Superior Court of Massachusetts, Suffolk, Business Litigation Session
John J. Meunier et al., and the John J. Meunier 2012 Irrevocable Trust
Market Strategies, Inc
June 13, 2017
MEMORANDUM AND ORDER ON MARKET STRATEGIES, INC.'S
MOTION FOR SUMMARY JUDGMENT
Kenneth W. Salinger, Justice.
Meunier, Christy White, and the John J. Meunier 2012
Irrevocable Trust (the " Trust") claim that Market
Strategies, Inc. (" MSI") breached its contractual
obligations to make certain payments to Cogent Research
Holdings, LLC (which the parties refer to as "
Holdco"). They also claim that after signing the
contract at issue MSI misrepresented its willingness and
ability to pay what it owes and thereby committed deceptive
acts in violation of G.L.c. 93A. Finally, Meunier and White
seek declaratory judgment regarding the enforceability of
certain non-competition, non-solicitation, and
confidentiality agreements. MSI has moved for summary
Court will grant summary judgment in MSI's favor on the
contract claim because Plaintiffs are not intended
beneficiaries of MSI's payment obligations to Holdco as a
matter of law. It will also allow MSI's motion with
respect to the declaratory judgment claim because any dispute
regarding enforceability of the non-competition or
non-solicitation agreements is moot and Plaintiffs lack
standing to challenge the confidentiality agreement on the
ground that MSI committed a material breach of contract by
not paying Holdco. However, the Court will deny the summary
judgment motion with respect to the misrepresentation and c.
93A claims because they are independent from the contract
Undisputed Factual Background
actions arise from the May 2013 sale of Cogent Research, LLC
to MSI. At the time of the transaction, Meunier, White, and
the Trust were the sole owners of Cogent Research. They
agreed to sell Cogent Research to MSI in exchange for an
" Initial Payment" of $8.0 million, a "
Delayed Payment" of $2.0 million, and a "
Contingent Payment" of roughly $3.15 million that was
due after MSI received additional audited financial
statements of Cogent Research. Meunier and White also agreed
to work for MSI for three years and entered into a
non-competition, non-solicitation, and confidentiality
White, and the Trust created Holdco in connection with this
transaction. They are the sole owners of Holdco. They
transferred ownership of Cogent Research to Holdco, which in
turn sold Cogent Research to MSI. The parties' purchase
agreement provides that MSI was required to pay an Initial
Payment, Delayed Payment, and Contingent Payment to Holdco.
MSI does not have any contractual obligation to make any of
these payments to Meunier, White, or the Trust.
the parties' purchase agreement provides that MSI was to
make the Deferred and Contingent Payments to Holdco no later
than April 30, 2016, a separate subordination agreement
executed at the same time modifies those terms. The parties
to the subordination agreement were Holdco, MSI, and an
administrative agent representing Senior Lenders of MSI.
Meunier and White signed this contract on behalf of Holdco.
The subordination agreement provides in § 2.1 that the
obligations of MSI to make the Delayed and Contingent
Payments " shall be subordinate and subject in right and
time of payment . . . to the prior Payment in Full of all
Senior Debt" held by the Senior Lenders. It provides in
§ 2.3 that, so long as Senior Debt is outstanding, MSI
shall not make and Holdco shall not accept payment of any
part of the Deferred and Contingent Payments if doing so
would cause MSI to default under the Senior Credit
Agreement. And it provides in § 2.4(a) that
Holdco shall not sue MSI or take any other action to enforce
MSI's payment obligations under the purchase agreement
until the Senior Debt is paid in full.
date, MSI has not paid any part of the $5.15 million in
Deferred and Contingent payments that it owes to Holdco.
Plaintiffs claim that this constitutes a breach of the
purchase agreement. Meunier, White, and the Trust all sued
MSI in their own names, purporting to assert their own rights
as intended third-party beneficiaries of MSI's
contractual promise to pay Holdco these amounts.
contends that it is entitled to summary judgment on this
claim because Plaintiffs have no standing to raise it. (On
the merits, MSI contends that it is required or at least
permitted to withhold these payments under the subordination
agreement. It does not seek summary judgment on that ground.)
Legal Background--Intended Beneficiaries and Contract
purchase agreement provides (in § 9.09) that it "
will be governed by and construed and enforced in accordance
with" Massachusetts law.
Under Massachusetts law, only intended beneficiaries, not
incidental beneficiaries, can enforce a contract." See
Harvard Law School Coalition for Civil Rights v.
President and Fellows of Harvard College, 413 Mass. 66,
71, 595 N.E.2d 316 (1992). " One need not be a
beneficiary of every provision of the contract in order to be
an intended beneficiary with enforceable rights; it is enough
to be the intended beneficiary of the promise one is seeking
to enforce." The James Family Charitable Foundation
v. State Street Bank and Trust Co., 80 Mass.App.Ct. 720,
725, 956 N.E.2d 243 (2011). An intended third-party
beneficiary " stands in the shoes" of, and thus has
no greater rights than, the contracting party whose rights
the beneficiary seeks to enforce. Rae v. Air-Speed,