Superior Court of Massachusetts, Suffolk, Business Litigation Session
June 1, 2017
MEMORANDUM AND ORDER ON THE INDIVIDUAL
DEFENDANTS' MOTIONS TO DISMISS
Kenneth W. Salinger, Justice of the Superior Court.
lawsuit arises from business dealings among four people who
formed a Delaware limited liability company called Market
Maker Solutions, LLC (" MMS"). Daniel Petrucci,
Charles Esdaile, and Christopher Hayes each owned 30 percent
of the company; Duncan McIntyre owned the remaining 10
percent. Petrucci's claims arise from the dissolution of
MMS and the alleged theft of intellectual property and
usurpation of business opportunities belonging to MMS. In
essence, Petrucci claims that the individual defendants froze
him out by claiming that MMS had no value as a going concern
and that its assets were worthless, dissolving MMS and
transferring its assets to a new entity, and leveraging
Petrucci's contributions to MMS to develop a profitable
new company in the same line of business that MMS had been
defendants served motions to dismiss Petrucci's first
amended complaint. Petrucci addressed the issues raised by
the two corporate defendants by moving for leave to file a
proposed second amended complaint. No party opposed that
motion, so it has been allowed. The parties agree that the
pending motions to dismiss filed by Esdaile, Hayes, and
McIntyre should be treated as motions to dismiss the claims
against them as restated in the second amended complaint.
Court concludes that none of the claims against the
individual defendants is clearly time-barred, but that part
of the contract claim, one of the two claims for breach of
fiduciary duty, and the claim under G.L.c. 93A must be
dismissed under Mass.R.Civ.P. 12(b)(6) for failure to state a
claim upon which relief can be granted. The Court will allow
the motions to dismiss as to those claims and deny them with
respect to all other claims.
survive a motion to dismiss under Rule 12(b)(6), a complaint
must allege facts that, if true, would " plausibly
suggest . . . an entitlement to relief." Lopez v.
Commonwealth, 463 Mass. 696, 701, 978 N.E.2d 67 (2012),
quoting Iannacchino v. Ford Motor Co., 451 Mass.
623, 636, 888 N.E.2d 879 (2008), and Bell A. Corp. v.
Twombly, 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d
929 (2007). For the purpose of deciding the pending motions
to dismiss, the Court must assume that the factual
allegations in the complaint and any reasonable inferences
that may be drawn in Plaintiff's favor from the facts
alleged are true. See Golchin v. Liberty Mut. Ins.
Co., 460 Mass. 222, 223, 950 N.E.2d 853 (2011). In so
doing, however, it must " look beyond the conclusory
allegations in the complaint and focus on whether the factual
allegations plausibly suggest an entitlement to relief."
Maling v. Finnegan, Henderson, Farabow, Garrett &
Dunner, LLP, 473 Mass. 336, 339, 42 N.E.3d 199 (2015),
quoting Curtis v. Herb Chambers I-95, Inc., 458
Mass. 674, 676, 940 N.E.2d 413 (2011).
Choice of Law as to Statute of Limitations
parties disagree as to whether the Massachusetts or Delaware
statute of limitations applies to Petrucci's claims for
breach of contract, unjust enrichment, and breach of
operating agreement provided that " This Agreement and
the application or interpretation hereof, shall be governed
exclusively by the laws of the State of Delaware, and
specifically the Act, " meaning the Delaware Limited
Liability Company Act as amended.
and Hayes contend that this choice-of-law provision requires
that the breach of contract, breach of fiduciary duty, and
unjust enrichment claims be governed by the three-year
Delaware statute of limitations; they agree with Petrucci
that the fraud and conspiracy claims are subject to a
three-year limitations period under Massachusetts law and
that the claim under G.L.c. 93A is subject to a four-year
limitations period under Massachusetts law. McIntyre
generally agrees with Esdaile and Hayes.
disagrees. He contends that the choice of law provision does
not control which state's limitations period applies,
that under the functional analysis required by Supreme
Judicial Court precedent Massachusetts law governs with
respect to all of the statutes of limitations, and as a
result the six-year limitations period established by G.L.c.
260, § 2 governs his claims for breach of contract and
Court agrees with Mr. Petrucci on this choice-of-law issue.
Specifically, it concludes that the Massachusetts statutes of
limitations govern the timeliness of all claims, even though
the MMS operating agreement provides that it is governed by
Delaware law. As explained below, it also concludes that the
six-year limitations period for contract claims applies to
Petrucci's claims for unjust enrichment.
no longer treats statutes of limitations as purely procedural
rules, and thus no longer automatically applies Massachusetts
limitations periods to all claims asserted in Massachusetts
courts. Instead, the Supreme Judicial Court has adopted
" a functional approach that treats the issue" of
which State's statute of limitations governs " as a
choice of law question, as stated in the Restatement (Second)
of Conflict of Laws § 142." Nierman v. Hyatt
Corp., 441 Mass. 693, 695, 808 N.E.2d 290; accord
New England Tel. & Tel. Co. v. Gourdeau Constr.
Co., 419 Mass. 658, 664, 647 N.E.2d 42 (1995).
the parties agreed by contract that any disputes arising
under the MMS operating agreement would be governed by
Delaware law, their choice-of-law provision does not
expressly address limitations periods and, for that reason,
does not control which State's statute of limitations
applies here. See Shamrock Realty Co., Inc. v.
