Psy-Ed Corp. v. Klein
Supreme Judicial Court of Masschusetts
May 12, 2011
BOTSFORD, J.
*1 This case involves bitter litigation spanning more than a decade. It raises the question, among others, whether actions taken by an employer against a former employee may violate G.L. c. 151B, § 4(4) and (4A), sections of the antidiscrimination law that respectively prohibit retaliation and interference with a protected right. On this question, we conclude that an employer or other person may be liable to a former employee under these sections for retaliatory or interfering conduct that occurs after the employment relationship has terminated. We defer all discussion of the additional issues raised until later in this opinion.FN5
1. Background. a. Introduction. Before us are cross appeals from judgments in two actions in the Superior Court. The first was brought in 1999 by Psy–Ed Corporation (Psy–Ed, or company) and Joseph Valenzano, Jr., against Dr. Stanley Klein and Kimberly Schive. Klein brought the second action in 2002 against Valenzano and Psy–Ed, setting out a claim of retaliation. The two actions were consolidated prior to trial, which took place in 2006. We summarize first the facts as the trial judge found them, followed by a summary of the procedural history of the two actions. We reserve for later discussion the posttrial proceedings.
b. Facts. Klein, Maxwell Schleifer, and a third man founded Psy–Ed in 1969. In 1971, Psy–Ed began publishing Exceptional Parent (EP), a magazine for families of children with disabilities and special health care needs; Klein and Schleifer served as copublishers. In the early 1990's, Psy–Ed began to have financial problems and in 1993, Valenzano was approached to evaluate Psy–Ed as an investment opportunity. He decided to invest, and brought in about forty other investors. In the resulting restructuring of the company, Psy–Ed bought Schleifer's shares, Klein remained with the company and became editor-in-chief of EP, Valenzano joined Psy–Ed as president, chief executive officer, a member of the company's board of directors (board), and publisher, and the company opened a second office in New Jersey in addition to its original Massachusetts office. At various times after 1993, the third-party defendants, Kenneth Rossano, Dr. David Hirsch, Robert Striano, Donald S. Chadwick, and Robert K. Hopkins, served as members of the board. During Klein's employment as editor-in-chief, there were disagreements between him and the board.
From 1993 until 1996, Schive worked for Psy–Ed in the Massachusetts office, first as an assistant editor of EP and later as associate editor. Schive, who is deaf, required certain accommodations to be provided by her employer, including an interpreter at meetings. On several occasions, she was not provided an interpreter at meetings, and she perceived Valenzano to be impatient and angry at questions she asked while attempting to follow the discussion. In the summer of 1996, during the restructuring process initiated by Valenzano's new management team, certain functions were moved to New Jersey, and Schive was told she would continue to have a role at Psy–Ed. However, she was offered only a three-month position as a part-time consultant, and thereafter she no longer worked for the company.FN6 On February 13, 1997, Schive filed a charge of discrimination with the Massachusetts Commission Against Discrimination (MCAD). On June 13, 1997, at Valenzano's request and despite misgivings of which Valenzano was aware, Klein signed an affidavit generally supportive of Psy–Ed's position in Schive's MCAD matter.
*2 Klein was informed in June, 1997, that his employment contract with Psy–Ed was due to expire on June 30, and that it would not be renewed.FN7 Klein still held a twenty-one per cent interest in the company, however, and he proposed an alternative slate of Psy–Ed directors for election at a shareholders' meeting September 30, 1997. Valenzano, meanwhile, promoted the election of his own preferred slate. Klein's attempt to have Psy–Ed shareholders elect his slate of directors failed at the September shareholder meeting.
His proxy fight lost, Klein entered into negotiations with representatives of Psy–Ed for a complete and permanent separation from the company. Valenzano began negotiating with third-party defendant C. Kenneth Mehrling to arrange financing for the acquisition of Klein's shares. On March 27, 1998, Klein, Psy–Ed, and Valenzano executed a settlement agreement that included a mutual release of all claims (settlement agreement). Under the terms of the settlement agreement, Klein received an initial payment of $45,000, and a promissory note specifying sixteen quarterly payments of $13,797.19, for a total of $265,755, while Psy–Ed reacquired all of Klein's shares in the company.FN8
On October 6, 1997, without Valenzano's knowledge and while the negotiations over buying out Klein's Psy–Ed shares were in process, Klein signed a second affidavit in connection with Schive's MCAD charge against Valenzano and Psy–Ed. In his second affidavit, which was filed with the MCAD, Klein stated that after preparing his June, 1997, affidavit, he had become aware of and dissatisfied with the company's response to Schive's charge, as well as the manner in which his earlier affidavit had been characterized in that response. Klein also stated in the second affidavit that after completing the first affidavit, he had been reminded of certain incidents by former members of the Massachusetts staff.FN9
In September, 1999, Valenzano became aware of Klein's second affidavit in the Schive MCAD matter. He became aware as well that a former Psy–Ed sales and marketing contractor, Lawrence Qualiano, also had signed an affidavit in support of Schive's claim. At the next formal meeting of Psy–Ed's board of directors, held on September 30, 1999, the directors FN10 addressed the affidavits of Klein and Qualiano. They decided to terminate the company's involvement in an ongoing mediation of Schive's discrimination complaint before the MCAD, and agreed to “litigate this matter aggressively.”
