Opinion
14-P-1191
05-29-2015
MICHAEL J. MENINNO v. CARL F. COLARUSSO & another.
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 plaintiff and the two individual defendants each owned one third of the stock of One Centre Street, Inc., a closely-held corporation whose only asset was a building located in downtown Brockton. The plaintiff brought suit after the individual defendants sold the building for $1.2 million without paying him one third of the net sale proceeds. A jury found that the defendant Carl F. Colarusso breached his fiduciary duty to the plaintiff and awarded $301,692.53 in damages. On appeal, Colarusso argues that (1) the judge erred by refusing to instruct the jury on the doctrine of equitable estoppel, and (2) the issue of damages should not have been submitted to the jury, and the jury's award was speculative. We affirm.
Wainwright was defaulted and, after a damages assessment hearing, the court entered judgment of $276,256.94 against him.
Wainwright filed a notice of appeal, but did nothing further to pursue an appeal. Accordingly, no issue concerning him is before us.
1. Estoppel. Because Colarusso objected to the judge's denial of his request for an estoppel instruction, we review to determine whether the judge's instructions were legally erroneous, and, if so, whether that error was prejudicial. Crown v. Kobrick Offshore Fund, Ltd., 85 Mass. App. Ct. 214, 223 (2014).
"To establish estoppel, a party must show '(1) a representation intended to induce reliance on the part of a person to whom the representation is made; (2) an act or omission by that person in reasonable reliance on the representation; and (3) detriment as a consequence of the act or omission.'" Reading Co-op. Bank v. Suffolk Constr. Co., 464 Mass. 543, 556 (2013), quoting from Bongaards v. Millen, 440 Mass. 10, 15 (2003).
Colarusso made no such showing here. First, he introduced no evidence that the plaintiff made a representation, and he does not contend otherwise. Instead, he argues that the plaintiff's lack of participation in corporate affairs constituted "silence," which in turn signified his consent to the divestment of his shares. Although silence may in some circumstances satisfy the first element of estoppel, Reading Co-op. Bank, supra at 556, there was nothing here tending to prove that the plaintiff's silence constituted such consent. See ibid. Furthermore, there was no evidence that the plaintiff's silence was intended to induce the individual defendants' or the corporation's reliance. See ibid. (the representation must be "intended to induce reliance"). Nor could the individual defendants' actions -- selling the building without paying the plaintiff his share of the proceeds -- have been reasonably construed as having been taken in reliance on that silence. See ibid.
Similarly, Colarusso argues that the plaintiff "acquiesced" to the divestment of his shares by his silence and was therefore estopped from seeking his portion of the net proceeds. "It is a familiar principle of equity jurisprudence, that long continued acquiescence in a course of conduct by one interested in it, especially when the rights of others are affected thereby, will induce the court to refuse him relief upon his subsequent complaint of it." Uccello v. Gold'n Foods, Inc., 325 Mass. 319, 328 (1950), quoting from Dunphy v. Traveller Newspaper Assn., 146 Mass. 495, 500 (1888). This is "not estoppel in a strict sense," but may be raised as a defense when appropriate. Uccello, supra at 328. No evidence was introduced at trial, however, to show that the plaintiff shared in the advantages of the corporation, including its sale, or that the plaintiff was required to perform any of the activities supposedly relied upon by Colarusso.
Finally, there was no evidence of detriment to the individual defendants or to the corporation from the plaintiff's decision to stop participating in corporate affairs or from the plaintiff's decision to call the note he had previously issued to the corporation. There was nothing to suggest that Colarusso had difficulty replacing the plaintiff's services to the corporation. Nor did Colarusso and Wainwright experience difficulty in obtaining new financing after the plaintiff called the note. While they faced personal liability as guarantors of the new loan, the risk did not materialize. To the contrary, the building was sold at a profit. Because the evidence did not warrant an instruction on estoppel, the judge did not err by declining to give it. See Crown, supra at 223.
Although he did not use the language of estoppel, the judge did instruct the jury on Colarusso's defense, as argued at trial, that the plaintiff violated his fiduciary duty to the corporation by calling the note and abandoning the corporation.
2. Damages. Although Colarusso admits that the judge was permitted to send the equitable breach of fiduciary claim to the jury, see, e.g., Mass.R.Civ.P. 39(c), 365 Mass. 801 (1974); One to One Interactive, LLC v. Landrith, 76 Mass. App. Ct. 142, 146 n.8 (2010), he argues that damages should have been determined by the judge. We disagree. The judge had discretion to submit the equitable claim to the jury, even after the legal claims had dropped out of the case, "unless there was substantial prejudice to the defendants in doing so." Sullivan v. First Massachusetts Financial Corp., 409 Mass. 783, 791 (1991). The fact that the jury found against Colarusso is, by itself, not the type of prejudice with which we are concerned, and Colarusso has shown no other. Moreover, the cases he has cited do not stand for the proposition that the judge was required to determine damages himself. Cf. Charles River Constr. Co. v. Kirksey, 20 Mass. App. Ct. 333, 339 (1985) ("[I]t would be 'almost unprecedented' to regard the award of a jury trial as reversible error . . . , and, not surprisingly, our search of the Massachusetts cases has revealed no judgment reversed because a jury trial was improvidently granted" [citation omitted]).
Nor were the damages speculative. On its face, the jury's award appears to represent one-third of the net proceeds from the sale of the building, corresponding to the plaintiff's one-third interest in the corporation. Although Colarusso contends the judge improperly excluded evidence that a promissory note was given for a portion of the purchase price, we discern no error. The witness called by Colarusso to testify about the note was not a signatory and had no personal knowledge of its terms or balance. Moreover, even if the evidence should have been admitted, it would not have made the award speculative.
The defendant also argues the judge erred by failing to apply the remedy of equitable forfeiture. See Chelsea Indus., Inc. v. Gaffney, 389 Mass. 1, 12 (1983) ("[A] corporate officer, director, or trusted agent or employee can be required to forfeit the right to retain or receive his compensation for conduct in violation of his fiduciary duties"). However, this argument is waived since the defendant did not request this remedy below.
We deny the plaintiff's request for attorney's fees.
Judgment affirmed.
By the Court (Cohen, Wolohojian & Maldonado, JJ.),
The panelists are listed in order of seniority.
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Clerk Entered: May 29, 2015.