Opinion
HHDCV176078722S
10-24-2018
Brandon ROCCO v. SABIA TAIMAN, LLC et al.
UNPUBLISHED OPINION
OPINION
Cesar A. Noble, J.
The motion to strike before the court of the defendants, Sabia Taiman, LLC, Attorney Randall Sabia and Attorney Edward Taiman, attacks the legal sufficiency of claims of breach of fiduciary duty, bad faith and fraud contained in the amended complaint, of the plaintiff, Brandon Rocco, as well as claims for attorneys fees and punitive damages. For the reasons stated below the motion to strike is denied in its entirety.
FACTS
On April 23, 2018, the plaintiff, Brandon Rocco, filed an amended, nine-count complaint alleging legal malpractice, breach of fiduciary duty, breach of the covenant of good faith and fair dealing, and fraud against the defendants Randall J. Sabia, Edward C. Taiman Jr., and the Sabia Taiman, LLC law firm. The amended complaint alleges the following facts, which are common to all of the counts at issue. The plaintiff and Doug George, who is not a party to this action, decided to open a health and fitness center called Amped Fitness of Connecticut, LLC (Amped) together as partners, where the plaintiff would run the daily operations and George would finance the business. Pursuant to this agreement, the plaintiff quit working for his previous employer, a gym called Melt Fitness (Melt). The plaintiff received a letter from Melt, notifying him that he was subject to a noncompetition agreement and threatening him with legal action. After the plaintiff shared this letter with George, George retained the defendants to represent the plaintiff in connection with Melt’s claims. The defendants agreed to provide legal representation to the plaintiff. The defendants also advised the plaintiff and George on how to set up their formal business partnership and operate their new gym. In reliance on this legal advice, the plaintiff agreed to have the defendants prepare the documentation structuring his legal relationship with George. Approximately one year into Amped’s operation, the plaintiff and George’s business relationship deteriorated and the plaintiff ultimately ended their business relationship. Amped, through George and the defendants, brought an action against the plaintiff, alleging that the plaintiff is liable to Amped for money damages it suffered as a result of the plaintiff’s alleged computer crimes, which were relevant to the legal services the defendants provided.
Counts one and two alleging negligence (legal malpractice) are not relevant to this motion; only counts three through nine are at issue here.
The plaintiff brings a claim of breach of fiduciary duty against Attorney Sabia in count three and the same claim against the firm through vicarious liability in count four. The plaintiff brings a claim of bad faith against Attorney Sabia in count five and the same claim against the firm through vicarious liability in count six. In counts seven, eight, and nine, the plaintiff brings claims of fraud against the firm, Attorney Sabia, and Attorney Taiman respectively. Hereafter, for convenience, all references to the defendants in this memorandum are to Attorney Sabia, Attorney Taiman, and the firm collectively.
On May 9, 2018, the defendants filed a motion to strike counts three through nine of the plaintiff’s amended complaint along with the plaintiff’s prayer for relief for attorneys fees and punitive damages. The motion is accompanied by a memorandum of law. The defendants move to strike counts three and four, alleging breach of fiduciary duty, on the grounds that the plaintiff fails to allege that the defendants advanced their own interests to the plaintiff’s detriment and that the plaintiff’s allegations are mere reiterations of the legal malpractice claims in counts one and two. The defendants move to strike counts five and six, alleging bad faith, on the grounds that bad faith is not an independent cause of action outside of the insurance and contracts contexts and that the plaintiff fails to allege that a contract existed between the parties. The defendants move to strike counts seven, eight, and nine, alleging fraud, on the grounds that the plaintiff fails to plead with the requisite particularity. The defendants also moved to strike the claims for relief of attorneys fees and punitive damages sought to be recovered under the allegations of fraud. The plaintiff filed a memorandum of law in opposition to the motion to strike on June 7, 2018.
