Weinstein v. Weinstein

882 A.2d 53, 275 Conn. 671, 2005 Conn. LEXIS 348
Supreme Court of Connecticut·Decided October 4, 2005·No. SC 17097·Published·Cited by 60 cases

Opinions

Opinion

KATZ, J.

The plaintiff, Nancy Weinstein, appeals, following our grant of certification,1 from the judgment of the Appellate Court, affirming the judgment of the trial court. Weinstein v. Weinstein, 79 Conn. App. 638, 830 A.2d 1134 (2003). The trial court had denied the plaintiffs application for a rule to show cause requesting that the court open and vacate the judgment dissolving her marriage to the defendant, Luke A. Weinstein, on the ground that the stipulation on which the judgment was based was the result of a fraudulent misrepresentation by the defendant. On appeal to this court, the plaintiff challenges the Appellate Court’s conclusion that the trial court’s findings, namely, that the plaintiff had failed to prove both that the defendant committed fraud by clear and convincing evidence and [675] that there was a substantial likelihood that the result of a new trial would be different, were not clearly erroneous. Id., 648. Specifically, the plaintiff contends that she offered clear and convincing evidence that: (1) the defendant had committed fraud by failing to disclose a $2.5 million offer he and his business partners had received for the purchase of a software company that they owned during the pendency of the marriage dissolution proceedings; and (2) the defendant’s rejection of that lucrative offer compelled the conclusion that the defendant fraudulently had undervalued his ownership interest in the company in his financial affidavit submitted to the court in the marriage dissolution proceedings. The plaintiff also contends that she established that there is a substantial likelihood that the outcome of a new trial would be different in light of the withheld and misrepresented information. We agree with the plaintiff, and, accordingly, we reverse the judgment of the Appellate Court.

The record reveals the following facts and procedural history. After nearly seven years of marriage and the birth of one child, the plaintiff filed a complaint seeking to dissolve her marriage due to an irretrievable breakdown. At the time of the dissolution proceedings, the defendant owned a substantial minority interest in a small, privately held software company, Product Technologies, Inc. (Product Technologies).2 During the pendency of the matter, the plaintiff deposed the defendant, seeking specifically to obtain financial information about the value of his interest in the company. At trial before Higgins, J. (dissolution court), the plaintiff, [676] through her expert witness, Kenneth J. Pia, Jr., submitted a report to the court containing Pia’s valuation of the defendant’s interest, which Pia had made on the basis of the financial information contained in the defendant’s deposition, discovery and other representations, including the defendant’s sworn financial affidavits in which he repeatedly had valued his interest at $40,000.3 Subsequently, the parties stipulated to, and the dissolution court adopted, the $40,000 value for the defendant’s interest in the company. On May 12, 1998, the dissolution court entered orders for, inter alia, child support and alimony. The court also ordered the defendant to pay to the plaintiff $100,000 as a property settlement. On the basis of the stipulated valuation of the defendant’s interest in Product Technologies, the dissolution court allowed the defendant to retain that interest and the plaintiff to retain an inherited interest in a separate partnership owned by her family.

On May 29, 1998, the defendant filed a motion for reconsideration of the financial orders in the dissolution judgment, claiming that complying with the existing orders would “strip him bare” and force him to sell premarital assets. While that motion was pending, on June 12, 1998, the defendant received a memorandum of understanding from ICL, Inc. (ICL), a company wdth which Product Technologies jointly had developed certain software.4 Although the memorandum of under[677] standing did not set forth the finalized terms of the sale, it nonetheless clearly stated ICL’s intent to purchase Product Technologies, stating: “This [memorandum of understanding] sets forth the intent of the parties that the Shareholders shall sell to ICL and ICL shall purchase from the Shareholders all of the issued and outstanding shares of [Product Technologies], As such, the [Product Technologies] Business . . . shall be transferred to ICL including, but not limited to, all intellectual property rights. The term ‘[Product Technologies] Business’ shall include, but is not limited to, [Product Technologies] operations as a smart card software developer and systems integration/solutions provider. More specifically, the [Product Technologies] Business includes, but is not limited to, the supply, both directly and through strategic relationships, of SmartCity system software, hardware, installation, customization, system integration, support and training. At ICL’s election the Shares shall be sold to either ICL or to one or more of the companies within the ICL Group. The term ‘ICL Group’ means ICL’s parent, affiliated and subsidiary companies.” (Emphasis added.) On June 15, 1998, the defendant and his partners met with representatives from ICL, at which time ICL made an offer to purchase Product Technologies for $2.5 million. The defendant and his partners immediately rejected the offer, in part because they believed it was too low if ICL expected it to include the intellectual property asset. The defendant did not notify the plaintiff or the dissolution court that he had received and rejected this offer.

On June 16, 1998, the dissolution court denied the defendant’s motion for reconsideration. In October, 1998, five months after the entry of the judgment of dissolution, the defendant and his partners sold Product Technologies to ICL for $6 million. As a result of the sale, the defendant received approximately $1.45 million for his interest in the company.

[678] Thereafter, the plaintiff filed an application for a rule to show cause seeking to open and to vacate the judgment on the basis of fraud, asserting that the defendant fraudulently had failed to disclose and misrepresented material financial information during the pendency of the marital dissolution proceedings.5 With respect to nondisclosure, the plaintiff claimed, inter alia, that the defendant’s failure to disclose the $2.5 million offer constituted fraud. Specifically, the plaintiff contended that the defendant’s duty to disclose pertinent financial information had extended until June 16,1998, when the dissolution court ruled on the defendant’s motion for reconsideration. The plaintiff asserted that the defendant had become aware of ICL’s intent to purchase Product Technologies upon receipt of the memorandum of understanding on June 12, 1998, and that he had a duty to disclose the $2.5 million offer because the dissolution court had not yet ruled on his motion to reduce his financial obligations under the dissolution judgment due to monetary constraints.

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Weinstein v. Weinstein, 882 A.2d 53, 275 Conn. 671, 2005 Conn. LEXIS 348 (Colo. 2005).

882 A.2d 53 (Weinstein v. Weinstein) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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