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Lakes Region Gaming & A. v. Jeremey Miller

February 13, 2013

LAKES REGION GAMING & A.
v.
JEREMEY MILLER



The opinion of the court was delivered by: Dalianis, C.J.

a.m. on the morning of their release. The direct address of the court's home page is: http://www.courts.state.nh.us/supreme.

Argued: January 10, 2013

The defendant, Jeremey Miller, appeals the Superior Court's (McNamara, J.) order finding in favor of the plaintiffs, Lakes Region Gaming, LLC (Lakes Region Gaming) and three of its members - Christopher G. Gistis, his son (Glenn M. Gistis), and Lawrence N. Kasser - on their claim that Miller breached his fiduciary duties to them. We affirm.

The trial court found, or the record supports, the following facts. In 2005, Christopher Gistis agreed with David J. Johnston to purchase the Lakes Region Greyhound Park in Laconia through a court-approved bidding process. Gistis and Johnston formed a joint venture pursuant to which Johnston's development company, David Johnston Development LLC (Johnston Development), would bid on the race track, and Gistis would provide the requisite deposit. On April 18, 2005, Johnston Development successfully bid $4,101,002 to purchase the race track. In connection with the bid, Gistis wired a deposit of approximately $205,000 to the escrow account of the seller's attorney.

Approximately nine days later, Johnston Development and Gistis formed Lakes Region Gaming in order to "own and manage the premises known as 'Lakes Region Greyhound Park' and to engage in any and all activities related or incidental thereto." The other members of Lakes Region Gaming were: Glenn Gistis, Kasser, and Miller. The parties agreed that Johnston Development would contribute its right to purchase the race track to Lakes Region Gaming as part of the capitalization of the company, and that Lakes Region Gaming would own the track.

On May 19, 2005, Johnston Development and the seller entered into a purchase and sale agreement for the race track that gave Johnston Development until July 18, 2005, to conduct due diligence. If Johnston Development failed to notify the seller by July 18 as to whether it intended to proceed with the transaction, the $205,000 deposit would be forfeited.

The transaction to purchase the race track never closed because, in June 2005, a New Hampshire grand jury indicted a dozen people involved with the track, which caused the members of Lakes Region Gaming to reconsider the purchase decision. The members decided to try to sell the right to purchase the race track so that they could recoup their expenses or make a profit. If a profit were realized, it would be split according to each member's interest in the company.

Unbeknownst to the plaintiffs, Miller and Johnston had been negotiating the right to purchase the race track with a number of potential buyers. As a result of these negotiations, on July 17, 2005, Torguson Gaming Group, Inc. (Torguson) agreed with Johnston to pay $5,000,000 for the right to purchase the race track for $4,101,002, resulting in a net profit of $898,998.

Also unbeknownst to the plaintiffs, on July 18, Johnston agreed with the seller's attorney to extend the due diligence period until July 25, in exchange for Miller paying the attorney $50,000. Under this agreement, the $50,000 would be non-refundable, and the $205,000 deposit would remain in the attorney's escrow account until July 25.

In another agreement of which the plaintiffs were not aware, also entered into on July 18, Torguson agreed, in effect, to replace the $205,000 held in the seller's attorney's escrow account. On July 19, Torguson transferred the money to the escrow account and, thereafter, the seller's attorney transferred $205,000 to Gistis.

Ultimately Torguson paid Johnston Development $898,998 for the right to purchase the race track, of which Johnston transferred $445,000 to Miller.

Eventually, the plaintiffs brought claims against Johnston, Johnston Development, and Miller, alleging, among other things, breach of fiduciary duty. The plaintiffs ultimately obtained a default judgment against Johnston and Johnston Development, and the claim against Miller proceeded to trial.

Following a bench trial, the trial court found that Miller breached his fiduciary duties to the plaintiffs by using the $205,000 deposit from Gistis, which belonged to Lakes Region Gaming and "which was being held for the purpose of owning the race track," in order to appropriate for himself the opportunity to sell the purchase rights to Torguson. The trial court ruled that Miller was jointly and severally liable with Johnston and Johnston Development for damages in the amount of $898,998, and ordered him to pay the plaintiffs' attorney's fees and costs. See RSA 304-C:76, III (2005) (amended 2012).

Miller unsuccessfully moved to reconsider the trial court's decision, arguing that: (1) he did not owe a fiduciary duty to the plaintiffs because Lakes Region Gaming "had abandoned [its] contemplated dealings"; and (2) the trial court's order failed to consider paragraph ...


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