Opinion
CV155014808S
05-26-2017
William A. Lomas v. Partner Wealth Management, LLC et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION DEFENDANTS' MOTION FOR SUMMARY JUDGMENT #204
Irene P. Jacobs, J.
The plaintiff commenced this action in June of 2015, seeking damages arising from the defendants' alleged breach of contract and breach of fiduciary duty, allegedly depriving the plaintiff of the sums due to him upon his withdrawal as a member from the defendant p. The plaintiff filed an amended complaint on December 15, 2015 [#136]. The defendants filed an answer, special defenses and counterclaim on September 23, 2016. [#184].
On December 2, 2016, the defendants moved for partial summary judgment on counts one and seven of the plaintiff's amended complaint and on count eleven of their counterclaim. In support of their motion, the defendants filed a memorandum of law [#205] and submitted a joint affidavit signed and sworn by each of the defendants [206, 207], as well as forty-eight additional exhibits filed under seal. The plaintiff filed an objection on January 18, 2017, [232] in support of which he submitted his own signed and sworn affidavit [#233] and fifty-two other exhibits, filed under seal. The defendant filed their reply memorandum on January 26, 2017 [#237]. The court heard argument on the motion at the January 30, 2017 short calendar.
The plaintiff alleges the following facts. The plaintiff and the three individually named defendants were the four partners in the defendant Partner Wealth Management, LLC. On October 13, 2014, the plaintiff provided the partners with written notice of his intent to withdraw as a partner as of January 14, 2015. The plaintiff's notice of withdrawal was in compliance with the requirements of a 2009 Partner Wealth Management LLP operating agreement. Subsequent to receiving the notice of withdrawal, and prior to January 14, 2015, the defendants amended the 2009 operating agreement. The 2009 operating agreement provided for the partners' repurchasing a member's 25% interest in the company upon withdrawal. The new 2015 operating agreement altered the calculation of the interest buyout of disassociated partners, diminishing the amount that would be paid to the plaintiff.
In Count One of the complaint, the plaintiff alleges breach of contract against the defendants for changing the 2009 agreement while he withdrew in reliance upon it.
In Count 7 of the complaint, the plaintiff seeks a declaratory judgment that the 2009 agreement was controlling at the time of his withdrawal in January 2015.
In their September 23, 2016 counterclaim, the defendants allege that their amendment of the 2009 operating agreement was in accordance with the 2009 operating agreement. In count eleven of the counterclaim, the defendants move for a declaratory judgment that the 2015 operating agreement was operative at the time of the plaintiff's withdrawal and that said the 2015 operating agreement controls the calculation of the plaintiff's interest buyout.
The defendants move for partial summary judgment on counts one and seven of the complaint and count eleven on the counterclaim on the ground that the defendants' amendment of the 2009 operating agreement was in full compliance with its terms, resulting in the valid 2015 operating agreement.
DISCUSSION
" [S]ummary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Cefaratti v. Aranow, 321 Conn. 637, 645, 138 A.3d 837, (2016).
" [T]he genuine issue aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred . . . A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case." (Citation omitted; internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002). " A genuine issue has been variously described as a triable, substantial or real issue of fact . . . and has been defined as one which can be maintained by substantial evidence." (Citation omitted; internal quotation marks omitted.) United Oil Co. v. Urban Redevelopment Commission, 158 Conn. 364, 378, 260 A.2d 596 (1969). " 'Issue of fact' encompasses not only evidentiary facts in issue but also questions as to how the trier would characterize such evidentiary facts and what inferences and conclusions it would draw from them." Id., 379.
Breach of Contract
" The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party, and damages." Meyers v. Livingston, Adler, Pulda, Meiklejohn & Kelly, P.C., 311 Conn. 282, 291, 87 A.3d 534 (2014).
Operating agreements are construed in accordance with the guiding maxims of contract interpretation. See Radding v. Freedom Choice Mortgage, LLC, 76 Conn.App. 366, 820 A.2d 317 (2003); Ocsai v. Exit 88 Hotel, LLC, 127 Conn.App. 731, 17 A.3d 83 (2011). " When the language of a contract is ambiguous, the determination of the parties' intent is a question of fact . . . [W]here there is definitive contract language, [however] the determination of what the parties intended by their contractual commitments is a question of law." (Citation omitted; internal quotation marks omitted.) Cruz v. Visual Perceptions, LLC, 311 Conn. 93, 101, 84 A.3d 828 (2014). " In determining whether a contract is ambiguous, the words of the contract must be given their natural and ordinary meaning . . . A contract is unambiguous when the language is clear and conveys a definite and precise intent . . . The court will not torture words to impart ambiguity where ordinary meaning leaves no room for ambiguity . . . Moreover, the mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous." Id., 102-03. " In contrast, a contract is ambiguous if the intent of the parties is not clear and certain from the language of the contract itself . . . [A]ny ambiguity in a contract must emanate from the language used by the parties . . . The contract must be viewed in its entirety, with each provision read in light of the other provisions . . . and every provision must be given effect if it is possible to do so . . . If the language of the contract is susceptible to more than one reasonable interpretation, the contract is ambiguous." (Citation omitted; internal quotation marks omitted.) Id.
