Turacova v. DeThomas

• Court: Rhode Island Supreme Court
• Writing for the Court: Justice GOLDBERG
• Citation: Turacova v. DeThomas, 45 A.3d 509 (R.I. 2012)
• Decision Date: 14 June 2012
• Docket Number: No. 2010–385–Appeal.,2010–385–Appeal.
• Parties: Daniela TURACOVA, M.D. v. Patricia DeTHOMAS, Administratrix of the Estate of Ronald DeThomas, et al.

45 A.3d 509

Daniela TURACOVA, M.D.

v.Patricia DeTHOMAS, Administratrix of the Estate of Ronald DeThomas, et al.

No. 2010–385–Appeal.

Supreme Court of Rhode Island.

June 14, 2012.

Steven A. Robinson, Esq., Cranston, for Plaintiff.

Kevin F. Bowen, Esq., Providence, for Defendant.

Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, and INDEGLIA, JJ.

OPINION

Justice GOLDBERG, for the Court.

This case came before the Supreme Court on January 26, 2012, pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not summarily be decided. The plaintiff, Daniela Turacova, M.D. (plaintiff or Turacova), is before us on appeal from a Superior Court judgment in favor of the defendant and counterclaimant, Patricia DeThomas, administratrix of the estate of Ronald DeThomas (defendant or the estate), in the amount of $658,573.28, including prejudgment interest. On appeal, the plaintiff contends that the trial justice erred in disregarding the parties' agreement that payment for DeThomas's interest in an entity known as Taunton Avenue Medical Associates, LLC (TAMA) was due within thirty days from the trial court's determination of the purchase price. The plaintiff also argues that the trial justice erred in entering judgment and awarding prejudgment interest to the defendant when there was no money judgment and no breach of contract action before the court. Lastly, the plaintiff argues that the trial court erred in determining that the TAMA operating agreement (operating agreement) executed by the parties contemplated that interest would run at the statutory rate beyond the three-month buyout period set forth in the agreement.

Having carefully reviewed the memoranda submitted by the parties and the arguments of counsel, we are satisfied that cause has not been shown; thus, the appeal may be decided at this time. For the reasons below, we affirm the judgment of the Superior Court.

Facts and Travel

On February 2, 2006, Turacova and Ronald DeThomas (DeThomas) formed a limited liability company, known as TAMA, to acquire and manage property located in East Providence, Rhode Island. Turacova and DeThomas were the only organizing members of TAMA. The parties executed the operating agreement on March 9, 2006, setting forth the terms of their arrangement with respect to TAMA. The property in East Providence housed medical offices and was the site of the East Providence Medical Center (EPMC), a walk-in, emergent care medical facility. ¹

A dispute arose between Turacova and DeThomas in June or July of 2006 regarding the EPMC shareholder's agreement. The dispute concerned an alleged promise by DeThomas to provide Turacova with $100,000 for the purchase of 400 shares of EPMC stock. Turacova brought suit against DeThomas, alleging misrepresentation and fraud in connection with the purchase of EPMC shares. Turacova asserted that she had purchased two-thirds of the outstanding shares, while DeThomas asserted that she had purchased only half of the shares, making them co-owners of all shares. On March 22, 2008, while the EPMC litigation was pending, DeThomas passed away. After his death, the parties entered into a settlement agreement (settlement agreement) on January 9, 2009, whereby they resolved their dispute concerning the fraud and misrepresentation connected with Turacova's purchase of DeThomas's EPMC shares. Turacova purchased DeThomas's shares in EPMC in conformity with the formula set forth in the EPMC shareholder's agreement and at a purchase price specified in the settlement agreement.²

DeThomas's death also gave rise to a new issue regarding the buyout of his interest in TAMA. The TAMA operating agreement provided that in the event of the death of one member, the remaining member or members “shall, upon the date not more than three (3) months after the date of [m]ember's death, purchase and * * * the [administrator] shall sell the Membership Interests of the deceased [m]ember to the remaining [m]ember(s) at the purchase price as defined in Section 8.4.” The settlement agreement that the parties entered into, resolving the EPMC share dispute, also provided language setting forth the manner in which the TAMA purchase was to occur.

