ALLIED HOME MORTGAGE CAPITAL CORP., Plaintiff, v. Peter BELLI and Regency Service Company, Inc., Defendants Civil Action No. 07cv11597-NG United States District Court, D. Massachusetts Signed March 03, 2011 Counsel Diane M. Saunders, M. Amy Carlin, Morgan, Brown & Joy, LLP, Boston, MA, for Plaintiff. Gershon M. Gulko, Worcester, MA, Neal M. Brown, Law Offices of Neal M. Brown, Hingham, MA, for Defendants. Gertner, Nancy, United States District Judge MEMORANDUM AND ORDER RE: MOTIONS REGARDING DAMAGES *1 Plaintiff Allied Home Mortgage Capital Corp. (“Allied”), a nationwide mortgage banker and broker, sued its former employee Peter Belli (“Belli”) and his company Regency Service Company, Inc. (“Regency”) for the return of various business-related items and for damages resulting from misrepresentations Belli made to Allied. The litigation against Belli and Regency, however, has hardly proceeded in an orderly, linear fashion. For over two years, defendants Belli and Regency employed deceptive and dilatory practices that derailed the case and wasted judicial resources. They repeatedly defied unambiguous orders, refused to pay sanctions, stalled the litigation at every opportunity, spoliated evidence, violated the terms of the preliminary injunction, declined to participate in the discovery process, and submitted misleading and often incomprehensive briefing. Enough is enough. At some point, the Court had no choice but to enter default judgment against the defendants. This was not an action taken lightly. It was rather the only option left to ensure fairness to the plaintiff and the integrity of these proceedings. Nonetheless, defendants have the temerity to move that I set aside and vacate default judgment (document #240). For the reasons described below, their motion is DENIED. With a judgment on the merits in its favor, Allied moved for an order to assess damages. Pursuant to Fed. R. Civ P. 55(b)(2), I conducted a damages hearing that required four separate court appearances spanning over two months. In addition, the parties submitted pre-and post-hearing briefs, affidavits, business records and other supporting documentation. But the same defendants who had scoffed at the regular litigation process and showed nothing but disrespect for this Court during it suddenly decided to participate in the post-default process. It was, as they say, too little, too late. Accordingly, based on the evidence provided, plaintiff's Motion for Order to Assess Damages (document #276) is GRANTED IN PART AND DENIED IN PART. Specifically, I AWARD Allied damages in the amount of $1,459,523.74 to be paid jointly and severally by Allied and Belli; $937,134 to be paid by Belli alone; and $281,500 to be paid by Regency alone, plus prejudgment interest. Finally, Allied's reasonable Motion for Bill of Costs (document #315) is GRANTED IN PART AND DENIED IN PART. As such, I AWARD Allied $10,928.49 in costs pursuant to Fed. R. Civ. P. 54(d) and 28 U.S.C. § 1920. In addition, plaintiff asks for a declaratory judgment that Belli is “legally responsible for any monies found owing to John Rife,” an employee of Belli's, as alleged by Rife in a pending state court action brought against Allied. Pl.'s Mot. Declaratory J. 1 (document #290). Because the record lacks sufficient evidentiary support for this declaration, plaintiff's Motion for Declaratory Judgment (document #290) is DENIED. I. BACKGROUND A. The Lawsuit From October 1, 1998, until August 23, 2007, Belli was employed by Allied as branch manager of Allied's offices in Milford and Foxboro, Massachusetts, among other offices. The computer networks for the Milford and Foxboro branches were supported by eighteen computer servers and four networking devices located in a building in Marlborough, Massachusetts. *2 Belli was the Director, President, Secretary, and Treasurer of Regency. During the course of Belli's employment with Allied, Belli and Regency made numerous false representations upon which Allied relied, to its detriment. This fraud induced Allied to pay unnecessary rent, undeserved bonus payments to employees, and unwarranted salaries to non-employees. On August 23, 2007, Allied terminated all of its employees at the Milford and Foxboro branches, including Belli, and closed the branches. At that time, Allied demanded that Belli return all of Allied's files, documents, equipment, and property located in the Milford and Foxboro branch offices, and requested that Belli restore Allied's administrative access to the computer servers located in the Marlborough data center. Belli refused; Allied filed the instant case. Through its suit, Allied hoped to (1) recover confidential and personal information about Allied's customers contained in the files and documents maintained at the Milford and Foxboro offices; (2) restore Allied's administrative access to the computer servers and equipment at the Marlborough data center; (3) reclaim other files, documents, and equipment that has been stored at the Milford and Foxboro offices; and (4) recover monetary damages related to the false representations Belli and Regency made to Allied. B. Default Judgment Since Allied filed its complaint in August 2007, defendants have wasted both the Court's and plaintiff's time and resources with delay tactics, noncompliance with the Court's orders, and patent disregard for the judicial process. Allied, in contrast, made good-faith efforts to propel this case forward, as the rules require. They requested discovery, attempted to confer with defendants, and assumed financial burdens that were not theirs to bear alone. Time and again, defendants flouted their legal obligations, disregarded deadlines, and provided plaintiffs with responses that bordered on the nonsensical. Allied was forced to seek the Court's assistance repeatedly through motions to compel, and then motions for sanctions, all to no avail. Accordingly, I entered default judgment against Belli on September 22, 2009, and against Regency on February 4, 2010. Elec. Order Entering Default J. Against Peter Belli, 9/22/2009; Elec. Order Granting Allied's Renewed Mot. to Strike Regency's Answer & Mot. for Default J. Against Regency, 2/4/2010; see Fed R. Civ P. 37(b)(2)(A)(vi) (empowering the court to render a default judgment against a disobedient party that has failed to obey a discovery order); Fed. R. Civ P. 55(b)(2) (establishing the procedure for entering default judgment). Defendants ask that I set aside and vacate these orders for default judgment. I decline to do so. As described below, nothing—absolutely nothing—about defendants' behavior in this case warrants another chance. A sampling of defendants' behavior is described below: 1. Preliminary Injunction In its original complaint, Allied alleged that when it closed the branches, Belli refused to turn over 88 active loan files and refused to grant Plaintiff access to data stored on the servers in the data center in Marlborough. Allied moved for a preliminary injunction, which I granted on September 6, 2007. In so doing, I ordered, among other things, that Allied and Belli “work together” to 1) inventory and audit the data, programs, and applications on the servers and network devices in the Marlborough data center, and determine which of these items were Allied's; and 2) segregate Allied's data, programs, and applications on seven specific servers in the data center. Prelim. Inj. Order 1 (document #19). The injunction also required that the eighteen servers and four networking devices in the data center remain there during the pendency of the instant suit. Id. at 2. Moreover, Allied was to pay the lease initially, but reserved the right to seek recoupment of these payments from defendants. Id. *3 Issues arose almost immediately with respect to compliance with the injunction. a. Password and Sanctions When the parties segregated the data pursuant to the preliminary injunction, they could not agree on the disposition of certain emails sent by Belli from his Allied account while working for the company. The information was put on a password-protected CD-ROM and held in escrow by counsel for Allied. Allied sought to review the emails to litigate its fraud claim; Belli refused to do so. On July 23, 2008, Allied moved to compel Belli to turn over the password. The Court delayed requiring that the password be turned over until September 9, 2008, to give the parties an opportunity to execute a confidentiality agreement. While Allied asked Belli to send a proposed agreement, identifying which categories of material were confidential, Belli refused to do so and continued to defy the Court's order. In response to defendants' flagrant defiance, plaintiff's motion to compel was granted on October 24, 2008, though the Court declined plaintiff's request to also award monetary sanctions at that time. By November 4, 2008, Belli had still refused to turn over the password; he was ordered to do so again, this time with a new deadline of November 6, 2008. The order indicated that failure to comply would subject Belli to all of the sanctions available under Fed. R. Civ. P. 37, including contempt or evidentiary sanctions. The games continued. On November 6, 2008, counsel for defendants submitted a letter in which he claimed to have provided Allied's attorney with the password. Not surprisingly, it was incorrect. Allied then reached out to Belli's former counsel and got a different password, which was also incorrect. Having provided fair warning, on November 12, 2008, I awarded sanctions in the amount of $2,510.00, a figure that reflected the attorney's fees Allied had incurred in its attempt to compel production of the password. By August 14, 2009, nearly nine months later, Belli had not paid. Still patient, perhaps overly so, the Court indicated that if Belli did not pay the $2,510 by August 28, 2009, the Court would “look favorably” upon a motion to strike his answer and enter default judgment against him. Mem. & Order, 8/14/2009 4 (document #185). In the same order, I awarded $38,902.00 in attorneys fees, the cost of Allied's repeated efforts to secure compliance.