# Lowry v. Beardsley

> Superior Court of Maine · September 29, 2015

URL: https://www.frixlaw.com/law-library/cases/10810684

## Case

- **Court:** Superior Court of Maine
- **Decided:** September 29, 2015
- **Precedential status:** Unpublished
- **Opinion:** Opinion
- **Judges:** Roland A. Cole
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

c:;c·, ~
'- -':: OF '·/LI_INE
STATE OF MAINE Cumber 3':o ss Ciuk s ~WERIOR COURT
CUMBERLAND, SS. ~docket No. CV-2014-372 1
SEP 2 9 2015
DONALD GREY LOWRY, )
RECEIVED
Plaintiff, ) ORDER ON PLAINTIFF'S MOTION
) FOR SUMMARY JUDGMENT
v. )
)
JAMES C. BEARDSLEY & JCB )
CORPORATION, P.A., )
)
Defendants. )

Plaintiff Donald G. Lowry moves for summary judgment on Count I ofhis

Complaint for breach of contract against Defendants James C. Beardsley and JCB

Corporation, P .A. Mr. Lowry argues summary judgment is warranted because there is no

dispute that the full payments required under the contract between Messrs. Beardsley and

Lowry have not been made. Defendants respond that summary judgment should not be

granted because there is at least a disputed factual issue as to how the payments under the

Agreement should be characterized. As discussed in greater detail below, the Court

denies Mr. Lowry's motion because there are genuine issues of material fact.

I. Background

A. The Agreement and Payments Thereunder

Mr. Lowry entered into a contract with Mr. Beardsley on September 3, 2013

(hereinafter, the "Agreement"). (Pl.'s S.M.F. ~ 1.) Mr. Lowry drafted the Agreement.

(Def.'s A.S.M.F. ~ 16.) Pursuant to paragraph 1 of the Agreement, Mr. Lowry

transferred 100% of the stock in Lowry & Associates Attorneys, P.A. (the "Law Firm" or

"Firm") to Mr. Beardsley. (!d. at~ 3.) Pursuant to paragraph 5(a), the Firm was to pay

1
On July 21,2015, this Court consolidated CV-2014-372 with CV-2014-390.

1
Mr. Lowry $5,000 on the last day of each month for the period of September 2013

through December 2015. (ld. at~ 5.) Specifically, the Agreement provides that "Lowry

shall be compensated as follows:

a. The corporation [i.e. the Law Firm] agrees to pay monthly the sum of
$5,000.00 to Lowry on the last day of each month for the period
September, 2013 through December, 2015.

(Pl.'s Ex. A, the Agreement,~ 5(a).) The Law Firm paid Mr. Lowry $5,000 at the end of

September, October, November, and December 2013. (Id. at~ 6.) Subsequently, all

monthly payments to Mr. Lowry have been in the amount of $5,000 minus certain

withholdings for tax purposes pursuant to state and federal employment law. (ld. at~ 7;

Def.'s O.S.M.F. ~ 7.)

Pursuant to paragraph 5(b) of the Agreement, the Law Firm is obligated to pay

Mr. Lowry 8% of the total fees in excess of $850,000 received by the Firm for the year

ending December 31,2014, payable no later than the end of January 2015. (Pl.'s S.M.F.

~ 8.) Specifically, the Agreement provides that Mr. Lowry shall be compensated as

follows:

b. The corporation agrees to pay Lowry, in addition to the amount stated
in paragraph a above, 8% of the total fees in excess of $850,000.00
received by the firm in each of the years ending December 31, 2013,
December 31, 2014 and December 31, 2015, payable no later than the
end ofthe following January.

(Agreement~ 5(b).) In the payment Mr. Lowry received pursuant to paragraph 5(b), the

Law Firm withheld money as if Mr. Lowry were an employee of the Law Firm. (See

Pl.'s S.M.F. ~ 9; Def.'s O.S.M.F. ~ 9.)

Paragraph 10 of the Agreement provides that in the event the Law Firm fails to

make any of the payments required, Mr. Beardsley shall have 30 days written notice of

2
the default to cure and bring the Firm into full compliance. (Pl.'s S.M.F. ~ 11.) On May

29, 2014, Lee Bals, counsel for Mr. Lowry, sent Roy Pierce, then counsel for Mr.

Beardsley, an email declaring Mr. Beardsley in breach of the Agreement. (Id. at~ 12.)

