NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as 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 23.0 or 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).
COMMONWEALTH OF MASSACHUSETTS
APPEALS COURT
24-P-492
CRANBERRY COMMONS CONDOMINIUM, LLC, & others 1
vs.
PETER R. BARBAGALLO & another. 2
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
After a bench trial limited to the determination of the
correct statutes of limitations for two counts of the
plaintiffs' complaint, a Superior Court judge (trial judge)
denied the plaintiffs' motion for a directed finding and entered
judgment for the defendants. The plaintiffs appeal, arguing
that the trial judge erred in concluding that both counts were
barred by the statute of limitations applicable to torts. We
affirm.
1 Road Glider Enterprises, LLC, and Frank Ciampa.
2 Cranberry Commons Investors, LLC. Background. In 2011, plaintiff Road Glider Enterprises,
LLC (RGE) and defendant Cranberry Commons Investors, LLC (CCI)
entered into a joint venture agreement creating plaintiff
Cranberry Commons Condominium, LLC (CCC) for the purpose of
purchasing land and developing condominiums in Middleton (the
project). At the same time, plaintiff Frank Ciampa, as manager
of RGE, and defendant Peter R. Barbagallo, as manager of CCI,
entered into the CCC operating agreement. Under the terms of
both agreements, Barbagallo would serve as CCC's sole manager.
In June 2013, Ciampa and his attorney investigated the
disappearance of CCC's funds and learned that Barbagallo "was
cashing [CCC] checks and checks for the Project's vendors for
his personal use." In 2014, Barbagallo was convicted in the
Superior Court of larceny, embezzlement, making false entries
into corporate books, forgery, and passing forged checks
relating to funds belonging to CCC. 3 Barbagallo was sentenced to
serve a period of incarceration on weekends at the house of
correction, followed by a period of probation, and ordered to
pay restitution of $200,000.
On May 20, 2019, five years and eleven months after
Ciampa's discovery of Barbagallo's wrongdoing, the plaintiffs
3 See Commonwealth vs. Barbagallo, Mass. Super. Ct., No. 1477CR01250 (Essex County Feb. 2, 2015).
2 (CCC, RGE, and Ciampa) filed the instant lawsuit against
defendants Barbagallo, CCI, and others, 4 asserting nine claims,
alleging breach of contract, tortious conduct, and violations of
G. L. c. 93A. Prior to trial, four of the nine counts were
dismissed as barred by the applicable statutes of limitations,
and the plaintiffs agreed not to proceed on three others.
The parties tried the remaining counts (count I, alleging
breach of contract, and count II, alleging breach of the implied
covenant of good faith and fair dealing) on agreed facts and
exhibits. In a written memorandum of decision and order on the
plaintiffs' motion for a directed finding, the trial judge
determined that both counts were barred by the three-year
statute of limitations applicable to tort claims, G. L. c. 260,
§ 2A, and dismissed them. Judgment then entered for the
defendants.
Discussion. The plaintiffs argue that the judge erred in
concluding counts I and II were barred by the three-year statute
of limitations applicable to tort claims, G. L. c. 260, § 2A,
because the claims sounded in contract and thus a six-year
statute of limitations applied pursuant to G. L. c. 260, § 2.
4 Peabody Check Cashing, Inc., William Masino, and Scott Cerullo. Because the counts against these defendants were dismissed prior to trial, and the plaintiffs do not challenge the dismissal of those counts, these defendants are not parties in this appeal.
3 1. Standard of Review. The applicability of a particular
statute of limitations is a question of law. See Premier
Capital, LLC v. KMZ, Inc., 464 Mass. 467, 469 (2013). We review
a trial judge's conclusions on questions of law de novo. See H1
Lincoln, Inc. v. South Washington St., LLC, 489 Mass. 1, 13
(2022).
2. Applicable statute of limitations. "[T]he
determination of whether the contract or tort statute of
limitations applies is controlled by the essential nature of a
party's claim." Royal-Globe Ins. Co. v. Craven, 411 Mass. 629,
636 (1992). "The court must look to the 'gist of the action.'"
Anthony's Pier Four, Inc. v. Carndall Dry Dock Eng'rs, 396 Mass.
