Karter v. Pleasant View Gardens, Inc.

248 F.Supp.3d 299

Patricia KARTER

v.PLEASANT VIEW GARDENS, INC., Henry Huntington, and Robert Ladue

CIVIL ACTION NO. 16-11080-RWZ.

United States District Court, D. Massachusetts.

Signed March 31, 2017

Ellen J. Zucker, Neerja Sharma, Burns & Levinson LLP, Boston, MA, for Patricia Karter.

Christine K. Bush, Hinckley, Allen & Snyder LLP, Providence, RI, Rhiannon A. Campbell, Hinckley Allen & Snyder, LLP, Boston, MA, for Pleasant View Gardens, Inc., Henry Huntington, and Robert Ladue.

MEMORANDUM OF DECISION

ZOBEL, S.D.J.

In 2011, plaintiff Patricia Karter began developing an idea for a business that would locally grow and sell salad greens. She reached out to Henry Huntington, Chief Executive Officer of Pleasant View Gardens ("PVG"), a large ornamental flower grower, about this endeavor, and in 2012, they entered into a partnership. Plaintiff then identified Robert LaDue, a grower, as another participant, and he began collaborating with plaintiff and Huntington. Plaintiff and Huntington had reached an agreement under which plaintiff would have an equity stake in the new company. However, before formalizing this agreement, Huntington and LaDue decided to move forward without plaintiff, and Huntington/PVG registered a company without her. In this lawsuit, plaintiff makes various allegations against some or all of defendants Huntington, PVG, and LaDue.

See Docket # 1–1. Defendants have moved to dismiss all claims. See Docket # 6.

I. Factual Background

The following facts are recited as alleged in the complaint (Docket # 1–1). See Ocasio–Hernández v. Fortuño–Burset, 640 F.3d 1, 5 (1st Cir. 2011).

Plaintiff, a Massachusetts resident, has built and worked with companies in various sectors of the economy. She co-founded Dancing Deer Baking Company in 1994, served as its Chief Executive Officer from 2000 to 2010, and then served as its Chairperson Emeritus from 2010 to 2014. In or around 2011, plaintiff began developing the idea of a locally grown salad greens product. She called the venture "LightEffect Farms" and registered it as a limited liability company with the Massachusetts Secretary of State. From 2011 through 2015, plaintiff devoted substantial resources to developing the business.

Around April of 2011, plaintiff approached Huntington to learn about his operation. Huntington appeared interested in plaintiff's plan, and the two "agreed to stay in touch." Docket # 1–1, at ¶ 19. Plaintiff reached out to Huntington again around September of 2012. They discussed entering a partnership¹ between LightEffect Farms and PVG. In the proposed partnership, LightEffect Farms would produce salad greens, "which would be grown and cultivated in greenhouses owned by the new venture near PVG's current operations in Loudon, NH." Id. at ¶ 21. By the fall of 2012, Huntington agreed that each party would have an equity stake in the venture.

Plaintiff and Huntington each took steps to further the venture. Plaintiff worked without pay, used her own resources to pay staff to help develop the business model, and, in reliance on the promises made with Huntington, declined opportunities to work with other potential partners. Huntington provided financial resources to pay consultants that plaintiff had identified to help with market research and refining their business model.

Around September of 2012, Karter introduced Huntington to LaDue, a grower who had previously operated a commercial greens-growing operation in New York. LaDue began collaborating with plaintiff and Huntington based on their existing agreements. During the winter of 2012 to 2013 plaintiff and Huntington/PVG "divided up the costs of exploring their joint venture, while [plaintiff] continued to work without pay as part of her contribution to the effort." Id. at ¶ 32. "Huntington and PVG entered into a consulting agreement with Mr. LaDue and paid his consulting fees." Id. Plaintiff used her own resources to compensate staff as well as "to pay certain costs associated with site exploration." Id.

Plaintiff and Huntington "reaffirmed their commitment to the partnership" in the middle of 2014. Id. at ¶ 33. On approximately August 27, 2014, plaintiff provided Huntington with a memorandum that stated she would be entitled to an equity stake in the venture and that the business would be called LightEffect Farms. As the two continued to work together, plaintiff proposed receiving some payment for the services she would provide in 2014. They entered into a " ‘consulting agreement’ to provide [plaintiff] with modest income simply to tie her over as the partners moved towards actualizing their plan." Id. at ¶ 38. The agreement stated that it was not the entire agreement between the parties and that a "Purchase Agreement" would be executed at a later point. The fees plaintiff received through the consulting agreement were a fraction of what she usually charged for her consulting services. Around January of 2015, plaintiff, Huntington, and LaDue made a formal presentation about the venture to PVG's executive and ownership team, Huntington's advisors, and his bank, Farm Credit East. At the presentation, the parties represented that the business's team included plaintiff, Huntington, and LaDue.

