McLaughlin v. J-PAC, LLC

28 Mass. L. Rptr. 295
CourtMassachusetts Superior Court
DecidedApril 14, 2011
DocketNo. 102594BLS1
StatusPublished

This text of 28 Mass. L. Rptr. 295 (McLaughlin v. J-PAC, LLC) 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
McLaughlin v. J-PAC, LLC, 28 Mass. L. Rptr. 295 (Mass. Ct. App. 2011).

Opinion

Lauriat, Peter M., J.

William McLaughlin (“McLaughlin”) brought this action against J-PAC, LLC (“J-PAC”), his former employer, JPDM Holdings, LLC (“JPDM Holdings”), with which he is involved as an investor and lender, and JPDM, LLC. McLaughlin alleges that he was terminated without cause from his position as Chief Executive Officer of J-PAC. He has sued to enforce his Employment Agreement and rights that he asserts he holds as an investor in and lender to JPDM Holdings. The defendants have now moved to dismiss six counts of the Amended Complaint for failure to state a claim upon which relief may be granted. For the following reasons, the defendants’ motion is allowed in part and denied in part.

BACKGROUND

The following facts are drawn from the Amended Complaint and taken as true for purposes of this motion. See Iannacchino v. Ford Motor Co., 451 Mass. 623, 625 n.7 (2008). McLaughlin is the former Chief Executive Officer (“CEO”) of J-PAC. On JanuaRy 4, 2007, McLaughlin and JPDM Holdings entered into an Equity Units and Assets Purchasing Agreement (“Purchasing Agreement”). Under the Purchasing Agreement, McLaughlin contributed $2,000,000 in units of J-PAC in exchange for 2,000,000 common units of JPDM Holdings, with an initial capital account of $2,000,000. McLaughlin also received a Subordinated Promissory Note (“Promissory Note”) from JPDM Holdings in the amount of $666,667. The principal of that Promissory Note remains unpaid.

On or about July 31, 2008, McLaughlin was terminated without cause from his position as CEO. Under [296]*296an Employment Agreement he had entered into with J-PAC, McLaughlin was entitled to severance in the form of twelve months’ payment of (1) his base salary as of the date of termination, and (2) J-PAC’s share of his medical and dental insurance premiums, pursuant to company benefit plans. The defendants have not paid McLaughlin’s base salary as required, and since December 1, 2008, they have refused to pay his insurance premiums. The defendants refuse to comply with the severance provision unless McLaughlin provides a general release of any and all claims that he may have under the Employment Agreement and as an investor in, and lender to, JPDM Holdings. McLaughlin is willing to provide a general release in connection with his employment by J-PAC, but he is unwilling to release potential claims stemming from his relationships with JPDM Holdings.

On August 21, 2008, approximately three weeks after McLaughlin’s termination, JPDM, LLC was created for the purpose of being the transferee of JPDM Holdings’ assets. Thereafter, all of JPDM Holdings’ assets were transferred to JPDM, LLC. McLaughlin did not consent to this transfer of assets.

DISCUSSION

The defendants have now moved to dismiss Counts III, IV, VI, VII, VIII, and IX of the amended complaint for their failure to state a claim upon which relief may be granted. See Mass.R.Civ.P. 12(b)(6). Counts III and IV are against only JPDM Holdings and JPDM, LLC, and Counts VI through IX are against all three defendants. “While a complaint attacked by a motion to dismiss does not need detailed factual allegations . . . a plaintiffs obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief requires more than labels and conclusions . . . Factual allegations must be enough to raise a right to relief above the speculative level...” Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). Under this heightened standard, the plaintiff must make factual allegations that possess enough heft to show that the he or she is entitled to relief. Id.

A.Aiding and Abetting, and Procuring, Breach of the Implied Covenant of Good Faith and Fair Dealing (Count III)

In Count II, which is not the subject of the present motion, McLaughlin alleges that J-PAC breached the implied covenant of good faith and fair dealing by refusing to comply with the severance provision unless he provided a general release of all potential claims against it and JPDM Holdings. In Count III, McLaughlin alleges that JPDM Holdings and JPDM, LLC aided, abetted and procured J-PAC’s breach of the implied covenant by “causing, authorizing, and directing” J-PAC to make that ultimatum. He alleges that the defendants hoped to avoid payment on the severance provision and the Promissory Note, and to force McLaughlin to forfeit his equity interest in JPDM Holdings.

