Brinkley v. Matteucci, 1st Cir. (1995)

7/26/2019 Brinkley v. Matteucci, 1st Cir. (1995)

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USCA1 Opinion

June 28, 1995 [NOT FOR PUBLICATION]

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

____________________

No. 94-2284

BRINKLEY & CO., INC.,

Plaintiff, Appellant,

v.

VINCENT T. MATTEUCCI, ET AL.,

Defendants, Appellees.


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____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Edward F. Harrington, U.S. District Judge] ___________________

____________________

Selya, Cyr and Stahl,

Circuit Judges. ______________

____________________

Valeriano Diviacchi, with whom Diviacchi Law Office was o___________________ _____________________

for appellant.

Harvey Weiner, with whom Michael P. Duffy and Peabody &______________ _________________ ________

were on brief for appellees Barber, Looney, Grahn, Synder,


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Pisegna, Kelly, Farrell and Grossman.

Maria R. Durant, with whom Michael A. Collora and Dwyer &_______________ __________________ _______

were on brief for appellee Matteucci.

____________________

____________________

Per Curiam. Plaintiff Brinkley & Co., Inc. ("Brin


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Per Curiam. __________

Co.") appeals from a district court judgment summarily dismis

its complaint against Vincent Matteucci ("Matteucci"), former

of Athena Management Co., Inc. ("Athena"), and various member

the law firm of Looney & Grossman. As summary judgment

proper, we affirm.

I I

BACKGROUND1 BACKGROUND __________

Athena was incorporated on August 28, 1984, for

purpose of providing investment management services. Matte

served as its first president. Peter Brinkley, Brinkley C

principal shareholder, was hired by Athena in April 1987


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eventually became president and CEO, although he was neve

shareholder.

Athena lacked financial strength from its incept

By June 30, 1987, it had accumulated a $648,848 deficit an

negative net worth. In September of 1988, Brinkley Co. exte

Athena an unsecured loan and obtained a $100,000 demand not

return. At the end of the following fiscal year, Athena's

worth was minus $799,588 and its financial position continue

erode throughout the following year as well.

By September of 1989, Athena had lost seven of its

clients. Hanson Industries ("Hanson") and Nazareth Family Ce

____________________

1We relate the evidence in the light most favorable

Brinkley Co., the party resisting summary judgment. Simon____


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FDIC, 48 F.3d 53, 56 (1st Cir. 1995).____

2

("Nazareth") were its only remaining clients. On October

1989, Peter Brinkley resigned and Matteucci resumed the rol

president. On October 12, Brinkley Co. demanded payment on

$100,000 note. As payment was not forthcoming, Brinkley

brought the instant action against Athena in the United St

District Court for the District of Massachusetts. Sho


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thereafter, Peter Brinkley resigned as a director of Athena.

On December 9, 1989, one Frank Griswold, a busi

acquaintance of Matteucci, executed Articles of Incorpora

establishing Charles River Management Company, Inc. ("Cha

River"), a new investment management services company. At

time, Griswold and Matteucci understood that Matteucci woul

be listed as a Charles River stockholder or incorporator,

that he would become its majority shareholder on May 1, 1990.

In November of 1989, Looney & Grossman under

Athena's representation in the Brinkley Co. action.3

extensive consultation, Matteucci instructed Looney & Gros

not to defend the Brinkley Co. action against Athena on___

$100,000 demand note. As a result, in due course default j


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____________________

2Matteucci's brief incorrectly asserts that there i

evidence that he planned to join Charles River. See Matte ___

Brief at n.13. In a letter dated May 30, 1991, Matteucci

formed Nazareth that "[d]ue to a prearranged agreement in p

with Frank [Griswold] at the time of incorporation, I became

majority shareholder of Charles River Management on May 1, 19

3Brinkley Co. contends that Looney & Grossman became

volved during the fall of 1988. But though the record refl

that Looney & Grossman billed Matteucci personally for l

services during that time period, Brinkley Co. points to

evidence that this representation had anything to do with At

3


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ment was entered against Athena.

