Maffeo v. White Pines Investments et al

Filing 11

Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER: For the foregoing reasons, defendant's motion to dismiss (Docket No. 6 ) is DENIED without prejudice. So ordered. (Vieira, Leonardo)

Case 1:21-cv-10251-NMG Document 11 Filed 04/28/21 Page 1 of 7

United States District Court
District of Massachusetts
)
)
)
Plaintiff,
)
)
v.
)
)
White Pine Investments, et al., )
)
Defendants.
)
)
Anthony Maffeo,

Civil Action No.
21-10251-NMG

MEMORANDUM & ORDER
GORTON, J.
Plaintiff Anthony Maffeo, Jr. (“Maffeo” or “plaintiff”)
brings this action individually and as trustee of the 401(k)
plan of Integrated Benefits Group, Insurance Brokerage, Inc.
(“the IBG Plan”) against defendants Andrew Kustas (“Kustas”) and
White Pine Investments (“White Pine”) (collectively,
“defendants”).

Plaintiff asserts that defendants improperly

managed the IBG Plan, causing plaintiff and other individual
investors to lose a significant amout of money.
Pending before the Court is the motion of defendant Kustas,
who appears pro se, to dismiss the complaint for failure to
state a claim.

For the reasons that follow, that motion will be

denied.

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I.

Background
Plaintiff is a Massachusetts resident and the President and

founder of Integrated Benefits Group, Insurance Brokerage Inc.,
a Massachusetts corporation with its principal place of business
in the Commonwealth.
IBG Plan.

He is also apparently the trustee of the

Defendant Kustas is a New Hampshire resident and the

owner of White Pine, an unincorporated New Hampshire registered
investment advisor firm with its principal place of business in
that state.
Plaintiff alleges that, in or about the fall of 2014,
defendants began advising plaintiff and other individuals who
invested in the IBG Plan.

Kustas allegedly met with Maffeo and

each of the individual investors to discuss their contributions
to the IBG Plan but supposedly did not inquire about the
individuals’ risk tolerance, time horizon, investment background
or knowledge of the proposed markets.

Instead, plaintiff

contends that Kustas invested the members’ funds without
providing them with any material relating to those investments
or any subsequent updates as to how they were doing.
In the spring of 2020, plaintiff retained a new investment
firm which reviewed the portfolio managed by defendants and
concluded that defendants had made several misrepresentations
with respect to the investments.

Maffeo asserts that his new

firm determined that Kustas’ investments severely underperformed
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and were totally inappropriate for Maffeo and the other
individual investors.

Plaintiff adds that, due to the timing of

the investments, he and the other investors remain unable to
divest them and, thus, continue to lose money.
Accordingly, in February, 2021, plaintiff filed this
lawsuit seeking damages exceeding $400,000.

He asserts five

counts: (I) breach of fiduciary duty, (II) breach of contract,
(III) unsuitability, (IV) failure to supervise: control person;
respondeat superior and (V) negligence.

In response, defendant

Kustas has moved to dismiss the complaint, presumably for
failure to state a claim.
II.

Motion to Dismiss
In March, 2021, defendant Kustas filed a single-spaced, pro

se pleading in which he, moves to dismiss Count I (breach of
fiduciary duty) of the complaint on statute of limitations
grounds. 1
Defendant Kustas failed to comply with Local Rule 5.1 that
requires all pleadings to be filed double-spaced. If he does so
in the future, the pleading will be returned to him for
correction before it is considered by the Court. Moreover, if
defendant makes any further accusations of “lying” by counsel,
he should either be prepared to back them up with evidence and
refer them to the Board of Bar Overseers or show cause why he
should not be sanctioned by this Court. See Eagle Eye Fishing
Corp. v. U.S. Dep’t of Commerce, 20 F.3d 503, 506 (1st Cir.
1994) (“While courts have historically loosened the reins for
pro se parties, the right of self-representation is not a
license not to comply with relevant rules of procedural and
substantive law.” (internal quotation marks and citations
omitted)).
1

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Defendant asserts, specifically, that Maffeo’s claim for
breach of fiduciary duty is time barred because plaintiff was a
client of White Pine only until 2015 and this lawsuit was filed
in February, 2021, many years after the expiration of the
applicable three-year statute of limitations period set forth in
M.G.L. c. 260, § 2A.
Plaintiff responds that his claim is timely under the
“discovery rule” because he did not become aware of the facts
giving rise to the defendants’ alleged misconduct until he hired
a new investment firm in the spring of 2020.

