Opinion
No. CV06 5003463S
December 16, 2009
DECISION RE MOTION FOR SUMMARY JUDGMENT (#282)
The plaintiff, Starview Ventures, commenced this action by service of process against defendants Acadia Insurance Company (Acadia), Underwriters at Lloyd's of London (Lloyd's), Matthew Humphrey (Humphrey) and Geoffrey Lyn (Lyn) on April 5, 2006; defendant Joseph Krar and Associates (Krar) on April 6, 2006; defendant D.M.N. Autocare, L.L.C. (D.N.M.) on April 11, 2006; and defendant Dwight Fowlin (Fowlin) on April 12, 2006. The operative complaint is the third amended complaint (#179) filed by the plaintiff on March 28, 2007. The following are the counts in the third amended complaint that pertain to the parties involved in and/or relevant to the present motion — the plaintiff; Lloyd's; Krar; D.N.M.; and Humphrey, Lyn and Fowlin as D.N.M.'s principals. Count four is against Lloyd's and sounds in negligence. Count five is against Krar and sounds in negligence. Counts six, seven, eight, nine and ten are against D.N.M and its principals and sound in breach of contract, negligence, conversion, misappropriation of funds and civil theft under General Statutes § 52-564.
There have been two major changes with respect to the defendants since the commencement of .his action. First, the plaintiff agreed to accept the sum of $15,000 in exchange for the withdrawal of its claims against Acadia, which was done on April 8, 2009. Second, the plaintiff filed a motion to cite in Wachovia Bank, N.A. (Wachovia) (#180) on March 28, 2007 and amended the complaint to include two counts against Wachovia sounding in common-law and statutory conversion.
The third amended complaint alleges the following facts. On April 13, 2004, a fire caused damage to property at 30 Orange Avenue in New Haven that was owned by the plaintiff and leased to D.N.M. The plaintiff had a commercial property insurance policy in effect at the time of the fire with Acadia. D.N.M. also had an insurance policy for the property in effect at the time of the fire with Lloyd's. Krar acted as Lloyd's agent or representative. Both the plaintiff and D.N.M. hired public adjusting firms to assess the cost and extent of the damage. Biller Associates TA-State, L.L.C. (Biller Associates) was the plaintiff's public adjuster. D.N.M.'s public adjuster was the defendant who brings the present motion, United Adjusters, L.L.C. After both firms' assessments, Lloyd's issued a check payable to the plaintiff, D.N.M. and the defendant, but not Biller Associates, on or about November 22, 2004, through Krar to the defendant in the amount of $86,966.72 from Krar's account with Webster Bank (Webster). On or about November 29, 2004, Humphrey endorsed the check on behalf of D.N.M., and Jon Biller (Biller) did likewise on behalf of the defendant. They presented the check to Wachovia on or about November 30, 2004, who paid it without the plaintiff's endorsement. The plaintiff has yet to receive any amounts from the check, either directly or by virtue of repairs done to the subject property and funded by the check's proceeds.
Because United Adjusters, L.L.C. is the only defendant who brings the present motion, it shall be referred to as the defendant hereinafter.
On January 18, 2007, Lloyd's and Krar filed a motion to implead Webster, the defendant and Biller as third-party defendants and an accompanying third-party complaint (#154). The third revised third-party complaint filed on December 18, 2008 (#270) is the operative pleading in the present motion. Counts two through seven are against the defendant. Count two sounds in conversion. Count three seeks indemnification for any recovery obtained by Starview against Lloyd's and Krar and any loss suffered by Lloyd's and Krar as a result of such recovery. Count four sounds in breach of fiduciary duty. Count five requests that the court impose a constructive trust because the defendant has wrongfully retained the check's proceeds. Count six sounds in breach of contract. Finally, count seven sounds in promissory estoppel.
Lloyd's and Krar removed all counts against Biller in the second and third revised third-party complaints.
The defendant filed a motion to strike Lloyd's and Krar's second revised third-party complaint and an accompanying memorandum of law (#262 and 263) on October 30, 2008. Lloyd's and Krar responded by filing a request for leave to amend the third-party complaint, accompanied by the proposed third revised third-party complaint. Even though the defendant objected to the request on January 16, 2009 (#274), citing the pending motion to strike and the pending assignment of Lloyd's and Krar's claims to the plaintiff, both it and the plaintiff refer to the third revised third-party complaint in their respective memoranda on the present motion.
