Mullins v. Colonial Farms Ltd., et al. (Lawyers Weekly No. 12-077-17)
1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION NO. 2013-04375 BLS1 JOSEPH R. MULLINS, on behalf of nominal defendants CMJ MANAGEMENT COMPANY and CMJMC, INC. vs. COLONIAL FARMS LTD., & others1 FINDINGS OF FACT AND CONCLUSIONS OF LAW FOLLOWING JURY WAIVED TRIAL ON DAMAGES INTRODUCTION As reflected in the court’s earlier Memorandum of Decision and Order on the Parties’ Cross-Motions for Summary Judgment (the Decision, capitalized terms shall have the same meaning in this memorandum as in the Decision), it is undisputed that, at Corcoran’s direction, the Partnerships ceased making payment of the Incentive Management Fees to CMJ Management under the Supplemental Agreements in January, 2010. Further, the termination of these payments would constitute a breach of each of the Supplemental Agreements, unless Corcoran (on behalf of the Partnerships) proved at trial that (i) Corcoran, Jennison and Mullins had all agreed that the Supplemental Agreements were to be cancelled as part of the transaction in which each of them repurchased their interests in the Partnerships from Paine Webber in 1999, and (ii) this cancellation was not reflected in the 1999 transaction documents as a consequence of a mutual mistake. Following a jury trial, on March 1, 2017, the jury answered the single 1 Fawcett’s Pond Apartments Company (Fawcett), Holbrook Apartments Company (Holbrook) Marvin Gardens Associates (Marvin) Quaker Meadows Apartments Company (Quaker), Joseph E. Corcoran, and Gary A. Jennison and CMJ Management Company and CMJMC, Inc., nominal defendants. 2 question put to them in a special verdict slip concerning the existence of such a mutual mistake2: “NO.” The parties had previously agreed that if the jury found that no mutual mistake had occurred, they would submit the question of how much should have been paid to CMJ Management by the Partnerships to the court for its decision, jury-waived. The court heard evidence on this issue on March 3, 2016 (as a supplement to the evidence presented during the jury trial). Three witnesses testified and an additional six exhibits were admitted in evidence. Thereafter, the parties submitted proposed findings of fact and conclusions of law. FINDINGS OF FACT/CONCLUSIONS OF LAW Findings and Conclusions Addressing the Manner in which the Incentive Management Fees are Calculated During Years in which there were no Regulatory/Loan Restrictions on Distributions The Supplemental Agreements for four of the Partnerships—Colonial, Marvin, Quaker, and Fawcett all provided that, “to the extent funds are available for [their] payment”: The Incentive Management Fee shall be an annual, non-cumulative fee payable out of cash available therefor . . . in an amount equal to, for each year, 40% of the amount, if any, by which Cash Flow for such year exceeds one half of the maximum amount of distributable cash flow […]