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AM Project Norwood, LLC v. Endicott South Development Corp.

Superior Court of Massachusetts, Suffolk

August 20, 2018


          File Date: August 21, 2018


          Janet L. Sanders, Justice of the Superior Court

          This is a dispute between members of EW Development, LLC (EW), a limited liability company. The plaintiff, AM Project Norwood, LLC (AM Project) owns a 51 percent interest in EW. The defendant Endicott South Development Corporation (Endicott) owns the remaining 49 percent. AM Project instituted this lawsuit to enforce a buy-sell provision in EW’s Operating Agreement. Endicott responded by asserting various counterclaims, including claims for breach of fiduciary duty, breach of contract and conversion. AM Project then amended its Complaint to add a claim for abuse of process. Specifically, it alleges that EW and its de facto manager Peter True have engaged in a campaign of harassment designed to avoid compliance with the Operating Agreement and gain unfair advantages. The counterclaims are (according to the Amended Complaint) the culmination of this campaign and are asserted simply to obtain financial or business concessions from AM Project.

         Endicott and True now seek dismissal of the abuse of process claim pursuant to G.L.c. 231, § 59H, the anti-SLAPP (Strategic Lawsuit against Public Participation) statute. After hearing and careful review of the parties’ submissions, this Court concludes that Endicott and True have failed to meet their burden of showing that the abuse of process claim is based solely on EW’s and True’s petitioning activity. Duracraft Corporation v. Holmes Products Corp., 427 Mass. 156, 167-68 (1998). This Court further concludes that, even if they had met that burden, AM Project has demonstrated that its claim was not brought primarily to chill Endicott’s and True’s legitimate petitioning activities. Blanchard v. Steward Carney Hospital, 477 Mass. 141, 159-61 (2017).


         The following facts are taken from the pleadings as well as from two affidavits submitted by AM Project.[1] In 2014, True approached Jan Steenbrugge, a manager of AM Project, about developing a parcel of land for condominium use at 70 Endicott Street in Norwood (the Property). True would provide the Property and certain permits and plans; Steenbrugge would provide the financing and construction expertise. In December 2014, the two negotiated an Operating Agreement that would govern the development. Exhibit A of Steenbrugge Affidavit. Construction on the Property began.

         By 2017, the relationship between Steenbrugge and True had soured. When EW needed to obtain bank financing for the second phase of the development, Endicott conditioned its consent to the financing on AM Project’s ceding certain information and management rights to Endicott. With $2 million already committed to the development, Endicott agreed to modify the Operating Agreement via a Memorandum of Understanding (MOU). That did not resolve the problems between the two, however. According to Steenbrugge, Endicott-through True-continued to interfere with the development, which included making on-site visits to the Property. Those visits are described in the Affidavit of Paul Soughley, the project’s construction manager. According to that affidavit, they resulted in confrontations so belligerent that members of the construction team threatened to quit.

          Concerned that True’s behavior would have "disastrous consequences" for EW and the project itself, AM Project in April 2017 decided to exercise its rights under Section 22 of the Operating Agreement, which permitted one member to buy out the other. Steenbrugge Aff., ¶¶ 22-23. That same provision also permitted the member receiving the offer to require the offering member to sell its interest on the same terms as the original offer so long as that demand was made within 30 days of the original offer. Endicott responded to AM Project’s offer by demanding additional information and on June 14, 2017, made its own offer to buy out AM Project, purportedly relying on Section 22. AM Project regarded this offer as noncompliant with that provision.[2] Meanwhile, True continued to barrage Steenbrugge with emails demanding information and records, even though (according to AM Project), it was making every effort to provide Endicott with the information it requested and the requests went beyond what Endicott was entitled to receive under the Operating Agreement. In Steenbrugge’s view, this conduct was intended either to force AM Project to buy out Endicott at a higher price or alternatively to sell its own interest to Endicott at a lower price.

