MICHAEL KONOVER ET AL.
v.
MICHAEL KOLAKOWSKI ET AL.
Argued
September 25, 2018
Procedural
History
Action
to recover damages for, inter alia, breach of contract, and
for other relief, brought to the Superior Court in the
judicial district of Hartford, where the named defendant et
al. filed a counterclaim; thereafter, the trial court,
Moukawsher, J., granted in part the motion for
summary judgment filed by the named defendant et al. and
rendered judgment in part thereon for the named defendant et
al., from which the plaintiff Konover Development Corporation
et al., appealed to this court; subsequently, following the
granting of permission by this court, the named plaintiff
filed a separate appeal with this court, which consolidated
the appeals. Affirmed.
Frank
J. Silvestri, Jr., with whom were Kristen G. Rossetti and
Jeffrey R. Babbin, for the appellants (plaintiffs).
Richard J. Buturla, with whom was Ryan P. Driscoll, for the
appellees (defendants).
Lavine, Sheldon and Bishop, Js.
OPINION
BISHOP, J.
This
action arises from the indemnification provisions in a stock
purchase and sales agreement (agreement) between the
plaintiff Michael Konover[1] and the defendants Michael Kolakowski,
Simon Etzel, and Eric Brown (the buyers)[2] for the
buyers' purchase of Konover's stock in the KBE
Building Corporation (KBE).[3] The plaintiffs appeal from the
trial court's rendering of partial summary judgment in
favor of the defendants. On appeal, the plaintiffs claim that
the trial court erroneously ruled that the parties'
agreement does not obligate the defendants to reimburse
Konover for legal fees incurred while litigating certain
legal actions that had been pending against Konover and KBE
at the time the agreement was executed. In the alternative,
the plaintiffs claim that, even if the language of the
agreement does not require the defendants to reimburse
Konover for any legal fees, the trial court should have
considered admissions in the defendants' pleadings and
other extrinsic evidence, which evinced an understanding
between the parties that the defendants were responsible for
paying their own legal fees incurred in conjunction with the
referenced litigation. We affirm the judgment of the trial
court.
The
following undisputed facts and procedural history are
relevant to the resolution of this appeal. Konover was the
sole director and shareholder of KBE. The buyers formed KBE
Holdings, Inc., to acquire all of Konover's KBE stock. On
March 30, 2007, the buyers and Konover executed the agreement
at issue, which set forth the terms for the stock purchase
and sale of all of Konover's stock.
At the
time the agreement was executed, KBE was a defendant in two
separate groups of civil actions, which the agreement
referred to as the ‘‘Existing
Litiga-tion.''[4] One group of actions, denominated the
Archam-bault litigation, arose from personal
injuries suffered by several construction workers, employed
by a subcontractor of KBE, while building a BJ's
Wholesale Club in Willimantic.[5] The second group of actions,
referred to as the Wells Fargo litigation, stemmed
from a foreclosure action in Maryland, in which Wells Fargo
had obtained a judgment of foreclosure relating to a failed
shopping center. In the Wells Fargo litigation, both
Konover individually, and other entities related to him, had
been named as defendants. KBE, however, had not been named as
a defendant. After a final judgment was rendered in Maryland
against both Konover in his individual capacity, as well as
several other entities, the prevailing plaintiffs commenced
an action against Konover and several entities owned by him,
including KBE, seeking enforcement of the Maryland judgment
in the United States District Court for the District of
Connecticut.
Recognizing
the possibility that KBE would need to satisfy potential
judgments and would incur substantial legal fees as a result
of the existing litigation, Konover and the buyers included
indemnification provisions in the stock purchase and sales
agreement. Pursuant to § 4.3 (b) (i) and (ii) of the
agreement, Konover promised to indemnify KBE and the buyers
for ‘‘Damages'' resulting from
‘‘any judgment'' rendered against KBE or
the buyers in the existing litigation. In exchange, Konover
was given the exclusive right to manage the existing
litigation, and the defendants were required to cooperate
with Konover in the defense of the existing litigation. The
defendants were obligated, as well, to cooperate with Konover
in any counterclaims or new actions brought by Konover
against any parties to the existing litigation. These
potential actions were referred to as ‘‘Successor
Actions'' in the parties'
agreement.[6]Section 4.4 further provided, however, that
Konover was responsible for the cost of any successor
actions.
During
the course of the existing litigation, the defendants became
discontent with Konover's management of the litigation.
Also, Konover demanded reimbursement from the defendants for
legal fees incurred during the course of defending these
matters.[7] Unable to resolve these disagreements,
Konover and the plaintiffs filed a twelve count complaint
against the defendants, alleging, inter alia, breach of
contract for KBE's refusal to reimburse Konover for legal
fees he incurred during the existing litigation. In turn, the
defendants filed a counterclaim, alleging, inter alia, that
Konover's mismanagement of the litigation constituted a
breach of contract and a breach of fiduciary duty owed to
them. The defendants also claimed, in response to the
complaint, that they were not obligated pursuant to the
agreement to reimburse Konover for expenses he incurred in
conjunction with the existing litigation. The defendants
subsequently filed a motion for summary judgment on the same
basis.
After
briefing and argument, the trial court granted the motion for
summary judgment on all claims pertaining to breach of
contract for failure to pay attorney's fees in the
existing litigation, ruling that the agreement clearly and
unambiguously did not require KBE to reimburse Konover for
legal fees incurred during the course of the existing
litigation, and only required the defendants to pay legal
fees for any future claims brought by the
Archambault or Wells Fargo plaintiffs.
Specifically, the court ordered: ‘‘Summary
judgment is granted on all claims premised on breach of a
contract to pay attorneys' fees in the existing
litigation in favor of the defendants that moved for summary
judgment. . . . Because all counts of the current complaint
are through incorporation by reference premised on the
existence of the contract obligation rejected in this
opinion, the plaintiffs may have [thirty] days leave to file
a new complaint if they believe they can state causes of
action without the contract based premise that KBE promised
to pay fees in existing litigation.'' The trial
court's ruling disposed of all claims made by Konover
Development Corporation, Konover and Associates, Inc.,
Blackboard, LLC, and Ripple, LLC. These entities subsequently
filed an appeal as a matter of right. The trial court's
ruling did not, however, dispose of all claims made by
Konover in the complaint. As a result, Konover sought and was
granted permission from the trial court, Moukasher,
J., and this court to appeal, pursuant to Practice Book
§ 61-4. In a separate motion, this court consolidated
the appeals. Additional facts will be set forth as necessary.
At the
outset, we note the applicable standard of review and legal
principles relating to motions for summary judgment.
‘‘Summary judgment shall be granted 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.
Practice Book § 17-49. A fact is material when it will
make a difference in the outcome of a case.''
(Internal quotations omitted.) McFarline v.Mickens, 177 Conn.App. 83, 90, 173 A.3d 417 (2017),
cert. denied, 327 Conn. 997, 176 A.3d 557 (2018).
‘‘Appellate review of the trial court's
decision to grant summary judgment is plenary.''
Id. ‘‘On appeal, we must determine
whether the legal conclusions reached by the trial ...