-III of the first amended complaint, and with respect to the request to include so-called “police tow” plaintiffs in the certified class.
The Court hereby certifies a plaintiff class consisting of all owners of any passenger motor vehicle displaying a passenger or motorcycle plate who: (a) had their passenger vehicle towed without their consent by Todisco Services, Inc. (d/b/a Todisco Towing) after September 5, 2012, from a private way or private property at the direction of someone having lawful control of such way or property; and (b) were assessed and paid a mileage surcharge for mileage in excess of five miles although Todisco did not record the mileage on the invoice or tow slip, or were assessed and paid a fuel surcharge although Todisco did not record fuel surcharge information on the invoice or tow slip, or both.
This plaintiff class is certified solely for the purpose of pressing the pending claims against Todisco Services, Inc., under G.L. c. 93A and so much of the pending declaratory judgment claim that seeks declaratory relief as to the alleged violations of c. 93A
March 6, 2018
___________________________
Kenneth W. Salinger
Justice of the Superior Court read more

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Posted by Massachusetts Legal Resources - March 20, 2018 at 2:36 pm

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

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1884CV00375-BLS2
____________________
ANAESTHESIA ASSOCIATES OF MASSACHUSETTS, PC
v.
PLEXUS ANESTHESIA SERVICES OF MASSACHUSETTS, PC
____________________
MEMORANDUM AND ORDER DENYING PLAINTIFF’S MOTION FOR A PRELIMINARY INJUNCTION
Anaesthesia Associates of Massachusetts, PC (“AAM”) claims that defendant Plexus Anesthesia Services of Massachusetts, PC (“PASM”) owes it at least $ 2.0 million for past anesthesia services. AAM asks the Court to enter a preliminary injunction that would PASM from transferring or encumbering any assets, or from making any payments of any funds except for paying wages to its employees, paying its attorneys, or paying rent, utilities, and taxes. AAM asserts that it will suffer irreparable harm without the requested injunction because PASM has been making and would continue to make preferential payments to entities other than AAM, thereby preventing from receiving money it is still owed for past services rendered.
“A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). To the contrary, “the significant remedy of a preliminary injunction should not be granted unless the plaintiffs had made a clear showing of entitlement thereto.” Student No. 9 v. Board of Educ., 440 Mass. 752, 762 (2004). “Trial judges have broad discretion to grant or deny injunctive relief.” Lightlab Imaging, Inc. v. Axsun Technologies, Inc., 469 Mass. 181, 194 (2014).
The Court will DENY this motion for a preliminary injunction for two reasons: AAM has not met its burden of proving irreparable harm, and the broad relief it seeks is not permitted without a judgment under Massachusetts law.1
1 At the close of the oral argument, the Court stated that it was also persuaded that granting the preliminary injunction sought by AAM would be against the public interest because it would materially interfere with PASM’s ability to provide anesthesiology services to its hospital clients. However, the Massachusetts Appeals Court has held that it is reversible error for a trial court to consider harm to the public interest as a factor in granting or denying a preliminary injunction in a case like this
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1. Failure to Prove Irreparable Harm. As the moving party, AAM has the “burden of showing it would suffer an irreparable harm absent an injunction.” GTE Products Corp. v. Stewart, 414 Mass. 721, 726 (1993).
AAM asserts that it will suffer irreparable harm without the proposed preliminary injunction because PASM has been making preferential payments to another entity. The sole evidence supporting that assertion is a statement made “upon information and belief” by AAM’s chief operating officer. But assertions in an affidavit or verified complaint made on “information and belief” that are not supported by any other evidence do “not supply an adequate factual basis for the granting of a preliminary injunction.” Eaton v. Federal Nat’l Mortgage Ass’n, 462 Mass. 569, 590 (2012); accord Alexander & Alexander, Inc. v. Danahy, 21 Mass. App. Ct. 488, 494 (1986).
Since AAM has made no factual showing of likely irreparable harm other than assertions made solely on “information and belief,” it has failed to meet its burden of proving that it will suffer irreparable harm without the proposed injunction. It is therefore not entitled to obtain preliminary injunctive relief. See, e.g., American Grain Products Processing Institute v. Department of Pub. Health, 392 Mass. 309, 326-329 (1984) (vacating preliminary injunction because plaintiff did not prove it would suffer irreparable harm without relief); Nolan v. Police Comm’r of Boston, 383 Mass. 625, 630 (1981) (same).
2. Failure to Justify a Creditor’s Bill Attachment. AAM would not be entitled to the requested preliminary injunction even if it had met its burden of proving irreparable harm. AAM is seeking incredibly broad relief. Rather than seek a real estate attachment or some other kind of pre-judgment security that is authorized by rule or statute, AAM asks the Court to tie up freeze all of PASM’s assets and to bar it from spending any many except to pay its employees, lawyers, or its rent, utility, and tax bills. AAM has not met its burden of proving that such preliminary injunctive relief can or should be granted.
that involves a dispute between a private debtor and a private creditor. See Bank of New England, N.A. v. Mortgage Corp. of New England, 30 Mass. App. Ct. 238, 246-248, rev. denied, 409 Mass. 1105 (1991). The Court has therefore not considered the public interest in deciding AAM’s motion.
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AAM’s request to tie up PASM funds and other assets is essentially a “nonstatutory action[] to reach and apply” that used to be known as a “creditor’s bill.” See Cavadi v. DeYeso, 458 Mass. 615, 625 (2011). “Traditionally, a creditor’s bill could be brought (i) by a judgment creditor, (ii) who had attempted to obtain satisfaction at law, and (iii) who sued in equity for the purpose of reaching property that could not be taken on execution at law.” Id. The “true rule in equity is that under usual circumstances a creditor’s bill may not be brought except by a judgment creditor after a return of ‘nulla bona’ on execution.” First Nat. Bank of Boston v. Nichols, 294 Mass. 173, 182 (1936), quoting Harkin v. Brundage, 276 U.S. 36, 52 (1928). In cases involving fraudulent conveyances that leave a judgment debtor insolvent, the judgment creditor need not prove a fruitless attempt at execution, but still must show that it has obtained a final and enforceable judgment before obtaining equitable relief in the nature of a creditor’s bill. See Foster v. Evans, 384 Mass. 687, 693-694(1981).
Since Plaintiffs are not yet judgment creditors of PASM, the Court may not exercise its general equity jurisdiction to temporarily grant injunctive relief in the nature of creditors’ bill attachment.2 See First Nat. Bank, 294 Mass. at 182-183; Consolidated Ordnance Co. v. Marsh, 227 Mass. 15, 23 (1917); In re Rare Coin Galleries of America, Inc., 862 F.2d 896, 904-905 (1st Cir. 1988) (applying Massachusetts law); Hunter v. Youthstream Media Networks, 241 F.Supp.2d 52, 55-57 (2002) (Collings, M.J.) (applying Massachusetts law). The Court notes that the United States Supreme Court has reached the same result under federal law, holding that federal courts have “no authority to issue a preliminary injunction preventing” parties “from disposing of their assets pending adjudication of [a] claim for money damages,” where the plaintiff does not claim any lien upon or other equitable interest in the assets. Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 310, 333 (1999).
2 PASM did not argue that AAM is seeking equitable relief that the Court lacks the power to grant. Nonetheless, since the scope of a court’s general equitable powers is matter of public interest, the Court concludes that it is appropriate to raise and resolve the issue sua sponte. Cf. Quincy Trust Co. v. Taylor, 317 Mass. 195, 198 (1944) (“Where a court has once taken jurisdiction and has become responsible to the public for the exercise of its judicial power so as to do justice, it is sometimes the right and even the duty of the court to act in some particular sua sponte.”).
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The one published appellate Massachusetts decision cited by AAM for the proposition that trial courts may freeze a defendant’s assets is not to the contrary. The Boston Athletic Ass’n appeal did not involve a creditor’s bill attachment, but instead involved an injunction to prevent the dispersal of particular, contested funds generated by a contract the validity of which was in dispute. See Boston Athletic Ass’n v. International Marathons, Inc., 392 Mass. 356, 362 (1984). The Court recognizes that it would have the power to enjoin the dissipation of particular funds in which a plaintiff has a demonstrated equitable interest, as in the BAA case. See also, e.g., Gucci America, Inc. v. Weixing Li, 768 F.3d 122, 130-131 (2d Cir. 2014) (distinguishing Grupo Mexicano on ground that plaintiff asserted equitable interest in defendant’s profits under federal trademark act). But AAM only asserts a legal claim for damages, not an equitable claim in particular funds.
ORDER
Plaintiff’s motion for a preliminary injunction is DENIED.
February 20, 2018
___________________________
Kenneth W. Salinger
Justice of the Superior Court read more

