McGrath v. McGrath

22 Mass. L. Rptr. 195
CourtMassachusetts Superior Court
DecidedFebruary 12, 2007
DocketNo.0202753H
StatusPublished

This text of 22 Mass. L. Rptr. 195 (McGrath v. McGrath) 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
McGrath v. McGrath, 22 Mass. L. Rptr. 195 (Mass. Ct. App. 2007).

Opinion

Murtagh, Thomas R., J.

This court (Murphy, J.) issued a decision on October 27, 2004, awarding partial summary judgment as to liability only to Scott McGrath (“Scott”), Christopher McGrath (“Christopher”), and Stephen Howe (“Howe") (collectively, “Counterclaimants”) on their breach of contract counterclaim against counterclaim defendants Sean McG-rath (“Sean”) and David McGrath (“David”) (collectively, “Defendants”). The Counterclaimants now seek to exclude from a trial on damages arising from the Defendants’ breach of contract all evidence concerning the Counterclaimants’ investment history and the mitigation defense. For the following reasons, the Counterclaimants’ motion is DENIED.

BACKGROUND

The following facts are taken primarily from this court’s (Murphy, J.) partial summary judgment decision (“Summary Judgment Decision”) as well as from the documents the parties have submitted in support of their motion and opposition.

In 1995, the father of Christopher, David, Holly, Scott, and Sean McGrath (“McGrath Siblings”) died, and the McGrath Siblings purchased from his estate all of the residential real estate holdings through Collins Investments, LLC (“Collins I”), an entity they formed for the purpose of making this purchase.3 Among these residential real estate holdings were thirty-four units in Park Village West (“PVW”), a cooperative apartment complex that consists of 252 units and is located in Westborough, Massachusetts. Sean served as PVWs property manager. Through C&S Realty Trust (“C&S”), of which he is the owner, Sean purchased additional units in PVW with the expectation that the other four McGrath Siblings would reimburse him.

The McGrath Siblings were unable to reach an agreement regarding their purchasing interests in the PVW units Sean had purchased through C&S, as well as regarding their compensating Sean for those purchased units. Thereafter, the McGrath Siblings recruited the assistance of a group of three individuals (“Tribunal”) to settle their dispute. In a document dated June 20, 2001, the McGrath Siblings agreed that the Tribunal was formed “to decide the final disposition of the Park Village West Investment.”4 The Tribunal issued its written decision on or about July 2, 20015 (“Tribunal Decision”). The Tribunal Decision “stated that it would ‘serve to provide the definitive governing resolutions going forward for [each sibling’s] investment in [PVW], should [they] choose to participate.’ ” Summary Judgment Decision, at 2 (alterations in original). “It then set forth a payment schedule, via capital calls, to be made to Sean for reimbursement of exactly what he had advanced on behalf of the others to purchase units in PVW.” Id. “Assuming all 5 members [meaning the McGrath Siblings] proceedfed] with their required funding, all 5 [were to] have an equal state in the resulting enterprise.” Tribunal Decision, at 2.

This court (Murphy, J.) recounted the events that followed:

Pursuant to the Tribunal’s [DJecision, three capital calls were made between July 2001 and January 2002, whereby Scott and Chris sent Sean, in total, approximately $670,000 each.6 Sean accepted the first two payments but rejected the third in the amount of $230,000,7 claiming it was insufficient, notwithstanding the Tribunal [DJecision. Sean, through counsel, then sent a letter to each of his four siblings, requiring them to send $250,000 to remain invested in PVW, or otherwise Sean would return their first two payments and ‘proceed with[196]*196out [them].’ When Scott and Chris refused to submit to Sean’s new terms, Sean, Holly and David, on their own, formed a new agreement,8 dated April 19, 2002.

Summary Judgment Decision, at 3 (footnotes added) (final alteration in original). In June 2002, Sean returned to Christopher and Scott the first and second payments they had made to him, with interest. Howe, Scott’s trustee, deposited Scott’s repayments in an “interest-bearing account.” According to the Defendants, Christopher failed to cash the check Sean sent to him in June 2002; thus, pursuant to Christopher’s request during a late 2003 mediation before J. Owen Todd, Esq., Sean, in December 2003, sent Christopher a check representing the first and second payments with interest added.

Meanwhile, Sean collaborated with the Kargman family (“Kargmans”) to acquire additional units in PVW. By Spring 2001, this collaboration, called Westborough Ventures (“WV”) owned seventy-nine units in PVW. By January 2003, Sean and the Kargmans had consolidated their holdings, creating “PVW Ventures, LLC (“PVWV”). PVWV consisted of the WV units, the units owned by Sean through C&S, and the units owned by the Kargmans through PVI Really Trust; by February 2006, PVWV owned approximately 153 PVW units. The original thirty-four PVW units owned by Collins I are not included in PVWV. "According to the PVWV Operating Agreement, the McGrath related membership interest [in PVWV] is 45.19% and the remaining membership interest in PVWV is held by the Kargman family through PVI Realty." Supplemental Expert Interrogatoiy Response Concerning Pricewaterhouse Coopers, LLP, Exhibit S to Defendant’s Opposition, at 3.

In the Summary Judgment Decision, this court (Murphy, J.) held that the Defendants breached the Tribunal Decision “(w]hen Sean ultimately rejected Chris and Scott’s third set of checks [on or about January 25, 2002], set at the Tribunal’s direction, and refused further compliance with the Tribunal [Decision . . .” Summary Judgment Decision, at 6. The Defendants now argue that the Counterclaimants’ failure to mitigate reduces any damage award to which they are entitled as a result of the Defendants’ breach. The Counterclaimants dispute that they had a duty to mitigate and that, even if they did have a duty to mitigate, evidence of their investment history is irrelevant and would be more prejudicial than probative.

The Defendants claim that alternative transactions existed and that the Counterclaimants failed to take advantage of them with the money from the capital calls that Sean returned to them. In response to interrogatories from the Counterclaimants, the Defendants state that they intend to call as experts Emmet Logue (“Logue”), a real estate appraiser, and Frederic Miller (“Miller”), a Certified Public Accountant (“CPA”) from Pricewaterhouse Coopers, LLP. The Coun-terclaimants intend to call as expert witnesses Carl Jenkins and/or Richard Mackenzie, both of whom are CPAs from B&B. The Counterclaimants expect B&B to testify as to lost profits, meaning what the Coun-terclaimants would have received through December 31, 2005, had they been allowed to participate in the real estate investment, and as to future lost profits, meaning what the Counterclaimants would have received from Januaiy 1, 2006 through December 31, 2016, had they been allowed to participate in the real estate investment.

The Defendants expect that Miller will not only rebut the testimony expected from B&B, the Counterclaimants’ expert, but also testify as to the value of the PVW real estate venture had the McGrath Siblings all participated throughout, using the “actual performance . . .’’of the McGrath interest in PVWV/WV . . . [as] a yardstick by which to measure the proj ected performance Supplemental Expert Interrogatory Response Concerning Pricewaterhouse Coopers, LLP (“Miller Interrogatory”), Exhibit S to Defendant’s Opposition, at 3.

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Bluebook (online)
22 Mass. L. Rptr. 195, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcgrath-v-mcgrath-masssuperct-2007.