Superior Court of Massachusetts, Suffolk, Business Litigation Session
D. Douglas Young et al.
Date: August 29, 2019
(with first initial, no space for Sullivan, Dorsey, and
Walsh): Davis, Brian A., J.
DECISION AND ORDER REGARDING THIRD-PARTY DEFENDANT
DOUGLAS BUCKLEYâS MOTION TO DISMISS DEFENDANT D. DOUGLAS
YOUNGâS THIRD-PARTY COMPLAINT (DOCKET ENTRY NO.
A. Davis Associate Justice
Hyperactive, Inc. ("Hyperactive") is a business
that creates multimedia presentations for various commercial
clients. Hyperactive brought this action in July 2018
claiming that defendant D. Douglas Young ("Mr.
Young"), a former company executive and one of two
Hyperactive shareholders, conspired with one of Hyperactiveâs
competitors, defendant AVFX, LLC ("AVFX"), to steal
Hyperactiveâs confidential and proprietary trade secrets,
customer relationships, and key employees for the joint
benefit of Mr. Young and AVFX. Hyperactive further claims
that another former employee, defendant Joseph Pannoni
("Mr. Pannoni"), wrongfully copied and has retained
the source code to Hyperactiveâs proprietary
"HyperFrame" software, and wrongfully copied and
has retained certain confidential digital project files
associated with Hyperactiveâs clients, possibly at the
request or direction of Mr. Young and/or AVFX. The Court
issued a preliminary injunction against Mr. Young and Mr.
Pannoni on July 20, 2018, which prohibits them from, among
other things, retaining or making use of Hyperactiveâs
proprietary software during the pendency of this action. That
preliminary injunction remains in full force and effect in
accordance with its terms.
other current shareholder in Hyperactive is Douglas Buckley
("Mr. Buckley"). The relationship between Mr.
Buckley and Mr. Young has, in recent years, been a stormy
one. In April 2018, Mr. Young filed an action against Mr.
Buckley and Hyperactive in Norfolk Superior Court, Civil
Action No. 1882CV00539 (the "Norfolk Action"),
seeking monetary damages from Hyperactive and Mr. Buckley
based, in part, upon Mr. Buckleyâs alleged unilateral
decision to "cut in half" Mr. Youngâs 2017
compensation "with retroactive application."
Norfolk Action Complaint, Â¶24. Mr. Young further claimed
in the Norfolk Action that, beginning in or about 2017, Mr.
Buckley had disparaged and defamed Mr. Young in front of
other Hyperactive employees (id., Â¶45); had
improperly blocked Mr. Youngâs efforts to acquire Mr.
Buckleyâs shares of Hyperactiveâs stock (id., Â¶44);
and had wrongfully caused Hyperactive to retroactively
reimburse Mr. Buckley for fourteen years of travel expenses
Buckley moved to dismiss all of the claims asserted against
him by Mr. Young in the Norfolk Action in May 2018. See Rider
Aff., Exhibit C . Mr. Buckleyâs motion to dismiss
was not opposed by Mr. Young and eventually was allowed by
the Norfolk Superior Court on July 9, 2018. Id., Exhibit
F . Separate and final judgment dismissing Mr. Youngâs
claims against Mr. Buckley with prejudice entered on
September 17, 2018. Id., Exhibit G . No appeal of
that order was ever taken by Mr. Young.
February 2019, Mr. Young filed a third-party complaint
against Mr. Buckley in this case. See Answer, Affirmative
Defenses and Third-Party Complaint of Defendant D. Douglas
Young with Demand for Jury Trial ("Third-Party
Complaint," Docket Entry No. 26.0). Many of the
allegations in Mr. Youngâs Third-Party Complaint are similar,
if not identical, to the allegations that Mr. Young made
against Mr. Buckley in the Norfolk Action. For example, Mr.
Young has asserted third-party claims against Mr. Buckley
based, in part, upon Mr. Buckleyâs alleged unilateral
decision in December 2017 to "retroactively chang[e]
[Mr. Youngâs] profit sharing for all of 2017 by fifty percent
(50%)" (id., Â¶26). Mr. Young further alleges in
his Third-Party Complaint that, beginning in or about 2017,
Mr. Buckley unfairly "ridiculed Mr. Young in the
presence of all of [Hyperactiveâs] staff" (id.,
Â¶37); improperly ignored or blocked Mr. Youngâs efforts to
"acquire [Mr.] Buckleyâs interest in [Hyperactive]"
(id., Â¶Â¶47-49); and wrongfully "directed
[Hyperactive] to pay [Mr. Buckley] personally for expenses he
and his family ... incurred retroactively for fourteen (14)
years" (id., Â¶70). Mr. Youngâs Third-Party
Complaint also includes, however, new allegations that Mr.
Young now has been "ousted" from Hyperactiveâs
affairs by Mr. Buckley, as well as a request for a judicial
declaration that, among other things, the partiesâ
"partnership" in Hyperactive has been effectively
and legally dissolved, and a request for the appointment of a
"disinterested third party to wind up all partnership
affairs." Id., Â¶Â¶51, 60, and 61(B) and (E).
Buckley now has moved to dismiss Mr. Youngâs Third-Party
Complaint, in its entirety, on res judicata grounds
pursuant to Mass.R.Civ.P. 12(b)(6). See, e.g., Heacock v.
