Court Opinion

ID: 5128267
Source: CourtListenerOpinion
Date Created: 2021-11-22 13:02:58.223967+00
Date Added: 2024-06-11T08:23:06.165585
License: Public Domain

***********************************************
    The “officially released” date that appears near the be-
ginning of each opinion is the date the opinion will be pub-
lished in the Connecticut Law Journal or the date it was
released as a slip opinion. The operative date for the be-
ginning of all time periods for filing postopinion motions
and petitions for certification is the “officially released”
date appearing in the opinion.

   All opinions are subject to modification and technical
correction prior to official publication in the Connecticut
Reports and Connecticut Appellate Reports. In the event of
discrepancies between the advance release version of an
opinion and the latest version appearing in the Connecticut
Law Journal and subsequently in the Connecticut Reports
or Connecticut Appellate Reports, the latest version is to
be considered authoritative.

   The syllabus and procedural history accompanying the
opinion as it appears in the Connecticut Law Journal and
bound volumes of official reports are copyrighted by the
Secretary of the State, State of Connecticut, and may not
be reproduced and distributed without the express written
permission of the Commission on Official Legal Publica-
tions, Judicial Branch, State of Connecticut.
***********************************************
              ASPIC, LLC v. BRACK G. POITIER
                        (AC 42495)
                        Prescott, Bright and Moll, Js.*

                                    Syllabus

The plaintiff, a single member limited liability company, sought to recover
     monetary damages from the defendant, a general partner in four limited
     partnerships, for default on promissory notes that had been executed
     by H, the managing general partner of the limited partnerships, and the
     plaintiff’s predecessor in interest. Before the trial court, the defendant
     raised several special defenses, including that the plaintiff was barred
     from recovery because H breached his fiduciary duties to the defendant,
     who was H’s general partner in the limited partnerships. The defendant
     alleged that H, without providing him any notice, executed certain notes
     on behalf of the limited partnerships for H’s own benefit, entered into
     another note using the original notes as collateral, and sold real property
     assets of the limited partnerships to entities controlled by H’s son or
     an affiliate of the plaintiff for inadequate consideration. Following a
     trial, the court rendered judgment in favor of the defendant on his
     special defense of breach of fiduciary duty, and the plaintiff appealed
     to this court. Held:
1. This court concluded that the trial court’s finding that H failed to disclose
     to the defendant all relevant information related to the note transactions
     was not clearly erroneous, and this failure constituted a breach of fidu-
     ciary duty that precluded enforcement of the notes against the defendant.
    a. The plaintiff could not prevail on its claim that the trial court could
    not have reasonably found that the defendant lacked notice of the notes,
    there being no evidence that the defendant was aware of their execution:
    the record did not reflect that, prior to executing certain of the notes,
    H ever communicated to the defendant that he intended, as the managing
    general partner of the limited partnerships, to issue promissory notes
    to himself and another company, R Co., memorializing the amounts he
    claimed were owed by the limited partnerships; moreover, the evidence
    the plaintiff pointed to that allegedly showed a free and frank disclosure
    of relevant information, certain letters of correspondence and audited
    financial statements, fell short of clear and convincing evidence of fair
    dealing, and, by issuing the notes, H circumvented the contractual limits
    of liability for obligations arising under the management agreement and
    converted a nonrecourse debt obligation into a recourse debt obligation;
    furthermore, the mere fact that certain partnership agreements author-
    ized H to execute the notes, coupled with the defendant’s knowledge of
    debts owed to H and R Co. and of H’s contemplation of a potential loan
    transaction, did not relieve H of his fiduciary duty to disclose to the
    defendant all relevant information specific to the notes; accordingly, H’s
    fiduciary duty was not simply to inform the defendant that the limited
    partnerships were in debt, but, rather, to keep the defendant apprised
    of the details of the limited partnerships’ repayment plans, especially
    when those plans implicated the defendant to the extent they did here.
    b. The trial court did not err in failing to address the relevant factors under
    Konover Development Corp. v. Zeller (228 Conn. 206), which outlines,
    in certain circumstances involving sophisticated business ventures, how
    a fiduciary demonstrates that a particular transaction is fair: in light of
    this court’s conclusion that H failed to disclose all relevant information
    regarding the notes, the other Zeller factors could not outweigh, as a
    matter of law, the failure to make a free and frank disclosure, as a party
    cannot have competent and independent advice about a transaction as
    to which there has not been a free and frank disclosure of all relevant
    information, and a party’s level of sophistication to understand a transac-
    tion is of little value if the party does not know about the transaction;
    moreover, adequate consideration is a necessary, not sufficient, condition
    to establish fair dealing, as although the lack of adequate consideration
    may lead to a conclusion that a fully disclosed transaction nevertheless
    constitutes a breach of fiduciary duty, adequate consideration alone will
    not establish fair dealing as to a transaction that was not fully disclosed
    to the principal and to which the principal did not agree.
    c. The plaintiff could not prevail on its claim that the trial court, in
    reaching the conclusion that H breached his fiduciary duty to the defen-
    dant, committed a number of legal errors that required reversal: the
    plaintiff misconstrued the import of the court’s conclusion and minimized
    the central finding of the court that H failed to disclose to the defendant
    that he was converting his accounts receivable claims against the limited
    partnerships into promissory notes that he then would use to secure
    loans for himself and R Co., as the court’s reference to the sale of
    the limited partnerships’ real property assets was not the basis for its
    conclusion that H breached his fiduciary duty to the defendant, but that
    H’s breach of fiduciary duty occurred much earlier when he endorsed
    the notes over to himself and/or R Co.; moreover, it was not just that
    H benefitted from the transaction, but that he did so without making
    the necessary free and frank disclosure of all relevant information to
    the defendant; accordingly, the plaintiff could not exclude from the
    court’s analysis its key finding, which was not clearly erroneous, that H
    failed to disclose all relevant information relating to the notes, and the
    failure to make a free and frank disclosure of all the information regarding
    the transactions, which unquestionably personally benefited H to the
    detriment of the defendant, was fatal to the plaintiff’s claims of legal error.
