Others v. Club Caravan Inc

• Decision Date: 11 June 2010
• Docket Number: No. 09-P-750.,09-P-750.
• Citation: 77 Mass.App.Ct. 17,928 N.E.2d 348
• Parties: Juan RIVERA & others v.CLUB CARAVAN, INC., & others.
• Court: Appeals Court of Massachusetts

77 Mass.App.Ct. 17

928 N.E.2d 348

Juan RIVERA & others ¹v.CLUB CARAVAN, INC., & others.²

No. 09-P-750.

Appeals Court of Massachusetts Suffolk.

Argued Jan. 19, 2010.

Decided June 11, 2010.

COPYRIGHT MATERIAL OMITTED

Charles P. Kindregan, III, Boston, for Club Caravan, Inc., & others.

Paul F. Denver, for Juan Rivera.

Timothy M. Burke, Boston, for Gerald Shea & another.

Present: DUFFLY, RUBIN, & MILKEY, JJ.

MILKEY, J.

In the early morning hours of January 28, 2001, a drunk driver slammed into a State police cruiser that was parked in the breakdown lane of Route 24. As a result, Trooper Gerald Shea and Juan Rivera, a stranded motorist that Trooper Shea had stopped to assist, were severely injured. They brought negligence claims against the driver and various entities and individuals that owned or operated the bar in Revere that had served the driver.³ A Superior Court jury found all of the defendants liable and awarded total damages of almost five million dollars. In a jury-waived portion of the trial, the judge voided sales of the business and underlying real estate as fraudulent conveyances, thereby allowing the plaintiffs to reach and apply those assets to satisfy the judgment. The owners and operators of the bar appeal on various grounds.⁴ We affirm in part and reverse in part.

Background. On the evidence, the judge and jury could have found the following facts.

1. The accident. Sometime around midnight on January 27, 2001, John Bright arrived at the Club Caravan bar in Revere to drink with friends. While there, he was served fourteen drinks (seven rounds of cognac shots with beer “chasers”), most of which he finished. Bright felt intoxicated while at the bar and was stumbling by the time he left around 2:00 a.m. After stopping to get food at a local restaurant, Bright drove south, and he crashed into Trooper Shea's cruiser at approximately 3:30 a.m. Bright pleaded guilty to driving under the influence, for which he served jail time.

2. The relationship between the parties. Rocco Solimeno founded the Club Caravan bar, and he operated it through two corporations that he owned and controlled: Club Caravan, Inc., held the liquor license and ran the business, while Caravan Realty, Inc. (Caravan Realty), owned the underlying real estate. After Rocco Solimeno died in 1993, his widow, June Solimeno, acquired ownership of the corporations, although she had little direct involvement with running the bar. June Solimeno's daughter, Jean Geary, served that role.

In 2000, Jean Geary and her husband formed a new corporation, Rockwal Entertainment, Inc. (Rockwal Entertainment), to purchase the bar from her mother. Although June Solimeno wanted to give the bar to her daughter, Jean Geary and her husband insisted on paying for it. The parties agreed on a total price for the business and underlying real estate of $450,000,⁵ with Rockwal Entertainment to make monthly payments of approximately $4,200. In November, 2000 (two months before the accident), June Solimeno and the Gearys filed an application to transfer the liquor license to Rockwal Entertainment (eventually approved in May of 2001). The application recited that Rockwal Entertainment would start paying “rent” of $3,000 per month as of January 1, 2001.

On January 1, 2001 (four weeks before the accident), Rockwal Entertainment took over the business's finances and began making total monthly payments of $4,200 to June Solimeno.⁶ However, the sale of the business was not formalized until February 1, 2002, when Rockwal Entertainment executed an interest-bearing promissory note to June Solimeno. The formal transfer of the underlying real estate did not occur until August 1, 2002. On that day, June Solimeno had the long-defunct record owner, Caravan Realty, transfer title of the real estate to herself for one dollar. She then transferred title to Rockwal Realty Trust (realty trust), a realty trust created that day to receive title on behalf of the Gearys.⁷ The realty trust executed an interest-bearing promissory note to June Solimeno, and it provided her security by granting a mortgage on the real estate. At the time of sale, the preacquisition payments made to June Solimeno by Rockwal Entertainment were not treated as installments on the sale of the real estate. Instead, the promissory note (and corresponding mortgage) that the realty trust gave to June Solimeno when the real estate was transferred on August 1, 2002, was for the full purchase price ($338,000), without credit given for any prior payments, and the life of the loan was to run the full fifteen years from the date of transfer. The parties do not dispute that June Solimeno and the Gearys were unaware of the accident and of their potential liability for it until after the transfer of the bar and underlying real estate was completed.