Lloyd's and Krar made the following requests in the prayer for relief with respect to counts two through seven. The first request is that the court order that the defendant is liable to Lloyd's and Krar for conversion of the check. The second request is that the court order that the defendant is liable to Lloyd's and Krar for indemnity of any amount that Lloyd's and Krar must pay to the plaintiff. The third request is that the court order that the defendant has breached a fiduciary duty owed to Lloyd's and Krar. The fourth request is that the court impose a constructive trust and order the defendant to either repay Lloyd's and Krar the full amount of the check or pay the plaintiff its rightful share of the check's proceeds. The fifth request is that the court order that the defendant has breached its contract with Lloyd's and Krar and must therefore satisfy any and all of the plaintiff's claims against Lloyd's and Krar. Finally, Lloyd's and Krar request that the court order the defendant to pay the plaintiff under the theory of promissory estoppel what the plaintiff claims is due to it.
The preceding two paragraphs show that count three is the only count in the third revised third-party complaint in which the third-party plaintiff seeks indemnification from the defendant. The defendant's reference in its motion and memorandum to counts two through seven as "indemnification claims" is therefore a misnomer.
On January 26, 2009, the plaintiff filed a motion to substitute itself as the third-party plaintiff in Lloyd's and Krar's causes of action against Webster and the defendant (#275), pursuant to an assignment made by Lloyd's and Krar in exchange for the plaintiff's release of its causes of action against them. The plaintiff formally withdrew the complaint in relation to Lloyd's and Krar on May 7, 2009 (#278). A letter from the plaintiff to the court, Lager, J., dated January 12, 2009 and attached to the defendant's memorandum, refers to the assignment. The defendant filed the present motion for summary judgment (#282) and an accompanying memorandum of law (#283) on September 17, 2009. The plaintiff filed its memorandum in opposition to the motion (#285) on October 28, 2009. The matter was heard at short calendar on November 2, 2009.
DISCUSSION I.
"Summary judgment is a method of resolving litigation when pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law . . . The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried." (Citations omitted.) Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989). "However, since litigants ordinarily have a constitutional right to have issues of fact decided by a jury . . . the moving party . . . is held to a strict standard . . . of demonstrating his entitlement to summary judgment." (Citation omitted; internal quotation marks omitted.) Kakadelis v. DeFabritis, 191 Conn. 276, 282, 464 A.2d 57 (1983).
"[S]ummary judgment is appropriate only if a fair and reasonable person could conclude only one way . . . [A] summary disposition . . . should be on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party . . . [A] directed verdict may be rendered only where, on the evidence viewed in the light most favorable to the nonmovant, the trier of fact could not reasonably reach any other conclusion than that embodied in the verdict as directed." (Citations omitted; emphasis in original; internal quotation marks omitted.) Dugan v. Mobile Medical Testing Services, Inc., 265 Conn. 791, 815, 830 A.2d 752 (2003).
"Where the issues are purely legal and there is no disputed issue of fact, summary judgment is appropriate. See Vernon v. Cassadega Valley Cent. School Dist., 49 F.3d 886, 889 (2d Cir. 1995)." CT Page 1251 Annelli v. Ford Motor Co., Superior Court, judicial district of New London, Docket No. CV 04 4001345 (June 7, 2007, Hurley, J.T.R.). See also Blackwell v. Barone's Sports Cafe, Inc., Superior Court, judicial district of Waterbury, Docket No. CV 02 4000570 (January 10, 2005, Schuman, J.) ( 38 Conn. L. Rptr. 636) ("Because the defendants do not dispute the facts for the purposes of this motion, but instead raise [a] purely legal issue . . . the court can decide the issue on summary judgment. See Haynes v. Yale-New Haven Hospital, 243 Conn. 17, 32 n. 17, 699 A.2d 964 (1997); Drahan v. Board of Education, 42 Conn.App. 480, 498 n. 17, 680 A.2d 316, cert. denied, 239 Conn. 921, 682 A.2d 1000 (1996)"). "[T]he question of whether the assignment of an action is barred as a matter of public policy is an issue of law." Stearns Wheeler v. Kowalski Bros., 289 Conn. 1, 7, 955 A.2d 538 (2008). This is the only issue that the parties dispute in the present motion. The consistency between the parties' respective allegations about the assignment demonstrates that there is no disputed issue of fact. The motion therefore will turn on whether the defendant is entitled to judgment as a matter of law.
