RICHARD KIRBY & Another v. JOHN J. MOUSIS & Another.

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28,
as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties
and, therefore, may not fully address the facts of the case or the panel's
decisional rationale. Moreover, such decisions are not circulated to the entire
court and, therefore, represent only the views of the panel that decided the case.
A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25,
2008, may be cited for its persuasive value but, because of the limitations noted
above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260
n.4 (2008).

COMMONWEALTH OF MASSACHUSETTS

APPEALS COURT

24-P-1200

RICHARD KIRBY & another1

vs.

JOHN J. MOUSIS & another.2

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

The plaintiffs, Richard Kirby and Pondview Investments, LLC

(PVI), brought this action alleging that the defendants, John J.

Mousis and his newly-formed company, Pondview Vending, Inc.

(PVV), improperly cut the plaintiffs out of a business

arrangement to purchase and operate gaming terminals in the

Commonwealth of Pennsylvania. The defendants asserted

counterclaims against Kirby alleging that Mousis had no

obligation to include PVI in the arrangement because Kirby

misrepresented his ability to raise funds for the venture,

Kirby's involvement was conditioned on his ability to raise $1

1 Pondview Investments, LLC.

2 Pondview Vending, Inc.
million, and Kirby failed to raise that required amount. After

a bench trial, a Superior Court judge found in favor of the

plaintiffs on their claim for unjust enrichment and ordered the

defendants to pay $60,000 in damages. The judge found that the

plaintiffs did not prevail on their remaining claims nor did the

defendants on their counterclaims.

On appeal, the plaintiffs argue that the judge's findings

that Mousis did not owe a fiduciary duty to PVI and that the

plaintiffs' involvement in the business arrangement was subject

to a condition precedent (i.e., raising $1 million) were clear

error. In their cross appeal, the defendants argue that the

plaintiffs were not entitled to recover on their unjust

enrichment claim and that the defendants should have prevailed

on their fraud counterclaim. We affirm.

Background. 1. Facts. We summarize the facts found by

the judge, supplemented by undisputed parts of the record. We

reserve further recitation of the facts for our discussion.

Kirby and Mousis met at a stock investment meeting in 2012.

At the time, Mousis and a business associate, Michael Palermo,

were involved in the "skill-based" gaming business.3 As part of

that business, Mousis and Palmero purchased gaming terminals and

3 In their brief, the plaintiffs explained that "skill-
based" games include electronic poker and backgammon machines,
as opposed to "chance" games.

2
software from Gracie Technologies (Gracie), a company

headquartered in South Carolina that had a "strong business

relationship" with Mousis. The terminals then were placed in

establishments like bars and social clubs. Customers would

deposit money into the terminals and play games that paid out to

winners. Gracie tabulated the revenue generated by the

terminals through a backend accounting system and then made

payments to distributors, like Mousis and Palmero, based on

those calculations. The business required significant capital

to purchase the terminals and software, and to retain attorneys

to stay abreast of State legislation that affected the business.

At their initial meeting and thereafter, Kirby told Mousis

that he was a highly successful businessperson who was

knowledgeable about the gaming industry and had access to

significant investment capital. Mousis and Kirby remained in

touch, but Mousis and Palmero continued to expand their gaming

business without Kirby. Specifically, between 2013 and 2016,

Mousis and Palmero formed three companies, Nebraska Vending LLC,

M&M Vending, and QP Industries, to run gaming businesses in

Nebraska, Florida, and Pennsylvania.

Meanwhile, in 2013, Kirby told Mousis about the Solgen

Energy project, an investment opportunity to construct a power

plant for the Jamaican government; Mousis declined the

3
opportunity but introduced Kirby to potential investors. This

project ultimately failed, and the people referred to the

business by Mousis lost their investments.

Eventually, Mousis advised Kirby of an opportunity to

purchase equity from existing investors in Nebraska Vending.

