CFM OF CONNECTICUT v. TAUFIQUL CHOWDHURY, ET AL.
NO. CVH 8910-3368; H#1005
SUPERIOR COURT OF CONNECTICUT
JUDICIAL DISTRICT OF HARTFORD-NEW BRITAIN, AT HARTFORD, HOUSING SESSION
1993 Conn. Super. LEXIS 889
March 15, 1993, Decided
MEMORANDUM OF DECISION
I. INTRODUCTION
This matter is before the court in connection with defendant 294 Farmington Realty’s (hereinafter 294 Farmington) application for a writ of quo warranto to determine the ownership of the plaintiff CFM of Connecticut. This case involves a tangled thicket of motions, claims and counter-claims, all of which return to the question immediately before the court: Who is the rightful owner of the stock CFM of Connecticut and which counsel, Tarlow, Levy & Droney or Attorney John Timbers, properly and lawfully represents the plaintiff in this action? If Tarlow, Levy & Droney is determined to be counsel for plaintiff, this litigation will be terminated by virtue of that firm having filed a withdrawal of this case.
This action was filed by CFM of Connecticut in August 1989, and for reasons described below, it soon developed into a legal quagmire. In order to terminate the litigation, defendants 294 Farmington Realty, Barry L. Siegal and Sielev Associates purchased what they believed to be the outstanding shares of CFM. Upon the purchase of the stock, CFM’s newly installed officers directed Attorney Timbers, original counsel for CFM, to withdraw the action against defendants. Timbers refused and the “new CFM” fired him, and retained Tarlow, Levy & Droney which immediately filed a withdrawal of this action.
Attorney Timbers and his client initially responded to Tarlow, Levy & Droney’s appearance by moving to strike the appearance and the withdrawal filed by it. Attorney Timbers subsequently withdrew those motions and now insists that the withdrawal filed by Tarlow, Levy & Droney is binding upon the court, but refuses to concede that the stock of CFM is now owned by 294 Farmington or that Tarlow, Levy & Droney in fact represents CFM. Attorney Timbers has candidly acknowledged that if Tarlow, Levy & Droney’s withdrawal is permitted to stand, without any finding by the court that it is the duly authorized counsel for plaintiff, he intends to reinstitute this action either in the name of CFM or another entity to which CFM claims to have assigned the interests in the litigation.
The court, therefore, is faced with the curious situation of both parties agreeing that the withdrawal filed by Tarlow, Levy & Droney on behalf of CFM is valid, but disagreeing as to who owns the stock of CFM and who is its duly authorized attorney. Although superficially this would appear to render the case moot, the court will determine who is the rightful owner of the stock of CFM and, therefore, whose appearance should be recognized by the court because of its conclusion that all other issues in this case are subordinate to and dependent on a resolution of the question of which person or persons own the stock of CFM and which counsel represents CFM. Failure to answer those questions will invite this litigation to proceed in perpetuo.
II. FACTS
A. The Parties
Plaintiff CFM of Connecticut, Inc. was incorporated on October 6, 1987. It has one class of stock with a $10 par value. Five thousand shares were authorized, but only 1,000 were issued; five hundred each to James Schmidt and Janice P. Schmidt, both of whom were appointed directors. Amongst other things CFM was in the business of franchising mini-marts under the name of “Express Marts.” In November, 1988, plaintiffs entered into a franchise agreement with defendants Taufiqul Chowdhury and 5 C’s Corporation whose stock is owned by Chowdhury. As part of the agreement defendants Chowdhury and 5 C’s Corporation contracted to operate a Total Express Mart store at 302 Farmington Avenue in Hartford.
Defendant 294 Farmington Realty Company is a partnership which owns the property at 302 Farmington Avenue. 294 Farmington entered into a lease for that property with plaintiff CFM, which in turn made it available to Chowdhury as a Total Express Mart. Defendant Barry Siegal is a partner in 294 Farmington Realty. Defendant Sielev Associates is the trade name for 294 Farmington Realty.
In April 1989, 294 Farmington Realty brought a summary process action against CFM alleging that CFM should be evicted because of nonpayment of rent. In that case, Docket #SPH-8905-49982, defendants were defaulted for failure to appear at trial. Thereafter, in August 1989, CFM brought this suit alleging that Chowdhury breached the franchise agreement by refusing to reimburse CFM for the rental fee for 302 Farmington Avenue, and also claiming that 294 Farmington, Siegal and Sielev Associates unlawfully conspired with Chowdhury to evict CFM.