[1] Defendants again did not pay. b. Lease Payments Between October 2007 and August 18, 2008, Allied paid approximated $37,823.42 in lease payments for that data center that housed the 18 servers and 4 networking devices, while Belli paid nothing. On October 24, 2008, the preliminary injunction was amended, instructing that Belli pay half of the monthly data center lease and post a bond for the other half. By July 8, 2009, Belli had not contributed at all, claiming inability to pay. However, the only documentation that he provided to buttress this allegation was an incomplete IRS Form 433-A. In contrast, and quite disturbingly, “Allied ... produced credible evidence that Belli [was] working for another mortgage company, Diamond Funding ... [though he] disclosed nothing of his affiliation with Diamond to the Court.”Elec. Order Granting Mot. for Contempt, 7/8/09. In response, Allied's motion for civil contempt was granted on July 8, 2009. Nonetheless, by August 14, 2009, Allied still had not recouped any of the rent it was owed. As with the sanctions, on August 14, 2009, the Court gave Belli one last opportunity to pay back Allied for the rent by September 11, 2009. That deadline passed without any action by defendants. 2. Other Non-Compliance *4 Defendants' dilatory tactics were not limited to issues regarding payments to Allied. For instance, they delayed these proceedings for several months in the spring of 2008 by neglecting to hire counsel to represent Regency, despite my March 12, 2008, ruling that, as a corporation, Regency could not proceed without proper representation. Similarly, by December 2008, defendants had accumulated a number of outstanding discovery obligations. Allied agreed to an extension of the discovery deadlines in deference to new counsel's appearance. The parties submitted a proposed stipulation to the Court in which defendants agreed, among other things, to provide all required discovery responses by January 22, 2009. Five months after the deadline, Allied yet again had to ask the Court to compel Belli to produce the promised documents. 3. Spoliation of Evidence During Belli's deposition, he testified that he had moved the contents of Allied's former Foxboro branch office to its former Milford branch office and had a weekend sale of everything from both offices. He did this even though the ownership of these items was at issue in this case. Empowered to impose sanctions for the spoilation of evidence, I struck defendants' answers to Allied's replevin claims. 4. Entering Default Judgment The chronicle of defendants' defiance continued, providing a more than adequate basis for a default judgment. On September 22, 2009, I entered default judgment against Belli pursuant to Fed. R. Civ. P. 37(b)(2)(A)(vi) for repeated failure to comply with the Court's orders. The Rule empowers the Court to render a default judgment against a disobedient party that has failed to obey a discovery order. See also Fed. R. Civ. P. 55(b)(2) (establishing the procedure for entering a default judgment). A few months later, Regency was also held responsible for certain sanctions ordered against Belli, since the sanctions related to orders directed against Regency and since Belli was Regency's agent in failing to fulfill those orders. To be fair, the Court did not enter default judgment against Regency at that time. Rather, the company was given time to pay the sanctions. Nevertheless, the order was clear: Default judgment would be entered against Regency if it failed to comply. Regency did not. On February 4, 2010, the Court entered a second default judgment, this time against the company, and struck Regency's answer, once again reciting the history of non-compliance in this case. These default judgments were more than two years in the making. I gave the defendants many, indeed too many, opportunities to be full participants in this proceeding, to litigate their defenses as they were supposed to be litigated under the Federal Rules. At each opportunity, they refused. Therefore, defendants' Motion to Set Aside and Vacate Default Judgment (document #240) is emphatically DENIED. II. LEGAL STANDARD AND SCOPE OF DAMAGES HEARING A. General Standard After an entry of default judgment, it is “incumbent upon plaintiffs to establish the extent of the damages.” Eisler v. Stritzler, 535 F.2d 148, 153 (1st Cir. 1976). Therefore, for each category of damages it has requested, the plaintiff has the burden of proving each element of the cause of action under which he or she is requesting damages. Plaintiff, however, is not starting from scratch. Rather, one of the consequences of the entry of default judgment is that all well-pleaded factual allegations of the complaint, except those relating to the amount of damages, are taken as true. Quirindongo Pacheco v. Rolon Morales, 953 F.2d 15, 16 (1st Cir. 1992); see, e.g., Dundee Cement Co. v. Howard Pipe & Concrete Prods., Inc., 722 F.2d 1319, 1323 (7th Cir. 1983); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981); Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978); see also Thomson v. Wooster, 114 U.S. 104, 111 (1885). *5 A hearing may be necessary when the amount of damages is “in dispute or [is] not ascertainable from the pleadings.” Graham v. Malone Freight Lines, Inc., 314 F.3d 7, 16 n.12 (1st Cir. 1999) (citing Eisler, 535 F.2d at 154); see Fed. R. Civ. P. 55(b)(2); HMG Prop. Investors, Inc. v. Parque Indus., 847 F.2d 908, 919 (1st Cir. 1988); see also Pope v. United States, 323 U.S. 1, 12 (1944) (“It is a familiar practice ... for a court upon default, by taking evidence when necessary or by computation from facts of record, to fix the amount which the plaintiff is lawfully entitled to recover and to give judgment accordingly.”). However, a jury trial is not necessary. Rather, a hearing which is the functional equivalent of a bench trial is sufficient. See Eisler, 535 F.2d at 153. At that bench trial, parties may submit evidence through affidavits and declarations as part of their direction examination. See generally The Judicial Conference of the United States, Civil Litigation Management Manual 113 (2d ed. 2010) (suggesting that, during a bench trial, the parties may submit direct testimony of witnesses in advance in narrative form). The scope of a post-default-judgment damages hearing is limited to a determination of the amount of plaintiff's damages, rather than an analysis of the merits of plaintiff's claims. Brockton Sav. Bank v. Peat, Marwick, Mitchell & Co., 771 F.2d 5, 12-13 (1st Cir. 1985) (upholding a district court's refusal to expand the scope of a damages hearing to include evidence beyond the “mere arithmetical computation of [plaintiff's] damages” in a case where default was entered as a discovery sanction). B. The Instant Action In this case, a hearing was necessary to determine the amount of damages. Even taking all well-pled facts as true, certain causes of actions required Allied to prove additional facts. In order to put both sides on notice with regard to the scope of the hearing, I issued a comprehensive preliminary order, detailing exactly what facts would be necessary for assessing damages. The hearing was held over a series of four days. While I allowed the parties to submit testimony through declarations and affidavits, there were two caveats. First, any document that either side wanted to admit via an affidavit had to be admissible under the federal rules of evidence. Second, the opposing party had to have the opportunity to subpoena and cross-examine any affiant. Therefore, prior to the hearing, I required both sides to submit their witness and exhibit lists. Defendants elected not to submit any evidence through declarations, affidavits, or business records. Allied provided all three. For the most part, defendants stipulated to Allied's exhibits. However, the parties disagreed about the admissibility of 1) the business records attached to the declaration of Joe James (“James”) (exhibits #P-19-27); 2) the declaration of David Langston (“Langston”) (exhibit #P-8); 3) the declaration of Todd Wedlake (“Wedlake”) (exhibit #P-17); and 4) the business records attached to Wedlake and Langston's declaration (exhibits #P-9-10, P-17A). James, in-house counsel for Allied, testified during the first day of the hearing, September 15, 2010. He established that all of the documents attached to his declaration were business records; as such, they were admitted under Fed. R. Evid. 803(6). See Damages Hr'g Tr., vol.1, 17:14-18:6 (document #255). Neither Langston—a former Chief Information Officer, Senior Vice President, and Chief of Information and Security Committee for Allied—nor Wedlake—a former Director of Network Operations for Allied—testified. However, prior to leaving Allied, they executed declarations containing information material to this case. In my Preliminary Memorandum Re: Scope of Damages Hearing (document #269), I held that the Wedlake and Langston declarations would not be admissible unless Allied produced Wedlake and Langston. During the second day of the hearing, October 12, 2010, I refined that ruling to make it clear that the declarations of Langston and Wedlake, along with the accompanying documents, could be admitted so long as the defendants had an opportunity to cross-examine them in court. Between October 12, 2010, and the final hearing day, December 7, 2010, defendants had ample opportunity to subpoena Wedlake and Langston. They did not. Thus, I admitted the statements in the two declarations—as direct testimony—and the accompanying documents—as business records. *6 Finally, during the last day of the hearing, I took under advisement the admissibility of the following exhibits identified by Allied: 1) Allied's lease for the data center (exhibit #P-11); 2) Letter from Neal Brown to Saunders (exhibit #P-34); 3) Notice of IRS levy to Allied (exhibit #P-35); 4) Letter dated 10/7/2010 to Allied from the IRS (exhibit #P-36); and 5) Supplemental declaration of Joe James (exhibit #P-46). I now hold that each of these exhibits, except for James' supplemental declaration, is admissible. Allied did not offer the James' supplemental declaration until shortly before the final day of the hearing, long after the due date I had set in my October 15, 2010, Procedural Order. III. CAUSES OF ACTION For each count that it pled in its complaint, Allied has articulated the legal cause(s) of action under which it seeks damages. Since the elements of these causes of action dictate those facts that must be established in order to award Allied damages, I begin with the elements of each of Allied's claims. A. Unjust Enrichment A plaintiff establishes a claim for unjust enrichment by showing the following elements: “1) a benefit conferred upon the defendant by the plaintiff; 2) an appreciation or knowledge by the defendant of the benefit; and 3) the acceptance or retention by the defendant of the benefit under such circumstances as to make it inequitable for the defendant to retain the benefit without payment of its value.” 