Opinion
16–P–844
08-24-2017
Juliette BERGERON & another v. L & M FLOORING, LLC,& others.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
These cross appeals arise out of an employment and business dispute between the plaintiffs, Juliette Bergeron and Gary Bergeron (the Bergerons), and the defendants, L & M Flooring, LLC (L & M), Ira Lefkowitz, and Michelle Lefkowitz (the Lefkowitzes). Ira Lefkowitz (Ira), acting on behalf of L & M, fired Gary Bergeron (Gary) for alleged performance issues. The Bergerons commenced this action in the Superior Court alleging, inter alia, that Ira acted in bad faith and also defamed Gary. The case was tried to a jury; both sides appeal from the judgment.
For convenience we shall refer to related individuals by first name.
Background. We recite the facts as the jury could have found them, reserving some details for our discussion below. L & M is a flooring products wholesaler. In 2009, on behalf of L & M, Ira purchased two franchise locations from a floor-coverings wholesale and retail business managed by Gary. It was agreed that L & M would employ Gary after the acquisition.
Gary alleges that in April, 2009, he and Ira agreed that Gary would have a starting salary of $100,000, which would increase to $125,000 after one year, and that Gary would acquire an immediate ten percent ownership interest in L & M. This agreement was never reduced to writing. Gary began working for L & M under the oral agreement.
In June, 2009, Ira presented Gary with a document entitled "Membership Interest Award and Redemption Agreement." The agreement stated, inter alia, that Gary was to be given a two percent ownership interest initially and an additional two percent on each anniversary of the issuance date, capped at ten percent ownership. The agreement also contained a clause that allowed Gary to be terminated, and his ownership interest forfeited, for "good cause." Gary signed the agreement. After nine months of employment, Gary received a $12,000 salary increase.
L & M used general contractors, including plaintiff Juliette Bergeron (Juliette), to sell its products. A contractor would receive a referral fee equaling a percentage of the sale. In one transaction relevant here, a customer contacted Juliette to purchase kitchen flooring shortly before the Bergerons left for a week-long vacation. Two other L & M employees agreed to perform the delivery and installation for the purchase. Gary advised the customer to issue a check payable to him in a sealed envelope and to give it to the employee responsible for delivery and installation. Juliette then was to pay L & M for the flooring, less her referral fee.
In the months leading up to Gary's termination, Ira had become concerned with Gary's performance, and had begun interviewing replacements. Ira learned of the above transaction but was unable to find any record of the sale. He further learned that the customer had been instructed to make the check payable to Gary.
On August 1, 2010, Gary returned to work after his vacation. Ira went into Gary's office and terminated his employment in the presence of two private investigators. At this meeting, Ira cited his purported reasons for the termination: Gary's poor management style, his misuse of the company credit card, his leaking of proprietary information, missing petty cash receipts, and missing inventory. Ira also allegedly accused Gary of theft.
The Bergerons filed a ten-count complaint in February of 2011. The defendants filed a partial motion to dismiss various counts of the complaint. The court allowed the motion in part, dismissing Gary's claims of wrongful termination, tortious interference, a portion of his breach of oral contract claim, and a portion of the declaratory judgment claim.
The first two counts were brought by Juliette against L & M for breach of contract and unjust enrichment. The next seven counts, brought by Gary, included the following: (1) breach of contract against L & M and Ira, (2) deceit against L & M and Ira, (3) breach of the covenant of good faith and fair dealing against L & M and Ira, (4) breach of fiduciary duty against the Lefkowitzes, (5) wrongful termination against all the defendants, (6) tortious interference with contractual relations against the Lefkowitzes, and (7) defamation per se against Ira. The remaining count sought declaratory relief for the plaintiffs against all defendants.
After discovery, the defendants moved for partial summary judgment, which the court denied. The case proceeded to trial with special jury questions. The jury's findings and awards were as follows: (1) that L & M breached a contract with Juliette, awarding damages of $29,004; (2) that L & M twice breached the implied covenant of good faith and fair dealing vis-à -vis Gary, awarding damages of $55,000 for breach of the oral contract and $55,000 for breach of the written agreement; and (3) that Ira defamed Gary, awarding damages of $375,000. The jury rejected the Bergerons' remaining claims submitted to them.
