Chesterton Capital LLC v. Holley et al
District Judge Leo T. Sorokin: ORDER entered granting in part and denying in part 120 Motion for Summary Judgment; denying 128 Motion for Summary Judgment (Sorokin, Leo)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
BYRON L. HOLLEY, JOHN C. LOUDON, )
and LEGACY POINT CAPITAL LLC,
Third Party Defendant.
CHESTERTON CAPITAL, LLC,
Civil No. 16-10848-LTS
ORDER ON MOTIONS FOR SUMMARY JUDGMENT (DOCS. 120 and 128)
October 20, 2017
Plaintiff Chesterton Capital LLC (“Chesterton”) sued Defendants John Loudon
(“Loudon”), Byron Holley (“Holley”), and Legacy Point Capital LLC (“Legacy Point”) for
common law fraud and violation of Mass. Gen. Laws Ch. 93A in relation to a loan Chesterton
extended toward the production of a long-in-the-works Janis Joplin biopic, “Get It While You
Can” (herein “GIWYC”). In turn, Loudon and Legacy Point (together, the “Third Party
Plaintiffs”) filed a Third Party Complaint against Anne Brensley (“Brensley”) for, inter alia,
fraud, breach of fiduciary duty, breach of contract, and indemnification. Doc. 40 at 1. These
claims arise from Brensley’s engagement to assist Loudon, Holley, and Legacy Point in
obtaining the loan from Chesterton. Brensley has moved for summary judgment on these claims.
Doc. 120. Loudon and Legacy Point have opposed Brensley’s motion, Doc. 127, and filed a
cross-motion for summary judgment on their claim for indemnification, Doc. 128, which
Brensley has opposed, Doc. 139.
For the reasons stated below, the Court ALLOWS IN PART and DENIES IN PART
Brensley’s Motion for Summary Judgment (Doc. 120) and DENIES Third Party Plaintiffs’ Cross
Motion for Partial Summary Judgment (Doc. 128).
Agreements between Third Party Plaintiffs and Brensley
Loudon and Holley are Managing Members of Legacy Point, an investment banking
company. Beginning in June 2012, Legacy Point acted as a broker and middleman and sought
investors for the GIWYC project. Doc. 40 at 2. At that time, Brensley was the Managing
Director of Boston Financial Trust Advisors, LLC (“BFT”). Id. On or around August 15, 2012,
Legacy Point, BFT, and a separate production company, Get It While You Can, LLC (“GIWYC
LLC”), executed a Co-Financing Agreement, under which BFT agreed to assist Legacy Point
and GIWYC LLC with obtaining funding for GIWYC. Doc. 49-2 at 16-23. This agreement
provided: “Nothing contained herein shall constitute a partnership between or joint venture by,
the parties hereto or constitute either party the agent of the other.” Id. at 19.
On February 4, 2013, Loudon and Holley (on behalf of Legacy Point) and Brensley (on
behalf of BFT) executed a Venture Agreement under which they agreed “to collaborate to
finance an on-going slate of feature films and/or structure the financing for entertainment
projects secured through the joint efforts of the Parties and to direct all film related projects that
either party anticipates participating in, into the collaboration.” Doc. 88-1 at 2. The Venture
Agreement entitled Brensley to a share of “[a]ll revenue, and profits paid to the extent and
arising from this Venture Agreement[.]” Id. at 7. It further provided:
“Nothing contained in this Agreement shall be deemed to create or establish, and nothing
contained in this Agreement shall be interpreted as recognizing or acknowledging the
existence of a partnership by or between existing Parties hereto, it being understood and
agreed that each of The Parties is acting independently of the other in connection with the
subject matter of this Agreement.”
Id. at 8.
Pursuant to the Co-Financing Agreement but prior to entering the Venture Agreement,
Brensley introduced Third Party Plaintiffs to Chesterton, who agreed to provide a $1.2 million
bridge loan towards the GIWYC project (the “Chesterton Loan”). Doc. 40 at 2. While GIWYC
LLC ultimately received the Chesterton Loan, Chesterton sought from Loudon and Holley
personal guaranties and confirmation of their financial capacity to backstop the loan. Id.; Doc.