As a point of comparison, the court in Esposito v. CPM Ins. Services, Inc., Superior Court, judicial district of New Haven, Docket No. CV 04 4010919 and CV 044010920 (February 9, 2006, Blue, J.) ( 40 Conn. L. Rptr. 787), which is legally analogous to the present case for reasons discussed infra, also dealt with motions for summary judgment where there was no disputed issue of fact.
The defendant argues that it is entitled to judgment as a matter of law because the assignment of Lloyd's and Krar's common-law indemnification claims to the plaintiff is void as against public policy. Specifically, the defendant first contends in its memorandum that the indemnification claims are tort-based because the plaintiff's causes of action against Lloyd's and Krar sounded in negligence. It then makes the argument that such claims therefore cannot be the subject of an assignment due to public policy concerns over the "merchandizing" of tort claims, the impropriety of a party recovering an amount greater than its claimed loss and the fact that there can be no amount for the defendant to reimburse to Lloyd's and Krar because Lloyd's and Krar can no longer be held liable to the plaintiff.
The defendant also contends that there are "independent public policy grounds" that preclude the assignment. It first reiterates its point regarding the absence of an amount for it to reimburse under the theory of indemnification. It then repeats its argument that the assignment enables the plaintiff to recover doubly or triply in light of what the plaintiff already seeks in damages from Wachovia, D.N.M. and D.N.M's principals. It finally contends that the assignment promotes improper and increased litigation because it facilitates the plaintiff's taking of and benefitting from the position against which it argued when Lloyd's and Krar were defendants in the original action. In support of the motion, the defendant submits as evidence a copy of the plaintiff's letter to the court dated January 12, 2009.
The plaintiff replies in its opposition memorandum that the assignment at issue is valid under Connecticut law. Specifically, the plaintiff first contends that the case upon which the defendant primarily relies is inapposite. The plaintiff then argues that public policy does not preclude the present assignment because the underlying claims involve breach of contract and injury to property, neither of which are subject to the categorical prohibition against assignments of personal injury claims. The plaintiff also contends that the assignment does not change the position it takes in the litigation because the third-party complaint, like the plaintiff's complaint, alleges that the plaintiff has not received its rightful share of the check's proceeds and that the plaintiff should be able to recover the amount from, inter alia, the defendant. The plaintiff finally argues that the assignment actually simplifies the litigation by reducing the number of involved parties.
The Supreme Court undertook an analysis of "the general principles that guide our inquiry as to the issue of the assignability of legal actions" in Stearns Wheeler v. Kowalsky Bros., supra, 289 Conn. 8. It first noted that it had "previously recognized that the assignment of contract claims is permissible" on the basis that "the modern approach to contracts rejects traditional common-law restrictions on the alienability of contract rights in favor of free assignability of contracts. Common-law restrictions on assignment were abandoned when courts recognized the necessity of permitting the transfer of contract rights." (Internal quotation marks omitted.) Id. It then remarked that it had "prohibited . . . the assignment of tort claims" because "[t]he reasons underlying the rule . . . have been variously stated: unscrupulous interlopers and litigious persons were to be discouraged from purchasing claims for pain and suffering and prosecuting them in court as assignees; actions for injuries that in the absence of statute did not survive the death of the victim were deemed too personal in nature to be assignable; a tortfeasor was not held to be liable to a party unharmed by him; and excessive litigation was thought to be reduced." Id., 8-9. The assigned claims at issue in Stearns Wheeler were brought, however, under the Connecticut Unfair Trade Practices Act. Because the claims "were purely statutory and [could not] be precisely characterized either as tort claims or as contract claims," the court evaluated the assignment on the basis of whether it "violate[d] public policy." Id.