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

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MHM Correctional Services, Inc., et al. v. Darwin Select Insurance Company, et al. (Lawyers Weekly No. 09-008-18)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss SUPERIOR COURT
CIVIL ACTION
NO. 2017-01825-BLS2
MHM CORRECTIONAL SERVICES, INC.,
CENTURION OF MINNESOTA, LLC, CENTURION OF MISSISSIPPI, LLC &
MASSACHUSETTS PARTNERSHIP FOR CORRECTIONAL HEALTHCARE, LLC,
Plaintiffs
vs.
DARWIN SELECT INSURANCE COMPANY N/K/A
ALLIED WORLD SURPLUS LINES INSURANCE COMPANY &
ALLIED WORLD ASSURANCE COMPANY,
Defendants
MEMORANDUM OF DECISION AND ORDER
ON DEFENDANTS’ MOTION TO DISMISS
This case concerns six separate claims for coverage brought by insureds against their insurers. The plaintiffs are MHM Correctional Services, Inc. (MHM), Centurion of Mississippi, LLC (Centurion-MS), Centurion of Minnesota, LLC (Centurion-MN), and Massachusetts Partnership for Correctional Healthcare, LLC (MPCH), each of which provides healthcare services to inmates housed in state prison facilities. Plaintiffs have been sued or are the subjects of indemnification demands in connection with six class action lawsuits alleging that the health care rendered to inmates in those facilities is so inadequate as to violate their constitutional rights. In the instant case, plaintiffs seek declaratory and injunctive relief as to the coverage obligations of the defendants Darwin Select Insurance Company n/k/a Allied World Surplus Lines Insurance Company (Darwin) and Allied World Assurance Company (Allied World) in relation to these six lawsuits. Defendants now move to dismiss, relying on the language of the underlying policies, all of which are before the Court. In the event that this Court does not
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dismiss certain counts, the defendants ask this Court to stay the proceedings. For the reasons that follow, the Motion to Dismiss is Denied.
BACKGROUND
Plaintiffs have contracts with various Departments of Corrections (DOCs) throughout the United States to provide medical and mental healthcare services to their prisoner populations. MHM provides mental healthcare services for the Alabama DOC (ADOC). Centurion-MS provides medical and mental healthcare services for the Mississippi DOC (MSDOC). Centurion-MN provides medical and mental healthcare services for the Minnesota DOC (MNDOC). MPCH provides medical and mental healthcare services for the Massachusetts DOC (MADOC).
These DOCs are currently defendants in six federal class action lawsuits filed between 2010 and 2015 on behalf of incarcerated individuals. Those lawsuits are: Dunn v. Thomas (Dunn), No. 2:14-cv-00601-MHT-TFM; DePriest v. Walnut Grove Correctional Authority (DePriest), No. 3:10-cv-663 DPJ-FKB; Dockery v. Epps (Dockery), No. 3:13-cv-326-TSL-JMR; Ligons v. Minnesota Department of Corrections (Ligons), No. 15-cv-2210, PJT/BT; Paszko v. O’Brien (Paszko), No. 1:15-cv-12298-NMG; and Briggs v. Massachusetts Department of Corrections (Briggs), No. 1:15-cv-40162-GAO. Each of these lawsuits seeks injunctive and declaratory relief as well as attorney’s fees.
Both the MNDOC and Centurion-MN are defendants in Ligons. Both the MADOC and MPCH are defendants in Paszko and Briggs. The ADOC is a defendant in Dunn and the MSDOC is a defendant in DePriest and Dockery. MHM and Centurion-MS are not named defendants in Dunn, DePriest, or Dockery. However, pursuant to indemnification provisions in their service contracts with these DOCs, MHM and Centurion-MS have agreed to defend and indemnify them for losses arising from the lawsuits.
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The language of these indemnification provisions is relevant to the issues before the Court. The indemnification provision in the ADOC’s agreement with MHM (the ADOC Contract) provides that:
MHM will indemnify and hold harmless . . . the ADOC . . . from and against all claims, losses, or costs arising out of MHM’s negligence, gross negligence, wantonness, deliberate indifference, or criminal negligence, or from willful disregard of proper or lawful written instructions from the Commissioner of the ADOC and Associate Commissioner of Health Services. . . .
MHM will indemnify and hold harmless . . . the ADOC . . . from and against any and all loss or damage, including court costs and attorney fees, for liability claimed against or imposed upon the ADOC because of bodily injury, death, or property damage, real or personal, including the loss or the use thereof, arising out of or as a consequence of the breach of any duty or obligation of MHM included in this Agreement, negligent acts, errors or omissions, including engineering and/or professional error, fault or mistake, or negligence of MHM . . . . MHM’s obligation, under this Section, will not extend to any liability caused by the negligence of ADOC. . . .
ADOC Contract at § 10.3. In other words, the indemnification obligation extends only to those losses that arise out of MHM’s negligence or breach of its duties. The indemnification provision in the MSDOC’s agreement with Centurion-MS (MSDOC Contract) provides that:
To the fullest extent allowed by law, Centurion shall indemnify, defend, save and hold harmless, protect, and exonerate the [MSDOC] . . . from and against all claims, demands, liabilities, suits, actions, damages, losses, and costs of every kind and nature whatsoever, including without limitation, judgments, court costs, investigative fees and expenses, and attorney’s fees, arising out of or caused by Centurion . . . in the performance of or failure to perform this Agreement. . . . Centurion’s obligations, duties, and responsibilities under this section include, but are not limited to, the duty to defend and indemnify [MSDOC] . . . in [DePriest and Dockery].
MSDOC Contract at § 10.1. Centurion-MS entered the MSDOC Contract on July 1, 2015, several years after DePriest and Dockery were initiated, and the MSDOC tendered DePriest and Dockery pursuant to Section 10.1 on the same day. However, Centurion-MS specifically
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disclaimed any obligations to defend and indemnify the MSDOC for any actions that occurred prior to July 1, 2015, when there was no contractual relationship between the two. Section 10.1 also arguably limits liability to Centurion-MS’s failure to perform its own obligations and duties. Thus, like the indemnification provision in the ADOC Contract, the indemnification provision in the MSDOC Contract would appear to be limited to those losses arising out of acts and omissions of Centurion-MS and not for those acts or omissions of a third party.
From 2013 through 2016, plaintiffs were insured by primary Locum Tenens and Contract Staffing Professional Liability Insurance Policies issued by Evanston Insurance Company (Evanston). Evanston has declined to provide coverage in connection with Dunn, DePriest, Dockery, and Briggs. It has provided a partial defense in connection with Ligons under a reservation of rights. Plaintiffs have filed a separate coverage action in Illinois state court against Evanston regarding coverage for the class action lawsuits. The Illinois action remains pending.
In addition to the coverage provided by Evanston, plaintiffs were also insured for the years 2013 through 2016 by several Healthcare Excess and Umbrella Liability Insurance Policies issued by Darwin and Allied World to MHM Health Professionals, Inc. and MHM Services, Inc., two entities affiliated with plaintiffs but not themselves parties to this action. For each policy year, MHM Health Professionals and MHM Services were issued separate and identical policies. Plaintiff MHM is an insured under 2013 and 2014 Darwin Policies and a 2015 Allied World Policy issued to MHM Services. Plaintiffs MPCH and Centurion-MN are insureds under a 2014 Darwin Policy and a 2015 Allied World Policy issued to MHM Health Professionals. Plaintiff Centurion-MS is insured under the 2015 Allied World MHM Health Professionals Policy. After
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Evanston largely denied coverage in connection with the six class action lawsuits, plaintiffs sought coverage under these Policies. Defendants, however, declined to provide it.
Each of the Policies at issue in this case contains two “Insuring Agreements,” described as “Insuring Agreement I.A” and “Insuring Agreement I.B.” Insurance Agreement I.A provides Umbrella “Claims Made” Professional Liability coverage; Insuring Agreement I.B provides Umbrella “Occurrence Based” General Liability coverage. With regard to Insuring Agreement I.A, the Policies provide, in relevant part, that:
The Insurer will pay on behalf of the Insured . . . Loss and Defense Expenses. . . which the Insured becomes legally obligated to pay as a result of a Claim alleging a Medical Professional Incident, provided always that: 1. such a Claim is first made against the Insured during the Policy Period . . . ; and 2. notice of such Claim is given to the Insurer in accordance with . . . this Policy….
(Boldface in original). With regard to Insurance Agreement I.B, the Policies provide, in relevant part, that:
The Insurer will pay on behalf of the Insured . . . Loss and Defense Expenses. . . which the Insured becomes legally obligated to pay as a result of a Claim alleging Bodily Injury, Property Damage, or Personal or Advertising Injury caused by an Occurrence, provided always that: 1. such Bodily Injury, Property Damage, or Personal or Advertising Injury occurs during the Policy Period . . . ; and 2. notice of such Claim is given to the Insurer in accordance with . . . this Policy….
(Boldface in original). The relevant terms and conditions of the Policies are in most respects the same. To the extent there are differences, those differences will be discussed below.
DISCUSSION
The claims for which plaintiffs seek coverage fall into two categories. First, MHM and Centurion-MS seek coverage from defendants for the contractual indemnification demands made by the ADOC and MSDOC in connection with Dunn, DePriest, and Dockery. As noted above, neither MHM nor Centurion-MS are named as defendants in those actions. Second, Centurion-MN and MPCH seek a declaration that the defendants have both a duty to defend and indemnify
6
them in connection with Ligons, Paszko and Briggs. Centurion-MN and MPCH are named defendants in the underlying complaints in those three cases. As to both categories, plaintiffs maintain they are entitled to coverage under both Insuring Agreement I.A and Insuring Agreement I.B. This Court concludes the Complaint survives the defendants’ Motion to Dismiss under Insuring Agreement I.A. It concludes that there is no coverage for any of the class actions under Insuring Agreement I.B.
A. Insuring Agreement I.A
1. ADOC and MSDOC Indemnification Demands for Dunn, DePriest, and Dockery
MHM seeks coverage under Insuring Agreement I.A of the 2013 Darwin MHM Services Policy (the 2013 Darwin Policy) for its contractual obligation to indemnify ADOC in the Dunn lawsuit. Centurion-MS seeks coverage under Insuring Agreement I.A of the 2015 Allied World MHM Health Professionals Policy (the Allied World Policy) for its contractual indemnification obligations to MSDOC, named as a defendant in DePriest and Dockery. The Court concludes that, based on the documents before me now, MHM and Centurion-MS would appear to be entitled to coverage under Insuring Agreement I.A of these Policies, provided that MHM and Centurion-MS indemnify the DOCs (and seek coverage for that indemnification) only as to losses that arose from their own conduct.1
In support of their motion to dismiss, defendants argue that they are entitled to deny coverage as to the underlying class action complaints because neither MHM nor Centurion-MS has been named as a defendant in those actions and therefore no “Claim” has been made against an insured so as to trigger coverage for those lawsuits. That does not dispose of the issue,
1 It is important to note that these issues are raised by way of a motion to dismiss. The underlying lawsuits remain pending and the indemnification obligations have not been finally decided. This Court therefore makes no final determination in favor of plaintiffs as to coverage. Rather, the only question before the Court at this point is whether the plaintiffs have stated a claim upon which relief may be granted.
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however. The question is rather whether the indemnification demands made against MHM and Centurion-MS as a result of those lawsuits constitute a “Claim” within the meaning of the policies and whether such a claim is covered.
The indemnification demands seek to recoup from MHM and Centurion-MS costs and expenses the DOCs incur as a result of any finding of liability against them in the class action lawsuits and that can be shifted to MHM and Centurion under their service contracts. As to whether that is covered, the applicable policies require the insurer to pay, on behalf of the insured, any “Losses or Defense Expenses” which the insured becomes legally obligated to pay “as a result of a Claim alleging a Medical Professional Incident….” A “Medical Professional Incident” means, among other things, “an actual or alleged act, error, or omission in the Insured’s rendering of or failure to render Medical Professional Services.” (Boldface in original). Dunn, DePriest and Dockery all allege a failure to render adequate medical care to inmates – medical care which MHM and Centurion-MS agreed to provide pursuant to their contracts with the DOCs. In demanding indemnification, the DOCs are seeking to shift liability to MHM and Centurion-MS for costs and expenses incurred by any determination in those lawsuits that inmate medical care was inadequate. As the Court construes the contractual indemnification provisions that form the basis for that demand, the DOCs will be able to shift those costs (and Centurion-MS and MHM are seeking coverage for) only those losses that arose from MHM’s or Centurion-MS’s acts or omissions in rendering inadequate medical services. In other words, it will be for losses incurred as a result of an “act, error or omission in the Insured’s rendering of or failure to render Medical Professional Services.” Accordingly, the indemnification demand would be a “Claim” that triggers coverage.
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Defendants argue that the indemnification provisions are broader than that, however, and allow the DOCs to shift costs for acts or omissions in which the plaintiff insureds played no part. This Court disagrees. As to the ADOC Contract, MHM’s indemnity obligation extends only to losses incurred by the ADOC “arising out of or as a consequence of the breach of any duty or obligation of MHM … including negligent acts, errors or omissions” on MHM’s part. Similarly, the MSDOC Contract permits the MSDOC to seek reimbursement from Centurion-MS for any costs or expenses “arising out of or caused by Centurion . . . in the performance of or failure to perform this Agreement.” Although that contract was entered into after the DePriest and Dockery lawsuits began, Centurion-MS has specifically disclaimed any obligation to defend and indemnify the MSDOC for any actions that occurred prior to July 1, 2015, when there was no contractual relationship between Centurion-MS and MSDOC. In any event, the question before the Court at this juncture in the case is whether the plaintiffs have stated a claim for coverage. If it turns out that the DOCs seek to be indemnified for costs that arise out of acts and omissions by other entities (and a court determines that the DOC is entitled to do that), then the defendants might well be correct to deny coverage. To assume that would occur, however, would be premature, particularly where the contractual indemnification provisions at issue could be more narrowly construed, and (as this Court understands it) plaintiffs are not seeking coverage for costs and expenses which are attributable to the acts or omissions of others.
Defendants next contend that coverage for the indemnification demands are excluded under the Policies’ contractual liability exclusion. The contractual liability exclusion provides that:
This Policy shall not apply to any Claim based on, arising out of, directly or indirectly resulting from, in consequence of, or in any way involving . . . any Bodily Injury, Property Damage, Personal or Advertising Injury, or a Medical Professional Incident for which the Insured is legally obligated to pay damages
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by reason of the assumption of liability of another in any Express Contract or Agreement.
(Boldface in original). There are two exceptions to the exclusion. First, it does not apply to liability for damages “that the Insured would have in the absence of the contract or agreement.” (Boldface in original) (Exception A). Second, the contractual liability exclusion does not apply to liabilities “assumed in a contract or agreement that is an Insured Contract, provided the Bodily Injury or Property Damage occurs subsequent to the execution of such contract or agreement.” (Boldface in original) (Exception B). This Court concludes that the indemnification demands arguably fall within Exception A, so that the contract exclusion provision would not apply.
The allegations in the underlying complaints suggest that, as the entities that carried out the DOCs’ healthcare-related policies, MHM and Centurion-MS played a role in the alleged failures to deliver adequate care. Moreover (as already noted above) the contractual indemnification provisions can be construed to permit a shifting of costs and expenses only as to MHM’s and Centurion-MS’s own failure to provide the medical care that they promised to the DOCs pursuant to their contracts. Thus, the demands concern conduct for which MHM and Centurion-MS could be liable even absent the indemnification provisions, and therefore fall within Exception A. In short, these claims for coverage are not so clearly outside the scope of the relevant policies as to be subject to dismissal at this stage of the case.
2. Ligons, Paszko, and Briggs
