Scarcelli v. Gleichman
| Decision Date | 25 April 2012 |
| Docket Number | Case No. 2:12-cv-72-GZS |
| Parties | ROSA W. SCARCELLI, Plaintiff v. PAMELA W. GLEICHMAN, Defendant and CHRISTOPHER J. W. COGGESHALL, Trustee of The Promenade Trust, Party-in-Interest |
| Court | U.S. District Court — District of Maine |
Before the Court is Plaintiff's Motion for Preliminary Injunction (Docket # 7). Plaintiff Rosa Scarcelli filed this Motion on March 21, 2012 and Defendant Pamela Gleichman failed to respond to the motion by the deadline of April 11, 2012. Defendant Gleichman also did not file an answer to the Amended Complaint and, as a result, a default was entered on April 19, 2012 (Docket # 23). The Court now GRANTS the Motion for Preliminary Injunction as explained herein.
The Motion for Preliminary Injunction is supported by various declarations with exhibits, including the Declaration of Christopher J. W. Coggeshall, the Declaration of Rosa W. Scarcelli, and the Declaration of James D. Poliquin. In light of Defendant's default on the Amended Complaint, the Court deems all of the allegations contained in the Amended Complaint (Docket # 4) admitted for purpose of the pending Motion. Upon consideration of this record, the Courtmakes the following findings of fact and conclusions of law in connection with the Motion for Preliminary Injunction.
1. Oak Knoll Associates Limited Partnership ("Oak Knoll LP") is a limited partnership formed on November 18, 1988 under the laws of the State of Connecticut for the purpose of constructing and operating a 42-unit apartment project known as Oak Knoll Apartments (the "Project") located in Norwalk, Connecticut.
2. The Project is a subsidized housing project regulated under the jurisdiction of the Connecticut Housing Financing Authority ("CHFA") and CHFA provided financing for the Project as reflected in various financing documentation executed on December 8, 1988.
3. Section 10.2 of the Oak Knoll LP Limited Partnership Agreement provides that "this Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut."
4. The original Managing General Partner of Oak Knoll LP was Gleichman & Company, Inc. The Defendant Gleichman became Managing General Partner on February 1, 1997 pursuant to an "Amendment to Limited Partnership Agreement of Oak Knoll Limited Partnership" executed on that date. Subsequent to the execution of the February 1, 1997 Amendment, Defendant Gleichman has been the Managing General Partner, Plaintiff Rosa Scarcelli, a General Partner, and The Promenade Trust, the only Limited Partner. Christopher Coggeshall is the Trustee of The Promenade Trust.
5. As amended by the February 1, 1997 Amendment, Section 4 of the Limited Partnership Agreement regarding allocation of profits, losses and distributions provides in relevant part as follows:
6. A Purchase and Sale Agreement was executed as of October 11, 2011 between Oak Knoll LP and Navarino Capital Management LLC, which document was executed by Defendant Gleichman on behalf of Oak Knoll LP.
7. The total purchase price identified in Article 1.3 of the Purchase and Sale Agreement is $6,300,000, $950,000 less than the purchase price offered in a letter of intent by the same buyer dated June 21, 2010.
8. The current status of the Purchase and Sale Agreement is unknown, including any scheduled closing date or whether the agreement has been further modified by reductions in purchase price or otherwise.
9. The Purchase and Sale Agreement at Article 1.4 provides in part that the purchase price "shall be payable in full at Closing in cash by wire transfer of immediately available federal funds to a bank account designated by Seller in writing to Purchaser prior to the Closing." This provision entitles Defendant Gleichman as Managing General Partner to direct 100% of the sale proceeds to be wired immediately to any account designated by her.
10. Defendant Gleichman previously has indicated to both Rosa Scarcelli and Christopher Coggeshall that she considers herself entitled to receive personally a portion of the sale proceeds upon closing of any sale of the Project.
11. Although Defendant Gleichman has not provided Scarcelli or Coggeshall with a specific statement of either the amount or basis for her entitlement to any payment from any sale proceeds, it appears her claimed entitlement is based either on a claim for "unpaid owner distributions" calculated under the CHFA loan documents or a "success fee" in connection with the sale of the Project.
