Butler v. Anderson et al

UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS
EASTERN DIVISION
____________________________________________________
IN RE:
C.R. STONE CONCRETE CONTRACTORS, INC., 	Chapter 7
DEBTOR. 	Case No. 05-11119-W CH
____________________________________________________
JOSEPH BUTLER, CHAPTER 7 TRUSTEE,
PLAINTIFF,
v. 	Ad. P. No. 05-1307
RICHARD ANDERSON, GILLIAN W ELBY, JOHN MARINI, 	(Lead Case)
PLUMB HOUSE, INC., DALTON BUILDERS, INC., JOHN
MARINI MANAGEMENT COMPANY, LENOX-NORW OOD
LLC, AND THE FRAMING COMPANY, INC.,
DEFENDANTS.
____________________________________________________
JOSEPH BUTLER, CHAPTER 7 TRUSTEE,
PLAINTIFF,
v. 	Adv. P. No. 05-1241
PLUMB HOUSE, INC., RICHARD K. ANDERSON, JOHN
MARINI MANAGEMENT COMPANY, JOHN S. MARINI,
AND GILLIAN W ELBY,
DEFENDANTS.
____________________________________________________
JOSEPH BUTLER, CHAPTER 7 TRUSTEE,
PLAINTIFF,
v. 	Adv. P. No. 05-1346
PLUMB HOUSE, INC., TRESCA BROTHERS SAND &
GRAVEL, INC., PATRIOT HAULING CO., INC., AND
SAFECO INSURANCE COMPANY OF AMERICA,
DEFENDANTS.
____________________________________________________
JOSEPH BUTLER, CHAPTER 7 TRUSTEE,
PLAINTIFF,
v. 	Adv. P. No. 05-1347
PLUMB HOUSE, INC., SAFECO INSURANCE COMPANY
OF AMERICA,
DEFENDANTS.
____________________________________________________
JOSEPH BUTLER, CHAPTER 7 TRUSTEE,
PLAINTIFF,
v. 	Adv. P. No. 05-1348
JOHN MARINI MANAGEMENT COMPANY AND LENOX-
NORW OOD LLC,
DEFENDANTS.
____________________________________________________
MEMORANDUM OF DECISION
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I. INTRODUCTION
The matters before the Court are the “Motion to Dismiss Adversary Complaint of Defendants
John Marini, John Marini Management Company, Lenox-Norwood LLC, and The Framing
Company, Inc.” and the “Defendant’s [sic] Emergency Motion to Dismiss Plaintiff’s Complaint to
Enforce Judicially Dissolved Mechanic’s Lien, Expunge the Recording of the Complaint from the
Registry of Deeds and for Rule 11 Sanctions” (collectively, the “Motions to Dismiss”) filed in
adversary proceeding numbers 05-1307 (the “Lead Case”) and 05-1348, respectively, prior to their
consolidation on April 14, 2010. 	Through the Motions to Dismiss, defendants John S. Marini1
(“Marini”), John Marini Management Company (“Marini Management”), Lenox-Norwood LLC
(“Lenox”), and The Framing Company, Inc. (“Framing Co.,” collectively, the “Marini Defendants”)2
seek to dismiss several counts of the complaints now before me for failure to state a claim upon
which relief can be granted. Joseph G. Butler (the “Trustee”), the Chapter 7 trustee of the estate of
C.R. Stone Concrete Contractors, Inc. (the “Debtor”), opposes. For the reasons set forth below, I
will grant the Motions to Dismiss with respect to Count XIV of the complaint filed in the Lead Case
(the “Omnibus Complaint”) only and otherwise deny them.
II. BACKGROUND
The Debtor filed a voluntary Chapter 11 petition on February 18, 2005, but the case was
subsequently converted to one under Chapter 7 on August 17, 2005. The Trustee was appointed two3
See Adv. P. No. 05-1307, Docket No. 129.1
Identification of these parties as the “Marini Defendants” is meant for ease of reference2
and does not constitute a finding that these entities are the alter ego of Marini.
All references to the Bankruptcy Code shall be to 11 U.S.C. § 101, et seq. as in effect3
prior to the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of
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days later. Prior to the conversion and while the Debtor was still operating as a Chapter 11 debtor-
in-possession, the Debtor commenced several adversary proceedings. Upon conversion, however,
the Trustee, as the representative of the Debtor’s estate, was substituted as the plaintiff in all actions.
As all these proceedings give rise to common questions of fact or law, I granted the Trustee’s motion
for consolidation on April 14, 2010. Before delving more deeply into the procedural history of these
cases, a review of the complex factual background leading to the Debtor’s bankruptcy filing, by way
of the allegations set forth in the complaints that I must accept as true, is necessary to place the4
present dispute in context.
B. The Debtor’s Factual Allegations 5
The Debtor is a Massachusetts corporation that operated a business performing concrete
contracting, design, and installation in all phases of construction. 	Christopher Stone (“Stone”), the6
president of the Debtor, incorporated the Debtor in 2000 and operated it with increasing profitability
between the years of 2001 and 2004. 	As of 2004, the Debtor “was the largest non-union cast in7
place concrete contractor in Massachusetts, with 140 employees during peak periods and was on
2005, Pub. L. No. 109-8, 119 Stat. 23 (“BAPCPA”).
