Preview
31.2 RECEIVED
12/9/2020
COMMONWEALTH OF MASSACHUSETTS
MIDDLESEX, ss. SUPERIOR COURT
CA. No. 18-3441
RONALD LEOMBRUNO, As Personal Representative
Of The Estate of Camillo Leombruno and
Denivatively on behalf of ARLINGTON AUTO
BODY, INC. and RONALD LEOMBRUNO, Individually
And Derivatively on behalf of ARLINGTON AUTO
BODY, INC.,
Plaintiffs,
Vv.
HOWARD F. LOWRE, JR.,
Defendant.
DEFENDANT HOWARD F. LOWRE, JR.’S OPPOSITIONTO
PLAINTIFF’
S MOTION TO BIFURCATE TRIAL
On November 12, 2020, Arlington Auto Body, Inc. (“AAB”), the putative plaintiff in
whose name Ronald Leombruno asserted this action, filed a Chapter 7 bankruptcy
petition.
Defendant Howard F. Lowre, Jr., AAB’s president, director, and 50% owner, then notified
the
Court of this development in a Suggestion of Bankruptcy that he filed on November 13, 2020.
(Paper No. 30). Promptly thereafter, this Court issued an Order providing that, “All proceedings
in this action
are stayed until further order of the Order.” (Paper No. 31). Due to the Court-
ordered stay of all proceedings, the jury-waived trial of this action previously scheduledto begin
onJanuary 11, 2021 has been indefinitely stayed as well.
In spite of the stay, plaintiff Ronald Leombruno (a disgruntled former AAB employee
who inherited
his late father’s 50% interest
in AAB as of June, 2019) has filed what he calls a
“motion to bifurcate” the trial that previously was scheduled for January 11, 2021. For all intents
FW
and purposes, it effectively functions as a motion seeking relief from this Court’s stay of all
proceedings. For the reasons discussed below, this Court should DENY Mr. Leombruno’s
motion and maintain the stay while the bankruptcy proceeding remains pending.
1 Mr. Leombruno concedes that at least eight of the ten counts in his operative
Amended Complaint, a copy of which is attached
at Tab A, are subjectto the automatic stay
under 11 U.S.C. § 362. Those eight claims are automatically stayed because they are derivative
Claims putatively asserted on behalf of the bankrupt debtor, AAB. Mr. Leombruno argues,
however, that Counts 5 and 9 of Amended Complaint are direct claims against
Mr. Lowre,
AAB’s president and director, and therefore should proceed to trial in the Superior Court.
Plaintiff further argues that those direct claims “are not affected
by the bankruptcy filing.”
Motion, p. 1. Mr. Lowre addresses
each of these two claims below.
2. Count 5. Count 5 of the Amended Complaint is styled “Breach of Contract.”
(Amended Complaint (“AC”), 182-84). Therein, Mr. Leombruno alleges that, “Lowre, through
his actions, had breached his agreement with Camillo [Mr. Leombruno’s late father] by
unilaterally terminating Camillo’s weekly salary... .” (Id. 183). More specifically, Mr.
Leombnuno alleges that, in or about 2005, his late father Camillo formed an agreement with Mr.
Lowre requiring AAB, the bankrupt debtor, to pay Camillo a $2,000 weekly salary for the restof
his life, even after he retired in 2005. (See id. 1114-15). Mr. Lowre denies that the parties ever
made such an agreement, and notes that the purported contract never was reduced
to writing."
By way of damages on this breach of contract claim, Mr. Leombruno seeks to recover $372,000
in salary payments that he alleges Mr. Lowre, as an officer and owner of AAB, have should
caused AAB to pay Camillo between 2015 and 2019.
1 This Court has, in the course of denying three successive motions for injunctive relief that Mr. Leombruno
filed between
2018 and 2020, ruled on three separate occasions that Mr. Leombruno
has failed to establish a
likelihood
of success on these claims. (Paper Nos. 4, 5, 15, 18, & 22).
2
3. Although plaintiff characterizes Count 5 as a direct claim solely against Mr.
Lowe, it has a potentially significant impact on the financial affairs of the bankrupt debtor,
AAB. If plaintiff
were to prevail on Count 5, and obtain a judgment
against Mr. Lowre for the
$372,000
that he allegedly should have directed
AAB to payto Camillo, then Mr. Lowre could,
in tum, seek indenmification from AAB for that judgment. See G.L. c. 156D, §§ 8:51 & 8:56.
Moreover, if Mr. Lowre were to prevail and defeat Count 5, he likewise
would seek
indennnification
from AAB for the legal fees and expenses incurred
in successfully defending
against Count 5. Seeid. Accordingly, permitting
Count 5 to proceed to trial in state court
against AAB’s president and director Mr. Lowre while AAB’s bankruptcy proceeding is still
pending in federal court may ultimately have the effect of adding to AAB’s overall liability. Itis
the bankruptcy court’s role to manage, oversee, and resolve AAB’s liabilities without
interference from pending state court proceedings.
4. Accordingly, proceedings against a solvent officer/director of a bankrupt
corporation who is the subject of a claim for which he or she may seek indemnification from the
bankrupt corporation should
be stayed. See A.H. Robins Co., Inc. v. Piccinin, 788 F.2d 994, 999
(4th Cir. 1986) (stay was appropriate
where “there is such identity between
the debtor and the
third-party defendant that the debtor may be said to be the real party defendant
and that a
judgment
against the third-party defendant will in effect be a judgment or finding against the
debtor’). This Court should maintain its stay
of all proceedings
in order to permit the
bankruptcy court to decide, in the first instance, the extent to which Count 5 should be resolved
in the bankruptcy proceeding, as opposedto this state court proceeding.
5. Count 9, Count 9 of the Amended Complaint is styled “Accounting.” (AC, 191
96-100). Therein, Mr. Leombnuno alleges that, “Lowre has refusedto account for monies
generated
by AAB and Dudley Street Place that are owed to Camillo.” (Id. 198). Mr.
Leombnuno’s Motion now limits this claimto a request for recovery of Dudley Street Place
“rental income distributions”. See (Memorandum in Support of Motion, p. 2).
