MAL A. SALVADORE, Plaintiff,
DAVID C. LAROCHE, BRIAN LAROCHE, STEPHEN LAROCHE, RANDI C. LAROCHE, WILDFLOWER CORPORATION, WILDFLOWER STONY FORT, LLC, DAVID C. LAROCHE d/b/a WILDFLOWER CORPORATION, DAVID C. LAROCHE d/b/a WILDFLOWER STONY FORT, LLC, BRIAN LAROCHE d/b/a WILDFLOWER CORPORATION, BRIAN LAROCHE d/b/a WILDFLOWER STONY FORT, LLC, STEPHEN LAROCHE d/b/a WILDFLOWER CORPORATION and STEPHEN LAROCHE d/b/a WILDFLOWER STONY FORT, LLC, Defendants.
Washington County Superior Court No. WC 2010-0437
Plaintiff: David P. DeStefano, Esq.
Defendant: Gerard Mcg. DeCelles, Esq.
gravamen of the instant action before the Court is the
erstwhile attorney-client relationship between Plaintiff Mal
A. Salvadore (Plaintiff or Salvadore) and the late David F.
LaRoche (David F.). David F. signed a promissory note (the
Note) by which he agreed to pay off the outstanding legal
fees owed to Plaintiff for services rendered on his behalf.
However, before any payments were made on the Note, David F.
passed away. Plaintiff now seeks to collect the fees
previously owed by David F. by imposing a constructive upon
the assets of certain corporations of which David F.'s
three sons, defendants David C., Brian and Stephen, are the
sole shareholders, or alternatively declaring that such
corporations are the alter ego of the Plaintiff's
case was tried without a jury. Jurisdiction is pursuant to
G.L. 1956 §§ 8-2-13 and 8-2-14(a). For the reasons
set forth herein, judgment shall enter in favor of Defendants
on all counts.
assessing the credibility of the witnesses and weighing all
evidence presented, including undisputed facts and exhibits
submitted by the parties, this Court makes the following
findings of fact.
F.'s Indebtedness to Plaintiff
is a resident of South Kingstown and an attorney duly
licensed to practice law within the State of Rhode Island.
See Joint Statement of Undisputed Facts and
Undisputed Exhibits at 1, ¶¶ 1-2. Plaintiff first
became acquainted with David F. in January of 1991 and
provided him with legal counsel for nearly a decade
thereafter, which included at least two involuntary
bankruptcy proceedings, the first lasting from 1991 through
1996, and the second from 1997 through 1999. Following this
legal representation, David F. was indebted to Plaintiff in
the sum of approximately $160, 000.00, which had not been
paid through either bankruptcy estate or from David F.
effort to collect the outstanding legal fees, Plaintiff had
periodic conversations with David F. to suggest a payment
arrangement. During the mid- to late-summer of 2001,
Plaintiff and David F. agreed that the remaining unpaid
balance due would be reduced by $20, 000.00, from $160,
000.00 to $140, 000.00. In October of 2001, while David F.
was incarcerated at the Adult Correctional Institutions
(ACI),  Plaintiff presented David F. with a
promissory note for the payment of the agreed upon $140,
000.00. Shortly thereafter, Plaintiff received the Note in
the mail from David F., purporting to be David F.'s
signature thereon and dated October 10, 2001.See Joint
Ex. 1. By its express terms, the Note reflects the principal
sum of $140, 000.00; an annual interest rate of 7%;
interest-only payments for five years beginning on October
10, 2002 and due annually thereafter; and the entire
principal and all interest due to be paid in full on October
10, 2006. Id. The Note further provides for payment
of the entire balance, including principal and interest, at
the option of the holder of the Note without presentment,
notice or demand upon any of the following events: default in
the payment or performance of any obligation under the Note;
death; or any manner of dissolution, liquidation, insolvency,
or bankruptcy filed by or commenced against David F. See
maturity date of the Note, October 10, 2006, came and went
with no payments thereon ever having been made. Every couple
of months thereafter, Plaintiff would discuss payment on the
Note with David F. to no avail. Plaintiff testified to a
specific conversation with David F. in the late spring or
summer of 2008 wherein they met at Plaintiff's residence
in South Kingstown for nearly an hour and later traveled
together to view a parcel of real estate in North
Kingstown.During that visit, David F. suggested that
Plaintiff purchase the North Kingstown real estate for $800,
000.00 to $900, 000.00. Although Plaintiff indicated an
interest in purchasing the real estate if the price were fair
and the amount due on the Note was deducted from the purchase
price, Plaintiff ultimately declined because he believed the
price exceeded the property's fair market value. At no
time did David F. make Plaintiff aware that he did not own
that real estate.
in 2008, Plaintiff learned that David F. was terminally ill.