Discussion. 1. Jury trial. We will first address the arguments that apply to all of the appellants (collectively, the bar-related defendants) and then address those that have a more limited application.

(a) Sufficiency of outward signs of intoxication. To prevail in a dram shop case, a plaintiff must prove by a preponderance of the evidence that the patron in question was exhibiting outward signs of intoxication by the time he was served his last alcoholic drink. Vickowski v. Polish Am. Citizens Club of Deerfield, Inc., 422 Mass. 606, 610, 664 N.E.2d 429 (1996). However, a plaintiff can establish this with circumstantial proof. “In other words, a jury confronted with evidence of a patron's excessive consumption of alcohol, properly could infer, on the basis of common sense and experience, that the patron would have displayed obvious outward signs of intoxication while continuing to receive service from the licensee.” Id. at 611, 664 N.E.2d 429. Contrary to suggestions made by the bar-related defendants, some quantum of direct evidence that the patron was exhibiting outward signs of intoxication is unnecessary; circumstantial proof alone can suffice if it is sufficiently robust. See Cimino v. Milford Keg, Inc., 385 Mass. 323, 328, 431 N.E.2d 920 (1982) (service of “large number of strong alcoholic drinks” deemed “sufficient to put the defendant on notice that it was serving a man who could potentially endanger others”). See also Vickowski, supra at 611, 664 N.E.2d 429 (“Direct evidence of obvious intoxication is not necessarily an essential part of a plaintiff's proof”); Douillard v. LMR, Inc., 433 Mass. 162, 165, 740 N.E.2d 618 (2001) (plaintiff may prove apparent intoxication of bar patron “by direct evidence, circumstantial evidence, or a combination of the two”).

Although there was no direct evidence that Bright was exhibiting outward signs of intoxication before he was served his last drink (and some testimony to the contrary), the plaintiffs' proof did not fail as a matter of law. Where the jury could have concluded that Bright was served fourteen drinks over a two-hour period and drank “most” of them, it was for the jury to decide whether Bright likely appeared intoxicated before he was served his last drink. Compare Cimino v. Milford Keg, Inc., supra at 325, 328, 431 N.E.2d 920 (service of “six or more ‘White Russians' ” deemed sufficient circumstantial proof), with Vickowski, supra at 611, 664 N.E.2d 429 (insufficient proof where patron, “who was in the habit of drinking beer, ‘sipped’ four to five bottles over the course of approximately two hours”).

(b) Opening statement. During the opening statement of the Sheas, counsel stated that Bright had a blood alcohol level of 0.20. Defense counsel immediately objected on the ground that no evidence of Bright's blood alcohol level would be forthcoming and asked for a mistrial. After a side bar conference, the judge struck the reference to the blood alcohol level and instructed the jury as follows: “there will be no evidence in this case concerning Mr. Bright's blood alcohol content ... [s]o it should not have been referred to in the opening and the jury is instructed to disregard it.” In this manner, the judge did more than generally instruct the jury to confine themselves to the evidence, he instructed them to disregard the specific comment made by plaintiff's counsel. Compare Kirby v. Morales, 50 Mass.App.Ct. 786, 794, 741 N.E.2d 855 (2001) (“the judge's charge to the jury, which contained the usual admonishment that they not treat as evidence statements in the opening, was a sufficient response to the comments complained of”). We conclude that the judge's curative instruction was sufficient and that he did not abuse his discretion in refusing to grant a mistrial.

(c) Liability of the realty trust under “veil piercing.” The realty trust argues that, as a matter of law, there was insufficient evidence to establish its liability, and that its motion for judgment notwithstanding the verdict therefore should have been granted.⁸ We agree.

The realty trust was not created until eighteen months after the accident occurred. Thus, whoever served the alcohol to Bright was not employed by the realty trust, an entity that did not yet exist, and the realty trust could not be liable based solely on a theory of respondeat superior. Instead, the trust could be liable for the actions of the servers only if it was somehow derivatively liable because of its relationship with those who did employ them.

The plaintiffs rely on a theory of “veil piercing” in an attempt to establish the requisite chain of derivative liability. See My Bread Baking Co. v. Cumberland Farms, Inc., 353 Mass. 614, 618-619, 233 N.E.2d 748 (1968) (discussing “[t]he circumstances in which one corporation, or a person controlling it, may become liable for the acts or torts of an affiliate or a subsidiary under common control”). The Supreme Judicial Court has set forth twelve factors to be considered in determining whether to disregard the corporate form (or other business forms that would ordinarily provide limited liability). See Attorney Gen. v. M.C.K., Inc., 432 Mass....