Cody B. Heisinger v. Ward F. Cleary, Esq. et al. (2014)

MEMORANDUM OF DECISION RE DILLON'S MOTION FOR SUMMARY JUDGMENT (133.00)

I. Background

The plaintiff Cody Heisinger, by a revised complaint, sues the co-executors of the Estate of Frank B. Heisinger, the plaintiff's late father.   The co-executors and defendants are Ward F. Cleary, an attorney and Ann H. Dillon, the deceased's sister and the plaintiff's aunt.

The operative complaint alleges a single count against the defendants sometimes described as “maladministration” of the Estate and sometimes described as “breach of fiduciary duties.”   See Revised Complaint (Dkt. Entry 109.00) ¶¶ 1, 3, 8 and 10.   In essence, the plaintiff alleges that the defendants maladministered the Estate by “grossly overvaluing”;  id., ¶ 8;  the Estate's holding of common stock in the F.A. Bartlett Tree Expert Company (“Bartlett Co.”) a closely held business, reporting such valuation on the federal and Connecticut estate tax returns, and leaving the Estate illiquid and unable to pay the resulting taxes.   There are allegations, as well, that the defendants' handling of the valuation of the Bartlett Co. shares was reckless, and the complaint seeks punitive damages.

Dillon has moved for summary judgment dismissing the complaint as to her.

II. Facts

The following undisputed facts are drawn from Dillon's affidavit submitted in support of her motion for summary judgment (Dkt. Entry 134.00) and the plaintiff Heisinger's responses to Requests to Admit (Dkt. Entry 115.00).   Cody Heisinger is the sole beneficiary of his father's will and the trust established under the will.   Dillon has been a speech and language pathologist in the Torrington, Connecticut public schools for thirty-five years.

Following her brother's death on November 9, 2007 Dillon met with Cleary, a partner in the law firm of Curtis, Brinckerhoff and Bartlett, P.C. a firm her brother, their family, and she had relied upon for many years.   She learned that her late brother's most valuable asset was 702 common shares of Bartlett Co. which just before her brother died, had been valued at $4,070,600 by a firm known as Management Planning, Inc. (MPI).  Dillon had no training or experience valuing corporate stock and no experience serving as a fiduciary.

Dillon was advised by Cleary that the Bartlett Co. stock needed to be valued as of the date of her brother's death, and pursuant to Cleary's recommendation MPI was hired to prepare that valuation.   MPI's appraisal valued the 702 Bartlett common shares as of November 9, 2007 at $4,843,800, including a 35% discount for their lack of marketability and the decedent's 951 shares of Bartlett's preferred stock at $19,020, including a 20% discount for marketability.¹  Dillon relied on the MPI appraisal in preparing the inventory of the Estate, in reviewing drafts of the federal and Connecticut state estate tax returns, and in filing the federal and state returns.

The Connecticut estate tax was paid in 2011.   There were insufficient funds in the Estate to pay the federal estate tax until 2013, when after the estate sold 189 of the common shares back to Bartlett Co.—at the per share price contained in the MPI appraisal—the federal tax was paid.

Counsel for the plaintiff submitted an affidavit in opposition to Dillon's summary judgment motion.   Dkt. Entry 150.00.   Included as an exhibit was the affidavit of the plaintiff;  Dkt. Entry 152.00;  an unsigned valuation report as of November 9, 2007 of the Bartlett Co. common shares owned by the decedent;  Dkt. Entry 158.00;  and subsequently a copy of the same valuation report signed by Tim Hurley of Bentley Associates, L.P. stating a “preliminary opinion” that these shares had a value “between $1,760,000 and $2,460,00.”   Dkt. Entry 165.00 (“Bentley Valuation”).