*3 On December 2, 1999, the MCAD issued a probable cause determination in Schive's favor on her complaint.FN11 On December 17, 1999, Psy–Ed and Valenzano filed a complaint against Klein and Schive in which they alleged defamation, violation of G.L. c. 93A, § 11, civil conspiracy, and tortious interference with contractual and business relations (1999 action).FN12 Before serving either defendant, the board met on December 23, 1999, and voted five-to-one to discontinue further payments to Klein under the promissory note attached to the settlement agreement until Klein signed a settlement agreement between Psy–Ed and Qualiano,FN13 and until authorized by the board “based on the opinion of Boston counsel and their assessment and evaluation of alternative scenarios and their estimate of legal costs associated with the litigation the company has filed against Stan Klein and Kim Schive.” FN14 Rossano's was the sole dissenting vote.
c. Prior proceedings. As just stated, Psy–Ed and Valenzano filed their action against Klein and Schive in December, 1999. In response, Klein counterclaimed against Psy–Ed and Valenzano and brought a third-party complaint against Rossano and the other members of the board.FN15 In his counterclaim and third-party complaint, Klein alleged interference with contractual relations by Valenzano, Rossano, and the other board members. He also alleged abuse of process by Psy–Ed and Valenzano, and violations of G.L. c. 93A, § 11, by Psy–Ed, Valenzano, and the board members.FN16 On account of Psy–Ed's 1999 action, Schive filed another complaint with the MCAD on February 17, 2000, asserting a claim of retaliation in violation of G.L. c. 151B against Psy–Ed and Valenzano. Thereafter, as authorized by G.L. c. 151B, § 9, she brought this retaliation claim in the Superior Court as a counterclaim in the 1999 action. At the same time, Schive counterclaimed against Psy–Ed and Valenzano for abuse of process. Psy–Ed and Valenzano moved to amend their complaint in November, 2000, to add an allegation that by executing the settlement agreement without disclosing his second affidavit, Klein fraudulently induced them to enter the settlement agreement. A Superior Court judge (the eventual trial judge) denied Psy–Ed's and Valenzano's motion as untimely under the tracking order applicable to the case.
In 2002, Klein filed a separate complaint against Psy–Ed and Valenzano alleging retaliation in violation of G.L. c. 151B, § 4(4) and (4A) (§ 4[4] and [4A] ) (2002 action). In response, Psy–Ed and Valenzano counterclaimed, alleging breach of contract and fraud. On December 1, 2003, a Superior Court judge allowed Klein's motion to dismiss the counterclaims because in the 1999 action, Psy–Ed and Valenzano's attempt to add a breach of contract claim been dismissed as untimely, and the allegation of fraud arose out of the same transaction as the barred breach of contract claim.FN17 In April, 2005, a different Superior Court judge (motion judge) entered judgment sua sponte against Klein on his retaliation claims because the alleged conduct had occurred when he was no longer an employee.