88 at 5. Loudon and Holley agreed to guaranty the loan and produced proof of funds of over $3
million. Id. They separately entered into a side letter with GIWYC LLC outlining the terms
under which they would provide personal guaranties. Id. On or around October 9, 2012,
Chesterton and GIWYC LLC closed on the Chesterton Loan, and Loudon and Holley signed
personal guaranties thereof. Doc. Nos. 25-1 and 25-2.
Throughout 2013, Chesterton provided several loan extensions and advanced additional
amounts to GIWYC. Doc. 1 at 7-9. However, neither GIWYC nor Third Party Plaintiffs
procured the financing necessary to begin production of the film. Doc. 38 at 7. GIWYC LLC
defaulted on the Chesterton Loan on June 1, 2014. Doc. 1 at 9.
Holding an uncollectable judgment against GIWYC LLC, Chesterton brought suit on the
personal guaranties in state court. Doc. 1 at 9. Chesterton separately brought this action in
federal court. Chesterton’s Complaint alleges that Defendants engaged in unfair and/or
deceptive acts and practices and made misrepresentations of material fact about their financial
wherewithal in order to induce Chesterton to invest in the GIWYC project. Id. at 10-11.
Consistent with their claims in the state court litigation, 1 Loudon and Legacy Point filed a Third
Party Complaint in this action against Brensley for her role in the GIWYC project. Doc. 40.
SUMMARY JUDGMENT STANDARD
“[A] court may grant summary judgment only where there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law.” Perez v. Lorraine
Enterprises, Inc., 769 F.3d 23, 29 (1st Cir. 2014) (citing Fed. R. Civ. P. 56(a)). “A ‘genuine’
issue is one on which the evidence would enable a reasonable jury to find the fact in favor of
either party.” Id. (citation omitted). “A ‘material’ fact is one that is relevant in the sense that it
has the capacity to change the outcome of the jury's determination.” Id. (citation omitted).
“When considering the summary judgment record, all reasonable inferences are to be drawn in
favor of the party opposing summary judgment, ... just as all disputed facts are viewed in the
light most favorable to him.” Thompson v. Cloud, 764 F.3d 82, 87 (1st Cir. 2014) (citation,
internal quotation marks, and modifications omitted).
That said, where “the non-movant has the burden of proof on a critical issue and the
evidence that she proffers in opposition to summary judgment is so vague that she could not
prevail at trial, the motion must be granted.” Perez, 247 F.3d at 318 (citing Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 252 (1986)). The Court is to ignore “conclusory allegations,
improbable inferences, and unsupported speculation.” Prescott v. Higgins, 538 F.3d 32, 39 (1st
Loudon and Holley filed a third party complaint in state court against Brensley on or around August 15, 2015.
Cir. 2008) (quoting Medina–Munoz v. R.I. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990)).
“Cross motions for summary judgment do not alter the basic Rule 56 standard, but rather simply
require [the Court] to determine whether either of the parties deserves judgment as a matter of
law on facts that are not disputed.” Adria Int'l Grp., Inc. v. Ferré Dev., Inc., 241 F.3d 103, 107
(1st Cir. 2001). “Where, as here, a district court rules simultaneously on cross-motions for
summary judgment, it must view each motion, separately, through this prism.” Estate of Hevia
v. Portrio Corp., 602 F.3d 34, 40 (1st Cir. 2010).
Loudon and Legacy Point asserted nine counts against Brensley in their Third Party
Complaint. 2 Brensley moved for summary judgment on Counts II, III, VI, VIII, and IX,
discussed below. Additional claims for fraudulent misrepresentation as to Brensley’s status as a
legal advisor (Count I) and as to the consequences of a Chesterton Loan default (Count IV),
violation of 93A (Count VII), and negligence (Count X) will proceed to trial, as no party has
moved for summary judgment on these claims.
Fraudulent Misrepresentation as to Repayment Obligation
In Count II, Third Party Plaintiffs allege that Brensley fraudulently induced Loudon to
sign the guaranty by falsely representing to Loudon that she would share in the repayment of any
amounts for which Loudon may be liable thereunder. Doc. 40 at 4-5. They rely chiefly on an
email from Brensley purporting to indicate her intent to indemnify Loudon and Holley should
their obligations under their personal guaranties be triggered. Doc. 127 at 2-3. Brensley argues
Loudon and Legacy Point mislabel the fifth through ninth counts in the Third Party Complaint as Counts VI
through X. Doc. 40. The Court follows the Third Party Complaint’s labeling, which omits a Count V.
that Count II must be dismissed because the alleged agreement to share in any guaranty
obligation is not an enforceable contract. Doc. 121 at 8-10.
