Levco Tech, Inc. v. Kelly
279 A.3d 248
Conn. App. Ct.2022Background
- Levco Tech is a closely held family corporation that originally issued 70 common shares equally among parents (Sally, Martin) and five children (10 shares each).
- On July 15, 2012 Dorothy (Dot) transferred her 10 shares to her mother Sally; they discussed holding them for Dot’s children but did not consult counsel and, within 1–2 days, agreed to rescind and treated Dot as retaining ownership.
- By 2015 family tensions produced two factions: Robert/Jeffrey/Dot sought majority control (Robert acquired additional proxies/shares) while Edward/Sally/Martin sought to block that effort.
- On Nov. 20, 2015 Edward’s faction held a 25‑minute‑noticed special board meeting and approved a stock purchase/loan that issued 12 new shares to Edward; several directors later rescinded their votes.
- Litigation followed; the trial court (after a bifurcated trial on ownership) found any 2012 trust either not irrevocable or revoked, found Robert and Jeffrey could vote 36 shares, and held the Nov. 20 issuance of 12 shares to Edward invalid (primarily for insufficient notice).
Issues
| Issue | Edward/Sally (plaintiff) | Robert/Jeffrey/Dot (defendant) | Held |
|---|---|---|---|
| Whether Dot’s July 2012 transfer created an irrevocable trust (so Dot lacked her 10 shares in 2015) | Dot created an irrevocable trust for her children; therefore she lacked the shares when she gave Robert a proxy | No enforceable irrevocable trust was created; any trust was revocable and was revoked within 1–2 days | Court: Any trust was revocable (mistaken omission of revocation power) or was rescinded; Dot owned the 10 shares in 2015 |
| Validity of Nov. 20, 2015 board meeting and issuance of 12 shares to Edward | The meeting and issuance were valid (consistent with practice); the shares increased outstanding shares to 82 | Meeting notice (25 minutes) was insufficient and the issuance was invalid; Edward was conflicted and votes were later rescinded | Court: Meeting notice insufficient under bylaws/circumstances; issuance invalid |
| Validity of Philip’s transfer/option to Jeffrey (6 shares) | The transfer/option was invalid (argued challenges to Philip’s title/joinder) | Philip validly transferred/optioned six shares to Jeffrey | Court: Jeffrey had right to vote six shares (Philip’s transfer valid) |
| Whether Sally was elected to board Nov. 17, 2015 by plurality | Sally elected by plurality under §33-712(a) | Sally not elected because Robert/Jeffrey controlled majority votes | Court: Because Dot owned shares and the 12‑share issuance was invalid, Robert/Jeffrey controlled majority; Sally not on board (issue effectively moot given other holdings) |
Key Cases Cited
- Goytizolo v. Moore, 27 Conn. App. 22 (1992) (applies Restatement factors for inferring a settlor mistakenly omitted a revocation power)
- Crews v. Crews, 295 Conn. 153 (2010) (standard for reviewing mixed questions of law and fact)
- ASPIC, LLC v. Poitier, 208 Conn. App. 731 (2021) (review: subsidiary historical facts for clear error; legal application plenary)
- Lippman v. Kehoe Stenograph Co., 11 Del. Ch. 80 (1915) (articulates rationale for requirement of notice to directors and right to be heard)