Cavolick v. DeSimone

• Decision Date: 26 April 2005
• Docket Number: (AC 24532).
• Parties: JACK CAVOLICK v. P. GERALD DESIMONE ET AL.
• Court: Connecticut Court of Appeals

88 Conn. App. 638

870 A.2d 1147

JACK CAVOLICK v. P. GERALD DESIMONE ET AL.

(AC 24532).

Appellate Court of Connecticut.

Argued December 1, 2004.

Officially released April 26, 2005.

Schaller, DiPentima and Peters, Js.

Richard P. Weinstein, with whom was Nathan A. Schatz, for the appellant-appellee (plaintiff).

Frank H. Santoro, with whom, on the brief, were R. Cornelius Danaher, Jr., and Calum B. Anderson, for the appellees-appellants (defendants).

Opinion

SCHALLER, J.

The plaintiff, Jack Cavolick, appeals, and the defendants, P. Gerald DeSimone, Life Consultants, Inc., and Woodgate II Limited Partnership, cross appeal following a trial to the court arising out of a dispute involving a partnership agreement between the parties. The plaintiff claims that the court improperly (1) admitted certain evidence in violation of the hearsay rule and the disclosure requirements for expert witness testimony, (2) made certain factual findings and (3) sustained the defendants' objection to one of his discovery requests and granted the defendants' motion to quash a subpoena. The defendants cross appeal, claiming that they did not owe the plaintiff a fiduciary duty because the plaintiff, who was a limited partner, did not place any trust in the general partner before entering into the partnership agreement. We affirm the judgment of the trial court.

The following facts are relevant to our resolution of the issues on appeal. The plaintiff and DeSimone entered into a working relationship in 1982. The two obtained a contract to develop a condominium project in 1984. While the project was being developed, the two began planning another construction project for an apartment complex that was to be named Woodgate II and later became known as Countrywood at Enfield (Countrywood). The Connecticut Housing Finance Authority (housing authority) was scheduled to finance the project. Both the plaintiff and DeSimone participated in the loan negotiations with the housing authority.

On October 1, 1984, the housing authority committed to the financing for Countrywood and established a plan for the operation of the project. Shortly thereafter, on October 5, 1984, the plaintiff and DeSimone entered into the Woodgate II Limited Partnership Agreement. The plaintiff contributed approximately $100 to the partnership. DeSimone paid the housing authority a nonrefundable commitment fee of $102,000 and guaranteed letters of credit in the amounts of $1,049,000, $56,900, $496,282, and $244,800.

Despite the fact that the plaintiff contributed little financially to the partnership, he represented the partnership and the managing agent, Life Consultants, Inc., at the March 7, 1985 loan closing with the housing authority. The plaintiff executed several documents concerning the operation of Countrywood. The loan closing documents provided that the management and operation of the apartment complex was to be regulated and supervised by the housing authority. Among the documents reviewed, executed and agreed to by the plaintiff was a management agreement.

As a condition to obtaining financing from the housing authority, the partnership executed a covenant of compliance and a regulatory agreement dated March 6, 1985. Pursuant to the regulatory agreement, the partnership agreed that the housing authority would closely regulate and monitor the annual budget. Moreover, at the close of the fiscal year, the partnership was required to furnish the housing authority with a complete financial report prepared by and certified by a certified public accountant, which was to contain a detailed itemized statement of gross revenues, operating expenses, surplus cash and distributions for the following fiscal year. The agreement provided that the housing authority would have a significant amount of control over the management of the property and the compensation to those involved in the project, and would have the ability to review contracts.

The plaintiff commenced his action by a complaint dated April 30, 1999, seeking damages and a distribution of partnership funds. The plaintiff alleged that the defendants breached the terms of the partnership agreement and their fiduciary duties because they (1) failed to make distributions from surplus cash, (2) improperly charged the partnership refinancing fees, furniture and equipment rental fees and overhead costs on construction contracts, (3) improperly paid themselves management fees, (4) engaged in self dealing by providing improper payments to family members and other related parties, and (5) improperly provided Life Consultants, Inc., with office space and paid various costs related to other business practices of Life Consultants, Inc. The court determined that the financing fees and the furniture and equipment fees charged to the partnership were improper and awarded the plaintiff $194,923.57. The plaintiff filed a motion for articulation on September 13, 2003, which the court denied. This court granted review of that decision, but denied the relief requested on January 16, 2004. Additional facts will be set forth as necessary.

