                                                    Supreme Court

                                                    No. 2012-141-Appeal.
                                                    (PC 02-2785)

Langdon Wilby et al.              :

         v.                       :

 Paul Savoie, Alias.              :




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 notify the Opinion Analyst, Supreme Court of Rhode Island, 250
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                                                                    Supreme Court

                                                                    No. 2012-141-Appeal.
                                                                    (PC 02-2785)

             Langdon Wilby et al.                :

                       v.                        :

              Paul Savoie, Alias.                :

              Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

                                          OPINION

       Chief Justice Suttell, for the Court.         The plaintiff, Paul Savoie, appeals from a

November 14, 2011 judgment in favor of the defendants, Langdon Wilby and Tammy Emmett. 1

The plaintiff and the defendants were members of the board of directors of Green Mountain

Park, Inc., a Vermont corporation formed for the purpose of reconstructing, reviving, and

operating a defunct horseracing facility in the Town of Pownal, Vermont. The plaintiff invested

$350,000 in the venture before the project was ultimately abandoned due to issues surrounding

the corporation’s ability to obtain a racetrack license. The plaintiff brought claims against the

defendants for breach of fiduciary duty, 2 breach of contract, and fraud. At the conclusion of a

bench trial in Superior Court, the trial justice entered judgment for the defendants on all counts.

For the reasons set forth herein, we affirm the judgment of the Superior Court.




1
  This lawsuit was initially brought by Emmett and Wilby against Savoie; however, this appeal
solely concerns the judgment on Savoie’s counterclaims. Therefore, we will refer to Savoie as
the plaintiff, and Wilby and Emmett shall be referred to as the defendants.
2
   Count 1 of Savoie’s amended counterclaim is titled “negligence”; however, the specific
allegations relate only to the execution of Wilby’s and Emmett’s fiduciary duties to the
corporation and/or to Savoie as a shareholder.
                                               -1-
                                                 I

                                  Facts and Procedural History

                                    The Racetrack Property

       In early 1997, Marcus Vitali, a horse trainer, became aware that an unused racetrack

facility in the Town of Pownal, Vermont was available after being closed for nearly a decade.

Vitali told an acquaintance, Langdon Wilby, about the racetrack and presented the idea of

rehabilitating the facility. Wilby had been working in the restaurant industry for approximately

thirty years, and he owned a restaurant called “Lang’s Villa Rosa” 3 in Massachusetts. Wilby had

no experience developing, managing, or running racetracks prior to the beginning of this

particular venture. After discussing the potential project, Vitali and Wilby visited the racetrack

facility and met with the owner of the property, Mr. Tietjen. 4

       It is not clear whether Vitali or Wilby ever executed a lease agreement regarding the

racetrack property. According to Wilby, there was first an “oral commitment” in the spring of

1997 and then a signed lease for the racetrack premises the following summer. 5 The oral

agreement allegedly gave Wilby and Vitali permission to take possession of the premises, on the

condition that they would receive a racing license. Vitali also testified that he and his wife,

Tammy Emmett, and Wilby reached an “agreement” with Tietjen in 1997, which was signed and

reduced to writing. No written lease was produced at trial. At some point in 1997, Wilby and

Vitali, along with two other acquaintances, Gary Owens and Paul Rizzo, began working to

3
  At trial, Wilby’s restaurant was referred to variously as “Lang’s Villa Rosa,” “Lang’s Villa,”
and “the Villa Rosa.” We shall call it “Lang’s Villa Rosa.”
4
  According to Vitali, the racetrack was owned by “George Tietjen.” According to Wilby, this
person was “John Tietjen.” The trial justice’s decision refers to the owner as “Mr. Tiegens.” We
shall refer to him as “Tietjen.”
5
  In his deposition, however, Wilby stated that there was never a written lease. Also, on July 17,
1998, Wilby’s attorney sent him a letter in which he indicated that he had not heard anything
about a lease agreement with the racetrack owners.
                                                -2-
rehabilitate the racetrack property. Vitali supervised the project and was in charge of hiring and

billing. Owens and Rizzo held managerial positions. 6

                                          The Corporation

       On July 21, 1997, Wilby and Emmett formed a Vermont corporation called Green

Mountain Park, Inc. (Green Mountain), for the purpose of “conducting thoroughbred and other

horse racing and the simulcasting of same at lawfully licensed establishments.” The articles of

incorporation listed three directors: Wilby, Emmett, and Ralph A. Foote, who was also the

corporation’s legal counsel. Wilby served as President and Treasurer of Green Mountain, and

Emmett was Vice President and Secretary. Vitali chose not to be involved in the corporation as a

stockholder, director, or officer, because he did not want his career as a horse trainer to be

jeopardized in the event that the corporation’s racing license was denied. Vitali testified that

Emmett, his wife, “agreed to be part of the venture and step in.” According to Wilby, Vitali

made the decisions for Emmett’s share of the corporation. Emmett testified that Vitali was

authorized only to perform work that she had assigned to him, but she could not recall at trial any

specific duties or tasks that she had so assigned. 7

                      Savoie’s Involvement in Green Mountain Park, Inc.

