Roskind v. Hanna

8 Mass. L. Rptr. 721
CourtMassachusetts Superior Court
DecidedAugust 10, 1998
DocketNo. 981371
StatusPublished

This text of 8 Mass. L. Rptr. 721 (Roskind v. Hanna) 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
Roskind v. Hanna, 8 Mass. L. Rptr. 721 (Mass. Ct. App. 1998).

Opinion

Brassard, J.

This case was before the court on June 10, 1998, for a hearing on the above-captioned motions. Herbert G. Roskind, Jr. and Holtrachem, Inc. brought this action in the Middlesex Superior Court of Massachusetts alleging fraud in the inducement, breach of fiduciary duty, interference with economic relations, conspiracy, violation of G.L'.c. 93A, breach of contract, indemnity, and failure to pay a promissoiy note. The defendants, Mark S. Hanna (“Hanna”), CalChlor Corp. (“Cal-Chlor") and Eugene Rodgers, Jr. (“Rodgers”) have moved for dismissal pursuant to Mass.R.Civ.P. 12(b)(3) and 12(b)(6). Defendants maintain that the forum selection clause of a stock purchase agreement signed by the parties mandates that all claims be heard in Lafayette, Louisiana. For the reasons which follow, Hanna and Cal-Chlor’s motion to dismiss is ALLOWED and Rodgers’ motion to dismiss is DENIED.

BACKGROUND

The facts as found in the stock agreement and the complaint are as follows:1

In 1986, plaintiff Herbert G. Roskind (“Roskind”), his then-partner Eiy Magasanik (“Magasanik”) and defendant Hanna established Cal-Chlor, a business owned and operated in Louisiana. Magasanik and Roskind each loaned $6,250.00 to Hanna, to enable Hanna to acquire slightly less than fifty percent of the stock in Cal-Chlor. On or about December 30, 1986, Hanna executed a promissoiy note in favor of Roskind in the principal amount of $6,250.00. After the purchase of Cal-Chlor, Hanna managed the business. The business grew into a substantial and profitable business with operations in several states.

Subsequently, Roskind purchased Magasanik’s interest in Cal-Chlor and thereby came to own a majority of the stock in the company. Notwithstanding his majority stock ownership, Roskind permitted Hanna to manage Cal-Chlor.

From 1986 through 1997, HoltraChem Inc. (“Holtrachem”), owned by Roskind and located in Na-tick, Massachusetts, provided administrative and management services and to Cal-Chlor. The services consisted of management, financial and accounting services, and administration of health insurance benefits for Cal-Chlor’s employees. All of the services were provided from HoltraChem’s headquarters in Massachusetts, and HoltraChem received a monthly fee for its services.

Beginning in or about 1995, HoltraChem and CalChlor did other business together. Cal-Chlor fulfilled orders taken by HoltraChem sales personnel. Holtrachem paid Cal-Chlor for the handling of calcium chloride by Cal-Chlor for HoltraChem’s customers, and also paid the cost of hiring and paying additional Cal-Chlor employees to administer the fulfillment of orders on behalf of HoltraChem. Amounts owed by each corporation for services rendered by the other company were settled through “intercompany accounts.”

In January of 1997, Hanna visited Massachusetts and presented Roskind with a proposal to purchase Roskind’s stock interest in Cal-Chlor. Hanna expressed his desire to own and operate Cal-Chlor independently.

During the first half of 1997, Roskind and Hanna, through their respective counsel and chief officers, negotiated an agreement (the “Stock Purchase Agreement”) whereby Hanna would purchase Roskind’s stock interest in Cal-Chlor, and the two companies, [722]*722HoltraChem and Cal-Chlor, would sever their business relationship. Roskind and HoltraChem, throughout the negotiations and stock purchase, relied on the financial and accounting services of Eugene Rodgers, Jr. (“Rodgers”). Rodgers was an employee of HoltraChem, but also served as the vice-president of finance of Cal-Chlor. In this capacity, Rodgers provided management, financial and accounting services to CalChlor. Under the employ of HoltraChem, Rodgers retained the authority to sign checks drawn by CalChlor and authorize wire transfers by Cal-Chlor.

