Jury Verdict for Firm’s Client in Dispute Over Six-figure Brokerage Commission

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Jon Friedmann recently represented a manufacturing company and its owner in a contract dispute with a broker. The broker was hired to sell the manufacturing company’s assets and our clients were later sued by the broker who argued he was entitled to a commission under the terms of the contract. The owner maintained the broker was not entitled to a commission under the terms of the brokerage contract. The one-week jury trial resulted in a dismissal of all claims against our client after two hours of deliberation.

Background
The firm’s client, the owner of a manufacturing company, entered into a contract with a broker who specialized in the sale of closely-held New England businesses. The owner specified he wanted to net $3 million from the sale of the business.

Almost a year after the contract was signed, the broker approached the owner with an offer from an interested party. The offer was comprised of a purchase price of $2.5 million to be paid at closing, an additional $125,000 to be paid within 90 days of closing if the business’ inventory was sold, and a sliding percentage of gross sales for two years if the company’s sales exceeded set targets. The proposal was put into writing, but it was not signed by the interested party and no deposit was put down. In addition, the time within which the offer needed to be accepted was left blank.

After reviewing the offer, the broker sent a counter-proposal to the interested party and included the manufacturer’s first quarter earnings and a letter explaining why sales were down. Although the broker discussed the terms of the counter-proposal with the owner, the owner never reviewed or approved the letter that “explained” why sales were down and did not sign the counter-proposal. When the owner discovered the misstatements in the broker’s letter, he requested that the broker rescind the counter-proposal.

Several weeks later, the owner asked the broker to reissue the counter-proposal to the interested party. The broker told the owner he would not represent him until the owner paid him $100,000. The owner refused to pay the broker and the broker filed suit against the owner and the manufacturing company alleging, among other things, breach of contract, negligent misrepresentation, fraud, and violation of the Massachusetts Consumer Protection Act. G.L. c. 93A, which would entitle the broker to triple damages. The exposure for the firm’s client was in excess of $800,000.

Result
After three years of litigation, the matter was tried before a jury. All counts were submitted to the jury to render a verdict, however, the Court indicated the jury’s finding on the 93A claim would be a non-binding, advisory opinion and the Court would reserve final determination of the 93A claim. The jury found in favor of the owner on all counts and determined there was no offer by the interested party that would entitle the broker to a commission under the brokerage contract or at all. The firm’s client, therefore, did not owe a commission fee to the broker. The jury also found in the owner’s favor on the 93A claim. The Court adopted the jury’s advisory opinion with respect to the 93A claim, ruled there was no basis for liability, and ordered the broker could not recover any damages from the owner.

 

Potential Legal Issues for College Students: Traps for the Unwary

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By James L. Rudolph

Whether your child is a senior in high school about to start college next fall or presently a college student, at some time in the next few years, there may be legal issues affecting you and them. This article addresses the following potential issues that may concern parents and students: alcohol and drugs, fake IDs, credit cards, pranks, social networking and defamation, gambling, cheating/plagiarism, date rape, copyright infringement, landlord/tenant issues, and harassment and discrimination. Additionally, it gives general advice on how to respond to potential legal issues. (more…)

Massachusetts Lawyers Weekly Features Jon Friedmann and Adam Shafran in Employment Case of First Impression

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The Supreme Judicial Court ruled that employees who brought a successful class action against their employer for violation of the Wage Act are entitled to statutory pre-judgment interest on their lost pay and benefits. This case of first impression, argued by Jon Friedmann and Adam Shafran, answers an unsettled question of law and employers now have clarity about their obligations for interest under the Wage Act. The ruling could promote faster settlement of Wage Act claims because it may impact an employer’s decision about how long they want to defend a wage dispute before settling the case.

It Pays to Eat – The Massachusetts Meal Break Law

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by Adam. J. Shafran

In a recent class action law suit brought by employees of a security company, the Massachusetts Superior Court described the legal standard to be applied when determining whether a thirty-minute meal break constitutes compensable working time. In this case brought under the Massachusetts Wage Act, the employer Longwood Security Services Inc. (“Longwood”) maintained a company policy pursuant to which its employees/security officers were permitted to take an unpaid thirty-minute meal break, but were required to stay in uniform, not permitted to leave their assigned location without permission, and remained responsible for keeping their radio on and responding to calls during their meal break.

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Land Court Rules No Binding Agreement Where Broker Lacks Authority to Bind Seller

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by Robert P. Rudolph

In this fast-paced world, where many people are more likely to send a text message than an e-mail or handwritten letter, a case before the Massachusetts Land Court, St. John’s Holdings, LLC v. Two Electronics, LLC, reminds us of the perils of doing so. A potential purchaser of real estate was interested in buying property in Danvers from the owner to use as a medical marijuana facility. Both parties had real estate brokers.

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