Opinion ID: 765605
Heading Depth: 3
Heading Rank: 2

Heading: The Remedy for Breach of the 1989 Agreement

Text: 75 Appellants next contend that the bankruptcy court abused its discretion in declaring that Cambridge was licensed under the 1989 Agreement as a remedy for the breach of the 1989 Agreement. Appellants principally assert that the bankruptcy court applied the wrong equitable standard and improperly weighed the equities in favor of Cambridge. Appellants' argument as to the wrong standard is easily dismissed; even if we were to accept the assertion that the bankruptcy court should have applied the equitable standard proposed by appellants, i.e., equity regards that as done which was agreed or directed to be done, the result is the same. The bankruptcy court effected what the parties intended, agreed, and directed would be done, which was that PSD would use its best efforts to recover the rights to the patents. As we concluded above, this intent was plainly expressed in 2.2. 76 Appellants further contend that the equities weigh in their favor. Appellants principally argue that PSD could not have granted rights which it did not possess (Genetic and PSD are distinct legal entities), and that the bankruptcy court's decision conflicts with the public policy against disregarding corporate entities absent illegitimate purposes. We disagree. The concept of piercing the corporate veil is equitable in nature and courts will pierce the corporate veil to achieve justice, equity, to remedy or avoid fraud or wrongdoing, or to impose a just liability. See 1 William M. Fletcher, Fletcher Cyclopedia of the Law of Private Corporations 41.20, at 598-601, 603 (Perm. ed. 1999). Under Massachusetts law, 11 corporations are generally to be regarded as separate from each other and from their respective stockholders where there is no occasion to look beyond the corporate form for the purpose of defeating fraud or wrong, or for the remedying of injuries. [However, t]he general principle is not of unlimited application. My Bread Baking Co. v. Cumberland Farms, Inc., 233 N.E.2d 748, 751 (Mass. 1968) (internal citations, quotations, and quotation marks omitted). 77 While Massachusetts law is clear that the corporate veil should only rarely be pierced to prevent gross inequity, see Gurry v. Cumberland Farms, Inc., 550 N.E.2d 127, 133 (Mass. 1990) (citation omitted), we conclude that the bankruptcy court properly disregarded the corporate structures at issue here to achieve an equitable result. Appellants cannot enable PSD to shirk its contractual obligations by permitting it to hide behind its wholly-owned subsidiary, SDP, a company which wholly owns Genetic, the holder of the sublicensing rights. See Fletcher, 41.10, at 587 (Wholly owned subsidiaries present a common situation ripe for piercing the corporate veil.). PSD could have satisfied its best efforts obligation by directing SDP to direct Genetic to transfer the right to operate under the patents, thereby satisfying its best efforts obligation. Instead, PSD did essentially nothing. In this case, [t]o do equity among the parties, undue emphasis cannot fairly be placed upon strict compliance with corporate formalities. Samia v. Central Oil Co. of Worcester, 158 N.E.2d 469, 474 (Mass. 1959). As to the other factors cited by appellants in their brief, we are not persuaded that the bankruptcy court was unreasonable in concluding that they do not sufficiently weigh in favor of appellants in view of both the corporate relationships in this case and the other factors weighed by that court. Accordingly, we hold that the bankruptcy court did not abuse its discretion in concluding that the equities favored Cambridge and in declaring that Cambridge was licensed to practice the inventions of the '391 and '496 patents. 78