Preview:

Supreme Court
No. 2006-51-Appeal.
(PB 02-1904)
Scott S. Lavoie                                                                                     :
v.                                                                                                  :
North East Knitting, Inc. et al.                                                                    :
Present:  Williams, C.J., Goldberg, Flaherty, and Suttell, JJ.
O P I N I O N
Chief Justice Williams, for the Court.  The plaintiff, Scott S. Lavoie (plaintiff), appeals
the Superior Court’s grant of summary judgment in favor of the defendants, North East Knitting,
Inc. (NEK) and Rosalie DaRosa (collectively defendants).   This case came before the Supreme
Court for oral argument on January 22, 2007, pursuant to an order directing the parties to appear
and show cause why the issues raised in this appeal should not summarily be decided.   After
hearing the arguments of counsel and examining the memoranda filed by the parties, we are of
the opinion that this appeal may be decided at this time, without further briefing or argument.
For the reasons set forth below, we affirm the judgment of the Superior Court.
I
Facts and Travel
In 1986, plaintiff’s father, Louis Lavoie (Louis), and DaRosa, who were coworkers at a
bankrupt textile manufacturing company, had a vision.   As the doors to their defunct employer’s
business closed, they dreamed of purchasing its equipment and inventory to establish a new
textile company.   With the help of investors Robert Erdon and Robert Primeau, they formed
1




NEK, a Rhode Island corporation, and appointed Louis as its president and DaRosa as its vice
president.  DaRosa currently serves as the company’s president.
At the corporation’s inception, Louis contributed funds and expertise to become the
majority shareholder with 51 percent of the stock.   Primeau invested $100,000 and received 22.5
percent of the stock, and Erdon invested  $60,000 and received  13.5 percent of the stock.
Salesman Peter Izzi was awarded 8 percent of the stock for his expertise, and DaRosa received
the remaining 5 percent in consideration of her $25,000 contribution.   This arrangement lasted
for about three years, until DaRosa expressed dissatisfaction with her  5 percent share.    In
response, Louis raised the issue at a NEK shareholders’ meeting at which, upon unanimous vote,
the shareholders awarded DaRosa a $200,000 bonus with which she could purchase 100 shares
of NEK stock from Primeau.
In 1993, NEK shareholders entered into a shareholders’ agreement, which provided that,
upon a shareholder’s death, his or her stock would be sold back to the company.   The agreement
also granted Louis the exclusive right to transfer his stock to his sons, plaintiff and David Lavoie
(David).1   However, Louis never exercised this provision before his death in December 2001.   In
accordance  with  the  shareholders’  agreement,  his  shares  were  sold  back  to  NEK  and  the
proceeds were bequeathed to his wife, Elizabeth Lavoie, pursuant to a will Louis executed in
1990.
This litigation commenced in 2002, when plaintiff and David filed suit against NEK
seeking further information about the company’s assets to carry out their fiduciary duties as
coexecutors of Louis’s estate.  Two months after the initial lawsuit was filed, plaintiff and David
amended their complaint to add DaRosa as a defendant, alleging that she unduly influenced
1 Initially a plaintiff, David Lavoie did not oppose DaRosa’s motion for summary judgment
below and is not a party on appeal.
2




Louis not to transfer his stock to them.   The complaint also sought a declaratory judgment as to
how the shares should be valued and requested an order instructing NEK to resume dividend
payments to Louis’s estate.   On July 29, 2002, the Superior Court ordered that the shares be
valued at the time of Louis’s death.
The plaintiff and David thereafter moved to file a second amended complaint, which the
court granted on December 2, 2003.   This second amended complaint against DaRosa—filed by
plaintiff and David in their capacity as executors of Louis’s estate and in their individual
capacities—alleged that, “[a]s a direct and proximate result of DaRosa’s adulterous relationship
with the decedent, Louis Lavoie, DaRosa was able to manipulate the decedent and, by use of
undue influence, caused or contributed to the unnatural disposition of Louis Lavoie’s property
during his lifetime.”   Specifically, they alleged that DaRosa used her relationship with Louis to
prevent him from conveying to his sons, before his death, his stock or company treasury stock
that he otherwise intended to convey to them.
On June 17, 2005, defendants moved for summary judgment on the grounds that there
was no evidence that DaRosa unduly influenced Louis.   In opposition to defendants’ motion,
plaintiff cited the following facts:
According to plaintiff, upon hiring him, Louis informed plaintiff that DaRosa was his
“girlfriend” and that he should not accept the employment offer if he disagreed with their
relationship.   For years, Louis and DaRosa traveled together, often sharing a hotel room and
acting like a married couple.  Louis frequently informed plaintiff of his travel plans with DaRosa
and asked plaintiff to cover for him so his wife would not learn of his adulterous relationship.
Louis and DaRosa also openly held hands, kissed, hugged, and exchanged “I love yous.”
3




