Opinion
1884CV03064BLS2
12-17-2018
Charles GREICO, on Behalf of Himself and Greico Williams, LLC v. John Michael WILLIAMS
File Date: January 3, 2019
MEMORANDUM AND ORDER ON PRETRIAL MOTIONS
Kenneth W. Salinger, Justice Superior Court
A jury-waived trial of these civil actions begins in six weeks. This will be the second trial of this matter, as a mistrial was declared part way into the first jury trial. After hearing oral argument, the Court rules as follows on the pre-trial motions filed by plaintiff Charles Grieco and defendant John Michael Williams.
A jury trial began on June 12, 2018, in Essex Superior Court, but the trial judge (Lu, J.) declared a mistrial on the seventh day. Plaintiff then asked that the matter be specially assigned to one justice to conduct all subsequent proceedings in the case. The case was accepted into the Business Litigation Session and specially assigned to Judge Salinger. The parties then waived their rights to a jury trial and agreed that the case will be tried jury-waived beginning January 28, 2019.
1. Williams’ Motion to Withdraw Admissions
Williams seeks leave pursuant to Mass.R.Civ.P. 36(b) to withdraw his admissions that exhibits 1 and 2 of Grieco’s amended complaint were true and accurate copies of the Operating Agreement between the members of Grieco Williams, LLC ("GW") and of the Production Agreement between GW and Williams. The contracts that Williams admitted were true and accurate were entered into by Grieco or GW on the one hand and "John Michael Williams d/b/a John Michael Williams Productions" on the other. Williams now argues that these exhibits were only preliminary drafts of these documents, and that in the final, executed versions Grieco and GW actually contracted with an entity called "John Michael Williams Productions, LLC," not with Williams individually.
The Court will DENY this request because Williams has not met his burden of showing why withdrawal of these admissions "would be justified," and because Grieco has demonstrated that he would be unfairly prejudiced by "the sudden need to obtain evidence with respect to the questions previously answered by the admission." See Reynolds Alum. Bldg. Prod. Co. v. Leonard, 395 Mass. 255, 260 & n.9 (1985), quoting Brook Village North Assocs. v. General Elec. Co., 686 F.2d 66, 70 (1st Cir. 1982).
Williams has not justified withdrawing these admissions because there is no reason to believe that they were inadvertent and mistaken, rather than deliberate and accurate admissions of the true facts. The Court reaches this conclusion for several reasons.
Williams has repeatedly asserted throughout this litigation that he, personally and individually, entered into the Operating Agreement with Grieco and entered into the Production Agreement with GW. For example, Williams asserts in his amended counterclaim that the GW Operating Agreement provides that "John Michael Williams and Charles Grieco were the sole members" of GW, and that GW entered into the Production Agreement "with John Michael Williams, d/b/a John Michael Williams Production."
By law, Williams is bound by these allegations. See G.L.c. 231, § 87 ("In any civil action pleadings shall not be evidence on the trial, but the allegations therein shall bind the party making them"). Under this statute, "facts admitted in pleadings" are "conclusive upon" the party making them. Adiletto v. Brockton Cut Sole Corp., 322 Mass. 110, 112 (1947). As detailed in Grieco’s opposition, Williams reiterated his assertion that he entered into these contracts individually in numerous filings throughout this litigation. These submissions show that Williams always understood that he had entered into these contracts on behalf of himself individually, and not on behalf of corporate entity called "John Michael Williams Productions, LLC."
In addition, Williams has presented no evidence that an entity called "John Michael Williams Productions, LLC" existed at the time that Williams executed the operating and production agreement or that it was created thereafter. Williams says in his affirmative pleadings that he executed these two contracts on July 28, 2008. Williams has now provided copies of emails between himself and Grieco’s lawyer from July 25 to July 28, 2008, in which Williams asks that the draft contracts be revised to delete Williams as a party to the contracts and to substitute "John Michael Williams Productions, LLC." The emails also indicate that Williams agreed to drafts referring to "John Michael Williams Productions, LLC" as a Massachusetts limited liability company. But Williams proffers no evidence to show that he followed up by creating such a limited liability company. To state the obvious, Williams could not have entered into contracts on behalf of a non-existent corporate entity.