By the time of trial, in June, 2006, no claims remained in Psy–Ed's and Valenzano's 1999 action against Schive, and only one claim, for defamation, remained against Klein.FN18 The trial judge tried that claim and the remaining counterclaims FN19 and third-party claims of Klein and Schive in a jury-waived trial, and thereafter issued findings of fact, rulings of law, and an order of judgment. He rejected Psy–Ed's and Valenzano's claim of defamation.FN20 The judge found in favor of Klein on his claim of tortious interference with contractual relations, in favor of Klein and Schive on their respective claims of abuse of process, and in favor of Schive on her retaliation claim. He found against Klein on his remaining claims, including violation of G.L. c. 93A, § 11.FN21
*4 In his order, the trial judge indicated a hearing would be held to determine damages with respect to those counterclaims on which he had found liability. However, the trial judge retired before holding such a hearing. As we explain in more detail below, a different Superior Court judge (posttrial judge) held a nonevidentiary hearing on damages on January 4, 2008. On March 13, 2009, she awarded Klein $125,000 in emotional distress damages in connection with his claims of abuse of process and tortious interference with contractual relations, $124,174.71 plus prejudgment interest in connection with the unpaid principal on the promissory note, $510,960.23 in attorney's fees, and $17,002.50 in costs. The same day, she awarded Schive $125,000 in emotional distress damages, $443,040.95 in attorney's fees, and $20,407.65 in costs. In Schive's case, judgment entered against Psy–Ed and Valenzano, the only defendants named in her counterclaims. All amounts due to Klein, however, were awarded and assessed jointly and severally against Psy–Ed, Valenzano, and four of the six third-party defendants: Hirsch, Striano, Chadwick, and Mehrling. FN22
Before us are multiple appeals. Psy–Ed and Valenzano appeal from and argue error in the judgments against them on Klein's claims of tortious interference with contractual relations and abuse of process, and on Schive's claims of abuse of process and retaliation. Psy–Ed and Valenzano also argue abuse of discretion or other error of law in the denial of Psy–Ed's and Valenzano's motion to amend the complaint in the 1999 action and in awarding damages without conducting further evidentiary hearings. Hirsch, Chadwick, Striano, and Mehrling appeal from and claim error in the judgments against them on Klein's claim of tortious interference with contractual relations. Finally, Klein appeals and challenges the entry of summary judgment on his claims of retaliation under § 4(4) and (4A) and the entry of judgment against him on his claim of unfair or deceptive conduct under G.L. c. 93A, § 11.
[1] [2] [3] 2. Retaliation. a. Generally. Both Schive and Klein claim they were the victims of retaliation in violation of G.L. c. 151B. FN23 Chapter 151B, however, does not actually use the word “retaliation.” Rather, § 4(4) makes it unlawful for “any person ... to discharge, expel or otherwise discriminate against any person because he has ... filed a complaint, testified or assisted in any proceeding under [ G.L. c. 151B, § 5],” while § 4(4A) makes it unlawful for “any person to coerce, intimidate, threaten, or interfere with another person in the exercise or enjoyment of any right granted or protected by this chapter, or to coerce, intimidate, threaten or interfere with such other person for having aided or encouraged any other person in the exercise or enjoyment of any such right granted or protected by this chapter.” FN24 A claim of retaliation may succeed even if the underlying claim of discrimination fails, provided that in asserting her discrimination claim, the claimant can “prove that [she] reasonably and in good faith believed that the [employer] was engaged in wrongful discrimination.” Abramian v. President & Fellows of Harvard College, 432 Mass. 107, 121, 731 N.E.2d 1075 (2000), quoting Tate v. Department of Mental Health, 419 Mass. 356, 364, 645 N.E.2d 1159 (1995). In the absence of direct evidence of a retaliatory motive, to make out a prima facie case of retaliation, the plaintiff must show that “he engaged in protected conduct, that he suffered some adverse action, and that ‘a causal connection existed between the protected conduct and the adverse action.’ ” Mole v. University of Mass., 442 Mass. 582, 591–592, 814 N.E.2d 329 (2004), quoting Mesnick v. General Elec. Co., 950 F.2d 816, 827 (1st Cir.1991), cert. denied, 504 U.S. 985, 112 S.Ct. 2965, 119 L.Ed.2d 586 (1992). This causal connection may be inferred, for example, where “adverse action is taken against a satisfactorily performing employee in the immediate aftermath of the employer's becoming aware of the employee's protected activity.” Mole v. University of Mass., supra at 592, 814 N.E.2d 329. However, the employer's desire to retaliate against the employee must be shown to be a determinative factor in its decision to take adverse action. Abramian v. President & Fellows of Harvard College, supra.
As with the word “retaliation,” courts have adopted “adverse employment actions” as shorthand for the actions of an employer that may violate § 4(4) and (4A). See, e.g., Mole v. University of Mass., supra at 592 n. 14, 594, 814 N.E.2d 329 (defining “adverse actions” by quoting § 4[4] and [4A], then relying on shorthand “adverse employment actions” later in decision). Like “retaliation,” however, “adverse employment action” appears nowhere in the statute.FN25 See § 4(4) and (4A). Rather, courts use “adverse employment action” as a convenient term of reference to the more detailed statutory language when assessing, for example, whether actions taken by employers were substantial enough to have materially disadvantaged an employee, see MacCormack v. Boston Edison Co., 423 Mass. 652, 662–663, 672 N.E.2d 1 (1996), or whether actions of employers were causally related to employees' protected conduct. See, e.g., Pardo v. General Hosp. Corp., 446 Mass. 1, 19–20, 841 N.E.2d 692 (2006), quoting Mole v. University of Mass., supra at 592, 595, 814 N.E.2d 329 (juries may infer retaliation from timing and sequence of “protected activity” and “adverse employment actions”). Cf. Lipchitz v. Raytheon Co., 434 Mass. 493, 505–506, 751 N.E.2d 360 (2001) (discussing causal link required between “discriminatory animus” and adverse employment action).
