268 Conn. 499 | Conn. | 2004
Opinion
This appeal is a companion to the appeal in Efthimiou v. Smith, 268 Conn. 487, 846 A.2d 216 (2004), which we also decide today. In the present appeal, the plaintiff, Gus Efthimiou, Jr., the executor of the estate of the decedent, Eleanor C. Smith, claims that the trial court improperly found that the defendant in the companion case, Richard B. Smith, did not breach his fiduciary duties as trustee of the H.H. and E.C. Smith trust (Smith trust) through his dealings with the defendants in the present case, Jody Roher Smith, the West-ville trust and Vorlon Holding, LLC. In response, the defendants claim that: (1) the plaintiffs failure to cross appeal from the judgment of the trial court in the companion appeal precludes him from successfully challenging that same judgment in the present appeal; and, in the alternative, (2) the trial court properly found that Richard did not breach his fiduciary duties. We agree with the defendants’ first claim. Accordingly, we affirm the judgment of the trial court.
The following facts are relevant to our resolution of this appeal. Hyman H. Smith and Eleanor C. Smith had three sons: Richard Smith, Bruce Smith and Ronald Smith. In 1979, Jody Roher married Richard. Subsequent to their marriage, Richard became a cotrustee, along with his brother Bruce, of the Smith trust. The corpus of the Smith trust consisted of real estate holdings that Hyman had accumulated in Connecticut. Eleanor held a 46.89 percent interest in the Smith trust,
In 1983, Ronald Smith brought an action in federal court challenging the management of the Smith trust by Richard Smith and Bruce Smith. In 1985, a settlement agreement was signed by all of the relevant parties: Eleanor Smith, individually, and as executrix of Hyman Smith’s estate; Richard, individually, as cotrustee of the Smith trust, and as trustee of the testamentary trust; Bruce, individually, and as cotrustee of the Smith trust; and Ronald, individually.
In 1993, at the request of Eleanor Smith, Richard Smith created the Westville trust in anticipation of receiving the proceeds of a life insurance policy held by Eleanor. Jody Roher Smith was named sole trustee of the Westville trust. Upon the death of Eleanor in February, 1994, Richard conveyed approximately $450,000 of the proceeds from Eleanor’s life insurance policy to the Westville trust. Between January 12,1995, and July 19,1995, Jody, acting as trustee of the Westville trust, made sixteen separate loans to Richard, as trustee of the Smith trust. The total amount of money loaned by Jody was $407,250. In return for each separate loan, Richard, as trustee of the Smith trust, gave the Westville
On October 21, 1996, Jody Roher Smith, acting as trustee of the Westville trust, instituted a civil action to collect the unpaid notes from Richard Smith, as trustee of the Smith trust. Richard did not assert any defense on behalf of the Smith trust in the action, and judgment was subsequently rendered for the Westville trust in the amount of $482,578.34. On March 10, 1997, the Westville trust filed a judgment lien against four properties owned by the Smith trust that were located in Milford. On November 14, 1997, Richard and Jody were divorced. From January 1, 1998, to June 15, 1998, despite not having acquired legal title to the liened properties, Jody made payments to the city of Milford for taxes due and owing on those properties.
In February, 1998, Jody Roher Smith formed Vorlon Holding, LLC, a domestic limited liability company, naming herself as the sole member. Subsequently, Jody assigned the judgment lien on the Smith trust property from the Westville trust to Vorlon Holding, LLC. On July 24, 1998, Jody, as trustee of the Westville trust, entered into a settlement agreement with Richard Smith, as trustee of the Smith trust, concerning the judgment obtained by the Westville trust. Pursuant to the terms of that agreement, the Smith trust transferred two of the four liened properties to Vorlon Holding, LLC, and the Westville trust released the Smith trust from any additional liability on the judgment.
