Lopiano v. Gedney, No. X05 CV 02 0191749 (CT 11/15/2004)
| Decision Date | 15 November 2004 |
| Docket Number | No. X05 CV 02 0191749,X05 CV 02 0191749 |
| Court | Supreme Court of Connecticut |
| Parties | Vincent J. Lopiano v. John C. Gedney, Jr. et al. |
For nearly one hundred years E.L. Wagner has been Connecticut's preeminent swimming pool construction and service company. Founded in 1919, it is also America's oldest continuously operated swimming pool company. Historically, the company operated out of a facility located at 554 Post Road, Darien, Connecticut.
Since 1986, John Gedney (Gedney) and Mary Louise Gedney have been the sole shareholders of E.L. Wagner. In 1986, the property at 554 Post Road, Darien, Connecticut was sold to an unrelated third party, necessitating the relocation of E.L. Wagner's staging facility. The Gedneys decided to move E.L. Wagner to Bridgeport over the winter of 1986-1987. Gedney, however, wanted to maintain a Darien office to ensure continuity with lower Fairfield County customers. Accordingly, when Vincent Lopiano, a former employee of E.L. Wagner, contacted Gedney concerning forming a venture to ensure that the "Wagner" swimming pools name remained visible in Darien, Gedney was interested in his proposition.1 In the winter of 1986-1987, Gedney and Lopiano discussed forming a business, to which E.L. Wagner would license the use of the "Wagner" name, through a Licensing Agreement, and refer Darien-area service customers to the new business which would engage in the installation and service of swimming pools. Lopiano would handle day-to-day operations and service the new business' accounts.
Eventually an agreement was reached that:
a. Gedney and Lopiano would be equal shareholders in an entity to be called Wagner Pools of Darien, Inc. and would haven an equal voice in management ("Wagner Darien");
b. E.L. Wagner would grant Wagner Darien a license to use the "Wagner" name that could be terminated on 30 days notice;
c. Gedney, on behalf of E.L. Wagner, and Lopiano, on behalf of Custom Pools, could refer certain swimming pools service customers in the Darien area to Wagner Darien if they desired;
d. Gedney and Lopiano would split profits from Wagner Darien equally;
e. Either party could terminate the agreement upon ninety days notice. The company would then take appropriate steps to dissolve and each party would receive one-half of the net proceeds; and
f. The agreement could only be modified in writing.2
Gedney, on behalf of E.L. Wagner, and Lopiano, on behalf of Wagner Darien, also entered into a License Agreement, permitting Wagner Darien to use the "Wagner" name. Gedney signed the License Agreement on behalf of E.L. Wagner. Lopiano was aware at the time Gedney signed the License Agreement that he was a 50% shareholder of E.L. Wagner, the licensor, and a 50% shareholder of Wagner Darien, the licensee.
The License Agreement required that all swimming pools constructed by Wagner Darien were to be "Wagner" Pools: "[d]uring the term of this Agreement, [Wagner Darien] shall not sell or offer to sell or construct any swimming pool other than a Wagner Pool." All construction of "Wagner Pools," also had to be in strict compliance with E.L. Wagner's specifications.
The License Agreement also specifically provided: "Upon the termination of the License Agreement for any reason, all of Licensee's [Wagner Darien's] rights shall terminate and it shall cease using the name `Wagner' or the trade name `Wagner Pools.'
All parties understood that Custom Pools would continue to operate and nothing in either of the Agreements prevented Custom Pools from entering into agreements to install or service swimming pools.
In furtherance of the new business operations, Gedney and Lopiano purchased property located at 101 Noroton Avenue, Darien, Connecticut (the "Property") as tenants in common. Gedney and Lopiano purchased the Property to serve as the principal place of business of Wagner Darien and Custom Pools. Gedney and Lopiano purchased the Property for the price of $500,000.00 and each contributed equal amounts of cash for a down payment and financed $380,000.00 by way of a Note and Mortgage with Gateway Bank n/k/a Fleet Bank. Gedney, Lopiano and their respective spouses, Mary Louise Gedney ("Mrs. Gedney") and Suzanne Lopiano ("Mrs. Lopiano"), signed the Note.
