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Carriage Hill Management, LLC v. Boston Lobster Feast, Inc.

United States District Court, D. Maryland, Southern Division

July 6, 2018

CARRIAGE HILL MANAGEMENT, LLC, Plaintiff,
v.
BOSTON LOBSTER FEAST, INC., Defendant.

          MEMORANDUM OPINION

          GEORGE J. HAZEL UNITED STATES DISTRICT JUDGE

         Plaintiff Carriage Hill Management, LLC brings a claim of breach of contract against Defendant Boston Lobster Feast, Inc. (“Defendant” or “the Company”), alleging Defendant entered into a transaction to sell all of its assets without paying Plaintiff an Advisory Fee due under the terms of an agreement negotiated between the parties. Presently pending before the Court is Plaintiff's Motion for Sanctions, ECF No. 36, Plaintiff's Motion for Summary Judgment, ECF No. 44, and Defendant's Cross Motion for Summary Judgment, ECF No. 64. No. hearing is necessary. Loc. R. 105.6 (D. Md. 2016). For the following reasons, Plaintiff's Motion for Summary Judgment will be granted as to Plaintiff's claim for payment of an Advisory Fee and denied as to Plaintiff's claim for production of Transaction documents. Plaintiff's Motion for Sanctions will be denied. Defendant's Cross Motion for Summary Judgment will be denied in part and granted in part.[1]

         I. BACKGROUND

         The following facts are not in dispute. Plaintiff is a Delaware corporation that identifies, evaluates, and develops merger and acquisition opportunities for its clients. Defendant is a wholesale and retail seafood company incorporated in Florida. On or about January 5, 2016, Plaintiff and Defendant entered into an agreement whereby Plaintiff would “advise the Company in connection with exploring a sale of all or substantially all of the assets or stock of the Company.” ECF No. 45-2 at 1 (the “Agreement”).[2] In return, Defendant was obligated to pay Plaintiff a work fee of $5, 000 per calendar month during the first six months of the Agreement and pay Plaintiff an Advisory Fee as follows:

If, as and when the Company consummates a Transaction, including, without limitation, any investment, sale or merger transaction which was pursued by the Company during the Term and closes during the Term or Tail Period of this Engagement (a "Transaction"), the Company shall pay to Carriage Hill a fee (the “Advisory Fee”) equal to 4% of the purchase price. The “purchase price” shall equal the price paid by the buyer (as agreed upon in the purchase agreement) or the total gross amount paid in connection with the Transaction, whether in cash, notes, stock or other securities, including debt and equity financing. plus the total amount of any assumed debt or liabilities.

Id. § 2(a). The Term of the Agreement commenced on the date it was signed and was set to expire one year later unless terminated by either party upon thirty days written notice. Id. §§ 4(a), (b). The Tail Period commenced “upon expiration or termination and [would] end three years later.” Id. § 4(a). Furthermore, the Agreement specified that the Advisory Fee would become due if the Transaction was consummated during the Term or if the Transaction was initiated during the Term but consummated during the Tail Period as follows:

In order for a Transaction that closes during the Tail Period to generate Advisory Fees, the investor shall have been introduced to the Company or such Transaction must be pursued by the Company during the Term, with the latter as evidenced by a target list agreed upon by the parties, one or more direct calls or meetings with the potential acquirer/investor or target, or execution of a confidentiality agreement with the potential acquirer/investor or target. . . .

Id. § 2(d).

         Once the parties ratified the Agreement, Plaintiff commenced work on behalf of Defendant and presented Defendant with at least two written offers, neither of which resulted in a Transaction. ECF No. 45-3 at 3; ECF No. 70-1 at 28. Defendant was not obligated “to accept any Transaction or to enter into any definitive agreement or letter of intent with any party making an offer or responding to an offer.” ECF No. 45-2 at 1. Plaintiff also provided Defendant with a target list that included “a number of private equity firms [and] a few non-institutional investors.” ECF No. 70-1 at 56. After Defendant paid Plaintiff all work fees due under the Agreement, Defendant terminated the Agreement by letter dated July 20, 2016 because Defendant wanted to take the Company “off the market for a while.” ECF No. 45-17. Pursuant to the Agreement, Defendant's termination was effective as of August 19, 2016, and the Tail Period continued for an additional three years, until August 19, 2019.[3]

         During the week of August 1, 2016, and still within the Term of the Agreement, Defendant attended the Red Lobster Conference where Defendant's President, Jeff Hazell, met with George Holm, Chief Executive Officer of Performance Food Group (“Performance”). ECF No. 45-3 at 4; ECF No. 67-1 at 17. Hazell and Holm had a number of conversations during the Red Lobster Conference. While Hazell pursued selling seafood to Performance, ECF No. 74-1 at 8-9, Holm asked Hazell if it made sense for Performance to purchase the Company instead, ECF No. 67-1 at 16-17. On August 3, 2016, during the Red Lobster Conference, Hazell provided Holm with a copy of the Company's 2015 and 2016 year-to-date income statements. ECF No. 47. That same day, Holm informed Hazell that James Hope, Performance's Executive Vice President of Operations, would be contacting Hazell to arrange a visit to the Company on August 24 and 25 in preparation for discussions regarding a possible acquisition. See ECF No. 50; ECF No. 51; ECF No. 67-1 at 40; ECF No. 69-1 at 57; ECF No. 74-1 at 9-10; see also ECF No. 68-1 at 29 (Hope Deposition) (Hope indicating that he contacted Hazell on or around August 4 to talk about acquiring the Company).

         On August 23, 2016, Defendant entered into a “Confidentiality Agreement Relating to a Proposed Transaction” with Performance. ECF No. 54. On October 7, 2016, Defendant and Performance signed a “Letter of Intent to Purchase Certain Assets of [the Company] and Certain Related Real Property.” ECF No. 55. Finally, on January 17, 2017, and within the Tail Period of the Agreement, Defendant and Performance entered into an Asset Purchase Agreement. ECF No. 56. The value of the acquisition established through the Asset Purchase Agreement was $41, 735, 000.00. ECF No. 45 at 13 (citing ECF No. 46 at 3). Plaintiff admits that Performance was not listed on its target list, that Plaintiff did not otherwise participate in any negotiations or discussions between Performance and Defendant, did not attend any meetings with Performance, and did not have any telephone calls with Performance. ECF No. 70-7 at 16.

         II. STANDARD OF REVIEW

         A party may move for summary judgment under Fed.R.Civ.P. 56(a). “The court shall grant summary judgment if there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The movant has the “initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings . . . together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 466 U.S. 317, 323 (1986) (internal citation omitted). In considering the motion, “the judge's function is not . . . to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial.” Anderson v. Liberty Lobby, 477 U.S. 242, 249 (1986). To withstand a motion for summary judgment, the nonmoving party must do more than present a mere scintilla of evidence. Phillips v. CSX Transport, Inc., 190 F.3d 285, 287 (4th Cir. 1999). Rather, “the adverse party must set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 250. No. genuine issue of material fact exists if the non-moving party fails to make a sufficient showing on an essential element of his case as to which he would have the burden of proof. See Celotex, 477 U.S. at 322-23. Although the Court should draw all justifiable inferences in the nonmoving party's favor, the nonmoving party cannot create a genuine issue of material fact “through mere speculation or the building of one inference upon another.” Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985).

         Cross-motions for summary judgment require that the Court consider “each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law.” Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003). “The Court must deny both motions if it finds there is a genuine issue of material fact, but if there is no genuine issue and one or the other party is entitled to prevail as a matter of law, the court will render ...


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