Heacock, 402 Mass. 21, 23 & n.2 (1988)
("Heacock ") (Res judicata is a
generic term that includes claim preclusion, which
"makes a valid, final judgment conclusive on the parties
and their privies, and bars further litigation of all matters
that were or should have been adjudicated in the
action"). See also Boyd, 7 Mass.App.Ct. at 163,
quoting Restatement (Second) of Judgments Â§ 61(1) (Tent.
Draft No. 5, 1978) ("[T]he entry of a âvalid and final
judgment extinguishes ... all rights of a plaintiff to
remedies against the defendant with respect to all or any
part of the transaction, or series of connected transactions,
out of which the action aroseâ "). Mr. Buckley argues
that all of Mr. Youngâs third-party claims were, or could
have been, adjudicated in the Norfolk Action and, therefore,
Mr. Young is precluded from litigating or relitigating the
claims in this subsequent proceeding. Mr. Young opposes Mr.
Buckleyâs motion to dismiss, arguing that the claims asserted
in his Third-Party Complaint "are not remotely related
to the claims that were made part of the [Norfolk
Action]." Memorandum of Law in Support of D. Douglas
Youngâs Opposition to Motion of Douglas Buckley to Dismiss
the Third-Party Complaint ("Young Opp.") at 1.
Court conducted a hearing on Mr. Buckleyâs motion to dismiss
on August 15, 2019. Both sides attended and argued. Upon
consideration of the written submissions of the parties and
the oral arguments of counsel, Mr. Buckleyâs motion to
dismiss Mr. Youngâs Third-Party Complaint is ALLOWED
as to Count I, to the extent that it seeks monetary damages
from Mr. Buckley, and all of Count II, and DENIED as
to all other claims for the reasons discussed, briefly,
order to survive a motion to dismiss under Mass.R.Civ.P.
12(b)(6), a claim must include "[f]actual allegations
[sufficient] ... to raise a right to relief above the
speculative level ... [based] on the assumption that all the
allegations in the [pleading] are true (even if doubtful in
fact) ..." Iannacchino v. Ford Motor Co., 451
Mass. 623, 636 (2008) (internal quotation marks and citation
omitted). The Court also is required to take as true
"such inferences as may be drawn [from the allegations
of the claim or counterclaim] in the [claimantâs] favor
..." Nader v. Citron, 372 Mass. 96, 98 (1977).
first question to be resolved in deciding Mr. Buckleyâs
motion to dismiss is whether Mr. Youngâs claims against Mr.
Buckley in this action arise out of "all or any part of
the transaction, or series of connected transactions, out of
which the [Norfolk Action] arose." Boyd, 7
Mass.App.Ct. at 163. A comparison of the allegations of Mr.
Youngâs Third-Party Complaint with the allegations of his
complaint in the Norfolk Action shows that they plainly do.
As previously noted, there is considerable overlap between
the alleged wrongdoings that form the basis for Mr. Youngâs
third-party claims against Mr. Buckley in this action and Mr.
Buckleyâs alleged wrongdoings as complained of by Mr. Young
in the Norfolk Action. They include, but are not limited to
Mr. Buckleyâs purported retroactive change in Mr. Youngâs
compensation in December 2017; Mr. Buckleyâs purported
disparagement of Mr. Young in front of other Hyperactive
employees; Mr. Buckleyâs purported refusal to acknowledge or
accept Mr. Youngâs offer to acquire Mr. Buckleyâs interest in
Hyperactive; and Mr. Buckleyâs purported instruction
directing Hyperactive to retroactively reimburse him and his
family for fourteen years of personal expenses. Mr. Young
sought damages from Mr. Buckley personally in the Norfolk
Action on account of these alleged misdeeds, just as he seeks
damages from Mr. Buckley personally in this action on account
of the same conduct.
there can be no doubt that all of Mr. Youngâs third-party
claims against Mr. Buckley for damages: (1) arise out of the
same "transaction, or series of connected
transactions" that formed the basis of his claims
against Mr. Buckley in the Norfolk Action; (2) were, or could
have been, adjudicated in the Norfolk Action; and (3) were
extinguished, as a consequence, by the final judgment entered
against Mr. Young in the Norfolk Action. See
Heacock, 402 Mass. at 23 n.2; Boyd, 7
Mass.App.Ct. at 163.
outcome is different, however, with respect to Mr. Youngâs
third-party claims that seek, among other things, to confirm
the dissolution of Hyperactive and to obtain the appointment
of a disinterested third party to wind up Hyperactiveâs
affairs. Mr. Young did not allege in the Norfolk Action that
he had been "oust[ed]" from Hyperactiveâs
day-to-day operations by Mr. Buckley, nor did he seek any
relief concerning Hyperactiveâs ongoing legal existence.
These claims simply were not litigated in the Norfolk Action
and Mr. Young was under no obligation to do so given that the
"ousting" he now complains of apparently became
effective after the events that gave rise to his claims
against Mr. Buckley in that earlier case. See, e.g.,
Third-Party Complaint, Â¶60. Res judicata does not
bar the litigation of claims between prior legal opponents
based upon new wrongful conduct. See Moniz v. Department
of Corr.,75 Mass.App.Ct. 1111, 2009 WL 3673061 at *1
(2009) (Rule 1:28) ("The plaintiffâs remaining claim
pertains to alleged statements and conduct arising after the
... [events giving rise to the prior proceedings between ...