6. By way of background, Dudley Street
Place refers to a parcel of land in Ardington,
Massachusetts
that directly abuts
the parcel on which
AAB operated
for many years (i.e. the
“AAB Property”). Mr. Lowre and Camillo formerly owned both Dudley Street Place and the
AAB Property
in the name of “L&L Realty Trust.” AAB occupied
the AAB Property, whilean
Enterprise Rent-A-Car (“Enterprise”) franchise occupied Dudley Street Place. Enterprise paid
rentto L&L Realty, and this was deposited
into a bank account held in the name of L&L Realty.
7. By way of a longstanding arrangement between Mr. Lowre
and Camillo, the L&L
Realty account also was used to pay property-related expenses (i.e. property taxes, mortgage
payments, utilities, insurance, etc.) for both properties. On May 3, 2019, Mr. Lowre provided
Plaintiff’s counsel witha detailed, full accounting of the L&L Realty account, including copies
of all checks and bank statements. That accounting demonstrated that Mr. Lowre
did not take
Dudley Street Place rental income for himself, as plaintiff falsely alleges. Rather, Mr. Lowre
directed L&L Realty to apply Dudley Street Place rental income towards property-related
expenses
for the two properties during the period when they were jointly owned, as had been
the
case for at least a decade before Mr. Leombruno
began filing his serial lawsuits againstMr.
Lowre.
8. In this litigation, Mr. Leombruno seeks to ignore the detailed accounting that Mr.
Lowre provided on May 3, 2019. He simply claims that Mr. Lowre should have paid him 50%
of the gross Dudley Street Place rental income, allegedly amountingto $37,729.25, without any
deduction for property-related expenses on either property.
9. To properly defend against Count 9 at trial, it is necessary
for Mr. Lowreto
present evidence regarding how and why he and Camillo established
the practice of using the
L&L Realty bank account to pay property-related expenses for both Dudley Street Place and the
AAB Property. To place that evidence in its proper context, Mr. Lowre must also explain the
background and evolution of his business partnership with Camillo, which dates back to the
1970s. The same evidence is necessary background for all the other claims
in this case.
10. Tt would be judicially inefficient and wasteful to hold separate, bifurcated trials of
Count9, on the one hand, and Counts 1-8 and 10, on the other hand. All counts
in the Amended.
Complaint form one convenient trial unit involving the same core of witnesses and evidence. To
preserve judicial resources and avoid potentially inconsistent results, this Court therefore should
maintain its stay of all proceedings in this case, and wait to see what, if any, claims survive the
bankruptcy proceeding before deciding how to proceed on Count 9.
For all the foregoing reasons, this Court should DENY Mr. Leombnno’s motion.
HOWARD F. LOWRE, JR.,
By his attomeys,
DR
Kurt B. Fliegauf (BBO #564329)
AndrewR. Dennington (BBO #666892)
CONN KAVANAUGH ROSENTHAL
PEISCH & FORD, LLP
One Federal Street 15" Floor
Boston, MA 02110
(617) 482-8200
kfliegauf@connkavanaugh.com
adennington@connkavanaugh.com.
Dated: December4, 2020
CERTIFICATE OF SERVICE
I, AndrewR. Dennington, hereby certify that I have caused a copy of the foregoing
document
to be served upon all counsel of record
via email on this December4, 2020.
/s{ AndrewR. Dennington.
Andrew R. Dennington (BBO#666892)
2656615.2 04639.003
TabA
COMMONWEALTH OF MASSACHUSETTS
MIDDLESEX, SS. SUPERIOR COURT DEPT.
WOBURN SESSION
CIVIL ACTION No. 1881cv03441
RONALD LEOMBRUNO, As Personal Representative
Of The Estate of Camillo Leombruno and
Derivatively on behalf of ARLINGTON AUTO
BODY, INC. and
RONALD LEOMBRUNO, Individually and Derivatively AMENDED
on behalf of ARLINGTON AUTO BODY, INC. VERIFIED COMPLAINT
Plaintiffs
Vv.
HOWARD F. LOWRE, JR.
Defendant
Parties
1 Plaintiff, Ronald Leombruno (“Ronald”), is an individual residing at 132 Mallard
Way, Waltham, Middlesex County, Massachusetts. Ronald is also the Personal
Representative of the Estate of Camillo Leombruno (“Estate”)
2 Plaintiff, Arlington Auto Body, Inc. (“AAB”), is a Massachusetts corporation with
a principal place of business at 14 Dudley Court, Arlington, Middlesex County,
Massachusetts.
3 Defendant, Howard F. Lowre, Jr. (“Lowre”) is an individual residing at 6 East
Road, Chatham, Massachusetts.
Facts
4 AAB is an auto body repair shop incorporated by Camillo Leombruno
(“Camillo”) and Lowre in or around 1977.
5 When they started AAB, Camillo and Lowre agreed to pay themselves a weekly
salary and split profits equally.
6 Camillo and Lowre were each 50% shareholders of AAB.
71
Camillo was an officer, director and the president of AAB.
8 Lowre is an officer, director and the treasurer of AAB.
9 Camillo and Lowre were the shareholder employees of AAB.
10. Camillo died on June 9, 2019.
11. Prior to Camillo’s death, Ronald as power of attorney for Camillo, transferred
Camillo’s shares of AAB to both of them as joint shareholders.
12. Upon the death of Camillo, Ronald became the owner of Camillo’s 50% of the
shares of AAB.
135 AAB is a close corporation with no ready market for its shares.
14. In or around 2005, Camillo wanted to transfer his shares of AAB to Ronald, so
that Ronald and Lowre could continue the AAB business together.
IS Although there are no restrictions on transferring AAB shares, Lowre objected to
Camillo’s request to transfer his shares to Ronald.
16. Camillo and Lowre then agreed that Camillo would not transfer his AAB shares to
Ronald, but would stop working at AAB on a daily basis. Camillo would remain president of
AAB and continue to receive his weekly salary and his employment benefits including, but
not limited to, the use of a company credit card, health insurance, pension contributions, etc.
17. Camillo relied upon his agreement with Lowre, knowing that he would continue
to receive his weekly salary, and equal profits, as long as he didn’t transfer his AAB shares to
Ronald.
