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Pontacolini v. Dailybreak/CP, LLC

Superior Court of Massachusetts, Suffolk

March 15, 2016

Nicholas Pontacolini
Dailybreak/CP, LLC et al No. 133099

          Filed Date March 21, 2016


          Dennis J. Curran, Associate Justice.

         The defendant Dailybreak/CP, LLC's has filed a motion to dismiss, that has since been converted into a motion for summary judgment. It asserts that, under the language of its Asset Purchase Agreement with Dailybreak Inc., it is not its successor-in-interest. Therefore, Dailybreak/CP argues that it cannot be liable to Mr. Pontacolini for unpaid wages. For the reasons that follow, the defendant's motion for summary judgment is DENIED.


         We take, as we must, all evidence and reasonable inferences drawn from that evidence, in the light most favorable to the non-moving party (here, Mr. Pontacolini).

         On June 13, 2013, Nicholas Pontacolini entered into an employment agreement with Dailybreak, Inc. under which he was hired as its Regional Sales Director. The agreement specified the terms of Mr. Pontacolini's employment, his duties, and detailed a compensation plan which included both a semi-monthly base salary of $5, 000 and a commission-based salary. The latter was based on a quarterly sales plan, and allowed Mr. Pontacolini to earn up to $105, 000.

         Under the agreement, Mr. Pontacolini began his employment as Regional Sales Director with Dailybreak, Inc. on July 9, 2013. However, the relationship between the two parties quickly unraveled. By October 7, 2013, Dailybreak, Inc. no longer employed Mr. Pontacolini. The parties offer conflicting reasons for the dissociation. Dailybreak, Inc. stated that Mr. Pontacolini resigned from his position, but Mr. Pontacolini claims that Dailybreak, Inc. wrongly terminated him after he gave notice he would be moving to Portland, Maine. After the separation, Mr. Pontacolini, under the impression he was entitled to commissions earned during the course of his employment, attempted to settle the issue with Dailybreak, Inc. but that effort bore no fruit. Dailybreak, Inc. denied that it owed Mr. Pontacolini any compensation for his work, and communications between the parties broke down.

         Mr. Pontacolini subsequently filed a Non-Payment of Wage and Workplace Complaint with the Office of the Attorney General's Fair Labor Division, alleging that Dailybreak, Inc. wrongfully withheld $13, 125 in sales commission owed to him under the employment agreement. After review, the Fair Labor Division authorized Mr. Pontacolini to pursue his case against Dailybreak, Inc. through a " private right of action." That process took some months to complete.

         On September 4, 2014, however, Dailybreak, Inc. and Dailybreak/CP, LLC[1] entered into an Asset Purchase Agreement. In relevant part, the Agreement stated that Dailybreak, Inc. agreed to sell all of its assets--including the rights to the name " Dailybreak" and its website, "" --to Dailybreak/CP for $175, 000 plus earned payouts. Dailybreak/CP also agreed to assume specific liabilities of Dailybreak, Inc., to operate the business in its ordinary course and as a separate business unit apart from the other businesses of Connelly Partners, to fund the operating deficit of Dailybreak, Inc. up to $825, 000, and to sublease Dailybreak, Inc.'s Boston office. Furthermore, the Agreement was conditioned on Dailybreak, Inc.'s termination of all employees, but curiously required Dailybreak/CP to hire those same employees--including Chief Executive Officer John Federman, Chief Technology Officer Jared Stenquist, Chief Marketing Officer Nancy Liberman, and co-founder Boris Revsin--at the same salary.

         On May 13, 2015, Mr. Pontacolini commenced this action under G.L.c. 149, § 148 for the unpaid commissions owed to him. He alleges that Dailybreak/CP is a successor-in-interest to Dailybreak, Inc., and is therefore liable for unpaid wages due him.


          A court should grant summary judgment when, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law. Bank of N.Y. v. Bailey, 460 Mass. 327, 331, 951 N.E.2d 331 (2011). The party moving for summary judgment has the burden of establishing that there is no genuine issue of material fact on every relevant issue, even if the party would not have the burden on the issue if the case were to go to trial. Matthews v. Ocean Spray Cranberries, Inc., 426 Mass. 122, 127, 686 N.E.2d 1303 (1997). This burden may be satisfied by affirmative evidence negating an essential element of the opposing party's case or by establishing that proof of that element is unlikely to be forthcoming at trial Flesner v. Technical Commc'ns Corp., 410 Mass. 805, 809, 575 N.E.2d 1107 (1991).

          Massachusetts adheres to the corporate law principle that the liabilities of a selling predecessor corporation are not imposed on the successor corporation which purchases its assets unless: 1) the successor expressly or impliedly assumes liability of the predecessor; 2) the transaction is a de facto merge or consolidation; 3) the successor is a mere continuation of the predecessor; or 4) the transaction is a fraudulent effort to avoid liabilities of the predecessor. Cargill, Inc. v. Beaver Coal & Oil Co., Inc., 424 Mass. 356, 359, 676 N.E.2d 815 (1997). In determining whether to characterize an asset sale as a de facto merger, courts consider: 1) whether there is a continuation of the enterprise of the seller corporation so that there is continuity of management, personnel, physical location, assets, and general business operations; 2) whether there is a continuity of shareholders which results from the purchasing corporation paying for the acquired assets with shares of its own stock, this stock ultimately coming to be held by the shareholders of the seller corporation so that they become a constituent part of the purchasing corporation; 3) whether the seller corporation ceases its ordinary business operations, liquidates, and dissolves as soon as legally and practically possible; and 4) whether the purchasing corporation assumes those obligations of the seller ordinarily necessary for the uninterrupted continuation of normal business operations of the seller corporation.[2] Milliken & Co. v. Duro Textiles, LLC, 451 Mass. 547, 557, 887 N.E.2d 244 (2008). Finally, no single fact is necessary or sufficient to establish a de facto merger. Id.

         In support of its motion for summary judgment, Dailybreak/CP thrusts forward its Asset Purchase Agreement with Dailybreak, Inc., alleging that the Agreement has immunized itself from liability as against Mr. Pontacolini's claim. However, viewing the Agreement in the light most favorable to Mr. Pontacolini, this language is insufficient to ...

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