Opinion
No. 04-1632.
December 3, 2007.
MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
The plaintiff, Pavement Restoration Engineering, Inc., brought this action alleging breach of contract and misrepresentation against Patterson Industries, Limited and Heinz W. Haischt (collectively, the defendants), alleging the defendants caused Pavement to obtain paving operations contracts but then failed to give Pavement the requisite technology to carry out those contracts. The defendants filed a counterclaim against Pavement and third-party defendant F. Peter Montenegro, alleging abuse of process and libel/defamation. The case is now before this court on the defendants' Motion for Summary Judgment as to the remaining two counts in the Complaint and for partial summary judgment as to liability on their counterclaims against Pavement and Peter Monenegro. For the reasons that follow, the defendants' Motion for Summary Judgment is ALLOWED IN PART and DENIED IN PART. This court also sua sponte ALLOWS summary judgment for Pavement and Peter Montenegro on both counts of the Counterclaim.
Counts III and IV have previously been withdrawn by Pavement in response to an earlier Motion to Dismiss.
BACKGROUND
The undisputed facts and the facts viewed in the light most favorable to the non-moving parties are as follows:
Pavement is a corporation that was incorporated in Massachusetts on October 28, 2003. The sole owner of Pavement is William D. Montenegro, an individual who has been engaged in the asphalt/paving industry his entire adult life.
During early 1998, William Montenegro and his brother, F. Peter Montenegro, discovered that Peter Lloyd had invented machinery and equipment that would introduce new asphalt paving technology into the industry. Lloyd held the patent on the machinery and equipment, which is manufactured exclusively by Patterson at its Canadian location. Haischt is the owner of Patterson. Negotiations between the Montenegros and Lloyd took place but the Montenegros eventually gave up attempting at that time to purchase some of the new equipment.
The new technology would conduct the process of scarifying, milling, mixing-rejuvenating, storing-metering, and street-leveling of heated recycled asphalt all in one place.
Patterson is a Canadian corporation.
In January, 2003, Lloyd and Haischt contacted William Montenegro and explained that they had an interest in becoming a contractor in the New England, New York and New Jersey markets in order to demonstrate the capabilities of the machinery to potential buyers. They asked for William's help in organizing a contracting company that would solicit business and perform the work. The parties had several conferences regarding the proposed business plans. They discussed the fact that William would be forming a corporation, Pavement, that would be the company in charge of all projects arising from this venture. Pavement was incorporated on October 28, 2003, in Massachusetts.
An agreement was reached whereby Haischt would provide the machinery and equipment to be used in performing asphalt reconstruction projects and Pavement would receive a commission based on the value of the public agency contracts, and an hourly wage for daily contracting operations, job logistics, and job management. Pavement would only be paid if and when the defendants were paid by the public agency. This agreement was confirmed by e-mail correspondence between the parties in June, 2003. Haischt stated that the necessary technology and equipment would be ready in the fall of 2003.
Based upon Haischt's representations, Peter Montenegro secured municipal contracts from the towns of Tolland, Manchester and Windsor Locks, Connecticut in July, 2003. He also obtained a contract from the town of Berkeley, Massachusetts, and was in negotiations with Westwood and Yarmouth, Massachusetts. Pavement issued invoices to HIR Enviro-Pave, Inc., a Delaware corporation formed on April 25, 2003 by Haischt, which were paid.
Haischt continued to represent that the equipment was ready to be placed in the New England market. It became apparent that the equipment would not be available for performance of the municipal contracts before the end of New England's paving season, so Peter Montenegro convinced the public transportation agencies to agree that the contracts be performed in the spring of 2004. Haischt told the Montenegros to continue to market the new technology, including in warmer states so that the machinery would not sit idle in the winter months. The equipment was delivered to Natick, Massachusetts on June 8, 2004, and sent to Tolland, Connecticut for the first project. The machinery failed to work. When Haischt was informed the machinery was not working, he represented to the Montenegros that he would repair the machinery. He never did, and the municipalities eventually canceled their contracts with Pavement when they realized the equipment would not function.