On June 9, 2014, Mr. Bals sent Mr. Pierce a letter advising that Mr. Beardsley was in

default of the Agreement and providing an opportunity to cure. (Jd. at~ 13.) Since June

9, 2014, Mr. Beardsley-through JCB Corporation, P.A.-has continued with the same

payment practices complained of by Mr. Lowry. (See id. at~ 14.) On June 10, Mr. Pierce

sent a letter to Mr. Bals requesting he identify what "other things" were being claimed as

grounds for the alleged default. (Def.'s A.S.M.F. ~ 39.) Mr. Bals did not respond to the

request for further information. (!d. at~ 40.)

B. Disputed Factual Contentions Regarding the Alleged Intent.ofthe
Agreement

Mr. Beardsley asserts that in drafting the agreement, Mr. Lowry ensured that all

payments to him were to come from the Law Firm, not Mr. Beardsley personally. (411/15

Beardsley Aff. ~ 7.) He claims that the two discussed how this would result in Mr.

Lowry's payments being tax-deductible expenses for the Law Firm. (!d.) This, Mr.

Beardsley claims, was part of the reason he provided a personal guarantee of the Firm's

obligations to Mr. Lowry. (!d.) Mr. Beardsley also asserts that he understood the

payments under the Agreement were for services rendered by Mr. Lowry, not as a capital

contribution based on a document included with the initial drafts of the Agreement,

which states, "The provisions for transfer of shares of the corporation make it possible for

[Mr. Beardsley] to attain ownership without the necessity of making any capital

contribution .... " (Jd. at~ 8 and Exhibit 1 attached thereto.) In addition, Mr. Beardsley

asserts that Mr. Lowry characterized the payments he would be receiving as being

3
derived from profits and understood that profits could vary year to year, preventing any

sum certain of amounts to be paid. (!d. at~ 9.) Mr. Beardsley further asserts that Mr.

Lowry stressed that the Firm had no market value before entering the Agreement and

supported this assertion with a personal financial statement and handwritten notes

evidencing this assertion. (!d. at~ 11 and Exhibit 2 attached thereto.)

Mr. Lowry counters that permitting the payments to come from the Law Firm was

offered as a courtesy to Mr. Beardsley so he could make payments from the Firm, rather

than his personal funds. (4/9/15 Lowry Aff. ~ 5.) He also asserts that he did not discuss

the tax implications of the Agreement with Mr. Beardsley during the negotiations thereof.

(!d. at~ 6.) Mr. Lowry further claims that the parties understood Mr. Beardsley was

paying Mr. Lowry for the stock of the Firm and that it was never intended for him to be

employed by the Firm after the sale. (ld. at~ 7.) He also downplays the relevance of the

pre-Agreement document alluded to by Mr. Beardsley and contends that at the time,

various methods of payment were under consideration, which was ultimately resolved in

the Agreement. (Id.) As to the valuation that the Firm had no market value, Mr. Lowry

asserts that he always thought the Firm had great potential because of good will, brand

recognition, and reputation, but was concerned an outside appraisal would be negative in

light of a low recent earnings history. (ld. at~ 8.)

After the Agreement was executed, Mr. Beardsley claims Mr. Lowry began

questioning the characterization ofthe payments. (411115 Beardsley Aff. ~13.) This

questioning allegedly stemmed from conversations with his accountant about tax

implications and was designed to make the Agreement more beneficial to Mr. Lowry.

(Id. at~ 14.) In an apparent attempt at compromise, Mr. Beardsley asserts that he told Mr.

4
Lowry the Firm would pay his wages with a 1099, as an independent contractor. (!d.)

Shortly after this discussion, Mr. Lowry allegedly changed his mind and claimed that he

considered 100% of the payments to be capital payments. (!d. at~ 16.) Mr. Lowry

responds that he never changed his attitude or position with respect to the nature of the

payments under the Agreement and that it was only after a period of time following the

execution of the Agreement that he learned Mr. Beardsley proposed to consider the

payments as compensation for services rendered. (4/9/15 Lowry Aff. ~ 9.)

Mr. Beardsley also claims that on October 21,2013, Mr. Lowry told him he was

going to sue the Firm and Mr. Beardsley personally. (411/15 Beardsley Aff. ~ 17.) On

November 12, 2013, the Firm's bookkeeper allegedly discovered that someone had

deleted two entries from the Firm's books totaling $30,000. (!d. at~ 18.) By process of

elimination, Mr. Beardsley believes it was Mr. Lowry. (See id.) Mr. Lowry denies this

allegation. (4/9/15 Lowry Aff. ~~ 12-13.)

