Justia Massachusetts Supreme Court Opinion Summaries

Articles Posted in Contracts

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At issue in this case was the meaning and application of the stockholders’ agreement between Babcock Power Inc. and its former executive, Eric Balles. Babcock terminated Balles’ employment after discovering that he was engaged in an extramarital affair with a female subordinate. Concluding that Balles had been terminated “for cause” under the terms of his stockholders’ agreement with the company, the company’s board of directors “repurchased” Balles’ stock at a minimal price, withheld subsequent dividends, and refused to pay Balles any severance. Balles sought declaratory relief seeking that the stock be returned to him along with the withheld dividends. Balles prevailed at a jury-waived trial on his claim for declaratory relief but was unsuccessful in his request to receive severance pay. The Supreme Judicial Court affirmed, holding (1) the trial judge properly reviewed the board’s decision on a de novo basis; (2) the judge did not err in determining that Balles’ conduct did not constitute “cause” as defined in the stockholders’ agreement; and (3) Balles was not precluded from seeking relief pursuant to the terms of the stockholders’ agreement. View "Balles v. Babcock Power Inc." on Justia Law

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Service Employees International Union, Local 509 (Union) brought a declaratory judgment action against the Department of Mental Health (DMH) maintaining that certain contracts DMH made with private vendors were “privatization contracts” subject to the requirements of the Pacheco Law. The Union sought a declaration invalidating the contracts because DMH did not comply with the statutory prerequisites of the Pacheco Law. The case was dismissed. The Supreme Judicial Court remanded the case. On remand, DMH again successfully moved to dismiss the Union’s declaratory judgment action on the basis that it was moot because the initial contracts had expired and the remaining extant renewal contracts were immune from challenge by virtue of Mass. Gen. Laws ch. 7, 53. The Union appealed, asserting that because the non-compliant initial contracts were invalid under Mass. Gen. Laws ch. 7, 54, so too were any renewal contracts made pursuant to them. The Supreme Judicial Court vacated the judgment of dismissal, holding that the protection afforded renewal contracts by section 53 is not extended to those renewal contracts made pursuant to timely challenged and subsequently invalidated privatization contracts under section 54. View "Service Employees International Union, Local 509 v. Department of Mental Health" on Justia Law

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In 1971, the City of Quincy, as trustee of the Adams Temple and School Fund (Adams Fund), sought a decree authorizing it to execute a proposed fifty-year lease of a building and parking lot of the Adams Academy that it had negotiated with the Quincy Historical Society (Society). In 1972, a single justice of the Supreme Judicial Court decreed that the City was authorized to execute the proposed lease. In 2014, the successor trustee of the Adams Fund (Plaintiff) filed a complaint seeking rescission of the lease and money damages, arguing that the City violated its fiduciary duty to the Woodward School for Girls, Inc., the sole income beneficiary of the Adams Fund, by executing the lease. Defendants, the City and the Society, moved for summary judgment, arguing that they were entitled to judgment under res judicata. The single justice allowed Defendants’ motion. Plaintiff appealed, contending that he should not be precluded by res judicata from obtaining relief because neither he nor the Woodward School was a party to the 1972 equity proceeding. The Supreme Judicial Court affirmed, holding that Plaintiff was precluded by res judicata from prevailing on his challenge to the execution of the lease. View "DeGiacomo v. City of Quincy" on Justia Law

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In Suffolk I, the Supreme Judicial Court held that Reading Co-Operative Bank (Bank) was allowed to require Suffolk Construction Company, Inc. (Suffolk) to perform fully Suffolk’s obligations pursuant to a collateral assignment of payments under a subcontract between Suffolk and Benchmark Mechanical Systems, Inc. (Benchmark) to secure a debt owed by Bankmark to the Bank. Suffolk subsequently commenced this action to recover the surplus that resulted when the Bank applied that collateral to satisfy Benchmark’s debt. Suffolk’s equitable claims for implied subrogation and implied indemnification were dismissed for failure to state a claim, and Suffolk’s common-law claims were dismissed as time-barred. The Supreme Judicial Court affirmed in part and reversed in part, holding (1) Suffolk’s common-law claims were time-barred; but (2) Suffolk stated viable equitable claims to prevent Benchmark’s potential windfall and unjust enrichment for which relief can be granted. View "Suffolk Constr. Co., Inc. v. Benchmark Mechanical Sys., Inc." on Justia Law
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The United States Court of Appeal for the First Circuit certified two questions of state law to the Massachusetts Supreme Court. The questions arose in the context of a bankruptcy proceeding, and concerned the power and effect of an affidavit of an attorney, executed pursuant to G.L. c. 183 section 5B, in relation to a mortgage containing a defective certificate of acknowledgement. The first question centered on whether, pursuant to the statute, a recorded mortgage omitting the name of the mortgagor, a material defect of that mortgage. The second question centered on whether the recording of that allegedly defective mortgages provides constructive notice of the mortgage to a bona fide purchaser, either independently or in combination with the mortgage. The Massachusetts Supreme Court answered both questions "yes." View "Bank of America, N.A. v. Casey" on Justia Law

