United States District Court, D. Massachusetts
JOSEPH G. BUTLER, as Chapter 7 Trustee, and JOHN W. STRACHAN, Plaintiffs,
EDWARD T. MOORE, LAWRENCE W. ROSENFELD, EASTERN TOWERS, LLC, EASTERN PROPERTIES, LLC, HORIZON TOWERS, LLC, TOWER INVESTORS TRUST, GLOVER PROPERTY MANAGEMENT, INC., 5G TOWERS, LLC, 5G INVESTMENT TRUST, LLC, TOWER ACQUISITIONS, INC., TOWER ACQUISITIONS, LLC, TOWER ACQUISITION TRUST, GROUND LEASE ACQUISITIONS, INC., GROUND LEASE ACQUISITIONS, LLC, GROUND LEASE ACQUISITION TRUST, and MIDWEST TOWERS INVESTMENT, LLC, Defendants.
MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY
JUDGMENT AS TO REMEDY
DENNIS SAYLOR IV UNITED STATES DISTRICT JUDGE.
action arises out of a dispute concerning a closely held
business that developed towers for the cellular telephone
industry. The principal dispute involves a series of
transactions in which the majority owners of the business
froze out the minority owners and appropriated assets and
business opportunities for their own benefit. The Court
previously issued a decision on liability, and the proceeding
is now at the remedy stage. Familiarity with the Court's
previously-issued Findings of Fact and Conclusions of Law is
November 2006, defendants Edward Moore and Lawrence Rosenfeld
caused Eastern Towers, Inc., to file a voluntary petition
under Chapter 7 of the Bankruptcy Code. With two very minor
exceptions, plaintiff Strachan is the only remaining
creditor. The reference to the Bankruptcy Court was
withdrawn in 2010, and the matter was then tried to the Court
without a jury.
January 27, 2012, the Court ordered the case bifurcated into
liability and remedy phases. After a bench trial as to
liability, the Court issued Findings of Fact and Conclusions
of Law on March 26, 2015. Following the issuance of the
judgment, the Court granted defendants' motion for a new
trial as to remedy on the grounds that the conclusions of law
inappropriately included findings that should have been
reserved for the remedy phase. Defendants have now moved for
summary judgment as to the proper remedy, and plaintiffs have
cross-moved for partial summary judgment as to the same
Additional Factual Background
as noted, the following facts are either based on those
Findings of Fact or are not disputed by the parties.
2010 Sale of Thirteen Towers
Court's Findings of Fact identified 33 towers that had
been acquired and developed in violation of the fiduciary
duties of Moore and Rosenfeld to Eastern Towers. (COL ¶
those 33 towers, 13 were sold on September 1, 2010, to SBA
Towers III, LLC, an unrelated third party. (Exs. 913.400,
13 towers that were sold were as follows:
a. Four towers that were formerly owned by Eastern
Properties, LLC (Esko, Ivan, Manitowish, and Bergland);
b. One tower that was formerly owned by Tower Acquisition
Trust or Tower Acquisitions, Inc. (South Grantham);
c. Eight towers that were formerly owned by 5G Investment
Trust, LLC (Antigo, Trego, Lake Nebagamon, West Fergus Falls,
Grand Rapids, Americus, Tennille, and Oakland).
seller of the 13 towers on September 1, 2010, was Midwest
Towers Investment, LLC, a Delaware limited liability company
owned and controlled by Moore and/or Rosenfeld.
(Id.). Midwest Towers Investment, LLC is a single
member LLC owned by 5G Investment Trust. (Phillips Rpt. at 2
Midwest Towers Investment, LLC had apparently acquired the 13
towers by means of an asset purchase agreement dated July 14,
2010. (Ex. 913.402). The sellers of the towers under that
July 14, 2010 agreement were 5G Investment Trust, LLC;
Eastern Properties, LLC; and Tower Acquisition Trust.
sales price for that transaction, as reflected on the closing
statement dated September 1, 2010, was $15, 464, 924.30. (Ex.
913.401). That amount included the Marblehead tower (which is
not subject to the Court's remedy) and may have included
other towers, but did not include the Oakland tower (which
is). The Oakland tower was sold separately for a stated price
of $813, 135. (See SOF ¶ 50; Floyd Rpt., Ex. 6-H).
that approximately $15.4 million purchase price, $171, 719.39
was paid to Media Capital Advisors, Inc., as a broker fee.