In connection with these three cases, plaintiffs seek coverage not based on an indemnification demand but because they are themselves named as defendants in the underlying complaints. Specifically, Centurion-MN seeks coverage for Ligons under the 2014 Darwin MHM Health Professionals Policy (the 2014 Darwin Policy). MPCH seeks coverage for Paszko
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under that same policy and as to Briggs, under the 2015 Allied World MHM Health Professionals Policy (the Allied World Policy). Defendants make three arguments as to why plaintiffs’ coverage claims have no merit and must be dismissed. First, they contend that MPCH and Centurion-MN did not provide them with timely notice in connection with either the Paszko or Ligons litigation. Under the 2014 Darwin Policy, “prompt” notice is required. Second, the defendants argue that MPCH cannot make a claim for coverage under the Allied World Policy as to the Briggs lawsuit because the claim was not “first made” under that policy. Third, the defendants assert that they are not required to provide coverage to MPCH or Centurion-MN under either the 2014 Darwin Policy or under the Allied World Policy because the underlying complaints in Paszko and Briggs request only declaratory and injunctive relief, which is not a covered “Loss.” This Court will discuss each of these arguments in turn.
As to the notice issue, this Court must decide as an initial matter whether to apply Massachusetts or Virginia law, since there is a material difference between those two states on this issue. Under Massachusetts law, an insurer can prevail on a defense of late notice only if it proves both that the late notice was in breach of the policy’s notice provision and that the breach resulted in actual prejudice. Johnson Controls, Inc. v. Bowes, 381 Mass. 278, 282 (1980); Darcy v. Hartford Ins. Co., 407 Mass. 481, 485 (1990). Under Virginia law, however prejudice to the insurer is only a factor that a court should consider; it is not in and of itself determinative. State Farm Fire and Cas. Co. v. Wallace, 997 F. Supp. 2d 439, 446-447 (W.D. Va. 2014).2 That is, an insurer may deny coverage even in the absence of actual prejudice.
2 Plaintiffs suggest that there is potentially no conflict between Massachusetts and Virginia law because Virginia law has yet to determine whether this rule applies to excess carriers. Plaintiffs emphasize that the Virginia cases on this issue all involve primary insurance policies. However, this Court fails to see why defendants should be treated any differently than the primary insurer, especially since plaintiffs are seeking coverage under the applicable policies under a theory that they should “drop down” to provide a defense of these actions. In other words, plaintiffs are asking that the defendants effectively assume the primary insurer’s obligations.
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In determining which law is applicable, the Court looks to the conflict-of-law rules of the forum state – here, Massachusetts. OneBeacon America Ins. Co. v. Narragansett Elec. Co. (OneBeacon), 90 Mass. App. Ct. 123, 125 (2016). Massachusetts applies a functional choice-of-law analysis, guided by the Restatement (Second) of Conflict of Laws (Restatement). Id. In insurance cases, the first step is to ascertain whether Section 193 of the Restatement will resolve the matter. Clarendon Nat’l Ins. Co. v. Arbella Mut. Ins. Co. (Clarendon), 60 Mass. App. Ct. 492, 496 (2004). Under Section 193, “the rights created by a contract of casualty insurance are to be determined by the local law of the State that the parties to the insurance contract understood would be the principal location of the insured risk during the term of the policy, unless some other State has a more significant relationship under the principles of § 6.” Id. The insured risk will typically be located in the state where the policyholder is domiciled. OneBeacon, 90 Mass. App. Ct. at 125. Where the principal location of the risk cannot be ascertained, the next step is to apply Section 188 of the Restatement. Clarendon, 60 Mass. App. Ct. at 496. Under Section 188, “the rights and duties of the parties, with respect to a contract issue, [are to] be determined by the local law of the State which, as to that issue, has the most significant relationship to the transaction and to the parties under the principles of § 6.” Id. at 497.3 In applying Sections 193 and 188, the Court looks to the circumstances surrounding the procurement and issuance of the policy, not the circumstances that prompted the claim for which coverage is sought. See OneBeacon, 90 Mass. App. Ct. at 126-127.
3 Section 6(2) of the Restatement provides seven factors relevant to the choice of applicable law: “(a) the needs of the interstate and international systems, (b) the relevant policies of the forum, (c) the relevant policies of other interested [S]tates and the relative interests of those [S]tates in the determination of the particular issue, (d) the protection of justified expectations, (e) the basic policies underlying the particular field of law, (f) certainty, predictability and uniformity of result, and (g) ease in the determination and application of the law to be applied.”
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In the present case, the Court cannot locate the principal location of the insured risk in one state because the relevant policies cover multiple insureds that provide services to prisons in multiple states. See Restatement §193, Comment b, para. Third (noting that the location of the insured risk cannot be determined “where the policy covers a group of risks that are scattered throughout two or more states.”). Accordingly, this Court looks to the law of that state which has the most significant relationship to the notice issue, which is Virginia. The policyholders (MHM Services and MHM Health Professionals) have their principal place of business in that state and the policies were delivered there. See W.R. Grace Co. v. Hartford Accident & Indem. Co., 407 Mass. 572, 585-586 (1990) (holding that New York law governed coverage of nationwide asbestos claims, where most of the policies were negotiated in New York and the insured, which had multistate operations, was incorporated and domiciled in New York); General Elec. Co. v. Lines, 2008 Mass. Super. LEXIS 284 (Mass. Super. July 10, 2008) (Gants, J.) at *6-*13 (applying law of insured’s domicile to late notice issue arising out of more than a hundred different environmental claims nationwide in scope). The Court is also mindful of the fact that in the Evanston coverage litigation, plaintiffs have taken the position that, if a conflict of law arose, Virginia law would control. See MHM Insureds’ Memorandum of Law in Support of Their Re-Filed Motion for Summary Judgment on the Duty to Defend and Indemnify at 9, n.4.
Under Virginia law, untimely notice constitutes a breach of the policy only if the failure to notify is substantial and material. Wallace, 997 F. Supp. 2d at 446. “Three factors bear upon the materiality of a breach of the notice provision of a policy: (1) the reasonableness of the delayed notice, (2) the amount of prejudice suffered by the insurer as a result of the delay, and (3) the length of time that elapsed before notice was given.” Id. at 447 (internal quotes omitted). In evaluating the reasonableness of the delayed notice, the Court applies “an objective standard,
13
requiring that an insurer be notified whenever it should reasonably appear to the insured that the policy may be implicated.” Penn-America Ins. Co. v. Mapp, 461 F. Supp. 2d 442, 453 (E.D. Va. 2006). In most cases, the reasonableness of the delay is an issue to be resolved by a fact finder. Wallace, 997 F. Supp. 2d at 447.
Defendants contend that the failure to notify was substantial and material because Paszko was reported to the defendants approximately ten months after the action was filed and Ligons was reported almost twelve months after the action was filed. However, defendants do not assert that they suffered any prejudice as a result of the delay and plaintiffs may be able to show that any delay was reasonable. In particular, plaintiffs maintain that the delay can be explained because they reasonably believed that Evanston would provide a complete defense for these actions and that Evanston would notify the defendants of the lawsuits. This argument could have merit. See Munchenbach v. Nationwide Mut. Fire Ins. Co., 2007 WL 6002108 at *5 (Va. Cir. Feb. 13, 2007) (“If there is a reasonable explanation for the insured’s delay in notifying the insurance company, the insured is not barred from a recovery because of the delay.”); Mount Vernon Realty, Inc. v. St. Paul Ins. Co., 1990 WL 10039273 at *1 (Va. Cir. Mar. 26, 1990) (“Prompt notice under an insurance contract means notice within a reasonable time, and compliance is measured by reference to the facts and circumstances.”). At the very least, this fact-specific determination requires the development of an evidentiary record and cannot be decided on a motion to dismiss.
The defendants’ second argument relates only to Briggs and raises the question of when the claim was “first made.” The Briggs lawsuit was filed on November 24, 2015 and MPCH provided notice of that action to the defendants on April 20, 2016. Both dates are within the period covered by the Allied World policy, which runs from July 1, 2015 to July 1, 2016.
14
Defendants, however, argue that the claim was first made on March 20, 2015 – before the Allied World Policy took effect. On that date, the MPCH and the MADOC received a letter from Prisoners’ Legal Services (PLS) accusing them of mistreating or inadequately treating deaf and hard of hearing prisoners in violation of their constitutional and statutory rights. This Court concludes that the PLS letter cannot constitute a “Claim” within the meaning of the Policy.
A Claim is defined under the Allied World Policy as “a written notice received by an Insured that a person or entity intends to hold an Insured responsible for a Medical Professional Incident.” (Boldface in original). The PLS letter came from a prisoners’ advocacy group, which on its own has no standing to bring a lawsuit against MPCH. Without standing, there was no legal mechanism for PLS to hold MPCH “responsible for a Medical Professional Incident.” Moreover, the letter did not state that any prisoners intended to file a lawsuit. Rather, it urged the MADOC and MPCH to take remedial measures and to contact PLS to “discuss a resolution to this matter.” In short, that MPCH received this letter and did not notify defendants of it does not bar its claim for coverage under Allied World Policy.4
Turning to the defendants’ final argument that the complaints in Paszko and Briggs do not involve a “Loss” within the meaning of the Policies, this Court looks to the policy language. Neither one of these lawsuits seeks compensatory damages. They do, however, seek injunctive and equitable relief that will likely require the expenditure of funds if a court determines that the medical care provided to inmates was indeed deficient. They also seek an award of attorney’s fees. Both the 2014 Darwin Policy and the 2015 Allied World Policy define Loss as “any monetary amount paid on account of an award, judgment or settlement which the Insured is
4 Plaintiffs argue in the alternative that if the letter were a “Claim,” then MPCH can seek coverage under the 2014 Darwin Policy. Because this Court agrees with the plaintiffs that the PLS letter is not a Claim, this alternative avenue of coverage is not available to MPCH in connection with the Briggs litigation.
15
legally obligated to pay as a result of a Claim.” (Boldface in original). Each of the Policies expressly states that certain things are excluded from this definition and therefore do not constitute a “Loss.” The Policies differ, however, as to what is excluded.
Under the 2014 Darwin Policy, “non-monetary relief or redress in any form other than monetary compensation or damages, including, but not limited to, injunctive, declaratory and administrative relief” does not constitute a “Loss” and therefore is not covered. In other words, non-monetary relief is not a covered Loss. Although that is stated to include injunctive relief, this Policy language does not expressly exclude monetary costs associated with such relief. Keeping in mind that exclusions from coverage must be strictly construed, this Court concludes that this exclusion would not prevent coverage for expenditures that plaintiffs would be required to make to comply with any equitable relief that is ordered. Both Ligons and Paszko seek an injunction ordering defendants to implement and adhere to a comprehensive treatment protocol with regard to prisoners who are infected with the Hepatitis C virus. Because this will likely require the expenditure of money, this Court concludes that Centurion-MN and MPCH’s claims for coverage under the 2014 Darwin Policy in connection with these two lawsuits state a claim upon which relief may be granted.
The exclusion in the 2015 Allied World Policy is broader and makes clear what the 2014 Darwin Policy did not. That is, it does not provide coverage for “non-monetary relief or redress in any form other than monetary compensation or damages, including but not limited to the costs to comply with an order granting injunctive, declaratory, or administrative relief.” (Emphasis added). 5 Thus, there is no coverage obligation with respect to any out-of-pocket expenditures in
5 That this language was included in the Allied World Policy supports this Court’s conclusion that the 2014 Darwin Policy does cover costs associated with injunctive relief. That is, had the parties intended to exclude those costs, they clearly knew how to do that.
16
the Briggs litigation that are incurred by MPCH as a result of its compliance with any equitable order. However, the Briggs lawsuit also seeks attorney’s fees, and those costs are arguably covered.
In contending that such costs are not covered, defendants rely on a policy provision which excludes “Defense Expenses” from the definition of Loss so that these expenses are not covered. The Allied World Policy defines Defense Expenses, however, as “reasonable fees, costs and expenses incurred by or on behalf of the Insured in connection with the defense of a Claim.” (Boldface in original, underline added). An award of attorney fees whereby the insured (here MPCH) is required to pay the inmate plaintiffs’ attorney’s fees is therefore not a “Defense Expense.” As to whether attorney’s fees are covered, the Allied World Policy (like the other policies) provide coverage if it is for “Losses or Defense Expenses” which the insured becomes legally obligated to pay “as a result of a Claim alleging a Medical Professional Incident.” Plaintiffs in the Briggs litigation ask the court to require MPCH to pay their attorney’s fees (as required by statute for constitutional violations). This is therefore a claim that seeks monetary compensation. If the Court then ordered MPCH to pay those fees as a result of its failure to provide adequate medical care, then that would fall within the definition of a Loss as defined by the Policy. See UnitedHealth Group Inc. v. Hiscox Dedicated Corp. Member Ltd., 2010 WL 550991 at *10-*11 (D. Minn. Feb. 9, 2010) (applying similar policy language, court concluded that attorney’s fees awarded against the insured in underlying litigation come within insurer’s coverage obligations).
B. Insuring Agreement I.B
Plaintiffs alternatively maintain that they are entitled to coverage under Insuring Agreement I.B because the indemnification demands and the complaints in Paszko, Ligons, and
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Briggs allege “Bodily Injury.” This Court disagrees. Under the Policies, Bodily Injury means “physical injury, sickness or disease sustained by a person other than a Patient, including mental anguish, emotional distress or death resulting therefrom.” (Boldface in original, underline added). Patient, in turn, means “any persons or human bodies admitted or registered to receive Medical Professional Services from an Insured, whether on an inpatient, outpatient or emergency basis.” (Boldface in original). In each of the underlying actions, the prisoner plaintiffs allege that they did not receive adequate medical and/or mental health services. The complaints also allege – either explicitly or implicitly – that plaintiffs were complicit in that failure. The services the prisoner-plaintiffs claimed they should have received were those that plaintiffs were contractually obligated to provide them. Thus, the prisoners-plaintiffs are properly viewed as plaintiffs’ Patients. Accordingly, there is no coverage under Insuring Agreement I.B.
That there is no coverage is made clearer when Insuring Agreements I.A and I.B are read together. Insuring Agreement I.A provides coverage for a Medical Professional Incident, which is defined as, “an actual or alleged act, error, or omission” connected to the “rendering of or failure to render” Medical Professional Services. (Emphasis added). Thus, it envisions coverage for situations where individuals do not receive any medical care. Insuring Agreement I.B is intended to provide coverage for conduct that lies entirely outside the provision of medical care. The underlying lawsuits (and the indemnification demands that arise from them) stem from the failure to render proper medical care. Any coverage obligations would therefore fall under Insuring Agreement I.A.
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CONCLUSION AND ORDER
For the forgoing reasons, Defendants’ Motion to Dismiss is DENIED in that plaintiffs have stated a claim for coverage under Insuring Agreement I.A, at least with respect to some portion of the monetary losses they could incur as a result of the six class action lawsuits. This matter is scheduled for a Rule 16 conference on January ___, 2018 at 2:00 p.m. at which time the defendants can (if they choose) raise the issue of whether this litigation should be stayed pending resolution of the Evanston action.
________________________
Janet L. Sanders
Justice of the Superior Court
Dated: January 8, 2018 read more