In January 2014, the issue ofhowto characterize the payments to Mr. Lowry

came to a head. (Pl.'s S.M.F. ~ 30.) Mr. Lowry's accountant proposed a compromise,

whereby the payment would be characterized as W2 wages and the first $20,000 in

payments be considered payment in full for the stock of the Firm, with all remaining

payments to be considered wages. (ld at~ 31.) In a January 29, 2014 email to Mr.

Beardsley, cc'ing Mr. Bouffard-an accountant-Mr. Lowry responded that:

Although I have no doubt that you are misdirected and that your position
will never stand any scrutiny by the IRS, I think that starting a war over
this relatively inconsequential matter is ridiculous. Therefore I will just
give in. Let's consider the payments in 2013 as payment for the stock and
all succeeding payments as salary. Please have Joan deduct taxes before
making the January payment to me. You can give me a W-2 at the end of
the year. When I pass away ... [E1izabeth Lowry] will then be your

5
employee. I guess that your basis in the stock will be $20,000 as absurd as
that seems.

(Ex. 5 to Def.'s A.S.M.F.) (emphasis added).

C. Mr. Lowry's Firm Related Activities Following the Execution of the
Agreement

Mr. Lowry asserts that he has not performed any employment related activity for

the Law Firm since October 2013. (3/11/15 Lowry Aff. ~ 7; see also 9111114 Beardsley

Aff. ~~ 29-30 (stating that Mr. Lowry has done no client related or firm management

work since January 2014).) Mr. Beardsley responds that Mr. Lowry has conducted work

on behalf of the Law Firm subsequent to October 2013. (4/1115 Beardsley Aff. ~~ 30-

32.) Specifically he alleges that between September 2013 and January 2014, Mr. Lowry

was asked to: maintain a log of settled cases and income projections, review the accuracy

of data entry for new cases, write a detailed history ofthe Law Firm that could be used

for marketing and development purposes, and participate in the Law Firm's employee

goals project. (Jd. at~ 30.) Mr. Beardsley contends that he only stopped providing

assignments to Mr. Lowry after a February 3, 2014 voicemail from Mr. Lowry's counsel

instructing him not to communicate with Mr. Lowry. (!d. at~ 31 and Exhibits 7 & 8

thereto.) Nevertheless, Mr. Beardsley asserts that Mr. Lowry conducted work on behalf

ofthe firm-without Mr. Beardsley's instruction, direction or request-as evidenced by a

phone call Mr. Lowry received from an upset business owner in Massachusetts in

response to a letter sent by the Law Firm, and signed by Mr. Lowry, on June 21, 2014.

(Jd. at~ 32 and Exhibit 9 thereto.)

6
D. The Florida Court Proceedings

While the Agreement negotiations were proceeding, Mr. Lowry was the defendant

in a Florida court action brought by a creditor. (Def.'s S.M.F. ~ 41.) On August 27,

2013, Mr. Lowry was provided with a proposed final judgment in that case against him in

the amount of$128,948.09, plus interest. (ld. at~ 42.) Mr. Beardsley asserts that he had

a number of discussions about the immanency of the judgment with Mr. Lowry and, in

those discussions, Mr. Lowry explained that it was important that his payments from the

Firm be for work performed and not payments from Mr. Beardsley. (4115/15 Beardsley

Aff. ~ 39.) Mr. Beardsley also claims that Mr. Lowry pressured him into signing the

Agreement by, among other things, stating that he would terminate Mr. Beardsley if he

would not sign. (!d. at~ 40; see also Exhibit 14 thereto, a memo from Mr. Lowry to Mr.

Beardsley stating that if he cannot reach an Agreement with Mr. Beardsley, Mr. Lowry

has "in mind a termination package for you if you decide to depart.") Mr. Lowry denies

these allegations. (4/9/15 Lowry Aff. ~ 17.)

On September 11, 2013, final judgment was entered against Mr. Lowry by the

Florida court in the amount of$128,948.09, plus interest. (Def.' S.M.F. ~ 46.) Pursuant

to the judgment, Mr. Lowry was required to submit a fact information sheet, which

required information including Mr. Lowry's employment status, wages, other income,

real estate value, motor vehicles, and whether Mr. Lowry had transferred any asset valued

at greater than $100 during the past year. (!d. at~ 47.) Mr. Beardsley suspects that Mr.

