Title: Bacon v. Reimer & Braunstein, LLP

State: vermont

Issuer: Vermont Supreme Court

Document:

Bacon v. Reimer & Braunstein, LLP (2005-289)

2007 VT 57

[Filed 20-Jun-2007]

                                 ENTRY ORDER

                                 2007 VT 57

                      SUPREME COURT DOCKET NO. 2005-289

                             JANUARY TERM, 2007


  Charles Bacon, Maureen Bacon and     }         APPEALED FROM:
  M & C Realty, Inc.                   }
                                       }
       v.                              }         Windsor Superior Court
                                       }  
  Reimer & Braunstein, LLP,            }
  Paul Samson, David Fanikos,          }         DOCKET NO. 598-12-04 Wrcv
  Doremus & Kantor, Steven Kantor      }
  and Peter Barton                     }
                                                 Trial Judge: Theresa S. DiMauro

             In the above-entitled cause, the Clerk will enter:

       ¶  1.  Plaintiffs M & C Realty and its principals, Charles and
  Maureen Bacon, appeal from a superior court order granting summary judgment
  in favor of defendants, attorneys and other agents of the Rhode Island
  Depositors Economic Protection Corporation (DEPCO).  The court ruled that
  the Bacons' malicious prosecution suit was barred by an adverse ruling on
  their summary judgment motion in an earlier civil action by DEPCO against
  them and others. The Bacons contend the court erred in concluding that the
  denial of their earlier motion established that DEPCO had probable cause to
  bring the action as a matter of law. As explained below, we agree that the
  court erred, and we therefore reverse and remand for further proceedings.  

       ¶  2.  The material facts are as follows.  DEPCO is a public
  corporation established by the State of Rhode Island to collect and
  liquidate the assets of a number of credit unions which failed during the
  1991 Rhode Island credit union crisis.  In May 1997, DEPCO filed a superior
  court complaint against David F. LaRoche, the Bacons and a number of
  Vermont entities, seeking to recover more than $15 million owed on various
  promissory notes to the failed credit unions.  The complaint alleged that
  the Bacons and other defendants had participated with LaRoche in the
  transfer of assets in a scheme designed to defraud the credit unions.  As
  to the Bacons and their company, the complaint alleged two such
  transactions, one in which LaRoche used several corporate entities that he
  controlled to sell a property known as Westenfeld Farm to the Bacons for
  less than fair market value, and a second in which LaRoche allegedly
  orchestrated the below-market tax sale of a lot in a Quechee development to
  the Bacons, who then resold it for a substantially higher amount.  The
  complaint sought to set aside the allegedly fraudulent transfers under the
  Vermont fraudulent conveyance statutes, 9 V.S.A. §§ 2285 to 2312,  to
  "pierce the veil" and appoint receivers for the corporate defendants, and
  to attach realty owned by the various defendants.
   
       ¶  3.   In October 1997, the Bacons moved for summary judgment,
  asserting that there were no connections between themselves and the LaRoche
  entities that would entitle DEPCO to relief and that all of the disputed
  transactions were done at arms length and for a fair price.  DEPCO opposed
  the motion, arguing that it had not completed discovery "[i]n what is
  clearly a complex and factually detailed case," that "the sparse . . .
  document production" it had received thus far suggested that Charles Bacon
  was "heavily involved" in LaRoche-controlled entities in Vermont, and that
  the Bacons had "profited substantially because of their favored insider
  status" from the two transactions at issue.  The court issued a written
  decision in January 1998 denying the motion.  The court found that the
  documents and affidavits submitted by the parties "do not demonstrate a
  lack of material facts in dispute; instead, they suggest that there have
  been several complex transactions involving David LaRoche and Charles
  Bacon."  As the court explained, it could not "accept at face value" the
  Bacons' relatively unsupported assertion that the "transactions at issue
  were negotiated at arms length." 

       ¶  4.  In September 2001, following the successful resolution of its
  claims against the other defendants, DEPCO dismissed its complaint against
  the Bacons with prejudice, later explaining that the action was no longer
  "cost-effective."  In November 2004, the Bacons filed the instant suit for
  malicious prosecution against defendants, a DEPCO employee and three of its
  former attorneys.  Defendants moved for summary judgment, claiming that the
  denial of the Bacons' motion for summary judgment in the underlying DEPCO
  action established, at a minimum, probable cause for the action.  See
  Anello v. Vinci, 142 Vt. 583, 586-87,