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-1200
RICHARD KIRBY & another1
vs.
JOHN J. MOUSIS & another.2
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The plaintiffs, Richard Kirby and Pondview Investments, LLC
(PVI), brought this action alleging that the defendants, John J.
Mousis and his newly-formed company, Pondview Vending, Inc.
(PVV), improperly cut the plaintiffs out of a business
arrangement to purchase and operate gaming terminals in the
Commonwealth of Pennsylvania. The defendants asserted
counterclaims against Kirby alleging that Mousis had no
obligation to include PVI in the arrangement because Kirby
misrepresented his ability to raise funds for the venture,
Kirby's involvement was conditioned on his ability to raise $1
1 Pondview Investments, LLC.
2 Pondview Vending, Inc. million, and Kirby failed to raise that required amount. After
a bench trial, a Superior Court judge found in favor of the
plaintiffs on their claim for unjust enrichment and ordered the
defendants to pay $60,000 in damages. The judge found that the
plaintiffs did not prevail on their remaining claims nor did the
defendants on their counterclaims.
On appeal, the plaintiffs argue that the judge's findings
that Mousis did not owe a fiduciary duty to PVI and that the
plaintiffs' involvement in the business arrangement was subject
to a condition precedent (i.e., raising $1 million) were clear
error. In their cross appeal, the defendants argue that the
plaintiffs were not entitled to recover on their unjust
enrichment claim and that the defendants should have prevailed
on their fraud counterclaim. We affirm.
Background. 1. Facts. We summarize the facts found by
the judge, supplemented by undisputed parts of the record. We
reserve further recitation of the facts for our discussion.
Kirby and Mousis met at a stock investment meeting in 2012.
At the time, Mousis and a business associate, Michael Palermo,
were involved in the "skill-based" gaming business.3 As part of
that business, Mousis and Palmero purchased gaming terminals and
3 In their brief, the plaintiffs explained that "skill- based" games include electronic poker and backgammon machines, as opposed to "chance" games.
2 software from Gracie Technologies (Gracie), a company
headquartered in South Carolina that had a "strong business
relationship" with Mousis. The terminals then were placed in
establishments like bars and social clubs. Customers would
deposit money into the terminals and play games that paid out to
winners. Gracie tabulated the revenue generated by the
terminals through a backend accounting system and then made
payments to distributors, like Mousis and Palmero, based on
those calculations. The business required significant capital
to purchase the terminals and software, and to retain attorneys
to stay abreast of State legislation that affected the business.
At their initial meeting and thereafter, Kirby told Mousis
that he was a highly successful businessperson who was
knowledgeable about the gaming industry and had access to
significant investment capital. Mousis and Kirby remained in
touch, but Mousis and Palmero continued to expand their gaming
business without Kirby. Specifically, between 2013 and 2016,
Mousis and Palmero formed three companies, Nebraska Vending LLC,
M&M Vending, and QP Industries, to run gaming businesses in
Nebraska, Florida, and Pennsylvania.
Meanwhile, in 2013, Kirby told Mousis about the Solgen
Energy project, an investment opportunity to construct a power
plant for the Jamaican government; Mousis declined the
3 opportunity but introduced Kirby to potential investors. This
project ultimately failed, and the people referred to the
business by Mousis lost their investments.
Eventually, Mousis advised Kirby of an opportunity to
purchase equity from existing investors in Nebraska Vending.
Later, Mousis proposed that Kirby raise funds to purchase equity
from existing investors in QP Industries, Mousis's company that
operated in Pennsylvania. In May 2016, Kirby formed PVI, a
Delaware limited liability company, for the purpose of accepting
investors for the gaming business. Kirby was unable to open a
bank account for PVI due to State and Federal tax issues, so
Mousis opened the account. Kirby represented to Mousis that he
could raise significant capital, "claimed funding was on the
horizon, and even showed Mousis promising communications with
investors who claimed they were ready to invest from $1 to $1.5
million in the Pennsylvania opportunity." Mousis agreed that if
Kirby was successful in raising $1 million,4 Mousis would give
Kirby a thirty percent interest in PVV, an entity not yet formed
for the purposes of expanding Mousis's gaming business in
Pennsylvania.