Haischt at all times, both before and after formation of HIR Enviro-Pave, Inc., represented to the Montenegros that the equipment, machinery, and technology "had been perfected" and was ready to be used in the New England market; the machinery only needed to be assembled and transported. The machinery never did perform as Haischt had represented. William Montenegro's affidavit states that Haischt made his statements regarding the functionality of the equipment at a time when he knew the equipment was not functioning
On April 18, 2004, Peter Montenegro sent an e-mail to Lloyd and Haischt stating that "We are not comfortable with [Haischt's] credibility and choose not to deal directly with him for business . . . [Heinz Haischt's] business ethics require us to keep him at arm's length."
DISCUSSION
The court will grant summary judgment where there are no genuine issues of material fact and the summary judgment record entitles the moving party to judgment as a matter of law. Cassesso v. Comm'r of Corr., 390 Mass. 419, 422 (1983). Accordingly, the court will grant a motion for summary judgment where there is an absence of evidence to support the non-moving party's position. Rogers v. Fair, 902 F. 2d 140, 143 (1st Cir. 1990). The opposing party must establish by reference to competent and admissible evidence that a genuine issue of material fact exists. See Mass. R. Civ. P. 56;Chiu-Woo v. May, 17 Mass. App. Ct. 949 (1983). The court should not weigh evidence, assess credibility, or find facts; it may only consider undisputed material facts and apply them to the law. Kelly v.Rossi, 395 Mass. 659, 663 (1985). The court must view the facts in the light most favorable to the non-moving party. See G.S. Enters., Inc. v. Falmouth Marine, Inc., 410 Mass. 262, 263 (1991).
I. Summary Judgment as to the Plaintiff's Claims
A. Summary Judgment on Count I
Count I alleges breach of contract. The defendants claim they have satisfied all of their contractual obligations to the Montenegros, and therefore there is insufficient evidence to prove a breach of contract/joint venture claim. The agreement states that two forms of compensation are to be given to the Montenegros: (1) a commission arrangement based on the volume of asphalt paving contracts; and, (2) an hourly fee for field management by William Montenegro. William has admitted that all invoices under the $60 per hour arrangement have been paid in full. The commission provision states that the Montenegros will not receive payment until the defendants have received payment. SeeMassachusetts Municipal Wholesale Electric Co. v. Town of Danvers, 411 Mass. 39, 45 (1991) (holding that a condition precedent must be met before an obligation to perform arises under a contract, and that the court will look to the parties' intent when interpreting a condition precedent, including words used in the agreement). William Montenegro stated, and Pavement admits, that if the recycling equipment could not perform, then he would not be paid his commissions. He also stated that there were no paving jobs completed in Pavement's territories. The agreement clearly states that the payment scheme was "100% performance based." According to the language of the June, 2003 correspondence, Patterson was not under any obligation to have the machinery working by a certain date. Therefore, summary judgment will enter for the defendants as to Count I.
B. Summary Judgment on Count II
Count II alleges fraudulent misrepresentation. In order to state a claim for misrepresentation, a plaintiff must show a false statement of material fact made to induce the plaintiff to act in reliance on the false statement of the defendant, to its detriment. McEnaney v.Chestnut Hill Realty Corp., 38 Mass. App. Ct. 573 (1995). In some circumstances, a false statement of material fact may encompass statements as to future conduct, if "the statements misrepresent the actual intention of the speaker and were relied upon by the recipient to his damage." McEvoy Travel Bureau, Inc. v. Norton Co., 408 Mass. 704 (1990). Pavement argues that the affidavits filed by William Montenegro and F. Peter Montenegro establish numerous fraudulent misrepresentations made by Haischt and Patterson. Specifically, William's affidavit states that Haischt made his statements at a time when he knew the machinery and equipment were not functioning. William's affidavit requires that this court deny summary judgment on Count II, as there is evidence in the record to establish a genuine issue of material fact as to misrepresentation by Haischt.
II. Summary Judgment as to the Defendants' Counterclaims
A. Summary Judgment on Count I
The first count of the Counterclaim alleges abuse of process. To prevail on an abuse of process claim, "it must appear that the process was used to accomplish some ulterior purpose for which it was not designed or intended, or which was not the legitimate purpose of the particular process employed." DataComm Interface, Inc. v. Computer World, Inc., 396 Mass. 760 (1986).
