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Rick v. Profit Management Associates, Inc.

United States District Court, D. Massachusetts

October 19, 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 THIRD AMENDED COMPLAINT

          Judith Gail Dein United States Magistrate Judge.

         I. INTRODUCTION

         By Memorandum of Decision and Order dated April 13, 2018, this court granted the plaintiff's motion for leave to file a second amended complaint against defendant Ronald Cooper on Count II (violation of Mass. Gen. Laws. ch. 93A), but denied the motion as to the remaining claims. See Rick v. Profit Mgmt. Assoc., Inc., Civil Action No. 15-11171-JGD, 2018 WL 1783797 (D. Mass. Apr. 13, 2018). Thereafter, the plaintiff filed a motion for leave to file a third amended complaint (Docket No. 86), which asserts claims solely against defendant Michael Egan. Defendant Egan opposes the motion. For the reasons detailed herein, the proposed third amended complaint fails to state a claim upon which relief can be granted. The motion for leave to file the third amended complaint (Docket No. 86) is therefore DENIED.

         II. STATEMENT OF FACTS

         Since the proposed third amended complaint is premised on the prior amended complaints, this court will assume the reader's familiarity with its earlier decisions. Briefly, 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 and a default was entered against it.

         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 v. Profit Mgmt. Assoc., Inc., 241 F.Supp.3d 215, 222 (D. Mass. 2017). 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. Thus, the court dismissed the claim without prejudice. Id.

         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.

         Count III of the first amended complaint purported to state a claim of “intentional misrepresentation/fraud.” This court found that the claim was barred by the statute of limitations and dismissed the claim with prejudice. Id. at 224-25.

         The Second Amended Complaint

         Rick subsequently moved for leave to file a second amended complaint. The proposed second amended complaint included additional factual allegations and named six new corporate entities headed by the Individual Defendants. This court denied Rick's motion as to Count I (breach of contract), concluding that while the defendant had “added facts regarding what actions the Individual Defendants took in furtherance of that contract, he [had] not alleged any facts which alter the reality that the Individual Defendants are not parties to the agreement.” Rick, 2018 WL 1783797, at *3. Further, the court concluded that the plaintiff had also failed to “allege[] any facts which would support a theory of piercing the corporate veil” or a claim of successor liability. Id. at *3-4.

         The court also denied Rick's motion as to Count III (intentional misrepresentation/ fraud). The court explained that while Rick had added additional details to his second amended complaint on this count, the claim was ...


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