The settlement agreement was preceded by a series of discussions focused on effectuatingTuracova's purchase of DeThomas's interest in TAMA. The discussions regarding this purchase were conducted through the parties' respective counsel. The attorneys discussed the joint selection of a real estate appraiser to appraise the TAMA property, in accordance with the provisions of the operating agreement. On April 2, 2008, several appraisers were considered for selection by the parties, including Thomas Andolfo (Andolfo), Paul Bordieri (Bordieri), and Peter M. Scotti & Associates (Scotti & Associates). On April 18, 2008, the parties jointly agreed to retain Andolfo to appraise the property. Several weeks later, however, counsel for Turacova advised the estate that his client was withdrawing from the agreement to retain Andolfo as the appraiser. The plaintiffs counsel then conveyed an offer to the estate, proposing to purchase DeThomas's interest in TAMA for $475,000. At the same time, plaintiffs counsel notified counsel for the estate that he had faxed a request to Scotti & Associates soliciting a bid to perform the appraisal on the property. The estate never received a bid from Scotti & Associates, nor did the estate ever consent to commissioning Scotti & Associates to conduct the appraisal.³ Scotti & Associates nonetheless performed an appraisal, dated June 20, 2008, that indicated a value of $930,000 for the realty.

The estate rejected Turacova's offer to purchase for $475,000. Counsel for the estate then advised plaintiff that time was of the essence with respect to the buyout of DeThomas's interest in TAMA, in accordance with the provisions of the operating agreement. The estate then retained Robert Bargamian (Bargamian) to appraise the TAMA real estate. Bargamian appraised the property at $1,325,000, as of July 24, 2008.

It was in the aftermath of these disputes that the parties entered into the aforementioned settlement agreement, setting forth that the purchase price for DeThomas's 50 percent interest in TAMA would be established either by agreement of the parties or, failing that, it would be determined by a justice of the Superior Court. The settlement agreement also provided that in the event a justice of the Superior Court determined the fair market value of the property, the justice also would be asked to construe several provisions of the TAMA operating agreement in order to fix the total amount that Turacova owed to the estate. The trial justice was to consider the allocation of income earned by TAMA after DeThomas's death, whether the term “property” in the agreement encompassed non-real estate property, and the effect, if any, of the delay in payment of the purchase price beyond the three-month period set forth in the operating agreement. Both parties specifically waived the right to appeal the trial justice's decision with respect to the determination of value.

A hearing commenced on February 2, 2009, before a justice of the Superior Court. The plaintiff presented the testimony of Peter Scotti (Scotti) of Scotti & Associates, a real estate appraiser who valued the property in question at $930,000. The defendant presented the testimony of Bargamian, who appraised the real estate at $1,325,000. The parties also filed stipulations concerning their discussions about selecting an appraiser to value the property, notwithstanding their inability to come to a meeting of the minds on this issue.

At the conclusion of the hearing, the parties filed amended pleadings. The plaintiff filed a third amended complaint, containing two counts. Count 1 requested a declaratory judgment that: (1) the estate was not entitled to the award of any income from TAMA; (2) the estate was not entitled any interest or penalties beyond the payment of one-half of the fair market value of the property; (3) the estate was not entitled to any distributions from TAMA after the death of DeThomas; (4) the trial justice was to determine the fair market value of the property; and (5) the trial justice was to find and declare that the settlement agreement modified the operating agreement concerning the three-month period in which the estate was required to sell and plaintiff was required to buy the decedent's interest in TAMA. In Count 2, plaintiff sought specific performance finding that the fair market value of the property was $930,000, thus requiring the estate to convey DeThomas's interest in the property for $465,000.

Significantly for our purposes, defendant's two-count counterclaim was for breach of contract, including a claim that Turacova breached the terms of the operating agreement by failing to select a mutually agreed upon appraiser and by failing to purchase DeThomas's interest in TAMA within the three-month period specified in the operating agreement. The defendant also alleged that plaintiff breached the terms of the operating agreement by refusing to include non-real property in establishing the purchase price and by failing to distribute any of TAMA's funds to the estate. The defendant sought a judicial determination that the fair market value of the property was $1,325,000, a declaration that provisions of the operating agreement required that all property of TAMA—including non-real estate property—be included in the valuation, and a finding that Turacova breached the contract.

Further argument was presented to the Superior Court trial justice on November 4, 2009. After reviewing the testimony, exhibits, memoranda, and arguments, the trial justice rendered a bench decision on February 5, 2010. In a Solomonic ruling, the trial justice concluded that the property's fair market value was $1,100,000, noting that he was “satisfied that the plaintiff's...