Title: NTV Management, Inc. v. Lightship Global Ventures, LLC

State: massachusetts

Issuer: Massachusetts Supreme Court

Document:

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revision and are superseded by the advance sheets and bound 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 
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SJC-12737 
 
NTV MANAGEMENT, INC.  vs.  LIGHTSHIP GLOBAL VENTURES, LLC, & 
another.1 
 
 
 
Suffolk.     November 5, 2019. - March 5, 2020. 
 
Present:  Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher, & 
Kafker, JJ. 
 
 
Contract, Performance and breach, Implied covenant of good faith 
and fair dealing.  Consumer Protection Act, Unfair act or 
practice, Attorney's fees.  Securities, Registration of 
broker-dealer.  Practice, Civil, Affirmative defense, 
Waiver, Consumer protection case, Attorney's fees. 
 
 
 
 
Civil action commenced in the Superior Court Department on 
January 29, 2016. 
 
 
Motions for summary judgment were heard by Mitchell H. 
Kaplan, J.; the remaining issues were tried before Edward P. 
Leibensperger, J., and posttrial motions were heard by him. 
 
 
The Supreme Judicial Court on its own initiative 
transferred the case from the Appeals Court. 
 
 
 
Daniel N. Marx for the plaintiff. 
 
H. Joseph Hameline for the defendants. 
 
Laurie Flynn, Special Assistant Attorney General, & Diane 
Young-Spitzer, for Office of the Secretary of the Commonwealth, 
Securities Division, amicus curiae, submitted a brief. 
                     
 
1 G. Kent Plunkett. 
2 
 
 
 
 
 
LENK, J.  Plaintiff NTV Management, Inc. (NTV), sued 
defendant Lightship Global Ventures, LLC (Lightship), alleging 
breach of contract, breach of the implied covenant of good faith 
and fair dealing, and violations of G. L. c. 93A.  NTV also sued 
Lightship's principal, defendant G. Kent Plunkett, for 
violations of G. L. c. 93A.  A jury found Lightship liable for 
breach of contract and breach of the implied covenant of good 
faith and fair dealing; the jury also found both Lightship and 
Plunkett liable for violations of G. L. c. 93A, and awarded 
treble damages.  On the defendants' motion, the judge 
subsequently set aside the jury verdict in its entirety, after 
concluding that NTV's failure to register as a securities 
"broker-dealer" rendered its contract with Lightship void and 
unenforceable. 
 
The principal question presented in this case is whether a 
contract requiring NTV to "source capital and structure 
financing transactions from agreed-upon target investors and/or 
lenders" for Lightship triggered an obligation for NTV to 
register as a securities broker-dealer under Massachusetts and 
Federal securities laws.  If so, the contract would be invalid 
and unenforceable.  We conclude that the contract in question 
did not require a transaction in "securities," and thus did not 
trigger an obligation that the plaintiff register as a broker-
3 
 
 
dealer.  Therefore, the jury award for breach of the enforceable 
contract, breach of the implied covenant of good faith and fair 
dealing, and treble damages under G. L. c. 93A must be 
reinstated.2 
 
1.  Background.  Lightship, represented by its principal, 
Plunkett,3 hired NTV to provide "consulting and advisory 
services" in connection with Lightship's efforts to acquire "the 
business and assets" of the website Salary.com from 
International Business Machines Corporation (IBM).4  Plunkett, 
who started Lightship for the purpose of acquiring Salary.com, 
had commenced negotiations with IBM, but lacking the financial 
resources to complete the transaction, sought partners to help 
finance the purchase. 
 
a.  The contract.  Lightship and NTV executed a contract 
under which NTV agreed to "serve as consultant and advisor" to 
Lightship, under the "coordination, oversight, and direction" of 
                     
 
2 We acknowledge the amicus brief of the Secretary of the 
Commonwealth, securities division. 
 
 
3 G. Kent Plunkett was the chief executive officer of 
Lightship Global Ventures, LLC (Lightship), a company he founded 
in order to pursue this transaction. 
 
