ELSAID v. BOCH (2021)

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

Michael A. Elsaid brought this action against Dale A. Boch and Boch's company, Management Developers, Inc. (MDI), seeking damages arising out of Boch's alleged promise to engage Elsaid as his investment manager. Following motion practice, Elsaid's claims were narrowed to claims against only Boch for breach of contract and promissory estoppel. After the close of evidence in a jury trial, but before a verdict was returned, a judge of the Superior Court entered a directed verdict against Elsaid, dismissing the remaining claims. Elsaid appeals the directed verdict, as well as the judge's allowance in part of the defendants’ motion to dismiss, and the denial of Elsaid's motion for leave to amend the complaint. He also challenges other alleged judicial improprieties and personal grievances. We affirm.

Background. We summarize the relevant facts, reserving certain details for our discussion of the issues.

Elsaid was the sole shareholder and CEO of Suntex Corporation (Suntex), an investment advisory firm formed to provide investment management advice and to manage investor portfolios. Elsaid allegedly developed a proprietary system for day trading in stocks that he claims produces a higher rate of return than what is typically associated with the speculative and risky practice of day trading.

In 2010, Elsaid approached Boch about investing in Suntex, in an arrangement Elsaid alternately described as an investment partnership or joint venture, to engage in day trading using Elsaid's system. Boch, who had been close friends with Elsaid for many years, was interested, but at the same time concerned that the proposed arrangement was too risky. Elsaid, however, persistently pursued Boch's involvement. Discussions between the two went on for over two years and would sometimes turn contentious. At one point the two stopped speaking; on another occasion Elsaid described a telephone conversation where Boch was “yelling” at him.

At some point, at Elsaid's urging, Boch opened an investment account with Trade Station Securities, a brokerage firm, but he did not fund it or authorize Elsaid to trade on the account. By the fall of 2012, Elsaid and Boch had discussed several different arrangements, all involving Boch funding his Trade Station account with a large sum of cash from which Elsaid would draw for trading, and with Elsaid guaranteeing initial investments against any losses up to a certain amount. Boch would then gradually increase the investment amount, and Elsaid and Boch would split the profits. Boch maintains he never agreed to any of these proposals.

Elsaid contends, but Boch disputes, that at some point in their ongoing discussions, Boch requested exclusive use of Elsaid's trading system, and that in response, Elsaid terminated his relationship with his other clients.

On November 28, 2012, Elsaid came to Boch's home to again try to persuade Boch to move forward. Elsaid gave him a proposed portfolio management agreement, along with a trading authorization form. He also gave Boch $2,250 in cash to hold in escrow against any potential future trading losses. In return for the cash, Boch provided Elsaid with a handwritten receipt. The portfolio management agreement and the trading authorization form were never executed.³ Elsaid concedes that there was no written agreement between the parties, claiming instead that they had an oral agreement.

In 2013, Boch and Elsaid's relationship continued to deteriorate, especially after Elsaid sent a letter to Boch's then fiancée enlisting her help in pressuring Boch to invest. In the end, Boch, suspecting something possibly nefarious with Elsaid's investment scheme, declined to fund the investment account. Elsaid claimed to have lost $13.6 million in anticipated business and investment income, including the loss of earned commissions his other clients refused to pay when he dropped them.

When Boch did not go forward as Elsaid proposed, Elsaid filed a complaint against Boch and MDI on March 18, 2013, with the defendants asserting counterclaims shortly thereafter.⁴ The complaint alleged that Boch breached an agreement to make Elsaid his investment manager and to permit Elsaid to day-trade stocks on Boch's account (count I). It also included, inter alia, a claim for promissory estoppel (count III). Additional claims for unjust enrichment (count II), quantum meruit (count IV), and unfair and deceptive practices under G. L. c. 93A (count V), were dismissed by the trial judge on the defendants’ motion to dismiss, along with all claims against MDI (February 2015 order).⁵

The breach of contract and promissory estoppel claims, narrowed after motion practice to an alleged oral agreement or promise made on November 28, 2012, proceeded to a jury trial, commencing on February 23, 2016.

Shortly after Elsaid filed his lawsuit, but before trial, Boch submitted a complaint to the securities division of the Secretary of State's office claiming that Elsaid was improperly acting as an unregistered investment advisor under the Massachusetts Uniform Securities Act, G. L. c. 110A, § 201. According to Elsaid, after a two-year investigation, the Secretary of State cleared him of any wrongdoing, and advised him that he did not have to register as an investment advisor because he was exempt from the registration requirement for unspecified reasons. Following the close of Elsaid's case, however, a hearing was held with counsel representing the securities division of the Secretary of State's office, who confirmed that Elsaid was still under investigation by the securities division.

