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Irish v. Irish

United States District Court, D. Massachusetts

June 30, 2015

DAWN E. IRISH, Plaintiff,
v.
CRAIG S. IRISH, Defendant.

FINDINGS OF FACT AND RULINGS OF LAW

WILLIAM G. YOUNG, District Judge.

I. INTRODUCTION

This case arises out of the acrimonious 2010 divorce of the plaintiff, Dawn E. Irish ("Ms. Irish"), and the defendant, Craig S. Irish ("Mr. Irish") (collectively, "the Irishes").

Specifically, Ms. Irish alleges that Mr. Irish manipulated his compensation package and failed fully to disclose his finances in an attempt to prevent Ms. Irish from receiving what she was due after their divorce, thus giving rise to claims for breach of contract and breach of the covenant of good faith and fair dealing. The parties agreed to resolve the question of liability on these claims at a case stated hearing[1] held on July 30, 2014.

This case followed a circuitous path through both state and federal courts to its present resolution. The federal portion of the case began on November 15, 2012, when Ms. Irish filed a complaint alleging nine counts sounding in contract, tort, and fraud against Mr. Irish and two other defendants - Aron Seiken ("Seiken") and Pebble Nuclear, Inc., formerly known as Nuclear Logistics, Inc. ("NLI"). Compl., ECF No. 1. At a motion session held on March 21, 2013, the Court dismissed the claim against Seiken because of improper venue, dismissed one of the counts against NLI for failure to state a claim, and denied a motion to dismiss filed by Mr. Irish. Elec. Clerk's Notes, ECF No. 38. Mr. Irish subsequently filed a motion for summary judgment, which was granted as to the fraud claim but was otherwise denied on July 15, 2013. Elec. Clerk's Notes, ECF No. 63. Pursuant to an agreement between Ms. Irish and NLI, the Court dismissed the claims against NLI on November 12, 2013. Final J. Certain Party, ECF No. 80. On January 22, 2014, following a set of cross-motions for summary judgment and a motion to dismiss for lack of jurisdiction, the Court dismissed all remaining counts except for Count II (alleging breach of contract) and Count III (alleging breach of the covenant of good faith and fair dealing), as all but the contract claims were barred by the domestic relations exception to federal subject matter jurisdiction.[2] Elec. Clerk's Notes, ECF No. 144; Mot. Hearing Tr. 9:16-11:10, ECF No. 135. The Court then administratively closed the case (to be reopened upon the motion of either party) to allow the claims to be resolved in the Middlesex Probate and Family Court. Elec. Clerk's Notes, ECF No. 144; Order, ECF No. 145; Order, ECF No. 146.

The matter finally began approaching its present posture on May 30, 2014, when Ms. Irish filed a motion to reopen the case and set a date for trial of the remaining claims. Pl. Dawn E. Irish's Mot. Reopen Case & Set Trial Incorporated Mem. Supp., ECF No. 148; Elec. Order, ECF No. 149. At a status conference on June 12, 2014, the parties agreed to resolve the issue of liability for the remaining counts at a case stated hearing. Status Conf. Tr. 3:14-5:1, ECF No. 160. Ms. Irish filed a memorandum in support of her position on July 23, 2014. Pl.'s Case-Stated Mem. Count II (Breach Contract) & Count III (Breach Covenant Good Faith & Fair Dealing) ("Ms. Irish's Mem."), ECF No. 163. Mr. Irish filed his own memorandum the same day. Craig Irish's Mem. July 30, 2014 Case-Stated Hr'g & Supp. Mot. Exclude Reports Pl.'s Experts ("Mr. Irish's Mem."), ECF No. 166.[3] The Court held a case stated hearing on July 30, 2014 and took the matter under advisement. Elec. Clerk's Notes, ECF No. 170.