The Supreme Court in Gurski v. Rosenblum Filan, L.L.C., 276 Conn. 257, 268, 885 A.2d 163 (2005), discussed infra, likewise decided to resolve the assignment issue before it "on the basis of public policy," since the subject "action for legal malpractice [could] be pleaded either in contract or in tort."
The defendant relies upon Gurski v. Rosenblum Filan, L.L.C, 276 Conn. 257, 885 A.2d 163 (2005), for the proposition that the assignment of a tort claim to an adversary in the same litigation is void as against public policy. In Gurski, the plaintiff physician was the defendant in a medical malpractice action brought by a former patient. The plaintiff's medical malpractice insurer initially retained the defendant law firm to represent the plaintiff but later determined that the plaintiff's policy did not cover the action. The defendant thereafter ceased its representation of the plaintiff. The court entered a default judgment against the plaintiff, and because the plaintiff had insufficient funds to pay the judgment, he entered into an agreement with the former patient to initiate and then assign a legal malpractice action against the defendant to her. The Supreme Court reversed the trial court's acceptance of the assignment and held "that the assignment of a malpractice action to an adverse party in the underlying action creates a distortion that the profession cannot endure and thus should not tolerate." Id., 280.
The analogy that the defendant attempts to draw between the assigned legal malpractice action in Gurski and the assigned third-party action in the present case is untenable. The Supreme Court in Gurski "underscored throughout [the] opinion [that it had] confined [its] decision in this case to the public policy concerns of an assignment solely in this specific context." Id., 283. Such context-specific public policy concerns included "the unique and personal nature of the relationship between attorney and client and the need to preserve the sanctity of that relationship"; "the incompatibility of the assignment and the attorney's duty of loyalty and confidentiality"; "the commercialization of . . . claims"; the chilling effect that such assignments would have on the representation of "insolvent, underinsured or judgment proof defendants"; and "the potential for a reversal of roles that could undermine the legitimacy of the malpractice judgment" specifically and besmirch the integrity of the profession generally. Id., 268-72. For reasons stated below, such concerns are not attendant in the present case to the assignment of claims in contract, equity and tort based upon injury to property or to the relationship between the assignors and the defendant in the assigned action. The relationship is one of an insurer and its agent to a party acting on behalf of an insured, and it implicates neither a fiduciary duty nor a profession that public policy especially seeks to protect.
The court described the problematic role reversal as follows: "This counterintuitive claim and reversal of roles, requiring the assignee to bring a claim for legal malpractice when she was the very party who benefitted from that malpractice in the underlying litigation, would engender a perversion that would erode public confidence in the legal system." Gurski v. Rosenblum Filan, L.L.C., supra, 276 Conn. 278.
The plaintiff counters the defendant's reliance on Gurski by referring to Esposito v. C.P.M Ins. Services, Inc., Superior Court, judicial district of New Haven, Docket Nos. CV 04 4010919 and CV 04 4010920 (February 9, 2006, Blue, J.) ( 40 Conn. L. Rptr. 787), in which the court conducted an exhaustive examination of pre-and post- Gurski jurisprudence in the area of claims assignments. It interpreted " Gurski's reasoning in reaching [the] conclusion [that "public policy considerations warrant the barring of an assignment of a legal malpractice action to an adversary in the underlying litigation" as] narrow rather than sweeping." Id., 790. It also determined that "[t]he most logical interpretation to be drawn from Gurski" is that "[c]ontract rights remain freely assignable," "[t]ort claims based on personal injury remain unassignable" and "[t]he gray area of tort claims based on injury to property interests is not subject to a similar categorical rule" and therefore "must be resolved on the basis of public policy." (Internal quotation marks omitted.) Id., 791.
The assignor in Esposito was a defendant in two wrongful death actions involving one automobile accident whose insurer refused to provide a defense because the subject policy did not cover the subject automobile. The assignor settled the actions with the plaintiffs, the decedents' estates, by assigning its right to bring a professional malpractice action against the defendants, the insurer's agents. The basis for the malpractice action was that the defendants should have advised the assignor to obtain more comprehensive coverage. The defendants brought motions for summary judgment on the ground that the assignment was void as against public policy.