18. Thereafter, Camillo stopped working at AAB on a daily basis and moved to
Florida.
19. Around that same time, Lowre stopped working on vehicles as his only job
description at that time was as a car painter, and co-manager of AAB.
20. Lowre did not have experience repairing vehicles and was not licensed to conduct
repair estimates for insurance companies.
21. Ronald was licensed to conduct repair estimates for insurance companies and co-
managed AAB in Camillo’s absence.
22. Lowre and Ronald then ran the day to day management of AAB, but Lowre took
control of the financial management of AAB.
23. After 2005, Lowre began to convert AAB monies, on average of approximately
$1,500 per week, by taking cash and writing himself checks, which were used for his own
personal benefit and not for AAB expenses.
24. On various dates after 2005 and continuing through at least 2018, Lowre collected
cash on behalf of AAB and did not deposit that cash into the AAB bank account.
25. On various dates after 2005 and continuing through at least 2015, Lowre,
continued to write AAB checks to himself and to cash and kept those monies for himself.
26. Lowre fraudulently concealed from Camillo that he was keeping AAB cash for
himself and writing himself checks out of the AAB bank account.
27. Lowre also unilaterally increased his own salary and fraudulently concealed that
fact from Camillo.
28. Lowre’s misrepresentations and omissions were intended to deceive and did in
fact deceive Camillo.
29. Lowre also breached his agreement with Camillo to provide a weekly pay check
and split profits equally.
30. On or about June 16, 2014, Lowre requested that Camillo make an offer to
purchase his shares of AAB.
31. Camillo offered to purchase Lowre’s AAB shares for $250,000.
32. Lowre rejected Camillo’s offer and demanded $1,300,000 for his shares of AAB.
Camillo rejected that demand.
33. The parties then hired Howard Gordon, CFA, as an expert business appraiser to
value the shares of AAB. Gordon determined the total value of AAB to be approximately
$400,000.
34, In the Summer of 2015, Lowre knew that Camillo, then 80 years old, was not
doing well physically or mentally.
35. On or about October 28, 2015, knowing Camillo’s medical condition, Lowre
threatened to terminate Camillo’s salary if Camillo would not agree to increase his offer to
purchase Lowre’s shares of AAB.
36. Camillo refused to increase his offer to Lowre.
37. On or about November 1, 2015, Lowre attempted to unilaterally terminate
Camillo’s $2,000 weekly salary and withheld his pay check.
38. On or about December 9, 2015, after Camillo was able to convince the AAB
accountant to authorize a pay check for him, Lowre formally terminated Camillo’s salary and
instructed his attorney to threaten litigation against the AAB accountant if he authorized any
more pay checks to Camillo.
39. Lowre’s termination of Camillo’s salary was solely to force Camillo to pay
$1,300,000 for Lowre’s half-interest in AAB, knowing that AAB had been valued in its
entirety at approximately $400,000.
40. Lowre’s termination of Camillo’s salary was a breach of their agreement to pay
themselves equally and a freeze-out, motivated solely by improper business purposes, to
exclude Camillo from the benefits of being a shareholder.
4. Lowre’s termination of Camillo’s salary was not the least harmful means of
achieving his goals of forcing Camillo to buy his shares in AAB.
42. Camillo repeatedly made demand for Lowre to reinstate his salary but Lowre
refused.
43. In January, 2016, Camillo was diagnosed with dementia.
44 Ronald, who held power of attorney for Camillo, repeatedly asked Lowre to
reinstate Camillo’s weekly salary.
4S. Ronald also requested that Lowre accept a reduced offer for his shares of AAB or,
alternatively, offer to purchase Camillo’s shares of AAB.
46. Lowre rejected all requests made by Ronald.
47. Consequently, Camillo, through Ronald as POA, commenced a petition to
partition real estate in the Middlesex Probate Court in order to force the sale of the real estate
located at 14 Dudley Court, Arlington, MA, which is the real estate that AAB operates out of,
but is not an AAB asset. (A judgment has now entered in the partition case which has
resulted in transfer of two parcels of real estate.)
48. Camillo also sought to partition the real estate he and Lowre owned at 4 Dudley
Street Place, Arlington, MA (“Dudley Street Place”), which they co-owned and rented for
profit.
49. Lowre has refused to pay Camillo and now the Estate, the rental income he is
entitled to from Dudley Street Place.
50. The Middlesex Probate and Family Court (McSweeney, J.) has ordered the parties
to resolve their dispute over the rental income from Dudley Street Place, in this action.
31, During the discovery phase of the partition case, it was discovered that Lowre had
written himself checks in the amount of approximately $462,310 from 2009-2015.
52. None of these AAB checks signed by Lowre appear to have been reimbursement
for AAB expenses.
53. On May 24, 2016, Lowre repeatedly asserted his Fifth Amendment Rights when
questioned at his deposition about the additional $1,500 per week he was taking from AAB.
54. Prior to commencing this action Camillo served a derivative demand letter on
Lowre.
55. Lowre has refused to repay to AAB the approximately $500,000 he has converted.
56. Lowre has refused to provide Camillo or Ronald with the financial books and
records of AAB.
Die Lowre refused to provide Camillo with AAB financial distributions and dividends
or to reinstate his salary before he died.
58. Lowre refused to make AAB contributions to Leombruno’s AAB pension account
betore he died.
59. Lowre has not provided complete and accurate AAB tax returns or financial
information to Camillo or Ronald.
60. Lowre knew that his termination of Camillo’s weekly salary and increase in his
own salary was not authorized and was a breach of their agreement.
61. Lowre is conducting business on behalf of AAB without holding shareholder
meetings or obtaining the required number of votes of shareholders.
62. Lowre’s actions amount to those of a dis-loyal officer, director and treasurer.
63. In violation of his fiduciary duty and his duty of good faith and utmost loyalty,
Lowre continues to operate AAB for his own benefit and to make financial decisions without
regard to the duties he owed to Camillo and AAB, and now Ronald.
64. Lowre continues to acknowledge that Camillo was the president of AAB by filing
annual reports listing him as such, but continues to withhold monies due Camillo and access
to AAB records in an effort to freeze-out Camillo, and now Ronald.
