Wilby v. Savoie
| Decision Date | 12 March 2014 |
| Docket Number | No. 2012–141–Appeal.,2012–141–Appeal. |
| Citation | 86 A.3d 362 |
| Parties | Langdon WILBY et al. v. Paul SAVOIE, Alias. |
| Court | Rhode Island Supreme Court |
OPINION TEXT STARTS HERE
Michael F. Horan, Esq., Pawtucket, for Plaintiff.
Daniel V. McKinnon, Esq., Pawtucket, for Defendant.
Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, and INDEGLIA, JJ.
The plaintiff, Paul Savoie, appeals from a November 14, 2011 judgment in favor of the defendants, Langdon Wilby and Tammy Emmett.1 The plaintiff and the defendantswere members of the board of directors of Green Mountain Park, Inc., a Vermont corporation formed for the purpose of reconstructing, reviving, and operating a defunct horseracing facility in the Town of Pownal, Vermont. The plaintiff invested $350,000 in the venture before the project was ultimately abandoned due to issues surrounding the corporation's ability to obtain a racetrack license. The plaintiff brought claims against the defendants for breach of fiduciary duty,2 breach of contract, and fraud. At the conclusion of a bench trial in Superior Court, the trial justice entered judgment for the defendants on all counts. For the reasons set forth herein, we affirm the judgment of the Superior Court.
In early 1997, Marcus Vitali, a horse trainer, became aware that an unused racetrack facility in the Town of Pownal, Vermont was available after being closed for nearly a decade. Vitali told an acquaintance, Langdon Wilby, about the racetrack and presented the idea of rehabilitating the facility. Wilby had been working in the restaurant industry for approximately thirty years, and he owned a restaurant called “Lang's Villa Rosa” 3 in Massachusetts. Wilby had no experience developing, managing, or running racetracks prior to the beginning of this particular venture. After discussing the potential project, Vitali and Wilby visited the racetrack facility and met with the owner of the property, Mr. Tietjen.4
It is not clear whether Vitali or Wilby ever executed a lease agreement regarding the racetrack property. According to Wilby, there was first an “oral commitment” in the spring of 1997 and then a signed lease for the racetrack premises the following summer.5 The oral agreement allegedly gave Wilby and Vitali permission to take possession of the premises, on the condition that they would receive a racing license. Vitali also testified that he and his wife, Tammy Emmett, and Wilby reached an “agreement” with Tietjen in 1997, which was signed and reduced to writing. No written lease was produced at trial. At some point in 1997, Wilby and Vitali, along with two other acquaintances, Gary Owens and Paul Rizzo, began working to rehabilitate the racetrack property. Vitali supervised the project and was in charge of hiring and billing. Owens and Rizzo held managerial positions.6
On July 21, 1997, Wilby and Emmett formed a Vermont corporation called Green Mountain Park, Inc. (Green Mountain), for the purpose of “conducting thoroughbred and other horse racing and the simulcasting of same at lawfully licensed establishments.” The articles of incorporation listed three directors: Wilby, Emmett, and Ralph A. Foote, who was also the corporation's legal counsel. Wilby served as President and Treasurer of Green Mountain, and Emmett was Vice President and Secretary. Vitali chose not to be involved in the corporation as a stockholder, director, or officer, because he did not want his career as a horse trainer to be jeopardized in the event that the corporation's racing license was denied. Vitali testified that Emmett, his wife, “agreed to be part of the venture and step in.” According to Wilby, Vitali made the decisions for Emmett's share of the corporation. Emmett testified that Vitali was authorized only to perform work that she had assigned to him, but she could not recall at trial any specific duties or tasks that she had so assigned.7
Wilby, Vitali, and Emmett began to look for investors in the summer of 1997. Vitali had known Paul Savoie, a former Pawtucket firefighter, for many years. Vitali, knowing that Savoie had been previously involved in dog racing, thought that Savoie might be interested in participating in the new racetrack venture. Vitali introduced Savoie to Wilby in late 1997 or early 1998 at Lang's Villa Rosa. A couple of weeks after Savoie met Wilby, Savoie agreed to invest $350,000 in the enterprise. Wilby testified that he met with Savoie approximately fifteen to twenty times prior to the time when Savoie made his investment. Savoie testified, in contrast, that they had only “[t]wo or three” meetings. Vitali estimated that he met with Savoie seven times prior to Savoie's investment, and Emmett testified that she met with Savoie at least once.