 
4 Plunkett founded Salary.com and served as its chief 
executive officer; he subsequently left the company, which 
eventually was acquired by International Business Machines 
Corporation (IBM).  Plunkett, along with Yong Zhang, the former 
chief operations officer of Salary.com, then sought to reacquire 
their former company from IBM. 
4 
 
 
Plunkett, in "the acquisition" of Salary.com and the "financing 
transactions" necessary to "facilitate" the acquisition.  As 
"mutually agreed," but with "final determination" by Lightship, 
NTV was to "source capital" from "agreed-upon target investors 
and/or lenders," and to assist Lightship, in a "mutually agreed" 
manner, in "structur[ing] financing transactions" and 
"facilitat[ing] and participat[ing] in meetings and due 
diligence with capital sources."  If NTV succeeded in finding 
sources of capital that ultimately were accepted by Lightship 
and provided capital for the final acquisition, NTV would earn a 
commission commensurate with that amount of capital.  If NTV did 
not introduce any sources of capital that actually were used in 
the purchase, but introduced at least ten "qualified sources of 
capital," it would earn an "advisory fee" of $330,000. 
 
b.  The dispute.  The parties' relationship quickly soured.  
Eventually, Lightship terminated the contract and completed its 
acquisition of Salary.com with the support of a partner not 
introduced by NTV.  Under the terms of the resulting 
transaction, Lightship and its financial partner agreed to form 
a new business venture, which in turn would purchase Salary.com 
from IBM.  The financial partner received a majority stake 
(sixty percent) in that business.  Yong Zhang was appointed 
chief operations officer, and Plunkett was appointed chief 
executive officer; both Plunkett and Zhang received identical 
5 
 
 
salaries and were to serve under three-year, renewable 
contracts.  Lightship then took the position that NTV had earned 
neither a commission nor an advisory fee in the acquisition of 
Salary.com. 
 
2.  Prior proceedings.  NTV commenced an action in the 
Superior Court against Lightship, raising, inter alia, claims of 
(1) breach of contract, (2) breach of the implied covenant of 
good faith and fair dealing, and (3) violations of G. L. c. 93A.5  
NTV also raised a G. L. c. 93A claim against Plunkett 
individually.  On the defendants' motion for summary judgment, a 
Superior Court judge determined that NTV had failed to present 
sufficient evidence that, even if the defendants had honored the 
contract, NTV successfully would have introduced capital and 
earned a commission.6  The motion judge accordingly limited NTV's 
                     
 
5 NTV Management, Inc. (NTV), also raised claims against 
Lightship and Plunkett of (1) promissory estoppel, (2) unjust 
enrichment, (3) intentional misrepresentation, (4) and 
violations of the Uniform Fraudulent Transfer Act, and (5) 
sought to reach and apply against the stock or assets of 
Salary.com.  These claims were dismissed on the defendants' 
motion for summary judgement, a decision from which NTV appeals.  
As we conclude that NTV can recover for breach of contract, we 
need not consider whether NTV could recover under any alternate 
theory. 
 
 
6 NTV likewise appealed from this decision; NTV did not, 
however, pursue the matter in its brief or in argument before 
this court, and we therefore deem it waived. 
6 
 
 
claims to the defendants' failure to pay NTV the $330,000 
advisory fee. 
 
A Superior Court jury, at a trial over which a judge who 
was not the motion judge presided, subsequently found Lightship 
liable for breach of contract and breach of the implied covenant 
of good faith and fair dealing, and awarded NTV damages of 
$330,000.7  The jury also found that Lightship and Plunkett 
knowingly or willfully had engaged in unfair or deceptive 
practices in violation of G. L. c. 93A, and awarded NTV treble 
damages. 
 
The defendants then moved to "invalidate" the verdict, on 
the ground that NTV had not registered as a broker-dealer, in 
violation of the Massachusetts Uniform Securities Act 
(Massachusetts act), G. L. c. 110A, § 201 (a), and the Federal 
Securities Exchange Act of 1934 (Federal act), 15 U.S.C. 
§ 78o(a).8  Under each act, such violations render a contract 
                     
 
7 Because of the motion judge's determination on the 
defendants' motion for summary judgment that NTV had not put 
forth sufficient evidence that it would have been entitled to 
collect a commission under the contract, the jury were 
instructed that the appropriate measure of damages was $330,000, 
i.e., the amount of the contracted "advisory fee." 
 
 
8 As discussed infra, prior to trial, the defendants raised 
the question of NTV's failure to register as a broker-dealer as 
an affirmative defense.  At a pretrial conference, the parties 
elected not to put the defense to the jury, but chose instead to 
resolve it by motion before the judge after the jury trial; for 
7 
 
 
unenforceable.  See 15 U.S.C. § 78cc(b); G. L. c. 110A, 
§ 410 (f).9  The trial judge concluded that NTV had been required 
to register as a broker-dealer, and that its failure to do so 
rendered the contract invalid and unenforceable.  The trial 
judge further concluded that, absent a valid contract, NTV could 
not sustain its claim under G. L. c. 93A, and therefore, he 
vacated the jury award in its entirety.10 
                     
reasons that are not entirely clear, the trial judge agreed to 
this procedure. 
 
