Nardone v. LVI Services, Inc.

CourtListener 4548400MassappctOct 29, 2018

Full text

NOTICE: All slip opinions and orders are subject to formal
revision and are superseded by the advance sheets and bound
volumes of the Official Reports. If you find a typographical
error or other formal error, please notify the Reporter of
Decisions, Supreme Judicial Court, John Adams Courthouse, 1
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us

17-P-845 Appeals Court

RONALD F. NARDONE vs. LVI SERVICES, INC.

No. 17-P-845.

Middlesex. April 12, 2018. - October 29, 2018.

Present: Rubin, Sacks, & Singh, JJ.

Contract, Promissory estoppel. Damages, Quantum meruit.
Practice, Civil, Judgment notwithstanding verdict.

Civil action commenced in the Superior Court Department on
November 14, 2011.

The case was tried before Bruce R. Henry, J., and motions
for judgment notwithstanding the verdict and for a new trial or
remittitur were considered by him.

William J. Royal, Jr. for the plaintiff.
Matthew A. Porter for the defendant.

RUBIN, J. Plaintiff Ronald Nardone brought suit against

his former employer, LVI Services, Inc. (LVI), for breach of

contract, promissory estoppel, and quantum meruit.1 A jury found

1 The jury also found LVI not liable for unpaid commissions,
and the judge granted summary judgment in favor of LVI on counts
2

LVI not liable for breach of contract, but liable for $800,000

on the promissory estoppel claim and $200,000 on the quantum

meruit claim. Following trial, a judge of the Superior Court

granted LVI's motion for judgment notwithstanding the verdict on

the promissory estoppel and quantum meruit claims. Nardone

appeals from this decision, and we reverse.

Facts. "In reviewing [a] judgment [notwithstanding the

verdict], we consider the facts and inferences therefrom in the

light most favorable to the plaintiff to determine if 'anywhere

in the evidence, from whatever source derived, any combination

of circumstances could be found from which a reasonable

inference could be drawn in favor of the plaintiff.'" Phelan v.

May Dep't Stores Co., 60 Mass. App. Ct. 843, 844 (2004), quoting

Stapleton v. Macchi, 401 Mass. 725, 728 (1988). Viewed in that

light, the jury could have found the following.

Nardone began working for LVI, an environmental remediation

company, in 1988, as the director of sales and marketing for its

Boston branch. He was promoted to president of the branch in

1989 and then to corporate vice-president of business

alleging age discrimination, breach of the covenant of good
faith and fair dealing, and unpaid commissions owed anytime
earlier than six years before the date the action was filed.
Burton Fried, Paul Cutrone, Scott State, and David Pearson were
also named as defendants, but all claims against them were
dismissed before trial. This appeal does not concern any of the
claims mentioned in this footnote, or any claims against the
noncorporate defendants.
3

development in 1990, a position he held until his departure from

LVI in 2011. In his position as corporate vice-president of

business development, Nardone was responsible for developing and

maintaining relationships with clients, which included Fortune-

100 companies. He also hired individuals, trained and managed

salespeople, engaged in business development strategy, and

regularly presented at senior management meetings.

In 1997, 2002, and 2005, LVI searched for investors to

recapitalize the company in order to provide cash to fund its

rapid growth. Nardone participated in each search by making

"roadshow presentations," at which he, along with president and

chief executive officer Burton Fried and chief financial officer

Paul Cutrone, pitched the recapitalization to potential

investors. It was disputed at trial whether making these

presentations was part of Nardone's job, but, viewed in the

light most favorable to Nardone, a reasonable juror could have

concluded that it was not a required part: Nardone "wouldn't say

[the roadshow presentations] were part of [his] job," he "would

not classify [doing the roadshow presentations] as part of [his]

job," he did not "believe it was part of [his] job description,"

and, in response to a question on cross-examination whether it

was "part of the ordinary course of [his] duties and

responsibilities to make these presentations; wasn't it?"

Nardone responded, "I don't agree." And Fried testified that,
4

"I asked [Nardone] if he wanted to appear and give the

presentation on behalf of the business development aspect of the

business and he said yes. He thanked me for inviting him. I

thought important to invite him. . . . Although I didn't

require him, he just accepted the invitation." Nardone did not

receive any compensation for his work on the roadshow

presentations apart from his salary. LVI obtained

recapitalizations of approximately $24 million in 1997, $70

million in 2002, and $300 million in 2005.