See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).4
The following recitation of the factual allegations set forth in the Omnibus Complaint is5
taken in large part from my prior Memorandum of Decision regarding the disapproval of the
Trustee’s proposed settlement of the present adversary proceedings. See C.R. Stone Concrete
Contractors, Inc., v. Anderson (In re C.R. Stone Concrete Contractors, Inc.), 346 B.R. 32, 35-40
(Bankr. D. Mass. 2006).
Omnibus Complaint, Adv. P. No. 05-1307, Docket No. 1, ¶¶ 1, 14.6
Id. at ¶¶ 13,15.7
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track to achieve its highest net profit ever.”8
Defendant Richard K. Anderson (“Anderson”) is the principal and “primary decision maker”
of the defendants Plumb House, Inc. (“Plumb House”) and Dalton Builders, Inc. (“Dalton,”
collectively with Anderson, the “Anderson Defendants”). 	Dalton and Plumb House are9
Massachusetts corporations engaged in the business of general contracting and the Debtor was a
concrete subcontractor for Plumb House on various projects. 	Plumb House is the general10
contractor on two construction sites, The Ridge in Waltham, Massachusetts (the “Waltham Project”)
and The Village at Quarry Hills in Quincy, Massachusetts (the “Quincy Project”). 11
The Debtor hired Gillian Welby (“Welby”) in December 2003 as the Debtor’s Project
Manager, 	and Welby served in that capacity until January 5, 2005. 	As Project Manager, Welby12 	13
was responsible for the Debtor’s project accounting, billing and change order submissions on the
various projects for which the Debtor was a subcontractor. 	Welby, who the Debtor claims was also14
the “former significant other” of Stone, 	was not authorized to sign certain documents, including15
Id. at ¶ 15.8
Id. at ¶ 2. Identification of these parties as the “Anderson Defendants” is meant for ease9
of reference and does not constitute a finding that these entities are the alter ego of Anderson.
Id. at ¶¶ 5-6, 25-26.10
Id. at ¶¶ 25-26.11
Omnibus Complaint Ex. 1, Gillian Welby’s Employment Agreement with C.R. Stone12
Concrete Contractors, Inc.
Omnibus Complaint ¶ 3.13
Id.14
Id. at ¶ 19.15
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requisitions and lien waivers, without Stone’s approval. 16
Marini is the principal and “primary decision maker”of Marini Management, Framing Co.,
and Lenox. 	Marini Management is a Massachusetts corporation in the business of general17
contracting. 	Lenox is a Massachusetts corporation which owns a construction site in Norwood,18
Massachusetts (the “Norwood Project”). 	The Norwood Project is managed by the Framing Co. and19
Marini Management is the general contractor on that site.20
The Debtor alleges that Anderson and Marini are friends and business associates. 	In early21
2004, on the recommendation of Anderson, the Debtor submitted a proposal to Marini to undertake
concrete subcontract work at the Norwood Project. 	Marini accepted the Debtor’s bid for the22
Norwood Project in the amount of $2,200,000 by executing the Debtor’s project proposal on March
10, 2004. Marini approved a second subcontract for an additional $150,000 of work on May 10,
2004. 	The Debtor also subcontracted for the two Plumb House projects, and on July 2, 2004,23
Welby, on the Debtor’s behalf, executed subcontracts on the Waltham and Quincy Projects for
Id. at ¶ 27.16
Id. at ¶ 4.17
Id. at ¶¶ 7, 22.18
Id. at ¶¶ 8, 22.19
Id. at ¶¶ 9, 22.20
Id. at ¶ 18.21
Id. at ¶ 22.22
Id. at ¶¶ 23, 24.23
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$1,025,000 and $1,800,000, respectively. 24
The Debtor claims that it delivered “substantial amounts of expensive equipment, materials
and tools” to the Norwood, Quincy and Waltham Projects to perform the subcontracts. 	According25
to the Debtor, as work on the Quincy Project progressed Anderson advised Stone in the fall of 2004
that the Debtor would need to complete the project in five months instead of the originally planned
year and a half. 	Although under similar circumstances the Debtor had previously required a change26
order to the subcontract price to reflect the expedited nature of a project, the Debtor alleges that
Stone and Anderson negotiated and orally agreed that there would be no such change order in
exchange for Dalton providing free additional manpower to assist the Debtor.27
During the fall and winter of 2004, while the Debtor was working on the Norwood, Quincy
and Waltham Projects, the Debtor alleges that Welby and Anderson with the assistance of Marini
“joined together to strip [the Debtor’s] lucrative business away from it and transfer it to Anderson.”28
During this time, Anderson is alleged to have told Plumb House employees that he wanted Welby
and other employees of the Debtor to work for Plumb House and Dalton and that within five years
Id. at ¶¶ 25, 26.24
Id. at ¶ 28. Specifically, the Debtor claims that it delivered $800,000 worth of concrete25
forms, supplies, equipment, tools and a forklift to the Norwood Project, a crane and construction
materials with a value of $330,000 to the Waltham Project, and $1,120,000 of property to the
Quincy Project consisting of a crane and various other concrete construction equipment. Id.