Around March of 2015, Huntington sent plaintiff a proposed term sheet, which provided that each partner would have equity in the business. However, plaintiff alleges that "[t]he term sheet ... deviated sharply in other ways from the parties' prior agreements and suggested that Mr. Huntington had induced [plaintiff] to forfeit years of her personal and professional resources by making promises he apparently did not intend to keep." Id. at ¶ 49. Nevertheless, the parties continued to collaborate on the venture and discuss the terms of the "Purchase Agreement." During this time, Huntington continued to acknowledge plaintiff's right to an equity stake in the company.

On approximately October 30, 2015, plaintiff and Huntington finalized the terms of the venture. They agreed to meet to formalize the terms on November 6, 2015. On November 5, 2015, the day before meeting with plaintiff, Huntington/PVG, with LaDue's knowledge, registered a new corporation, "lef Farms" with the New Hampshire Secretary of State's office. The name "lef Farms" came from "LightEffect Farms, LLC," the company plaintiff had registered with the Massachusetts Secretary of State in 2011. At the November 6 meeting, Huntington told plaintiff that he and LaDue had decided to move forward with the venture without her. Huntington did not offer plaintiff any rights, equity, or compensation. Plaintiff tried to resolve the dispute amicably. However, her attempts at discussion were unavailing, and Huntington and LaDue proceeded without her.

On May 13, 2016, plaintiff filed the present suit in the Massachusetts Superior Court. Defendants removed the case to federal court on June 9, 2016, and then moved to dismiss the complaint.

II. Legal Standard

"To survive a motion to dismiss, 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) ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. For purposes of a motion to dismiss, the court accepts all well-pleaded factual allegations as true and draws all reasonable inferences in the plaintiff's favor. See Rodríguez–Reyes v. Molina–Rodríguez, 711 F.3d 49, 52–53 (1st Cir. 2013).

III. Analysis

Defendants contend that each of the ten counts included in plaintiff's complaint must be dismissed.²

A. Count I—Unfair and Deceptive Trade Practices Under Mass. Gen. Laws ch. 93A

In Count I of the complaint, plaintiff alleges that defendants engaged in unfair and deceptive acts and practices in violation Massachusetts General Laws Chapter 93A, §§ 2 and 11. Chapter 93A prohibits "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." Mass. Gen. Laws ch. 93A, § 2(a).

In seeking to invoke Chapter 93A, plaintiff faces the obstacle that "[t]he protections of Chapter 93A are not available to parties in a strictly private transaction." KPS & Assocs., Inc. v. Designs By FMC, Inc., 318 F.3d 1, 23 (1st Cir. 2003). "Included in this classification are ‘disputes ... between individual members of a partnership arising from partnership business [ ] and transactions and disputes between parties to a joint venture.’ " Id. at 23–24 (quoting Linkage Corp. v. Trs. of Bos. Univ., 425 Mass. 1, 679 N.E.2d 191, 207 n. 33 (1997) ); see also Debnam v. FedEx Home Delivery, 766 F.3d 93, 96–97 (1st Cir. 2014) (explaining that 93A is unavailable to "someone seeking to sue his or her business partner").

Plaintiff tries to avoid this hurdle by maintaining that to determine whether she can invoke 93A, the court must follow a "dual inquiry: first, [it] assesses whether the interaction is ‘commercial’ in nature, and second, it evaluates whether the parties were both engaged in ‘trade or commerce,’ and therefore acting in a ‘business context.’ " Linkage Corp., 679 N.E.2d at 206. She contends that at the first prong of the inquiry, "the subject matter of the interactions are ‘commercial undertakings involving[’] commercial parties," and at the second prong, "there is little question that the parties here were acting in a commercial context." Docket # 17, at 6 (quoting Grand Pac. Fin. Corp. v. Brauer, 57 Mass.App.Ct. 407, 783 N.E.2d 849, 860 (2003) ). However, this argument runs counter to existing case law, which makes clear that "[a]n interaction is not commercial in nature if it is a ‘purely private’ intra-enterprise interaction," such as disputes between parties to a partnership or a joint venture. States Res. Corp....