818, 823 (1986), quoting Hendrickson v. Sears, 365 Mass. 83, 85
(1974). See, e.g., Massachusetts Hous. Opportunities Corp. v.
Whitman & Bingham Assocs., P.C., 83 Mass. App. Ct. 325, 330
(2013) (gist of breach of contract claim sounded in negligence
and therefore three-year statute of limitations applied). If
the defendant raises the statute of limitations as a defense,
"the burden of proving facts that take the case outside the
impact of the statute falls to the plaintiff." Riley v.
Presnell, 409 Mass. 239, 244 (1991).
In the present case, the plaintiffs have failed to meet
their burden of proving that the facts take their claims in
counts I and II outside of the three-year statute of limitations
4 period applicable to torts. The plaintiffs' central allegation,
spelled out clearly in their complaint, is that Barbagallo, in
his capacity as manager of CCC, secured funds from CCC,
ostensibly to pay contractors and subcontractors working on the
project, and then stole those funds for his personal use.
Therefore, the "gist" of the action is for fraud, embezzlement,
conversion of funds, and, because Barbagallo stole from CCC to
the detriment of CCC and its members, a breach of his fiduciary
duty. "[C]onversion of funds . . . [is] plainly a tort claim."
Woodcock v. American Inv., Co., 376 Mass. 169, 174 (1978).
Fraud and embezzlement are both forms of conversion. See
Black's Law Dictionary 420 (11th ed. 2019) (defining tort of
"conversion" as "[t]he wrongful possession or disposition of
another's property as if it were one's own").
The CCC operating agreement does not convert the alleged
tortious behavior here into a breach of contract claim. It
provides that the managers, with Barbagallo specifically named
as the initial manger, are to "manage the business and affairs
of [CCC] and for this purpose to employ, retain or appoint any
officers, employees, consultants, agents, brokers, professionals
or other persons in any capacity for such compensation and on
such terms as the Managers deem necessary or desirable." The
agreement does not provide that managers must compensate these
contractors, how they are to allocate the personal property of
5 CCC, or that they are to refrain from embezzling funds. Rather,
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NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as 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 23.0 or 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).
COMMONWEALTH OF MASSACHUSETTS
APPEALS COURT
24-P-492
CRANBERRY COMMONS CONDOMINIUM, LLC, & others 1
vs.
PETER R. BARBAGALLO & another. 2
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
After a bench trial limited to the determination of the
correct statutes of limitations for two counts of the
plaintiffs' complaint, a Superior Court judge (trial judge)
denied the plaintiffs' motion for a directed finding and entered
judgment for the defendants. The plaintiffs appeal, arguing
that the trial judge erred in concluding that both counts were
barred by the statute of limitations applicable to torts. We
affirm.
1 Road Glider Enterprises, LLC, and Frank Ciampa.
2 Cranberry Commons Investors, LLC. Background. In 2011, plaintiff Road Glider Enterprises,
LLC (RGE) and defendant Cranberry Commons Investors, LLC (CCI)
entered into a joint venture agreement creating plaintiff
Cranberry Commons Condominium, LLC (CCC) for the purpose of
purchasing land and developing condominiums in Middleton (the
project). At the same time, plaintiff Frank Ciampa, as manager
of RGE, and defendant Peter R. Barbagallo, as manager of CCI,
entered into the CCC operating agreement. Under the terms of
both agreements, Barbagallo would serve as CCC's sole manager.
In June 2013, Ciampa and his attorney investigated the
disappearance of CCC's funds and learned that Barbagallo "was
cashing [CCC] checks and checks for the Project's vendors for
his personal use." In 2014, Barbagallo was convicted in the
Superior Court of larceny, embezzlement, making false entries
into corporate books, forgery, and passing forged checks
relating to funds belonging to CCC. 3 Barbagallo was sentenced to
serve a period of incarceration on weekends at the house of
correction, followed by a period of probation, and ordered to
pay restitution of $200,000.