The following procedural history is also relevant to our resolution of this appeal. On August 13, 1996, the plaintiff brought an action against Richard Smith,
On October 20, 1999, the plaintiff brought a separate action against Jody Roher Smith, individually, as trustee of the Westville trust, and as the sole member of Vorlon Holding, LLC, alleging that she had aided and abetted Richard Smith in removing assets from the Smith trust and placing them under their personal control. The plaintiff sought monetary damages, as well as a constructive trust over the property transferred to Vorlon Holding, LLC, by the Smith trust. The plaintiffs action against the defendants was consolidated for trial with the action pending against Richard. The trial court found in the companion case that Richard had breached his fiduciary duties to the Smith trust through various financial transactions, all of which were unrelated to Jody, the Westville trust or Vorlon Holding, LLC. The trial court also found, however, that Richard had not breached his fiduciary duties to the Smith trust when he obtained loans from the Westville trust, or when he settled the Westville trust action by transferring several properties to Vorlon Holding, LLC. In sum, the trial court found that the only breaches of fiduciary duties committed by Richard were entirely unrelated to Jody, the Westville trust and Vorlon Holding, LLC. Accordingly, the trial court ordered that, “[b]ased on this court’s June 6, 2002 memorandum of decision in the
In his preliminary statement of the issues filed pursuant to Practice Book § 63-4, the plaintiff submitted the following issue: “Whether the trial court erred in concluding that the [defendants did not aid and abet a breach of fiduciary duty by Richard B. Smith when such conclusion was factually unsupported by the evidence at trial?” The trial court never made a specific determination as to whether the evidence supported a finding that the defendants actually had aided and abetted Richard in breaching his fiduciary duties. Instead, the trial court rendered judgment for the defendants in the present case based entirely on the judgment in the companion case that Richard had not breached his fiduciary duties to the Smith trust when dealing with Jody Roher Smith, the Westville trust and Vorlon Holding, LLC. Therefore, the plaintiffs prehminary statement of the issues in the present appeal improperly focused on a finding that was never made by the trial court, namely, whether the defendants in the present case actually aided and abetted Richard.
The plaintiff corrected this mistake in his brief, however, by restating the issue as whether “[t]he trial court erred in concluding that Richard Smith did not breach his fiduciary duty as trustee through his dealings with the defendants when Richard failed to prove the fairness and propriety of his conduct by clear and convincing evidence.” This formulation of the issue properly focuses on the propriety of the trial court’s initial finding concerning Richard’s conduct that the defendants in the present appeal allegedly aided and abetted. Furthermore, this formulation demonstrates that the defendants’ derivative liability for aiding and abetting flows
“Claim preclusion (res judicata) and issue preclusion (collateral estoppel) have been described as related ideas on a continuum.” (Internal quotation marks omitted.) Dowling v. Finley Associates, Inc., 248 Conn. 364, 373, 727 A.2d 1245 (1999). More specifically, collateral estoppel, or issue preclusion, is that aspect of res judicata that prohibits the relitigation of an issue when that issue was actually litigated and necessarily determined in a prior action between the same parties or those in privity with them upon a different claim. Cumberland
It is clear that any liability of the defendants to the plaintiff in the present action is derivative of Richard Smith’s liability to the plaintiff. It is also clear that Richard’s liability to the plaintiff for his dealings with the defendants was “properly raised in the pleadings or otherwise, submitted for determination, and in fact determined” in the companion case. (Internal quotation marks omitted.) Id. Further, that determination was essential to the judgment in the companion case, and it remains unchallenged. See Efthimiou v. Smith, supra, 268 Conn. 492 n.5. Accordingly, we conclude that Richard’s liability to the plaintiff was actually litigated and necessarily determined in the companion case and, therefore, that the doctrine of collateral estoppel precludes the plaintiff from relitigating that issue in the present appeal.
The judgment is affirmed.
In this opinion the other justices concurred.
According to the terms of the settlement agreement, Eleanor Smith agreed to make a will in favor of Richard Smith and Bruce Smith, bequeath to them her entire interest in the Smith trust, and execute her power of appointment under the testamentary trust in favor of Richard and Bruce. In exchange, Richard and Bruce agreed to create a new inter vivos trust for the sole benefit of Eleanor and Ronald Smith. This new trust would be funded by $1,000,000 from the Smith trust. In addition, Richard and Bruce agreed to: (1) provide a separate bank account, solely in Eleanor’s name, and initially fund it with $50,000; (2) provide Eleanor with $100,000, prorated monthly, on an annual tax free basis; and (3) provide Eleanor with annual distributions of 5 percent of the corpus of the Smith trust.
Bruce Smith died in 1996, at which time Richard Smith became the sole remaining trustee of the Smith trust.
Because the defendants did brief the issue of res judicata, their failure specifically to brief or raise the issue of collateral estoppel does not prevent this court from applying it to the facts of the present case. See Connecticut National Bank v. Rytman, 241 Conn. 24, 36 n.15, 694 A.2d 1246 (1997) (while not raised by plaintiff or third party defendant, trial court properly