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Nardone v. Lvi Services, Inc.

Appeals Court of Massachusetts, Middlesex

October 29, 2018


          Heard: April 12, 2018.

         Civil action commenced in the Superior Court Department on November 14, 2011. The case was tried before Bruce R. Henry, J., and motions for judgment notwithstanding the verdict and for a new trial or remittitur were considered by him.

          William J. Royal, Jr. for the plaintiff.

          Matthew A. Porter for the defendant.

          Present: Rubin, Sacks, & Singh, JJ.

          RUBIN, J.

         Plaintiff Ronald Nardone brought suit against his former employer, LVI Services, Inc. (LVI), for breach of contract, promissory estoppel, and quantum meruit.[1] A jury found LVI not liable for breach of contract, but liable for $800, 000 on the promissory estoppel claim and $200, 000 on the quantum meruit claim. Following trial, a judge of the Superior Court granted LVI's motion for judgment notwithstanding the verdict on the promissory estoppel and quantum meruit claims. Nardone appeals from this decision, and we reverse.


"In reviewing [a] judgment [notwithstanding the verdict], we consider the facts and inferences therefrom in the light most favorable to the plaintiff to determine if 'anywhere in the evidence, from whatever source derived, any combination of circumstances could be found from which a reasonable inference could be drawn in favor of the plaintiff.'" Phelan v. May Pep't Stores Co., 60 Mass.App.Ct. 843, 844 (2004), quoting Stapleton v. Macchi, 401 Mass. 725, 728 (1988). Viewed in that light, the jury could have found the following.

         Nardone began working for LVI, an environmental remediation company, in 1988, as the director of sales and marketing for its Boston branch. He was promoted to president of the branch in 1989 and then to corporate vice-president of business development in 1990, a position he held until his departure from LVI in 2011. In his position as corporate vice-president of business development, Nardone was responsible for developing and maintaining relationships with clients, which included Fortune-100 companies. He also hired individuals, trained and managed salespeople, engaged in business development strategy, and regularly presented at senior management meetings.

         In 1997, 2002, and 2005, LVI searched for investors to recapitalize the company in order to provide cash to fund its rapid growth. Nardone participated in each search by making "roadshow presentations," at which he, along with president and chief executive officer Burton Fried and chief financial officer Paul Cutrone, pitched the recapitalization to potential investors. It was disputed at trial whether making these presentations was part of Nardone's job, but, viewed in the light most favorable to Nardone, a reasonable juror could have concluded that it was not a required part: Nardone "wouldn't say [the roadshow presentations] were part of [his] job," he "would not classify [doing the roadshow presentations] as part of [his] job," he did not "believe it was part of [his] job description," and, in response to a question on cross-examination whether it was "part of the ordinary course of [his] duties and responsibilities to make these presentations; wasn't it?" Nardone responded, "I don't agree." And Fried testified that, "I asked [Nardone] if he wanted to appear and give the presentation on behalf of the business development aspect of the business and he said yes. He thanked me for inviting him. I thought important to invite him. . . . Although I didn't require him, he just accepted the invitation." Nardone did not receive any compensation for his work on the roadshow presentations apart from his salary. LVI obtained recapitalizations of approximately $24 million in 1997, $70 million in 2002, and $300 million in 2005.

         As compensation for the 1997 recapitalization, members of senior management, including Nardone, received a combination of shares and stock options. These stock options "expired worthless" because the company did not meet certain earning criteria that were necessary conditions for the options to vest. Fried told Nardone that members of senior management would receive similar compensation -- shares and stock options -- for the 2002 recapitalization.

         In August of 2005, after one of the roadshow presentations relating to the 2005 recapitalization, Nardone learned from Fried that a potential investor had offered to purchase stock options from option-holders at a rate of $1, 400 per option. Fried told Nardone that, once he went home and saw his stock option agreement, he would realize that he was "going to be a millionaire." But, when Nardone got home, he discovered that he had no stock options. He relayed this information to Fried, who said, "That's impossible." Nardone, Fried, and Cutrone then examined a list, maintained by Cutrone, of all the optionholders together with the number of options they held. The list contained approximately thirty people, but not Nardone: about twenty employees who did not own equity in the company, and all the management stockholders except Nardone. Based on the number of stock options held by each management stockholder and the offer price, Nardone estimated that the average management stockholder would have received approximately one million dollars for his or her options.

         After seeing the list, Nardone said to Fried, "[W]hat are we going to do about this, because if this isn't made right, I'm not going to continue with the roadshow; you can get someone else to do it; I'm finished; get Bob Katz (phonetic), Brian Messico, Dave Pearson; I don't care who, but I'm done." Fried responded that this must have been a mistake, that he needed Nardone to "finish ...

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