65. On December 18, 2018, Lowre fired Ronald from his employment at AAB, solely
as retaliation for commencing this action on behalf of Camillo.
66. As a result of Lowre’s termination of Ronald, AAB’s two largest customer
terminated their business relationship with AAB, as they knew that Lowre was not capable of
operating AAB on his own.
67. On July 10, 2019, Ronald notified Lowre’s counsel that he was now the owner of
Camillo’s 50% shares of AAB and requested that he return to work at the same $3,000 per
week salary, that Lowre was paying himself.
68. On July 16, 2019, Lowre responded to Ronald’s request by threatening to call the
police if he returned to AAB, implying that he would be arrested.
69. Ronald seeks dissolution and liquidation by sale of AAB, as both he and Lowre
are deadlocked as to the business affairs of AAB.
Count 1 — Breach of Fiduciary Duty
70. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB,
restates the above allegations.
71. Lowre owes a fiduciary duty of good faith and utmost loyalty to Camillo, Ronald
and AAB.
72. As a result of Lowre’s breach of fiduciary duty, Camillo, Ronald AAB have
sustained damages.
Count 2 - Conversion
73. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB,
restates the above allegations.
74. Lowre has converted monies belonging to Camillo, Ronald and AAB for his own
personal use.
75. As aresult of Lowre’s conversion, Camillo, Ronald AAB have sustained
damages.
Count 3 - Unjust Enrichment
76. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB,
restates the above allegations.
77. Lowre has been unjustly enriched at the expense of Camillo, Ronald and AAB.
78. As a result of Lowre’s conduct, Camillo, Ronald and AAB have sustained
damages.
Count 4 — Fraud
79. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB,
restates the above allegations.
80. Lowre has made intentional misrepresentations or omissions, with the intent that
Camillo, Ronald and AAB would rely on those acts or omissions, and which Leombruno and
AAB relied upon to their detriment.
81. As a result of Lowre’s fraud and misrepresentation, Camillo, Ronald, and AAB
have sustained damages.
Count 5 — Breach of Contract
82. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB >
restates the above allegations.
83. Lowre, through his actions, has breached his agreement with Camillo by
unilaterally terminating Camillo’s weekly salary, failing to distribute profits AAB profits
equally, and failing to distribute Dudley Street Place rental income to him.
84. As a result of Lowre’s breach of contract Camillo and now his Estate have
sustained damages.
Count 6 — Promissory Estoppel
85. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB,
restates the above allegations.
86. Lowre agreed to continue paying Leombruno a weekly salary and split profits
equally so long as Camillo did not transfer his AAB shares to Ronald.
87. Camillo relied to his detriment on Lowre’s representations.
88. Lowre is estopped from unilaterally terminating Camillo’s salary and not splitting
profits.
89. As a result of Lowre’s promise and Camillo’s detrimental reliance thereon,
Camillo has sustained damages.
Count 7 — Declaratory Judgment for Equitable Forfeiture of Lowre’s Salary
90. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB,
restates the above allegations.
91. Lowre has been a disloyal officer, director and treasurer of AAB since
approximately 2005, and has fraudulently concealed his disloyalty while breaching his
fiduciary duty to AAB and converting monies of AAB.
92. Camillo seeks a declaratory judgment that Lowre be ordered to forfeit his salary
and refund his salary to AAB for the time during which he was disloyal to AAB.
Count 8 ~ Declaratory Judgment for Constructive Trust
93. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB,
restates the above allegations.
94. Lowre has created an actual controversy in regard to actions he has taken and
money he has taken from Camillo, Ronald, and AAB.
95. Lowre should be declared to be holding any monies belonging to Camillo,
Ronald, and AAB in a constructive trust for the benefit of Camillo, Ronald, and AAB.
Count 9 — Accountin:
96. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB,
restates the above allegations.
10
97. Lowre has wrongfully deprived Camillo of his interest in and control over the
business of AAB.
98. Lowre has refused to account for monies generated by AAB and Dudley Street
Place that are owed to Camillo.
99. Camillo has sustained damages as a result of Lowre’s failure to account.
100. Camillo seeks an order compelling Lowre to provide an accounting of the
financial activity of AAB and Dudley Street Place.
Count 10 — Dissolution of AAB
101. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB,
restates the above allegations.
102. Ronald and Lowre, are at odds as to the corporate management of AAB, are
unable to break the deadlock, and AAB is suffering irreparable injury as Lowre continues to
strip AAB of monies and lose customers.
103. Ronald seeks the dissolution and liquidation by sale of AAB, pursuant to
G.L.c.156D, §14.30.
PRAYERS FOR RELIEF
WHEREFORE, plaintiffs pray that this Court:
On Count 1, enter judgment for the Plaintiffs and award damages, costs, interest,
and reasonable attorney’s fees;
On Count 2, enter judgment for the Plaintiffs and award damages, costs, interest,
and reasonable attorney’s fees;
11
On Count 3, enter judgment for the Plaintiffs and award damages, costs, interest,
and reasonable attorney’s fees;
On Count 4, enter judgment for the Plaintiffs and award damages, costs, interest,
and reasonable attorney’s fees;
On Count 5, enter judgment for the Plaintiffs and award damages, costs, interest,
and reasonable attorney’s fees;
On Count 6, enter judgment for the Plaintiffs and award damages, costs, interest,
and reasonable attorney’s fees;
On Count 7, enter an order that Lowre is required to forfeit his salary;
On Count 8, enter an order that the monies unilaterally taken by Lowre are held in
a constructive or resulting trust for the benefit of Camillo, Ronald, and AAB.
On Count 9, order Lowre to account for all monies of AAB and Dudley Street
Place.
10. On Count 10, order the dissolution and liquidation by sale of AAB.
ll For such other and further relief as this Court deems just and proper.
JURY TRIAL DEMAND
The plaintiffs demand a trial by jury on all matters so triable.
12
VERIFICATION
I, Ronald Leombruno, hereby depose and state as follows:
I have read the Verified Complaint filed herein and, knowing the contents thereof, have found
that the allegations set forth therein are based on my personal knowledge and are true, except as
to those allegations based on information and belief, which I believe to be true, and that no
material facts have been omitted.