*5 [4] Perhaps because of the term “adverse employment action,” confusion has arisen as to whether conduct challenged as retaliatory must target a current employee in order to fall afoul of § 4(4) and (4A). FN26 We conclude that under the plain meaning of these sections, it need not. Section 4(4) addresses action taken by “any person” against “any person,” while § 4(4A) concerns actions taken by “any person” against “another person.” In neither case does the statute expressly require that an employer-employee relationship exist at the time of the wrongful conduct, or at any other time. In light of the c. 151B's broad remedial purposes, it would be an error to imply such a limitation where the statutory language does not require it. See G.L. c. 151B, § 9 (G.L. c. 151B to be “construed liberally for the accomplishment of its purposes”). Cf. Robinson v. Shell Oil Co., 519 U.S. 337, 346, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997) (limiting protections of antiretaliation provision of Title VII, 42 U.S.C. § 2000e–3(a), to current employees would be destructive of a primary statutory purpose: “Maintaining unfettered access to statutory remedial mechanisms”). Cf. also Burlington N. & Santa Fe Ry. v. White, 548 U.S. 53, 67, 126 S.Ct. 2405, 165 L.Ed.2d 345 (2006) (to achieve primary purpose, scope of Title VII's antiretaliation provision “extends beyond workplace-related or employment-related retaliatory acts and harm”). For example, where an employer's discriminatory conduct results in an employee's termination, § 4(4) and (4A) must necessarily expand beyond current employees to have the intended effect of protecting victims of discrimination from suffering further ill treatment as a consequence of exercising their rights under G.L. c. 151B. Cf. Robinson v. Shell Oil Co., supra (restriction of statutory antiretaliation provision to current and not former employees would undermine Title VII's effectiveness “by allowing the threat of postemployment retaliation to deter victims of discrimination from complaining”).
[5] [6] [7] Where the alleged retaliatory act is the filing of a lawsuit, however, the scope of § 4(4) and (4A) are bounded by State and Federal constitutional rights to seek judicial resolution of disputes. See Sahli v. Bull HN Info. Sys., Inc., 437 Mass. 696, 700–701, 774 N.E.2d 1085 (2002) ( Sahli ). But the “right to petition is not ... an absolute right.” Id. at 702, 774 N.E.2d 1085. The filing of “sham” or “baseless” litigation, as distinct from “unsuccessful but reasonably based suits,” is not a constitutionally protected right.FN27 Id. at 702–704, 774 N.E.2d 1085. “Sham” litigation, at least in the antitrust context, is litigation that is “objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits,” and also is subjectively motivated by the litigant's desire to use the governmental process—as opposed to its outcome—to influence or harm the target of the litigation. Id. at 702–703, 774 N.E.2d 1085, quoting Professional Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60–61, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993). This court in Sahli concluded that a complaint filed by an employer seeking a declaration of its contractual rights, vis—vis an employee, was reasonably based and therefore constitutionally protected in that it had “a legitimate basis in law and fact,” and the record lacked “evidence that the employer's purpose [was] other than to stop conduct it reasonably believe[d] violate[d] the terms of the contract.” Sahli, supra at 704–705, 774 N.E.2d 1085. See BE & K Constr. Co. v. NLRB, 536 U.S. 516, 533–534, 122 S.Ct. 2390, 153 L.Ed.2d 499 (2002) (right to petition protects suits that are “subjectively genuine and objectively reasonable”).
*6 [8] b. Schive's claim of retaliation. In reviewing a judge's decision after a jury-waived trial, “we accept the judge's findings of fact as true unless they are clearly erroneous” but “scrutinize without deference the legal standard which the judge applied to the facts.” Kendall v. Selvaggio, 413 Mass. 619, 620, 621, 602 N.E.2d 206 (1992). With respect to Schive's claim of retaliation, we conclude that the trial judge applied the proper legal standards to the facts, and that his factual findings were not clearly erroneous.
The judge properly outlined the elements of unlawful conduct under § 4(4). Relying on Sahli, 437 Mass. at 702–704, 774 N.E.2d 1085, he identified the dividing line between “[b]aseless” or “sham” litigation, which is not protected by the First Amendment to the United States Constitution, and those “reasonably based but unsuccessful lawsuits” that are constitutionally protected and so cannot constitute a violation of § 4(4) or (4A). He correctly pointed out that, while a causal connection must be established between protected conduct and adverse action, that connection may be shown either directly or by inference. Where the link is inferentially shown by closeness in time between an adverse action and the conduct that apparently triggered it, he stated, the triggering conduct need not be the initial filing of the complaint.
