The United States District Court for the District of Massachusetts recently rendered a decision that underscores the reach of Massachusetts General Laws Chapter 93A. The district court declined to dismiss an unfair business practices claim where the parties' contract was governed by Florida law and the alleged misconduct occurred, in part, during litigation. The case, Aiello v. Signature Commercial Solutions, LLC, serves as a cautionary tale for businesses that transact in Massachusetts, even when contracts contain a choice-of-law provision and are drafted with the goal of limiting exposure.
The dispute arose from an asset purchase agreement between Aiello and Signature whereby Aiello assigned to Signature interest in certain assets in return for payments to Aiello based on Signature's income from those assets. In 2023, Signature terminated those business contracts, thereby ceasing the payments to Aiello. Aiello filed suit in Massachusetts, alleging breach of contract and unfair and deceptive business practices under Chapter 93A. Aiello claimed that Signature's conduct not only breached the asset purchase agreement, but also violated commercial fairness norms.
The Chapter 93A claim survived a motion for summary judgment for five separate reasons.
- The choice-of-law provision in the contract could not act as a shield to bar the Chapter 93A claim; the provision in the contract applied only to the agreement itself. The Chapter 93A claim was based on conduct outside of the agreement, and the commercial conduct at issue touched Massachusetts. Therefore, the claim was allowed to proceed.
- Signature argued that the Chapter 93A claim must fail if the breach of contract claim failed. The breach of contract claim also survived summary judgment, so this argument was moot.
- The Chapter 93A claim did not simply mirror damages available under the breach of contract theory. While double recovery for damages would be barred, the same acts may govern a determination that the defendant also violated Chapter 93A.
- Signature was not entitled to litigation privilege for acts its in-house counsel allegedly undertook. Allegedly, Signature's in-house counsel attempted to pressure Aiello into dropping the lawsuit by threatening to withhold payments that were already undisputedly due and owing under the contract. Privilege does not protect this type of coercion and it is actionable under Chapter 93A.
- That coercive conduct that began prior to litigation and continued thereafter did not remove the dispute from Chapter 93A's scope. The obligations flowed directly from the parties' prior business dealings and remained commercial in nature even during the litigation.
This case underscores that Chapter 93A liability may be difficult to escape where business relationships and communications touch Massachusetts. Companies doing business in Massachusetts should not assume that an out-of-state choice-of-law provision will immunize them from Chapter 93A exposure. Furthermore, a business's litigation tactics, if viewed as coercive or retaliatory, may expose the company to statutory liability or potentially multiple damages.
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