       Wilby, Vitali, and Emmett began to look for investors in the summer of 1997. Vitali had

known Paul Savoie, a former Pawtucket firefighter, for many years. Vitali, knowing that Savoie

had been previously involved in dog racing, thought that Savoie might be interested in

participating in the new racetrack venture. Vitali introduced Savoie to Wilby in late 1997 or

6
  According to Wilby, Owens served as general manager of the racetrack beginning in May
1997, and Rizzo was the assistant general manager. In a Small Business Plan submitted to the
Vermont racetrack licensing commission, however, Owens was listed as the corporation’s
“Chief,” and Rizzo was listed as “General Manager.”
7
  Emmett also testified that she suffered from a “brain hemorrhage” and that her memory had
been affected as a result.
                                                 -3-
early 1998 at Lang’s Villa Rosa. A couple of weeks after Savoie met Wilby, Savoie agreed to

invest $350,000 in the enterprise. Wilby testified that he met with Savoie approximately fifteen

to twenty times prior to the time when Savoie made his investment. Savoie testified, in contrast,

that they had only “[t]wo or three” meetings. Vitali estimated that he met with Savoie seven

times prior to Savoie’s investment, and Emmett testified that she met with Savoie at least once.

       Savoie testified that, prior to investing, he did not ask Wilby or Vitali about financial

matters, nor did he inquire about their business plan, the prospective purchase of the racetrack

property, or any lease arrangements.       Savoie also testified that he did not ask about any

preliminary work that had been done on the racetrack, did not ask to see any records, and did not

know whether the company had been incorporated. Savoie also did not ask whether Wilby or

Emmett had any prior experience with racetracks. Savoie was aware that Vitali was a horse

trainer and that Emmett owned a horse farm. According to Wilby, Savoie was also aware that

Vitali would essentially be in charge of the racetrack operation even though he was not a formal

member of the company. Savoie also knew that Wilby and Emmett had hired Attorney Foote as

their legal counsel, but he did not attempt to contact Attorney Foote prior to investing.

       Savoie testified that he visited the racetrack property once before he invested and

observed that it was “kind of run down.” Later on, however, Savoie testified that he could not

recall whether he visited the property before investing. Vitali testified that Savoie went to the

racetrack once before making his investment and that he “never really asked a lot of questions.”

When asked at trial, “what did you do for due diligence before issuing the check for $350,000?”

Savoie replied, “I didn’t do anything.”

       Prior to making his $350,000 investment, Savoie met with his brother, Robert, who

worked as a financial analyst. This meeting was arranged by Wilby and Vitali. Savoie told



                                                -4-
Robert that he “had an opportunity to own part of a racetrack” and that he intended to invest

$350,000. Savoie first testified that Robert did not express an opinion regarding the investment.

Later during trial, however, Savoie stated that his brother told him that “he didn’t really think

[the investment] was a good idea.”

       According to Savoie, Wilby and Emmett both told him that they would invest $175,000

in the racetrack venture; however, they actually invested only $100,000 each, a few days after

Savoie made his initial deposit of $350,000 into a new bank account opened for Green Mountain

at Vermont National Bank. Savoie received a one-third equity interest in the corporation in

exchange for his monetary investment, with Wilby and Emmett holding the other two-thirds. 8

       At the first shareholders meeting, held on April 9, 1998, Savoie was elected to the board

of directors, and Attorney Foote resigned. 9 The corporate minutes also indicate that Wilby was

elected President and Treasurer, and Emmett was elected Vice President and Secretary. Wilby

testified that his duties as President were to oversee the general activities of the racetrack and

that, as Treasurer, he was responsible for “checking the books.” 10 Wilby testified that Vitali

handled the payroll for the corporation and was in charge of the petty cash. Emmett testified that

she held the positions of Secretary and Vice President, although she also stated that Savoie

replaced her as Vice President at some point during the venture. Emmett testified that she

believed she “had no responsibilities” in the development of the business.




8
  Wilby, Emmett, and Savoie were the only shareholders of Green Mountain, with 10,000 shares
apiece.
9
  The minutes from this meeting also indicate that the board of directors resolved to treat Green
Mountain “as a small business corporation for income tax purposes.” However, there is no
indication that any action was taken as a result of this resolution, and the corporation never filed
income tax returns.
10
   When deposed prior to trial, however, Wilby stated that he “never had any responsibilities” as
Treasurer.
                                               -5-
       Savoie testified that he never served as an officer of Green Mountain. According to

Wilby, however, Savoie served as Vice President of the corporation starting in the spring of

1998. Wilby did not produce any records to support this assertion. Wilby also testified that

Savoie was elected Secretary of the corporation shortly after he became involved in the business.

Savoie was identified as “Secretary” in a Small Business Plan submitted to the Vermont

licensing commission. 11

       The parties presented conflicting testimonies regarding the extent of Savoie’s presence at

the racetrack in 1998 and early 1999. According to Savoie, he visited the racetrack only “[o]n

one or two occasions” after he made his investment and stayed overnight “once or twice.”

Savoie testified that he spent a total of “four or five” days at the racetrack between the spring of

1998 and February 1999. Savoie contended that he did not help with the racetrack rehabilitation

project, was not assigned any responsibilities in developing the company, and did not attend any

formal meetings to discuss the development of the venture. 12 Savoie did testify, however, that

each time he visited the racetrack he would go to “the deli across the road,” which was owned by

James Winchester, who was also a member of Green Mountain’s board of directors. Savoie also

testified that, when he went to the track, he would spend the day with Doug Saunders, who had




11
   Wilby was unable to reconcile the difference between the corporation’s Small Business Plan,
which listed Savoie as Secretary, and the minutes of the April 1998 meeting that listed Emmett
as Secretary.
12
   Roger R. Nolette, a friend of Savoie since the early 1970s, testified that he was a Eucharistic
Minister at a parish of which Savoie’s mother was a member in 1998. Nolette testified that he
and Savoie had a practice of delivering communion to Savoie’s ill mother in the Town of Bristol,
Rhode Island, approximately once a week throughout some or all of 1998. Nolette testified that
this activity did not occur on the same day each week, and that he would call Savoie between
twenty-four and forty-eight hours in advance to schedule the meetings. Nolette did not recall
Savoie ever telling him that he was unavailable because he was in Vermont. Nolette also
testified that he and Savoie had a tradition of gathering with friends at a bar in the City of
Pawtucket, “on just about a daily basis” throughout the year in 1998.
                                               -6-
been hired as the head of racetrack security. 13 Savoie, Wilby, and Vitali all testified that Savoie

kept an antique car at the racetrack.