The court denied them because "the `role reversal' issue that invalidated the assignment in Gurski [was] not sufficiently problematic to invalidate the assignment [here]." Id., 792. The court also determined that "nothing akin to the sanctity of the attorney-client relationship, a point of obvious concern in Gurski, [was] at issue here." Id. The court specifically described the "assignment [in Gurski as one] requir[ing] a party to switch from `I would have won on the merits' to `I would have lost on the merits but for the negligence of my opponent's attorney.'" Id., 791. In contrast, the positions that the assignor and the assignees took in Esposito were such that their interests "precisely coincide[d]." Id.
The court concluded that there was also a difference between Gurski and Esposito with respect to the nature of the relationship between the assignor and the defendant in the assigned action. It described the attorney-client relationship in Gurski as "personal" and "a fiduciary relation of the very highest character." (Internal quotation marks omitted.) Id., 792. In contrast, the insured-insurer's agent relationship between the assignor and the defendants in Esposito were "a commercial relationship not comparable to the attorney-client relationship, shaped by centuries of tradition and jurisprudence." Id.
II.
Before analyzing counts two through seven individually, the court addresses two of the defendant's arguments in relation to all six counts. The defendant argues that the assignment would allow "the plaintiff, who had sued Lloyds and Krar and claimed their negligence had caused the plaintiff's losses" to "[claim] [that they] were not negligent and had not caused the plaintiff's loss, as clear a `role reversal' and `duplicitous change in position' as that involved in Gurski." The court is not persuaded by the defendant's argument. First, the plaintiff has not disavowed its allegations against Lloyd's and Krar by virtue of the assignment and release but instead has only agreed not to proceed with its negligence causes of action against them. Second, the plaintiff's assumption of Lloyd's and Krar's role in the third-party litigation is not tantamount to the plaintiff "having a vested interest in the jury's determination that [Lloyd's and Krar] had not been negligent." (Emphasis in original.) Gurski v. Rosenblum Filan, L.L.C., supra, 276 Conn. 279. The court instead accepts the plaintiff's argument that its "position remains the same regardless of the assignment of the claims" for reasons discussed infra.
The defendant also argues that the assignment enables the plaintiff to recover doubly or triply in light of what the plaintiff already seeks in damages from Wachovia, D.N.M. and D.N.M's principals. Again, the court is not persuaded by the defendant's argument. The only monetary relief that the plaintiff requests in the third-party complaint is that the defendant pay the plaintiff's share of the check's proceeds from what should be subject to a constructive trust and that the defendant pay the plaintiff's share of the check's proceeds because it made a promise to do so upon which Lloyd's and Krar detrimentally relied. Such relief would not change the amount and/or character of the damages that the plaintiff seeks in the original action, because the plaintiff sought to recover from Lloyd's and Krar "the value of the proceeds that were paid by [them] to [D.N.M.], to the exclusion of the plaintiff." Furthermore, the defendant's statement in its memorandum that the plaintiff's respective claims against D.N.M. and its principals and Wachovia permit full recovery of the plaintiff's damages is inaccurate. The damages sought from D.N.M. and its principals pertain to losses involving the 30 Orange Avenue property and related rental income while those sought from Wachovia are not specified and relate only to the alleged acts of conversion.
III. COUNT TWO: CONVERSION
"The tort of conversion occurs when one, without authorization, assumes and exercises ownership over property belonging to another, to the exclusion of the owner's rights." (Emphasis in original; internal quotation marks omitted.) Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 43, 761 A.2d 1268 (2000). The plaintiff in the present case alleges in count two of the third revised third-party complaint that the defendant authorized D.N.M. to negotiate the check without the plaintiff's endorsement and then retained the check's proceeds in violation of Krar's right as their rightful owner until all three joint payees endorsed the check. Because conversion is a tort that involves injury to one's property rather than person, the assignment of the claim is not per se void but rather is subject to a public policy-based assessment.
