RICHARD C. PANCIERA and LOUIS PANCIERA, INC., Plaintiffs,
LAWRENCE C. VETELINO, Defendant.
County Superior Court
Plaintiff: Joseph V. Cavanagh, Jr., Esq. Lynne B. Dolan, Esq.
Defendant: Daniel P. McKiernan, Esq.
this Court are Plaintiffs Richard C. Panciera (Panciera) and
Louis Panciera, Inc.'s (LPI) (collectively, Plaintiffs)
motion for summary judgment, as well as Defendant Lawrence C.
Vetelino's (Vetelino) motion for partial summary
judgment. Both motions seek a declaration of interpretation
regarding the validity of certain rights afforded to Vetelino
in his employment contract after LPI exercises its right to
repurchase Vetelino's shares in LPI. Jurisdiction is
pursuant to Super. R. Civ. P. 56(c) and G.L. 1956
§§ 9-30-1 et seq.
Facts and Travel
1934, Panciera's father, Louis Panciera, founded LPI, an
insurance and real estate agency with its primary business
located in Westerly, Rhode Island. Compl. ¶ 5. He
operated and managed the company for over fifty-three years
until his death in 1987. Id. In the 1950s, Louis
Panciera purchased another smaller insurance and real estate
agency called Richmond & Nichols, Inc. (Richmond &
Nichols) in Hope Valley, Rhode Island. Id. at ¶
6. His wife, Grace Panciera, operated and managed Richmond
& Nichols until her death in 2001. Id.
Panciera was the only child of Louis and Grace Panciera and
in 1975 became a practicing attorney in Rhode Island.
Panciera Aff. ¶¶ 1-2. Since 1975, Panciera has been
substantially involved in the affairs of LPI and Richmond
& Nichols as general legal counsel. Id. at
¶ 6. Additionally, between 1981 and 1987 he was Vice
President of LPI and became LPI's President after his
father's death in 1987. Id.
Grace Panciera passed away in 2001, Panciera became the sole
owner of both LPI and Richmond & Nichols; he assumed sole
responsibility for the management of LPI and continued to
rely on many long-term employees to service LPI's
customers and conduct day-today affairs. Id. at
¶¶ 8-9. Since 2001, Panciera personally loaned LPI
almost $300, 000 to pay off loans incurred by the agency but,
as of this Decision, has yet to be fully repaid. Id.
at ¶ 10. Panciera also funded the construction of new
LPI offices on land owned by Princess Pines Estate, Inc., a
corporation owned and organized by the Panciera family.
Id. Since 2001, Panciera has been the sole personal
guarantor of LPI's working capital loan from Washington
Panciera hired Vetelino in or around 1971; he worked at LPI
without an employment contract or non-competition agreement.
Pls.' Mem. in Supp. of Mot. for Summ. J. (Pls.'
Mot.). Over his time at the agency, Vetelino had pursued an
ownership interest in LPI: he first asked Louis Panciera, but
his request was rejected because Louis Panciera did not want
to turn the agency into a partnership. See id. After
Louis Panciera's death, Vetelino pursued his ownership
interest with Grace Panciera; however, she, for the same
reasons as her husband, also refused. Id. Then, in
or around 2005, Vetelino pursued Panciera for the same
reasons, and, after having a change of heart, Panciera
decided to enter into negotiations. Id. After
drafting at least four versions, Panciera finalized an
Employment Contract (Contract) on December 22, 2006.
Contract provided Vetelino with a number of terms and
conditions. First, and most important to this Decision, LPI
was to issue a forty percent minority interest in LPI at no
cost to Vetelino. Employment Contract Art. 6. Second, LPI was
required to pay the cost of health insurance benefits up to
Vetelino's death and thereafter for the remainder of his
spouse's life. Id. at Art. 4(A). Third, LPI was
responsible for paying the premiums on Vetelino's life
insurance policy as and when due until the death of Vetelino.
Id. at Art. 4(B). Fourth, upon Vetelino's
retirement, LPI had to purchase a reasonable automobile at
the sole cost and expense of LPI. Id. at Art. 4(C).
Fifth, any indebtedness that LPI would undertake had to be
specifically consented to by Vetelino in writing, except for
debt reasonably incurred in the ordinary course of business
with Vetelino's prior consent. Id. at Art. 5.
Sixth, the Contract provided a "Right of First
Refusal" for Vetelino whenever LPI or its shareholders
decided to "sell, transfer, assign, convey or dispose of
. . . substantially all of the assets or stock of
[LPI]." Id. at Art. 7. Seventh, in the event
that Vetelino were to voluntarily retire, LPI was required to
pay him fifty percent of Vetelino's gross income from the
prior year and such weekly payments would continue until
Vetelino turned sixty-eight years old. Id. at Art.
8. Eighth, in the event that Vetelino were to become totally
and permanently disabled, LPI was required to pay him his
then-current salary and benefits for a period of six months
from the date of his total and permanent disability, and, at
that point, he would be deemed to have voluntarily retired.
Id. Ninth, LPI could not voluntarily assign this
Contract or any of its duties and obligations without the
prior written consent of Vetelino; this section further
defines an assignment as a "change of control of the
ownership of [LPI], whether directly or indirectly."
Id. at Art. 14(b). Lastly, LPI was required to pay
premiums on Panciera's life insurance policy that could
not be less than $750, 000. Id. at Art. 14(c).
However, upon Panciera's death and the payment of such
life insurance policy to Panciera's designee, all of the
stock would then be transferred to Vetelino. Id.
the rights granted to Vetelino, the Contract also contained
provisions relevant to this Decision. For example, the
repurchase right granted to LPI provided: "In the event
that the stock or assets of [LPI] have not been sold by the
time [Vetelino] has attained the age of sixty-six (66) years,
[LPI] shall have the option to repurchase the shares of stock
of [LPI] held by [Vetelino]." Id. at Art. 7.
Notably, this provision is located under the same article
that granted Vetelino his right of first refusal; in fact,
this article is titled "Right of First Refusal."
the Contract provided an acceleration clause of all rights,
duties, obligations and liabilities set forth in the Contract
if there ever was a separation of employment between Vetelino
and LPI for any reason prior to Vetelino's voluntary
retirement. Id. at Art. 8. Furthermore, if Vetelino
were to predecease Panciera or die prior to the disposition
of LPI's stock or assets, only LPI's obligation to
pay health insurance premiums for Vetelino, the forty-percent
stock transfer, and Vetelino's right of first refusal
would survive Vetelino's death and inure to the benefit
of his spouse for the remainder of her natural life.
Id. at Art. 9. Upon ...