Later, Mousis proposed that Kirby raise funds to purchase equity

from existing investors in QP Industries, Mousis's company that

operated in Pennsylvania. In May 2016, Kirby formed PVI, a

Delaware limited liability company, for the purpose of accepting

investors for the gaming business. Kirby was unable to open a

bank account for PVI due to State and Federal tax issues, so

Mousis opened the account. Kirby represented to Mousis that he

could raise significant capital, "claimed funding was on the

horizon, and even showed Mousis promising communications with

investors who claimed they were ready to invest from $1 to $1.5

million in the Pennsylvania opportunity." Mousis agreed that if

Kirby was successful in raising $1 million,4 Mousis would give

Kirby a thirty percent interest in PVV, an entity not yet formed

for the purposes of expanding Mousis's gaming business in

Pennsylvania.

4 The judge's decision also references Kirby's ability to
raise $1.5 million in capital. We use the $1 million figure
because Mousis testified that Kirby was required to raise $1
million to operate in the Pennsylvania market and $1.5 million
for the Nebraska market.

4
In 2017, Kirby raised $184,000 for PVI and fell far short

of meeting the condition that he raise $1 million. Much or all

of the $184,000 "came from funds that had been previously

committed to the failed Solgen project and then diverted to

PVI." Kirby depleted the capital from the PVI account, using

most of the funds for personal and business expenses. Mousis

also advanced money to Kirby to pay for personal and business

expenses throughout their relationship. However, in mid-2017,

PVI made wire transfers totaling $70,000 to Gracie. That money

was used to pay off Mousis's prior debts incurred through his

Nebraska business "[i]n an effort to pave the way for a future

deal with Gracie." Mousis repaid $10,000 of this money.

In December 2017, Mousis and Kirby traveled to South

Carolina to discuss two potential deals -- purchasing the

Pennsylvania market and buying out Gracie's entire business.

That month, a sales agreement between PVV and Gracie for the

Pennsylvania deal was drafted and signed by Kirby but not

executed by Gracie. The following month, in January 2018,

Mousis as "Vice-President" of PVI executed a letter agreement to

purchase 270 gaming terminals in Pennsylvania from Gracie

(January 2018 agreement).5 That agreement set a schedule for PVI

5 Although the judge found the January 2018 agreement was
between PVV and Gracie, the record reflects that the agreement
was signed by Mousis on behalf of PVI.

5
to pay Gracie $270,000 between February 1 and March 15, 2018,

with the remaining balance of $164,500 to be paid over the

course of the following year. PVI almost immediately failed to

make the scheduled payments. As a result, Gracie terminated the

agreement.

Given Kirby's failure to raise $1 million, Mousis decided

to move forward with the deal without Kirby. In March 2018,

Mousis and Kirby again traveled to South Carolina. At the time,

Kirby was attempting to negotiate a deal to purchase Gracie for

$6 million, although he ultimately was unable to raise the

necessary funds to do so. Following that trip, on March 15,

2018, Mousis as president of PVV executed a new letter agreement

to purchase 270 gaming terminals in Pennsylvania from Gracie

(March 2018 agreement). Five days later, Mousis created PVV and

incorporated the company in New Hampshire.6 PVI and Kirby had no

equity stake in PVV and were not entitled to cash distributions,

revenues, or profits generated by PVV. Nonetheless, Kirby made

false claims to Gracie that he owned a fifty percent interest in

PVV, causing Gracie to withhold $10,000 in payments owed to PVV.

PVV ultimately earned significant revenue through its deal with

Gracie.

6 The judge made no specific finding about when PVV was
created, but the articles of incorporation entered in evidence
reflect the date of incorporation as March 20, 2018.

6
2. Procedural history. Kirby and PVI brought this action

against Mousis and PVV, alleging breach of fiduciary duty,

usurping a corporate opportunity, fraud, a violation of G. L.

c. 93A, § 11, and unjust enrichment, and seeking to pierce the

corporate veil. The defendants asserted counterclaims against

Kirby for fraud, interference with business relations,

defamation, and conversion.

The matter proceeded to a bench trial. At the close of

trial, the judge entered a directed verdict on the defendants'

counterclaims for defamation and conversion. The judge

subsequently issued written findings of fact and rulings of law.