Other evidence suggests that Williams never did create "John Michael Williams Productions, LLC" or any other legal entity to work on the documentary film project at issue in this case. Grieco invested $ 900, 000 in the project. He conveyed that money to Williams, as provided in the parties’ production agreement. Williams deposited those funds into, and over time withdrew those funds from, a Bank of American ("BoA") checking account opened by "John M. Williams, Jr." as "sole proprietor DBA John Michael Williams Productions." If the production agreement was actually between Grieco and "John Michael Williams Productions, LLC," and such an entity actually existed, one would expect that Williams would have opened and deposited Grieco’s investment into a bank account in the name of that LLC, rather than holding and spending that money in his own name. Williams’ actions in handling the Grieco’s investment are consistent with his admissions that he entered into this contract individually, and not on behalf of an LLC.
The arguments by Williams in support of his motion to withdraw his admissions cannot be squared with publicly available information that seems to show he never formed a Massachusetts limited liability company called "John Michael Williams Productions, LLC." If Williams had formed such a company, it would be listed in the business entity database maintained by the Secretary of the Commonwealth’s Corporations Division. The Court takes judicial notice that no such LLC appears in the database. If Williams contends that the database is incorrect, the Court will give him the opportunity to present evidence to the contrary.
This database can be searched at http://corp.sec.state.ma.us/corpweb/CorpSearch/CorpSearch.aspx. The Court searched this database on December 17, 2018, by entity name for any business entity the name of which begins with "John Michael Williams." It also searched by individual name for John Michael Williams, for all entities with which Williams is affiliated. See Tilcon-Warren Quarries, Inc. v. Commissioner of Revenue, 392 Mass. 670, 671 n.4 (1984) (taking judicial notice of publicly-accessible list of manufacturing corporations maintained by state official); Marhefka v. Zoning Bd. of Appeals of Sutton, 79 Mass.App.Ct. 515, 516 n.5 (2011) (taking judicial notice of official online database maintained by local assessors); see generally Commonwealth v. Greco, 76 Mass.App.Ct. 296, 301 n.9, rev. denied, 457 Mass. 1106 and 458 Mass. 1105 (2010) (court may take judicial notice of facts "capable of accurate and ready determination by resort to resources whose accuracy cannot reasonably be questioned" (quoting Mass. Guide Evid. § 201(b)(2)).
Since Williams has not shown that he or anyone else ever created a company called "John Michael Williams Productions, LLC," in Massachusetts or in any other state, he has failed to establish that withdrawal of his prior admissions is justified. (The Court would have reached this conclusion even if it had not consulted and taken judicial notice of the Secretary’s database of Massachusetts corporate entities.)
A search of this business entity database for the name John Michael Williams reveals that Williams is the manager of Heartbeat Productions, LLC, which was formed on December 2, 2015, and also has some affiliation with Format the Movie, LLC, which was formed on January 28, 2014. Neither of those entities could have contracted with Grieco in 2008 because they were not created until years later.
In any case, Grieco would be unfairly prejudiced if Williams were to withdraw these admissions at this late date. Not only would Grieco suddenly have to muster evidence that Williams was a party to the operating and production agreements individually, he would also have to press and try to prove a claim in the alternative that Williams could be held liable individually on a piercing-the-corporate veil theory even if those contracts were with an LLC rather than with Williams. If Grieco were not permitted to rely on Williams’ prior admissions, and instead had to assert and prove a piercing-the-veil claim, he would have to obtain and present additional evidence regarding whether Williams could be held personally liable for the acts or torts of the alleged corporate entity. See generally My Bread Baking Co. v. Cumberland Farms, Inc., 353 Mass. 614, 618 (1968). It would be unfair to Grieco to require him suddenly to face this new burden on the eve of trial. Cf. Reynolds Alum. Bldg. Products Co., 395 Mass. at 260 n.9.
2. Grieco’s Spoliation Motion
Grieco asks the Court to sanction Williams for alleged spoliation of evidence. The "doctrine of spoliation ... is based on the premise that party who has negligently or intentionally lost or destroyed evidence known to be relevant for an upcoming legal proceeding should be held accountable for any unfair prejudice that results." Keene v. Brigham and Women’s Hospital, Inc., 439 Mass. 223, 234, 234 (2003). "As a general rule, a judge should impose the least severe sanction necessary to remedy the prejudice to the nonspoliating party." Id. at 235.
Williams’ assertion that this motion was "expressly prohibited" by the Court’s recent scheduling order is incorrect.
