Opinion ID: 196516
Heading Depth: 2
Heading Rank: 2

Heading: Quantum Meruit Offset

Text: 20 Nadal-Ginard next suggests that, even if the district court correctly found that he breached his fiduciary duties, it erroneously calculated his liability for this breach to be the total compensation he received from BCHF after November 12, 1990. 6 Nadal-Ginard contends that principles of equity, specifically the theory of quantum meruit, required the district court to exclude from BCHF's damages that portion of Nadal-Ginard's salary which represented the reasonable value of the services he rendered to BCHF. Nadal-Ginard alleges two ways in which the district court erred with respect this issue. 21 First, Nadal-Ginard argues that the district court erroneously decided that it was precluded from applying such an offset in cases in which a defendant has committed an unexcused fiduciary breach. We dispense with this allegation forthwith, as even a cursory review of the district court's opinion fails to reveal such a pronouncement. Indeed, the district court expressly assumed that it was permitted to weigh such considerations: I assume, without deciding, that a court has authority when determining the appropriate measure of damages for breach of fiduciary duty, in a context such as this, to weigh the harm caused by the defendant's breach with the benefits to the plaintiff from the defendant's overall performance of his duties. Trial Court Opinion, pp. 46-47. 22 Nadal-Ginard next asserts that the district court erred in factoring the harm to BCHF's reputation that resulted from his fiduciary breach into its damages equation. Although Nadal-Ginard couches this claim in terms of a denial of what he refers to as a quantum meruit offset, in reality, he is challenging the method by which the district court applied the quantum meruit analysis. In whatever light this allegation is viewed, however, it must fail. 23 Under Massachusetts law, trial courts are vested with the discretion to determine the amount of damages for fiduciary breaches according to the peculiar factors of each individual case. See Chelsea Industries, Inc. v. Gaffney, 389 Mass. 1, 449 N.E.2d 320, 327 (1983); Lydia E. Pinkham Medicine Co. v. Gove, 303 Mass. 1, 20 N.E.2d 482, 486 (1939). Notwithstanding the existence of this discretion, courts have consistently followed the same routine in determining whether such an offset is warranted. We examine Nadal-Ginard's allegation of error after synthesizing this routine. 24 Most courts begin their analyses with the baseline proposition that a court can require a corporate officer, director, or trust agent or employee to forfeit the right to retain or receive his or her compensation for conduct in violation of his or her fiduciary duties. See, e.g., Chelsea Industries, Inc. v. Gaffney, 449 N.E.2d at 326-27; Lydia E. Pinkham Medicine Co. v. Gove, 20 N.E.2d at 486. Such a forfeiture can be required even absent a showing of actual injury to the employer. See Chelsea Industries, Inc. v. Gaffney, 449 N.E.2d at 327. Indeed, [a] trustee who commits a breach of trust or an agent who is guilty of disloyal conduct ... imperils his right to compensation. Lydia E. Pinkham Medicine Co. v. Gove, 20 N.E.2d at 486 (emphasis added). 25 The courts next proceed to determine whether they should stray from the baseline and require a disloyal employee to repay only that portion of his or her compensation, if any, in excess of the value of his or her service to the employer. See, e.g., Chelsea Industries, Inc. v. Gaffney, 449 N.E.2d at 327; Anderson Corp. v. Blanch, 340 Mass. 43, 162 N.E.2d 825, 830 (1959); Lydia E. Pinkham Medicine Co. v. Gove, 20 N.E.2d at 486. Courts weigh two factors when contemplating whether such a deviation is warranted: first, whether the defendant has met his or her burden of establishing the value of the services rendered, see Chelsea Industries, Inc. v. Gaffney, 449 N.E.2d at 327; and, second, the nature of the defendant's conduct, see, e.g., Production Mach. Co. v. Howe, 99 N.E.2d at 36. It is only when a court is satisfied that a defendant has established the value of his services, and that his or her conduct was not egregious, that such an offset is factored into the damage equation. 26 Nadal-Ginard asserts that the district court erred in examining the harm to the reputation, services, and functions of BCHF that would naturally flow from the public disclosure of Nadal-Ginard's conduct because the plaintiff failed to prove such harm. In so asserting, Nadal-Ginard has the right church, but wrong pew. 27 Nadel-Ginard is correct in his assertion that a plaintiff normally can recover only those damages which he or she has proven to have incurred. See Hendricks & Assocs., Inc. v. Daewoo Corp., 923 F.2d 209, 217 (1st Cir.1991); Snelling & Snelling of Mass., Inc. v. Wall, 345 Mass. 634, 189 N.E.2d 231, 232 (1963). In this instance, however, the district court was not factoring the reputational harm into its damage calculations. Rather, the court considered this harm only in its analysis of whether an equitable offset to the damages to which BCHF was entitled was warranted. The court committed no error in doing so. 7 28 In charging that BCHF failed to meet its burden in proving damages, Nadal-Ginard overlooks the fact that the main reason the district court denied the offset was because he failed to meet his. That is, the district court found the evidence he presented with respect to the value of his services to be conflicting and speculative at best. Trial Court Opinion, p. 33. Close examination of the record evidences nothing to suggest that the district court erred in reaching such a conclusion. Nowhere in the record is there any evidence of the specific value of Nadal-Ginard's services. Indeed, Nadal-Ginard relies only on broad, self-aggrandizing statements in support of his argument. 29 Having addressed all of Nadal-Ginard's allegations of error relating to his BCHF salary, we turn our sights to the next area in which he alleges error, that is, with respect to his claim of entitlement to indemnification from BCHF.