Opinion
15-P-75
02-12-2016
BASS RIVER TENNIS CORPORATION & others v. MANUEL C. BARROS.
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 defendant, Manuel C. Barros, founded the Bass River Tennis Corporation (Bass River) in 2007. Bass River operated on property in Beverly owned by a related entity, 31 Tozer LLC (Tozer). In the ensuing years, the plaintiffs Mark Greenberg and Michael LaPierre loaned Bass River significant funds to keep it afloat, and pursuant to a "securities purchase agreement" (SPA) that they entered into with Barros, Bass River, and Tozer in 2010, they eventually converted the debts owed to them into a controlling equity interest in Bass River. Together with Bass River itself, they brought this action alleging that Barros violated his obligations under the SPA in various respects, e.g., by failing to satisfy certain debts Bass River owed to third parties. On summary judgment, a Superior Court judge ruled in the plaintiffs' favor and entered judgment requiring Barros to pay various sums to the plaintiffs. On Barros's appeal, we vacate in part and affirm in part.
The SPA also gave Greenberg and LaPierre an option to purchase a pro rata share of Tozer.
The plaintiffs brought various other claims, and Barros counterclaimed. However, those claims are no longer live and are not subject to this appeal.
Barros note. Pursuant to the SPA, Barros executed a note (the new Barros note) to Bass River in the amount of $143,750. It is uncontested that Barros never paid this obligation; his only claim is that the new Barros note is void for want of consideration. There is no merit to this claim. Regardless whether there was separate consideration for the new Barros note if that note is viewed in isolation, Barros's agreement to execute the new Barros note was bound up in the SPA as a whole and thus supported by consideration (all of the obligations that the plaintiffs provided under the SPA). We need not consider the plaintiffs' additional arguments on this point.
Hawley mortgage. The SPA stated that at the time Greenberg and LaPierre converted their debt into equity (referred to as the "closing"), the Tozer property would be subject to encumbrances only to an expressly specified extent. With respect to a $173,000 mortgage that had been granted to Thomas Hawley, the SPA in two places specified that the Hawley mortgage would have a "balance 0 as of closing." We agree with the judge that this unambiguously set forth Barros's obligation to pay off the Hawley mortgage prior to the closing.
Some documents in the record refer to the Hawley mortgage as being in the amount of $173,000, while others refer to it as being in the amount of $173,600. We use the first figure which was accepted by the judge and has not been challenged on appeal.
Barros separately argues that because the Hawley mortgage has not been paid, the plaintiffs have not shown that they were damaged to the full amount of that mortgage (the $173,000 component of the judgment). As Barros argues, the fact that the Tozer property, which none of the plaintiffs currently own, is burdened by the Hawley mortgage does not necessarily mean that the plaintiffs have been damaged to that amount. There is no evidence in the summary judgment record that the plaintiffs have paid off the Hawley mortgage, and the property appears to be burdened by multiple mortgages and may have no equity. The issue of damages related to Barros's failure to pay the Hawley mortgage requires a remand.
The plaintiffs claim that this argument was not raised below and therefore has been waived. See Flynn v. Boston, 59 Mass. App. Ct. 490, 496 (2003). The problem with this claim is that the plaintiffs never put the amount of their damages regarding the Hawley mortgage at issue in the summary judgment proceedings. Neither in their motion for summary judgment nor their accompanying memorandum did the plaintiffs request $173,000 in damages for this particular breach. Instead, they stated that "Greenberg and LaPierre continue to suffer damage as a result of the $173,000 Hawley mortgage, which remains unpaid and which, among other things, impairs the option granted to Greenberg and LaPierre to purchase membership interests in Tozer."
According to the plaintiffs' own memorandum in support of summary judgment, the Tozer property had at most a fair market value of $4.7 million while its mortgages and debts amounted to almost $5.7 million.
Budryk mortgage and guarantee. In 2008, Barros borrowed $550,000 from Frances Budryk. This was a personal loan, with the note executed by Barros. However, the note was secured by both a mortgage on the Tozer property and a guarantee from Bass River. In 2013, the plaintiffs obtained a release of the mortgage and guarantee for a payment of $100,000. This got Bass River and Tozer out from under any obligations to Budryk, while still leaving Barros liable to Budryk for any shortfall. We agree with the judge that the plaintiffs are entitled to reimbursement of the $100,000 pursuant to § 4.1(a) of the SPA. Barros's argument that his continuing liability to Budryk somehow excused his liability to the plaintiffs pursuant to § 4.1(a) of the SPA was not made in his opposition to summary judgment and therefore was waived. Flynn v. Boston, 59 Mass. App. Ct. 490, 496 (2003). We discern no merit in Barros's contention that by obtaining the release of the Budryk mortgage and guarantee, the plaintiffs somehow breached the fiduciary duties they owed to Barros.
See, e.g., Hamlen v. Rednalloh Co., 291 Mass. 119, 126-127 (1935).
Attorney's fees. Barros has not demonstrated that the judge abused his discretion in calculating the plaintiffs' reasonable attorney's fees. The plaintiffs well documented their fee demand and it is plain that the judge carefully reviewed it (reducing the amount requested by $10,000).
In addition, Barros waived his argument that the fees directly attributable to the Budryk mortgage and guarantee were excessive by not making that argument in the trial court.
Because we do not view this appeal as frivolous (the only grounds for appellate attorney's fees raised by the plaintiffs), we deny their request for those fees.
Disposition. The portion of the judgment that requires Barros to pay Greenberg and LaPierre $173,000 is vacated, and the issue of damages related to Barros's failure to pay the Hawley mortgage is remanded for further proceedings consistent with this memorandum and order. The judgment is otherwise affirmed.
So ordered.
By the Court (Grainger, Rubin & Milkey, JJ.),
The panelists are listed in order of seniority. --------
/s/
Clerk Entered: February 12, 2016.