26 Richard A. Lord, Williston on Contracts § 68:5 (4th ed.). A plaintiff who has prevailed with a claim for unjust enrichment may recover restitution. Keller v. O'Brien, 425 Mass. 774, 778 (1997) (citing Salamon v. Terra, 394 Mass. 857, 859 (1985)). Restitution is an equitable remedy through which a party unjustly enriched at the expense of another is required to repay the injured party. Restatement (First) of Restitution § 1 (1937); seeSalamon, 394 Mass. at 859 (adopting § 1 of the Restatement). Restitution damages are measured by the amount the defendant unjustly “acquired, retained or disposed of” by “fraud, duress or other consciously tortious conduct.” Restatement (First) of Restitution § 151. Therefore, any damages to which Allied is entitled pursuant to its claim of unjust enrichment are measured by Belli or Regency's enrichment, not by Allied's loss. See id.; 1 Dobbs Law of Remedies § 4.5(1) (2d ed. 1993). B. Replevin Replevin is an action for the recovery of property wrongfully taken or detained by another. See Mass. Gen. Laws ch. 247, § 7 (2004); Black's Law Dictionary 1413-14 (9th ed. 2009). In order to seek replevin of certain goods, the plaintiff must prove that (1) the goods in question have a value greater than twenty dollars; (2) plaintiff is entitled to possession of the goods; (3) defendant unlawfully took or detained the goods; and (4) plaintiff has been deprived of the goods. See Mass. Gen. Laws ch. 247, § 7 (2004); Evergreen Marine Corp. v. Six Consignments of Frozen Scallops, 806 F. Supp. 291, 295 (D. Mass. 1992). In addition to the return of the goods in question, the plaintiff may recover damages caused by the unlawful taking or detention and may recover for costs associated with the recovery of the goods. Mass. Gen. Laws ch. 247, § 13 (2004). These damages include interest on the monetary value of the property during the time the owner was deprived of it, the value of the lost use of the property, and other losses and expenses resulting from the interruption of possession or the operation of replacing the property. See Restatement (First) of Torts § 931 & cmt. a (1939); see also Reliable Sewing Mach. Co. v. Price Sewing Mach., 5 Mass. App. Ct. 807, 808 (1977) (adopting § 931 of the Restatement). C. Conversion *7 Conversion is the wrongful exercise of control over another's property that seriously interferes with the owner's rights. Restatement (Second) of Torts § 222A (1965); see Third Nat'l Bank of Hampden Cnty. v. Cont'l Ins. Co., 388 Mass. 240, 244 (1983) (adopting § 222A). A plaintiff can sustain a claim of conversion if she can show that defendant “intentionally or wrongfully exercise[d] acts of ownership, control or dominion over personal property to which defendant has no right of possession at the time.” Grand Pac. Fin. Corp. v. Brauer, 57 Mass. App. Ct. 407, 412 (2003) (citing Abington Nat'l Bank v. Ashwood Homes, Inc., 19 Mass. App. Ct. 503, 507 (1985)). In contrast to replevin, which entitles the plaintiff to recovery of the chattel and damages incidental to their deprivation, conversion entitles the plaintiff to recover monetary damages for the full value of the chattel at the time and place of the tort in lieu of recovering the chattel itself. Restatement (Second) of Torts § 222A cmt. c (1965). The title to the property that is the subject of a successful conversion claim passes to the defendant after the defendant satisfies the judgment for monetary damages. If a plaintiff is entitled to a judgment for the conversion of a chattel, then the damages are measured by the fair market value at the time and place of conversion, interest from the date of conversion, and the amount of “any further loss suffered as the result of the deprivation.” Restatement (First) of Torts § 927 (1939); see Manhattan Clothing Co. v. Goldberg, 322 Mass. 472, 475-76 (1948) (adopting § 927). D. Intentional Misrepresentation/Fraud To make out a case of intentional misrepresentation, a plaintiff must prove that the defendant “made a false representation of a material fact with knowledge of its falsity for the purpose of inducing the plaintiff to act thereon, and that the plaintiff relied upon the representation as true and acted upon it to his damage.” Barrett Assocs., Inc. v. Aronson, 346 Mass. 150, 152 (1963) (quoting Kilroy v. Barron, 326 Mass. 464, 465 (1950)); see also Damon v. Sun Co., 87 F.3d 1467, 1471-72 (1st Cir. 1996). A plaintiff injured by a fraudulent misrepresentation is entitled to recover the “difference between the value of what he has received in the transaction and its purchase price or other value given for it” and the “pecuniary loss suffered ... as a consequence of the [plaintiff's] reliance upon the misrepresentation.” Restatement (Second) of Torts § 549(1) (1977); see Goldman v. Mahony, 354 Mass. 705, 709 (1968) (adopting § 549).Other times, a plaintiff may instead recover what is known as the “benefit of the bargain.” Rice v. Price, 340 Mass. 502, 507 (1960) (citing the Restatement). Under this measure of damages, the plaintiff is entitled to recover the difference between the value of what she in fact received and the actual value of what she would have received if the representations had been true. Id. E. Negligent Misrepresentation A defendant may be liable for negligent misrepresentation in the course of business if (1) the defendant supplied plaintiff “false information for the guidance of [a] business transaction;” (2) defendant failed to exercise reasonable care or competence in obtaining or communicating the information; and (3) plaintiff suffered pecuniary loss as a result of justifiable reliance on the information. Restatement (Second) of Torts § 552(1) (1977); see Cumis Ins. Soc'y, Inc. v. BJ's Wholesale Club, Inc. 455 Mass. 458, 471-72 (2009) (adopting § 552). A plaintiff injured by a fraudulent misrepresentation is entitled to recover those damages necessary to compensate the plaintiff for the pecuniary loss she suffered as a consequence of her reliance upon the misrepresentation. Restatement (Second) of Torts § 552B(1) (1977); see Danca v. Taunton Sav. Bank, 385 Mass. 1, 9 (1982) (accepting § 552B's measure of damages in an action for negligent misrepresentation). Unlike in the case of intentional misrepresentation, the plaintiff is not entitled to the benefit of the bargain. Restatement (Second) of Torts § 552B(2). F. Breach of Duty of Loyalty An agent has a fiduciary duty “to act loyally for the principal's benefit in all matters connected with the agency relationship.” Restatement (Third) of Agency § 8.01 (2006). In order to recover damages for defendant's breach of the duty of loyalty, plaintiff must establish duty, breach, damages, and causation. See Hanover Ins. Co. v. Sutton, 46 Mass. App. Ct. 153, 164 (1999). Specifically, plaintiff must show that the damages would not have resulted but for the employee's breach of loyalty. Augat, Inc. v. Aegis, Inc., 409 Mass. 165, 175 (1991). Damages are measured by the loss to the plaintiff. Restatement (Third) of Agency § 8.01 cmt. d (2006) (“An agent's breach subjects the agent to liability for loss that the breach causes the principal.”). IV. DAMAGES *8 With the elements of each cause of action in mind, I will now determine the damages to which Allied is entitled. A. Unpaid Sanctions The court-ordered sanctions against Belli and Regency are not technically damages. Nonetheless, I used the damages hearing as an opportunity to determine the amount of unpaid sanctions. Based on the testimony and documents submitted by the parties, I hold that Regency has satisfied its obligation to pay $14,470 in sanctions, but Belli still owes $26,942 of the $41,412 originally assigned.[2] SeeDamages Hr'g Tr. vol. 2, 14:13-28:20 (document #272). B. Computer Servers and Equipment Allied requests the return from Belli of seventeen pieces of computer equipment that remain housed at the Marlborough data center pursuant to its claim of replevin. Given Allied's complaint, I take the following as true as a matter of law: Allied owns sixteen of the twenty-two servers and other networking devices that were housed in the Marlborough data center at the time Allied filed its complaint. Compl. ¶ 4 (exhibit #P-4).