Opinion ID: 2302242
Heading Depth: 2
Heading Rank: 2

Heading: Appellants' Direct Claims

Text: In their multicount counterclaim, defendants make a number of allegations against plaintiff Randolph Takian, some of which are also levied against his parents: negligent misrepresentation; fraudulent inducement; breach of the duty of good faith and fair dealing; loss of business opportunity; fraudulent inducement to sell an interest in real estate; violation of the Rhode Island RICO Act; and conspiracy to violate the RICO Act. The defendants base these claims primarily on Randolph's involvement in the sale of the property, during which he acted not only as an interested party in his own right, but also as the messenger between the Rafaelians and his parents. In brief, they assert that Randolph failed to exercise reasonable care with respect to the information he conveyed about the sale, and that his representations were an attempt to further hinder or confuse the Rafaelians with respect to their investigation of his parents' management of Lumar. In his ruling, the motion justice considered the claims against Randolph Takian separately from those lodged against his parents, and found that the Rafaelians have pointed to nothing in the memoranda or in argument before this Court in the way of specific representations or concealed facts by Randolph Takian upon which they conceivably relied upon to their detriment in settling their dispute with the Takians. To the contrary, the motion justice found most persuasive an express statement by Ralph Rafaelian in his deposition testimony that he did not rely on Randolph Takian in any way, and that he had no relationship with him. We agree with the ruling of the motion justice. First, defendants did not demonstrate that they reasonably relied, to their detriment, on representations made by Randolph. See Manchester v. Pereira, 926 A.2d 1005, 1012 (R.I.2007) (discussing elements of negligent misrepresentation); Women's Development Corp. v. City of Central Falls, 764 A.2d 151, 161 (R.I.2001) (discussing elements of fraudulent inducement). The supporting material defendants submitted in opposition to plaintiff's motion for summary judgment detail how Charles and Marguerite Takian relied extensively on Randolph for advice and legwork related to the property. However, other than the fact the he served as a conduit for most of the communication between his parents and defendants, defendants point to no specific representations made by Randolph that resulted in any injury to them. In our opinion, defendants' assertion that Randolph colluded with his parents to defraud them is speculative and unsupported by the evidence presented to the motion justice. We reach a similar conclusion with respect to the claim against Randolph for loss of corporate opportunity. Corporate officers and directors of any corporate enterprise, public or close, have long been recognized as corporate fiduciaries owing a duty of loyalty to the corporation and its shareholders and [are] thereby prohibited from diverting corporate opportunities to themselves. A. Teixeira & Co. v. Teixeira, 699 A.2d 1383, 1386 (R.I.1997). To successfully state a claim [for loss of corporate opportunity] a plaintiff must demonstrate that the defendant was a corporate fiduciary and that he or she diverted a corporate opportunity. Id. Randolph was not an officer, director, or other corporate fiduciary of the Lumar Corporation. Moreover, defendants' evidence with respect to Randolph's alleged collusion to sell the property to the Blackbeard Homeowners' Association  despite the extensive discovery in the case  was wholly speculative. In addition, because the loss of opportunity is a wrong against the corporation, the vast majority of courts analyzing such claims have concluded that the appropriate remedy is an action either by the corporation itself or by shareholders in a derivative suit. See, e.g., Perlman v. Feldmann, 219 F.2d 173 (2d Cir.), cert. denied, 349 U.S. 952, 75 S.Ct. 880, 99 L.Ed. 1277 (1955); In re Big Wheel Holding Co., 214 B.R. 945, 951-52 (D.Del.1997); Energy Resources Corp. v. Porter, 14 Mass.App.Ct. 296, 438 N.E.2d 391 (1982). As discussed above, the Rafaelians lacked standing to sustain any derivative claims on behalf of Lumar. Therefore, we affirm that portion of the motion justice's ruling that granted summary judgment to plaintiffs on count 7 of defendants' counterclaim with respect not only to Randolph, but also in favor of Charles and Marguerite Takian. Count 6 of defendant's counterclaim against Randolph for breach of the duty of good faith and fair dealing also must fail. [I]t is well settled that there is an `implied covenant of good faith and fair dealing between parties    so that the contractual objectives may be achieved.' Now Courier, LLC v. Better Carrier Corp., 965 A.2d 429, 435 (R.I.2009) (quoting Ide Farm & Stable, Inc. v. Cardi, 110 R.I. 735, 739, 297 A.2d 643, 645 (1972)). However, this Court has also held that this requirement only applies after a binding contract is formed. Centerville Builders, Inc. v. Wynne, 683 A.2d 1340, 1342 (R.I.1996). Here, defendants have failed to allege facts suggesting that Randolph acted in bad faith in carrying out the terms of the release; on the contrary, they are asking that the release be set aside. Count 9 of defendants' counterclaim alleges abuse of process against Takian Counterclaim Defendants. We have scoured the record and are unable to find any definitive analysis from the trial justice on this issue. [8] Because this allegation necessarily arose separate and apart from the facts that underlie the other counts in this dispute, we are thus left without a sufficient record to review this claim, and we remand the matter to the Superior Court for a ruling on defendants' abuse-of-process counterclaim against Charles, Marguerite and Randolph Takian.