2. The plaintiff’s claim that the trial court improperly rendered judgment
     for the defendant on the notes issued to R Co., even though it concluded
     that R Co. had not breached any fiduciary duty it owed to the defendant,
     was without merit; the court rejected the special defense that R Co.
     breached its fiduciary duty to the defendant because R Co. owed no
     fiduciary duty to the defendant, and, nonetheless, the transaction by
     which it received promissory notes from the limited partnerships was
     orchestrated by H, for his own benefit and without making a free and
     frank disclosure to the defendant, and the plaintiff, standing in H’s shoes,
     could not avoid the effects of H’s breach of fiduciary duty simply because
     H created an obligation to a third party he controlled instead of a direct
     obligation to himself.
    Argued December 11, 2019—officially released November 23, 2021

                              Procedural History

   Action to collect on promissory notes, and for other
relief, brought to the Superior Court in the judicial dis-
trict of New Haven, where the court, Ecker, J., granted
the plaintiff’s application for a prejudgment remedy,
and the defendant appealed to this court, Alvord, Bright
and Sullivan, Js., which reversed the decision and
remanded the case for further proceedings; thereafter,
the matter was tried to the court, S. Richards, J.; judg-
ment for the defendant, from which the plaintiff
appealed to this court. Affirmed.
  Timothy A. Diemand, with whom were Jeffrey R.
Babbin and Richard Luedeman, for the appellant
(plaintiff).
  Matthew T. Wax-Krell, with whom were Mark A.
Rosenblum, and, on the brief, Michael D. Blumberg,
for the appellee (defendant).
                          Opinion

  BRIGHT, J. In this debt collection action, the plaintiff,
ASPIC, LLC, appeals from the judgment of the trial court
rendered in favor of the defendant, Brack G. Poitier.
The plaintiff claims that the court erred in concluding
that it cannot hold the defendant personally liable for
amounts due on promissory notes entered into by the
plaintiff’s predecessor in interest, Wendell Harp,
because Harp breached his fiduciary duties to the defen-
dant, who was Harp’s general partner in certain limited
partnerships. We disagree and, accordingly, affirm the
judgment of the court.
  This case returns to us after our decision in ASPIC,
LLC v. Poitier, 179 Conn. App. 631, 181 A.3d 593 (2018)
(ASPIC). This court reversed the judgment of the trial
court, Ecker, J., granting a prejudgment remedy in the
amount of $1 million in favor of the plaintiff.1 Id., 633.
Following our remand for further proceedings, the case
was tried to the court, S. Richards, J., on March 20,
2018.
   The following facts, which are either undisputed or
were found by the trial court, are relevant to this appeal.
‘‘The plaintiff is a single member limited liability com-
pany, whose sole member is Municipal Capital Appreci-
ation Partners III, L.P. (Muni). The defendant is a gen-
eral partner in four limited partnerships, GAB Hill
Limited Partnership [(GAB)], BHP Limited Partnership
[(BHP)], WCH Limited Partnership [(WCH)], and
Renaissance [Hill] Limited Partnership [(Renaissance
Hill)]. These partnerships collectively are known as the
Court Hill Partnerships (Court Hill). The partnership
agreements provide that each general partner has
unlimited personal liability for all obligations of the
partnerships. Court Hill owns properties that served
low income individuals in the New Haven area. In addi-
tion to the defendant, George Bumbray and . . . Harp2
also are general partners in Court Hill, with Harp having
been appointed as the managing partner. Harp’s com-
pany, Renaissance Management Company, Inc. (Renais-
sance [Management]), acts as the managing agent for
all of the properties owned by Court Hill.’’ (Footnote
in original.) ASPIC, LLC v. Poitier, supra, 179 Conn.
App. 634.
   ‘‘[Renaissance Management] handled all of the day-to-
day tenant and operational needs of Court Hill’s rental
properties including, but not limited to, paying Court
Hill’s tax liabilities, complying with its annual housing
audit requirements, screening tenants, overseeing prop-
erty leasing and rent collection, performing routine
maintenance work, managing federal and state regula-
tions and performing routine maintenance work on the
units, elevators, [and] roofs along with other capital
improvements. For years, Court Hill’s independent audi-
tors’ report noted that Court Hill was experiencing sub-
stantial operating deficits and net losses compared to
the net cash provided by its operating activities.’’
   ‘‘On December 24, 2008, Harp, on behalf of Court
Hill, signed an amended and restated promissory note
in the amount of $2,039,763 in substitution for an
August, 2008 promissory note.3 The note purported to
memorialize Court Hill’s debt for ‘operating expenses as
of November 30, 2008, plus accrued interest’ by entering
into an ‘amended and restated promissory note’ with
Renaissance [Management] for that amount. Harp
endorsed this note four times, once for each of the
Court Hill member partnerships. Also on December 24,
2008, Harp, on behalf of Court Hill, then entered into
an ‘amended and restated promissory note,’ in the
amount of $817,692, with Harp, individually. This note
also was for ‘operating expenses as of November 30,
2008, plus accrued interest thereon.’ Harp also endorsed
this note four times, once for each of the Court Hill
member partnerships.4
   ‘‘On December 30, 2008, Harp, on behalf of himself
and Renaissance [Management], executed a loan agree-
ment and a $1.5 million promissory note with Muni
(Muni note). The loan agreement provided in part that
$695,963.94 of the loan would be advanced to Harp and
Renaissance [Management] ‘to be used by [Harp and
Renaissance Management] to repay the promissory note
made by [Muni] to Harp,’ and that proceeds from this
loan also were to be used to pay federal, state, and
local tax liabilities of Harp and/or Renaissance [Manage-
ment]. Schedule 7 (f) of the loan agreement contains,
inter alia, a listing of the tax obligations of Renaissance
[Management]: $950,000 to the Department of Revenue
Services; $732,000 to the Internal Revenue Service
[IRS]; and $3700 to the city of New Haven.
