Levesque v. Ojala
| Citation | 2005 MBAR 620 |
| Decision Date | 08 December 2005 |
| Docket Number | 20034485 |
| Parties | Robert E. Levesque, Jr. et al.[1] v. Jeffrey A. Ojala et al.[2] |
| Court | Superior Court of Massachusetts |
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Neel, Stephen E., J.
The plaintiffs, Robert E. Levesque, Jr. ("Levesque") and Dorothy Levesque (collectively, "Levesques") brought this case against defendants Jeffrey A. Ojala ("Ojala"), Dram Cup Hill, Inc. ("DCH") Arthur T. Demoulas ("Demoulas"), and Lisa B Miller, as trustee of the Second Campana Trust ("Miller") (collectively, "Defendants"), concerning actions taken with respect to the formation and operation of a spring water company, DCH, situated on property located in Milford, New Hampshire. This case is before the court on the Defendants' motions for summary judgment. For the following reasons, the Defendants' motions will be allowed in part and denied in part.
For purposes of summary judgment, the court considers the facts as set forth in the summary judgment record, in the light most favorable to the non-moving party. In view of the complexity of the facts and claims in this case, the Court has examined the ample summary judgment record in some detail, as reflected in what follows.
Levesque had worked in the spring water industry since the late 1970s as a processor, producer, and deliverer of spring water. In the 1980s he owned Intervale Spring Water Company, which he eventually sold, and in the early-to-mid-1990s, he owned Spring Water Vending Company. The Levesques were trustees of the Hillsborough Mills Trust ("Hillsborough"), the beneficiaries of which were members of Dorothy Levesque's family. Hillsborough owned tracts of land in Milford, New Hampshire, totaling approximately 180 acres ("Property"). In the mid-1990s, Levesque tested the waters on the Property to determine whether the natural spring there produced safe drinking water. Hillsborough had problems paying the Property's taxes, and, according to Levesque, the Hillsborough beneficiaries authorized Levesque to do whatever he could to make the Property profitable.
Levesque and Ojala met in approximately 1977, and Ojala served as Levesque's best man in the Levesques' wedding. In October 1997, Levesque and Ojala discussed Levesque's desire to develop a spring water company on the Property. Levesque's plan was that for $600,000, he could pay off the back taxes on the Property and build an underground tank that could hold 50,000 gallons; drivers from, for example, Garelick Farms, could then back their trucks up to the underground tank, punch in their credit card number, and buy the water. The facility Levesque envisioned would be unmanned, and he anticipated it could sell up to 300,000 gallons per day.
As both Levesque and Ojala were unemployed at that time, financing through a bank was not an option, so Ojala contacted Demoulas, his close friend and former college roommate. Demoulas was involved in his family's supermarket business ("Demoulas Company") and had loaned money to Ojala on a number of occasions during the course of their friendship. Later that month, Levesque and Ojala met with Demoulas in his Massachusetts office.[3]
At this meeting, Levesque presented his plan for the spring water company, and discussed the necessary financing. Demoulas said that he was not interested in financing the proposed company. In his deposition, Demoulas stated that he offered Levesque and Ojala his views on their plan, informing them that most start-up businesses end up exceeding their budget, and that Levesque's and Ojala's projected timetable of profitability within six months of commencement of production was overly optimistic. He also informed them that Demoulas Company was a retailer that was not in the bulk water business.
Demoulas recommended that Levesque and Ojala contact Bobby Farnum ("Farnum"), Demoulas' brother-in-law, to see if he would be interested in financing the project. Levesque, however, had a "gut reaction" that Demoulas would eventually agree to finance the proposed company, and Levesque so informed the Hillsborough beneficiaries. Levesque based his gut reaction on Ojala's assurances that they would obtain financing, and on the fact that the Property was adjacent to a Demoulas family store. Moreover, Levesque stated in his deposition, Demoulas suggested they speak with Farnum because Demoulas "could not be directly involved [in the proposed company] because of the lawsuit[s in which Demoulas Company was involved], [so]... he needed somebody else as a vehicle to hold his position in the company[.]" Exh. 3, at 117. Levesque intended to sell the Property if he could not obtain financing from Demoulas. Levesque alleges that Demoulas had significant contacts with various companies to whom Levesque and Ojala could make bulk sales of water, and that on numerous occasions Demoulas assured Levesque and Ojala that he would guaranty sales if they could produce the necessary volume of water. Exh. 3, at 99, 100-02.