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Posted by Massachusetts Legal Resources - February 2, 2018 at 5:55 am

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Juliand v. Stanley Services, Inc. (Lawyers Weekly No. 09-010-18)

1
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
NO. 2017-01570-BLS2
CHARLES JULIAND, on behalf of himself
And all others similarly situated,
Plaintiff
vs.
STANLEY SERVICES, INC.,
Defendant
MEMORANDUM OF DECISION AND ORDER
ON DEFENDANT’S MOTION TO DISMISS
In this putative class action, plaintiff alleges that the defendant Stanley Services Inc., (Stanley) unlawfully assesses a fuel surcharge on the motor vehicles that it tows. The Amended Complaint contains multiple counts, including a claim under G.L.c. 93A. Stanley now moves to dismiss on the grounds that the case is moot in light of Stanley’s proffer of an amount to the individual plaintiff that was more than enough to cover any out-of pocket loss to him. More generally, Stanley argues that the Complaint fails to state a claim upon which relief may be granted. This Court concludes that the Motion must be DENIED.
Briefly summarized, the Complaint states the following. On December 1, 2016 and then again on March 24, 2017, Stanley removed plaintiff Charles Juliand’s car from a street in Jamaica Plain, Massachusetts and towed the car to Stanley’s Jamaica Plain facility. On both occasions, Stanley assessed a fuel charge for the tow — $ 1.80 on December 1 and $ 2.25 on March 24. Massachusetts regulations permits a fuel charge only where the tow in question exceeds five miles and then only if certain information is provided on the tow slip. These tows did not exceed five miles and the tow slips did not provide the requisite information.
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The Complaint alleges that Stanley has engaged in a practice of assessing these unlawful charges for years; it seeks relief on behalf of Juliand individually as well as others similarly situated. In addition to seeking certification of the class, the Complaint seeks damages as well as injunctive and declaratory relief. On May 19, 2017, two days before this suit was instituted, plaintiff’s counsel sent a Demand Letter to Stanley pursuant to G.L .c. 93A. Plaintiff amended the Complaint on July 19, 2017 to include a 93A count.
Defense counsel made a formal response to plaintiff’s Demand Letter by letter dated June 21, 2017 (the Response). Its contents are relevant to the issues before the Court. It begins by stating that it is being “provided in the interest of settlement only, and subject to a full reservation of Stanley Service’s rights.” It goes on at some length to outline why the individual and class claims are legally and factually defective. To the extent that there were any omissions of information regarding the fuel surcharge, the Response says that they were the result of “individual oversight” and do not reflect a general policy. On a more conciliatory note, the Response says that it “has taken steps to prevent any future omissions of information to the extent necessary.” It also encloses two checks payable to Juliand “without any conditions and/or restrictions,” each in the amount of $ 380.40. The Response states that this sum represents a full refund, both for the disputed and the “undisputed” amounts of Juliand’s tow bills, with the actual amount trebled to account for the 93A claim. Finally, the Response makes a “full and final” settlement offer on the class claims. Juliand did not cash the checks.
The primary basis for defendant’s motion is that Juliand no long has standing to assert these claims, depriving the Court of subject matter jurisdiction. Juliand lacks standing, the defendant argues, because Stanley has essentially paid (or at least attempted to pay) Juliand more than he could individually recover. In support, it relies on an unpublished decision of a federal
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district court. Demmler v. ACH Food Companies, Inc., 2016 WL 4703875 (D. Mass. 2016). In Demmler, plaintiff brought a class action alleging that defendant misrepresented its barbecue sauce as “all natural” when in fact it contained caramel color. Before suit was filed, the defendant, in response to a 93A demand letter from plaintiff’s counsel, tendered to plaintiff $ 75 which represented treble the amount of statutory damages that the individual plaintiff was seeking under 93A. The Court determined that this mooted his claim, noting in particular that the Complaint did not seek injunctive relief or declaratory relief, perhaps because the defendant had discontinued the products at issue.
Putting aside the fact that Demmler has no precedential value, this Court concludes that it is readily distinguishable form the instant case, if only because this case, unlike Demmler, does request injunctive and declaratory relief. Thus, plaintiff’s claim cannot be moot, because the proffered monetary amount does not give the individual plaintiff all that he seeks. See Johansen v. Liberty Mutual Group, Inc., 2016 WL 7173753 (D. Mass. December 8, 2016) (distinguishing Demmler, court applies the same reasoning in denying motion to dismiss on mootness grounds). Defendant argues that it has already agreed to discontinue the policy that is at issue in this case, citing the Response. But the Response says only that Stanley “has taken steps to prevent any future omissions of information to the extent necessary.” This statement – clearly ambiguous as to precisely what has been done — appears in a letter written by counsel that otherwise denies any wrongdoing. In short, it is clearly not enough to render plaintiff’s request for injunctive relief moot.1
Defendant’s remaining arguments require little discussion, since they generally involve
1 There are other reasons for rejecting defendant’s mootness argument; these reasons are set forth in Johansen and in plaintiff’s opposition. This Court finds these other reasons to be persuasive but ultimately unnecessary to support the Court’s ruling.
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fact questions that cannot be resolved at this early stage in the case. To the extent the facts ultimately do not support one or more of the counts alleged, that can be dealt with by way of a motion for summary judgement, keeping in mind the BLS’s procedural rule regarding partially dispositive motions.
__________________________________
Janet L. Sanders
Justice of the Superior Court
Dated: January 16, 2018 read more

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Posted by Massachusetts Legal Resources - February 2, 2018 at 2:20 am

