United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY
ALLISON D. BURROUGHS, U.S. DISTRICT JUDGE
commercial dispute following the underperformance of a
make-up retail store, Plaintiff Zotbelle, Inc.
(“Zotbelle”), whose President ran the store,
alleges that Defendants Kryolan Corporation and Kryolan GmbH
(together, “Kryolan”) breached a contract or
implied contract that set the terms for the parties’
relationship, breached the implied covenant of good faith and
fair dealing, misrepresented information about its intended
relationship with Zotbelle, and engaged in unfair and
deceptive business practices in violation of Massachusetts
General Laws ch. 93A, § 11 (“Chapter 93A”).
Currently pending before the Court are Zotbelle’s and
Kryolan’s cross-motions for summary judgment. [ECF Nos.
49, 50]. For the following reasons, Kryolan’s motion
for summary judgment on all counts of the Amended Complaint
and on its cross-claim [ECF No. 50] is GRANTED, and
Zotbelle’s motion for partial summary judgment on its
Chapter 93A claim [ECF No. 49] is DENIED.
following facts are uncontroverted pursuant to Federal Rule
of Civil Procedure 56 and Local Rule 56.1 unless otherwise
stated. Kryolan is a professional makeup brand that has
supplied the film, theater, and television industries for
over 70 years. [ECF No. 53 (“Kryolan’s Statement
of Facts” or “KSOF”) ¶ 3]. Kryolan
Corporation is incorporated in California and operates
Kryolan’s business in the United States. [KSOF ¶
4]. Claudia Longo is the Secretary and CEO of Kryolan
Corporation. [KSOF ¶ 5]; see [ECF No. 49-2
(“Zotbelle’s Statement of Facts” or
“ZSOF”) ¶ 6]. Kryolan Corporation is a
wholly-owned subsidiary of Kryolan GmbH, which is
incorporated in Germany and managed by Wolfram Langer and two
other individuals. [KSOF ¶¶ 3–4; ZSOF ¶
is incorporated in Barbados and registered to do business in
Massachusetts. [KSOF ¶ 1; ZSOF ¶ 1]. Deborah
Blenman is the President of Zotbelle. [KSOF ¶ 2; ZSOF
¶ 2]. Zotbelle’s business relationship with
Kryolan dates back to at least 2011. [KSOF ¶ 6; ZSOF
¶ 8]. Ms. Blenman worked as a make-up retailer and sales
representative for Kryolan in Barbados and the Caribbean.
[KSOF ¶ 6]. She held a B-1 visa in June 2013 that
allowed her to temporarily visit the United States but did
not permit her to remain in the United States to manage a
business or to work for a business. See [KSOF ¶
40]. Ms. Blenman never obtained a work permit that would have
allowed her to be employed in the United States. [KSOF ¶
2013, Ms. Blenman expressed interest in opening a Kryolan
store in Boston and wrote to Mr. Langer about the business
opportunity. [KSOF ¶¶ 7, 11]. On May 14, 2013, Ms.
Blenman e-mailed Mr. Langer to confirm the details of a
telephone conversation with him. [KSOF ¶ 13]. The email
read as follows:
ZOTBELLE is responsible for finding a location of approx..
700- 800 sq. ft. in good location in Boston for the retailing
of KRYOLAN PROFESSIONAL MAKE-UP and Dr. Babor Skin Care Line.
(the acquiring of skin care will be arranged through Mr.
Langer’s office at Kryolan) Photos are to be captured
and sent to Mr. Langer.
ZOTBELLE is responsible for ensuring good floors, walls and
electricity in the building. The space should be lease for no
less than five years and as a last resort and if absolutely
necessary it can be rented under KRYOLAN CORPORATION and sub
leased to ZOTBELLE.
KRYOLAN would install the furniture in the space, which is
approx.. $60, 000-$50, 000 U.S. and ZOTBELLE is required to
pay a 1/3 of this amount after three years, in installments
to be determined. Installation of the furniture should take
(3) weeks; please confirm.
Product is to be ordered from the San Francisco location and
the first delivery can be a maximum of $30, 000 - $40, 000
U.S. to be paid in 12 months. All other orders after this are
to be paid in four (4) weeks.
The target date to commence is Oct. 2013 – early next
Additional assistance from KRYOLAN is available upon request,
within reason and under agreement.
. . . .
[Ms. Blenman] will facilitate the establishing of this store
in Boston, however it will not negate from the current
business in the Caribbean.
[KSOF ¶ 13].
12, 2013, Ms. Longo provided Ms. Blenman with a
“Proposal for Kryolan City Boston 31 Saint James
St.” [KSOF ¶ 20; ECF No. 51-10]. This document
provided for a $20, 000 deposit and a five-year lease with a
lease amount of $1, 500 “[p]lus 5% of net Retail Sales
or 9.5 % of value of purchased products, whatever is greater,
but not less than the agreed annual minimum purchases.”
