Opinion
AANCV166021155S
10-31-2017
Santa Engergy Corp. et al. v. Janet N. Santa, Executrix of the Estate of Norman K. Santa et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Arthur A. Hiller, Judge Trial Referee.
I. FINDINGS OF FACT
Norman K. Santa (the " Decedent") died intestate on October 18, 2014.
Prior to his death, the Decedent executed a Last Will and Testament (the " Will").
At the time of his death, he owned 1388 shares of Class C common stock of Santa Energy Corporation, a closely held private corporation, one of the Plaintiffs in this action.
At the time of his death, the Decedent was married to Janet N. Santa, and they had four (4) children: Thomas S. Santa, John Farley Santa, Elizabeth G. Santa, and Michael Hillgen-Santa.
The Decedent's son, Thomas S. Santa, and his wife, MaryLynn Santa, in turn had three (3) children: Stephen B. Santa, Erin C. Mercede, and Scott T. Santa.
Michael Hillgen-Santa, a son of Decedent had a daughter, Lorraine Foell Hillgen-Santa (the " Defendent").
In the Will, Decedent left 75 shares in the company to each of the following to children of his son Thomas S. Santa: Erin C. Santa (now Mercede), Stephen B. Santa, and Scott T. Santa. He also bequeathed the remainder of his shares equally to Elizabeth G. Santa and John Farley Santa. Each of these beneficiaries is a Plaintiff in this action along with the Company.
Contrary to claims asserted during the trial on behalf of the Defendant that her grandfather, the Decedent, had promised to gift her shares of his stock in the Company before he died, no evidence was presented to confirm this claim, how many shares were discussed, nor that any action was taken to effectuate a gift, nor that any shares of the Company stock were ever transferred or gifted by the Decedent to the Defendant. This Court finds that no such gift or transfer of stock ever occurred.
The Decedent did not bequeath any of his stock in the Company to the Defendant under his Will.
On February 17, 2015, the Shelton Probate Court admitted the Will of the Decedent and noted the Will designated Janet N. Santa, the Decedent's wife, as his Executrix and Trustee (" Executrix").
The Shelton Probate Court ordered the Executrix to complete an Inventory of the property of the Decedent's estate and to file a Connecticut Estate Tax Return.
At the time of the Decedent's death, the Defendant was less than ten (10) years old.
While not bequeathed any stock in the Company, the Defendant was a residual beneficiary of a small Trust to be shared with other descendants of the Decedent under the Will.
The Defendant has never been a shareholder in the Company.
The Will specifically disinherited Michael Hillgen-Santa.
The Decedent declined to provide any bequest to his son Michael Santa because of animosity with his son's family. This animosity appears to have arisen at least in part after the son sued the family Company over a dispute unrelated to this lawsuit.
The Decedent's estate retained the services of the BlumShapiro accounting firm (the " Accountant") to help prepare the Estate Tax Return. The Accountant made a request to the Company for information on the value of the Decedent's Company stock. Kevin R. Lloyd responded by sending a letter setting forth a value for the stock.
The Company was then contacted by the Accountant again asking for more detailed information to justify the valuation of the Company stock.
In response to the request, Mr. Lloyd transmitted the Company's most recent Stock Valuation Report to the Accountant, which valued the Company and its subsidiaries and included details on sales and profits of each division.
The Stock Valuation Report transmitted to the Accountant was deemed " Confidential" by the Company and its officials and could be harmful to the Company if released to the public, competitors, or potential suitors and was a typical company document that a non-publicly traded company would deem confidential.
Prior to his death, the Decedent executed a Shareholders Agreement which included an obligation to keep confidential the Company's non-public information.
Section 15 of the Shareholder's Agreement provided that it would be binding upon the heirs, legatees, personal representatives, successors and assigns of the Decedent.
It was the practice of the Company to require shareholders to sign a Shareholders Agreement that contained a confidentiality provision.
Kevin R. Lloyd was not concerned about the confidentiality of the Stock Valuation Report because: he was providing it to Janet N. Santa, the wife of a trusted former Board Member and stockholder; there was a confidentiality provision that was binding upon Janet N. Santa as the Decedent's Executrix; and though he knew it was going to the estate's accountants, those were the same accountants that the Company used.
Unbeknownst to representatives of the Company, the Accountant subsequently attached the full Stock Valuation Report as an exhibit to the Decedent's Estate Tax Return.
Probate Court Rule 31.8 provides that the Probate Court " may" permit disclosure of the Estate Tax Return (CT-706 NT) or other tax return information, if the person seeking the disclosure is a residual beneficiary.
A law firm was hired to represent the Defendant, and on her behalf made requests to the Executrix to obtain copies of the Decedent's Estate Tax Return. Ultimately, the Executrix provided a copy of the Tax Return, but not the attachment that included the Stock Valuation Report. In response to this refusal, the attorney for the Defendant made a request to the Probate Court that it order the disclosure of the missing attachment citing Rule 31.8.
Thereafter, the Probate Court ordered that the attachments to the decedent's Estate Tax Return (CT-706 NT) be provided to the Defendant. This Order prompted the Company to write to the Executrix and direct her not to reveal the Company's confidential information.
Thereafter, the Probate Court entered a Stay of its Order so that the Company and other plaintiffs could file this Appeal.
