American Heritage Agency v. Gelinas, No. Cv 97 0572840 (Jun. 25, 1999)

[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]

MEMORANDUM OF DECISION CT Page 6696 This is an action brought on August 7, 1997 by the plaintiff William P. Gelinas and American Heritage Agency, Inc. (AHA, Inc.) against defendants Rita Gelinas, Mark Rosenblit and Gertrude Irwin; alleging that the defendants have held, and continue to hold themselves out as officers or directors of plaintiff AHA, Inc., exercising or purporting to exercise control over its proceeds and employing its resources to the detriment of the plaintiffs. In the complaint, the plaintiffs seek an order enjoining each of the defendants from holding herself or himself out to be either an officer or a director of AHA, INC. and from exercising or purporting to exercise any control over the assets of AHA, Inc. The plaintiffs further seek an accounting of AHA, Inc. for the period during which the defendants have exercised, or purported to exercise, dominion and control over AHA, Inc. and its assets. The plaintiffs seek compensatory and punitive damages from the defendants.

On March 2, 1999 the plaintiffs withdrew their claims against defendants Mark Rosenblit and Gertrude Irwin. Defendants Rosenblit and Irwin waived costs.

On March 31, 1998, defendants Rita Gelinas and Gertrude Irwin filed an amended answer with a one-count counterclaim, with allegations that William P. Gelinas, claims that he is an officer and/or shareholder of AHA, Inc., are false and fraudulent. The defendants asked for a declaratory judgment that Rita Gelinas is the sole stockholder and that both defendants are authorized officers of AHA, Inc. The defendants further sought a declaration that William P. Gelinas is not and has not been a shareholder, director or officer of the AHA, Inc. and that neither Rita Gelinas nor Gertrude Irwin has engaged in any conduct detrimental to any claimed interests of William P. Gelinas in AHA, Inc. The counterclaim also seeks compensatory and punitive damages against William P. Gelinas.

The plaintiffs filed an answer to the counterclaim together with the following defenses: failure to state a claim upon which relief can be granted; waiver; laches; estoppel; unclean hands; misrepresentation and fraud, unjust enrichment; breach of fiduciary duty; treble damages pursuant to Connecticut General Statutes § 52-564, for the conversion to their own use of property belonging to counter-claim defendants William P. Gelinas and AHA, Inc. CT Page 6697

The facts are as follows. William Gelinas and Rita Gelinas were married in 1954. Between 1954 and 1963 both worked. William Gelinas taught school during the day and worked nights for the railroad. He had a bachelor's degree in business administration from the University of Hartford. Rita Gelinas worked as a secretary with a local manufacturer.

Before his marriage and while still in high school William Gelinas worked with his father who in 1925 started a catering business which he called American Heritage Agency. The business was located in Putnam Connecticut. While working for his father in the business William Gelinas was inducted into the Korean War. Upon his return he found his mother had sold the business so that in 1963 when he decided to go back into the catering business he had to start from scratch.

Prior to 1963 the Gelinases began buying property from which they derived rental income. By 1963 the Gelinases decided to focus their full work efforts on a wedding catering venture and on the management of their properties. A new corporation, Bee-Gee's, Inc. was formed to carry on these business activities. William Gelinas had his attorney F. Owen Egan prepare the corporation papers to be filed with the office of the Secretary of State. This was done on September 3, 1963. William Gelinas was president and treasurer, Rita Gelinas was vice-president and secretary, F. Owen Egan was assistant treasurer.

Rita Gelinas ran the office. William Gelinas was the outside man. He bought in the business and decided on the property acquisitions, sometimes with and sometimes without input from Rita Gelinas. Between 1963 and 1970 when the name of the corporation was changed to American Heritage Agency, Inc. the business of the corporation was expanded to include a travel agency, the school lunch program in East Hartford and to becoming a Sealtest distributor.

In 1975 William Gelinas was called to active duty as a colonel in the Viet Nam War. He was released from active duty in 1976 after experiencing a stroke and was placed on reserve status. William Gelinas met Attorney Eddie Zyko in 1978 while both were in the reserves. William Gelinas employed Attorney Zyko to set up a new corporation for him to be called Heritage Windjammer, Inc. The corporation was formed in 1977. Between 1977 and 1979 the name American Heritage Agency appeared with the CT Page 6698 name Heritage Windjammer, Inc. on the corporate tax returns for those years.

On March 13, 1979 the American Heritage Agency, Inc. changed its name back to Bee-Gee's. Later that year on December 20, 1979 a certificate of dissolution was filed in the Secretary of States office dissolving Bee-Gee's on December 31, 1979.