The plaintiffs allege that prior to and during the negotiations with Roskind and HoltraChem, Hanna and Rodgers diverted assets of Cal-Chlor to their personal use. Plaintiffs further contend that Hanna and Rodgers caused Cal-Chlor to enter into a series of unnecessary transactions outside the regular course of its business. These alleged transactions caused the wasting of liquid assets of Cal-Chlor, thereby reducing the value of Roskind’s stock interest in the company.

Plaintiffs allege that Hanna and Rodgers fraudulently concealed their wrongdoings from Roskind and HoltraChem. During the first half of 1997, Rodgers repeatedly delayed in delivering the monthly Cal-Chlor financial reports to Roskind. Plaintiffs contend that this concealment was done in order to ensure that Roskind would not suspect any wrongdoing on the part of Rodgers and Hanna.

On or about June 30, 1997, Roskind, Hanna, CalChlor and HoltraChem entered into the Stock Purchase Agreement. Pursuant to the agreement, the closing of the stock purchase transaction was scheduled to occur on July 10, 1997. The Stock Purchase Agreement provided that the intercompany accounts between HoltraChem and Cal-Chlor were to be settled before the agreement closed. Cal-Chlor and HoltraChem disputed the actual amount owed under the intercompany accounts. Cal-Chlor refused to pay its intercompany debt to HoltraChem at the closing of the Stock Purchase Agreement on July 10, 1997. The debt remains unsettled. Moreover, the Stock Purchase Agreement provides, in a forum selection clause, that any dispute concerning the conduct of the parties in connection with the Agreement shall be heard in Louisiana.2

Subsequent to the closing of the Stock Purchase Agreement, Roskind discovered a series of suspicious financial transactions in Cal-Chlor’s financial records. Roskind and HoltraChem determined that Rodgers had charged personal and excessive expenses to HoltraChem, and had otherwise diverted assets of HoltraChem to his own use.

On September 8, 1997, Rodgers resigned his position as Chief Financial Officer of HoltraChem effective September 30, 1997. Rodgers removed his expense report files from HoltraChem before or when he left the company. HoltraChem contends that the taking of the expense reports has prevented it from determining the full extent of his wrongful diversion of assets of HoltraChem.

DISCUSSION

The Supreme Judicial Court accepts “the modem view that fomm selection clauses are to be enforced if it is fair and reasonable to do so.” Jacobson v. Mailboxes etc., USA, 419 Mass. 572, 574-75 (1995); citing The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, (1972) (“[t]he correct approach would have been to enforce the fomm clause specifically unless [the challenging party] could clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching”).

A. Hanna and Cal-Chlor’s Motion to Dismiss

Hanna and Cal-Chlor move to dismiss Roskind and HoltraChem’s claims against them arguing that Roskind and HoltraChem have expressly agreed in writing that these claims “shall be heard” in Lafayette, Louisiana. Roskind and HoltraChem oppose Hanna and Cal-Chlor’s motion arguing that their claims are directed to fraud and commercial bribery prior to the execution of the Stock Purchase Agreement.

The clause at issue provides that “any dispute concerning the conduct of any party in connection with this Agreement or otherwise shall be heard only in the courts ...

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

Related

The Bremen v. Zapata Off-Shore Co.
407 U.S. 1 (Supreme Court, 1972)
Ayala v. Boston Housing Authority
536 N.E.2d 1082 (Massachusetts Supreme Judicial Court, 1989)
Flattery v. Gregory
489 N.E.2d 1257 (Massachusetts Supreme Judicial Court, 1986)
Jacobson v. Mailboxes Etc. U.S.A., Inc.
419 Mass. 572 (Massachusetts Supreme Judicial Court, 1995)
Simplex Time Recorder Co. v. Federal Insurance
641 N.E.2d 1358 (Massachusetts Appeals Court, 1994)

Cite This Page — Counsel Stack

Bluebook (online)
8 Mass. L. Rptr. 721, Counsel Stack Legal Research, https://law.counselstack.com/opinion/roskind-v-hanna-masssuperct-1998.