The defendant classifies the public policy issues that should preclude the plaintiff's pursuit of the assigned causes of action as those traditionally associated with prohibitions on assignments of tort claims and those addressing excess recovery and duplicitous litigation. These public policy issues, however, are not prohibitive with respect to the assigned conversion claim. First, a personal injury claim is personal and specific to a claimant in a way that a conversion claim is not. Second, the relationship between the plaintiff and the defendant with respect to the assigned conversion claim is not one that would be insignificant or nonexistent but for the assignment. The defendant acted on behalf of D.N.M. and its principals, all of whom are defendants in the plaintiff's original action and against all of whom the plaintiff has asserted a separate conversion claim, also based upon the handling and retention of the check's proceeds. Third, the assignment will not excessively increase litigation because the defendant is already implicated in the case by virtue of the allegations in the plaintiff's original complaint and the defendant's relationship with D.N.M. and its principals. The similarity of the allegations underlying the plaintiff's original and assigned conversion claims also mitigates against the argument that the assignment facilitates inconsistent and unnecessary litigation. Finally, the plaintiff would not recover in excess of its actual claimed loss by virtue of the assigned conversion claim because the relief sought is simply that the court order that the defendant is liable. It is therefore submitted that the court should deny the defendant's motion for summary judgment on count two of the third revised third-party complaint.
The defendant describes the first category of public policy issues as follows: "[L]itigious persons were to be discouraged from purchasing claims for pain and suffering and prosecuting them in court as assignees . . . a tortfeasor was not to be held liable to a party unharmed by him . . . excessive litigation was thought to be reduced." Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 382-83, 698 A.2d 859 (1997).
IV. COUNT THREE: INDEMNITY
"[I]ndemnity involves a claim for reimbursement in full from one on whom a primary liability is claimed to rest . . ." (Emphasis added; internal quotation marks omitted.) Skuzinski v. Bouchard Fuels, Inc., 240 Conn. 694, 697 n. 3, 694 A.2d 788 (1997). "To assert a claim for indemnification . . . an out-of-pocket defendant must show that: (1) the party against whom the indemnification is sought was negligent; (2) that party's active negligence, rather than the defendant's own passive negligence, was the direct, immediate cause of the . . . resulting injuries . . . (3) the other party was in control of the situation to the exclusion of the defendant seeking reimbursement; and (4) the defendant did not know of the other party's negligence, had no reason to anticipate it and reasonably could rely on the other party not to be negligent." (Emphasis added; internal quotation marks omitted.) McCann Real Equities Series XXII, L.L.C. v. David McDermott Chevrolet, Inc., 93 Conn.App. 486, 523-24, 890 A.2d 140 (2006).
In order to determine whether a common-law indemnification action is viable, "it is necessary to assume that the jury found that the plaintiff established the elements of the cause or causes of action [in] the first-party complaint against the defendant." Quincy Mutual Fire Ins. Co. v. Nurkovic, Superior Court, judicial district of Middlesex, Docket No. CV 06 4005119 (May 15, 2009, Taylor, J.) ( 47 Conn. L. Rptr. 830, 831), citing Lassow v. Jefferson Pilot Financial Ins. Corp., Superior Court, judicial district of Hartford, Docket No. CV 01 0807131 (September 8, 2003, Shapiro, J.) ( 35 Conn. L. Rptr. 496) (court granted third-party defendant's motion for summary judgment on third-party plaintiff's common-law indemnification claim on ground that original action could not provide basis for claim). "If the underlying cause of action against a defendant fails, there would be no need for a third-party action for indemnification." Id., 831-32.
In the present case, the plaintiff alleges that the defendant is primarily liable for its failure to receive its share of the check's proceeds because the defendant exclusively controlled the handling of the check and its proceeds to the plaintiff's direct and immediate detriment and did so in a negligent manner of which Lloyd's and Krar had no knowledge. The plaintiff claims in the last paragraph of the count: "If Underwriters and/or Krar is found liable to Starview, then United is liable to Underwriters and Krar for any recovery Starview obtains from Underwriters and any loss suffered by Underwriters and Krar." The assignment and release agreement explicitly provides, however, that the plaintiff will dismiss its claims against Lloyd's and Krar in the litigation. The agreement therefore precludes the possibility that Lloyd's and Krar will be found liable to the plaintiff and accordingly be required to pay damages. As a result, no common-law indemnification claim may lie in the present case because there neither can be a "claim for reimbursement" nor can the plaintiff act in the capacity of an "out-of-pocket" indemnitee. Because no common-law indemnification claim may lie, an assignment of such a claim cannot survive. The court therefore grants the defendant's motion for summary judgment on count three of the plaintiff's third revised third-party complaint.
