Lipsitt v. Plaud

• Decision Date: 12 August 2013
• Docket Number: SJC–11285.
• Citation: 994 N.E.2d 777,466 Mass. 240
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: Cyrus D. LIPSITT v. Joseph J. PLAUD & another.

466 Mass. 240

994 N.E.2d 777

Cyrus D. LIPSITT

v.Joseph J. PLAUD & another.¹

SJC–11285.

Supreme Judicial Court of Massachusetts, Worcester.

Argued April 2, 2013.

Decided Aug. 12, 2013.

Mark I. Zarrow, Worcester, for the plaintiff.

Brandon H. Moss, Quincy, for the defendants.

Present: IRELAND, C.J., SPINA, CORDY, BOTSFORD, GANTS, DUFFLY, & LENK, JJ.

CORDY, J.

In this case, we are asked to decide whether G.L. c. 149, §§ 148 and 150 (Wage Act), are intended to be the exclusive remedy for the recovery of unpaid wages under Massachusetts law, preempting common-law breach of contract and related quasi-contract claims. We conclude that they are not.

Cyrus D. Lipsitt filed suit against the defendants, the Franklin D. Roosevelt American Heritage Center, Inc. (Heritage Center), and its president, Joseph J. Plaud, for failing to pay approximately $117,500 in compensation he claimed was owed to him under an employment contract. The complaint asserted claims for breach of contract, quantum meruit, and violations of the Wage Act, among others. A judge in the Superior Court dismissed all but Lipsitt's claim under the Wage Act, reasoning that the Wage Act is the exclusive remedy for the recovery of unpaid wages, thereby preempting his common-law claims. Further, because Wage Act claims are subject to a three-year statute of limitations, G.L. c. 149, § 150, the judge ruled that Lipsitt's potential recovery would be limited to wages earned but unpaid during the three-year period preceding the filing of the suit. After voluntarily dismissing the remaining portion of his Wage Act claim with prejudice, Lipsitt appealed from the earlier dismissal, and we transferred his appeal to this court on our own motion. We reverse. ²

1. Background. We review the allowance of a motion to dismiss de novo, accepting as true all factual allegations in the complaint and favorable inferences drawn therefrom. Curtis v. Herb Chambers I–95, Inc., 458 Mass. 674, 676, 940 N.E.2d 413 (2011), and cases cited. We may also consider exhibits attached to the complaint and items appearing in the record. Melia v. Zenhire, Inc., 462 Mass. 164, 165–166, 967 N.E.2d 580 (2012), citing Schaer v. Brandeis Univ., 432 Mass. 474, 477, 735 N.E.2d 373 (2000).

Plaud founded the Heritage Center in 2004 for the purpose of establishing a museum to showcase his collection of memorabilia focused on President Franklin D. Roosevelt. Just prior to the Heritage Center's opening, Plaud offered Lipsitt the position of museum director, and the parties agreed that Lipsitt would be paid $2,000 per month for June and July, 2004, after which his salary would increase to $4,167 per month. Payments were to be made on the 15th and 30th of each month. The parties memorialized their agreement in October, 2004.³

The Heritage Center experienced financial difficulties from its inception. Lipsitt never received the full salary due to him under the contract, but continued to work for the Heritage Center based on Plaud's continuing representations to Lipsitt that the arrearages would be paid in full once debts owed to Plaud by third parties were paid. Most of the salary Lipsitt did in fact receive was paid from Plaud's personal checking account. Based on his desire to see the Heritage Center succeed and his belief that Plaud would honor his repeated promises to pay the back salary in full, Lipsitt continued to work for the Heritage Center through the summer of 2007.⁴

In July, 2007, the city of Worcester, which owned the building where the Heritage Center was located, decided not to renew its lease with the Center and the Center closed its doors. Initially, Plaud intended to reopen the Center at a new location in Chicopee in late 2007, and Lipsitt continued to work for the Center performing tasks relative to the intended relocation. Ultimately, Plaud abandoned the relocation plan, and the Center never reopened.

On September 17, 2008, Lipsitt filed a complaint with the Attorney General for nonpayment of wages pursuant to G.L. c. 149, § 150. On April 22, 2010, after an investigation, the Attorney General settled various Wage Act complaints with the Heritage Center and, on the same day, issued Lipsitt a right-to-sue letter. Lipsitt filed this action in Superior Court on September 20, 2010, seeking damages of approximately $117,500, a figure that apparently represents the roughly $127,000 he claims he is owed, minus the $9,000 in restitution he received from the Heritage Center pursuant to the terms of its settlement with the Attorney General. The complaint asserted claims for breach of contract, quantum meruit, fraud and deceit, violations of the Wage Act, and violations of G.L. c. 93A, § 11.