On November 15, 1989, Matteucci presented two alte

tive proposals to Athena's board of directors. Under the f

proposal, Athena would be dissolved; the second called for

complete recapitalization. Neither proposal was adopted

Athena's financial position continued to worsen, so that

November 30, 1989, it had a $969,176 negative net worth. By

end of calendar year 1989, it had lost an additional $142,036

On December 12, Athena was informed that Hanson, by

the larger of Athena's two remaining clients, would reduce

fee payments to Athena by 60% as of January 1, 1990, and that

additional funds would be invested in Hanson's short-term pen


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fund account with Athena. These actions by Hanson would re

Athena's projected gross income for the ensuing year by thi

seven percent.

Matteucci promptly called a stockholders' meeting

January 3, 1990, to consider Athena's dissolution. The no

discussed Athena's unmanageable debt and concluded as follows

even if all the liabilities were forgiven, it

would still be impossible to continue since

Hanson Industries (our only major account),

which has been extremely generous to Athena,

has reduced our fees by 60% on the larger of

the two accounts that we manage for it. As a

result, we are unable, even on a minimum

basis, to meet the obligations of rent, tele-

phone, and salaries which are necessary to

keep Athena's doors open.

With seven-eighths of Athena's outstanding s

represented, shareholders unanimously voted to liquidate.


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learning of the liquidation, the two remaining Athena client

4

Hanson and Nazareth immediately terminated their invest

contracts. Matteucci arranged a sale of Athena's fixture

Charles River, and resigned from all offices with Athena.

On February 1, 1990, as previously arranged, Matte

joined Charles River. Shortly thereafter, and on their


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N.E. 828, 833 (Mass. 1934) ("a cause of action which is

assignable cannot be reached and applied under [Mass. Gen. L.

214, 3(7)]"). There is no clear statement of Massachusetts

on whether such a cause of action may be reached and applied,

____________________

4We review the summary judgment ruling de novo to deter __ ____

whether the "'pleadings, depositions, answers to interrogator

and admissions on file, together with the affidavits, if

show that there is no genuine issue as to any material fact

that the moving party is entitled to judgment as a matte

law.'" Simon, 48 F.3d at 56 (citations omitted). The par _____

agree that the substantive law of Massachusetts governs

claims.

5


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the decisions in other jurisdictions are mixed. The majo

view is that a legal malpractice claim cannot be assigned.

Continental Cas. Co. v. Pullman, Comley, Bradley & Reeves, 70____________________ _________________________________

Supp. 44, 50 n.7 (D. Conn. 1989) (collecting cases), aff'd,_____

F.2d 103 (2d Cir. 1991). We bypass this unsettled questio

Massachusetts law, because, as the district court corre

noted, Athena would have had no viable malpractice claim aga

the Looney & Grossman defendants in any event.

Brinkley Co. asserts that Athena had three bases


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asserting a malpractice claim. First, the Looney & Gros

defendants failed to contest the action Brinkley Co. bro

against Athena. Second, during 1990 certain Looney & Gros

defendants allegedly engaged in dual representation of Cha

River and Athena. Third, the Looney & Grossman defen

allegedly failed to provide Athena's creditors with the requ

bulk transfer notice under Mass. Gen. L. ch. 106, 6-102

connection with the sale of Athena's tangible assets. We bri

address each contention in turn.

First, it is undisputed that Looney & Grossman

instructed by Athena not to answer the Brinkley Co. compla __________ __ ______ ___

See Fleet Nat'l Bank v. Anchor Media Television, Inc., 45___ ________________ ______________________________

546, 558 (1st Cir. 1995) (party may not resort to intenti


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self-contradiction to obtain unfair advantage). Second, ther

no record evidence whatsoever that any Looney & Grossman de

dant simultaneously represented Athena and Charles River. T

the Massachusetts bulk transfer law expressly applies onl

6

"those whose principal business is the sale of merchandise

stock." Mass. Gen. L. ch. 106, 6-102(3). Athena sol


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merchandise from stock, hence was not subject to the bulk tr

fer notice requirement.5

Summary judgment on Brinkley Co.'s civil conspi

claim was appropriate as well. It is essential to a c

conspiracy claim under Massachusetts law that the alleged

spirators have intended harm to the plaintiff. Robitaille_________

Morse, 186 N.E. 78, 80 (Mass. 1933). Brinkley Co. proffere_____

such evidence.