Although not parties to this litigation reference must be made to the TM and Gillette Corporations as well as to Donald Feigenbaum and Roger Cote. The Gillette Company is a distributor of candy and tobacco products. Its principal stockholders are Donald Feigenbaum and Roger Cote. In 1989 they came into contact with James and Janice Schmidt, the stockholders of CFM. Believing that CFM mini-mart franchise stores would provide a ready source of business for the Gillette Corporation’s candy and tobacco products, the four agreed to create a joint venture, TM corporation. Cote and Feigenbaum, together with two of their partners were 51% shareholders of TM; the Schmidts owned 49% of the stock. Feigenbaum and Cote, through the Gillette Corporation, contributed between $75,000 and $200,000 to TM. The Schmidts, in turn, assigned CFM’s interest in its franchise agreements and its trademark to TM. Thus, while CFM was nominally the franchisor of Express Mart convenience stores, TM and its shareholders–the Schmidts, Feigenbaum and Cote–were the individuals who would directly gain or lose from the success or failure of the franchise effort.
Attorney Timbers, meanwhile, was counsel to CFM and TM both prior to and subsequent to the commencement of this action. As more fully set forth below, at about the time that 294 Farmington purchased the stock of CFM, Attorney Timbers devised a strategy to issue and sell the outstanding, but unissued 4,000 remaining shares of CFM in an effort to defeat 294 Farmington’s purchase of CFM. He also prepared a fee agreement which, inter alia, prohibited CFM from settling the instant action without his consent unless he were paid a fee equal to the number of hours worked on this case times twice his hourly fee. n1 Additionally, Attorney Timbers was elected Assistant Secretary of CFM and as such is responsible for the corporate records and books.
n1 The Court, Berger, J., referred Attorney Timbers to the Statewide Grievance Committee as a result of his fee agreement with CFM. That agreement prohibited CFM from discontinuing this litigation without Timbers’ permission unless Timbers is paid twice his hourly fee. The Local Grievance Committee of the Stamford-Norwalk Judicial District found probable cause to believe that that agreement violated Rule 1.5 of the Rules of Professional Conduct. A three-member panel of the Statewide Grievance Committee, however, dismissed the complaint.
B. Factual Background
The following additional facts are relevant to the resolution of this matter. On February 15, 1990, James F. Schmidt and Janice Schmidt filed for protection under Chapter 7 of the United States Bankruptcy Code. According to their Bankruptcy petition, at the time of the filing Mr. Schmidt and his wife owned 100 percent of the stock of plaintiff CFM of Connecticut, Inc., namely 1,000 shares. CFM was dissolved on October 9, 1990, by the Secretary of the State pursuant to a Certificate of Dissolution based upon its failure to file a biennial report. As such, CFM was prohibited from engaging in any corporate activities except those required to wind up its affairs.
In April 1991, defendant 294 Farmington offered to purchase from the Bankruptcy Trustee the Schmidt’s 100% interest in CFM for $5,000. The purpose of 294 Farmington’s offer was to conclude the litigation brought against it by CFM. On July 24, 1991, the Trustee conducted an auction of the stock, with 294 Farmington making the only bid. The Trustee sold his interest in 100 percent of the stock of CFM to 294 Farmington for $5,000.
After purchasing Schmidt’s stock, 294 Farmington executed a consent on July 25, 1991, appointing Barry L. Siegal as the sole Director of CFM. Siegal in turn executed a consent on behalf of the Board appointing Barry Siegal and E. Mark Siegal as the sole officers of CFM. In addition to appointing the new officers, CFM’s Board of Directors also resolved that it would be in the best interest of the corporation to withdraw all pending litigation in which it was involved. It instructed Attorney Timbers by letter dated July 25, 1991, to withdraw all pending litigation, including this action. Timbers refused to heed that directive, and CFM immediately retained Tarlow, Levy & Droney to file an appearance in lieu of Attorney Timbers and to file a withdrawal of this case. That withdrawal was filed with the court on July 29, 1991.