II. STANDARD OF REVIEW
An appeal from a Probate Court order is heard from the Superior Court de novo, except in specific situations. See C.G.S. § 45a-186(a); In re Adoption of Baby Z., 45 Conn.Supp. 33, 39, 699 A.2d 1065 (1996); Prince v. Sheffield, 158 Conn. 286, 293, 259 A.2d 621 (1969); Miller v. Miller, 158 Conn. 217, 224, 258 A.2d 89 (1969). An appeal to the Superior Court from a decision of the Probate Court presents for redetermination both the questions of law and the questions of fact which are embraced within the order or decree appealed from. Miller, 158 Conn. at 224; Appeal of Stevens, 157 Conn. 576, 580, 255 A.2d 632 (1969); Willard v. McKone, 155 Conn. 413, 416, 232 A.2d 322 (1967); Boschen v. Second Nat'l Bank of New Haven, 130 Conn. 501, 503, 35 A.2d 849 (1944); Haverin v. Welch, 129 Conn. 309, 315, 27 A.2d 791 (1942); see also State v. Estate of China, 42 Conn.Supp. 548, 551, 631 A.2d 1171 (1993). The Superior Court should " exercise the same power of judgment which the probate court possessed and decide the appeal as an original proposition unfettered by, and ignoring, the result reached in the probate court." Kerin v. Stangle, 209 Conn. 260, 265, 550 A.2d 1069 (1988) (citing Prince v. Sheffield, 158 Conn. at 298). The case at bar is an appeal of an order issued pursuant to Rule 31.8 of the Probate Court Rules, a de novo appeal, leaving all of questions of fact and questions of law embraced in the Shelton Probate Court's Decree for redetermination by this Superior Court.
III. DISCUSSION
A. INSPECTION OF STOCK VALUATION REPORT
This Plaintiff Corporation's Shareholders are not entitled to see the Stock Valuation Report unless they have signed a Shareholder Agreement that incorporates a confidentiality provision. Merely by being a Shareholder, one would not be entitled to see such information under Connecticut law. See C.G.S. § 33-946 (providing inspection rights of shareholders with respect to corporate records). Section 33-945(e) of the Connecticut General Statutes does not include financial information in the documents that may be reviewed by a shareholder. Here, the Defendant is neither a shareholder nor beneficial owner of stock.
NO NEED FOR ACCESS
In this case, the stock in the Company does not fall under the residual provisions of the Decedent's Will. As established by the Will, and the testimony of Thomas S. Santa, all of the Decedent's stock was specifically bequeathed to specific beneficiaries other than the Defendant. Thus, the Company stock and its value (as set forth in the Stock Valuation Report) have no bearing whatsoever upon the residual interest of the Defendant, Lorraine Foell Hillgen-Santa.
C. DECEDENT'S WISH FOR PRIVACY
The Decedent here had signed a Shareholder Agreement with a confidentiality provision promising to keep such information as the Stock Valuation Report confidential and further providing that his personal representatives upon death would be bound by his obligation. There is a presumption that in the absence of express language, parties to a contract intend to bind their personal representatives, in addition to themselves. Welsh v. Welsh 4 Conn.Supp. 470, 473 (1937). Connecticut also enforces provisions in pre-death agreements that continue the obligations upon the signor's heirs, legatees, personal representative and successors and assigns. McDonnell v. McDonnell, 166 Conn. 146, 149, 348 A.2d 575 (1974); Welsh v. Welsh, 4 Conn.Supp. at 473. Thus, it appears to be an almost universal holding in cases from other jurisdictions that the personal representative is bound by provisions of an agreement that expressly provides that a shareholder's personal representative will be bound by the same terms, absent questions concerning inequitable provisions or waivers of rights by the corporation. See, e.g., Renberg v. Zarrow, 1983 OK 22, 667 P.2d 465 (Okla. 1983); Bennet v. Foust, 996 P.2d 693 (Wyo. 2000); Jimenez v. Corr, 288 Va. 395, 764 S.E.2d 115 (Va. 2014). Connecticut law appears consistent with this basic principal.
D. NO WAIVER OF CONFIDENTIALITY
The Defendant argues that by transmitting the Company document to the Executrix, the Company waived any right to keep it confidential. In fact, the document was only transmitted to someone who was legally bound by the confidentiality provisions executed by the Decedent, before her acquisition of the document. The attachment of the Stock Valuation Report to the Estate Tax Return was not a waiver of confidentiality as the Company did not authorize that act, and because tax returns are not publically available records. Providing the Stock Valuation Report to the Accountant was not a waiver of any confidentiality because the Accountant was a Fiduciary and consultant to the Executrix, who in turn was bound by the confidentiality provisions of the Decedent's Shareholder Agreement. Here, there has been no dissemination to the general public that could be deemed a waiver of any right to confidentiality.
IV. CONCLUSION
The Defendant failed to establish that she was ever a shareholder in the Company before her Grandfather's passing. She was not bequeathed any stock under her Grandfather's Will. The request for the confidential Company document surely is not coming from the ten (10) year old Defendant, and no possible reason or need for the document was offered.
V. ORDER
For the foregoing reasons, this court orders that the Executrix, Janet N. Santa, shall not turn over the disputed Stock Valuation Report to the Defendant, Lorraine Foell Hillgen-Santa.