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Marram v.
Kobrick Offshore Funds, Inc., 2009 WL 1015557
(Mass. Super. Jan. 30, 2009) (Gants, J.). |
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Although In one of his last decisions
before being elevated to the SJC, Judge Gants ironically
was asked to address a case that already had been before
his soon to be SJC colleagues. See Marram v. Kobrick
Offshore Funds, 442 Mass. 43 (2004). In that case
the SJC reversed Judge van Gestel’s order dismissing the
complaint, holding that an integration clause in a
subscription agreement – stating that all
representations concern-ing the fund at issue were set
forth in the subscription agreement – did not bar a
plaintiff from relying upon representations made prior
to delivery of the subscription agreement. After remand
from the SJC, the parties conducted discovery and filed
summary judgment and other motions.
The upshot of this lengthy opinion is
that the SJC’s decision – with which, to this reader,
Judge Gants did not agree – made it virtually impossible
for the defendant to dismiss the case prior to trial.
Judge Gants held that there was sufficient, albeit
“slim,” evidence that if believed, would entitle the
plaintiff (a profit sharing plan) to recover under the
Massachusetts Uniform Securities Act, for negligent
misrepresentation and under Chapter 93A. The SJC’s
opinion also doomed Defendant’s counterclaim for
indemnity under the subscription agreement. Judge Gants
held that in light of the SJC’s opinion allowing these
claims |
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to go forward, certain provisions in the
subscription agreement – in particular the attorneys’
fees provision requiring the loser to pay the other’s
fees – were unenforceable as a matter of public policy.
This broad reaching opinion also
discusses the differences between the federal Securities
Act of 1933 and Massachusetts securities laws, noting
that no right exists under the former to bring a claim
based on representations in a private placement
memorandum, whereas such a claim is within the scope of
the Massachusetts statute. Judge Gants also addressed a
discovery violation by the Plaintiff – failure to
supplement discovery responses – and sanctioned the
plaintiff with attorneys’ fees, not with dismissal as
defendant requested. Also contained in this opinion is a
discussion of ERISA pre-emption rules. Specifically,
Judge Gants held that the defendant’s claim for
contribution was pre-empted by ERISA, which supersedes
any and all state laws insofar as they relate to any
employee benefit plan. The Court concluded that
defendant’s counterclaim – alleging that the Plan’s
trustee was a fiduciary whose negligence contributed to
the Plan’s alleged damage – was a claim that directly
related to an ERISA plan. The common law contribution
claim therefore was pre-empted by ERISA.
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