The judge found in favor of the defendants on the

plaintiffs' claims for breach of fiduciary duty, usurping a

corporate opportunity, fraud, and violation of G. L. c. 93A.

Specifically, the judge concluded that Mousis did not owe a

fiduciary duty to PVI because Mousis did not have an official

position as "an owner, partner, on the board of directors or an

officer of that company." The judge also found that Kirby's

involvement in the Pennsylvania deal was conditioned on his

ability to raise $1 million in capital and he "fell far short of

that condition precedent required to trigger [an] equity

position in PVV." On the plaintiffs' unjust enrichment claim,

the judge found Mousis and PVV jointly and severally liable for

7
$60,000 that Mousis used from PVI's funds to pay down debt owed

to Gracie for Mousis's Nebraska business. As to the defendants'

fraud counterclaim, the judge found that the defendants failed

to prove damages arising from Kirby's "materially false

misrepresentations to Mousis about [Kirby's] ability to raise

capital to fund business ventures." The judge also found the

defendants failed to prove their interference with business

relationships counterclaim. Judgment, as amended, entered and

these cross appeals followed.

Discussion. 1. Standard of review. "Where a judge makes

findings of fact in a bench trial, we review them for clear

error." H1 Lincoln, Inc. v. South Washington St., LLC, 489

Mass. 1, 13 (2022). "A trial judge's finding is clearly

erroneous only when, 'although there is evidence to support it,

the reviewing court on the entire evidence is left with the

definite and firm conviction that a mistake has been

committed.'" Id., quoting Demoulas v. Demoulas Super Mkts.,

Inc., 424 Mass. 501, 509 (1997) (Demoulas I), S.C., 428 Mass.

543 (1998), and S.C., 432 Mass. 43 (2000). We review the trial

judge's legal conclusions de novo. See H1 Lincoln, Inc., supra.

2. Breach of fiduciary duty claim. The plaintiffs claim

that the judge's finding that Mousis did not owe a fiduciary

duty to PVI was clear error. The plaintiffs also argue that

8
Mousis was in breach of that duty when he entered into the March

2018 agreement on behalf of PVV, excluding PVI from the deal

with Gracie.

a. Duty. "Directors of a corporation stand in a fiduciary

relationship to that corporation." Estate of Moulton v.

Puopolo, 467 Mass. 478, 492 (2014). Here, the judge found that

Mousis did not owe a fiduciary duty to PVI because he did not

hold an official position like owner, partner, director, or

officer. However, on this point, Mousis testified that he was

the chief operating officer, a director, and a managing member

of PVI. The plaintiffs also presented other evidence supporting

their position that Mousis was an officer or director such as

the statement of authorized person that accompanied PVI's

certificate of formation listing Kirby and Mousis as managing

members of PVI. Mousis also signed the January 2018 agreement

with Gracie on behalf of PVI as its vice president and was the

sole signatory on PVI's bank account. We recognize that some

evidence also was presented that Mousis was not an officer of

PVI, including a document from the Federal Internal Revenue

Service (IRS) addressed to Kirby as the sole member (owner) of

PVI as Kirby had reported to the IRS in his request for PVI's

EIN. However, given Mousis's own testimony about his role in

9
PVI, the finding that Mousis did not owe a fiduciary duty

whatsoever to PVI was clear error.

b. Breach. Directors and officers of a close corporation

owe a duty of the "utmost good faith and loyalty" (citation

omitted). Zimmerman v. Bogoff, 402 Mass. 650, 657 (1988). That

duty prohibits a fiduciary "from taking, for personal benefit,

an opportunity or advantage that belongs to the corporation."

Demoulas I, 424 Mass. at 529. "A director or officer is not

entirely barred from pursuing a corporate opportunity," id. at

530, but "must first disclose material details of the venture to

the corporation, and then either receive the assent of

disinterested directors or shareholders, or otherwise prove that

the decision is fair to the corporation." Id. at 533.

Here, the judge found that Mousis was not in breach of any

duty or contractual obligation to involve Kirby or PVI in the

Pennsylvania deal with Gracie after Mousis gave Kirby the

opportunity to participate, Kirby falsely represented his

ability to raise capital (a condition precedent to Kirby's

participation), and Kirby failed to raise the promised funds

leading Gracie to terminate the January 2018 agreement for

nonperformance. Those findings are not erroneous.