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JRM Hauling & Recycling Services, Inc. v. The Newark Group, Inc. (Lawyers Weekly No. 09-056-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 2015-3790 BLS 1
JRM HAULING & RECYCLING SERVICES, INC.
vs.
THE NEWARK GROUP, INC.
FINDINGS OF FACT AND RULINGS OF LAW AFTER TRIAL
This contract dispute was tried before me, jury waived, from October 23 to 27, 2017. The
dispute arises out of a contract between plaintiff, JRM Hauling & Recycling Services, Inc.
(“JRM”), and defendant, The Newark Group, Inc. (“Newark”), wherein Newark agreed to
purchase and JRM agreed to sell “all secondary fiber produced by [JRM] at” JRM’s location in
Malden, Massachusetts (the “Agreement”). JRM claims that Newark wrongfully terminated the
Agreement in January 2015. By its terms, the Agreement was to run for ten years from its
execution on November 1, 2006 to October 31, 2016.
JRM asserts its claim in two counts: breach of contract and breach of the implied
covenant of good faith and fair dealing. Newark counterclaims, pursuant to a provision of the
Agreement, seeking indemnification from JRM for Newark’s costs, including legal fees and
disbursements, incurred defending any unsuccessful claims made by JRM.
I. FINDINGS OF FACT
The Agreement
JRM, a company with headquarters in Peabody, Massachusetts, is a hauler of trash and
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recycled material. JRM is under contract with municipalities and businesses to pick up at
curbside the trash generated by the occupants. JRM picks up trash that has been separated by the
occupants to put newspaper and other paper into one bin and all other trash in another bin. The
contract in this case concerns what JRM was to do with the “loose paper” picked up at curbside.
Under its contracts with the municipalities, JRM was required to guarantee that the materials it
collected from the residents would be recycled..
Newark is a New Jersey corporation with corporate offices in Cranford, New Jersey. In
February 2015, as discussed below, Newark was acquired by Caraustar Industries, Inc.
In 2005, JRM learned that a facility located at 1130 Eastern Avenue in Malden,
Massachusetts (“the Malden facility”) might be available as a location for JRM’s operations. The
facility had been operated previously as a recycling center. JRM began negotiations with the
owner of the facility, Robert Heffernan, who was, at that time, a Newark employee. At around
the same time in 2005, Newark was looking for sources of supply of Secondary Fiber/RMP for
use by its mill in Fitchburg, Massachusetts. Secondary Fiber/RMP is a description of the loose
news and other paper collected by JRM. The mill in Fitchburg manufactured recycled paper
board products from the secondary fiber. In particular, the mill was producing “graphic board” to
be used as game boards and covers for books.
Jonathan Gold was a long time executive of Newark. He started employment with Newark
in 1978. In 2006, Gold was Senior Vice-President of the Recycled Fibers Division of Newark.
Gold lived in Swampscott, Massachusetts. His family had a long history of working in the
recycle industry. Gold knew the president and sole shareholder of JRM, James R. Motzkin, and
Motzkin’s son, James (“Jimmy”) S. Motzkin. In 2006, Gold became involved, on behalf of
2
Newark, in the discussions with JRM regarding a lease of the Malden facility and a supply
contract for secondary fiber for Newark.
According to Gold, Newark wanted to secure all of the output of secondary fiber from
JRM. Newark’s demand for secondary fiber for its Fitchburg mill was so large that it also
contracted with other suppliers of secondary fiber to provide the material. Gold was told by his
superiors to get sufficient supply under contract because it was very important to the success of
the Fitchburg mill. The Fitchburg mill was looking for as much as 10,000 tons monthly of
secondary fiber. Gold testified that at the time of the supply contract with JRM it did not matter
to Newark where JRM collected secondary fiber to deliver to Newark. He did not even consider
the possibility that JRM could deliver more secondary fiber than the Fitchburg mill could use. I
find this testimony to be credible.
JRM simultaneously negotiated (1) an agreement with Heffernan to lease the Malden
facility, (2) an agreement with Newark to provide approximately $ 250,000 in financing for the
purchase of equipment for the Malden facility; and (3) the supply Agreement with Newark that is
the subject of this case. A deal was struck. JRM entered into a lease for the Malden facility with a
term of 10 years, starting on July 1, 2005. JRM would not have entered into the lease for the
Malden facility if it were not also entering into the Agreement with Newark to supply the
Fitchburg mill. JRM needed a guaranteed market for secondary fiber to sustain its operations at
the new Malden facility.
The Agreement was entered into on November 1, 2006. The term of the Agreement was
for ten years, from November 1, 2006 to October 31, 2016. The form of the Agreement was a
standard form developed and presented by Newark. Both parties, however, were represented by
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counsel with respect to the negotiation of the Agreement. Paragraph 1 of the Agreement is as
follows:
1. AGREEMENT TO PURCHASE AND SELL
Buyer agrees to buy, and Seller agrees to sell, all secondary fiber
produced by Seller at the following location(s): 1130 Eastern
Avenue, Malden, MA on the following terms and conditions:
(Emphasis in the original). Paragraph 1 goes on to describe the price, grade and quality of the
secondary fiber. Paragraph 1 also includes a promise by Newark as the buyer to purchase a
minimum of 500 tons per month. The Agreement contains no specified limit in tons that
constitutes a maximum amount of secondary fiber that Newark was obligated to purchase.
The Agreement includes an integration clause stating that the Agreement constitutes the
entire agreement between the parties. The parties agreed that the Agreement may not be
amended, nor may compliance with its terms be waived, except pursuant to a writing signed by
the party to be charged. The Agreement precludes JRM from assigning any interest in the
Agreement without first obtaining the written consent of Newark. The Agreement provides that
“the duties, rights and remedies of the parties hereunder shall be governed by the substantive
laws of the State of New Jersey, without regard to its conflicts of law principles.” The Agreement
provides for the waiver of trial by jury with respect to any litigation arising out of the Agreement.
Finally, the Agreement provides that Newark, but not JRM, shall be indemnified for its legal fees
and disbursements and other costs incurred in enforcing or defending against any unsuccessful
claims made by JRM with respect to the Agreement.
At the time JRM entered into the Agreement with Newark, the Malden facility was the
only location that JRM used to receive recycled materials from its trucks picking up trash from
4
customers pursuant to JRM’s contract with municipalities and businesses. The JRM trucks
picked up trash at curbside, drove to Malden, and then simply dumped the trash on the floor of
the Malden facility. Recycled paper was dumped in a separate area from other recyclables. A
JRM employee then pushed with a loader vehicle the loose paper onto a conveyer belt leading to
a compactor. Another employee watched the loose paper on the belt and pulled out anything that
was not paper. The belt dropped the paper into the compactor. From the compactor, the paper
was pushed into the trailer of a truck. The paper was not baled or otherwise processed. The paper
was delivered to Newark loose.
Under the Agreement, Newark could select a mutually agreeable location for Newark to
pick up the secondary fiber from JRM. The parties subsequently agreed, however, that JRM
would deliver the loose paper/secondary fiber to Newark for an additional price per ton.
As referenced, Gold, the lead negotiator for Newark of the Agreement, testified that
Newark did not care at the time of entering into the Agreement whether the secondary fiber
delivered from JRM would come from the Malden facility or elsewhere. Notwithstanding the
language in the Agreement stating that Newark was obligated to purchase “ all secondary fiber
produced by Seller at the following location(s): 1130 Eastern Avenue, Malden, MA”, Gold
testified that the specification of the collection location was insignificant. I find this testimony to
be credible, given the heavy demand for secondary fiber anticipated by Newark for its Fitchburg
mill.1
1 Newark called as a witness Ms. Lynn Herro. Herro currently works for Caraustar, and
was previously employed by Newark as corporate controller. She works at the corporate office in
New Jersey. She testified that she had no role in negotiating the Agreement with JRM.
Nevertheless, she offered the opinion that the reason for specifying the location from which
Newark was obligated to purchase was to impose some limit on the quantity Newark was to buy.
5
Performance of the Contract Until 2014
For eight years, from 2006 to mid 2014, the parties operated under the Agreement with no
difficulties, disagreements or disputes. JRM typically delivered secondary fiber to Newark each
work day (on average, twenty days per month), taking two, and sometimes three, truck loads per
day to Newark. Each delivery was approximately 20 to 25 tons of secondary fiber. Thus, using
the estimate of 25 tons per load, JRM could deliver secondary fiber to Newark in the amount of
approximately 1,000 to 1,500 tons per month. For the calendar year 2014, however, JRM’s
delivery of secondary fiber to Newark averaged 933 tons per month.
Market Changes Affecting Newark
In or about 2010, market demand for the products manufactured by Newark at its
Fitchburg mill decreased significantly. In 2011, Newark began the process of changing the
products produced at its Fitchburg mill to paperboard that required much less loose paper/
secondary fiber. As a result, Newark began selling the loose paper received from JRM to
customers in the domestic and export market. Newark suffered losses, at an increasing rate, on
those transactions. By January 2014, Newark’s Fitchburg mill was using only ten per cent of the
secondary fiber being furnished by its suppliers. Newark was experiencing substantial losses as a
result of the Agreement with JRM.
Newark Considers Getting Out of the Contract
In February 2014, Mr. Frank Papa, Newark’s CEO, stated to Gold that “the mill needs
I find that although Herro’s testimony might be correct in another context, in this case Gold was
adamant that there was no limit to what Newark wanted to buy. The location designation was
merely to reference the one and only place JRM operated a facility to collect material for recycle.
The actual location of the JRM collection facility was insignificant to Newark.
6
your help to try to minimize this expense. We can’t be absorbing a $ 1.5 million loss for next
year. I’m confident you can get creative and find a home for the news.”
A few months later, Newark, for the first time in the eight year history of the Agreement,
claimed that the paper delivered by JRM was excessively contaminated with prohibited food
materials. The claim was raised by officials at the Newark mill in Fitchburg. Gold investigated
the claim. He concluded that the claim of contamination was baseless. The rejection of JRM’s
load was, according to Gold in an email at the time, “laughable.” Gold recommended in writing
to his superiors that Newark divert the tonnage from JRM to Newark’s plant in Salem,
Massachusetts instead of Fitchburg. Gold would then cause the Salem plant to sell the secondary
fiber to overseas markets. The other option, Gold wrote to his superiors, was to terminate the
Agreement for default on quality. Gold recommended against this option because the claim of
contamination would not hold up. Newark elected not to terminate the Agreement on the ground
of poor quality of the delivered secondary fiber.
JRM Fails to Deliver Loose Paper to Newark on January 13, 2015
In the several years prior to 2015, JRM planned to construct a state-of-the-art recycling
facility on property owned by the Moskins. The facility would have the capability to handle,
refine and process various types of recycled material (e.g., paper, cardboard, glass, plastic,
aluminum and steel) into raw materials for use in manufacturing. JRM’s owners created a
separate company called GreenWorks, Inc. in 2013 to own and operate this new facility. A major
investment with respect to GreenWorks was to purchase and install a large, technologically
sophisticated, sorting machine. The GreenWorks facility cost at least $ 18 million to develop.
JRM’s owners expected that GreenWorks could do more complete processing of recycled
7
material, enabling it to sell the material in finer and higher grades at higher prices. On January
12, 2015, JRM’s owners opened GreenWorks for business.
In January 2015, JRM was aware that Newark was losing money under the Agreement to
purchase JRM’s secondary fiber. Likewise, Newark was aware of the development, construction
and opening of GreenWorks by the owners of JRM. JRM’s owners intended, ultimately, to move
all of its operations from the Malden facility to GreenWorks. The lease for the Malden facility
expired at the end of June 2015. JRM’s owners testified that there was space at GreenWorks
where the JRM trucks could dump the loose paper for delivery to Newark exactly as had been
done for years under the Agreement. In fact, there was capacity at GreenWorks for GreenWorks
or JRM to increase the amount of secondary fiber collected for delivery.
As the GreenWorks facility was in the process of becoming operational in mid-January
2015, GreenWorks needed to test its new sorting machine. JRM directed its drivers to deliver
loose paper to GreenWorks, instead of the Malden facility, to be used to test the machine. JRM
failed to notify Newark that JRM would not be delivering its daily tons to Newark. Immediately
upon the lack of a delivery to Newark, on January 13, 2015, Newark emailed JRM inquiring
whether JRM intended to make deliveries to Newark. JRM responded the same day stating that it
was testing the machine at GreenWorks and “if you want material we have it.” Gold, on behalf of
Newark, responded within 45 minutes: “Let’s meet to go over the future. Name the time, place
etc. I have no problem with ending the loads that were going to Fitchburg and now Salem (your
call but no problem at all). Just want to make sure I finish all orders that I have taken before we
stop.” JRM responded in an email: “We are working out a lot of kinks this week. Testing speeds,
angles, etc to make sure we have a good product. We definitely want to work together and would
8
like to sit down to go over some details. Give me a week or two to get things worked out and we
can meet up then or at a break in the action.” Jimmy Motzkin testified, credibly, that JRM did not
intend to stop delivering material to Newark as called for under the Agreement.2 Gold responded
to Jimmy Motzkin’s email: “Perfecto and a big congratulations with the start up.” As indicated
by the emails, and as testified to by Gold, Newark had no objection to JRM suspending deliveries
on January 13, 2015.3 Gold testified: “We didn’t want the material.”
Gold testified that he had been aware of the plan to build GreenWorks by the owners of
JRM for years. Further, Gold was aware that JRM intended ultimately to move its operations
from the Malden facility to a location at GreenWorks. He understood that JRM would continue
to supply loose paper/secondary fiber to Newark under the Agreement from the GreenWorks
location starting in January 2015. Gold testified that JRM’s plan was of “no concern” to him. I
credit the testimony of Gold.
Newark Decides to Terminate the Agreement
Within three days of the missed delivery, by January 16, 2015, Newark decided to
terminate the Agreement. Gold testified that the CEO of Newark, Mr. Papa, instructed Gold to
“end the deal.” In an exchange of emails on that date among executives at Newark, reference is
made to a meeting that was scheduled with JRM on January 20, 2015. Gold invites Chuck Stone,
2 The parties stipulated that “[a]fter January 13, 2015, JRM continued delivering at least
some of the secondary fiber it collected to the Malden Facility.”
3 The record contains an exchange of emails from Newark (Marc Galardi) and Jimmy
Moskin on January 14, 2015. Newark had some existing orders for loose paper to fulfill. Galardi
mentions that Newark may be “facing roll over charges” if it does not receive material from
JRM. No evidence was presented at trial that Newark actually experienced the charges. JRM
responded by offering loose paper for pick up and referencing the agreement with Gold to sit
down for a meeting.
9
the Vice President/General Manager of the Northeast Region of Newark’s Recycled Fibers
Division, from the corporate office in New Jersey to attend the meeting. Stone asks that two
additional Newark employees attend. In the email, Gold states “come to JRM as I am putting an
end to the deal.”
A meeting between Newark and JRM occurred, over lunch at a restaurant, on January 20,
2015. Five people testified at trial regarding what was said at the meeting: James Motzkin,
Jimmy Motzkin, Gold, Stone, and Marc Galardi, another Newark employee. According to the
Motzkins, Gold stated at the meeting that effective immediately Newark would no longer accept
any material from JRM. The Motzkins testified that they were shocked at the termination. They
did not say that JRM agreed to the termination.4 Gold testified that he told the Motzkins at the
meeting that he had been given marching orders: Newark could no longer take delivery of
materials. Gold could not recall any response from the Motzkins. Stone testified that there was
discussion about Newark not wanting the material but he denied that Gold said Newark would
not accept deliveries. Stone also testified that James Motzkin said that “they will do whatever
[Gold] wanted to do.” Galardi testified that he could not recall the discussions at the meeting.
After the lunch meeting, the participants adjourned to a pre-arranged tour of the new
GreenWorks facility and there were discussions about future business opportunities.
I find the testimony of the Motzkins and Gold to be credible. At the meeting on January
20, 2015, Newark refused further deliveries under the Agreement. JRM did not assent to the
4 At trial, Jimmy Motzkin was confronted with his deposition where he testified that he
said “Okay” in response to Gold’s rejection of future deliveries. The context of the
“Okay” response at deposition was not provided. The use of the word “Okay” is ambiguous. It
does not necessarily mean that Jimmy Motzkin agreed to the termination of the Agreement.
10
termination of the Agreement.
In February 2015, the corporate office of Newark prepared a document to terminate the
Agreement in writing. Newark was about to be sold to Caraustar Industries, Inc. Gold was urged
to obtain a written confirmation from JRM that the Agreement was terminated. By email dated
February 7, 2015, Gold states to JRM that “with the sale of the company eminent [sic] Feb 17,
I’ve been asked to get all contracts closed or ended. Please see the attachment on the loose new
deal. Let me know when you have a chance.” The attachment is a document entitled Termination
Agreement. The Termination Agreement, dated February 1, 2015, purports to terminate the
November 1, 2006 Secondary Fiber Purchase Agreement and states that “neither party shall have
any further liability to the other” after the termination date. The document is signed by Gold.
Gold testified, credibly, that when he sent this email on February 7, 2015, he knew there had
been no agreement by JRM to terminate the Agreement. JRM responded by requesting a meeting
to discuss the proposed Termination Agreement. In fact, JRM never accepted the proposed
Termination Agreement and did not sign it.
On February 17, 2015, the date of the acquisition of Newark by Caraustar, Gold resigned
from his officer position at Newark. Starting in April 2015, Gold began to perform some
consulting work for JRM. Stone continued to be employed by Caraustar until his retirement in
2017. At the end of March 2015, Caraustar inquired of Marc Galardi (still employed by Newark)
about the status of the Agreement. Galardi responded in an email that “JRM has stopped bringing
material in, but the contract is still in place.”
JRM’s Response to Termination of the Agreement
JRM’s owners intended to move JRM’s collection of loose paper from the Malden
11
facility to GreenWorks once GreenWorks was up and operating. According to James Motzkin,
JRM had no reason to anticipate that Newark would object to the transfer of JRM’s collection
activity to the GreenWorks location. In fact, Motzkin had discussed JRM’s plan to move JRM’s
operation to GreenWorks with Gold, and Gold was supportive of the move. Gold never
expressed any concern over the proposed move. It was JRM’s intention to collect loose paper,
and deliver it to Newark, exactly as JRM had been doing from the Malden facility. JRM wanted
the Agreement with Newark to continue for the life of the contract.
After the January 20, 2015 meeting, JRM began to look for other purchasers of the loose
