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DOCKET NO. X07-HHD-CV-19-6109896-S SUPERIOR COURT
SHAPIRO BARASH, SUSAN, CO-TRUSTEE COMPLEX LITIGATION DOCKET
Vv AT HARTFORD
RUBINOW, LAURENCE P. JULY 1, 2021
DOCKET NO. X07-HHD-CV-18-6096025-S SUPERIOR COURT
SHAPIRO BARASH, SUSAN, CO-TRUSTEE COMPLEX LITIGATION DOCKET
V. AT HARTFORD
RUBINOW, LAURENCE P. JULY 1, 2021
DOCKET NO. X07-HHD-CV-18-6096422-S SUPERIOR COURT
SHAPIRO BARASH, SUSAN, CO-TRUSTEE COMPLEX LITIGATION DOCKET
AT HARTFORD
Vv.
RUBINOW, LAURENCE P. JULY 1, 2021
DOCKET NO. Xo07-HHD-CV-18-6101376-S SUPERIOR COURT
RUBINOW, LAURENCE P., EXECUTOR OF COMPLEX LITIGATION DOCKET
THE ESTATE OF RICHARD RIPPS
Vv. AT HARTFORD
SHAPIRO BARASH, SUSAN, CO-TRUSTEE JULY 1, 2021
DOCKET NO. X07-HHD-CV-18-6101388-S : SUPERIOR COURT
SHAPIRO BARASH, SUSAN, CO-TRUSTEE : COMPLEX LITIGATION DOCKET
Vv. : AT HARTFORD
RUBINOW, LAURENCE P., ET AL. : JULY 1, 2021
PILED
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vee 40 2021
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DOCKET NO X07-HHD-CV-18-6091 749
DOCKET:
: COMPLEX LITIGATION
BARASH, SUSAN SHAPIR' OQ, CO-TRUSTEE
: AT HARTFORD
V.
: JULY 1, 2021
LEMBO, BARBARA
on Granting
Memorandum of Decisi ent
Partial Summary Ju gm
pments.
l mo gu l’ s hei rs c om pl ain of unfavorable develo
4. Mal
chester
a com mer cia l real est ate develope: r with properties in Man
Richard Ripps was
es with the
r. He was a rou ghh y equ al partner in several ventur
and South Windso
,
ir ubi qui tou s fri end and legal a dvisor was the defendant
defendant J ohn Finguerra. The
Laurence Rubinow.
his three
He left alm ost eve ryt hin g to a tru: st that would benefit
Ripp s died in 2006.
idual trust.
Rub ino w exe cut ol r of his est ate and co-trustee of the res
children. Ele made
Later Ripps’
e was Rub ino w’s last wife , the defendant, Barbara Lembo.
Another truste
Barash, also became a trustee.
ex-wife, the plaintiff Susan
tied up in
ps’ arr ang eme nts was that almost all of his money was
The trouble with Rip
n Ripps died, his
and Fin; guerra developed. Whe
the commercial properties he
limited
guerra, interacting with his
friend Rubinow, running the
arrangements left Fin
them.
liability ecmpanies that owned
ldren gave way to
Reco; gnition of this on the par
t of Barash and the Ripps chi
ts. In a series
pic ion to accu sati on. The accusations ripened into lawsui
suspicion and sus
they say Rubinow has
suit s Bar ash and the chi ldr en now make a central cla’ im:
of six law.
rra, the client
ed the m by per for min g his duti es so as to advantage Fingue
betray
2
nee
e e
cerc
en
Rubinow still has, rather than favoring a less lucrative liaison with the Ripps
children
with whom he has no prospect of future business. Barash and the Ripps children want
to hold Finguerra liable for helping Rubinow and Lembo liable for doing nothing
to stop
Rubinow.
2. Can Evergreen walk the talk?
This motion turns mostly on the ultimate viability of a series of shops
called
Evergreen Walk. Several years after Ripps died, Finguerra with Rubinow’s
acquiescence
poured money into it from two successful projects Ripps and Fingue
rra had developed
elsewhere. They say it has struggled but is viable and that a half interest
in it will
someday yield fruit for the Ripps children.
Barash and the Ripps children disagree. They say the project is a Potemk
in Village—
a losing veriture masquerading as a potentially successful one. They
say Rubinow and
Finguerra dressed it up only because Finguerra personally guaranteed
some of its debt
and preferred losing the Ripps children’s money rather than his own.
They also say
Finguerra has a nearby development he is shielding from harm.