The plaintiffs argue, in essence, that after Gracie

terminated the January 2018 agreement with PVI, Mousis had an

10
ongoing obligation to disclose that he was pursuing the

opportunity for himself and PVV in March 2018. In support, the

plaintiffs note that Kirby traveled with Mousis to South

Carolina shortly before the March 2018 agreement was executed

and Mousis did not tell Kirby about that agreement.7

The plaintiffs' reliance on Mousis's conduct after the

January 2018 agreement was terminated fails. The judge found

that the plaintiffs only were entitled to participate in the

deal if Kirby raised $1 million and he failed to do so. Given

this agreed on and unmet condition precedent, Mousis's fiduciary

duty to PVI with respect to the Pennsylvania deal had not yet

arisen and there was no breach thereof. See Fronk v. Fowler,

456 Mass. 317, 331-332 (2010) (duties of members of closely held

business may be limited by agreement); Butts v. Freedman, 96

Mass. App. Ct. 827, 829-830 (2020) (same). Cf. Greenleaf Arms

Realty Trust I, LLC v. New Boston Fund, Inc., 81 Mass. App. Ct.

282, 292 (2012) ("Parties to a fiduciary relationship may agree

to alter or limit to some degree their fiduciary rights and

obligations").

Although the plaintiffs challenge the judge's finding

regarding the $1 million requirement, there was ample evidence

7 At that time of the trip, Kirby was attempting to buy all
of Gracie and also continued to represent that he could raise
money for PVI.

11
to support it, including Mousis's testimony on the issue and two

unsigned memorandums of understanding from November and December

2017 (MOUs). Those MOUs concerned the "new Pennsylvania gaming

venture" between Mousis, Palmero, and PVI, and stated that in

consideration for a thirty percent ownership interest in PVV,

PVI would "make an initial cash contribution" of $1 million to

PVV. Both MOUs included a line for Paul Chapman's signature on

behalf of PVI; Chapman was Kirby's investor who represented that

he had $1 million for the Pennsylvania deal. Mousis testified

that he sent the first MOU to Kirby, and the judge was free to

credit the unsigned MOUs as evidence of the discussions between

Mousis and Kirby about PVI's involvement in the Pennsylvania

deal and PVV.

The plaintiffs also claim that the judge failed to credit

the evidence that PVV was not formed until after the March 2018

agreement was executed. Regardless of when PVV was

incorporated, ample evidence was presented that the parties

contemplated the formation of PVV as the entity to operate in

the Pennsylvania market well before the execution of the March

2018 agreement. That evidence included the November and

December 2017 MOUs and a December 2017 agreement between PVV and

Gracie that was not fully executed but was signed by Kirby.

Mousis also testified, "[PVV] would always be the operating

12
entity for any final agreement and deal in Pennsylvania. [PVI]

was to be able to raise capital to fund the deal, and [PVI]

would have an interest in [PVV]." Most importantly, the judge

made findings to this effect, including that PVV was the entity

that Mousis formed to "further expan[d] into the skill based

gaming business in Pennsylvania" and that Kirby's participation

in PVV was conditioned on his ability to successfully raise $1

million.

Notwithstanding our conclusion that the parties' agreement

governed the relationship between Mousis and Kirby until Kirby

raised the requisite funds, Mousis demonstrated that even if he

owed a fiduciary duty to PVI with respect to the Pennsylvania

deal, he did not breach that duty. The judge's findings

demonstrate that Mousis gave PVI the opportunity to work in the

Pennsylvania market, but PVI tried and failed to take advantage

of it due to a lack of capital. See Demoulas I, 424 Mass. at

532 ("opportunities must be presented to the corporation without

regard to possible impediments, and material facts must be fully

disclosed, so that the corporation may consider whether and how

to address these obstacles"). Cf. Puritan Med. Ctr., Inc. v.