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Ronald Leombruno =
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Leonard A. Frisofi, BBO ¥ 8201
Joseph W. ermott, BBO #330710
Frisoli AssgCiates, P.C.
Bulfinch Square
43 Thorndike Street
Cambridge, MA 02141
(617) 494-0200 x7
Laf@Frisolilaw.com
IWM@Frisolilaw.com
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13
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31.2 RECEIVED 12/9/2020 COMMONWEALTH OF MASSACHUSETTS MIDDLESEX, ss. SUPERIOR COURT CA. No. 18-3441 RONALD LEOMBRUNO, As Personal Representative Of The Estate of Camillo Leombruno and Denivatively on behalf of ARLINGTON AUTO BODY, INC. and RONALD LEOMBRUNO, Individually And Derivatively on behalf of ARLINGTON AUTO BODY, INC., Plaintiffs, Vv. HOWARD F. LOWRE, JR., Defendant. DEFENDANT HOWARD F. LOWRE, JR.’S OPPOSITIONTO PLAINTIFF’ S MOTION TO BIFURCATE TRIAL On November 12, 2020, Arlington Auto Body, Inc. (“AAB”), the putative plaintiff in whose name Ronald Leombruno asserted this action, filed a Chapter 7 bankruptcy petition. Defendant Howard F. Lowre, Jr., AAB’s president, director, and 50% owner, then notified the Court of this development in a Suggestion of Bankruptcy that he filed on November 13, 2020. (Paper No. 30). Promptly thereafter, this Court issued an Order providing that, “All proceedings in this action are stayed until further order of the Order.” (Paper No. 31). Due to the Court- ordered stay of all proceedings, the jury-waived trial of this action previously scheduledto begin onJanuary 11, 2021 has been indefinitely stayed as well. In spite of the stay, plaintiff Ronald Leombruno (a disgruntled former AAB employee who inherited his late father’s 50% interest in AAB as of June, 2019) has filed what he calls a “motion to bifurcate” the trial that previously was scheduled for January 11, 2021. For all intents FW and purposes, it effectively functions as a motion seeking relief from this Court’s stay of all proceedings. For the reasons discussed below, this Court should DENY Mr. Leombruno’s motion and maintain the stay while the bankruptcy proceeding remains pending. 1 Mr. Leombruno concedes that at least eight of the ten counts in his operative Amended Complaint, a copy of which is attached at Tab A, are subjectto the automatic stay under 11 U.S.C. § 362. Those eight claims are automatically stayed because they are derivative Claims putatively asserted on behalf of the bankrupt debtor, AAB. Mr. Leombruno argues, however, that Counts 5 and 9 of Amended Complaint are direct claims against Mr. Lowre, AAB’s president and director, and therefore should proceed to trial in the Superior Court. Plaintiff further argues that those direct claims “are not affected by the bankruptcy filing.” Motion, p. 1. Mr. Lowre addresses each of these two claims below. 2. Count 5. Count 5 of the Amended Complaint is styled “Breach of Contract.” (Amended Complaint (“AC”), 182-84). Therein, Mr. Leombruno alleges that, “Lowre, through his actions, had breached his agreement with Camillo [Mr. Leombruno’s late father] by unilaterally terminating Camillo’s weekly salary... .” (Id. 183). More specifically, Mr. Leombnuno alleges that, in or about 2005, his late father Camillo formed an agreement with Mr. Lowre requiring AAB, the bankrupt debtor, to pay Camillo a $2,000 weekly salary for the restof his life, even after he retired in 2005. (See id. 1114-15). Mr. Lowre denies that the parties ever made such an agreement, and notes that the purported contract never was reduced to writing." By way of damages on this breach of contract claim, Mr. Leombruno seeks to recover $372,000 in salary payments that he alleges Mr. Lowre, as an officer and owner of AAB, have should caused AAB to pay Camillo between 2015 and 2019. 1 This Court has, in the course of denying three successive motions for injunctive relief that Mr. Leombruno filed between 2018 and 2020, ruled on three separate occasions that Mr. Leombruno has failed to establish a likelihood of success on these claims. (Paper Nos. 4, 5, 15, 18, & 22). 2 3. Although plaintiff characterizes Count 5 as a direct claim solely against Mr. Lowe, it has a potentially significant impact on the financial affairs of the bankrupt debtor, AAB. If plaintiff were to prevail on Count 5, and obtain a judgment against Mr. Lowre for the $372,000 that he allegedly should have directed AAB to payto Camillo, then Mr. Lowre could, in tum, seek indenmification from AAB for that judgment. See G.L. c. 156D, §§ 8:51 & 8:56. Moreover, if Mr. Lowre were to prevail and defeat Count 5, he likewise would seek indennnification from AAB for the legal fees and expenses incurred in successfully defending against Count 5. Seeid. Accordingly, permitting Count 5 to proceed to trial in state court against AAB’s president and director Mr. Lowre while AAB’s bankruptcy proceeding is still pending in federal court may ultimately have the effect of adding to AAB’s overall liability. Itis the bankruptcy court’s role to manage, oversee, and resolve AAB’s liabilities without interference from pending state court proceedings. 4. Accordingly, proceedings against a solvent officer/director of a bankrupt corporation who is the subject of a claim for which he or she may seek indemnification from the bankrupt corporation should be stayed. See A.H. Robins Co., Inc. v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986) (stay was appropriate where “there is such identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor’). This Court should maintain its stay of all proceedings in order to permit the bankruptcy court to decide, in the first instance, the extent to which Count 5 should be resolved in the bankruptcy proceeding, as opposedto this state court proceeding. 5. Count 9, Count 9 of the Amended Complaint is styled “Accounting.” (AC, 191 96-100). Therein, Mr. Leombnuno alleges that, “Lowre has refusedto account for monies generated by AAB and Dudley Street Place that are owed to Camillo.” (Id. 198). Mr. Leombnuno’s Motion now limits this claimto a request for recovery of Dudley Street Place “rental income distributions”. See (Memorandum in Support of Motion, p. 2). 6. By way of background, Dudley Street Place refers to a parcel of land in Ardington, Massachusetts that directly abuts the parcel on which AAB operated for many years (i.e. the “AAB Property”). Mr. Lowre and Camillo formerly owned both Dudley Street Place and the AAB Property in the name of “L&L Realty Trust.” AAB occupied the AAB Property, whilean Enterprise Rent-A-Car (“Enterprise”) franchise occupied Dudley Street Place. Enterprise paid rentto L&L Realty, and this was deposited into a bank account held in the name of L&L Realty. 