[3] Allied has a right to immediate possession of this equipment and has asked Belli to return the property that is Allied's. Id. ¶ 56. Belli has refused to return Allied's equipment. Id. ¶ 31. Belli's possession of these sixteen servers and networking devices is “wrongful.” Id. ¶ 57. Furthermore, based on the additional evidence produced at the damages stage, I find the following: During the process of dividing data and equipment at the Marlborough data center, Belli returned to Allied an additional piece of equipment (a Watchguard 1000 firewall) that is now also housed at the Marlborough data center. Damages Hr'g Tr. vol.1, 18:7-21:15 (adopting statements from David Langston's declaration); see Langston Decl. ¶ 7 n.1 (exhibit #P-8). Consequently, there are now twenty-three pieces of equipment at the Marlborough data center, seventeen of which belong to Allied. Id. ¶ 7. The seventeen servers and devices at the Marlborough data center that belong to Allied are: FS-AL005 File Server AL-SQL001 SQL Data—POINT EX-AL008 SPARE NAS400M Backup TS-AL022 Terminal Server TS-AL023 Terminal Server TS-AL027 Terminal Server EX-AL006 E-Mail EX-AL010 E-Mail DC-AL002 Domain Controller FS-AL003 File Server NAS400R Backup (1,000) TS-AL021 Terminal Server Watchguard 1000 Firewall Belkin Devices KVM Switch Coyote Point Load Balance Watchguard 1000 Firewall Damages Hr'g Tr. vol.1, 18:7-21:15 (adopting statements from David Langston's declaration); see Langston Decl. ¶¶ 7, 8; List of Servers and Networking Devices, Langston Decl. Ex. D (exhibit #P-9); Invoices and Checks, Langston Decl. Ex. E (exhibit #P-10).[4] Based on this evidence, I hold that Allied is the rightful owner of the above-named servers and equipment, and order Belli to return all of these devices that are in his possession. C. Lease Payments to Marlborough Data Center (10/07–7/10) *9 As explained above, at the time Allied filed its complaint, the Marlborough data center housed twenty-two servers and other networking devices. Compl. ¶ 4. When Belli refused to return this equipment to Allied or provide Allied access to it, on September 6, 2007, a preliminary injunction was issued, instructing Allied and Belli to audit, inventory, and segregate the data on the servers at the Marlborough service center, and granting Belli physical and administrative control over half of the contested machines. Prelim. Inj. Order (document #19). In addition, the injunction required that all of the servers and networking devices in the data center remain there during the pendency of this case. Id. at 2. Since the data center's lease was in Allied's name, I instructed Allied to pay the rent “reserving its right to seek to recoup all or a portion of such lease payments.” Id. On October 24, 2008, the preliminary injunction was modified to require Belli to 1) post a bond for the full amount of the lease payments Allied had covered between October 2007 and October 24, 2008, for the Marlborough data center; 2) pay one-half of the rent to the landlord going forward; and 3) post a bond for the half of the rent payments Allied was covering going forward. Elec. Order Granting Mot. Modify Prelim. Inj. Order, 10/24/2008; see Pl.'s Mot. to Modify the Prelim. Inj. Order 2 (document #64). At the time I ordered this modification, Allied asserted that it had paid $37,823.24 in rent between October 2007 and August 18, 2008, for the Marlborough space. Pl.'s Mot. to Modify the Prelim. Inj. Order 6. On July 8, 2009, I found that Belli had violated my October 24, 2008, order by posting “no bond for any of the payments made by Allied.” Elec. Order Granting Mot. for Contempt, 7/8/2009. As a result, I entered a finding of civil contempt against Belli. Id.Thereafter, on August 14, 2009, I ordered Belli to pay Allied the sum of $11,960, which represented his half of the data center rent from October 24, 2008, through June 2009. Mem. & Order, 9/14/09 4 (document #185). In addition, I told Belli to post a bond totaling $55,973.42, representing the full amount of rent Allied had paid between October 2007 and October 24, 2008 (including $18,150 paid from August 18, 2008, through October 24, 2008). Id. Belli did neither; Allied continued to pay the full Marlborough rent through July 2010. Furthermore, based on the declarations, testimony, cancelled checks, and ledgers that Allied has submitted, I find that between October 2007 and June 25, 2009, Allied paid a total of $67,723.42 in rent for the Marlborough data center. Damages. Hr'g Tr., vol.1, 22:4-27:24 (adopting statements in Wedlake's declaration and verifying that the documents attached to Wedlake's declaration were business records); One Communications Invoices, James Decl. Ex. 8 (exhibit #P-26); Check to One Communication, James Decl. Ex. 9 (exhibit #P-27); seeWedlake Decl. ¶ 5 (exhibit #P-17); Ledger, Wedlake Decl. Ex. A, at 3-4 (exhibit #P-17A). In addition, from July 2009 through July 28, 2010, Allied paid $1,800 in connection with the storage of the computer servers and equipment. James Decl. ¶ 11 (exhibit #P-18); see Check to One Communication, James Decl. Ex. 9.[5] *10 Allied asks to be reimbursed by Belli one half the amount Allied paid in rent for the Marlborough Data Center between October 2007 and July 2010. Allied seeks these damages pursuant to its claims of replevin. When a plaintiff raises a replevin claim, in addition to the return of the goods in question, the plaintiff may also recover the costs plaintiff incurs while seeking the return of these items. Mass. Gen. Laws ch. 247, § 13 (2004). In this case, I ordered Allied and defendants to pay the Marlborough rent in order to protect the items at issue pending the resolution of the instant litigation. Therefore, I hold that any rent that Allied has paid for the Marlborough data center is a cost it has incurred in its attempt to regain possession of its seventeen servers and devices at the Marlborough data center, a cost recoverable pursuant to its replevin claim. While the full rent that Allied has paid for the data center ($67,723.42) arguably comprises the damages to which Allied is entitled pursuant to its replevin claim, plaintiff is seeking only half of the rent payments ($33,861.71). To date, Belli has paid Allied $1,472.50 for the Marlborough lease. Damages. Hr'g Tr., vol.1, 22:4-27:24 (adopting statements in Wedlake's declaration); see Wedlake Decl. ¶ 5. Thus, Belli still owes Allied $32,389.21 ($33,861.71–$1,472.50), plus the additional $1,800 incurred in connection with the storage of the computer servers and equipment. Therefore, pursuant to Allied's replevin claim for the lease payments made for the Marlborough Data Center, I award Allied damages from Belli in the amount of: 1) $32,389.21, plus prejudgment interest at a rate of 12% per annum on that sum from 6/25/09, see Mem. and Order, 9/14/09 4, until the date of the Judgment; and 2) $1,800, plus prejudgment interest at a rate of 12% per annum on that sum from 7/28/10 until the date of the Judgment.[6] D. Property and Equipment from Foxboro and Milford Offices After firing Belli on August 23, 2007, Allied made numerous demands to Belli for the return of equipment located in the former Milford and Foxboro branch offices. Compl. ¶¶ 29, 30. This equipment included “copy machines, computers, a plasma display and a digital camera, which are all owned by Allied.” Id. ¶ 29. Allied made “numerous demands for the return of this property, but Belli ... refused to return it.” Id.¶¶ 30-31. The value of the “two computer servers formerly located in the Milford branch office and other equipment ... is over $75,000.” Id.at 29. Pursuant to its conversion claim, Allied originally sought from Belli the fair market value of all of the equipment and property that was once stored in the former Milford and Foxboro offices. However, as the defendant himself admitted during his deposition, Belli wrongfully spoliated this property at a weekend sale, in defiance of my preliminary injunctions. See Elec. Order Granting Mot. Sanctions, 7/8/09. As a result, Allied cannot state with certainty exactly what items were in the offices or their worth. Therefore, Allied has abandoned its request for the fair market value of these items and is instead seeking only $75,000, an amount the defendants are entitled to as a matter of law, given the allegations they made in their complaint.[7] *11 Once Allied abandoned its request for the fair market value of these items, Allied could have rested on its complaint alone. Instead, they provided additional evidence, including a letter to Belli, a depreciation schedule, and testimony. For instance, Allied submitted a letter that the company sent to Belli on September 11, 2007, asking for the return of specified items. Letter to Belli from Klenk, 9/11/2007, Saunders Aff. Ex. A, at 3 (exhibit # P-16). This list includes the items from the Foxboro and Milford offices at issue in this claim. See James Decl. ¶ 10. Based on the complaint and this evidence, I find that the fair market value of the items at issue in this claim far surpassed $75,000—and was likely in the hundreds of thousands—though the exact amount is unclear. See Depreciation List, James Decl. Ex. 7, at 1 (exhibit #P-25). Since Belli spoliated the evidence, the burden was on him to show that the items were not worth at least $75,000. He did not. Therefore, pursuant to Allied's conversion claim, I award plaintiff damages to be paid by Belli in the amount of $75,000, plus prejudgment interest at a rate of 12% per annum on that sum from 11/8/07, see Compl. 