United States District Court, D. Massachusetts
DAWN E. IRISH, Plaintiff,
CRAIG S. IRISH, Defendant.
MEMORANDUM & ORDER
WILLIAM G. YOUNG DISTRICT JUDGE
On June 30, 2015, this Court found Craig Irish liable to Dawn Irish on Counts II (breach of contract) and III (breach of the covenant of good faith and fair dealing) of her complaint. Findings Fact and Rulings Law 23-24, ECF No. 185.
After conducting a bench trial on the scope of damages, this Court issued its ruling on October 6, 2015. See Excerpt Tr.: Judge’s Ruling (“Excerpt Tr.”), ECF No. 234. The Court held that Dawn Irish was entitled to a 20% interest in Craig Irish’s proceeds from the sale of his equity interest in Nuclear Logistic, Inc. (“NLI”) (less the sums already paid), and 50% of his reimbursement checks. Id. at 5. The Court requested that the parties prepare a proposed judgment, and noted that doing so would not waive their appellate rights. Id. at 6. On October 16, 2015, the parties submitted their proposed forms of judgment along with memoranda in support of their proposals. Pl.’s Proposed Final J., ECF No. 243; Pl. Dawn Irish’s Mem. Supp. Proposed Form J. and Pre-J. Interest Calculation (“Pl.’s Mem.”), ECF No. 244; Def. Craig Irish’s Mem. Form J. (“Def.’s Mem.”), ECF No. 249.
Having carefully considered the parties’ positions, the Court, with one exception, adopts the judgment proposed by Dawn Irish. This memorandum explains the Court’s reasoning with respect to four issues disputed by the parties: tax considerations, reimbursement checks, prejudgment interest, and attorneys’ fees.
II. TAX CONSIDERATIONS
On June 30, 2015, having found that Craig Irish breached the separation agreement of January 21, 2010 (“Separation Agreement”), as well as the implied covenant of good faith and fair dealing, this Court imposed a constructive trust on the proceeds of the sale of Craig Irish’s equity in NLI. See Excerpt Tr. 4, ECF No. 234; Findings Fact and Rulings Law 24 (citing Nile v. Nile, 432 Mass. 390, 401 (2000)).
Relying on this ruling, Dawn Irish posits that she is entitled to 20% of the proceeds of the equity sold, minus the amounts already paid to her, and calculates the baseline monetary award as follows:
$4, 320, 000 (which is 20% of $21, 600, 000)
- $480, 000 (which is the sum of the amounts already paid)
= $3, 840, 000.
Pl.’s Mem. 5.
Craig Irish contends that the award should reflect the taxes “that were due (and paid)” on the proceeds of the NLI equity. Def.’s Mem. 3. He argues that “Dawn is not entitled to a windfall of receiving payment of an amount that is really a tax liability already paid.” Id.
The Court agrees with him in part. Under Massachusetts law,  his basic legal argument is correct: generally, he would be entitled to subtract from his liability his prior tax payments on the wrongfully obtained property. See Demoulasv.Demoulas Super Mkts., Inc., 424 Mass. 501, 555-59 (1997) (holding that the defendants must pay back wrongfully obtained corporate earnings that had been distributed to them but that they could “deduct their tax payments” on these earnings). Here, Craig Irish would be entitled to a reduction in the judgment by any taxes that he paid on the 20% of the proceeds due to Dawn Irish. See id. (stating defendants’ ...