Hunter v. Youthstream Media Networks, Inc., CIV.A.01-10659-RBC

• Decision Date: 05 December 2002
• Docket Number: No. CIV.A.01-10659-RBC,CIV.A.01-10659-RBC
• Citation: Hunter v. Youthstream Media Networks, Inc., 241 F.Supp.2d 52 (D. Mass. 2002)
• Parties: Jason HUNTER, Plaintiff, v. YOUTHSTREAM MEDIA NETWORKS, INC., Network Event Theater, Inc., Common Places, LLC, Defendants.
• Court: U.S. District Court — District of Massachusetts

241 F.Supp.2d 52

Jason HUNTER, Plaintiff, v.YOUTHSTREAM MEDIA NETWORKS, INC., Network Event Theater, Inc., Common Places, LLC, Defendants.

No. CIV.A.01-10659-RBC¹

United States District Court, D. Massachusetts.

December 5, 2002.

Paul M. Rezendes, Nelson P. Lovins, Levins & Metcalf, Woburn, MA, for Plaintiff.

David C. Aisenberg, Looney, Cohen, Reagan & Aisenberg, Looney, Cohen, Reagan & Aisenberg, Boston, MA, for Defendants.

MEMORANDUM AND ORDER ON MOTION OF THE PLAINTIFF FOR AN INJUNCTION IN THE NATURE OF EQUITABLE ATTACHMENT, PURSUANT TO FED.R. CIV. P. 64(# 67)

COLLINGS, United States Magistrate Judge.

I.Introduction

PlaintiffJason Hunter("Hunter") has filed a motion requesting that the Court enjoin defendantYouthStream Media Networks, Inc.("YouthStream") to hold three hundred thousand dollars ($300,000.00) in cash and assets as security for the judgment Hunter expects to recover in this action.(# 67)In support of his motion the plaintiff has submitted a memorandum of law (# 68), proposed findings and rulings under Fed.R.Civ.P. 52(a)(# 69), and a three volume appendix of exhibits.(# 70-2)YouthStream has filed an opposition to the motion for equitable attachment with supporting exhibits (# 75) as well as a declaration of its corporate counsel with exhibits.(# 76)

In response to a Procedural Order (# 79) issued on October 29, 2001, Hunter filed a supplemental memorandum on the issue of the availability of an equitable attachment in the state court.(# 82)On November 19, 2002, YouthStream filed a supplemental response to the plaintiffs submission.(# 83)At this juncture the record is now complete.Having thoroughly reviewed the parties' submissions, the Court finds that Hunter's motion is amenable to disposition on the papers with some degree of dispatch.

There are two contracts at issue in this litigation.The first is a written agreement of merger executed on or about October 15, 1999, pursuant to the terms of which defendantNetwork Event Theater, Inc.("NET") acquired all the shares of stock of Invino Corporation, a company founded and partially owned by Hunter.(Amended Complaint # 28¶15;Answer # 27¶ 15)The second, also signed on or about October 15, 1999, is a three-year employment agreement between Hunter and defendantCommon Places, LLC("Common Places").(#28 ¶26 and Exh. B; # 27 ¶ 26)The crux of the plaintiffs amended complaint is that NET and Common Places have breached these contracts, respectively.YouthStream is said to have exercised pervasive control over the other two defendants and assumed the performance of these contracts such that it, too, is liable for the alleged breaches.²

Although discovery is yet ongoing,³ Hunter is now moving under Rule 64, Fed. R.Civ.P., for an equitable attachment against the liquid assets of YouthStream to secure the favorable judgement he anticipates receiving from the jury.To be entitled to such an injunction in this Circuit, the plaintiff must satisfy the very familiar four-prong test set forth in Planned Parenthood League of Massachusetts v. Bellotti:The Court must find: (1) that plaintiff will suffer irreparable injury if the injunction is not granted; (2) that such injury outweighs any harm which granting injunctive relief would inflict on the defendant; (3) that plaintiff has exhibited a likelihood of success on the merits; and (4) that the public interest will not be adversely affected by the granting of the injunction.

Planned Parenthood,641 F.2d 1006, 1009(1st Cir.1981)quotingWomen's Community Health Ctr., Inc. v. Cohen,477 F.Supp. 542, 544(D.Me.1979);accordSuarezCestero v. Pagan-Rosa,172 F.3d 102, 104(1 Cir., 1999).

II.Equitable Attachment Under Massachusetts Law

A.Common Law

Hunter claims to be entitled to an equitable attachment under the common law of the Commonwealth.According to the plaintiff, a judgment is no longer required in Massachusetts for an equitable injunction to issue.Rather, Hunter argues all that is necessary is that he"show that his remedies at law have been exhausted without providing relief, or that resort to a legal remedy would be futile."(# 82 at 4, emphasis in original)While the principle may be valid, the cases make clear that it is applied in extremely limited circumstances not present in the instant case.