Id. at ¶ 29.26
Id. at ¶ 29.27
Id. at ¶ 30.28
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ninety-percent of Plumb House revenue would come from concrete construction work. 29
As part of the alleged conspiracy among Welby, Anderson and Marini, Welby allegedly
failed to submit prepared draft change orders to the Marini Defendants for the Debtor’s extra work
at the Norwood Project. 	Concerning the Norwood Project, Welby allegedly went beyond her30
authority and forged Stone’s signature on lien waivers and requisitions for project work. 	Welby31
also allegedly did not submit change orders for the Debtor’s extra work at the Quincy and Waltham
Projects.32
In December of 2004, the Debtor alleges that, at Anderson’s direction, Plumb House withheld
payment of the Debtor’s submitted requisitions of November 30, 2004, on account of alleged
expenses Dalton incurred assisting the Debtor on the expedited Quincy project. 	The Debtor alleges33
that Plumb House withheld payments in contravention of the oral agreement between Stone and
Anderson regarding same.34
At the same time, Welby had allegedly forged Stone’s signature on various requisitions and
as of December 2004 had stopped preparing and submitting requisitions for the Debtor's work at the
Norwood, Quincy and Waltham Projects. 	The net effect of Welby’s actions, claims the Debtor,35
Id. at ¶ 31. See also Omnibus Complaint Ex. 6, Witness Statement of Brian Armitage29
¶¶ 4, 5, 6.
Omnibus Complaint ¶ 32.30
Id. at ¶ 33.31
Id. at ¶ 32.32
Id. at ¶ 34.33
Id.34
Id. at ¶ 35, 36.35
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was to substantially underbill for the Debtor’s work on all three projects and to stifle the Debtor’s
cash flow by January, 2005. 	The Debtor alleges that both Anderson and Marini were aware of and36
assisted in Welby’s actions to benefit Anderson. 	Anderson, Marini and Welby also allegedly37
contacted the Debtor’s suppliers and encouraged them to demand payment from the Debtor despite
any contrary terms in the suppliers’ agreements with the Debtor.38
During the first week of January, 2005, Stone requested an advance from Anderson of
$200,000 upon the Debtor’s December 2004 work to which Anderson allegedly agreed. 	On39
January 7, 2005, Stone visited the Plumb House office to receive the advance, but instead was given
a letter, titled “Termination of Contract,” which terminated the Debtor's subcontracts on the Quincy
and Waltham Projects. 	Specifically, the Termination of Contract stated:40
Please be advised that Plumb House, Inc. is terminating your subcontracts at both
Quarry Hills (Quincy) and The Ridge (Waltham) for your failure to pay suppliers
which has resulted in liens being placed on both projects, pursuant to sections 9.1 and
9.3 of your subcontract. Unless you give the undersigned satisfactory evidence of
payment of all subcontractors and suppliers and removal of all liens by Tuesday,
January 11, 2004 [sic], your contracts will terminate and we will take possession of
all equipment and materials on site. You will also be responsible for all damages
Plumb House, Inc. may suffer as a result of your defaults. 41
On the same day, Anderson and Welby allegedly contacted key employees of the Debtor with
Id. at ¶¶ 38, 41.36
Id. at ¶¶ 39, 40.37
Id. at ¶ 37.38
Id. at ¶ 42.39
Id. at ¶ 43.40
Omnibus Complaint Ex. 7. The letter was apparently erroneously dated January 7, 200441
rather than January 7, 2005.
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the purpose of usurping the Debtor’s work force for Plumb House. 	The next day, the Debtor claims42
that Anderson held a meeting with key employees of the Debtor and advised them that the Debtor
had been terminated from the Quincy and Waltham Projects and advised the Debtor’s foreman on
the Norwood Project that Marini would also be terminating the Debtor’s subcontract on that
project. 	According to the Debtor, Anderson encouraged the employees to return to the Plumb43
House offices on January 9, 2005 to fill out Plumb House job applications if they wanted to keep
working on the various project sites.44
The Debtor claims that on January 8, 2005, Stone spoke to Marini concerning the Norwood
Project. 	Marini assured Stone that the Debtor would be permitted to continue and complete its45
work on the Norwood Project which was, according to the Debtor, 95% complete. 	Despite Marini's46
alleged assurance, Stone was notified at approximately 6:00 A.M. on January 10, 2005 that the
Debtor’s employees would not be permitted to work at the Norwood Project or recover any of the
Debtor’s property and equipment therefrom. 	The Debtor was similarly unable to recover any47
property and equipment from the Quincy and Waltham Projects. 	Later that same day, the Debtor48
received a letter titled “Termination of Contract/Lenox Station, Norwood, MA” from a representative
Omnibus Complaint ¶¶ 46, 47, 48.42
Id. at ¶ 49.43
Id.44
Id. at ¶ 51.45
Id.46
Id. at ¶ 53.47
Id. at ¶ 54.48
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of Marini Management which stated:
Marini Management is terminating your sub-contract dated March 23, 2004, at Lenox
Station, Norwood, MA, for your failure to pay suppliers which has resulted in liens
having been placed on the project and there is satisfactory evidence of further liens
being placed imminently. Unless you give [Marini Management] satisfactory
evidence of payment of all sub-contractors and suppliers and removal of all liens by
Tuesday, January 11, 2005 at 4:00p.m., your contract will be considered terminated
and [Marini Management] shall take possession of all equipment and materials on
site. You will also be responsible for all damages Marini Management may encore
[sic] as a result of your default. 49
The Debtor alleges that when Welby left the Debtor's offices on January 7, 2005, she took
a laptop computer and various documents of the Debtor. 	The Debtor also alleges that Welby50
deleted unsubmitted change orders for the Norwood Project from the Debtor’s computer system,
forged Stone’s signature on various documents including lien release and requisition forms, left the
Debtor’s documents and records in a state of disarray and improperly delivered the Debtor’s
proprietary and confidential business information to Anderson.51
Following termination from the Norwood, Quincy and Waltham Projects, the Debtor filed
Notices of Contract and Statements of Amounts Due pursuant to Mass. Gen. Laws ch. 254, §§ 4 and
8 against all three projects in order to preserve its mechanic’s lien claims. 	On February 10, 2005,52
Marini Management brought suit in Norfolk Superior Court 	to discharge the Debtor’s mechanic’s53
Id. at ¶ 55; Omnibus Complaint Ex. 9.49
Omnibus Complaint ¶ 58.50
Id. at ¶ 59.51
Id. at ¶ 63.52
Marini Management brought suit in the Commonwealth of Massachusetts, Superior53
Court Department, Norfolk County. The court will be referred to as “Norfolk Superior Court”
and the case will be referred to as the “Norfolk Action.”