4 The judge's decision also references Kirby's ability to raise $1.5 million in capital. We use the $1 million figure because Mousis testified that Kirby was required to raise $1 million to operate in the Pennsylvania market and $1.5 million for the Nebraska market.
4 In 2017, Kirby raised $184,000 for PVI and fell far short
of meeting the condition that he raise $1 million. Much or all
of the $184,000 "came from funds that had been previously
committed to the failed Solgen project and then diverted to
PVI." Kirby depleted the capital from the PVI account, using
most of the funds for personal and business expenses. Mousis
also advanced money to Kirby to pay for personal and business
expenses throughout their relationship. However, in mid-2017,
PVI made wire transfers totaling $70,000 to Gracie. That money
was used to pay off Mousis's prior debts incurred through his
Nebraska business "[i]n an effort to pave the way for a future
deal with Gracie." Mousis repaid $10,000 of this money.
In December 2017, Mousis and Kirby traveled to South
Carolina to discuss two potential deals -- purchasing the
Pennsylvania market and buying out Gracie's entire business.
That month, a sales agreement between PVV and Gracie for the
Pennsylvania deal was drafted and signed by Kirby but not
executed by Gracie. The following month, in January 2018,
Mousis as "Vice-President" of PVI executed a letter agreement to
purchase 270 gaming terminals in Pennsylvania from Gracie
(January 2018 agreement).5 That agreement set a schedule for PVI
5 Although the judge found the January 2018 agreement was between PVV and Gracie, the record reflects that the agreement was signed by Mousis on behalf of PVI.
5 to pay Gracie $270,000 between February 1 and March 15, 2018,
with the remaining balance of $164,500 to be paid over the
course of the following year. PVI almost immediately failed to
make the scheduled payments. As a result, Gracie terminated the
agreement.
Given Kirby's failure to raise $1 million, Mousis decided
to move forward with the deal without Kirby. In March 2018,
Mousis and Kirby again traveled to South Carolina. At the time,
Kirby was attempting to negotiate a deal to purchase Gracie for
$6 million, although he ultimately was unable to raise the
necessary funds to do so. Following that trip, on March 15,
2018, Mousis as president of PVV executed a new letter agreement
to purchase 270 gaming terminals in Pennsylvania from Gracie
(March 2018 agreement). Five days later, Mousis created PVV and
incorporated the company in New Hampshire.6 PVI and Kirby had no
equity stake in PVV and were not entitled to cash distributions,
revenues, or profits generated by PVV. Nonetheless, Kirby made
false claims to Gracie that he owned a fifty percent interest in
PVV, causing Gracie to withhold $10,000 in payments owed to PVV.
PVV ultimately earned significant revenue through its deal with
Gracie.
6 The judge made no specific finding about when PVV was created, but the articles of incorporation entered in evidence reflect the date of incorporation as March 20, 2018.
6 2. Procedural history. Kirby and PVI brought this action
against Mousis and PVV, alleging breach of fiduciary duty,
usurping a corporate opportunity, fraud, a violation of G. L.
c. 93A, § 11, and unjust enrichment, and seeking to pierce the
corporate veil. The defendants asserted counterclaims against
Kirby for fraud, interference with business relations,
defamation, and conversion.
The matter proceeded to a bench trial. At the close of
trial, the judge entered a directed verdict on the defendants'
counterclaims for defamation and conversion. The judge
subsequently issued written findings of fact and rulings of law.
The judge found in favor of the defendants on the
plaintiffs' claims for breach of fiduciary duty, usurping a
corporate opportunity, fraud, and violation of G. L. c. 93A.