9 The Federal act provides that "[e]very contract made in 
violation of any provision of [the act] . . . , and every 
contract . . . the performance of which [violates the act] . . . 
shall be void."  15 U.S.C. § 78cc(b).  The Massachusetts act 
similarly provides that "[n]o person who has made or engaged in 
the performance of any contract in violation of any provision of 
[the act] . . . may base any suit on the contract."  G. L. 
c. 110A, § 410 (f). 
 
 
10 Following the jury trial, the defendants filed two 
motions:  a motion to "invalidate" the verdict and a motion for 
judgment notwithstanding the verdict or, in the alternative, for 
a new trial.  With respect to the latter motion, the defendants 
argued that there was insufficient evidence to support the 
contract claims and the G. L. c. 93A award, and took issue with 
the judge's decision to submit to the jury the question of the 
parties' intent regarding the use of "ambiguous words" in the 
contract (the meaning of the phrase "to introduce" qualified 
sources of capital). 
 
 
In denying the motion, the trial judge noted that there was 
sufficient evidence to support the jury finding on the claims of 
breach of contract and violations of G. L. c. 93A, and that it 
had been proper to submit to the jury the question regarding 
ambiguous terms in the contract.  Thus, but for the 
determination that NTV's failure to register as a broker-dealer 
precluded its claims, the trial judge concluded that "there 
[was] no reason to disturb the jury's verdict." 
8 
 
 
 
3.  Discussion.  On appeal, NTV argues that the defendants 
waived the broker-dealer defense, that its contract with the 
defendants did not require it to register as a broker-dealer, 
and that, even if the contract did so require, it still could 
recover from the defendants based on the violations of G. L. 
c. 93A.  We conclude that there was no waiver, but that the 
judge erred in determining that the contract required NTV to 
register as a broker-dealer. 
a.  Waiver of broker-dealer defense.  NTV argues that the 
defendants waived any affirmative defense under the 
Massachusetts act by failing to raise the argument explicitly in 
their answer to the complaint.11  In their original answer, the 
defendants asserted the affirmative defense that the contract 
was "unenforceable and/or void due to violations of the 
securities laws and regulations."  In response to a discovery 
                     
 
 
The defendants filed a notice of cross appeal seeking 
review of the judge's order insofar as the order denied the 
defendants' motion for judgment notwithstanding the verdict.  In 
their brief before this court, as in their initial brief in the 
Appeals Court, the defendants did not elaborate on this issue, 
and we discern no reason to disturb the judge's decision. 
 
11 NTV does not argue that the defendants waived any defense 
under the Federal act, presumably because NTV views the 
Massachusetts act's arguably broader prohibition against 
"bas[ing] any suit" on an unlawful contract as more likely to 
preclude its claims under G. L. c. 93A.  G. L. c. 110A, 
§ 410 (f).  In light of our conclusion that NTV's contract was 
enforceable, we need not, and do not, decide whether such an 
interpretation of the Massachusetts act is correct. 
9 
 
 
request from NTV seeking to clarify what securities laws NTV was 
alleged to have violated, the defendants specified that they 
were referring to the requirement to register as a broker-dealer 
under the Federal act, a position they reiterated in their 
motion for summary judgment, and again in the joint pretrial 
memorandum. 
 
During a pretrial conference, the parties agreed that the 
judge, not the jury, should determine whether the contract 
required NTV to register as a broker-dealer, and whether it was 
invalid and thus unenforceable under the Federal act in light of 
the fact that NTV was not so registered.  The parties further 
agreed that the judge would decide the issue on motions 
submitted after the jury trial.  In a subsequent memorandum on 
the eve of trial, the defendants, for the first time, argued 
that NTV also was required to have registered under the 
Massachusetts act.  NTV argues that the defendants' failure 
explicitly to incorporate the Massachusetts act in their 
original answer constitutes waiver.  We disagree. 
 