[9] [10] [11] [12] [13] The judge ruled that Schive engaged in legally protected conduct by bringing her discrimination claim with the MCAD. He further ruled that the 1999 action FN28 was an “adverse employment action” and that it was “baseless,” see Sahli, supra at 702–704, 774 N.E.2d 1085, in that all claims against Schive were dismissed “on the grounds that admissible evidence of damages and actionable defamation was lacking.” FN29 He found Schive demonstrated the necessary causal link between the protected conduct and the adverse action where, in the judge's view, Valenzano testified at trial that he brought the case to “retry” Schive's MCAD claims, FN30 and where the “rapid succession” of events in the fall and winter of 1999 also supported an inference of a causal connection between Schive's MCAD case and the complaint her former employer filed.FN31 The trial judge concluded by ruling that “Schive has acted reasonably and in good faith in believing she had suffered discrimination, and reasonably responded to that belief by filing a complaint at MCAD.” FN32 The judge found, “[b]ased on direct and indirect evidence,” that Psy–Ed and Valenzano brought suit “because of her reasonable efforts at MCAD.” FN33
*7 c. Klein's claim of retaliation. As noted in Part 1(c), supra, the motion judge entered summary judgment on Klein's claim for retaliation on the ground that the retaliatory acts he alleged “occurred over two years after the employment relationship between the parties terminated.” Because, as we have concluded, a person need not be a current employee to enjoy the protection of § 4(4) and (4A), the entry of summary judgment on Klein's claim must be vacated.FN34
[14] [15] [16] [17] 3. Abuse of process. As noted above, the trial judge found in favor of Klein and Schive on their respective counterclaims of abuse of process, brought in both instances against Psy–Ed and Valenzano. The elements of an abuse of process claim are “that ‘process' was used, for an ulterior or illegitimate purpose, resulting in damage.” Millennium Equity Holdings, LLC v. Mahlowitz, 456 Mass. 627, 636, 925 N.E.2d 513 (2010) ( Millennium ). To sustain the claim, “the fact finder must find that process was used ‘to accomplish some ulterior purpose for which it was not designed or intended, or which was not the legitimate purpose of the particular process employed.’ ” Id., quoting Quaranto v. Silverman, 345 Mass. 423, 426, 187 N.E.2d 859 (1963). Filing a groundless claim is not an element of the tort, but it is relevant, because it may “tend[ ] to show that the process was used for an ulterior purpose.” Fishman v. Brooks, 396 Mass. 643, 652, 487 N.E.2d 1377 (1986). However, the ulterior purpose element is not satisfied merely by a showing that a person commenced litigation knowing it was groundless. Beecy v. Pucciarelli, 387 Mass. 589, 596, 441 N.E.2d 1035 (1982).
[18] [19] Relying on the standard for the separate tort of malicious prosecution laid out in Beecy v. Pucciarelli, the trial judge erred in this case in equating the ulterior purpose element with an improper motive of vexation, harassment, or annoyance. See id. at 594 n. 9, 441 N.E.2d 1035. In an abuse of process claim, in contrast to a claim for malicious prosecution, such a motive does not alone suffice to show ulterior purpose.FN35 Rather, the ulterior purpose must be to gain some collateral advantage. FN36 See Fabre v. Walton, 436 Mass. 517, 519 n. 3 (2002), S. C., 441 Mass. 9, 802 N.E.2d 1030 (2004), quoting Vittands v. Sudduth, 49 Mass.App.Ct. 406 (2000) (“More specifically, abuse of process has been described as a ‘form of coercion to obtain a collateral advantage, not properly involved in the proceeding itself, such as the surrender of property or the payment of money’ ”). See also Restatement (Second) of Torts § 682 comment b, at 475 (1977) (“[T]here is no action for abuse of process when the process is used for the purpose for which it is intended, but there is an incidental motive of spite or an ulterior purpose of benefit to the defendant. Thus, the entirely justified prosecution of another on a criminal charge, does not become abuse of process merely because the instigator dislikes the accused and enjoys doing him harm”).
