Opinion
CV084018121S
05-19-2016
James J. Meter, Administrator et al. v. Mark Ryan
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION FOR JOINDER (#146)
Andrew W. Roraback, J.
I
Background
Presently awaiting review by the court is a stipulated order for judgment of distribution and dissolution dated March 7, 2016 (the 2016 stipulation) which sets forth proposed terms for the dissolution of Lizbro, Inc. (Lizbro) and the distribution of its assets among its shareholders. The parties to this action are seeking court approval of the 2016 stipulation as it is the culmination of many years of negotiations between the equal co-owners of all of the stock in Lizbro, Mark Ryan and the estate of Adam M. Lizauskas, Sr. (the estate). The administrator of the estate is Attorney James J. Meter. Lizbro has legal title to six separate parcels of real property together containing approximately 300 acres of land and several associated buildings in Woodbury, Connecticut. The 2016 stipulation is the product of an earlier stipulation to judgment of dissolution, which Ryan, Ryan's attorney, Meter, Meter's then attorney Robert Kolesnik, Sr. and Adam Lizauskas, Jr., then president of Lizbro, executed on November 13, 2013 (the 2013 stipulation).
In the 2013 stipulation, the parties consented to the dissolution of Lizbro and agreed to engage in a winding up process. The 2013 stipulation provided that Lizbro would pay $410,000 to settle an outstanding claim and that Ryan agreed to reimburse " the Corporation the $410,000 out of his share of the distribution of assets except that Ryan reserves the right to contest and advocate in the distribution process that $110,000 of said $410,000 settlement should be the responsibility of the Estate . . . and should be repaid out of the Estate's share leaving [Ryan]with no less than $300,000 reimbursement responsibility."
The 2013 stipulation further provided that each party reserved the right to file with the court its own plan of liquidation and distribution after obtaining appraisals of all corporate real estate. In January of 2016, both stockholders availed themselves of the right to file their plans. Their respective plans offered competing approaches to the distribution of the corporate assets to the respective shareholders. The court advised the parties that should they be unable to agree as to how to distribute the properties, the court might need to resort to auction sales of those properties in order to effectuate a fair distribution of the corporation's assets. At the urging of the court, the stockholders engaged in further discussions aimed at reaching an agreement as to how to distribute the corporation's assets, and on March 7, 2016, they submitted the currently pending 2016 stipulation to the court. Before acting on the 2016 stipulation, the court must rule on the motion for joinder as a party in a judgment pursuant to General Statutes § § 52-102 and 52-107 (motion for joinder), which has been filed by Adam Lizauskas, Jr. (A.L., Jr.)
At the time of the 2013 stipulation, A.L., Jr. was both a director and the president of Lizbro. He currently is neither a director nor an officer of Lizbro. Rather, A.L., Jr.'s sole current interest in Lizbro is as a beneficiary of the estate which owns fifty percent of its stock. He therefore has an interest in the assets that will become property of the estate as a result of the dissolution of Lizbro.
A.L., Jr. takes exception to several provisions of the proposed 2016 stipulation and wishes to be made a party and to formally participate in this action. He further claims to have the status of a " third party beneficiary" to the 2013 stipulation, which he claims vests him with the right to be made a party in this matter. A hearing on this motion for joinder was held on April 11, 2016.
II
Discussion
A recent Appellate Court decision, factually related to the present case, elucidates the circumstances under which a beneficiary of an estate has a right to intervene in a case where the estate itself is a party. Litwin v. Ryan, 131 Conn.App. 558, 563-64, 27 A.3d 71, 74 (2011). In Litwin, the plaintiff, the administrator of the estate of P. Edward Lizauskas, sought to invalidate a transfer of Lizbo, Inc. stock from the decedent to Mark Ryan. The decedent had a will in which he left his entire estate to his widow, Grayce Lizauskas. Grayce died after P. Edward died, and she also had a will. Her will named Iris Lord as the executrix and as a primary beneficiary. Dissatisfied with the manner in which the administrator of P. Edward's estate was prosecuting the action to set aside the stock transfer, Iris Lord filed a motion to intervene and to be added as a party plaintiff in that action. The trial court denied her motion to intervene. In upholding that ruling, the Appellate Court stated: " [I]n order for a proposed intervenor to establish that it is entitled to intervene as a matter of right, the proposed intervenor must satisfy a well established four element conjunctive test: [T]he motion to intervene must be timely, the movant must have a direct and substantial interest in the subject matter of the litigation, the movant's interest must be impaired by disposition of the litigation without the movant's involvement and the movant's interest must not be represented adequately by any party to the litigation . . . A proposed intervenor must allege sufficient facts, through its motion to intervene and the pleadings, to make the requisite showing of its right to intervene . . . Failure to meet any one of the four elements, however, will preclude intervention as of right . . . If . . . there is a party charged by law with representing a proposed intervenor's interest, a presumption of adequate representation arises that the would-be intervenor can overcome only through a compelling showing of why this representation is not adequate . . ." (Citations omitted; emphasis in the original; internal quotation marks omitted.) Litwin v. Ryan, supra, 131 Conn.App. 563-64.