       Wilby, on the other hand, testified that he saw Savoie “at least five times a week,” either

at Lang’s Villa Rosa or at the racetrack, after Savoie made his investment. Wilby stated that, “I

[Wilby] used to go up on a Monday and Tuesday and [Savoie] was there almost all summer long

when I went up.” Wilby also testified that Savoie would go to the hardware store, that “[h]e

spent time over at the deli,” and that he would stay overnight in the jockeys’ room. According to

Vitali, “[Savoie] was there a lot. I [Vitali] can’t say how often, but he was there quite a bit, you

know, we were working. He would come floating through, walking around, you know, he had

his car downstairs. He was around quite often. He’d stay in the jockey[s’] room.” According to

Vitali, Savoie would “stay a couple of days, go home, and come back.” Vitali testified that

Savoie was “absolutely” present at the track more than four or five times in 1998.

                                             The Checks

       At some point in 1997, Vitali began hiring local workers to perform renovations on the

racetrack property, paying them first in cash and then with checks drawn from the account of his

and Emmett’s business, Country Side Farms. 14 Vitali testified that, when he paid workers in

cash, he did not obtain receipts.       In the spring of 1998, Green Mountain opened a business

account at Vermont National Bank with an initial deposit of Savoie’s $350,000, followed shortly

by Wilby and Emmett’s $200,000.

       More than 250 checks drawn on the Green Mountain account were introduced into

evidence at trial. The checks were made out to various payees, including “Villa Rosa” (Wilby’s

13
  Wilby described Saunders as Tietjen’s “right-hand man.”
14
   Emmett testified that Country Side Farms was a horse boarding facility located in
Massachusetts that also provided horse-riding lessons. Country Side Farms had its own checking
account in 1997, on which Emmett and Vitali were authorized signatories.
                                                 -7-
restaurant) and “Country Side Farms” (Vitali and Emmett’s horse farm), 15 and they all contained

what purported to be Savoie’s, Wilby’s, and Emmett’s signatures. Some of the checks contained

memos indicating that the funds were spent on racetrack-related expenditures, while others had

blank memos or merely contained the word “loan.” At trial, Savoie recalled signing only some

of these checks and said he did not recognize all of the various payee names. Savoie testified

that he had signed blank checks on behalf of Green Mountain during the course of the business

venture because Wilby had asked him to do so. Savoie also testified that he did not authorize

anyone to sign his name on checks drawn from the Green Mountain account. Vitali testified that

he wrote the signatures on some of the checks, although Wilby, Emmett, and Savoie were the

only authorized signatories on the account. Wilby and Emmett testified that they had given

Vitali permission to execute their signatures; according to Vitali, he also had permission to sign

Savoie’s name.

       Vitali testified that he kept a “ledger” of the money that was spent on rehabilitating the

racetrack. Vitali stated that his practice was to make a note of each check that he wrote, either

on the ledger or on “a piece of paper or pad in my office, * * * or I’d use my checkbook,

whatever.” Vitali’s ledger was included as a trial exhibit, and it contained more than 250

handwritten entries indicating payments with corresponding check numbers.

                                  Attorney Foote’s Concerns

       Wilby received a letter from Attorney Foote dated August 5, 1997, in which Attorney

Foote advised Wilby that Green Mountain’s racing-license application must indicate whether any

officers of the corporation had ever been arrested. Wilby testified that he had in fact been

15
  Emmett testified that Vitali sometimes used Country Side Farms checks for Green Mountain
expenses. Emmett also “vaguely” recalled checks being made out from Green Mountain to
Country Side Farms, and that these checks were for “[a] multitude, just payroll, materials, and
whatever it was that [Vitali] paid out” at Green Mountain.
                                              -8-
arrested in 1971, but that he had forgotten about this arrest when he received the letter from

Attorney Foote. 16 On August 19, 1997, Wilby and Emmett filed an “Application for License to

Conduct Horse Race Meets with Pari-Mutuel Wagering” with the Vermont Racing Commission,

on behalf of Green Mountain. The application contained the following question: “Has any

officer, director, stockholder, or any employee of the corporation been arrested at any time for

other than a minor traffic violation?” The applicants checked the box for “no” in response to this

question.

       Wilby received another letter from Attorney Foote dated December 10, 1997, in which

Attorney Foote indicated that he was “not optimistic” about how the commission would react to

Green Mountain’s application. This letter indicated that Attorney Foote was concerned about

Green Mountain’s financial capacity. 17 Green Mountain also submitted a “Proposal” to the

Vermont Racing Commission that contained estimated costs for the construction and renovation

of the racetrack facility, with a total projected cost of $1,300,000. Additionally, Attorney Foote

sent a “Memorandum for Lang Wilby” to Rizzo on January 10, 1998, in which he indicated that

the commission “would want to know precisely where we planned to obtain the 1.3 to 1.5 million

we had estimated it would cost to restore the track.” Attorney Foote’s memorandum did not

contain a breakdown of this estimate. Wilby testified that, upon receiving this memorandum, he

assigned Vitali the task of “looking into” the corporation’s financial issues.




