Bongiorno v. Capone

• Decision Date: 02 October 2018
• Docket Number: AC 40205
• Citation: 196 A.3d 1212,185 Conn.App. 176
• Court: Connecticut Court of Appeals
• Parties: Frank BONGIORNO v. Joseph CAPONE

185 Conn.App. 176

196 A.3d 1212

Frank BONGIORNO

v.Joseph CAPONE

AC 40205

Appellate Court of Connecticut.

Argued May 22, 2018

Officially released October 2, 2018

Richard J. Rapice, with whom, on the brief, were Peter V. Lathouris, Stamford, and Michael P. Longo, Jr., for the appellant (defendant).

Mark F. Katz, for the appellee (plaintiff).

Sheldon, Elgo and Flynn, Js.

SHELDON, J.

The defendant, Joseph Capone, appeals from the judgment of the trial court, rendered in accordance with the second revised finding of facts and report of an attorney trial referee (referee) to whom this case was referred for trial, awarding the plaintiff, Frank Bongiorno: compensatory damages of $17,000 on the plaintiff's claim of breach of contract, plus statutory prejudgment interest on that sum, under General Statutes § 37-3a, at the rate of 10 percent per annum; and treble damages of $51,000 on the plaintiff's claim of statutory theft under General Statutes § 52-564, less $17,000 to avoid duplication of the damages awarded for breach of contract.¹ The defendant claims that the court improperly:

(1) concluded that the plaintiff had standing in his individual capacity to pursue claims of breach of contract and statutory theft against the defendant based upon his withdrawal of $17,000 from the checking account of AAA Advantage Carting & Demolition Service, LLC (company), a limited liability company in which the defendant had a 50 percent membership interest that he had agreed to sell to the plaintiff for $200,000 on the basis of a binding term sheet that did not authorize the challenged withdrawal; (2) rendered judgment in favor of the plaintiff on the merits of his breach of contract claim without making legal conclusions as to the applicability of the waiver-of-suit provisions in the contractual documents to that claim; and (3) rendered judgment in favor of the plaintiff on the merits of his statutory theft claim.²

We agree with the defendant that the plaintiff lacked standing, in his individual capacity, to bring an action against him in this case to recover damages for losses he allegedly caused to the company. On that basis, we conclude that both the plaintiff's statutory theft claim and that portion of his breach of contract claim, in which he sought compensatory damages for diminishing the value of his own preexisting 50 percent interest in the company, rather than the other 50 percent interest in the company that he agreed to purchase under the contract, must be dismissed for lack of subject matter jurisdiction. To the extent, however, that the plaintiff sought damages from the defendant for losses he personally suffered due to the defendant's withdrawal of $17,000 from the company's account based on the resulting diminution in value of the 50 percent interest in the company that the defendant had agreed to sell him in exchange for his payment of $200,000, we find that the plaintiff had standing to prosecute that claim. Even so, although the defendant admittedly failed to raise before the trial court, and thus to preserve for appellate review, his only present challenge to the merits of that judgment, we further conclude that the amount of that judgment on the plaintiff's breach of contract claim must be reduced, in light of our jurisdictional ruling, to reflect the true extent of the proven diminution in value of the company resulting from the defendant's $17,000 withdrawal from it that he had standing, in his individual capacity, to recover as damages in this case. Because the proven diminution of the company's aggregate value that resulted from the defendant's withdrawal was $17,000, the resulting diminution in value of the 50 percent interest in the company that he received from the defendant in consideration for his payment was only one half of that amount, or $8500. We, thus, reverse the court's judgment for the plaintiff on his breach of contract claim, as to damages only, and remand this case with direction to render judgment for the plaintiff on that claim in the modified amount of $8500, plus prejudgment statutory interest on that sum, of 10 percent per annum, from the date on which the defendant's transfer of interest to the plaintiff became final until the date of judgment.

