Opinion
11-P-2113
05-31-2012
CAPITAL ALLOCATION PARTNERS, LLC v. NEW FRONTIER ADVISORS, LLC.
NOTICE: Decisions issued by the Appeals Court pursuant to its rule 1:28 are primarily addressed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, rule 1:28 decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28, issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
For the reasons stated in our decision today in the related case of Capital Allocation Partners, LLC v. Michaud, No. 11-P-1524, the evidence that was excluded below, including the evidence of statements made by attorneys for defendant New Frontier Advisors, LLC (NFA), at a meeting on July 16, 2007, and statements made in the letter from an attorney for NFA dated July 30, 2007, should not have been excluded either on the ground of litigation privilege or on the ground now put forward by the defendant in its brief, the evidentiary rule concerning statements made during settlement negotiations.
The 'lost opportunity claim' respecting revenues that might have been earned from the Vanguard deal had it gone forward with NFA (alone or via an arrangement with Compass, CAP, and/or any other party) providing the 'back office' services requested by Vanguard, amounted only to a request for expectancy damages, not to a different, unpleaded claim. To be sure, the Vanguard deal is not part of this case in the sense that no breach of an agreement between NFA, CAP, and Compass was alleged. But the prayer for relief in the complaint is for damages for breach of the client marketing agreement (CMA) and for violation of G. L. c. 93A, § 11. If properly admitted evidence would have supported a finding that a proximate consequence of the defendant's breach -- which was found by the jury -- or of its violation of G. L. c. 93A (if any) was that the Vanguard deal failed, and that, therefore, CAP lost commissions it would have otherwise have made, such losses might be part of the damages that could be awarded under an expectancy theory.
At argument the parties disagreed about whether revenue obtained as a result of the failed Vanguard deal would have been subject to a twenty percent commission under the CMA at all. The defendant argued that it would not, and that, therefore, as a matter of law, expectancy damages from the Vanguard project could not be part of at least the breach of contract case.
We do not agree, however, with the defendant that such a reading is compelled by the text of either the CMA, the initial proposed contract between NFA and Vanguard, or, to the extent it is relevant, the contract actually entered into by New Frontier Management, LLC (NFM), and Vanguard. Further, the defendant's proposed reading of the contracts is belied by the text of the July 30, 2007, letter from Attorney Carey to Attorney Lund in which Attorney Carey notes with respect to the Vanguard deal 'CAP has no more than an introductory role for which it will be amply paid with NFA's 20% fee to CAP.'
With respect to the breach of contract claim, the judge did not allow the introduction of the plaintiff's expert's evidence with respect to damages, including any evidence of expectancy damages. This determination was based on the judge's conclusion that commissions that might have been lost due to the failure of the Vanguard project were not relevant to the breach of contract case. In light of our conclusion above, the award of damages must be vacated and the case remanded for a new trial with respect to damages for the breach of contract. ,
Even without the wrongly excluded evidence, the jury concluded a breach had occurred, and thus no retrial on the question of liability is necessary.
While we express no opinion on whether anything will remain of the count seeking a declaratory judgment after the determination of damages on the breach of contract claim on remand, we also vacate the judgment on count two in order to permit the judge to address any issue with respect to it that may remain unresolved.
The basis upon which the judge ruled against the plaintiff on its claim under G. L. c. 93A is not completely apparent. The jury on an advisory basis recommended a finding of liability and a c. 93A award of $625,000, which they advised to be doubled or tripled. This was their recommendation despite the absence of any specific evidence of expectancy damages. The judge, who was not bound by the jury's recommendation, see Chamberlayne Sch. & Chamberlayne Jr. College v. Banker, 30 Mass. App. Ct. 346, 354-355 (1991), rejected the recommendation as 'the verdict of a thoroughly confused jury.' The judge concluded that the jury based their determination on the 'lost opportunity' with respect to the Vanguard deal. The judge said that plaintiff's counsel 'brought the lost opportunity case in through the backdoor of the breach of contract and 93A case; such conduct cannot be rewarded or allowed to stand.'
The judge also noted that the only evidence of extortionate statements or acts on the part of the principalsles of NFA was the evidence excluded by the litigation privilege. Although she opined that on voir dire 'the testimony did not have the strength claimed by the plaintiff,' we think that a reasonable, but not necessary, inference from the evidence, which we have concluded is admissible, is that NFA sought to reduce the commissions that would be payable to CAP under the CMA with respect to the Vanguard project.
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That language may sound stronger standing alone than the judge intended, and we do not think the judge's ultimate basis for her verdict was a punitive one with respect to plaintiff's counsel. Having reviewed the transcript, we do not see conduct on the part of plaintiff's counsel meriting condemnation or punitive sanction. To be sure, the judge and plaintiff's counsel were apparently operating at cross purposes with respect to the relevance of the Vanguard deal to the claims pleaded in the complaint and to damages with respect to those claims. The issue of their differing understandings of the relevance of the Vanguard deal to the claims before the court appears never to have been truly joined and resolved. Significantly, to the extent the Vanguard deal was discussed during the first four days of trial, there was, as the judge observed, no objection by the defendant.
As to the merits of the c. 93A claim, we conclude that expectancy damages, including any that may have arisen out of the failure of the Vanguard deal, may permissibly be considered with respect to both the breach of contract claim and the c. 93A claim. We disagree with the plaintiff that the evidence compels a judgment in its favor on the latter claim, but conclude there was sufficient evidence to support it. Consequently, the judgment on the c. 93A claim must be reversed and the case remanded for a new trial on that claim.
While we have no doubt that the experienced and thoughtful trial judge could impartially retry the remaining portions of this case on remand, in light of her statement concerning plaintiff's counsel's conduct, we think the appearance of justice would best be served if on remand the case were reassigned.
The judgment on counts one and three of the complaint is reversed, the judgment on count two is vacated, and the case is remanded to the Superior Court for further proceedings consistent with this memorandum and order.
So ordered.
By the Court (Rubin, Brown & Hanlon, JJ.),