The plaintiff also asserted that his father repeatedly assured him that someday he would
run the family business and that he intended to transfer his shares of NEK stock to plaintiff.
Despite these assurances, Louis never transferred NEK stock to plaintiff.   The plaintiff contends
that DaRosa used her relationship with Louis to unduly influence him, causing him to fail to
transfer stock to plaintiff.
A hearing on defendants’ summary-judgment motion was held on August 16, 2005, and a
judgment granting the motion entered on October 26, 2005.    The plaintiff timely appealed.
II
Analysis
On  appeal,  plaintiff  argues  that  the  motion  justice  erred  by  granting  defendants’
summary-judgment motion.   The plaintiff contends that undue influence is a fact-intensive claim
and, therefore, inherently is inappropriate for summary judgment.   The defendants counter that
plaintiff failed to make out a prima facie case of undue influence.
A
Standard of Review
“This Court reviews a grant of summary judgment de novo, applying the same standards
as the motion justice.”   Smiler v. Napolitano, 911 A.2d 1035, 1038 (R.I. 2006) (citing Andreoni
v. Ainsworth, 898 A.2d 1240, 1241 (R.I. 2006)).   Summary judgment is proper if no genuine
issues of material fact are evident from “the pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits, if any” and, in addition, the motion justice
finds that the moving party is entitled to prevail as a matter of law.   Super. R. Civ. P. 56(c).
Therefore, summary judgment should enter  “against a party who fails to make a showing
sufficient to establish the existence of an element essential to that party’s case * * *.”   Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986) (construing the substantially similar federal rule).
4




“[C]omplete failure of proof concerning an essential element of the nonmoving party’s case
necessarily renders all other facts immaterial.”  Id. at 323.
B
North East Knitting
Although plaintiff’s second amended complaint did not name NEK as a defendant in this
matter, NEK signed on to DaRosa’s summary judgment motion.    Inexplicably, NEK was
permitted to move for summary judgment in an action in which it was not a party.  Nevertheless,
summary judgment entered in favor of NEK and DaRosa.   The plaintiff, in his notice of appeal,
named both NEK and DaRosa and both parties briefed this Court.   Any error the motion justice
committed in permitting NEK to move for summary judgment was harmless.   The plaintiff has
failed to state any claim against NEK, let alone any claim upon which relief may be granted.
Therefore, we affirm the Superior Court’s summary judgment grant with respect to NEK.
C
DaRosa
The plaintiff’s sole allegation is that DaRosa unduly influenced Louis to refuse to transfer
stock to plaintiff during Louis’s lifetime.   On appeal, plaintiff contends that the motion justice
failed to appreciate the materiality of the disputed evidence with respect to undue influence.
At the outset, we note that plaintiff has failed to provide this Court with a transcript of the
motion justice’s bench decision, but, because this Court’s review is de novo, the omission is not
fatal to plaintiff’s appeal.    We pause, however, to remind litigants that failure to order a
transcript is “risky business.”   Sentas v. Sentas, 911 A.2d 266, 270 (R.I. 2006).   Without a
transcript of the bench decision in this case we are unable to conclude whether the motion justice
granted summary judgment because he found that there were no genuine issues of material fact
or whether he concluded that plaintiff simply could not establish a prima facie case for undue
5