In response to Tarlow, Levy & Droney’s appearance and the withdrawal filed by it, Attorney Timbers filed in open court on August 2, 1991 a motion to strike Tarlow, Levy & Droney’s “purported” appearance and its “purported” withdrawal. In his motion Attorney Timbers assigned five reasons why the appearance and withdrawal were ineffective. The principal claims were that: (1) the 4,000 remaining, unissued shares of stock of CFM were in fact issued and sold to Mr. Cote and Mr. Feigenbaum on July 23, one day prior to the Bankruptcy auction, such that they, and not 294 Farmington owned a controlling interest in CFM; (2) CFM assigned the cause of action in this case to TM, also on July 23, such that CFM was not authorized to withdraw this action; and (3) CFM’s fee agreement with Timbers prohibited CFM from withdrawing the litigation without Timbers’ consent or CFM paying Timbers’ attorney’s fees calculated at twice his hourly rate, neither of which condition had been satisfied.
On August 2, 1991, the Court, Berger, J., upon motion of Tarlow, Levy & Droney, stayed further proceedings in this case and referred Attorney Timbers to the Statewide Grievance Committee for investigation of possible violation by Timbers of Rule 1.5 of the Rules of Professional Conduct. The Court also referred the matter to the Bankruptcy Court for its determination of the lawful owner of CFM stock. On January 6, 1992, Tarlow, Levy & Droney filed in this court “Application For Quo Warranto and a determination of Interests”, in which it requested a ruling that 294 Farmington Realty is the sole shareholder of CFM. On January 15, 1992, Attorney Timbers withdrew his motion to “Strike Tarlow, Levy & Droney’s Purported Withdrawal and . . . Appearance”, thereby, in his estimation, giving full effect to the withdrawal such that there is no longer, according to him, a pending case before this court, and therefore no basis for considering the application for quo warranto. In May 1992, after the Bankruptcy Court declined to rule on the ownership of CFM stock, Tarlow, Levy & Droney renewed its application for quo warranto. The matter is now before this court for determination of 294 Farmington’s petition for a writ of quo warranto.
III.
Both procedurally and substantively, Attorney Timbers objects to the court’s hearing the application for quo warranto. First, he claims that the court is without jurisdiction to hear the petition. Second, even if the court does have jurisdiction, he argues that the petition should be denied on the merits.
A.
The claim with respect to lack of subject matter jurisdiction is straightforward. Although Attorney Timbers filed a Motion to Strike the Purported Appearance and Withdrawal filed by Tarlow, Levy & Droney, he withdrew that motion on January 15, 1992. Therefore, he argues that the withdrawal is binding and effective, such that there is no longer a pending case before the court. Relying on Lusas v. St. Patrick’s Roman Catholic Church Corp., 123 Conn. 166, 169-70 (1937), Timbers argues that without such a pending case the court does not have jurisdiction to hear the petition for quo warranto, or for that matter, any other motion, unless and until an application to restore the case to the docket is filed and approved by the court. The following additional facts are relevant to this claim.
On June 25, 1992, this case was scheduled for a hearing in connection with pending Motions for Contempt and Cross Motion for Sanctions and Application for Writ of Quo Warranto. At the outset of that hearing the court, Holzberg, J., indicated that it would proceed with the scheduled hearing, notwithstanding Attorney Timbers’ subject matter jurisdiction objection, because of the court’s preliminary determination that under its supervisory authority it was authorized, indeed required, to determine which counsel, Timbers or Tarlow, Levy & Droney properly appears for CFM. In order to make that determination the court indicated that it would necessarily have to determine the rightful owner of CFM stock. The court observed that under the circumstances of this case it believed itself obliged to determine which counsel spoke for plaintiff and that it was inconsistent with the orderly administration of justice to have two sets of counsel claiming to represent the plaintiff. It, therefore, determined that whether the hearing was denominated a hearing in support of the petition for a writ of quo warranto, or a hearing conducted by the court pursuant to its inherent, supervisory authority; a determination was required as to which counsel’s appearance should be recognized by the court.
