DIGINOVATIONS INC v. WHITWELL WALES THIRD (2026)

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

After an eleven-day trial in the Superior Court, a jury returned verdicts for the plaintiff, DigiNovations, Inc., on all nine counts in its amended complaint,³ awarding damages separately as to defendants H. Whitwell Wales III, Christopher Mackos, and Endeavor Films, Inc. (Endeavor), totaling nearly $1.6 million.⁴ After trial, the judge ordered Endeavor to pay all of the plaintiff's attorney's fees and doubled the damages award against the company pursuant to G. L. c. 93A, § 11 (c. 93A). The defendants appeal, arguing that the evidence at trial was insufficient to prove several of the claims; the damages award was improper; the judge erred in awarding double damages under c. 93A and in denying its motion for a new trial on damages; and that the judge erred in imposing discovery sanctions against the defendants.⁵ The plaintiff cross-appeals, arguing that the judge erred in instructing the jury to allocate damages separately rather than jointly and severally. We affirm.

Background. We recount the facts as the jury could have found them, in the light most favorable to the plaintiff. See Haddad v. Wal-Mart Stores, Inc., 455 Mass. 91, 94 n.5 (2009). DigiNovations, founded in 2001, is a digital media company that produces promotional content such as films, commercials, and documentaries. DigiNovations hired Wales as executive producer in 2011, and he became vice president of the company in 2012. Mackos joined the company in 2013, signing an offer of employment letter and a confidentiality and nonsolicitation agreement.

Beginning in 2017, Wales and the owner of DigiNovations began discussing the possibility of Wales purchasing the company. Ultimately, Wales rejected the offer to purchase and, unbeknownst to the owner of DigiNovations, began the process of creating another entity, Endeavor, as a competing company. Around that time, Wales asked Mackos to join Endeavor, and Mackos agreed. Between January 2019 and March 2019, Wales secured a business loan for Endeavor, recruited another DigiNovations employee to join the new company, and secured commitments from DigiNovations clients to move their business to Endeavor. During that time, Wales delayed projects for DigiNovations clients so that Endeavor could complete the work.

On March 1, 2019, Wales, Mackos, and the aforementioned third employee resigned from DigiNovations and notified existing DigiNovations clients about their departure. Wales deleted everything from his company laptop while Mackos deleted the company electronic mail accounts for him and the third employee and “cleaned up ․ files that [he] didn't see as necessary” from his laptop. Mackos deleted a long-term storage log file on the DigiNovations server, intending to hide his activity. Mackos also destroyed text messages he was instructed to retain in advance of litigation. Endeavor (Wales, Mackos, and the third employee) began working on projects for former DigiNovations clients the week following their departures.

DigiNovations sent Endeavor a cease-and-desist letter on March 7, 2019, and filed a complaint in the Superior Court on March 27, 2019, which it amended in July 2019 to add Mackos and another as defendants. A judge of the Superior Court appointed a master to manage the discovery disputes, and DigiNovations ultimately moved for sanctions based on spoliation of evidence. The discovery master made findings, and the defendants admitted to deleting several e-mail accounts, log files, and text messages as well as wiping their laptop computers. The discovery master then recommended that the defendants be prohibited from discussing the absence of the spoliated evidence to the jury, that the jury be instructed to draw an adverse inference regarding the spoliated evidence, and that the defendants pay the plaintiff's attorney's costs and fees associated with the motion for sanctions.

The motion judge adopted the master's evidentiary recommendations while rejecting the costs and fees recommendation, which she instead scheduled for a posttrial hearing on reasonableness.⁶ During trial at the charge conference, the trial judge limited the adverse inference instruction to permit the jury to draw the inference at its discretion. In September 2023, after eleven days of trial, the jury returned a verdict in favor of the plaintiff. In March 2024, the trial judge authored a thoughtful and comprehensive written decision and ordered fees and double damages pursuant to the plaintiff's c. 93A claims. In a supplemental order, the trial judge required the defendants to pay, jointly and severally, the plaintiff's costs and fees as sanction for their discovery violations. These cross-appeals followed.

Discussion. We address the defendants’ issues in three parts before turning to the plaintiff's cross-appeal. First, we discuss the defendants’ argument that the trial court erred in awarding discovery sanctions due to the defendants’ spoliation. Second, we analyze the defendants’ sufficiency arguments. Third, we consider the issues the defendants raise regarding the damages awards. Lastly, we review the plaintiff's cross-appeal regarding joint and several liability.