Specifically, the judge concluded that Mousis did not owe a
fiduciary duty to PVI because Mousis did not have an official
position as "an owner, partner, on the board of directors or an
officer of that company." The judge also found that Kirby's
involvement in the Pennsylvania deal was conditioned on his
ability to raise $1 million in capital and he "fell far short of
that condition precedent required to trigger [an] equity
position in PVV." On the plaintiffs' unjust enrichment claim,
the judge found Mousis and PVV jointly and severally liable for
7 $60,000 that Mousis used from PVI's funds to pay down debt owed
to Gracie for Mousis's Nebraska business. As to the defendants'
fraud counterclaim, the judge found that the defendants failed
to prove damages arising from Kirby's "materially false
misrepresentations to Mousis about [Kirby's] ability to raise
capital to fund business ventures." The judge also found the
defendants failed to prove their interference with business
relationships counterclaim. Judgment, as amended, entered and
these cross appeals followed.
Discussion. 1. Standard of review. "Where a judge makes
findings of fact in a bench trial, we review them for clear
error." H1 Lincoln, Inc. v. South Washington St., LLC, 489
Mass. 1, 13 (2022). "A trial judge's finding is clearly
erroneous only when, 'although there is evidence to support it,
the reviewing court on the entire evidence is left with the
definite and firm conviction that a mistake has been
committed.'" Id., quoting Demoulas v. Demoulas Super Mkts.,
Inc., 424 Mass. 501, 509 (1997) (Demoulas I), S.C., 428 Mass.
543 (1998), and S.C., 432 Mass. 43 (2000). We review the trial
judge's legal conclusions de novo. See H1 Lincoln, Inc., supra.
2. Breach of fiduciary duty claim. The plaintiffs claim
that the judge's finding that Mousis did not owe a fiduciary
duty to PVI was clear error. The plaintiffs also argue that
8 Mousis was in breach of that duty when he entered into the March
2018 agreement on behalf of PVV, excluding PVI from the deal
with Gracie.
a. Duty. "Directors of a corporation stand in a fiduciary
relationship to that corporation." Estate of Moulton v.
Puopolo, 467 Mass. 478, 492 (2014). Here, the judge found that
Mousis did not owe a fiduciary duty to PVI because he did not
hold an official position like owner, partner, director, or
officer. However, on this point, Mousis testified that he was
the chief operating officer, a director, and a managing member
of PVI. The plaintiffs also presented other evidence supporting
their position that Mousis was an officer or director such as
the statement of authorized person that accompanied PVI's
certificate of formation listing Kirby and Mousis as managing
members of PVI. Mousis also signed the January 2018 agreement
with Gracie on behalf of PVI as its vice president and was the
sole signatory on PVI's bank account. We recognize that some
evidence also was presented that Mousis was not an officer of
PVI, including a document from the Federal Internal Revenue
Service (IRS) addressed to Kirby as the sole member (owner) of
PVI as Kirby had reported to the IRS in his request for PVI's
EIN. However, given Mousis's own testimony about his role in
9 PVI, the finding that Mousis did not owe a fiduciary duty
whatsoever to PVI was clear error.
b. Breach. Directors and officers of a close corporation
owe a duty of the "utmost good faith and loyalty" (citation
omitted). Zimmerman v. Bogoff, 402 Mass. 650, 657 (1988). That
duty prohibits a fiduciary "from taking, for personal benefit,
an opportunity or advantage that belongs to the corporation."
Demoulas I, 424 Mass. at 529. "A director or officer is not
entirely barred from pursuing a corporate opportunity," id. at
530, but "must first disclose material details of the venture to
the corporation, and then either receive the assent of
disinterested directors or shareholders, or otherwise prove that
the decision is fair to the corporation." Id. at 533.
Here, the judge found that Mousis was not in breach of any
duty or contractual obligation to involve Kirby or PVI in the
Pennsylvania deal with Gracie after Mousis gave Kirby the
opportunity to participate, Kirby falsely represented his
ability to raise capital (a condition precedent to Kirby's
participation), and Kirby failed to raise the promised funds
leading Gracie to terminate the January 2018 agreement for
nonperformance. Those findings are not erroneous.
