Element Productions, Inc.
Editbar, LLC et al.
Date: September 6, 2019
(with first initial, no space for Sullivan, Dorsey, and
Walsh): Davis, Brian A., J.
DECISION AND ORDER REGARDING DEFENDANT MARK HANKEYâS
MOTION FOR APPROVAL OF DAMAGES OFFSET RESULTING FROM
PLAINTIFF ELEMENT PRODUCTIONS, INC.âS RECEIPT OF SETTLEMENT
PAYMENT (DOCKET ENTRY NO. 128.0) AND ORDER FOR
A. Davis Associate Justice
is an action in which plaintiff Element Productions, Inc.
("Element" or "Plaintiff") alleges that
one of its former executives, defendant Mark Hankey
("Mr. Hankey"), clandestinely assisted former
defendants Editbar, LLC ("Editbar") and Stir Films,
LLC ("Stir Films") in establishing a video
production business to compete against Element. The case was
filed in May 2016 and litigated aggressively for more than
two years. Editbar and Stir Films eventually entered into a
confidential settlement with Element shortly before trial,
which resulted in their dismissal from the case. The
confidential settlement included a monetary payment by
Editbar and Stir Films to Element (the "Editbar
Settlement Payment"), the amount of which has been
disclosed to the Court, but need not be further disclosed for
purposes of this decision and order.
Following Elementâs settlement with Editbar and Stir Films,
the case went to trial, jury-waived, in December 2018 solely
on Elementâs claims against Mr. Hankey, Mr. Hankeyâs
counterclaims against Element, and Mr. Hankeyâs third-party
claim against Elementâs founder, Eran Lobel ("Mr.
Lobel"). The trial lasted ten days. After the evidence
had closed, the Court gave the parties time to submit revised
proposed findings of fact and rulings of law. Closing
arguments took place on April 25, 2019.
24, 2019, the Court delivered its final findings of fact and
rulings of law on the partiesâ claims and counterclaims from
the bench. The Court found in favor of Element on its breach
of contract and breach of duty of loyalty claims against Mr.
Hankey, but concluded that Element had failed to prove its
resulting actual damages with reasonable certainty. The Court
also ruled, however, that Mr. Hankeyâs breach of his duty of
loyalty warranted an order directing him to repay, as
equitable restitution, that portion of the compensation he
received from Element during the final year of his employment
which exceeded the fair value of the services he had provided
to Element in the same time frame. See Meehan v.
Shaughnessy, 404 Mass. 419, 438 (1989) (a fiduciary who
violates his fiduciary duties can be required to forfeit
"that portion of his compensation, if any, that was in
excess of the worth of his services to his employer")
(citation omitted). See also Chelsea Indus., Inc. v.
Gaffney, 389 Mass. 1, 12-13 (1983) ("Chelsea
Indus. ") (recognizing that a fiduciary can be
required to forfeit his compensation for conduct that
violated his fiduciary duties, even without a showing of
actual injury to the employer). The total amount of
restitution that Mr. Hankey was ordered to pay to Element
comes to $609,500.00, which represents precisely one-half of
the total compensation that Mr. Hankey received from Element
between April 1, 2015 (i.e., the approximate date on
which Mr. Hankey first began providing clandestine assistance
to EditBar and Stir Films) and April 12, 2016 (i.e.,
the date on which Element officially terminated Mr. Hankeyâs
Currently before the Court is Mr. Hankeyâs Motion for
Approval of Damages Offset Resulting from Plaintiff Element
Productions, Inc.âs Receipt of Settlement Payment (the
"Motion to Offset," Docket Entry No. 128.0). In a
nutshell, Mr. Hankeyâs Motion to Offset asks the Court to
order that the amount of restitution Mr. Hankey has been
ordered to pay be reduced by the amount of the Editbar
Settlement Payment pursuant to G.L.c. 231B, commonly referred
to as the "Joint Tortfeasors Act." Section 1 of the
Joint Tortfeasors Act provides, in relevant part, that,
[e]xcept as otherwise provided in this chapter, where two or
more persons become jointly liable in tort for the same
injury to person or property, there shall be a right of
contribution among them even though judgment has not been
recovered against all or any of them.
G.L.c. 231B, Â§ 1(a). Section 4 of the Joint Tortfeasors Act
similarly provides, in relevant part, that,
[w]hen a release or covenant not to sue or not to enforce
judgment is given in good faith to one of two or more persons
liable in tort for the same injury ... [i]t shall not
discharge any of the other tortfeasors from liability for the
injury unless its terms so provide; but it shall reduce the
claim against the others to the extent of any amount
stipulated by the release or the covenant, or in the amount
of the consideration paid for it, whichever is the greater
Id ., Â§ 4(a).
Relying upon the foregoing provisions of the Joint
Tortfeasors Act, Mr. Hankey asserts that,
Element indisputably sued Hankey, EditBar, and Stir Films for
their alleged joint torts, including Hankeyâs alleged breach
of fiduciary duty. Because Element has already received [the
Editbar Settlement Payment] which the Court found resulted
from those tortious activities, Hankey is entitled under ...
Â§ 4(a) [of the Joint Tortfeasors Act] ...