1. Spoliation sanctions. “The doctrine of spoliation permits the imposition of sanctions and remedies where a litigant ․ negligently or intentionally loses or destroys evidence that the litigant ․ knows or reasonably should know might be relevant to a possible action, even when the spoliation occurs before an action has been commenced.” Scott v. Garfield, 454 Mass. 790, 798 (2009). We review a judge's spoliation decision for abuse of discretion. See Santiago v. Rich Prods. Corp., 92 Mass. App. Ct. 577, 580 (2017).

The defendants argue that, in recommending sanctions for spoliated evidence, the discovery master exceeded his lawful authority because he was limited by the order appointing him to “resolving all non-dispositive discovery disputes.” We disagree as the recommendations by the master were related to discovery disputes and were not dispositive and thus had no force until the trial judge adopted them. See Peabody N.E., Inc. v. Marshfield, 426 Mass. 436, 439 (1998) (upholding judge's rejection of master's recommendation). Even if we were to accept the defendants’ position -- and we are not so inclined-that the recommendations exceeded the discovery master's authority, the judge cured any such error by performing an independent review of the recommendations. The judge, after further consideration of the discovery master's recommendations, did not adopt the master's recommendations whole cloth. Instead, the judge limited the adverse inference instruction at the charge conference, which enured to the defendants’ benefit. The defendants did not challenge that instruction. Furthermore, we discern no abuse of discretion in the judge's decision to adopt the discovery master's recommendations without an independent hearing where the defendants admitted to all of the facts underlying the charge of spoliation. Spoliation is evaluated against an objective standard, and therefore the judge could proceed without evidence such as the defendants’ subjective understanding of the pendency of litigation. See Scott, 454 Mass. at 798.

Alternatively, the defendants argue that the amount of attorney's fees awarded against Wales and Mackos for spoilation of evidence was unreasonable because the judge declined to hold a posttrial hearing as indicated in the order reconsidering the initial sanctions order. The defendants cite no authority, nor have we found any, for the proposition that a judge must conduct a hearing prior to ordering a party to pay fees as a sanction.⁷ We acknowledge that the trial judge did not hold a hearing after the motion judge indicated one was necessary. However, the motion judge's reconsideration order entered long before trial, during which substantial evidence of the defendants’ spoliation was introduced. Even assuming this lack of a hearing could constitute error rather than a valid exercise of discretion, we discern no prejudice to the defendants where the trial judge's only task was to determine the reasonableness of the fees charged by the plaintiff's counsel. See Berman v. Linnane, 434 Mass. 301, 302-303 (2001) (“What constitutes a reasonable fee is a question that is committed to the sound discretion of the judge”).

2. Sufficiency of the evidence. In reviewing a ruling on a motion for a directed verdict or a judgment notwithstanding the verdict (judgment n.o.v.) in a civil trial, we are to decide 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 [nonmoving party].” Motsis v. Ming's Supermkt., Inc., 96 Mass. App. Ct. 371, 380 (2019), quoting Dobos v. Driscoll, 404 Mass. 634, 656, cert. denied, 493 U.S. 850 (1989). The defendants raise several arguments, all of which take issue with the sufficiency of the evidence presented by the plaintiff. Each of these claims is based on the premise that the adverse inference instruction given by the judge was either improper or insufficient to fill perceived gaps in the plaintiff's case. We have reviewed the trial transcript and are satisfied that, drawing all reasonable inferences in favor of the plaintiff, a reasonable jury could have found for the plaintiff on each claim.⁸ Motsis, supra. We address the defendants’ arguments regarding breach of contract and breach of the implied covenant of good faith and fair dealing in more detail.

The jury found Wales liable for breaching three contracts with the plaintiff: a confidentiality and nonsolicitation agreement, an employment contract, and a nondisclosure agreement.⁹ To prevail on a claim for breach of contract, a plaintiff must show that “there was an agreement between the parties; the agreement was supported by consideration; the plaintiff was ready, willing, and able to perform his or her part of the contract; the defendant committed a breach of the contract; and the plaintiff suffered harm as a result.” Vacca v. Brigham & Women's Hosp., Inc., 98 Mass. App. Ct. 463, 467 (2020).