After the hearing, Elsaid declined to participate further in the trial. The defendants orally moved for a directed verdict.⁶ The trial judge allowed the motion and dismissed Elsaid's remaining claims.⁷ Judgment on the directed verdict entered on March 15, 2016. Elsaid filed a timely notice of appeal thereafter.⁸

Elsaid appears to appeal the directed verdict, the February 2015 order dismissing MDI and several other claims against Boch, and the order denying Elsaid leave to amend the complaint. Elsaid also asserts a myriad of other alleged judicial improprieties and personal grievances against the trial judge, opposing counsel, and others.

Discussion. 1. Motion for directed verdict. “We review the grant of a motion for a directed verdict to determine whether ‘anywhere in the evidence, from whatever source derived, any combination of circumstances could be found from which a reasonable inference could be drawn in favor of the plaintiff.’ ” Claudio v. Chicopee, 81 Mass. App. Ct. 544, 546 (2012), quoting Dobos v. Driscoll, 404 Mass. 634, 656, cert. denied sub nom. Kehoe v. Dobos, 493 U.S. 850, (1989). We detect no such reasonable inferences here. The trial judge had ample grounds to support a directed verdict, as Elsaid failed to provide sufficient evidence of an enforceable written or oral contract, or promise, made on November 28, 2012.⁹

a. Breach of contract. To prove a breach of contract, a plaintiff must, as a preliminary matter, show the existence of a valid and binding contract. See Rombola v. Cosindas, 351 Mass. 382, 384 (1966). Elsaid admits that the proposed portfolio management agreement given to Boch on November 28, 2012, was never executed. Instead, he contends that he and Boch entered into an oral agreement (evidenced by the $2,250 in cash he gave Boch to hold in escrow against future trading losses), and that Boch breached this agreement by failing to fund an investment trading account or authorize Elsaid to manage the account. We determine there was insufficient evidence to support this contention.¹⁰

To create an enforceable contract, “there must be agreement between the parties on the material terms of that contract, and the parties must have a present intention to be bound by that agreement.” Situation Mgmt. Sys. v. Malouf Inc., 430 Mass. 875, 878 (2000). No such evidence is in the record before us. It does not appear, as is required, that the parties “progressed beyond the state of ‘imperfect negotiation.’ ” Id., quoting Rosenfield v. United States Trust Co., 290 Mass. 210, 217 (1935).

Even were sufficient evidence of an existing contract established, Elsaid's contract claim would still be barred by the Massachusetts Uniform Securities Act, G. L. c. 110A, § 201 (c) (Act), because Elsaid did not proffer sufficient evidence that he was either registered as an investment advisor pursuant to the Act, or legitimately exempted.

Section 201 (c) of the Act states that “[i]t is unlawful for any person to transact business in this commonwealth as an investment advisor” unless they are registered pursuant to the Act. See Indus Partners, LLC v. Intelligroup, Inc., 77 Mass. App. Ct. 793, 795 (2010), quoting G. L. c. 110A, § 410 (f) (“[n]o person who has made or engaged in the performance of any contract in violation of any provision of [the Act] ․ may base any suit on the contract”). The Act defines an investment advisor as “any person who, for compensation, engages in the business of advising others ․ as to [the] value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities.” G. L. c. 110A, § 401 (m). The Act, however, also contains a number of exemptions to the registration requirement. See 950 Code Mass. Regs. § 12.205 (2016).

Prior to trial, the judge determined that Elsaid was an investment advisor as defined by the Act. The finding, reaffirmed by trial evidence, established that Elsaid ran an investment advisory firm and offered investment advisory services to clients, and that the proposed portfolio management agreement was a financial advisory agreement. Accordingly, we agree that Elsaid was subject to the Act.