         On August 29, 2017, AM Project filed this action in the Superior Court. The original complaint alleged only a breach of contract and sought specific performance of Section 22. The emails from True, however, continued, with some containing accusations of fraud and other criminal activity. On September 20, 2017, Endicott filed an Answer and Counterclaim and at the same time moved to disqualify AM Project’s then legal counsel. On October 17, 2017, AM Project answered the counterclaims and asserted an additional abuse of process claim against Endicott and True. On January 18, 2018, AM Project amended its Complaint to formally add Count IV, abuse of process. The Amended Complaint alleges among other things that True and/or Endicott asserted the counterclaim in order to force "AM Project to reduce the offer price so Endicott could become the sole member of the Company [EW], or force AM Project to increase the offer price to extract greater proceeds from AM Project’s purchase of Endicott’s membership in the Company, or to obtain other financial or business concessions." Amended Complaint, ¶ 67. It further alleges that True and Endicott have not proceeded in good faith, deliberately breached the Operating Agreement, requested documents only to harass AM Project, and have "concocted counterclaims ... as leverage to obtain their extortionate ulterior objectives." Amended Complaint, ¶ 68.


         The anti-SLAPP statute provides a procedural remedy for early dismissal of lawsuits "brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances." 477 Harrison Ave., LLC v. Jace Boston, LLC, 477 Mass. 162, 167 (2017), quoting Duracraft v. Holmes Prods. Corp., 427 Mass. at 161. This procedural remedy is a special motion to dismiss, which allows a special movant to seek dismissal of "civil claims, counterclaims, or cross claims" based solely on its exercise of the right of petition. See G.L.c. 231, § 59H. To prevail on this motion, the special movant bears the initial burden of showing, through pleadings and affidavits, that the claims against it "are ‘based on’ the petitioning activities alone and have no substantial basis other than or in addition to the petitioning activities." Duracraft, 427 Mass. at 167-68. This Court concludes that Endicott and True as moving parties have not sustained that threshold burden.

         Endicott argues that the abuse of process claim was asserted only because, after AM Project filed suit, Endicott filed its compulsory counterclaims based on AM Project’s failure to turn over financial and other materials. Clearly those counterclaims constitute petitioning activity under the anti-SLAPP statute. That is not the end of the analysis, however. An anti-SLAPP motion should be denied where the party asserting the abuse of process claim can identify conduct "before, after and separate" from the petitioning activity at issue as the basis for the claim. Keystone Freight Corp. v. Bartlett Consol., Inc., 77 Mass.App.Ct. 304, 314 (2010) (affirming denial of anti-SLAPP motion to dismiss abuse of process claim). For example, in Keystone, the non-moving party successfully argued that it made its abuse of process claim not simply because the moving party had brought a collection action against it; rather, the claim was the result of an ongoing pattern of conduct consisting of excessive billing practices and overstatement of costs engaged in by the moving party prior to and concurrent with the filing of the collection action itself. In the instant case, the affidavits submitted by AM Project contain evidence that Endicott made demand for information that it knew it was not entitled to receive, and that True barraged AM project with threatening emails, made repeated and unnecessary site visits, and otherwise engaged in conduct disruptive to the development of the Property-all for the purpose of trying to extract financial and business concessions from AM Project. Endicott and True deny those allegations. But a mere denial (particularly one made without any supporting affidavits) is not sufficient, since the burden is on Endicott and True-not on AM Project-and that burden is to show that that the abuse of process claim is based solely on their petitioning activity.

          Even if Endicott and True were able to sustain this threshold burden, there is an alternative basis for denying this motion. The Supreme Judicial Court recently augmented the framework for analyzing anti-SLAPP motions in Blanchard v. Steward Carney Hospital,477 Mass. 141, 159-61 (2017). If the non-moving party can show that its suit was not brought primarily to chill the special movant’s legitimate exercise of its right to petition, then the claim is not a "SLAPP" suit and should not be dismissed. Id. at 159. Such a showing is met if the court may conclude "with fair assurance" the nonmoving party’s primary motivating goal in bringing its claim, "viewed in its entirety, was not to interfere with and burden [the moving party’s] petition rights ... but to seek damages for the personal harm" caused by the moving party’s acts. Blanchard, 477 Mass. at 160. In applying this standard, this Court is to assess the totality of the circumstances pertinent to the nonmoving party’s asserted primary purpose in bringing its claim, considering the course and manner of proceedings, the pleadings filed, and affidavits stating the facts upon which the liability or defense is based. Id. A "necessary but not sufficient factor in this analysis will be whether the nonmoving party’s claim at issue is ‘colorable or ... worthy of being presented to and considered by the court, ’ see L.B. v. Chief Justice of Probate & Family Court Dept.,474 Mass. 231, 241 (2016), i.e., whether it ‘offers some reasonable possibility’ of a decision in the party’s favor." Blanchard v. ...

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