Beckworth v. Bizier
| Decision Date | 29 September 2015 |
| Docket Number | Civ. No. 3:13CV1593 (AWT) |
| Court | U.S. District Court — District of Connecticut |
| Parties | Glenn Beckworth, individually and derivatively on behalf of Discount Trophy & Co., Inc., Willis Beckworth, individually and derivatively on behalf of Discount Trophy & Co., Inc., Vicky Juneau, individually and derivatively on behalf of Discount Trophy & Co., Inc., Glenn Beckworth, individually and derivatively on behalf of Marco Plastic Industries, Inc., Plaintiffs, v. Marcel O. Bizier and Barbara King Bizier, Defendants, and Discount Trophy & Co., Inc. and Marco Plastic Industries, Inc., Nominal Defendants. |
Carol L. Austin, J. Jerome Miller, Miller Walker & Austin, Charlotte, NC, Matthew C. Mason, Gregory & Adams, Wilton, CT, for Plaintiffs.
Erick M. Sandler, Ernest J. Mattei, Meredith A. Long, Day Pitney LLP, Hartford, CT, for Defendants.
RULING ON MOTION TO AMEND
Plaintiffs Glenn Beckworth, Willis Beckworth, and Vicky Juneau, individually and derivatively on behalf of Discount Trophy & Co., Inc. ("DTC"), and Glenn Beckworth, individually and derivatively on behalf of Marco Plastic Industries, Inc. ("MPI"), have moved for leave to file an amended complaint pursuant to Fed. R. Civ. P. 15(a)(2)
. For the reasons set forth below, the plaintiffs' motion is being granted in part and denied in part. The plaintiffs are being allowed to amend their complaint only with respect to their request to inspect and copy books and records.
The plaintiffs allege the following circumstances. From 1988 to 2008, Glenn Beckworth managed and operated Plastic Plus Awards ("Plastic Plus"), a company "engaged in the wholesale trophy/awards component business with [its] primary customers being retail trophy/awards stores throughout the continental United States." (First Amended Complaint (Doc. No. 45-3) ("Proposed Complaint") ¶ 22.) Plastic Plus was a Louisiana general partnership composed of Glenn Beckworth, Willis Beckworth and Vicky Juneau.
In or about 1998, Glenn Beckworth became acquainted with Marcel Bizier, the sole shareholder, president and Chief Executive Officer of Discount Trophy & Co., Inc., a Connecticut corporation in the same line of business as Plastic Plus. Prior to November 20, 2008 the four children of Marcel Bizier and his wife Barbara King Bizier were the sole shareholders of Marco Plastic Industries, Inc. ("MPI"), a Connecticut corporation that "acts as a conduit in ordering trophy/awards parts and components from Chinese vendors and reselling them to [DTC] at a 5% markup." (Proposed Complaint ¶ 24).
For 12 to 18 months prior to November 20, 2008, Marcel Bizier and Glenn Beckworth had discussed merging Plastic Plus and Discount Trophy & Co., Inc. "with a view to Glenn and Marcel jointly operating the [combined businesses] for three years ...." (Proposed Complaint ¶ 26.) After the three year period, Glenn Beckworth would "purchas[e] the shares of Marcel [Bizier] and assum[e] management and control of the combined businesses and Marcel [Bizier would] retir[e]." (Proposed Complaint ¶ 26.)
By agreement dated November 20, 2008, DTC and Plastic Plus agreed to merge and operate under the name Discount Trophy & Co., Inc. Under a Shareholder Agreement having the same date, Marcel Bizier owns 75% of DTC, Glenn Beckworth, Willis Beckworth and Vicky Juneau collectively own 25% of DTC, and Glenn Beckworth owns 20% of MPI. The Shareholder Agreement provided that Marcel Bizier would be the President and Chief Executive Officer of DTC, Glenn Beckworth would be the Vice-President and Chief Operating Officer, and DTC's Board of Directors would be composed of Marcel Bizier, Glenn Beckworth and Barbara King Bizier. In connection with the merger, an employment agreement was executed between DTC and Marcel Bizier.