“Civil claims for aiding and abetting . . . are a form of civil conspiracy, and therefore require an underlying tort by a third party.” Whalen v. Commonwealth, 2006 Mass.Super. LEXIS 293, *7 n.8 (Mass.Super. 2006) [21 Mass. L. Rptr. 193), citing Norman v. Brown, Todd & Heyburn, 693 F.Sup. 1259, 1264 (D.Mass. 1988) (“Aiding and abetting is one variation of joint tort liability”). For the reasons set forth infra regarding Count VI, the defendants’ motion to dismiss is allowed as to Count III.

B.Aiding and Abetting, and Procuring, Breach of Contract (Count IV)

McLaughlin alleges that JPDM Holdings and JPDM, LLC aided, abetted and procured J-PAC’s breach of the Employment Agreement’s severance provision. As noted regarding Count III, supra, civil claims for aiding and abetting are a form of civil conspiracy. Whalen, 2006 Mass.Super. LEXIS at *7 n.8. For the reasons set forth infra regarding Count VI, the defendants’ motion to dismiss is allowed as to Count IV.

C.Civil Conspiracy (Count VI)

McLaughlin alleges that the defendants conspired and acted jointly to refuse to comply with the Employment Agreement’s severance provision, to demand that McLaughlin forfeit his rights with respect to JPDM Holdings, and to avoid liability on the Promissory Note. The defendants argue that Counts III, IV, and VI must be dismissed because McLaughlin fails to allege an underlying tort, which is a required element of civil conspiracy.

Massachusetts courts recognize two different theories of civil conspiracy. First, there is a “very limited cause of action” for a coercive type of civil conspiracy. Aetna Cas. Sur. Co. v. P&B Autobody, 43 F.3d 1546, 1563 (1st Cir. 1994). To state a claim for civil conspiracy by coercion, a “plaintiff must allege that defendants, acting in unison, had some peculiar power of coercion over plaintiff that they would not have had if they had been acting independently.” Id. (internal quotations omitted); see also Kurker v. Hill, 44 Mass.App.Ct. 184, 188 (1998). McLaughlin has not alleged that the defendants held unique coercive power over him, so he cannot succeed under this theory.

“Th[e] second type of civil conspiracy is more akin to a theory of common law joint liability in tort.” Aetna Cas. Sur. Co., 43 F.3d at 1564. This form of civil conspiracy requires “a common design or an agreement, although not necessarily express, between two or more persons to do a wrongful act and, second, proof of some tortious act in furtherance of the agreement.” Id., see, e.g., Kurker, 44 Mass.App.Ct. at 189-90 (holding plaintiffs stated a claim for civil conspiracy based on underlying tort of breach of fiduciary duty). In this case, McLaughlin’s allegations of conspiracy [297]*297hinge on breach of contract. He does not ascribe any tortious conduct to the defendants, so his claim for civil conspiracy cannot survive.1

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Bell Atlantic Corp. v. Twombly
550 U.S. 544 (Supreme Court, 2007)
Donahue v. Rodd Electrotype Co. of New England, Inc.
328 N.E.2d 505 (Massachusetts Supreme Judicial Court, 1975)
Tetrault v. Mahoney
425 Mass. 456 (Massachusetts Supreme Judicial Court, 1997)
Iannacchino v. Ford Motor Co.
451 Mass. 623 (Massachusetts Supreme Judicial Court, 2008)
International Totalizing Systems, Inc. v. PepsiCo, Inc.
29 Mass. App. Ct. 424 (Massachusetts Appeals Court, 1990)
Kurker v. Hell
689 N.E.2d 833 (Massachusetts Appeals Court, 1998)
Ray-Tek Services, Inc. v. Parker
831 N.E.2d 948 (Massachusetts Appeals Court, 2005)
Whalen v. Commonwealth
21 Mass. L. Rptr. 193 (Massachusetts Superior Court, 2006)

Cite This Page — Counsel Stack

Bluebook (online)
28 Mass. L. Rptr. 295, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mclaughlin-v-j-pac-llc-masssuperct-2011.