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lien claim on the Norwood Project pursuant to Mass. Gen. Laws. ch. 254, § 15A. Prior to a hearing,
the Debtor filed for bankruptcy relief.
C. Procedural History54
On March 7, 2005, the Debtor instituted an adversary proceeding pursuant to 11 U.S.C. § 542
seeking the turnover by the Marini Defendants and Anderson Defendants of the Debtor’s property
that was allegedly retained by them at the Waltham, Quincy and Norwood Projects (the “Turnover
Proceeding”). 	On the same date, Marini Management sought relief from stay to resume the Norfolk55
Action with respect to the mechanic’s lien and to amend Marini Management’s pleadings to
prosecute its asserted contract claims against the Debtor. 	At the conclusion of a hearing held on56
March 22, 2005, I entered a formal order lifting the automatic stay “for the limited purpose of
allowing Marini to continue the proceeding to dissolve the mechanic’s lien pursuant to [Mass. Gen.
Laws ch. 254, § 15A].” 	Moreover, with respect to the Turnover Proceeding, I entered an order57
directing Marini and Marini Management to “as soon as practicable, assemble and return all of the
Debtor’s property within their custody.” 	Nonetheless, the Debtor alleges that much of the property58
I take judicial notice of the docket in the present case, as well as those of related cases54
before this Court. See Rodi v. Southern New England School of Law, 389 F.3d 5, 17-19 (1st Cir.
2004) (citations omitted). See also In re C.R. Stone Concrete Contractors, Inc., 346 B.R. at 40-
43 (discussing the events following the Debtor’s Chapter 11 filing).
See Adv. P. No. 05-1241.55
Motion by John Marini Management Company for Relief from the Automatic Stay,56
Case No. 05-11119-WCH, Docket No. 51.
Case No. 05-11119, Docket No. 104.57
Order for Turnover by Defendants John Marini Management Company and John58
Marini, Adv. P. No. 05-1241, Docket No. 28, p. 2. The Order does not mention the Anderson
Defendants because, according to the Debtor, they agreed to voluntarily turn over all of the
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returned to it pursuant to that order was damaged and that some of its property was never returned.59
The Norfolk Action resumed and on April 11, 2005, the Norfolk Superior Court entered an
order dissolving the Norwood Project mechanic’s lien. 	The Debtor subsequently appealed the60
order to the Massachusetts Court of Appeals and while that appeal remained pending, filed suit in
Norfolk Superior Court to perfect and enforce its mechanic’s lien against the Norwood Project
(“Lien Enforcement Action”). Thereafter, the Debtor filed a Notice of Removal seeking to remove
the Lien Enforcement Action to this Court pursuant to 28 U.S.C. § 1452(a) and Fed. R. Bankr. P.
7027. 	Although the Marini Defendants sought a remand of the Lien Enforcement Action to61
Norfolk Superior Court, I denied the request on the basis that the underlying mechanic’s lien issue
“so affects my case that I have to hang on to it.” 	Prior to the removal, however, Marini62
Management and Lenox filed the first motion to dismiss.
The Debtor filed the Omnibus Complaint on April 15, 2005, commencing the Lead Case.63
Despite increasing profits up until 2004, the Debtor contends that it was forced into bankruptcy
because the defendants “joined together in bad faith to seize control of all of C.R. Stone's property;
Debtor's equipment in their possession on the eve of the hearing. See Omnibus Complaint ¶ 69. I
further note that the order entered on March 24, 2005, two days after the hearing.
Omnibus Complaint ¶¶ 72, 73.59
John Marini Mgmt. Co. v. C.R. Stone Concrete Contractors, Inc., No. 05-0250, 200560
WL 6199480 (Mass. Super. Apr. 11, 2005), rev’d, John Marini Mgmt. Co. v. Butler, 70
Mass.App.Ct. 142, 144, 873 N.E.2d 1150 (2007).
