Heard: May 16, 2016.
actions commenced in the Superior Court Department on May 24,
2012, and May 14, 2013.
consolidation, the case was heard by Janet L. Sanders, J.; a
motion for attorney's fees and costs was heard by her;
and entry of final judgment was ordered by her.
W. Moran (Michael T. Grant with him) for Elizabeth Beninati.
Charles R. Bennett, Jr., for Steven Borghi.
Stern for Harold Dixon & others.
Michael S. Marino, for Joseph Masotta & others, was
present but did not argue.
Present: Agnes, Massing, & Kinder, JJ.
plaintiffs, Elizabeth Beninati and Joseph Masotta, together
with defendants Steven Borghi and Linda Borghi, owned and
operated a chain of fitness clubs licensing the "Work
Out World" (WOW) trade name (collectively, WOW New
England).While actively involved in the
management of WOW New England, Steven, working with an
outside partner, defendant Harold Dixon, and using WOW New
England's inside information and resources, formed Blast
Fitness Group, LLC (Blast), and opened a chain of similar
clubs in the same geographic area, some using the WOW name,
others using the name "Blast Fitness." (We refer to
the defendant clubs that Dixon and Steven controlled as the
Blast clubs or, together with Blast, as the Blast
defendants). After a jury-waived trial on two consolidated
complaints,  a Superior Court judge found the
Borghis and Dixon liable to Elizabeth, Masotta, and the other
WOW New England owners for breach of fiduciary duty on the
plaintiffs' derivative claims and awarded approximately
$4 million in damages. The judge held as a matter of law,
however, that Dixon and the Blast defendants could not be
liable for unfair competition under G. L. c. 93A because
their misconduct involved only aiding and abetting Steven in
the breach of his fiduciary duties. The judge also upheld
corporate votes of the WOW New England companies removing the
Borghis from management, and awarded attorney's fees to
Elizabeth under G. L. c. 156C, § 57, but not Masotta.
Elizabeth and Masotta's appeal from the judge's
ruling in favor of Dixon and the Blast defendants on the c.
93A claim, we vacate and remand for further proceedings. On
Masotta's appeal from the denial of his request for
reimbursement of attorney's fees and expenses, and on the
Borghis' cross appeal from the enforcement of their
removal, we affirm.
state the uncontested facts as set forth in the judge's
thoughtful and comprehensive memorandum of decision, based on
the testimony she heard and the nearly one thousand exhibits
she reviewed during a twenty-day bench trial. We reserve some
disputed factual issues for later discussion.
England began as a single club in Randolph in 1999.
Elizabeth's husband, Anthony Beninati (Tony), and Steven
opened the first club, with Masotta receiving an ownership
interest in exchange for doing the build-out work. A year
later, the trio opened a second club in Norwood. Early on,
they decided to license the WOW name from WOW Licensing LLC
(WOW Licensing). The licensing agreement, with a stated term
of five years, specified that WOW Licensing would not grant
the rights to the WOW name to any other entity within five
miles of the WOW New England clubs.
1999 and Tony's untimely death from a rare and apparently
incurable disease in 2005, Tony, Steven, and Masotta opened
ten more health clubs in New England, eight of which were
still in operation at the time of trial. Each club entered
into the same licensing agreement with WOW Licensing. Steven
was responsible for scouting new locations, Masotta oversaw
construction of the new clubs, and Tony ran the day-to-day
business. Steven's wife Linda took an active role in
running the clubs as a salaried employee. While Tony was
alive, Elizabeth did not actively participate in the
management of the clubs.
club was owned and operated through a separate limited
liability company, with discrete operating agreements and
varying ownership percentages allocated among the three
majority owners, as well as assorted minority investors.
However, attention to corporate niceties was lax, and eight
of the clubs were opened without written operating
agreements. In December, 2004, just a month before Tony's
death, WOW New England's accountant drew up written
operating agreements for the eight LLCs, and an updated
agreement for one of the other clubs. The eight new
agreements referred to "Anthony (Elizabeth)
Beninati" as one of the members. For the first time, the
agreements included noncompetition clauses -- Tony, Steven,
and Masotta would open new clubs either together or not at
Tony's death in 2005, Elizabeth began to play an active
role in the management of WOW New England. By 2006, she was
signing equipment finance agreements, advertising contracts,
and leases; handling personnel matters such as schedules and
pay, employment policies, and approval of employees'
expenditures; and helping to develop the clubs' Web site.
For all major decisions, Elizabeth and Steven were equals,
with Masotta casting the deciding vote on upper management
decisions when the two disagreed.
three years following Tony's death, no new clubs were
opened. Then, between 2008 and 2010, four new health clubs
were launched. Following the template of the original clubs,
each was owned by a separate corporation and each paid an
annual fee to WOW Licensing, though neither the operating nor
licensing agreements were ever committed to writing. During
this time, the five-year licensing agreements between the
original clubs and WOW Licensing began to expire. Although
the licensing agreements were never renewed in writing, both
WOW Licensing and WOW ...