[KSOF ¶ 21; ECF No. 51-10]. Ms. Blenman responded the
same day and inquired what the $20, 000 deposit was for.
[KSOF ¶ 22]. Mr. Langer explained that Kryolan would
bear all the expenses of remodeling the store and equipping
it with furniture and that he “[thought] it to be fair
that [Ms. Blenman] contribute with a deposit.” [KSOF
¶ 23]. After an additional email exchange, Kryolan
reduced the deposit to $17, 000. [KSOF ¶¶
24–25]. Ms. Blenman testified that, at the time, she
“understood [the deposit] . . . was the franchise
fee.” [KSOF ¶ 26].
entered into a five-year lease agreement dated August 8, 2013
for the retail store location at 31 St. James Avenue in
Boston. [KSOF ¶ 27; ZSOF ¶ 9; ECF No. 51-13].
Kryolan paid for the renovations and furnishing of the store
(“Kryolan City Boston”) and supplied the initial
inventory. [KSOF ¶ 28]. Kryolan City Boston opened on
December 7, 2013. [KSOF ¶ 29; ZSOF ¶ 10].
alleges that it entered into an agreement with Kryolan before
Kryolan City Boston opened on December 7, 2013 concerning
“things like marketing, the sales, . . . advertising,
technical, . . . information, workshops, ” and that
this agreement was not reflected in any writing. [KSOF ¶
62]. Ms. Blenman understood from these conversations that
Kryolan promised to provide marketing and advertising for
Kryolan City Boston. [KSOF ¶ 63]. Ms. Longo agreed that
she spoke with Ms. Blenman about marketing but recalled
discussing general marketing and awareness of the Kryolan
brand rather than advertising for the Kryolan City Boston
store specifically. See [KSOF ¶ 63].
February 4, 2014, Kryolan Corporation and Ms. Blenman
executed an “Agreement for operating a retail store
named Kryolan City Boston at 31 St. James St., Boston”
(“Lease Agreement”), which had been drafted by
Ms. Longo and Mr. Langer. [KSOF ¶ 31; ZSOF ¶¶
11– 12; ECF No. 58 at 5; ECF No. 51-12]. The Lease
Agreement required Ms. Blenman to pay a monthly lease
payment, a “base payment” of $17, 000, and
inventory invoices according to a schedule set by the
contract. [KSOF ¶¶ 35–36; ZSOF ¶ 13; ECF
No. 51-12]. The Lease Agreement also stated that any sales
promotions needed to be authorized by Kryolan and that store
personnel were required to follow Kryolan’s dress code.
[ZSOF ¶¶ 17–19; ECF No. 51-12]. Neither
Zotbelle nor Kryolan GmbH are parties to the Lease Agreement.
[KSOF ¶ 33]. Zotbelle argues that it assumed the Lease
Agreement and notes that a loan agreement between Zotbelle
and Kryolan GmbH states that “ZOTBELLE INC. requests
the loan to purchase the initial product supply to operate
the Kryolan retail store.” [ECF No. 64 at 10]. There is
no evidence in the summary judgment record corroborating an
assignment of the Lease Agreement to Zotbelle.
Blenman managed and worked at Kryolan City Boston starting in
December 2013. [KSOF ¶ 42]. She testified that she did
not believe she was “working” in the United
States because she was not on the payroll. [Id.].
Zotbelle paid Ms. Blenman’s rent in Boston, her car
payment, and her tithes to Family Life Fellowship as business
expenses. [KSOF ¶¶ 43–44].
alleges that Kryolan City Boston was a franchise of Kryolan.
[KSOF ¶ 58]. Ms. Blenman does not recall who at Kryolan
told her that she would be a franchisee. [Id.].
Zotbelle identifies several references to Kryolan City Boston
being a franchise location. See [ZSOF ¶¶
23–24, 26, 28–29]. On April 1, 2014, a human
resources employee at Kryolan wrote in a letter for Ms.
Blenman that was intended for U.S. Customs and Immigration
Services that Ms. Blenman “is the owner of Zotbelle,
Inc., doing business as (DBA) Kryolan City Boston as a
franchise owner with four staff members.” [ZSOF ¶
23; ECF No. 58 at 10]. Ms. Longo testified that Kryolan
described Ms. Blenman as a “franchise owner” in
the letter in order to “help her . . . get a
visa.” [ZSOF ¶ 24]. On November 20, 2014, Ms.
