Opinion
No. 05-1735 BLS2.
May 16, 2008, May 19, 2008.
MEMORANDUM AND ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT.
The plaintiff, Henry C. Suominen Jr., has filed this thirteen-count action against his former employer, Goodman Industrial Equities Management Group, LLC (Goodman Industrial), Steven E. Goodman (Goodman) and seventeen reach and apply defendants. The essence of his claim as to the majority of counts is that Goodman, both individually and as owner of Goodman Industrial, as well as owner or part owner of the reach and apply defendants (collectively, the defendants), breached an oral contract whereby the defendants would distribute to Suominen a certain percentage of the return or distributions realized from the sale of properties they owned, often called a "promote." The matter is before the Court on the defendants' motion for summary judgment on those claims that seek to enforce the distribution to plaintiff of a percentage of the return to the equity investors.
At all relevant times, Goodman did business under both his own name, and also under the name GFI Partners.
Count I: breach of contract/employment agreement; Count II: breach of the implied covenant of good faith and fair dealing/employment agreement; Count III: breach of contract/consulting agreement; Count IV: breach of the implied covenant of good faith and fair dealing/consulting agreement; Count V: Wage Act, G. L. c. 149, §§ 148-150; Count VI: deceit; Count VII: negligent misrepresentation; Count VIII: violation of G. L. c. 93A, § 11; Count IX: breach of fiduciary duty; Count X: conversion; Count XI: unjust enrichment and constructive trust; Count XII: detrimental reliance; and Count XIII: action to reach and apply/ G.L. c. 214, § 3 (clauses 6 and 7).
Promote is a term of art in the real estate business and as used here means the distributions to Goodman or a Goodman owned entity or nominee on a particular property after any preferred distribution.
While Suominen's complaint claims damages regarding unused vacation time, consulting fees, and reimbursement for business expenses, those claims collectively seek $42,115.13, in contrast to his multi-million dollar claim to enforce the distribution of a percentage of the return to the equity investors. Defendants do not seek summary judgment as to the former claims.
DISCUSSION
In brief, Suominen contends that he and Goodman entered into an oral agreement sometime in 2000 for him to participate in an Employee Limited Partnership (ELP or ELIP) by which he would be paid 23.33% of any promote realized by the defendants as a result of the sale of property developed by them. As support therefor, he points to several iterations of an "Operating Agreement of GFI/HS," an Employee Limited Liability Company (ELLC), drafted by Goodman's attorney at Goodman's behest, designed to establish a company whose purpose was to allow him to participate in Goodman's business activities. As to the individual projects in which Goodman was to realize a distribution, or promote, Suominen points to drafts of an Equity Sharing Agreement (ESA), designed to allow Suominen's ELLC to share in a portion of the economic benefits ultimately received by GFI Partners. The draft in the record, specific to GFI Winston-Salem, LLC, states that GFI Partners shall pay the ELLC an amount equal to 23.3% of any return it realized as an equity investor.
The defendants, for their part, claim that there was never any oral agreement, and that, even if there were one, the parties were not in agreement as to all material terms, and therefore any oral contract is unenforceable as against them. See Situation Mgmt. Sys., Inc. v.Malouf, Inc., 430 Mass. 875, 878 (2000). They argue that Goodman was merely exploring the possibility of employee participation in any distributions and, ultimately, abandoned the idea in early 2001.
It is well established that an agreement need not be in writing in order to be enforceable. ESO, Inc. v. Kasparian, 32 Mass. App. ct. 731, 733-734 (1992). "In the absence of an express agreement, a contract implied in fact may be found to exist from the conduct and relations of the parties." LiDonni v. Hart, 355 Mass. 580, 583 (1969). Where no written agreement exists, the interpretation of an implied agreement depends on the weighing of the evidence. ESO, 32 Mass. App. Ct. at 734. See Brewster Com. v. Blue Mountain Inc., 68 Mass. App. Ct. 582, 596 (2007) ("[e]xcept where the evidence is undisputed or consists solely of writings, whether a contract was intended to be formed, what were its terms, and whether it was supported by consideration are issues of fact for determination by the jury"); see also Situation Mgmt. Sys., 430 Mass. at 879; Monaco v. Lombard Bros., 24 Mass. App. Ct. 941, 942 (1987) (it is for the fact finder to choose from conflicting testimony).
Viewing the evidence in the light most favorable to the plaintiff,Cabot Corp. v. AVX Corp., 448 Mass. 629, 636-637 (2007), the Court concludes there are genuine issues of material fact regarding the intent of the parties and the terms of the agreement that preclude summary judgment.
As to the intent of the parties, although Goodman states that he never intended that his employees participate in any promote, a reasonable jury could find evidence to the contrary. In a deposition taken in another litigation, Goodman stated "[t]he guys that work for me get compensated with salary and participation in some of the deals." Emails from the company's CFO, David Heller to Suominen and to Goodman could be read to indicate that, as late as 2003, Heller was of the opinion that both he and Suominen were to receive some form of distribution. Furthermore, Suominen actually did receive 23.33% of a distribution made to Goodman from the sale of GFI/Milford, a percentage recorded "per agreement," some indication that there existed an implied contract. See DiLonni, 355 Mass. at 583.
The record before the Court contains drafts of an ELLC for Heller, "Operating Agreement of GFI/DH," as well as several drafts of an ESA between an ELLC and either Suominen or Heller. David Holmes, Goodman's attorney, testified that he drafted an ESA between an ELLC and GFI Winston-Salem whereby Heller would realize 11.66% of any return to Goodman or GFI Partners. Plaintiff's Ex. 71. In addition, Heller received 11.66% of the distribution made to Goodman from the sale of GFI/Milford.
As to the defendants' argument that any oral agreement was unenforceable where fundamental issues remained unresolved, a jury could find this belied by the drafts of the ELLC and ESA, which set forth multiple provisions in considerable detail. At a minimum, the specificity of the documents establish that the issue of whether any implied agreement is unenforceable for vagueness is not suitable for summary judgment. See Hunneman Real Estate Corp. v. The Norwood Realty, Inc., 54 Mass. App. Ct. 416, 424 (2002).
It is also a question of fact for the jury whether the parties, if they intended there to be an agreement at all, intended it to be a blanket agreement to be applied to all projects on which Suominen worked, or whether it was to be re-negotiated as to each project. A question of fact likewise remains as to whether Suominen was to receive a percentage only of those returns realized from a project that, in its operating agreement, indicated the existence of a promote, or whether he was entitled to a percentage of any distribution to the common equity investors on a project that did not specifically provide for a promote.
For example, the operating agreement for GFI Milford, LLC, did not provide for a promote. Nonetheless, Suominen was paid 23.33% of Goddman's return on the project. See discussion, supra.
ORDER
For the forgoing reasons, defendants' motion for summary judgment is DENIED .