United States District Court, D. Massachusetts
ERROL RICK, Assignee of COMFORT BEDDING AND FURNITURE, INC., Plaintiff,
PROFIT MANAGEMENT ASSOCIATES, INC. d/b/a PROFIT MANAGEMENT PROMOTIONS and/or PROFIT MANAGEMENT ASSOCIATES EAST, INC.; MICHAEL J. EGAN, as President and Individually; JOHN “HECTOR” MUSTAFA, Individually; and RONALD COOPER, Individually, Defendants.
MEMORANDUM OF DECISION AND ORDER ON INDIVIDUAL
DEFENDANTS' MOTION TO DISMISS
Gail Dein United States Magistrate Judge
pro se plaintiff, Errol Rick, was the former
President and 50% owner of Comfort Bedding and Furniture,
Inc. (“Comfort Furniture”), a company that was
liquidated pursuant to a Chapter 7 Bankruptcy Proceeding in
the United States District Court, District of Massachusetts
(No. 11-42740-MSH). He brings this action by virtue of an
assignment from Comfort Furniture authorized by the
Bankruptcy Court dated January 20, 2014.
about February 24, 2011, Comfort Furniture entered into a
Sales Promotion Agreement with Profit Management Associates,
Inc. d/b/a Profit Management Promotions (“PMP”)
pursuant to which PMP was to conduct a high impact
promotional sale on behalf of Comfort Furniture for 60 days,
commencing on March 24, 2011. Problems arose virtually
immediately. By April 18, 2011, Comfort Furniture served PMP
a Notice and Demand letter pursuant to Mass. Gen. Laws ch.
93A. According to the individual defendants, but denied by
the plaintiff, PMP and Comfort Furniture entered into a Sales
Promotion and Settlement Agreement dated May 16, 2011, which
addressed their issues. Comfort Furniture filed for bankruptcy
on June 28, 2011.
commenced this action on March 24, 2015 against PMP. The
complaint was subsequently amended to add the individual
defendants, Michael Egan, John “Hector” Mustafa,
and Ronald Cooper, to the claims originally brought against
PMP, namely breach of contract, fraudulent misrepresentation,
and violation of Mass. Gen. Laws ch. 93A. PMP never filed a
responsive pleading. The individual defendants contend that
PMP is no longer in business, although the plaintiff contends
that it is continuing to do business under various other
“Profit Management” names. A default has been
entered against PMP.
matter is presently before the court on the individual
defendants' motion to dismiss the amended complaint.
(Docket No. 37). The parties have agreed to have this motion
finally resolved by a Magistrate Judge pursuant to 28 U.S.C.
§ 636(c). (Docket No. 46). After consideration of the
parties' oral and written filings, including the
supplemental materials filed after the hearing, the motion to
dismiss is ALLOWED WITHOUT PREJUDICE. The plaintiff may file
a motion to amend his complaint consistent with this
decision, if appropriate, within 30 days of the date of this
STATEMENT OF FACTS
of the Record
ruling on a motion to dismiss, the court must accept as true
all well-pleaded facts, and give the plaintiff the benefit of
all reasonable inferences. See Cooperman v. Individual
Inc., 171 F.3d 43, 46 (1st Cir. 1999). Where, as here,
the plaintiff is proceeding pro se, the court must
construe his allegations liberally. See Estelle v.
Gamble, 429 U.S. 97, 106, 97 S.Ct. 285, 292, 50 L.Ed.2d
251 (1976) (a pro se complaint, however inartfully
pleaded, must be liberally construed). Of significance in the
instant case, “[o]rdinarily, a court may not consider
any documents that are outside of the complaint, or not
expressly incorporated therein, unless the motion is
converted into one for summary judgment.” Alt.
Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267
F.3d 30, 33 (1st Cir. 2001). “There is, however, a
narrow exception ‘for documents the authenticity of
which are not disputed by the parties; for official public
records; for documents central to plaintiff[‘s] claim;
or for documents sufficiently referred to in the
complaint.'” Id. (quoting Watterson v.
Page, 987 F.2d 1, 3 (1st Cir. 1993)). Here, the parties
have submitted affidavits and various documents which go
beyond those which are appropriately considered in connection
with a motion to dismiss. As detailed below, this court has
only considered those materials which fall within this narrow
exception. This court has not converted the motion to dismiss
to one for summary judgment.
