Sys. Pros, Inc. v. Kasica

• Decision Date: 12 July 2016
• Docket Number: No. 37105.,37105.
• Citation: 166 Conn.App. 732,145 A.3d 241
• Court: Connecticut Court of Appeals
• Parties: SYSTEM PROS, INC., et al. v. Gene KASICA.

166 Conn.App. 732

145 A.3d 241

SYSTEM PROS, INC., et al.

v.Gene KASICA.

No. 37105.

Appellate Court of Connecticut.

Argued Feb. 16, 2016.

Decided July 12, 2016.

Michelle M. Seery, with whom was William J. O'Sullivan, Wethersfield, for the appellant (defendant).

Peter A. Ventre, Hartford, for the appellee (plaintiff Robert J. Majewicz).

GRUENDEL, LAVINE and BEACH, Js.^*

GRUENDEL

, J.

This appeal concerns the disintegration of a business relationship. The defendant, Gene Kasica, appeals from the judgment of the trial court in favor of the plaintiff Robert J. Majewicz¹ on all eight counts of the operative complaint. On appeal, the defendant challenges the propriety of the court's award of damages in numerous respects. Specifically, he claims that the court improperly awarded the plaintiff (1) one half of the value of System Pros, Inc. (corporation), as that corporation was valued on December 31, 2012, (2) $467,786 in lost wages, (3) $18,149 attributable to certain tax penalties the plaintiff sustained as a result of the defendant's actions, (4) $103,835 in obligations that the court found the plaintiff owed his former wife in his marital dissolution proceeding, (5) $326,864 in prejudgment interest pursuant to General Statutes § 37–3a

, and (6) damages for violating the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42–110a et seq. The defendant also argues that, should he prevail on the aforementioned claims, the court's supplemental judgment awarding the plaintiff $146,440 in attorney's fees should be vacated. We affirm in part and reverse in part the judgment of the trial court.

In its memorandum of decision, the court found the following facts. The parties formed the corporation “on or about January 12, 1993, for the purpose of supplying consulting services, particularly in the areas of computers and computer software to insurance companies.... Each owned ... fifty percent of the stock of [the] corporation. They were and are the only members of [its] board of directors. [The plaintiff] was elected president and treasurer, and [the defendant] vice president and secretary. The division of duties and responsibilities of the corporation were that [the defendant] would be in charge of marketing and sales, and [the plaintiff] would be in charge of administration of the corporation, although [the plaintiff] was to be assigned by the corporation to do consulting work for various insurance companies. This division of duties and responsibilities was admittedly oral but performed by each party. It has been contested by [the defendant] that there was such an agreement. However, this court after listening to the testimony, in particular the testimony [of] James Valenski ... who testified that he was an independent contractor hired by the corporation and, during the time that he was so involved, that he fully understood that the division of responsibility was as set forth above. The court also believes [the plaintiff] as to this arrangement and finds such arrangement to have taken place. When [the plaintiff] did consulting work for an insurance company, his income from that consulting work would go into his account, and when [the defendant] did consulting work for an insurance company, his income went into his account. There was also an account for work done by employees/independent contractors which would go into a corporate account which would then be divided between [the plaintiff] and [the defendant] after payment of expenses.

“This arrangement worked quite well and was financially profitable for both individuals up until 2009 when [the defendant], unhappy with [the plaintiff], took over the corporation and in effect locked [the plaintiff] out of any further dealings involving [the corporation]. [The plaintiff] was no longer allowed on the premises, and, as of the end of 2009, he became a nonentity as far as [the defendant] and the corporation were concerned. There is no question that the individuals no longer trusted each other and were very critical of each other, which has led this court to grant an application of dissolution of the corporation. There were personality differences and differences as to how the operation of the corporation was being conducted.... Part of the problem between the parties was that [the defendant] wanted to make Valenski a member and/or partner of the corporation to which [the plaintiff] objected. Valenski was hired as an independent contractor to promote marketing and sales and develop clients for himself and clients [for] whom [the defendant] and [the plaintiff] would perform consulting work. [The plaintiff] believed that Valenski was doing work that was really the responsibility of [the defendant]. Although [the plaintiff] objected to retaining Valenski, he signed the contract between [the corporation] and Valenski as the president of [the corporation], thereby approving the independent contract with Valenski. [The parties] were unable to work out their differences....”

