Opinion
14-P-1645
07-03-2015
ALAN S. ADAMS & others v. GARY P. RICHARD & others.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such 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. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiffs appeal from a judgment entered in favor of the defendants on count VI of the plaintiffs' second amended complaint. Count VI alleged that the defendants violated G. L. c. 110A, § 410. Count VI further alleges that Gary P. Richard "knew, or in the exercise of reasonable care, should have known that Sun-Up's products potentially infringed upon the Nemoto patent" but failed to tell the investors about the potential patent issue prior to the plaintiffs' respective investments. Count VI also alleges that Gary P. Richard and Gary J. Richard entered an agreement in December, 2004, concerning repayment of funds to Banner Industries of New England, Inc., and the agreement was material information, that was not disclosed to the investors.
In light of the specification in the plaintiffs' pleadings, there is no merit to the plaintiffs arguments that the trial judge misapplied the statute by failing to discuss other "material facts" the plaintiff now alleges were not disclosed and were violations of G. L. c. 110A, § 410. Further, there is no merit to the plaintiffs' argument that the judge incorrectly viewed the plaintiffs' claim as being limited to whether or not Gary P. Richard knew or with the exercise of reasonable care could have known about the possibility that there would be an issue with the Nemoto patent.
The plaintiffs argue that the judge made legal errors in concluding that the defendants met their burden to prove that Gary P. Richard "did not know, and in the exercise of reasonable care could not have known, of" the potential problem with the Nemoto patent. See Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43, 52 (2004). The plaintiffs have not argued nor demonstrated that the judge's relevant factual findings were clearly erroneous. See Demoulas v. Demoulas Super Markets, Inc., 424 Mass. 501, 509 (1997), citing First Pa. Mort. Trust v. Dorchester Sav. Bank, 395 Mass. 614, 621-622 (1985) ("It is the appellant's burden to show that a finding of fact is clearly erroneous"). The judge found that Gary P. Richard did not know that Sun-Up Products, Inc., was potentially violating the Nemoto patent until after the investments were made. This factual finding along with some of the other facts found support the judge's legal conclusion. There was no legal error.
Although there are factual findings that support the legal conclusion, we note that it is irrelevant that Gary P. Richard was not a scientist, engineer, or patent attorney. He made representations that he had reviewed patents and no patents stood in the way of developing the products. Gary P. Richard's expertise has no relevance as to whether the statements were untrue or omitted a material fact.
The plaintiffs further argue that it was clearly erroneous for the judge to conclude that the December, 2004, agreement was not material. The plaintiffs assert that the judge inappropriately failed to consider that part of the agreement was "to shut down the company if all of the debt was not repaid out of investor funds upon receipt." The plaintiffs further assert that this fact was critical to determining whether or not the agreement was material.
However, the judge did not find as fact that those terms were part of the agreement. The testimony concerning the terms of the December agreement was not consistent. Gary P. Richard testified that he had a conversation with Gary J. Richard in which they discussed that Banner Industries of New England, Inc., was not going to underwrite any additional expenses and if Sun-Up Products, Inc., could not pay its operating expenses moving forward they "were going to shut the company down." Gary J. Richard testified that he discussed with his father that "as of January 1 . . . Banner would not be paying any more money for Sun Up" but "Banner would still be willing to very much help Sun Up, of course." In addition, there was testimony that the agreement was that investor funds would only be used to repay new debt that was incurred after January 1, 2005. The plaintiffs have not demonstrated that the judge's findings concerning the terms of the agreement were clearly erroneous. Kendall v. Selvaggio, 413 Mass. 619, 620-621 (1992), quoting from J.A. Sullivan Corp. v. Commonwealth, 397 Mass. 789, 792 (1986), ("A finding is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed"). We will not disturb the trial judge's determination that the agreement was not material. See Marram v. Kobrick, 442 Mass. at 58 ("The determination of materiality is a mixed question of law and fact ordinarily decided by the trier of fact")
Finally, we decline the request to impose attorney's fees and costs.
Judgment affirmed.
By the Court (Trainor, Agnes & Blake, JJ.),
The panelists are listed in order of seniority. --------
Clerk Entered: July 3, 2015.