After Farnum had met with Levesque and Ojala in his Massachusetts office, and had visited the Property, he declined to finance the proposed spring water company. Levesque and Ojala attempted, unsuccessfully, to find alternative funding sources.
Ultimately, Levesque and Ojala spoke with Demoulas again, in either November or December 1997. At that time, according to Levesque's deposition testimony, Demoulas stated that he had changed his mind and was interested in financing the proposed spring water company as long as his involvement remained secret, citing Demoulas Company's pending legal issues. Levesque testified that Demoulas wanted a fifty percent interest in the company because he was putting up his own money; Ojala was to hold Demoulas' fifty percent in addition to Ojala's own twenty-five percent, giving Ojala a seventy-five percent interest in the company, and Levesque a twenty-five percent interest. According to Levesque, Demoulas also agreed to find bottlers, shippers, and purchasers for the spring water including Polar Beverage, Garelick Farms, Twin Mountain, and Demoulas Company itself. Demoulas denies having made such statements to Levesque or Ojala.
Consistent with Demoulas' denial, Ojala stated in his deposition that, after he "hound[ed] him [Demoulas] and hound[ed] him," Demoulas indicated again that he was not interested and told him "there's a trust that lends money out that may be interested in doing something like that, and that led [Levesque and Ojala] to Sumner Darman and the [Second] Campana Trust." Exh. 6, at 156. Demoulas testified that he called attorney Sumner Darman ("Darman"), "knowing that he runs a law firm, he has clients, he is involved in a business way with different clients[,]" and passed on to him information regarding the Property. Exh. 8, at 69-70. Demoulas "asked Mr. Darman to look into this matter [of the proposed spring water company]... and did not suggest that he loan money, but put it in his corner to do what he thought was sensible." Exh. 8, at 69. Darman is a director of Demoulas Company, and has provided legal services to the Demoulas family in general and Demoulas himself in particular since the 1990s.
Darman testified in his deposition that Ojala informed Darman that Ojala would be the seventy-five percent owner of the proposed spring water business "because he had the availability of the cash, if [Darman] loaned the cash[.]" Exh. 9, at 43. Darman knew that Ojala had no experience in the water business, but Ojala had told him that the twenty-five percent owner of the business was a "water man named Levesque." Exh. 9, at 44-45.
Between late 1997 and early 1998, Levesque and Ojala met with Demoulas or spoke with him on the telephone on multiple occasions. On one occasion, Levesque recalled in his deposition, Demoulas met with Levesque and Ojala at the Property at which time Demoulas, while sitting in the back of Ojala's Jeep, said, "[Y]ou fellows just make sure you can produce 20 loads [equaling 120,000 gallons] a day" and he would secure the sales. Demoulas denies making any such statement. In his deposition, he recalled visiting the Property only once after his son's hockey game in Nashua, New Hampshire. Demoulas did not characterize this visit as a "meeting," and stated that it took place after Levesque and Ojala had received funding and wanted to show Demoulas the work they had done there.
On March 10, 1998, Ojala incorporated defendant DCH in New Hampshire. Attorney Roy A. Duddy was listed as the registered agent and his Bedford, New Hampshire, address was listed as DCH's initial registered office. On March 13, 1998, defendant Miller,[4] as trustee, formed the Second Campana Trust ("Second Campana"), a nominee trust. The sole beneficiary of Second Campana was Darman in his capacity as trustee of the First Dalem Trust ("First Dalem"); the beneficiaries of First Dalem were Demoulas and his children. According to Darman's deposition testimony, First Dalem was not a nominee trust; as trustee, Darman had absolute authority over First Dalem funds, and was able to lend them to any party and to use them in any way that he wished. However, Demoulas, as beneficiary, had the authority to revoke the principal, not the income, if he was unhappy with Darman's investments.
Also on March 13, 1998, through a quitclaim deed, Hillsborough granted the Property to defendant DCH; this transfer terminated Hillsborough's tax deficiency on the Property. That same day, Second Campana and DCH executed a Promissory Note ("1998 Note") pursuant to which Second Campana loaned DCH $600,000. To obtain this loan, DCH never submitted a...
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