16
   Wilby testified that he had been arrested, charged, tried, and convicted on charges of aiding
and abetting and moving stolen property.
17
   The letter stated, in part:
                 “Very frankly I am not optimistic as to what [the Commission’s]
                 reaction is going to be. However we have done, as far as I can see,
                 all we can do and if we don’t have enough to assure them it can
                 work it may be a fair signal that the risks involved exceed any to
                 which you should be exposing yourself.”
                                                -9-
       Wilby did not tell Savoie about Attorney Foote’s letters and memorandum before Savoie

became an investor. Savoie testified that, if he had known that Attorney Foote had raised

concerns about persons being arrested and/or charged with crimes, he would not have invested in

the corporation. Additionally, Savoie asserted that he would not have invested had he known

about the financial concerns raised in Attorney Foote’s memorandum. Savoie also testified,

however, that he did not ask to see any corporate records, did not ask about the corporation’s

financial situation, and did not attempt to contact Attorney Foote before making his investment.

                            Savoie’s and Wilby’s Criminal Records

       Savoie testified that he met with officers from the Vermont State Police in the summer of

1998, during the course of the police investigation of the principals involved in the racetrack

venture. Savoie told the officers that he had a criminal record, specifically that he had pled

guilty to a currency-violation charge in Vermont in 1980 and served sixty days in jail. 18 Savoie

testified that he told Wilby about his criminal record before he invested in the racetrack venture,

because he “knew we would be investigated,” and Wilby told him “not to worry about it.”

Wilby, however, did not recall this conversation. Savoie did not ask, prior to investing, whether

Wilby had a criminal record.

       Wilby was also interviewed by the Vermont State Police in 1998, and the police asked

whether he had a criminal record. After first denying that he had a record, Wilby eventually told

the investigating officers that he had been charged in relation to an incident involving stolen

property and had served one year of probation in 1970 or 1971. Wilby then told Savoie that the

police had discovered his record, and Savoie told Wilby that he had also been investigated.

Wilby testified that he, Savoie, Owens, and Vitali had a meeting with Attorney Foote at the

18
  Savoie also testified that he had a second meeting with the Vermont State Police, but he could
not recall any details about the encounter.
                                              - 10 -
racetrack, at some point in the beginning of 1999, for the purpose of discussing Wilby’s and

Savoie’s criminal records.

                              The License Application Withdrawal

       In February 1999, Green Mountain submitted a “Withdrawal of Application for License

to Conduct Horse Races or Meets with Pari-Mutuel Wagering” to the Vermont Racing

Commission.19      This document stated two reasons for the withdrawal: an issue with

“construction of a suitable sanitation plant,” and fire-code-compliance reconstruction that would

cost “between 1.2 and 1.9 millions of dollars.” 20

       The parties disputed whether Savoie was involved in the decision to withdraw Green

Mountain’s license application. Wilby testified that in early 1999 there was a meeting at the

racetrack, at which Wilby, Vitali, Rizzo, Attorney Foote, and Savoie were present, and the

decision was made to withdraw the license application.       According to Wilby, Savoie was

involved in the discussions that led to this decision. No records or minutes were produced from

any meetings having to do with the withdrawal. Emmett testified that she was involved in a

meeting in which the withdrawal decision was made, along with Vitali, Wilby, and Savoie.

Emmett testified that she understood that the reason for the withdrawal was that Savoie’s and

Wilby’s criminal records had “come to light,” and they thought it better to withdraw rather than

be denied.

       Vitali also recalled that there was a meeting concerning the Vermont State Police

investigation. Vitali testified that Emmett and Savoie were present at this meeting, and the

purpose was to discuss the severity of the criminal records with Attorney Foote. As a result of

19
  Green Mountain had submitted its racing license application in August 1997.
20
   Wilby testified that Owens had been responsible for establishing this numerical estimate.
Wilby also testified that he was unsure of exactly how Owens had arrived at the estimate, and he
said he did not make any inquiries about it.
                                               - 11 -
that meeting, according to Vitali, the decision was made to withdraw the application. Vitali

testified that it was understood that the commission was going to deny the application because of

Wilby’s and Savoie’s criminal records. Vitali also testified that, at the time of the withdrawal,

there were issues with the racetrack’s septic system and fire-code compliance.

       Savoie, on the other hand, testified that he did not participate in any meetings in which

the withdrawal of the license application was discussed and was never given an opportunity to

vote on the matter. Savoie stated that, in February 1999, Wilby informed him at Lang’s Villa

Rosa that the racetrack venture was no longer going to be pursued because the license

application had been denied. Savoie testified that he did not ask Wilby why the application had

purportedly been denied.

                                       The Final $100,000

       After the license application was withdrawn, $100,000 remained in Green Mountain’s

bank account. According to Savoie, he and Wilby agreed to invest this money in the stock

market. 21 Wilby “had a guy” who would invest the money; Savoie did not recall who this person

was. Savoie did not know where the $100,000 was invested, and he did not ask. Wilby testified

that he invested the money in the stock market, and that $62,000 was subsequently lost. Wilby

could not recall the name of the brokerage firm or the last name of the broker, and he produced

no records detailing this investment. At some point in 1999, Wilby and Vitali gave Savoie a

check for the remaining $38,000, with the understanding that Savoie would invest it with his

brother, Robert. Savoie’s brother refused to take the check or become involved, and Savoie

deposited the check into his personal account at Pawtucket Credit Union.