influence.   To the extent that the motion justice based his decision upon finding there were no
genuine issues of material fact, we affirm summary judgment on grounds other than those relied
upon by the motion justice.   See Ahlburn v. Clark, 728 A.2d 449, 452 (R.I. 1999) (this Court
may “affirm a judgment on grounds not actually relied upon by the trial court to justify its
ruling”).   Without passing on whether there were genuine issues of material fact, we hold that
summary  judgment  was  proper  because  plaintiff  cannot  sustain  his  claim  because  undue
influence is not a cause of action at law entitling him to damages.
Undue influence long has been recognized in equity as a defense to or a means of
challenging the validity of a will, deed, or contract.   See Tinney v. Tinney, 770 A.2d 420, 435
(R.I. 2001) (action to rescind a deed on grounds of undue influence); Caranci v. Howard, 708
A.2d 1321, 1322 (R.I. 1998) (action to set aside a will on grounds of undue influence); Stockett
v. Penn Mutual Life Insurance Co., 82 R.I. 172, 174, 175, 106 A.2d 741, 742, 743 (1954) (action
to rescind a contract on grounds of undue influence).  In such cases, equity provides an action for
restitution or rescission to cure the dominant party’s wrongful “substitution of [his or her will]
for the free will and choice [of the subservient party].”  Filippi v. Filippi, 818 A.2d 608, 630 (R.I.
2003) (quoting Tinney, 770 A.2d at 437-38); see also 2 Dan B. Dobbs, Dobbs Law of Remedies,
§ 10.3 at 657 (2d ed. 1993) (noting that “[t]he victim of undue influence is entitled to the same
battery of restitutionary remedies as the victim of fraud or other wrongdoing”).
Although undue influence is well recognized in equity, it is equally established that
“there is no tort of undue influence, and there is no right to damages, as distinct from restitution,
because of such influence.”                                                                              2 Dobbs, § 10.3 at 658; see also Cyr v. Cote, 396 A.2d 1013, 1019
n.7 (Me. 1979) (“[U]ndue influence and duress, traditionally considered wrongful under well-
established precedent * * * are simply the means by which the alleged interference occurred.”);
6




Restatement (Second) Contracts ch. 7, topic 2, introductory note at 474 (1993) (“Since duress
and undue influence, unlike deceit, are not generally of themselves actionable torts, the victim of
duress or undue influence is usually limited to avoidance and does not have an affirmative action
for damages.”).
In this case, even if the facts plaintiff has alleged are true, summary judgment must be
entered against him because he cannot establish an essential component of his case, namely that
he is entitled to damages at law.   The plaintiff has attempted to utilize a tool recognized only in
equity as the sole basis for his tort action against DaRosa.   Unfortunately for plaintiff, the law is
clear: undue influence is not an independent tort, and, thus, compensatory damages are not
available.                                                                                               2 Dobbs, § 10.3 at 658.   Although the facts, taken in the light most favorable to
plaintiff, conceivably could lead a finder of fact to find that DaRosa’s acts were wrongful, her
undue influence cannot, by itself, be deemed tortious.  See id., § 10.1 at 632.
The difficulty for plaintiff is that an action in equity in this case would be unavailing.
Had plaintiff alleged that DaRosa unduly influenced Louis to affirmatively execute a will, a
deed, or a contract, an action in equity would be available to set aside the transaction.   However,
his sole allegation is that DaRosa unduly influenced his father not to do what he otherwise
intended to do, and, therefore, there is no operative transaction here for equity to set aside.
Nevertheless, we are not prepared to recognize undue influence as an independent tort based
only upon the facts of this case.
Because undue influence is not a tort and is only remediable by an action in equity, the
plaintiff cannot prevail as a matter of law.
7




Conclusion
For the foregoing reasons, the judgment of the Superior Court is affirmed.   The record
shall be remanded to the Superior Court.
Justice Robinson did not participate.
8




Supreme Court
No. 2006-51-Appeal.
(PB 02-1904)
Scott S. Lavoie                                                              :
v.                                                                           :
North East Knitting, Inc. et al.                                             :
NOTICE:   This opinion is subject to formal revision before publication in
the Rhode Island Reporter.   Readers are requested to notify the Opinion
Analyst, Supreme Court of Rhode Island, 250 Benefit Street, Providence,
Rhode  Island,  02903  at  Tel.  222-3258 of any typographical or other
formal errors in order that corrections may be made before the opinion is
published.
9




COVER SHEET
TITLE OF CASE:                                                    Scott S. Lavoie v. North East Knitting, Inc. et al.
DOCKET SHEET NO.:                                                 2006-51-A
COURT:                                                            Supreme
DATE OPINION FILED:   April 3, 2007
Appeal from
SOURCE OF APPEAL:    Superior                                     County:  Providence
JUDGE FROM OTHER COURT:      Judge Michael A. Silverstein
JUSTICES:                                                         Williams, CJ., Goldberg, Flaherty, and Suttell, JJ.
Not Participating -  Robinson, J.
WRITTEN BY:      Chief Justice Frank J. Williams, for the Court
ATTORNEYS:
For Plaintiff:                                                    Mark W. Freel, Esq.
ATTORNEYS:
For Defendant:                                                    Mary C. Dunn, Esq., for North East Knitting,
Inc.
Raymond A. Marcaccio, Esq., for Rosalie
DaRosa
10

Download 06-51.pdf

Rhode Island Law