Commonwealth v. Tradition (North America) Inc. / Jampel
AC 15-P-1543
Mass. App. Ct.Feb 21, 2017Background
- Tradition (broker) was sued by the Commonwealth under G. L. c. 93A and the Massachusetts False Claims Act for alleged bid‑rigging in GIC (guaranteed investment contract) auctions; Tradition denied liability and asserted it was also a victim.
- Tradition filed a second‑amended third‑party complaint seeking contribution (under G. L. c. 231B) and various tort and contract claims against consultants and bidders (including Jampel, Goldberg, Trinity, FSA) for allegedly sharing confidential bid information and receiving swaps/bribes.
- While third‑party motions to dismiss were pending, Tradition settled with the Commonwealth and obtained a release that expressly did not release the third‑party defendants.
- The Superior Court dismissed (1) all statutory contribution claims because Tradition’s settlement did not discharge the common liability of joint tortfeasors, and (2) nearly all noncontribution claims as time‑barred or on other independent grounds; it also dismissed contract claims against Jampel for failure to pierce CFP’s corporate veil.
- On appeal, the SJC (per the panel) affirmed dismissal of the contribution claims and the contract/implicit covenant claims against Jampel, but reversed the dismissal of the remaining noncontribution claims and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument (Tradition) | Defendant's Argument (Third‑party Ds) | Held |
|---|---|---|---|
| Whether Tradition can pursue statutory contribution after settling without releasing joint tortfeasors | Not required to obtain releases if third parties’ liability was already extinguished by limitation periods; contribution should survive | G. L. c. 231B requires the settling party to discharge the common liability to preserve a contribution claim | Contribution claims barred: settlement did not discharge common liability as §3(d)(2) requires; affirmed |
| Accrual date for noncontribution claims (statute of limitations) | Limitations accrue on May 27, 2008 (DOJ call); claims filed within limitations | Limitations accrued on March 7, 2007 (DOJ subpoena); claims untimely | Reversal of dismissal: disputed accrual date (fact question); cannot dismiss on 12(b)(6) |
| Joinder/pendency of noncontribution claims after contribution dismissal | Noncontribution claims are independent and properly joined under Mass. R. Civ. P. 18; dismissal of contribution does not mandate dismissal of others | Noncontribution claims depended on contribution claims and should be dismissed if contribution fails | Reversed: misjoinder is not grounds for dismissal of entire claims; Rule 21 permits severance, not dismissal |
| Piercing corporate veil to hold Jampel liable on contract claims | Jampel signed consulting agreement and participated; should be liable on contract/implicit covenant claims | Tradition failed to plead facts sufficient to pierce CFP’s corporate veil; veil piercing required for contract claims | Contract and implied covenant claims against Jampel dismissed for failing to plead veil piercing; other tort claims against Jampel may proceed because personal participation alleged |
| Sufficiency of damages allegations (esp. vs. FSA) | Alleged multiple categories of damages (lost swaps revenue, investigation costs, travel reimbursements) | Damages not pled with required specificity and causal link to scheme | Reversed as to damages: Tradition pleaded at least investigation/subpoena costs as actual damages; further factual development required |
| Dismissal of conspiracy and related tort claims based on alleged illegality of swaps | Even if swaps were bribes, Tradition cannot recover illegal profits | Swaps were alleged as bribes; recovery of fruits of illegality barred | Reversed: whether swaps were illegal is a factual question not resolvable on 12(b)(6); conspiracy and underlying torts survive if proven |
Key Cases Cited
- Harrington v. Costello, 467 Mass. 720 (SJC 2014) (pleading facts accepted as true on 12(b)(6) review)
- Bowen v. Eli Lilly & Co., 408 Mass. 204 (SJC 1990) (discovery rule for accrual of causes of action)
- Hayon v. Coca Cola Bottling Co. of New England, 375 Mass. 644 (SJC 1978) (purpose of contribution statute: equitable distribution among tortfeasors)
- Medical Professional Mut. Ins. Co. v. Breon Labs., Inc., 966 F. Supp. 120 (D. Mass. 1997) (settlement that fails to release joint tortfeasor bars contribution under act)
- Kraft Power Corp. v. Merrill, 464 Mass. 145 (SJC 2013) (standards for piercing the corporate veil)
- Lyon v. Morphew, 424 Mass. 828 (SJC 1997) (employees personally liable for torts in which they personally participated)