As compensation for the 1997 recapitalization, members of

senior management, including Nardone, received a combination of

shares and stock options. These stock options "expired

worthless" because the company did not meet certain earning

criteria that were necessary conditions for the options to vest.

Fried told Nardone that members of senior management would

receive similar compensation -- shares and stock options -- for

the 2002 recapitalization.

In August of 2005, after one of the roadshow presentations

relating to the 2005 recapitalization, Nardone learned from

Fried that a potential investor had offered to purchase stock

options from option-holders at a rate of $1,400 per option.

Fried told Nardone that, once he went home and saw his stock

option agreement, he would realize that he was "going to be a

millionaire." But, when Nardone got home, he discovered that he
5

had no stock options. He relayed this information to Fried, who

said, "That's impossible." Nardone, Fried, and Cutrone then

examined a list, maintained by Cutrone, of all the option-

holders together with the number of options they held. The list

contained approximately thirty people, but not Nardone: about

twenty employees who did not own equity in the company, and all

the management stockholders except Nardone. Based on the number

of stock options held by each management stockholder and the

offer price, Nardone estimated that the average management

stockholder would have received approximately one million

dollars for his or her options.

After seeing the list, Nardone said to Fried, "[W]hat are

we going to do about this, because if this isn't made right, I'm

not going to continue with the roadshow; you can get someone

else to do it; I'm finished; get Bob Katz (phonetic), Brian

Messico, Dave Pearson; I don't care who, but I'm done." Fried

responded that this must have been a mistake, that he needed

Nardone to "finish this process," and that, if Nardone continued

with the roadshows, he would "make it right."

The next week, Fried contacted Nardone and told him that he

had "found a way to make up for the oversight." According to

Fried, the offer to purchase the company included a cash bonus

at closing, and Fried would be able to "make up for [his]

oversight through that cash pool." Although it was impossible
6

for Nardone to receive any new options, according to Fried, the

cash bonus was a "perfect mechanism" to rectify the situation.

Fried also told Nardone that the likelihood was "extremely high"

that the company would receive the cash bonus, and that it would

be in the millions. Nardone told Fried that, if Fried agreed to

compensate Nardone through this mechanism, then he would

continue to do roadshow presentations. Fried agreed, and

Nardone made five or six more presentations.

After the recapitalization deal closed on November 15,

2005, Fried told Nardone that LVI did not receive a closing

bonus, but that he had managed to get $50,000 for Nardone.

Nardone grudgingly accepted the money and continued to work for

LVI.

In February of 2008, though, Nardone came across a summary

of the 2005 recapitalization deal that stated that LVI had, in

fact, received a closing bonus of $7.95 million. Approximately

$2 million had gone to Fried, $750,000 had gone to each of the

chief operating officers, and $4 million had been distributed

among other managers. Nardone brought this situation to the

attention of Robert McNamara, who had succeeded Fried as

president of the company. McNamara told Nardone, "You got

screwed," and said he would try to make Nardone whole by giving

him stock options that Nardone would be able to sell when the

company went public. However, this did not transpire because
7

the 2008 financial crisis, which began shortly after Nardone's

conversation with McNamara, foreclosed any possibility of an

initial public offering. Apart from the $50,000, Nardone never

received what Fried had promised.

Discussion. The jury found for the plaintiff Nardone on

his promissory estoppel claim and on his claim in quantum

meruit. The trial court, however, allowed LVI's motion for

judgment notwithstanding the verdict on both claims.

In order to succeed on such a motion, the defendant must

show that, taking all the evidence and the reasonable inferences

drawn therefrom in the light most favorable to the plaintiff, no

reasonable juror could return a verdict for the plaintiff. See

Phelan, 60 Mass. App. Ct. at 844. Our review of the allowance

of such a motion is de novo, id. at 845, and consequently we,

too, employ this high bar.

1. Promissory estoppel. In the judge's order allowing the

motion for judgment notwithstanding the verdict on the

promissory estoppel claim, the judge concluded that the proof

before the jury was inadequate to establish either that the

plaintiff was induced to act in reliance on a promise of the

defendant or that he suffered a detriment as a result of relying
8

on the promise of the defendant.2 The judge first concluded that

"participation in the investor presentations was part of the

plaintiff's job." And that meant, the judge held, that he was

"not induced to participate in those presentations by the

defendant's promises."