7. By way of a longstanding arrangement between Mr. Lowre and Camillo, the L&L Realty account also was used to pay property-related expenses (i.e. property taxes, mortgage payments, utilities, insurance, etc.) for both properties. On May 3, 2019, Mr. Lowre provided Plaintiff’s counsel witha detailed, full accounting of the L&L Realty account, including copies of all checks and bank statements. That accounting demonstrated that Mr. Lowre did not take Dudley Street Place rental income for himself, as plaintiff falsely alleges. Rather, Mr. Lowre directed L&L Realty to apply Dudley Street Place rental income towards property-related expenses for the two properties during the period when they were jointly owned, as had been the case for at least a decade before Mr. Leombruno began filing his serial lawsuits againstMr. Lowre. 8. In this litigation, Mr. Leombruno seeks to ignore the detailed accounting that Mr. Lowre provided on May 3, 2019. He simply claims that Mr. Lowre should have paid him 50% of the gross Dudley Street Place rental income, allegedly amountingto $37,729.25, without any deduction for property-related expenses on either property. 9. To properly defend against Count 9 at trial, it is necessary for Mr. Lowreto present evidence regarding how and why he and Camillo established the practice of using the L&L Realty bank account to pay property-related expenses for both Dudley Street Place and the AAB Property. To place that evidence in its proper context, Mr. Lowre must also explain the background and evolution of his business partnership with Camillo, which dates back to the 1970s. The same evidence is necessary background for all the other claims in this case. 10. Tt would be judicially inefficient and wasteful to hold separate, bifurcated trials of Count9, on the one hand, and Counts 1-8 and 10, on the other hand. All counts in the Amended. Complaint form one convenient trial unit involving the same core of witnesses and evidence. To preserve judicial resources and avoid potentially inconsistent results, this Court therefore should maintain its stay of all proceedings in this case, and wait to see what, if any, claims survive the bankruptcy proceeding before deciding how to proceed on Count 9. For all the foregoing reasons, this Court should DENY Mr. Leombnno’s motion. HOWARD F. LOWRE, JR., By his attomeys, DR Kurt B. Fliegauf (BBO #564329) AndrewR. Dennington (BBO #666892) CONN KAVANAUGH ROSENTHAL PEISCH & FORD, LLP One Federal Street 15" Floor Boston, MA 02110 (617) 482-8200 kfliegauf@connkavanaugh.com adennington@connkavanaugh.com. Dated: December4, 2020 CERTIFICATE OF SERVICE I, AndrewR. Dennington, hereby certify that I have caused a copy of the foregoing document to be served upon all counsel of record via email on this December4, 2020. /s{ AndrewR. Dennington. Andrew R. Dennington (BBO#666892) 2656615.2 04639.003 TabA COMMONWEALTH OF MASSACHUSETTS MIDDLESEX, SS. SUPERIOR COURT DEPT. WOBURN SESSION CIVIL ACTION No. 1881cv03441 RONALD LEOMBRUNO, As Personal Representative Of The Estate of Camillo Leombruno and Derivatively on behalf of ARLINGTON AUTO BODY, INC. and RONALD LEOMBRUNO, Individually and Derivatively AMENDED on behalf of ARLINGTON AUTO BODY, INC. VERIFIED COMPLAINT Plaintiffs Vv. HOWARD F. LOWRE, JR. Defendant Parties 1 Plaintiff, Ronald Leombruno (“Ronald”), is an individual residing at 132 Mallard Way, Waltham, Middlesex County, Massachusetts. Ronald is also the Personal Representative of the Estate of Camillo Leombruno (“Estate”) 2 Plaintiff, Arlington Auto Body, Inc. (“AAB”), is a Massachusetts corporation with a principal place of business at 14 Dudley Court, Arlington, Middlesex County, Massachusetts. 3 Defendant, Howard F. Lowre, Jr. (“Lowre”) is an individual residing at 6 East Road, Chatham, Massachusetts. Facts 4 AAB is an auto body repair shop incorporated by Camillo Leombruno (“Camillo”) and Lowre in or around 1977. 5 When they started AAB, Camillo and Lowre agreed to pay themselves a weekly salary and split profits equally. 6 Camillo and Lowre were each 50% shareholders of AAB. 71 Camillo was an officer, director and the president of AAB. 8 Lowre is an officer, director and the treasurer of AAB. 9 Camillo and Lowre were the shareholder employees of AAB. 10. Camillo died on June 9, 2019. 11. Prior to Camillo’s death, Ronald as power of attorney for Camillo, transferred Camillo’s shares of AAB to both of them as joint shareholders. 12. Upon the death of Camillo, Ronald became the owner of Camillo’s 50% of the shares of AAB. 135 AAB is a close corporation with no ready market for its shares. 14. In or around 2005, Camillo wanted to transfer his shares of AAB to Ronald, so that Ronald and Lowre could continue the AAB business together. IS Although there are no restrictions on transferring AAB shares, Lowre objected to Camillo’s request to transfer his shares to Ronald. 16. Camillo and Lowre then agreed that Camillo would not transfer his AAB shares to Ronald, but would stop working at AAB on a daily basis. Camillo would remain president of AAB and continue to receive his weekly salary and his employment benefits including, but not limited to, the use of a company credit card, health insurance, pension contributions, etc. 17. Camillo relied upon his agreement with Lowre, knowing that he would continue to receive his weekly salary, and equal profits, as long as he didn’t transfer his AAB shares to Ronald. 18. Thereafter, Camillo stopped working at AAB on a daily basis and moved to Florida. 19. Around that same time, Lowre stopped working on vehicles as his only job description at that time was as a car painter, and co-manager of AAB. 20. Lowre did not have experience repairing vehicles and was not licensed to conduct repair estimates for insurance companies. 21. Ronald was licensed to conduct repair estimates for insurance companies and co- managed AAB in Camillo’s absence. 22. Lowre and Ronald then ran the day to day management of AAB, but Lowre took control of the financial management of AAB. 23. After 2005, Lowre began to convert AAB monies, on average of approximately $1,500 per week, by taking cash and writing himself checks, which were used for his own personal benefit and not for AAB expenses. 