Lowry reported the Firm's value as zero and stated that the payments he received from

the Firm were wages, not capital payments. (!d.)

7
II. Discussion

"The function of a summary judgment is to permit a court, prior to trial, to

determine whether there exists a triable issue of fact or whether the question[ s] before the

court [are] solely ... oflaw." Bouchardv. American Orthodontics, 661 A.2d 1143,1144

(Me. 1995). Summary judgment is appropriate where there are no genuine issues of

material fact and the moving party is entitled to judgment as a matter of law. M.R. Civ.

P. 56( c); see also Levine v. R.B.K. Caly Corp., 2001 ME 77, ~ 4, 770 A.2d 653. A

material fact is one that can affect the outcome of the case, and a genuine issue exists

when there is sufficient evidence for a fact finder to choose between competing versions

of the fact. Lougee Conservancy v. City-Mortgage, Inc., 2012 ME 103, ~ 11, 48 A.3d

774. In ruling on a motion for summary judgment, the court must consider the facts in

the light most favorable to the non-moving party. See Perkins v. Blake, 2004 ME 86, ~ 7,

853 A.2d 752

A. Whether the Defendants Breached the Agreement by Withholding
Money from the Payments Due Mr. Lowry Under the Agreement

Mr. Lowry argues that summary judgment is warranted because there is no

disputed issue of material fact that the Defendants breached the Agreement by failing to

pay him all of the monies he was entitled to thereunder. Specifically, the Defendants

paid the agreed upon $5,000 for the first four months of the Agreement, but thereafter

withheld monies from the $5,000 payment. In addition, the Defendants withheld money

for taxes from the annual payments due to Mr. Lowry. The monies withheld were

allegedly for employee taxes to the state. Mr. Lowry argues that this was improper

because under state law, employees must be paid at regular intervals not to exceed 16

days, not a monthly basis. See 26 M.R.S. § 621-A (2014).

8
Defendants respond that summary judgment is not warranted because there are

material facts in genuine dispute. Specifically, Defendants argue that there is at least a

dispute as to whether the $5,000 monthly payments were for wages, as opposed to capital

payments for the purchase of the Firm's stock. This is because every reference to

payments in the Agreement is for the Firm-not Mr. Beardsley-to pay Mr. Lowry. As a

result, Mr. Lowry's interpretation results in the absurdity of the Firm buying itself and

retaining its stock as treasury shares. Furthermore, an interpretation in which the

payments to Mr. Lowry were for wages is consistent with his own market valuation of the

firm as having no value.

The Defendants further point out that Mr. Lowry-an experienced attorney-

drafted the agreement and could have included provisions regarding more definite terms

of payment had he wished. Instead, he deliberately chose not to characterize the

payments as capital for the acquisition of the Firm. Defendants argue that this position is

consistent with his attempt to minimize the potential for an attachment against him

stemming from the Florida action. More importantly, Defendants point out that in

January 2014, Mr. Lowry agreed in writing to have all future payments characterized as

wages and provided Mr. Beardsley a W -4 to compute the withholding amounts. (!d.

(citing Def. 's A.S.M.F. ~~ 30-33).) This writing, Defendants claim, constitutes an

amendment to the Agreement and removes any doubt as to the proper characterization of

the payments.

The Defendants also argue that 26 M.R.S. § 621-A does not alter Mr. Lowry's

status as an employee because the statute does not apply to Mr. Lowry as he is a salaried

9
employee and, even if it did apply, it would simply create a liability under the statute for

the Firm, it would not render the Agreement void or transform the payments made.

The Defendants then contend that there is a material dispute as to whether Mr.

Lowry was treated like an employee by the Firm. They dispute Mr. Lowry's claim that

he was not provided access to the Firm's records and point out instances in which Mr.

Lowry allegedly carried out work for the Firm. They also argue that the Agreement does

not require Mr. Lowry to provide active legal services. Instead, he must remain

"available for consultation and advice 'to the extent requested by Beardsley."'

(Agreement~ 2.) Defendants further contend that they had legitimate reasons for

minimizing Mr. Lowry's role in the firm such as his hostile attitude, and alleged deletion

of two entries from the Firm's books. 2

Mr. Lowry replies that because the manner in which the Agreement pays Mr.

