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
22-P-1116
JAMES L. XARRAS & another 1
vs.
J. WHITNEY DEVELOPMENT, INC.
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
On September 9, 2022, following a trial on a complaint for
contempt in the Superior Court, James S. Whitney (Whitney), as
president, treasurer, director, agent, and sole shareholder of
J. Whitney Development, Inc. (Whitney Development), was found in
civil contempt for failing to install a sewer line in compliance
with a February 2, 2017, court order. Whitney appeals from that
judgment, arguing it was error to hold him individually liable
for the failure of his corporation, Whitney Development, to
comply with the prior court order. We affirm.
Background. We summarize the relevant background as
follows. 2 In 1995, Whitney founded Whitney Development, a
1 Margot Xarras, individually and as trustee of NMJ Realty Trust. 2 The parties do not contest the factual findings of the contempt trial judge and thus we adopt them as true. commercial and residential construction company. Since its
creation, Whitney was Whitney Development's president,
treasurer, director, agent, and sole shareholder. In 2006, a
civil action was filed by the plaintiffs 3 regarding the
installation of a sewer line. As a result of that action, the
parties signed a settlement agreement. 4 Pursuant to that
settlement agreement, Whitney Development agreed to install a
sewer line. The plaintiffs brought the underlying action in
2013, seeking to compel Whitney Development to install the sewer
line in accordance with their prior settlement agreement.
Following a jury-waived trial in the underlying action, a
Superior Court judge found in the plaintiffs' favor and entered
judgment against Whitney Development. During trial, Whitney
Development's counsel expressed a preference for an equitable
remedy (in lieu of monetary damages) in the event of an adverse
ruling. Accordingly, the judge ordered Whitney Development to
obtain the necessary permits within 180 days and install the
sewer line. The sewer line's construction was divided into
three sections.
On August 3, 2017, the plaintiffs filed their first
complaint for contempt. Whitney Development filed a motion,
3 Although the parties in this appeal were parties in the 2006 case, they were not the only parties. 4 All the parties involved in the 2006 case signed the settlement
agreement.
2 arguing that it needed additional time to prepare and submit a
new plan for the sewer line before it could proceed with the
permitting process. The judge ordered that the parties meet
with the Leominster Department of Public Works and report back
to the court. By May 2018, Whitney Development had obtained the
necessary permits to build the first section of the sewer line
and the parties jointly submitted a report stating that Whitney
Development anticipated beginning installation within thirty
days. Despite this representation to the court, Whitney
Development never began construction of the sewer line and
subsequently plaintiffs requested a conference pursuant to Mass.
R. Civ. P. 16, as amended, 466 Mass. 1401 (2013).
A conference between the parties was held in March 2019,
and the judge ordered that the parties meet with the
Massachusetts Environmental Protection Agency (MEPA) to
determine if MEPA review was required. On March 18, 2020, MEPA
issued an advisory opinion indicating that no such review was
required. At this point, it is undisputed that Whitney
Development had obtained all the necessary permits for the
installation of the entire sewer line. Despite this, Whitney
Development never began construction of the sewer line.
Instead, on August 19, 2020, Whitney, as the sole shareholder,
authorized the dissolution of Whitney Development, and, on
3 November 19, 2020, Whitney Development filed articles of
voluntary dissolution with the Secretary of the Commonwealth.
By then, Whitney had created a "new" corporation, Whitney
Companies, LLC (Whitney Companies), in which he once again was
the principal and sole manager. Whitney Companies, organized in
July 2019, is also a construction company with the same
corporate address as Whitney Development. Whitney Companies'
website takes credit for certain projects that it completed
before its inception which were completed by Whitney Development
and listed two ongoing projects that were begun by Whitney
Development.
Almost four years after the February 2, 2017, adverse
judgment, Whitney Development filed a motion for relief from
judgment on the grounds of a material change of circumstances.
The court denied Whitney Development's motion for relief from
judgment both as untimely and because the alleged change of
circumstances had been entirely within Whitney's control when he
decided to dissolve Whitney Development. 5 On December 7, 2021,
with still no work on the sewer line initiated, the plaintiffs
filed an amended complaint for contempt. A Superior Court judge
(contempt judge) 6 conducted a contempt trial in which Whitney was
5 The denial of Whitney Development's motion for relief from judgment has not been appealed. 6 The judge presiding at the contempt trial was not the same
judge who presided at trial in the underlying action.
4 the only witness. Whitney was held in contempt on September 9,
2022. The contempt judgment required Whitney to carry out the
obligations imposed on Whitney Development in the February 2,
2017, order and to pay plaintiffs' costs and attorney's fees.