The defendants filed posttrial motions seeking judgment notwithstanding the verdict or a new trial, and remittitur as to the award on the defamation count. The Bergerons moved for entry of judgment on equitable claims which they contended remained unadjudicated. The judge denied all posttrial motions and entered judgment in accordance with the jury's verdict. The parties now cross-appeal.
The Bergerons argue that the judge erred in: (1) allowing the motion to dismiss Gary's claim of breach of an oral contract, (2) dismissing Gary's claim for wrongful termination, (3) denying a motion for a determination of Gary's claims of unjust enrichment and declaratory relief, (4) denying a motion in limine that the defendants had waived a privilege pursuant to G. L. c. 151A, § 46, and were collaterally estopped from relitigating whether Gary had stolen from L & M, and (5) instructing the jury on "qualified privilege" in connection with Gary's defamation claim.
The defendants argue that the judge erred in: (1) denying their motion for summary judgment as to the defamation claim and failing to apply the conditional business privilege to the claim, (2) failing to instruct the jury on the Bergerons' burden to prove abuse of the business privilege by clear and convincing evidence, (3) failing to vacate the awards for breach of the implied covenant of good faith and fair dealing, (4) refusing to vacate the award on Juliette's contract claim where the amount of damages was speculative, (5) refusing to allow Ira to testify to his account of conversations with Gary, as relevant to both the oral contract and defamation claims, and (6) refusing to order a remittitur of the jury's award for defamation.
Discussion. A. The Bergerons' appeal. 1. Claims dismissed pursuant to Mass.R.Civ.P 12(b)(6), 365 Mass. 754 (1974). The Bergerons challenge the pretrial dismissal of several of their claims: (1) enforcement of the oral contract as to terms not executable within one year from the making of the contract, (2) wrongful termination, and (3) unjust enrichment and declaratory judgment. "We review the allowance of a motion to dismiss de novo, accepting as true all factual allegations in the complaint and favorable inferences drawn therefrom." Lipsitt v. Plaud, 466 Mass. 240, 241 (2013).
a. Oral contract. The Bergerons submit that the judge erred in determining that the Statute of Frauds prohibited enforcement of the oral employment agreement to the extent that performance could not take place within one year. See G. L. c. 259, § 1. We disagree.
The alleged oral agreement discussed in April, 2009, provided that Gary would be paid a starting salary of $100,000. The promised salary increase to $125,000 was to occur in June, 2010. The salary increase was not a term that could be "fully performed within a one-year period from the making of the contract." Meng v. Trustees of Boston Univ., 44 Mass. App. Ct. 650, 651 (1998). See id. at 652–653 (contract that called for payments over fourteen-month period was one that could not be fully performed in one year). Therefore, the Statute of Frauds prevents enforcement of this part of the oral agreement and the judge did not err in dismissing so much of this claim.
The judge also determined, correctly, that because the oral promise that Gary would receive ten percent ownership of L & M could have been fulfilled within one year, that portion of the claim should not be dismissed under this theory.
b. Wrongful termination. The judge dismissed Gary's wrongful termination claim because, as an at-will employee, Gary could be terminated for any or no reason so long as that reason does not violate clearly established public policy. The judge concluded that although the complaint alleged sufficient facts to seek damages for breach of the covenant of good faith and fair dealing and breach of fiduciary duty, "it does not contain facts demonstrating that Bergeron's termination violated public policy." See King v. JWP Businessland, 425 Mass. 756, 757 (1997). Further, the facts underlying the breach and wrongful termination claims are essentially the same, rendering the wrongful termination claim duplicative. On appeal, Gary asserts that the dismissal was in error because he could not recover an equity interest in L & M on an implied covenant theory; therefore, he claims, he could not be made whole. We disagree.
Deprivation of an ownership interest in L & M may be remedied by an award of damages. The membership interest that Gary sought here was allegedly part of his employee compensation package, which the jury sufficiently covered in its award of damages under two claims of breach of the implied covenant of good faith and fair dealing (one against L & M and one against Ira). The judge did not err in dismissing the wrongful termination claim, nor has Gary been harmed by the dismissal.
c. Unjust enrichment and declaratory judgment. Gary claims that the judge failed to adjudicate whether he is entitled to an ownership interest in L & M, and erred in denying his request for findings of fact and rulings of law on those unjust enrichment and declaratory judgment claims following the jury trial. The judge concluded, and we agree, that the jury "clearly determined that Bergeron is not entitled" to an ownership interest (instead awarding damages), and addressed the factual questions underlying these claims by means of answering a forty-seven question special verdict slip, agreed upon by both parties. The jury had the option to award Gary an ownership interest in L & M, but chose not to do so. There was no error.