Attorney Timbers now renews his claim that the court lacked jurisdiction to conduct such a hearing, claiming that his clients do not object to the withdrawal of this case such that there is nothing pending before this court. Specifically, he argues that once the issue of subject matter jurisdiction is raised, the court cannot proceed until it resolves that issue. See, Respondents’ Third Memorandum In Support of Their Motion To Dismiss (August 2, 1992). Attorney Timbers correctly points out that
Whenever the absence of jurisdiction is brought to the attention of the court, it must be taken and the matter passed upon before it can move one step further in the cause, as any movement is necessarily the exercise of jurisdiction. Baldwin Piano & Organ Co. v. Blake, 186 Conn. 295, 297 (1982).
The practical difficulty with Attorney Timbers’ argument is that his claim of lack of jurisdiction is based on his assumption that there is no case pending before the court because: a) Tarlow, Levy & Droney, although not duly authorized counsel for CFM, has withdrawn this case; and b) he, as authorized counsel, does not object to the withdrawal. In order for the court to evaluate Attorney Timbers’ claim, it will have to undertake the very inquiry he claims the court is without jurisdiction to conduct: who is counsel for CFM, as determined by who owns the stock?
The principal flaw in Attorney Timbers’ jurisdiction argument is that it begs the central question in this case: who owns the CFM stock and which counsel represents it in this litigation? On the one hand Attorney Timbers argues that Feigenbaum and Cote own 4,000 shares of CFM and that he, not Tarlow, Levy & Droney, represents CFM. On the other hand, he does not object to this action being withdrawn by Tarlow, Levy & Droney but refuses to concede that such withdrawal, if valid and binding, signifies that 294 Farmington owns the stock of CFM and that its counsel, not he, properly represents CFM. Timbers further asserts that if the court adopts his position, he intends to refile this action.
Attorney Timbers’ argument, if accepted, would hold the resolution of this case hostage to some unknown time in the future when the very question he seeks to avoid will inevitably be raised. If, as he promises, this action is refiled by him it is inevitable that Tarlow, Levy & Droney will move to dismiss the action, arguing that its clients, not Timbers’ clients, are the rightful owners of CFM. This dispute, in short, will not go away, and no amount of legal legerdemain can obscure the fact that under the circumstances of this case–when each counsel unyieldingly insists that it represents plaintiff–the court has the inherent obligation and authority to determine which counsel speaks for plaintiff.
“Simply stated, ‘the inherent powers . . . of courts are those which are necessary to the exercise of all others.'” In the Matter of Presnick, 19 Conn. App. 340, 347 (1989) (cites and internal quotations omitted). “That power . . . exists and arises because of the control that must necessarily be vested in courts in order for them to be able to manage their own affairs to as to achieve an orderly and expeditious disposition of cases.” Id. Our Supreme and Appellate Courts have consistently affirmed, in a number of situations, the inherent power of trial courts to take those steps that are reasonably necessary for the administration of justice. See, e.g., Jaconski v. AMF, Inc., 208 Conn. 230, 233 (1988) (“The trial court has the inherent power to provide for the imposition of reasonable sanctions, to compel the observance of its rules.”); Papa v. New Haven Federation of Teachers, 186 Conn. 725, 737 (1982) (the court has inherent power to impose penalties for civil contempt to coerce compliance with its orders); Burritt Mutual Savings Bank of New Britain v. Tucker, 183 Conn. 369, 373 (1981) (“Courts have inherent power to disregard sham or frivolous pleadings which have been interposed for the purpose of thwarting the orderly progress of a case.”); Hall v. Dichello Distributors, Inc., 14 Conn. App. 184, 192 (1988) (“Courts have inherent power . . . to fashion a remedy appropriate to the vindication of a prior judgment.”); Annot., 20 Am Jur 2d Sec. 79 (“Courts have inherent power to do all things that are reasonably necessary for the administration of justice within the scope of their jurisdiction . . . and to take appropriate action . . . to maintain order and to function properly as a court.”).
Surely, if the court has the inherent power to impose sanctions to enforce its orders and discipline members of the bar, it has the similar authority to determine which of two appearances on behalf of the same party should be recognized by it. Attorney Timbers’ claim that the court does not have jurisdiction to make that fundamental determination is without merit. In view of the court’s conclusion that it has the inherent authority to determine which counsel’s appearance should be recognized, it need not address Attorney Timbers’ objections to the petition for a writ of quo warranto. n3
n3 Attorney Timbers has filed a battery of objections to the petition for quo warranto. In addition to his claim that the court lacks jurisdiction because there is no case pending before it, he also alleges that a quo warranto proceeding must be instituted by the filing of a writ, summons and complaint, and cannot be initiated by the filing of a motion, as was done in this case. See CFM’s Objection to Motion for Quo Warranto, dated June 22, 1992.