The directors and officers of Bee-Gee's Inc. on the date of Expiration were listed as William P. Gelinas, president/treasurer and Rita Gelinas, vice president/secretary. On December 20, 1979 a certificate Amending or Restating certificate of incorporation was also filed in the Secretary of State's office amending the certificate of Incorporation with the following resolution:

Resolved that the Certificate of Incorporation be and the same hereby is amended by inclusion of the following:

The duration of the corporation shall be limited and expire on December 31, 1979; and

Further resolved, that the certificate of Incorporation shall remain in full force and effect in all other aspects.

In 1970 when the certificate of Incorporation was amended changing the name from Bee-Gee's to American Heritage Agency, Inc. a Certificate of Dissolution by Incorporation for Bee-Gee's was to have been filed with the Secretary of State's office. It was not. In 1979 the publishers of American Heritage books were threatening litigation over the use of the name American Heritage Agency, Inc. In response to this concern William Gelinas did two things. He asked Attorney Zyko to set up the new corporation Heritage Windjammer, Inc. and took back the name Bee-Gee's in place of the name American Heritage Agency, Inc. Once he was advised by his attorney that the corporation could resume use of the name American Heritage Agency, Inc. the dissolution papers for Bee-Gee's were filed with the Secretary of State's office. This took place on December 20, 1979.

During all of these years from 1963 through 1979 William Gelinas was the one who decided when a corporation was to be formed, what it was to do, when it was to be named and renamed for whatever business purposes warranted such changes. Rita Gelinas other than to sign documents pertaining to these actions as a director or officer did not involve herself with these CT Page 6699 matters. By her own testimony she went along with whatever her husband wanted to do.

Between 1979 and 1989 the corporate name American Heritage Windjammer, Inc. and American Heritage Agency, without the Inc., were used together. They were listed together on letterhead and on income tax returns. In 1989 the name of the corporation was changed from American Heritage Windjammer, Inc. to American Heritage Agency, Inc. . Actually the paperwork for the name change was completed in 1980 but not filed with the Secretary of State's office until 1989.

In 1985 William Gelinas purchased a twenty-two unit apartment complex called King's Court and a Mobile Home Park called Oakview Leisure Village. Both were located in New Jersey. At the same time the Eileen Quigley Corporation was formed by William Gelinas and owned 100% by him. In 1989 Eileen T. Quigley, Inc. needed close to one million dollars ($1,000,000.00) to pay off the purchase money mortgage on the Oakview Leisure Village Mobile Home Park. The $1,000,000.00 given to Eileen Quigley, Inc. was funded by placing $1,500,000.00 in mortgages on the properties owned by William Gelinas and Rita Gelinas. The remaining $500,000.00 was kept by Rita Gelinas to buy jewelry and muni bonds. Eileen Quigley, Inc. in turn gave American Heritage Agency, Inc. a $1,000,000.00 mortgage. The American Heritage Agency, Inc. was the property manager of rental properties in Connecticut and New Jersey. In 1989 the properties had gross rental income of $1,580,511.00.

The leases with tenants were entered into with American Heritage Agency, Inc. on behalf of the individual owners.

The marriage of William Gelinas and Rita Gelinas broke down in the years 1977 and 1978 a period during which Rita Gelinas became aware that her husband was involved with other women. Between 1978 and 1993 the two of them continued to carry on their business relationship, a lot of their properties being jointly owned. During this period, when he was not in New Jersey, William Gelinas continued to occupy their jointly owned home where he maintained an office. Neither had dissolution of the marriage in mind. They had a mutually acceptable living and business arrangement which each profited from. Over the years they had amassed a total of 27 pieces of property valued in excess of seven million dollars and generating annual income of up to half a million dollars. CT Page 6700

In 1992 William Gelinas was found to have colon cancer. He was very sick. He thought he was going to die. He discussed with his wife the transfer of his property interests to her. This took place in June of 1992. William Gelinas would not have divested himself of his property interests if he did not think he was dying. In December of 1992 a mutually agreed upon divorce took place. After their divorce William Gelinas and Rita Gelinas lived together for 2 1/2 years under the same arrangements they had had prior to the divorce. On August 18, 1993 Rita Gelinas made out her last will and testament leaving everything to William Gelinas.

In 1995 William Gelinas found himself locked out of the home he had continued to occupy with Rita Gelinas after their 1992 divorce. He also found himself locked out of their business office. At that point he got through to Rita Gelinas who told him he did not die and that she couldn't stand him. Just prior to the lock out Rita Gelinas had received bills involving the New Jersey property which her husband continued to be involved with, bills which indicated there were financial problems and another looming bankruptcy proceeding in New Jersey. She contacted Attorney Glick the attorney who had handled the first bankruptcy proceedings in New Jersey. In August or September of 1995 Attorney Glick took on representation of the American Heritage Agency, Inc. at Rita Gelinas's request. She told Attorney Glick she was the owner of American Heritage Agency, Inc. Prior to that time Attorney Glick had dealt with William Gelinas or Brenda McLean, a part-time worker taken on by William Gelinas. Brenda's job was to find tenants.

