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Companion Health Services, Inc., A Massachusetts Corporation v. Majors Mobility

March 31, 2011

COMPANION HEALTH SERVICES, INC., A MASSACHUSETTS CORPORATION, PLAINTIFF,
v.
MAJORS MOBILITY, INC., A MICHIGAN CORPORATION; MAJORS MEDICAL, INC., A MICHIGAN CORPORATION; MMS NORTHERN DETROIT, INC., A MICHIGAN CORPORATION; MAJORS MOBILITY-ZANESVILLE, LLC, A MICHIGAN LIMITED LIABILITY COMPANY; GEORGE KURTZ; MARY KAY REID; STUART SHERMAN; AND JACOB & WEINGARTEN, P.C., DEFENDANTS, AND J.P. MORGAN CHASE BANK, N.A., AS TRUSTEE-PROCESS DEFENDANT.



The opinion of the court was delivered by: Toole, D.J.

FINDINGS OF FACT, CONCLUSIONS OF LAW, and ORDER FOR JUDGMENT

O‟

After trial on the matter, a jury found that the defendant, Majors Mobility, Inc., had breached four of its agreements with the plaintiff, Companion Health Services, Inc., and awarded Companion damages for three of the four breaches. Companion now seeks further recovery for unjust enrichment, interest payments, and violations of Chapter 93A of the Massachusetts General Laws ("Chapter 93A"). Companion also seeks judgment as a matter of law to recover additional damages not awarded by the jury. The defendant opposes recovery beyond the jury award. The Court finds and concludes as follows.

I.Findings of Fact

Companion, a Massachusetts company, licenses locations within Wal-Mart stores to companies that sell durable medical equipment. Majors, a Michigan company operated by George Kurtz and Mary Kay Reid, entered with Companion into a number of these licensing agreements. In April 2005, Companion and Majors entered into such an agreement for a store in Mansfield, Ohio; in December 2006, for a store in Zanesville, Ohio; and in December 2006, for a store in Evansville, Indiana. Majors expressed interest in licensing three additional Wal-Mart locations as well.

Companion also had licensed twenty locations to a man named Scott Hirsh. By the fall of 2006, Hirsch was behind in his rent payments for those locations. On or about January 10, 2007, an associate of Hirsch told Jack Huls of Companion that Hirsch would shut down his twenty locations in the very near future if Hirsch did not receive certain concessions. Soon after this conversation, Huls contacted Kurtz and told him that Companion was at risk of defaulting on its agreements with Wal-Mart if Hirsch shut down his locations. Huls informed Kurtz that Companion would have to take over Hirsch‟s locations. He asked if Majors would be interested in succeeding Hirsch in those locations. Kurtz said that Majors would be interested in taking over the locations.

On January 17, 2007, Majors took over the twenty Hirsch locations, although the written terms of an agreement between Companion and Majors had not yet been finalized by the time of the takeovers. Lawyers from Companion and Majors then worked to capture their agreements in writing. On January 19, Kimberly Mairs of Companion signed the Master Agreement between the two parties. On January 30, 2007, Kurtz signed the Master Agreement and Equipment Agreement on behalf of Majors.

Problems soon arose. Within weeks of the signing, employees at certain of the locations were claiming that Majors had not paid them, and some locations under control of Majors were not opening for business. Majors was dissatisfied with the training and skills of the employees at its newly-acquired locations and with the quality of the inventory there. By late February 2007, Reid informed Companion that Majors intended to close down its locations. By March 1, 2007, Majors had vacated all twenty Hirsch locations as well as Major‟s three original locations.

The closure of these locations caused Companion significant economic damage and harmed Companion‟s valuable relationship with Wal-Mart. Companion was able to find replacement operators for some, but not all, of the locations that Majors had left. Companion was required to return unoccupied sites to Wal-Mart in a cleaned "white-box" condition.

On November 7, 2007, Companion commenced this suit against Majors, Kutz, Reid, and related entities. As noted, after trial, the jury found that Majors had breached the Master Agreement and the agreements for the Mansfield, Zanesville, and Evansville locations. The jury also found that Majors breached the implied covenant of good faith and fair dealing for those agreements. From these breaches, the jury found that Companion suffered the following damages: $968,036 with regard to the Master Agreement, $0 with regard to the Mansfield Agreement, $11,541 with regard to the Zanesville Agreement, and $63,932 with regard to the Evansville Agreement. The jury found that Majors had not breached the Equipment Agreement nor that agreement‟s covenant of good faith and fair dealing.

The parties now dispute whether Companion is entitled to damages under Chapter 93A and for unjust enrichment, whether Companion is entitled to additional recovery for its attorney fees and "white-box" fees, and whether Companion is entitled to damages for the breach of the Mansfield Agreement. Companion also seeks, without opposition, interest on its award of damages.

II.Conclusions of Law

A. Chapter 93A

Section 11 of Chapter 93A provides that "[a]ny person who engages in the conduct of any trade or commerce and who suffers any loss of money or property, real or personal, as a result of the use or employment by another person who engages in any trade or commerce of . . . an unfair or deceptive act or practice" is entitled to relief. To determine whether an act or practice is unfair or deceptive under Chapter 93A, a court must focus primarily on "the nature of challenged conduct and on ...


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