21
   Savoie also testified inconsistently, however, at one point stating that he was reluctant to make
this investment.
                                               - 12 -
                                          The Lawsuit

       Wilby and Emmett filed a complaint against Savoie in Superior Court on May 29, 2002,

seeking an accounting of the $38,000 that was supposedly invested on their behalf. Savoie

counterclaimed for breach of fiduciary duty, 22 fraud, and breach of contract, seeking $312,000 in

damages. 23 Wilby and Emmett’s complaint was dismissed for failure to comply with discovery,

and the case proceeded to trial on Savoie’s counterclaims. After a five-day bench trial, judgment

was entered for Wilby and Emmett on all counts. Savoie filed a timely appeal to this Court.

                                                II

                                      Standard of Review

       “Rule 52(a) of the Superior Court Rules of Civil Procedure requires a trial justice in a

nonjury * * * case ‘to make specific findings of fact upon which he [or she] bases his [or her]

decision.’” Connor v. Schlemmer, 996 A.2d 98, 109 (R.I. 2010) (quoting Nardone v. Ritacco,

936 A.2d 200, 206 (R.I. 2007)). “Rule 52(a) further requires a trial justice to ‘find the facts

specially and state separately its conclusions of law thereon * * * .’” Id. (quoting Rule 52(a)).

The trial justice, however, “need not engage in extensive analysis to comply with this

requirement.” Id. (quoting Nardone, 936 A.2d at 206). “This Court has ‘recognized that [a] trial

justice’s analysis of the evidence and findings in the bench trial context need not be exhaustive,

[and] if the decision reasonably indicates that [he or she] exercised [his or her] independent

judgment in passing on the weight of the testimony and the credibility of the witnesses it will not

be disturbed on appeal unless it is clearly wrong or otherwise incorrect as a matter of law.’”




22
    As previously mentioned, this count was titled “negligence” in plaintiff’s amended
counterclaim.
23
   Savoie also sought interest, costs, reasonable legal fees, and punitive damages.
                                              - 13 -
Notarantonio v. Notarantonio, 941 A.2d 138, 144-45 (R.I. 2008) (quoting McBurney v.

Roszkowski, 875 A.2d 428, 436 (R.I. 2005)).

       Furthermore, “[i]t is well settled that [t]his Court will not disturb the findings of a trial

justice sitting without a jury unless such findings are clearly erroneous or unless the trial justice

misconceived or overlooked material evidence * * * .” Reagan v. City of Newport, 43 A.3d 33,

37 (R.I. 2012) (quoting Notarantonio, 941 A.2d at 144). On review, “[w]e accord great weight to

a trial justice’s determinations of credibility, which, inherently, ‘are the functions of the trial

court and not the functions of the appellate court.’” Cullen v. Tarini, 15 A.3d 968, 976 (R.I.

2011) (quoting Raheb v. Lemenski, 115 R.I. 576, 579, 350 A.2d 397, 399 (1976)). If “the record

indicates that competent evidence supports the trial justice[’]s findings, we shall not substitute

our view of the evidence for his [or hers] even though a contrary conclusion could have been

reached.” Reagan, 43 A.3d at 37 (quoting Notarantonio, 941 A.2d at 144). We will, however,

review questions of law de novo. Cullen, 15 A.3d at 977.


                                                III

                                            Discussion

       The plaintiff raises three issues on appeal:

               “1. Whether the trial court committed reversible error when it
               failed to address plaintiff’s claim that defendants fraudulently
               induced him to invest in Green Mountain by misrepresenting their
               lack of legal right to the track premises and by withholding
               material information * * * .

                “2. Whether the trial court committed reversible error when it
               concluded that defendants breached their fiduciary duty by failing
               to keep proper account of Green Mountain funds, but then failed to
               hold defendants responsible for their failure to account * * * .

               “3. Whether the trial court failed to do substantial justice between
               the parties, made clear errors of fact, drew unreasonable inferences

                                               - 14 -
               from the evidence and overlooked and misconceived material
               evidence when it concluded that plaintiff knew of defendants’
               mismanagement of Green Mountain and that plaintiff and
               defendants had equal responsibility for Green Mountain’s failure
               * * * .”

We will address each of plaintiff’s proposed issues in turn. The parties agree that Vermont law

controls the substantive legal issues in this case.

                                                  A

                Failure to Address Fraud and Fraudulent Concealment Claims

       The plaintiff argues that the trial justice erred by “d[oing] and sa[ying] nothing whatever

concerning swaths of plaintiff’s fraud claim.” First, plaintiff argues that defendants induced

plaintiff to invest in Green Mountain and led him to believe that he would be a part owner of the

racetrack property, when in fact the corporation did not have any ownership rights to convey.

According to plaintiff, “an offer to sell shares in a venture designed to develop a physical

premises includes an implicit representation that the offeror has some form of legal right to the

premises into which the investor’s money is to be poured.” The plaintiff contends that the trial

justice found that defendants did not have a written lease for the racetrack property, “but failed

then to draw the required legal conclusion: that, when defendants implicitly led plaintiff to

believe that they had an interest in the track, they materially misled him.”

       Next, plaintiff argues that the trial court entirely “disregarded” his claim of fraudulent

concealment. The plaintiff claims that the trial justice erred by failing to address the issue of

whether defendants had a legal duty to disclose information they had learned about the business

prior to plaintiff’s involvement. The plaintiff argues that defendants had a “duty to disclose

material information” to him, because they had been involved in the racetrack venture for

approximately one year before plaintiff became an investor. The defendants, for their part, argue



                                                - 15 -
that plaintiff failed to prove a necessary element of fraud or fraudulent concealment, namely that

there was an intention to mislead or defraud.

