241 F. Supp. 3d 215
D. Mass.2017Background
- Comfort Bedding & Furniture, Inc. ("Comfort Furniture") contracted with Profit Management Associates, Inc. d/b/a Profit Management Promotions ("PMP") on Feb. 24, 2011 to run a 60‑day high‑impact promotional sale beginning Mar. 24, 2011.
- Comfort Furniture alleged PMP provided inadequate personnel, engaged in improper pricing and bookkeeping, withheld funds, failed to pay agreed bills, and otherwise caused substantial losses.
- Comfort Furniture filed bankruptcy (Chapter 11 converted to Chapter 7) in 2011; the Chapter 7 trustee sold the estate’s claims against PMP to Errol Rick, who sued in 2015.
- The amended complaint (pro se plaintiff Rick) asserts breach of contract, fraudulent misrepresentation, and violations of Mass. Gen. Laws ch. 93A against PMP and three individual defendants (Egan, Mustafa, Cooper).
- PMP defaulted; individual defendants moved to dismiss for lack of subject‑matter jurisdiction and for failure to state claims.
- The magistrate judge allowed dismissal without prejudice as to breach of contract and the Chapter 93A claim (Counts I and II) but dismissed the fraud claim (Count III) with prejudice; plaintiff may move to amend Counts I and II within 30 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject‑matter jurisdiction (amount in controversy) | Rick asserts damages exceed $75,000 based on various losses alleged. | Defendants point to contract provision capping PMP liability to amounts paid by client (≈ $19k–$44k) and argue damages fall below diversity threshold. | Court: Diversity exists; the contractual cap limits PMP (not individuals). Jurisdiction not defeated at dismissal stage. |
| Breach of contract against individual defendants | Rick alleges individuals were responsible and should be bound for the contract breaches. | Defendants: individuals are not parties to the Agreement; no veil‑piercing or successor liability pleaded. | Court: Dismiss Count I against individuals without prejudice for failure to plead basis to bind individuals to the contract; leave to replead. |
| Fraud/intentional misrepresentation (Rule 9(b) & timeliness) | Rick alleges PMP misrepresented ability to save the business and committed theft/fraud causing reliance and damage. | Defendants: allegations lack particularity as to who, when, where; statute of limitations bars claim. | Court: Dismissed with prejudice — complaint fails Rule 9(b) particularity and fraud claim is time barred. |
| Chapter 93A claim against individuals | Rick relies on the same wrongful acts and seeks 93A relief against individuals. | Defendants: 93A claim is untimely under some state rules and lacks allegations identifying each individual’s wrongful acts. | Court: Dismissed without prejudice for failure to plead individual conduct with required specificity; four‑year 93A limitations permits potential repleading. |
Key Cases Cited
- Cooperman v. Individual Inc., 171 F.3d 43 (1st Cir.) (pleading facts accepted as true on motion to dismiss)
- Estelle v. Gamble, 429 U.S. 97 (U.S.) (pro se complaints construed liberally)
- Alt. Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30 (1st Cir.) (limited exceptions for documents outside complaint on Rule 12 motions)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S.) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S.) (distinguish factual allegations from conclusory legal assertions)
- OrbusNeich Med. Co., Ltd. v. Boston Sci. Corp., 694 F.Supp.2d 106 (D. Mass.) (Rule 9(b) requires time, place, content of alleged fraud)
- Russell v. Cooley Dickinson Hosp., Inc., 437 Mass. 443 (Mass.) (elements of common‑law fraud under Massachusetts law)