See Adv. P. No. 05-1348, Docket No. 1.61
Transcript of Hearing on Emergency Motion to Remand Case, June 8, 2005, p. 15.62
See Adv. P. No. 05-1307.63
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to raid C.R. Stone's employees; and to take over the highly profitable business of [C.R. Stone].”64
Through the Omnibus Complaint, the Debtor sought relief against the Anderson Defendants and
Marini Defendants by way of: turnover of the Debtor’s business and property (Count I); damages for
the post-petition use of, damage to, and failure to return the Debtor’s property (Count II); recovery
of the Debtor’s property fraudulently transferred to the Marini Defendants and Anderson Defendants
(Count III); damages for the conversion of the Debtor’s property (Count IV); damages for civil
conspiracy to destroy the Debtor and steal its business (Count V); damages for breach of contract
and to enforce a mechanic’s lien against the Marini Defendants (Count VI); damages for Plumb
House’s Breach of Contract on the Waltham (Count VII) and Quincy (Count VIII) projects; damages
for breach of the obligations of good faith and fair dealing by Plumb House and Marini Management
(Count IX); damages for interference with the Debtor’s contractual relationships (Count X); damages
for violations of Mass. Gen. Laws ch. 93A, which prohibits unfair or deceptive acts or practices
(Count XI); equitable subordination of the claims of all defendants (Count XII); recovery of
preferential transfers (Count XIII); damages for violations of the automatic stay (Count XIV);
damages for interference with contract rights by the Anderson Defendants (Count XVII); damages
for interference with advantageous business relations by the Anderson Defendants (Count XVIII);
equitable estoppel to prevent the Anderson Defendants from benefitting from their wrongdoing
(Count XIX); and creation of a constructive trust to sequester the ill-gotten gains of the Anderson
Defendants (Count XX). 	On May 18, 2005, the Marini Defendants filed the second motion to
dismiss, seeking to dismiss counts I, VI, X, XII, and XIV for either lack of jurisdiction over the
Complaint p. 1.64
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subject matter or failure to state a claim upon which relief may be granted. 65
On June 29, 2005, I conducted a hearing on the Motions to Dismiss and at its conclusion,
took them under advisement. My consideration of the Motions to Dismiss, however, was suspended
once the Debtor’s case was converted to one under Chapter 7 and the responsibility for prosecuting
the adversary proceedings fell to the Trustee. The Trustee sought to settle the adversary proceedings,
and to that end, filed stipulations between himself and both the Marini and Anderson Defendants on
March 28, 2006 and April 26, 2006, respectively. 	Nonetheless, after a thorough review I denied66
the Trustee’s motions to approve the stipulations, concluding he had not met his burden in
demonstrating they were in the best interests of the estate.67
Upon the disapproval of the Trustee’s proposed settlements, none of the parties took any
further action in any of the adversary proceedings. Although the Motions to Dismiss remained under
advisement, due to a clerical error, a decision was never rendered. 	As a result, the adversary
proceedings remained inactive for nearly three years. During this period of inactivity, however, the
Massachusetts Court of Appeals reversed the Norfolk Superior Court’s judgment dissolving the
Debtor’s mechanic’s lien and remanded it for further proceedings. 68
Ultimately, in response to the Court’s Notice of Inactivity, the Trustee filed a request for a
pre-trial order on December 17, 2009. On April 14, 2010, I conducted a pre-trial status conference
Id. at ¶¶ 75-172, Motion to Dismiss Adversary Complaint of Defendants John Marini,65
John Marini Management Company, Lenox-Norwood LLC, and The Framing Company, Inc.
(“Marini Motion to Dismiss”), Adv. P. No. 05-1307, Docket No. 19.
See In re C.R. Stone Concrete Contractors, Inc., 346 B.R. at 4366
Id. at 51.67
John Marini Mgmt. Co. v. Butler, 70 Mass.App.Ct. at 153.68
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at which time successor counsel to the Marini Defendants called my attention to the still outstanding
Motions to Dismiss. 	Realizing that the Trustee never filed a response to them since having
succeeded to the Debtor as the Plaintiff of these adversary proceedings, I ordered him to file one by
May 18, 2010, which he did.
III. POSITIONS OF THE PARTIES
The Marini Defendants
Turning first to the motion to dismiss Counts I, VI, X, XIII, and XIV of the Omnibus
Complaint, the Marini Defendants assert that Count I, seeking turnover of assets of the Debtor, is
moot because the Marini Defendants have already returned all property belonging to the Debtor
pursuant to my March 24, 2005 order. 	Similarly, the Marini Defendants argue that Count VI,
through which the Debtor sought to enforce the mechanic’s lien, is not ripe for adjudication as the
lien was previously dissolved by the Norfolk Superior Court. 	With respect to Count X, which
alleges interference with the Debtor’s contractual relations with Marini Management, the Marini
Defendants assert that the Debtor has not stated a claim based upon the Omnibus Complaint’s
simultaneous allegation that Marini Management, The Framing Co., and Lenox are all Marini’s alter
egos. They argue that it is well established under Massachusetts law that a party cannot be sued for
interfering with its own contract. 	Next, relying on factors set forth in In re APF Co., 	the Marini69 	70
Defendants contend that the Omnibus Complaint fails to set forth sufficient facts to support a claim
for a preferential transfer in Count XIII. In particular, they note the Debtor’s failure to specifically
See Harrison v. NetCentric Corp., 433 Mass. 465, 744 N.E.2d 622 (2001); Schinkel v.69
Maxi-Holding, Inc., 30 Mass.App.Ct. 41, 50, 565 N.E.2d 1219 (1991).