*8 The trial judge determined that the primary reason, and ulterior motive, for Valenzano's filing the abuse of process claim against Schive was to retaliate for her initiating and pursuing the MCAD proceedings. Immediately before stating this conclusion, the judge quoted Schive's contention that the company and Valenzano brought the lawsuit against her in order to discourage her from pursuing her pending MCAD claims, to distract her from the MCAD claims and impose legal costs on her, and to induce her to abandon her claims. The purpose articulated by Schive qualifies as an effort to obtain a collateral advantage. See Millennium, supra at 640, 642, 925 N.E.2d 513 (upholding judgment on abuse of process claim where motive in bringing separate action against attorney was desire to remove attorney as wife's divorce counsel). However, the judge did not indicate whether he was adopting or rejecting Schive's position.FN37 When this fact is considered in light of the judge's initial articulation of the incorrect legal standard to apply to an abuse of process claim, we are constrained to conclude that the judgment in favor of Schive on the abuse of process claim must be vacated.FN38
[20] With respect to Klein, the judge's findings do not clearly identify what, if any, ulterior purpose and collateral advantage Psy–Ed and Valenzano sought to gain in bringing suit against Klein. The judge stated Valenzano testified that he brought the lawsuit because he “expected to bring into one point of justice the unbelievably frivolous charges of the MCAD complaint against me” and that he “wanted to have some kind of resolution ... with a man who had essentially defrauded us.” The desire to litigate a dispute, by itself, does not translate into an ulterior purpose for bringing the action, even when, as here, many of the claims were groundless. See Ladd v. Polidoro, 424 Mass. 196, 199–200, 675 N.E.2d 382 (1997). As with Schive, we must vacate the judgment on Klein's abuse of process claim and remand for further review in light of the proper standard for abuse of process.FN39
[21] [22] 4. Tortious interference with contract. The trial judge found that Valenzano and the members of Psy–Ed's board who were third-party defendants tortiously interfered with Klein's contract with the company. To prevail on a claim of tortious interference with a contract, a plaintiff must establish “(1) he had a contract with a third party; (2) the defendant knowingly induced the third party to break that contract; (3) the defendant's interference, in addition to being intentional, was improper in motive or means; and (4) the plaintiff was harmed by the defendant's actions.” G.S. Enters., Inc. v. Falmouth Marine, Inc., 410 Mass. 262, 272, 571 N.E.2d 1363 (1991). Where the defendant is a corporate official acting in the scope of his corporate responsibilities, a plaintiff has a heightened burden of showing the improper motive or means constituted “actual malice,” that is, “a spiteful, malignant purpose, unrelated to the legitimate corporate interest.” Blackstone v. Cashman, 448 Mass. 255, 260–261, 860 N.E.2d 7 (2007) ( Blackstone ), quoting Wright v. Shriners Hosp. for Crippled Children, 412 Mass. 469, 476, 589 N.E.2d 1241 (1992).FN40 We consider separately Klein's tortious interference claims against Valenzano and against the third-party defendant board members.
*9 a. Valenzano. The judge began his analysis of Klein's claim against Valenzano by stating the legal proposition that “a defendant may be liable for his intentional interference with the performance of his own contract with the plaintiff.” The judge then concluded that Klein's settlement agreement with Psy–Ed, an agreement to which Valenzano was a party,FN41 was a contract, that it included the promissory note between Klein as “Payee” and Psy–Ed as “Maker,” and that Valenzano intentionally interfered with the settlement agreement by deciding to suspend payments on the note on account of his personal animus and hostility toward Klein.
[23] The judge's threshold premise—that a party can tortiously interfere with a contract to which he is a party—is an incorrect statement of the law. See Harrison v. NetCentric Corp., 433 Mass. 465, 476 n. 12, 477–478, 744 N.E.2d 622 (2001) (party to contract cannot be held liable for intentional interference with that contract).FN42 Accord Blackstone, 448 Mass. at 259 n. 8, 860 N.E.2d 7.FN43 For Valenzano to be held liable for tortious interference, it must be proved that there existed a relevant contract to which Valenzano was not a party, that Valenzano caused one or more parties to that contract to “break” (i.e., breach) it, and that Klein was harmed as a result, and that Valenzano acted with actual malice. G.S. Enters., Inc. v. Falmouth Marine, Inc., 410 Mass. at 272, 571 N.E.2d 1363. See Blackstone, supra at 260–261, 860 N.E.2d 7. Assuming that the promissory note, to which Valenzano was not a party, see note 43, supra, was an operative contract independent of the settlement agreement, the note could form the basis of a claim of tortious interference against Valenzano.FN44 But for Klein to prevail on his claim, the judge would have had to find that Valenzano induced Psy–Ed's breach of a contract (specifically, the promissory note) with Klein.
The trial judge made no findings on this issue, or on the antecedent issue whether, when Psy–Ed's board voted to suspend payments on the promissory note, this action in fact caused a breach by Psy–Ed of the contract that the note represented.FN45 This omission was significant in light of Klein's contractual obligation, under the terms of the settlement agreement, “to cooperate with the Company in its investigation and defense of any claims against the Company by Kimberly Schive.” If, as Valenzano and the third-party defendants suggested below and argue on appeal, Klein breached the settlement agreement or fraudulently induced Psy–Ed and Valenzano to enter into it by failing to disclose the second affidavit he had signed in connection with Schive's MCAD matter, Psy–Ed may not have had a legal obligation to make the full payments on the promissory note.FN46 See G.L. c. 106, §§ 3–303 ( b ) and 3–305 ( a ) (2) (defenses to enforcement of instruments). If that were the case, Valenzano (as well as the third-party defendant board members) could not be liable for tortious interference. Cf. Harrison v. NetCentric Corp., 433 Mass. at 478–479, 744 N.E.2d 622 (chief executive officer of corporate employer did not tortiously interfere with plaintiff's employment contract where, under terms of contract, employer was entitled to take action it did).FN47 We therefore vacate the judgment against Valenzano on Klein's claim of tortious interference with contract and remand for further proceedings.