paper that had previously been delivered to Newark under the Agreement. According to James
Motzkin’s testimony there was essentially no market for loose paper. JRM could not obtain the
purchase price under the Agreement for the loose paper that Newark was obligated to pay. To
mitigate its losses, JRM decided to have GreenWorks process the loose paper to a higher, finer
grade and baled, for which there was a market. JRM was then able to sell the fully processed and
baled secondary fiber at a price higher per ton than what would have been paid by Newark for
loose paper. The cost, however, of processing the loose paper to a baled, refined degree was a
cost that JRM would not have incurred if Newark had continued the Agreement to buy
unprocessed, unbaled loose paper.
Damages
JRM claims that it has suffered damages as a result of Newark’s unjustified termination
of the Agreement. JRM calculates its damages to be $ 2,169,948 (Exhibit 43). Findings regarding
the damages calculation are in Part III, below.
12
II. ANALYSIS AND CONCLUSIONS OF LAW
The Agreement provides that the “duties, rights, and remedies of the parties” shall be
governed by New Jersey law. Because the sale of secondary fiber under the Agreement is a sale
of “goods” as defined by the Uniform Commercial Code (“UCC”), N.J. Rev. Stat. § 12A: 2-101,
105 et seq, the New Jersey UCC will be applied. It will be cited as UCC §2-xxx. New Jersey also
recognizes the implied covenant of good faith and fair dealing that applies to all contracts. To
prove a breach of the implied covenant, JRM must prove (i) the existence of a contract, (ii) that
Newark engaged in conduct, without good faith, with bad motive or intention, for the purpose of
depriving JRM of the rights and benefits of the parties’ contract, (iii) that JRM suffered damages
as a result of that conduct, and (iv) that JRM performed its own contractual duties, unless
excused. Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210,
224-225 (2005).
A. Repudiation of the Agreement
As referenced above, I find that Newark unilaterally terminated the Agreement on
January 20, 2015. Newark informed JRM that it would no longer accept deliveries of secondary
fiber from JRM under the Agreement. JRM did not consent to the termination.
Under UCC § 2-610, “[w]hen either party repudiates the contract with respect to a
performance not yet due the loss of which will substantially impair the value of the contract to
the other” the aggrieved party has certain options. I find that Newark’s repudiation of the
Agreement substantially impaired the value of the contract to JRM. The Agreement, providing a
guaranteed price to JRM for loose paper, had approximately 21 months left before the agreedupon
term ended. Under UCC § 2-610 (b) and (c), JRM was entitled, upon repudiation, to
13
suspend its own performance and to seek any remedy for breach.
Newark makes three legal arguments to justify the termination of the Agreement on
January 20, 2015. First, Newark contends that the failure of JRM to deliver loose paper on
January 13 – 20, 2015, was a breach of the Agreement, relieving it from performance. Second,
Newark avers that JRM abandoned the Agreement by failing to provide adequate assurance of
performance. Third, Newark says that JRM was planning to deliver loose paper from
GreenWorks, not the Malden facility. Thus, Newark had no obligation to continue purchases. I
will address each argument in turn.
The parties agree that the contract at issue is an installment contract as described in UCC
§ 2-612. JRM was obligated to deliver “all” of its secondary fiber/loose paper in separate lots.
The Agreement does not specify when the deliveries should occur. The Agreement provides that
the goods will be picked up by Newark pursuant to “a pickup schedule, which [Newark] may
revise from time to time in its reasonable discretion.” According to the parties’ stipulated facts, at
some date after the execution of the Agreement, the parties entered into another agreement for
JRM to deliver the goods to Newark for an additional price per ton. A copy of this delivery
agreement is not in the record. Accordingly, the record reflects no obligation for JRM to deliver
every business day, every week or every month. JRM was, however, obligated to sell “all” of its
output of secondary fiber to Newark. The evidence shows that the practice of the parties was for
JRM to deliver loose paper to Newark every business day.
Newark contends that the failure of JRM to deliver loose paper on January 13 – 20, 2015,
was a breach, or default, under the Agreement. If the failure to deliver was a “breach [that] goes
to the whole contract (12A: 2-612)”, Newark may cancel the Agreement. UCC § 2-711(1). The
14
reference to § 2-612 invokes the applicable provisions of law governing an installment contract
like the Agreement here.
Under UCC § 2-612(3), when a “default with respect to one or more installments
substantially impairs the value of the whole contract there is a breach of the whole.” I find that
the failure of JRM to deliver loose paper on January 13 – 20, 2015, did not impair the value of the
Agreement to Newark. Newark was losing money on its re-sale of loose paper. As stated by
Gold: “We didn’t want the material.” I find that the suspension of delivery by JRM on January
13, 2015, was viewed by Newark as an opportunity, not an impairment. The opportunity was to
use the suspension of delivery to “end the deal” as Gold did on January 20, 2015.
Next, Newark says that JRM failed to provide adequate assurance that it intended to
continue to perform following the suspension of deliveries on January 13, 2015. Newark argues
that failure to provide reasonable assurance from JRM to Newark constitutes repudiation by
JRM. UCC § 2-609(1) provides that “[w]hen reasonable grounds for insecurity arise with respect
to the performance of either party the other may in writing demand adequate assurance of due
performance and until he receives such assurance may if commercially reasonable suspend any
performance for which he has not already received the agreed return.”
Newark’s argument under UCC § 2-609 fails at more than one level. First, Newark’s
“insecurity” must arise from a threat to its “expectation of receiving due performance” that will
not impair the value of the contract. Id. As described above, Newark was not insecure about
JRM’s performance. On the contrary, it wanted to end the contract. Second, I find that the emails
from Marc Galardi to Jimmy Motzkin on January 13 and 14, 2015, are not, when viewed in
context, demands for assurance of performance of the whole contract. Galardi was inquiring
15
regarding the short term interest of Newark to obtain material to fulfill a handful of existing
orders. Gilardi did not express “insecurity” as to the contract as a whole and did not demand
performance of the contract as a whole. At precisely the same time as Galardi’s emails, Galardi’s
superior, Gold, stated to JRM that he had “no problem with ending the loads that were going to
Fitchburg and now Salem (your call but no problem at all).” Third, JRM did, in fact, provide
assurance that it could deliver the short-term loads requested by Galardi.
Finally, UCC § 2-609 requires “reasonable” grounds and “adequate” assurance.
According to Official Comment 3 to this UCC section, those terms should be understood by
applying commercial standards in accordance with commercial practices. JRM and Newark had
been performing under the Agreement for more than eight years prior to January 13, 2015. The
emails between the parties at that time propose reasonable steps to determine both parties’ intent
as to performance under the Agreement. A meeting was set for seven days5 after January 13,
2015, on January 20, 2015. Rather than engage in a commercially reasonable discussion at that
meeting regarding the continuation of performance under the Agreement, however, Newark
repudiated the Agreement. At no point did JRM repudiate the Agreement.
Newark’s last line of defense to the finding that it repudiated the Agreement on January
20, 2015, is to point to the fact that JRM intended, ultimately, to move its operation of collecting
the truck loads of curbside pick up of loose paper to GreenWorks rather than the Malden facility.
Newark argues that it was only obligated under the Agreement to purchase loose paper collected
5 Even if Newark’s emails from Galardi could be viewed as a justified demand for
assurance of performance, under UCC § 2-609(4), JRM had a “reasonable time not exceeding
thirty days” to provide assurance. I find that JRM acted reasonably by proposing, then attending,
a meeting within seven days.
16
at the Malden facility.
On January 20, 2015, JRM was still operating the Malden facility. Newark repudiated the
Agreement on that date because it was losing money on the deal, not because JRM might in the
near future begin to collect material at GreenWorks rather than Malden. The collection location
was immaterial to Newark at the time the Agreement was entered into, and the location remained
immaterial to Newark after it chose to repudiate.
Newark unjustifiably repudiated the installment Agreement on January 20, 2015. JRM
did not assent in writing or otherwise to the termination. JRM is entitled to proceed to the
remedies provided to a seller upon default by the buyer as described in UCC §§ 2-703, 2-706,
and 2-708.
III. DAMAGES
UCC § 2-703 lists the remedies available to a seller when the buyer has repudiated the
contract. Among the remedies are to resell the goods and recover damages (§ 2-706), or to
recover the difference between the contract price and the market price for the goods (§ 2-708(1)).
Here, JRM is proceeding under UCC § 2-708(1). See JRM’s Proposed Conclusions of Law, ¶ 15.
JRM’s theory of damages is that the market price for the loose paper that, absent repudiation,
would have been sold to Newark, can be determined by the evidence of what GreenWorks did
with the loose paper. JRM delivered the loose paper to GreenWorks for no consideration.6
GreenWorks then processed the loose paper to a higher, refined degree than mere loose paper,
and baled the finished product (‘finished paper”). GreenWorks sold the finished paper to third
6 Because JRM delivered the loose paper to GreenWorks for no consideration there was
no “resale” that would allow a calculation of damages pursuant to UCC § 2- 706.
17
parties, thereby determining a market price for the finished paper.
To calculate damages, JRM then applies a cost factor to refining the loose paper to
become finished paper. JRM subtracts that cost from the market value (total revenue received) of
the finished paper. The calculation produces a “net return.” The “net return” is a loss in 2015 and
a profit in 2016. The last step in JRM’s damages theory is to take the total revenue that would
have been received by JRM from Newark if the contract had been performed, and adjust that
number by the “net return.”
UCC § 2-708(1) provides as follows:
Subject to subsection (2) and to the provisions of this Chapter with respect to
proof of market price (12A: 2-723), the measure of damages for non-acceptance
or repudiation by the buyer is the difference between the market price at the time
and place for tender and the unpaid contract price together with any incidental
damages provided in this Chapter (12A: 2-710), but less expenses saved in
consequence of the buyer’s breach.
JRM does not seek the remedy of profit it would have earned under the Agreement, pursuant to
subsection (2) of § 2-708.7 It proceeds under § 2 – 708(1), as guided by UCC § 2-723.
Under JRM’s theory of damages, it bears the burden of proving three measurement points
necessary for JRM’s calculation of damages: (1) the contract price for loose paper that Newark
was obligated to pay, (2) the market price of the loose paper at the time and place of tender, and
(3) the reasonable quantity of loose paper that Newark was obligated to buy. JRM’s damages
calculation is contained in Exhibit 43. The calculation was prepared by JRM’s long-time
7 As referenced above, JRM is explicitly proceeding under UCC § 2-708(1), not § 2-
708(2). JRM’s Proposed Conclusions of Law, ¶ 15. Moreover, JRM offered no evidence to show
the profit margin that it, as opposed to GreenWorks, experienced prior to the breach. JRM’s
damages witness (John Hoffman) testified that he did not prepare any analysis of JRM’s profits
in 2014.
18
accountant, John Hoffman. Hoffman is a certified public accountant who has acted as JRM’s
outside accountant for more than twenty years. He has also served as the outside accountant for
GreenWorks since its inception. At trial, Hoffman explained the calculations.
As to the first measurement point, Hoffman used the minimum price per ton of loose
paper that Newark agreed to pay. That price is $ 57.50 per ton of loose paper. The price of $ 57.50
per ton is referenced in the “Minimum Price Rider” attached to the Agreement. While Newark
argued that the minimum price rider “provides for suspension of the minimum price in certain
circumstances” (JRM Proposed Findings of Fact ¶ 17), there was insufficient proof that any such
circumstances applied to JRM’s calculation of damages. I find that $ 57.50 per ton is the correct
price to use in calculating JRM’s damages.
The second measuring point under JRM’s theory of damages is “the market price at the
time and place for tender” of the goods not purchased by Newark. See UCC § 2-708(1). JRM
elected to offer no evidence of what the market price for loose paper was in the 2015 – 2016
period. Instead, it proceeded on a theory of showing what a reasonable estimate of market price
for loose paper could be based on a comparable market.
UCC § 2-708(1) directs the court to UCC § 2-723 for a description of acceptable proof of
market price. As stated in the Official Comment to that section, “[w]here the appropriate market
price is not readily available the court is here granted reasonable leeway in receiving evidence of
prices current in other comparable markets or at other times comparable to the one in question.”
JRM introduced evidence showing that there was no market for loose paper, or at least there was
no “readily available” market. Consequently, in its effort to mitigate damages, JRM decided to
use the market for finished paper as a comparable market. While it may be that the market for
19
finished paper could be used as a “comparable market” under the circumstances of this case,
JRM failed to offer acceptable evidence to adjust the finished paper price to a reasonable
estimate of the price of loose paper.8 In fact, nowhere in its damages analysis (Exhibit 43) or in
Hoffman’s testimony is there evidence that would allow a reasonable estimate of the market price
of loose paper in the 2015 – 2016 period. This is the fundamental flaw in JRM’s claim for
damages.
Hoffman detailed in Exhibit 43 the per ton price actually obtained by GreenWorks from
third parties for finished paper. That evidence was unrebutted. As shown on Exhibit 43, the
comparable market price for finished paper varied significantly over the remaining 21 months of
the Agreement. By the use of actual prices obtained for finished paper, JRM satisfied the
requirement of UCC § 2- 708(1) to show market price in a comparable market “at the time and
place for tender.”
The market price for finished paper must be adjusted, however, to come to a reasonable
estimate of the market price for loose paper. Finished paper sells at a higher price because the
product is refined and baled. It costs more to refine and bale finished paper than to sell loose
paper. Guided by that fact, JRM embarked on an analysis of the cost of producing finished paper.
Hoffman calculated the cost of refining and baling the loose paper to make the product finished
paper. Hoffman calculated the cost for processing the paper to be $ 75.16 per ton and $ 73.50 per
ton for 2015 and 2016, respectively.
JRM’s proof of damages goes awry at this point. Instead of proving the market price of
8 For example, it is possible that there could be evidence that the price of loose paper
fluctuates at a certain percentage below the price of finished paper. There was no such evidence
offered.
20
loose paper, even by way of deduction or inference, JRM limits its proof to the cost of processing
loose paper to a finished product. Then, JRM performs a “net return” calculation measuring
GreenWorks’ profit and loss. For example, the calculation for 2016 in Exhibit 43 simply
calculates that GreenWorks made a profit on the sale of finished paper. Then, inexplicably, the
damages to JRM for that year are calculated to be the revenue JRM would have received had
Newark performed, less the profit GreenWorks made. This damages formula is inconsistent with
UCC § 2-708(1). JRM’s proof does not prove anything about the market price of loose paper
during the 2015 – 2016 period. On that basis alone, JRM fails to prove damages.
Even if JRM’s damages model is considered further, it is erroneous in its methodology.
First, the calculation of cost per ton is faulty. The premise of the calculation was to determine a
cost per ton of all of GreenWorks’ output, including product from glass, metals and paper. The
calculation uses 100% of GreenWorks’ costs, but fails to divide by 100% of GreenWorks’
output, when calculating cost per ton.9 If all output is considered, including cardboard, the cost
per ton of product from GreenWorks would be $ 59.15 and 53.80 for 2015 and 2016, respectively.
Use of those revised cost per ton numbers shows that GreenWorks made a substantial profit on
the sale of finished paper derived from loose paper delivered by JRM. Second, JRM fails to
explain the rationale of calculating damages by taking expected revenue from the Agreement in
9 Hoffman offered Exhibit 40 as his calculation of cost. As described by Hoffman, he
compiled the total cost of operating the GreenWorks facility for each of 2015 and 2016, and the
monthly average for each year. From the records of GreenWorks, Hoffman took the number of
total tons processed at the facility for the year. The number of total tons processed included all
materials processed at the facility, not just paper. Hoffman divided the cost number by the total
tons of product, except that he reduced by 75% the tons of cardboard product, to come to the
price per ton for processing. The reduction for cardboard is inconsistent with the purpose of the
calculation.
21
2015 – 2016, and adjusting that number by GreenWorks’ net profit or loss. That calculation is
comparing apples to oranges. It says nothing about JRM’s loss or profit, nor does it provide a
basis for estimating the market price for loose paper in 2015 – 2016.
The third, and last, measuring point for JRM’s theory of damages is to prove the
reasonable quantity of loose paper that Newark was obligated to buy. Because JRM failed to
prove a reasonable estimate of price for loose paper in the 2015 – 2016 period, this measuring
point does not need to be addressed. Nevertheless, I make the following finding for the record.
JRM’s damages model, Exhibit 43, is built on the assumption that JRM could have delivered to
Newark a much larger amount of loose paper than it ever did during the time the Agreement was
operating. The damages model assumes 20,816 tons delivered in 2015 and 20,217 tons delivered
in 2016. In contrast, the tonnage delivered to Newark in 2014 was approximately 1,000 tons per
month, or 12,000 tons for the year. Testimony at trial showed that the Moskins intended in 2015 –
2016 to increase the amount of loose paper picked up because JRM had more capacity at
GreenWorks. UCC § 2-306 provides guidance for evaluating the reasonable expectations of the
parties to an output contract like this one. “A term which measures the quantity by the output of
the seller . . . means such actual output . . . as may occur in good faith, except that no quantity
unreasonably disproportionate to . . . any normal or otherwise comparable prior output . . . may
be tendered or demanded.” I find that Newark was not obligated to purchase the disproportionate
amounts of approximately 20,000 tons in the years 2015 – 2016.
In sum, JRM elected to transfer the loose paper it collected after January 20, 2015 to
GreenWorks for no consideration, thereby eliminating the typical measure of damages based on
resale of the goods. UCC § 2-706. It chose to seek damages under UCC § 2-708(1). There was,
22
however, no proof of the market price of loose paper after Newark’s repudiation. The evidence
offered at trial by JRM was insufficient to prove that JRM suffered damages.
ORDER
JRM’s claims for breach of contract and breach of the implied covenant of good faith and
fair dealing must be DISMISSED for failure to prove damages. Under the Agreement, “Seller
shall also indemnify Buyer for its costs (including legal fees and disbursements) in enforcing, or
defending against any unsuccessful claims made by Seller with respect to, this Agreement.”
Newark counterclaims under that provision of the Agreement. Newark is hereby ORDERED to
serve, pursuant to Superior Court Rule 9A, its motion for legal fees and disbursements,
accompanied by supporting material and affidavits. The deadline for service of the motion is
January 8, 2018. Both parties should indicate in their respective motion and opposition papers
whether they wish to have an evidentiary hearing on the motion.
By the Court,
Edward P. Leibensperger
Justice of the Superior Court
Date: December 7, 2017
23 read more