Lowry would violate Maine's comprehensive statutes and regulations governing

employment law practice if the payments were treated as wages to an employee, the

Court should interpret the Agreement as making capital payments. In support, Mr.

Lowry attacks the Defendants' characterization of him as an exempt, salaried employee

because he was not permitted to perform any work for the Firm. Mr. Lowry also asserts,

for the first time, that the Defendants violated 26 M.R.S. § 665 requiring Maine

employers to provide each employee, with each payment of wages, "a statement that

clearly shows the date of pay period, the hours, total earnings and itemized deductions."

26 M.R.S. § 665 (2014).

2
The Defendants also raise two additional arguments that are premised on the assumption that their
interpretation of the Agreement is correct. Namely, that there are disputed issues of fact about whether the
Defendants' decision to withhold taxes from Mr. Lowry's payments constituted a breach ofthe Agreement
because tax law requires such monies to be withheld, and whether the notice of default was effectual
because there was no default under the Agreement to trigger said notice.

10
Mr. Lowry further replies that the Agreement's provision regarding Elizabeth

Lowry establishes that the payments were not intended to be wages for Mr. Lowry as an

employee. This is because in the event Mr. Lowry predeceases his spouse, she would

become entitled to the payments. Elizabeth Lowry, however, is clearly not an employee

of the Firm. Mr. Lowry also questions what would happen, under the Agreement, if he

quit as an "employee." Would the payments cease? Finally, Mr. Lowry argues that the

discussion of the Florida foreclosure proceeding is irrelevant to the question of whether

Mr. Lowry is an employee of the Firm or whether Defendants breached the agreement.

(ld. at 5-6.)

Here, when viewed in the light most favorable to the Defendants, there is at least

a genuine dispute of material fact regarding the proper characterization of the payments

to Mr. Lowry and/or Elizabeth Lowry under the Agreement. This is because the payment

language in the Agreement does not explicitly characterize the payments as capital

contributions-or employee wages. (See Agreement~~ 5(a), (b), (c).) In addition, the

Defendants-primarily through the affidavits of Mr. Beardsley-have introduced

evidence that, when viewed in the light most favorable to the Defendants, indicates the

questioned payments were intended to be treated as employee wages. 3 (See 4/1/15

Beardsley Aff. ~~ 7-8 (Mr. Lowry allegedly ensured Mr. Beardsley all payments would

come from the Law Firm, would be tax deductible to the Firm, and were for services

performed);~ 11 (Mr. Lowry allegedly communicated that the Firm had no market value

3
Certain extrinsic evidence regarding the parties' intent when entering the Agreement is admissible
because the Agreement does not contain an integration clause. See Brown Dev. Corp. v. Hemond, 2008
ME 146, ~~ 13, 17,956 A.2d 104 (The application ofthe parol evidence rule is contingent on an initial
finding that the contract at issue is integrated, whether a contract is integrated is a question of law); see also
Rogers v. Jackson, 2002 ME 140, ~ 10, 804 A.2d 379 ("As a general rule parol evidence of additional terms
is admissible to supplement a partially integrated written agreement ifthe additional terms are consistent
with the writing.").

11
supporting an interpretation that the payments were for wages);~~ 13-14 (Mr. Lowry

allegedly began questioning the characterization of the payments only after the

Agreement was executed indicating a dissatisfaction with the prior characterization that

continues in this litigation);~~ 30-32 and Exhibit 9 thereto (Mr. Lowry was asked to

perform work between September 20 13 and January 2014 and allegedly undertook legal

work under the Firm's letterhead on June 21, 2014); Ex. 5 to Def.'s A.S.M.F. (Mr. Lowry

emails Mr. Beardsley and agrees to consider the payments in 2013 as payments for the

stock ofthe Firm and all succeeding payments as salary); 4/1/15 Beardsley Aff. ~~ 39-42

(Mr. Lowry allegedly explained that having his payments come from the Firm would help

him in dealing with creditors in the Florida action).)

This remains the case despite the Agreement's alleged violation of26 M.R.S. §

621-A. That statute provides that every employer must pay in full all wages earned by

each employee at regular intervals not to exceed 16 days. 26 M.R.S. § 621-A(l). Section

621-A, however, does not apply to "salaried employees," 26 M.R.S. § 623, which are

defined as an employee "who works in a bona fide executive, administrative or

professional capacity and whose regular compensation, when converted to an annual rate,

exceeds 3000 times the State's minimum hourly wage .... " 26 M.R.S. § 663(3)(K)

(2014).