The record does not support the Bergerons' contention that some of the questions submitted to the jury were merely advisory. As the judge noted, at no point did the Bergerons suggest that these questions could only be determined by the judge.
In the unique circumstances of this case, an award of a membership interest would have been duplicative of the jury's award for breach of the implied covenant of good faith and fair dealing, and (had the judge awarded such an interest) would have contradicted the jury's verdict.
2. Privilege pursuant to G. L. c. 151A, § 46, and collateral estoppel. The Bergerons preemptively filed a motion in limine seeking a ruling that the defendants had waived the protections of G. L. c. 151A, § 46, by appealing the decision of the board of review of the Department of Unemployment Assistance (department) to the District Court. The judge denied this motion and the Bergerons challenge her ruling on appeal.
Section 46 states in relevant part that
"information secured pursuant to this chapter is confidential and for the exclusive use and information of the department [of unemployment assistance] in the discharge of its duties. Such information is not a public record nor admissible in any action or proceeding, except as provided in this section. This information is absolutely privileged and shall not be made the subject matter or basis in any action of slander, libel or emotional distress."
G. L. c. 151A, § 46(a ), as appearing in St. 1990, c. 154, § 31.
General Laws c. 151A, § 46, prohibits the admission in a subsequent action of "information secured pursuant to [c. 151A]," under which proceedings before the department are conducted. Accordingly, we discern no error in the judge's reading of § 46. See Tuper v. North Adams Ambulance Serv., Inc., 428 Mass. 132, 137 (1998) (upholding allowance of motion "to preclude any reference to the board[ ] [of review's] proceedings and decision in the [subsequent] civil action" [emphasis supplied] ). Furthermore, the judge correctly ruled that the Bergerons may not use the decision by the department offensively against the defendants in a subsequent civil action for wrongful termination. See id. at 136–137. A posttermination civil action against one's employer is not one of the proceedings excepted by the statute. See id. at 137 ; G. L. c. 151A, § 46(b ).
We are not persuaded by the Bergerons' attempt to distinguish Tuper. We further note that in Tuper, the Supreme Judicial Court emphasized overall considerations of fairness and broad policy considerations. See 428 Mass. at 136–137.
3. Qualified privilege. The Bergerons lastly claim that the judge erred in giving a jury instruction on qualified privilege. Assuming, without deciding, that the instruction was given in error, we discern no prejudice, see Kassis v. Lease & Rental Mgmt. Corp., 79 Mass. App. Ct. 784, 788 (2011), because Gary prevailed on his defamation claim.
Where we affirm the judgment in this case and do not order a remand, we need not delve into the merits of the Bergerons' qualified privilege argument.
B. The defendants' appeal. 1. Failure to grant summary judgment. The defendants claim that the trial judge erred in denying their motion for summary judgment. However, the motion sought summary judgment on claims the outcomes of which were determined at trial. "After a trial on the merits, as here, the denial of a motion for summary judgment may not be reviewed on appeal." Johnson v. Massachusetts Bay Transp. Authy., 418 Mass. 783, 785 (1994). See Okerman v. VA Software Corp., 69 Mass. App. Ct. 771, 783 (2007) ("The purpose of summary judgment is to bring litigation to an early conclusion without the delay and expense of a trial when no material facts are at issue, and it goes without saying that that purpose cannot be served after the case has gone to trial" [quotation omitted] ). "This is true even if we think summary judgment should have been allowed." Harootian v. Douvadjian, 80 Mass. App. Ct. 565, 567 (2011). The argument is not properly before us.
This is not a case where "the trial on the merits involve[d] a different claim from that which was the basis for the summary judgment motion." Harootian v. Douvadjian, 80 Mass. App. Ct. 565, 567 n.4 (2011).
2. Business privilege instruction. The defendants next claim that the judge erred by failing to properly instruct the jury on the business privilege. However, the defendants failed to properly preserve this issue. The judge gave counsel two opportunities to raise objections regarding the jury instructions, once before the charge and once after.
