Court Opinion

ID: 9889737
Source: CourtListenerOpinion
Date Created: 2023-10-11 14:06:49.844802+00
Date Added: 2024-06-11T12:48:22.190101
License: Public Domain

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28,
as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties
and, therefore, may not fully address the facts of the case or the panel's
decisional rationale. Moreover, such decisions are not circulated to the entire
court and, therefore, represent only the views of the panel that decided the case.
A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25,
2008, may be cited for its persuasive value but, because of the limitations noted
above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260
n.4 (2008).

                       COMMONWEALTH OF MASSACHUSETTS

                                 APPEALS COURT

                                                  22-P-1116

                         JAMES L. XARRAS & another 1

                                       vs.

                        J. WHITNEY DEVELOPMENT, INC.

               MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

       On September 9, 2022, following a trial on a complaint for

 contempt in the Superior Court, James S. Whitney (Whitney), as

 president, treasurer, director, agent, and sole shareholder of

 J. Whitney Development, Inc. (Whitney Development), was found in

 civil contempt for failing to install a sewer line in compliance

 with a February 2, 2017, court order.           Whitney appeals from that

 judgment, arguing it was error to hold him individually liable

 for the failure of his corporation, Whitney Development, to

 comply with the prior court order.          We affirm.

       Background.     We summarize the relevant background as

 follows. 2   In 1995, Whitney founded Whitney Development, a

 1 Margot Xarras, individually and as trustee of NMJ Realty Trust.
 2 The parties do not contest the factual findings of the contempt
 trial judge and thus we adopt them as true.
commercial and residential construction company.      Since its

creation, Whitney was Whitney Development's president,

treasurer, director, agent, and sole shareholder.      In 2006, a

civil action was filed by the plaintiffs 3 regarding the

installation of a sewer line.   As a result of that action, the

parties signed a settlement agreement. 4    Pursuant to that

settlement agreement, Whitney Development agreed to install a

sewer line.   The plaintiffs brought the underlying action in

2013, seeking to compel Whitney Development to install the sewer

line in accordance with their prior settlement agreement.

     Following a jury-waived trial in the underlying action, a

Superior Court judge found in the plaintiffs' favor and entered

judgment against Whitney Development.      During trial, Whitney

Development's counsel expressed a preference for an equitable

remedy (in lieu of monetary damages) in the event of an adverse

ruling.   Accordingly, the judge ordered Whitney Development to

obtain the necessary permits within 180 days and install the

sewer line.   The sewer line's construction was divided into

three sections.

     On August 3, 2017, the plaintiffs filed their first

complaint for contempt.   Whitney Development filed a motion,

3 Although the parties in this appeal were parties in the 2006
case, they were not the only parties.
4 All the parties involved in the 2006 case signed the settlement

agreement.

                                 2
arguing that it needed additional time to prepare and submit a

new plan for the sewer line before it could proceed with the

permitting process.   The judge ordered that the parties meet

with the Leominster Department of Public Works and report back

to the court.   By May 2018, Whitney Development had obtained the

necessary permits to build the first section of the sewer line

and the parties jointly submitted a report stating that Whitney

Development anticipated beginning installation within thirty

days.   Despite this representation to the court, Whitney

Development never began construction of the sewer line and

subsequently plaintiffs requested a conference pursuant to Mass.

R. Civ. P. 16, as amended, 466 Mass. 1401 (2013).

     A conference between the parties was held in March 2019,

and the judge ordered that the parties meet with the

Massachusetts Environmental Protection Agency (MEPA) to

determine if MEPA review was required.   On March 18, 2020, MEPA

issued an advisory opinion indicating that no such review was

required.   At this point, it is undisputed that Whitney

Development had obtained all the necessary permits for the

installation of the entire sewer line.   Despite this, Whitney

Development never began construction of the sewer line.

Instead, on August 19, 2020, Whitney, as the sole shareholder,

authorized the dissolution of Whitney Development, and, on

                                 3
November 19, 2020, Whitney Development filed articles of

voluntary dissolution with the Secretary of the Commonwealth.

     By then, Whitney had created a "new" corporation, Whitney

Companies, LLC (Whitney Companies), in which he once again was

the principal and sole manager.   Whitney Companies, organized in

July 2019, is also a construction company with the same

corporate address as Whitney Development.    Whitney Companies'

website takes credit for certain projects that it completed

before its inception which were completed by Whitney Development

and listed two ongoing projects that were begun by Whitney

Development.

     Almost four years after the February 2, 2017, adverse

judgment, Whitney Development filed a motion for relief from

judgment on the grounds of a material change of circumstances.

