TERSLY INVESTMENTS LIMITED v. GREAT HILL PARTNERS (2023)

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

The plaintiff, Tersly Investments Limited (Tersly), appeals from a judgment of the Superior Court, dismissing its complaint for failure to state a claim upon which relief may be granted. For substantially the reasons explained by the motion judge, and as summarized below, the judgment is affirmed.

In essence, Tersly asserts that the defendants, together with Highlander Worldwide Limited (Highlander), wrongfully deprived Tersly of the opportunity to realize the full value of its entitlement to receive a share of proceeds from a subsequent sale of stock in Cheapflights.com (Cheapflights), that Tersly sold to Highlander in 2002.³ Under the terms of the 2002 sale, Highlander agreed to pay to Tersly a share of the proceeds of any sale of Cheapflights stock by Highlander before January 2023 (described in the 2002 sale agreement as deferred consideration). Thereafter, in 2014, Highlander sold certain preferred shares of Cheapflights to a third party without advising Tersly. Upon learning of that transaction, Tersly asserted a claim to a share of the sale proceeds. By letter dated May 15, 2015, the defendant Dechert LLP (Dechert), in its capacity as Highlander's counsel, responded to Tersly's claim, expressing Highlander's willingness to negotiate a “global settlement” of any and all claims by Tersly. As part of such a global settlement, Dechert proposed that the settlement address not only the previously sold shares but all remaining shares still held by Highlander. As to the latter, Dechert observed that

“a heavy discount would necessarily be applied to the balance of the shares held to reflect i) the uncertainty as to whether any exit is likely to be achieved within the timeframe contemplated by the [2002 sale agreement], and ii) the liquidation preference attached to the preferred shares held [by the successor to Cheapflights], pursuant to which the remaining ordinary shares held by [Highlander] rank below the preferred shares sold by [Highlander] on a future exit.”

The parties thereafter continued negotiations for a considerable time. Eventually, on December 15, 2016, Tersly sent to Highlander a formal written demand for payment of £4,134,592.00, representing the full amount Tersly claimed it was due as deferred consideration in respect of Highlander's 2014 sale of Cheapflights shares. Dechert responded, on Highlander's behalf, with a proposal under which Highlander would pay the full amount demanded by Tersly in exchange for an agreement by Tersly to relinquish any further claims, including any claim to further deferred consideration from any future sale by Highlander of Cheapflights stock. Tersly agreed to those terms and, after some further negotiations over details of the form of the settlement agreement, the parties executed an agreement in full settlement of all claims on February 6, 2017; Highlander paid the agreed amount, plus interest, to Tersly two days later. Shortly following execution of the settlement agreement between Highlander and Tersly, Highlander announced that it had agreed to sell all of its remaining Cheapflights shares to a third party for a substantial sum. In its complaint, Tersly claimed that Dechert conspired with Highlander to deceive Tersly concerning its imminent plans to sell Cheapflights shares to a third party, thereby depriving Tersly of its opportunity to receive a share of the proceeds of that sale, and that Great Hill facilitated the deceit, by delaying announcement of the 2017 stock sale until after Tersly and Highlander concluded their settlement.⁴

Tersly's claims fail principally because they rest on a flawed premise: that Dechert and Highlander owed it a duty to disclose in 2017 that Highlander had identified a purchaser for the remaining Cheapflights shares Highlander held, based on Dechert's statement in its May 2015 letter concerning “uncertainty” about the prospect that Highlander would achieve an “exit” from its Cheapflights holdings before January 2023. As the motion judge observed, for such a duty of disclosure to arise, Dechert's statement had (at least) to have been knowingly untrue when made. But Tersly has not alleged that Dechert's statement concerning uncertainty was untrue when made, and in any event the statement constituted a statement of opinion about future market conditions, rather than one of fact. See Stolzoff v. Waste Sys. Int'l, Inc., 58 Mass. App. Ct. 747, 759 (2003). Moreover, far from owing a duty to Tersly to reveal information about a change in market conditions, Dechert owed a duty of confidentiality to its client. “It is well-established that attorneys owe no duty to their client's adversary.” Lamare v. Basbanes, 418 Mass. 274, 276 (1994).

Tersly's claim against Dechert for violation of G. L. c. 93A fails for similar reasons. See Lamare, supra (no duty by attorney to disclose information to client's adversary). Finally, Tersly's claim for civil conspiracy fails because of the failure of the tort claims upon which it is based. See Bartle v. Berry, 80 Mass. App. Ct. 372, 383-384 (2011).⁵

Judgment affirmed.⁶

FOOTNOTES

3.   As the motion judge observed in footnote 2 of his memorandum of decision (and as Tersly's counsel explained at oral argument), Highlander was not named in the Tersly's complaint for jurisdictional reasons.

4.   Tersly's complaint asserted claims against both Great Hill and Dechert for interference with advantageous business relations, violations of G. L. c. 93A, and civil conspiracy, and against Dechert for fraud. Tersly makes no claim on appeal regarding its claims against either Dechert or Great Hill for interference with advantageous business relations, and we accordingly do not address them.

5.   Tersly's claims against Great Hill fail for essentially similar reasons. Great Hill had no contractual or other relationship with Tersly, and there was nothing unfair or deceptive about its extension of the due diligence period. It accordingly can sustain no claim under G. L. c. 93A. See Nei v. Boston Survey Consultants, Inc., 388 Mass. 320, 324-325 (1983). In any event, as Great Hill observes in its brief, the c. 93A claim against it is wholly derivative of Tersly's interference claim. See Pembroke Country Club, Inc. v. Regency Sav. Bank, F.S.B., 62 Mass. App. Ct. 34, 40-41 (2004).

6.   In the exercise of our discretion, we deny Great Hill's request for appellate attorneys’ fees and costs.