Prior to the charge, the judge stated to counsel, "I will get you guys the instructions I have this afternoon. If you can respond by email to issues that you want to talk about, that would be helpful to get us going." The defendants submitted a "redlined" version of the instructions. When discussing the instructions the following day, each side made several objections, but the defendants did not object to the formulation of the business privilege instruction. Although the defendants submit that the redlined version of the jury instructions constitutes a proper objection, the judge did not solicit objections in such a manner and the record is devoid of any indication that the redlining was sufficient to alert the judge to the grounds of the objection. See Flood v. Southland Corp., 416 Mass. 62, 66 (1993). "Merely objecting [without stating the grounds for the objection], as the counsel for the defendant did here, has no curative value, and will not preserve for appeal an objection to a judge's not giving certain jury instructions." Miller v. Boston & Maine Corp., 8 Mass. App. Ct. 770, 774 (1979). See Mass.R.Civ.P. 51(b), 365 Mass. 816 (1974) ("No party may assign as error the giving or the failure to give an instruction unless he objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the grounds of his objection"). The issue is waived. See Narkin v. Springfield, 5 Mass. App. Ct. 489, 491–492 (1977).
Even assuming, arguendo, that the requested instruction had been provided to the jury, we see nothing in the record to indicate that such an instruction would have altered the jury's decision in any material way.
3. Posttrial motions. The defendants also challenge the denial of their motions for judgment notwithstanding the verdict or for new trial. We review for "whether the evidence, construed most favorably to the plaintiff[s], could not support a verdict for the plaintiff[s]." Poirier v. Plymouth, 374 Mass. 206, 212 (1978).
a. Breach of the implied covenant of good faith and fair dealing. The defendants moved to vacate the jury's award of damages for breach of the implied covenant of good faith and fair dealing based on the oral contract, arguing that the written contract replaced the oral agreement and that thus there was no oral contract on which to base an implied covenant claim. See Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 471 (1991). The judge denied their motion.
Without disturbing the jury's findings of fact, we conclude that the evidence, in the light most favorable to the Bergerons, supports an interference that the written agreement did not replace the oral contract. As the judge noted, the terms covered by the two contracts did not overlap in substance; the oral agreement covered Gary's salary and terms of employment with L & M, and the written agreement covered Gary's ownership interest. The jury could have concluded that the oral agreement remained separate and in effect as to terms not also covered in the written agreement. Accordingly, the judge properly denied the motion.
The jury explicitly found that Ira entered into an oral contract with Gary. The jury also found that Ira breached the implied covenant of good faith and fair dealing with respect to the written contract.
b. Speculative damages. In the same posttrial motion, the defendants claim that the damages awarded to Juliette are speculative. At trial, Juliette presented monthly averages rather than actual sales figures to show her damages. L & M employees testified that L & M had intentionally spoliated evidence that the Bergerons had subpoenaed in order to calculate the precise amount of referral fees owed to Juliette. The judge instructed the jury that if they credited the testimony that L & M intentionally spoliated evidence, then they could infer that the spoliated documents would have been unfavorable to L & M, and they could use the averages to assess damages. We agree with the judge that use of the averages could be found to be necessitated by the defendants' spoliation of the evidence, as "[e]xcluding it would have allowed the defendants to benefit from their own misconduct." See Fletcher v. Dorchester Mut. Ins. Co., 437 Mass. 544, 550–551 (2002). We discern no error.
c. Excluded testimony. The judge admitted Gary's testimony to two conversations relating to the oral contract and defamation, but excluded Ira's side of the conversations on the grounds that it was hearsay. The defendants argue that this constituted prejudicial error. Because "[t]rial judges have broad discretion to make discovery and evidentiary rulings conducive to the conduct of a fair and orderly trial," we review for an abuse of discretion. Mattoon v. Pittsfield, 56 Mass. App. Ct. 124, 131 (2002) (quotation omitted).
The judge allowed Ira to testify to his understanding of the terms of the oral agreement, but not what he explicitly said to Gary. Ira stated that his understanding of the oral agreement was that Gary would acquire an ownership interest at the rate of "two percent a year for five years, for a total of ten percent." He further testified that Gary would only secure economic value from the membership if L & M were sold, merged, or acquired. This is effectively what Ira now claims he would have testified to had he been permitted to testify. We agree with the judge that this proposed testimony is cumulative of his actual testimony and thus the exclusion at trial did not constitute an abuse of discretion. See Mattoon, supra at 138.
