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Chesterton Capital LLC v. Holley

United States District Court, D. Massachusetts

October 20, 2017

CHESTERTON CAPITAL, LLC, Plaintiff,
v.
BYRON L. HOLLEY, JOHN C. LOUDON and LEGACY POINT CAPITAL LLC, Defendants,
v.
ANNE BRENSLEY, Third Party Defendant.

          ORDER ON MOTIONS FOR SUMMARY JUDGMENT (DOCS. 120 AND 128)

          Leo T. Sorokin, United States District Judge.

         Plaintiff Chesterton Capital LLC (“Chesterton”) sued Defendants John Loudon (“Loudon”), Byron Holley (“Holley”), and Legacy Point Capital LLC (“Legacy Point”) for common law fraud and violation of Mass. Gen. Laws Ch. 93A in relation to a loan Chesterton extended toward the production of a long-in-the-works Janis Joplin biopic, “Get It While You Can” (herein “GIWYC”). In turn, Loudon and Legacy Point (together, the “Third Party Plaintiffs”) filed a Third Party Complaint against Anne Brensley (“Brensley”) for, inter alia, fraud, breach of fiduciary duty, breach of contract, and indemnification. Doc. 40 at 1. These claims arise from Brensley's engagement to assist Loudon, Holley, and Legacy Point in obtaining the loan from Chesterton. Brensley has moved for summary judgment on these claims. Doc. 120. Loudon and Legacy Point have opposed Brensley's motion, Doc. 127, and filed a cross-motion for summary judgment on their claim for indemnification, Doc. 128, which Brensley has opposed, Doc. 139.

         For the reasons stated below, the Court ALLOWS IN PART and DENIES IN PART Brensley's Motion for Summary Judgment (Doc. 120) and DENIES Third Party Plaintiffs' Cross Motion for Partial Summary Judgment (Doc. 128).

         I. FACTS

         A. Agreements between Third Party Plaintiffs and Brensley

         Loudon and Holley are Managing Members of Legacy Point, an investment banking company. Beginning in June 2012, Legacy Point acted as a broker and middleman and sought investors for the GIWYC project. Doc. 40 at 2. At that time, Brensley was the Managing Director of Boston Financial Trust Advisors, LLC (“BFT”). Id. On or around August 15, 2012, Legacy Point, BFT, and a separate production company, Get It While You Can, LLC (“GIWYC LLC”), executed a Co-Financing Agreement, under which BFT agreed to assist Legacy Point and GIWYC LLC with obtaining funding for GIWYC. Doc. 49-2 at 16-23. This agreement provided: “Nothing contained herein shall constitute a partnership between or joint venture by, the parties hereto or constitute either party the agent of the other.” Id. at 19.

         On February 4, 2013, Loudon and Holley (on behalf of Legacy Point) and Brensley (on behalf of BFT) executed a Venture Agreement under which they agreed “to collaborate to finance an on-going slate of feature films and/or structure the financing for entertainment projects secured through the joint efforts of the Parties and to direct all film related projects that either party anticipates participating in, into the collaboration.” Doc. 88-1 at 2. The Venture Agreement entitled Brensley to a share of “[a]ll revenue, and profits paid to the extent and arising from this Venture Agreement[.]” Id. at 7. It further provided:

“Nothing contained in this Agreement shall be deemed to create or establish, and nothing contained in this Agreement shall be interpreted as recognizing or acknowledging the existence of a partnership by or between existing Parties hereto, it being understood and agreed that each of The Parties is acting independently of the other in connection with the subject matter of this Agreement.”

Id. at 8.

         B. Chesterton Loan

         Pursuant to the Co-Financing Agreement but prior to entering the Venture Agreement, Brensley introduced Third Party Plaintiffs to Chesterton, who agreed to provide a $1.2 million bridge loan towards the GIWYC project (the “Chesterton Loan”). Doc. 40 at 2. While GIWYC LLC ultimately received the Chesterton Loan, Chesterton sought from Loudon and Holley personal guaranties and confirmation of their financial capacity to backstop the loan. Id.; Doc. 88 at 5. Loudon and Holley agreed to guaranty the loan and produced proof of funds of over $3 million. Id. They separately entered into a side letter with GIWYC LLC outlining the terms under which they would provide personal guaranties. Id. On or around October 9, 2012, Chesterton and GIWYC LLC closed on the Chesterton Loan, and Loudon and Holley signed personal guaranties thereof. Doc. Nos. 25-1 and 25-2.

         Throughout 2013, Chesterton provided several loan extensions and advanced additional amounts to GIWYC. Doc. 1 at 7-9. However, neither GIWYC nor Third Party Plaintiffs procured the financing necessary to begin production of the film. Doc. 38 at 7. GIWYC LLC defaulted on the Chesterton Loan on June 1, 2014. Doc. 1 at 9.

         Holding an uncollectable judgment against GIWYC LLC, Chesterton brought suit on the personal guaranties in state court. Doc. 1 at 9. Chesterton separately brought this action in federal court. Chesterton's Complaint alleges that Defendants engaged in unfair and/or deceptive acts and practices and made misrepresentations of material fact about their financial wherewithal in order to induce Chesterton to invest in the GIWYC project. Id. at 10-11. Consistent with their claims in the state court litigation, [1] Loudon and Legacy Point filed a Third Party Complaint in this action against Brensley for her role in the GIWYC project. Doc. 40.

         II. SUMMARY JUDGMENT STANDARD

         “[A] court may grant summary judgment only where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.” Perez v. Lorraine Enterprises, Inc.,769 F.3d 23, 29 (1st Cir. 2014) (citing Fed.R.Civ.P. 56(a)). “A ‘genuine' issue is one on which the evidence would enable a reasonable jury to find the fact in favor of either party.” Id. (citation omitted). “A ‘material' fact is one that is relevant in the sense that it has the capacity to change the outcome of the jury's determination.” Id. (citation omitted). “When considering the summary judgment record, all reasonable inferences are to be drawn in favor of the party opposing summary judgment, ...


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