There is sufficient evidence to support the naming of Haischt individually in the Complaint; that is, Pavement believed and alleged that Haischt committed fraudulent misrepresentations. A corporate officer may be held liable for the torts of a corporation if he personally participated in the tort. Ray-tek Servs. v. Parker, 64 Mass. App. Ct. 165, 177 (2005). As discussed above, William Montenegro's affidavit, combined with other evidence, is sufficient evidence to find that Haischt has committed fraudulent misrepresentation. Haischt, who carries the burden to prove abuse of process, has provided no evidence that he has not committed fraudulent misrepresentation, and no evidence that process was used for some ulterior purpose. Therefore, pursuant to Mass. R. Civ. P. 56 and Petrillo v. Zoning Bd. of Appeals of Cohassset, 65 Mass. App. Ct. 453, 460-62 (2006), this court finds as a matter of law that summary judgment should enter for Pavement on the abuse of process claim.
The portions of William Montenegro's deposition that the defendants reference do not establish that plaintiff filed a complaint with an ulterior purpose. Those discrepancies in William's testimony at most create a question of material fact that the factfinder may examine in determining whether there was a fraudulent misrepresentation. They do not constitute sufficient evidence for this court to infer that process was used for some ulterior purpose.
II. Summary Judgment on Count II
The second count of the counterclaim alleges libel. The defendants allege that the e-mail sent by Peter Montenegro to Haischt and Lloyd, stating that "We are not comfortable with his credibility and choose not to deal directly with him for business . . . [Heinz Haischt's] business ethics require us to keep him at arm's length[,]" constitutes defamation. "To prevail on a claim of defamation, a plaintiff must establish that the defendant was at fault for the publication of a false statement regarding the plaintiff, capable of damaging the plaintiff's reputation in the community, which either caused economic loss or is actionable without proof of economic loss." White v. Blue Cross and Blue Shield of Mass., Inc., 442 Mass. 64, 66 (2004). A statement is per se defamatory if the statement consists of "words charging [Haischt] with conduct which [tend] to injure him in his trade, business or profession." Deloruso v. Monteiro, 47 Mass. App. Ct. 475 (1999). The alleged defamatory statement must be a factual assertion, not just pure opinion. Meany v. Dever, 170 F. Supp. 2d 46 (D. Mass. 2001). A statement cast in the form of an opinion may imply the existence of some undisclosed defamatory facts on which the opinion purports to be based, and thus may be actionable. King v. Globe Newspaper Co., 400 Mass. 705 (1987).
The statements made by Peter Montenegro imply that there are defamatory facts on which Montenegro's opinions are based; i.e., that Haischt committed some unethical act. This court will sua sponte grant summary judgment to the plaintiff on this count, however, because according to the evidence in the record it is undisputed that Haischt did commit an "unethical" act; that is, he fraudulently misrepresented to the Montenegros that the equipment was ready for use. The e-mail was sent by Montenegro to Haischt on April 18, 2004, well after Haischt fraudulently represented to Pavement and the Montenegros that the paving equipment was ready. There is no evidence in the record that the defamatory fact on which the opinion was based is false, therefore summary judgment will enter for Pavement and Peter Montenegro on this count.
This court will sua sponte grant summary judgment to Pavement and Peter Montenegro on this count because the defendants have the burden of proof on their counterclaim. To the contrary, regarding Count II of the Complaint, the defendants argued that the plaintiff would be unable to demonstrate the elements of fraudulent misrepresentation, and the plaintiff has demonstrated that it will be able to. For Count II of the Complaint, the defendants were not required to put forth evidence in order to succeed on their Motion for Summary Judgment; to succeed on their motion on the counterclaim, they were required to but failed to do so. Cf. Langton v. Comm'r of Corr., 34 Mass. App. Ct. 564, 576 (1993) (stating that a court should not sua sponte allow summary judgment where a party would not be on notice that it is required to present its case).
ORDER
For the reasons discussed above, it is ORDERED that defendants' Motion for Summary Judgment is ALLOWED as to Count I of the Complaint and DENIED as to Count II; defendant's Motion for Summary Judgment is DENIED as to both counts of the Counterclaim. This court sua sponte ALLOWS summary judgment for the plaintiff, Pavement, and third-party defendant, Peter Montenegro, as to Counts I and II of the Counterclaim. The Counterclaim is to be DISMISSED. The only remaining claim is Count II of the Complaint alleging fraudulent misrepresentation.