Recently in Breach of Contract Category

October 2, 2014

No Lost Profits Damages in Trade Secret Misappropriation Case

The Massachusetts Supreme Judicial Court ("SJC") recently analyzed the use of expert testimony regarding "lost profits" damages in a case from Suffolk Superior Court's Business Litigation Session, and provided some guidance relative to the appropriate measure of damages in cases involving misappropriation of trade secrets.

In LightLab Imaging, Inc. v. Axsun Technologies, Inc., LightLab Imaging, Inc. ("LightLab") filed suit in Suffolk Superior Court, alleging that a competitor, Volcano Corporation ("Volcano"), was using its trade secrets relative to certain laser technology after a joint venturer, Axsun Technologies, Inc., ("Axsun") secretly offered itself for sale to Volcano and divulged LightLab's specifications for that technology. At the outset of the case, the court granted a preliminary injunction. Later, a jury returned a favorable verdict for LightLab, concluding that Axsun had violated the confidentiality provision of its contract with LightLab. The jury also found that Volcano tortiously interfered with LightLab's contract and business relationship with Axsun, and that Volcano had misappropriated LightLab's trade secrets. On a separate count under M.G.L. c. 93A, the court found that Axsun and Volcano acted knowingly and willfully, thus entitling LightLab to $400,000 in damages plus attorney's fees totaling $4,500,000.

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May 22, 2014

Ruling Emphasizes Punitive Nature of Attorney's Fees Award Pursuant to M.G.L. c. 93A

In Holland v. Jachmann, the Massachusetts Supreme Judicial Court (SJC) considered whether the attorney's fees attributable to the plaintiff business's in-house counsel are recoverable as part of assessed damages in a successful claim under M.G.L. c. 93A (Chapter 93A). There, the dispute arose out of a complicated business transaction that effectively split the plaintiff company in two. The defendants were found to have violated Chapter 93A on eight counts, including flagrant breaches of contract and deceptive business practices.

Chapter 93A gives a court discretion to award attorney's fees incurred in connection with an action for unfair and/or deceptive acts or practices in violation of the statute, as well as recovery of double or treble damages. As the SJC observed, the legislative purpose of the statute is to deter misconduct, making the multiple damages and attorney's fee awards punitive in nature.

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April 10, 2014

Business Disputes in Automotive Industry Can Present Unique Issues

A recent decision from the United States District Court in Massachusetts illustrates how business disputes in the automotive industry may be subject to specific laws that can have an effect on substantive claims as well as the enforcement of arbitration agreements to resolve such disputes. In Aston Martin Lagonda of North America, Inc. v. Lotus Motorsports, Inc., laws specific to automotive business disputes led the federal court to dismiss various claims brought by dealership franchisee Lotus Motorsports, Inc. (Lotus) against franchisor Aston Martin Lagonda of North America, Inc. (Aston Martin).

After entering into an automobile dealership franchise agreement with Aston Martin in 1996, Lotus served as the only Aston Martin dealer in New England, except for southern Connecticut. Around 2003, Aston Martin advised Lotus that the showroom at Lotus's dealership was insufficient for the anticipated increase in volume, and assured Lotus that it would sell 75 to 100 units per year when Aston Martin's new volume model was released. Based on these statements and encouragement from Aston Martin, Lotus moved its dealership to a larger facility in which it invested more than $700,000, and passed on other business opportunities. In 2013, Lotus learned that another Aston Martin authorized dealership would be opening 8.7 miles from Lotus's new location.

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March 27, 2014

Bonus Payment Excluded from Wage Act Claim

The Suffolk County Superior Court recently analyzed the Massachusetts Wage Act in a case involving the compensation package of a company's departing president. The case was complicated by the multiple and inconsistent compensation agreements the plaintiff and defendant company signed. At bottom, the court decided the issue of whether annual bonuses and vacation pay may be considered wages under the Wage Act. The court found that annual bonuses may not be considered wages under the Wage Act, but that vacation pay may be wages, provided that certain criteria are be met.

In Boesel v. Swaptree, Inc., the plaintiff brought claims the defendants under the Wage Act, for breached of fiduciary duties, and for interference with contractual relations. The plaintiff founded Swaptree, Inc. and served as its CEO until 2010. As part of an investment agreement, the plaintiff resigned as CEO, and accepted the position of president of the company. Upon accepting the position, the plaintiff entered into an employment agreement with the company that differed from the original agreement he had signed at the company's inception. The agreement provided that Boesel receive a certain salary, health and retirement benefits, paid vacations, and would receive compensation for unused vacation days. In addition, Boesel was to receive an annual bonus each year he worked for the defendant company, as well as a discretionary bonus based on his success as president. However, the company paid Boesel only his base salary, without bonuses or vacation time reimbursement.

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March 13, 2014

General Contractor Who Delayed Project Held to Have Breached Contract with Subcontractor

A Massachusetts Superior Court recently ruled on a case involving a construction contract between a subcontractor and a general contractor, where the contract included a provision that prohibited the subcontractor from recovering damages from the contractor for a delay in the project. The court held that the "no damages for delay" clause did not prevent the plaintiff-subcontractor from recovering damages from the contractor, as the contractor denied the subcontractor of its only available remedy under the contract.

In Central Ceilings, Inc. v. Suffolk Construction Company, Inc., et al., Central Ceilings, Inc. agreed to furnish labor and material for the drywall and ceiling portions of a project under the control of the general contractor, Suffolk Construction Company. Central agreed to respond to change order requests promptly, and to work under a specific schedule, while Suffolk Construction supervised and coordinated the project and job site.

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