Articles Posted in Contracts

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In this civil case, the Supreme Court held that, for purposes of measuring fault under the doctrine of in pari delicto, only the conduct of senior management is imputed to the plaintiff organization. Plaintiff in this case was a college acting through its agents. At issue was whether courts in this case should follow the traditional principles of agency law and impute the wrongdoing of those agents to Plaintiff when determining whether it should be barred from recovery under the in pari delicto doctrine. The trial judge granted summary judgment to Defendant under the doctrine of in pari delicto after imputing to Plaintiff the wrongdoing of an employee who was not a member of senior management. The Supreme Judicial Court vacated the summary judgment order, holding that where summary judgment was granted to Defendant on the sole ground that Plaintiff’s claims were barred under the in pari delicto doctrine, the case must be remanded for consideration of Defendant’s other grounds for summary judgment. View "Merrimack College v. KPMG LLP" on Justia Law

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In this insurance dispute, the Supreme Judicial Court reversed the superior court’s allowance of the insurers’ motion for summary judgment, holding that the allegations in the underlying complaint were sufficient to trigger the insurers’ duty to defend the insured in the underlying action. The two insurers in this case had issued several general commercial liability policies to the insured. The insured was sued in federal court for improper advertising. The insurers denied coverage on the ground that a provision in the policies covering improper use of another’s advertising idea did not cover the claims raised in the action but, nevertheless, agreed to fund the insured’s defense under a reservation of rights. The insurers then sought a declaration that they were not obligated to defend the insured in the underlying action. The superior court granted summary judgment for the insurers. The Supreme Judicial Court reversed, holding that the policies that the insured purchased, which provided coverage in the event the insured was sued for alleged advertising injuries, covered the insured for the claims at issue in the underlying action. View "Holyoke Mutual Insurance Co. in Salem v. Vibram USA, Inc." on Justia Law

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The Supreme Judicial Court held that the trial judge did not abuse his discretion by allowing Defendant’s motion to dismiss on the ground of forum non conveniens because a Massachusetts choice of law provision in a confidentiality, nonsolicitation, and noncompetition agreement between the parties in this case was unenforceable. Defendant was employed in California by Plaintiff, a company headquartered in Massachusetts. Plaintiff signed an agreement as a condition of employment that declared that the agreement would be governed by Massachusetts law and that all lawsuits arising from the agreement would be brought in a Massachusetts court. When Defendant left to work for a California competitor, Plaintiff filed suit in the Massachusetts Superior Court. Defendant filed a motion to dismiss on the ground of forum non conveniens, and the trial judge allowed the motion. The Supreme Judicial Court affirmed, holding (1) where California substantive law would apply under choice of law principles and where the application of Massachusetts substantive law would violate California public policy favoring open competition and employee mobility, the Massachusetts choice of law provision was not enforceable; and (2) the trial judge did not abuse his discretion in deciding that this action should be dismissed on the ground of forum non conveniens. View "Oxford Global Resources, LLC v. Hernandez" on Justia Law

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At issue was when a right of first refusal may be exercised under the terms of the agreements executed in connection with the project in this case. The parties here were partners in a limited partnership formed for the purpose of rehabilitating and operating an affordable housing complex under the Low Income Housing Tax Credit program set forth in 26 U.S.C. 42. Under the agreements executed in connection with the project, the majority owner of the general partner held a right of first refusal to purchase the partnership’s interest in the property in accordance with section 42(i)(7). Plaintiffs commenced this action seeking a declaratory judgment as to the parties’ rights under the relevant agreements, arguing that the right of first refusal could be exercised once a third party makes an enforceable offer to purchase the property interest. Defendants argued that the right of first refusal could not be exercised unless the partnership received a bona fide offer from a third party and decided, with the special limited partner’s consent, to accept that offer. The superior court granted summary judgment in favor of Plaintiffs. The Supreme Judicial Court affirmed, holding that the superior court judge correctly granted summary judgment to Plaintiffs under the facts of this case. View "Homeowner's Rehab, Inc. v. Related Corporate V SLP, L.P." on Justia Law

Posted in: Contracts

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In this appeal arising from a construction contract dispute, the Supreme Court held (1) complete and strict performance is required for all construction contract terms relating to the design and construction itself, but ordinary contract principles, including the traditional Massachusetts materiality rule, apply to breaches of other provisions, such as the one at issue in this case governing payment certifications; and (2) as recovery sought under a theory of quantum meruit, good faith applies to the contract as a whole, and the intentional commission of breaches of individual contract provisions must be considered in the overall context. A superior court judge in this case concluded that Plaintiff was barred from seeking recovery on the contract or under quantum meruit because it intentionally filed false certifications of timely payments to subcontractors. It also concluded that Defendant could not maintain a fraud action against Plaintiff, in which it sought damages in addition to a payment Defendant had already withheld, because any recovery would be duplicative. The Supreme Judicial Court held (1) Plaintiff’s false certifications and intentional subcontractor payment delays constitute a material breach of the contract and precluded recovery for breach of contract; (2) disputed material facts precluded summary judgment on the quantum meruit claim; and (3) the dismissal of Defendant’s fraud claim against Plaintiff was error. View "G4S Technology LLC v. Massachusetts Technology Park Corp." on Justia Law