When in 1995 William Gelinas was locked out of what had been the family home in which he still maintained an office, as well as being locked out of the business office, documents dealing with the various corporate entities he had put together were no longer available to him.

The instant case was brought by American Heritage Agency, Inc. and William Gelinas when Rita Gelinas began holding herself out as the sole owner of American Heritage Agency, Inc. This occurred around the time that the Oakview Leisure Village mortgage of $910,000 owned by American Heritage Agency, Inc. became a real asset of that corporation rather than one which up to 1993 had been perceived by Rita Gelinas as a mortgage obligation to the American Heritage Agency, Inc. which would be CT Page 6701 uncollectible.

From its inception the American Heritage Agency, Inc. was used by William Gelinas and Rita Gelinas as a vehicle for receiving and disbursing income from their property management activities. Money went into that corporation to pay for salaries associated with the couple's business activities. It was William Gelinas' decision to make American Heritage, Inc. the holder of the $910,000.00 mortgage given by Eileen Quigley, Inc. in 1989.

Documents dealing with ownership of the American Heritage Agency, Inc. include minutes of Shareholders/Directors Meeting dated March 1, 1989 attached as Exhibit "A" and minutes of special meeting of the Shareholder dated October 6, 1995, attached as Exhibit "B" and Resolutions of Board of Directors dated October 6, 1995, attached as Exhibit "C".

Handwriting experts were presented by both the plaintiffs and defendants on the question of the authenticity of the signature of Rita Gelinas on the March 1, 1989 minutes. This court is persuaded that the signature on the March 1, 1989 minutes is that of Rita Gelinas. In 1989 there was no reason for William Gelinas to forge or to have his wife's signature forged on the 1989 minutes. This was a time when William Gelinas and Rita Gelinas were carrying on business as usual. She was minding the store in Connecticut. He was focusing on his New Jersey property. The American Heritage Agency, Inc. formally American Windjammer, Inc. was a not for profit corporation which was used to receive and disburse money from the property management operation. William Gelanis was the moving force in the business constellation he and his wife had. He was the one who decided what to incorporate, when to incorporate, how to incorporate and when and how to dissolve that corporate structure. Over the years, by her own testimony, Rita went along with whatever her husband wanted to do with one exception. She had a voice in what property to buy or not to buy.

Over the years Rita Gelinas had not objected to the corporations formed by her husband being solely owned by him. Their money was not in the corporations. It was in the properties they owned jointly and individually.

This court found the testimony of Clarissa DeAngellis, a certified document examiner to be more credible on the authenticity of Rita Gelinas's signature on the 1989 minutes CT Page 6702 which stated that William Gelinas was the sole stockholder of the American Heritage Agency, Inc.

Finally, the only document as to ownership of the American Heritage Agency, Inc. put forth by Rita Gelinas is in the form of Minutes of Special Meeting of the Shareholders dated October 6, 1995 in which she refers to herself as the sole shareholder of American Heritage Inc., electing herself as a director and signing as sole shareholder. The minutes have only Rita Gelinas's name and signature on them. By this unilateral action Rita Gelinas declared herself sole owner of American Heritage Agency, Inc. without a scintilla of documentation to back that representation up. Within three months on January 11, 1996 a resolution was issued by Rita Gelinas as the sole director of the American Heritage Agency, Inc., "authorizing the corporation to enter into a future agreement with the Chapter 7 Bankruptcy trustee of the Estate of Oakview Leisure Village, Inc. and to take such action in furtherance thereof which will permit sale of the Oakview Leisure Village Mobil Home Park, Shamong, New Jersey and thereby effect a liquidation of the corporation's mortgage on said Park upon such terms and conditions as are acceptable to Rita Gelinas, President of the corporation who is hereby authorized to execute any such agreement on behalf of and in the name of the corporation." The resolution is attached as Exhibit "D".

In 1995 Rita Gelinas had been in touch with the attorney handling the Chapter 7 bankruptcy of the Estate of Oakview Leisure Village, Inc. The attorney had started out by representing William Gelinas and then after being contacted by Rita Gelinas became her attorney, she having represented herself to him as the owner of American Heritage Agency, Inc.

William Gelinas was locked out of Rita Gelinas's house in September or October of 1995 after she learned of the bankruptcy proceedings and just before she declared herself sole owner of American Heritage Agency, Inc. Three months later Rita Gelinas issued a resolution dealing with the mortgage owned by American Heritage Agency, Inc.