*10 [24] b. Third-party defendants. The board members who are third-party defendants argue that the trial judge's factual findings reflect the absence of actual malice on the part of all members of the board other than Valenzano. See Blackstone, supra at 260–261, 860 N.E.2d 7. We agree.
The judge stated that the board's minutes indicated the board's decision to stop payment was due to Klein's unwillingness to sign a settlement agreement with Qualiano. The judge describes this reason as constituting “economic coercion,” and therefore improper. It is not clear what the judge meant, but in any event, the reason stated in the board's minutes does not suggest “a spiteful, malignant purpose, unrelated to the legitimate corporate interest.” Id. at 261, 860 N.E.2d 7, quoting Wright v. Shriners Hosp. for Crippled Children, 412 Mass. 469, 476, 589 N.E.2d 1241 (1992).
[25] On appeal, Klein argues the directors adopted and participated in Valenzano's vengeful campaign. For evidence he cites Rossano's testimony the board was “adamant” in its decision to discontinue payments on the note; Klein argues this means the board members failed to manifest objectivity or independence of thought. Klein also states they “flouted” the advice of Rossano, a decision that ultimately exposed the company to litigation expenses greatly in excess of the note's outstanding principal. Even if, as Klein suggests, the board's course of action was ill considered or short sighted, Klein's arguments simply fail to demonstrate “a spiteful, malignant purpose.” The judgment against the members of the Psy–Ed board other than Valenzano on Klein's claim for tortious interference with contract cannot stand.
[26] 5. Chapter 93A. The trial judge found in favor of Valenzano, Psy–Ed, and the third-party defendant board members on Klein's counterclaim alleging a violation of G.L. c. 93A, § 11. Section 11 covers “individuals acting in a business context in their dealings with other business persons and not to every commercial transaction whatsoever.” Manning v. Zuckerman, 388 Mass. 8, 10, 444 N.E.2d 1262 (1983). It does not provide a remedy for disputes arising out of an employer-employee relationship, see id. at 15, 444 N.E.2d 1262, or for disputes that “occur within a single company.” Szalla v. Locke, 421 Mass. 448, 451, 657 N.E.2d 1267 (1995). The facts as found by the judge adequately support his conclusion that the dispute arose out of a private transaction between the Psy–Ed board and Klein in his role as a former employee and shareholder of the company. Klein's efforts to describe the dispute as commercial in nature are contradicted by the fact that, despite the complex entanglement of the parties in this case, the context in which they were operating was a single business enterprise. See Newton v. Moffie, 13 Mass.App.Ct. 462, 466–467, 434 N.E.2d 656 (1982) (G.L. c. 93A, § 11, intended to apply only to dealings between legally separate “persons” engaged in arm's-length transactions, not to dealings between members of single legal entity). Contrast Grand Pac. Fin. Corp. v. Brauer, 57 Mass.App.Ct. 407, 416 n. 7, 783 N.E.2d 849 (2003) (“distinguishing mark” for G.L. c. 93A applicability is “interactive business transactions [involving] independent business entities”). There was no error in the judge's rejection of Klein's claims under G.L. c. 93A.
*11 6. Psy–Ed's and Valenzano's counterclaims against Klein. As noted previously, after Klein filed his separate action for retaliation against Psy–Ed and Valenzano in 2002, his motion to dismiss Psy–Ed's and Valenzano's counterclaims alleging breach of contract and fraud was allowed because, in 2001, Psy–Ed's and Valenzano's efforts to amend their own complaint to raise these same claims against Klein had been denied as untimely under the applicable tracking order.
The allowance of Klein's motion to dismiss the counterclaims was error. The denial in 2001 of the motion to amend Valenzano's and Psy–Ed's complaint had no bearing on Psy–Ed and Valenzano's right to bring timely counterclaims to Klein's separate complaint.FN48 See Mass. R. Civ. P. 13(a), as amended, 423 Mass. 1405 (1996) (pleadings shall state counterclaims arising out of same transaction or occurrence); Mass. R. Civ. P. 13(b), 365 Mass. 758 (1974) (pleadings may state other claims against opposing party). Their counterclaims were not so closely connected to the claims in their own, earlier complaint as to be derivative of the pending action brought by Psy–Ed and Valenzano. See Mass. R. Civ. P. 12(b)(9), as appearing in 450 Mass. 1403 (2008). See also Harvard Community Health Plan, Inc. v. Zack, 33 Mass.App.Ct. 649, 652, 603 N.E.2d 924 (1992) (dismissal under rule 12[b][9] may be appropriate if parties and issues are identical to those in prior pending action). We reverse the grant of Klein's motion to dismiss Psy–Ed's and Valenzano's claims of breach of contract and fraud.