On May 20, 2019, five years and eleven months after
Ciampa's discovery of Barbagallo's wrongdoing, the plaintiffs
3 See Commonwealth vs. Barbagallo, Mass. Super. Ct., No. 1477CR01250 (Essex County Feb. 2, 2015).
2 (CCC, RGE, and Ciampa) filed the instant lawsuit against
defendants Barbagallo, CCI, and others, 4 asserting nine claims,
alleging breach of contract, tortious conduct, and violations of
G. L. c. 93A. Prior to trial, four of the nine counts were
dismissed as barred by the applicable statutes of limitations,
and the plaintiffs agreed not to proceed on three others.
The parties tried the remaining counts (count I, alleging
breach of contract, and count II, alleging breach of the implied
covenant of good faith and fair dealing) on agreed facts and
exhibits. In a written memorandum of decision and order on the
plaintiffs' motion for a directed finding, the trial judge
determined that both counts were barred by the three-year
statute of limitations applicable to tort claims, G. L. c. 260,
§ 2A, and dismissed them. Judgment then entered for the
defendants.
Discussion. The plaintiffs argue that the judge erred in
concluding counts I and II were barred by the three-year statute
of limitations applicable to tort claims, G. L. c. 260, § 2A,
because the claims sounded in contract and thus a six-year
statute of limitations applied pursuant to G. L. c. 260, § 2.
4 Peabody Check Cashing, Inc., William Masino, and Scott Cerullo. Because the counts against these defendants were dismissed prior to trial, and the plaintiffs do not challenge the dismissal of those counts, these defendants are not parties in this appeal.
3 1. Standard of Review. The applicability of a particular
statute of limitations is a question of law. See Premier
Capital, LLC v. KMZ, Inc., 464 Mass. 467, 469 (2013). We review
a trial judge's conclusions on questions of law de novo. See H1
Lincoln, Inc. v. South Washington St., LLC, 489 Mass. 1, 13
(2022).
2. Applicable statute of limitations. "[T]he
determination of whether the contract or tort statute of
limitations applies is controlled by the essential nature of a
party's claim." Royal-Globe Ins. Co. v. Craven, 411 Mass. 629,
636 (1992). "The court must look to the 'gist of the action.'"
Anthony's Pier Four, Inc. v. Carndall Dry Dock Eng'rs, 396 Mass.
818, 823 (1986), quoting Hendrickson v. Sears, 365 Mass. 83, 85
(1974). See, e.g., Massachusetts Hous. Opportunities Corp. v.
Whitman & Bingham Assocs., P.C., 83 Mass. App. Ct. 325, 330
(2013) (gist of breach of contract claim sounded in negligence
and therefore three-year statute of limitations applied). If
the defendant raises the statute of limitations as a defense,
"the burden of proving facts that take the case outside the
impact of the statute falls to the plaintiff." Riley v.
Presnell, 409 Mass. 239, 244 (1991).
In the present case, the plaintiffs have failed to meet
their burden of proving that the facts take their claims in
counts I and II outside of the three-year statute of limitations
4 period applicable to torts. The plaintiffs' central allegation,
spelled out clearly in their complaint, is that Barbagallo, in
his capacity as manager of CCC, secured funds from CCC,
ostensibly to pay contractors and subcontractors working on the
project, and then stole those funds for his personal use.
Therefore, the "gist" of the action is for fraud, embezzlement,
conversion of funds, and, because Barbagallo stole from CCC to
the detriment of CCC and its members, a breach of his fiduciary
duty. "[C]onversion of funds . . . [is] plainly a tort claim."
Woodcock v. American Inv., Co., 376 Mass. 169, 174 (1978).
Fraud and embezzlement are both forms of conversion. See
Black's Law Dictionary 420 (11th ed. 2019) (defining tort of
"conversion" as "[t]he wrongful possession or disposition of
another's property as if it were one's own").
The CCC operating agreement does not convert the alleged
tortious behavior here into a breach of contract claim. It
provides that the managers, with Barbagallo specifically named
as the initial manger, are to "manage the business and affairs
of [CCC] and for this purpose to employ, retain or appoint any
officers, employees, consultants, agents, brokers, professionals
or other persons in any capacity for such compensation and on
such terms as the Managers deem necessary or desirable." The
agreement does not provide that managers must compensate these
contractors, how they are to allocate the personal property of
5 CCC, or that they are to refrain from embezzling funds. Rather,
it allows managers substantial discretion in carrying out these
duties and, indeed, insulates them from liability to CCC, its
members, and from lawsuits arising from their good faith conduct
in managing the project. In short, the scope of the managers'
duties specified in the agreement does not alter the gist of
counts I and II of the complaint. 5
The plaintiffs further contend that Barbagallo's tortious
conversion of funds constituted a violation of the covenant of
good faith and fair dealing implied in every contract. See
Weiler v. PortfolioScope, Inc., 469 Mass. 75, 82 (2014). We are
not persuaded.
