BAYSTATE FINANCIAL SERVICES, LLC & Another v. GREGORY PINTO & Others

CourtMassachusetts Superior Court
DecidedJune 3, 2021
Docket2084CV02507
StatusPublished

This text of BAYSTATE FINANCIAL SERVICES, LLC & Another v. GREGORY PINTO & Others (BAYSTATE FINANCIAL SERVICES, LLC & Another v. GREGORY PINTO & Others) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
BAYSTATE FINANCIAL SERVICES, LLC & Another v. GREGORY PINTO & Others, (Mass. Ct. App. 2021).

Opinion

SUPERIOR COURT

BAYSTATE FINANCIAL SERVICES, LLC & another[1] vs. GREGORY PINTO & others[2]

Docket: 2084CV02507
Dates: February 18, 2021
Present: Robert B. Gordon, Justice of the Superior Court
County: SUFFOLK, ss.
Keywords: MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS’ MOTION TO DISMISS OR, ALTERNATIVELY, TO COMPEL ARBITRATION

            Baystate Financial Services, LLC (“Baystate”) and Baystate Wealth Management, LLC (“BWM”) (collectively, the “Plaintiffs”) filed this action seeking equitable relief and monetary damages on account of the Defendants’ alleged breaches of certain contractual and fiduciary obligations. Presented for decision is the Defendants’ Motion to Dismiss the First Amended Complaint (the “Complaint”) pursuant to Mass. R. Civ. P. 12(b)(6), or, in the Alternative, to Compel Arbitration. For the reasons which follow, the Defendants’ motion shall be ALLOWED

in part and DENIED in part.

BACKGROUND

            The following facts, assumed to be true, are taken from the Plaintiffs’ Complaint.[3] Some facts are reserved for later discussion of the Plaintiffs’ legal claims.

            I.          The Defendants, Baystate, and MassMutual

---------------------------

[1]Baystate Wealth Management, LLC

[2]Patrick Hinton, Daniel Wagner, Jack Heintzelman

[3]Along with the Complaint, the Court considers documents upon which the allegations of the Complaint rely. See Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43, 45 (2004). In particular, the Court relies on a representative copy of the Defendants’ contracts with MassMutual that was appended to the Complaint, and a copy of a resignation letter that was attached to the Plaintiffs’ Opposition to the Defendants’ Motion to Dismiss.

                                                            -1-

            Baystate is a general agency[4] of MassMutual, through which insurance and other financial products and services are sold to the public. Prior to July 24, 2020, the Defendants worked full-time as financial advisors from Baystate’s office in Wellesley.[5] While they were working at Baystate, the Defendants executed contracts with MassMutual, pursuant to which MassMutual authorized each Defendant to solicit and service business on behalf of MassMutual as a Financial Service Representative or Broker (the “MassMutual Contracts”).[6] The Defendants’ MassMutual Contracts contained virtually identical restrictive covenants, including a paragraph entitled “Non-Solicit Obligations” (the “Non-Solicitation Provision”), which states, in relevant part, that:

“Upon termination of this Contract and unless Advisor[7] executes another contract with [MassMutual][8] and/or another general agent, general manager or managing partner of [MassMutual] authorizing Advisor to solicit business for [MassMutual], Advisor will cease soliciting Products for, and holding himself or herself out as, an agent or representative of [MassMutual]. In addition, to the

[4]A general agent is “an agent authorized to conduct a series of transactions involving a continuity of service.” See Restatement (Second) of Agency, § 3. Although the term “general agent” has “no fixed meaning in the business world,” see id. § 3, comment e, in the insurance and financial services industries, it typically refers to a person or entity who employs agents to sell products and services offered by the principal. See id. (general agents of insurance companies ordinarily employ agents to “carry out the business” of the principal); see, e.g., Bay State Savings Bank v. Baystate Fin. Servs., LLC, 338 F. Supp. 2d, 181, 185 (D. Mass. 2004) (discussing Baystate’s history selling financial products and services as a general agency of New England Life); Life Plans Unlimited v. Connecticut Retail Merchant Assoc., 1998 Conn. Super. LEXIS 635 at *2 (Conn. Sup. Ct. 1998) (explaining that plaintiff, as an insurance general agent, wholesales insurance to independent agents rather than individual policy- holders, and is authorized to act as an agent for the principal insurance provider in order to service its independent agents).

[5]Although the MassMutual Contracts, defined and discussed infra, indicate that the Defendants were employed as independent contractors of MassMutual, the Complaint does not unequivocally state whether the Defendants were also employed by Baystate. The Complaint alleges only that the Defendants worked “at” and “from” Baystate’s Wellesley office, and used Baystate’s email system, phone number and facilities to conduct business with clients.

[6]The Complaint is unclear as to whether the Defendants executed the MassMutual Contracts before or after they started working at Baystate.

[7]The MassMutual Contracts define “Advisor” as the person who entered into the Contract with MassMutual. The Court hereinafter uses the term “MassMutual advisor” to refer to individuals who sell MassMutual’s products.

[8]The MassMutual Contracts expressly define MassMutual as “the Company.” For clarity, the Court has replaced references to “the Company” with “MassMutual.”

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extent permitted by law, Advisor agrees not to directly or indirectly, during the term of this Contract and for a period of two years following such termination, solicit, induce or do anything to cause, persuade, encourage or assist, either directly or indirectly, any:

            a.         person employed by or under a contract with a general agent of [MassMutual], any person employed or under a contract with [MassMutual] or any person employed by or under contract with both [MassMutual] and the general agent, to terminate such contract or employment and/or to affiliate with a competitor of [MassMutual] . . .

            b.         policyholder, insured, or contract holder of [MassMutual] whom Advisor serviced or otherwise had contact with to surrender (either partially or fully), make withdrawals from, substantially modify, cancel, lapse, or fail to renew such policies, or to obtain policy loans on such policies for the purpose of paying premiums on policies not issued by [MassMutual] . . . .

                        . . .

                        Advisor acknowledges that information related to policyholders, insured, and contract holders of [MassMutual] (i) is not readily ascertainable through public sources, (ii) is costly to maintain, protect and safeguard, (iii) could be discovered only through the expenditure of great effort and resources, and (iv) has independent economic value to [MassMutual] and, consequently, constitutes a trade secret of [MassMutual].”

            Immediately following the Non-Solicitation Provision, the MassMutual Contracts set forth a provision entitled “Remedies” (the “Remedies Provision”), which states that if an Advisor breaches any of the covenants or obligations of the Non-Solicitation Provision:

“Advisor agrees that [MassMutual] will be entitled to injunctive relief. Advisor recognizes that [MassMutual] will suffer immediate and irreparable harm and that monetary damages alone will not be adequate to compensate [MassMutual] or to protect and preserve the status quo.

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BAYSTATE FINANCIAL SERVICES, LLC & Another v. GREGORY PINTO & Others, Counsel Stack Legal Research, https://law.counselstack.com/opinion/baystate-financial-services-llc-another-v-gregory-pinto-others-masssuperct-2021.