Michael F. Rose, Jr. et al.
Stephen M. Brusini et al.
County Superior Court (PC 11-7329), Richard A. Licht,
Plaintiffs: Peter J. Brockmann, Esq. Frank F. Sallee, Esq.
Defendants: J. David Freel, Esq. Paul S. Callaghan, Esq.
Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and
Francis X. Flaherty, Associate Justice
case came before the Supreme Court on appeal by the
plaintiffs, Michael F. Rose, Jr. and RC&D, Inc.
(collectively plaintiffs), from a decision of the Superior
Court granting the defendants' motion for summary
judgment in favor of Attorney Stephen M. Brusini and the law
firm Orson & Brusini Ltd. (collectively defendants). The
plaintiffs argue that the hearing justice erred when he
concluded that there was no evidence of proximate cause
linking the defendants' alleged negligence and any
damages the plaintiffs may have suffered, and that Rose's
own conduct was the proximate cause of his damages. The
matter came before this Court for oral argument on November
2, 2016, pursuant to an order directing the parties to appear
and show cause why the issues raised by this appeal should
not summarily be decided. After considering the oral and
written arguments of the parties, and after a thorough review
of the record, we are of the opinion that cause has not been
shown and that this case should be decided at this time
without further briefing or argument. For the reasons set
forth in this opinion, we vacate the judgment of the Superior
January 7, 2004, Rose and David Egan formed a closely held
corporation, RC&D, Inc. RC&D provided specialized
construction services, equipment, and personnel for
environmental restoration and related land development in the
New England region. At first, Rose and Egan were equal owners
of the corporation. The ownership percentages later changed,
however, and Egan acquired 51 percent of the issued shares of
RC&D stock and Rose held the remaining 49 percent. Egan
was responsible for office administration and keeping and
maintaining the financial records while Rose supervised field
construction operations. Rose had very little personal
involvement in managing or overseeing RC&D's finances
and he did not have access to the company's books and
records, which Egan kept password-protected through a
software program called Quickbooks. In 2007 the two began
discussing Rose's buyout of Egan's 51 percent
interest in RC&D. In August 2008, after negotiations
became contentious, Rose engaged defendants to represent him
in connection with the buyout.
December 14, 2008, negotiations had progressed to a point
where defendants were able to prepare a draft purchase and
sale agreement (P&S) and circulate it to the parties. One
component of the P&S involved Rose's purchase of
Egan's shares of stock in RC&D and the second
component involved a distribution from RC&D to Egan of
the company's profits earned through December 31, 2008.
On December 16, 2008, Egan's counsel sent a
"redlined" version of the first draft of the
P&S to defendants. Two days later, Egan finally sent an
email to Rose containing some information about
RC&D's finances, including balance sheets, a
projection as of December 31 of assets and liabilities, and a
schedule of accounts receivable.
December 19, 2008, Brusini advised Rose not to sign the
P&S because Egan was refusing to provide critical
financial information regarding RC&D. Later that day,
during a conference call with the parties, Brusini reiterated
his advice that Rose should not execute the P&S. And
again, on December 22, 2008, Brusini called Rose to tell him
the same thing, but Rose was intent on going forward.
email, on December 23, 2008 at 9:55 a.m., Brusini sent a
marked-up draft of the P&S to, among others, Egan's
counsel and Rose. At 10:06 a.m. the same day, Brusini sent a
letter to Rose by email. The letter recounted their telephone
conversations from December 19 and December 22 and specified,
"I cannot recommend and do not recommend that you [Rose]
sign the agreement as revised by [Egan's counsel]"
because Rose had not been involved in the finances of the
company and did not know what the finances of the company
were. The letter continued:
"That said, I am aware that you are willing to take the
risks outlined above and the risks generally posed by
[Egan's counsel's] revisions, and that you are
anxious to close these transactions as soon as possible. With
that in mind, in the red-lined version that I sent to you
earlier this morning I have attempted to make at least a few
changes to [Egan's counsel's] version to provide you
with some basic protections."
amended version of the P&S referred to in the letter
included a "True-up Clause" to protect Rose in
order "to capture post-closing any amount paid to Mr.
Egan in connection with the buyout that, for any reason,
[was] improper or incorrect."
closing on the buyout took place on January 6, 2009, and the
distribution amount ($1, 204, 695.75) was paid in full to
Egan. After the closing, Rose finally gained full access to
RC&D's financial books and records, including
Quickbooks. The financial books and records revealed that
Egan, in the very limited information he had provided to Rose
preclosing, had overstated the accounts receivable and assets
and had understated the accounts payable, thereby resulting
in a considerably higher 2008 year-end distribution to Egan.
According to the company's books and records, the
distribution paid by RC&D to Egan was approximately $584,
695.70 more than what Egan was entitled to under the terms
and conditions of the P&S.