Plaintiff: Michael Daly, Esq.
Defendant: Michael R. McElroy, Esq.; Leah J. Donaldson, Esq.;
John O. Mancini, Esq.; Erin A. Hockensmith, Esq.; Anthony F.
DeMarco, Esq.; Katherine Merolla, Esq.
this Court are cross-motions for partial summary judgment.
Plaintiffs, Sara McGinnes and Clifford McGinnes (Mrs. and Mr.
McGinnes, respectively; collectively, Plaintiffs) ask this
Court to grant summary judgment on Counts I and II of their
First Amended Complaint. Defendants, Albert Casazza (Casazza)
and John Pezzimenti (Pezzimenti) (collectively, Defendants),
object to Plaintiffs' motion and ask this Court to
summarily dispose of Counts I and II of the First Amended
Complaint. Plaintiffs likewise object to Defendants'
motion. Jurisdiction is pursuant to Super. R. Civ. P. 56.
Facts and Travel
Island Power Company (BIPCO) is an electric utility company
that serves the Town of New Shoreham (the Town) and has been
privately owned and operated since 1925. Am. Compl. ¶
16. Prior to June 14, 2012, Mr. McGinnes, Casazza, Jerome
Edwards (Edwards), and Pezzimenti were equal shareholders of
BIPCO, together owning the entirety of BIPCO's shares.
Id. at ¶ 17. On June 14, 2012, Mr. McGinnes,
Casazza, Edwards, and Pezzimenti executed an agreement titled
"BIPCo Shareholders' Agreement"
(Shareholders' Agreement). Id.
¶ 18. The Shareholders' Agreement provided:
"If any of the current shareholders wishes to sell his
stock, the remaining shareholders will have the right of
first refusal to the sale.
"Should any of the current shareholders die, the estate
may transfer the stock to a descendent heir. Should that
descendant heir or the estate wish to sell the stock to a non
related heir, the remaining shareholders will have the right
of first refusal to the sale." Am. Compl., Ex. A.
November 2013, Edwards unfortunately passed away, and his
BIPCO shares were converted to treasury stock, which resulted
in Mr. McGinnes, Casazza, and Pezzimenti each owning
one-third of the outstanding shares of BIPCO. Am. Compl.
on or about March 7, 2016, Mr. McGinnes conveyed his
one-third ownership in BIPCO to Mrs. McGinnes as a marital
gift. Id. at ¶ 22. The conveyance was
accomplished by delivery of an endorsed certificate in
accordance with BIPCO bylaws Article X, Section
and resulted in Mr. McGinnes transferring his ownership
interest in BIPCO to his wife. Id. Neither Casazza
nor Pezzimenti objected to the transfer; rather, the transfer
was accepted and ratified. Id. at ¶ 23.
Plaintiffs assert that the right of first refusal belonging
to Mr. McGinnes as delineated in the Shareholders'
Agreement was assigned to Mrs. McGinnes at the time of the
transfer. Alternatively, Plaintiffs aver that Mr. McGinnes
retained his right of first refusal as set forth in the
Shareholders' Agreement. See id. at ¶ 24.
early 2016, Mr. and Mrs. McGinnes, Casazza, and Pezzimenti
engaged in discussions with the Town and with Northern
Transmission, LLC (Northern Transmission) about the
possibility of selling BIPCO shares to either entity.
Id. at ¶ 25. As a result of these discussions,
the Town enlisted the Electric Utilities Task Group (EUTG) to
aid in developing a plan for the future operation of BIPCO
should the Town purchase ownership of BIPCO. Id. at
¶ 26. Several current members of BIPCO's Board of
Directors-Barbara MacMullan, Bill Penn, and Everett
Shorey-were part of the Town Council which formed the EUTG.
Id. Thereafter, on May 18, 2016, the Town Council
voted to support a potential purchase of BIPCO and directed
Nancy Dodge (Dodge), the Town Manager at the time, to
"submit a resolution advocating for the passage of a
state law that would allow the Town to create a non-profit
successor organization to which the Town would transfer the
Shares and assets of BIPCO." Id. at ¶ 27.
In addition, by spring 2016, negotiations for the Town and
Northern Transmission's purchase of BIPCO had progressed
to such a point where material and specific transactional
terms were exchanged between the parties. Id. at
Mrs. McGinnes had learned that Casazza and Pezzimenti
intended to sell their BIPCO shares to the Town, she provided
notice to Casazza, Pezzimenti, and the Town that she did not
intend to divest her ownership in BIPCO and indicated that
she would exercise her right of first refusal "on terms
equal to those offered by the Town." Id. at
¶ 29. Dodge acknowledged Mrs. McGinnes's notice, but
indicated that the Town intended to proceed with its purchase
of Casazza and Pezzimenti's BIPCO shares nevertheless.
Id. at ¶ 30; see also Am. Compl., Ex.
B. Thereafter, Casazza and Pezzimenti entered into a Stock
Purchase Agreement with the Town on July 11, 2016. Am. Compl.
¶ 31; see also Am. Compl., Ex. C. The Stock
Purchase Agreement acknowledged Mrs. McGinnes's right of
first refusal and set a closing date within 120 days of its
execution. See Am. Compl. ¶ 31. Plaintiffs
allege that, subsequently, the Town planned to assume full
control of BIPCO by, among other things, forming a non-profit
utility district or coop and retire Mrs. McGinnes's stock
upon transfer of BIPCO stock to the new entity. See
id. at ¶ 32.
October 3, 2016, the Town formed a "BIPCO Transition
Team" at a Town Council meeting, which was composed of
the members now composing the BIPCO's Board of Directors.
See id. at ¶ 35. Thereafter, the Town closed on
its purchase of Casazza and Pezzimenti's stock on
November 7, 2016 and, that same evening, appointed the
members of the BIPCO Transition Team to the Board of
Directors. Id. at ¶¶ 37-40.
have pleaded claims for rescission of the Stock Purchase
Agreement, breach of contract seeking specific performance of
right of first refusal, breach of contract for damages,
tortious interference with prospective business
relationships, and breach of fiduciary duty against Casazza
and Pezzimenti. The original Complaint also asserted a claim
for breach of fiduciary duty against the current members of
BIPCO's Board of Directors. On February 1, 2017, however,
Plaintiffs voluntarily dismissed their claim against the
board members. Subsequently, BIPCO was permitted to intervene
in the action pursuant to Super. R. Civ. P. 24.
judgment is an extreme remedy and should be granted only when
'the pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as [a]
matter of law.'" Rose v. Brusini, 149 A.3d
135, 139 (R.I. 2016) (quoting Plunkett v. State, 869
A.2d 1185, 1187 (R.I. 2005)). "'Only when a review
of the admissible evidence viewed in the light most favorable
to the nonmoving party reveals no genuine issues of material
fact, and the moving party is entitled to judgment as a
matter of law, will this Court . . . grant . . . summary
judgment.'" Id. at 139-40 (quoting
Nat'l Refrigeration, Inc. v. Standen Contracting
Co., 942 A.2d 968, 971 (R.I. 2008)). "The party
opposing 'a motion for summary judgment carries the
burden of proving by competent evidence the ...