"Ordinarily, a 'failure to plead an affirmative defense 
results in a waiver and exclusion of the defense from the 
case.'"  Alicea v. Commonwealth, 466 Mass. 228, 236 n.12 (2013), 
quoting Demoulas v. Demoulas, 428 Mass. 555, 575 n.16 (1998).  
The purpose of this rule, however, "is to provide notice to the 
plaintiffs of defenses that will be raised."  See Demoulas, 
10 
 
 
supra (no waiver where, inter alia, affirmative defense "was 
raised by both parties in briefs and at a hearing" in connection 
with defendant's motion for directed verdict). 
 
Here, NTV has not demonstrated that it lacked sufficient 
notice of the defendants' contention that NTV was required to 
register as a broker-dealer.  Although the defendants did not 
specifically indicate the relevant statutory provisions in their 
answer, they did raise an affirmative defense concerning 
"violations of the securities laws."  In response to NTV's 
request, the defendants identified the applicable Federal 
statutes during discovery.  NTV thus had ample notice at least 
with respect to the Federal act.  Because, as discussed infra, 
the relevant provisions of the Massachusetts and Federal acts 
are essentially identical, NTV cannot claim any prejudice from 
the defendants not sooner specifying the Massachusetts act.  In 
addition, NTV agreed that the question whether it needed to 
register as a broker-dealer could be resolved through a motion 
filed after the jury trial, thus suggesting that NTV had ample 
time in which to prepare a response.  Hence, the defendants did 
not waive the broker-dealer defense. 
 
b.  Whether NTV could enforce the contract absent 
registration as a broker-dealer.  The central issue in this 
appeal is whether NTV's contract with Lightship is invalid and 
unenforceable under Massachusetts and Federal securities law in 
11 
 
 
light of the fact that NTV was not registered as a broker-
dealer.  The defendants argue that the "equity and debt" 
investments NTV agreed to solicit were securities transactions, 
and that NTV's contemplated active involvement in the process, 
as well as its ability to earn a commission based on the size of 
the investments it facilitated, mean that NTV agreed to act as a 
broker-dealer. 
 
i.  Standard of review.  The interpretation of a contract 
is a question of law, which we review de novo.  See 
EventMonitor, Inc. v. Leness, 473 Mass. 540, 549 (2016).  At 
root, the guiding question in interpreting the meaning of a 
contract is the intentions of the signatories when the contract 
was signed.  See MacDonald v. Gough, 326 Mass. 93, 96 (1950).  
In making these determinations, absent ambiguous provisions, we 
look solely to the language of the contract and do not consider 
extrinsic evidence.  See Bank v. Thermo Elemental, Inc., 451 
Mass. 638, 648 (2008).  Moreover, "we construe a contract as a 
whole, so as 'to give reasonable effect to each of its 
provisions'" (citation omitted).  James B. Nutter & Co. v. 
Estate of Murphy, 478 Mass. 664, 669 (2018). 
 
ii.  Statutory background.  The Massachusetts act provides 
that it is "unlawful for any person to transact business in [the 
Commonwealth] as a broker-dealer . . . unless he [or she] is 
registered."  See G. L. c. 110A, § 201 (a).  The Federal act has 
12 
 
 
a substantively identical requirement.  See 15 U.S.C. § 78o(a).12  
Both acts likewise provide that "[n]o person who has made or 
engaged in the performance of any contract" that violates the 
securities laws may enforce the contract.  G. L. c. 110A, 
§ 410 (f).  See 15 U.S.C. § 78cc(b).13 
 
iii.  Definition of a broker-dealer.  Under the 
Massachusetts Act, a broker-dealer is "any person engaged in the 
business of effecting transactions in securities for the account 
of others or for his own account."  See G. L. c. 110A, 
§ 401 (c).  This definition is virtually identical to that in 
the Federal act.  See 15 U.S.C. § 78c(a)(4).14  Two inquiries are 
necessary to determine whether a contract on its face triggers 
an obligation to register as a broker-dealer:  (1) whether the 
contract requires that the transactions "effected" be in 
"securities"; and (2) whether the contract requires a person to 
"effect" such transactions.  Put differently, we must consider 
(1) whether the instrument that is the subject of the 
                     
 
12 The Federal act provides, "It shall be unlawful for any 
broker or dealer [to effect transactions in securities] unless 
such broker or dealer . . . is registered . . . ."  See 15 
U.S.C. § 78o(a). 
 
