Abrams v. Liss

762 N.E.2d 862, 53 Mass. App. Ct. 751
CourtMassachusetts Appeals Court
DecidedFebruary 13, 2002
DocketNo. 01-P-975
StatusPublished
Cited by2 cases

This text of 762 N.E.2d 862 (Abrams v. Liss) is published on Counsel Stack Legal Research, covering Massachusetts Appeals Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Abrams v. Liss, 762 N.E.2d 862, 53 Mass. App. Ct. 751 (Mass. Ct. App. 2002).

Opinion

Greenberg, J.

This is an appeal by Stephen and Dawn Liss [752]*752(Liss) and the Newport Apparel Corporation from an order entered on June 29, 2001, by a single justice of this court, the effect of which was to allow, pendente lite, a preliminary injunction, an application for which had been denied in the Superior Court. A judge of that court had refused to enjoin the defendants from opening a retail clothing store under the name “Newport Apparel Corporation” in Provincetown. Without an injunction, Liss would have engaged in competition with “Clothing by Nira,” a retail store that the plaintiff, Steven Abrams, and Liss had formerly run as a partnership, with the added result, according to Abrams, that certain suppliers would not ship goods to that store while the underlying litigation concerning the legality of Liss’s Provincetown store remained undecided.

A single justice of this court has the authority to enter such an order, however rare the exercise of that power may be. See Edwin R. Sage Co. v. Foley, 12 Mass. App. Ct. 20, 22-23 (1981); Jet-Line Servs., Inc. v. Selectmen of Stoughton, 25 Mass. App. Ct. 645, 646 (1988). Nor is there dispute as to the criteria that must be demonstrated before a preliminary injunction may issue. See Packaging Indus. Group, Inc. v. Cheney, 380 Mass. 609, 616-618 (1980). We need not repeat those principles here. It is also familiar law that an appellate court, reviewing such an order pursuant to G. L. c. 231, § 118, second par., does not “substitute [its] judgment for that of the [issuing] court, where the records disclose reasoned support for its action.” Edward R. Sage Co. v. Foley, 12 Mass. App. Ct. at 26. See Carabetta Enterprises, Inc. v. Schena, 25 Mass. App. Ct. 389, 392 (1988). Accordingly, we must determine whether the single justice applied proper legal standards and whether there is reasonable support in the record for her evaluation of factual questions. See Packaging Indus. Group, Inc. v. Cheney, 380 Mass, at 615.

We recite the salient facts found in the record. For many years prior to the spring of 2000, Abrams and Liss owned and managed six retail clothing stores in Massachusetts and Rhode Island. Despite its corporate form, the “Clothing by Nira” stores were run by Abrams and Liss as a partnership, each partner dividing responsibilities, profits, and debts. Two of the stores were located in Provincetown, one each in Hyannis and [753]*753Fall River (the latter store also served as a warehouse), and two were situated in Newport, Rhode Island. In the winter of 1999-2000, following a personal disagreement, they ended their business relationship and went separate ways. It was agreed (with nothing written) that Abrams would operate the two Provincetown stores under the “Clothing by Nira” name, and Liss would operate the remaining four stores by some other name. Consistent with their accord, Abrams conveyed to Liss certain equipment fixtures, inventory, automobiles, and leasehold interests, all as related to Liss’s stores, which he would run under the name of “Newport Apparel Corporation.”

Things did not go according to plan. The present litigation arose out of ensuing conflicts between the parties. One concerned credit and payments intended for Newport Apparel which apparently were misdirected to Clothing by Nira. There was strife over the division of liability for prior obligations to creditors and, prophetically, with the transfer of good will associated with the “Clothing by Nira” name.

Liss filed a complaint in the Superior Court, claiming that Abrams had breached their dissolution agreement and raising the foregoing issues. In due course, Abrams learned that Liss intended to establish a Newport Apparel store in Provincetown, contrary to what Abrams had perceived was their understanding at the time they separated — that neither would compete with the other. This information was brought home to him, in part, by vendors that informed Abrams that they would no longer supply his store (Abrams had closed one of the Provincetown locations of Clothing by Nira after the dissolution) with inventory, at the direction of Liss. As a result, Abrams filed the instant complaint seeking, among other things, to enjoin Liss from opening á competing store in Provincetown.3 As we have stated, a Superior Court judge denied relief, but a single justice of this court granted the injunction.

On appeal, Liss has abandoned the initial contention that no implied covenant not to compete arose under the circumstances of this case. Liss no longer disputes that the voluntary division of partnership assets between the parties, in these circumstances, [754]*754constituted a sale by which good will also was transferred. The cases in support of this proposition are legion. See Tobin v. Cody, 343 Mass. 716, 720-721 (1962), upon which the single justice relied in reaching her conclusion. See also Old Corner Book Store, Inc. v. Upham, 194 Mass. 101, 104-105 (1907); Foss v. Roby, 195 Mass. 292, 296-297 (1907); Certified Pest Control Co. v. Kuiper, 1 Mass. App. Ct. 201, 204-205 (1973), and cases cited. “The good will of a business including its trade name may be sold as an incident of the business,” despite the parties’ failure to express it. Canadian Club Bev. Co. v. Canadian Club Corp., 268 Mass. 561, 568 (1929).

By establishing that good will impliedly passed between Abrams and Liss, there is, additionally, the implication that each party may not compete so as to derogate from what was given away. -The same cases to which we have referred are consistent with this view. See, e.g., Tobin v. Cody, supra. Contrast United Tool & Indus. Supply Co. v. Torrisi, 356 Mass. 103, 106-108 (1969); Packaging Indus. Group, Inc. v. Cheney, 380 Mass, at 618-620. Settled authority holds that these implied covenants are enforceable, if reasonable in time, space, and in their effect on the public interest. See Cap’s Auto Parts, Inc. v. Caproni, 347 Mass. 211, 216 (1964); Certified Pest Control Co. v. Kuiper, 1 Mass. App. Ct. at 205.

Finally, though not always explicit in the cases we have cited, there is the proposition that an implied covenant not to compete arises when former partners remain in business in separate locations. While none of the cases we have examined and cited in our opinion directly address this question, the issue was considered, albeit in a slightly different context, in Canadian Club Beverage Co. v. Canadian Club Corp., 268 Mass, at 513-514. The case involved William Ireland, Inc., which until 1922 had bottled and sold carbonated beverages in Boston as well as making and selling syrups and extracts at the same plant for distribution outside of Boston. In that year, the plaintiff purchased the bottling plant and operated next door to Ireland, which remained in the syrup business. See id. at 565-566. As part of the transaction, Ireland agreed not to engage in bottling, directly or indirectly, for twenty-five years. See ibid. By 1923, Ireland went bankrupt, but its assets were sold to a successor [755]*755who resumed the syrup business. See id. at 566-567. After the successor began bottling and licensing the “Canadian Club” name to others, the reported litigation eventually ensued. See id. at 567.

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762 N.E.2d 862, 53 Mass. App. Ct. 751, Counsel Stack Legal Research, https://law.counselstack.com/opinion/abrams-v-liss-massappct-2002.