When viewed in the light most favorable to the Defendants, the Court cannot say

that Mr. Lowry does not qualify as a salaried employee as a matter of law. (See

Agreement~ 2 (discussing Mr. Lowry's agreement to be available for consultation and

advice as well as his promise not to perform legal work for any other law firm or legal

related business).) Furthermore, even if the statute applied and the Defendants were

12
found in violation thereof, it would not mean ipso facto that the Agreement intended to

characterize the payments to Mr. Lowry as capital payments. Instead, it would simply

constitute evidence that this was the parties' intent. Accordingly, genuine issues of

material fact exist that preclude the Court from granting Mr. Lowry's motion for

summary judgment.

III. Conclusion

The Court denies Mr. Lowry's motion for summary judgment because, when

viewed in the light most favorable to the Defendants, there is at least a genuine issue of

material fact regarding the proper characterization of the payments under the parties'

Agreement.

Pursuant to M.R. Civ. P. 79(a), the Clerk is her orporate this

Order by reference in the docket.

Dated: SeptemberJ{, 2015

13
DONALD G LOWRY VS JAMES C BEARDSLEY ET AL CONS WITH CV14-390
UTN:AOCSsr -2014-0070451 CASE #:PORSC-CV-2014-00372

01 0000003412 BALS, LEE
ONE CANAL PLAZA SUITE 600 PORTLAND ME 04101-4035
F DONALD GREY LOWRY PL RTND 08/19/2014

02 0000009024 PELLEGRINI ANTHONY D
84 HARLOW ST PO BOX 1401 BANGOR ME 04402-1401
F JAMES C BEARDSLEY DEF RTND 09/11/2014
F JCB CORPORATION PA PII RTND 09/11/2014
STATE OF MAINE
Cumberl~nl:l. ~t\. C\efk-'s Office

JUL 2 ' 20\5
STATE OF MAINE SUPERIOR COURT
CUMBERLAND, SS. RECE\VED LOCATION: Portland
Docket No. CV-14-372

)
DONALD GREY LOWRY, )
)
Plaintiff, ) ORDER ON PLAINTIFF'S
) EMERGENCY MOTION FOR
v. ) APPOINTMENT OF A RECEIVER
)
JAMES C. BEARDSLEY & JCB )
CORPORATION, P.A., )
)
Defendants. )

Plaintiff Donald Grey Lowry moves on an emergency basis for the appointment

of a receiver to manage the business of Lowry & Associates, P .A. on an interim basis.

Plaintiff supports his motion with an affidavit and exhibits attached thereto. Defendants

James C. Beardsley and JCB Corporation, P.A. oppose Plaintiffs motion and support

their opposition with affidavits from Mr. Beardsley and JCB Corp's bookkeeper, Joan

Kelly.

For the reasons discussed below, the Court denies Plaintiffs emergency motion

for appointment of receiver.

I. Factual Background

Plaintiff is the founder and former sole shareholder of the law firm Lowry &

Associates, P.A. (the "Firm"). (Lowry Aff. ~ 3.) In the late 2000s, defendant James C.

Beardsley became an employee of the Firm. (!d. at~ 4.) On September 3, 2013, Plaintiff

sold his ownership interest in the Firm to Mr. Beardsley pursuant to a written agreement

(hereinafter, the "Agreement"). (!d. at~ 5 and Exhibit A thereto, the Agreement.)

Plaintiff asserts that the intent of the Agreement was to fairly compensate Plaintiff for his
ownership interest in the Firm and his continuing services to the Firm. (Lowry Aff. ~ 6

(quoting Exhibit A, p. 1).) Under the terms of the Agreement, Plaintiff transferred 100%

of his stock in the Firm to Mr. Beardsley. (Agreement, 1 ~ 1.) In exchange, Plaintiff

received the following pertinent consideration: (1) the monthly sum of $5,000 on the last

day of each month for the period September, 2013 through December, 2015; (2) 8% of

the total fees in excess of $850,000.00 received by the Firm in each of the years ending

December 13,2013, December 31,2014 and December 31,2015, payable no later than

the end of the following January; (3) the retention of the Firm's business related perks

and benefits which Plaintiff has heretofore enjoyed including use of an automobile for

business related and personal use within the State of Maine (to be replaced as necessary)

and the use of an office, office supplies and equipment, and access to staff assistance for

firm business related purposes to the same extent as in the past. (!d. at pp. 2-3, ~~ 4-5.)