 
13 See note 9, supra. 
 
 
14 The Federal act defines a "broker" as "any person engaged 
in the business of effecting transactions in securities for the 
account of others"; the act separately defines "dealer," but the 
distinction is immaterial to the present case.  15 U.S.C. 
§ 78c(4)-(5). 
13 
 
 
transaction is a "security," and, if so, (2) whether the conduct 
required by the contract amounts to "effecting transactions." 
 
iv.  Whether NTV contracted to act as a broker-dealer.  In 
order to establish that NTV "made" a "contract in violation [of 
the securities laws]," see G. L. c. 110A, § 410 (f), the 
contract must have required NTV to act as a broker-dealer.  Cf. 
Pransky v. Falcon Group, Inc., 311 Mich. App. 164, 192-193 
(2015) (declining to hold contract unenforceable where, by its 
terms, it did not require affected party to act as broker-
dealer).  We therefore look to the terms of the contract on 
which NTV bases its suit.  See Indus Partners, LLC v. 
Intelligroup, Inc. 77 Mass. App. Ct. 793, 795 (2010) (Indus 
Partners).15  We consider first whether NTV was required to 
engage in transactions that involve securities. 
A.  The definition of "security."  Under the Massachusetts 
act, "unless the context otherwise requires," a "security" 
includes 
"any note; stock; treasury stock; bond; debenture; evidence 
of indebtedness; certificate of interest or participation 
in any profit-sharing agreement; collateral-trust 
certificate; preorganization certificate or subscription; 
transferable share; investment contract; voting-trust 
                     
 
15 Although the jury heard evidence regarding NTV's 
performance under the contract, the parties agreed that the 
judge could decide the motion to "invalidate" based solely on 
the language of the contract, and NTV's stipulation that it was 
not registered as a broker-dealer.  We likewise limit our review 
to the language of the contract and NTV's stipulation that it 
was not registered as a broker-dealer. 
14 
 
 
certificate; certificate of deposit for a security; 
certificate of interest or participation in an oil, gas, or 
mining title or lease or in payments out of production 
under such a title or lease; or, in general, any interest 
or instrument commonly known as a 'security,' or any 
certificate of interest or participation in, temporary or 
interim certificate for, receipt for, guarantee of, or 
warrant or right to subscribe to or purchase, any of the 
foregoing.  'Security' does not include any insurance or 
endowment policy or annuity contract under which an 
insurance company promises to pay money either in a lump 
sum or periodically for life or some other specified 
period." 
 
G. L. c. 110A, § 401 (k).16  As the relevant provisions of the 
Massachusetts act closely mirror those of the Federal act, 
decisions interpreting the Federal act with respect to the 
meaning of "security" are instructive.  See Valley Stream 
Teachers Fed. Credit Union v. Commissioner of Banks, 376 Mass. 
845, 857-858 (1978).  In addition, the Massachusetts act "shall 
be . . . construed . . . to coordinate the interpretation and 
administration of [the act] with the related [F]ederal 
regulation."  G. L. c. 110A, § 415.  Thus, we look to decisions 
under the Federal act for guidance. 
 
The scope of the term "security" is "quite broad" and 
includes "ordinary stocks and bonds, along with the 'countless 
and variable schemes devised by those who seek the use of the 
money of others on the promise of profits.'"  See Marine Bank v. 
Weaver, 455 U.S. 551, 555-556 (1982), quoting Securities & Exch. 
                     
16 The Federal act contains a substantially identical 
definition of "security."  See 15 U.S.C. § 78c(a)(10). 
15 
 
 
Comm'n v. W.J. Howey Co., 328 U.S. 293, 299 (1946) (Howey).  
When Congress originally defined the term in the Federal 
context, however, it did not "intend to provide a broad . . . 
remedy for all fraud."  Marine Bank, supra at 556. 
 
As explicitly stated in both the Massachusetts and Federal 
acts, the examples of securities enumerated in the statutory 
definitions are to be considered securities "unless the context 
otherwise requires."  See G. L. c. 110A, § 401; 15 U.S.C. 
§ 78c(a).  Thus, whether a particular instrument is, in fact, a 
security is a nuanced inquiry, one that is context dependent.  
The United States Supreme Court has developed a number of tests 
to determine whether an instrument is a security, depending on 
the specific type of instrument at issue.  Where, for example, 
the instrument at issue is "stock," and bears the traditional 
features of "stock," the Court has held that the instrument is a 
security regardless of the economic substance of the 
transaction.17  See Landreth Timber Co. v. Landreth, 471 U.S. 
681, 690 (1985) (Landreth). 
                     