24. On various dates after 2005 and continuing through at least 2018, Lowre collected cash on behalf of AAB and did not deposit that cash into the AAB bank account. 25. On various dates after 2005 and continuing through at least 2015, Lowre, continued to write AAB checks to himself and to cash and kept those monies for himself. 26. Lowre fraudulently concealed from Camillo that he was keeping AAB cash for himself and writing himself checks out of the AAB bank account. 27. Lowre also unilaterally increased his own salary and fraudulently concealed that fact from Camillo. 28. Lowre’s misrepresentations and omissions were intended to deceive and did in fact deceive Camillo. 29. Lowre also breached his agreement with Camillo to provide a weekly pay check and split profits equally. 30. On or about June 16, 2014, Lowre requested that Camillo make an offer to purchase his shares of AAB. 31. Camillo offered to purchase Lowre’s AAB shares for $250,000. 32. Lowre rejected Camillo’s offer and demanded $1,300,000 for his shares of AAB. Camillo rejected that demand. 33. The parties then hired Howard Gordon, CFA, as an expert business appraiser to value the shares of AAB. Gordon determined the total value of AAB to be approximately $400,000. 34, In the Summer of 2015, Lowre knew that Camillo, then 80 years old, was not doing well physically or mentally. 35. On or about October 28, 2015, knowing Camillo’s medical condition, Lowre threatened to terminate Camillo’s salary if Camillo would not agree to increase his offer to purchase Lowre’s shares of AAB. 36. Camillo refused to increase his offer to Lowre. 37. On or about November 1, 2015, Lowre attempted to unilaterally terminate Camillo’s $2,000 weekly salary and withheld his pay check. 38. On or about December 9, 2015, after Camillo was able to convince the AAB accountant to authorize a pay check for him, Lowre formally terminated Camillo’s salary and instructed his attorney to threaten litigation against the AAB accountant if he authorized any more pay checks to Camillo. 39. Lowre’s termination of Camillo’s salary was solely to force Camillo to pay $1,300,000 for Lowre’s half-interest in AAB, knowing that AAB had been valued in its entirety at approximately $400,000. 40. Lowre’s termination of Camillo’s salary was a breach of their agreement to pay themselves equally and a freeze-out, motivated solely by improper business purposes, to exclude Camillo from the benefits of being a shareholder. 4. Lowre’s termination of Camillo’s salary was not the least harmful means of achieving his goals of forcing Camillo to buy his shares in AAB. 42. Camillo repeatedly made demand for Lowre to reinstate his salary but Lowre refused. 43. In January, 2016, Camillo was diagnosed with dementia. 44 Ronald, who held power of attorney for Camillo, repeatedly asked Lowre to reinstate Camillo’s weekly salary. 4S. Ronald also requested that Lowre accept a reduced offer for his shares of AAB or, alternatively, offer to purchase Camillo’s shares of AAB. 46. Lowre rejected all requests made by Ronald. 47. Consequently, Camillo, through Ronald as POA, commenced a petition to partition real estate in the Middlesex Probate Court in order to force the sale of the real estate located at 14 Dudley Court, Arlington, MA, which is the real estate that AAB operates out of, but is not an AAB asset. (A judgment has now entered in the partition case which has resulted in transfer of two parcels of real estate.) 48. Camillo also sought to partition the real estate he and Lowre owned at 4 Dudley Street Place, Arlington, MA (“Dudley Street Place”), which they co-owned and rented for profit. 49. Lowre has refused to pay Camillo and now the Estate, the rental income he is entitled to from Dudley Street Place. 50. The Middlesex Probate and Family Court (McSweeney, J.) has ordered the parties to resolve their dispute over the rental income from Dudley Street Place, in this action. 31, During the discovery phase of the partition case, it was discovered that Lowre had written himself checks in the amount of approximately $462,310 from 2009-2015. 52. None of these AAB checks signed by Lowre appear to have been reimbursement for AAB expenses. 53. On May 24, 2016, Lowre repeatedly asserted his Fifth Amendment Rights when questioned at his deposition about the additional $1,500 per week he was taking from AAB. 54. Prior to commencing this action Camillo served a derivative demand letter on Lowre. 55. Lowre has refused to repay to AAB the approximately $500,000 he has converted. 56. Lowre has refused to provide Camillo or Ronald with the financial books and records of AAB. Die Lowre refused to provide Camillo with AAB financial distributions and dividends or to reinstate his salary before he died. 58. Lowre refused to make AAB contributions to Leombruno’s AAB pension account betore he died. 59. Lowre has not provided complete and accurate AAB tax returns or financial information to Camillo or Ronald. 60. Lowre knew that his termination of Camillo’s weekly salary and increase in his own salary was not authorized and was a breach of their agreement. 61. Lowre is conducting business on behalf of AAB without holding shareholder meetings or obtaining the required number of votes of shareholders. 62. Lowre’s actions amount to those of a dis-loyal officer, director and treasurer. 63. In violation of his fiduciary duty and his duty of good faith and utmost loyalty, Lowre continues to operate AAB for his own benefit and to make financial decisions without regard to the duties he owed to Camillo and AAB, and now Ronald. 64. Lowre continues to acknowledge that Camillo was the president of AAB by filing annual reports listing him as such, but continues to withhold monies due Camillo and access to AAB records in an effort to freeze-out Camillo, and now Ronald. 65. On December 18, 2018, Lowre fired Ronald from his employment at AAB, solely as retaliation for commencing this action on behalf of Camillo. 66. As a result of Lowre’s termination of Ronald, AAB’s two largest customer terminated their business relationship with AAB, as they knew that Lowre was not capable of operating AAB on his own. 67. On July 10, 2019, Ronald notified Lowre’s counsel that he was now the owner of Camillo’s 50% shares of AAB and requested that he return to work at the same $3,000 per week salary, that Lowre was paying himself. 