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LEISURE RESORT TECHNOLOGY, INC. v. TRADING COVE ASSOCIATES ET AL. (SC 17427)
Sullivan, C. J., and Borden, Katz, Vertefeuille and Zarella, Js. Argued September 21, 2005--officially released January 31, 2006

Kerry R. Callahan, with whom was Barbara A. Frederick, for the appellant (plaintiff). Philip C. Korologos, pro hac vice, with whom were Hugh F. Keefe, Eric Brenner, pro hac vice, and Nicole M. Fournier, for the appellees (named defendant et al.).
Opinion

VERTEFEUILLE, J. The plaintiff, Leisure Resort Technology, Inc., appeals from the summary judgment of the trial court rendered in favor of the defendants, Trading Cove Associates (Trading Cove), Waterford Gaming, LLC, and Waterford Group, LLC.1 The plaintiff contends that the trial court improperly rendered summary judgment based on its conclusion that the plaintiff could not present sufficient evidence of its damages resulting from the defendants' alleged tortious nondisclosure. We disagree, and, accordingly, we affirm the judgment of the trial court. The record reveals the following factual and procedural history. In January, 1993, an informal association of the plaintiff and three other corporations entered into an agreement with the Mohegan Tribe (tribe) to construct and manage what would become the Mohegan Sun Casino (casino). Shortly thereafter, the four entities formed Trading Cove as a general partnership in which the plaintiff held a 10 percent partnership interest. Approximately twenty months later, the plaintiff's

interest in Trading Cove was reduced to a 5 percent partnership interest when a new partner was admitted into the partnership. Subsequently, the plaintiff altered its partnership interest again, when, in February, 1995, the plaintiff entered into an agreement with the other partners of Trading Cove to relinquish its 5 percent partnership interest for a 5 percent beneficial interest in the partnership. The beneficial interest entitled the plaintiff to 5 percent of a partner's interest in profits, losses, excess cash, and distributions of the organizational and administrative fees related to Trading Cove's business with the tribe for a maximum fourteen year period. Approximately one year prior to the plaintiff's exchange of its partnership interest for a beneficial interest, Trading Cove and the tribe had entered into an agreement that granted Trading Cove the exclusive right to manage, operate and maintain certain hotel and resort facilities of the tribe for fourteen years (nongaming management agreement). Thereafter, on August 30, 1995, the tribe and Trading Cove entered into another agreement that granted Trading Cove the right to operate, manage, and market gaming operations at the casino for seven years (gaming management agreement) in exchange for a percentage of net revenues from the casino. The casino opened on October 12, 1996. During the first year of the casino's operations, the plaintiff did not receive any payments from Trading Cove nor did it receive information about Trading Cove's finances that it had requested. The plaintiff thereafter filed suit against Trading Cove to compel the disclosure of the requested financial information. Settlement discussions quickly ensued and focused on a sale by the plaintiff of its beneficial interest in Trading Cove. Negotiations continued throughout the fall of 1997. At about the same time that Trading Cove was negotiating a purchase of the plaintiff's interest, it also began negotiations with the tribe to terminate its existing agreements and establish a new agreement that would expand the tribe's gaming and nongaming facilities. In mid-July, 1997, Trading Cove made an initial proposal to the tribe for an agreement that would result in Trading Cove realizing a present value at that time of $620 million. Salomon Brothers, the tribe's investment bankers, thereafter presented a counterproposal to Trading Cove that called for: (1) the termination of all existing agreements between Trading Cove and the tribe; (2) new agreements under which Trading Cove would be the exclusive developer of new gaming and nongaming facilities, and would manage the nongaming facilities; and (3) the tribe's assumption of the management of all gaming facilities. The proposed initial term of the new agreements would be fifteen years, and Salomon Brothers estimated that they would have a present value at that time of $440 million to Trading Cove ``if the aggregate facilities yield $300 million when the expan-