       Under Vermont law, “[t]he elements of fraud or intentional misrepresentation are * * * as

follows: * * * ‘an intentional misrepresentation of existing fact, affecting the essence of the

transaction, so long as the misrepresentation was false when made and known to be false by the

maker, was not open to the defrauded party’s knowledge, and was relied on by the defrauded

party to his damage.’” Silva v. Stevens, 589 A.2d 852, 857 (Vt. 1991) (quoting Union Bank v.

Jones, 411 A.2d 1338, 1342 (Vt. 1980)). Fraudulent concealment, on the other hand, requires:

“(1) concealment of facts, (2) affecting the essence of the transaction, (3) not open to the

defrauded party’s knowledge, (4) by one with knowledge and a duty to disclose, (5) with the

intent to mislead, and (6) detrimental reliance by the defrauded party.” Fuller v. Banknorth

Mortgage Co., 788 A.2d 14, 16 (Vt. 2001). “A duty to disclose may arise ‘from the relations of

the parties, such as that of trust or confidence, or superior knowledge or means of knowledge.’”

Lay v. Pettengill, 38 A.3d 1139, 1144 (Vt. 2011) (quoting White v. Pepin, 561 A.2d 94, 96 (Vt.

1989)). “‘In arm’s-length transactions,’ however, ‘where facts are equally within the means of

knowledge of both parties, neither party is required to speak, in the absence of inquiry respecting

such matters.’” Id. (quoting White, 561 A.2d at 96).

       Here, the trial justice found as fact that “all three of these principal parties, Wilby,

Emmett and Savoie, met in an arm[’]s-length mutual desire to make an investment that they

thought would have the possibility of reaping great rewards * * * .” The trial justice further

found that “at least on one occasion [Savoie] met with the owner of the track, nearby business

persons with whom he developed some personal relationship, and was well aware of the situation

involving the extent of the project of developing, rehabilitating and operating the race track



                                                - 16 -
facility.” The trial justice was “not impressed at all by the individual credibility of any of the

principal witnesses, Langdon Wilby, Tammy Emmett, Marcus Vital[i] or Paul Savoie,” finding

that “each of these witnesses testified to their involvement in this case with a light to cast each of

them in the most favorable position possible.” The trial justice found “as a fact and as a matter

of law that Mr. Savoie was a willing participant in the venture and that there was no material

misrepresentation of fact or omissions of fact concerning Mr. Savoie’s participation that were

knowingly designed to induce him to invest $350,000.”

       Bearing in mind that “[a] trial justice’s analysis of the evidence and findings in the bench

trial context need not be exhaustive,” we do not find merit in plaintiff’s argument that the trial

justice failed to adequately address his fraud claim. See Notarantonio, 941 A.2d at 144-45

(quoting McBurney, 875 A.2d at 436). After a thorough review of the record, we do not find any

evidence of the intention to misrepresent or defraud that is required for a claim of intentional

misrepresentation or fraudulent concealment under Vermont law. Accordingly, the trial justice

had no need to address the issue of whether defendants owed a legal duty to disclose information

about the racetrack venture before Savoie became an investor, because the intent element of the

fraudulent concealment claim was clearly missing. 24 As for intentional misrepresentation, the

trial justice made factual findings regarding Wilby’s, Emmett’s, and Savoie’s pre-investment

knowledge and behavior, and these findings comport with the conclusion that defendants did not

intentionally mislead Savoie into believing that they had an interest in the racetrack property.

We perceive no error in these factual findings.          Accordingly, we affirm the trial justice’s

judgment on plaintiff’s fraud claim.




24
  Nevertheless, the trial justice did find that this was an “arm[’]s-length” transaction, which
supports the finding that defendants did not owe a special duty to plaintiff.
                                                - 17 -
                                                   B

                                     Breach of Fiduciary Duty

        The plaintiff argues that the trial justice erred by “declin[ing] to hold defendants

responsible for * * * breaches of fiduciary duty.” Specifically, plaintiff points to the evidence of

payments made from the Green Mountain account to Wilby, Country Side Farms, and other third

parties. The plaintiff also points to the evidence of “forgeries,” referring to the checks that Vitali

signed allegedly on plaintiff’s behalf, and the loss of $62,000 from the final $100,000 that was

invested through an unnamed broker. The plaintiff also notes various “managerial deficits,” such

as the fact that papers were never filed to allow Green Mountain to be treated as a small-business

corporation for income tax purposes, and the failure to secure a written lease of the racetrack

property. The plaintiff argues that the trial court erred by seemingly crediting this evidence of

mismanagement and yet failing to hold defendants accountable to plaintiff for his resulting loss.

        The plaintiff also argues that defendants were agents of the corporation, and that they had

certain responsibilities as corporate fiduciaries due to their positions as officers. The plaintiff

asserts that, as agents or fiduciaries, defendants had a duty to account for the corporation’s assets

and a duty to disprove a presumption of negligence created by dispensing the corporation’s funds

without proper documentation.        Thus, plaintiff suggests that defendants had the burden of

proving that the funds spent from Green Mountain’s account were not misappropriated. The

plaintiff asserts that the trial justice “let defendants off scot free, and instead faulted plaintiff for

his inability to prove exactly how corporate funds were spent.” The plaintiff maintains that this

was legal error because, “[w]hen defendants failed to provide records to justify the expenditure

of Green Mountain funds, including multiple thousands of dollars paid to themselves, they

breached their fiduciary duty to account, making them liable for the unexplained expenditures.”



                                                 - 18 -
       The defendants, for their part, dispute plaintiff’s contention regarding the trial justice’s

findings on the issue of fiduciary duty. The defendants assert that the trial justice “did not

conclude as a finding of fact or conclusion of law that Defendants’ actions constituted a breach

of any fiduciary duty to Plaintiff.” The defendants also claim that plaintiff’s argument is not

supported by the documentary evidence, such as Vitali’s payment ledger, the checks paid from

Green Mountain’s account, and other documents that showed “the substantial time and effort

invested by Defendants in the preparation of the [racing license application].”