Because he filed

this action in February, 2021, plaintiff contends that his
breach of fiduciary duty claim is timely.
A. Legal Standard
To survive a motion under Fed. R. Civ. P. 12(b)(6), the
subject pleading must contain sufficient factual matter to state
a claim for relief that is actionable as a matter of law and
“plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)).

A claim is facially plausible if, after accepting as

true all non-conclusory factual allegations, the court can draw
the reasonable inference that the defendant is liable for the
misconduct alleged. Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d
1, 12 (1st Cir. 2011).

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When rendering that determination, a court may not look
beyond the facts alleged in the complaint, documents
incorporated by reference therein and facts susceptible to
judicial notice. Haley v. City of Boston, 657 F.3d 39, 46 (1st
Cir. 2011).

A court also may not disregard properly pled

factual allegations even if actual proof of those facts is
improbable. Ocasio-Hernandez, 640 F.3d at 12.

Rather, the

relevant inquiry focuses on the reasonableness of the inference
of liability that the plaintiff is asking the court to draw. Id.
at 13.
B. Application
i. Statute of Limitations
A defendant may assert a statute of limitations defense in
a motion to dismiss if “the facts establishing the defense are
clear on the face of the plaintiff’s pleadings.” Trans-Spec
Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315, 320 (1st
Cir. 2008) (internal quotation marks and citations omitted).
Granting a motion to dismiss on limitations grounds is
appropriate, therefore, only when the complaint “leave[s] no
doubt that an asserted claim is time-barred.” LaChapelle v.
Berkshire Life Ins. Co., 142 F.3d 507, 509 (1st Cir. 1998).
When a complaint “sketch[es] a factual predicate” warranting the
tolling of the statute of limitations, however, dismissal is
inappropriate. Trans-Spec Truck, 524 F.3d at 320.
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In Massachusetts, claims for breach of fiduciary duty are
subject to a three-year statute of limitations. See M.G.L. c.
260, § 2A.

As a general rule, the tort accrues at the time the

plaintiff is injured. See Koe v. Mercer, 876 N.E.2d 831, 836
(Mass. 2007).

Massachusetts state courts have developed an

exception to that rule, however, which provides that
the statute of limitations starts when the plaintiff
discovers, or reasonably should have discovered, [his
injury].
Id. (“the discovery rule”).
Here, defendant has failed to establish in his pro se
pleadings that plaintiff’s breach of fiduciary duty claim is
time-barred.

Plaintiff plausibly states in his complaint that

he was unaware of any misrepresentations by Kustas or any
misconduct with respect to his investing decisions until
plaintiff retained a new investment firm in the spring of 2020
(“discovery date”).

That describes a factual predicate which,

if proved, would warrant the tolling of the statute of
limitations until that alleged discovery date.

If the

limitation period was tolled, plaintiff filed his complaint
within it.
In any event, “what the plaintiff knew or should have
known” is generally “a factual question that is appropriate for
the trier of fact”. See Koe, 876 N.E.2d at 836.

Accordingly, at

this early stage of litigation, it is premature to determine
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whether the discovery rule applies or plaintiff’s claim is timebarred.

For that reason, this Court will deny defendant’s

motion to dismiss for failure to state a claim, without
prejudice.
The Court also strongly urges defendant to retain counsel.
If Kustas nevertheless chooses to proceed pro se, he will be
expected to comply with the Federal Rules of Civil Procedure and
professional protocol in pleading. Eagle Eye Fishing, 20 F.3d at
506 (noting that, by proceeding pro se, the [litigants] appeared
“to have been penny wise and pound foolish”).
ORDER
For the foregoing reasons, defendant’s motion to dismiss
(Docket No. 6) is DENIED without prejudice.
So ordered.
/s/ Nathaniel M. Gorton
Nathaniel M. Gorton
United States District Judge

Dated April 28, 2021

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