Plaintiff asserts that Mr. Beardsley breached the Agreement by: 1) failing to pay

the full $5,000 per month agreed to; 2) freezing Plaintiff out ofthe practice; 3) changing

the locks ofthe office building to cut-off Plaintiffs access; 4) preventing Plaintiff from

accessing the Firm's books, records, and staff; 5) denying Plaintiff internet access and

preventing him from reading firm e-mail; 6) shutting off Plaintiffs office cell phone; and

7) cancelling his Firm credit card. (Lowry Aff. ~~ 8-9.) Plaintiff also asserts that in the

weeks before he filed the motion, the Firm suffered damage due to flooding. (!d. at~ 10.)

Finally, Plaintiff contends that there is an ongoing dispute between himself and Mr.

Beardsley. (!d. at~ 11.) Part of that dispute is based on Plaintiffs belief that Mr.

Beardsley is irreparably harming the Firm, withholding money from him, and damaging

the Firm's reputation. (!d.)

2
Defendants contend that they have paid Plaintiff $5,000 for each month,

beginning with September 2013, through the present. (Beardsley Aff. ~ 7.) The first four

payments were allegedly made without withholdings, whereas the subsequent payments

were made subject to withholding. (Beardsley Aff. ~8; Affidavit of Joan Kelly,

bookkeeper for Defendant JCB Corp.~~ 6-8.) Mr. Beardsley asserts that the decision to

characterize the payments to Plaintiff as wages subject to withholding was first suggested

by Plaintiff's accountant in January 2014 and was consistent with the parties' pre-

acquisition understanding that payments to Plaintiff would be expenses of the Firm.

(Beardsley Aff. ~~ 9-11.) In a January 29, 2014 email, Plaintiff wrote that he did not

want to start a war over this matter, considered it relatively inconsequential, and therefore

gave in to Mr. Beardsley's interpretation. (Exhibit 1 to Beardsley Aff.) Consistent with

this representation, Plaintiff filled out a W-4 form to the Firm. (Exhibit 3 to Beardsley

Aff.)

With regard to business perks, Mr. Beardsley contends that Plaintiff was provided

with the use of an automobile. (Beardsley Aff. ~~ 15.) He further claims that until

shortly before the motion was filed, Plaintiff was provided with the use of an office,

office supplies and equipment, and access to staff assistance for Firm business. (Jd. at ~

16.) However, on August 13, 2014, Mr. Beardsley alleges that the building in which the

Firm has its offices became flooded and unusable. (Jd. at~ 17.) He contends that he

asked the landlord ofthe building, who happens to be the Plaintiff, to remediate the

damages. (!d. at ~~ 18-19.) Mr. Beardsley further contends that Plaintiff refused to

remediate the damages and thereby breached the Lease between the Firm and Plaintiff.

(Jd. at~~ 19-21.) Due to this alleged breach, Mr. Beardsley declared in writing that he

3
was going to find new office spaces for the Firm. (!d. at~ 21.) Mr. Beardsley thereafter

filed a separate lawsuit against Plaintiff for breach of contract. (!d. at~ 22.) Mr.

Beardsley then asserts that through late August 2014, he allowed Plaintiff unfettered

access to the building. (!d. at~ 26.) After August 26, 2014, he allowed Plaintiff

unfettered access to the building during office hours and access after hours with notice to

Mr. Beardsley. (!d. at~ 27.) The access limitations were purportedly because Plaintiff

insisted on leaving the building unlocked and the windows open to air out the building

after the flood. (!d.) Mr. Beardsley was opposed to this because they had experienced

vandalism in the recent past. (!d.) Mr. Beardsley also asserts that Plaintiff used his

access to the building to remove personal items therefrom. (!d.)

Regarding Plaintiffs access to the Firm's books and records, Mr. Beardsley

contends that he denied Plaintiff access thereto pursuant to paragraph 2 of the Agreement,

which provides, in pertinent part, that Mr. Beardsley "agrees to assume the duties of

Managing Attorney of the [Firm] and shall have primary responsibility for the

management of the firm including all issues involving the firm operations[.]"