II. FINDINGS OF FACT

A. The Irishes' Marriage & Divorce

The Irishes were married in Chelmsford, Massachusetts, on October 3, 1992. Aff. Sean T. Carnathan Supp. Pl.'s Opp'n Def. Craig S. Irish's Mot. Summ. ("Carnathan Aff."), Ex. 6, Separation Agreement ("Separation Agreement") 1, ECF No. 59-6. During the course of the marriage, Mr. Irish worked at NLI (ultimately rising to the position of officer, director, and part owner), and Ms. Irish maintained their home while Mr. Irish traveled for work. Ms. Irish's Mem. 3. The marriage began to deteriorate in 2008 and became irreconcilable on February 2, 2009. Id . Mr. Irish filed for divorce two days later on February 4, 2009. Id.

Judge Dorothy M. Gibson of the Middlesex Probate and Family Court entered a judgment of divorce nisi on January 21, 2010. Carnathan Aff., Ex. 7, J. Divorce Nisi, ECF No. 59-7. The judgment incorporated a Separation Agreement filed the same day, though the Separation Agreement was not merged into the divorce judgment. See id.; Separation Agreement. In addition to a number of other provisions not relevant to the case currently at bar, the Separation Agreement provided for an equal split of all of the Irishes' assets with the exception of Mr. Irish's equity in NLI. Ms. Irish's Mem. 3 (citing Separation Agreement ¶¶ 6, 7). At the time of the divorce, Mr. Irish represented that he had a 6 equity point interest in NLI, translating to 120 shares. Separation Agreement 5.[4]

It appears that going into the negotiation of the Separation Agreement, it was very important to Ms. Irish that she receive 20% of Mr. Irish's equity in NLI; at the parties' conference on January 21, 2010, she produced a draft of the Separation Agreement that explicitly gave her this 20% share. Mr. Irish's Mem. 6. In the final version of the Separation Agreement, this 20% clause is crossed out, and Ms. Irish instead was explicitly given 24 shares of NLI, representing 20% of the 120 shares in the company that Mr. Irish purportedly owned. See Separation Agreement 5. Ms. Irish attests that she agreed to strike out the clause granting her 20% of Mr. Irish's stake in NLI because it "seemed superfluous" when set against the explicit grant of a number of shares amounting to this 20% interest and because Mr. Irish "had represented many times that he would not get any more from a sale [of NLI] than his 6% equity entitled him to." Aff. Dawn Irish Supp. Her Mot. Summ. J. Counts I & V Against Craig Irish ("Ms. Irish Aff.") ¶ 12, ECF No. 86. Because Mr. Irish was not permitted to sell his stock in NLI, the Separation Agreement transferred the 24 shares granted to Ms. Irish to an escrow account, with the Escrow Agreement becoming incorporated into the Separation Agreement itself. See Separation Agreement 5; Aff. Elizabeth G. Crowley, Ex. C, Probate & Family Ct. Tr. 4:12-20, ECF No. 99-3.

Two other provisions of the Separation Agreement bear on the matter at bar. First, the same paragraph of the document that grants 24 shares of NLI to Ms. Irish states that "HUSBAND further covenants and agrees that he shall do nothing to deprive WIFE of the benefits intended by this agreement, including, but not limited to... entering into any agreement intended to diminish WIFE's share of any compensation paid for HUSBAND's interest in [NLI]." Separation Agreement 5-6. Second, the Separation Agreement refers repeatedly to the Irishes' Financial Statements, which were sworn and submitted to the Middlesex Family and Probate Court approving the divorce. See Separation Agreement 2, 5, 7; Ms. Irish's Mem. 4 (describing submission of the statements). The Financial Statement Mr. Irish submitted and signed on January 21, 2010 - the day the Separation Agreement was approved - contains a clause stating that he "certif[ies] under the penalties of perjury that the information stated on this Financial Statement and the attached Schedules, if any, is complete, true, and accurate." Carnathan Aff., Ex. 5, Financial Statement (Long Form) ("Fin. Statement") 20, ECF No. 59-5.

B. Mr. Irish's Employment & Compensation

During the Irishes' marriage, Mr. Irish worked as Vice President of Sales for NLI, earning a sizable yearly salary in addition to performance bonuses and his aforementioned ownership stake. Mr. Irish cites evidence that Ms. Irish knew in the several years prior to the divorce that NLI could be sold to another company, possibly leading to ...


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