       Under Vermont law, “[d]irectors of a corporation are regarded as fiduciaries and are

required to exercise their own independent judgment for the highest welfare of the corporation

and its stockholders.” Vermont Department of Public Service v. Massachusetts Municipal

Wholesale Electric Co., 558 A.2d 215, 224 (Vt. 1988) (quoting Stoneman v. Fox Film Corp., 4

N.E.2d 63, 66 (Mass. 1936)). Shareholders of a corporation may bring suit against directors for

breach of fiduciary duties owed to the corporation; and, under Vermont law, “[t]he general

principles governing shareholder suits are well settled. In a derivative suit, the shareholder sues

on behalf of the corporation for harm done to the corporation; in a direct action, the shareholder

brings suit individually, or on behalf of a class of shareholders, for injuries done to them in their

individual capacities.” Bovee v. Lyndonville Savings Bank & Trust Co., 811 A.2d 143, 145 (Vt.

2002). “[A]ctions charging mismanagement which depress[ ] the value of stock [allege] a wrong

to the corporation; i.e., the stockholders collectively, to be enforced by a derivative action.” Id. at

146 (quoting Kramer v. Western Pacific Industries, Inc., 546 A.2d 348, 353 (Del. 1988)). The

Vermont Supreme Court has further held that “shareholders in a closely held corporation owe




                                                - 19 -
one another a fiduciary duty of good faith and loyalty * * * .” P.F. Jurgs & Co. v. O’Brien, 629

A.2d 325, 331 (Vt. 1993). 25

       The plaintiff cites principles of agency law for the proposition that the burden of proof

should have shifted to defendants, requiring them to show that they did not misappropriate Green

Mountain’s funds. In our opinion, this application of the law is misguided. Wilby and Emmett,

as officers and directors of Green Mountain, were not agents of plaintiff; rather, they were agents

of Green Mountain. The plaintiff here asserted his claim for breach of fiduciary duty directly on

behalf of himself, not derivatively on behalf of the corporation; however, plaintiff cited no

Vermont law suggesting that there would be a shift in the burden of proof in a direct suit for

breach of fiduciary duty between co-shareholder-directors of a closely held corporation. We are

satisfied, therefore, that the trial justice did not err by requiring plaintiff to prove

misappropriation of corporate funds by a preponderance of the evidence.

       Next, we address the issue of whether the trial justice found a breach of fiduciary duty

and, if not, whether this finding was clearly erroneous. In his twenty-one-page decision, the trial

justice acknowledged that Green Mountain “was extremely poorly run, without adhering to

common reasonable business practices of accounting, tax filing and reporting, etc.,” but found

that Savoie was “well aware of the business venture and its pitfalls and possible reward.” The

trial justice also found as fact that Savoie had visited the racetrack more frequently than he

admitted, and that he “was well aware of the situation involving the extent of the project of

25
   The trial justice found that “[Green Mountain] was a closely held corporation,” and this
finding is not challenged on appeal. We assume, therefore, that plaintiff’s claims were asserted
against defendants for breach of their “fiduciary dut[ies] of good faith and loyalty” stemming
from their positions as co-shareholders of a closely held corporation, see P.F. Jurgs & Co. v.
O’Brien, 629 A.2d 325, 331 (Vt. 1993), rather than as claims for breach of fiduciary duties owed
to the corporation and its stockholders stemming from defendants’ capacities as directors. See
Vermont Department of Public Service v. Massachusetts Municipal Wholesale Electric Co., 558
A.2d 215, 224 (Vt. 1988).
                                              - 20 -
developing, rehabilitating and operating the race track facility.” Further, the trial justice found

that Savoie was aware that standards of corporate accountability were not being met, that Vitali

was signing Savoie’s name on checks drawn from the Green Mountain account, and that

payments were being made to other third parties. While the trial justice was “dismayed at the

lack of recordkeeping, accountancy and travel of the funds from the ledger book and

checkbook,” he was “not convinced by a fair preponderance of the evidence that these funds

were misappropriated and put into anyone’s pocket.” Ultimately, the trial justice noted that

while he was “aware of the corporate duties and the fiduciary duty of officers of corporations to

their stockholders and shareholders, * * * in this particular instance * * * all three of these

stockholders and directors were pretty much in the same boat * * * .”

       After reviewing the trial justice’s decision, we are of the opinion that he did not find that

defendants breached any fiduciary duties owed to plaintiff. While the trial justice did list a litany

of ways in which the corporation was poorly run, he explicitly stated that “Plaintiff has failed to

prove by a fair preponderance of the credible evidence that the Defendants were negligent as to

him and the operation of the corporation * * * .” Additionally, while the trial justice found the

loss of $62,000 from the corporation’s final $100,000 to be “extremely troublesome,” he also

found that, “[a]bsent any hard evidence as to where that money did go, the [c]ourt is without the

ability to make a determination that it was embezzled or otherwise unjustly enriched by Wilby or

Ms. Emmett.”