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Posted by Massachusetts Legal Resources - January 6, 2018 at 9:54 am

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Daley v. Secretary of the Executive Office of Health and Human Services, et al.; Nadeau v. Director of the Office of Medicaid (Lawyers Weekly No. 10-092-17)

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

SJC-12200

SJC-12205

MARY E. DALEY, personal representative,[1]  vs.  SECRETARY OF THE EXECUTIVE OFFICE OF HEALTH AND HUMAN SERVICES & another.[2]

LIONEL C. NADEAU  vs.  DIRECTOR OF THE OFFICE OF MEDICAID.

Worcester.     January 5, 2017. – May 30, 2017.

Present:  Gants, C.J., Lenk, Hines, Gaziano, Lowy, & Budd, JJ.

Medicaid.  Trust, Irrevocable trust.  Real Property, Life estate, Ownership.

Civil action commenced in the Superior Court Department on February 11, 2015. read more

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Posted by Massachusetts Legal Resources - May 30, 2017 at 3:13 pm

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Deputy Chief Counsel for the Public Defender Division of the Committee for Public Counsel Services, et al. v. Acting First Justice of the Lowell Division of the District Court Department (Lawyers Weekly No. 10-084-17)

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

SJC-12121

DEPUTY CHIEF COUNSEL FOR THE PUBLIC DEFENDER DIVISION OF THE COMMITTEE FOR PUBLIC COUNSEL SERVICES & another[1]  vs.  ACTING FIRST JUSTICE OF THE LOWELL DIVISION OF THE DISTRICT COURT DEPARTMENT.

Suffolk.     November 9, 2016. – May 24, 2017.

Present:  Gants, C.J., Hines, Gaziano, Lowy, & Budd, JJ.

Committee for Public Counsel Services.  District Court, Drug court session.

Civil action commenced in the Supreme Judicial Court for the county of Suffolk on February 23, 2016. read more

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Posted by Massachusetts Legal Resources - May 24, 2017 at 7:41 pm

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Airport Fuel Services, Inc. v. Martha’s Vineyard Airport Commission, et al. (Lawyers Weekly No. 12-051-17)

COMMONWEALTH OF MASSACHUSETTS

 

 

DUKES COUNTY, ss.                                                                     SUPERIOR COURT

                                                                                                            CIVIL ACTION

  1. 2017-0017

 

 

AIRPORT FUEL SERVICES, INC.

 

vs.

 

 

MARTHA’S VINEYARD AIRPORT COMMISSION and DEPOT CORNER, INC.

 

 

 

 

 

MEMORANDUM OF DECISION AND ORDER ON THE PLAINTIFF’S MOTION FOR A PRELIMINARY INJUNCTION

 

           

This action arises out of the defendant, Martha’s Vineyard Airport Commission’s (the Commission) decision to award a lease of Lot #33 in the Airport Business Park (the Property) to the defendant, Depot Corner, Inc. (Depot), following a public bidding procedure.  The Plaintiff, Airport Fuel Services, Inc. (AFS), has been the lessee of the Property pursuant to a 20 year lease that expired on March 9, 2017 (the Lease).  It constructed a gas station, convenience store, and car wash on the Property and operated them over the term of its lease.  In its complaint, AFS alleges that “the 2017 RFP issued by [the Commission] was misleading and an inherently unfair proposal” and seeks an order requiring the Commission to lease the Property to it, according to its bid proposal.  The case is before the court on AFS’s motion for a preliminary injunction enjoining the Commission from leasing the Property to Depot. read more

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Posted by Massachusetts Legal Resources - May 9, 2017 at 12:27 am

