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Packaging Partners, LLC v. Pilothouse Packaging, LLC

Appeals Court of Massachusetts

September 28, 2015

Packaging Partners, LLC
v.
Pilothouse Packaging, LLC § another. [1]

SUMMARY DECISIONS ISSUED BY THE APPEALS COURT PURSUANT TO ITS RULE 1:28, AS AMENDED BY 73 Mass.App.Ct. 1001 (2009), ARE PRIMARILY DIRECTED TO THE PARTIES AND, THEREFORE, MAY NOT FULLY ADDRESS THE FACTS OF THE CASE OR THE PANEL'S DECISIONAL RATIONALE. MOREOVER, SUCH DECISIONS ARE NOT CIRCULATED TO THE ENTIRE COURT AND, THEREFORE, REPRESENT ONLY THE VIEWS OF THE PANEL THAT DECIDED THE CASE. A SUMMARY DECISION PURSUANT TO RULE 1:28 ISSUED AFTER FEBRUARY 25, 2008, MAY BE CITED FOR ITS PERSUASIVE VALUE BUT, BECAUSE OF THE LIMITATIONS NOTED ABOVE, NOT AS BINDING PRECEDENT. SEE CHACE V. CURRAN, 71 Mass.App.Ct. 258 260 N.4, 881 N.E.2d 792, (2008).

PUBLISHED IN TABLE FORMAT IN THE MASSACHUSETTS APPEALS COURT REPORTS.

PUBLISHED IN TABLE FORMAT IN THE NORTH EASTERN REPORTER.

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

The defendants, Pilothouse Packaging, LLC and Jeffrey A. Deacon (together, Pilothouse), appeal from judgments issued following a jury-waived trial in the Superior Court dismissing Pilothouse's counterclaim for posttermination commissions and awarding Packaging Partners, LLC $20,314 in lost profits, which the judge doubled pursuant to G. L. c. 93A. On appeal, Pilothouse claims the judge erred by (1) denying posttermination commissions because Pilothouse was the procuring cause of the sales, (2) miscalculating Packaging Partners's lost profits, and (3) awarding multiple damages and attorney's fees to Packaging Partners because Pilothouse's reasonable settlement offer should preclude an award of " more than single damages." G. L. c. 93A, § 11. We affirm.

1. Posttermination commissions.

 Pilothouse contends that it is entitled to posttermination commissions as Packaging Partners's broker because it was the procuring cause of the sales. We disagree.

" The general rule is well settled that a broker must act with entire good faith towards his principal, and he is bound to disclose to his principal all facts within his knowledge which are or may be material to the matter in which he is employed, . . . and if he has failed to come up to this standard of duty he cannot recover." Veasey v. Garson, 177 Mass. 117, 120, 58 N.E. 177 (1900). In this instance, Pilothouse's purposeful and deceitful actions against Packaging Partners's interest preclude recovery. See Alvord v. Cook, 174 Mass. 120, 126, 54 N.E. 499 (1899) (" [W]hen the individual interests of the broker in the transaction are antagonistic to those of his principal . . . he is not in a situation to perform his full duty to his employer, and his failure to inform his employer of the fact is a fraud upon the latter; and in such case the plaintiff cannot recover a commission" ). Regardless of any commission that Packaging Partners might have owed under different circumstances, here Pilothouse effectively forfeited its right to recover. See Little v. Phipps, 208 Mass. 331, 334, 94 N.E. 260 (1911) (" This may operate to give to the principal the benefit of valuable services rendered by the agent, but the agent has only himself to blame for that result" ). As Pilothouse's conduct amounted to a breach of the duties owed to Packaging Partners, it is not entitled to any posttermination commissions.[2]

2. Packaging Partners's lost profits.

Pilothouse claims the judge erred in including the cost of two tape heads ($2,072) in Packaging Partners's lost profits calculation. " Valuation is a question of fact, and we will not disturb a judge's determination unless it is clearly erroneous." Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 483, 583 N.E.2d 806 (1991) (quotation omitted). Here, the judge explicitly credited testimony that the manufacturer offered free tape heads, Packaging Partners had not quoted a price for them, and the manufacturer had tape heads " coming out [their] ears." Because the judge was entitled to rely on, and credit, that evidence in providing a fair and reasonable approximation of Packaging Partners's lost profits, we cannot say that determination was clearly erroneous.

3. Packaging Partners's c. 93A claim.

Pilothouse claims that its offer to pay Packaging Partners's lost net profits by crediting that amount against its own claim for unpaid posttermination commissions was reasonable and therefore precludes an award of multiple damages or attorney's fees pursuant to G. L. c. 93A, § 11. We disagree.

Reasonableness is examined " in relation to the injury actually suffered." G. L. c. 93A, § 11. Although Pilothouse claims that the judge erred as a matter of law in finding its settlement offer unreasonable, the judge was within his discretion as the fact finder to determine the offer to be unreasonable as a matter of fact. Kohl v. Silver Lake Motors, Inc., 369 Mass. 795, 799, 343 N.E.2d 375 (1976) (" A determination of reasonableness normally is a question of fact" ); Parker v. D'Avolio, 40 Mass.App.Ct. 394, 395, 664 N.E.2d 858 (1996) (" Whether the defendants' settlement proposal was an unreasonable refusal or made in bad faith [is] a question of fact" ).[3]

" Findings of fact shall not be set aside unless clearly erroneous." Mass.R.Civ.P. 52(a), as amended, 423 Mass. 1402 (1996). See Parker, supra (applying clearly erroneous standard to c. 93A reasonableness determination). A finding of fact is generally deemed to be clearly erroneous when no evidence supports the finding. Custody of Eleanor, 414 Mass. 795, 799, 610 N.E.2d 938 (1993). Here, the judge relied on the plain language of Pilothouse's settlement offer and was warranted in ruling that Pilothouse's " offer" to settle by crediting Packaging Partners's lost profits against the amount it claimed due in commissions (to which Pilothouse is not entitled) was not reasonable. Although the judge noted that, alone, the offer to settle would have been reasonable, he was justified in interpreting the offer as a conditional credit requiring Packaging Partners's acquiescence to Pilothouse's demands for commissions. Because it was questionable whether Pilothouse was entitled to any posttermination commission at all, the offer did not promote settlement as § 11 intends, but instead represented a " summons to litigate." Calimlim v. Foreign Car Center, Inc., 392 Mass. 228, 234, 467 N.E.2d 443 (1984). Pilothouse's insistence that its commissions would significantly outweigh any amount owed for lost profits resulted in an offer of less than zero. As such, the judge was justified in reading and interpreting both the " offer" and demand of payment in the letter together and finding it unreasonable.[4] See ibid. (" The gross inadequacy of this 'offer' makes it patently unreasonable" ).

Pilothouse further asserts that its conduct in breaching its contract with Packaging Partners did not violate c. 93A and that the judge erred in concluding that Packaging Partners's breach of contract damages can ...


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