Pardo v. Avanti Corp. Health Sys., Inc. (In re APF Co.), 274 B.R. 634, 640 (Bankr. D.70
Del. 2001).
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identify any preferential payments as well as demonstrate that if such a payment occurred, it was on
account of an antecedent debt. Lastly, the Marini Defendants seek dismissal of Count XIV because
a corporation cannot recover damages for willful violations of the automatic stay under 11 U.S.C.
§ 362(h).71
Next, with respect to the motion to dismiss the Lien Enforcement Action, the Marini
Defendants reiterate their argument that the Debtor’s mechanic’s lien has been dissolved by the
Norfolk Superior Court and therefore not ripe for determination. Additionally, they argue that the
Trustee is barred from pursuing this action now as it was a compulsory counterclaim to the Norfolk
Action. 	The Marini Defendants contend that the only reason why the Debtor filed the Lien
Enforcement Action was to cloud the title to the Norwood Project and disrupt its financing. As such,
they contend that Debtor’s counsel should be sanctioned under rule Mass. R. Civ. P. 11 for filing
pleadings without good supporting grounds.72
The Trustee
By his response, the Trustee incorporates the arguments made by the Debtor in its opposing
memorandum filed prior to the conversion of the case. First, Trustee asserts that Count I should not
be dismissed because the Marini Defendants, by asserting that they returned all of the Debtor’s
property, are inappropriately challenging the allegations of the Omnibus Complaint which this Court
Spookyworld, Inc. v. Town of Berlin (In re Spookyworld, Inc.), 346 F.3d 1, 8 (1st Cir.71
2003).
The Marini Defendants also assert that the breach of contract count of the Lien72
Enforcement Action complaint should be dismissed pursuant to Mass. R. Civ. P. 12(b)(9) as it
mirrors Count VI of the Omnibus Complaint. Mass. R. Civ. P. 12(b)(9) provides for the
dismissal of a proceeding due to the pendency of a prior action in a court of the Commonwealth.
In light of the removal of the Lien Avoidance Action to this Court and its subsequent
consolidation with the Lead Case, this argument is moot.
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must accept as true for purposes of the Motions to Dismiss. Second, the Trustee contends that the
Massachusetts Court of Appeals’ reversal of the Norfolk Superior Court’s dissolution of the
mechanic’s lien renders the Marini Defendants’ arguments regarding Count VI and the Lien
Avoidance Action moot. 	Third, with respect to Count X, the Trustee notes that contrary to the
Marini Defendants’ assertions, the Omnibus Complaint does not allege that Marini Management,
The Framing Co., and Lenox are alter egos of Marini. Instead, it merely identifies them collectively
for ease of reference. 	Moreover, a veil piercing claim, even if it was raised, is a fact intensive
analysis that would preclude dismissal at this stage. 	Fourth, the Trustee asserts that the Marini
Defendants’ reliance on In re APF Co. is misplaced because it is not the law in this jurisdiction and
is not even universally accepted in the District of Delaware. 	In any event, the Trustee argues, the73
preference claim should not be dismissed before an opportunity to conduct discovery. 	Finally,
although the Trustee concedes that 11 U.S.C. § 362 does not permit corporations to recover damages
for stay violations, he contends that there is nothing preventing the Trustee from obtaining other
relief, such as injunctive relief or equitable relief under 11 U.S.C. § 105(a).
IV. DISCUSSION
In Ashcroft v. Iqbal, the Supreme Court of the United States explained the standard for
dismissal under Fed. R. Civ. P. 12(b)(6), made applicable in adversary proceedings by Fed. R. Bankr.
P. 7012(b):
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.” . . . A claim
See, e.g., Official Committee of Unsecured Creditors of The IT Group, Inc., v.73
Brandywine Apartments (In re The IT Group, Inc.), 313 B.R. 370 (Bankr. D. Del. 2004); Family
Golf Centers, Inc. v. Acushnet Co. (In re Randall's Island Family Golf Centers, Inc.), 290 B.R.
55 (Bankr. S.D.N.Y. 2003).
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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. . . . The plausibility standard is not akin to a “probability requirement,” but
it asks for more than a sheer possibility that a defendant has acted unlawfully. . . .
Where a complaint pleads facts that are “merely consistent with” a defendant's
liability, it “stops short of the line between possibility and plausibility of ‘entitlement
to relief.’” . . .