O'Brien, 72 Mass.App.Ct. 251, 257, 890 N.E.2d 863
& n.9 (2008) (distinguishing Newburyport Five Cents
Sav. Bank v. MacDonald, 48 Mass.App.Ct. 904, 907, 718
N.E.2d 404 (1999), on the ground that it failed to apply
§ 142 of the Restatement and therefore is inconsistent
with Nierman and Gourdeau ).
and Delaware law are the same in this respect. See
Pivotal Payments Direct Corp. v. Planet Payment,
Inc., Del.Sup.Ct. C.A. No. N15C-02-059 EMD CCLD, 2015 WL
11120934, *3 (Del.Super.Ct. Complex Comm'l Lit. Div.
2015) (" Under Delaware law, choice-of-law provisions in
contracts do not apply to statutes of limitations, unless a
provision expressly includes it").
it appears that the clear majority rule in other
jurisdictions is that a contractual choice-of-law provision
will usually only determine which forum's substantive law
governs the contract, and will not affect which State's
statute of limitations applies to claims under or arising
from the contract unless the provision says so explicitly.
See, e.g., Portfolio Recovery Assocs., LLC v. King,
14 N.Y.3d 410, 927 N.E.2d 1059, 1061, 901 N.Y.S.2d 575 (NY
2010); Smither v. Asset Acceptance, LLC, 919 N.E.2d
1153, 1158 (Ind.Ct.App. 2010); Belleville Toyota, Inc. v.
Toyota Motor Sales, U.S.A., Inc., 199 Ill.2d 325, 770
N.E.2d 177, 194, 264 Ill.Dec. 283 (Ill. 2002); Western
Video Collectors, L.P. v. Mercantile Bank of Kansas, 23
Kan.App.2d 703, 935 P.2d 237, 239 (Kan.Ct.App. 1997);
Financial Bancorp, Inc. v. Pingree and Dahle, Inc.,
880 P.2d 14, 16 n.2 (Utah Ct.App. 1994); Nez v.
Forney, 1989- NMSC 074, 109 N.M. 161, 783 P.2d 471, 473
(N.M. 1989); U.S. Leasing Corp. v. Biba Info. Processing
Svcs., Inc., 436 N.W.2d 823, 826 (Minn.Ct.App. 1989);
Gluck v. Unisys Corp., 960 F.2d 1168, 1179-80 (3d
Cir. 1992); Phelps v. McClellan, 30 F.3d 658, 662
(6th Cir. 1994); Berger v. AXA Network, LLC, 459
F.3d 804, 813 n.15 (7th Cir. 2006); In re Sterba,
852 F.3d 1175, 1178 (9th Cir. 2017); Federal Deposit Ins.
Co. v. Petersen, 770 F.2d 141, 142-43 (10th Cir.
has a six-year limitations period for contract claims, while
Delaware cuts off such claims after three years. The parties
seem to agree that the same basic rules determine when a
contract claim accrues in both states. As discussed below,
the parties also agree that the contract claims are timely if
the Massachusetts six-year limitations period applies; they
disagree as to whether those claims are time-barred if the
Delaware three-year limitations period governs because they
disagree about when those claims first accrued.
the Massachusetts statute of limitations would allow the
contract claims to proceed and the Delaware statute may not,
the choice-of-law between these two options is governed by
the principles summarized in Restatement § 142(2). See
Andersen v. Lopez, 80 Mass.App.Ct. 813, 815-16, 957
N.E.2d 726 (2011). Under § 142(2), " unless the
exceptional circumstances of the case make such a result
unreasonable, " the forum state will " apply its
own statute of limitations permitting the claim unless: (a)
maintenance of the claims would serve no substantial interest
of the forum; and (b) the claim would be barred under the
statute of limitations having a more significant relationship
to the parties and the occurrence." Id. at 815,
quoting Restatement § 142(2). " In other words,
Massachusetts will apply its own statute of limitations to
allow the action to proceed unless some exceptional
circumstances about the case make it unreasonable to do so or
unless, after analyzing the interests of Massachusetts and
[Delaware], allowing the action to proceed would serve no
substantial Massachusetts interest, and [Delaware] has a more
significant relationship to the parties and the accident than
does Massachusetts. In assessing those interests, we focus
only on the interests that bear on the statute of
limitations, " and not on the interests relevant to the
merits of Petrucci's claims. Id. at 815-16;
accord, e.g., Kahn v. Royal Ins. Co., 429 Mass. 572,
574, 709 N.E.2d 822 (1999).
Court concludes that, under this standard, the Massachusetts
statutes of limitations governs whether Mr. Petrucci's
claims are timely. Massachusetts has a substantial interest
in the maintenance and resolution of these claims and a more
significant relationship to the parties and to the facts
giving rise to this dispute. According to the allegations of
the second amended complaint, the four individual parties all
lived and worked in Massachusetts during the relevant time,
they all executed the MMS operating agreement in
Massachusetts, and the contract was allegedly breached
through conduct in Massachusetts, including through the
creation of and transfer of assets to a Massachusetts
corporate entity. In addition, the individual defendants all
still live in Massachusetts, which therefore " has a
significant interest in seeing that . . . that its resident
defendant[s] . . . be held accountable for [their] conduct,
which took place in Massachusetts, and which allegedly
caused" Plaintiff's " injury." Dasha
v. Adelman, 45 Mass.App.Ct. 418, 426, 699 N.E.2d 20
(1998), quoting Cosme v. Whitin Mach. Works, Inc.,
417 Mass. 643, 649, 632 N.E.2d 832 (1994).
the merits of Petrucci's claim for breach of the MMS
operating agreement, as purportedly amended by a subsequent
" Letter of Intent" is governed by Delaware law
because that is what the parties agreed to in their contract.
But the Massachusetts six-year statute of limitations governs
whether the contract claim was filed on a timely basis.