Nationwide Book Indus., LLC v. A&S Booksellers, Inc.

950 F.Supp.2d 264

NATIONWIDE BOOK INDUSTRIES, LLC, Plaintiff,

v.A & S BOOKSELLERS, INC., et al., Defendants.

Civil Action No. 11–12195–JGD.

United States District Court, D. Massachusetts.

May 22, 2013.

Edward J. Dailey, Sunstein Kann Murphy & Timbers LLP, Boston, MA, for Plaintiff.

Krista L. Hawley, Bartlett Hackett Feinberg P.C., Boston, MA, for Defendants.

MEMORANDUM OF DECISION AND ORDER ON DEFENDANT ANDREW WEISS'S MOTION FOR SUMMARY JUDGMENT

DEIN, United States Magistrate Judge.

I. INTRODUCTION

This action arises out of a series of purchase orders under which the plaintiff, Nationwide Book Industries, LLC (“Nationwide”), agreed to sell more than 216,000 books to the defendant, A & S Booksellers, Inc. (“A & S”). ¹ Nationwide claims that it continued to fill orders and ship books to A & S based on repeated assurances from A & S' principal, defendant Andrew Weiss (“Weiss”), that A & S' business was prospering and that payment to Nationwide would be made in full. It further claims that Weiss's representations were false, and were made only as a pretense to obtain additional books from the plaintiff without paying for them. By its Complaint, Nationwide has asserted claims against A & S for breach of contract (Count I) and unfair business practices (Count II). It has also asserted a claim against Weiss for fraudulent pretense and deception, by which A & S is seeking to hold Weiss liable under Mass. Gen. Laws ch. 93A (“Chapter 93A”) (Count III). On January 13, 2012, A & S filed for Chapter 11 bankruptcy. Accordingly, Nationwide's claims against that defendant are currently stayed.

The matter is presently before the court on “Defendant Andrew Weiss's Motion for Summary Judgment” (Docket No. 23), by which Weiss is seeking summary judgment, pursuant to Fed.R.Civ.P. 56, on Nationwide's claim against him under Chapter 93A. The plaintiff opposes the motion and urges the court to grant summary judgment in its favor, even absent a motion,pursuant to Fed.R.Civ.P. 56(f)(1). For the reasons that follow, this court finds that there are genuine issues of material fact which preclude summary judgment in favor of either party. Accordingly, Weiss's motion for summary judgment is DENIED, and this court declines to grant summary judgment in favor of the non-moving party under Rule 56(f)(1).

II. DISCUSSION

A. Summary Judgment Standard of Review

Summary judgment is appropriate when the moving party shows, based on the discovery and disclosure materials on file, and any affidavits, “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[A]n issue is ‘genuine’ if it ‘may reasonably be resolved in favor of either party.’ ” Vineberg v. Bissonnette, 548 F.3d 50, 56 (1st Cir.2008) (quoting Garside v. Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir.1990)). “A fact is material only if it possesses the capacity to sway the outcome of the litigation under the applicable law.” Id. (quotations, punctuation and citations omitted).

The moving party bears the initial burden of establishing that there is no genuine issue of material fact. See Borges ex rel. S.M.B.W. v. Serrano–Isern, 605 F.3d 1, 5 (1st Cir.2010). If that burden is met, the opposing party can avoid summary judgment only by providing properly supported evidence of disputed material facts that would require trial. LeBlanc v. Great Am. Ins. Co., 6 F.3d 836, 841 (1st Cir.1993). Accordingly, “the nonmoving party ‘may not rest upon mere allegation or denials of his pleading,’ ” but must set forth specific facts showing that there is a genuine issue for trial. Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986)). The court must view the record in the light most favorable to the nonmoving party and indulge all reasonable inferences in that party's favor. See Vineberg, 548 F.3d at 56. “If, after viewing the record in the non-moving party's favor, the Court determines that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law, summary judgment is appropriate.” Walsh v. Town of Lakeville, 431 F.Supp.2d 134, 143 (D.Mass.2006).

Federal Rule of Civil Procedure 56(f)(1) permits the court to “grant summary judgment for a nonmovant[.]” “Thus, the law in the First Circuit is ‘well established’ that a party that moves for summary judgment runs the risk that ‘the court may grant summary judgment sua sponte against the movant.’ ” Banco do Brasil, S.A. v. 275 Washington St. Corp., 889 F.Supp.2d 178, 187 (D.Mass.2012) (quoting Rothschild v. Cree, Inc., 711 F.Supp.2d 173, 195 (D.Mass.2010)). However, in the instant case, this court finds that disputed issues of material fact preclude summary judgment in favor of either party on Count III of Nationwide's complaint.

