Jenny B. Realty, LLC v. Danielson, LLC
| Decision Date | 22 April 2020 |
| Docket Number | CIVIL ACTION NO. 18-40067-TSH |
| Citation | 456 F.Supp.3d 307 |
| Parties | JENNY B. REALTY, LLC, Plaintiff, v. DANIELSON, LLC, Dimitrious Moutoudis, and Toudis, LLC, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Christopher J. Fein, Fein Law Office, Braintree, MA, for Plaintiff.
Roy A. Bourgeois, Dale R. Kiley, BourgeoisWhite, LLP, Worcester, MA, for Defendants.
HILLMAN, D.J.
Jenny B Realty, LLC ("Jenny B" or "Plaintiff") has filed claims against Danielson, LLC ("Danielson"), Demetrious Moutoudis ("Moutoudis"), and Toudis, LLC ("Toudis" and, together with Danielson and Toudis, "Defendants") for Breach of Contract (Count I), Tortious Interference With Contractual Relations (Count II), an Action to Reach and Apply (Count III), violation of Mass.Gen.L. ch. 109A, the Massachusetts Fraudulent Transfer Act ("MFTA")(Count IV), and Breach of Fiduciary Duty (Count V). Jenny B's claims arise out of the termination of a lease agreement between Jenny B and Danielson for property located at 483 Providence Road, Brooklyn, Connecticut (the "Property") which Danielson utilized to operate a Dunkin Donuts franchise. This Memorandum and Order of Decision addresses: Plaintiff's Motion for Summary Judgment (Docket No. 31), Defendants Dimitrious Moutoudis and Toudis LLC's Motion For Summary Judgement (Docket No. 35), and Defendants’ Motion to Strike Paragraphs 10 and 13 of the Affidavit Joaquim Lopes (Docket No. 44).
For the reason set forth below, the motion to strike is denied. Plaintiff's motion for summary judgment is granted , in part, and denied, in part, and Defendants’ motion for summary judgment is granted , in part, and denied , in part.
Defendants seek to strike portions of the Affidavit of Joaquim Lopes (Docket No. 33-2) which Plaintiff relies on in support of its motion for summary judgment. More specifically, Defendants seek to strike ¶10 () and ¶13 () on the grounds that the asserted statements constitute inadmissible hearsay, are not based on personal knowledge and/or are based on unauthenticated documentation. Plaintiff argues that the statements are based on personal knowledge, and/or were admitted by Defendants in their discovery responses or can be inferred therefrom. I agree with the Plaintiff that the statements are self-evident based on Defendants’ discovery responses. The motion to strike is denied.
Summary Judgment is appropriate where, "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Carroll v. Xerox Corp. , 294 F.3d 231, 236 (1st Cir. 2002) (citing Fed. R. Civ. P. 56(c) ). " ‘A "genuine" issue is one that could be resolved in favor of either party, and a "material fact" is one that has the potential of affecting the outcome of the case.’ " Sensing v. Outback Steakhouse of Florida, LLC , 575 F.3d 145, 152 (1st Cir. 2009) (quoting Calero-Cerezo v. U.S. Dep't. of Justice , 355 F.3d 6, 19 (1st Cir. 2004) ).
When considering a motion for summary judgment, the Court construes the record in the light most favorable to the nonmoving party and makes all reasonable inferences in favor thereof. Sensing, 575 F.3d at 153. The moving party bears the burden to demonstrate the absence of a genuine issue of material fact within the record. Id., at 152. " ‘Once the moving party has pointed to the absence of adequate evidence supporting the nonmoving party's case, the nonmoving party must come forward with facts that show a genuine issue for trial.’ " Id. (). " ‘[T]he nonmoving party "may not rest upon mere allegations or denials of the [movant's] pleading, but must set forth specific facts showing that there is a genuine issue of material fact as to each issue upon which [s/he] would bear the ultimate burden of proof at trial." Id. (). The nonmoving party cannot rely on "conclusory allegations" or "improbable inferences". Id. (). " ‘The test is whether, as to each essential element, there is "sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." ’ " Id. (). "Cross-motions for summary judgment require the district court to ‘consider each motion separately, drawing all inferences in favor of each non-moving party in turn.’ " Green Mountain Realty Corp. v. Leonard , 750 F.3d 30, 38 (1st Cir. 2014) ().
