Superior Court of Massachusetts, Suffolk, Business Litigation Session
Orion Equity Partners et al No. 134244
8, 2016, Filed
MEMORANDUM AND ORDER DENYING CROSS MOTIONS FOR
Kenneth W. Salinger, Justice
Inc., claims that Defendants intentionally interfered with an
exclusive negotiation agreement between Stemgent and Asterand
plc, and that as a result Stemgent was forced to pay Asterand
a higher price for certain of assets than if Defendants had
not so interfered. Stemgent also claims that the same alleged
misconduct was an unfair or deceptive act or practice in
violation of G.L.c. 93A.
sides have moved for summary judgment in their favor on all
claims. The Court concludes that the claims turn on disputed
issues of material fact. It must therefore DENY the cross
motions for summary judgment. Cf. Molly A. v.
Commissioner of Dept. of Mental Retardation, 69
Mass.App.Ct. 267, 284, 867 N.E.2d 350 (" 2007")
(" summary judgment cannot be granted if the evidence
properly before the motion judge reveals a genuine issue of
disputed material fact" that must be resolved at trial).
the factual background to this case appears to be undisputed.
By late 2011, Asterand was in default on roughly $9 million
in debt. As a result, it put two of its business units up for
sale. Stemgent and defendant Mark Carthy (who said he was
acting on behalf of " Orion Equity Partners") both
made bids on Asterand's human tissue business. After the
first round of bidding Stemgent was the highest bidder,
offering $7.7 million compared to Carthy's offer of $7.6
million. As a result, Asterand signed a letter of intent with
Stemgent and thereby agreed to an exclusive period of
negotiation during which Asterand would only negotiate with
Stemgent. Although Carthy quickly learned of Asterand's
exclusive arrangement with Stemgent, he sent a new and higher
offer to Asterand's board of directors. Stemgent
ultimately agreed to buy and Asterand agreed to sell the
tissue business for $9 million.
alleges that it could have purchased Asterand's tissue
business for $7.7 million if Carthy had not induced Asterand
to breach its exclusive negotiation agreement. It claims that
Carthy and the other Defendants tortuously interfered with
Stemgent's contractual and advantageous business
relationship with Asterand, and thereby also breached G.L.c.
93A. To prove its tortious interference claims, Stemgent will
have to establish that
(1) [it] had an advantageous relationship with a third party
(e.g., a present or prospective contract or employment
relationship); (2) the defendant knowingly induced a breaking
of the relationship; (3) the defendant's interference
with the relationship, in addition to being intentional, was
improper in motive or means; and (4) the plaintiff was harmed
by the defendant's actions.
Blackstone v. Cashman, 448 Mass. 255, 260, 860
N.E.2d 7 (2007). A party's " legitimate advancement
of its own economic interest" is not an improper motive
" for purposes of a tortious interference claim."
Pembroke Country Club, Inc. v. Regency Sav. Bank,
F.S.B., 62 Mass.App.Ct. 34, 39, 815 N.E.2d 241 (2004).
" To demonstrate improper means, a plaintiff must prove
improper conduct beyond the fact of the interference
itself." Bartle v. Berry, 80 Mass.App.Ct. 372,
380, 953 N.E.2d 243 (2011). Thus, Defendants were free to
compete with Stemgent and try to " pick [ ] the deal
off" for themselves " if, in advancing [their] own
interest, [they] refrain[ed] from employing wrongful
means." Doliner v. Brown, 21 Mass.App.Ct. 692,
695, 489 N.E.2d 1036 (1986); accord Brewster Wallcovering
Co. v. Blue Mountain Wallcoverings, Inc., 68
Mass.App.Ct. 582, 608-09, 864 N.E.2d 518 (2007).
argues that Carthy used improper means to interfere with the
exclusive negotiation agreement. In particular, it asserts
that Carthy made material misrepresentations in connection
with its further offer to Asterand. Stemgent bears the burden
of proving that the alleged misrepresentations somehow caused
Asterand to breach or disregard the exclusive negotiation
agreement. See Bartle, supra, at 381 (plaintiff
" must show that the defendant . . . used improper means
to cause" third party to withdraw or negate prior
advantageous relationship with plaintiff).
are not entitled to summary judgment in their favor. They
argue that Stemgent cannot prove that any of their alleged
misrepresentations had any effect on Asterand's
bargaining position. But there is a disputed issue of
material fact as to this point with respect to at least one
of Defendants' alleged misrepresentations. The record
shows that Carthy told Asterand that he was one of several
" principals" acting on behalf of an entity called
" Orion Equity Partners, " when in fact there was
no such partnership, there were no other principals, and
Carthy was acting only on his own behalf. Defendants point to
deposition testimony by Asterand's chief executive
officer stating that it would not have made any difference if
he had known that Carthy was acting on his own. But Stemgent
counters with testimony by Asterand's investment banker
that if he had known that " Orion Equity Partners was
simply a d/b/a through which [Carthy] was doing
business" that " might well have" "
created . . . concerns . . . about his ability to close a
transaction." This may not be the strongest reed, but it
is enough to stave off summary judgment. A reasonable jury
could choose to credit this testimony and, based on it, find
that Carthy had deliberately made a material
misrepresentation and thereby used improper means to
interfere with Stemgent's exclusive negotiation
arrangement with Asterand. See generally Dennis v.
Kaskel, 79 Mass.App.Ct. 736, 741, 950 N.E.2d 68 (2011)
(summary judgment inappropriate where " a reasonable
jury could return a verdict for the nonmoving party"
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).
is not entitled to summary judgment in its favor either. At
the very least, there is a disputed issue of material fact as
to whether Defendants' alleged interference led to
Stemgent having to pay a higher price. Stemgent argues that
the evidence supports an inference in its favor on this
issue. As Defendants note, however, there is contrary
evidence in the record suggesting that Stemgent raised its
bid because it feared that Asterand's secured creditors
would walk away with the tissue business if Stemgent did not
agree to pay Asterand enough money to allow it to pay off its
secured debt. A reasonable jury could therefore find that the
alleged interference by Defendants did not cause Stemgent to
suffer any damages.
and Defendants' cross motions for summary judgment are
both DENIED. A final pre-trial conference will ...