Beginning in 1991, Custom Pools and Wagner Darien occupied the property and each made a monthly payment to Gedney and Lopiano consisting of one-half of the monthly mortgage to cover the debt service. Neither Custom Pools nor Wagner Darien ever entered into an actual lease agreement with Lopiano or Gedney. The checks were deposited into an account jointly owned by Gedney and Lopiano (the "Joint Account"). Thereafter, Gedney and Lopiano paid the Debt Service using funds that had been deposited into the Joint Account. The mortgage was discharged on February 14, 2002. When the mortgage was paid off there was no agreement between Gedney and Lopiano to continue to make payments into the joint account. Title to the Property remains in the names of Gedney and Lopiano as tenants in common. At no time since they purchased the Property did either Lopiano or Gedney ever request that Custom Pools and/or Wagner Darien pay the fair rental value of the Property to Lopiano and/or Gedney.
At the time of acquisition, and as of today, the property consisted of land improved by a small building (the "Building") and a 358 square foot studio apartment (the "Apartment") located on the second floor of the Building. The Apartment is currently rented at $850.00 per month to a resident tenant.
From July 1991 through May 9, 2000, Wagner Darien used approximately 50% of the Property for its business operations. From July 1991 through the present Custom Pools used, and uses, approximately 50% of the Property for its business operations. Lopiano never prevented E.L. Wagner or Gedney from occupying the property after Wagner Darien ultimately ceased operations.
Wagner Darien and Custom Pools had separate phone lines at the property. When a call was made to the Wagner Darien phone line, a new account was opened for Wagner Darien unless the caller was a personal friend of Lopiano. Similarly, Gedney agreed to refer Darien area service customers of E.L. Wagner to Wagner Darien, unless the customer specifically requested service through E.L. Wagner (such as personal friends of the Gedneys, etc.) or if Lopiano, through Wagner Darien, was unable to service a particular customer, such as those customers who purchased pools containing technology that Lopiano was not able to service.
From the inception of Wagner Darien, the parties understood that the "Wagner" name was to be advertised and promoted. While Lopiano was permitted to retain and operate Custom Pools, he did not advertise the company or have a sign for Custom Pools in front of the business. Accordingly, the sign in front of Wagner Darien's office said, "Wagner Pools of Darien, Inc." Likewise, the vehicles used by Wagner were emblazoned with the Wagner Darien name and the Custom Pools name was removed.3 Indeed, the purpose of the Wagner Darien venture was to leverage the "Wagner" name to attract new customers and maintain existing E.L. Wagner customers in the Darien area. Gedney would benefit because E.L. Wagner would maintain a Darien presence and Lopiano would benefit because he would receive one-half of the profits from the business that would evolve due to the "Wagner" name.
In the spring of 1987, Gedney referred approximately one hundred E.L. Wagner service customers to Wagner Darien. Gedney, on behalf of E.L. Wagner, continued to refer from time to time Darien-area service customers to Wagner Darien. Lopiano ran the day-to-day operations of Wagner Darien. He ordered supplies, and had primary customer communication with Wagner Darien customers. The court also finds that Gedney is a sophisticated businessman who had knowledge and input regarding the operation of the Wagner Darien business.
Lopiano delegated the tasks of accounting and bookkeeping to his wife, Mrs. Lopiano. She handled all of the accounts payable and receivables functions, bookkeeping, tax and financial accounting. She also reconciled bank accounts and signed checks on behalf of her husband. Gedney was aware that Mrs. Lopiano was paid a fee by Wagner Darien for these services through Custom Pools.
The Wagner Darien business was successful and by agreement between Lopiano and Gedney, Wagner Darien, from time to time, distributed: (a) Lopiano's 50% share of Wagner Darien's net profits to Custom Pools; and (b) Gedney's 50% share of Wagner Darien's profits to E.L. Wagner.
From Wagner Darien's inception through May 9, 2000, with the knowledge and consent of Wagner Darien and of Gedney, Lopiano continued to service swimming pools through Custom Pools. In 1999, Gedney learned that Lopiano was also installing two pools. It is undisputed that the agreements with homeowners to build these pools were with Custom Pools, not Wagner Darien. Gedney conceded at trial that Custom Pools had the right to build pools using Custom Pools' name. There is also no dispute that the individuals buying the pools understood and in fact demanded that the pools be built by Custom Pools, not Wagner.
By letter dated May 9, 2000, from counsel for E.L. Wagner, Gedney caused E.L. Wagner to terminate the License Agreement (the "Termination Notice"), thus terminating all of Wagner Darien's rights. By virtue of the Termination Notice, Wagner Darien could not conduct its business and as a result of the Termination Notice, Wagner Darien ceased its business operations. Neither Lopiano nor Gedney ever formally sent a ninety-day written notice of termination of the Shareholders' Agreement. However, the Shareholders' Agreement did not require that notice of its termination be in writing. Additionally, both Gedney and Lopiano understood that Wagner Darien could no longer operate when the...
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