Superior Court of Massachusetts, Suffolk, Business Litigation Session
MMA Lincoln Gardens, LLC et al.
Dale Lancaster; Henderson Management, LLC et al.
Boston Financial Investment Management Limited Partnership et al No. 135843
December 8, 2016
MEMORANDUM AND ORDER ON MOTION TO DISMISS THE FIRST
AMENDED COMPLAINT [in No. 1684CV1830]
P. Leibensperger, Justice
cases present disputes between a general partner and investor
limited partners. The disputes arise with respect to four
separate limited partnership agreements for the development
of real property. The general partner entity for each of the
projects was owned and managed by Dale Lancaster. Thus, the
general partners will be called, collectively, the "
Lancaster General Partners." The investor limited
partners for each project were organized by Boston Financial
Investment Management Limited Partnership ("
BFIM"). Thus, the investor limited partners will be
called, collectively, the " BFIM Limited Partners."
litigation began with the commencement of an action by the
BFIM Limited Partners against Dale Lancaster for nonpayment
of amounts owed as a result of his personal guarantees of
debts owed by the Lancaster General Partners. That action is
the Lead Case, described above. The BFIM Limited Partners
describe the Lead Case as a collection action.
response, Dale Lancaster and the Lancaster General Partners
commenced a separate action against the BFIM Limited Partners
and BFIM. Among other things, the Lancaster General Partners
allege that they were wrongfully removed as general partners
of the projects by the BFIM Limited Partners. The separate
action is Docket Number 1684CV1830 which, as described above,
is now consolidated (the " Consolidated Case") with
the Lead Case.
BFIM Limited Partners now seek to dismiss the First Amended
Complaint filed in the Consolidated Case. The BFIM Limited
Partners base their motion on two arguments, one procedural
and one substantive.
Ground for Motion to Dismiss
BFIM Limited Partners contend that the claims in the First
Amended Complaint should have been asserted as counterclaims
in the Lead Case rather than in a new action (that later
became consolidated with the Lead Case). Because the claims
were not asserted as counterclaims in the Lead Case, the BFIM
Limited Partners say that the claims are barred.
critical dates are as follows. On February 19, 2016, the BFIM
Limited Partners commenced the Lead Case. On March 31, 2016,
Dale Lancaster answered the complaint. He did not assert any
counterclaims with his answer. On June 10, 2016, the
Lancaster General Partners and Dale Lancaster commenced the
Consolidated Case. On June 27, 2016, Dale Lancaster moved to
consolidate the Consolidated Case with the Lead Case, and on
June 29, 2016, the consolidation was allowed.
claims asserted in the Consolidated Case arise out of the
transaction or occurrence that was the subject matter of the
Lead Case complaint. Accordingly, the claims in the
Consolidated Case were compulsory counterclaims, at least as
to Dale Lancaster (the only defendant in the Lead Case), that
should have been asserted in the Lead Case. The BFIM Limited
Partners therefore rely on the maxim that failure to plead a
compulsory counterclaim bars a party from bringing a later
independent action on that claim. Keystone Freight Corp.
v. Bartlett Consolidated, Inc., 77 Mass.App.Ct. 304,
temporal context presented here, BFIM Limited Partners'
argument exalts form over substance. Mass.R.Civ.P. 13(f)
allows a party to assert an untimely counterclaim when "
through oversight, inadvertence, or excusable neglect, or
when justice requires" the party failed to plead a
counterclaim at the time of the answer. While Dale Lancaster
failed to plead a counterclaim in the Lead Case, he asserted
the counterclaim in the Consolidated Case within
approximately 70 days, and then immediately moved to
consolidate the two cases. In substance, the motion to
consolidate acted as a motion to be allowed to file a
counterclaim late. The BFIM Limited Partners joined the
motion to consolidate. Stated another way, had Dale Lancaster
moved to file a late counterclaim in the Lead Case, it would
have been allowed because (a) the motion would have been
timely made, (b) it was excusable for Lancaster not to file
the counterclaim given that the other Lancaster General
Partners and BFIM were not parties in the Lead Case, (c)
there was no unfair prejudice to the BFIM Limited Partners,
and (d) justice requires the case to be decided on the merits
rather than on a procedural technicality. Diversified
Mortgage Investors v. Viking General Corp., 16
Mass.App.Ct. 142, 151 (1983) (" in the administration of
rules like rule 13(a), there must be reasonable flexibility
in order to accomplish the fundamental purpose of combining
related claims in one action in the interest of judicial
economy while at the same time accomplishing a just
result"). Dale Lancaster's prompt motion to
consolidate the two cases put the parties in the same
position as if he had moved to file a counterclaim late in
the Lead Case. Consequently, the BFIM Limited Partners'
motion to dismiss the First Amended Complaint in the
Consolidated Case on procedural grounds fails.
Grounds for Motion to Dismiss
BFIM Limited Partners move to dismiss the First Amended
Complaint in the Consolidated Case on the ground that it
fails to state a claim upon which relief may be granted.
Mass.R.Civ.P. 12(b)(6). To survive a motion to dismiss, a
complaint must set forth the basis for the plaintiff's
entitlement to relief with " more than labels and
conclusions." Iannacchino v. Ford Motor Co.,
451 Mass. 623, 636, quoting Bell A. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). At the pleading
stage, Mass.R.Civ.P. 12(b)(6) requires that the complaint set
forth " factual 'allegations plausibly suggesting
(not merely consistent with)' an entitlement to relief .
. ." Id., quoting Bell A. Corp., 550
U.S. at 557. The court must, however, accept as true the
allegations of the complaint and draw every reasonable
inference in favor of the plaintiff. Curtis v. Herb
Chambers I-95, Inc., 458 Mass. 674, 676 (2011).
count of the First Amended Complaint (Counts I through XII)
is based on the claim that the BFIM Limited Partners breached
the respective Limited Partnership Agreement applicable to
one of the four real estate projects and that BFIM tortiously
interfered with the contracts. The Lancaster General Partners
allege that, in breach of the Limited Partnership Agreements,
the BFIM Limited Partners exercised, without justification,
authority in the contracts to remove and replace the general
partners. The BFIM Limited Partners then installed BFIM
affiliates as ...