This is a quite a thing to face on summary judgment. What matters most for the
motion is whether Evergreen Walk was a known loser or whethe
r putting more money
into it was a genuine business decision. If the parties agreed on this
question, there
likely wouldn't be all of these lawsuits. Given that they bitterly disagr
ee on this point,
the only hope the parties have is that the court will see the facts being
so lopsided that
their side might win a summary judgment.
— a
Unfortunately, the court must dash these hopes. As it stands now, a reasonable
fact
finder could go either way on this pivotal subject. Only the crucible of a trial
will show
who is right. Meanwhile, there is enough evidence on both sides to avoid a summary
judgment.
Barash and the children point to statements from Finguerra between 2010 and
2016
expressing alarm about the financial status of Evergreen Walk. They have
employed an
expert to support this claim. They further point to indisputable evidence
that Rubinow
and Finguerra—and Ripps for the matter—were very close. They point to
all the money
Rubinow has made as a lawyer for Finguerra and might still make by favoring
Finguerra.
Barash and the children emphasize the undisputed fact that, after Ripps
died,
Finguerra cid personally guarantee some of the Evergreen Walk debt and
remains the
only personal guarantor of the project’s debts. It is undisputed that Rubino
w worked
with Finguerra on a nearby project called Evergreen Crossing that Finguer
ra but not the
Ripps childen would profit from. It is also undisputed that Rubinow approv
ed and
helped arrange a new agreement under which Finguerra would earn
money from
managing Evergreen Walk.
Barash and the children particularly emphasize that Finguerra diverte
d several
million dollars from more successful projects to Evergreen Walk when that
money could
have been paid to the estate and reached the Ripps children. They even
claim that
making the loans to Evergreen Walk was contrary to the stated purposes
of the lender
companies and that the loans were therefore prohibited by the lender compan
ies’
operating agreements. Most of all they are enraged that much of what they
say was $12
4
million of zssets has eluded their grasp for almost a decade and half, pointing out that
the money that did make it into the estate was almost entirely devoured by taxes and
fees paid tc Rubinow.
Rubinow and Finguerra admit they are friends and long-time collaborators. They
say they had the same relationship with Ripps. They say that, as Ripps wanted it, they
are carrying on his good work and trying to get the most money out of all of the projects.
They admit that Evergreen Walk hasn’t always been profitable as a single entity. But
they insist it is viable and a good investment. They claim they arranged for Finguerra to
earn fees for his work on it to preserve what they see as the most valuable thing—the
Ripps children’s undiminished interest in 49% of the property.
Rubinow and Finguerra say the children fixate only on snapshots of unfavorable
moments while they are looking at the longer term—just as Ripps would have wanted
them to do. They ask how Barash and the children can claim that Finguerra has
anything to fear about his personal guarantee when they haven’t proved to the court that
the property isn’t worth the debt on it. In other words, they say Barash and the children
haven’t shown that Finguerra will ever have to honor his guarantee. Where’s the
motive, they ask, if the guarantee isn’t needed?
Rubinow and Finguerra defend the right of the other companies to give money to
Evergreen Walk. They correctly point out that the operating agreements of the lending
companies say these companies can make loans to any company—what matters as usual
is whether it was prudent or at least done in good faith. If they were good loans, they
would surely be—in the language of the stated purpose in each operating agreement—a
a.
thing “reasonable in connection” with making a success of the real estate development
described in the document.
Both parties dispute the burden of proof. It’s true in fiduciary litigation that, at some
point, the burden typically shifts to the fiduciary to justify his actions.: But here it’s
different. Both the will and the trust document seek to protect Rubinow against all
claims except those of bad faith and reverse the ordinary assumptions in the trust
instrument by requiring Barash and the Ripps children to prove this bad faith by clear
and convincing evidence.
Barash and the Ripps children wrongly claim that the language in the will is limited
to tax matters. The language may be in a section that also discusses tax issues, but the
plain language of the applicable provision is broad and makes no such limitation.
Indeed, it is a section called “additional powers” that seeks to enhance the position of
the fiduciary in several ways.
The cout has no reason not to honor Ripps’ wishes that his fiduciaries be insulated
from attack except in cases of bad faith. This language means, certainly for summary
Judgment purposes, that doubts have to be resolved against granting a judgment against
a party who must at most establish good faith. Indeed, but for the reality of Rubinow’s
entangleme:tts and the serious allegations of intentional betrayal, this standard would
point to Rubinow being entitled to such a judgment.
