Compliance Management Group Corp. v. Quest Engineering Solutions, Inc.

2007 Mass. App. Div. 79, 2007 Mass. App. Div. LEXIS 21

This text of 2007 Mass. App. Div. 79 (Compliance Management Group Corp. v. Quest Engineering Solutions, Inc.) is published on Counsel Stack Legal Research, covering Massachusetts District Court, Appellate Division primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Compliance Management Group Corp. v. Quest Engineering Solutions, Inc., 2007 Mass. App. Div. 79, 2007 Mass. App. Div. LEXIS 21 (Mass. Ct. App. 2007).

Opinion

Greco, PJ.

Judgments were entered in this case for plaintiff Compliance Management Group Corporation (“Compliance”) on both its complaint against Quest Engineering Solutions, Inc. (“Quest) and on the counterclaim filed by Quest. This appeal by Quest relates only to the judgment on the counterclaim. Quest claims that the trial judge erred (1) in dismissing the counterclaim as a sanction for its noncompliance with the court’s discovery orders, and (2) in allowing Compliance’s motion for summary judgment on the counterclaim.

It is not clear what Compliance was seeking in its complaint because the record contains Quest’s answer and counterclaim, but not the complaint. Quest alleges in its counterclaim that in January of 2002, it entered into an agreement with Eric Wilbur (‘Wilbur”) whereby Wilbur was to perform “marketing services” for Quest; that Wilbur subsequently caused Compliance “to be formed;” that Wilbur is the director, president, and treasurer of Compliance; that Compliance “assumed and adopted ... as its own” the January, 2002 agreement, which contained an obligation not to compete with Quest; and that Wilbur and, by extension, Compliance breached that provision as well as provisions not to use “confidential and proprietary information” and not to induce Quest’s “employees to leave [its] employ.” Quest further alleges that these breaches occurred before Compliance and Quest “replace[d]” the January, 2002 agreement with a different agreement in 2004. Quest sought damages for these contract breaches and under G.L.c. 93A.

Compliance moved to dismiss Quest’s counterclaim on the ground that Quest failed to provide adequate answers to certain interrogatories. Quest alleged in its counterclaim that “on information and belief, [Compliance] engaged in acts competitive to Defendant, in breach of [their] Agreement;” and that Compliance “utilized confidential and proprietary information ... in setting up its competitive business.” In its first set of interrogatories, Compliance asked Quest to “state each and every fact’ in support of these allegations. In its initial response, Quest stated that it “had not yet completed discovery” and gave, based on “information and belief,” a very general description of its claims, devoid of any specifics concerning the time, manner, and employees involved with respect to any such breaches. The trial judge allowed Compliance’s motion to compel a further answer. Quest responded to that order with a much more detailed account of the acts alleged to be competitive, but with essentially the same general answer concerning the use of confidential and proprietary information, merely omitting the use of the term, “on information and belief.” The trial judge ordered further responses. In the tran[80]*80script of the hearing on Compliance’s motions for sanctions and for summary judgment, reference was made to a further answer filed the day before (i.e., May 9, 2006), but no such response appears in the record before us. On May 11, 2006, the trial judge ruled on the motion for sanctions and dismissed Quest’s counterclaim.

Compliance also moved for summary judgment on Quest’s counterclaim on the ground that Quest “relinquished” any claims it may have had for violations of the 2002 agreement when it entered into the April, 2004 replacement agreement which contained neither a covenant not to compete, nor a confidentiality clause. In allowing Compliance’s summary judgment, the trial judge also stated that “the specific facts proffered by Quest would not be sufficient to prove a breach of a non-compete clause or any damages resulting therefrom” (emphasis in original).

The 2002 agreement indicated that it was “intended as an interim agreement,” that it was anticipated that Wilbur would form a corporation to undertake its obligations, and that “certain provisions may change.” The agreement contained a covenant not to compete during its term and “in the case of Existing Clients... for a period of one (1) year thereafter.” Competition was “deemed to include engaging in any activity ... intended to attract or induce” any employee of Quest “to leave such employ.” It was expressly provided that the covenant not to compete along with an agreement not to disclose confidential or proprietary knowledge and information “would survive the termination of this Agreement for a period of 2 years.” The initial term of the whole agreement was three months, and would be automatically extended “for successive one (1) month periods” unless either party gave written notice of its intention not to extend.

Consistent with the anticipation expressed in the 2002 agreement, a new agreement was entered into in April of 2004, which stated that it “replace [d]” the January, 2002 agreement between Quest and Wilbur. Wilbur signed the new agreement as president of Compliance, not in his personal capacity. Not only did the parties change, but the whole arrangement changed, although it is difficult to determine from the four corners of the agreement what the new arrangement was. Among other things, the agreement included references to the payment of Quest’s invoices by Compliance, but then to a retention of funds as repayment of money owed by Quest to Compliance; to the payment of rent by Compliance to Quest; to specific individuals using office space in return for “support to Quest;” to how much a specific person would be paid by Quest “for CMG tests;” to payments from revenue by Quest to Compliance in order “to accelerate the loan payments due” to Compliance; and to Quest’s obligation to provide Compliance with a copy of its “Quality Manual.” In addition, the parties were to “maintain the current business relationship including the use of the present office and lab space within Quest.”

# A document submitted by Compliance in support of its motion for summary judgment may have served to shed some light on these rather cryptic provisions. Six months before the April, 2004 agreement was signed, the president of Compliance sent to the president of Quest an e-mail to which was attached an outline of a new agreement to replace the 2002 agreement. A completely different arrangement was proposed. Compliance would no longer be Quest’s sales representative; instead, Compliance would subcontract work to Quest. The former agreement would be “cancelled in its entirety. All items that would survive the termination of the old agreement [would be] also canceled, unless they [were] restated in the new agreement.” The new agreement would also “replace any existing written or unwritten agreement” between Quest and Compliance.

The trial judge allowed Compliance’s motion for summary judgment the day after he had dismissed the counterclaim by way of his ruling on the motion for sanctions. If the dismissal were to be affirmed, we need not reach the issues [81]*81raised on summary judgment

What sanction to impose for the violation of discovery orders lies in the trial judge’s discretion. See Partlow v. Hertz Corp., 370 Mass. 787, 790 (1976). In Partlow, the Court noted that “ [wjhile dismissal of the plaintiffs complaint is not a trivial sanction,” it was appropriate in view of “the plaintiffs or his counsel’s lack of diligence and apparent failure to take seriously the responsibility of conducting litigation in compliance with the rules of civil procedure.” Id. It would be difficult to characterize Quesfs conduct in the same way with respect to its response to the interrogatory seeking information on the claim for a violation of the agreement not to compete. Its first response clearly could not pass muster.

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Cite This Page — Counsel Stack

Bluebook (online)
2007 Mass. App. Div. 79, 2007 Mass. App. Div. LEXIS 21, Counsel Stack Legal Research, https://law.counselstack.com/opinion/compliance-management-group-corp-v-quest-engineering-solutions-inc-massdistctapp-2007.