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Day v. Gracy

United States District Court, D. Massachusetts

July 20, 2018

MICHAEL DAY, Plaintiff,
v.
CHARLES GRACY and MARK GRACY, Defendants.

          ORDER ON DEFENDANTS' MOTION FOR PARTIAL DISMISSAL

          F. Dennis Saylor, IV United States District Judge

         This is an action for repayment of a loan. Jurisdiction is based on diversity of citizenship.

         Plaintiff Michael Day loaned defendants Charles and Mark Gracy a total of $71, 312.67 over the course of about a year to help them operate their community theater company. Despite the Gracys' many promises to the contrary, only $11, 000 of that amount was ever repaid. Day has filed this action alleging fraud, breach of contract, money had and received, and violation of Mass. Gen. Laws ch. 93A, among other things. The Gracys have filed a motion for partial dismissal for failure to state a claim on which relief can be granted as to the violation of chapter 93A. For the following reasons, that motion will be denied.

         I. Background

         A. Factual Background

         The following facts are set forth as alleged in the complaint.

         Charles and Mark Gracy, who are married, owned and operated the Community Theater Company of Andover, Inc. (“ACT”) from at least May 1, 2008, through the summer of 2016. (Compl. ¶¶ 6, 7, 9, 49). Charles Gracy was the President and Mark Gracy was the Director. (Id. ¶ 7). ACT was tax exempt under 26 U.S.C. § 501(c)(3) from at least 2013 until May 15, 2015. (Id. ¶ 8).

         In September 2013, Day told both Gracys that he would be willing to lend them money for ACT, but that it would need to be paid back before his children went to college. (Id. ¶¶ 10-11). Charles Gracy promised it would be repaid much sooner than that. (Id. ¶ 11) Accordingly, on September 16, 2013, Day loaned the Gracys and ACT $15, 000 pursuant to a short loan agreement, which stated as follows:

Today, September 16, 2013, Michael Day has loaned Charles Gracy and ACT Theater Company, individually and collectively, Fifteen Thousand Dollars.* Charles Gracy, individually and on behalf of ACT Theater Company, agrees to pay as much of the loan back as possible by November 30, 2013. Any amount not paid back by said date will be paid back in whatever increments possible, as soon as possible, but in no event later than November 30, 2014.
As long as best efforts are made by Charles Gracy to pay back the loan as noted above, no interest will be charged as long as the loan is paid back within twelve months of today. Any amounts remaining outstanding as of that date will be charged interest at a simple rate of 1% per month from the initial date of the loan.
* If any additional loans are made then they will follow these same terms.

(Compl. Ex. 2). The agreement was signed by Day and Charles Gracy. (Id.).

         In December 2013, the Gracys represented to Day that ACT was having trouble fundraising because they could not show any funds in its accounts. (Id. ¶ 22). Mark Gracy stated that he was willing to take money out of his retirement account to repay Day if the business was unsuccessful. (Id. ¶ 25). Day loaned them and ACT an additional $50, 000 on December 31, 2013, “for the sole purpose of being able to demonstrate the existence of a capital fund.” (Id. ΒΆΒΆ 23, 26). It was ...


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