Elsaid contends, however, that he was not required to be registered, claiming he was told by the securities division of the Secretary of State that he was exempt (although he never specified which of the exceptions set forth in the Act applied). He persistently maintained this position even after counsel representing the securities division represented to the court that the investigation of Elsaid (triggered by Boch's complaint) was still open and pending. Thus, the securities division had not, in fact, determined that Elsaid was exempt. We therefore conclude that Elsaid failed to offer sufficient evidence supporting exemption, and that this failure to satisfy the statutory registration requirement set forth in the Act renders any oral or written contract unenforceable as a matter of law. Consequently, Elsaid's contract claim cannot be sustained.¹¹ See Situation Mgmt. Sys., 430 Mass. at 878.

b. Promissory estoppel. Elsaid also asserted a claim for promissory estoppel, claiming that his reliance on Boch's promise to invest and Boch's alleged request for exclusive access to Elsaid's investment model caused him to cancel contracts with two existing clients, thereby sustaining a loss of $13.6 million in anticipated business and investment income.

A claim for promissory estoppel requires a showing that the plaintiff reasonably relied on an unambiguous promise to the plaintiff's detriment. See Rhode Island Hosp. Trust Nat'l Bank v. Varadian, 419 Mass. 841, 848 (1995). To enforce a promise on a theory of reliance, Elsaid needed to prove all the elements of a contract claim, except that of consideration. See id. at 850.

Here, Elsaid's evidence of reliance is insufficient to support his claim. In both Elsaid's complaint and in his testimony at trial, Elsaid indicated that the contracts he had with two clients were terminated in April and May of 2012. The scope of Elsaid's promissory estoppel claim was, however, like his contract claim, limited to a promise, if any, made on November 28, 2012. Even if sufficient evidence had been presented at trial to support the existence of such a promise on that date, since Elsaid initiated the termination of these two contracts months earlier (in April and May of 2012), he could not have done so in reliance on a promise that had not yet been made. Thus, like the contract claim, in the absence of an enforceable promise, we agree that a directed verdict on Elsaid's claim of promissory estoppel was warranted.

2. Pretrial motions. Elsaid appears to challenge the trial judge's February 2015 order issued in response to the defendants’ motion to dismiss pursuant to Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974), or in the alternative, for judgment on the pleadings pursuant to Mass. R. Civ. P. 12 (c), 365 Mass. 754 (1974).¹² Elsaid also appears to challenge the denial of several motions for leave to file an amended complaint. There is, however, only one order in the record before us, dated September 3, 2015 (September 2015 order). Therefore, we will limit our review to this order.¹³

The basis for Elsaid's appeal of both orders are obscure, and the legal reasoning, if any, difficult to discern. Beyond disparaging the trial judge, and conclusory assertions regarding the harm he sustained, Elsaid does not provide coherent legal arguments (or factual detail) as to why the trial judge erred, or otherwise address the judge's rulings in any meaningful way. “The appellate court need not pass upon questions or issues not argued in the brief.” Mass. R. A. P. 16 (a) (9) (A), as appearing in 481 Mass. 1629 (2019). See Kellogg v. Board of Registration in Med., 461 Mass. 1001, 1003 (2011) (“bald assertions of error” that lack legal argument and authority provide insufficient basis for court to consider appellant's claims). We thus conclude that the arguments before us do not rise to the level of proper appellate argument. See Davis v. Tabachnick, 425 Mass. 1010, 1010 (1997) (pro se litigants are held to same standards as their represented counterparts). For these reasons, Elsaid's appeal of the trial judge's February 2015 and September 2015 orders fail on procedural grounds.

Notwithstanding our decision here, even were we to consider the merits of a challenge, Elsaid would fare no better. Upon a de novo review of the February 2015 order, the ultimate inquiry is whether Elsaid alleged facts “so as to plausibly suggest an entitlement to relief.” Baker v. Wilmer Cutler Pickering Hale & Dorr, LLP, 91 Mass. App. Ct. 835, 842 (2017), quoting Greenleaf Arms Realty Trust I, LLC v. New Boston Fund, Inc., 81 Mass. App. Ct. 282, 288 (2012). The judge concluded there was no such entitlement, and for the reasons cited by the judge, we agree.

As for the September 2015 order, “[w]e review the denial of a motion to amend [a] complaint for abuse of discretion.” Dzung Duy Nguyen v. Massachusetts Inst. of Tech., 479 Mass. 436, 461 (2018). “Although leave to amend should be ‘freely given when justice so requires,’ Mass. R. Civ. P. 15 (a), 365 Mass. 761 (1974), such leave may be denied where there is undue delay, undue prejudice to the opposing party, or futility in the amendment.” Dzung Duy Nguyen, supra. Here, the judge denied leave to amend based on timeliness, an inference of bad faith given significant changes in the underlying factual allegations, and futility -- and, with respect to futility, the judge included a thorough analysis of each of the proposed claims. As these are all permissible grounds for denial, we conclude that the trial judge did not err or abuse his discretion in declining Elsaid leave to amend.

