8 N.E.3d 281
Mass. App. Ct.2014Background
- This cross appeal challenges securities act misrepresentation and c.93A claims, both decided against the plaintiff.
- Plaintiff Marram invested plan assets in Kobrick Offshore Fund; subsequent market decline occurred after investments.
- December 1999 meeting: Marram alleges Kobrick made misrepresentations about suitability, diversification, tech exposure, and volatility.
- Offering memorandum described the fund as speculative with high risk and potential concentration in high-growth tech; Marram signed subscription agreeing to read the memorandum.
- Marram liquidated assets in May 2001 after losses; the plan received limited recoveries.
- The trial court granted summary judgment on a breach-of-contract counterclaim; the securities claim proceeded to trial and failed; posttrial motions were denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of Marram's investment experience and Kobrick's style | Impeachment relevant to constructive knowledge; excessive cumulative. | Impeachment evidence appropriate to challenge credibility and nexus to claims. | No abuse; admissible as impeachment and forthcoming; not prejudicial given verdict. |
| Sufficiency of evidence for securities misrepresentation | Evidence showed misrepresentations about leverage and strategy. | Evidence supported no misrepresentation; complies with statute. | Evidence sufficient; verdict supported by record. |
| Preclusion of plaintiff’s expert testimony | Expert Scales would testify on preinvestment trading activity. | Judge properly exercised discretion; Scales unqualified. | No error; discretionary ruling within trial court’s gatekeeping role. |
| Jury instructions on knowledge and investor sophistication | Instruction failed to distinguish actual vs constructive knowledge and allowed sophistication to matter. | Instruction aligned with Marram I; actual knowledge required; sophistication irrelevant. | Instruction correct and not prejudicial; Marram I followed. |
| Enforceability of indemnification clause for defendants’ legal fees | Indemnification would chill securities claims and contravene Massachusetts public policy. | Indemnification clause valid and does not contravene policy; federal law varies. | Indemnification clause unenforceable to the extent it would require loser-pay in securities actions; Marram I guidance applied; summary judgment proper. |
Key Cases Cited
- Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43 (Mass. 2004) (public policy protects investors; governs interpretation of securities act claims against indemnification)
- Doody v. E.F. Hutton & Co., 587 F. Supp. 829 (D. Minn. 1984) (indemnity clause unenforceable as against public policy to discourage securities actions)
- Zissu I, 627 F. Supp. 687 (S.D.N.Y. 1986) (indemnity clause enforcement discussed; issues of specificity and public policy)
- Huffington v. T. C. Group, LLC, 685 F. Supp. 2d 239 (D. Mass. 2010) (forum/contract clauses and public policy considerations in securities actions)
- Barnebey v. E.F. Hutton & Co., 715 F. Supp. 1512 (M.D. Fla. 1989) (indemnification and public policy discussions in securities context)