In assessing a motion for judgment notwithstanding the

verdict the judge is required to view the evidence in the light

most favorable to the plaintiff. See Phelan, 60 Mass. App. Ct.

at 844. After all, the jury is the finder of fact and unless

the evidence was insufficient to support a finding necessary for

the judgment it is not the role of the trial judge to second

guess the jury's factual findings.

In this case, the evidence was sufficient to allow the jury

to find that although the defendant was not compensated for his

"roadshow" presentations on top of his usual salary, neither

were they required as part of this job. Although the trial

judge asserted that the plaintiff testified that the road shows

were part of his job responsibilities, fairly read his testimony

was far more nuanced than that. The jury may view the evidence

2 "Circumstances that may give rise to an estoppel are (1) a
representation intended to induce reliance on the part of a
person to whom the representation is made; (2) an act or
omission by that person in reasonable reliance on the
representation; and (3) detriment as a consequence of the act or
omission." Sullivan v. Chief Justice for Admin. and Mgt. of the
Trial Court, 448 Mass. 15, 27-28 (2006) (citation omitted).
9

as a whole, and the plaintiff testified that he "wouldn't say

[the roadshow presentations] were part of [his] job," he "would

not classify [doing the roadshow presentations] as part of [his]

job," and he did not "believe it was part of [his] job

description." In light of all this, the jury could have

concluded that his statement that all of his work in connection

with the roadshows "was done while [he was] a salaried employee

of LVI," on which the defendant before us relies, was merely a

statement that he received no further compensation for doing the

roadshows although they were not a required part of his job.

Nor is a statement that Nardone made in his affidavit on which

the defendant also relies inconsistent with this. He said: "In

the ordinary course of my duties and responsibilities as an

executive, as [s]enior [v]ice [p]resident of [b]usiness

[d]evelopment at [d]efendant, LVI, I was well aware of the

corporate actions of LVI and the status of LVI's efforts to

market to potential investors and LVI in connection with the

1997, 2002, and 2005 [r]ecapitalizations of LVI, and was very

involved in the marketing, presentations, due diligence, and

related in the recapitalizations, including the 2005

[r]ecapitalization with Code Hennessy." Even if this is read to

mean that he did the presentations as part of his job, and it is

ambiguous on the point, the jury were still free to find that he
10

was not required to do so. Indeed, Burton Fried testified that

"I didn't not require him, he just accepted the invitation."

In light of all the evidence, the jury were entitled to

conclude that the roadshows were not a required part of the

plaintiff's job responsibilities, that he could have declined to

continue doing them, and that he threatened to do so.

If doing these presentations were not a required part of

Nardone's job responsibilities such that he could decline to

continue doing them -– even if, when he did them, he did them as

part of his job -– the jury were also free to find that LVI's

unkept promise nonetheless induced him to make the subsequent

roadshow presentations once he concluded that he had been

treated unfairly and that, if his concerns were not addressed,

he would stop making the presentations. Indeed, it is obvious

on the face of it that the promises made here and found by the

jury were precisely intended to induce the plaintiff to make the

subsequent roadshow presentations. And neither is the fact that

Nardone did the presentations in the past dispositive of whether

Fried's promise constituted an inducement. It would be

inconsistent with the equitable nature of the doctrine of

promissory estoppel to say that a promise that was intended to

induce voluntary action, and that did, in fact, induce that

action, did not, as a matter of law do so, simply because at an

earlier time, the plaintiff would have done that action without
11

that promise. Given the facts that could have been found by the

jury about the precise way in which doing the presentations was

and was not "part of" Nardone's job, the trial judge's

conclusion that the jury could not have found that the promise

induced any action by the plaintiff is in error.

The judge's second conclusion with respect to the

promissory estoppel claim was that any action or failure to act

by the plaintiff in reliance on the promise made to him was not

"detrimental." The judge's analysis in full, was that "the

plaintiff failed to show that he was caused to forego some other

employment opportunity . . . because he relied on the promised

payment."