3. Other arguments. Elsaid asserts a myriad of personal grievances, and claims of judicial improprieties, including vague and unsubstantiated claims involving fraud, collusion, and conspiracy on the part of the trial judge, other court personnel, and Boch's counsel, without citation to any legal authority.¹⁴ All these assertions fail to rise to the level of appellate advocacy, and constitute claims not adequately argued in the briefs on appeal. See Maroney v. Planning Bd. of Haverhill, 97 Mass. App. Ct. 678, 683 n.8 (2020), citing Mass. R. A. P. 16 (a) (9) (A), as appearing in 481 Mass. 1629 (2019). Accordingly, as these issues are not properly before us, we need not address them.¹⁵

Conclusion. For the foregoing reasons, we discern no error in the trial judge's order allowing the defendants’ motion for a directed verdict, the February 2015 order on the defendants’ motion to dismiss, or the September 2015 order denying Elsaid's motion for leave to amend the complaint.¹⁶

Judgment affirmed.

FOOTNOTES

3.   There are two versions of the portfolio management agreement in the record before us. The parties disagree as to which draft constituted the agreement Elsaid purportedly gave to Boch on November 28, 2012. The dispute, however, is irrelevant given that there is no evidence either draft agreement was ever executed.

4.   Elsaid's original complaint included claims filed on behalf of himself and Suntex. However, because Elsaid eventually appeared pro se, and Massachusetts law requires corporations to be represented by legal counsel in judicial proceedings, claims asserted by Elsaid on the company's behalf were dismissed. See Varney Enters., Inc. v. WMF, Inc., 402 Mass. 79, 81-82 (1988).

5.   A claim for conversion added in an amended complaint was dismissed on summary judgment.

6.   This was the defendants’ third attempt to move for a directed verdict; two previous attempts were denied.

7.   The defendants’ counterclaims were dismissed without prejudice to being tried if a new trial is ordered on Elsaid's claims, or in a subsequent action.

8.   A motion for a new trial filed by Elsaid was denied without prejudice to refiling the motion pursuant to Rule 9A of the Rules of the Superior Court (2016).

9.   While the trial judge did not make specific findings, either written or on the record in open court, a directed verdict was nevertheless warranted for the reasons set forth here.

10.   Alternatively, Elsaid testified at trial that a plan of action drafted by Boch in October 2012 constituted their agreement. Boch counters that the plan of action was merely a list of topics for discussion, and that, in fact, it referenced the portfolio management agreement as a “legal detail” to be addressed. Elsaid's reliance on this document is, in any event, irrelevant because the judge had previously limited the scope of Elsaid's case to an agreement created on November 28, 2012.

11.   Based on our decision here, we need not consider Boch's alternative argument that any alleged agreement, if it existed, was actually between Suntex and Boch; and that Elsaid had no standing to bring an action in his own behalf or, as a pro se plaintiff, on behalf of the company.

12.   The February 2015 order, allowing the defendants’ motion in part and denying it in part, dismissed several of Elsaid's claims against Boch (unjust enrichment, quantum meruit, and violation of G. L. c. 93A, § 11), and dismissed all claims against MDI. While the breach of contract and promissory estoppel claims survived, as discussed supra, both were narrowed in scope to the events of November 28, 2012.

13.   In his September 2015 order, the trial judge allowed Elsaid to amend his complaint to add a conversion claim and denied leave to add nine other claims. Several months later, summary judgment entered for Boch on the conversion claim.

14.   He also raises, but does not argue, an assortment of issues such as the proposed jury verdict slip (rendered moot by Elsaid's decision to prematurely end the trial), the trial judge's refusal to allow him to present certain witnesses, and the order allowing his then counsel to withdraw.

15.   To the extent that any arguments are not expressly addressed, they were not overlooked, but rather, “[w]e find nothing in them that requires discussion.” Commonwealth v. Brown, 479 Mass. 163, 168 n.3 (2018), quoting Commonwealth v. Domanski, 332 Mass. 66, 78 (1954).

16.   Boch's request for appellate attorney's fees and double costs is denied. See Avery v. Steele, 414 Mass. 450, 455 (1993) (“The determination whether an appeal is frivolous is left to the sound discretion of the appellate court”).