17 The traditional features of stock include (1) the right 
to receive dividends from the profits; (2) negotiability; 
(3) the ability to be pledged; (4) the conferral of voting 
rights in proportion to the number of shares; and (5) the 
potential to appreciate in value.  See United Hous. Found., Inc. 
v. Forman, 421 U.S. 837, 851 (1975). 
16 
 
 
 
Similarly, an instrument described as a "note" is presumed 
to be a security unless it bears a "family resemblance" to the 
categories of notes that have been deemed not to be securities.18  
Reves v. Ernst & Young, 494 U.S. 56, 64-65 (1990).  See Silvia 
v. Securities Div., 61 Mass. App. Ct. 350, 356-357 (2004) 
(discussing Reves, supra).  To determine whether a note is a 
security requires consideration of four factors, known as the 
"Reves factors":  (1) the motivations of the parties, (2) the 
distribution scheme, (3) the reasonable expectations of the 
investing public as to whether the note indeed is a security, 
and (4) the availability of other risk-reducing mechanisms.  See 
Reves, supra at 66-67. 
 
Where the precise character of a particular instrument is 
less clear, courts often consider whether the instrument is an 
"investment contract."  The Supreme Court defines an investment 
contract as "an investment in a common venture premised on a 
reasonable expectation of profits to be derived from the 
entrepreneurial or managerial efforts of others."  See United 
                     
18 Notes that are not securities include "the note delivered 
in consumer financing, the note secured by a mortgage on a home, 
the short-term note secured by a lien on a small business or 
some of its assets, the note evidencing a 'character' loan to a 
bank customer, short-term notes secured by an assignment of 
accounts receivable, . . . a note which simply formalizes an 
open-account debt incurred in the ordinary course of business," 
and "notes evidencing loans by commercial banks for current 
operations" (citations omitted).  See Reves v. Ernst & Young, 
494 U.S. 56, 65 (1990). 
17 
 
 
Hous. Found., Inc. v. Forman, 421 U.S. 837, 852 (1975) (Forman).  
The investment contract standard proves useful where the form of 
instrument is unclear, because it is designed to capture the 
"countless and variable" forms that securities transactions may 
take, regardless of their formal characterization.  See Howey, 
328 U.S. at 298-299.  A transaction likely involves an 
investment contract, and thus securities, where an investor, on 
the promise of profits, provides capital to a venture over which 
the investor has no meaningful control.  See Forman, supra. 
 
B.  Whether the contract required NTV to "effect" a 
transaction in "securities."  The posture in which this case 
arises is unusual.  In the cases that set forth the various 
standards for determining whether a particular instrument is a 
security, the Court had before it evidence of actual 
performance.  See, e.g., Reves, 494 U.S. at 58 ("demand notes" 
issued); Landreth, 471 U.S. at 683-684 (sale of timber company); 
Marine Bank, 455 U.S. at 552-553 (loan guarantee in return for 
stake in profits); Forman, 421 U.S. at 842 (issuance of "stock" 
in housing cooperative); Howey, 328 U.S. at 295-296 (investors 
purchased stakes in citrus groves).  In each of these cases, 
unlike here, there was evidence of the instrument used, the 
parties involved, and the economic realities of the transaction. 
Here, the contract provided that NTV was to "source capital 
and structure financing transactions from agreed-upon target 
18 
 
 
investors and/or lenders," and that "NTV expect[ed] to introduce 
and facilitate investment from third party sources collectively 
able to finance all levels of the transactions (i.e., both 
equity and debt)."  The contract did not define key terms such 
as "capital," "equity," and "debt."  NTV further agreed that it 
would "facilitate and participate in meetings and due diligence 
with capital sources, structuring and negotiating terms, and 
closing financing," and would be "included in such process as 
may be mutually agreed [upon by NTV and Lightship]."  Lightship, 
however, had the right to determine "whether or not to enter 
into a definitive arrangement," and agreed to "act in good faith 
with NTV to determine the capital structure and sources of 
capital" that were in its best interest. 
 
The issue then becomes whether the contractual language 
necessitates the conclusion that NTV was required to "effect" a 
transaction in "securities."19  Because the contract does not 
identify a specific type of instrument, such as "stock" or a 
"note," that would be used to facilitate the sought-after 
financing, we cannot rely upon the standards outlined in 
                     
 
19 We reject NTV's argument that, because it agreed to 
assist Lightship with the purchase of the "assets" of 
Salary.com, it was engaged in an asset purchase, and not a 
securities transaction.  NTV's specific role was to facilitate 
financing; if the contract required that such financing take the 
form of securities, then it would require NTV to effect 
transactions in securities. 
19 
 
 
Landreth, 471 U.S. at 690 (transaction that involves "stock" is 
transaction in securities), or in Reves, 494 U.S. at 65-67 
(four-factor test for when "note" is security).  Even resorting 
to the far more flexible standard for determining whether a 
transaction involves an "investment contract" -- and thus is a 
transaction in securities -- does not suffice to resolve the 
question. 
 