Sales Promotion Agreement
Comfort Furniture sold furniture and home furnishings at its
retail store located in Lowell, Massachusetts. On February
24, 2011, “Comfort Bedding & Furniture, Inc.”
entered into a Sales Promotion Agreement (the
“Agreement”) with “Profit Management
Associates East, Inc., d/b/a Profit Management Promotions
(‘PMP')” to conduct “a high impact
promotional sale” at the store. See
Agreement at recital; Amended Complaint (Docket No.
34) (“Compl.”) ¶ 7. Comfort Furniture was
experiencing financial difficulties, and PMP promoted itself
as a business with the expertise to run a promotional sale
that would get Comfort Furniture out of its financial
troubles. See Compl. ¶ 29. The Agreement
provides that it “shall be construed and interpreted
under the laws of the State of Pennsylvania.” Agreement
to the Agreement, PMP was to provide personnel and funding
for the sale, among other things, in exchange for which it
was to be paid a commission. See Agreement
¶¶ 1-3, 8, 10. From the outset, Comfort Furniture
was dissatisfied with the personnel PMP provided, and with
its business practices. Compl. ¶¶ 9-16. Comfort
Furniture felt that PMP was running a “going out of
business” or liquidation sale, instead of helping
Comfort Furniture stay in business. Id. ¶ 12.
In particular, but without limitation, PMP priced inventory
in such a way that PMP received a large commission, but
Comfort Furniture ended up with a deficiency. Id.
¶ 13. PMP also allegedly failed to pay bills it was
contractually obligated to pay, and failed to obtain
necessary lines of credit to be able to obtain product from
manufacturers to fill customer orders. Id.
¶¶ 14, 16. In addition, Comfort Furniture contends
that PMP employees were disrespectful and abusive, in
addition to being incompetent, thereby causing Comfort
Furniture to sustain significant losses. Id.
¶¶ 10-11, 15.
result of PMP's conduct, Comfort Furniture allegedly
suffered damages. According to Comfort Furniture, these
damages are in the form of (a) sales taxes and delivery costs
that were collected by PMP but not turned over to Comfort
Furniture, which was liable for the expenses ($23, 445); (b)
$25, 000 in “cash advances” taken by PMP
employees without authorization; (c) the balance of the
parties' joint bank account, which was created for the
promotional event and which PMP wrongfully retained for its
own use ($8, 727.01); (d) costs paid by Comfort Furniture for
promotion items that were properly the responsibility of PMP
($4, 707); (e) refunds to customers paid by Comfort Furniture
on sales proceeds retained by PMP ($54, 929.71); (f)
pre-promotion invoices PMP had promised to pay in
consideration for the Agreement ($134, 000); (g) a check that
was improperly issued by a PMP employee to himself ($3, 179);
(h) lost profits from the sale ($318, 733.50); and (i) lost
profits from sales lost due to PMP's improper sales
practices ($320, 000). Id. ¶ 18. For their
part, the defendants argue that damages are capped, and point
to ¶ 13.6 of the Agreement, which provides:
In the event that Client has a claim against PMP for any
reason, PMP's liability shall in all circumstances and
for all claims be limited to the amounts actually paid by
Client to PMP hereunder.
Id. ¶ 13.6. The defendants contend that these
amounts are far below the $75, 000 threshold necessary to
support the diversity jurisdiction of the federal court.
undisputed that Comfort Furniture filed for protection under
Chapter 11 of the United States Bankruptcy Code on June 28,
2011. Defs. Mem. (Docket 38) Ex. D (Docket Sheet for
Bankruptcy Petition #11-42740, United States Bankruptcy
Court, District of Massachusetts (Worcester)). On August 5,
2011, the motion of the debtor, Comfort Furniture, to convert
its case to Chapter 7 was allowed, and “an order for
relief under Chapter 7” was entered on that date.
Id. Ex. E (Bankruptcy Trustee's Motion) at
¶ 1. On August 9, 2011, David Nickless accepted his
appointment as Trustee in Bankruptcy for the estate of
Comfort Furniture. On December 27, 2013, the Trustee filed a
motion to sell the claims of the estate of Comfort Furniture
against Profit Management ...