The following facts and procedural history are relevant to our review. The plaintiff and the defendant are brothers-in-law. For many years, both owned 50 percent interests in the company. In 2012, however, they decided to end their business relationship. To that end, the plaintiff and the defendant signed two documents by which they agreed that the defendant would convey his 50 percent interest in the company to the plaintiff for the sum of $200,000. The parties first signed a "binding term sheet" on August 28, 2012, which provided that the plaintiff would purchase the defendant's interest in the company for $200,000, and that their agreement to make purchase and sale became enforceable on that date. Pursuant to the term sheet, the parties agreed to execute a "settlement agreement" no later than September 7, 2012, at which time the plaintiff would pay the defendant the agreed upon purchase price, and the defendant would convey his 50 percent interest in the company to the plaintiff. Although the term sheet did not specifically define what was to be included in the company's assets as of that date, August 28, 2012, it did specify that the defendant's attorneys were to send to the plaintiff's attorneys a list of all of the defendant's personal property then located in the company offices, that the defendant must remove such property by September 1, 2012, and that the defendant must remove all confidential or trade secret information of the company from his personal files.³ The term sheet did not include a reference to any checking account belonging to the company.

On September 7, 2012, the parties executed a settlement agreement, which expressly incorporated the term sheet and its provisions. The settlement agreement provided that, upon its execution, the plaintiff would purchase from the defendant, and the defendant would sell to the plaintiff, the defendant's 50 percent interest in the company for the purchase price of $200,000,⁴ and that upon the delivery of the purchase price to the defendant, he would execute and deliver to the plaintiff an assignment of his membership interest, irrevocably transferring his 50 percent interest in the company to the plaintiff. The settlement agreement further provided that the defendant would deliver certain specific property to the plaintiff at the time of transfer, or as soon as possible thereafter.⁵ The settlement agreement provided that, immediately following the transfer of his membership interest, the defendant would have no ownership or any other interest in the company and no authority to act on the company's behalf, and that he would be deemed to have resigned from any and all positions within the company. The settlement agreement also included provisions as to mutual special releases and remedies. The parties released each other from any and all actions against each other relating to the company, except with respect to any breach of the settlement agreement or the term sheet.⁶ The parties agreed that, should a party breach the settlement agreement or the term sheet, the nonbreaching party would not be prohibited from pursuing or being entitled to available redress, including the recovery of damages.⁷

On August 29, 2012, the day after the binding term sheet was signed, the defendant withdrew $17,000 from a checking account owned by the company. On September 7, 2012, the parties executed the settlement agreement, and the defendant signed an assignment of membership interest, conveying all of his rights, title and interest in his 50 percent membership interest in the company to the plaintiff in exchange for the purchase price of $200,000.

The plaintiff commenced this action against the defendant by causing him to be served with a writ, summons and complaint on September 28, 2012. On December 10, 2012, in response to the defendant's request to revise, the plaintiff filed a revised complaint, which thereby became the operative complaint in this action. The operative complaint initially included the following claims: (1) breach of contract; (2) violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq. ; (3) conversion; (4) statutory theft in violation of § 52-564 ; and (5) breach of contract as to Diaz Boncap, LLC.⁸ The plaintiff later withdrew his claim under CUTPA and his breach of contract claim as to Diaz Boncap, LLC.

In his first count, pleading breach of contract, the plaintiff alleged that all assets of the company, except for items of the defendant's personal property that were referenced in the term sheet, were to have remained the assets and property of the company when the defendant conveyed his 50 percent interest in the company to the plaintiff pursuant to the settlement agreement. He therefore claimed that the defendant had breached the provisions of the term sheet by withdrawing $17,000 from the company checking account on August 29, 2012. The defendant subsequently filed an answer in which he denied all material allegations of the operative complaint and asserted seven special defenses, including that the plaintiff had suffered no actual damages as a result of the defendant's challenged $17,000 withdrawal. The plaintiff denied all of the defendant's special defenses.

The matter was ultimately referred for trial to a referee, who conducted the trial on June 24, 2015. The documentary evidence presented at trial included: the binding term sheet, the settlement agreement, a copy of the withdrawal slip for the $17,000, a list of personal items to be removed from the company by the defendant, a Sprint phone bill, a Sprint account history, and a spreadsheet of financial distributions from the company to the plaintiff and the defendant. The plaintiff and the...