N. Beacon 155 Assocs., LLC v. Mesirow Fin. Interim Mgmt. LLC.
| Decision Date | 29 September 2015 |
| Docket Number | Civil Action No. 15-11750-LTS |
| Citation | 135 F.Supp.3d 1 |
| Parties | North Beacon 155 Associates, LLC, Plaintiff, v. Mesirow Financial Interim Management LLC., and Mesirow Financial Consulting LLC, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Richard W. Gannett, Gannett & Associates, Boston, MA, for Plaintiff.
William G. Potter, K & L Gates LLP, Boston, MA, for Defendants.
SOROKIN
Plaintiff North Beacon 155 Associates LLC ("North Beacon") has filed an Amended Equity Complaint against Defendants Mesirow Financial Management LLC ("Mesirow Financial") and Mesirow Financial Consulting LLC ("Mesirow Consulting") (collectively "Mesirow") centering around debts that a fourth company, Spectrowax Corporation ("Spectrowax"), owes North Beacon. See generally Doc. No. 14. The gravamen of North Beacon's Complaint is that Mesirow, acting as a "Liquidating Trustee" for Spectrowax, has improperly failed to marshal Spectrowax's assets and use them to pay North Beacon, an unsecured creditor of Spectrowax. See generally id. North Beacon raises what the Complaint calls four "equity claims" against Mesirow: 1) Declaratory Judgment; 2) Specific Performance; 3) Class Action; and 4) Constructive Trust. Id. at 24-30. Mesirow has filed a Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted. Doc. No. 17. After careful review of the briefs, and for the reasons set forth below, Mesirow's motion is ALLOWED.1
id. ¶ 7-17, 19-27, 32, 42-50.
One particular Spectrowax relationship bears mentioning. As of 2008, Spectrowax owed $4 million to Rosenthal & Rosenthal, Inc. ("R&R"), a preferred creditor with a security interest in all of Spectrowax's assets. Id. ¶ 33-34, Doc. No. 15-3 at 2. In 2008, Dynasol Corporation ("Dynasol") and Supreme Industrial Products, Inc. ("Supreme") together purchased all of Spectrowax's assets. Doc. No. 15-3 at 2. R&R, per its agreement with Spectrowax, approved the sale, and Supreme and Dynasol made all future payments to R&R. Subsequently, R&R released Spectrowax's debt, Pinnacle Industries, Inc. ("Pinnacle") acquired Dynasol, and Pinnacle continued Dynasol's payments to R&R. Id.
When Spectrowax sold its assets to Supreme and Dynasol, R&R "allow[ed], under certain conditions, a portion of the proceeds of its collateral to be made available for distribution to unsecured creditors." See Doc. No. 15 at 1. Mesirow was "employed [by Spectrowax] to receive the funds from [R&R] and distribute funds to creditors," id. ; see Doc. No. 14 ¶ 109, and Mesirow sent creditors, including North Beacon, a letter ("Broadcast Letter"), dated March 26, 2008, informing them of this. See Doc. No. 14 at 2; see also Doc. No. 15 (the Broadcast Letter). In the letter, Mesirow characterized its role "as Liquidation Agent for [Spectrowax] for distribution." Doc. No. 15. Per Mesirow's contract with Spectrowax, either party "may terminate the Agreement at any time by giving written notice to the other party not less than ten (10) calendar days ... before the effective date of termination." Doc. No. 18-2 at 5.2 Spectrowax no longer has the assets whose sale would provide money to pay unsecured creditors—those assets reside with Supreme, Dynasol, and Pinnacle. See Doc. No. 15-3 at 2.
In addition to this litigation, North Beacon has brought a Uniform Voidable Transactions Act suit against Spectrowax, Supreme, Dynasol, Pinanacle, and assorted individuals in Massachusetts Superior Court, alleging, inter alia , that Spectrowax fraudulently transferred assets to those defendants. See id. On October 24, 2014, the court denied Spectrowax's motion for summary judgment, noting that "certain ‘Badges of Fraud’ exist[ed]." Doc. No. 14 ¶ 18.
To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure
, a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting
Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). The Court "must take the allegations in the complaint as true and must make all reasonable inferences in favor of the plaintiff[ ]." Watterson v. Page , 987 F.2d 1, 3 (1st Cir.1993). "[F]actual allegations" must be separated from "conclusory statements in order to analyze whether the former, if taken as true, set forth a plausible, not merely a conceivable, case for relief." Juarez v. Select Portfolio Servicing, Inc ., 708 F.3d 269, 276 (1st Cir.2013) (internal quotations omitted). This "highly deferential" standard of review "does not mean, however, that a court must (or should) accept every allegation made by the complainant, no matter how conclusory or generalized." United States v. AVX Corp ., 962 F.2d 108, 115 (1st Cir.1992). Dismissal for failure to state a claim is appropriate when the pleadings fail to set forth "factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory." Berner v. Delahanty , 129 F.3d 20, 25 (1st Cir.1997) (quoting
Gooley v. Mobil Oil Corp ., 851 F.2d 513, 515 (1st Cir.1988) ).
