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In a stinging rebuke, a New Britain, Conn., judge socked a former Plainville Electrical Products Co. executive with a $2.3 million judgment after finding she had derailed the purchase of a business PEPCO had sought to acquire so she could snatch up the company herself. In addition, Judge Julia L. Aurigemma, in her scathing June 30 decision in PEPCO v. Michaud, ordered defendant Louise Michaud to transfer 100 percent of the stock of Salem, Mass.-based Bass Products Co. — as well as that of the company Michaud set up to acquire Bass — to her former employer. In her ruling, Aurigemma, who sits on the state’s complex litigation docket, makes no bones about her view of the defendant’s credibility — or, more to the point, the lack thereof — during the roughly two-and-a-half-week trial in PEPCO. Michaud quickly responded by filing a July 13 appeal in which she challenges Aurigemma’s award of both monetary damages and Bass stock as “duplicative.” Michaud also questions whether the nearly total lack of weight given by Aurigemma to the evidence presented by the defense amounted to an abuse of the court’s discretion. OPPORTUNITY KNOCKS Founded in 1922, PEPCO provided stage lighting for Broadway theaters and, during World War II, supplied electrical equipment to nearly every ship in the U.S. Navy. But by the mid-1990s, its cyclical financial performance, coupled with the decline in military defense spending, put the company on the lookout for new business opportunities that could provide PEPCO with the steady cash flow needed to fund the development of new products, according to Aurigemma’s factual findings. When Bass Products, which manufactures electrical control panels for recreational boats and panel trucks, came knocking at its door in August 1995, the benefits of combining both companies was recognized almost immediately by PEPCO President Robert Sposato, Aurigemma determined. He instructed Michaud, then PEPCO’s general manager, to devise a business plan for acquiring Bass. But, according to Aurigemma’s findings, Michaud took no action on PEPCO’s behalf and later told Sposato that Bass had been purchased by another buyer. She then left the company and bought Bass for herself, completing the transaction in November 1996. PEPCO retaliated, suing Michaud for fraud, misappropriation of business opportunity, breach of fiduciary duty, breach of employment contract, and civil theft. Crucial to Aurigemma’s finding in favor of the plaintiff on those counts was the point at which Michaud notified Sposato of her intention to acquire Bass herself, and whether PEPCO had the financial ability to purchase the Massachusetts company, had Michaud not beaten it to the punch. CREDIBILITY SHATTERED A past mistruth, however, came back to haunt Michaud, looming large in Aurigemma’s assessment of her credibility. Attacking her character, PEPCO brought up a resum� Michaud provided when applying to the company in 1991, which stated that she had a bachelor’s degree from the University of Hartford. “In the course of her testimony at trial,” Aurigemma noted in her decision, “Michaud admitted that not only did she have no bachelor’s degree, but she had never even attended the University of Hartford.” Michaud seemingly never recovered from that point on. “The judge prejudged the case,” maintained Meredith E. Russell of Kleinman & Associates in New London, Conn., who is representing Michaud on appeal. Among the more glaring examples of that, Russell asserted, was Aurigemma’s nearly complete disregard of expert testimony on PEPCO’s ability to obtain the financing it would have needed to purchase Bass itself. In dismissing Michaud’s affirmative defense, Aurigemma concluded that if Michaud — with virtually no assets and no experience as a business owner — could have obtained financing, there is no reason that PEPCO couldn’t as well. “Her purchase,” the judge insisted, “was based on the strength of the value of Bass assets alone and amounted to a leveraged buy-out.” As for Michaud’s claim that she had advised Sposato in September of 1995 of her intent to buy Bass, Aurigemma found that testimony in conflict with Sposato’s assertion that Michaud initially told him that a home she was purchasing in Massachusetts was for her daughter and not herself. Plaintiff’s counsel, Sergio C. Deganis of Cheshire, Conn.’s Ouellette, Deganis, Gallagher & Ward, said the judge also saw through Michaud’s claim that she had been sexually harassed by Sposato — with whom she had a sexual relationship — and that she had signed an employment agreement with PEPCO under duress. Despite the sexual relationship, Deganis maintained that there was no basis for Michaud’s harassment claim against Sposato. “There’s no reason to stay at your job for two or three years if you’re being harassed,” he said.

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