Cashman, 413 Mass. 167, 178 (1992) (considering whether

corporation was "financially unable to exploit the opportunity,"

"the party offering the opportunity refused to deal with the

13
corporation," or "the corporation sought without success to

obtain [the opportunity]" [citation omitted]). Mousis also

demonstrated that the March 2018 agreement was fair and did not

result in harm to PVI. PVI remained unable to pursue the

opportunity because it did not raise the amount necessary to

satisfy the terms of either the January or the March 2018

agreement, let alone the promised $1 million.8 See Demoulas I,

supra at 534 (existence of impediments to deal relevant to

determining fairness of fiduciary's action). As the judge

found, "Mousis was able to keep this project going based upon

his long-term relationship and despite Kirby's ineffective and

hollow promises to raise capital." Accordingly, judgment

properly entered for the defendants on this claim.9

c. Related claims. The plaintiffs also claim that the

erroneous finding on the fiduciary duty issue affected the

8 Both agreements required payment for the gaming terminals
as well as preexisting debt owed by Mousis's other companies.
The price just for the 270 gaming terminals was $210,000 under
the terms of both agreements, and the judge found that Kirby
raised $184,000 in capital.

9 To the extent the plaintiffs argue that Mousis was in
breach of his fiduciary duty by using $60,0000 in furtherance of
the March 2018 agreement, that claim is duplicative of the
damages ordered on the unjust enrichment claim and we affirm
that portion of the judgment for the reasons stated below. See
Zimmerman, 402 Mass. at 661 (remedy for breach of fiduciary duty
is to restore party "as nearly as possible [to] the position he
would have been in had there been no wrongdoing").

14
judge's analysis on their claims for usurping a corporate

opportunity, fraud, and a violation of G. L. c. 93A. However,

the plaintiffs' failure to meet the condition precedent

precludes their recovery under such claims.

Any claim for usurping a corporate opportunity fails for

the reasons stated above.10 The plaintiffs also did not

establish fraud through Mousis's nondisclosure of the March 2018

agreement because Mousis did not have a duty to disclose his

continued interest in the Pennsylvania deal after Kirby failed

to raise the requisite funds to obtain an equity share in PVV

(and PVI defaulted on the January 2018 agreement). Contrast

Rood v. Newberg, 48 Mass. App. Ct. 185, 192 (1999)

(nondisclosure may amount to fraud if fiduciary is under duty to

other party to "exercise reasonable care to disclose the matter

in question" [citation omitted]). Finally, the plaintiffs

failed to establish that the defendants' conduct was unfair or

deceptive within the meaning of c. 93A, where Kirby falsely told

Mousis he was able to raise $1 million, knew that he could not

raise the promised capital, and agreed that his involvement in

the Pennsylvania deal hinged on his ability to do so. See UBS

10To the extent that claim is for intentional interference
with advantageous business relations, the plaintiffs did not
show "an even probable future business relationship from which
there is a reasonable expectancy of financial benefit." Owen v.
Williams, 322 Mass. 356, 361-362 (1948).

15
Fin. Servs., Inc. v. Aliberti, 483 Mass. 396, 412–413 (2019)

(court may consider what the parties knew or should have known

when determining whether conduct is unfair under c. 93A).

3. Unjust enrichment claim. On cross appeal, the

defendants claim that the judge erred in awarding $60,000 to the

plaintiffs based on funds PVI paid to Gracie because "[t]he

record establishes that Kirby misused PVI funds . . . , and that

Mousis used the funds in furtherance of shared business goals."11

In order to recover for unjust enrichment, the plaintiffs were

required to prove that "(1) [they] conferred a measurable

benefit upon the defendant[s]; (2) [they] reasonably expected

compensation from the defendant[s]; and (3) the defendant[s]

accepted the benefit with the knowledge, actual or chargeable,

of the [plaintiffs'] reasonable expectation." Stewart Title

Guar. Co. v. Kelly, 97 Mass. App. Ct. 325, 335 (2020).