But at this stage, there is something to be said on both sides. Rubinow has allowed
himself to be placed in a tricky position where accusations of conflict of interest were
1 Oakhill “Associates v. D'Amato, 228 Conn. 723, 726-727 (1994).
oe
always likely to arise from the hats he wears—counselor and friend to Finguerra,
executor of the Ripps estate, and trustee of the Ripps trust. Of course, if the children
were being showered with money, this might look different, but with the money being
withheld, Fubinow is bound to face scrutiny. If it were clear when the other companies’
money was loaned to Evergreen Walk that Evergreen Walk would never be viable,
perhaps a fact finder would infer that Rubinow betrayed his trust by giving in to his
selfish interest in Finguerra’s future business and friendship.
But if it was a wise thing to put the money into Evergreen Walk—or at least the
money wer. in in good faith—the children haven’t anything to complain about—the
ultimate pzeyoff would be worth it. Both sides agree that Rubinow would be liable for
intentionally betraying the children and the children have offered enough evidence to
show there is a genuine dispute about whether the investment was made in good faith.
Contrary to Rubinow’s claim, Barash and the children don’t have to offer precise
proof of da:nages to survive a summary judgment motion. We know enough about these
claims for <1 least this stage. The children want the money they would have had if the
money given to Evergreen Walk were given instead to the estate and then passed on to
them. The parties know these precise amounts. Barash and the children also want
Rubinow’s fees disgorged, put back into the estate and then transferred to them. They
doubtless want more, but they have enough to meet any requirement of law that if
Rubinow breached his duties the breaches cost the children money.
Summary judgment is denied to both sides with respect to Rubinow.
3. The law doesn’t recognize liability for aiding and abetting fiduciary
breaches.
_ —
The analysis for Finguerra is different. The only claim Barash and the children make
against Finguerra is that he aided and abetted Rubinow in breaching his fiduciary
duties. But: this claim can’t succeed. Connecticut hasn’t recognized that a person can be
sued for aiding and abetting a breach of fiduciary duty. Indeed, in Flannery v. Singer
Asset Finance Co. in 2014 our Supreme Court declined an opportunity to address the
question.?
This court can’t decline to consider the issue. It is Finguerra’s main defense. While
not every legal question has been decided by our higher courts, that doesn’t mean the
lower courts can proclaim areas of lawlessness. Barash and the children are asking the
court to recognize that they have a right to bring this lawsuit. If the court says “no” it
means the cause of action doesn’t exist. It doesn’t mean it might exist but that the court
will refuse to decide the issue until an upper court has addressed it.
This court holds that a person can’t be sued for aiding and abetting a breach of
fiduciary duty arising from a will or trust instrument. Fiduciary duties under a written
instrument are the highest duties known to law.3 They are assumed voluntarily and, we
hope, knowingly.
A person like Finguerra who had no legal duty to a party should not have one so
great forcec. upon him so unwillingly and so indirectly. The demands are just too high to
give a perscn no choice in the matter. This is true even when he knows the other party is
a fiduciary and is allegedly manipulating him for financial gain.
-
2312 Conn. 286, 296, n.12.
3 See, e.g., Me'nhard v. Salmon 249 N.Y. 458, 464 (1928)(Cardozo, J.)(the “punctilio” of honor). These
words were held “an accurate statement of the law” in Konover Development Corporation v. Zeller, 228
Conn. 206, 220 (1994).
If courts were to indirectly impose fiduciary duty liabilities on strangers, banks,
accountan:s, lawyers, planners— all kinds of deep pockets—such claims might be added
routinely to every breach of fiduciary duty claim. If they were, who would want to do
business with a fiduciary? They would have to fear that every time something goes
wrong they will be accused of aiding and abetting a breach. It is simply too wide of a net
to cast.
There is no reason to think this won’t be the view of upper courts. Our state has only
narrowly recognized aiding and abetting liability in civil cases. The classic example is in
our Suprerie Court’s 1949 decision in Carney v. DeWees. In that case the Court held
that a participant in an impromptu car race aided and abetted the other racer in
committing an ordinary civil tort and was found liable for the consequences when the
other driver’s truck tipped over, killing two of its passengers.4
Today, our Supreme Court might handle that case differently. It might find instead
that the racer was negligent, and that he was a substantial factor in causing the ultimate
and foreseeable crash. In other words, the driver who didn’t crash might be liable
directly in tort rather than for aiding and abetting.
