Beckworth ex rel. Discount Trophy & Co. v. Bizier

138 F. Supp. 3d 144, 2015 U.S. Dist. LEXIS 130605, 2015 WL 5722721
CourtDistrict Court, D. Connecticut
DecidedSeptember 29, 2015
DocketCiv. No. 3:13CV1593 (AWT)
StatusPublished
Cited by2 cases

This text of 138 F. Supp. 3d 144 (Beckworth ex rel. Discount Trophy & Co. v. Bizier) is published on Counsel Stack Legal Research, covering District Court, D. Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Beckworth ex rel. Discount Trophy & Co. v. Bizier, 138 F. Supp. 3d 144, 2015 U.S. Dist. LEXIS 130605, 2015 WL 5722721 (D. Conn. 2015).

Opinion

RULING ON MOTION TO AMEND

Alvin W. Thompson, United States District Judge

Plaintiffs Glenn Beekworth, Willis Beck-worth, and Vicky Juneau, individually and derivatively on behalf of Discount Trophy & Co., Inc. (“DTC”), and Glenn' Beck-worth, individually and derivatively on behalf of Marco Plastic Industries, Inc. (“MPI”), have moved for leave to file an amended complaint pursuant to Fed. R. Civ. P. 15(a)(2). For the reasons set forth below, the plaintiffs’ motion is being granted in part and denied in part. The plaintiffs are being allowed to amend their complaint only with respect to their request to inspect and copy books and records.

I. BACKGROUND

The plaintiffs allege the following circumstances. From 1988 to 2008, Glenn Beekworth managed and operated Plastic Plus Awards (“Plastic Plus”), a company “engaged in the wholesale trophy/awards component business with [its] primary customers being retail trophy/awards stores throughout the continental United States.” (First Amended Complaint (Doc. No. 45-3) (“Proposed Complaint”) ¶ 22.) Plastic Plus was a Louisiana general partnership composed of Glenn Beekworth, Willis Beck-worth and Vicky Juneau.

In or about 1998, Glenn Beekworth became acquainted with Marcel Bizier, the sole shareholder, president and Chief Executive Officer of Discount Trophy & Co., Inc., a Connecticut corporation in the same line of business as Plastic Plus. Prior to November 20, 2008 the four children of Marcel Bizier and his wife Barbara King Bizier were the sole shareholders of Marco Plastic Industries, Inc. (“MPI”), a Connecticut corporation that “acts as a conduit in ordering trophy/awards parts and components from Chinese vendors and reselling them to [DTC] at a 5% markup.” (Proposed Complaint ¶ 24).

For 12 to 18 months' prior to November 20, 2008, Marcel Bizier and Glenn Beck-worth had discussed merging Plastic Plus and Discount Trophy & Co., Inc. “with a view to Glenn and Marcel jointly operating the [combined businesses] for three years ____” (Proposed Complaint ¶ 26.) After the three year period, Glenn' Beekworth would “purchas[e] the shares of Marcel [Bizier] and assum[e] management and control of the combined businesses and Marcel [Bizier would] retir[e].” (Proposed Complaint ¶ 26.)

By agreement dated November 20, 2008, DTC and Plastic Plus agreed to merge and operate under the name Discount Trophy & Co., Inc. Under a Shareholder Agreement having the same date, Marcel Bizier owns 75% of DTC, Glenn Beekworth, Willis Beekworth and Vicky Juneau collectively own 25% of DTC, and Glenn Beekworth owns 20% of MPI. The Shareholder Agreement provided that Marcel Bizier would be the President and Chief Executive Officer of DTC, Glenn Beekworth would be the Vice-President and Chief Operating Officer, and DTC’s Board of Directors would be composed of Marcel Bizier, Glenn Beck-worth and Barbara King Bizier. In connection with the merger, an employment agreement was executed between DTC and Marcel Bizier.

The plaintiffs allege that Marcel Bizier and Barbara King Bizier engaged in cer[147]*147tain conduct after the merger that was in violation of the various merger-related agreements and was detrimental to DTC, MPI, their shareholders, and the plaintiffs. Specifically, .the plaintiffs allege that Marcel Bizier unilaterally increased his salary in violation of the Shareholder Agreement and Marcel Bizier’s employment agreement; Marcel Bizier withheld access to the books and accounting records of DTC and MPI; DTC acquired the issued and outstanding shares of Barhill Manufacturing, Inc. (“Barhill”), a Pennsylvania corporation owned by Barbara King Bizier; and Marcel Bizier caused MPI to distribute a sum of $2,076,828.00 to his children instead of distributing a pro-rated amount to all shareholders.

The Complaint (Doc. No. 1) contained derivative claims and individual claims, and one of the 'individual claims was a request for an order to inspect and copy the books and records of DTC.1

The court granted the defendants’ motion to dismiss all claims in the Complaint. The court dismissed the derivative claims without prejudice for lack of standing because the plaintiffs failed to satisfy the fair and adequate representative requirements of Conn. Gen. Stat. §§ 33-721 and 52-572j and Fed. R. Civ. P. 23.1(a). The Ninth Cause of Action was dismissed without prejudice and with permission to file a motion for leave to amend the complaint.

The Proposed Complaint omits all individual claims-except for,a request to inspect and copy the books and records of DTC. and MPI (Sixth Cause of Action). It also, includes five derivative claims: breach of contract for excess compensation (First Cause of Action); breach of contract for unauthorized acquisition (Second Cause of Action); director conflict of interest in violation of Conn. Gen. Stat. § 33-781(l)(4) and §§ 33-783(a) and (c) (Third Cause of Action); unlawful distribution in violation of Conn. Gen. Stat, §§ 33-687(a) and (b) as to MPI (Fourth Cause of Action); and breach of fiduciary duty (Fifth Cause of Action).

II. LEGAL STANDARD

Fed R. Civ. P. 15(a)(2) provides that, absent circumstances set forth in subsection (a)(1):

a party may amend its pleading only with the opposing party’s written' consent or the court’s leave. The court should freely give leave when justice so requires.

The Supreme Court has emphasized that amendment should normally be permitted:

Rule 15(a) declares that leave to amend “shall be freely given when justice so requires”; this mandate is to be heeded. If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim [148]*148on the merits. In the absence of any apparent or declared reason—such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.—the leave sought should, as the rules require, be “freely given.”

Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962) (internal citations omitted). “[I]t is rare that [leave to amend] should be denied, especially when there has been no prior amendment.” Ricciuti v. N.Y.C. Transit Auth., 941 F.2d 119, 123 (2d Cir.1991) (internal citations omitted.

“Where the amended portion of the complaint would fail to state a cause of action, however, the district court may deny the party’s request to amend.” Parker v. Columbia Pictures Indus., 204 F.3d 326, 339 (2d Cir.2000). “Am amendment to a pleading will be futile if a proposed claim could not withstand a motion to dismiss pursuant to Rule 12(b)(6).” Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 88 (2d Cir.2002).

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Bluebook (online)
138 F. Supp. 3d 144, 2015 U.S. Dist. LEXIS 130605, 2015 WL 5722721, Counsel Stack Legal Research, https://law.counselstack.com/opinion/beckworth-ex-rel-discount-trophy-co-v-bizier-ctd-2015.