Savoie testified that, prior to investing, he did not ask Wilby or Vitali about financial matters, nor did he inquire about their business plan, the prospective purchase of the racetrack property, or any lease arrangements. Savoie also testified that he did not ask about any preliminary work that had been done on the racetrack, did not ask to see any records, and did not know whether the company had been incorporated. Savoie also did not ask whether Wilby or Emmett had any prior experience with racetracks. Savoie was aware that Vitali was a horse trainer and that Emmett owned a horse farm. According to Wilby, Savoie was also aware that Vitali would essentially be in charge of the racetrack operation even though he was not a formal member of the company. Savoie also knew that Wilby and Emmett had hired Attorney Foote as their legal counsel, but he did not attempt to contact Attorney Foote prior to investing.
Savoie testified that he visited the racetrack property once before he invested and observed that it was “kind of run down.” Later on, however, Savoie testified that he could not recall whether he visited the property before investing. Vitali testified that Savoie went to the racetrack once before making his investment and that he “never really asked a lot of questions.” When asked at trial, “what did you do for due diligence before issuing the check for $350,000?” Savoie replied, “I didn't do anything.”
Prior to making his $350,000 investment, Savoie met with his brother, Robert, who worked as a financial analyst. This meeting was arranged by Wilby and Vitali. Savoie told Robert that he “had an opportunity to own part of a racetrack” and that he intended to invest $350,000. Savoie first testified that Robert did not express an opinion regarding the investment. Later during trial, however, Savoie stated that his brother told him that “he didn't really think [the investment] was a good idea.”
According to Savoie, Wilby and Emmett both told him that they would invest $175,000 in the racetrack venture; however, they actually invested only $100,000 each, a few days after Savoie made his initial deposit of $350,000 into a new bank account opened for Green Mountain at Vermont National Bank. Savoie received a one-third equity interest in the corporation in exchange for his monetary investment, with Wilby and Emmett holding the other two-thirds. 8
At the first shareholders meeting, held on April 9, 1998, Savoie was elected to the board of directors, and Attorney Foote resigned.9 The corporate minutes also indicate that Wilby was elected President and Treasurer, and Emmett was elected Vice President and Secretary. Wilby testified that his duties as President were to oversee the general activities of the racetrack and that, as Treasurer, he was responsible for “checking the books.” 10 Wilby testified that Vitali handled the payroll for the corporation and was in charge of the petty cash. Emmett testified that she held the positions of Secretary and Vice President, although she also stated that Savoie replaced her as Vice President at some point during the venture. Emmett testified that she believed she “had no responsibilities” in the development of the business.
Savoie testified that he never served as an officer of Green Mountain. According to Wilby, however, Savoie served as Vice President of the corporation starting in the spring of 1998. Wilby did not produce any records to support this assertion. Wilby also testified that Savoie was elected Secretary of the corporation shortly after he became involved in the business. Savoie was identified as “Secretary” in a Small Business Plan submitted to the Vermont licensing commission.11
The parties presented conflicting testimonies regarding the extent of Savoie's presence at the racetrack in 1998 and early 1999. According to Savoie, he visited the racetrack only “[o]n one or two occasions” after he made his investment and stayed overnight “once or twice.” Savoie testified that he spent a total of “four or five” days at the racetrack between the spring of 1998 and February 1999. Savoie contended that he did not help with the racetrack rehabilitation project, was not assigned any responsibilities in developing the company,and did not attend any formal meetings to discuss the development of the venture.12 Savoie did testify, however, that each time he visited the racetrack he would go to “the deli across the road,” which was owned by James Winchester, who was also a member of Green Mountain's board of directors. Savoie also testified that, when he went to the track, he would spend the day with Doug Saunders, who had been hired as the head of racetrack security.13 Savoie, Wilby, and Vitali all testified that Savoie kept an antique car at the racetrack.
Wilby, on the other hand, testified that he saw Savoie “at least five times a week,” either at Lang's Villa Rosa or at the racetrack, after Savoie made his investment. Wilby stated that, “I [Wilby] used to go up on a Monday and Tuesday and [Savoie] was there almost all summer long when I went up.” Wilby also testified that Savoie would go to the hardware...
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