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Rick v. Profit Management Associates, Inc.

United States District Court, D. Massachusetts

April 13, 2018

ERROL RICK, Assignee of COMFORT BEDDING AND FURNITURE, INC., Plaintiff,
v.
PROFIT MANAGEMENT ASSOCIATES, INC. d/b/a PROFIT MANAGEMENT PROMOTIONS and/or PROFIT MANAGEMENT ASSOCIATES EAST, INC.; MICHAEL J. EGAN, as President and Individually; JOHN “HECTOR” MUSTAFA, Individually; and RONALD COOPER, Individually, Defendants.

          MEMORANDUM OF DECISION AND ORDER ON MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

          Judith Gail Dein United States Magistrate Judge

         I. INTRODUCTION

         By Memorandum of Decision and Order dated March 13, 2017, this court dismissed plaintiff's amended complaint (Docket No. 34), but granted him permission to seek leave to file a second amended complaint to address the deficiencies in Count I (breach of contract) and Count II (violation of Mass. Gen. Laws ch. 93A). Count III, which purported to state a claim for intentional misrepresentation/fraud, was dismissed with prejudice as it raised claims which were time-barred. See Rick v. Profit Mgmt. Assoc., Inc., 241 F.Supp.3d 215 (D. Mass. 2017). Thereafter, the plaintiff filed a motion for leave to file a second amended complaint (Docket No. 60), although the proposed amended complaint, at the plaintiff's request, was subsequently amended. (Docket No. 74).[1] The defendants have opposed the motion. For the reasons detailed herein, the proposed second amended complaint, as amended, states a claim for unfair and deceptive acts or practices against the defendant Ronald Cooper. The remaining counts, however, still fail to state a claim upon which relief can be granted. The motion for leave to file the second amended complaint (Docket Nos. 60 & 74) is ALLOWED IN PART and DENIED IN PART accordingly.

         II. STATEMENT OF FACTS

         Since the proposed second amended complaint is premised on the first amended complaint, this court will assume the reader's familiarity with its earlier decision. By way of an overview, the pro se plaintiff, Errol Rick, was the former President and 50% owner of Comfort Bedding and Furniture, Inc. (“Comfort Furniture”), a company that was liquidated pursuant to a Chapter 7 Bankruptcy Proceeding in the United States District Court, District of Massachusetts (No. 11-42740-MSH). He brings this action by virtue of an assignment from Comfort Furniture authorized by the Bankruptcy Court dated January 20, 2014.

         On or about February 24, 2011, Comfort Furniture entered into a Sales Promotion Agreement with Profit Management Associates, Inc. d/b/a Profit Management Promotions (“PMP”) pursuant to which PMP was to conduct a high impact promotional sale on behalf of Comfort Furniture for 60 days, commencing on March 24, 2011. Problems arose virtually immediately. By April 18, 2011, Comfort Furniture served PMP with a Notice and Demand letter pursuant to Mass. Gen. Laws ch. 93A.

         The First Amended Complaint

         Plaintiff commenced this action on March 24, 2015 against PMP. The complaint was subsequently amended to add the individual defendants, Michael Egan, John “Hector” Mustafa, and Ronald Cooper (collectively, the “Individual Defendants”), to the claims originally brought against PMP, namely breach of contract, fraudulent misrepresentation, and violation of Mass. Gen. Laws ch. 93A. PMP never filed a responsive pleading. The Individual Defendants contend that PMP is no longer in business, although the plaintiff contends that it is continuing to do business under various other names. A default has been entered against PMP.

         The Individual Defendants moved to dismiss all the counts of the complaint. This court dismissed Count I - breach of contract - on the grounds that the contract was between “Profit Management Associates East, Inc., d/b/a Profit Management Promotions (‘PMP'), and Comfort Bedding & Furniture, Inc.” and the Individual Defendants were not parties to the agreement. Rick, 241 F.Supp.3d at 222. The court noted that while the complaint hinted at theories of piercing the corporate veil of PMP, or successor corporate liability, those theories had not been articulated. Id. As this court ruled, “[w]hile there may be a theory for holding the individual defendants, and other Profit Management entities, liable under the Agreement, it has not been pleaded in the complaint. Therefore, Count I will be dismissed without prejudice.” Id.

         Count III of the first amended complaint purported to state a claim of “intentional misrepresentation/fraud.” In addition to finding that the complaint “fail[ed] to delineate the role of each defendant in connection with the alleged fraudulent misrepresentations” and otherwise failed to allege fraud with particularity, this court found that the claim was barred by the statute of limitations, as a result of which any amendment would be futile. Id. at 223-24. Consequently, Count III was dismissed with prejudice. Id. at 224-25.

         Count II of the first amended complaint purported to state a claim under Mass. Gen. Laws ch. 93A. Rick alleged that the defendants had committed “unfair and deceptive acts and practices in connection with the promotional sale by making misrepresentations, misappropriating funds and failing to properly allocate funds, among other things.” Id. at 225. This court dismissed this Count against the Individual Defendants, without prejudice, because the allegations were “insufficient to state a claim against the individual defendants for their own personal wrongdoing” and failed to “state a basis for disregarding the corporate entity.” Id.

         The Second Amended Complaint

         By the proposed second amended complaint (Docket No. 74) (“SAC”), Rick has added various factual allegations, which will be discussed in more detail below. Similarly, he has sought to add six new parties: National Furniture Liquidators, National Furniture Liquidators of Pennsylvania and National Furniture Liquidators, L.L.C., all of which are Pennsylvania corporations whose president is the defendant Egan; A Plus Promotions L.L.C. and PMP Sales, L.L.C., which are New ...


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