Liabilities of this kind and others recognized by the courts in the aiding and abetting
context are assumed without an express agreement. Tort liabilities like this can extend
to strangers. We are all at risk during our ordinary activities of picking up these duties.
It isn’t too much to ask to avoid risking other people’s lives and limbs.
4136 Conn. 255, 259-60.
The fiduciary duty is quite different. An underlying violation can be triggered
relatively easily where the duty is to make the best possible judgment call. Perhaps that’s
why our Supreme Court hasn’t seized an opportunity to recognize this kind of liability.
Because no cause of action exists for aiding and abetting a breach of fiduciary duty,
the court must grant Finguerra’s motion for summary judgment. Remember, the
children don’t claim he owed them any direct duty. They are solely trying to hold him
responsible for helping Rubinow to breach the duty he willingly took on. Therefore,
judgment will enter for Finguerra.
4. Residuary trust fiduciary duties arise when the estate closes.
The claim against the widow, Barbara Lembo, also fails on a point of law. Barash
and the ch'ldren claim that Lembo breached her duties as a trustee of the trust that was
to be funded out of what remained after closure of the Ripps estate. Yet they claim she
should have acted against Rubinow before that time— when he was acting as fiduciary of
the Ripps estate.
As the Connecticut Appellate Court held in 1984 in Warner v. Merchants Bank & Tr.
Co., where money flows from an estate into a trust: “The duties of a trustee are placed
upon him after the settlement of the estate is completed.”5 As the Warner court
explained, in a residuary trust, the residue—if there is any—can’t even be ascertained
until the estate is settled.© Consequently, the trust duties begin when the money flows in
and not before.
5 2Conn. App. 729, 732 (emphasis added).
6 Id.
10
Imposing responsibility earlier would leave fiduciaries unclear about when they pick
up their awesome duties. Should they pick up duties only once they pick up the right to
property? Or are they to become supervising-fiduciaries of the estates that precede their
work? This seems dubious given that they might never have any duties at all.
After all, money might flow into an estate. The trustee of a residuary trust might see
this and anticipate that money might make its way into the trust. But it might never get
there. It might be overwhelmed by the debts and fees that must be paid out of the
estate. And those debts and fees aren’t the responsibility of the residuary trustee. The
legitimacy of these matters is committed to the fiduciary of the estate to scrutinize, not
the fiduciary of the resulting trust.
Shaping what property goes into a trust is the job of others. Guarding it once it is
there is the job of the trustee. That’s why in Reinecke v. Smith in 1933 the United States
Supreme Court held that while a trustee “owes a duty to the beneficiary to protect the
trust res, faithfully to administer it, and to distribute the income” a trustee “owes no
duty to the beneficiary to resist alteration or revocation of the trust.”7
Of course, the trustee has to gather in trust property once it becomes trust property.
Money in the bank might need to be moved, personal property might have to be secured,
and assets might have to be sold. Barash and the Ripps children confuse this duty with
creating a roving commission to increase rather than protect the trust res. But the
residuary trust duty does not include a duty to protect property that might become trust
property.
7 289 U.S. 17 2, 176-77.
a1
Perhaps we have to protect Lembo for the same reason we protected Finguerra.
Fiduciary duties are serious things to undertake. Unless otherwise provided in the trust
documents, the duties might be high indeed, so it should at least be clear when they are
assumed.
Barash and the children don’t claim Lembo mismanaged anything that made it into
her care and control. Their claims that she should be responsible for anything else fail
as a matter of law because they relate solely to matters prior to her assuming any duties.
Summary judgment will enter for Lembo.
Asumraary judgment for Lembo on this issue means the identical financial claims
against Rubinow fail too. Rubinow certainly had fiduciary duties to the estate, but like
Lembo he didn’t have any trust duties about property that didn’t belong to the trust. At
best Barasii and the children may press their claim to remove Rubinow as residuary
trustee if they prove he betrayed them as executor in the manner they allege. But they
may not seek to blame him as fiduciary of the trust for things he did as fiduciary of the
estate. The court grants Rubinow a summary judgment on any damages claims for
breach of his duties as residuary trustee.
5. Barash and the Ripps children’s claims against Rubinow are timely
under the continuing course of conduct doctrine.
All of the defendants claim the statute of limitations has run out on Barash and the
children’s claims. This issue now matters only with respect Rubinow. Rubinow was the
estate fiduciary at the time he allegedly did wrong. He is a fiduciary today. Barash and
the children say that, at a minimum, their claims about his actions are saved from
staleness by the continuing course of conduct doctrine.
