Clinton v. Aspinwall

• Court: Connecticut Supreme Court
• Writing for the Court: DANNEHY, J.
• Citation: 338 A.3d 1103,352 Conn. 597
• Docket Number: SC 21072
• Decision Date: 29 July 2025
• Parties: John B. CLINTON v. Michael E. ASPINWALL et al.
• topic: Contracts,Corporate / Commercial

338 A.3d 1103

352 Conn. 597

John B. CLINTON

v.Michael E. ASPINWALL et al.

(SC 21072)

Supreme Court of Connecticut.

Argued February 5, 2025

Officially Released July 29, 2025

Garrett S. Flynn, West Hartford, with whom was Barbara M. Schellenberg, for the appellants (defendants).

Howard Fetner, New Haven, with whom was Glenn W. Dowd, Hartford, for the appellee (plaintiff).

McDonald, D’Auria, Ecker, Alexander and Dannehy, Js.

DANNEHY, J.

₆₀₀This corporate governance dispute involving CCP Equity Partners, LLC (CCP), a Delaware limited liability company, requires us to determine whether the trial court properly interpreted certain provisions of the company’s operating agreement in accordance with Delaware law. The defendants, Michael E. Aspinwall, Steven F. Piaker, and David W. Young,¹ ₆₀₁appeal from the judgment of the trial court, rendered after a jury trial, in favor of the plaintiff, John B. Clinton, on the plaintiffs breach of contract claim. The defendants’ principal claim on appeal is that the trial court committed reversible error by improperly interpreting an exculpatory clause in CCP’s operating agreement as imposing affirmative duties on the defendants and instructing the jury in accordance with that flawed interpretation. They also claim that the trial court abused its discretion by permitting the plaintiffs expert, Kenneth Pia, to testify about CCP’s capital reserve. We agree with the defendants on their first claim but disagree with them on their second claim. Because the error on their first claim was not harmless, we reverse the judgment of the trial court and remand the case for a new trial.²

I

Beginning in 1992, the plaintiff led a private equity group at Conning Capital Partners (Conning). Piaker joined Conning in 1995, followed by Young and Aspinwall sometime in 2001 or 2002. Soon after Young and Aspinwall joined Conning, Conning’s owner decided that it no longer wished to be in the private equity business.

The plaintiff, with the help of others, negotiated₆₀₂ a deal with Conning’s owner to take over two investment funds that had been previously raised. To effectuate the spinoff of the two funds, the parties, in addition to two other individuals, Gerard Vecchio and Preston Kavanagh, created CCP.

On December 29, 2003, the plaintiff, the defendants, Vecchio, and Kavanagh entered into an Amended and Restated Limited Liability Company Agreement for the operation of CCP (agreement). These individuals were the initial “members” of CCP (i.e., the owners of the company) under the agreement. Each member was also a “Manager,” as that term is defined in the agreement, and served on the board of managers. The agreement, which the parties agreed would be governed by Delaware law,³ entrusted the board of managers, but not the members, with the management of CCP. The principal purpose of CCP was to provide management services to its investment funds.

In August, 2005, the board of managers established a $3 million capital reserve for the future expenses of CCP.⁴ The purpose of the capital reserve was to keep money within CCP in the event of an unforeseen circumstance or contingency that required the payout of CCP capital, such as a “Repurchase Event” (i.e., a member withdrew or was removed from the company) under § 10.3 of the agreement, pursuant to which CCP was required to repurchase the member’s interest in the company for a sum equal to his capital account, minus his pro rata share of the capital reserve.

₆₀₃In 2006, the members, who at that time included the parties and Kavanagh, amended § 8.1 of the agreement (2006 amendment). Before the 2006 amendment, § 8.1, titled “General Distributions,” provided: “Subject to applicable law and except as otherwise provided in Section 8.5, the Company shall make distributions to the Members at such times and in such aggregate amounts as may be determined by the Board of Managers, in its sole discretion. Each such distribution shall be made pro rata among the Members in proportion to their relative Capital Accounts as of the date of the applicable distribution.” The 2006 amendment changed the last sentence of § 8.1 to provide: “Each such distribution shall be made pro rata among the Members in proportion to their relative Capital Accounts as of the date of the applicable distribution, unless otherwise determined and agreed by all of the Members and subject to the remainder of this Section VIII.”⁵ (Emphasis in original.)

In 2008, the defendants, who at that time collectively held a 61 percent interest in CCP, made additional amendments to the agreement (2008 amendments) pursuant to § 2.5, which permitted amendments to the agreement when members holding 60 percent or more of the interest in CCP consented to them.⁶ The 2008 amendments changed, among other things, each member’s percentage interest and the method of allocating income to each member’s capital account. They also made it so that a member’s death or disability would not require CCP to repurchase his interest.