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Silva v. Todisco Services, Inc. (Lawyers Weekly No. 12-006-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1684CV02778-BLS2
____________________
CHRISTOPHER SILVA, on behalf of himself and all others similarly situated
v.
TODISCO SERVICES, INC. d/b/a Todisco Towing
____________________
MEMORANDUM AND ORDER DENYING DEFENDANT’S MOTION TO DISMISS
Todisco Towing towed Christopher Silva’s motor vehicle without Silva’s consent from a private parking lot in Salem, Massachusetts, to East Boston. The Todisco invoice says this was a “trespass” tow, which presumably means that the vehicle was towed at the request of the property owner or manager because it was parked there illegally in violation of a posted notice. Cf. G.L. c. 266, § 120D. Silva says Todisco charged him $ 169.00, including a $ 90.00 towing charge; a $ 42.00 mileage charge; a $ 35.00 storage charge; and a $ 2.00 fuel surcharge.
Silva alleges that the mileage charge and fuel surcharge were illegal because Todisco’s invoice or tow slip did not include information required by 220 C.M.R. § 272.03, a regulation promulgated by the Department of Public Utilities (“DPU”) that establishes maximum rates for towing vehicles. Silva asserts claims for negligent misrepresentation, intentional fraud, unjust enrichment, violating G.L. c. 93A, and declaratory judgment. He also seeks to represent a class consisting of all people whose motor vehicles were towed by Todisco and were charged a mileage fee or fuel surcharge when Todisco did not record the required information on the tow slip. Silva seeks monetary compensation for damages, punitive damages under c. 93A, equitable relief, and declaratory relief on behalf of himself and the putative class members.
Todisco moves to dismiss this action on the grounds that Silva lacks standing, the DPU has primary jurisdiction, the statute authorizing a fine for violating the tow charge regulation bars any other relief, the cited regulation did not require Todisco to disclose any information, the claims for misrepresentation and fraud cannot be decided on a class-wide basis, and the claims for misrepresentation and fraud and under G.L. c. 93A are all preempted by federal law. The Court concludes that none of these arguments justifies dismissal. It will therefore DENY the motion to dismiss.
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1. Standing. Todisco asserts that Silva lacks standing to bring this action because the allegations in the complaint establish that Todisco’s alleged wrongdoing did not cause Silva himself to suffer any injury. This argument is without merit.
Todisco correctly points out that the complaint alleges that Nathan Silva went to East Boston to retrieve the towed vehicle and paid the $ 169.00 total charge demanded by Todisco.
But the complaint also alleges that Nathan paid the towing charges imposed by Todisco on behalf of Christopher Silva, Nathan was acting as Christopher’s agent, Christopher is the one who actually paid the amount charged by Todisco, and therefore Christopher (not Nathan) is the one who suffered financial harm as a result of Todisco imposing towing charges that were not allowed under 220 C.M.R. § 272.03.
Those allegations plausibly suggest that Todisco breached a legal duty owed to Silva by charging more for an involuntary tow than permitted by law, that Silva himself was injured by Todisco’s actions, and that Silva therefore has standing to bring this action. See G.L. c. 93A, § 9(1) (any person injured by unfair or deceptive act or practice in trade or commerce may bring action in superior court for damages and equitable relief); Sullivan v. Chief Justice for Admin. & Mgmt. of the Trial Court, 448 Mass. 15, 22-23 (2007) (plaintiff has standing if allegations in complaint plausibly suggest that defendant owed legal duty to plaintiff, breached that duty, and plaintiff suffered injury as a result). Silva was not required to allege in more detail facts showing that Nathan was acting as Silva’s agent and paid Todisco on behalf of Silva. See, e.g., Lopez v. Commonwealth, 463 Mass. 696, 701 (2012) (“detailed factual allegations are not required”); Cannonball Fund, Ltd. v. Dutchess Capital Mgmt., LLC, 84 Mass. App. Ct. 74, 93-95, rev. denied, 466 Mass. 1106 (2013) (plaintiff’s standing is determined based on factual allegations in complaint, assuming them to be true).
2. Primary Jurisdiction. Todisco asserts that the DPU has primary jurisdiction over Silva’s claims, and that the Court should therefore dismiss this action. “The doctrine of primary jurisdiction arises in cases where a plaintiff, ‘in the absence of pending administrative proceedings, invokes the original jurisdiction of a court to decide the merits of a controversy’ that includes an issue within the special
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competence of an agency.” Fernandes v. Attleboro Hous. Auth., 470 Mass. 117, 121 (2014), quoting Murphy v. Administrator of the Div. of Personnel Admin., 377 Mass. 217, 220 (1979). This doctrine “has particular applicability when ‘an action raises a question of the validity of an agency practice … or when the issue in litigation involves “technical questions of fact uniquely within the expertise and experience of an agency.” ’ ” Id. (ellipsis in original), quoting Murphy, supra, at 221, quoting in turn Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 304 (1976).1
The DPU and the Superior Court share jurisdiction over claims that a towing company has violated the Department’s towing rate regulation. Since Silva’s vehicle was towed at the request of the owner or operator of the property where the vehicle had been parked, and without the consent of Silva or any authorized user of the vehicle, Todisco could not charge Silva any more than the maximum amount allowed for such involuntary tows under the applicable DPU regulations. See G.L. c. 266, § 120D. All of Silva’s claims are based on his allegation that Todisco imposed towing charges for mileage and a fuel surcharge without providing information required under 220 C.M.R. § 272.03. This regulation was adopted by the Department pursuant to its authority under G.L. c. 159B, § 6B, to regulate the maximum charges that may be assessed for the involuntary towing of motor vehicles. Anyone affected by a violation of this regulation “may file” a complaint with the Department. G.L. c. 159B, § 21. But this jurisdiction is not exclusive. See Papetti v. Alicandro, 317 Mass. 382, 385-390 (1944). The governing statute provides that the Superior Court retains “jurisdiction in equity to restrain any … violation” of regulations promulgated this statute. See G.L. c. 159B, § 21. In addition, individuals like Silva who contend they have been overcharged may file an action in Superior Court seeking repayment, just
1 The doctrines of exhaustion of administrative remedies and primary jurisdiction serve similar purposes but apply in different circumstances. See Liability Investigative Effort, Inc. v. Medical Malpractice Joint Underwriting Ass’n of Massachusetts, 409 Mass. 734, 750-751 (1991). “The doctrine of exhaustion of administrative remedies contemplates a situation where some administrative action has begun, but has not yet been completed; where there is no administrative proceeding under way, the exhaustion doctrine has no application. In contrast, primary jurisdiction situations arise in cases where a plaintiff, in the absence of pending administrative proceedings, invokes the original jurisdiction of a court to decide the merits of a controversy.” Id., quoting Murphy, 377 Mass. at 220.
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as carriers or towers who contend they are owed money under this regulation may file a civil action seeking payment. Cf. Papetti, supra, at 391-393.
Where a lawsuit involves a dispute over which a court and an administrative agency share jurisdiction, as in this case, the court generally has broad discretion as to whether to allow the lawsuit to proceed or instead dismiss or stay the action and refer issues to the agency under the doctrine of primary jurisdiction. See Blauvelt v. AFSCME Council 93, Local 1703, 74 Mass. App. Ct. 794, 801-802 (2009).
But Silva seeks damages and other relief under G.L. c. 93A, § 9. That makes it inappropriate to dismiss or even to stay this case on the ground that the DPU has primary jurisdiction over this dispute.
By statute, individuals who are “entitled to bring an action” under G.L. c. 93A, § 9, “shall not be required to initiate, pursue or exhaust” any administrative remedies before filing suit or obtaining relief under c. 93A in court. See G.L. c. 93A, § 9, ¶ (6). This provision bars courts from dismissing or staying a § 9 claim on the ground that the plaintiff should first seek relief in some other forum. Hannon v. Original Gunite Aquatech Pools, Inc., 385 Mass. 813, 826 (1982). It was added to c. 93A to reverse a contrary ruling by the Supreme Judicial Court. In 1972 the SJC held that an individual claiming he was overcharged by an insurer had to exhaust his administrative remedies before the Commissioner of Insurance before filing suit in Superior Court under c. 93A. See Gordon v. Hardware Mut. Cas. Co., 361 Mass. 582, 585-588 (1972). The Legislature responded to Gordon by enacting “St.1973, c. 939, which amended G.L. c. 93A, s 9, so as to obviate, except in specified cases, the requirement that administrative remedies be exhausted before relief can be granted under c. 93A.” Slaney v. Westwood Auto, Inc., 366 Mass. 688, 691 n.4 (1975).
Although courts retain some discretion to stay § 9 claims to give the defendant the opportunity to initiate a proceeding before an administrative agency, by statute they may do so “only in certain limited circumstances.” Hannon, supra. Specifically, the Legislature has authorized such a stay only if: (a) “there is a substantial likelihood” that the court case could result in an order “that would disrupt or be inconsistent with a regulatory scheme” that applies to the conduct at issue in the case, or (b) the regulatory agency “has a substantial interest in reviewing” the conduct
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at issue and also “has the power to provide substantially the relief sought[.]” G.L. c. 93A, § 9, ¶ (7).
Neither of these statutorily-permissible reasons for staying claims applies in this case. Since Silva seeks an order compelling Todisco to comply with the regulatory scheme that governs involuntary tows, there is little chance that Silva will obtain an order requiring Todisco to do anything inconsistent with the regulatory scheme. And the DPU “lacks authority to order” Todisco to repay “a collected overcharge to customers” or to award the other relief sought by Silva under c. 93A. See Southbridge Water Supply Co. v. Dept. of Pub. Utils., 368 Mass. 300, 310 (1975).
Nor does it make any sense to stay Silva’s common law claims. As the Court just noted, the DPU “is not authorized to order reimbursement of collected charges to customers.” See Lowell Gas Co. v. Attorney Gen., 377 Mass. 37, 45 (1979). Furthermore, the question of whether Todisco is charging fees not allowed under the DPU’s towing charge regulations turns on questions of regulatory interpretation that Superior Court judges deal with regularly; it is not a highly technical issue that cannot be understood and fairly resolved without the Department’s specialized expertise. Under these circumstances, Silva should be allowed to press his claim and the putative class claims in court. “This is not a case in which the proper allocation of responsibilities between the courts and an administrative agency calls for judicial forbearance until agency action occurs.” See Columbia Chiropractic Group, Inc. v. Trust Ins. Co., 430 Mass. 60, 61-62 (1999) (Superior Court properly retained jurisdiction over counterclaims that provider violated G.L. c. 93A, § 11, by overcharging for chiropractic services, rather than deferring to primary jurisdiction of Board of Registration of Chiropractors, where board had “no authority to award G.L. c. 93A damages” and overcharging claim was “not a complicated issue calling for agency expertise”).
3. Availability of Compensatory Remedy. Todisco notes that the DPU may impose a $ 100 fine to punish a violation of the towing charge regulation. See G.L. c. 159B, § 21. Todisco then asserts that this fine is the exclusive remedy and that Silva may not seek compensatory damages or injunctive relief on behalf of himself or the putative class. This argument is without merit.
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Nothing in § 21 provides or even suggests that courts are barred from ordering repayment of overcharges, punitive damages and attorneys’ fees under c. 93A, or appropriate injunctive relief as a remedy for a violation of this regulation. Cf. J. & J. Enterprises, Inc. v. Martignetti, 369 Mass. 535, 539 (1976) (statute authorizing Alcoholic Beverages Control Commission to impose fine did not create exclusive remedy that would bar court from awarding damages, injunctive relief, and other relief under c. 93A). To the contrary, and as noted above, the power of the DPU to enforce the towing charge regulations is not exclusive. See Papetti, 317 Mass. at 385-390; G.L. c. 159B, § 21. The mere fact that the Legislature authorized imposition of a small fine does not, by itself, make that the exclusive remedy. See Labor Relations Comm’n v. Boston Teachers Union, Local 66, 374 Mass. 79, 92-93 (1977).
4. Legal Obligation to Disclose Mileage and Fuel Information. Todisco next asserts that Silva’s claim fails as a matter of law because nothing in the governing regulation required Todisco to disclose odometer and fuel surcharge information to the customer before imposing and collecting mileage and fuel charges for an involuntary tow. This argument is also without merit.
The regulation cited by Silva expressly required Todisco to provide customers like Silva with the information at issue. With respect to the mileage charge, the regulation provides that the charge is to be “based on round trip mileage from garage to return thereto,” that the towing companying is to “establish the mileage from the service vehicle odometer,” and that it “must include the odometer readings on the tow slip.” See 220 C.M.R. § 272.03, Note 3. With respect to the fuel surcharge, the regulation states that “the towing slip must record” certain specified information. Id., “Fuel Price Surcharge,” ¶ 6. By requiring that certain information be included on the tow slip, the regulation makes clear that this information must be disclosed and provided to the customer.
5. Amenability to Class Certification. Todisco argues that Silva should not be allowed to assert claims for intentional fraud or negligent misrepresentation on behalf of the putative class because the question of actual reliance cannot be decided on a class-wide basis. This argument is premature. Silva has not yet moved for class certification. The proper time to raise this argument is in response to a motion to
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certify the class, which Silva is not required to serve or file at this time. Cf. Massachusetts General Hospital v. Rate Setting Commission, 371 Mass. 705, 713 (1977) (unlike parallel federal rule, Mass. R. Civ. P. 23 does not require that class certification be decided at outset of case).
6. Federal Preemption. Todisco argues that Silva’s claims for intentional fraud, negligent misrepresentation, and violation of the Massachusetts Consumer Protection Act (G.L. c. 93A) are preempted by the Federal Aviation Administration Authorization Act, which bars states from regulating any “price, route, or service of any motor carrier … with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1).
This argument fails because it cannot be squared with a separate provision of this federal law. Congress provided that the preemption provision relied upon by Todisco “does not apply to the authority of a State or a political subdivision of a State to enact or enforce a law, regulation, or other provision relating to the regulation of tow truck operations performed without the prior consent or authorization of the owner or operator of the motor vehicle.” Id. § 14501(c)(2)(C). Since Silva’s vehicle was towed without the prior consent or authorization of the vehicle owner or operator, the Commonwealth of Massachusetts is free to regulate the charges imposed by Todisco without running afoul of the FAAAA preemption provision. As a result none of Silva’s claims is preempted. See Tillison v. Gregoire, 424 F.3d 1093, 1100 (9th Cir. 2005) (state regulations that “impact the prices operators charge for non-consensual towing” are “saved from preemption by the exception in FAAAA which allows such regulation of prices”); State v. Transmasters Towing, 168 P.3d 60, 66 (Kansas Ct. App. 2007) (claims under Kansas Consumer Protection Act that charges for involuntary tows were excessive not preempted by FAAAA, in part because they fall within preemption exception of § 14501(c)(2)(C)).
7. Declaratory Relief. Finally, since Silva’s other claims survive the motion to dismiss, his claim seeking declaratory relief under G.L. c. 231A does as well. As explained above, the pleadings in this case make clear that there is an actual controversy between the parties regarding whether the towing charges imposed by Todisco were lawful, and Silva has standing to seek relief. Nothing more is needed to
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state a claim for declaratory relief. See, e.g., Galipault v. Wash Rock Investments, LLC, 65 Mass. App. Ct. 73, 83 (2005).
ORDER
Defendant’s motion to dismiss this action is DENIED. The Court will conduct a scheduling conference under Mass. R. Civ. P. 16 on February 21, 2017, at 2:00 p.m.
23 January 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court read more

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Posted by Massachusetts Legal Resources - February 3, 2017 at 3:42 pm

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