   ‘‘Harp, Renaissance [Management], and Muni also
entered into a ‘pledge and security agreement’ on
December 30, 2008, whereby Renaissance [Manage-
ment] and Harp pledged as collateral for the Muni note
their interests in and rights under the Court Hill notes.
Additionally, on April 1, 2009, Harp, Renaissance [Man-
agement], and Muni entered into a ‘first amendment
to pledge and security agreement’ (amended security
agreement), which amended the December 30, 2008
pledge and security agreement to include a collateral
pledge of two additional notes payable by Court Hill
(2009 advance notes), one in favor of Renaissance [Man-
agement] in the amount of $251,010 for operating
expenses between December 1, 2008, and February 28,
2009, and one in favor of Harp in the amount of $13,572,
also for operating expenses during that same period.’’
(Footnotes in original.) ASPIC, LLC v. Poitier, supra,
179 Conn. App. 634–35.
  The defendant was unaware that Harp executed the
Court Hill notes and the 2009 advance notes on behalf of
the partnerships and in favor of Harp and Renaissance
Management. There also was no evidence that the
defendant was aware of the execution of the loan agree-
ment or the pledge and security agreement between
Harp and Muni in December, 2008.5 The entire principal
balance of the Muni note was due and payable on
December 31, 2010, but no payment was made at that
time.6
   In May or June, 2011, Harp told his son Wendell
Matthew Nathaniel Harp that he had been diagnosed
with terminal cancer and asked his son to return home
and take over Harp’s businesses. In November, 2011,
Harp, as the Court Hill managing general partner,
divested Court Hill of its real property assets through
four separate purchase and sale agreements. In three
of these transactions, Harp transferred the real property
assets of GAB, BHP, and WCH to limited liability compa-
nies owned and controlled by his son.7 Additionally, on
November 4, 2011, Harp executed a purchase and sale
agreement transferring Renaissance Hill’s real property
assets to ASPIC Renaissance, LLC—an affiliate of the
plaintiff—for the purchase price of $2,800,000. Although
the total stated consideration for all of the real property
assets sold was $6,850,000, which represented the pur-
ported fair market value of the properties, neither the
Court Hill partnerships nor their partners received any
proceeds from the transactions. Instead, the buyers paid
off mortgages owed on the properties in the amount of
$1,830,272.23 and became co-obligors on the Court Hill
notes. Thus, as a result of these transactions, Court Hill
lost more than $5 million of equity in real estate assets
and remained liable, along with its general partners and
the purchasers of those assets, for the Court Hill notes
executed by Harp on behalf of Court Hill. Harp did
not notify the defendant that he sold Court Hill’s real
property assets to entities controlled by his son and
the plaintiff. On December 2, 2011, Harp died, and his
son became the president of Renaissance Management.
   On January 8, 2014, after not receiving any payment
from Harp or Renaissance Management on the Muni
note, Muni declared the note in default and held a public
sale of the collateral securing the Muni note—the Court
Hill and 2009 advance notes. Muni was the highest bid-
der at the auction and took title to the Court Hill notes
and the 2009 advance notes. Muni thereafter transferred
legal title of those notes to its subsidiary, the plaintiff,
which brought this action to enforce the Court Hill
notes and the 2009 advance notes against the defendant,
as a general partner in Court Hill. The plaintiff did
not seek to enforce the notes against the Court Hill
partnerships, Harp’s estate, Bumbray, or any of the enti-
ties that became co-obligors on the notes when they
purchased the Court Hill properties in 2011, including
the plaintiff’s affiliate, ASPIC Renaissance, LLC.
   In response to the plaintiff’s complaint, the defendant
filed an answer and amended special defenses. At issue
in this appeal is the defendant’s eighth special defense
that the plaintiff is barred from recovery by virtue of
Harp’s breach of his fiduciary duties to the defendant.
The defendant argued that Harp breached his fiduciary
duties by (1) executing the Court Hill notes and the
2009 advance notes on behalf of the Court Hill partner-
ships, for his own benefit, without providing sufficient
notice to the defendant that he was doing so, (2) enter-
ing into the Muni note and using the Court Hill notes
and the 2009 advance notes as collateral, also without
notifying the defendant, and (3) selling the real property
assets of the Court Hill partnerships to entities con-
trolled by his son or an affiliate of the plaintiff for
inadequate consideration, again without informing the
defendant that he was doing so.
   Before the trial court, the parties agreed that, because
the plaintiff acquired the notes after the notes were in
default, the plaintiff stood in Harp’s shoes and, there-
fore, owed a fiduciary duty to the defendant. Accord-
ingly, the plaintiff conceded that, if Harp breached his
fiduciary duty to the defendant, it would be precluded
from enforcing the notes. The plaintiff also conceded
that, because Harp owed a fiduciary duty to the defen-
dant, it bore the burden of proving, by clear and convinc-
ing evidence, that the transactions at issue constituted
fair dealing by Harp. The plaintiff claimed that Harp
dealt fairly with the defendant, arguing that the evi-
dence established that the defendant was well aware
of the substantial amounts Court Hill owed Harp and
Renaissance Management, and that Harp explicitly told
the defendant that he intended to borrow money from
Muni and to assign to Muni, as collateral for the loan, the
receivables owed to him and Renaissance Management.
