Byline: Barry Bridges
A Rhode Island lawyer did not demonstrate that certain corporations were the "alter ego" of his deceased client so as to allow the imposition of a constructive trust over the companies' assets to recover past due attorneys' fees, according to a recent Superior Court ruling.
Plaintiff Mal A. Salvadore maintained that the client, David F. LaRoche, formed and operated several real estate companies the Wildflower entities in a manner that was fraudulent.
But in light of the fact that LaRoche had no interests in the companies owned by his three sons, and considering the dearth of evidence showing that the companies engaged in any inequitable conduct, Judge Kristin E. Rodgers concluded that the two prongs of the alter ego test were not satisfied.
And in any event, a constructive trust could not be imposed inasmuch as there was no fiduciary relationship between the parties, the judge found.
"The requested remedy must be denied as there is no fiduciary relationship between plaintiff and any of the defendants," Rodgers wrote. "There was no relationship that plaintiff had with [LaRoche's sons], individually or in their capacities as shareholders of [the Wildflower entities], nor was there any fiduciary relationship between the plaintiff and [the companies]."
With Salvadore failing to sustain his burden of proving his claims, judgment was entered in favor of the corporate and individual defendants.
The 30-page decision is Salvadore v. LaRoche, et al., Lawyers Weekly No. 61-078-19. The full text of the ruling can be found here.
David P. DeStefano represented the plaintiff, and Gerard M. DeCelles was counsel for the defendants. Neither Providence attorney responded to requests for comments prior to press time.
Unpaid legal fees
Throughout the 1990s, the plaintiff, a South Kingstown attorney, provided legal counsel to LaRoche on various matters, including two involuntary bankruptcies. With that representation, LaRoche was eventually indebted to Salvadore for approximately $160,000.
Salvadore occasionally suggested payment arrangements to settle the debt, and in 2001 they agreed to reduce the unpaid balance to $140,000. While incarcerated at the Adult Correctional Institutions, LaRoche signed a promissory note to that effect, specifying an annual interest rate of 7 percent; interest-only payments for five years beginning Oct. 10, 2002, and due annually thereafter; and the entire principal and all interest due to be paid in full on...