For a transaction to involve an investment contract, it 
must include (1) "an investment in a common venture," that 
(2) is "premised on a reasonable expectation of profits," where 
such profits are (3) "to be derived from the entrepreneurial or 
managerial efforts of others."  See Forman, 421 U.S. at 852.  
Here, the only evidence we have is the contract between NTV and 
Lightship, which does not definitively state the nature of the 
financing transactions NTV would facilitate.  To the contrary, 
the terms of the contract do not require NTV to facilitate any 
particular form of transaction, but instead allow Lightship to 
determine which types of transactions to pursue.  Although the 
contract refers to "all levels of the transactions," including 
"equity and debt," it also makes clear that the financing 
obtained could be obtained from "investors and/or lenders," 
thereby implying that different forms of financing would be 
possible.  In any event, the contract states that NTV would 
solicit such financing only from "agreed-upon" sources, over 
20 
 
 
which Lightship retained the rights of "coordination, oversight, 
and direction."  Thus, the specific types of transactions to be 
pursued were indeterminate, and subject to future agreement. 
 
Moreover, neither an "equity" transaction nor a "debt" 
transaction necessarily implies a "transaction in securities."20  
Because "equity" is not specifically enumerated in the statutory 
definition of security, it is best analyzed under the flexible 
"investment contract" framework.21  See Howey, 328 U.S. at 298-
299 (investment contract is flexible standard designed to reach 
"the countless and variable schemes" that constitute securities 
transactions).  As discussed supra, one of the essential 
elements of an investment contract is that any profits "be 
derived from the entrepreneurial or managerial efforts of 
others."  See Forman, 421 U.S. at 852. 
 
Hence, a critical question in determining whether "equity" 
financing is an "investment contract" is the degree of control 
the financing party obtains in the venture.  See, e.g., Marine 
Bank, 455 U.S. at 559-560 ("unique agreement, negotiated one-on-
                     
 
20 As explained supra, the question whether a "transaction 
in securities" has taken place rarely is resolved, as it was 
here, solely on the face of a contract.  While the Appeals Court 
relied exclusively on the contract in Indus Partners, LLC v. 
Intelligroup, Inc. 77 Mass. App. Ct. 793 (2010), it was 
undisputed in that case that the contract required a transaction 
in securities.  See id. at 793 n.1. 
 
 
21 See G. L. c. 110A, § 401 (k); 15 U.S.C. § 78c(a)(10). 
21 
 
 
one by the parties" was not investment contract, and thus not 
security, where terms of agreement afforded investors 
uncharacteristic level of control over operations of venture); 
Howey, 328 U.S. at 295-296, 299-300 (opportunity to purchase 
stake in citrus grove was investment contract where investors 
were reliant on third party to manage citrus-growing operations 
and where offerings included standardized terms not subject to 
negotiation by investors).  Here, because the contract does not 
include any specific parameters regarding the intended structure 
of a transaction, the degree of control over the venture that 
the transaction would afford a potential investor is equally 
indeterminate.22  We therefore cannot ascertain whether the 
"equity" transactions alluded to in the contract would be 
transactions in securities. 
 
Nor does the broad reference to "debt" necessitate the 
conclusion that a securities transaction was involved.  Although 
"evidence of indebtedness" is included as an example of a 
security in the Massachusetts act, see G. L. c. 110A, § 401 (k), 
this cannot be read to imply that any form of debt is 
                     
 
22 For example, were an "equity" transaction to result in a 
single investor receiving a majority of the equity in the 
venture, that investor would be able to direct the operations of 
the company and would not expect to derive its profits from "the 
entrepreneurial or managerial efforts of others."  See Forman, 
421 U.S. at 852. 
22 
 
 
automatically a security.  Several types of notes, for 
example –– any of which could be considered "evidence of 
indebtedness" -- are not considered to be securities.23  See 
Reves, 494 U.S. at 65.  See also Valley Stream Teachers Fed. 
Credit Union, 376 Mass. at 857-858 (neither "loans" nor "sale of 
loan participation interests" in indebtedness of credit union 
securities were securities, where, inter alia, transactions 
lacked "[the] obvious characteristics of a security such as 
pledgeability, appreciability in value and concomitant voting 
rights"). 
 
