Patel v. Dammai, et al. (Lawyers Weekly No. 12-121-17)
COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION No. 1784CV0113-BLS 1 VINOD PATEL vs. VINCENT DAMMAI, et al ORDER ON CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT In this action on a promissory note the parties seek a ruling by the court on two issues: (1) what should be the interest rate on the promissory note when the interest rate stated in the note is unlawful under the usury statute, and (2) what amount of attorneys’ fees are recoverable by the lender under the terms of the note. This action was commenced by plaintiff, the lender, against defendant, a person individually liable under the note, on January 12, 2017. As a result of this lawsuit and collection efforts by plaintiff, the principal sum of the note ($ 400,000) was repaid to plaintiff on May 31, 2017. On April 20, 2017, in anticipation of the imminent payment of the principal amount, the parties submitted a Joint Proposal for Procedure and Schedule that was accepted and ordered by the court. In the Joint Proposal, the parties stated “[a]ll parties believe that these two issues can likely be resolved without discovery, on cross motions for summary judgment. All parties further believe that if these two issues are resolved by the Court, then that will likely facilitate a final resolution of the case . . . .” 1 BACKGROUND The Interest Rate The following facts regarding the promissory note and the interest rate are submitted as undisputed in the parties’ Consolidated Statement of Undisputed Material Facts. In May 2016, the parties met to discuss a business venture proposed by defendant, Vincent Dammai. Dammai intended to form a company called Biosimilars & Biologics to distribute and/or manufacture generic pharmaceutical drugs. Plaintiff, Vinod Patel, agreed to become employed by the company and to receive a 4% equity interest in the company. Before the company could be organized it was recognized that the company needed money to get off the ground. Patel agreed to loan the not-yet-organized company $ 400,000. It was anticipated that the loan would be for a short time period because Dammai anticipated a major investment from the government of Brazil. On July 1, 2016, a promissory note was executed by Dammai, Patel and a third person, Venkat Reddy. The relevant terms of the promissory note are the following. The “Borrower” is a “new business” designated as “NewCo.” It is recited that NewCo consists of three “Owners”, Dammai, Patel and Reddy. NewCo and the Owners “individually and severally” promise to pay Patel the sum of $ 400,000, plus interest on or before September 1, 2016. The promissory note states that the “loan is intended to be used [as] an advance to fund the start-up of […]