Clamp-All Corp. v Foresta

Decision Date15 February 2002
Docket Number99-P-1714
Citation53 Mass. App. Ct. 795
CourtAppeals Court of Massachusetts
PartiesCORPORATION vs. ANTHONY J. FORESTA & another.(FN1) Docket No.: 99-MASSACHUSETTS COURT OF APPEALS County: Essex

Practice, Civil, Default, Reconsideration, Vacation of judgment, Substitution, Directed verdict, Judgment notwithstanding verdict, Damages, Attorney's fees, Interest. Damages, Breach of contract, Consumer protection case, Mitigation, Attorney's fees, Interest. Consumer Protection Act, Attorney's fees. Interest.

Civil action commenced in the Superior Court Department on December 17, 1993.

The case was heard by Joseph A. Grasso, Jr., J., on a motion to dismiss for failure to comply with court orders, and motions for relief from judgment were heard by him; the damages portion of the case was tried before Howard J. Whitehead, J., and motions to nonsuit, for judgment notwithstanding the verdict, and for attorney's fees, costs, and sanctions were heard by him.

C. Peter R. Gossels for the plaintiff.

Craig J. Ziady for the defendants.

Present: Laurence, Mason, & Doerfer, JJ.

MASON, J.

A judge of the Superior Court, acting pursuant to Mass.R.Civ.P. 37(b)(2), as amended, 390 Mass. 1208 (1984), caused a default judgment to be entered against the plaintiff, Clamp-All Corporation (Clamp-All), for failure to comply with the court's discovery orders. The judgment dismissed Clamp-All's claims against the defendant, Anthony J. Foresta, and also established Clamp-All's liability on each of the counterclaims brought against it by Foresta. The counterclaims alleged that Clamp-All had committed a breach of a marketing support agreement it had entered into with Caliber Consulting Corporation (Caliber), a company owned by Foresta, and had also violated G. L. c. 93A, by terminating the agreement in violation of its terms and to coerce Foresta to accept lower commissions than he was entitled to under the agreement. A separate counterclaim also alleged that Clamp-All had breached an insurance agreement it had entered into with Foresta by failing to pay premiums on the policies covered by the agreement.

Following a jury trial before a different judge to determine damages, the jury found such damages to be $723,906 on the claims pertaining to the marketing agreement and $15,775 on the claim pertaining to the insurance agreement. The trial judge then conducted a further evidentiary hearing and determined that Clamp-All was not liable for multiple damages since its violation of G. L. c. 93A had not been wilful. The judge accordingly caused judgments to be entered against Clamp-All in the amounts determined by the jury, plus interest from the date Clamp-All had filed its complaint. The judge, acting pursuant to G. L. c. 93A, § 11, also awarded attorney's fees and costs.

On appeal, Clamp-All claims that the judge abused his discretion in entering the judgment of default and also in failing to grant Clamp-All's subsequent motions to vacate the default. Clamp-All also claims that the trial judge committed numerous errors in connection with the proceedings to determine damages and in determining the amount of attorney's fees to be awarded under G. L. c. 93A, § 11. For the reasons discussed below, we vacate the judgment pertaining to the marketing agreement and remand for the entry of a new judgment deducting $10,000 from the amount of the damages awarded in the judgment, and recalculating prejudgment interest. We affirm the judgment pertaining to the insurance agreement.

The facts. We set forth in some detail the facts found by the trial judge or shown by the record in order to place in context Clamp-All's numerous claims of error.

Clamp-All has its offices in Haverhill, Massachusetts, and produces couplings which are used to join piping that conveys waste water. Clamp-All's product is unique in the industry.

Prior to 1991, Foresta was president and a principal stockholder of Clamp-All. His particular forte was marketing, which he accomplished by convincing regulatory bodies, architects, and entities to require the use of Clamp-All products in various construction projects on which they were working.

In 1991, however, as the result of Clamp-All's proceedings under Chapter 11 of the United States Bankruptcy Code, Foresta's ownership interest in Clamp-All became minimal and he was replaced as president of the corporation by David J. Palmer, an attorney who had been a member of the bar of Massachusetts since 1959. At this time, Foresta caused Caliber to be incorporated as a separate marketing support company, with Foresta as its sole owner and employee.