The defendants argue the plaintiff failed to introduce evidence that there was ever a nonsolicitation agreement between Wales and the plaintiff. We are unpersuaded. Although the plaintiff did not introduce a signed copy of such a contract, the jury heard sufficient evidence from which to infer its existence. This evidence included the fact that it was the plaintiff's custom to require all employees to sign such an agreement, that the owner of DigiNovations instructed Wales to fill out necessary employment paperwork and Wales told him he had done so, and that Wales had signed the nonsolicitation agreement on behalf of DigiNovations when hiring new employees. This evidence, combined with the adverse inference instruction given to the jury, would allow a reasonable jury to infer that there was an agreement, Wales had signed the agreement and later destroyed it in anticipation of litigation. Similarly, the evidence was sufficient to permit the jury to infer that Wales breached the implied covenant of good faith and fair dealing, which provides that “neither party shall do anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract” (citation omitted). K.G.M. Custom Homes, Inc. v. Prosky, 468 Mass. 247, 254 (2014).

3. Damages. The defendants raise three issues pertaining to the damages awarded to the plaintiff in this case. First, they argue that the trial judge erred in awarding double damages on the c. 93A claim without making factual findings pursuant to Mass. R. Civ. P. 52 (a), as amended, 423 Mass. 1402 (1996) (Rule 52 [a]). Second, they argue that the judge should have granted their motion for a new trial because the damages were undifferentiated. Third, they argue in the alternative, the damages were duplicative.

We turn first to the defendants’ argument that the judge erred in doubling the damages against Endeavor pursuant to c. 93A. They argue that, because the judge reserved the issue of c. 93A damages for herself, she was required to find facts separately from the jury pursuant to Rule 52 (a) and that failure to do so was reversible error. We are not so persuaded because the jury found the facts underlying the judge's posttrial order on damages pursuant to G. L. c. 93A, § 9 (3), i.e., that Endeavor's violation of c. 93A was willful and knowing. In such situations, Rule 52 (a) does not apply. Rule 52 (a) requires a judge to find facts only in an “action[ ] tried upon the facts without a jury”(emphasis added). See Rule 52 (a). Here, there was a jury trial. Additionally, in deciding whether to double or treble the c. 93A damages, the judge did make written findings specifically noting that, “while the defendants’ conduct was harmful to the plaintiff, it was not so egregious as to warrant treble damages.” The judge's doubling of damages against Endeavor was procedurally proper and there was no error.

Second, the defendants argue that the damages award for the tort claims was erroneous because the jury was not asked to differentiate the damages between the various torts. To the contrary, the plaintiff's tort claims all arose out of the same core facts -- Wales harmed the plaintiff's business by secretly competing with it while still employed by the plaintiff. Although the law recognizes multiple theories of liability based on these underlying facts, it permits the plaintiff to be made whole only once. Indeed, “[w]here the same acts cause the same injury under more than one theory, duplicative damage recoveries will not be permitted.” Szalla v. Locke, 421 Mass. 448, 454 (1995). Asking the jury to apportion out damages to each count of tortious behavior that caused a single harm would therefore result in duplicative damages.

In any event, the unchallenged breach of fiduciary duty claim alone would support the jury's award of tort damages. Under Massachusetts law, the proper damages award for an employee's breach of fiduciary duty is actual loss caused by the breach. See Augat, Inc. v. Aegis, Inc., 409 Mass. 165, 175 (1991). The plaintiff introduced evidence that it lost profits in the amount of $818,464, which puts the jury's award of $558,020 against Wales for the tort claims well within an appropriate range for redressing the plaintiff's single harm.

These facts stand in contrast to Ayash v. Dana-Farber Cancer Inst., 443 Mass. 367, 393 (2005), in which a jury assessed undifferentiated damages for three distinct harms-invasion of privacy, violation of the implied covenant of good faith and fair dealing, and retaliation. Each of those claims supported a separate award of damages, and the undifferentiated verdict made it impossible to determine the appropriate award when some of the claims were deemed invalid.

Third, the defendants claim that the damages awards against Wales for both the breach of contract claim and the tort claim were duplicative. The defendants claim that, because the damages awards attributed to Wales and Endeavor were for identical amounts, the damages awards must be duplicative of one another. This argument reverses the logic of the defendants’ previous argument, in essence now arguing that the damages awards should have been a single, undifferentiated whole because their course of conduct caused a single injury. This argument does not withstand scrutiny, however, because a breach of contract and a breach of fiduciary duty have different measures of damages. The measure of recovery for breach of contract is expectancy damages, “an amount intended to put the plaintiff in the position he would be in if the contract had been performed.” Sullivan v. O'Connor, 363 Mass. 579, 583 (1973). The measure of damages for a breach of fiduciary duty, on the other hand, is actual loss caused by the breach. See Augat, Inc., 409 Mass. at 175.