On the issue of PVI's expenditures, we note that the

plaintiffs produced at trial a chalk summarizing the money

raised and spent by PVI, but the chalk is not in the record

before us. Beyond the PVI bank records, it also appears that

11Our review of the defendants' arguments on cross appeal
is hindered by the fact that the defendants largely cited to the
judge's findings but not the underlying evidence in the record
in their brief. See Mass. R. A. P. 16 (a) (9) (A), as appearing
in 481 Mass. 1628 (2019) (appellate brief shall include argument
"with citations to the authorities and parts of the record on
which the appellant relies").

16
neither Mousis or Kirby kept records of business contributions

(or the sources thereof) or expenditures for PVI, nor did Mousis

keep records of funds given to Kirby for his personal use, used

to pay off Kirby's loans, or used by or provided to PVI from

Mousis's other businesses. Nonetheless, the judge found that

Mousis used $70,000 of PVI funds "in mid 2017 to payoff prior

debt he had incurred in Nebraska with Gracie . . . [and that]

Mousis repaid $10,000 of this money to Kirby from Nebraska

funds."

At trial, Mousis testified that the money in the PVI

account was raised by Kirby. The PVI bank records reflect two

wire transfers totaling $70,000 made to Gracie in May and June

2017. That money was sent in furtherance of Mousis's Nebraska

business's deal with Gracie. In January 2018, a check for

$70,000 from one of Mousis's other businesses, M&M, was

deposited in the PVI account. Mousis testified at trial that

$60,000 of that money went to Gracie (as is reflected as a

subsequent January 2018 wire transfer to Gracie on PVI's bank

statement) and $10,000 went to Kirby because Kirby "said he

needed it to finish off his funding." Mousis also was impeached

at trial with his prior deposition testimony that Kirby's money

contributed to the Pennsylvania deal and Mousis did not return

the money because it was owed to him for repaying Kirby's debts.

17
Based on this evidence, we discern no error in the judge's

finding as to the $60,000 figure.12

As to the defendants' argument that the plaintiffs were not

entitled to equitable relief, the judge found that Kirby

incurred over $40,000 in debt with Mousis's friends and Mousis

paid back as much as he could; however, Mousis did not present

any documentation of those loans or repayments. Applying

equitable principles, the judge did not abuse his discretion in

determining that the defendants should not be entitled to keep

money raised by Kirby that was used to further business deals to

which Kirby and PVI were not parties, and in failing to credit

payments made by Mousis on Kirby's loans where no documentation

was presented of same. See Cavadi v. DeYeso, 458 Mass. 615, 624

(2011) (judge's imposition of equitable remedies reviewed for

abuse of discretion).

4. Fraud counterclaim. The defendants also claim that the

judge erred in finding that they failed to prove damages

resulting from Kirby's false representations. The defendants

12As the plaintiffs note, two wire transfers totaling
$30,000 were made from the PVI account to Gracie in mid-February
2018, but the plaintiffs do not argue that this amount should
have been included in the damages awarded to them. The judge
made no findings about the purpose of those payments including
whether they were paid in furtherance of the January 2018
agreement or whether the money was advanced as part of Kirby's
February 2018 "side deal" to buy out Gracie for $6 million. In
any event, any argument about those payments is waived.

18
contend that they were harmed because Mousis covered

"substantial operating costs for PVI" and Kirby's conduct caused

"delayed progress, lost opportunities, and misapplied funds."

Although the judge found that Mousis advanced Kirby money for

personal and business expenses based on Kirby's false

representations about his ability to raise capital, "[t]he

extent of the injury for which a [party] seeks compensation must

be proved with a fair degree of certainty." Pearl v. William

Filene's Sons Co., 317 Mass. 529, 532 (1945). It was the

defendants' burden to prove damages. See National Shawmut Bank

of Boston v. Johnson, 317 Mass. 485, 491 (1945). On the record

before us, we cannot say that the judge erred in finding that

the defendants' failed to prove damages flowing from Kirby's

misrepresentations, particularly where Mousis ultimately was

able to proceed with the Pennsylvania deal resulting in

"significant revenues" for PVV and Mousis did not produce.

Amended judgment affirmed.

By the Court (Meade,
Desmond & Wood, JJ.13),

Clerk

Entered: January 22, 2026.

13 The panelists are listed in order of seniority.

19