In February, 1991, Clamp-All and Caliber entered into a marketing support agreement which called for Caliber to perform various marketing and consulting services for Clamp-All, and also to visit and train each of Clamp-All's independent sales representatives at least once a year. The agreement provided that Clamp-All would pay Caliber commissions for such services equal to five percent of its gross sales less returns, allowances, discounts, and freight charges, and would also reimburse Caliber for certain of its start-up business expenses. The agreement further provided that it would continue in effect for successive one-year terms subject to the right of either party to cancel the agreement by providing two months' written notice of such cancellation to the other party. In the event the agreement was terminated by Clamp-All, the agreement provided that both Foresta and Caliber would be subject to a two-year noncompetition period during which they would be paid for performing ongoing consulting services in accordance with a formula set forth in the agreement.

In April, 1991, the parties amended the marketing support agreement to provide that it would remain in effect for as long as certain personal guarantees that Foresta and his wife had agreed to provide in connection with certain loans Clamp-All had obtained from Middlesex Savings Bank remained in effect and Clamp-All was meeting or exceeding certain specified sales goals. At this same time, Clamp-All and Foresta also entered into a separate agreement providing for the exchange of certain insurance policies each of them were separately maintaining on Foresta's life. The first of these policies (no. 6939500) was in the face amount of $1,000,000, and was being maintained by Clamp-All subject to an interest held by the bank. The second of these policies (no. 7228100) was in the face amount of $260,900 and was being maintained by Foresta. The agreement, as amended, provided that the parties would transfer both of these policies into an insurance trust which would continue in effect until the bank had released its interest in policy no. 6939500, at which time policy no. 6939500 would be transferred to Foresta's wife, while policy no. 7228100 would be transferred to Clamp-All. The agreement further provided that, while the policies remained in the trust, Clamp-All would pay the premiums due on both policies and then deduct Foresta's proportionate share of such premiums from the commissions due Caliber under the marketing support agreement.

The parties operated under their agreements without incident for a period of several months. In the latter part of 1992, however, Clamp-All's senior officers determined that there was a need to reduce expenses because the company's sales were down. They also became concerned that Foresta was not fully complying with the provisions contained in the marketing support agreement requiring him to visit and train each of the company's independent sales representatives at least once a year. Accordingly, in August or September, 1992, Frank Logan, who was Clamp-All's chief financial officer, began meeting with Foresta and proposing that the parties enter into a new agreement which would require him to provide fewer services, but would also reduce the commissions to be paid to him. Foresta, however, insisted that the parties' existing agreement should remain in effect.

On October 30, 1992, Clamp-All sent Foresta a letter notifying him that it was terminating the existing agreement as of the end of December, 1992, and again inviting him to enter into a new agreement. Foresta continued to refuse to do so. Clamp-All accordingly terminated the agreement at the end of December, 1992, and ceased paying any commissions to Caliber. Clamp-All did, however, continue paying Foresta $1,000 per week pursuant to the noncompetition provisions contained in the agreement. In March, 1993, however, Clamp-All ceased making even these payments when Foresta refused its request to attend a meeting of the American Society for Testing Materials. Foresta was eventually required to relocate his family to Wisconsin and accept a job with a company there.

In September, 1993, the bank released its interest in policy no. 6939500, causing the insurance trust to be terminated in accordance with its terms. Shortly thereafter, in December, 1993, Clamp-All commenced the instant action by filing a complaint against Foresta in Superior Court. The complaint alleged that Clamp-All was entitled to reimbursement for premiums it had paid to keep the insurance policies in effect but had not previously recovered from Caliber.

In June, 1994, Foresta filed an answer and two counterclaims. The counterclaims alleged that Clamp-All had improperly terminated the marketing support agreement and had breached the insurance agreement by failing to pay all the premiums due on the policies. In February, 1996, Foresta filed a motion to add a third counterclaim alleging that Clamp-All had terminated the marketing support agreement in order to compel Foresta to accept lower commissions, and had thereby violated G. L. c. 93A, § 2. This motion was allowed on February 23, 1996.

At or about the same time, Foresta served on Clamp-All a set of written interrogatories and two sets of requests for production of documents. When Clamp-All did not respond to any of these discovery requests within the time...

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