Opinion ID: 2750655
Heading Depth: 3
Heading Rank: 2

Heading: Other Proceedings

Text: Before initiating this lawsuit, plaintiffs sued numerous other parties to recover the losses they suffered as a result of L&H's fraud. The defendants were L&H and several of its officers and directors, entities related to L&H, entities and individuals affiliated with L&H's auditor, L&H's investment bank, and certain banks that provided financing to L&H. Plaintiffs collectively received over $75 million in settlements from those parties. James and Janet Baker (the Baker plaintiffs) and Roth and Bamberg (the Roth plaintiffs) then sued Goldman in separate actions in state and federal court, respectively. Goldman removed -15- the Bakers' suit to federal court, and the two actions were then consolidated for purposes of discovery and trial. They have been consolidated for purposes of appeal. Each set of plaintiffs brought claims for negligent and intentional misrepresentation, negligence, gross negligence, breach of fiduciary duty, and violations of Mass. Gen. Laws ch. 93A.4 After a 20-day trial, the jury found in favor of Goldman on all of plaintiffs' common law claims. The verdict form instructed the jury to reach Goldman's third-party claims against the Bakers only if they determined that Goldman was liable to the Roth plaintiffs. Nonetheless, the jury also found that Janet Baker made negligent misrepresentations and had committed a breach of her fiduciary duty to the Roth plaintiffs, and that James Baker had committed a breach of his fiduciary duty to Bamberg. The district court found for Goldman on plaintiffs' ch. 93A claims.5 In a thorough opinion, the court ruled that, although Goldman may have committed negligence by failing to (1) disclose to plaintiffs that no one at Goldman was covering L&H at the time of the transaction; (2) repeat the Goldman team's due 4 Goldman asserted third-party contribution claims against the Baker plaintiffs for negligent misrepresentation and breach of fiduciary duty with respect to any liability that the Roth plaintiffs might establish against Goldman. These are not at issue in the appeal. 5 There is no right to a trial by jury for claims brought under ch. 93A. Walsh v. Chestnut Hill Bank & Trust Co., 607 N.E.2d 737, 740–41 (Mass. 1993). -16- diligence concerns after expressing those concerns once in the February 29 memo; and (3) adequately analyze L&H's Asian revenues and its revenue projections, Goldman's conduct was not so egregious as to warrant ch. 93A relief. In reaching its conclusion, the court gave weight to the jury's verdict exonerating Goldman of any liability, as it was entitled to do. The court also rejected the Roth plaintiffs' theory, presented for the first time in a post-trial brief, that Goldman had violated ch. 93A because it violated 940 Mass. Code Regs. 3.16(2). That section provides that an act or practice is a violation of [ch. 93A] if . . . [a]ny person or other legal entity . . . fails to disclose to a buyer or prospective buyer any fact, the disclosure of which may have influenced the buyer or prospective buyer not to enter into the transaction. The court ruled that the Roth plaintiffs had waived any claim under § 3.16(2) by failing to present it before trial, and held that the theory was meritless in any event because the regulation does not apply to business-to-business transactions. The court later denied both sets of plaintiffs' motions for reconsideration of the ch. 93A ruling, as well as their motions for a new trial. This appeal followed.