7. Damages. In his order, the trial judge stated that a hearing would be held to determine damages on Klein's and Schive's successful counterclaims. After the trial judge retired, the posttrial judge held a status conference on March 21, 2007, and a nonevidentiary hearing January 4, 2008. She awarded damages on the basis of that conference and hearing and her review of the record, including the findings of the trial judge. The posttrial judge proceeded under Mass. R. Civ. P. 63, 365 Mass. 831 (1974), which allows a different judge to perform duties of the trial judge if the trial judge is unable to do so. FN49 We conclude that the award of emotional distress damages to Schive was properly within the posttrial judge's authority to make, but that she erred in her other awards of damages.
*12 [27] a. Award of damages to Schive for emotional distress. The posttrial judge awarded Schive damages for emotional distress on the basis of the judge's review of Schive's trial testimony and the trial judge's finding that “Schive credibly testified that she suffered emotional distress on account of [Psy–Ed's] and Valenzano's lawsuit.” The posttrial judge detailed the evidence presented at trial concerning Schive's emotional injuries and awarded damages in the amount of $125,000. Where Psy–Ed and Valenzano challenge the award only fleetingly and without any critique of the methodology for calculating the amount,FN50 we conclude that the posttrial judge acted within her discretion in this award of damages.FN51
b. Award of damages to Klein. The posttrial judge awarded Klein $125,000 as damages for emotional distress in connection with his claims of abuse of process and tortious interference with contractual relations. She also awarded him $124,174.71, plus interest since December 31, 1999, as separate damages on the same two claims. Because, for reasons previously discussed, we have concluded that the judgments in favor of Klein on these two claims were in error, we vacate the damage awards that pertain to them.FN52
[28] [29] c. Attorney's fees. Psy–Ed and Valenzano contest the posttrial judge's awards of attorney's fees, challenging, among other claimed errors, the lack of an evidentiary hearing. An evidentiary hearing on attorney's fees is not always required, especially when the award of fees is being considered by the judge who presided over the trial. Cf. Matter of the Estate of King, 455 Mass. 796, 805–806, 920 N.E.2d 820 (2010). In this case, fees were awarded without an evidentiary hearing by a judge who did not preside at trial, despite some indication at trial and in the trial judge's ruling that a further evidentiary hearing was anticipated. Furthermore, in calculating and adjusting the “lodestar” figure in order to determine Schive's attorney's fees, the posttrial judge relied on the affidavit of an expert witness who did not testify and whom Psy–Ed and Valenzano had no opportunity to cross-examine. In the circumstances, the posttrial judge erred in declining to hold at least a limited evidentiary hearing on the issue of attorney's fees. On remand, the award of attorney's fees to Schive may also need to be adjusted if she does not pursue or in any event does not prevail on her abuse of process claim.
[30] [31] The award of attorney's fees to any party must be tied to specific claims and supported by findings that are adequately supported by the record. With respect to Klein, in light of the conclusions we have reached concerning his substantive claims, we vacate the award of attorney's fees and costs.FN53
*13 8. Conclusion. We affirm the decisions with regard to liability and damages in favor of Schive on her counterclaim of retaliation against Psy–Ed and Valenzano, but vacate the judgment on this counterclaim with respect to associated attorney's fees. We also vacate the judgment in favor of Schive on her counterclaim of abuse of process against Psy–Ed and Valenzano.
We vacate the judgments in favor of Klein on his counterclaim of abuse of process against Psy–Ed and Valenzano, and on his counterclaim of tortious interference with contract against Valenzano. We reverse the judgment in favor of Klein on his counterclaim of tortious interference with contractual relations with respect to the third-party defendants. We affirm the judgment in favor of Valenzano, Psy–Ed, and the third-party defendants on Klein's counterclaim alleging a G.L. c. 93A, § 11, violation. We vacate the grant of summary judgment in favor of Psy–Ed and Valenzano on Klein's retaliation claim and the judgment of dismissal with respect to Psy–Ed's and Valenzano's counterclaims against Klein for breach of contract and fraud.
Finally, with the exception of the award to Schive of emotional distress damages, which, as noted above, we affirm, we vacate all other awards of damages, attorney's fees, and costs. We remand the case for further proceedings consistent with this opinion.
So ordered.
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