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Cruickshank v. Dixon (In re Blast Fitness Grp.)

Cruickshank v. Dixon (In re Blast Fitness Grp.)

United States Bankruptcy Court for the District of Massachusetts, Eastern Division

January 8, 2019, Decided; January 8, 2019, Filed

Chapter 7, Case No. 16-10236-MSH, Adversary Proceeding, No. 18-01011) or (18-01011)

Opinion

MEMORANDUM OF DECISION ON MOTIONS TO DISMISS OF GOODWIN PROCTER LLP, JOHN R. LECLAIRE AND JEREMIAH J. SULLIVAN AND MOTION FOR PARTIAL SUMMARY JUDGMENT OF GOODWIN PROCTER LLP AND JOHN R. LECLAIRE

I. Introduction

In a thirty-count complaint,1 Gary W. Cruickshank, the chapter 7 trustee of the bankruptcy estate of Blast Fitness Group, LLC ("BFG"), seeks damages and injunctive relief against forty-seven named2 and dozens of unnamed John Doe defendants for allegedly depriving BFG of or diverting from it valuable assets and profit opportunities, ultimately leading to BFG's filing of a petition under chapter 7 of the United States Bankruptcy Code on January 26, 2016.3 This adversary proceeding was commenced two years after the petition date on January 26, 2018.

Several of the defendants, including the law firm of Goodwin Procter LLP ("Goodwin"), [*2]  John R. LeClaire, a Goodwin partner, and Jeremiah J. Sullivan, a former Goodwin attorney (collectively, the "Goodwin Defendants") have filed motions to dismiss with Goodwin and Mr. LeClaire also filing a joint motion for partial summary judgment.4 Specifically, Goodwin and Mr. LeClaire jointly moved to dismiss count I (fraudulent transfer under Bankruptcy Code § 548(a)(1)(B)),5 count XII (legal malpractice), count XIII (breach of professional fiduciary duty), count XIV (violation of Mass. Gen. Laws. ch. 93A, §§ 2 and 11), count XXII (breach of contract pursuant to Bankruptcy Code §§ 544 and 550) and the correlative portions of count VII (turnover pursuant to Bankruptcy Code § 550), count VIII (unjust enrichment), count XXIX (attorneys' fees) and count XXX (costs). They moved for partial summary judgment with respect to count III (fraudulent transfer under Massachusetts Fraudulent Transfer Act ("MFTA") § 5(a)(2)), count IV (fraudulent transfer under MFTA § 6(a)),6 count VIII (unjust enrichment)7 and the correlative portions of count VII (turnover pursuant to Bankruptcy Code § 550). Mr. Sullivan seeks dismissal of all of the counts asserted against him, namely count VIII (unjust enrichment), count XII (legal malpractice), count XIII (breach of professional fiduciary duty), count XIV (violation of Mass. Gen. Laws. ch. 93A, §§ 2 and 11), count XXII (breach of contract [*3]  pursuant to Bankruptcy Code §§ 544 and 550) and the correlative portions of count XXIX (attorneys' fees) and count XXX (costs).

The causes of action asserted against the Goodwin Defendants fall into two categories: legal malpractice claims and unjust enrichment claims. The legal malpractice claims, including those styled as breaches of fiduciary duty, breach of contract and violation of Mass. Gen. Laws ch. 93A, arise from 2012 and 2013 corporate transactions involving BFG, defendant Harold R. Dixon, who controlled BFG, and others. Fees paid to Goodwin in 2013 form the basis for the unjust enrichment claims. The legal malpractice claims are the subject of the Goodwin Defendants' motions to dismiss while the unjust enrichment claims are the subject of the joint motion for partial summary judgment filed by Goodwin and Mr. LeClaire.

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2019 Bankr. LEXIS 41 *

In re: BLAST FITNESS GROUP, LLC, Debtor; GARY W. CRUICKSHANK, CHAPTER 7 TRUSTEE OF THE ESTATE OF BLAST FITNESS GROUP LLC, Plaintiff, v. HAROLD R. DIXON et al., Defendants.

Subsequent History: Dismissed by, in part, Motion granted by, in part, Motion denied by, in part Cruickshank v. Dixon (In re Blast Fitness Grp., LLC), 602 B.R. 208, 2019 Bankr. LEXIS 1336 (Bankr. D. Mass., Apr. 30, 2019)

Dismissed by, in part, Motion granted by, in part, Motion denied by, in part Cruickshank v. Dixon (In re Blast Fitness Grp., LLC), 603 B.R. 219, 2019 Bankr. LEXIS 1338 (Bankr. D. Mass., Apr. 30, 2019)

Complaint dismissed at, in part Cruickshank v. Dixon (In re Blast Fitness Grp., LLC), 603 B.R. 654, 2019 Bankr. LEXIS 1590 (Bankr. D. Mass., May 24, 2019)

Dismissed by Cruickshank v. Dixon (In re Blast Fitness Grp., LLC), 2020 Bankr. LEXIS 343 (Bankr. D. Mass., Feb. 5, 2020)

Complaint dismissed at, in part, Motion granted by, in part, Motion denied by, in part Cruickshank v. Dixon (In re Blast Fitness Grp., LLC), 2020 Bankr. LEXIS 1142 (Bankr. D. Mass., Apr. 27, 2020)

Prior History: Beninati v. Borghi, 2014 Mass. Super. LEXIS 101 (Mass. Super. Ct., July 9, 2014)

CORE TERMS

alleges, real estate, transfers, transactions, motion to dismiss, unjust enrichment, Acquisition, discovery, malpractice, fraudulent, entities, partial summary judgment, statute of limitations, counts, continuing representation, fraudulent transfer, asserts, unfair, malpractice claim, concealed, fiduciary, drafted, loyalty, parties, harmed, summary judgment, cause of action, tolling statute, limitations, properties

Civil Procedure, Responses, Defenses, Demurrers & Objections, Motions to Dismiss, Governments, Legislation, Statute of Limitations, Time Limitations, Torts, Malpractice & Professional Liability, Professional Services, Procedural Matters, Tolling, Tolling, Discovery Rule, Business & Corporate Law, Duties & Liabilities, Unlawful Acts of Agents, Fraud & Misrepresentation, Legal Ethics, Client Relations, Duties to Client, Antitrust & Trade Law, Consumer Protection, Deceptive & Unfair Trade Practices, State Regulation, Bankruptcy Law, Adversary Proceedings, Judgments, Judgments, Summary Judgment, Entitlement as Matter of Law, Opposing Materials, Motions for Additional Discovery