Two working principles underlie our decision in Twombly. First, the tenet that a court
must accept as true all of the allegations contained in a complaint is inapplicable to
legal conclusions. . . . Second, only a complaint that states a plausible claim for relief
survives a motion to dismiss. 74
“In deciding a motion to dismiss, however, a court is not always limited to the facts alleged
in the plaintiff’s complaint.” 	The court must also consider “facts extractable from the75
documentation annexed to or incorporated by reference in the complaint and matters susceptible to
judicial notice.” 	It is well established that a court may look to matters of public record, including76
its own docket. 	Moreover, the United States Court of Appeals for the First Circuit has previously77
explained that prior state court cases are public records.78
The Marini Defendants contend that Count I of the Omnibus Complaint should be dismissed
because, pursuant to my March 24, 2005 order, they already returned all of the Debtor’s property in
their possession. This argument is flawed because the Fed. R. Civ. P. 12(b)(6) standard requires that
Ashcroft v. Iqbal, – U.S. –, 129 S.Ct. 1937, 1949-1950, 173 L.Ed2d 868 (2009)74
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. at 556-570) (citations omitted).
Rederford v. U.S. Airways, Inc., 586 F.Supp.2d 47, 50 (D.R.I. 2008).75
Jorge v. Rumsfeld, 404 F.3d 556, 559 (1st Cir. 2005).76
See, e.g., Boateng v. InterAmerican Univ., 210 F.3d 56, 60 (1st Cir. 2000); In re77
Marrama, 345 B.R. 458, 464 (Bankr. D. Mass. 2006); In re Hyde, 334 B.R. 506, 508 n.2 (Bankr.
D. Mass 2005).
Rasheed v. Duval, 57 F.3d 1061, 1995 WL 365994 *1 (1st Cir.1995).78
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I accept as true the allegations contained within the complaint. 	The Omnibus Complaint expressly79
alleges that the Marini Defendants failed to comply with my order and retained various business
assets of the Debtor. 	Instead, the Marini Defendants would have me assume the opposite. As such,80
dismissal of Count I is inappropriate.
Moving on, the premise of the Marini Defendants’ motion to dismiss Count VI of the
Omnibus Complaint and the Lien Avoidance Action is that the Norfolk Superior Court dissolved the
Debtor’s mechanic’s lien, and therefore, there is nothing for the Trustee to enforce. The subsequent
reinstatement of the lien by virtue of the Massachusetts Court of Appeals’ vacation of the Norfolk
Superior Court’s judgment, of which I may take judicial notice, renders their arguments moot.
Similarly, in light of the Court of Appeals’ decision, sanctions against Debtor’s counsel for filing
the Lien Enforcement Action are unwarranted. Accordingly, I will not dismiss Count VI of the
Omnibus Complaint and will deny the motion to dismiss the Lien Avoidance Action. 81
Next, the Marini Defendants assert that dismissal of Count X is warranted because one
cannot interfere with one’s own contract. This assertion, however, is based upon a fundamental
misapprehension that the Trustee alleges that Marini Management, The Framing Co., and Lenox are
all alter egos of Marini. Having reviewed the Omnibus Complaint, I find that the identification of
these parties as the “Marini Defendants” was meant only to simplify references to them. Although
Marini is alleged to be the “primary decision maker” of those entities, an allegation that they are his
alter egos or a claim for piercing the corporate veil is notably absent from the Omnibus Complaint.
See Bell Atlantic Corp. v. Twombly, 550 U.S. at 555.79
Omnibus Complaint ¶¶ 72-74.80
The Marini Defendants’ reliance on Mass. R. Civ. P. 12(b)(9) is also81
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Consequently, the Marini Defendants have not stated grounds to dismiss Count X.
Relying on In re APF Co., the Marini Defendants also assert that the Omnibus Complaint
fails to set forth sufficient facts to support a preference claim in Count XIII. In that case, Judge
Walsh of the District of Delaware, citing In re Valley Media, Inc., 	set forth several factors that he82
stated should be included in a complaint to put the defendant on notice of the basis for the plaintiff’s
preferential transfer claim:
(a) an identification of the nature and amount of each antecedent debt and (b) an
identification 	of 	each alleged preference transfer by (i) date, (ii) name of
debtor/transferor, (iii) name of transferee and (iv) the amount of the transfer.83
A number of courts, including those in the District of Delaware, have disagreed with In re
Valley Media, Inc. and its progeny. 	For example, in In re The IT Group, Inc., 	Judge Lindsey, also84 	85
of the District of Delaware, declined to follow In re Valley Media, Inc., reasoning that:
While plaintiffs should be encouraged to provide specific information in support of
their claims whenever possible, to require them to do so in their initial pleading in
all cases, particularly with the specificity demanded by Valley Media, is in this court's
view inappropriate and unnecessarily harsh. The fact that Bankruptcy Rule 7008,
which contains special pleading requirements in certain adversary cases before
Valley Media, Inc. v. Borders, Inc. (In re Valley Media, Inc.), 288 B.R. 189 (Bankr. D.82
Del. 2003)
In re APF, Co., 274 B.R. at 640 (quoting In re Valley Media, Inc., 288 B.R. at 192)83
(quotation marks omitted); see also Posman v. Bankers Trust Co. (In re Lomas Fin. Corp.), No.
Adv. A-97-245, 1999 WL 33742299 (Bankr. D. Del. July 28, 1999).
See, e.g., Gold v. Winget (In re NM Holdings Co., LLC), 407 B.R. 232 (Bankr. E.D.84
Mich. 2009); Gold v. Nova Indus., Inc. (In re NM Holdings Co., LLC), 376 B.R. 194 (Bankr.