The plaintiff also argued that the liquidation of Court
Hill’s real property assets in 2011 was separate and
distinct from the transactions involving the Court Hill
and 2009 advance notes and in no way tainted its right
to enforce those notes.
   On March 20, 2018, the court held a one day bench
trial. On November 8, 2018, the court rendered judgment
in favor of the defendant on his special defense asserting
a breach of fiduciary duty, concluding that Harp breached
his fiduciary duty to the defendant. The court reasoned:
‘‘The plaintiff produced no rebuttal evidence that either
Bumbray or the defendant was aware of Harp’s endorse-
ment of the Court Hill notes over to himself and/or to
Renaissance. The court finds the testimony of Bumbray
and the defendant, both of whom denied any prior
knowledge of Harp’s endorsements, to be highly credi-
ble.8 The plaintiff presented no transcripts from any
meetings of the general partners regarding said endorse-
ments and there was no evidence that any such meet-
ings were held.’’ (Footnote added.) The plaintiff now
appeals. Additional facts will be set forth as necessary.
  On appeal, the plaintiff claims that the court improp-
erly (1) concluded that Harp, as the plaintiff’s predeces-
sor in interest, breached his fiduciary duties to the
defendant and (2) rendered judgment for the defendant
on the Court Hill notes and the 2009 advance notes
issued to Renaissance Management even though it con-
cluded that Renaissance Management had not breached
any fiduciary duty it owed to the defendant. We address
each claim in turn.
                             I
   The plaintiff first claims that the court’s conclusion
that Harp breached his fiduciary duties to the defendant
was premised on multiple legal errors and clearly erro-
neous factual findings. The plaintiff argues that the
court improperly (1) found that the defendant lacked
notice of the Court Hill notes, the 2009 advance notes,
and the Muni note, (2) failed to consider all of the
relevant factors under Konover Development Corp. v.
Zeller, 228 Conn. 206, 635 A.2d 798 (1994), and (3) ana-
lyzed Harp’s performance of his fiduciary duties to the
defendant.
   We begin with the standard of review and legal princi-
ples relevant to our resolution of the plaintiff’s claims.
‘‘The scope of our appellate review depends upon the
proper characterization of the rulings made by the trial
court. To the extent that the trial court has made find-
ings of fact, our review is limited to deciding whether
such findings were clearly erroneous. When, however,
the trial court draws conclusions of law, our review is
plenary and we must decide whether its conclusions
are legally and logically correct and find support in the
facts as they appear in the record. . . .
  ‘‘[W]hen the resolution of a question of law, such as
the existence of a fiduciary duty, depends on underlying
facts that are in dispute, that question becomes, in
essence, a mixed question of fact and law. Thus, we
review the subsidiary findings of historical fact, which
constitute a recital of external events and the credibility
of their narrators, for clear error, and engage in plenary
review of the trial court’s application of . . . legal stan-
dards . . . to the underlying historical facts.’’ (Citation
omitted; internal quotation marks omitted.) Saggese v.
Beazley Co. Realtors, 155 Conn. App. 734, 751–52, 109
A.3d 1043 (2015). ‘‘Appellate review of facts on which
a claim of breach of fiduciary duty is based is subject
to the clearly erroneous standard.’’ Chioffi v. Martin,
181 Conn. App. 111, 136, 186 A.3d 15 (2018).
  As a preliminary matter, we reiterate—as we did in
ASPIC—that it is undisputed that Harp owed a fiduciary
duty to the defendant, and that the plaintiff is bound
by that fiduciary duty. See ASPIC, LLC v. Poitier, supra,
179 Conn. App. 641 n.6 (‘‘The court found, and the
parties do not dispute, that the plaintiff, having acquired
the Court Hill collateral notes after the notes were in
default, is not a holder in due course under General
Statutes § 42a-3-302 (a), and that the plaintiff is subject
to any personal defenses that the defendant could have
asserted against Harp and Renaissance. The parties also
agree that the plaintiff stands in Harp’s shoes and owes
a fiduciary duty to the defendant.’’).
   ‘‘Our Supreme Court has recognized that partners are
generally bound in a fiduciary relationship and act as
trustees toward each other and toward the partnership.
. . . Proof of a fiduciary relationship imposes a twofold
burden on the fiduciary. First, the burden of proof shifts
to the fiduciary; and second, the standard of proof is
clear and convincing evidence. Once a fiduciary rela-
tionship is found to exist, the burden of proving fair
dealing properly shifts to the fiduciary. . . . Further-
more, the standard of proof for establishing fair dealing
is not the ordinary standard of proof of fair preponder-
ance of the evidence, but requires proof either by clear
and convincing evidence, clear and satisfactory evi-
dence or clear, convincing and unequivocal evidence.’’
(Citation omitted; internal quotation marks omitted.)
Spector v. Konover, 57 Conn. App. 121, 127, 747 A.2d
39, cert. denied, 254 Conn. 913, 759 A.2d 507 (2000).
   Thus, the central issue for this court is whether the
trial court properly concluded that Harp breached his
fiduciary duty to the defendant because the plaintiff
failed to prove fair dealing by clear and convincing
evidence. Accordingly, we review the court’s factual
findings for clear error and conduct a plenary review
of the court’s ultimate conclusion as to whether the
plaintiff proved that Harp did not breach his fiduciary
duty to the defendant. See Saggese v. Beazley Co. Real-
tors, supra, 155 Conn. App. 751–52.
                             A
   The plaintiff first contends that the court erred by
finding that the defendant lacked notice of the Court
Hill notes, the 2009 advance notes, and the Muni note.