Longo, Mr. Langer, and Ms. Blenman corresponded concerning a
proposed payment plan for Ms. Blenman to pay amounts due to
Kryolan. [ECF No. 49-3 at 59–62]. In that
correspondence, Ms. Longo explained that “the $10, 000
is a contribution fee, like you have at franchises.”
[ZSOF ¶ 26]. On July 20, 2016, a Kryolan sales manager
wrote a colleague and noted in reference to Kryolan City
Boston that “one of our open stores that was a
franchise suddenly los[t] the franchisee and we are
re-opening that location.” [ZSOF ¶ 27]. Ms.
Blenman acquired business cards identifying her as a
“Franchise Owner, ” but the parties dispute how
those cards came to be printed. [ZSOF ¶¶ 28–
29; ECF No. 58 at 14].
30, 2014, Kryolan advised Ms. Blenman that she had failed to
pay Kryolan Corporation for the initial purchase of inventory
and proposed new terms for paying the debt. [KSOF ¶ 48].
Ms. Blenman argues that she was unable to pay the debt
because “there are a few factors that are out of my
control” including “a great need for advertising,
” which she said she was told was “handled by the
marketing department in Germany.” [ECF No. 64 at
Ms. Blenman did not make the inventory payments, Kryolan GmbH
offered a loan in December 2014 to avoid a default under the
Lease Agreement. [KSOF ¶ 49]. On December 18, 2014,
Zotbelle and Kryolan GmbH entered into a loan for $63, 010.37
(“Loan Agreement”), which provided for monthly
payments. [KSOF ¶¶ 50–51; ZSOF ¶ 36].
Zotbelle failed to make the required payments due under the
Loan Agreement and therefore defaulted on the Loan Agreement
and the Lease Agreement. [KSOF ¶¶ 53–54]. The
parties dispute the reason for Zotbelle’s failure to
comply with the terms of the Lease and Loan Agreements. [ECF
No. 64 at 18–21].
22, 2016, Kryolan terminated the Lease Agreement for failure
to pay rent, failure to pay for inventory by defaulting on
payments due under the Loan Agreement, and failure to fulfill
a contractual obligation to purchase a minimum of $100, 000
and $140, 000 during 2014 and 2015, respectively. [KSOF
¶ 55; ZSOF ¶ 38]. Ms. Blenman testified that she
had not paid the rent in April, May, and June 2016, that she
had failed to make payments due under the Loan Agreement, and
that she did not purchase the required amount of annual
inventory. [KSOF ¶ 56]. Ms. Blenman states that she did
not have the “necessary support that [she and Kryolan
City Boston] needed in order to generate the sales . . . to
make the payments to Kryolan.” [Id.]. Zotbelle
confirmed that it owes $56, 781 plus interest to Kryolan.
[KSOF ¶ 57]. Ms. Blenman claims to have invested $34,
000 Barbados dollars into the Boston store. [KSOF ¶ 60].
terminating the Lease Agreement, Kryolan took over operation
of the Kryolan City Boston store. [KSOF ¶ 68]. The store
was closed in June 2018 because it was not profitable. [KSOF
¶ 68]. Concerning Ms. Blenman’s ongoing business
in Barbados, Kryolan Corporation also required Zotbelle to
pay cash for Kryolan products and demanded that Zotbelle pay
an additional 25% or a minimum of $500 on top of each product
order. [ZSOF ¶ 39]. There is no written
agreement between Zotbelle and Kryolan requiring it to sell
product to Zotbelle in Barbados. [KSOF ¶ 72].
5, 2017, Zotbelle initiated this action against Kryolan
Corporation in the Superior Court of Suffolk County. [ECF No.
4-1]. On August 1, 2017, Kryolan Corporation removed the case
to this Court, and on August 31, 2017, it answered the
complaint. [ECF Nos. 4, 12]. On December 15, 2017, Zotbelle
filed an Amended Complaint. [ECF No. 29 (“Am.
Compl.”)]. Kryolan Corporation answered the Amended
Complaint on January 5, 2018. [ECF No. 31]. Kryolan GmbH
answered the Amended Complaint on March 27, 2018 and asserted
a counterclaim for breach of the Loan Agreement. [ECF No.
36]. Zotbelle answered the counterclaim on April 5, 2018.
[ECF No. 43]. On November 12, 2018, Zotbelle moved for
partial summary judgment and Kryolan cross-moved for summary
judgment on all counts and its counterclaim. [ECF Nos. 49,
50]. Both motions have been fully briefed. See [ECF
Nos. 49-1, 52, 59, 63, 67].
judgment is appropriate where the movant demonstrates that
“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
its resolution might affect the outcome of the case under the
controlling law.” Cochran v. Quest Software,
Inc., 328 F.3d 1, 6 (1st Cir. 2003). “A genuine