Absence of a binding indemnity does not itself entitle Brensley to judgment as a matter of
law. A plaintiff may prove false misrepresentation by establishing “that the defendant ‘made a
false representation of material fact with knowledge of its falsity for the purpose of inducing the
plaintiff to act thereon, and that the plaintiff reasonably relied upon the representation as true and
acted upon it to [its] damage.’” Russell v. Cooley Dickinson Hosp., Inc., 437 Mass. 443, 458
(Mass. 2002) (internal citation omitted). Statements by Brensley that fall short of an agreement
thus still may support Third Party Plaintiffs’ fraudulent misrepresentation claim if Brensley knew
that she would not share in the repayment obligation; if she nonetheless obtained Loudon’s
personal guaranty by telling him that she would; and if Loudon’s reliance on her statement of
intent was reasonable.
On these questions, Loudon and Legacy Point have “set forth specific facts showing there
is a genuine issue for trial.” Barbour v. Dynamics Research Corp., 63 F.3d 32, 37 (1st Cir.1995).
Brensley’s email to Loudon stated that she would be “taking on an obligation to participate in the
repayment to [Chesterton] upon default.” Doc. 127-2. When asked at her deposition whether it
was fair to say that her email statement was not true, Brensley explained that the participation
envisioned “wasn’t necessarily a monetary repayment” but was rather an undertaking “not to
leave them hanging.” Doc. 127-4. Drawing all reasonable inferences in favor of Loudon and
Legacy Point, a jury could reasonably conclude on this record that Brensley fraudulently
misrepresented her intent. Accordingly, the Court DENIES Brensley’s Motion for Summary
Judgment as to Count II.
Fraud as to Guaranty Version
Count III alleges that, in coordinating execution of Loudon’s guaranty, Brensley
fraudulently submitted to Chesterton a signed version of the guaranty that was not the version
that Loudon intended to submit. Doc. 40 at 5. Insofar as Loudon contends that he never signed
the submitted version (and rather that Brensley swapped the version that he did sign for the
submitted version), Loudon admitted and alleged the submitted version of the guaranty in his
2015 third party complaint against Brensley in the related state court litigation. Doc. 122-6 at 6.
He therefore is estopped from taking a different position in this matter. See Alternative System
Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 32-33 (1st Cir. 2004) (“As a general matter, the
doctrine of judicial estoppel prevents a litigant from pressing a claim that is inconsistent with a
position taken by that litigant either in a prior legal proceeding or in an earlier phase of the same
legal proceeding.”) (internal citation omitted). 3
In his Opposition to Brensley’s motion, Loudon and Legacy Point also advance a claim
that Brensley “tricked [Loudon] into signing something other than what was intended.” Doc.
127 at 3. By contrast, this contention does not contradict Loudon’s earlier position on the
version of the guaranty that he signed, and it is not estopped. However, Third Party Plaintiffs
fail to offer any factual support for this theory. To thwart summary judgment, they must offer
admissible evidence that Brensley tricked Loudon as to what he signed. Here, they do not even
offer an affidavit statement by Loudon. Rather than explaining how the executed version came
to bear Loudon’s signature, Third Party Plaintiffs instead resort to their explanation that Loudon
The state court found that Loudon was estopped from denying that he signed the submitted version based on his
earlier position in those proceedings. Loudon notes that this estoppel was not part of a final judgment. Doc. 127 at
3. However, the Court does not base estoppel here on collateral estoppel (requiring final judgment) arising from the
state court’s ruling. Rather, the Court applies the doctrine of judicial estoppel, for which courts generally require (1)
that “the estopping position and the estopped position [are] directly inconsistent,” and (2) that “the responsible party
[has] succeeded in persuading a court to accept its prior position.” Alternative System Concepts, 374 F.3d at 33.
The Court finds both that Loudon’s positions contradict and that the state court accepted Loudon’s prior position.
Doc. 122-6 at 6 (“In the portion of their answer addressing the plaintiff’s allegations that they executed the original
personal guaranty, the defendants merely “state[d] that the Personal Guaranty speaks for itself as to its contents.”).
signed and returned a revised version of the guaranty and that he was not notified that Chesterton
rejected the revised version. 4 Id. Accordingly, Brensley’s Motion for Summary Judgment is
ALLOWED as to Count III.