STANDARD
In addition to allowing entire counts to be stricken, "Practice Book § [10-39] ... allows for a claim for relief to be stricken only if the relief sought could not be legally awarded." Pamela B. v. Ment, 244 Conn. 296, 325, 709 A.2d 1089 (1998). "[A] motion to strike ... requires no factual findings by the trial court ... [The court] construe[s] the complaint in the manner most favorable to sustaining its legal sufficiency." (Internal quotation marks omitted.) Geysen v. Securitas Security Services USA, Inc., 322 Conn. 385, 398, 142 A.3d 227 (2016). Moreover, "[w]hat is necessarily implied [in an allegation] need not be expressly alleged ... It is fundamental that in determining the sufficiency of a complaint challenged by a defendant’s motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted ... Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Sepega v. Delaura, 326 Conn. 788, 791, 167 A.3d 916 (2017).
DISCUSSION
Counts Three and Four: Breach of Fiduciary Duty
In their memorandum of law in support of the motion to strike, the defendants argue that the plaintiff fails to allege that the defendants advanced their own interests to the plaintiff’s detriment, which is one of the four essential elements to pleading a cause of action for breach of fiduciary duty. Specifically, the defendants posit that the complaint alleges that the defendants discharged their duties to the plaintiff so that George would gain legal advantages, not Attorney Sabia or the firm. The defendants also conclude that the plaintiff’s allegations are merely restatements of the first two negligence counts and do not support an independent cause of action. The plaintiff argues in response that (1) he only needs to show that the defendants advanced the interest of any individual other than the plaintiff to his detriment; (2) self-dealing is not the exclusive means for an attorney to breach his fiduciary duty; and (3) the plaintiff’s claims are distinguishable from his legal malpractice claims because although professional negligence implicates a duty of care, the fiduciary duty implicates a duty of loyalty, honesty, and good faith efforts to advance the client’s interests above others’ interests.
"[A] fiduciary ... relationship is characterized by a unique degree of trust and confidence between the parties, one of whom has superior knowledge, skill or expertise and is under a duty to represent the interests of the other." (Emphasis in original; internal quotation marks omitted.) Biller Associates v. Peterken, 269 Conn. 716, 723, 849 A.2d 847 (2004). "[A]n attorney-client relationship imposes a fiduciary duty on the attorney ..." (Internal quotation marks omitted.) Giulietti v. Giulietti, 65 Conn.App. 813, 835, 784 A.2d 905, cert. denied, 258 Conn. 946, 788 A.2d 95 (2001). An attorney’s fiduciary duty implicates "a duty of loyalty and honesty" and a duty "to act primarily for the benefit of the [client]." (Internal quotation marks omitted.) 2 National Place, LLC v. Reiner, 152 Conn.App. 544, 552-53, 99 A.3d 1171, cert. denied, 314 Conn. 939, 102 A.3d 1112 (2014); see also Matza v. Matza, 226 Conn. 166, 184, 627 A.2d 414 (1993) (a "high degree of fidelity and good faith" is required of the attorney). Notably, "[a]n attorney’s allegiance is to his [or her] client, not to the person who happens to be paying for his [or her] services." Martyn v. Donlin, 151 Conn. 402, 414, 198 A.2d 700 (1964).
"Professional negligence alone ... does not give rise automatically to a claim for breach of fiduciary duty." Beverly Hills Concepts, Inc. v. Schatz & Schatz, Ribicoff & Kotkin, 247 Conn. 48, 56, 717 A.2d 724 (1998). "A viable cause of action for breach of fiduciary duty requires factual allegations impugning the attorney’s honesty, morality, or loyalty." Straw Pond Associates, LLC v. Fitzpatrick, Mariano & Santos, P.C., 167 Conn.App. 691, 726, 728, 145 A.3d 292, cert. denied, 323 Conn. 930, 150 A.3d 231 (2016). Specifically, "[t]he elements which must be proved ... are: [1] [t]hat a fiduciary relationship existed which gave rise to ... a duty of loyalty ... an obligation ... to act in the best interests of the plaintiff, and ... an obligation ... to act in good faith in any matter relating to the plaintiff; [2] [t]hat the defendant advanced his or her own interests to the detriment of the plaintiff; [3] [t]hat the plaintiff sustained damages; [and] [4] [t]hat the damages were proximately caused by the fiduciary’s breach of his or her fiduciary duty." (Emphasis omitted; internal quotation marks omitted.) Chioffi v. Martin, 181 Conn.App. 111, 138, 186 A.3d 15 (2018).