Five years later, the defendants voted to remove the plaintiff as a member of CCP pursuant to § 2.5 of the ₆₀₄agreement.⁷ See footnote 6 of this opinion. The plaintiff had served as managing partner of CCP from December, 2003, until March, 2008, and was a manager of CCP from its formation in 2003 until he was removed in 2013.

The plaintiff then brought the present action. The operative complaint alleged that the defendants breached their contractual duties under the agreement by making the 2008 amendments (amendment claim),⁸ voting to remove the plaintiff as a member of CCP (removal claim), and maintaining a capital reserve fund of $3 million when it was no longer needed (capital reserve claim).⁹ The plaintiff alleged that each of these actions was taken in violation of the duty of care provision set forth in § 3.4 of the agreement¹⁰ and that the 2008 amendments also violated § 8.1 of the agreement, as amended.¹¹

₆₀₅The defendants filed a motion to strike in December, 2014, and a motion for summary judgment in December, 2016, both of which were denied by the trial court. Prior to trial, the defendants also filed a motion in limine to preclude the plaintiff from introducing parol evidence to vary the meaning of the unambiguous contract language that they argued was contained in both §§ 3.4 and 8.1 of the agreement. Specifically, the defendants argued that the court was “obligated to perform an independent pretrial analysis” of those provisions to determine whether the provisions were clear and unambiguous. If they were unambiguous, the plaintiff would be precluded from introducing parol evidence or argument at trial to vary their terms. As to § 3.4 of the agreement, the defendants argued that the second sentence of that section is an exculpatory provision under Delaware law and did not create any duty or contractual obligation. The defendants requested that the court rule, as a matter of law, that the second sentence of § 3.4 cannot form a basis of a breach of contract claim. With respect to § 8.1 of the agreement, as amended, the defendants similarly argued that the provision was clear and unambiguous on its face and that, contrary to the plaintiff’s assertions, it did not preclude the defendants’ ability to amend the agreement in 2008, to remove the plaintiff in 2013, or to apply CCP’s $3 million capital reserve in calculating the amount CCP used to repurchase the plaintiffs interest. The defendants, therefore, moved to preclude the plaintiff from introducing any evidence or argument to suggest otherwise.

The trial court denied the defendants’ motion in limine. It concluded that “[t]he defendants’ arguments regarding §§ 3.4 and 8.1, as amended, of the … agreement at issue were previously the subject of other decisions in this case by other judges” and that “[t]he motion in limine, in essence, [sought] reargument as to certain ₆₀₆aspects of those decisions.”¹² The court stated that “§ 8.1 is relevant to the plaintiffs claims and § 3.4 [is] to be read together with other provisions of the agreement to ascertain meaning,” that it “decline[d] to categorically exclude the general subject matter alluded to in the defendants’ motion,” and that “[w]hat evidence is admitted at trial remains to be determined.”

The parties tried the case to a jury.¹³ The jury awarded the plaintiff $146,901 for breach of contract on the amendment claim, $672,208 for breach of contract on the removal claim, and $303,426 for breach of contract on the capital reserve claim.¹⁴ The trial court denied the defendants’ motions for judgment notwithstanding the verdict and to set aside the verdict and, after an evidentiary hearing, granted the plaintiffs motion for attorney’s fees and costs pursuant to the agreement, awarding the plaintiff $716,200 in attorney’s fees and $6118.75 in costs.

The defendants appealed to the Appellate Court, which affirmed in part and reversed in part the judgment of the trial court and remanded the case for a new hearing on the issue of attorney’s fees and costs. Clinton v. Aspinwall, 200 Conn. App. 205, 229, 238 A.3d 763 (2020), vacated, 344 Conn. 696, 281 A.3d 1174 (2022). The plaintiff and the defendants each filed with this court a petition for certification to appeal from the Appellate Court’s judgment, both of which were granted. ₆₀₇Clinton v. Aspinwall, 335 Conn. 980, 241 A.3d 703 (2020); Clinton v. Aspinwall, 335 Conn. 979, 241 A.3d 704 (2020). This court ultimately vacated the Appellate Court’s judgment on the basis that the court lacked subject matter jurisdiction over the defendants’ consolidated appeals because the defendants did not appeal from a final judgment. Clinton v. Aspinwall, 344 Conn. 696, 699, 281 A.3d 1174 (2022). On remand to the trial court, the plaintiff withdrew the claim that had been unadjudicated. See footnote 11 of this opinion. The plaintiff also filed a motion for interest and additional attorney’s fees, which the trial court granted in part.¹⁵ The defendants subsequently appealed...