GRAZIANO v. CROW POINT PARTNERS LLC (2020)

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

Defendant Crow Point Partners, LLC (Crow Point), provides global investment management to institutional clients. Beginning in 2012, Crow Point engaged plaintiff Michael Graziano as an information technology consultant to help improve its digital marketing. Specifically, Graziano was hired to develop websites and various other digital-based work product, such as template “Power Point slides.” The relationship ended badly, with Crow Point refusing to pay approximately one-half of the amount that Graziano had billed, and with Graziano refusing to turn over to Crow Point some of his work product. Graziano brought a multicount action in Superior Court alleging breach of contract, quantum meruit, fraud, deceit, and misrepresentation (collectively, the common-law claims), as well as a violation of G. L. c. 93A. Crow Point brought various common-law counterclaims and its own c. 93A claim. Following a four-day trial, a jury ruled that both parties had failed to prove their respective common-law claims (thus leaving the parties where the jury had found them). However, having reserved the dueling c. 93A claims to himself, the judge ruled in Graziano's favor. An amended judgment entered that required Crow Point to pay Graziano damages of $40,683, attorney's fees of $14,100, interest of $18,216.59, and costs. On Crow Point's appeal, we conclude that one aspect of this case (the amount of the awarded attorney's fees) requires a remand. We otherwise affirm.

Background. In explaining his ruling, the judge issued a fifteen page memorandum of decision that included detailed factual findings. The recitation that follows is drawn from those factual findings, none of which Crow Point has shown to be clearly erroneous. We reserve additional facts for later discussion.

After Graziano successfully performed some initial work for Crow Point in 2012, Crow Point's principal, Peter DeCaprio, approached Graziano in February of 2013 to perform additional work. In response, Graziano sent Crow Point a draft contract under which the company was to give him a retainer of $4,500 and to pay him at the rate of $75 per hour, with bills to be paid within ten days of receipt. Although DeCaprio never signed the proposed contract, he paid the requested $4,500 retainer and raised no objection to paying Graziano on an hourly basis at the listed rate. Through such actions, the judge concluded that “DeCaprio and Crow Point led Graziano to believe that Crow Point had accepted the Agreement and thereby induced Graziano to work for Crow Point under the misimpression he would be paid promptly and in full for his work at his hourly rate.”

After five weeks of work, Graziano sent Crow Point an initial invoice dated May 9, 2013, for $12,150, which was expressly calculated at the $75 per hour rate. Three days later, DeCaprio sent an e-mail complaining about the bill and about Graziano's communications skills.² DeCaprio specifically suggested that Crow Point was considering changing vendors and “asked Graziano to ‘give us a reason’ to consider him a ‘long term solution for us.’ ” After additional prompting by Graziano on May 23, 2013, Crow Point still declined to pay the full billed amount, paying instead $4,500, which, factoring in the $4,500 retainer, left a shortfall of $3,150. In trial testimony that the judge credited, DeCaprio admitted that he withheld full payment in part “to manage the project” (that is, as a means of seeking to induce favorable action by Graziano). According to DeCaprio, this was “common practice in the industry.”

After Graziano completed work on the Crow Point website in July of 2013, DeCaprio expressed his satisfaction with that work, stating in an e-mail that “I know we have had our moments, but the website is awesome. Looks very hip and smart. Congratulations.” Meanwhile, the scope of the work that Crow Point requested Graziano to perform expanded significantly beyond what the parties initially contemplated.³ For example, “the website for Crow Point went from an anticipated 8 to 10 pages to over 100 pages.”

After Graziano sent Crow Point an invoice for $5,006.25 in July, 2013, Crow Point paid $5,000 without otherwise bringing the account current. On September 17, 2013, Graziano sent DeCaprio a batch of invoices totaling approximately $67,000. DiCaprio refused to pay that amount, although he did make the following additional payments: $10,000 (paid October 4, 2013), $5,000 (paid December 3, 2013), and $5,816.67 (paid January 29, 2014). Despite DeCaprio's having made a statement to Graziano that the judge viewed as an admission that Graziano's work was worth at least $40,000, Crow Point ultimately paid only $34,816.67 of the total $75,500 that Graziano billed.⁴

Crow Point's payments left a shortfall of $40,683.33, the precise amount of damages that the judge awarded. The judge awarded that amount despite his having concluded that the actions taken by Crow Point warranted an award of double damages. After raising some question about the propriety of Graziano's billing practices,⁵ the judge stated as follows:

“Even were [I] inclined to adjust Graziano's claim downward as a result and reduce Graziano's recovery by as much as half of his claim, [I] would nonetheless double Graziano's damages under Section 11. Accordingly, based on all of the facts, [I] conclude[ ] that damages in the amount of $40,683 is appropriate, whether damages are doubled or not.”