During David F.'s period of grave illness, Plaintiff made
a personal decision not to take any action against David F.
to collect on the matured Note. David F. passed away on
February 26, 2009. See Joint Statement of Undisputed
Facts and Undisputed Exhibits at 2, ¶ 9-A.
the death of David F., Plaintiff contacted defendant David
C., the oldest son of David F. and his ex-wife, defendant
Randi, to resolve the debt owed by his father. After several
informal exchanges of unfulfilled promises, which included
real estate referrals over time from David C. to
Plaintiff's law practice, Plaintiff sent a letter to
Randi. Plaintiff did not receive a response from Randi, nor
did he recoup any legal fees owed to him.
effort to trace David F.'s money to the named defendants
in the instant action, Plaintiff offered evidence on the
funding and operations of three corporations,  defendant
Wildflower Corporation (Wildflower Corp.), defendant
Wildflower Stony Fort, LLC (Wildflower Stony Fort), and
Wildflower Gilbert Stuart, LLC (Wildflower Gilbert Stuart).
1993, defendants David C., Brian and Stephen each received
monetary transfers from Rock Realty, Inc. (Rock Realty) at a
time when they were all minors. No credible evidence was
offered to demonstrate who served as an officer, director or
agent of Rock Realty, or who directed or authorized the
transfer of funds to David C., Brian and Stephen. In March of
1996, Wildflower Corp. was formed, of which defendant Randi,
David F.'s then-wife, served as President. At or about
that same time, Wildflower Corp. began to enter into a series
of real estate transactions which, at times, required each of
the LaRoche children to provide capital towards those
transactions. Specifically, in 1996, Wildflower Corp.
purchased a lot in North Kingstown designated as
Assessor's Plat 22, Lot 23 from Andrea Davia and Susan
Davia (collectively, the Davias) for approximately $110,
000.00. In order to purchase the lot from the Davias, David
C., Brian and Stephen each contributed $17, 333.00 to
thereafter, in June of 1996, Wildflower Corp. acquired a
condominium in Quechee, Vermont (Ridge 1C) for $112, 500.00.
In order to make the purchase of Ridge 1C, Wildflower Corp.
utilized capital that was transferred from the LaRoche sons
in the amount of $32, 500.00 each. In addition to the funds
contributed by the LaRoche sons, David F. loaned Wildflower
Corp. $5, 500.00 for the purchase of Ridge 1C and was
subsequently repaid by Wildflower Corp. In December of 1996,
Wildflower Corp. sold the Ridge 1C condominium for $123,
386.00 and purchased another Quechee, Vermont condominium
(Coach Road 5A) for approximately $150, 000.00. In order to
purchase Coach Road 5A, Wildflower Corp. again utilized
capital from the LaRoche children as well as funds received
by Wildflower Corp. from the sale of Ridge 1C. Shortly
thereafter, Coach Road 5A was sold, and the net proceeds were
placed in escrow.
roughly 1997, when Randi and David F. were in the midst of
divorcing, Randi voluntarily ceased serving as the President,
Secretary, Treasurer and Director of Wildflower Corp. Before
her tenure came to an end, the mortgage to the Davias was
satisfied in full. Randi's involvement in Wildflower
Corp. was minimal as there was little in the way of
day-to-day activity of the corporation. Nonetheless, Randi
acknowledged executing the 1997 annual report, signing the
paperwork relative to the two Quechee condominiums, and
ensuring that the mortgage was paid.
least 1999 until 2006, David C., who was born in
1979, served as the President of Wildflower Corp. Annual
reports for 2002 and 2003 reveal that David C. also served as
Vice-President, Secretary and Treasurer of Wildflower Corp.
See Exs. 32, 33. The annual reports state that the
character of the business conducted by Wildflower Corp. is
"the purchase, sale, and development of real estate and
other investments." Id. The three LaRoche sons
were the sole shareholders of Wildflower Corp., although
neither Brian nor Stephen were active in its corporate
affairs. The annual reports and tax returns of Wildflower
Corp. were not routinely filed, thus leading, at various
times, to the corporate charter being revoked and the
corporation later being reinstated.
capacity as President of Wildflower Corp. and as the only
individual with signatory authority, David C. executed
several mortgage deeds and security agreements, all of which
were secured by the North Kingstown property purchased from
the Davias. Among those transactions were the following: a
Mortgage and Security Agreement dated January 13, 2003, for
the payment of the principal sum of $110, 000.00 to Ned
Stevens Advertising, Inc. (Ned Stevens Advertising),
see Ex. 6; a Mortgage Deed dated July 9, 2004,
securing the payment of the principal sum of $80, 000.00 to
Andrew H. Berg (Berg), see Ex. 8; a Mortgage Deed
dated November 4, 2004, securing the payment of the principal
sum of $15, 000.00 to James P. Howe (Howe), see Ex.
10; a Mortgage Deed dated December 2, 2005, securing the
payment of the principal sum of $85, 000.00 to Berg,
see Ex. 9; and a Mortgage and Security Agreement
dated May 2, 2006, for the payment of the principal sum of
$32, 840.62 to David M. Ryan (Ryan), see Ex. 11.