Because of this conclusion, the court does not reach the defendant's arguments that allowing the assignment of the claims would a) allow the plaintiff to receive attorneys fees and costs for litigating an action in which it was the opposing party and b) encourage plaintiffs to sue multiple defendants, increase litigation costs and then settle for indemnification rights in lieu of damages.
V. COUNT FOUR: BREACH OF FIDUCIARY DUTY
"Traditionally, claims arising out of a tort were not assignable . . . Current law continues to make personal torts unassignable, unlike property or contract claims, which may be freely assigned . . . Specifically, claims for malpractice or breach of fiduciary duty are not assignable. [6 Am.Jur.2d, Assignments, § 65 (1999)]; annot. 40 A.L.R.4th 684 (1985); see CT Page 1259 Gurski v. Rosenblum, 48 Conn.Sup. 226, 243, 838 A.2d 1090 (2003) . . ." (Citations omitted.) Infinity Ins. Co. v. Worcester Ins. Co., Superior Court, judicial district of Hartford, Docket No. CV 02 20817023 (March 18, 2005, Langenbach, J.) ( 39 Conn. L. Rptr. 72, 78). The court in Infinity Ins. Co. denied a motion to strike a special defense that the doctrine of maintenance and champerty barred the plaintiff's assigned causes of action. It relied in part on the conclusion that the assigned causes of action, based on allegations that the assignee/insured tortfeasor "suffered injury from the defendant [insurer]'s negligence and bad faith in failing to adequately defend him against the claims of the [victim's] estate," were "personal in nature, akin to a malpractice Claim," and therefore "subject to the public policy rule that personal torts are unassignable." Id.
The authorities that the Infinity Ins. Co. court cites for the proposition that breach of fiduciary duty claims are not assignable discuss, however, such claims in the context of the attorney-client relationship. In addition to Gurski, the referenced section of the American Law Reporter is titled "Assignability of claim for legal malpractice," and section fifty-seven (formerly section sixty-five) of American Jurisprudence, Second Edition likewise looks at assignments of breach of fiduciary claims in terms of professional, specifically legal, malpractice. The case to which the American Jurisprudence section cites for the proposition that "[a] claim for the breach of a fiduciary duty may not be assigned," Community First State Bank v. Olsen, 587 N.W.2d 364 (1998), involved the assignment of a claim that an attorney breached his fiduciary duty. The Supreme Court of Nebraska looked to precedent establishing that "any professional misconduct or any unreasonable lack of skill or fidelity in the performance of professional or fiduciary duties is malpractice" and therefore treated the claim as akin to one of legal malpractice for the purpose of ascertaining assignability. Id., 368.
In contrast, the Supreme Court of Hawaii in TMJ Hawaii v. Nippon Trust Bank, 153 P.3d 444 (2007), upheld the assignment of a breach of fiduciary duty claim in a non-legal malpractice context. The assignor was a commercial property owner with claims of professional malpractice, breach of fiduciary duty and fraud against the named defendant bank and a law firm, both of whom the assignor had retained to assist in a commercial property sale. The court determined that "[t]he personal/property dichotomy . . . governs whether a cause of action is assignable" under state law, characterized the complaint as "assert[ing] non-personal injuries" to the assignor's "estate or property," defined the damages sought by the assignee plaintiff as "direct and quantifiable" and concluded that the claims were assignable, "given the non-personal nature of the injuries alleged." Id., 452, 455. See also First Community Bank and Trust v. Kelley, Hardesty, Smith and Co., 663 N.E.2d 218, 222 (Ind.Ct.App. 1996) (distinguishing subject accountant-client relationship from traditional attorney-client relationship and allowing assignment of breach of fiduciary duty claim based upon it).