Discussion. 1. Merits. The main focus of Crow Point's appeal is that its actions at most amounted to a good faith dispute over the amount of a bill that, as a matter of law, does not rise to the level of a violation of G. L. c. 93A, § 11.⁶ See Duclersaint v. Federal Nat'l Mtge. Ass'n, 427 Mass. 809, 814 (1998) (“a good faith dispute as to whether money is owed, or performance of some kind is due, is not the stuff of which a c. 93A claim is made”). In light of the judge's specific findings, we are unpersuaded. The judge concluded that Crow Point: (a) led Graziano to believe that he would be paid on an hourly basis at a rate of $75 per hour without ever intending to pay him the full amount, (b) claimed -- in the face of strong evidence to the contrary -- that it never agreed even to pay him on an hourly basis,⁷ (c) disavowed the draft contract while still seeking to rely on favorable terms included there, and (d) refused to pay more than it did despite DeCaprio's own admission that Graziano's work was worth substantially more.⁸ Those well-supported findings in turn support the judge's conclusion that “[a]t its core, this is a case where a larger company lured a smaller one into a relationship and thereafter tried to bully the smaller company into giving up its claims.” Under that view of the case, Crow Point's actions fell comfortably within the type of behavior that our cases recognize as supporting a c. 93A claim (even in the business-to-business context). See, e.g., Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 474 (1991) (“conduct in disregard of known contractual arrangements and intended to secure benefits for the breaching party constitutes an unfair act or practice for c. 93A purposes” [quotation and citation omitted] ); Exhibit Source, Inc. v. Wells Ave. Business Ctr., 94 Mass. App. Ct. 497, 501 (2018) (c. 93A liability supported where, in context of commercial lease, landlord “deliberately strung the plaintiff along” with promises “that it would return the security deposit when it had ‘no intention’ of doing so” and offered pretextual reasons for not doing so as part of strategy to “wear out” plaintiff). See also VMark Software, Inc. v. EMC Corp., 37 Mass. App. Ct. 610, 620 (1994) (“To be held unfair or deceptive under c. 93A, practices involving even worldly-wise business people do not have to attain the antiheroic proportions of immoral, unethical, oppressive, or unscrupulous conduct, but need only be within any recognized or established common law or statutory concept of unfairness”).

Crow Point also argues that the case must be remanded, because the judge did not adequately address Crow Point's c. 93A counterclaim, which was based on Graziano's refusal to turn over his work product. As an initial matter, we note that this is not a case where the judge forgot those counterclaims; the judge's memorandum of decision expressly “concludes that, notwithstanding the jury's finding, Crow Point has proven no claim against Graziano, but that Graziano has proven unfair and deceptive conduct by Crow Point.” In light of this, it is evident that the judge viewed Graziano's actions as a reasonable response given that Crow Point “intentionally held back the payment ․ to manage the project and ensure Graziano actually performed the agreed-upon deliverables.” While it would have been preferable for the judge to spell this out, his failure to do so does not require a remand. See New England Fin. Resources, Inc. v. Coulouras, 30 Mass. App. Ct. 140, 147 (1991) (Mass. R. Civ. P. 52 [a], as amended, 423 Mass. 1402 [1996] “does not require extensive detail and only imposes a duty on a judge to articulate the essential grounds for a decision” [quotation and citation omitted] ).⁹

2. Damages. To the extent that Crow Point challenges the amount of damages the judge ordered, we discern no reversible error. Where the judge found that Crow Point induced Graziano to perform the requested work based on the expectation he would be paid $75 per hour for doing so, while never intending to honor that arrangement, there were grounds both to award damages based on how much Crow Point shortchanged Graziano and to allow a doubling of that amount based on Crow Point's bad faith. Under these circumstances, Crow Point cannot be heard to argue that an award of one-half that amount was too high.

