Laudano v. 214 South Street Corp., Inc.
| Decision Date | 17 April 2009 |
| Docket Number | Civil Action No. 06-10217-RCL. |
| Citation | 608 F.Supp.2d 185 |
| Parties | Rocco LAUDANO, Plaintiff v. 214 SOUTH STREET CORPORATION, INC. and James Martorilli and Marla Martorilli, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Michael L. Altman, Kristen M. Stathis, Theresa A. Labriola, Altman Riley Esher LLP, Boston, MA, for Plaintiff.
Peter J. Haley, WolfBlock LLP, Leslie F. Su, The Gordon Law Firm, Boston, MA, Shannon McCarthy, Jandorf Marshall Law Group, Mary L. Marshall, Marshall Law Group, Wellesley, MA, for Defendants.
I. INTRODUCTION ...................................................... 187
A. Procedural Posture ............................................. 187
B. Case Stated .................................................... 188
C. Federal Jurisdiction ........................................... 188
II. FINDINGS OF FACT .................................................. 188
A. Hotel Purchase and Development ................................. 188
B. Laudano's Employment and Compensation .......................... 189
C. Marla Martorilli's Role in the Business ........................ 190
D. Sale of Woburn Hotel and Property .............................. 191
III. RULINGS OF LAW .................................................... 191
A. Breach of Contract Claims ...................................... 191
B. Breach of Implied Covenant of Good Faith and Fair Dealing ...... 195
C. Intentional Interference With Contract ......................... 195
IV. CONCLUSION ......................................................... 196
Plaintiff Rocco Laudano ("Laudano") brought an action against defendants James Martorilli ("Martorilli"), his wife Marla Martorilli ("Marla"), and 214 South Street Corporation, Inc. ("South Street"), (collectively, the "Defendants") alleging breach of contract, breach of the implied covenant of good faith and fair dealing, intentional interference with a contract, and unfair and deceptive business practices in violation of Massachusetts General Laws chapter 93A sections 2 and 11. Docket No. 13. The Defendants moved for summary judgment, which all parties agreed might be treated as a case stated.
On February 2, 2006, Laudano filed a complaint against South Street, Martorilli and his wife Marla alleging breach of contract, breach of the implied covenant of good faith and fair dealing, unfair and deceptive practices in violation of Massachusetts General Laws chapter 93A, sections 2 and 11; and intentional interference with contract. Docket No. 1. On April 12, 2006, the Defendants filed a motion to dismiss. Docket No. 9. Laudano filed an opposition to the motion to dismiss on May 1, 2006. Docket No. 11. On May 3, 2006, Laudano filed an amended complaint against all the Defendants. Docket No. 13. In the amended complaint, Laudano alleges eight counts: two counts of breach of contract; two counts of breach of the implied covenant of good faith and fair dealing; three counts of engaging in unfair and deceptive business practices in violation of Massachusetts General Laws chapter 93A, sections 2 and 11; and one count of intentional interference with contract. Docket No. 13.
On October 2, 2006, the Court granted in part and denied in part the Defendants' motion to dismiss the amended complaint. The Court granted the motion to dismiss Counts IV and VI, the chapter 93A sections 2 and 11 claims, ruling that Chapter 93A claims cannot be raised in the context of a joint venture or employment relationship. The Court denied the motion to dismiss as to the remaining counts.
Thereafter, the parties engaged in protracted procedural skirmishing irrelevant to the merits.
On December 9, 2008, the Court commenced hearing the Defendants' motion for summary judgment. During that hearing, the parties agreed to have the case decided on the record before the Court as a case stated. On January 15, 2009, the Court heard closing arguments from both parties for judgment on the stipulated record and took the matter under advisement.
In lieu of summary judgment, the parties have agreed to proceed with a hearing after which the Court will make a judgment based on the record. "In a case stated, the parties waive trial and present the case to the court on the undisputed facts in the pretrial record." TLT Constr. Corp. v. RI, Inc., 484 F.3d 130, 135 n. 6 (1st Cir.2007). Accordingly, the First Circuit noted that case stated hearings may provide an efficacious procedural alternative to cross motions for summary judgment. Continental Grain Co. v. Puerto Rico Mar. Shipping Auth., 972 F.2d 426, 430 n. 7 (1st Cir.1992). In contrast to summary judgment where the Court must draw all reasonable inferences in favor of the nonmovant, in a case stated the Court is "entitled to `engage in a certain amount of factfinding, including the drawing of inferences.'" TLT Constr. Corp., 484 F.3d at 135, n. 6 (quoting United Paperworkers Int'l Union Local 14 v. Int'l Paper Co., 64 F.3d 28, 31 (1st Cir. 1995)).
This Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332. The Court has supplemental jurisdiction over the Massachusetts state law claim pursuant to 28 U.S.C. § 1367.
The 214 South Street Corporation, Inc. ("South Street") has a principal place of business located in Waltham, Massachusetts. James Martorilli ("Martorilli") is the president of South Street. His wife, Marla, is involved in his business ventures. Both Martorillis are residents of Massachusetts. In early 2005, Martorilli's attorney Robert Eberle ("Eberle") told Martorilli that Laudano had informed him of an opportunity to purchase property in Woburn, Massachusetts. The property included a Radisson Hotel (hereinafter the "Hotel" or the "Property"). On April 7, 2005, South Street entered into an initial Hotel Purchase and Sale Agreement with the Woburn Hotel Massachusetts II LP to purchase the Hotel located at 15 Middlesex Canal Park Road, Woburn, Massachusetts. In May 2005, Martorilli formed a Massachusetts limited liability company, Woburn Hotel, LLC ("Woburn Hotel"). Woburn Hotel, instead of 214 South Street, was the purchaser of the Property. Woburn Hotel is managed by Martin Reilly Realty, Inc. Martin Reilly Realty, Inc. is a real estate venture with Martorilli as the president and sole shareholder. Martorilli also formed the Hospitality Management Corporation of America, Inc. ("Hospitality") in May 2005. Hospitality was formed for the purpose of leasing and operating the Hotel. All of the Hotel employees were employed by Hospitality.
On June 23, 3005, the Property was purchased by the Woburn Hotel. Martorilli, or entities under his control, accumulated the funding used for the acquisition of the property. The hotel on the Property was converted from a Radisson Hotel to a Holiday Inn Select. Laudano assisted with the hotel conversion process. Since opening in June 2005, the Property operated at a loss.
In 2002, Laudano was working as the general manager for a Holiday Inn hotel in Peabody, Massachusetts. Martorilli approached Laudano and asked him to participate in a joint venture, offering that South Street would provide the necessary capital to purchase a suitable hotel; employ Laudano as the general manager of the hotel; and convey to Laudano a 3-5% equity interest in the company controlling the purchased hotel. In return, Laudano would locate a suitable hotel, negotiate the acquisition, and operate the hotel.
Laudano had several brief conversations with Martorilli about his compensation from the beginning of the deal, months before the conversation where he claims he was offered lifetime employment. Laudano Dep. 89:10-23, Oct. 18, 2007. In these earlier conversations, Martorilli offered to pay Laudano $85,000 (the same as his Holiday Inn salary), as well as food, lodging, and a bonus. Id. On June 9, 2005, Laudano discussed his compensation in a meeting with Martorilli and John Ciaramaglia ("Ciaramaglia"), an employee and close associate of Martorilli's. Laudano Dep. 86:23-89:23. Laudano told Martorilli that he wanted a two-year contract so that he could continue providing medical care for his then teenage daughter. Martorilli responded that Laudano would receive up to $125,000, need never "worry about a contract", and that he was "like [Martorilli's] brother." Laudano Dep. 87:21-23. Finally, Martorilli stood up, kissed Laudano's cheek and told him that he had "a job for life." Martorilli disputes that these words constituted an effective offer of lifetime employment. That night after this meeting, Laudano gave notice to his Holiday Inn employers. Laudano Dep. 88:1-8.
There is not a single document corroborating Laudano's claim that he had an agreement for lifetime employment as general manager of the Hotel, or that he would be given an equity interest in the Woburn Hotel. Laudano concedes that he was not sure whether his alleged equity interest would come to 3, 4, or 5 percent of the equity. In addition, Laudano cannot enumerate the factors that would be considered in the calculation of his alleged equity interest.
After the conversations with Martorilli, Laudano continued discussing his employment arrangement details with Martorilli's attorney Eberle. Laudano testified:
Robert Eberle told me from the day one that we got into Woburn that he was going to guarantee me that I would have it in writing before the day we opened. He said on numerous times to me, The [sic] only reason this is taking so long is that Jim [Martorilli] says that the financial package is not complete yet but once the financial package is complete, Rocco, you will have it in writing.
Laudano Dep. 103:17-104:2. The record indicates that Eberle did...
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