Breach of Fiduciary Duty
In Count VI, Loudon and Legacy Point allege that Brensley breached a fiduciary duty by
not disclosing to Loudon a conflict of interest (namely, a commission from Chesterton with
respect to its loan); not disclosing compensation from Chesterton for legal and financial advice;
and inducing Loudon to guarantee a loan for which she received an undisclosed commission
from Chesterton, thereby engaging in self-dealing. Doc. 40 at 5-6. To establish a breach of
fiduciary duty, Loudon and Legacy Point must show “1) existence of a fiduciary duty arising
from a relationship between the parties, 2) breach of duty, 3) damages and 4) a causal
relationship between the breach and the damages.” Qestec, Inc. v. Krummenacker, 367
F.Supp.2d 89, 97 (D.Mass.2005).
Brensley does not dispute that she owed Third Party Plaintiffs a fiduciary duty, and thus
for purposes of this motion the Court accepts that Brensley’s business dealings with Loudon and
Legacy Point gave rise to such a duty. However, Loudon and Legacy Point have not provided
sufficiently specific facts indicating that Brensley engaged in any conduct constituting a breach.
They advance several grounds for a breach. First, they claim that Brensley’s other work with
Chesterton on unrelated deals gave rise to a breach. However, Loudon and Legacy Point
The Court notes a second potential problem with this theory. In their Third Party Complaint, Third Party Plaintiffs
allege that that Brensley “committed fraud by switching the revised guaranty with the original guaranty causing
Chesterton to bring suit on a guaranty which Mr. Loudon never signed[.]” Doc. 40 at 5. Insofar as this theory
presents a new claim of fraudulent misrepresentation that would have shaped Brensley’s discovery requests had it
initially appeared in the Third Party Complaint, Third Party Plaintiffs may not raise this theory for the first time in
concede that Brensley disclosed that she had a preexisting relationship with Chesterton as early
as 2012, so this theory provides no basis for a breach. Doc. 127-1 at 2.
Next, Loudon and Legacy Point allege that Brensley received a “double commission”—
payments from both Chesterton and Legacy Point in relation to the Chesterton Loan that
Brensley secured while working on behalf of Legacy Point. But as their own Opposition
acknowledges, a double payment is only alleged. Doc. 127 at 5. The parties agree that Brensley
received a commission from Legacy Point. However, Loudon and Legacy Point have submitted
nothing in or with their Opposition either showing that Brensley received a commission from
Chesterton or supporting a reasonable inference that she did. For her part, Brensley denies
having ever served as an attorney to Chesterton and argues that there is no evidence supporting
“any payments made to Brensley by Chesterton for any services at all.” Doc. 121 at 3. Because
Loudon and Legacy Point “may not rest on mere allegations or denials of [their] pleading, but
must set forth specific facts showing there is a genuine issue for trial[,]” Barbour, 63 F.3d at 37,
this theory fails, and the Court ALLOWS Brensley’s Motion for Summary Judgment as to Count
Breach of Contract
In Count VIII, Loudon and Legacy Point sue Brensley for breach of an oral and written
agreement to share in repayment of the Chesterton Loan upon default by GIWYC LLC. Doc. 40
at 6. In order to succeed on this claim, Loudon and Legacy Point must prove “that a valid,
binding contract existed, the defendant breached the terms of the contract, and the plaintiffs
sustained damages as a result of the breach.” Brooks v. AIG SunAmerica Life Assur. Co., 480
F.3d 579, 586 (1st Cir. 2007). Third Party Plaintiffs rely on Brensley’s October 10, 2012 email:
“I just wanted to quickly acknowledge our agreement today that I will be taking on an
obligation to participate in the repayment to John Walsh upon default. It is my intention
to enter into an express agreement with you both collectively that will state that intent no
later than Friday, October 12, 2012.”
Doc. 122-9. Brensley argues that Third Party Plaintiffs cannot prove the first element of their
claim—existence of an enforceable contract—because her statement reflects only an agreement
to enter into an agreement.
The Court agrees with the state court’s determination (and Brensley’s argument) that
Brensley’s email establishes only an agreement to enter into a later agreement, and not an
agreement itself. Doc. 122-6 (noting that “[a]n agreement to reach an agreement is a
contradiction in terms and imposes no obligation on the parties thereto,” citing Rosenfield v.