Specifically, the plaintiff argues that the court’s determi-
nation was inconsistent with both the factual record—
in that the court cited to nonexistent testimony while
ignoring clear and convincing evidence of notice to the
defendant—and the well established legal principles
regarding fair dealing. We disagree.
   The following additional facts are relevant to our
resolution of the plaintiff’s claim. At trial, the plaintiff
proffered the following evidence in support of its claim
that the defendant had notice of the transactions at
issue. In a February 4, 2008 letter to the defendant and
Bumbray, Harp requested financial assistance to pay
off some of Court Hill’s debts, including delinquent
sewer fees assessed to Renaissance Hill. In order to
prevent one of Renaissance Hill’s creditors from seizing
its property, Harp claimed that he immediately bor-
rowed $60,000 to settle pending foreclosure sale judg-
ments. Harp requested that Bumbray and the defendant
each loan him $150,000 to help cover existing debts,
allowing him more time to negotiate ‘‘a less stringent
loan plan.’’ At trial, the defendant acknowledged receipt
of the letter and testified that he did not offer to help
pay off the sewer debt.
   In another correspondence from Harp to the defen-
dant dated March 20, 2008, Harp explained the extent
of Court Hill’s debts and outlined a plan to effect a
buyout of Bumbray and the defendant. Harp wrote: ‘‘I
am in need of borrowing another [$1.5 million plus or
minus] to cover partial payments on the [Connecticut]
taxes, installment payment of IRS withholding taxes,
sewer [and] utility fees, vendor debts, partial reimburse-
ment to me, and related expenses. [Muni] has expressed
a willingness to fund these subject to their ability to
[effect] a [buyout] of the other Court Hill general part-
ners and overall agreement of you and [Bumbray] con-
verting to [limited] partners or [you and Bumbray] pay-
ing substantially on the general partner obligations! In
the event the [buyout] is not agreed upon I will simply
borrow the additional funds available to me and assign
my collateral debts from Court Hill to [Muni].’’ (Empha-
sis omitted.)
  The defendant testified that Harp told him in 2008,
that Court Hill needed operating funds and that he
intended to borrow money from Muni if necessary.
When shown the March 20, 2008 letter, the defendant
acknowledged that he did not agree to the buyout pro-
posed by Harp and that the letter informed him that, if
he did not agree to the buyout, Harp intended to borrow
additional funds and assign his collateral debts from
Court Hill to Muni.
  The record does not reflect any evidence that, prior
to executing the Court Hill notes or the 2009 advance
notes, Harp ever communicated to the defendant that
he intended, as Court Hill’s managing general partner,
to issue promissory notes to himself and Renaissance
Management memorializing the amounts he claimed
were owed by Court Hill. The record also does not
reflect any further communications between Harp and
the defendant regarding the possible assignment of
Harp’s and Renaissance Management’s claims to Muni
between March and December, 2008, when the Muni
note was executed.
  As previously stated in this opinion, the plaintiff had
the burden to prove, by clear and convincing evidence,
that Harp dealt fairly with the defendant with respect
to the transactions at issue. See Konover Development
Corp. v. Zeller, supra, 228 Conn. 219 (‘‘[o]nce a [fidu-
ciary] relationship is found to exist, the burden of prov-
ing fair dealing properly shifts to the fiduciary’’ (internal
quotation marks omitted)). ‘‘Our Supreme Court has
stated that [i]t is a thoroughly [well settled] equitable
rule that any one acting in a fiduciary relation shall not
be permitted to make use of that relation to benefit his
own personal interest. This rule is strict in its require-
ments and in its operation. It extends to all transactions
where the individual’s personal interests may be
brought into conflict with his acts in the fiduciary capac-
ity, and it works independently of the question whether
there was fraud or whether there was good intention.
. . . The rule applies alike to agents, partners, guard-
ians, executors and administrators.’’ (Emphasis in origi-
nal; internal quotation marks omitted.) Spector v.
Konover, supra, 57 Conn. App. 128.
   In Spector, this court, referencing our Supreme Court’s
decision in Konover Development Corp. v. Zeller, supra,
228 Conn. 228, noted that, in certain circumstances
involving sophisticated business ventures, ‘‘a fiduciary
may demonstrate that a particular transaction is fair by
showing (1) that the fiduciary made a free and frank
disclosure of all the relevant information he had, (2)
that the consideration was adequate, (3) that the princi-
pal had competent and independent advice before com-
pleting that transaction, and (4) the relative sophistica-
tion and bargaining power among the parties.’’ Spector
v. Konover, supra, 57 Conn. App. 128–29. As this court
noted, however, this standard does not diminish the
nature of a partner’s fiduciary duties. Rather, ‘‘[t]he
Zeller standard effectively preserves the heightened
standards required of fiduciaries while allowing parties
in a fiduciary relationship the flexibility to contract
freely among themselves. . . . To invoke the Zeller
standard in an attempt to justify the fairness of a particu-
lar transaction, the fiduciary must first be able to show
that there was some agreement among the parties
allowing the fiduciary to act in a manner that may other-
wise be a breach of fiduciary duty.’’ Id., 129.
   The plaintiff, relying on the Zeller standard, points to
the February and March, 2008 letters of correspondence
from Harp to the defendant and the Court Hill audited
financial statements as evidence of a free and frank
disclosure of the relevant information relating to Harp’s
execution of the Court Hill and 2009 advance notes and
the pledge of those notes as collateral for the Muni
note. We agree that the February and March, 2008 letters
are evidence that Harp notified the defendant about
a tentative plan to enter into a pledge and security
agreement with Muni to secure a loan. We also agree
that the audited financial statements are evidence that
Court Hill owed a debt to Harp and Renaissance Man-
agement. Significantly, however, neither the letters nor
the audited financial statements constitute evidence of
Harp notifying the defendant of his intent to issue prom-
issory notes totaling more than $3 million on behalf of
Court Hill to himself and to Renaissance Management
or that he intended to pledge these notes as collateral
for the Muni note.