B.
In order to determine which counsel’s appearance should be recognized it is necessary to determine the ownership of CFM of Connecticut, Inc. The following additional facts are relevant to this inquiry. On July 23, 1991, the day before the Bankruptcy auction, James and Janice Schmidt held a Board of Directors meeting. The purpose of this meeting was to defeat 294 Farmington Realty Company’s purchase of the stock without making a competing bid at the auction. In order to accomplish this goal the Schmidts, in their capacity as Directors of CFM, purportedly voted to issue 4,000 additional shares of stock: 2000 shares to Roger Cote; and 2,000 shares to Donald Feigenbaum. Each paid only $25 for his shares even though the par value for the stock is $10 per share. As additional consideration Feigenbaum and Cote also agreed to not insist on the immediate repayment of $40,000 in indebtedness owed by CFM to TM. In addition to authorizing the issuance of additional stock, the Board of CFM purportedly elected a new slate of officers for the company. These officers were Roger Cote, President; Donald Feigenbaum, Secretary/Treasurer; and John Timbers, Assistant Secretary. Moreover, the Board unanimously approved an Assignment dated July 23, 1991, to TM of Connecticut which assigned all of CFM’s interest, including all causes of action, in the Chowdhury franchise, together with all of CFM’s assets.
For numerous reasons, any one of which is independently sufficient, the “sale” of the 4,000 shares of CFM stock to Cote and Feigenbaum was ineffective and therefore of no legal consequence. n4
n4 294 Farmington also alleges that the July 23, 1991 sale was fraudulent in that the corporate minutes pertaining to that transaction were fabricated and in that the claimed board of directors meeting authorizing that sale never took place. The court need not rule on those claims in light of its conclusion that the sale was ineffective for the reasons set forth in the text accompanying this note. It does find, however, that Attorney Timbers, as Secretary, was responsible for maintaining corporate books and records pertaining to the sale of the CFM stock, and that despite being served with a subpoena duces tecum directing him to produce corporate records of the sale, including stock certificates, he failed to produce such documents.
On October 19, 1990 CFM was dissolved by forfeiture. The Secretary of State, acting pursuant to General Statutes § 33-387, dissolved CFM because of its failure to file a biennial report. General Statutes § 33-378(a) provides that, “Dissolution terminates the corporate existence of the dissolved corporation. Subsection (b) specifies that:
A dissolved corporation shall cease to carry on its business and shall do only such acts as are necessary or expedient to collect, convey and dispose of such of its properties as are not to be distributed in kind to its shareholders, pay, satisfy and discharge or make adequate provisions for its liabilities and obligations, distribute its assets, and adjust and wind up its business and affairs as expeditiously as practicable, and for such purpose it shall continue as a corporation.
General Statutes § 33-379 further provides that:
(b) The board of directors of a dissolved corporation and their successors shall proceed to wind up the affairs of the corporation as expeditiously as practicable and shall act as a board of directors in accordance with the bylaws and the certificate of incorporation until the affairs of the corporation are completely wound up. A corporation and its shareholders, directors and officers shall have full power to take all corporate action appropriate to wind up its affairs, including the power to maintain, or to reestablish after failure to maintain, a board of directors and officers.
Upon CFM’s dissolution, therefore, the sole obligation of its officers and directors was to wind up the affairs of CFM. “Winding up is the process of closing out a corporation’s business and affairs. The process often involves the liquidation of properties, settlement of claims, provision for the payment of debts following dissolution, and then distribution of what remains of the assets to shareholders or members, or to others entitled to them.” S. Cross, Corporation Law in Connecticut (1972) Sec. 9.5, pp. 476-77, quoted in Campisano v. Nardi, 212 Conn. 282, 289 (1989). The legality of the acts of a dissolved corporation is defined by whether those acts are reasonably related to the process of winding up the corporation’s affairs. To the extent that the acts in question are not reasonably related to the winding up process, they are ultra vires and of no force and effect. In this connection, “The transferable character of corporate stock is destroyed by dissolution, and an attempted transfer or assignment of shares of stock after the corporation has been dissolved passes no legal title and does not make the purchaser or assignee a stockholder . . .” Fletcher, Cyclopedia of Corporations (1988, rev’d), § 8131, pp. 400-01.