Ira also claims that he should have been allowed to testify to his version of the conversation that was the basis of Gary's defamation claim. The judge allowed Ira to deny making the accusation in the form alleged by Gary. Ira further testified that during the conversation with Gary, he discussed his concerns with Gary's management style and some inventory issues. Thus, although Ira was not allowed to testify as to his specific words, he was able to detail his recollection of the content of the conversation and his state of mind. In addition, we have carefully reviewed the trial testimony and record in their entirety, and discern no prejudicial error. See Mattoon, 56 Mass. App. Ct. at 138.
d. Remittitur of the award of defamation damages. Finally, Ira contends that the court erred by refusing to order remittitur of the $375,000 awarded by the jury pursuant to Mass.R.Civ.P. 59(a). "[T]he allowance of a motion for a new trial based upon an inadequate or excessive award of damages, and the direction of an addition or remittitur, rests in the sound discretion of the judge." Loschi v. Massachusetts Port Authy., 361 Mass. 714, 715 (1972). "We do not substitute our judgment for that of the trial judge who saw the witnesses." Baudanza v. Comcast of Mass. I, Inc., 454 Mass. 622, 630 (2009) (quotation omitted). Moreover, "motions for a new trial on the theory that the damages were inadequate or excessive 'ought not to be granted unless on a survey of the whole case it appears to the judicial conscience and judgment that otherwise a miscarriage of justice will result.' " Walsh v. Chestnut Hill Bank & Trust Co., 414 Mass. 283, 292 (1993), quoting from Bartley v. Phillips, 317 Mass. 35, 41 (1944).
An excessive award of damages may be grounds for a new trial if the prevailing party is first given the opportunity to consent to remittitur. Mass.R.Civ.P. 59(a), 365 Mass. 827 (1974).
Ira claims that the award is excessive because Gary failed to offer evidence that the allegation of theft caused his inability to find suitable employment. We disagree. The jury specifically found that Ira defamed Gary by falsely accusing him of a crime. The judge thoroughly instructed the jury on finding causation and damages. The judge also instructed that if Gary "proved that it is more likely than not that he could not obtain such employment because of defamatory statements made by [Ira] then he is entitled to the loss of his income and damages he sustained as a result of this loss of income." We infer from the jury's award that they found Gary's inability to find comparable employment was the result of Ira's defamatory statement. See Tosti v. Ayik, 394 Mass. 482, 496 (1985). The inference is supported by the evidence adduced at trial. Gary testified to his difficulty finding employment in the flooring and carpeting industry for two years, and to his eventual acceptance of temporary positions unrelated to the industry that paid him a small fraction of his previous salary. He also testified to a conversation he had with a prospective employer who inquired about the falling out between Gary and Ira. The judge noted that "[du]ring [Gary's] job search, prospective employers apparently knew about [Ira's] accusation, and asked [Gary] to explain what happened before declining to hire him." Although not profuse, the evidence was sufficient to uphold the jury's implied finding of causation. See, e.g., T. L. Edwards, Inc. v. Fields, 371 Mass. 895, 896 (1976) (appellate courts shall "not review questions of fact ... where such findings are supported on any reasonable view of the evidence, including all rational inferences of which it was susceptible" [quotation omitted] ). The jury's award was not clearly excessive, and the judge did not err in refusing to grant remittitur.
The judge instructed, in relevant part, as follows:
"In order to obtain damages, [Gary] must have proven to you by a preponderance of the evidence that he suffered actual injury as a result of [Ira's] defamatory publication. Actual injury includes not only out-of-pocket loss but also impairment of [Gary's] reputation and standing in the community, emotional distress, personal humiliation, shame, and disgrace and mental suffering caused by the defamation."
We distinguish Tosti, where the Supreme Judicial Court ordered remittitur of the award due to the disparity between the plaintiff's potential earnings over a ten-year period (approximately $224,000) and the actual award ($495,000). 394 Mass. at 497, 499, 501. Here, Gary started with an annual salary of over $100,000 and made very little income in the four years between his termination and the trial. There was also evidence that the Bergerons suffered financial hardship, including the foreclosure of their home, which informs the jury's damages award.
Conclusion. We discern no reason to disturb the judgment of the trial court.
Other points relied on by the parties "have not been overlooked. We find nothing in them that requires discussion." Commonwealth v. Domanski, 332 Mass. 66, 78 (1954).
Judgment affirmed.