This court adopts the Supreme Court's approach in construing a motion for joinder as a motion to intervene. Franco v. East Shore Development, Inc., 271 Conn. 623, 858 A.2d 703 (2004).
There can be no dispute that the administrator is obligated by law to represent the best interests of the estate. In the present case, A.L., Jr. has not made the requisite compelling showing of inadequate representation on the part of the administrator of his late father's estate that would entitle him to be made a party to this action. While A.L., Jr. raises several concerns with respect to the proposed 2016 stipulation, none of them present persuasive evidence that the plaintiff administrator is not acting in the best interests of the estate and its beneficiaries.
It also bears noting that this court has not yet approved the 2016 stipulation.
Among the concerns raised is that the terms of the 2016 stipulation do not comport with the terms of the 2013 stipulation on the allocation of shareholder responsibility for the $410,000 settlement referenced in the 2013 stipulation. Nonetheless, paragraph 5 of the proposed 2016 stipulation expressly recites that the plan of distribution contained in the 2016 stipulation satisfies all of the terms of the 2013 stipulation with respect to the $410,000 settlement payment. A.L., Jr. also challenges the administrator's failure to provide a full explanation of the tax consequences of the 2016 stipulation. However, a failure to fully communicate with a beneficiary " does not, by itself, constitute a compelling showing that the [administrator] is not adequately representing [the beneficiary's] interest in this matter." (Emphasis in the original.) Litwin v. Ryan, supra, 131 Conn.App. 565-66.
Finally, A.L., Jr. objects to a provision of the 2016 stipulation that relates to the disposition of a parcel of real estate not owned by Lizbro. Ryan and Meter, as administrator, own this property in their individual capacities. While this court may be unable to assume jurisdiction over the disposition of this non-corporate asset in this action brought to dissolve Lizbro, there is nothing that prevents the owners of that property from entering into an agreement regarding its disposition incident to the dissolution of the corporation. There has been no showing that Meter inadequately represented A.L., Jr.'s beneficial interest in this other real estate. In addition, nothing arising out of this action will preclude A.L., Jr. from invoking such rights as he may possess under § 30.15 of the Probate Court Rules of Procedure in connection with any approval sought pursuant to General Statutes § 45a-164 to sell real property in which the estate has an interest.
A.L., Jr. also argues that he is a " third-party beneficiary" of the 2013 stipulation, and that this status entitles him to intervene as of right in the present action. This argument must fail, however, because any individual who is entitled to a share of an estate is by definition a third-party beneficiary of any contract to which the estate acting through its legal representative is a party. General Statutes § 45a-234(18) dictates that a fiduciary possesses the power " to sue on or defend . . . or otherwise deal with and settle claims in favor of or against the estate . . . as the fiduciary shall deem advisable, and the fiduciary's decision shall be conclusive between the fiduciary and the beneficiaries of the estate . . . in the absence of fraud, bad faith or gross negligence of the fiduciary." To confer standing as of right on any beneficiary when the legal representative of a subject estate is a party to litigation involving a contract without requiring the compelling showing of inadequate representation required by Litwin would subvert the statutory rationale which underlies the appointment of persons to serve as representatives of decedents' estates.
Under General Statutes § 45a-233(a)(1), " the term 'fiduciary' means the one or more executors or administrators . . . of the estate of a decedent."
As A.L., Jr. has failed to show fraud, bad faith or gross negligence on the part of Meter, A.L., Jr.'s request to intervene as a third party beneficiary of the 2013 stipulation is therefore denied.
III
Conclusion
For the reasons mentioned above, the motion for joinder as a party in a judgment pursuant to General Statutes § § 52-102 and 52-107 is denied.