Williams intentionally destroyed some of his financial records for the period when he was working on the GW film project. He gathered his records concerning the Bank of America checking account into which he had deposited Grieco’s $ 900, 000 investment and his American Express credit card records for the relevant period of time. Before providing those records to his lawyers, however, Williams used a black magic marker to permanently redact many entries on his AmEx statements, and he discarded eight checks totaling over $ 70, 000. Williams did not keep an unredacted copy his AmEx statements. None of the financial records that Williams destroyed can be recovered from BoA or AmEx because too much time has passed.
The financial records that Williams destroyed are relevant to Grieco’s claims. The missing BoA checks are directly relevant to Grieco’s claim that Williams violated a contractual obligation to use Grieco’s $ 900, 000 investment "solely for the purpose of producing the Project," by spending much of the money on other things. The deleted portions of Williams’ AmEx statements are relevant to Grieco’s claim that Williams violated a further contractual obligation to "devote one hundred percent" of his working time to this documentary film until the project was completed, by working on other films and professional projects rather than completing and diligently promoting this film.
These financial records are also directly relevant to Williams’ counterclaims. Williams alleges that he used his best efforts to promote the film and that the project floundered because of Grieco. If Williams had not destroyed these financial records, Grieco would be entitled to use them in an attempt to show that the project failed because Williams did not use his best efforts.
In addition to destroying financial records, Williams claims that he has lost his calendars for this period. When Williams was deposed in March 2016, Williams testified that he tracked his appointments on two calendars, one on his phone and one that he described as a "pocket calendar." Williams now asserts, in his written opposition to Grieco’s motion for spoliation sanctions, that he only kept his calendar "on a cell phone that he no longer possesses." At oral argument, Williams’ counsel represented that Williams accidently destroyed this phone by dropping it in a toilet. None of these new factual assertions is supported by any affidavit from Williams. Nor was Williams’ counsel able to explain why an electronic calendar used on a cell phone could not be recovered through the automatic cloud-based backups that most Apple or Android phones automatically maintain.
For purposes of resolving Grieco’s motion for spoliation sanctions, the Court will accept Williams’ unsupported representation that he lost all of his calendar information because he accidently destroyed his cell phone.
This means that Williams has negligently destroyed and thus spoliated additional information that is relevant to his counterclaims and to Grieco’s claims. Williams knew that his calendar information was important in this case. He had used it to create an alleged accounting of his time, efforts, and spending on behalf of the GW film project. Williams could easily have backed up his cell phone calendar to ensure that this information would not be lost if something happened to his phone. He failed to do so.
The Court finds that Williams acted willfully and in bad faith when he deliberately destroyed relevant financial records, and that Williams’ deliberate destruction of that evidence unfairly prejudices Grieco’s defense against Williams’ counterclaims.
Under these circumstances, the Court concludes that dismissal of Williams’ counterclaims is an appropriate sanction for Williams’ deliberate spoliation of potentially significant evidence. See Keene, 439 Mass. at 235-36 (affirming entry of default judgment as sanction for spoliation where defendant was at fault for loss of medical records). A party who deliberately destroys important relevant evidence should not be allowed to press counterclaims that would arguably be undercut by the missing evidence.
In addition, with respect to Grieco’s claims, the Court will bar Williams from presenting any evidence regarding the financial transactions that he deleted or is otherwise now missing from his banking records, will allow Grieco to present evidence regarding the spoliation of that evidence, and will instruct itself that the Court may-but is not required to-draw an adverse inference against Williams because of the unavailability of that evidence. See, e.g., Scott v. Garfield, 454 Mass. 790, 797-800 (2009) (affirming similar sanction imposed for negligent spoliation of evidence).
3. Williams’ Spoliation Motions
Williams asks the Court to sanction Grieco for withholding and not producing certain emails on the ground that they are protected by the attorney-client privilege. He also seeks to sanction Grieco and to bar Kristen Elworthy from testifying on his behalf on the ground that Grieco and Elworthy failed to produce emails from certain email accounts.
Although Williams seeks such sanctions on the ground that Grieco and Elworthy have spoliated evidence, Williams has not in fact shown that Grieco or his daughter either destroyed or lost any evidence. The withholding of documents on a claim of privilege or on the ground that they are not relevant or responsive is not spoliation. Williams did not bring a timely motion to compel production of any of these emails. He may not seek "spoliation" sanctions without proving that evidence that should have been maintained was lost or destroyed.
The Court will therefore DENY both of these motions.
4. Williams’ Motion to Exclude Personal Financial Records
Williams seeks to bar Grieco from introducing Williams’ bank account records, credit card records, tax returns, and a spreadsheet in which Williams tried to account for certain expenses.
