208 Conn.App. 731
Conn. App. Ct.2021Background:
- ASPIC, LLC (successor to Muni) sued Brack Poitier (general partner) to collect on promissory notes that Wendell Harp (managing general partner) had executed on behalf of four Court Hill limited partnerships in favor of Harp and Renaissance Management.
- Harp executed >$3 million in notes (the "Court Hill" and 2009 advance notes), endorsed them to himself and Renaissance Management, and then pledged them as collateral for a $1.5 million loan from Muni; Poitier was not shown notice of those specific note transactions.
- Harp later sold the partnerships’ real estate to entities controlled by his son and an ASPIC affiliate; the partnerships and partners received no cash proceeds; Harp did not notify Poitier of those sales; Harp died in 2011.
- Muni foreclosed on collateral, bought the notes at auction, transferred them to its subsidiary ASPIC (plaintiff), which then sought to enforce the notes against Poitier as a general partner.
- Poitier asserted, as an affirmative special defense, that Harp breached fiduciary duties by failing to disclose the note transactions, using the notes as collateral for personal loans, and selling assets without notice; the trial court found Harp breached his fiduciary duties and barred enforcement of the notes against Poitier.
- On appeal, ASPIC argued the trial court erred on factual findings (notice) and legal application (Konover/Zeller factors and other legal errors); the Appellate Court affirmed judgment for Poitier.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Harp breached fiduciary duty by issuing and endorsing notes and pledging them without giving Poitier notice | ASPIC: Poitier had notice of debts and Harp’s plan to borrow; letters and audited statements suffice as free and frank disclosure | Poitier: Harp never disclosed issuance/endorsement of specific promissory notes or pledge to Muni; failure to disclose was a breach | Held: Trial court’s finding that Poitier lacked notice was not clearly erroneous; non‑disclosure breached fiduciary duty and precluded enforcement of the notes |
| Whether plaintiff can enforce notes made out to Renaissance Management though the court found Renaissance had not breached any fiduciary duty | ASPIC: Renaissance did not breach, so notes in its name should be enforceable | Poitier: Transactions were orchestrated by Harp for his benefit without disclosure; plaintiff stands in Harp’s shoes and cannot avoid his breach | Held: Plaintiff cannot recover on notes arranged by Harp for his benefit; standing in Harp’s shoes, plaintiff is barred by Harp’s breach even though Renaissance itself owed no fiduciary duty |
Key Cases Cited
- Konover Development Corp. v. Zeller, 228 Conn. 206 (Conn. 1994) (sets multi‑factor test for when a fiduciary can show a transaction was fair in sophisticated business contexts)
- Spector v. Konover, 57 Conn. App. 121 (Conn. App. 1999) (applies Zeller and explains burden shifts to fiduciary to prove fair dealing by clear and convincing evidence)
- Springfield Oil Services, Inc. v. Conlon, 77 Conn. App. 289 (Conn. App. 2003) (partnership agreement terms do not negate fiduciary duty; full disclosure of transaction details required)
- Financial Freedom Acquisition, LLC v. Griffin, 176 Conn. App. 314 (Conn. App. 2017) (notes endorsed in blank carry prima facie force and make challenging amounts more difficult)
- Saggese v. Beazley Co. Realtors, 155 Conn. App. 734 (Conn. App. 2015) (standard of review for mixed questions of fact and law in fiduciary duty context)
- Chioffi v. Martin, 181 Conn. App. 111 (Conn. App. 2018) (appellate review of facts underlying breach of fiduciary duty governed by clearly erroneous standard)