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Chang v. ConnectU, Inc.

Superior Court of Massachusetts, Suffolk

August 11, 2016

Wayne Chang et al.
ConnectU, Inc. et al. [1] No. 134816


          Edward P. Leibensperger, Justice

         As a result of two previous decisions of this court, the only remaining defendant is ConnectU, Inc. (" CU"). Plaintiffs, Wayne Chang and his company, The I2Hub Organization, Inc., (referred to collectively as " Chang"), now moves for summary judgment on two counts (Count I and III) of his complaint against CU. In reality, however, the motion is for partial summary judgment. That is because resolution of the motion (a) would not address the issue of damages potentially owed to Chang, and (b) would leave open, unless voluntarily dismissed by Chang, the claims in Chang's complaint (Counts IV, VIII and IX) against CU that are not the subject of Chang's motion for summary judgment. In addition, the procedural history of the claims against CU gives rise to some lack of clarity that should be resolved before proceeding to judgment. Accordingly, the motion for partial summary judgment is denied, without prejudice, at this point. As described at the end of this Order, a schedule for resolving these last remaining claims against this last remaining party is imposed.[2]

         Background of Claims

         In Counts I and III of his complaint Chang alleges breach of contract and breach of the implied covenant of good faith and fair dealing, respectively. The claims are based on a Memorandum of Understanding (" MOU") entered into between Chang and CU in 2004. The MOU details certain conditions to be met by Chang regarding integration of software platforms and then states that upon completion of the conditions, " CU will give Wayne Chang the option to exercise a 15% stake in CU." Chang asserts that all conditions were met in accordance with the MOU. Chang Statement of Undisputed Material Facts (" SUMF") ¶ 15.

         At the time CU and Chang entered into the MOU, CU was involved in litigation against Mark Zuckerberg and Facebook, Inc. CU's claims against Zuckerberg and Facebook were assets of C U.SUMF ¶ 21. The litigation was eventually settled in 2008. Pursuant to the settlement, 100% of CU's common stock was transferred to Facebook in exchange for the payment of cash and Facebook common stock. Chang alleges that CU did not inform him of the settlement and did not pay him anything for his 15% interest in C U.SUMF ¶ s 27, 28, 32.

         Procedural Background

         Chang commenced this action on December 21, 2009, against CU and the other defendants listed in footnote one. On February 9, 2010, CU answered the complaint, denying liability. Both parties claimed trial by jury. Counsel of record for CU was Peter M. Durney from the Boston firm of Cornell & Gollub.

         All defendants subsequently moved to dismiss. By decision dated April 28, 2011, the court (Lauriat, J.) allowed the motion as to Counts V, VI and VII of the complaint. The court also allowed the dismissal of all claims against Scott R. Mosko and the law firm of Finnegan, Henderson, Farabow, Garrett & Dunner LLP. The court noted, in dicta, at page 8, note 3, that " Chang cannot recover from ConnectU" because the corporation was now wholly owned by Facebook.

         At a February 19, 2013, status conference there was discussion about whether Chang wished to proceed against CU, especially given the footnote mentioned above. Following the conference, on March 22, 2013, Chang and CU filed a Stipulation of Dismissal, without prejudice, pursuant to Mass.R.Civ.P. 41(a)(1). Judgment was entered on the docket reflecting the Stipulation of Dismissal pursuant to Mass.R.Civ.P. 58(a).

         On April 28, 2014, the Winklevoss Defendants moved for summary judgment. In a decision dated December 24, 2014, this court (Billings, J.) granted summary judgment in favor of the Winklevoss Defendants. That decision would have ended the case, but for the following. The court expressed disagreement with the previous dicta from the decision on the motion to dismiss where it was stated that Chang did not have a claim against CU. The court expressly ordered that final judgment should not enter until Chang had an opportunity to move, if he wished, to reinstate his claims against CU. The court ordered that " [s]hould Chang wish to pursue his option claim against ConnectU, Inc., he shall serve a motion upon its counsel who formerly appeared in this proceeding, and file the motion papers with the Court on or before January 30, 2015."

         What occurred next are the facts that prompt the need for further clarification. On January 16, 2015, Chang served his Second Motion to Join ConnectU, Inc. as Defendant[3] on Cornell & Gollub, the counsel for CU who had formerly appeared in this proceeding. Affidavit of Meredith Wilson Doty ¶ 2 (August 8, 2016) (" Doty Aff."). Counsel for Chang was then contacted by new counsel for CU--Roberto M. Braceras of the Boston firm of Goodwin Procter. Mr. Braceras indicated that he had been retained by CU to respond to the motion. Id. at ¶ 5. He requested an extension of time to consider a response to the motion by CU. Id. On January 29, 2015, the court received an " Assented-To Motion By Non-Party ConnectU, Inc. To Extend the Deadline for the Filing of Plaintiffs' Motion to Join ConnectU, Inc. As Defendant" (the " Extension Motion"). The motion was submitted on behalf of CU and signed by Mr. Braceras.

         In the Extension Motion, Goodwin Procter states that CU is filing the Extension Motion " and appears in the matter for the sole and limited purpose of seeking an extension of time to consider a response to the Motion to Join [CU] recently served upon it by Plaintiff." Goodwin Procter represents that it had been retained by CU " to serve as new counsel in connection with Plaintiffs' efforts to reinstate litigation against ConnectU." Goodwin Procter also states that CU appears in the matter to seek an extension of time " without waiving any claims, defenses, objections, or other rights it may have." The Extension Motion was allowed by the court.

         On February 19, 2015, Chang filed in court his Second Motion to Join ConnectU, Inc. as Defendant. No opposition to the motion was filed by CU, either by Goodwin Procter or Cornell & Gollub. The motion was allowed. Chang's counsel notified Goodwin Procter of the allowance of the motion to join CU. Doty Aff. ¶ 14.

         Thereafter, Chang commenced discovery from CU. According to Chang's counsel, in July 2015, Goodwin Procter informed her in writing that " any further correspondence directed to ConnectU in this matter can be sent to Roberto Braceras at Goodwin Procter, and does not need to be sent to Peter Durney at Cornell & Gollub." Doty Aff. ¶ 19. ...

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