United States Trust Co., 290 Mass. 210, 217 (1935)). Brensley’s same-day acknowledgement of
an earlier conversation and her statement of “intention to enter into an express agreement”
indicate that the parties had not “progressed beyond the stage of ‘imperfect negotiation’.”
Situation Mgmt. Sys., Inc. v. Malouf, Inc., 430 Mass. 875, 878 (2000) (internal citation omitted).
Importantly, were Brensley’s email to serve as the basis for a contract, it would still lack
essential terms, including foremost the proportion of Brensley’s share in the repayment
obligation. Because Loudon and Legacy Point cannot establish the existence of a contract for the
Court to enforce, the Court ALLOWS the Motion for Summary Judgment as to their breach of
Finally, Count IX requests indemnification by Brensley in the event that Loudon or
Legacy Point is found liable in state or federal court. Doc. 40 at 6. They advance two theories in
support of this claim. First, Loudon and Legacy Point claim that they are entitled to
indemnification as a matter of Massachusetts partnership law, 5 since “[n]o other legal
relationship besides a partnership, such as employer/employee, can describe the relationship that
existed between Ms. Brensley and Mr. Loudon.” Doc. 127 at 5. However, even drawing all
reasonable inferences in Third Party Plaintiffs’ favor, the Court finds that they have failed to
offer facts sufficient to establish a partnership. Even had both the Co-Financing Agreement and
the Venture Agreement governed the parties’ Chesterton Loan dealings, 6 neither would support
the existence of a partnership; both agreements expressly disclaim creation of such a relationship
between the parties. Doc. 88 at 5; Doc. 88-1 at 8. The deposition testimony of Brensley that
Loudon and Legacy Point cite as evidence of an admission of a partnership says no such thing.
Doc. 127-5. The only evidence supporting the existence of a partnership is Loudon’s onesentence assertion in his affidavit that Brensley was his partner for obtaining financing for
GIWYC and split any profits made as a result of obtaining such financing. Doc. 127-1 at 2.
Merely stating that a partnership existed does not make it so.
Second, the Third Party Complaint (but not the Opposition) grounds the claim for
indemnification in Brensley’s alleged promise to share 50% of the responsibility for repayment
of the Chesterton Loan. Doc. 40 at 6. This theory requires Third Party Plaintiffs to establish a
Under G.L. Chapter 108A, Section 18(a), “each partner must contribute towards the losses, whether of capital or
otherwise, sustained by the partnership according to his share in the profits.” Section 18(b) provides further: “The
partnership must indemnify every partner in respect of payments made and personal liabilities reasonably incurred
by him in the ordinary and proper conduct of its business.”
The record does not establish whether either agreement was in effect in October 2012. In her Answer to the Third
Party Complaint and her Opposition to Third Party Plaintiffs’ Cross-Motion for Summary Judgment, Brensley
asserts that this agreement expired months prior to October 2012, with no performance by the parties. Doc. 88 at 5;
Doc. 139 at 3. Elsewhere, she notes that she introduced Third Party Plaintiffs to Chesterton pursuant to that
agreement. Further, the 2013 Venture Agreement arguably would not establish retrospectively a partnership at the
time of the 2012 Chesterton Loan.
contract with this provision. They cannot. 7 The Court has determined that no such contract
existed. Supra Section III.D.
Presented with insufficient evidence of a source for an indemnification obligation, the
Court ALLOWS Brensley’s Motion for Summary Judgment and DENIES Third Party Plaintiffs’
cross-motion on Count IX.
For the foregoing reasons, the Court ALLOWS Brensley’s Motion for Summary
Judgment as to Counts III, XI, XIII, and IX and DENIES Brensley’s Motion for Summary
Judgment as to Count II (Doc. 120), and further DENIES Third Party Plaintiffs’ Motion for
Summary Judgment as to Count IX (Doc. 128).
/s/ Leo T. Sorokin
Leo T. Sorokin
United States District Judge
Neither in their Third Party Complaint nor in their Opposition do Loudon and Legacy Point assert that any
indemnification arises from the Co-Financing Agreement or the Venture Agreement. Therefore, although these
agreements contain indemnification provisions, neither provide a basis for judgment for Third Party Plaintiffs or for
proceeding to trial on this claim.
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