Another $2, 068, 377.70 of the purchase price was paid to TB
Bank in three separate wires to pay off loans that had been
incurred by Eastern Properties, LLC. (Id.). That
debt had been used to finance the acquisition of the towers,
and involved the same loan facility that had been originally
intended to be used by Eastern Towers.
remaining proceeds from the sale of the towers, after
adjustments for items such as taxes and rent, totaled $13,
126, 691.19. (Ex. 913.401). That amount was paid by wire
transfer on or about September 1, 2010, to the IOLTA Client
Account of Lampert, Hausler & Rodman, P.C., a law firm
that represents Moore and Rosenfeld.
approximately $13.1 million in proceeds from the sale of the
towers were then distributed by the law firm to Moore and
Rosenfeld directly or indirectly (through entities owned or
controlled by them). (Id.).
None of the proceeds of the sale were paid directly to
Midwest Towers Investment, LLC. (Id.).
Apparently because the July 10, 2010 sale included at least
some other assets, plaintiffs contend, and defendants admit,
that the sales price for the 13 relevant towers was $8, 433,
949. (Def. Counter-Statement of Material Facts, Dkt. No. 211,
No. 46 at 14).
plaintiffs contend, and defendants admit, that the sales
prices assigned to the 13 towers were as follows:
a. $482, 386 for Esko;
b. $313, 214 for Ivan;
c. $568, 778 for Manitowish;
d. $431, 580 for Bergland;
e. $475, 000 for South Grantham;
f. $2, 701, 533 for Antigo, Trego, and Lake Nebagamon;
g. $977, 899 for West Fergus Falls and Grand Rapids;
h. $1, 670, 424 for Americus and Tennille; and
i. $813, 135 for Oakland.
(Id., No. 48-50 at 14-15; Floyd Rpt., Ex. 6-H).
the 33 towers described above, 20 have not been sold. Those
towers are as follows:
Towers owned by Eastern Properties, LLC:
2. Franklin Church
4. Franklin Industrial
13. Grantham (Yankee Barn Road)
14. North Loudon
Towers owned by 5G Investment Trust, LLC:
2. Heritage Hills
4. Washington Borough
Tower owned by Tower Acquisition Trust or Tower Acquisition,
Tower owned by Horizon Towers, LLC:
Acquisition of Ground Leases between 2008 and
Between 2008 and 2013, Moore and Rosenfeld acquired ground
lease rights, or purchased real property, for the tower sites
for the Beverly, Loudon, South Grantham, Pembroke, and
Hopkinton towers. The acquisitions were conducted through a
new entity called Ground Lease Acquisitions, Inc. (Def.
Counter-Statement of Material Facts, Dkt. No. 211, No. 36 at
2008, Ground Lease Acquisitions, Inc., acquired the ground
lease for the Beverly and Loudon tower sites. (Id.,
No. 37 at 12).
2008, Ground Lease Acquisitions, Inc., purchased the land on
which the Loudon tower sits. (Id., No. 39 at 13).
2009, Ground Lease Acquisitions, Inc., acquired the ground
lease for the Pembroke tower site. (Id., No. 40 at
2009, Ground Lease Acquisitions, Inc., purchased the land on
which the South Grantham tower sits. (Id.).
2013, Ground Lease Acquisitions, Inc., acquired the ground
lease for the Hopkinton tower site. (Id., No. 44 at
Acquisition of Interest in 4G Towers, LLC in
2004 and 2005, 5G Investment Trust purchased and sold a
majority ownership in 4G Towers, LLC, a Massachusetts limited
liability company that owned towers in Minnesota, Oregon,
Wisconsin, and Washington. (Id., No. 32 at 10).
least $103, 222 of the payment made by 5G Investment Trust
for its interest in 4G Towers, LLC came from Eastern
Properties, LLC. (Id., No. 33 at 11-12).
2004 and 2005, 5G Investment Trust received $3, 955, 009 in
distributions from 4G Towers, LLC and recorded a profit of
$1, 189, 384 from its investment. (Id., No. 34 at
11; Floyd Rpt., Ex. K).
Distributions to Moore and Rosenfeld and/or Related
Between 2003 and 2004, Moore and Rosenfeld received at least
$571, 700 in distributions from Eastern Towers, LLC and/or
Eastern Towers, Inc. (Floyd Rpt., Ex. I).
Between 2003 and 2014, Moore and Rosenfeld received at least
$7, 630, 546 in distributions from Eastern Properties, LLC.
(Id., Exs. I, J).
Between 2004 and 2014, Moore and Rosenfeld received at least
$285, 000 in distributions from Horizon Towers, LLC.
(Id., Ex. I).
Between 2005 and 2014, Moore and Rosenfeld received at least
$7, 126, 909 in distributions from 5G Investment Trust.
Between 2009 and 2014, Moore and Rosenfeld received at least
$507, 428 in distributions from Tower Acquisitions Trust
and/or Tower Acquisitions Inc. (Id., Ex. 10-A).
noted, in 2005, Moore and Rosenfeld received an additional
$3, 955, 009 in distributions from 5G Investment Trust as
part of ...