This views too narrowly the nature of the equitable

doctrine of promissory estoppel. As an equitable doctrine,

promissory estoppel is concerned with any detrimental change in

position, not only with economic detriment. Indeed, before us,

LVI does not suggest that only economic detriment may give rise

to a promissory estoppel claim, and rightly so: the Supreme

Judicial Court has found detriment in forbearance from filing a

lawsuit, regardless of whether it would have been successful,

Sullivan v. Chief Justice for Admin. and Mgt. of the Trial

Court, 448 Mass. 15, 27-30 (2006), and other cases have found

detriment in giving up the right to do something one is legally

entitled to do. See, e.g., LeMaitre v. Massachusetts Turnpike
12

Auth., 452 Mass. 753, 755 n.2 (2008) (plaintiff remained in job

based on rate of benefits promised in defendant's employee

manual). A party can rely on a promise to his or her detriment

without showing that he or she forewent some other economic

opportunity.

Before us, LVI argues instead that "merely remaining

employed cannot constitute the detrimental reliance required for

a promissory estoppel claim." In this, LVI relies primarily on

our recent decision in Suominen v. Goodman Indus. Equities Mgt.

Group, LLC, 78 Mass. App. Ct. 723 (2011), in which we held that

"continued employment alone" is not sufficient to establish

detrimental reliance as a matter of law –- that a reasonable

juror could find that a person who continued in his or her

employment did not suffer the required detriment. Id. at 732

n.11. But this is not relevant to the heart of plaintiff's

claim here: that he suffered a legal detriment by doing further

roadshow presentations, which were not a required part of his

job responsibilities and that he otherwise would not have done,

presentations that were intentionally induced by the defendant's

promise and that were for its benefit. In fact, Suominen also

held that a jury could find the requisite detriment in a

plaintiff working harder in his or her position in reliance on a

promise -– what is required is something more than continuing

employment simpliciter. See id. at 734. This is analogous to
13

the detriment Nardone testified to here: In reliance on Fried's

promise to make him whole, Nardone agreed to do more roadshow

presentations than he otherwise would have or was required to do

as part of his job. Therefore, although they were not required

to do so, a jury could have found that Nardone suffered the

requisite detriment, and a judgment notwithstanding the verdict

in favor of the defendant on this basis was inappropriate.3

2. Quantum meruit. "To achieve recovery upon the theory

of quantum meruit, the claimant must prove (1) that it conferred

a measurable benefit upon the defendants; (2) that the claimant

reasonably expected compensation from the defendants; and (3)

that the defendants accepted the benefit with the knowledge,

actual or chargeable, of the claimant's reasonable expectation."

Finard & Co., LLC v. Sitt Asset Mgt., 79 Mass. App. Ct. 226, 229

(2011). The plaintiff argues, and apparently the jury found,

that he conferred a benefit upon the defendant by continuing the

3 The defendant would also rely on Hall v. Horizon House
Microwave, Inc., 24 Mass. App. Ct. 84 (1987), which, it contends
stands for the proposition that a party cannot show detriment
merely by continuing in one's employment. For the reasons given
above, we need not dwell on this point. To the extent the
defendant reads Hall as holding that a party must show economic
loss if he is to demonstrate that remaining in a job that he
otherwise would not have due to a promise amounts to detriment,
we disagree with its reading. As explained in Suominen, 78
Mass. App. Ct. at 734, the "type of detriment" at issue in that
case –- like the type of detriment at issue here –- "was not
discussed in Hall." In any event, even if the holding of Hall
were as the defendant contends, it was superseded by the Supreme
Judicial Court's subsequent opinion in Sullivan.
14

roadshow presentations, that Fried's promise to make him whole

in exchange for his continued participation in the roadshows

created a reasonable expectation of compensation, and that LVI,

through Fried, accepted the benefit knowing of the plaintiff's

expectation.

The judge concluded, and the defendant argues on appeal,

that "[t]here was no evidence that as a consequence of the

defendant's promise he did anything that he was not already

doing as part of the investor presentations. He did not take on

some new obligation and the defendant did not receive some new

benefit which it was not already entitled to receive." In other

words, the judge concluded that, because doing the roadshow

presentations was part of the plaintiff's job, his continuing to

do them did not confer a measurable benefit on the defendant to

which it was not already entitled. But since a reasonable juror

could have found that doing the presentations was not a required

part of Nardone's job, it equally could have found that his

continuing to do them did confer a measurable benefit on LVI to

which it was not already entitled. So this argument fails.

