Falcigno v. Falcigno
| Decision Date | 25 August 2020 |
| Docket Number | AC 42047 |
| Citation | 199 Conn.App. 663,238 A.3d 60 |
| Court | Connecticut Court of Appeals |
| Parties | David FALCIGNO v. Stephen FALCIGNO |
Chet L. Jackson, New Haven, for the appellant-cross appellee (plaintiff).
Barbara M. Schellenberg, Orange, with whom was Robert R. Lewis, for the appellee-cross appellant (defendant).
Lavine, Bright and Sheldon, Js.*
Following a trial to the court, the plaintiff, David Falcigno, appeals from the judgment of the trial court rendered in favor of the defendant, Stephen Falcigno, on his cause of action for breach of fiduciary duty. The defendant cross appeals from the judgment of the court, rendered in favor of the plaintiff, on the defendant's counterclaim for breach of the representations and warranties contained in an agreement signed by the plaintiff. In his appeal, the plaintiff claims that the court erred in finding that the defendant proved, by clear and convincing evidence, fair dealing and full disclosure as to the defendant's purchase of the plaintiff's minority shares of stock. In his cross appeal, the defendant claims that the court improperly failed to award him attorney's fees pursuant to the agreement that the plaintiff signed as part of the stock transaction. We affirm the judgment of the trial court.
The following facts, as found by the court, Hon. Thomas J. Corradino , judge trial referee, or as uncontested in the record, and the relevant procedural history assist in our review of the parties’ claims. The parties, who are brothers, and another brother, Richard Falcigno, together owned individual shares of stock, which totaled 100 percent of all the stock in a family business, Statewide Meats and Poultry, Inc. (Statewide). The defendant owned 60 percent of the shares, with each of his brothers owning 20 percent of the shares. Over the years, the defendant, who operated Statewide, allowed his brothers to get free gas and meat from the business, and, from approximately 2005 forward, the defendant paid each of his brothers a $14,000 yearly consulting fee, although there was no evidence that they rendered any services in exchange for those fees.1
The plaintiff was aware, since at least 2005, of the defendant's ultimate goal to sell Statewide. The brothers often were at odds with each other, and, in 2009, the plaintiff told the defendant that he wanted to sell his shares of Statewide to the defendant so that he could escape the turmoil and be brothers again with the defendant; he also needed money to build a house.2 The defendant told the plaintiff to contact Matthew Giglietti, the certified public accountant for Statewide, who also is a cousin of, and the personal accountant for, the parties and their brother, Richard, and to get whatever he needed from Giglietti.3 He encouraged the plaintiff to exercise due diligence with regard to the proposed stock sale and told the plaintiff that he could have access to anything he wanted for that purpose. The defendant acknowledged at trial that Giglietti had Statewide's balance sheets, ledgers, payroll records, and tax returns.
The plaintiff obtained and reviewed Statewide's tax returns, and he discussed selling his shares with Giglietti, telling him that he just wanted the fighting to end and that he thought selling his shares to the defendant might accomplish that end. Giglietti repeatedly advised the plaintiff not to sell his shares. Giglietti told the plaintiff that he estimated that Statewide was worth $2 million. The plaintiff was aware that Statewide had a certified Angus beef license (CAB license),4 and that it repeatedly won awards for being part of the "million pound club" for substantial sales of high quality beef. He also was aware of Statewide's customer base. The plaintiff had access to Statewide's balance sheet for 2008, and he had Statewide's tax returns going back several years before 2009, which indicated $17 million to $18 million in gross annual sales, which, the court found, "could only result from a strong customer base."
On September 9, 2009, the plaintiff and the defendant met at Luce Restaurant (Luce), along with the family's personal stock and bond broker, Fred Mueller, to discuss the terms of the sale. The plaintiff initially stated that he wanted $450,000 to $500,000 for his shares, and the defendant initially offered $100,000. The defendant explained to the plaintiff that because he was the majority shareholder and already controlled Statewide, he did not need the plaintiff's shares. After discussions, the parties ultimately agreed on a price of $200,000, and the defendant stated that he would revisit the compensation or cut the plaintiff back in if he later sold Statewide "for millions."5
The defendant asked Statewide's attorney, Mark Sklarz, to draft the necessary paperwork for the stock transfer.
