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Lockwood v. Madeiros

United States District Court, D. Massachusetts

August 27, 2018



          David H. Hennessy United States Magistrate Judge.

         Plaintiff Ana Flavia De Moura Lockwood has sued Defendants Todd Madeiros and his company The Auto Shops, LLC, doing business as (the “Company”). See Verified Complaint, dkt. no. 1-1. Plaintiff seeks attachment of $90, 000 of the Company's inventory. See dkt. no. 1-1 at 7; dkt. no. 4.[1] At the parties' request, the Court held a hearing on the motion on August 23, 2018, in anticipation of a sale of the Company's inventory that is scheduled to close on August 28. On August 22, 2018, Defendants filed an opposition to the motion, dkt. no. 7, and on August 23, 2018, immediately before the hearing, Plaintiff filed a reply comprising a six-page affidavit, dkt. no. 9.

         Because I find that Plaintiff has failed to carry her burden to attach, the motion for attachment is DENIED.

         Plaintiff's Allegations

         Plaintiff alleges in a verified complaint, dkt. no. 1-1, that she has worked for the Company since 2010 and has reported to Madeiros at all relevant times. Madeiros spends most of his time in California but periodically travels to Massachusetts on business.

         The complaint contains the following general allegation concerning Plaintiff's compensation: “Throughout the course of [Plaintiff]'s employment, the plaintiff [sic], in recognition of her value added to the Company, promised to compensate her for that value.” Id. ¶ 9.

         In 2017, Madeiros began considering offers to purchase the Company. At an unspecified time, Madeiros promised Plaintiff that if the Company sold for $5, 000, 000, he would give Plaintiff $250, 000-a sum that amounted to 5% of the $5 million purchase price. Id. ¶ 11. That alleged promise is central to the case.

         In June 2017, Plaintiff, while using a computer screen shared with Madeiros, discovered that Madeiros was watching pornography on a company computer, and was making the pornography visible to her and other employees. This went on for several months. In or around that September, Plaintiff confronted Madeiros about his behavior and “gave [him] an ultimatum that this behavior had to stop.” Id. ¶ 15. Since then, Madeiros has treated Plaintiff with hostility.

         In or around January 2018, Drake Automotive Group (“Drake”) emerged as a potential purchaser of the Company. Madeiros travelled to Massachusetts that month in connection with the potential sale. During that trip, Madeiros informed Plaintiff that he did not believe he owed Plaintiff anything. But Plaintiff insisted that she was owed, and Madeiros ultimately offered her $175, 000 if the sale to Drake occurred, subject to unspecified contingencies. That amount was 4.3% of the potential sale price.

         The sale to Drake fell through. Plaintiff told Madeiros she wanted to put their agreement in writing. Defendant replied that “‘in [his] mind' it is the same agreement we have always had.” Id. ¶ 23. Plaintiff then replied, confirming that her understanding of the agreement was that she would receive “about 4% of the purchase price, like the Drake deal.” Id. ¶ 24. Madeiros did not dispute that percentage, but said he would consider how to structure the agreement and then get back to her.

         Plaintiff kept working for Defendants “[i]n continued reliance on the oral promises of compensation.” Id. ¶ 26. Madeiros at one point offered Plaintiff and another employee a chance to buy the Company, but he ultimately chose to seek another buyer. There emerged a new potential buyer, with whom Madeiros is engaged in ongoing negotiations. Madeiros allegedly “put other business plans to increase the value of the company on hold” while conducting those negotiations. Id. ¶ 30. Plaintiff believes Madeiros and the buyer may consummate a sale before the end of the month. During a phone call in June 2018, Madeiros told Plaintiff he did not have to give her anything.

         If the Company is sold, Plaintiff will have the opportunity to agree to work for the buyer. But Madeiros's unspecified actions and inactions allegedly are interfering with her ability to do so. Madeiros's conduct also allegedly caused Plaintiff to suffer emotional distress and high blood pressure, for which Plaintiff has been prescribed medication.