24, until the date of the Judgment. E. Rent Payment to Regency for Milford Branch Space (4/04–5/07) From some time before January 24, 2005, through May 3, 2007, Allied made monthly payments to Regency for rent supposedly due for the Milford Branch space. Compl. ¶ 35. These purported rent payments were a result of Belli and Regency's “falsely representing to Allied that Allied had a lease for the Milford branch office space located at 189 Main Street in Milford with Regency.” Id. ¶ 35; see also id. ¶ 8. Regency in fact had no ownership or other interest in the property. Id. ¶ 35. Furthermore, Belli and Regency made these fraudulent representations to Allied “with the intent to deceive and for the purpose of inducing Allied to act.” Id. ¶ 89. In other words, any rent payment that Allied made to Regency in the name of rent for the Milford Branch space between some date before January 24, 2005, and May 2007 were induced by Belli and Regency's “fraudulent representations.” In addition, Belli, who “owed a duty of loyalty to Allied,” breached “that duty ... by ... fraudulently inducing Allied to make payments to third parties to which they were not entitled, including but not limited to Regency.” Id. ¶¶ 72-73. Based on James' testimony and declaration, James Decl. ¶ 4, along with Allied's ledger of rent payments, Ledger, James Decl. Ex. 1, at 1-4 (exhibit #P-19), I find that from November 8, 2004, through May 3, 2007, Allied paid Regency 31 monthly rent payments of $28,750, for a total of $891,250. Allied seeks to recoup from Belli this money it paid to Regency in the name of rent for the Milford space between November 2004 and May 2007 pursuant to its claims of 1) breach of loyalty; 2) unjust enrichment; 3) intentional misrepresentation/fraud; and 4) negligent misrepresentation. Given these causes of action, Allied needed to prove that it suffered a loss as a result of these payments and the amount of the loss. Allied did both by submitting Belli's deposition testimony. Belli acknowledged that, at his direction, Allied had also paid rent—the proper rent—to Alfonso Gillon Court for the Milford space since at least 2001. Belli Dep. Excerpt vol. 3, 245:10-253:9 (exhibit #P-37). As a result, anything that Allied paid to Regency in the name of rent was a loss for the company. All that Belli offered to the contrary was an allegation that the money that Allied spent was somehow his money, so any money that Allied paid to Regency was not a loss. He explained that Allied wrote checks as his “bookkeeper” with his money. Damages Hr'g Tr. vol. 3, 77:19. Belli once again offered no documentation to buttress this claim, much less a detailed explanation of the financial arrangement between Allied or Belli. In contrast, Allied submitted ledgers suggesting that the money paid in the name of “rent” came from its bank account. Weighing these two pieces of evidence against one other, I find Allied's representations to be more credible than Belli's. Therefore, Belli is responsible for the $891,250 paid to Regency in the name of rent. *12 In addition, Allied asks that Regency be jointly and severally liable for this amount, plus solely responsible for the rent it received from April 23, 2004, through November 7, 2004, pursuant to its claim of unjust enrichment.[8] In its complaint, Allied put forward allegations sufficient to satisfy all of the prongs of an unjust enrichment claim against Regency, namely that: 1) Allied conferred the benefit of monthly rent payments upon Regency; 2) Regency knew that it was receiving this money; and 3) it would be “inequitable” for Regency to retain this money since Regency was not the landlord and, therefore, not entitled to the rent payments. Thus, the only issue left to determine is the amount Regency received in the name of rent. I find that the same evidence Allied has submitted against Belli is sufficient to prove the exact amount that Regency was unjustly enriched. Specifically, from April 23, 2004, through November 7, 2004, Allied gave Regency 8 rent payments of $28,750, and 5 rent payments of $10,300, for a total of $281,500. Ledger, James Decl. Ex. 1, at 1. And, as explained above, Allied paid Regency $891,250 between November 8, 2004, and May 3, 2007. In total, Regency is responsible for $1,172,750. Therefore, I award Allied damages in the amount of $1,172,750, plus prejudgment interest at a rate of 12% annum on that sum from 11/8/07, see Compl. 24, until the date of the Judgment. F. Rent Payment Premiums to Regency for Foxboro Space (1/05–7/07) Allied argues that from January 24, 2005, through July 5, 2007, Belli fraudulently induced it to pay Regency $10,000 more per month for leasing the Foxboro office space than was appropriate. In its complaint, Allied vaguely alleges that Belli “owed a duty of loyalty to Allied,” and Belli breached “that duty of loyalty by ... fraudulently inducing Allied to make payments to third parties to which they were not entitled, including but not limited to Regency.” Compl. ¶¶ 72-73. However, they pled no details about the overage in connection with the Foxboro rent. Based on the damages hearing—Allied's business records, James' testimony, James' declaration, and Belli's deposition—I find the following: Allied made monthly rent payments totaling $805,000 (($28,750 x 27) + $19,250 + $9,500) for the Foxboro office space. SeeJames Decl. ¶ 5; Ledger, James Decl. Ex. 2 (exhibit #P-20). This rent included an “overage of $10,000 per month.” Belli Dep. Excerpt, Saunders Decl. Ex. 1, at 311:7-10 (exhibit #P-28). Belli tacked on this additional $10,000 per month for 28 months “[b]ecause [he] wanted to.... Just for the heck of it.” Id. at 313:5-7. Allied, though, did not know the reason that the rent amount had increased. See id. at 313:11. Allied seeks to recoup these overages from Belli pursuant to its claims of intentional misrepresentation, negligent misrepresentation, and breach of duty of loyalty. I find in its favor under the breach of duty of loyalty claim. I hold that the $10,000 monthly overage paid pursuant to Belli's whims is a loss incurred by Allied, since Belli had a duty not to increase the rent without sufficient justification. Therefore, Belli is responsible for the full $280,000 Allied paid in overages to Regency. In addition, plaintiff suggests that Regency is jointly and severally liable with Belli under a unjust enrichment claim. I agree. Regency was “not entitled” to these overage payments. Compl. ¶¶ 72-73. Therefore, I award Allied damages in the amount of $280,000, plus prejudgment interest at a rate of 12% annum on that sum from 11/8/07, see Compl. 24, until the date of the Judgment. G. Payments to Rife (10/05-2/07) *13 As a matter of law, I take the following allegations at true: Belli “owed a duty of loyalty to Allied,” and Belli breached “that duty of loyalty by ... fraudulently inducing Allied to make payments to third parties to which they were not entitled, including but not limited to ... Rife.” Compl. ¶¶ 72-73. From October 28, 2005, through February 28, 2007, Belli made “false representations that induced Allied to make ‘bonus payments’ ” to John Rife (“Rife”), a former Allied employee, even though he was “not entitled to such payments.” Id. ¶¶ 9, 37. Belli “wrongfully induced” Allied to make these “ ‘bonus payments’ in the amount of approximately $7,000.00 on a semi-monthly basis” by “falsely represent[ing]” to Allied that Rife was an employee of the Milford branch office. Id. ¶ 37. Allied relied upon Belli's false representations about Rife's employment status and entitlement to bonus payments when it made these payments to Rife. Id. ¶ 38. However, on October 28, 2005, Rife had stopped working for Allied, a fact that Allied did not learn until it conducted an audit of the employee list for the Milford and Foxboro branch offices in February 2007. Id. As a result, Allied now seeks to be reimbursed by Belli for all “bonus payments” it made to Rife between October 28, 2005, and February 29, 2007, pursuant to its claims for 1) intentional misrepresentation/fraud; 2) negligent misrepresentation; and 3) breach of duty of loyalty. Given plaintiff's complaint, the only issue left to determine during the hearing was the exact amount Allied had paid Rife during the relevant time period. To that end, Allied provided a salary ledger and testimony to authenticate the ledger. Belli did not contest the amount. Based on the evidence submitted, I find that, from October 28, 2005, through February 28, 2007, Belli fraudulently induced Allied to make 33 payments to Rife, each for $7,000, for a total of $231,000 ($7,000 x 33). Salary Ledger, James Decl. Ex. 3, at 1-8 (exhibit #P-21); seeDamages Hr'g Tr. vol.1, 17:4-18:6. Belli's only defense relates to an ongoing case currently pending in the Middlesex Superior Court. Specifically, Rife has filed a wage claim against Allied, seeking unpaid wages in the amount of $485,263.16. Rife v. Allied Home Mortgage Capital Corp., Docket No. MICV-2010-0073. As explained by Allied's complaint in this case, Rife claims that this money is owed to him pursuant to an unauthorized deferred compensation arrangement with him whereby Belli—Rife's former manager at Allied—placed all of the commissions Rife earned during his employment for Allied in a “pool” and then made semi-monthly payments of $7,000 to Rife from this pool. Comp. ¶ 39. According to Rife, $485,463 remains in this “pool.” Id. Allied further alleges in its complaint that “[i]n the event that Mr. Rife's allegation are found to be meritorious and that he is owed additional money by Allied, Belli is liable to Allied for such amount since those amounts were improperly paid to Mr. Belli as commission due to Allied's reliance on Mr. Belli's false representation about the branch expenses during the relevant time period.” Id. ¶ 40. Harping on the conditional language Allied used in its complaint (“[i]n the event that”) and noting that Rife's wage claim is yet unresolved, Belli argues that the damages relating to Rife's payments in this case are subject to the outcome of Rife's wage claim. I disagree. Through other statements in its complaint, its ledger, and its testimony, Allied has established that it is entitled to damages in the amount of the total bonus payments that Allied gave to Rife. Therefore, I award Allied damages in the amount of $231,000, plus prejudgment interest at a rate of 12% annum on that sum from 11/8/07, see Compl. 