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Hoilman v. Werner

United States District Court, D. Massachusetts

June 21, 2019




         C. William Hoilman brought this lawsuit against Melvin Jacob Werner, among others, [1] for participating in a fraudulent scheme to induce him to invest in diamonds and marble.[2] More specifically, the Complaint sets out ten claims: breach of contract (Counts I and II), breach of the implied covenant of good faith and fair dealing (Counts III and IV), unjust enrichment (Counts V and VI), violation of Mass. Gen. Laws ch. 93A, §§ 2, 11 (Counts VII and VIII), and fraud (Counts IX and X). Hoilman moves for partial summary judgment on Counts II, IV, VIII, and X.[3] For the reasons to be explained, Hoilman's motion for partial summary judgment will be denied.


         The facts, viewed in the light most favorable to Werner as the nonmoving party, are as follows. In 2014, defendant Ward asked for Werner's assistance in securing funding for a marble mine in Friendsville, Tennessee that defendant BMI purportedly owned. After touring the mine, Werner was appointed a Director of BMI on July 17, 2015. In early 2015, Oman Kruj, who presented himself as a consultant for a Saudi Arabian investment firm named Al-Muhaidib Group, contacted Werner about a $105 million investment in the mine. Ward then set up a BMI account in Spain, and Werner met with Kruj, among others, in Madrid in August of 2015 to confirm that the promised $105 million had indeed been deposited. Werner learned, however, that because of an unexpected tax, BMI needed more money to access the account.

         On September 27, 2015, defendants Peterson and McRae called Hoilman to request that he invest $60, 000 in the marble mine. On October 6, 2015, Peterson forwarded Hoilman an email, which stated that although BMI had “already secured and been transferred full funding for its Tennessee high quality Marble Mine Project” valued at over $2 billion, BMI was “in immediate need of a fully secured hard money loan.” Hoilman Aff. (Dkt # 110), Ex. 1. The email specifically requested a $60, 000 loan to address “an unexpected transfer tax . . . imposed by the Spanish government” after Werner, acting as BMI's attorney, had “personally opened the account” in Madrid. The loan would be secured by “the proceeds of 3 blocks, or as negotiated, of the existing cut marble.” The email further described two “exit plans” for the loan repayment, entitling Hoilman to either $120, 000 or $300, 000 dependent on certain contingencies. Hoilman was also provided with a “European Tax Certificate, ” which represented that the “European Economic Commission Board” had “sanctioned, certified, [a]uthenticated, and approved the transfer of” $105 million. Id., Ex. 2.

         That same day, Hoilman was forwarded an email from Werner, detailing the “Deal Points for [the] Hard Money Loan and Promissory Note.” Id., Ex. 3. The email included a promissory note acknowledging that Hoilman would be repaid $105, 000 by October 28, 2015, but if not, that “the Parties [would] execute and file a UCC-1 document perfecting [Hoilman's] security interest” of $262, 500.[4]

         The following day, Hoilman unsuccessfully attempted twice to wire $52, 500 to BMI. He was then instructed to wire $60, 000 directly to Werner at a bank account for Werner Management, where Werner was, at the time, the Director. On October 26, 2015, Hoilman successfully completed the $60, 000 wire transfer.

         Over the next several months, Hoilman repeatedly requested that his loan be repaid, and Werner consistently responded that repayment was in the works. For instance, on November 23, 2015, Werner represented in an email that he “had to wire additional funds to attorney [sic] for notarization and legalization of documents for the tax release, ” but that “all should be settled no later then [sic] Wednesday this week.” Compl., Ex. R. Similarly, in a February 9, 2016 email, Werner stated that “[g]etting our funds released from the bank in Spain became very problematic, ” but that he “anticipate[d] that they [would] have everything completed within the next 10 days.” Hoilman Aff., Ex. 10. However, on April 26, 2017, Werner sent Hoilman an email acknowledging for the first time, among other things, that he “ha[d] been working, going on a year now, on recovering the funds invested in the Spanish transaction, which turned out to be fraudulent.” Id., Ex. 13. To date, Hoilman has not been repaid his $60, 000 investment.


         Summary judgment is appropriate when, based upon the pleadings, affidavits, and depositions, “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A fact is material if it has the potential of determining the outcome of the litigation.” Maymí v. P.R. Ports Auth., 515 F.3d 20, 25 (1st Cir. 2008). “An issue is ‘genuine' when a rational factfinder could resolve it [in] either direction.” Boudreau v. Lussier, 901 F.3d 65, 71 (1st Cir. 2018) (citation omitted). Thus, “[t]o succeed, the moving party must show that there is an absence of evidence to support the nonmoving party's position.” Rogers v. Fair, 902 F.2d 140, 143 (1st Cir. 1990).

         Breach of Contract

          “Under Massachusetts law, a breach of contract claim requires the plaintiff to show that (1) a valid contract between the parties existed, (2) the plaintiff was ready, willing, and able to perform, (3) the defendant was in breach of the contract, and (4) the plaintiff sustained damages as a result.” Bose Corp. v. Ejaz, 732 F.3d 17, 21 (1st Cir. 2013), citing Singarella v. City of Bos., 342 Mass. 385, 387 (1961).

         Here, Hoilman alleges that Werner breached their contract by failing to adhere to the terms of the loan set out in the promissory note. Specifically, Hoilman transferred $60, 000 to Werner Management in exchange for an investment in a marble mine purportedly owned by BMI, but he has neither been repaid nor provided the promised security interest in $300, 000 worth of marble blocks. There is, however, an intractable problem with the effort to hold Werner personally to the contract. Since Werner signed the promissory note on behalf of BMI, see Hoilman Aff., Ex. 3, he cannot be held liable for the breach because, as a matter of law, he is not a party to the contract, see Marshall v. Stratus Pharm., Inc., 51 Mass.App.Ct. 667, 673 (2001) (“Unless otherwise agreed, a person making or purporting to make a ...

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