Article VII of the 2009 operating agreement states: " The Management Committee may, without the necessity of the consent of any of the members, amend any provision of this Agreement in any way that would not have an adverse effect on any Member . . . The Management committee may, with the approval of Members holding at least sixty-five percent (65%) of Percentage Interests, amend any Provision of this agreement."
Section 8.5 of the 2009 operating agreement states: " If any Member withdraws from the Company for any reason . . . the Company or the remaining Members shall be obligated to purchase from the Member, and the Member shall be obligated to sell to the Company . . . all of his Interests of the Company at the price established in accordance with the provisions of Section 8.7(b). The Company Value to be utilized to determine the purchase price for such Member's Interests shall be the Company Value as of December 31 of the year prior to the year in which withdrawal occurs. Each member shall give at least three (3) months prior written notice of his desire to withdraw from the Company."
Section 8.7 of the 2009 operating agreement states: " For purchases made as a result of withdrawal without cause pursuant to section 8.5, the closing (except for installment payments due thereafter) shall occur on the earlier of (1) that date when the Management Committee has determined that the withdrawing Member has substantially completed the transition of his clients to remaining Members, or (2) that date which is one (1) year from the date of notice of such Member's withdrawal."
It is undisputed that in October 2014, the 2009 operating agreement was in effect. It is also undisputed that the plaintiff gave written notice in October 2014 of his intent to withdraw as a member, said withdrawal to be effective in mid-January 2015. It is also undisputed that, on December 26, 2014, the Members voted to amend the 2009 operating agreement.
The defendants assert that, pursuant to the terms of Partner Wealth Management, LLC's 2009 operating agreement concerning amendments, it was within the discretion of the members to amend the operating agreement with a 65% majority vote. As the plaintiff was still a member from the time he tendered his notice until after the operating agreement was amended, he was subject to the new adopted provisions as a result. Therefore, no breach of contract occurred and the 2015 operating agreement controlled the calculation of the plaintiff's interest on January 14, 2015, the date of his withdrawal.
The plaintiff argues that there are genuine issues of material fact as to what the purpose and intent of the operating agreement was, and as to whether the agreement could be amended once a party has triggered his rights in reliance. The plaintiff argues that his notice of withdrawal was a " triggering event" that " locked in" his rights under the 2009 operating agreement. Consequently, the plaintiff argues, the defendants' amendment to the 2009 operating agreement after the plaintiff had provided written notice of his withdrawal constitutes a breach of contract. The plaintiff argues that the terms of the 2009 operating agreement should control the calculation of his interest in Partner Wealth Management, LLC. The plaintiff also claims that genuine issues of material fact exist as to whether, by materially changing the obligations under the terms of the operating agreement, the defendants breached the implied covenants of good faith and fair dealing.
The 2009 operating agreement is silent as to the specific right of the members to amend the operating agreement during the pendency of a member's withdrawal. This court finds that genuine issues of material fact remain as to the right of the members to amend the operating agreement during the pendency of a member's withdrawal pursuant to the 2009 operating agreement. In so finding, the court deems it unnecessary to address the plaintiff's claims that genuine issues of material fact exist as to the defendants' alleged breach of the implied covenants of good faith and fair dealing.
Declaratory Judgment
General Statutes § 52-29(a) provides that " [t]he Superior Court in any action or proceeding may declare rights and other legal relations on request for such a declaration, whether or not further relief is or could be claimed. The declaration shall have the force of a final judgment." " The purpose of a declaratory judgment action . . . is to secure an adjudication of rights where there is a substantial question in dispute or a substantial uncertainty of legal relations between the parties." (Internal quotation marks omitted.) Bysiewicz v. DiNardo, 298 Conn. 748, 756, 6 A.3d 726 (2010). Practice Book § 17-55 provides: " A declaratory judgment action may be maintained if all of the following conditions have been met: (1) [t]he party seeking the declaratory judgment has an interest, legal or equitable, by reason of danger of loss or of uncertainty as to the party's rights or other jural relations; (2) [t]here is an actual bona fide and substantial question or issue in dispute or substantial uncertainty of legal relations which requires settlement between the parties; and (3) [i]n the event that there is another form of proceeding that can provide the party seeking the declaratory judgment immediate redress, the court is of the opinion that such party should be allowed to proceed with the claim for declaratory judgment despite the existence of such alternate procedure."
The declaration sought is that either the 2009 or the 2015 operating agreement controls the evaluation of the plaintiff's interest. Having found the 2009 operating agreement to be ambiguous, the court declines to make such a declaration.
CONCLUSION
For the foregoing reasons, the court denies the defendants' motion for summary judgment on the first count of the plaintiff's amended complaint, the seventh count of the plaintiff's amended complaint, and the eleventh count of the defendants' counterclaim.