A release is a contractual agreement governed by the principles of contract law. See Young v. Warwick Rollermagic Skating Center, Inc., 973 A.2d 553, 558 (R.I.2009). As this Court held in Guglielmi v. Rhode Island Hospital Trust Financial Corp., 573 A.2d 687, 689 (R.I. 1990): The law concerning this issue is well settled in this jurisdiction. The validity of a release must be determined in light of three factors: (1) the existence of consideration for the release, (2) the experience of the person executing the release, and (3) the question of whether the person executing the release was represented by counsel. Finding satisfactory answers to these questions, the court will find a release to be valid and binding unless it has been procured through fraud, misrepresentation, overreaching, or a material mistake on the part of either party. We agree with the motion justice's finding that the parties did not seriously dispute whether the release was proper on its face. See Guglielmi, 573 A.2d at 689. However, the motion justice also ruled that the release should not be set aside because of fraud or misrepresentation. He based that finding on his conclusion that defendants knew when they signed the document not only about plaintiffs' mismanagement and misappropriation, but also about the potential for more significant wrongdoing. His decision relied primarily on defendants' memorandum to plaintiffs containing the threat to conduct a full audit. He found the $100,000 ultimatum was tantamount to an admission by defendants that they knew about more serious improprieties, and he concluded that they were making peace and willing to let sleeping dogs lie. [9] Whether plaintiffs committed acts or omissions that would render the release voidable, however, requires the resolution of material facts that the parties genuinely, indeed vigorously, disputed. See Guglielmi, 573 A.2d at 689. The record clearly shows that defendants steadfastly and vigorously contended throughout the course of this litigation that their demand for a $100,000 payment from plaintiffs represented, in their minds, only their fair share of distributions based on what they believed had already been distributed to plaintiffs, plus additional losses attributable to plaintiffs' mismanagement, but not for any further wrongdoings. Indeed, one of defendants' contentions was that they discovered evidence of wrongful acts  such as the letters from the late 1990s directing the trailer park tenants to make their rent checks payable to Charles Takian personally  only after the Takians had presented them with the release, and after they had executed it. When the motion justice decided otherwise, it is our opinion that he necessarily considered the evidentiary weight of the memorandum against the alternative evidence, and that he erred when he construed that evidence against defendants and not in the light most favorable to the nonmoving party. [10] See Zanni, 13 A.3d at 1071; Classic Entertainment & Sports, Inc., 988 A.2d at 849. The same is true of the motion justice's findings that defendants were sophisticated businesspeople, and his findings on the extent to which they may have been aware of negotiations with the tenants association about the sale of the property. Furthermore, there is, in our judgment, a triable issue of fact with respect to whether plaintiffs breached a duty of loyalty to defendants as the officers of a closely-held corporation. See Hendrick v. Hendrick, 755 A.2d 784, 789 (R.I.2000) (We are mindful that `[c]orporate officers and directors of any corporate enterprise, public or close, have long been recognized as corporate fiduciaries owing a duty of loyalty to the corporation and its shareholders   .' (quoting A. Teixeira & Co., 699 A.2d at 1386)). [S]ummary judgment should occasion the termination of a case only where it is absolutely clear `that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law.' Estate of Giuliano, 949 A.2d at 394. The judge's belief that one scenario is more probable than the other is not a legally sufficient reason to grant a motion for summary judgment. McPhillips, 582 A.2d at 750. Although a motion justice entertaining such a motion may search for the existence of factual issues, he or she may not determine them    nor may the trial justice assess the weight or the credibility of the evidence. Id. at 749. Those duties fall within the province of a fact-finder. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions   .). Therefore, we vacate the judgment of the Superior Court on plaintiffs' motion for summary judgment with respect to counts 2, 3, 4, 5, 6, and 8 against Charles and Marguerite Takian. Because we have concluded that the motion justice's ruling with respect to the release was error, we also must revisit counts 10 and 11 of defendants' counterclaim, which alleged a violation of the Rhode Island Racketeer Influenced and Corrupt Organizations Act and conspiracy to violate that act, respectively, against Charles, Marguerite, and Randolph Takian. Understandably, the trial justice found that defendants' RICO counterclaims were disposed of by [his] decision upholding the validity of the release; and he did not provide any further analysis of those claims. [11] In light of our holding that there were disputed issues of fact precluding summary judgment regarding whether the release should be set aside, and the lack of a detailed analysis from the trial judge on the validity of the RICO claims, we vacate the judgment of the Superior Court with respect to counts 10 and 11, and remand the matter for a ruling on whether the court should grant summary judgment in favor of the plaintiffs on those claims.