3. Attorney's fees. Crow Point argues that the judge's award of $14,100 in attorney's fees should be overturned because Crow Point was not given an opportunity to contest the amount of the award. Graziano's request for fees was included as part of his posttrial memorandum addressing the c. 93A issues. On appeal, Crow Point claims that it was never actually served with Graziano's memorandum. That claim is supported by the fact that Graziano's memorandum was not accompanied by a certificate of service.¹⁰ In addition, far from asserting that Crow Point nevertheless was aware of the amount of attorney's fees he was seeking, Graziano acknowledges in his brief that “[t]here was no opportunity [for Crow Point] to respond to or object to Graziano's request for attorney's fees.” Accordingly, despite the fact that Graziano is seeking only $14,100 in attorney's fees for work that included a four-day trial, fairness requires that Crow Point be given the opportunity to argue to the trial judge that the fees request somehow was excessive.¹¹

Graziano has requested an award of his reasonable attorney's fees and costs on appeal. We agree that he is entitled to such an award pursuant to c. 93A, § 11. See Twin Fires Inv., LLC v. Morgan Stanley Dean Witter & Co., 445 Mass. 411, 432-433 (2005). Within fourteen days of issuance of the rescript, Graziano shall submit a statement of his appellate attorney's fees and costs in accordance with the procedure specified in Fabre v. Walton, 441 Mass. 9, 10-11 (2004), and within fourteen days thereafter, Crow Point may submit an opposition to the amount requested.

Conclusion. So much of the amended judgment as awards attorney's fees of $14,100 is vacated, and the matter is remanded to Superior Court to allow Crow Point to object to that amount. The amended judgment is otherwise affirmed.

So ordered.

Affirmed in part; vacated in part and remanded

FOOTNOTES

2.   Writing “[i]t is not possible that powerpoint slides can take this much time,” DeCaprio's main complaint appeared to be the number of hours Graziano was billing, rather than his rate.

3.   As evidenced by the draft contract, the parties originally contemplated that Graziano's work would last only twelve weeks, at some twenty-five to thirty hours for the first six weeks, and fifteen to twenty hours for the last. In fact, as the judge found, “the work lasted some 11 months.”

4.   Specifically, DeCaprio stated in a February 11, 2014 e-mail: “I'm not going to pay you $89,000, which is essentially what you've asked. I could see this being a $40,000 project. I've paid you $34,000.”

5.   The batch of invoices that Graziano had sent Crow Point in September covered some work performed during periods for which earlier invoices had been sent. The suggestion is not that Graziano was seeking to be paid twice for the same work, but that his billing practices might have led Crow Point to believe that he already had fully billed his time for such periods.

6.   To the extent that Crow Point also argues that the judge impermissibly substituted his judgment for that of the jury while ruling on the reserved G. L. c. 93A claim, we disagree. “It is indeed both possible and feasible for a judge deciding a c. 93A claim to make findings of fact that are contrary to those made by a jury on a parallel common law claim.” Kattar v. Demoulas, 433 Mass. 1, 12 (2000).

7.   For example, in one e-mail, DeCaprio appears to concede that he agreed to pay Graziano on an hourly basis, relying on this point to contest the scope of Graziano's “assignment”: “If this were to be as broad an assignment as you lay out below, there is no way I would have agreed to an hourly approach. Something this broad would almost demand project pricing.”

8.   See note 3, supra (discussing the February 11, 2014 e-mail). Crow Point has not demonstrated that the judge abused his discretion in declining to exclude the e-mail on the grounds that it was an offer made in settlement of existing or anticipated litigation. For one thing, although it is clear that the parties were at the time seeking to resolve what Graziano was owed, there was no direct evidence that litigation had been threatened or was imminent (in fact, Graziano did not file his action until seven months after the February 11, 2014 e-mail). For another, the statement made in the e-mail is phrased in a manner that can be taken as an acknowledgment that Graziano's work was worth $40,000, not merely as an offer to pay that amount in settlement of the parties' dispute.

9.   From the record before us, it appears that Graziano may never have turned over some of his work product. Crow Point has not argued that the judge erred by not ordering Graziano to do so, which may reflect the fact that the material no longer has any appreciable value. Nor has Crow Point pressed the point that Graziano still appears to have retained an Internet domain that he acquired on Crow Point's behalf (an asset that still may have some value to Crow Point). Although we therefore need not address the issue, we note our expectation that Graziano would accede to a request for transfer of that domain should Crow Point make such a request.

10.   No certificate of service appears on Graziano's posttrial memorandum, which was included in the record appendix. We sua sponte confirmed that no certificate of service was filed in the Superior Court.

11.   Certainly, it would have been preferable had Crow Point raised the lack of service when the issue came to its attention when the judge ruled on Graziano's request for attorney's fees.