The Court will DENY this request because all of these records are potentially relevant. As noted above, Grieco claims that Williams breached contractual obligations to use Grieco’s $ 900, 000 only to pay costs of producing the documentary film, and to devote all of his professional efforts to this project. The financial records that Williams seek to exclude are admissible so long as Grieco lays an adequate foundation that they contain relevant information.
5. William’s Motion to Bar Expert Testimony
In addition, Williams asks the Court to bar Grieco’s accounting expert (Chad Robinson) from testifying. The Court will DENY this request. As an experienced film auditor who reviewed the financial documentation available in this case, Mr. Robinson appears to be qualified to summarize what those documents show about how Williams spent or used the $ 900, 000 in funding provided by Grieco. That testimony is relevant to Grieco’s claim that Williams used those monies for purposes not allowed under the parties’ Production Agreement, and is likely to help the Court in its role as fact finder. The Court concludes that all of the foundational requirements for the admission of Mr. Robinson’s testimony are satisfied. See generally Commonwealth v. Barbosa, 457 Mass. 773, 783 (2010). The Court will therefore DENY this motion.
6. Grieco’s Motion to Bar Expert Testimony
Finally, Grieco asks the Court to bar Williams’ film industry expert (Dean Cheley) from testifying. The Court will ALLOW this motion because none of Mr. Cheley’s proffered opinions would help the Court decide this case. See, e.g., Goldhor v. Hampshire College, 25 Mass.App.Ct. 716, 723 (1988) (upholding exclusion of expert testimony that would not assist jury).
Most of Cheley’s report is devoted to explaining his personal opinion that Williams satisfied his contractual obligations but Grieco did not. This proffered testimony is merely an opinion of law combined with his view on the ultimate issue of liability, "which generally is not a proper subject for expert testimony" and will not assist the fact finder. Silva v. Norfolk & Dedham Mut. Fire Ins. Co., 91 Mass.App.Ct. 413, 420, rev. denied, 477 Mass. 1113 (2017); accord, e.g., S.D. Shaw & Sons, Inc. v. Joseph Rugo, Inc., 343 Mass. 635, 639 (1962) (witness may not give opinion as to whether certain work was included in contract specification).
Cheley’s personal opinions regarding the meaning of certain contractual terms are not relevant and would not help the Court either. The Court recognizes that where "contract language is ambiguous, evidence of trade usage is admissible to determine the meaning of the agreement." Affiliated FM Ins. Co. v. Constitution Reinsurance Corp., 416 Mass. 839, 845 (1994). But such evidence is only admissible if the purported usage is truly "universal" and so "notorious" by "long and uniform practice" that one can fairly presume "that both parties knew of it, and contracted accordingly." Barrie v. Quimby, 206 Mass. 259, 265 (1910); accord Caggiano v. Marchegiano, 327 Mass. 574, 579 (1951); Acushnet Co. v. Beam, Inc., 92 Mass.App.Ct. 687, 700 (2018) (applying New York law). Cheley’s opinions regarding the meaning of certain contract terms do not meet this standard.
ORDER
Defendant’s motion to withdraw his admission to plaintiff’s requests for admissions numbers one and three is DENIED. Plaintiff’s related motion for leave to file a supporting affidavit is ALLOWED, without opposition.
Plaintiff’s motion for sanctions for spoliating evidence is ALLOWED IN PART. As sanctions for Defendant’s deliberate destruction of relevant and important evidence, the Court hereby dismisses Defendant’s counterclaims with prejudice. In addition, at trial Defendant may not present any evidence regarding the financial transactions that he deleted from his American Express records or the checks he failed to save from his Bank of America account, Plaintiff may present evidence that Defendant destroyed or failed to preserve those financial records, and Plaintiff may ask the Court to draw adverse inferences against Defendant regarding the content of the lost evidence.
Defendant’s motion for sanctions due to alleged spoliation of evidence is DENIED. Defendant’s motion to bar testimony by Kristen Elworthy is also DENIED.
Defendant’s motion to preclude the introduction of evidence of personal financial records is DENIED. Defendant’s motion to bar any testimony of Plaintiffs’ accounting expert, Chad Robinson, is also DENIED.
Plaintiffs’ motion to exclude the testimony of Defendant’s film industry expert, Dean Cheley, is ALLOWED. The Court will not hear any testimony by Mr. Cheley.