Contract – Asset purchase agreement

Where a plaintiff has brought suit under an asset purchase agreement, the defendant sellers are entitled to summary judgment because the plaintiff cannot prove any part of its misrepresentation claims and has not been able to muster any evidence that the defendants breached their duty of loyalty.

“Gem Plumbing and Heating Services, LLC, bought a similar business called Rusty’s, Inc., from Michael Roderick and Thomas Hansen. Two weeks after the closing Gem fired Roderick and Hansen, claiming that they knew but did not disclose that their employees Michael Hansen (the son of Tom Hansen) and Paul Neary were running a competing HVAC business called Air Pros MA, LLC. This lawsuit followed.

“Gem claims that the Rusty’s Defendants (Rusty’s, Roderick, and Tom Hansen) were required but failed to disclose that Air Pros was competing with Rusty’s and that they thereby committed fraud, breached the parties’ Asset Purchase Agreement (the ‘APA’), committed an unfair or deceptive trade practice in violation of G.L.c. 93A, and engaged in civil conspiracy. It also claims that Roderick and Hansen thereby breached their fiduciary duties after becoming Gem employees.

“The Rusty’s Defendants assert a number of counterclaims. The Rusty’s Defendants have moved for summary judgment on Gem’s remaining claims against them and on their counterclaims. Gem settled and has dismissed its claims against the other three defendants.

“The summary judgment record establishes that the Rusty’s Defendants are entitled to judgment in their favor as a matter of law on all of Gem’s remaining claims against them. Roderick and Hansen are entitled to partial summary judgment as to liability on their counterclaim for breach of their employment agreements. Gem is entitled to summary judgment in its favor under Mass. R. Civ. P. 56(c) with respect to the Wage Act counterclaim. The Court will otherwise deny the summary judgment motion and will deny the related motion to strike as moot. …

“The Rusty’s Defendants made a series of representations and warranties in §5 of the APA. Gem’s claims for fraud and for breach of contract are based on allegations that four of the representations made by the Rusty’s Defendants in the APA were false. The summary judgment record shows that Gem cannot prove any part of these claims. …

“Roderick and Hansen are entitled to summary judgment on Gem’s claim that they breached their fiduciary duty of loyalty.

“The Court agrees with Gem that there is a triable issue as to whether Roderick and Hansen owed fiduciary duties to Gem during the week or so that they were employed by Gem after the closing. …

“But Gem has not been able to muster any evidence that Roderick or Hansen breached their duty of loyalty, assuming that they owed fiduciary duties while employed by Gem. …

“Roderick and Hansen are entitled to partial summary judgment as to liability on their counterclaim that Gem breached their employment agreements by firing them without cause after just a few days, and failing to pay the severance benefits provided for in §6 of those contracts. The Court cannot determine what amount of damages Roderick and Hansen are entitled to recover on this record.

“For the reasons discussed above, the summary judgment record establishes that Gem did not fire Roderick and Hansen for cause. As Gem correctly notes, the employment agreements define ‘cause’ to include ‘the commission of any dishonesty, fraud, embezzlement, or illegal or grass misconduct that has or could be reasonably expected to cause material damage’ to Gem. In its termination letters, Gem said that it was firing Roderick and Hansen for failing ‘to disclose the competitive business activities of former employees before the closing of Gem’s acquisition of the assets of Rusty’s, Inc.’ As discussed above in §§1.1.1 and 1.1.2 of this decision, Roderick and Hansen had duty to make any such disclosure. Under the terms of the employment agreements, not disclosing information that Roderick and Hansen had no duty to disclose could not constitute ‘cause’ to terminate their employment, as a matter of law. …

“The Court will grant summary judgment in Gem’s favor on the Wage Act counterclaim. … In their counterclaims, Roderick and Hansen allege that they were not paid for all accrued vacation time when they were fired. That is incorrect for the reasons discussed in Gem’s opposition. Roderick and Hansen have no reasonable expectation of being able to prove this counterclaim. …

“The Court cannot determine on this record whether Gem paid all amounts due under the APA. It will therefore deny Rusty Defendants’ request for summary judgment on this counterclaim.”

Gem Plumbing and Heating Services, LLC v. Rusty’s, Inc., et al. (Lawyers Weekly No. 09-037-26) (10 pages) (Salinger, J.) (Suffolk Superior Court) (Docket No. 2484CV00083-BLS2) (April 29, 2026).

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