A jury could reasonably compensate the plaintiff for its actual and expected losses due to Wales and Endeavor's secret competition while at the same time putting the plaintiff back in the position it would have been in had Wales not solicited its clients. That is, the breach of fiduciary duty caused the plaintiff to lose its clients, but the defendants’ ongoing solicitation of the clients for the year the nonsolicitation agreement was in effect may have compounded the plaintiff's loss even after Wales's fiduciary duty ended. Furthermore, the judge instructed the jury not to duplicate damages, and “[j]urors are presumed to follow the law as instructed.” Commonwealth v. Silva, 93 Mass. App. Ct. 609, 615 (2018).

4. Cross-appeal on joint and several liability. The plaintiff argues that the trial judge erred in failing to allocate the tort liability jointly and severally to all of the defendants. Because the judge instructed the jury to separately determine damages resulting from each defendant's tortious conduct, we treat the plaintiff's argument as a challenge to the jury instructions. “When reviewing jury instructions to which there has been an objection, we conduct a two-part test: ‘whether the instructions were legally erroneous, and (if so) whether that error was prejudicial.’ ” Kelly v. Foxboro Realty Assocs., LLC, 454 Mass. 306, 310 (2009), quoting Masingill v. EMC Corp., 449 Mass. 532, 540 n.20 (2007). The plaintiff cites no authority for the proposition that it is an error of law for a judge to determine that tort claims are separable. It is true that “Massachusetts retains the traditional principle of joint and several liability in tort cases as part of the common law” (citation and quotation omitted). Chelsea Hous. Auth. v. McLaughlin, 482 Mass. 579, 586 n.10 (2019). “Under our current system of joint and several liability, a plaintiff injured by more than one tortfeasor may sue any or all of them for her full damages.” Shantigar Found. v. Bear Mountain Bldrs., 441 Mass. 131, 141 (2004).

While all defendants participated in the same general course of conduct, their contributions were discrete and separable. For example, the jury heard evidence of Wales's solicitation of the plaintiff's clients but none of Mackos's doing so. The jury found that Mackos breached his fiduciary duty to the plaintiff, but that the breach caused no loss to the plaintiff. In fact, Mackos largely interacted with Wales and not the plaintiff. Mackos and Wales each played different roles in causing damage to the plaintiff. Given this context, we cannot say it was an error of law for the trial judge to determine the defendants’ tortious conduct was separable and instruct the jury as such.

Judgments and order on plaintiff's supplemental application for attorney's fees, dated September 3, 2024, affirmed.

Order denying defendants’ motions for judgment notwithstanding the verdict, for new trial, and for remittitur dated July 3, 2025, affirmed.

FOOTNOTES

3.   The complaint included the following claims: (I) breaches of various contracts; (II) breach of implied covenant of good faith and fair dealing; (III) breach of duty of loyalty; (IV) fraud; (V) conversion; (VI) unjust enrichment; (VII) misappropriation of trade secrets; (VIII) tortious interference with contract and advantageous business relations; and (IX) violation of G. L. c. 93A. Defendant Wales was liable for counts I-VIII, Defendant Mackos was liable for part of count I, II, III, and V-VII. Defendant Endeavor Films, Inc., was liable for counts VI-IX.

4.   Damages were assessed as follows: Wales, $1,017,074; Mackos, $1,000; Endeavor, $558,120.

5.   Mackos appeals only from the judge's award of attorney's fees as a discovery sanction for evidence spoliation.

6.   The judge initially accepted the recommendation in full but later allowed the defendants’ motion for reconsideration as to the costs and fees.

7.   To the extent the defendants’ argument is that the judge abused her discretion by acting inconsistently with an earlier order, it similarly fails. We also note that the effect of the reconsideration order was merely to rescind the earlier fees sanction, not to require a hearing.

8.   The defendants waived their challenge to the c. 93A claim by failing to raise it in their motion for a directed verdict. See Matley v. Minkoff, 68 Mass. App. Ct. 48, 52 (2007).

9.   The defendants waived their challenges to the breaches of the employment contract and the nondisclosure agreement by failing to raise the issue in their motion for a directed verdict.