  Consequently, the plaintiff cannot claim that the court’s
specific finding that the defendant was unaware ‘‘of
Harp’s endorsement of the Court Hill notes over to
himself and/or to Renaissance [Management]’’ was clearly
erroneous. There was no evidence, let alone clear and
convincing evidence, that the defendant was aware of
the execution of those notes, the 2009 advance notes,
or the Muni note. Instead, the plaintiff essentially argues
that the defendant’s knowledge of (1) Court Hill’s debts
owed to Renaissance Management and Harp and (2)
Harp’s plan to borrow money from Muni using those
debts as collateral for the Muni note constitutes a free
and frank disclosure of the terms of the Court Hill
notes, the 2009 advance notes, and the Muni note to
the defendant before they were executed. We disagree.
   Owning accounts receivable, even if confirmed by
Court Hill’s audited financial statements, is materially
different from being the holder of a promissory note
that provides a clear and explicit obligation to pay the
amount set forth in the note pursuant to specific terms.
For example, a claim by Harp or Renaissance Manage-
ment for operating expenses incurred on behalf of Court
Hill would require proof of such expenses and the
amount due. See, e.g., Day v. Len-Metal-Fab, Inc., 3
Conn. Cir. 249, 253, 212 A.2d 426 (1965) (‘‘[t]he burden
of proof was upon the plaintiff to establish by a fair
preponderance of the evidence the substantial allega-
tions of his complaint, among which were the rendition
of services alleged, the rate of compensation, and the
time required to perform such services’’). After the exe-
cution of the Court Hill and 2009 advance notes in
specific amounts, the ability of Court Hill or its general
partners to challenge the amount owed to Harp and
Renaissance Management became much more difficult.
See, e.g., Financial Freedom Acquisition, LLC v. Grif-
fin, 176 Conn. App. 314, 323, 170 A.3d 41 (‘‘The posses-
sion by the bearer of a note [e]ndorsed in blank imports
prima facie [evidence] that he acquired the note in good
faith for value and in the course of business, before
maturity and without notice of any circumstances
impeaching its validity. The production of the note
[endorsed in blank] establishes [the possessor’s] case
prima facie against the makers and he may rest there.’’
(Internal quotation marks omitted.)), cert. denied, 327
Conn. 931, 171 A.3d 454 (2017).
   In addition, the Court Hill and 2009 advance notes
gave Harp and Renaissance Management remedies not
available to them without the notes. For example, the
notes include: a standard interest rate of 10 percent
and a default interest rate of an additional 5 percent;
a waiver of Court Hill’s right to a jury trial; a waiver
of notice and a hearing should Harp or Renaissance
Management seek a prejudgment remedy; and a provi-
sion requiring Court Hill to pay reasonable attorney’s
fees if the holder of the notes employs counsel to
enforce them. None of these remedies would have been
available to Harp or Renaissance Management in the
absence of the notes.
   Moreover, § 33 of the ‘‘Management and Affirmative
Fair Marketing Agreement’’ between one of the partner-
ships, Renaissance Hill, and Renaissance Management,9
provides: ‘‘If Owner is a partnership, no partner of
Owner shall be held to any personal liability, nor shall
resort be had to his, her or its private property for
satisfaction of any obligation or claim arising out of
this Agreement, unless such partner has specifically
undertaken performance of the obligations of Owner
by executing this Agreement in his or her personal
capacity. Only the Development assets of Owner shall
be liable and subject to levy or execution on account
of any liability of Owner arising hereunder. A deficit
capital account [of a] partner of Owner shall not be
deemed to be an asset or property of Owner.’’ (Empha-
sis added.) Thus, by issuing the Court Hill and 2009
advance notes, Harp circumvented the contractual lim-
its of liability for obligations arising under the manage-
ment agreement and converted a nonrecourse debt obli-
gation into a recourse debt obligation.
   Finally, the mere fact that the partnership agreements
authorized Harp to execute the Court Hill notes, cou-
pled with the defendant’s knowledge of debts owed
to Harp and Renaissance Management and of Harp’s
contemplation of a potential loan transaction with
Muni, did not relieve Harp of his fiduciary duty to dis-
close to the defendant all relevant information specific
to the Court Hill and 2009 advance notes. As this court
has previously stated: ‘‘The terms of a . . . partnership
agreement cannot negate the fiduciary duty of the gen-
eral partner even where the relationship and terms of
a contract between the fiduciary and its affiliate are
disclosed and even where the partnership involves
sophisticated parties. . . . Zeller requires more than a
disclosure of the relationship and terms underlying the
transaction. Zeller requires that the fiduciary make a
free and frank disclosure of all the relevant information
it has about the particular transaction.’’ (Citation omit-
ted; emphasis in original.) Springfield Oil Services, Inc.
v. Conlon, 77 Conn. App. 289, 302–303, 823 A.2d 345
(2003). Put another way, Harp’s fiduciary duty was not
simply to inform the defendant that Court Hill was in
debt but, rather, to keep the defendant apprised of the
details of Court Hill’s repayment plans, especially when
those plans implicated the defendant to the extent that
they did here.
  In sum, the February and March, 2008 letters of corre-
spondence and annual audited financial statements fall
short of clear and convincing evidence of fair dealing.
Accordingly, we reject the plaintiff’s contention that
the court could not have reasonably found that the
defendant lacked notice of the Court Hill notes, the
2009 advance notes, and the Muni note.
                            B
   The defendant next argues that the court erred in
failing to consider all of the relevant factors under
Konover Development Corp. v. Zeller, supra, 228 Conn.