12. Both Scarcelli and Coggeshall, individually or through counsel, have advised Defendant Gleichman that she is not entitled to the payment of any distribution or fee from the sale proceeds as apparently claimed by her.
13. Despite specific requests to Gleichman that any sale proceeds to which she claims entitlement be placed in "escrow" pending resolution of all claims to those proceeds, Defendant Gleichman, either individually or through counsel, has expressly rejected such requests.
14. Multiple requests have been made to Gleichman or her counsel by Scarcelli and Coggeshall, or their counsel, that Defendant Gleichman provide various documentation relating to the potential sale of the Project to Navarino Capital.
15. Defendant Gleichman has refused to provide any documentation to Scarcelli, Coggeshall or their counsel regarding the sale or potential sale of the Project.
16. The record contains substantial evidence of liabilities, debts and defaults of Defendant Gleichman in matters unrelated to Oak Knoll LP that supports the conclusion that Defendant Gleichman is experiencing substantial financial distress and is unable to meet her financial obligations when due.
17. The outstanding principal on the promissory note to CHFA as of December 31, 2011 was $1,786,676 and the note would be fully amortized by August 1, 2019 if all scheduled payments are made when due.
Oak Knoll LP is a Connecticut limited partnership governed by Connecticut law. Connecticut law regarding a general partner's fiduciary duty has been explained as follows:
The general partner of a limited partnership has a fiduciary duty to the limited partners and the limited partnership. Konover Development Corp. v. Zeller, 228 Conn. 206, 218, 635 A.2d 798 (1994). "Once a fiduciary relationship is found to exist, the burden of proving fair dealing shifts to the fiduciary." Id. at 219, 635 A.2d 798. clear and satisfactory evidence, or clear, convincing and unequivocal evidence. Id. at 229-30, 635 A.2d 798. The burden of clear and convincing evidence "is sustained if the evidence induces in the mind of the trier a reasonable belief that the facts asserted are highly probably true, that the probability that they are true or exist is substantially greater than the probability that they are false or do not exist." Springfield Oil Services, Inc. v. Conlon, 77 Conn.App. 289, 299, 823 A.2d 345 (2003). A general partner has the duty to prove that he dealt fairly with the limited partners and not just that he acted reasonably. Id. at 302, 823 A.2d 345. A general partner's fiduciary duty cannot be negated by the terms of the limited partnership agreement. Id. In the context of a commercial limited partnership with financially sophisticated parties, "a fiduciary may demonstrate that a particular transaction was fair by showing: (1) that he made a free and frank disclosure of all the relevant information he had; (2) that the consideration was adequate; (3) that the [fiduciary] had competent and independent advice before completing [the] transaction; and (4) the relative sophistication and bargaining power among the parties." Id. at 299-300, 823 A.2d 345. There is no breach of fiduciary duty where a partner is not given information he already has. McKosky v. Plastech Corp., Superior Court, judicial district of New Haven, No. 426036 (June 13, 2001, Blue, J.).
Hartley v. Boyd, 2008 WL 442142 at * 11 (Conn. Super. Feb. 4, 2008). The general partner of a limited partnership also has a fiduciary duty "of rendering true accounts and full information about anything which affects the partnership." Williams v. Bartlett, 457 A.2d 290, 298 n. 8(1983). In accordance with Connecticut's Uniform Partnership Act, a partner is obligated to furnish another partner "on demand, any other information concerning the partnership's business and affairs, except to the extent the demand or the information demanded is unreasonable or otherwise improper under the circumstances." See C.G.S.A. § 34-337(c).
The standards for a preliminary injunction under Rule 65(a) are clearly established:
For Plaintiffs to prevail on their motion for preliminary injunction under Rule 65(a) of the Federal Rules of Civil Procedure, each bears the burden of demonstrating (1) a likelihood of success on the merits, (2) irreparable injury, (3) that such injury outweighs any harm to the defendant, and (4) that the...
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