Under the facts and circumstances of this case, the purported sale of the 4,000 shares of stock bore no relationship to CFM’s obligations to wind up its affairs. Rather, it was an ill disguised effort by Feigenbaum and Cote to protect their own personal interests. Any suggestion that this sale was part of the winding up process must be rejected in view of the fact that the record in this case demonstrates that CFM’s officers and directors were not even aware CFM had been dissolved until after the purported sale of stock. They cannot now claim to have been winding up CFM’s affairs when they did not know, at the time the stock was sold, that the corporation was dissolved.
A dissolved corporation, in addition, is not empowered to transfer its stock. “[A] meeting of shareholders of a corporation, for the purpose of taking corporate action, can only be held by virtue of a corporate franchise, and that franchise is extinguished whenever the corporation is dissolved.” Butler v. Beach, 82 Conn. 417, 423 (1909). Annot, 19 Am Jur 2d (1988 rev’d) Sec. 2887; Fletcher, Cyclopedia of Corporations, supra. At most such transfer may be treated as an equitable assignment. Id.
Even assuming that the sale of stock was legitimately related to the winding up of CFM’s affairs, the sale was nevertheless null and void because of the failure of adequate consideration. General Statutes Sec. 33-348(d) provides that, “Shares with par value may be issued for such consideration as shall be fixed from time to time by the board of directors unless the certificate of incorporation reserves to the shareholders the right to fix the consideration, but, except as otherwise provided in this chapter, the value of such consideration shall not be less than the par value of the shares issued therefor.”
Subsection (b) sets forth legally acceptable consideration for the purchase of stock. Such consideration includes “(1) cash, securities or other property of any description, or . . . (2) labor on services actually rendered, or (3) . . . shares, securities or other obligations of the corporation actually surrendered, cancelled or reduced, or . . . (4) in satisfaction of dividends accrued with respect to preferred shares, or (5) amounts transferred from surplus to stated capital.”
Thus, no sale of stock is valid unless the consideration given is equal to the par value of the stock and the consideration itself is of the type described in § 33-348(b). The par value for CFM’s stock was ten dollars per share, as set forth in the articles of incorporation. The cost of 4,000 shares, therefore, is $40,000. Nevertheless, the purchase price for the 4,000 shares was only fifty dollars. In order to surmount this problem Cote and Feigenbaum also claim that as additional consideration they agreed not to insist on immediate repayment of $40,000 owed by CFM to TM. Their arguments are unavailing.
General Statutes § 33-348(b), as previously noted, specifies the type of consideration acceptable for the purchase of corporate shares. In addition to “cash, securities or other property of any description”, § 33-348(b) identifies “labor or services actually rendered” and “shares, securities or other obligations of the corporation actually surrendered” as acceptable forms of consideration. Forbearance on obligations owed by the corporation to the purchaser of the shares is not included in the list of valid consideration, nor can any of the categories specified in § 33-348(b) be reasonably construed to include forbearance of payment of corporate debt. Therefore the only valid consideration provided by Feigenbaum and Cote was $50. As such, the purchase of the $40,000 worth of stock for $50 was null and void and of no legal effect. Further, even if Cote and Feigenbaum’s waiver of immediate repayment of CFM’s obligation were valid consideration, the debt owed by CFM was to TM, not to Cote and Feigenbaum. Consequently it was not an obligation that Cote and Feigenbaum, personally, were empowered to waive.
The court concludes, therefore, that the sale of 4,000 shares of CFM stock to Roger Cote and Donald Feigenbaum was null and void because: (a) a dissolved corporation is not empowered to transfer or assign its stock; (b) even if CFM were empowered to sell its stock such stock, under the circumstances of this case, was not legitimately part of the winding up process; and (c) the sale, in any event, was not supported by adequate consideration.
Wherefore, it is hereby ordered, adjudged and decreed that:
1. 294 Farmington Realty is the sole shareholder of CFM of Connecticut, Inc.