The defendant next argues that the evidence as a matter of

law fails to establish that LVI had actual or chargeable

knowledge of Nardone's expectation, or that either party

reasonably expected LVI to pay Nardone for continuing to do the

roadshow presentations. According the defendant, no such
15

expectation could exist because the roadshow presentations were

part of his job, he had never been paid for them in the past,

and "there was no evidence that circumstances had changed."

But of course the jury were entitled to find changed

circumstances: Nardone discovered that, as a result of an

oversight, he had not received approximately one million

dollars' worth of stock options, and he threatened to stop doing

the roadshow presentations unless he was compensated, a threat

to which Fried, on behalf of LVI, acceded. A jury could have

concluded that, while he had no reasonable expectation of being

paid for the roadshow presentations in the past, Fried's promise

that Nardone would receive compensation commensurate with the

options he did not receive created a reasonable expectation he

would be paid in the future.

The argument that the jury could not have found that LVI

had actual knowledge of Nardone's expectation likewise fails.

Fried, LVI's CEO, induced this expectation by promising to

compensate Nardone through the cash bonus that was part of the

2005 recapitalization, so he clearly had knowledge of Nardone's

expectation that he would be paid. And, "knowledge of officers

and directors having substantial control of all activities of a

corporation is imputed to the corporation." Demoulas v.

Demoulas, 428 Mass. 555, 584 (1998), quoting Phoenix Sav. &
16

Loan, Inc. v. Aetna Cas. & Sur. Co., 381 F.2d 245, 250 (4th Cir.

1967).

Finally, the defendant argues that the jury's award of

$200,000 on the quantum meruit claim lacks evidentiary basis.

According to LVI, an award of $200,000 was disproportionate to

Nardone's work because Nardone testified to performing only

thirty-one hours of work on the roadshow presentations after

Fried's promise. But this argument incorrectly presupposes that

the measure of recovery in quantum meruit must be based on the

hourly rate the promisee might have charged for the work.

Indeed, we have held that "[t]he reasonable value of the

services to the promisor, that is to say, the value of the

benefit conferred upon the promisor, is the appropriate

restitutional measure of damages." Slawsby v. Slawsby, 33 Mass.

App. Ct. 465, 467 (1992) (emphasis added). And there is ample

evidence of the enormous value of Nardone's work to the

promisor, LVI. Fried agreed to pay Nardone the value of his

lost stock options -- which the jury was told was one million

dollars -- in exchange for his continuing the presentations. A

reasonable juror could have concluded that, if the value of

Nardone's work to LVI had been less than the value of Nardone's

lost stock options, Fried would not have promised this. It

would have been irrational to do so, doubtless out of character

for a highly successful CEO like Fried. And, given that the
17

jury awarded Nardone $800,000 for promissory estoppel, awarding

more than $200,000 on quantum meruit very well might have been

duplicative. The $200,000 figure is however supported by the

evidence.4

The order allowing the motion for judgment notwithstanding

the verdict is reversed. The judgment dated May 9, 2017, is

vacated. The judgment on jury verdict is reinstated.

So ordered.

4 LVI does not argue that, if we reverse, a new trial is
required, based on the judge's statement that, if he had not
granted JNOV he would have ordered a new trial because the
judgments were against the weight of the evidence. In any
event, because the judge's "decision . . . on the motion for
judgment notwithstanding the verdict points out the inadequacies
which [he] found with the evidence regarding the promissory
estoppel and quantum meruit claims," and that decision was
infected by the legal errors we have described above, there is
no basis for the judge to order a new trial. See Turnpike
Motors, Inc. v. Newbury Group, Inc., 413 Mass. 119, 127 (1992)
(decision to grant a new trial as against the weight of the
evidence is reviewed for abuse of discretion, but a judge may
exercise this discretion only "when the verdict 'is so greatly
against the weight of the evidence as to induce in his mind the
strong belief that it was not due to a careful consideration of
the evidence, but that it was the product of bias,
misapprehension or prejudice'"), quoting Scannell v. Boston
Elevated Ry., 208 Mass. 513, 514 (1911).

Continue your research in ChatGPT or Claude

Connect Omnilex to search the legal corpus from your AI assistant.