         Defendants' Allegations

         I now summarize relevant facts in Madeiros's affidavit opposing attachment, dkt. no. 8. According to the affidavit, Plaintiff started working for the Company as a part-time bookkeeper in 2010. She was promoted several times and is now the general manager. Her compensation in 2017 was $118, 560, 57% more than she made in 2016.

         In May 2017, Madeiros and Plaintiff agreed on a strategic plan for the Company, and agreed that Plaintiff would be responsible for executing the plan. They agreed that if the plan were successful, the Company's value could increase from somewhere between $3.5 million and $4 million to $5 million. In May 2017, Madeiros told Plaintiff that if he sold the Company in 2018 for $5 million, he would pay her a $250, 000 bonus. Madeiros never offered Plaintiff a specific percentage of the Company's sale price. The offer was expressly conditioned on the Company being sold for at least $5 million.

         In August 2017, Plaintiff sent Madeiros a monthly statement indicating that the Company's revenues had declined. Plaintiff expressed to Madeiros that the decline was not her fault and that Madeiros had “set her up to fail.” Id. ¶ 15. During a phone call on September 16, 2017, Plaintiff resigned with 30 days' notice. The next day, Plaintiff sent Madeiros a text message expressing, among other things, that “the reason I can't keep working for” Madeiros was that Madeiros “set[] me up to fail over and over.” Id. ¶ 18.

         The day of Plaintiff's text message (September 17, 2017), Madeiros approached two potential buyers: Drake, and Turn5. Four days later, Plaintiff and Madeiros agreed that Plaintiff would keep working for the Company through January 31, 2018 and would receive a $20, 000 bonus for doing so. Plaintiff did so, and Madeiros paid her the $20, 000 bonus.

         On December 13, 2017, Madeiros entered into a letter of intent with Drake to buy the Company for $3 million at closing, plus an additional $1 million if the Company's revenues increased by $1 million in the year following the sale. Madeiros discussed with Plaintiff the negotiations with Drake. Plaintiff expressed concern about what the sale would mean for her continued employment and threatened to “blow up” the deal. Id. ¶ 23.

         Concerned about Plaintiff's threat, Madeiros offered her a bonus conditioned on the sale to Drake going through. First, he offered Plaintiff $75, 000 if she worked for Drake for a transition period to be agreed upon, “most likely four to six months.” Id. ¶ 26. Second, he offered Plaintiff an additional $100, 000 if she remained with Drake for 12 months and the Company earned $1 million in “incremental revenue” during that 12-month period. Id.

         Plaintiff declined this bonus and made a counteroffer by email dated January 3, 2018. The counteroffer was a bonus of 4% of the sale price to Drake, plus 4% of the additional $1 million that Drake would owe Madeiros if the Company's revenues increased by $1 million in the year after the sale.[2] Madeiros did not agree to those proposed terms. The Drake deal was never consummated.

         In May 2018, Madeiros received an offer from Turn5 to purchase the Company. On July 20, 2018, Madeiros and Turn5 agreed that Turn5 would purchase the Company's assets for approximately $2.25 million, with approximately $1 million due at closing and the rest due in 36 monthly installments.[3] Madeiros had to lower the price by tens of thousands of dollars because he could not guarantee that Plaintiff would stay and help the Company transition to Turn5's ownership. At the August 23 hearing, Defendants represented that Madeiros and Turn5 are scheduled to close the deal on August 28, 2018 at midnight.

         During a phone call with Plaintiff on June 20, 2018, Madeiros offered Plaintiff a bonus of $75, 000 if she agreed to employment with Turn5 for 4 to 6 months after the sale. Plaintiff at first declined, and then said she would think about it while Madeiros and Turn5 conducted due diligence. On June 25, 2018, Madeiros received an email from Plaintiff's counsel rejecting the $75, 000 bonus offer.

         Madeiros denies ever sexually harassing Plaintiff, subjecting Plaintiff to a hostile work environment, or retaliating against Plaintiff. He notes that he and Plaintiff often stayed at each other's houses and with each other's families while travelling on business; that Madeiros promoted Plaintiff and increased her pay numerous times; that Madeiros paid her a $20, 000 bonus for staying with the Company through January 2018; and that in June 2017, Madeiros ...

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