B. Weiss's Motion for Summary Judgment

By its claim against Weiss, Nationwide is seeking to hold Weiss liable under Chapter 93A based on a series of representations in which the defendant allegedly stated, in essence, that A & S' business was good and prospering, and that A & S would make full payment for books that it had ordered from the plaintiff. According to Nationwide, Weiss's statements were false because Weiss knew but did not disclose that A & S was in financial distress and was unable to pay for the orders. ( See Bredmehl Decl., Ex. 1 at pp. 1–4). ²Under Massachusetts law, common law claims for deceit or fraudulent misrepresentation “often can form the basis for a Chapter 93A claim.” Rodi v. S. New England Sch. of Law, 389 F.3d 5, 20 (1st Cir.2004). See also Datacomm Interface, Inc. v. Computerworld, Inc., 396 Mass. 760, 778, 489 N.E.2d 185, 197 (1986) (“it is clear that common law actions for fraud and deceit are within the contemplation of an ‘unfair act’ under [Chapter 93A]”). The fundamental issue raised by Weiss's motion for summary judgment is whether Nationwide has presented sufficient evidence to support its underlying claim of fraudulent misrepresentation.

To prevail on a claim for fraudulent misrepresentation, the plaintiff “must establish that the defendant ‘made a false representation of a material fact with knowledge of its falsity for the purpose of inducing the plaintiff to act thereon, and that the plaintiff reasonably relied upon the representation as true and acted upon it to his damage.’ ” Russell v. Cooley Dickinson Hosp., Inc., 437 Mass. 443, 458, 772 N.E.2d 1054, 1066 (2002) (quoting Danca v. Taunton Sav. Bank, 385 Mass. 1, 8, 429 N.E.2d 1129 (1982)) (additional citation omitted). This court finds that when the record is viewed in favor of the plaintiff, it supports a claim for fraudulent misrepresentation. Accordingly, Weiss is not entitled to judgment as a matter of law.

i. Weiss's Challenge to Alleged Non–Disclosures

Weiss argues, as an initial matter, that Nationwide cannot prevail on its claim to the extent it is based on Weiss's failure to disclose facts regarding the financial condition of A & S because Weiss had no duty to disclose such information to the plaintiff. (Def. Mem. (Docket No. 24) at 8–9). A claim of “nondisclosure can be actionable only where there is a ‘duty’ to disclose, and a duty arises only in a number of discrete situations [.]” Greenery Rehab. Group, Inc. v. Antaramian, 36 Mass.App.Ct. 73, 78, 628 N.E.2d 1291, 1294 (1994). Significantly, no such duty arises where the parties are represented by “sophisticated businessmen, [who are] active and experienced in the area, [and are] dealing at arm's length without any fiduciary or confidential relationships or expectations.” Lily Transp. Corp. v. Royal Institutional Servs., Inc., 64 Mass.App.Ct. 179, 202, 832 N.E.2d 666, 684 (2005) (Lawrence, J., concurring in part and dissenting in part). See also Greenery Rehab. Group, Inc., 36 Mass.App.Ct. at 78, 628 N.E.2d at 1294 (no duty to disclose where parties to agreement were sophisticated businessmen active in real estate transactions). Because there is no dispute that Weiss and his counterpart at Nationwide, Erez Bredmehl (“Bredmehl”), were sophisticated business people who were dealing at arm's length during the course of their communications concerning the book orders at issue in this case ( see generally Bredmehl Decl.), Weiss had no duty to disclose A & S' deteriorating financial condition. See Berkshire–Westwood Graphics Group, Inc. v. Davidson, 73 Mass.App.Ct. 1128, 903 N.E.2d 605, 2009 WL 735074, at *1 (Mar. 23, 2009) (unpub. op.) (“Given that the parties were sophisticated business people involved in an adversarial business relationship, [the defendant] had no duty to disclose the full extent of [his company's] deteriorating financial condition”). Therefore, as Nationwide tacitly conceded, its claim cannot be based on any alleged non-disclosures about A & S' financial circumstances. ( See Pl. Opp. Mem. (Docket No. 26) at 7).

Nevertheless, Nationwide argues that its claim against Weiss is based on the defendant's affirmative statements regarding the growth and prosperity of his company, as well as his affirmative assurances that Nationwide would receive payment for A & S' book orders. (Id.). While Weiss raises a number of arguments in support of his contention that Nationwide has failed to state a claim, for the reasons that follow, Weiss has not shown that he is entitled to summary judgment with respect to these claims.

ii. Weiss's Challenge to the Alleged Affirmative Statements

There is evidence in the record that during the time period between April 2011 and October 2011, Weiss repeatedly assured Bredmehl that A & S' business was good and that payment to Nationwide would be forthcoming. For example but without limitation, there is evidence that during his conversations with Bredmehl, Weiss made the following representations:

• In April 2011, while placing a book order with Bredmehl, Weiss insisted that his business was prospering and growing, and that payment was not even a question....