206. We disagree.
   As previously noted in this opinion, in certain circum-
stances, ‘‘a fiduciary may demonstrate that a particular
transaction is fair by showing (1) that the fiduciary
made a free and frank disclosure of all the relevant
information he had, (2) that the consideration was ade-
quate, (3) that the principal had competent and indepen-
dent advice before completing that transaction, and (4)
the relative sophistication and bargaining power among
the parties.’’ Spector v. Konover, supra, 57 Conn.
App. 128–29.
   Having concluded in part I A of this opinion that Harp
failed to make a free and frank disclosure of all relevant
information to the defendant, the plaintiff’s claim
regarding application of the other Zeller factors fails.
We conclude that the other Zeller factors cannot out-
weigh, as a matter of law, the failure to make a free
and frank disclosure. This is particularly true as to the
third and fourth factors. Indeed, a party cannot have
competent and independent advice about a transaction
as to which there has not been a free and frank disclo-
sure of all relevant information. Similarly, a party’s level
of sophistication to understand a transaction is of little
value if the party does not know about the transaction.
   As to the second Zeller factor regarding the adequacy
of consideration, adequate consideration is a necessary,
not sufficient, condition to establish fair dealing. As we
have previously stated: ‘‘The standard articulated in
Zeller is most appropriately applied in situations where
a principal challenges the fairness of a particular trans-
action in which both the principal and the fiduciary
made a fully informed decision to act in a manner that
is seemingly contrary to the normal fiduciary relation-
ship. Implicit in the Zeller standard is the requirement
that the principal consent to the transaction carried
out by the fiduciary. To invoke the Zeller standard in
an attempt to justify the fairness of a particular transac-
tion, the fiduciary must first be able to show that there
was some agreement among the parties allowing the
fiduciary to act in a manner that may otherwise be
a breach of fiduciary duty.’’ (Emphasis added.) Spector
v. Konover, supra, 57 Conn. App. 129. Thus, although the
lack of adequate consideration may lead to a conclusion
that a fully disclosed transaction nevertheless consti-
tutes a breach of fiduciary duty, adequate consideration
alone will not establish fair dealing as to a transaction
that was not fully disclosed to the principal and to
which the principal did not agree. Consequently, in light
of the court’s conclusion that Harp failed to disclose
all relevant information regarding the Court Hill and
2009 advance notes, the trial court did not err in failing
to address the other Zeller factors.
                             C
   The plaintiff also claims that the court, in reaching
its conclusion that Harp breached his fiduciary duty to
the defendant, committed a number of legal errors that
require reversal. In particular, the plaintiff claims that
the trial court incorrectly (1) relied on the 2011 sales
of Court Hill’s real property assets because those trans-
actions were separate and distinct from the execution
of the Court Hill and 2009 advance notes and, therefore,
any breach of fiduciary duty by Harp in completing
those transactions cannot be attributed to the plaintiff,
(2) concluded that it was a breach of fiduciary duty that
Harp benefitted from the Court Hill and 2009 advance
notes, even though Court Hill also benefitted from those
notes, (3) based its conclusion on a nonexistent duty
that Harp ensure that the defendant was released from
liability under the Muni note, and (4) imposed a nonexis-
tent duty on Harp to have a formal meeting with his
partners before executing the Court Hill notes. We are
not persuaded.
  The plaintiff misconstrues the import of the court’s
conclusion and minimizes the central finding of the
court that Harp failed to disclose to the defendant that
he was converting his accounts receivable claims
against Court Hill into promissory notes that he then
would use to secure loans for himself and Renaissance
Management. Although the court did mention in its
memorandum of decision that Harp did not provide the
defendant with notice prior to selling Court Hill’s real
property assets, the court made clear that Harp’s breach
of fiduciary duty, as it relates to the plaintiff’s right to
enforce the Court Hill and 2009 advance notes, occurred
much earlier. The court specifically held: ‘‘The defining
moment happened once Harp endorsed the notes over
to himself and/or Renaissance [Management]: Harp’s
duty to deal fairly with Court Hill, Bumbray, and the
defendant collided with his personal objective in reduc-
ing or eliminating his own tax liabilities; he pursued
the Muni loan for a dual purpose. The notes and Muni
loan proceeds benefitted Harp and Court Hill not just
Court Hill. The court concludes that the point at which
Harp acted on his own behalf, in his own interest too,
as Harp, the ‘individual,’ the ‘person,’ the ‘maker’ in his
own name, he breached the trust that Court Hill and
the other general partners placed in him.’’ (Emphasis
in original.) Thus, the court’s reference to the sale of
the Court Hill real property assets was not the basis
for its conclusion that Harp breached his fiduciary duty
to the defendant.
   Similarly, the plaintiff’s claim that the court incor-
rectly concluded that a fiduciary may not benefit from
a transaction that also benefits his principal ignores the
court’s earlier finding that Harp failed to disclose to
the defendant his plan to execute the Court Hill notes
and the 2009 advance notes, and pledge them as security
for the Muni note. Thus, it was not just that Harp benefit-
ted from the transaction, but that he did so without
making the necessary free and frank disclosure of all
relevant information to the defendant. This failure to
disclose also undermines the plaintiff’s arguments as
to whether Harp was required to receive a release of
liability for the defendant as part of the Muni loan trans-
action and its claim that no formal meeting was required
to discuss Harp’s execution of the Court Hill and 2009
advance notes. Had Harp properly disclosed all relevant
information to the defendant and had the defendant
agreed to the transactions at issue, the plaintiff might
be correct that a formal meeting or a release of liability
would not have been required. That, however, did not
occur. Simply put, the plaintiff cannot exclude from the
court’s analysis its key finding, which was not clearly
erroneous, that Harp failed to disclose all relevant infor-
mation relating to the Court Hill notes, the 2009 advance
notes, and the Muni note to the defendant. The failure to
make a free and frank disclosure of all the information
regarding these transactions, which unquestionably
personally benefitted Harp to the detriment of the
defendant, is fatal to the plaintiff’s claims of legal error.