The defendants moved to dismiss the complaint in its entirety pursuant to Mass R. Civ. P. 12(b)(6), 365 Mass. 754 (1974), arguing that the Wage Act creates a comprehensive statutory remedy for the recovery of unpaid wages, thereby precluding Lipsitt's common-law claims for breach of contract, quantum meruit, and fraud and deceit. As to the Wage Act claim, the defendants argued it was time barred because more than three years had elapsed since the termination of Lipsitt's employment with the Heritage Center, which they contend occurred on July 31, 2007. Further, the defendants argued that G.L. c. 93A does not apply to employment relationships. Finally, Plaud argued that Lipsitt had failed to allege sufficient facts to pierce the corporate veil, which is a prerequisite to imposing individual liability on Plaud for the common-law claims. A judge in the Superior Court granted the motion to dismiss as to the common-law claims and the G.L. c. 93A claim, but not as to any portion of the Wage Act claim that alleged nonpayment of wages within the three-year period preceding the filing of the complaint.⁵ Following the dismissal of the majority of his claims, Lipsitt moved to amend his complaint to plead sufficient facts to pierce the corporate veil and hold Plaud individually liable. The judge denied the motion principally on the basis that the amendment was futile where Lipsitt's common-law claims had already been dismissed as preempted. Subsequent depositions in the case cast doubt on the viability of Lipsitt's claim that he was employed by the Heritage Center (and thus owed salary) as of September 17, 2007 (three years prior to the commencement of the action), and Lipsitt moved to voluntarily dismiss the remaining Wage Act claim with prejudice so that he could appeal the dismissal of his common-law claims. Given the much longer six-year statute of limitations for contract claims, G.L. c. 260, § 2, and the fact that the majority of Lipsitt's damages in the form of unpaid salary accrued between six and three years prior to the commencement of the Superior Court action, the survival of the contract claim was vital to any meaningful recovery. Lipsitt appeals from the dismissal of his contract and quantum meruit claims, and from the dismissal of Plaud as a defendant in his individual capacity.⁶

2. Discussion. a. Dismissal of common-law claims. The Wage Act requires “[e]very person having employees in his service” to pay “each such employee the wages earned” within a fixed period after the end of each pay period. G.L. c. 149, § 148. While acknowledging that there is “scant precedent” regarding whether the Wage Act preempts common-law claims for the recovery of unpaid wages, the motion judge nonetheless concluded that “[i]n enacting the Wage Act, the legislature created a comprehensive vehicle for recovering unpaid wages” and, accordingly, intended to preempt Lipsitt's common-law claims. We disagree.

“It is well established that ‘an existing common law remedy is not to be taken away by statute unless by direct enactment or necessary implication.’ ” Eyssi v. Lawrence, 416 Mass. 194, 199–200, 618 N.E.2d 1358 (1993), quoting Ferriter v. Daniel O'Connell's Sons, 381 Mass. 507, 521, 413 N.E.2d 690 (1980).⁷ Where the statute does not contain any express language concerning the availability of common-law remedies, we consider the possibility of implied preemption. Eyssi v. Lawrence, supra at 199–200, 618 N.E.2d 1358. This court has “long held that a statutory repeal of the common law will not be lightly inferred; the Legislature's ‘intent must be manifest.’ ” Passatempo v. McMenimen, 461 Mass. 279, 290, 960 N.E.2d 275 (2012), quoting Comey v. Hill, 387 Mass. 11, 20, 438 N.E.2d 811 (1982).

“The purpose of the Wage Act is ‘to prevent the unreasonable detention of wages.’ ” Melia v. Zenhire, Inc., 462 Mass. 164, 170, 967 N.E.2d 580 (2012), quoting Boston Police Patrolmen's Ass'n v. Boston, 435 Mass. 718, 720, 761 N.E.2d 479 (2002). See American Mut. Liab. Ins. Co. v. Commissioner of Labor & Indus., 340 Mass. 144, 147, 163 N.E.2d 19 (1959). The Wage Act “was intended and designed to protect wage earners from the long-term detention of wages by unscrupulous employers as well as protect society from irresponsible employees who receive and spend lump sum wages.” Melia v. Zenhire, Inc., supra, quoting Cumpata v. Blue Cross Blue Shield of Mass., Inc., 113 F.Supp.2d 164, 167 (D.Mass.2000). When the Wage Act was first enacted in 1886, its application “was initially limited to employees of a ‘manufacturing, mining or quarrying, mercantile, railroad, street railway, telegraph, telephone and municipal corporation and every incorporated express company and water company.’ ” Melia v. Zenhire, Inc., supra at 171 & n. 6, 967 N.E.2d 580, quoting St. 1886 c. 87, § 1. Since that time, the “Legislature has broadened the scope of employees covered, the type of eligible compensation, and the remedies available to employees whose rights have been violated” (footnotes omitted).⁸Id. at 171, 967 N.E.2d 580. The private right of action that is at issue here, however, did not exist until the Legislature amended the Wage Act in 1993. Statute 1993, c. 110, § 182, codified at G.L. c. 149, § 150, “dramatically increased” the remedies available to...