The principle appears in a 1907 case decided by the Supreme Judicial Court ("SJC"), Maguire v. Spaulding, 194 Mass. 601, 604, 80 N.E. 587(1907) in which lienors sued to enforce their liens as to which "the amounts due were determined [but]they never were prosecuted to final judgment ..."Maguire,194 Mass. at 603, 80 N.E. at 587.What occurred was that the property was sold under foreclosure proceedings, and after satisfying the mortgagor, the mortgagee had a surplus.The surplus was attached by a creditor of the mortgagee who claimed those who had liens on the property did not have a claim to the surplus superior to his because the lienors had never reduced their liens to judgment.Id.

On these facts, the SJC wrote: We assume as the complainant contends that the bill is brought under the general equity powers of the court[and not under a statute], and that generally speaking in order to maintain such a bill must appear that the claim has gone to judgment and execution (Carver v. Peck,131 Mass. 291); but the rule is not an absolute one, and does not apply where a judgment and execution would be of no practical utility.Case v. Beauregard101 U.S. 688, 11 Otto 688, 25 L.Ed. 1004(1879).Manifestly in the present case an order of sale would have accomplished nothing and would have been a useless formality.

Maguire,194 Mass. at 604, 80 N.E. at 587.

Thus, the SJC ruled that the lienors had a superior claim to the surplus.The important point for present purposes is that what had been determined in the proceedings to enforce the liens were the amounts due to the lienors.In the present case, there are no liens involved, and there has been no determination as to what, if anything, is owed by YouthStream to the plaintiff.

In First National Bank of Boston v. Nichols,294 Mass. 173, 200 N.E. 869(1936), the plaintiff bank filed a petition in the probate court seeking the entry of an order directing the executors of a certain individual's will to retain adequate monies as security for the payment of a claim by the bank against the estate.A statute permitted the probate court to issue such an order upon the petition of a "... creditor of the deceased whose right of action does not accrue within one year after the giving of the administration bond...[and] upon examination thereof, the court finds that such claim is or may become justly due from the estate."Mass. Gen. L. c. 197, § 13.⁴The probate court granted the requested order, and the executor appealed.The SJC upheld the probate court's decision.

The first distinction between that case and this is that in First National Bank, there was a statute authorizing the setting aside of funds; the statute is plainly inapplicable to the instant case.However, in the First National Bank case, the executor argued that the bank could have brought its claim within one year after the "giving of the administration bond" and, therefore, the statute did not apply.

The claim which the bank had was based on federal law, so the SJC had to examine whether, under federal law, the bank's claim could have been brought within one year.First National Bank,294 Mass. at 179, 181, 200 N.E. at 872-3.The SJC noted that the executor's argument "... proceeds on the ground that the right under this Federal statute to bring a `bill in equity, in the nature of a creditor's bill'... could have been brought within the one year time period."First National Bank,294 Mass. at 180, 200 N.E. at 873.The SJC held that the claim could not have been brought because it had not matured.First National Bank,294 Mass. at 183, 200 N.E. at 875.

It was in this connection that the SJC reviewed the law with respect to "an ordinary creditor's suit brought under general equity jurisdiction to reach and apply equitable assets of a debtor in payment of his debts."First National Bank,294 Mass. at 182, 200 N.E. at 874.The Court first noted that "... the `true rule in equity is that under usual circumstances, a creditor's bill may not be brought except by a judgment creditor after a return of `nulla bona' on an execution'."First National Bank,294 Mass. at 182, 200 N.E. at 874quotingHarkin v. Brundage,276 U.S. 36, 52, 48 S.Ct. 268, 72 L.Ed. 457(1928).It then added:

though it was said in the case of Case v. Beauregard,101 U.S. 688, 690, 691, 11 Otto 688, 25 L.Ed. 1004(1879) that `it has been decided that where it appears by the bill that the debtor is insolvent and that the issuing of an execution would be of no practical utility, the issuance of an execution is not a necessary prerequisite to equitable interference,' and that "whenever a creditor has a trust in his favor, or a lien upon property for the debt due him, he may go into equity without exhausting legal processes or remedies.'But even if the statutory bill in equity can be brought without a judgment against the bank first having been obtained [citations omitted] by analogy to the situation where the debtor is insolvent or the `creditor has a trust in his favor, or a lien on the property for the debt due him', it does not follow that such a bill in equity can be brought by a person whose claim cannot be proved because both unmatured and contingent.

First National Bank,294 Mass. at 183, 200 N.E. at 874.

This is not to suggest that Hunter's claims, unlike those of the bank, are "unmatured" or "contingent."Rather, if it is assumed that the SJC's discussion of the law with respect to when a creditor's bill can brought is a discussion of Massachusetts (as opposed to federal law), the exceptions to the general rule that a judgment is a prerequisite to bring a creditor's bill are very narrow, i.e., ...