12
The court agrees. It explored this issue extensively in its 2021 decision on summary
judgment in Sherman v. Sherman.’ The court incorporates here its reasoning there.
Suffice :o say for this decision that the court determined from our appellate case law
that whether to apply the doctrine ultimately turns on equitable factors, particularly: (1)
the relative seriousness of the alleged wrong, and (2) the relative weight of the duty that
the party accused bore.
In particular, in Watts v. Chittenden in 2015 our Supreme Court relied on the nature
of the wrong as well as the existence of a duty that is a “special relationship” between the
parties as militating in favor of finding a lawsuit timely. In that case, the Court
concluded that public policy favored applying the doctrine where a serious wrong—a
false accusation of child molestation—was coupled with the special duties owed by
husband arid wife to each other.?
Here, both factors favor applying the continuing course of conduct doctrine. The
self-interested betrayal alleged here and to be sorted out by a fact finder is a very serious
species of breach. Barash and the children claim that Rubinow carried out a calculated
scheme to betray his duties for his own financial gain. And the duties at issue are of the
most signif.cant magnitude. Whatever protections Ripps may have written for Rubinow
he still was a fiduciary, the quintessential special relationship under the law.
Indeed, fiduciary duties epitomize the doctrine-related, duty-creating, “special
relationships” discussed in cases like Watts. Our Supreme Court said this was so in
2014 in St Bernard School of Montville, Inc. v. Bank of America where it
8 Doc. No.: XO7-HHD-CV20-6125269-S (May 19, 2021)(docket entry 171.00).
9 301 Conn. 575, 596.
13
etn
recognized that: “Usually, such a special relationship is one that is built upon a
fiduciary or otherwise confidential foundation”..°
A particularly special thing about the fiduciary relationship is that the duty includes
the obligation to disclose and correct the fiduciary’s own wrongs. In 1983 in Pacelli
Bros. Transp., Inc. v. Pacelli, our Supreme Court held that corporate fiduciaries have a
duty to “make a full disclosure” of their doings and wrongdoings." While Rubinow
worries that applying the doctrine might make fiduciaries perpetually liable, holding
them respcnsible at least while they remain fiduciaries is nothing like perpetual liability.
Indeed, it flows naturally from having to put another person’s interests ahead of your
own.
It is also irrelevant that the Ripps children might have known of some of Rubinow’:
activities within the limitation period set out in General Statutes §52-577. The statute
isn’t a notice statute. The limitation runs from the relevant act or omission. Inherent in
the continuing course of conduct analysis is that the act or omission is deemed to
continue. With a fiduciary duty, that means that as long as the duty lasts the fiduciary
has a duty <0 disclose and remedy his own wrongdoing. So long as he is a fiduciary and
omits to dc so, the period set out in General Statutes §52-577 hasn’t even begun to run.
As our Supreme Court pointed out in Watts v. Chittenden, the limitation period is tolled
until the series of acts or omissions is completed.
10 312 Conn. 811, 835.
1 189 Conn. 401, 409.
12 301 Conn. $75, 584 (2015).
14
annem een et ee eee
Therefsre, Barash and the Ripps children’s claims against Rubinow are not barred by
the statute of limitations.
6. Conclusion: some of the parties will continue to build their cases.
The clzim against Rubinow remains. This means that the vicarious liability claims
against his employer McCarter & English, LLP remain as well.
As things stand now, Rubinow’s circumstances invite scrutiny, but no betrayal on his
part has been proved in a way that merits a summary judgment. Indeed, if Finguerra
was right to put money into Evergreen Walk, the Ripps children may get the money that
was loaned and profits from the development too. On the other hand, if the project was,
is, and always has been a loser, it will be evidence a fact finder might rely on to decide
that the likely explanation for acquiescing in a bad investment was Rubinow’s selfish
interest. Neither side has offered sufficient evidence for a summary judgment on this
question.
Finguerra and Lembo aren’t liable to the Ripps children because the law does not
impose on Finguerra and Lembo the duties Barash and the Ripps children claim they
owed. Summary judgment will enter for Finguerra and Lembo on all claims and for
Rubinow on the claim for damages arising from breaches of his residuary trust duties
Barash ancl the Ripps children may pursue a claim to remove Rubinow as a residuary
trustee.
15
ee
As should be apparent from this decision, the court didn’t consider the expert views
on what the operating agreements permit or rely on any of the other contested evidence
BY THE COURT
434447
Moukawsher, J.
16
etna
yp ween