The defendants argue -- and the trial judge determined -- 
that the parallels between the contract in this case and the 
contract at issue in Indus Partners indicate that here, too, 
broker-dealer registration was required.  We do not agree.  In 
that case, it was undisputed that the contract required a 
transaction in securities.  The plaintiff was to advise the 
defendant on a transaction that was defined to include a "sale 
. . . [of] securities . . . (whether outstanding or newly 
issued)" (emphasis supplied).  See Indus Partners, 77 Mass. App. 
Ct at 793 n.1.  The issue before the Appeals Court, therefore, 
was only whether the services described in the contract required 
the plaintiff to "effect transactions."  See id. at 798-799.  
                     
 
23 See note 18, supra. 
23 
 
 
Here, because we conclude that the contract does not, by its 
terms, require a transaction in securities, we need not consider 
whether the services described would require NTV to "effect" 
such transactions. 
 
We also note that, subsequent to the Appeals Court's 
decision in Indus Partners, there has been considerable 
evolution at the Federal level regarding bespoke investment 
transactions similar to the ones at issue in this case.  For 
example, a 2014 "No-Action" letter24 issued by the Securities and 
Exchange Commission (SEC) stated that the SEC would not require 
broker-dealer registration where a person facilitates the sale 
of a privately held business, provided that the circumstances of 
the transaction mitigated the risks inherent in a typical 
transaction in securities.25  See M&A Brokers, SEC No-Action 
Letter (Jan. 31, 2014).  The no-action letter recognizes that 
                     
 
24 "No-Action" letters do not have the force of law, but 
nonetheless are an instructive guide as to the circumstances 
that, in the view of the Securities and Exchange Commission 
(SEC), implicate broker-dealer registration requirements. 
 
 
25 The SEC identified a number of factors that would have to 
be present in order for a person to be able to forgo 
registration as a broker-dealer in such transactions.  For 
example, the broker could not have the authority to bind the 
parties to the transaction.  In addition, the broker was 
required to disclose to the purchaser any compensation it 
received for helping the purchaser obtain financing.  Further, 
the purchaser of the business must either actively operate or 
otherwise control the business going forward.  See M&A Brokers, 
SEC No-Action Letter (Jan. 31, 2014). 
24 
 
 
financing transactions resembling those at issue in the present 
case may not implicate the concerns that motivate broker-dealer 
registration requirements. 
 
We conclude that the contract, on its face, did not require 
NTV to "effect" transactions in "securities."  As the purported 
obligation to register as a broker-dealer was the sole basis for 
the judge's decision that NTV could not maintain its breach of 
contract and G. L. c. 93A claims, the judge's decision to vacate 
and set aside the jury verdict was erroneous.26 
 
v.  Appellate attorney's fees.  NTV seeks an additional 
award of attorney's fees and costs in connection with this 
appeal.  See T&D Video, Inc. v. Revere, 450 Mass. 107, 116-117 
(2007).  NTV's motion is allowed.  NTV may submit, within 
fourteen days of the date of issuance of the rescript in this 
case, a petition for fees and costs, together with supporting 
documentation, as discussed in Fabre v. Walton, 441 Mass. 9, 10-
11 (2004).  The defendants shall have fourteen days thereafter 
to respond. 
 
4.  Conclusion.  The judge's order setting aside the jury 
verdict is vacated, and the original judgment in favor of NTV 
shall be reinstated, as shall the award of $990,000 in damages 
                     
 
26 Accordingly, we need not, and do not, decide whether, 
absent an enforceable contract, NTV could seek to recover under 
G. L. c. 93A. 
25 
 
 
for breach of contract, breach of the implied covenant of good 
faith and fair dealing, and violations of G. L. c. 93A. 
 
On NTV's motion for attorney's fees in the amount of 
$405,724, and costs in the amount of $13,576.10, the judge 
determined that, if he were to award attorney's fees and costs, 
absent the issue of registration, he would have allowed $265,157 
in attorney's fees and $10,517.23 in costs.  An order shall 
enter in the Superior Court awarding NTV these amounts. 
 
The matter is remanded to the Superior Court for further 
proceedings consistent with this opinion. 
 
 
 
 
 
 
 
So ordered.