III. Scope of Review

Practice Book § 17–49 provides that summary 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.”  Appleton v. Board of Education, 254 Conn. 205, 209 (2000).   Summary judgment “is appropriate only if a fair and reasonable person could conclude only one way.”  Miller v. United Technologies Corp., 233 Conn. 732, 751 (1985).  “The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to judgment as a matter of law.”  Appleton v. Board of Education, supra, 254 Conn. 209.  “A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case.”  (Internal quotation marks omitted.)   United Oil Co. v. Urban Development Commission, 158 Conn. 364, 379 (1969).   The trial court, in the context of summary judgment motion, may not decide issues of material fact, but only determine whether such genuine issues exist.  Nolan v. Borkowski, 206 Conn. 495, 500 (1988).

“Although the party seeking summary judgment has the burden of showing the non existence of any material fact [question] ․ a party opposing summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact together with the evidence disclosing the existence of such an issue.   It is not enough however, for the opposing party merely to assert the existence of such a disputed issue.”  Maffucci v. Royal Park Ltd. Partnership, 243 Conn. 552, 554 (1998).  “[T]he party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact.”  Appleton v. Board of Education, supra, 254 Conn. 209.   See generally, Sic v. Nunan, 307 Conn. 399, 406 (2012);  Mott v. Wal–Mart Stores East L.P., 307 Conn.App. 618, 624–25 (2012).

IV. Discussion

Dillon has presented a strong case for summary judgment in her favor;  most of the arguments and contentions of the plaintiff fall short or wide of the mark.   Nevertheless, the court denies her motion on the ground that the Bentley Valuation could possibly raise a material question of fact.

In reaching this conclusion, the court has considered the arguments that the Bentley Valuation is not admissible evidence, is concededly preliminary and contains a significant error by not including the 2007 third quarter earnings of Bartlett Co. in one calculation.   While it is very late in the game to come forth with a unfinalized report that was “obtained and paid for” in February 2012;  Cody Heisinger Aff., ¶ 17 (Dkt. Entry 152.00);  discovery has not been completed, no trial date has been set, and its deficiencies may be corrected over time.

The court is not convinced that a difference of opinion on the valuation of the stock at issue is necessarily an unresolved material fact, nor is it convinced that even if the MPI valuation was too high and it was established that MPI was a poor choice of appraisers, that is a material fact relevant to the claims against Dillon who did not play a significant role in selecting MPI. Fogarty Affidavit (Dkt. Entry 154.00) Ex. F. Contrary to the plaintiff's argument, Dillon is not responsible for a co-executor's defalcations unless they were open, obvious and remediable by Dillon.   See American Surety Co. of New York v. McMullen, 129 Conn. 575, 583 (1943) (while for certain purposes coexecutors are treated as one, that principle does not include holding one coexecutor liable for another coexecutor's misuse of funds unless the first was involved in the misuse or was negligent in not preventing it);  see also Annotation:  “Liability of Cofiduciaries” 65 ALR 2d 1019 §§ 3, 4 (the fundamental rule is clearly that an executor is not liable for the wrongful acts of a coexecutor).

Nevertheless, the difference between the low end of the Bentley Valuation of the common stock, $1,760,000 and the MPI valuation of $4,843,800 is significant and could raise in the mind of a factfinder, which this court is not, questions of fact as to what, if anything was wrong with one or both of the appraisals, and if the MPI appraisal is found wanting and caused injury to the plaintiff, was it due in any substantial fashion to the alleged maladministration or breach of fiduciary duty by Dillon.

V. Conclusion

The motion is denied without prejudice to renewal in a timely fashion.

TAGGART D. ADAMS

JUDGE TRIAL REFEREE

FOOTNOTES

FN1. Dillon contends that the higher valuation of the common stock at date of death was due to an increase in Bartlett Co. earnings during the third quarter of 2007, information not available at the time of the first MPI valuation..  FN1. Dillon contends that the higher valuation of the common stock at date of death was due to an increase in Bartlett Co. earnings during the third quarter of 2007, information not available at the time of the first MPI valuation.

Adams, Taggart D., J.T.R.