E.D. Mich. 2007); Limor v. Buerger (In re Del-Met Corp.), 322 B.R. 781 (Bankr. M.D. Tenn.
2005); Ice Cream Liquidation, Inc. v. Calip Dairies, Inc. (In re Ice Cream Liquidation, Inc.), 319
B.R. 324 (Bankr. D. Conn. 2005); In re The IT Group, Inc., 313 B.R. at 370; In re Randall's
Island Family Golf Centers, Inc., 290 B.R. at 55.
In re The IT Group, Inc., 313 B.R. at 373.85
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bankruptcy judges, fails to provide any such additional requirements for preference
actions indicates it was intended that the adequacy of pleadings in such actions be
judged under the notice pleading standard of Civil Rule 8(a)(2), which requires only
a “short and plain statement of the claim showing that the pleader is entitled to
relief.” So long as the defendant is provided “fair notice of what the plaintiff's claim
is and the grounds upon which it rests,” the complaint should not be dismissed for
failure to state a claim. Further elaboration, if required, may be obtained through the
discovery process. 86
I agree with Judge Lindsey’s conclusions and will not apply In re Valley Media’s heightened
pleading standard to the present case.
The sole allegation relating to a Marini Defendant receiving a preferential transfer states:
By unilaterally and wrongfully withholding monies due to CR Stone, and paying
alleged claims of Dalton Builders, Plumb House and John Marini before they were
due, each of those Defendants received preferential payments, at a time when CR
Stone was rendered insolvent by the conduct of the Defendants, in violation of 11
U.S.C. § 547. 87
In Ashcroft v. Iqbal, the Supreme Court stated that “the pleading standard Rule 8 announces does
not 	require 	‘detailed 	factual 	allegations,’ 	but 	it 	demands 	more 	than 	an 	unadorned,
the-defendant-unlawfully-harmed-me accusation.” 	In the present case, I find that the Omnibus88
Complaint satisfies the liberal pleading standard set forth by Fed. R. Civ. P. 8(a), made applicable
to adversary proceedings by Fed. R. Bankr. P. 7008(a). Although the allegation lacks specificity, it
is sufficient to put Marini on notice that the Trustee’s preference claim arises from his alleged
retention of funds owed to the Debtor and subsequent allocation of those funds to an alleged claim
Id. (citations omitted).86
Omnibus Complaint ¶ 143.87
Ashcroft v. Iqbal, 129 S.Ct. at 1950.88
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owed to him by the Debtor. 	Therefore, I will not dismiss Count XIII of the Omnibus Complaint.89
Lastly, the Marini Defendants seek dismissal of Count XIV on the basis that, as a
corporation, the Debtor is not entitled to damages under 11 U.S.C. § 362(h). 	In In re Spookyworld,90
Inc., the First Circuit held that the reference to an “individual” in 11 U.S.C. § 362(h) precluded
corporations from bringing suit under that section to obtain damages for violations of the automatic
stay. 	The First Circuit noted, however, that:91
Corporations are not wholly without remedy for violations of the automatic stay:
under 11 U.S.C. § 105(a) (2000), “[t]he court may issue any order, process, or
judgment that is necessary or appropriate to carry out the provisions of this title.” .
. .
* * *
After enactment of section 362(h), corporations (and other non-“individual[s]”)
remain free to petition bankruptcy courts to award damages for automatic stay
violations pursuant to their section 105(a) power. . . . A discretionary remedy is not
as good as one that is assured, . . . but Congress could easily have thought that
corporations needed less protection. 92
I am also unimpressed by the Marini Defendants’ suggestion that the payment of an89
“alleged claim” of Marini’s is an admission that no antecedent debt existed. I note that the
Omnibus Complaint also sets forth a cause of action for conversion (Count IV) and that the
Trustee is free to plead alternative causes of action.
Prior to the enactment of BAPCPA, 11 U.S.C. § 362(h) provided in relevant part:90
An individual injured by any willful violation of a stay provided by this section
shall recover actual damages, including costs and attorneys' fees, and, in
appropriate circumstances, may recover punitive damages.
11 U.S.C. § 362(h) (emphasis added). As part of BAPCPA, 11 U.S.C. § 362(h) was amended
and re-designated 11 U.S.C. § 362(k).
In re Spookyworld, Inc., 346 F.3d at 10.91
Id.92
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Although the Trustee, acting on behalf of the corporate Debtor, is not without recourse for
the Marini Defendants’ alleged violations of the automatic stay, he is unable to avail himself of the
remedy provided by 11 U.S.C. § 362(h). Unfortunately, the sole relief requested under Count XIV
are damages pursuant to 11 U.S.C. § 362(h). 	As such, Count XIV, as pled, does not state claim93
upon which relief can be granted.94
V. CONCLUSION
In light of the foregoing, I will enter an order granting the Motions to Dismiss in part,
dismissing Count XIV of the Omnibus Complaint, and denying them in part.
______________________________
William C. Hillman
United States Bankruptcy Judge
Dated: June 9, 2010 	.
Omnibus Complaint ¶¶ 144-146.93
I note, however, that the Trustee is free to seek an amendment to the Omnibus94
Complaint requesting a remedy under 11 U.S.C. § 105(a) for any alleged violations of the
automatic stay committed by either the Marini or Anderson Defendants.
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