Jenny B is a limited liability company organized in Connecticut. In 2003, Dunkin Donuts auctioned some franchises including one located in Brooklyn, Connecticut (the "Brooklyn Dunkin Donuts"). That location was owned by Jenny B. Moutoudis and Konstantinos Frangakis ("Frangakis") formed Danielson, a limited liability company, in 2003 to acquire and operate the Brooklyn Dunkin Donuts. Prior to this, Moutoudis was a minority member of a limited liability corporation that owned several Dunkin Donuts franchises in Massachusetts.
Dunkin Donuts required the party assuming the Brooklyn Dunkin Donuts francise to execute a new lease agreement on the terms already in place. On June 19, 2003, Jenny B and Danielson entered into a commercial lease agreement ("Lease") for Danielson to operate a Dunkin Donuts franchise on the Property. Frangakis, the managing member, signed on behalf of Danielson. The initial term of the Lease was twenty (20) years ending on June 19, 2023. Danielson's monthly rent was based on a combination of a fixed rent of $8,238.41 per month, ten percent (10%) of the annual gross sales over $988,610 of Dunkin Donuts’ products, and property related expenses. The Lease provided that if Danielson defaulted, it would be responsible for all costs incurred by Jenny B, including attorney's fees.
Danielson reported gross sales of $1,545,523 in 2014, $1,584,993 in 2015, and $1,669,805 in 2016. Thus, the average gross sales for each of these three years exceeded the threshold for Danielson to pay Jenny B revenue-based rent payments under the Lease. Consequently, the average monthly rental payment made by Danielson to Jenny B during this three-year period was $13,334.24. Danielson was also responsible for property related expenses, such as real estate taxes, insurance, and municipal charges.
At some point, Moutoudis, who owned Danielson, determined that he could increase his profit if he owned the property from which the Dunkin Donuts was operated. Thus, on November 9, 2015, through Toudis, a Connecticut limited liability corporation he owns and controls, he purchased property at 445 Providence Road (the "Toudis Property"). The Toudis Property is located about 500 yards from the Property. Moutoudis then obtained permits to build a retail strip mall which would include a Dunkin Donuts that would start operating in 2017.
On April 11, 2017, Danielson notified Jenny B that it would be permanently closing the Dunkin Donuts, vacating the premises and closing the Property on July 31, 2017. However, Danielson did not vacate the Property until October 30, 2017. On that same date, a Dunkin Donuts franchise began operating on the Toudis Property. Danielson ceased operating after it vacated the Property and last payed rent to Jenny B on October 1, 2017. Danielson also failed to pay real property taxes for 2017, 2018 and 2019 ($24,078.76 per year).
Toudis, it is a separate business entity from Danielson: they do not comingle funds, do not have dealings with each other and do not share any properties in common. Toudis does not own the Dunkin Donuts operating on the Toudis Property, although it acknowledges that on its property, there is "a coffee shop of some type with a drive-up window."2 Danielson posted losses of over $35,000 in 2013, $34,000 in 2015, $67,000 in 2017. It also claims it lost $91,000 in the sale of its products in 2017.
Danielson vacated the Property because the building was old and had never been updated by Jenny B. The franchise agreement required remodeling that was becoming increasingly expensive and as a financial matter, Danielson could not justify the cost of remodeling a store that it did not own. Lack of updates to the building caused utility costs to greatly increase and the minimum wage had doubled. It became increasingly difficult for Danielson to maintain economic viability of the business based upon the rent structure.
The Court must first determine whether Massachusetts or Connecticut law applies to Plaintiff's claims. Defendants argue that Connecticut law should apply to all of Plaintiff's claims first, because the Lease provides that the proper venue for any claims brought pursuant thereto is Windham County, Connecticut and, in the alternative, because Connecticut is the state with the most significant contacts to this matter. Plaintiff argues that while the Lease contains a choice of forum provision (which the parties jointly agreed not to enforce), it is silent as to choice of law. Plaintiff asserts that Massachusetts law applies because it is the state with the most significant contacts to this matter.3
"Where, as here, a federal court exercises diversity jurisdiction, ‘[t]he question of which state's law applies is resolved using the choice of law analysis of the forum state.’ " Thus, the Court applies Massachusetts choice of law principles to determine which state's law apply. "The Massachusetts Supreme Judicial Court has decided ‘not to tie Massachusetts conflicts law to any...
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