24, until the date of the Judgment. Allied, however, seeks additional damages in the form of declaratory relief. Specifically, Allied has requested that the Court declare that “Belli is responsible for any judgment that arises from Mr. Rife's current state court action against Allied seeking unpaid commissions.” Pl.'s Mot. Declaratory Relief. I decline to make such a contingent judgment. Any future decision regarding Rife's alleged unpaid wages would concern entitlement to the remaining money in the “pool.” Nothing in Allied's complaint establishes that Belli has control over this remaining money. Rather, Allied's complaint suggests that this “pool” of money is Allied's—otherwise, Allied would not have lost money when paying Rife from this “pool” of money. Therefore, if the judge in Rife's case decides that the money in the “pool” is Rife's not Allied's, then Allied's complaint supplies no justification for declaring that Belli is responsible for reimbursing Allied for the “pool” money that Allied is wrongfully keeping from Rife. Therefore, plaintiff's Motion for Declaratory Relief (document #290) is DENIED. H. Ruscitti—Salary & Overhead *14 From 2002 through 2007, Belli, who owed Allied a duty of loyalty, “falsely represented” to Allied that Nicholas Ruscitti (“Ruscitti”) was working as a loan officer for the company at the Milford office. Compl. ¶¶ 33, 43. Belli “falsely represented” that Ruscitti was a legitimate employee of Allied's for the purpose of “inducing Allied to pay [Ruscitti] money for work that [he] did not perform for Allied.” Id. ¶ 10. As a result of Belli's misrepresentations, Allied paid Ruscitti a salary for five years. Id. While Ruscitti was indeed working on the premises of the Milford office, he was not an Allied employee. Id. Rather, Ruscitti was operating a private law office, all the while using Allied's computers, property, and office equipment with Belli's blessing. Id. ¶¶ 34, 43. To compensate Belli and Regency for allowing him to run his private business out of the Milford space and use Allied's supplies, Ruscitti paid Regency “overhead.” Allied now wants to be reimbursed by Belli for all salary payments it made to Ruscitti between November 8, 2004, and March 15, 2007, pursuant to its claims of 1) breach of duty of loyalty; 2) intentional misrepresentation/fraud; and 3) negligent misrepresentation. In addition, Allied seeks damages jointly and severally from Regency—under a theory of unjust enrichment—and Belli—under its breach of duty of loyalty claim—in the amount of all payments that Ruscitti made to Regency between November 8, 2004, and January 31, 2007, in the name of “overhead.” 1. Ruscitti Salary (11/04–3/07) Under any of the three causes of action asserted, Allied has established through its complaint alone that any salary payment that Allied made to Ruscitti between 2002 and 2007 was fraudulently induced by Belli.[9] The only fact left to determine at the hearing was the amount of these payments. To that end, Allied provided a salary ledger and testimony to authenticate it. Belli did not contest the amount.[10] Based on the evidence, I find that, from November 8, 2004, until March 15, 2007, Allied made salary payments to Ruscitti totaling $288,273.74 ((53 x $5,000) + $5,500 + ($6,000 x 2) + $540 + $4483.78 + $300 + $449)). Salary Ledger, James Decl. Ex. 4, at 1-16 (exhibit #P-22); seeDamages Hr'g Tr. vol.1, 17:4-18:6. Therefore, I award Allied damages in the amount of $288,273.74, plus prejudgment interest at a rate of 12% annum on that sum from 11/8/07, see Compl. 24, until the date of the Judgment. 2. Ruscitti “Overhead” Payments (11/04-3/07) In conjunction with plaintiff's general allegation that Belli “improperly and without authorization used Allied's computer servers” and “other property and equipment ... for the benefit of third parties,” Compl. ¶ 34, I find the following based on the evidence submitted: Between November 8, 2004, and January 31, 2007, Ruscitti paid Regency a total of $531,000 for “the rent and resources consumed by the ... business [he] ran at the [Milford] office.” Ruscitti Aff., Saunders Decl. Ex. 3, at ¶ 4 (exhibit #P-30); Check Register, Saunders Decl., Ex. 2, at 7 (exhibit #P-29); Checks by Ruscitti, Saunders Aff. Ex. C, at 2-25 (exhibit # P-14). This is money that Ruscitti should have been paying to Allied. First, the supplies that Ruscitti and his assistants used—e.g., paper, fax machines, telephone—were Allied's. Damages Hr'g Tr. vol. 3, 25:14-29:21. Second, Ruscitti and his two administrative assistants occupied space on the fourth floor of the Milord property. Ruscitti Dep. Excerpt vol. 2, 46:17-19 (exhibit #P-31). During the period at issue in this claim, Allied paid the rent for the fourth floor and was thus the leaseholder for the fourth floor. Belli Dep. Excerpt vol. 3, 766:9-13.[11] Since Allied was leasing the space that Ruscitti was subleasing, Ruscitti should have been paying rent to Allied, not Regency. Regency was thus unjustly enriched, and Belli breached his duty of loyalty to Allied by “improperly” allowing Ruscitti to use the fourth floor and directing Ruscitti to pay overhead to Regency. Therefore, I award Allied damages to be paid jointly and severally by Belli and Regency in the amount of $531,000 plus prejudgment interest at a rate of 12% annum on that sum from 11/8/07, see Compl. 24, until the date of the Judgment. I. Salary Payment to Brown & MacQueen (11/04-8/07) *15 In its complaint, Allied generally alleges that, from 2002 through 2007, Belli “falsely represented” that individuals “other” than Ruscitti were legitimate Allied employees “for the purposes of inducing Allied to pay them money for work that these individuals did not perform for Allied.” Compl. ¶ 10. Allied now claims that Carla Brown (“Brown”) and Cynthia MacQueen (“MacQueen”), who completed administrative and paralegal tasks for Ruscitti, were two of these “other” individuals. As such, Allied now wants to be reimbursed by Belli for all salary payments it made to Brown and MacQueen between November 8, 2004, and August 21, 2007, pursuant to its claims of 1) breach of duty of loyalty; 2) intentional misrepresentation/fraud; and 3) negligent misrepresentation. Given the vagueness of the complaint with respect to Brown and MacQueen, Allied needed to prove the following in order to recover the money it requested: 1) Brown and MacQueen were indeed both “other” individuals whom Belli “falsely represented” were legitimate Allied employees; 2) the salary payments to Brown and MacQueen were a result of this fraud; and 3) the amount of salary paid to Brown and MacQueen. In order to establish the first two elements, Allied examined Ruscitti. Through Ruscitti's testimony, Allied proved that Brown and MacQueen conducted paralegal assignments for him in connection with his mortgage closing business. While Belli did not contest that Brown and MacQueen ever worked for Ruscitti, his cross-examination of Ruscitti did established that Brown and MacQueen spent a portion of their time on tasks for Allied, although the parties dispute the percentage of their time that should be attributed to work for Allied. Based on the evidence supplied, I find Brown and MacQueen each spent 20% of her time on Ruscitti's closing business and 80% on Allied-related tasks. See Damages Hr'g Tr. vol.3, 17:12-24:13, 56:21-58:9. With regard to the third prong, Allied presented salary ledgers and corroborating testimony. Belli, in turn, did not dispute the amount of salary Allied paid to MacQueen or Brown. Thus, based on the evidence submitted, I find that, from November 8, 2004, until August 11, 2007, Allied made salary payments to Brown totaling $68,961.00 ((53 x $5,000) + $5,500 + ($6,000 x 2) + $540 + $4483.78 + $300 + $449). Salary Ledger, James Decl. Ex. 5, at 1-18 (exhibit #P-23); see Damages Hr'g Tr. vol.1, 17:4-18:6. During that same period, Allied made salary payments to MacQueen totaling $126,051.65 ($384.60 + $999.96 + $1632.58 + ($1730.70 x 2) + ($1799.93 x 2) + ($1923.00 x 5) + ($1999.92 x 7) + ($2115.30 x 10) + ($2199.91 x 15) + $2230.70 + ($2307.60 x 6) + $2331.64 + ($2399.90 x 6) + ($2699.91 x 2)). Salary Ledger, James Decl. Ex. 6, at 1-16 (exhibit # P-24); see Damages Hr'g Tr. vol.1, 17:4-18:6. Since each of these women spent 20% of her time on work for Ruscitti's closing business, Allied is entitled to be reimbursed 20% of each of their salaries. Therefore, I AWARD Allied damages in the amount $13,792 (0.2 x $68,961.00) for Brown and $25,210.33 (.2 x $126,051.65) for MacQueen plus prejudgment interest at a rate of 12% annum on that sum from 11/8/07, see Compl. 24, until the date of the Judgment. J. Total In total, I AWARD Allied the following damages: Jointly and Severally Against Belli and Regency Against Belli Alone Against Regency Alone Sanctions $26,942 Computer Servers & Equipment Return of the 17 servers and equipment specified above Marlborough Data Center Rent $34,189.21 Foxboro and Milford Equipment & Property $75,000 Milford Rent $891,250 $281,500 Foxboro Rent $280,000 Bonus Payments to Rife $231,000 Ruscitti Salary $288,273.74 Ruscitti “Overhead” $531,000 Brown Salary $13,792 MacQueen Salary $25,210.33 Total $1,459,523.74 $937,134 $281,500 V. COSTS *16 As the prevailing party, Allied seeks costs pursuant to Rule 54 of the Federal Rules of Civil Procedure and 28 U.S.C. § 1920. This rule and the statute work in tandem. While Fed. R. Civ. Pro. 54(d)(1) says that costs” should be allowed to the prevailing party” (emphasis added), 28 U.S. C. § 1920 notes exactly what costs a court “may” tax: (1) Fees of the clerk and marshal; (2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the case; (3) Fees and disbursements for printing and witnesses; (4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case; (5) Docket fees under section 1923 of this title; [and] (6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title. The combined effect of the statue and the rule is twofold. First, a court lacks the ability to access costs under Rule 54(d) “above and beyond those that come within the statutory litany” of § 1920. In Re Two Appeals Arising Out of the San Juan Dupont Plaza Hotel, 994 F.2d 956, 962 (1st Cir. 1993). Second, Rule 54(d) confers no discretion on the court independent of § 1920 to tax expenses as costs. Id. In other words, Rule 54(d) simply portends a negative discretion, “a power to decline to tax, as costs, the items enumerated in § 1920.” Id. (quoting Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 442 (1987)). At the same time, the First Circuit has stressed that this negative discretion “operates in the long shadow of a background presumption favoring cost recovery for prevailing parties.” San Juan Dupont, 994 F.2d at 962. In fact, a court may not disallow a prevailing party's costs in whole or in part without articulating reasons. Id. at 963. The costs that Allied request all fall under the ambit