Judge recommends $235,000 award in Live Lobster lawsuit

By Bill Trotter, BDN Staff
Posted July 16, 2012, at 5:08 p.m.

GOULDSBORO, Maine — A judge has issued a written recommendation that a former Live Lobster official be awarded a $235,000 judgment against a partner with the lobster distribution company.

Leo Sorokin, chief federal magistrate judge, made the recommendation late last month in a case filed in U.S. District Court in Massachusetts. In the case, former Live Lobster official Alan Brown is seeking to recover money he claims was owed to him as part of a 2010 settlement agreement.

The Live Lobster partner who should be held liable for the funds, according to Sorokin’s recommendation, is not Antonio Bussone, president of the Chelsea, Mass.-based firm who has functioned as its public face as it has expanded in Maine. Sorokin, who is not the presiding judge in the case, recommends a default judgment be awarded against Allesandro Verrini, who is another partner in the firm.

Brown was a minority owner and the company’s general manager from 2003 through 2009, at which point he claims he was “frozen out” of the operations of the company and its subsidiaries. He subsequently sued Bussone and Verrini for breach of contract and fiduciary duty.

Brown indicates in court documents that he was paid $225,000 in an initial payment that was stipulated in the 2010 agreement but that Bussone and Verrini have refused to pay him the remaining $235,702 which also was stipulated in the agreement.

Brown’s lawsuit against Live Lobster is one of two lawsuits the company is facing. In April, TD Bank filed suit against the lobster distributor, claiming the firm violated terms of a 2008 loan agreement for $4 million from the bank.

The lawsuits are believed to be the primary reason Live Lobster’s operations have been suspended since March 23. Company officials have said little publicly about its financial situation other than to blame TD Bank for freezing its checking accounts.

Sorokin’s June 25 recommendation notes that since Brown filed his latest claim against Bussone and Verrini in February of this year, Verrini “has not appeared and thus has not consented to the exercise of jurisdiction by [Sorokin].” On May 11, the judge noted, Verrini was found to be in default.

“Brown is entitled to a judgment against Verrini for the entire amount due under the

[2010] agreement, and may pursue judgments for the same amounts from the remaining defendants,” Sorokin wrote.

Brown’s attorney, John F. Tocci of Boston, said he does not expect that recovering the funds from Verrini, who lives in Italy, will be easy, but he said the recommended judgment is binding for 20 years, so he and his client have time to do it.

But he added that Brown still intends to pursue the claim against Bussone. Bussone has appeared in court on the matter, he said, so no default judgment is expected against the Live Lobster president, who lives in Massachusetts.

Bussone’s attorney, Christopher J. Marino of Boston, did not respond to a message seeking comment left at his office around midday Monday.

According to Tocci, the active parties in Brown’s lawsuit agreed to have Sorokin make a recommendation to the presiding judge, Patti B. Saris, about Verrini’s default. The issue is a relatively simple one to address, he said, and Saris’ caseload has been substantial, which could have delayed a decision on the matter.

Tocci said he expects Saris to endorse Sorokin’s recommendation.

Sorokin indicates in his recommendation that on Dec. 23, 2011, Brown served “notice and demand” upon TD Bank for the payment of $235,702, which the 2010 agreement required him to do before taking any legal action to recover the funds. Brown has claimed in court documents that TD Bank is preventing Bussone and Verrini from paying Brown the remaining money.

Tocci declined to discuss why Brown has not tried to sue TD Bank over the $235,702, saying he did not want his client’s legal strategies revealed in the media.

“We may or may not pursue that route,” Tocci said.

In its lawsuit against Live Lobster, the bank claims that as part of that loan agreement, Live Lobster promised the bank that it would have a “first-priority security interest in substantially all of its business assets … including without limitation, its inventory and accounts and the proceeds thereof,” according to the complaint.

TD Bank accuses Live Lobster of failing to make loan payments and of depositing some of its proceeds with another bank, Century Bank and Trust Co. of Medford, Mass., which TD Bank claims is a violation of the security agreement. TD Bank claims Live Lobster still owes TD Bank $3,403,811.26 in principal and $4,413.93 in interest.

TD Bank has declined to comment on its financial dispute with Live Lobster. Live Lobster has yet to respond to the TD lawsuit that was filed in April. No other motions or filings have been added to the suit, according to the federal court online database.

Live Lobster, which operates in Maine as Lobster Web Co., has buying stations in Phippsburg, Rockland, Spruce Head and Stonington. It has employed between 80 and 90 people at its distribution facilities in Maine and Massachusetts, not including its lobster processing facility in the Gouldsboro village of Prospect Harbor, which it purchased last year from Bumble Bee Foods.

Last summer, Live Lobster employed 70 people at the Gouldsboro plant, which operated seven days a week. The company, which had solely been a distributor until it bought the facility, spent months renovating the facility from a sardine cannery to a lobster processing plant.

Late last year, Live Lobster drew the ire of lobstermen up and down the coast when it bounced checks it wrote as payment for their lobster.

At the time, Bussone said that “not that many” checks bounced and that the company was having to adjust to new payment schedules associated with its Gouldsboro processing operations. Bussone said last December that the company had made good on the bounced checks and ironed out its cash flow problems with the bank.

Follow BDN reporter Bill Trotter on Twitter at @billtrotter.

http://bangordailynews.com/2012/07/16/business/judge-recommends-235000-award-in-live-lobster-lawsuit/ printed on August 22, 2014