       After a thorough review of the record, we are satisfied that the trial justice did not

overlook or misconceive material evidence and that his findings on the issue of fiduciary duty

were not clearly erroneous. The record reveals that the testimonies of Wilby, Vitali, Emmett,

and Savoie were replete with inconsistencies and vague recollections of even the most basic facts



                                               - 21 -
surrounding Green Mountain’s management. The witnesses’ hazy presentations of the events

certainly allowed for the conclusion that Savoie was more involved in the racetrack venture than

he claimed. Additionally, the parties do not dispute that plaintiff was a member of Green

Mountain’s board of directors, that he willingly invested in the corporation despite cautionary

advice from his financial-analyst brother, and that he failed to conduct even a cursory

investigation into the corporation’s prospective chances for success. We cannot say that the trial

justice was clearly wrong in finding that defendants, while apparently ineffectual in their ability

to rehabilitate the racetrack, breached any fiduciary duties owed to plaintiff, who also bore

responsibilities as a corporate director and apparently failed to make any attempts to remedy the

corporation’s mismanagement. Accordingly, we affirm the trial justice’s judgment on plaintiff’s

claim of breach of fiduciary duty.

                                                C

    Savoie’s Knowledge of and Participation in the Mismanagement of Green Mountain

       Finally, plaintiff argues that the trial justice’s factual findings were clearly wrong with

regard to plaintiff’s knowledge and participation in the mismanagement of the Green Mountain

venture. First, plaintiff argues that he carried out only “menial tasks” at the racetrack and that

“[t]hese activities would not even arguably have exposed plaintiff to defendants’ record-keeping

deficits or to the nature of the checks they were writing to themselves and others.” According to

plaintiff, the trial justice “acted unreasonably and without any evidentiary support” when he

found that plaintiff “was well aware” of defendants’ mismanagement of Green Mountain.

Second, plaintiff argues that the trial justice was clearly wrong in finding that plaintiff and

defendants, as stockholders and directors of the corporation, “were pretty much in the same

boat.” The plaintiff lists a litany of alleged differences between defendants and himself in



                                              - 22 -
relation to their corporate capacities, including plaintiff’s status as an inactive director, plaintiff’s

nonparticipation in spending corporate funds, and plaintiff’s lack of responsibility for corporate

recordkeeping. Third, plaintiff argues that the trial justice’s conclusions regarding the parties’

criminal records were clearly wrong. The plaintiff asserts that Wilby and plaintiff were not

similarly situated with regard to the implications of their criminal records, because Wilby failed

to disclose his record on Green Mountain’s license application, whereas plaintiff was not

involved in the application process. 26

        The trial justice laid out a detailed description of the facts underlying this case, and he

noted the areas where the parties’ versions of the facts diverged. He pointed out the distinction

between Savoie’s assertion that he visited the racetrack on only two or three occasions, and

Wilby’s and Vitali’s assertions that Savoie “was a constant presence at the race track facility.”

The trial justice also noted the parties’ disagreement over whether Savoie was ever an officer of

the corporation and the lack of corporate paperwork to verify Savoie’s status.                He noted

disagreement over how many corporate meetings were held with Savoie present, particularly the

meeting where the decision was made to withdraw the license application. The trial justice also

noted disagreement as to whether Savoie allowed Vitali to sign his name on corporate checks, as

well as whether Savoie and Wilby were aware of each other’s criminal records.

        After detailing the discrepancies in the parties’ various versions of the facts, the trial

justice found that Savoie, “as a shareholder and director, even though he may not have been a

26
   The plaintiff notes that the trial justice erroneously stated that plaintiff had served a sixty-day
sentence in the State of Nevada for “obtaining money under false pretenses,” whereas plaintiff
stated at trial that he had served a sixty-day sentence in the State of Vermont for a currency
violation. The plaintiff also argues that the trial justice erred by noting that “Wilby denied
withholding from plaintiff the contents of [Attorney] Foote’s warnings,” when in fact Wilby
admitted that he did not disclose this information. We are of the opinion that the trial justice’s
misstatements as to these matters do not amount to clearly erroneous findings or misconceptions
of material evidence.
                                                 - 23 -
director who was intricately involved in the development of this venture * * * was well aware of

the business venture and its pitfalls and possible reward.” The trial justice found that Savoie

“knew that Marcus Vital[i] was running the operation in Vermont,” and that Savoie’s testimony

“shad[ed] to his advantage the number of times that he was at that track.” The trial justice also

found that Wilby and Savoie did not inform each other of their criminal records.

       As noted by the trial justice, the record of this case indicates that the parties presented

diverging versions of the facts and that there was “a patent lack of recollection on the part of all

of the main witnesses.” In performing his duties of fact-finding in a nonjury trial, the trial justice

necessarily weighed the credibility of the witnesses and selected what he found to be the most

reliable version of the disputed facts. After careful review of the record, we are satisfied that the

trial justice ably waded through this quagmire of faulty memories and opaque testimonies, and

that he neither overlooked nor misconceived material evidence, nor were his factual findings

clearly erroneous.

                                                 IV

                                            Conclusion

       For the reasons stated herein, we affirm the judgment of the Superior Court. The record

shall be returned to the Superior Court.




                                                - 24 -
                            RHODE ISLAND SUPREME COURT CLERK’S OFFICE

                                 Clerk’s Office Order/Opinion Cover Sheet




TITLE OF CASE:        Langdon Wilby et al. v. Paul Savoie, Alias.

CASE NO:              No. 2012-141-Appeal.
                      (PC 02-2785)

COURT:                Supreme Court

DATE OPINION FILED: March 12, 2014

JUSTICES:             Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

WRITTEN BY:           Chief Justice Paul A. Suttell

SOURCE OF APPEAL:     Providence County Superior Court

JUDGE FROM LOWER COURT:

                      Associate Justice Francis J. Darigan, Jr.

ATTORNEYS ON APPEAL:

                      For Plaintiff: Michael F. Horan, Esq.

                      For Defendant: Daniel V. McKinnon, Esq.