of § 1920. I will address each category of costs in turn. A. Clerk Fees, Marshall/Process Server Fees, and Witness Fees, § 1920(1), (3) Allied seeks costs for its filing fee, along with fees incurred in effectuating service of its summons and complaint, certain deposition subpoenas, and a document production subpoena. In addition, Allied asks to be reimbursed for the witness fees it paid to Nicholas Ruscitti each of the three times he appeared for the damages hearing. Defendants claims that Allied is not entitled to costs for the witness fees under 28 U.S.C. § 1920(3) or costs associated with Ruscitti's deposition. In addition, defendants generally allege that Allied has not shown that any of these fees, except the filing fee, were reasonable, since Allied won by default judgment, rather than a trial. As defendants concede, by the plain language of 28 U.S.C. § 1920(1), Allied is entitled to the filing fee. See Phetosomphone v. Allison Reed Grp., Inc., 984 F.2d 4, 9 (1st Cir. 1993). Furthermore, while § 1920(1) explicitly allows for reimbursement of service fees paid to a marshal only, the fees paid to licensed process servers are also regularly taxed in this Circuit under § 1920(1). See, e.g., Sys. Mgmt., Inc. v. Loiselle, 154 F. Supp. 2d 195, 210-11 (D. Mass. 2001); Legrice v. Harrington, No. 09-10132-RBC, 2010 WL 299, at *1 (D. Mass. July 26, 2010); see also Collins v. Gorman, 96 F.3d 1057, 1058-60 (7th Cir. 1996). Defendants proved time and again that their tactic was to delay and avoid, so Allied's use of a process server was more than reasonable, even for service of deposition-related subpoenas, see infra Part V.B. *17 Contrary to defendants' allegation, § 1920(3) does allow a court to tax costs associated with witness fees. See also 28 U.S.C. § 1821(a)-(b) (“A witness shall be paid an attendance fee of $30 per day ... [plus] the attendance fee for the time necessarily occupied in going to and returning from the place of attendance at the beginning and end of such attendance.... “). When deciding whether to award a witness fee, a major factor is whether the testimony of the witness was “relevant and material to an issue in the case and reasonably necessary to its deposition.” Fed. Savs. & Loan Ins. Corp v. Szarabajka, 330 F. Supp. 1202, 1209 (D.C. Ill. 1971); see, e.g., Castro v. U.S., 104 F.R.D. 545, 549-52 (D.P.R. 1985). In this case, Ruscitti's testimony during the damages hearing was extremely relevant, as illustrated above by my reliance on it.[12] Therefore, I award Allied the following costs to be paid jointly and severally by Belli and Regency: Payee Date Type of Cost Amount Requested Amount Awarded Court 8/27/2007 Filing Fee for Complaint $350.00 $350.00 Beacon Hill Research 11/29/2007 Attempted service of summons and complaint on Belli, Milford, 11/15/2007 $170.20 $170.20 Beacon Hill Research 11/29/2007 Attempted service of summons and complaint on Peter Belli, 11/15/2007 $40.00 $013 Beacon Hill Research 11/30/2007 Attempted service of summons and complaint on Regency, 11/19/07 $40.00 $014 Beacon Hill Research 11/30/2007 Service of summons and complaint on Regency, 11/19/07 $165.00 $165.00 Beacon Hill Research 1/15/2007 Service of summons and order of attachment on Milford National Bank, 12/19/2007 $165.00 $165.00 Beacon Hill Research 1/15/2007 Service of summons and order of attachment on Milford National Bank, 12/20/2007 $165.00 $015 Worcester County Sheriff's Office 11/14/2008 Subpoena fee, deposition subpoena for John Rife $142.46 $142.46 Metrowest Constable & Process Service 11/14/2008 Service of process, deposition subpoenas on John Rife $135.40 $135.40 Beacon Hill Research 12/18/2008 Service of deposition subpoena on Nicholas Ruscitti, 11/28/2008 $125.00 $125.00 Beacon Hill Research 12/18/2008 Service of deposition subpoena on Nicholas Ruscitti, 11/26/2008 $125.00 $016 Beacon Hill Research 12/18/2008 Service of document production subpoena on Milford Bank, 11/26/2008 $125.00 $125.00 Nicholas Ruscitti 9/14/2010 Witness fee for Nicholas Ruscitti re: damages hearing subpoena, 9/15/10 hearing $86.20 $86.20 Nicholas Ruscitti 11/5/2010 Witness fee for Nicholas Ruscitti re: damages hearing subpoena, 11/23/10 hearing $86.20 $86.20 Nicholas Ruscitti 11/24/2010 Witness fee for Nicholas Ruscitti re: damages hearing subpoena, 12/7/10 hearing $86.20 $86.20 TOTAL $2,066.66 $1,636.66 B. Depositions, § 1920(2) The governing rule and statue do not explicitly indicate that deposition-related expenses are taxable as costs. Nevertheless, courts have generally found that the costs of taking and transcribing depositions fall within the ambit of 28 U.S.C. § 1920(2). See Templeman v. Chris Craft Corp., 770 F.2d 245, 249 (1st Cir. 1985). Specifically, the First Circuit has held that “if depositions are either introduced in evidence or used at trial, their costs should be taxable to the losing party,” and even when the depositions are not put in evidence or used at trial, it is “within the discretion of the district court to tax deposition costs if special circumstances warrant.” Id. Allied seeks costs relating to the depositions of Belli, Ruscitti, Alan A. Kalell (“Kalell”), Rife, and Jimmy Carl Hodge (“Hodge”). Defendant contests all deposition costs on the grounds that this discovery was unreasonable and unnecessary. They however do not challenge the amount of any specific expenditures. *18 During the damages hearing, the depositions of Belli (exhibits #P-28, P-33) and Ruscitti (exhibit #P-12) were both entered into evidence. Even if they had not been, the information the parties, and eventually the Court, learned from these deposition was material to the issue of damages and, undoubtedly, would have been relevant had the case proceeded on the merits. While I was able to award damages relating to the issue of Rife's “bonus” payments based on the complaint and a salary ledger, the fact that these payments were even at issue proves the reasonableness of his deposition. The Hodge deposition was critical since he was the President and Chief Executive Officer of Allied. In fact, on September 30, 2008, Belli and Regency filed a counterclaim against Allied and Jim Hodge. In its complaint against Hodge, Belli implicated him in development of the financial arrangement between Allied and Belli. See Defs.' Verified Counterclaim (document #72). Had defendants not derailed this litigation, Hodge would have become a key witness. However, with regards to Kalell—whose relationship with Allied, Belli, and Regency plaintiff fails to illuminate—Allied has offered no explanation for why he was relevant, except to note that he was one of thirteen possible witnesses that defendants listed prior to the damages hearing. Without providing more, Allied is not entitled to be reimbursed for Kalell's deposition. Therefore, I award Allied the following costs to be paid jointly and severally by Belli and Regency: Payee Date Type of Cost Amount Requested Amount Awarded G&M Court Reporters 8/26/2008 Transcript of deposition of Peter Belli, 8/6/2008 $487.50 $487.50 Jones Reporting 11/30/2008 Late cancellation fee charged due to late cancellation of deposition by Belli, 11/20/2008 $150.00 $150.00 Jones Reporting 11/30/2008 Transcript of deposition of Nicholas Ruscitti, 11/25/2008 $705.00 $705.00 Jones Reporting 12/31/2008 Transcript of deposition of Peter Belli, 12/11/2008 $1,444.08 $1,444.08 Flynn Reporting Associated 12/31/2008 Copy of transcript of deposition of Alan A Kalell, 11/13/2008 $691.00 $0 Jones Reporting 12/31/2008 Transcript of deposition of Peter Belli, 12/16/2008 $747.00 $747.00 Jones Reporting 12/31/2008 Transcript of deposition of John E. Rife, 12/22/2008 $250.00 $250.00 Jones Reporting 1/29/2009 Transcript of deposition of Peter Belli, 1/12/2009 $624.50 $624.50 Jones Reporting 2/13/2009 Transcript of deposition of Peter Belli, 1/22/2009 $895.50 $895.50 Jones Reporting 3/12/2009 Transcript of deposition of Peter Belli, 2/26/2009 $663.00 $663.00 G&M Court Reporters 3/26/2009 Copy of transcript of deposition of Jimmy Carl Hodge, 3/3/2009 $812.00 $812.00 G&M Court Reporters 3/26/2009 Copy of transcript of deposition of Jimmy Carl Hodge $251.00 $251.00 Jones Reporting 3/31/2009 Transcript of deposition of Peter Belli, 3/24/2009 $477.50 $477.50 TOTAL $8,198.08 $7,507.08 C. Hearing Transcripts, § 1920(2) Pursuant to 28 U.S.C. § 1920(2), which allows the prevailing party costs for the “fees of the court reports for all or any part of the stenographic transcript necessarily obtained for the use in the case,” Allied asks to be reimbursed the fees it paid to the court reporter for transcripts of the preliminary injunction hearing and the complete damages hearing transcript. Defendants retort that Allied offered “no present reason” for these transcripts. Defendants could not be more wrong. Both plaintiff and I relied heavily on these documents, as reflected in the copious citations to the transcripts that appear in Allied's briefing and this decision. Defendants' pleadings, in fact, could have benefitted from additional reliance on these transcripts. Therefore, I award Allied the following costs to be paid jointly and severally by Belli and Regency: *19 Payee Date Type of Cost Amount Requested Amount Awarded Valerie A O'Hara 9/30/07 Preliminary injunction hearing transcript, 9/4/2007 $115.50 $115.50 Valerie A O'Hara 9/30/10 Damages hearing transcript, 9/15/2010 $271.60 $271.60 Valerie A O'Hara 10/28/10 Damages hearing transcript, 10/12/2010 $382.50 $382.50 Valerie A O'Hara 12/27/10 Damages hearing transcript, 11/23/10 & 12/7/2010 $658.00 $658.00 TOTAL $1,427.60 $1,427.60 D. Copy Costs, § 1920(4) Under 28 U.S.C. § 1920(4), photocopying expenses can be recovered so long as they are reasonably necessary for the case. See, e.g., Martinez v. Cui, No. 06-40029-FDS, 2009 WL 3298080, at *3 (D. Mass. Apr. 13, 2009) (quoting Bowling v. Hasbro, Inc., 582 F. Supp. 2d 192, 210 (D.R.I. 2008)) (noting that a page-by-page justification is not required); Billings v. Cape Cod Child Dev. Program, Inc., 270 F. Supp. 2d 175, 178 n.3 (D. Mass. 2003). However, copies made for the convenience of the attorneys are not taxable costs. Billings, 270 F. Supp. 2d at 178 n.3. Allied seeks reimbursement for the costs it incurred when using an outside company but plaintiff is not asking to recover amounts it paid for internal copying. Allied claims this outside service was necessary on five distinct occasions in order to 1) move for summary judgment in February 2008, 2) respond to the “voluminous” discovery Belli produced around August 2008; and 3) and prepare for the deposition hearings. Pl.'s Mem of Law in Supp. of Mot. for Costs 5 (document #317). Defendants claim that Allied is not entitled to any of these costs because Allied failed to say exactly what was copied and the photocopying rate of the outside companies. While plaintiff did not indicate the rate, Allied did include a description of the documents copied and the company that made the copy. Moreover, I relied upon each of the documents copied, reflecting their necessity to this case. That said, Allied has indicated that several of the copies were made for “internal” or “client” use, and I will not reimburse Allied for copies made for its convenience. Therefore, I award Allied the following costs to be paid jointly and severally by Belli and Regency: Payee Date Type of Cost Amount Requested Amount Awarded WarRoom Document Solutions, Inc. 2/28/08 Copies of Peter Belli's opposition to motion for partial summary judgment for client and internal use, 2/19/2008 $57.58 $0 WarRoom Document Solutions, Inc. 8/31/08 Copies of Peter Belli's responses to discovery requests and documents produced for client and internal use, 8/28/08 $144.82 $0 WarRoom Document Solutions, Inc. 11/24/08 Copies of manuscripts of depositions transcripts for client and internal use, 11/19/2008 $140.91 $0 WarRoom Document Solutions, Inc. 11/29/10 Copies of exhibits and assembly of books for damages hearing produced to counsel and Court, 11/17/2010 $216.24 $216.24 WarRoom Document Solutions, Inc. 11/29/10 Copies of exhibits and assembly of books for damages hearing produced to counsel and Court, 11/18/2010 $140.91 $140.91 TOTAL $700.46 $357.15 E. Total *20 In total, Allied requests $12,322.80 in costs, and I AWARD them $10,928.49. VI. CONCLUSION For the foregoing reasons, I: • DENY defendants' Motion to Set Aside and Vacate Default Judgment (document #240); • GRANT IN PART AND DENY IN PART plaintiff's Motion for Order to Assess Damages (document #276); • DENY plaintiff's Motion for Declaratory Judgment (document #290); and • GRANT IN PART AND DENY IN PART plaintiff's Motion for Bill of Costs (document #315). Specifically, I AWARD Allied the following damages: One Million, Four Hundred Fifty-Nine Thousand, Five Hundred Twenty-Three And 74/100 ($1,459,523.74) Dollars, plus pre-judgment interest against Belli and Regency, jointly and severally; Nine Hundred Thirty-Seven Thousand, One Hundred Thirty-Four And 00/100 ($937,134.00) Dollars, plus pre-judgment interest against Belli; and Two Hundred Eighty-One, Five Hundred And 00/100 ($281,500.00) Dollars against Regency. In addition, I AWARD Allied Ten Thousand, Nine Hundred Twenty-Eight And 49/100 ($10,928.49) Dollars in costs. Plaintiffs are to provide a form of the judgment by Tuesday, March 8, 2011. SO ORDERED. Footnotes [1] Allied incurred these fees and cost in its attempts to secure Belli's compliance with a variety of the Court's orders, including but not limited to those concerning the password. See infra. [2] This amount takes into account that the $14,470 in sanctions already paid was jointly and severally assigned to both Regency and Belli. [3] This is really the Second Amended Complaint. [4] It should be noted that the only evidence that defendants offered to the contrary was Belli's testimony that either all or none of the servers present at the data center were his, a defense on the merits which, as noted above, was too little, too late. SeeDamages Hr'g Tr. vol. 3, 72:3-17 (document #308). At the default stage, I must accept all of the allegations in Allied's complaint as true, which means I must accept that Allied owns the sixteen servers and other networking devices that were housed in the Marlborough data center at the time Allied filed its complaint. See Compl. ¶ 4. [5] The only evidence that defendants offered to the contrary was Belli's testimony, during which he claimed that the money that Allied used to pay for the rent was not in fact Allied's money. Damages Hr'g Tr. vol. 3, 77:10-82:1. Specifically, when asked whether he had evidence to indicate that Allied had not paid $67,723.42 in rent for the data center, the following colloquy occurred: BELLI: [T]he preliminary injunction was after I was already terminated, so the payments at that time were to pay for three offices, which was [sic] my former office in Missouri, my former office in West Virginia and my former office in Rhode Island. Those branch managers bore the expense, Allied wrote the check, but they were the bookkeeper for those offices, so it was those branch managers. The money for the data center came out of their pocket, not Allied's pocket. THE COURT: You have personal knowledge of this even though you had left the company? BELLI: Sure, they're all good friends of mine. One is my brother that ran one office, so obviously I have— THE COURT: Right. That doesn't count as personal information. BELLI: I have the records. I don't have [them today.] Id. at 78:24-79:16. I find Belli's allegations to be not credible. First, he had no personal knowledge of the financial arrangement he claimed existed between Allied and certain branch managers after he was fired. Second, his statements relate to offices in Missouri, West Virginia, and Rhode Island, not the Marlborough data center. Finally, he offered no supporting documentation. In contrast, Allied submitted cancelled checks and ledgers indicating that Allied paid the rent. [6] For the same reason that I held Regency jointly and severally liable for some of the monetary sanctions ordered against Belli, I think that Regency could be held jointly and severally liable the damages awarded against Belli. However, Allied has sought only two categories of damages against Regency: rent payments, see infra Part IV.E-.F, and overhead payments, see infraPart IV.H.2. In both these situations, the money at issue was paid directly to Regency. Following plaintiff's request, I am limiting Regency's joint and several liability to those few categories. [7] Allied created some confusion in its initial Memorandum in Support of Motion for Order to Assess Damages (document #235) by suggestion that the property and equipment at issue did not include the computers referenced in ¶ 29 of the complaint. This seemed problematic because the complaint said that the value of” two computer servers formerly located in the Milford branch office and other equipment ... is over $75,000.” Compl. ¶ 29 However, Allied later clarified that it was including the computers in this conversation claim. [8] It is unclear why Allied does not ask that Belli be held jointly and severally liable for the rent paid between April 23, 2004, and November 7, 2004. [9] Allied's damages pursuant to its breach of duty of loyalty claim are the amount Allied lost as a result of Belli's breach. Allied's damages pursuant to the misrepresentation causes of action are measured by the cost Allied incurred as a result of its reliance upon Belli's misrepresentations. Although articulated slightly differently, the damages under all three theories are valued at the amount that Allied paid to Ruscitti in salary. [10] Rather than contest the amount paid to Ruscitti, Belli solicited testimony from Ruscitti that suggested that Ruscitti spent some proportion of this time working for Allied. See, e.g., Damages Hr'g Tr. vol. 3, 32:7-35:9, 57:15-58:9. However, given the nature of this proceeding, whether or not Ruscitti was in fact compensated in part for work he did on behalf of Allied is irrelevant. In the post-default judgment proceed, I must accept, based on plaintiff's complaint, that any salary payments made to Ruscitti were fraudulently induced and compensated for work that Ruscitti did not perform for Allied. As I have said over and over again, if Belli wanted to dispute this claim on the merits, he had every chance to do so. [11] Belli offers two failing counter arguments. First, he claims that “pursuant to Plaintiff's exhibit #P-7, the Lease Agreement dated 1/21/2003, by and between Afonso-Gillon Court, Inc. and Belli, Allied was not a tenant and therefore not entitled to rental payments from a subtenant until January of 2006.” Defs.' Post-Hr'g Br. Opp'n Pl.'s Appl. Damages 16 (document #311). However, the lease dated 1/21/2003 (though scheduled to commence on 1/1/03) was for the third floor, not the fourth floor. 1/21/2003 Lease 1 (exhibit #P-7). Belli's lease for the fourth floor began on April 1, 2000, was signed on April 6, 2000, and ran for three years. 4/6/2000 Lease 2, 23 (exhibit #P-7). Second, Belli again asserts that the money Allied paid as rent for the fourth floor was in fact his money. However, as explained above, Belli submitted no documentation to prove that the funds used to pay for the checks that Allied issued were his, whereas Allied offered ledgers indicating that it had paid the money. Again, if Belli wanted the opportunity to establish the intricacies of his financial relationship with Allied, then he should have engaged in the adjudicative process on the merits. At this stage, I accept that rent Allied paid was from its own funds. [12] Notwithstanding defendants' assertion to the contrary, Ruscitti was not a party. See, e.g., Hodge v. Seiler, 558 F.2d 284, 287 (5th Cir. 1977). 13 Plaintiff offered no explanation for this cost, which seems duplicative. 14 Plaintiff offered no explanation for this cost, which seems duplicative. 15 Plaintiff offered no explanation for this cost, which seems duplicative. 16 Plaintiff offered no explanation for this cost, which seems duplicative.