2. The Board of Directors of CFM of Connecticut, Inc. consists of Barry Siegal only.
3. Barry L. Siegal is the Secretary of CFM of Connecticut, Inc.
4. The assignment of this cause of action from CFM of Connecticut, Inc. to TM of Connecticut, Inc. is void and of no effect.
5. The assignment and license from CFM of Connecticut, Inc. to Total Food Mart Co. is void and of no effect.
6. Tarlow, Levy and Droney is authorized counsel for CFM, Inc. and its appearance in lieu of Attorney John Timbers is recognized as valid as of July 29, 1991.
7. The withdrawal of this action filed by Tarlow, Levy & Droney on behalf of CFM, Inc. is valid and binding.
8. Based on the foregoing, this action, CFM of Connecticut v. Taufiqul Chowdury, et al. is no longer pending and is deemed terminated by virtue of the withdrawal filed on July 29, 1991 by Tarlow, Levy & Droney, duly authorized counsel for CFM of Connecticut, Inc.
SO ORDERED.
Robert L. Holzberg, J.
n2 This case was commenced in August, 1989. Six days of hearings were held in the Spring of 1990 in connection with CFM’s application for a preliminary injunction. After five days of hearings CFM filed a motion to add two party plaintiffs and a request to add six additional counts. On August 3, 1990, CFM filed a motion to disqualify and/or recuse Judge Susco and a motion for a mistrial. On August 20, 1990, Judge Miano heard the motion to recuse, which he denied. See, Memorandum of Decision, dated August 30, 1990. On August 16, 1990, which was to have been the final day of the preliminary injunction hearing, CFM withdrew all of its pending motions, including the motion for a preliminary injunction. Three days earlier, on August 13, 1990, CFM and TM served on defendants a complaint returnable to the Judicial District of Windham. That complaint alleged the same causes of action as alleged in the instant case plus the five additional causes of action CFM attempted to add during the course of the preliminary injunction hearing.
The filing and withdrawal by CFM of various motions, including the motion to recuse Judge Susco, resulted in defendants seeking attorney’s fees from CFM and Attorney Timbers. Defendants alleged that the filing of the Windham action, coupled with the filing of the motion to recuse was an ill disguised attempt to forum shop in light of the likelihood that the motion for preliminary injunction and motion to add additional counts and party plaintiffs would be denied. By written decision dated June 13, 1991, Judge Miano concurred with defendants’ allegations and assessed approximately $3,000 in attorney’s fees against Attorney Timbers, having found that his motion to recuse Judge Susco was made in bad faith and without a colorable basis. Judge Susco, in an order dated August 31, 1990, assessed $10,000 in attorney’s fees against Attorney Timbers. Because Attorney Timbers has not paid either assessment defendants have filed a motion for contempt which is presently pending before this court.
In June, 1991, with the motion for recusal of Judge Susco having been resolved, CFM renewed its application for a prejudgment remedy. Despite extensive briefing and discovery CFM never proceeded with the hearing. In July, 1991, 294 Farmington resolved to purchase the stock in CFM in order to bring to a conclusion all pending litigation. It believed it had successfully purchased the stock at the Bankruptcy auction on July 24, 1991. On August 2, 1991, a hearing was scheduled before the Court, Berger, J., in connection with various pending motions. It was at this hearing that Attorney Timbers disclosed that Messrs. Cote and Feigenbaum had purchased on July 23, 1991–one day prior to the Bankruptcy auction–4,000 shares of CFM stock. This disclosure, prompted, amongst other things, Tarlow, Levy & Droney’s motions to refer Attorney Timbers to the Statewide Grievance Committee and to the U.S. Attorney. The Court, Berger, J., referred Attorney Timbers to the Grievance Committee; see note 1, supra. Tarlow, Levy & Droney requested the Bankruptcy Court to determine the ownership of CFM’s stock. That request having been denied for lack of jurisdiction in May, 1991, Tarlow, Levy & Droney renewed its quo warranto petition with this court.
In addition to this case, involving the franchise agreement, there were two pending summary process cases involving the same parties. The first, 294 Farmington Avenue v. CFM #8905-49982, resulted in a default judgment against the defendants for failure to appear. That judgment was sustained on appeal. The other summary process case, CFM v. Chowdury, which was stayed pending the appeal of the first summary process case, was subsequently withdrawn.