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Mass. Gen. Laws ch. 156C, 60(b) provides the exclusive remedy for dissenting members of a limited liability company that has voted to merge, so long as the merger is undertaken in accordance with Mass. Gen. Laws ch. 156C, 59-63. In this case, a member of a limited liability company (LLC) conducted a merger in breach of his fiduciary and contractual duties. The judge granted equitable relief. At issue was whether distribution of dissenting members’ interest in the LLC is the exclusive remedy of minority shareholders who objected to the merger and whether the judge erred in declining to rescind the merger. The Supreme Court held (1) where, as here, a merger was not conducted in compliance with Mass. Gen. Laws ch. 156C, 63, the remedy provided by Mass. Gen. Laws ch. 156C, 60(b) providing for distribution of dissenting members’ interest is not exclusive; (2) the trial judge did not abuse his discretion in fashioning an equitable remedy in this case, as rescission of the merger would be complicated and inequitable; and (3) the portion of the trial judge’s decision that increased Plaintiff’s interest in the merged LLC to five percent is remanded because there was no basis in the record for that figure. View "Allison v. Eriksson" on Justia Law

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Mass. Gen. Laws ch. 156C, 60(b) provides the exclusive remedy for dissenting members of a limited liability company that has voted to merge, so long as the merger is undertaken in accordance with Mass. Gen. Laws ch. 156C, 59-63. In this case, a member of a limited liability company (LLC) conducted a merger in breach of his fiduciary and contractual duties. The judge granted equitable relief. At issue was whether distribution of dissenting members’ interest in the LLC is the exclusive remedy of minority shareholders who objected to the merger and whether the judge erred in declining to rescind the merger. The Supreme Court held (1) where, as here, a merger was not conducted in compliance with Mass. Gen. Laws ch. 156C, 63, the remedy provided by Mass. Gen. Laws ch. 156C, 60(b) providing for distribution of dissenting members’ interest is not exclusive; (2) the trial judge did not abuse his discretion in fashioning an equitable remedy in this case, as rescission of the merger would be complicated and inequitable; and (3) the portion of the trial judge’s decision that increased Plaintiff’s interest in the merged LLC to five percent is remanded because there was no basis in the record for that figure. View "Allison v. Eriksson" on Justia Law

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At issue was the proper construction of the termination for convenience clause in a contract between the Massachusetts Bay Transportation Authority (MBTA) and A.L. Prime Energy Consultant, Inc. (Prime). The Supreme Judicial court held (1) a State or municipal entity may terminate a procurement contract for its convenience in order to achieve costs savings where, as in this case, the contractual language permits and in the absence of contrary applicable law; and (2) the superior court judge erred in denying MBTA’s motion to dismiss Prime’s complaint on the ground that a public entity may not invoke a termination for convenience clause in a State or municipal public procurement contract in order to secure a lower price. View "A.L. Prime Energy Consultant, Inc. v. Massachusetts Bay Transportation Authority" on Justia Law

Posted in: Contracts

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This litigation began when purchasers of computer service contracts filed a putative class action against the sellers. The sellers successfully moved to compel arbitration pursuant to the terms of the computer services contracts. The sellers, in the meantime, had applied for tax abatements from the Commissioner of Revenue. The Commissioner denied the applications, and the sellers petitioned the Appellate Tax Board. Appellant, one of the consumers who purchased these service contracts, moved to intervene in the proceedings, which petition the Board allowed. The Board reversed the Commissioner’s decision and allowed the abatements. Taxes were imposed on the service contracts purchased by Appellant. After final judgment was entered in the sellers’ favor in the class action litigation, the sellers withdrew their tax abatement petitions with prejudice. The Board denied Appellant’s motion to strike the withdrawals and terminated the proceedings. The Supreme Judicial Court reversed, holding (1) the Board did not err as a matter of law in allowing the Sellers’ withdrawals; but (2) the Board’s termination of the proceedings in their entirety, after permitting Appellant to intervene and allowing the abatements, was an error of law. Rather, Appellant should have been allowed to proceed as an intervener on its claim to recover the taxes imposed on the service contracts it purchased. View "WorldWide TechServices, LLC v. Commissioner of Revenue" on Justia Law

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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