The court denied Whitney Development's motion for relief from

judgment both as untimely and because the alleged change of

circumstances had been entirely within Whitney's control when he

decided to dissolve Whitney Development. 5   On December 7, 2021,

with still no work on the sewer line initiated, the plaintiffs

filed an amended complaint for contempt.     A Superior Court judge

(contempt judge) 6 conducted a contempt trial in which Whitney was

5 The denial of Whitney Development's motion for relief from
judgment has not been appealed.
6 The judge presiding at the contempt trial was not the same

judge who presided at trial in the underlying action.

                                  4
the only witness.    Whitney was held in contempt on September 9,

2022.   The contempt judgment required Whitney to carry out the

obligations imposed on Whitney Development in the February 2,

2017, order and to pay plaintiffs' costs and attorney's fees.

     Discussion.    Whitney appeals from the order of contempt.

He argues the contempt judge erred in finding him personally

liable for the failures of Whitney Development and that the

court was required to pierce the corporate veil of Whitney

Development, which he argues it could not do because there was

no evidence of fraud.

     "[A] judge may find a person in civil contempt if the judge

concludes that it is more likely than not that the person

clearly and undoubtedly disobeyed a clear and unequivocal

command."    In re Birchall, 454 Mass. 837, 852 (2009).   "The

complainant must prove his case by a preponderance of the

evidence."    L.F. v. L.J., 71 Mass. App. Ct. 813, 821 (2008),

citing Manchester v. Department of Envtl. Quality Eng'g, 381

Mass. 208, 212 (1980).    "We review the judge's ultimate finding

of contempt for abuse of discretion, but we review underlying

conclusions of law de novo and underlying findings of fact for

clear error."    Commercial Wharf E. Condominium Ass'n v. Boston

Boat Basin, LLC, 93 Mass. App. Ct. 523, 532 (2018), citing Judge

Rotenberg Educ. Ctr, Inc. v. Commissioner of the Dep't of Mental

Retardation (No. 1), 424 Mass. 430, 443 (1997).

                                  5
     The contempt judge gave Whitney Development a clear and

unequivocal order on February 2, 2017, when it mandated that

Whitney Development obtain the necessary permits within 180 days

and install the sewer line:    the equitable remedy Whitney

Development sought in lieu of monetary damages.    Whitney, as the

sole individual responsible for all of Whitney Development's

operations, was responsible for carrying out this action.

Milano v. Hingham Sportswear Co. makes clear that a court has

the discretion to hold a corporate agent in contempt if the

agent is responsible for the corporation's failure to comply

with the court order.    366 Mass. 376, 378 (1974) ("Although not

named in an order against a corporation, a corporate agent may

be held in contempt of that order if he was responsible for the

acts or inaction of the corporation which constituted a

violation of the court order").    We are not persuaded by any of

Whitney's arguments that Milano is not applicable and that the

contempt judge did not have discretion to hold Whitney in

contempt. 7   Accordingly, it was well within the contempt judge's

discretion in this case to hold Whitney, who was the sole agent

of the corporation, in contempt for the failure of Whitney

7 We are not persuaded by Whitney's claim at oral argument that
corporations created for the purpose of carrying out
construction work are treated differently under our law than any
other type of corporation. We further note that the defendant
neither argued this issue in its brief, nor provided any
citations in support of this proposition.

                                  6
Development to comply with the court order to install the sewer

line.   The dissolution of Whitney Development, which occurred

more than two years after the corporation had received the final

necessary permit to begin construction of the first section of

the sewer line, does not change our analysis.

     Whitney contends that such a conclusion is unjust because,

he argues, the contempt judge's finding that piercing the

corporate veil to hold Whitney personally liable was erroneous.

Put plainly, the contempt judge was not required to make such a

finding to hold Whitney in contempt, and so we need not analyze

whether it was error or not.    The order on appeal is not an

order to hold Whitney personally liable for the contractual

obligations of Whitney Development.    Rather, the order on appeal

is a contempt order against Whitney, as president, treasurer,

director, agent, and sole shareholder of Whitney Development,

for failing to comply with a court order against Whitney

Development.   Thus, piercing the corporate veil was unnecessary

and we need not examine the trial court's order stating that it

was appropriate in this case.

     Conclusion.   Whitney Development was given a clear order by

the court and failed to comply.    It was within the contempt

judge's discretion to hold Whitney, as a corporate agent of

Whitney Development, in contempt for that failure.    Accordingly,

                                  7
we see no abuse of discretion, and we affirm the judgment of

contempt.

                                      Contempt judgment entered
                                        October 12, 2022, affirmed.

                                      By the Court (Rubin, Neyman &
                                        Walsh, JJ. 8),

                                      Clerk

Entered:    October 11, 2023.

8   The panelists are listed in order of seniority.

                                  8