Heard: October 3, 2019.
action commenced in the Superior Court Department on July 24,
2015. The case was heard by Kenneth W. Salinger, J.
C. Oatway (Benjamin D. Stevenson also present) for the
Charles M. Sims, of Virginia (Michael Paris also present) for
Present: Massing, Sacks, & Hand, JJ.
appeal arises from the deterioration of the business
relationship between the two members of a closely held
investment banking firm, the plaintiff Boston Equity
Advisors, LLC (BEA). BEA and one of its members, plaintiff
Mark Butts, brought an action against three defendants:
BEA's other member, Arnold E. Freedman; an independent
contractor working with the firm, Oded Ben-Joseph; and an
investment banking firm, Outcome Capital, LLC (Outcome).
After a bench trial, a judge of the business litigation
session of the Superior Court entered judgment in favor of
the defendants. We affirm.
and Freedman cofounded BEA as equal members in 1999.
Ben-Joseph began working with the firm as an independent
contractor in 2010. After various disagreements with
Butts, mostly concerning Ben-Joseph's compensation,
Freedman and Ben-Joseph decided to leave BEA. To this end,
they began conversations with Outcome. When Freedman and
Ben-Joseph initially met with Outcome, Freedman raised the
possibility of BEA and Outcome merging, as well as the
possibility of Freedman and Ben-Joseph joining Outcome on
some other basis. Neither informed Butts of this initial
meeting or other ensuing discussions, and they never invited
Butts to join them.
Freedman and Ben-Joseph joined Outcome, Butts and BEA filed
this suit alleging an assortment of contract and business
tort claims. The trial judge found in favor of the defendants
on all counts. On appeal, Butts and BEA challenge the
judge's rulings only on their breach of fiduciary duty
claim against Freedman and on their G. L. c. 93A claim
against all three defendants, including the denial of
Breach of fiduciary duty claim against Freedman.
and BEA argue that Freedman breached his fiduciary duty owed
to them by failing to disclose the negotiations with Outcome
and by failing to share the opportunity for BEA to merge
with, or for Butts to join, Outcome. We review the
judge's conclusions of law de novo. See Martin
v. Simmons Props., LLC, 467 Mass. 1, 8
(2014); Demoulas v. Demoulas Super Mkts., Inc., 424
Mass. 501, 510 (1997).
preliminary matter, we agree with the judge that Freedman, as
a member of a closely held corporation, owed Butts and BEA a
fiduciary duty. See Pointerv.Castellani, 455 Mass. 537, 549 (2009). It is also
well settled that "fiduciaries may plan to compete with
the entity to which they owe allegiance, provided that in the
course of such arrangements they [do] not otherwise act in
violation of their fiduciary duties" (quotation and
citation omitted). Meehanv.Shaughnessy, 404 Mass. 419, 435 (1989). The
determination whether Freedman otherwise acted in violation
of his fiduciary duties rests on the interpretation of the
"Other Activities" ...