While the Court typically "may not consider any documents that are outside of the complaint, or not expressly incorporated therein, unless the motion is converted into one for summary judgment," Alt. Energy, Inc. v. St. Paul Fire & Marine Ins. Co ., 267 F.3d 30, 33 (1st Cir.2001)
, there is an exception "for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiffs' claim; or for documents sufficiently referred to in the complaint." Watterson , 987 F.2d at 3.
North Beacon posits four claims for relief against Mesirow. Count I seeks a declaratory judgment on a multitude of issues. Doc. No. 14 ¶¶ 93-96. Count II seeks an order of specific performance against Mesirow, to "gather[ ] and distribut[e] Spectrowax's assets." Id . ¶ 105. Count III seeks to bring a class action, on behalf of other Spectrowax creditors. Id. ¶ 108-13. And Count IV asks the Court to "enter an Order requiring [Mesirow] to seek a Constructive Trust for the benefit of unsecured creditors and to ensure unsecured creditors are paid in full." Id. ¶ 115.
Before going into a discussion of the individual claims, one point bears mentioning. All of North Beacon's claims require that Mesirow owed North Beacon a duty to assemble Spectrowax's assets from other parties—as the Complaint does not allege Mesirow possesses any of the assets in question—and distribute them to unsecured creditors, such as North Beacon. If Mesirow does not owe North Beacon a duty, then all of North Beacon's claims must fail. Because whether or not a duty exists is so essential, the Court addresses this issue before turning to the individual claims.
North Beacon's Complaint seems to offer two potential theories for the existence of a duty. The first is a contract theory, and the second is that Mesirow was a trustee of Spectrowax's assets. In opposing Mesirow's motion, North Beacon mentions a third source, one that emerged once Spectrowax entered the "Zone of Insolvency." Doc. No. 19 at 7. The Court examines each of these theories in turn. The Court then discusses two other theories North Beacon did not raise that could potentially support a duty. As explained below, the Court finds that Mesirow has no duty to North Beacon under any of these theories.
The Court infers a potential contract theory because North Beacon seeks specific performance, a contractual remedy. Doc. No. 14 ¶ 105; see Greenfield Country Estates Tenants Ass'n, Inc. v. Deep , 423 Mass. 81, 666 N.E.2d 988, 994 (1996)
. Under Massachusetts law, "the essential elements of an executory contract ... [are] offer, acceptance, and consideration." Quinn v. State Ethics Comm'n , 401 Mass. 210, 516 N.E.2d 124, 127 (1987). "An offer is the manifestation of willingness to enter into a bargain made in such a way as to justify the other person in understanding that his assent will conclude the agreement." I & R Mech., Inc. v. Hazelton Mfg. Co. , 62 Mass.App.Ct. 452, 817 N.E.2d 799, 802 (2004). "Acceptance occurs when the offeree gives the return requested in the offer." Id. "[F]or a contract to have valid consideration, the contract must be a bargained-for exchange in which there is a legal detriment of the promisee or a corresponding benefit to the promisor." Neuhoff v. Marvin Lumber and Cedar Co. , 370 F.3d 197, 201 (1st Cir.2004).
North Beacon cannot demonstrate that a contract existed. The only conceivable basis for a contract between North Beacon and Mesirow is the Broadcast Letter. However, the Broadcast Letter contains none of the three requisite elements. The Broadcast Letter is not an offer, as it in no real sense manifests any willingness on Mesirow's part to enter into a deal with North Beacon. It simply explains the terms of the arrangement Mesirow has with Spectrowax . See ...
To continue reading
Request your trial
-
In re Sullivan, Case No. 15–30544–HJB
...(1994) (citing to Nessralla v. Peck, 403 Mass. 757, 762, 532 N.E.2d 685 (1989) ); see also, North Beacon Street 155 Assocs., LLC v. Mesirow Fin. Interim Mgmt. LLC, 135 F.Supp.3d 1, 8–9 (D.Mass.2015). Such circumstances are not present here. Ms. Markowski holds title to the Agawam Condo as a......
-
Orkin v. Albert
...to the advantage of the recipient at the expense of the one who disclosed the information.’ " N. Beacon 155 Assocs., LLC v. Mesirow Fin. Interim Mgmt. LLC , 135 F. Supp. 3d 1, 8 (D. Mass. 2015). Boost asks the Court to impose a constructive trust over the Card Connect funds, which would in ......