In the present case, the defendants focus on the plaintiff’s failure to expressly allege that the defendants advanced their own interests to the plaintiff’s detriment, pursuant to the second element of a breach of fiduciary duty claim. When the complaint is construed broadly and realistically and when those facts necessarily implied from the allegations are considered admitted, the plaintiff has sufficiently pleaded self-dealing. In paragraphs 7 through 12 of the complaint, the plaintiff alleges that George retained the defendants to represent the plaintiff and that the defendants advised the plaintiff and George on how to set up their formal business relationship. In count three paragraph 20 of the complaint, the plaintiff alleges that the defendants failed to advise the plaintiff of the existence of a conflict of interest and then failed to prepare the legal documentation structuring the business relationship between the plaintiff and George as they had represented they would. The defendants argue that this language alleges that the defendants advanced George’s interests over the plaintiff’s as opposed to their own, but it can readily be inferred that the defendants advanced their own interests by advancing George’s interests when drafting the legal documentation because George was paying the defendants’ bills. On this ground the motion to strike count three is denied. Because count four is derivative of count three, the defendants’ motion to strike count four is also denied.
Counts Five and Six: Breach of the Duty of Good Faith and Fair Dealing
In their memorandum of law in support of the motion to strike, the defendants argue the following. First, "bad faith" is not an independent cause of action outside of the insurance and contract law contexts. Second, the plaintiff fails to properly allege a breach of the duty of good faith and fair dealing in the contracts context because the plaintiff fails to explicitly allege that a contract existed between the parties. This is significant because absent a contract, assert the defendants, bad faith does not lie. The plaintiff argues the following points in response: that the existence of a written contract is not always required for all breach of the duty of good faith and fair dealing claims; that the plaintiff is only required to allege facts sufficient to demonstrate that an attorney-client relationship existed, which may be proved from the facts of the case in the absence of a contract; and that if the facts show that an attorney-client relationship existed, all expected benefits that necessarily flow from the relationship exist as well, thereby imposing a duty of good faith on the defendants.
"Connecticut courts repeatedly have held that the existence of a contract between the parties is a necessary antecedent to any claim of breach of the duty of good faith and fair dealing." (Emphasis omitted; internal quotation marks omitted.) Carford v. Empire Fire & Marine Ins. Co., 94 Conn.App. 41, 45, 891 A.2d 55 (2006). "A duty of good faith and fair dealing is implied into every contractual relationship, and it requires that neither party do anything to injure the other’s right to receive the benefits of the contract." Landry v. Spitz, 102 Conn.App. 34, 46, 925 A.2d 334 (2007). In addition to the contracting parties, a third-party beneficiary may also have a right of action under the contract. See Rapaport & Benedict, P.C. v. Stamford, 39 Conn.App. 492, 497, 664 A.2d 1193 (1995) ("a third-party beneficiary ... may sue the obligor for breach [of contract]" [internal quotation marks omitted] ). "[T]he ultimate test to be applied [in determining whether a person has a right of action as a third-party beneficiary] is whether the intent of the parties to the contract was that the promisor should assume a direct obligation to the third-party [beneficiary] ..." (Internal quotation marks omitted.) Knapp v. New Haven Road Construction Co., 150 Conn. 321, 325, 189 A.2d 386 (1963).