The plaintiffs argue, in essence, that after Gracie
terminated the January 2018 agreement with PVI, Mousis had an
10 ongoing obligation to disclose that he was pursuing the
opportunity for himself and PVV in March 2018. In support, the
plaintiffs note that Kirby traveled with Mousis to South
Carolina shortly before the March 2018 agreement was executed
and Mousis did not tell Kirby about that agreement.7
The plaintiffs' reliance on Mousis's conduct after the
January 2018 agreement was terminated fails. The judge found
that the plaintiffs only were entitled to participate in the
deal if Kirby raised $1 million and he failed to do so. Given
this agreed on and unmet condition precedent, Mousis's fiduciary
duty to PVI with respect to the Pennsylvania deal had not yet
arisen and there was no breach thereof. See Fronk v. Fowler,
456 Mass. 317, 331-332 (2010) (duties of members of closely held
business may be limited by agreement); Butts v. Freedman, 96
Mass. App. Ct. 827, 829-830 (2020) (same). Cf. Greenleaf Arms
Realty Trust I, LLC v. New Boston Fund, Inc., 81 Mass. App. Ct.
282, 292 (2012) ("Parties to a fiduciary relationship may agree
to alter or limit to some degree their fiduciary rights and
obligations").
Although the plaintiffs challenge the judge's finding
regarding the $1 million requirement, there was ample evidence
7 At that time of the trip, Kirby was attempting to buy all of Gracie and also continued to represent that he could raise money for PVI.
11 to support it, including Mousis's testimony on the issue and two
unsigned memorandums of understanding from November and December
2017 (MOUs). Those MOUs concerned the "new Pennsylvania gaming
venture" between Mousis, Palmero, and PVI, and stated that in
consideration for a thirty percent ownership interest in PVV,
PVI would "make an initial cash contribution" of $1 million to
PVV. Both MOUs included a line for Paul Chapman's signature on
behalf of PVI; Chapman was Kirby's investor who represented that
he had $1 million for the Pennsylvania deal. Mousis testified
that he sent the first MOU to Kirby, and the judge was free to
credit the unsigned MOUs as evidence of the discussions between
Mousis and Kirby about PVI's involvement in the Pennsylvania
deal and PVV.
The plaintiffs also claim that the judge failed to credit
the evidence that PVV was not formed until after the March 2018
agreement was executed. Regardless of when PVV was
incorporated, ample evidence was presented that the parties
contemplated the formation of PVV as the entity to operate in
the Pennsylvania market well before the execution of the March
2018 agreement. That evidence included the November and
December 2017 MOUs and a December 2017 agreement between PVV and
Gracie that was not fully executed but was signed by Kirby.
Mousis also testified, "[PVV] would always be the operating
12 entity for any final agreement and deal in Pennsylvania. [PVI]
was to be able to raise capital to fund the deal, and [PVI]
would have an interest in [PVV]." Most importantly, the judge
made findings to this effect, including that PVV was the entity
that Mousis formed to "further expan[d] into the skill based
gaming business in Pennsylvania" and that Kirby's participation
in PVV was conditioned on his ability to successfully raise $1
million.
Notwithstanding our conclusion that the parties' agreement
governed the relationship between Mousis and Kirby until Kirby
raised the requisite funds, Mousis demonstrated that even if he
owed a fiduciary duty to PVI with respect to the Pennsylvania
deal, he did not breach that duty. The judge's findings
demonstrate that Mousis gave PVI the opportunity to work in the
Pennsylvania market, but PVI tried and failed to take advantage
of it due to a lack of capital. See Demoulas I, 424 Mass. at
532 ("opportunities must be presented to the corporation without
regard to possible impediments, and material facts must be fully
disclosed, so that the corporation may consider whether and how
to address these obstacles"). Cf. Puritan Med. Ctr., Inc. v.