The plaintiffs allege that Marcel Bizier and Barbara King Bizier engaged in certain conduct after the merger that was in violation of the various merger-related agreements and was detrimental to DTC, MPI, their shareholders, and the plaintiffs. Specifically, the plaintiffs allege that Marcel Bizier unilaterally increased his salary in violation of the Shareholder Agreement and Marcel Bizier's employment agreement; Marcel Bizier withheld access to the books and accounting records of DTC and MPI; DTC acquired the issued and outstanding shares of Barhill Manufacturing, Inc. ("Barhill"), a Pennsylvania corporation owned by Barbara King Bizier; and Marcel Bizier caused MPI to distribute a sum of $2,076,828.00 to his children instead of distributing a pro-rated amount to all shareholders.
The Complaint (Doc. No. 1) contained derivative claims and individual claims, and one of the individual claims was a request for an order to inspect and copy the books and records of DTC.1
The court granted the defendants' motion to dismiss all claims in the Complaint. The court dismissed the derivative claims without prejudice for lack of standing because the plaintiffs failed to satisfy the fair and adequate representative requirements of Conn. Gen. Stat. §§ 33–721
and 52–572j and Fed. R. Civ. P. 23.1(a). The Ninth Cause of Action was dismissed without prejudice and with permission to file a motion for leave to amend the complaint.
The Proposed Complaint omits all individual claims except for a request to inspect and copy the books and records of DTC and MPI (Sixth Cause of Action). It also includes five derivative claims: breach of contract for excess compensation (First Cause of Action); breach of contract for unauthorized acquisition (Second Cause of Action); director conflict of interest in violation of Conn. Gen. Stat. § 33–781(1)(4)
and §§ 33–783(a) and (c) (Third Cause of Action); unlawful distribution in violation of Conn. Gen. Stat. §§ 33–687(a) and (b) as to MPI (Fourth Cause of Action); and breach of fiduciary duty (Fifth Cause of Action).
provides that, absent circumstances set forth in subsection (a)(1):
a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.
The Supreme Court has emphasized that amendment should normally be permitted:
Foman v. Davis , 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)
(internal citations omitted). "[I]t is rare that [leave to amend] should be denied, especially when there has been no prior amendment." Ricciuti v. N.Y.C. Transit Auth. , 941 F.2d 119, 123 (2d Cir.1991) (internal citations omitted.
"Where the amended portion of the complaint would fail to state a cause of action, however, the district court may deny the party's request to amend." Parker v. Columbia Pictures Indus. , 204 F.3d 326, 339 (2d Cir.2000)
. "An amendment to a pleading will be futile if a proposed claim could not withstand a motion to dismiss pursuant to Rule 12(b)(6)." Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals , 282 F.3d 83, 88 (2d Cir.2002). "A party opposing a motion for leave to amend has the burden of proving that such amendment is futile ...." Schaghticoke Tribal Nation v. Norton , No. 3:06CV81 PCD, 2007 WL 867987, at *11 (D.Conn. Mar. 19, 2007).
The defendants contend that the proposed amendment to the plaintiffs' individual claim for inspection and copies of the books and records of DTC and MPI (the Sixth Cause of Action) is futile because the plaintiffs fail to state a claim upon which relief can be granted.
In Connecticut, two subsections of Conn. Gen. Stat. § 33–948
authorize a court to order the inspection of corporate documents. Section 33–948(a) authorizes the inspection of corporate records that a shareholder has requested pursuant to Section 33–946(a) :
If a corporation does not allow a shareholder who complies with subsection (a) of section 33–946
to inspect and copy any records required by that subsection to be available for inspection, the superior court for the judicial district where the corporation's principal office or, if none in this state, its registered office is located may summarily order inspection and copying of the records demanded at the corporation's expense upon application of the shareholder.
(emphasis added). Section 33–946(a) provides a shareholder with the right to inspect the records enumerated in Section 33-945(e):
A shareholder of a corporation is entitled to inspect and copy, during regular business hours at the corporation's principal office, any of the records of the corporation described in subsection (e) of section 33-945 if he gives the corporation a signed written notice of his demand at least five business days before the date on which he wishes to inspect and copy.
(emphasis added). Section 33-945(e) describes the following corporate records:
(1) Its certificate of incorporation or restated certificate of incorporation, all amendments to them currently in effect and any notices to shareholders referred to in subsection (1) of section 33-608 regarding facts on which a document is dependent; (2) its bylaws or restated bylaws and all amendments to them currently in effect; (3) resolutions adopted by its board of directors creating one or more classes or series of shares and fixing their relative rights, preferences and...
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