Sklarz drafted documents, including, a certificate of purchase, a stock power form, a certificate of satisfaction, and an affidavit of lost certificate.6 Sklarz then provided the plaintiff with the certificate of purchase and the stock power form, so that he could sign the documents and have them notarized, which he did on October 9, 2009. On October 13, 2009, the plaintiff and the defendant met at Sklarz’ office to close the sale. In connection with the closing of the sale, the plaintiff executed the certificate of satisfaction. The certificate of purchase signed by the plaintiff indicated that the sale price of the shares was $200,000. After the parties finished their business with Sklarz, the defendant gave the plaintiff a paper bag containing $50,000 in cash.7 The court found that "there [was] not an iota of evidence [that] the defendant over the years, since he had made it his goal to sell Statewide, ever tried to induce the plaintiff to sell his shares."
Around September, 2010, at a certified Angus beef conference, a representative of Sysco Corporation (Sysco) approached the defendant and asked if he might be interested in selling Statewide. The defendant told the representative to call him if Sysco was interested in buying the company. In January, 2011, a representative of Sysco met with the defendant. A few months later, Sysco sent the defendant a letter of intent, indicating that it was interested in purchasing Statewide. Following subsequent negotiations, Sysco ultimately made a firm offer of $8 million, consisting of $6 million up front and an additional $2 million earn-out if Statewide maintained a certain level of sales.8 Sklarz testified that he was "substantially surprise[d]" by the offer because it "was substantially in excess ... of what [the defendant and he] ... anticipated." He also testified that they had thought that Statewide was worth "somewhere in the neighborhood of two to three million dollars based on the financial statements ...." The sale closed on August 12, 2011.9 Giglietti testified that it appeared that Sysco was not
In or around April, 2012, the plaintiff and the defendant arranged to meet at the Quinnipiac Club in New Haven. The plaintiff was surprised because the defendant brought Attorney Jeffrey Hellman to their meeting. Hellman testified that the defendant offered the plaintiff a "gift" of $100,000, but the plaintiff stated that he was entitled to more and requested $250,000. By the end of the meeting, Hellman believed that the plaintiff was going to accept the $100,000, and, within a day or two, he drafted an agreement for the parties to sign.
On June 1, 2012, the plaintiff and the defendant met at Mueller's office, where the defendant was to give the plaintiff the $100,000 "gift." After the parties arrived, the defendant asked the plaintiff to sign the agreement prepared by Hellman, which provided in relevant part: "David Falcigno ... hereby releases Stephen Falcigno ... of and from any and all actions ... claims ... agreements, promises ... or demands ... of any kind whatsoever including, but not limited to any claims concerning the shares of Statewide ... from the beginning of the world to the date of this agreement." It does not appear that the plaintiff signed the agreement. Unbeknownst to the defendant and Mueller at the time, the plaintiff made an audio recording of this meeting.
On October 5, 2012, the plaintiff commenced the present action. His June 14, 2013 revised complaint was brought in ten counts: Count one, breach of contract; count two, promissory estoppel; count three, fraudulent concealment; count four, fraudulent misrepresentation; count five, negligent misrepresentation; count six, breach of fiduciary duty; count seven, breach of the implied covenant of good faith; count eight, unjust enrichment; count nine, unlawful conversion; and count ten, statutory theft in violation of General Statutes § 52-564. At the time of trial, five of the plaintiff's counts remained viable, namely, breach of contract, fraudulent concealment, fraudulent misrepresentation, negligent misrepresentation, and breach of fiduciary duty. The defendant also had a counterclaim that remained viable, namely, breach of the representations and warranties contained in the certificate of satisfaction signed by the plaintiff when he conveyed his shares to the defendant. In a very thorough memorandum of decision, the court found in favor of the defendant on all counts of the plaintiff's complaint and in favor of the plaintiff on the defendant's counterclaim. This appeal and cross appeal followed. Additional facts will be set forth as necessary.
The plaintiff claims that the court erred in rendering judgment in favor of the defendant on the plaintiff's cause of action for breach of fiduciary duty.10 Specificall...
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