I

On appeal, the plaintiff contends that the court improperly admitted into evidence a capital needs assessment, defense exhibit 564,¹ under the business record exception to the hearsay rule. The plaintiff claims that because the assessment was not prepared by the partnership or the managing agent, the business record exception does not apply and, in the absence of an exception to the rule, should not have been admitted. In the alternative, the plaintiff contends that the assessment constituted an expert opinion, which was not properly disclosed and, therefore, should not have been admitted at trial. We disagree.

As a preliminary matter, we set forth the applicable standard of review. "The standard of review we apply to a trial court's evidentiary rulings is well settled. Such rulings are entitled to great deference. . . . The trial court is given broad latitude in ruling on the admissibility of evidence, and we will not disturb such a ruling unless it is shown that the ruling amounted to an abuse of discretion. . . . Even when a trial court's evidentiary ruling is deemed to be improper, we must determine whether that ruling was so harmful as to require a new trial. . . . In other words, an evidentiary ruling will result in a new trial only if the ruling was both wrong and harmful. . . . Finally, the standard in a civil case for determining whether an improper ruling was harmful is whether the . . . ruling [likely] would [have] affect[ed] the result." (Internal quotation marks omitted.) Madsen v. Gates, 85 Conn. App. 383, 399, 857 A.2d 412, cert. denied, 272 Conn. 902, 863 A.2d 695 (2004).

The following additional facts are relevant to the resolution of the plaintiff's claim. On January 15, 2003, during the fourth day of trial, the defendants called as a witness Michael O'Connell, the attorney who represented the partnership in its business matters. During direct examination, the defendants asked O'Connell about the process of modifying the mortgage with the housing authority. To illustrate that the negotiations required the partnership to make deposits into the reserve account and that a capital needs assessment had been done to determine the required amount for the reserve account, the defendants attempted to introduce the assessment into evidence. The plaintiff objected to the introduction of the assessment on the grounds that it was hearsay and that the document purported to be an expert report, which had not been properly disclosed. Although the court did not specify whether the document was hearsay or whether there was a problem of disclosure, it sustained the plaintiff's objection, stating that it would not allow the document into evidence through O'Connell.

Later that day, the defendants called Janice Alexander, who worked for the housing authority. The defendants asked Alexander about the housing authority's procedures for giving a final mortgage loan. Part of the process included obtaining a capital needs study. The defendants then attempted to show her the assessment. The plaintiff objected on the same grounds on which he previously had objected. The court ruled that the assessment would be admitted under the business record exception because the housing authority "typically rel[ies] on this type of report in deciding whether to loan money . . . ." The court explained that in order to fit within the business record exception, the report did not have to be made by the business or organization because "as long as the organization preparing the report has a business duty to report to the person whose business record is at issue, it can be admissible as a business record." We agree.

General Statutes § 52-180,² which outlines the requirements of the business record exception, "should be liberally construed. . . . Appellate review of the admission of a document under § 52-180 is limited to determining whether the trial court abused its discretion." (Citations omitted.) River Dock & Pile, Inc. v. O & G Industries, Inc., 219 Conn. 787, 795, 595 A.2d 839 (1991); see also Conn. Code Evid. § 8-4. The court determined that despite the fact that the report was not prepared by the housing authority, the report was made in the regular course of business, and the organization that conducted the assessment had a duty to prepare the report. See River Dock & Pile, Inc. v. O & G Industries, Inc., supra, 795. The court did not abuse its discretion and properly admitted the assessment under the business record exception.

In response to the plaintiff's objection that the assessment constituted an expert opinion that was not disclosed, the court, referring to River Dock & Pile, Inc. v. O & G Industries, Inc., supra, 219 Conn. 794-95, ruled that the exhibit "lies somewhere between the continuum of fact and opinion, and it was prepared in the ordinary course at the request of [the housing authority]...