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In the late 1990s, Robert James, acting on behalf of the Robert and Ardis James Foundation, agreed to advance more than $650,000 to Daniel Meyers to purchase shares of stock in a fledgling, privately held company that Meyers had cofounded in exchange for a portion of the proceeds of an eventual sale of those shares. The agreement did not discuss the timing of sale. Beginning in 2004, the foundation sought to bring the agreements to a close, but Meyers did not comply. In 2006, the foundation filed a complaint against Meyers seeking specific performance and damages. The superior court concluded that Meyers had committed a breach of the implied covenant of good faith and fair dealing and awarded damages based on a date of breach of July 31, 2006. The Supreme Judicial Court affirmed, holding that the trial court correctly found that Meyers committed a breach of the implied covenant and did not err in setting the date of breach at July 31, 2006. View "Robert & Ardis James Found. v. Meyers" on Justia Law
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Plaintiffs and Defendant, members of an accounting firm (Firm), were parties to a stockholder agreement (Agreement) that contained an arbitration clause. The parties’ agreement to arbitrate was governed by the Massachusetts Uniform Arbitration Act for Commercial Disputes. When Plaintiffs voted to require the withdrawal of Defendant as a director and stockholder in the Firm, Defendant opened his own accounting firm. The nature and terms of Defendant’s withdrawal from the Firm and his subsequent competition with the Firm were the bases of a dispute between the parties. The dispute was submitted to binding arbitration. The arbitrator issued a final award awarding the Firm $1.7 million plus interest. The superior court confirmed the arbitration award. Defendant appealed, arguing (1) the arbitrator fundamentally misinterpreted the agreement, and (2) he was entitled to have a court consider the merits of his claim because, in the arbitration clause of the agreement, the parties specifically provided for judicial review of an award to determine if there was flagrant error by the arbitrator. The Supreme Judicial Court affirmed the motion judge’s confirmation award, holding (1) the grounds of judicial review in this case were limited to those delineated in Mass. Gen. Laws ch. 215, 12 and 13; and (2) Defendant’s claim was not reviewable by the Court. View "Katz, Nannis & Solomon, P.C. v. Levine" on Justia Law

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Plaintiff, a black male of African descent who had a medical degree from the University of the West Indies, was terminated from his employment with Mount Auburn Hospital while completing the first year of his residency. Plaintiff filed a ten-count complaint against the Hospital and three physicians who supervised his work, asserting employment discrimination and breach of contract, among other claims. The Appeals Court reversed as to the discrimination and breach of contract claims. The Supreme Judicial Court vacated the judgments in favor of Defendants on Plaintiff’s claims for employment discrimination and breach of contract, holding that Defendants were not entitled to summary judgment and that Plaintiff presented sufficient evidence to allow a jury to hear his claims. View "Bulwer v. Mount Auburn Hospital" on Justia Law

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EventMonitor, Inc. terminated the employment of Anthony Leness, characterizing the termination as “without cause.” After discovering that Leness had copies the data on a company laptop computer EventMonitor retroactively characterized the termination as having been for cause and stopped paying Leness any severance payments. EventMonitor filed suit against Leness, alleging breach of contract, breach of the covenant of good faith and fair dealing, and breach of fiduciary duty. Leness counterclaimed for breach of contract, breach of the covenant of good faith and fair dealing, and violations of the Wage Act. A superior court judge entered judgment for Leness on EventMonitor’s claims and Leness’s counterclaims, finding that Leness had not engaged in defalcation of EventMonitor’s assets and had not committed a material breach of the employment contract, and thus that his termination could not have been for cause. The Supreme Judicial Court affirmed, holding (1) the trial judge correctly found that Leness did not commit a material breach of the employment contract and did not engage in defalcation of company assets, and therefore, Leness committed no act giving rise to a termination for cause; and (2) the trial judge correctly concluded that Leness was entitled to severance payments under the terms of the contract. View "EventMonitor, Inc. v. Leness" on Justia Law

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Vittorio and Lydia Gentile were policyholders under a Massachusetts automobile insurance policy issued by Commerce Insurance Company. Their grandson, Vittorio Gentile, Jr. (Junior), an “excluded operator” under the policy, was operating one of the Gentiles’ vehicles covered by the policy when he caused an accident that injured Douglas and Joseph Homsis. Commerce filed this action seeking a declaratory judgment that the Gentiles’ violation of the operator exclusion form relieved it of the duty to pay the Homsises under the optional bodily injury provisions of the insurance contract. A superior court judge concluded that Commerce was relieved of its duty to pay the optional coverage for the Homsis’ injures because the Gentiles had violated their duty of “continuing representation” as to whether Junior was, in fact, operating their vehicles. The Appeals Court affirmed both on that basis and on the basis that the Gentiles had breached the insurance contract. The Supreme Judicial Court affirmed on the ground that, by allowing Junior to operate their vehicle, the Gentiles committed a breach of a material term of the insurance contract. View "Commerce Ins. Co., Inc. v. Gentile" on Justia Law