Discussion. Whitney appeals from the order of contempt.
He argues the contempt judge erred in finding him personally
liable for the failures of Whitney Development and that the
court was required to pierce the corporate veil of Whitney
Development, which he argues it could not do because there was
no evidence of fraud.
"[A] judge may find a person in civil contempt if the judge
concludes that it is more likely than not that the person
clearly and undoubtedly disobeyed a clear and unequivocal
command." In re Birchall, 454 Mass. 837, 852 (2009). "The
complainant must prove his case by a preponderance of the
evidence." L.F. v. L.J., 71 Mass. App. Ct. 813, 821 (2008),
citing Manchester v. Department of Envtl. Quality Eng'g, 381
Mass. 208, 212 (1980). "We review the judge's ultimate finding
of contempt for abuse of discretion, but we review underlying
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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
22-P-1116
JAMES L. XARRAS & another 1
vs.
J. WHITNEY DEVELOPMENT, INC.
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
On September 9, 2022, following a trial on a complaint for
contempt in the Superior Court, James S. Whitney (Whitney), as
president, treasurer, director, agent, and sole shareholder of
J. Whitney Development, Inc. (Whitney Development), was found in
civil contempt for failing to install a sewer line in compliance
with a February 2, 2017, court order. Whitney appeals from that
judgment, arguing it was error to hold him individually liable
for the failure of his corporation, Whitney Development, to
comply with the prior court order. We affirm.
Background. We summarize the relevant background as
follows. 2 In 1995, Whitney founded Whitney Development, a
1 Margot Xarras, individually and as trustee of NMJ Realty Trust. 2 The parties do not contest the factual findings of the contempt trial judge and thus we adopt them as true. commercial and residential construction company. Since its
creation, Whitney was Whitney Development's president,
treasurer, director, agent, and sole shareholder. In 2006, a
civil action was filed by the plaintiffs 3 regarding the
installation of a sewer line. As a result of that action, the
parties signed a settlement agreement. 4 Pursuant to that
settlement agreement, Whitney Development agreed to install a
sewer line. The plaintiffs brought the underlying action in
2013, seeking to compel Whitney Development to install the sewer
line in accordance with their prior settlement agreement.
Following a jury-waived trial in the underlying action, a
Superior Court judge found in the plaintiffs' favor and entered
judgment against Whitney Development. During trial, Whitney
Development's counsel expressed a preference for an equitable
remedy (in lieu of monetary damages) in the event of an adverse
ruling. Accordingly, the judge ordered Whitney Development to
obtain the necessary permits within 180 days and install the
sewer line. The sewer line's construction was divided into
three sections.
On August 3, 2017, the plaintiffs filed their first
complaint for contempt. Whitney Development filed a motion,
3 Although the parties in this appeal were parties in the 2006 case, they were not the only parties. 4 All the parties involved in the 2006 case signed the settlement
agreement.
2 arguing that it needed additional time to prepare and submit a
new plan for the sewer line before it could proceed with the
permitting process. The judge ordered that the parties meet
with the Leominster Department of Public Works and report back
to the court. By May 2018, Whitney Development had obtained the
necessary permits to build the first section of the sewer line
and the parties jointly submitted a report stating that Whitney
Development anticipated beginning installation within thirty
days. Despite this representation to the court, Whitney
Development never began construction of the sewer line and
subsequently plaintiffs requested a conference pursuant to Mass.
R. Civ. P. 16, as amended, 466 Mass. 1401 (2013).
A conference between the parties was held in March 2019,
and the judge ordered that the parties meet with the
Massachusetts Environmental Protection Agency (MEPA) to
determine if MEPA review was required. On March 18, 2020, MEPA
issued an advisory opinion indicating that no such review was
required. At this point, it is undisputed that Whitney
Development had obtained all the necessary permits for the
installation of the entire sewer line. Despite this, Whitney
Development never began construction of the sewer line.
Instead, on August 19, 2020, Whitney, as the sole shareholder,
authorized the dissolution of Whitney Development, and, on
3 November 19, 2020, Whitney Development filed articles of
voluntary dissolution with the Secretary of the Commonwealth.
By then, Whitney had created a "new" corporation, Whitney
Companies, LLC (Whitney Companies), in which he once again was
the principal and sole manager. Whitney Companies, organized in
July 2019, is also a construction company with the same
corporate address as Whitney Development. Whitney Companies'
website takes credit for certain projects that it completed
before its inception which were completed by Whitney Development
and listed two ongoing projects that were begun by Whitney
Development.
Almost four years after the February 2, 2017, adverse
judgment, Whitney Development filed a motion for relief from
judgment on the grounds of a material change of circumstances.