On the facts found this court concludes that William Gelinas has been and continues to be the sole owner of American Heritage Agency, Inc. Accordingly judgment may enter in favor of the plaintiffs William Gelinas and American Heritage Agency, Inc. against the one remaining defendant Rita Gelinas including CT Page 6703 damages which will be determined at a hearing to be held following this court's ordered accounting.

The court finds that the counterclaim plaintiffs have failed to prove by a preponderance of the evidence the allegations of the counterclaim. Accordingly judgment may enter in favor of the counterclaim defendant William Gelinas on the counterclaim.

The defendants are enjoined from holding themselves out to be either officers or directors of American Heritage Agency, Inc., and from exercising or purporting to exercise any control over American Heritage Agency, Inc., its proceeds, funds or assets.

The defendant Rita Gelinas shall render to the plaintiff William Gelinas a full and accurate accounting of the American Heritage Agency, Inc., its proceeds, funds and assets during the period of time in which the defendant has exercised or purported to exercise control over the American Heritage Agency, Inc., its proceeds, funds or assets. This accounting shall take place within ninety (90) days of the issuance of this decision.

Hennessey, J.

EXHIBIT "A" American Heritage Agency, Inc. F/K/A Heritage Windjammer, Incorporated 104 Park Road, West Hartford CT 06119 Minutes of Shareholders/Directors Meeting — March 1, 1989

Pursuant to the Law of the State of Connecticut and the bylaws of this Corporation, a special meeting of all 100% shareholders was held on this date. Present at this meeting was a quorum of Directors and shareholders and a formal notice of this meeting that may or may not be required was waived.

The meeting was called to order and the following items were resolved.

1. William P. Gelinas sole stockholder of this Corporation replaces Jean Goulet as President.

2. Rita Ann Gelinas will become Assistant Secretary and Treasurer of this Corporation. CT Page 6704

3. Eileen Quigley will become Secretary of this Corporation.

4. The following people have been elected to the Board of Directors: William P. Gelinas, Rita A. Gelinas, Eileen T. Quigley

It was resolved that the Shareholder/Directors shall consent to the appointment of the officers as written in the above paragraphs and having concluded all current business, the meeting was adjourned.

___________________________ _________________________ Jean Goulet, Past President William P. Gelinas, Stockholder newly elected Director and President

________________________ _________________________ Eileen T. Quigley Rita Ann Gelinas newly elected Director and newly elected Director, Asst. Secretary Secty and Treasurer

EXHIBIT "B" AMERICAN HERITAGE AGENCY, INC. SPECIAL MEETING OF THE SHAREHOLDER OCTOBER 6, 1995 Rita Gelinas, being the sole shareholder of American Heritage Agency, Inc. a Connecticut corporation (the "Corporation"), at a special meeting of the shareholder of the Corporation held on the above date, took the following actions:

1. The following persons are hereby elected to the Board of Directors of the Corporation, and there are no other members of the Board other than the following persons:

Name: Position:

Rita Gelinas Director

_________________ Rita Gelinas Sole Shareholder

EXHIBIT "C" CT Page 6705 AMERICAN HERITAGE AGENCY, INC. RESOLUTIONS OF BOARD OF DIRECTORS OCTOBER 6, 1995 Rita Gelinas, being the sole director of American Heritage Agency, Inc., a Connecticut corporation (the "Corporation"), at a special meeting of the Board of Directors of the Corporation held on the above date, took the following actions:

1. Resolved that the following persons are hereby appointed to the following offices of the Corporation:

Name: Position:

Rita Gelinas President, Treasurer

Gertrude Irwin Vice President, Assistant Secretary

Mark Rosenblit Secretary

______________ Rita Gelinas Sole Director

EXHIBIT "D" AMERICAN HERITAGE AGENCY, INC. RESOLUTIONS OF BOARD OF DIRECTORS JANUARY 11, 1996 Rita Gelinas, being the sole director of American Heritage Agency, Inc., a Connecticut corporation (the "Corporation"), at a special meeting of the Board of Directors of the Corporation held on the above date, took the following actions:

1. Resolved that the Corporation is hereby authorized to enter into a future agreement with the Chapter 7 Bankruptcy Trustee of the Estate of Oakview Leisure Village, Inc. and to take such actions in furtherance thereof which will Permit sale of the Oakview Leisure Village Mobile Home Park, Shamong, N.J. and thereby effect a liquidation of the Corporations mortgage on said park upon such terms and conditions as are acceptable to Rita Gelinas, President of the Corporation, who is hereby authorized to execute any such agreement on behalf of and in the name of the CT Page 6706 Corporation.

______________ Rita Gelinas Sole Director