System Pros, Inc. v. Kasica
145 A.3d 241
| Conn. App. Ct. | 2016Background
- Majewicz and Kasica formed System Pros, Inc. in 1993 as 50/50 shareholders and officers; Majewicz handled administration/consulting, Kasica marketing/sales.
- In late 2009 Kasica seized control, locked Majewicz out, and initiated corporate dissolution proceedings; Majewicz sued asserting accounting, torts (interference, fiduciary breaches), CUTPA, and breach of oral contract.
- The trial court appointed auditors, conducted bifurcated trials (dissolution then this action), found Kasica individually liable (piercing the corporate veil) and liable on counts 1–8, and credited Majewicz as a credible witness.
- The court awarded damages totaling about $1.29 million: lost wages ($467,786), half the corporation’s value as of Dec. 31, 2012 ($86,500), 401(k)/IRA penalties ($18,149), $103,835 for marital-dissolution obligations, prejudgment interest ($326,864), plus $140,322.55 from an audit and $146,440 in attorney’s fees.
- On appeal the court (Appellate Court) affirmed liability but reversed or reduced portions of damages: reduced the 50% corporate value award to reflect valuation as of Oct. 1, 2009, vacated lost-wages and marital-obligation awards, and struck prejudgment interest; it affirmed tax-penalty award, the supplemental audit award, and attorney’s fees as punitive damages.
Issues
| Issue | Majewicz's Argument | Kasica's Argument | Held |
|---|---|---|---|
| Proper valuation date/amount for 50% corporate interest | Seek 50% of value as determined by DeCaprio (used Dec. 31, 2012 valuation) | Valuation should be as of immediately before the corporate action (Oct. 2009) per statute and audit standard | Reduced award: used DeCaprio’s Oct. 1, 2009 valuation ($81,000) → 50% = $40,500 (court’s use of 2012 date was error) |
| Lost wages — sufficiency/certainty of proof | Lost wages shown by placements list, invoices, and a lost-wages spreadsheet asserting $533,400 (reduced by unemployment) | Evidence speculative; plaintiff didn’t show he would have obtained listed contracts or meet qualifications | Award vacated: damages for lost wages ($467,786) were speculative and not proved with reasonable certainty |
| Applicability of CUTPA to intracorporate dispute | CUTPA applies because Kasica used corporate assets for personal benefit and transferred assets to other business | Intracorporate conflict; CUTPA generally does not apply absent conduct placing defendant in direct competition with corporate interests | CUTPA claim rejected: record lacked evidence Kasica usurped clients/assets in favor of another business; exception to intracorporate rule not shown |
| Prejudgment interest under Conn. Gen. Stat. § 37-3a | (Not requested below) Court awarded sua sponte 10% prejudgment interest on various awards as interest for detention of money | § 37-3a applies only to liquidated sums that were due and payable and wrongfully detained; prejudgment interest should not be awarded sua sponte without evidentiary opportunity | Award vacated: § 37-3a inapplicable to (a) 50% corporate valuation (not previously due) and (b) tax-penalty award (obligation owed to IRS), and court should not grant interest sua sponte without allowing evidence |
Key Cases Cited
- Russell v. Russell, 91 Conn. App. 619 (discusses damages review and intracorporate CUTPA limits)
- Murtha v. Hartford, 303 Conn. 1 (standard for clearly erroneous factual findings)
- Ulbrich v. Groth, 310 Conn. 375 (damages must be proved with reasonable certainty)
- Weiss v. Smulders, 313 Conn. 227 (speculative damages and required evidentiary basis)
- American Diamond Exchange, Inc. v. Alpert, 302 Conn. 494 (plaintiff must produce non-speculative evidence to support damages)
- Beverly Hills Concepts, Inc. v. Schatz & Schatz, Ribicoff & Kotkin, 247 Conn. 48 (need objective, verifiable facts for damages)
- Fink v. Golenbock, 238 Conn. 183 (CUTPA may apply where conduct goes beyond governance and places defendant in direct competition with corporate interests)
- Metcoff v. Lebovics, 123 Conn. App. 512 (CUTPA exception when one business’s customers/assets are usurped for another)
- Larsen Chelsey Realty Co. v. Larsen, 232 Conn. 480 (illustrative CUTPA exception where officer acted to benefit competing entity)
- CAS Construction Co. v. East Hartford, 82 Conn. App. 543 (speculative evidence is insufficient for damages)
- Viejas Band of Kumeyaay Indians v. Lorinsky, 116 Conn. App. 144 (evidence speculative when relying on subjective opinion)