The court denied Whitney Development's motion for relief from
judgment both as untimely and because the alleged change of
circumstances had been entirely within Whitney's control when he
decided to dissolve Whitney Development. 5 On December 7, 2021,
with still no work on the sewer line initiated, the plaintiffs
filed an amended complaint for contempt. A Superior Court judge
(contempt judge) 6 conducted a contempt trial in which Whitney was
5 The denial of Whitney Development's motion for relief from judgment has not been appealed. 6 The judge presiding at the contempt trial was not the same
judge who presided at trial in the underlying action.
4 the only witness. Whitney was held in contempt on September 9,
2022. The contempt judgment required Whitney to carry out the
obligations imposed on Whitney Development in the February 2,
2017, order and to pay plaintiffs' costs and attorney's fees.
Discussion. Whitney appeals from the order of contempt.
He argues the contempt judge erred in finding him personally
liable for the failures of Whitney Development and that the
court was required to pierce the corporate veil of Whitney
Development, which he argues it could not do because there was
no evidence of fraud.
"[A] judge may find a person in civil contempt if the judge
concludes that it is more likely than not that the person
clearly and undoubtedly disobeyed a clear and unequivocal
command." In re Birchall, 454 Mass. 837, 852 (2009). "The
complainant must prove his case by a preponderance of the
evidence." L.F. v. L.J., 71 Mass. App. Ct. 813, 821 (2008),
citing Manchester v. Department of Envtl. Quality Eng'g, 381
Mass. 208, 212 (1980). "We review the judge's ultimate finding
of contempt for abuse of discretion, but we review underlying
conclusions of law de novo and underlying findings of fact for
clear error." Commercial Wharf E. Condominium Ass'n v. Boston
Boat Basin, LLC, 93 Mass. App. Ct. 523, 532 (2018), citing Judge
Rotenberg Educ. Ctr, Inc. v. Commissioner of the Dep't of Mental
Retardation (No. 1), 424 Mass. 430, 443 (1997).
5 The contempt judge gave Whitney Development a clear and
unequivocal order on February 2, 2017, when it mandated that
Whitney Development obtain the necessary permits within 180 days
and install the sewer line: the equitable remedy Whitney
Development sought in lieu of monetary damages. Whitney, as the
sole individual responsible for all of Whitney Development's
operations, was responsible for carrying out this action.
Milano v. Hingham Sportswear Co. makes clear that a court has
the discretion to hold a corporate agent in contempt if the
agent is responsible for the corporation's failure to comply
with the court order. 366 Mass. 376, 378 (1974) ("Although not
named in an order against a corporation, a corporate agent may
be held in contempt of that order if he was responsible for the
acts or inaction of the corporation which constituted a
violation of the court order"). We are not persuaded by any of
Whitney's arguments that Milano is not applicable and that the
contempt judge did not have discretion to hold Whitney in
contempt. 7 Accordingly, it was well within the contempt judge's
discretion in this case to hold Whitney, who was the sole agent
of the corporation, in contempt for the failure of Whitney
7 We are not persuaded by Whitney's claim at oral argument that corporations created for the purpose of carrying out construction work are treated differently under our law than any other type of corporation. We further note that the defendant neither argued this issue in its brief, nor provided any citations in support of this proposition.
6 Development to comply with the court order to install the sewer
line. The dissolution of Whitney Development, which occurred
more than two years after the corporation had received the final
necessary permit to begin construction of the first section of
the sewer line, does not change our analysis.
Whitney contends that such a conclusion is unjust because,
he argues, the contempt judge's finding that piercing the
corporate veil to hold Whitney personally liable was erroneous.
Put plainly, the contempt judge was not required to make such a
finding to hold Whitney in contempt, and so we need not analyze
whether it was error or not. The order on appeal is not an
order to hold Whitney personally liable for the contractual
obligations of Whitney Development. Rather, the order on appeal
is a contempt order against Whitney, as president, treasurer,
director, agent, and sole shareholder of Whitney Development,
for failing to comply with a court order against Whitney
Development. Thus, piercing the corporate veil was unnecessary
and we need not examine the trial court's order stating that it
was appropriate in this case.
Conclusion. Whitney Development was given a clear order by
the court and failed to comply. It was within the contempt
judge's discretion to hold Whitney, as a corporate agent of
Whitney Development, in contempt for that failure. Accordingly,
7 we see no abuse of discretion, and we affirm the judgment of
contempt.
Contempt judgment entered October 12, 2022, affirmed.
By the Court (Rubin, Neyman & Walsh, JJ. 8),
Clerk
Entered: October 11, 2023.
8 The panelists are listed in order of seniority.