sion is fully open.'' On October 22, 1997, the tribe and Trading Cove entered into a memorandum of understanding similar to the tribe's counterproposal as it called for the termination of all prior agreements and the enactment of new agreements. Specifically, under the new agreements, the tribe would purchase Trading Cove's rights under the gaming management agreement for a percentage of the tribe's revenues and cash flow for seventeen years, which was estimated to have a present value at that time of $296 million. The new agreements also called for Trading Cove to provide consulting services to the tribe for two years to aid in the management of the gaming operations in exchange for fees with a present value at that time of $11 million. Further, the new agreements would make Trading Cove the exclusive developer of the contemplated new gaming and nongaming facilities in exchange for a fee with a present value at that time of $26 million. Finally, the new agreements included a new nongaming management contract, under which Trading Cove would manage the tribe's nongaming facilities for seventeen years in exchange for a fee with a present value at that time of $127 million. The total then present value of the estimated fees to be paid to Trading Cove under the new agreements was $460 million. In early November, 1997, Salomon Brothers sent a letter (Salomon letter) to Trading Cove's investment banker, Bear Stearns, summarizing each firm's estimate of the fees to be paid to Trading Cove under the agreements described in the memorandum of understanding. While there was a wide disparity in the value of the fees to be paid under the new nongaming management agreement, both Salomon Brothers and Bear Stearns agreed that the payments under the buyout of the gaming management agreement had a present value at that time of approximately $290 million. Both firms valued the fees contemplated under all the agreements to be worth less than $460 million, but Salomon Brothers stated that ``[o]nce we have agreement on the [projected present values of each element of the deal] we will be able to adjust fees to yield $460 million of total value delivered to [Trading Cove].'' Subsequently, in mid-November, the tribe and Trading Cove exchanged drafts of the agreements proposed in the memorandum of understanding. These drafts still contemplated a buyout of Trading Cove's rights under the gaming management agreement, a new nongaming management agreement, and an agreement granting Trading Cove the right to develop a new casino, luxury hotel, and a convention and events center. Meanwhile, on November 21, 1997, the plaintiff and Trading Cove met again to negotiate the settlement of the plaintiff's action seeking the disclosure of certain financial information regarding Trading Cove and the

sale of the plaintiff's beneficial interest in Trading Cove. A settlement agreement was entered into on January 6, 1998, under which the plaintiff agreed to sell its beneficial interest in Trading Cove to Waterford Gaming, LLC, which owned a 50 percent partnership interest in Trading Cove, and consented to the dismissal of its lawsuit with prejudice. On that same date, the plaintiff was paid $5 million for its beneficial interest. The settlement agreement also provided that the plaintiff would receive an additional $2 million payment, if Trading Cove ``enters into any agreement with the [tribe] pursuant to which [Trading Cove's] management or operation of, or any other involvement of any kind with, the [tribe's] gaming facilities or other related facilities or enterprises is amended, restated, extended or renewed, or if a new agreement or arrangement relating to the foregoing is entered into between [Trading Cove] and the [tribe] . . . .'' On February 7, 1998, Trading Cove and the tribe's negotiations came to fruition as they entered into agreements that provided Trading Cove with the right to develop a new casino, luxury hotel, and convention and events center, and allowed the tribe to buy out Trading Cove's rights under both the nongaming management agreement and the gaming management agreement. In exchange, the tribe promised to pay Trading Cove 5 percent of its revenues for approximately fifteen years. The agreements differed from the prior draft agreements, which had included a buyout of Trading Cove's gaming management rights and an extension, rather than a buyout, of its nongaming management rights. During the negotiations to sell the plaintiff's beneficial interest, the defendants had informed the plaintiff that Trading Cove was ``in negotiations with the tribe to extend our relationship,'' but cautioned that ``we did not know what form it would take, and we did not know whether we would or would not be successful.'' In the settlement agreement, the plaintiff ``acknowledge[d] that [Trading Cove and the tribe] have had negotiations concerning the possibility of extending their relationship'' and ``[understood] that the results of such negotiations are at this point uncertain . . . .'' On March 18, 1999, pursuant to the settlement agreement, the plaintiff received the additional $2 million due because of Trading Cove's new agreement with the tribe. Early in 2000, the plaintiff brought the present action against the defendants. The complaint alleged the following causes of action: (1) breach of fiduciary duties; (2) fraudulent nondisclosure; (3) violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes

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