Cashman, 413 Mass. 167, 178 (1992) (considering whether
corporation was "financially unable to exploit the opportunity,"
"the party offering the opportunity refused to deal with the
13 corporation," or "the corporation sought without success to
obtain [the opportunity]" [citation omitted]). Mousis also
demonstrated that the March 2018 agreement was fair and did not
result in harm to PVI. PVI remained unable to pursue the
opportunity because it did not raise the amount necessary to
satisfy the terms of either the January or the March 2018
agreement, let alone the promised $1 million.8 See Demoulas I,
supra at 534 (existence of impediments to deal relevant to
determining fairness of fiduciary's action). As the judge
found, "Mousis was able to keep this project going based upon
his long-term relationship and despite Kirby's ineffective and
hollow promises to raise capital." Accordingly, judgment
properly entered for the defendants on this claim.9
c. Related claims. The plaintiffs also claim that the
erroneous finding on the fiduciary duty issue affected the
8 Both agreements required payment for the gaming terminals as well as preexisting debt owed by Mousis's other companies. The price just for the 270 gaming terminals was $210,000 under the terms of both agreements, and the judge found that Kirby raised $184,000 in capital.
9 To the extent the plaintiffs argue that Mousis was in breach of his fiduciary duty by using $60,0000 in furtherance of the March 2018 agreement, that claim is duplicative of the damages ordered on the unjust enrichment claim and we affirm that portion of the judgment for the reasons stated below. See Zimmerman, 402 Mass. at 661 (remedy for breach of fiduciary duty is to restore party "as nearly as possible [to] the position he would have been in had there been no wrongdoing").
14 judge's analysis on their claims for usurping a corporate
opportunity, fraud, and a violation of G. L. c. 93A. However,
the plaintiffs' failure to meet the condition precedent
precludes their recovery under such claims.
Any claim for usurping a corporate opportunity fails for
the reasons stated above.10 The plaintiffs also did not
establish fraud through Mousis's nondisclosure of the March 2018
agreement because Mousis did not have a duty to disclose his
continued interest in the Pennsylvania deal after Kirby failed
to raise the requisite funds to obtain an equity share in PVV
(and PVI defaulted on the January 2018 agreement). Contrast
Rood v. Newberg, 48 Mass. App. Ct. 185, 192 (1999)
(nondisclosure may amount to fraud if fiduciary is under duty to
other party to "exercise reasonable care to disclose the matter
in question" [citation omitted]). Finally, the plaintiffs
failed to establish that the defendants' conduct was unfair or
deceptive within the meaning of c. 93A, where Kirby falsely told
Mousis he was able to raise $1 million, knew that he could not
raise the promised capital, and agreed that his involvement in
the Pennsylvania deal hinged on his ability to do so. See UBS
10To the extent that claim is for intentional interference with advantageous business relations, the plaintiffs did not show "an even probable future business relationship from which there is a reasonable expectancy of financial benefit." Owen v. Williams, 322 Mass. 356, 361-362 (1948).
15 Fin. Servs., Inc. v. Aliberti, 483 Mass. 396, 412–413 (2019)
(court may consider what the parties knew or should have known
when determining whether conduct is unfair under c. 93A).
3. Unjust enrichment claim. On cross appeal, the
defendants claim that the judge erred in awarding $60,000 to the
plaintiffs based on funds PVI paid to Gracie because "[t]he
record establishes that Kirby misused PVI funds . . . , and that
Mousis used the funds in furtherance of shared business goals."11
In order to recover for unjust enrichment, the plaintiffs were
required to prove that "(1) [they] conferred a measurable
benefit upon the defendant[s]; (2) [they] reasonably expected
compensation from the defendant[s]; and (3) the defendant[s]
accepted the benefit with the knowledge, actual or chargeable,
of the [plaintiffs'] reasonable expectation." Stewart Title
Guar. Co. v. Kelly, 97 Mass. App. Ct. 325, 335 (2020).
On the issue of PVI's expenditures, we note that the
plaintiffs produced at trial a chalk summarizing the money
raised and spent by PVI, but the chalk is not in the record
before us. Beyond the PVI bank records, it also appears that
11Our review of the defendants' arguments on cross appeal is hindered by the fact that the defendants largely cited to the judge's findings but not the underlying evidence in the record in their brief. See Mass. R. A. P. 16 (a) (9) (A), as appearing in 481 Mass. 1628 (2019) (appellate brief shall include argument "with citations to the authorities and parts of the record on which the appellant relies").