(Agreement, pp. 1-2, ~ 2.) He further asserts that nothing in the Agreement guarantees

Plaintiff access to the books and records of the Firm. (Beardsley Aff. ~ 25.) Moreover,

Defendants assert that Plaintiff has no need to access the Firm's books and records

because he has not done any client related work for the Firm or provided any

management related work since January 2015. (See id. at~~ 29-30.) Finally, Mr.

Beardsley asserts that he anticipates 2014 will be the most profitable year for the Firm

since Mr. Beardsley joined. (!d. at~ 32.)

4
II. Argument

Plaintiff asserts that a receiver is necessary because the parties are deadlocked

with respect to the management and operation of the Firm and Plaintiff believes Mr.

Beardsley's current management is causing irreparable harm to the Firm. Plaintiff

requests a receiver be appointed on an interim basis to manage the day-to-day operation

of the Firm pending resolution of the present dispute. He requests that the receiver be

compensated for his work by the Firm.

Defendants respond that although Plaintiff cited no authority in support of his

request for a receiver, the appointment would be governed by 13-C M.R.S. § 781.

Defendants contend that pursuant to that statute, the Court may appoint a custodian in a

proceeding brought by a shareholder when the directors are deadlocked in the

management of corporate affairs, the shareholders are unable to break the deadlock, and

either the deadlock threatens or has caused irreparable injury to the Firm, or the directors

are acting fraudulently and may cause irreparable injury to the firm. 13-C M.R.S. §

781(1). Defendants argue that Plaintiffs request fails because: 1) he is not a shareholder

ofthe Firm; 2) he cannot establish that the directors ofthe Firm are deadlocked because

Plaintiff has no authority to manage the Firm; 3) there are no allegations that Mr.

Beardsley acted fraudulently; and 4) there is no evidence of irreparable injury to the

Firm. Defendants also argue that Plaintiff has no legal claim to participate in the business

of the Firm because the Agreement does not give Plaintiff said right. Indeed, while the

Agreement anticipates a plan that allows the Firm to continue to benefit from Plaintiffs

services, it squarely places the duties of managing the Firm with Mr. Beardsley.

5
Pursuant to 13-C M.R.S. § 781, the Court may appoint one or more persons to be

custodians or, if the corporation is insolvent, to be receivers of and for a corporation

when it is established that: A) the directors are deadlocked in the management of the

corporate affairs, the shareholders are unable to break the deadlock, and irreparable injury

to the corporation is threatened or being suffered; or B) the directors or those in control of

the corporation are acting fraudulently and irreparable injury to the corporation is

threatened or being suffered. 13-C M.R.S. § 781(1). Appointment of a receiver is a

matter within the discretion of the trial court. Bates v. Dep 't of Behavioral &

Developmental Servs., 2004 ME 154, ~ 86, 863 A.2d 890 (citing Dep 't of Envtl.

Protection v. Emerson, 563 A.2d 762, 767 (Me. 1989)).

Here, the Court denies Plaintiff's motion to appoint a receiver because he has not

established that Defendants' management of the Firm is causing irreparable damage.

Indeed, the primary evidence Plaintiff has presented on this point is his own speculation

that Mr. Beardsley's management is causing irreparable harm to the Firm. While not

disproved, this speculation is countered by Mr. Beardsley's assertion that the Firm is

having a very profitable year. In addition, while Plaintiff has put forth an argument as to

why the Court should find that he is a shareholder of the Firm, he has not established that

point. Accordingly, the Court denies Plaintiff's emergency motion for appointment of a

receiver.

d to incorporate this

Order by reference in the docket.

Dated: July .tl_, 2015
A. Cole, Justice
Superior Court

6
DONALD G LOWRY VS JAMES C BEARDSLEY ET AL CONS WITH CV14-390
UTN:AOCSsr -2014-0070451 CASE #:PORSC-CV-2014-00372

01 0000003412 BALS, LEE
ONE CANAL PLAZA SUITE 600 PORTLAND ME 04101-4035
F DONALD GREY LOWRY PL RTND 08/19/2014

02 0000009024 PELLEGRINI, ANTHONY D
84 HARLOW ST PO BOX 1401 BANGOR ME 04402-1401
DEF RTND
-F JAMES C BEARDSLEY 09/11/2014
-F JCB CORPORATION PA PII RTND 09/11/2014

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10810684. Public record. Not legal advice.