Are you contemplating a new contract? Has one of your contracts already been breached? The recent case of Butera Auburn, LLC, et al. v. Williams, et al., 83 Mass. App. Ct. 496 (2013), illustrates the importance of careful business planning and contract drafting. This case may also be used to double or triple Massachusetts plaintiffs’ damages for breach of contract under G.L. c. 93A.
In Butera Auburn, the defendant sold her veterinary practice to the plaintiffs. The defendant agreed to remain employed within the practice, and signed a non-compete clause. The plaintiffs gave the defendant a Note for some of the purchase price. After the purchase, the defendant began moving clients, licenses, and contracts from the practice she had sold to a new practice she was forming. In doing so, she secretly used the website, stationary, email, and client records of the business she had sold to redirect existing business into her new practice. This made it impossible for the plaintiffs to continue operating the practice they had purchased. The plaintiffs treated this as a breach of contract and suspended payments on the Note.
The Trial and Appeals Courts agreed that the plaintiffs’ failure to make payments on the Note was not excused by the defendant’s breach of contract. The Note and the Asset Purchase Agreement (APA) lacked language sufficient to link plaintiffs’ payments on the Note to the parties’ performance of the APA. The court did allow that if the plaintiffs had shown that “the damaged business itself was supposed to generate the income from which the debt … was to be repaid, [the defendant] might well be estopped from obtaining judicially compelled acceleration.” The plaintiffs were held liable on the accelerated Note.
However, the plaintiffs recovered double damages for the defendant’s unfair and deceptive practices. The Court in Butera Auburn extended G.L. c. 93A, § 11 to breaches of contract that are “both knowing and intended to secure unbargained-for benefits to the detriment of the other party.” (Citations omitted.). Under G.L. c. 93A, §§ 9 and 11, both contract damages and other claims arising out of a transaction that involves a 93A violation are subject to multiplication. Thus, the Court doubled not just the c. 93A damages, but also the breach of contract damages. This interpretation of 93A dramatically increases the potential recovery of plaintiffs.
When the future is unknown and out of your control, it is best to anticipate and provide for possible problems. The attorneys at Hutchins Law, P.C. can help. This includes negotiating and drafting contracts that anticipate and insulate you against possible future breakdowns in relationships. We can also help you with contracts that are already in default. Call or email today to discuss your legal needs.