16 neither Mousis or Kirby kept records of business contributions
(or the sources thereof) or expenditures for PVI, nor did Mousis
keep records of funds given to Kirby for his personal use, used
to pay off Kirby's loans, or used by or provided to PVI from
Mousis's other businesses. Nonetheless, the judge found that
Mousis used $70,000 of PVI funds "in mid 2017 to payoff prior
debt he had incurred in Nebraska with Gracie . . . [and that]
Mousis repaid $10,000 of this money to Kirby from Nebraska
funds."
At trial, Mousis testified that the money in the PVI
account was raised by Kirby. The PVI bank records reflect two
wire transfers totaling $70,000 made to Gracie in May and June
2017. That money was sent in furtherance of Mousis's Nebraska
business's deal with Gracie. In January 2018, a check for
$70,000 from one of Mousis's other businesses, M&M, was
deposited in the PVI account. Mousis testified at trial that
$60,000 of that money went to Gracie (as is reflected as a
subsequent January 2018 wire transfer to Gracie on PVI's bank
statement) and $10,000 went to Kirby because Kirby "said he
needed it to finish off his funding." Mousis also was impeached
at trial with his prior deposition testimony that Kirby's money
contributed to the Pennsylvania deal and Mousis did not return
the money because it was owed to him for repaying Kirby's debts.
17 Based on this evidence, we discern no error in the judge's
finding as to the $60,000 figure.12
As to the defendants' argument that the plaintiffs were not
entitled to equitable relief, the judge found that Kirby
incurred over $40,000 in debt with Mousis's friends and Mousis
paid back as much as he could; however, Mousis did not present
any documentation of those loans or repayments. Applying
equitable principles, the judge did not abuse his discretion in
determining that the defendants should not be entitled to keep
money raised by Kirby that was used to further business deals to
which Kirby and PVI were not parties, and in failing to credit
payments made by Mousis on Kirby's loans where no documentation
was presented of same. See Cavadi v. DeYeso, 458 Mass. 615, 624
(2011) (judge's imposition of equitable remedies reviewed for
abuse of discretion).
4. Fraud counterclaim. The defendants also claim that the
judge erred in finding that they failed to prove damages
resulting from Kirby's false representations. The defendants
12As the plaintiffs note, two wire transfers totaling $30,000 were made from the PVI account to Gracie in mid-February 2018, but the plaintiffs do not argue that this amount should have been included in the damages awarded to them. The judge made no findings about the purpose of those payments including whether they were paid in furtherance of the January 2018 agreement or whether the money was advanced as part of Kirby's February 2018 "side deal" to buy out Gracie for $6 million. In any event, any argument about those payments is waived.
18 contend that they were harmed because Mousis covered
"substantial operating costs for PVI" and Kirby's conduct caused
"delayed progress, lost opportunities, and misapplied funds."
Although the judge found that Mousis advanced Kirby money for
personal and business expenses based on Kirby's false
representations about his ability to raise capital, "[t]he
extent of the injury for which a [party] seeks compensation must
be proved with a fair degree of certainty." Pearl v. William
Filene's Sons Co., 317 Mass. 529, 532 (1945). It was the
defendants' burden to prove damages. See National Shawmut Bank
of Boston v. Johnson, 317 Mass. 485, 491 (1945). On the record
before us, we cannot say that the judge erred in finding that
the defendants' failed to prove damages flowing from Kirby's
misrepresentations, particularly where Mousis ultimately was
able to proceed with the Pennsylvania deal resulting in
"significant revenues" for PVV and Mousis did not produce.
Amended judgment affirmed.
By the Court (Meade, Desmond & Wood, JJ.13),
Clerk
Entered: January 22, 2026.
13 The panelists are listed in order of seniority.