In the present case, the plaintiff’s claims for breach of the duty of good faith and fair dealing are legally sufficient. Reading the pleadings realistically, the existence of a contract can readily be inferred from the alleged facts. In his amended complaint, the plaintiff alleges in paragraph 7 that George retained the defendants to represent the plaintiff and then alleges in paragraphs 9 through 12 that the defendants subsequently provided legal advice and services to the plaintiff. At a minimum, it can be inferred that the plaintiff was a third-party beneficiary to a contract between the defendants and George, who intended for the defendants to assume a direct obligation (of legal representation) to the plaintiff. Because a third-party beneficiary is entitled to bring a breach of contract action and because the implied covenant of good faith and fair dealing is inherent in every contractual relationship, the plaintiff, here, may properly bring and has sufficiently pleaded a claim of breach of the duty of good faith and fair dealing. Accordingly, the defendants’ motion to strike count five is denied. Because count six is derivative of count five it is also denied.
Counts Seven, Eight, and Nine: Fraud
In their memorandum of law in support of the motion to strike, the defendants argue that the plaintiff (1) fails to identify any specific false representations that the defendants made to deceive the plaintiff; and (2) fails to allege that the defendants intended to induce the plaintiff’s reliance by making a false representation. The plaintiff argues in response that the complaint alleges sufficient facts, including the allegation that the defendants failed to prepare the documentation structuring the legal relationship between the plaintiff and George as they had promised. The plaintiff argues that he sought the defendants’ legal advice to protect his interest in the business endeavor he was undertaking, that the defendants repeatedly and knowingly made representations that they knew to be false, and that the plaintiff relied on this to his detriment.
"The essential elements of an action in common-law fraud ... are that: (1) a false representation was made as a statement of fact; (2) it was untrue and known to be untrue by the party making it; (3) it was made to induce the other party to act upon it; and (4) the other party did so act upon that false representation to his injury." Barbara Weisman, Trustee v. Kaspar, 233 Conn. 531, 539, 661 A.2d 530 (1995). "Where a claim for damages is based upon fraud, the mere allegation that a fraud has been perpetrated is insufficient; the specific acts relied upon must be set forth in the complaint." Maruca v. Phillips, 139 Conn. 79, 81, 90 A.2d 159 (1952). Intent to induce the other party to act in reliance on the false representation may be inferred from the facts alleged. See, e.g., Sturm v. Harb Development, LLC, 298 Conn. 124, 142, 2 A.3d 859 (2010) ("[i]t can be inferred that [the defendant’s fraudulent] statements were made to ensure that the plaintiffs would believe that the ... contract had been fulfilled, causing the plaintiffs to [act in reliance]"); see also Maruca v. Phillips, supra, 81 (where plaintiff’s allegations regarding defendant’s readily inferred intent to "get the plaintiff’s money without in fact setting up the partnership as a going business" were sufficient); McLeod v. A Better Way Wholesale Autos, Inc., 177 Conn.App. 423, 452, 172 A.3d 802 (2017) ("[i]n considering whether there was clear and convincing evidence of fraud, the court ... was permitted to draw reasonable inferences, including that the defendant’s actions were intended to induce the plaintiff’s reliance upon its representations").
In the present case, the plaintiff specifically alleges that the defendants "failed to structure or otherwise prepare documentation structuring the legal relationship between [the plaintiff] and Mr. George according to how [they] represented, such as ... failing to prepare and/or draft a partnership agreement between [the plaintiff] and Mr. George." This sufficiently and specifically sets forth the defendants’ alleged false representation that they would draft documentation concerning the structure of the business’ ownership in a certain manner that would protect the plaintiff’s interests. Further, it can readily be inferred that the defendants intended to induce the plaintiff to act upon this false representation. Pursuant to the defendants’ legal advice, the plaintiff allegedly agreed to allow the defendants to structure the legal documentation of his new business relationship as promised. It can readily be inferred that the defendants then allegedly proceeded to draft this legal documentation differently than promised so as to favor George’s interests over the plaintiff’s because George was actually paying them. Accordingly, the defendants’ motion to strike as to counts seven, eight, and nine is denied. Because the plaintiff’s prayer for attorneys fees and punitive damages stems from these counts, the related prayers for relief also survive.
CONCLUSION
For the foregoing reasons, the defendants’ motion to strike as to counts three through nine and the prayers for relief is denied.