"The purpose of the covenant is to guarantee that the
parties remain faithful to the intended and agreed expectations"
expressed in a contract. Uno Restaurants, Inc. v. Boston
Kenmore Realty Corp., 441 Mass. 376, 385 (2004). "The scope of
the covenant is only as broad as the contract that governs the
particular relationship" (citation omitted). Chokel v. Genzyme
Corp., 449 Mass. 272, 276 (2007). It "may not, however, be
5 Indeed, section 3.08 of the operating agreement, which states that managers are not liable for their good faith conduct in exercising their duties under the contract, but may be liable for breaches of fiduciary duty, intentional conduct, or violations of law, essentially protects managers from contract claims but not from tort claims.
6 invoked to create rights and duties not otherwise provided for
in the existing contractual relationship." Uno Restaurants,
Inc., 441 Mass. at 385. As noted above, the agreements here did
not include specific provisions that made fraud, conversion of
funds, or irregularities related to payment of contractors
breaches of the contract. Accordingly, the implied covenant did
not impose a contractual duty on Barbagallo to avoid such
tortious conduct. Compare Chokel, 449 Mass. at 275-278
(shareholders' expectation that they would receive current fair
market value for their stock, contrary to explicit terms of
articles of organization that governed exchange provisions for
that stock, was not protected by implied covenant of good faith
and fair dealing). 6
3. Default. After judgment entered for the defendants,
the plaintiffs filed a motion to alter or amend the judgment.
In that motion, they argued, for the first time, that the trial
judge erred in allowing Barbagallo to assert a statute of
limitations defense after a default judgment had been entered
6 Because we affirm the trial judge's ruling that the gist of the plaintiffs' claims in counts I and II lie in tort and not contract, and therefore are barred by the three-year statute of limitations, we need not reach Barbagallo's alternative argument that he was not a party to either the joint venture or operating agreements and therefore, owed no contractual duty to the plaintiffs.
7 against him. We agree with the trial judge that this argument
was waived.
As the trial judge noted, after the default judgment was
entered against Barbagallo on August 15, 2019, he filed an
answer less than a month later, on September 11, 2019. The
plaintiffs never sought a hearing on the default judgment. To
the contrary, the parties filed an "Agreed Statement of Facts"
on April 14, 2023, and then an "Amended Agreed Statement of
Facts" on July 14, 2023, all in preparation for a jury-waived
trial. Prior to trial, the plaintiffs filed a memorandum of law
in support of a directed finding for plaintiffs on counts I and
II of the complaint. The trial judge presided over the trial on
August 4, 2023. Finally, the trial judge issued a memorandum
and order on August 23, 2023, denying the plaintiffs motion for
a directed finding and entering judgment for the defendants. At
no point between September 11, 2019, when Barbagallo filed his
answer, and August 23, 2023, when judgment entered, did the
plaintiffs seek a hearing on the legal significance of the
default judgment entered against Barbagallo. To the contrary,
the plaintiffs proceeded to trial with Barbagallo's full
participation, at which they requested and received a judgment
on the merits of their claim. In these circumstances, we
conclude that the trial judge did not err in finding that the
plaintiffs waived any challenge to the August 23, 2023, judgment
8 based on the earlier default judgment. See R.W. Granger & Sons,
Inc. v. J&S Insulation, Inc., 435 Mass. 66, 73-74 (2001) ("It
is, of course, axiomatic that an appellate court need not
consider a claim that is asserted for the first time after
judgment has entered below"; issue first raised in postjudgment
motion deemed waived).
Judgment affirmed.
By the Court (Massing, Neyman & Wood, JJ. 7),
Clerk
Entered: July 21, 2025.
7 The panelists are listed in order of seniority.