Although without details on how all the sums borrowed by
Wildflower Corp. were used, David C. did acknowledge that at
least some of the funds obtained through the aforementioned
mortgages may have been used to secure David F.'s bail,
to pay for David F.'s legal fees and/or sums needed to
retain counsel, and to keep David F. from living on the
licensed real estate agent with Gammons Realty, David C.
marketed the North Kingstown property that Wildflower Corp.
had acquired from the Davias. David C. negotiated the sale
and entered into a purchase and sales agreement with Jeffrey
H. Parker and Margaret E. Petruny-Parker (the Parkers) for
$400, 000.00. See Ex. 23. By Warranty Deed dated May
17, 2006, Wildflower Corp. sold its interest in that property
to the Parkers. See Ex. 12. From the proceeds of
that sale, all the outstanding debts and mortgages were paid
in full. See Ex. 23. Additionally, $56, 238.38 was
due to Wildflower Corp. from the proceeds of the sale.
Id. Those funds were placed into escrow with Russell
R. Sicard, Esq., in order to satisfy any amounts due upon the
filing of the required tax returns and annual reports.
See Ex. 24. Upon confirmation from the Division of
Taxation and the Office of the Secretary of State that all
taxes had been satisfied and that Wildflower Corp. was in
good standing, see Exs. 25-26, the escrow agent
disbursed funds to Wildflower Corp. on June 5, 2006, in the
amount of $65, 914.55. See Ex. 27.
Corp. did not acquire or have an interest in any other assets
after the deposit of the escrow funds in June of 2006 from
the sale of the real estate to the Parkers, nor did it have
any further business activity thereafter.
Stony Fort, LLC & Wildflower Gilbert Stuart, LLC
about December 30, 2001, David F. negotiated and entered into
a Purchase and Sales Agreement to purchase approximately 222
acres of land in North Kingstown for a total purchase price
of $220, 000.00. Ex. 13. The 222 acres were comprised of four
parcels, one parcel being owned by one group and three parcels
being owned by an offshoot of that group (collectively,
the Sellers). Id. at Exs. A-B. The proposed closing
date for the 222 acres was April 15, 2002. Id. The
Purchase and Sales Agreement required a deposit of $11,
000.00 to be paid within seventy-two hours from the
April 22, 2002, David F. and the Sellers executed an
Amendment to Purchase and Sales Agreement, which extended the
closing date by two months. See Ex. 14. The
Amendment to Purchase and Sales Agreement required an
additional deposit of $10, 000.00, plus interest of $2,
170.00 and pro-rata taxes in the amount of $711.60, for a
total additional amount due of $12, 881.60. Id.
C. did not participate in the negotiations for the Purchase
and Sales Agreement or the Amendment thereto, nor did he or
Wildflower Corp. pay the deposits or other expenses due under
the terms of either agreement. David F., on the other hand,
not only orchestrated the purchase of the 222 acres, but also
negotiated the immediate sale of one parcel, Assessor's
Plat 5, Lot 1, to Walter Barnes. There was no credible
evidence offered to demonstrate that David F. himself paid
the deposits and other expenses due under the terms of the
Purchase and Sales Agreement and the Amendment thereto, or
whether another person or entity paid those amounts on behalf
of David F.
21, 2002, David C., Brian and Stephen formed two limited
liability companies, Wildflower Gilbert Stuart and Wildflower
Stony Fort. See Exs. 50-51. The principal place of
business of each of the limited liability companies is listed
in the respective Operating Agreements as the Newport
residence of David F. Id. The purpose of forming
those entities was to separately purchase the real estate
comprising the 222 acres that was owned by the two groups of
Sellers. Wildflower Gilbert Stuart purchased Assessor's
Plat 5, Lot 1 and, on the same day, sold that real estate to
Walter Barnes. Wildflower Stony Fort purchased Assessor's
Plat 6, Lots 1 and 3 and Assessor's Plat 11, Lot 1
(collectively, the Stony Fort property). The funds used by
Wildflower Gilbert Stuart and Wildflower Stony Fort to
purchase those parcels was largely provided by the proceeds
from the immediate sale of Assessor's Plat 5, Lot 1 to
the Stony Fort property that Wildflower Stony Fort had
purchased was conveyed to David C. individually sometime
prior to the filing of this suit in 2010. No credible
evidence was offered concerning the fair market value or the
development potential of the Stony Fort property.
trial, Plaintiff presented five witnesses in their
case-in-chief: two non-party witnesses, Andrew Berg and
Nathaniel Baker; and three parties, David C., Randi, and
Plaintiff. Defendants did not offer any additional witnesses.
testified concerning business transactions he had with
Wildflower Corp. Specifically, Berg was the grantee of two
mortgages to the Wildflower Corp. Berg first loaned funds to
Wildflower Corp. on July 9, 2004 in the amount of $80,
000.00; the second loan was made on December 2, 2005, in the
amount of $85, 000.00. Each of the Berg ...