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Konover v. Kolakowski

Court of Appeals of Connecticut

December 18, 2018

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 ...


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