  In sum, we conclude that the court’s finding that
Harp failed to disclose to the defendant all relevant
information related to the transactions at issue was not
clearly erroneous. We also agree with the court that
this failure constituted a breach of fiduciary duty that
precludes enforcement of the Court Hill and 2009
advance notes against the defendant.
                             II
  The plaintiff finally claims that the court improperly
rendered judgment for the defendant on the Court Hill
and 2009 advance notes issued to Renaissance Manage-
ment even though it concluded that Renaissance Man-
agement had not breached any fiduciary duty it owed
to the defendant. This claim is without merit.
   In its memorandum of decision, the trial court
addressed each of the defendant’s special defenses.
Although the court found that the defendant prevailed
on his breach of fiduciary duty special defense against
Harp, it denied his breach of fiduciary duty special
defense as to Renaissance Management. It nevertheless
rendered judgment for the defendant on all of the plain-
tiff’s claims, both those arising from Harp’s Court Hill
and 2009 advance notes and those arising from Renais-
sance Management’s Court Hill and 2009 advance notes.
The reason for this should be clear. The court rejected
the special defense that Renaissance Management
breached its fiduciary duty to the defendant because
Renaissance Management owed no fiduciary duty to
the defendant. Its only relationship to Court Hill and
the defendant was as a provider of services to Court
Hill. Nonetheless, the transaction by which it received
promissory notes from Court Hill was orchestrated by
Harp, for his own benefit and without making a free
and frank disclosure to the defendant. The plaintiff,
standing in Harp’s shoes, cannot avoid the effects of
Harp’s breach of fiduciary duty simply because Harp
created an obligation to a third party he controlled
instead of a direct obligation to himself. Allowing
Renaissance Management to recover on the Court Hill
and 2009 advance notes would provide a road map for
how a fiduciary may breach his duty to his principal
and then insulate his misconduct from attack. We are
unwilling to provide such assistance.
   The judgment is affirmed.
   In this opinion the other judges concurred.
   * The listing of judges reflects their seniority status on this court as of
the date of oral argument.
   1
     In ASPIC, this court noted that the plaintiff owed a fiduciary duty to the
defendant because it stood in the shoes of the defendant’s former business
partner, Harp, and thus, was subject to any personal defenses asserted by
the defendant against Harp. ASPIC, LLC v. Poitier, supra, 179 Conn. App.
641 n.6. In reaching this conclusion, we determined that the defendant’s
breach of fiduciary duty defense required the trial court to shift the burden
of proving fair dealing by clear and convincing evidence to the plaintiff. Id.,
642. Because the court did not place any burden on the plaintiff to prove
that there was probable cause to believe that the transactions at issue were
conducted fairly, this court reversed the judgment of the trial court and
remanded the case for further proceedings. Id., 644, 647.
   2
     ‘‘By the time of the hearing on the prejudgment remedy application,
Harp was deceased.’’ ASPIC, LLC v. Poitier, supra, 179 Conn. App. 634 n.2.
   3
     ‘‘The amended and restated promissory note provided that it was ‘given
in substitution for (but not in satisfaction of) a [p]romissory [n]ote of [m]aker
to [l]ender in the original principal amount of [$2,007,820] dated on or about
August 1, 2008.’ It does not appear, however, that the August 1, 2008 note
was submitted into evidence at the [prejudgment remedy] hearing [or at
trial].’’ ASPIC, LLC v. Poitier, supra, 179 Conn. App. 634 n.3.
   4
     ‘‘These two December 24, 2008 amended and restated promissory notes
collectively are referred to as the Court Hill notes.’’ ASPIC, LLC v. Poitier,
supra, 179 Conn. App. 635 n.4.
   5
     The defendant admitted receiving a communication from Harp in March,
2008, in which Harp notified the defendant that Harp had borrowed $625,000
from Muni in 2007, and that he assigned ‘‘a receivable interest in funds owed
[to Renaissance and Harp] . . . .’’ That purported loan is not the subject
of this litigation. In the same communication, Harp informed the defendant
that if he and Bumbray did not agree to convert their general partner interests
in Court Hill to limited partner interests, he would borrow approximately
$1.5 million from Muni to cover various expenses arising out of Court Hill’s
operations and would ‘‘assign my collateral debts from Court Hill to [Muni].’’
Harp further told the defendant that, ‘‘after May 1, 2008, I will have put in
place the final agreement on [the Muni] loan/investment—and they will
probably move aggressively to consolidate their loans and enforce general
partner financial responsibility and collection.’’ The significance of this com-
munication is discussed further in part I A of this opinion.
   6
     Muni’s managing partner, Richard Corey, testified at trial that, in early
2017, a payment in the amount of $710,443 was made toward the Muni note
after one of the properties that secured the note was sold.
   7
     In the first sale, acting on behalf of GAB, Harp sold one property to
HOW WH, LLC, for the purchase price of $850,000. In the second sale, acting
on behalf of WCH, Harp sold another property to ROB WH, LLC, for the
purchase price of $1.3 million. In the third sale, acting on behalf of BHP,
Harp sold a third property to LEG WH, LLC, for the purchase price of
$1.9 million.
   8
     The parties agree that the court’s statements regarding Bumbray’s testi-
mony are clearly erroneous because Bumbray did not testify. Nevertheless,
because the plaintiff had the burden to prove, by clear and convincing
evidence, what the defendant knew, and because the plaintiff presented no
evidence that the defendant was aware of the execution of the notes, the
court’s error was harmless.
9
    This was the only management agreement introduced at trial.