In late October, 2009, the defendant commenced an action to dissolve the corporation pursuant to General Statutes § 33–896

(dissolution action). The plaintiff at that time declined his option to purchase all shares owned by the defendant pursuant to General Statutes § 33–900. The plaintiff also declined the defendant's offer to appoint a receiver to operate the corporation while the dissolution action was pending. The plaintiff thereafter filed an answer and counterclaim.²

In February, 2010, the plaintiff commenced the present action. The operative complaint, the plaintiff's January 30, 2014 amended complaint, contained eight counts. The first count sought an accounting, and the second count alleged tortious interference with business relationships. Counts three through six alleged that the defendant breached a fiduciary obligation, an implied covenant of good faith and fair dealing, the standards of a corporate director under General Statutes § 33–756

, and the standards of a corporate officer under General Statutes § 33–765. In count seven, the plaintiff alleged a CUTPA violation. The eighth and final count alleged that the defendant breached an oral contract between the parties. On March 8, 2010, the court granted a motion to consolidate that action with the dissolution action.

By order dated October 19, 2012, the court appointed Attorney Atherton B. Ryan as custodian of the corporation and certified public accountants Bart Giustina and Bruno Passacantano as auditors thereof, as well as a third auditor to be determined by agreement of the parties.³ Those auditors were directed to “reconcile the books and records of [the corporation] from October 1, 2009, to date.... In addition, each of the auditors shall independent of one another determine the [corporation's] fair value as of October 1, 2009, and a current date on or before January 31, 2013. The auditors shall file a report with the court of their findings by February 15, 2013.”

A court trial commenced in June, 2013. Although consolidated four years earlier, the court bifurcated the trials of the dissolution action and the present action. The court first conducted a trial on the dissolution action over the course of four days. It thereafter rendered a judgment that dissolved the corporation in accordance with General Statutes § 33–897 et seq.

, and designated Ryan as the receiver charged with winding up and liquidating the business and affairs of the corporation. The propriety of that judgment is not contested in this appeal.

Trial of the present action began on October 30, 2013, and was continued over ten additional days. All but two days consisted of the testimony of the plaintiff. The defendant did not testify, but the court did hear the testimony of Giustina, Passacantano, Philip J. DeCaprio, Jr., Valenski, and Attorney Douglas Manion. In its memorandum of decision, the court found that the plaintiff “was a very credible and honest witness.... [H]e was particularly honest, candid and forthcoming.” The court also credited the testimony of DeCaprio, finding that “[h]e was devoid of any bias and was independent, and he gave a good basis for his evaluation of the [corporation].” The court credited Valenski's testimony as it pertained to the affairs of the corporation and credited Passacantano's testimony on the “sole point” of whether the plaintiff “had to cash in his 401(K) and/or IRAs and suffered a penalty” due to “his involuntary departure from [the corporation]....” The court did not credit the testimony of Giustina or Manion.

In its July 30, 2014 memorandum of decision, the court concluded that the defendant was liable to provide an accounting of the corporation. The court also ruled in favor of the plaintiff on counts two through eight of the operative complaint while rejecting the defendant's statute of limitations and laches special defenses. With respect to damages, the court reiterated that it found the plaintiff “credible and trusts his valuation of the damages he suffered as set forth in [his] exhibit 87 with any exceptions described herein. [The plaintiff's] testimony and his list of damages, as well as the basis and computation thereof, the court finds to be credible.”⁴ The court then summarized its award of damages as follows: “(1) Lost Wages—$467,786; (2) Half of the value of the corporation as of December 31, 2012—$86,500; (3) Penalties re: 401(K) and IRAs—$18,149; (4) Obligations [the plaintiff] has to fulfill pursuant to the marriage dissolution case of Majewicz v. Majewicz —$103,835; (5) Sua sponte interest at 10 percent per annum, for money wrongfully withheld pursuant to [§] 37–3a from November 1, 2009 to August 1, 2014—$326,864 [for a total of] $1,003,134.” The court also awarded the plaintiff punitive damages in the form of attorney's fees, noting that “[a] supplemental judgment will be rendered following the hearing on attorney's fees and receipt of [an updated audit of the books and records of the corporation from DeCaprio] for the...