B. Matteucci B. Matteucci _________

Brinkley Co. alleges a breach of the fiduciary

Matteucci owed as an officer of Athena. The district court r

that Matteucci owed no fiduciary duty, since the corporate e

tence of Athena had been terminated before Matteucci first


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cussed with Griswold his plans to move over to Charles River

Athena's last two clients, Hanson and Nazareth.6

____________________

5Since the chapter 93A claim brought by Brinkley Co.,

Mass. Gen. L. ch. 93A, 2 (unfair business practices), is b

on the same allegations as the Brinkley Co. malpractice clai

too fails.

6The corporate opportunity doctrine, on which the dist

court rested its ruling, allows a fiduciary to take advanta

a business opportunity of which the principal cannot a

itself. However, "the corporate opportunity doctrine is a

of disclosure," Wartski v. Bedford, 926 F.2d 11, 19 (1st_______ _______

1991) (quoting In re Tufts Elecs., Inc., 746 F.2d 915, 917_________________________

Cir. 1984)), which requires "a full and honest disclosure of

relevant circumstances to permit a disinterested decision

to exercise its informed judgment." Id. (quoting Dynan v. Fr __ _____ _

508 N.E.2d 1371, 1378 (Mass. 1987)). There is strong re

evidence that Matteucci failed to comply with this duty. Co

quently, we do not rely on the corporate opportunity doctr


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7

Brinkley Co. contends on appeal that the district c

disregarded evidence that Matteucci breached his fiduciary

to Athena by arranging for the incorporation of Charles

prior to the dissolution vote on Athena. It points to an aff _____

vit by an Athena shareholder, stating that he would have opp

dissolution had he known of Matteucci's plans.

A corporate officer owes a fiduciary duty, Warts


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_____

Bedford, 926 F.2d 11, 13 (1st Cir. 1991) (applying Massachus _______

law), to accord "the utmost good faith and loyalty" to

corporation. Meehan v. Shaughnessy, 535 N.E.2d 1255, 1263 ( ______ ___________

1989) (citations omitted). Yet this fiduciary duty is

breached simply by "secretly setting up a new firm during

fiduciary's] tenure . . . 'provided that in the course of

arrangements [the fiduciary] do[es] not otherwise act in vi

tion of [his] fiduciary duties.'" Id. at 1264 (quoting Che ___ __

Indus. v. Gaffney, 449 N.E.2d 320, 326 (Mass. 1983)). Rat ______ _______

the corporate officer's duty is to refrain from "actively co

ing with his employer during the tenure of his employme

______

Chelsea Indus., 449 N.E.2d at 326.


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______________

The scope of a corporate officer's duty not to co

was outlined in Meehan, where law partners in Parker, Coul ______

Dailey & White ("Parker Coulter") planned and structure

competing law firm while still partners in Parker Coul

____________________

See Simon, 48 F.3d at 57 n.1 (court of appeals may affirm "on___ _____

ground supported in the record even if the issue was not plea

tried or otherwise referred to in the proceeding below.") (c

tions omitted).

8


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Meehan, 535 N.E.2d at 1257-59. The SJC nonetheless held______

there had been no breach of their fiduciary duty. Id. at 1 ___

The SJC further held that the fact that the defendant part

had induced Parker Coulter employees to join the breakaway

did not suffice to establish liability in the absence of "spe

ic losses resulting from this claimed breach." Id. at 1264___

At the same time, the SJC held that the defendant partn

secret solicitation of Parker Coulter's clients was an action

breach of their fiduciary duty. Id. at 1265. The latter sho ___

was not made in the instant case. There is no re


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evidence that Matteucci informed either Hanson or Nazareth of

impending move to Charles River until after Athena had_____ _____ ______ ___

dissolved and Matteucci was no longer in its employ. Moreo _________ ___ _________

there is not a scintilla of evidence supporting Brinkley C

allegation that Athena might yet have been transformed in

viable concern. On the contrary, Athena's debt exceede

assets by almost a million dollars and it had sustained ser

operating losses during its last three fiscal years. Due to

projected decline in gross income resulting from Hanson's

nounced cutbacks, Athena's future prospects were grim to say

least. Thus, Athena's vote of dissolution and Matteuc

resignation were anything but the untoward developments pos

by Brinkley Co.


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Accordingly, the district court judgment is affir ___________ ___ ________ _____ ________ __ ____

Double costs are awarded to the Looney & Grossman defen ______ _____ ___

only, pursuant to Fed. R. App. P. 38.

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Brinkley v. Matteucci, 1st Cir. (1995)