68. On July 16, 2019, Lowre responded to Ronald’s request by threatening to call the police if he returned to AAB, implying that he would be arrested. 69. Ronald seeks dissolution and liquidation by sale of AAB, as both he and Lowre are deadlocked as to the business affairs of AAB. Count 1 — Breach of Fiduciary Duty 70. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB, restates the above allegations. 71. Lowre owes a fiduciary duty of good faith and utmost loyalty to Camillo, Ronald and AAB. 72. As a result of Lowre’s breach of fiduciary duty, Camillo, Ronald AAB have sustained damages. Count 2 - Conversion 73. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB, restates the above allegations. 74. Lowre has converted monies belonging to Camillo, Ronald and AAB for his own personal use. 75. As aresult of Lowre’s conversion, Camillo, Ronald AAB have sustained damages. Count 3 - Unjust Enrichment 76. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB, restates the above allegations. 77. Lowre has been unjustly enriched at the expense of Camillo, Ronald and AAB. 78. As a result of Lowre’s conduct, Camillo, Ronald and AAB have sustained damages. Count 4 — Fraud 79. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB, restates the above allegations. 80. Lowre has made intentional misrepresentations or omissions, with the intent that Camillo, Ronald and AAB would rely on those acts or omissions, and which Leombruno and AAB relied upon to their detriment. 81. As a result of Lowre’s fraud and misrepresentation, Camillo, Ronald, and AAB have sustained damages. Count 5 — Breach of Contract 82. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB > restates the above allegations. 83. Lowre, through his actions, has breached his agreement with Camillo by unilaterally terminating Camillo’s weekly salary, failing to distribute profits AAB profits equally, and failing to distribute Dudley Street Place rental income to him. 84. As a result of Lowre’s breach of contract Camillo and now his Estate have sustained damages. Count 6 — Promissory Estoppel 85. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB, restates the above allegations. 86. Lowre agreed to continue paying Leombruno a weekly salary and split profits equally so long as Camillo did not transfer his AAB shares to Ronald. 87. Camillo relied to his detriment on Lowre’s representations. 88. Lowre is estopped from unilaterally terminating Camillo’s salary and not splitting profits. 89. As a result of Lowre’s promise and Camillo’s detrimental reliance thereon, Camillo has sustained damages. Count 7 — Declaratory Judgment for Equitable Forfeiture of Lowre’s Salary 90. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB, restates the above allegations. 91. Lowre has been a disloyal officer, director and treasurer of AAB since approximately 2005, and has fraudulently concealed his disloyalty while breaching his fiduciary duty to AAB and converting monies of AAB. 92. Camillo seeks a declaratory judgment that Lowre be ordered to forfeit his salary and refund his salary to AAB for the time during which he was disloyal to AAB. Count 8 ~ Declaratory Judgment for Constructive Trust 93. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB, restates the above allegations. 94. Lowre has created an actual controversy in regard to actions he has taken and money he has taken from Camillo, Ronald, and AAB. 95. Lowre should be declared to be holding any monies belonging to Camillo, Ronald, and AAB in a constructive trust for the benefit of Camillo, Ronald, and AAB. Count 9 — Accountin: 96. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB, restates the above allegations. 10 97. Lowre has wrongfully deprived Camillo of his interest in and control over the business of AAB. 98. Lowre has refused to account for monies generated by AAB and Dudley Street Place that are owed to Camillo. 99. Camillo has sustained damages as a result of Lowre’s failure to account. 100. Camillo seeks an order compelling Lowre to provide an accounting of the financial activity of AAB and Dudley Street Place. Count 10 — Dissolution of AAB 101. Ronald, individually, on behalf of the Estate, and derivatively on behalf of AAB, restates the above allegations. 102. Ronald and Lowre, are at odds as to the corporate management of AAB, are unable to break the deadlock, and AAB is suffering irreparable injury as Lowre continues to strip AAB of monies and lose customers. 103. Ronald seeks the dissolution and liquidation by sale of AAB, pursuant to G.L.c.156D, §14.30. PRAYERS FOR RELIEF WHEREFORE, plaintiffs pray that this Court: On Count 1, enter judgment for the Plaintiffs and award damages, costs, interest, and reasonable attorney’s fees; On Count 2, enter judgment for the Plaintiffs and award damages, costs, interest, and reasonable attorney’s fees; 11 On Count 3, enter judgment for the Plaintiffs and award damages, costs, interest, and reasonable attorney’s fees; On Count 4, enter judgment for the Plaintiffs and award damages, costs, interest, and reasonable attorney’s fees; On Count 5, enter judgment for the Plaintiffs and award damages, costs, interest, and reasonable attorney’s fees; On Count 6, enter judgment for the Plaintiffs and award damages, costs, interest, and reasonable attorney’s fees; On Count 7, enter an order that Lowre is required to forfeit his salary; On Count 8, enter an order that the monies unilaterally taken by Lowre are held in a constructive or resulting trust for the benefit of Camillo, Ronald, and AAB. On Count 9, order Lowre to account for all monies of AAB and Dudley Street Place. 10. On Count 10, order the dissolution and liquidation by sale of AAB. ll For such other and further relief as this Court deems just and proper. JURY TRIAL DEMAND The plaintiffs demand a trial by jury on all matters so triable. 12 VERIFICATION I, Ronald Leombruno, hereby depose and state as follows: I have read the Verified Complaint filed herein and, knowing the contents thereof, have found that the allegations set forth therein are based on my personal knowledge and are true, except as to those allegations based on information and belief, which I believe to be true, and that no material facts have been omitted. & tg? Ronald Leombruno = / LL4, 4 Ly A. f Z Leonard A. Frisofi, BBO ¥ 8201 Joseph W. ermott, BBO #330710 Frisoli AssgCiates, P.C. Bulfinch Square 43 Thorndike Street Cambridge, MA 02141 (617) 494-0200 x7 Laf@Frisolilaw.com IWM@Frisolilaw.com pac:4) /}¢//4 13