In the present case, the plaintiff first alleges in count four of the third revised third-party complaint that the defendant undertook a duty "characterized by a high degree of trust and confidence" to obtain the plaintiff's endorsement before cashing the check, notify the plaintiff of the check's issuance and remit the check's proceeds to the rightful recipients, including the plaintiff. The plaintiff then alleges that the defendant breached this duty first by failing to perform the acts listed in the preceding sentence and second by giving the check to D.N.M. without further oversight. As it did with respect to the assigned conversion claim, the defendant classifies the assigned breach of fiduciary claim as one sounding in tort, "personal in nature" and therefore unassignable.
The reasoning of the Supreme Court of Hawaii in TMJ Hawaii regarding the assignability of the breach of fiduciary duty claim is persuasive and consistent with Connecticut law. It provides a helpful rubric in deciding whether the assignment of the breach of fiduciary duty claim in the present case is void as against public policy. First, the alleged injury that resulted from the claimed breach is non-personal in nature because it affected the plaintiff's financial (and therefore property) interests. Furthermore, the damages sought by the plaintiff through the third-party complaint are "direct and quantifiable" insofar as they consist of the damages that the plaintiff had originally sought against Lloyd's and Krar, namely, the plaintiff's share of the check's proceeds.
The nature of the relationship between the assignor and the defendant in the assigned action is also a favorable factor in allowing for the assignment. Lloyd's and Krar were the insurer and the insurer's agent, respectively, for D.N.M., a client for whom the defendant provided public adjusting services. The relationship between an attorney and a client is "highly fiduciary in its nature and of a very delicate, exacting and confidential character, requiring a high degree of fidelity and good faith." (Internal quotation marks omitted.) Andrews v. Gorby, 237 Conn. 12, 20, 675 A.2d 449 (1996). Indeed, the Supreme Court in Gurski emphasized the "unique and personal nature of the relationship between attorney and client and the need to preserve the sanctity of that relationship." Gurski v. Rosenblum Filan, L.L.C., supra, 276 Conn. 268-69.
The relationship between Lloyd's and Krar and the defendant in the present case does not rise to the level of the attorney-client relationship with respect to the need for confidentiality, exactitude and delicacy and therefore does not warrant the same public policy interest in preserving its sanctity. The alleged wrongdoing committed by the defendant against Lloyd's and Krar cannot be categorized as professional malpractice, and the duty allegedly undertaken by the defendant on behalf of Lloyd's and Krar was not dictated by high, widely-recognized standards, such as those that govern attorneys or professionals in other industries where professional malpractice claims are not uncommon. For these reasons, the relationship in the present case is even distinguishable from the one between the assignor and the defendant in Infinity Ins. Co. because that relationship involved a client-service provider dynamic and an issue of professional malpractice. Lloyd's and Krar "share[d] a business relationship with [the defendant], not a `personal' one." Scacca v. Todd Cassanelli, Inc., Superior Court, judicial district of Hartford, Docket No. CV 07 5013081 (May 6, 2008, Rittenband, J.T.R.) ( 45 Conn. L. Rptr. 512, 514). The assignment is therefore not void as against public policy, and therefore the court denies the defendant's motion for summary judgment on count four of the plaintiff's third revised third-party complaint.
VI. COUNT FIVE: CONSTRUCTIVE TRUST
"A constructive trust is a flexible equitable remedy whose enforcement is subject to the equitable discretion of the trial court." Wendell Corp. Trustee v. Thurston, 239 Conn. 109, 120, 680 A.2d 1314 (1996). "The elements of a constructive trust are the intent by a grantor to benefit a third person, the transfer of property to another who stands in a confidential relationship to the grantor with the intent that the transferee will transfer the property to the third person and the unjust enrichment of the transferee if the transferee is allowed to keep the property." Gulack v. Gulack, 30 Conn.App. 305, 310, 620 A.2d 181 (1993).
In the present case, the plaintiff first alleges in count five of the third revised third-party complaint that Lloyd's and Krar owned legal title to the check's proceeds until the check's endorsement by and the proceeds' disbursement to all three joint payees. The plaintiff then alleges that the defendant undertook a fiduciary duty to see that the plaintiff endorsed the check, received notice of the check's issuance and obtained its share of the check's proceeds. The plaintiff further alleges that the defendant and D.N.M. have been unjustly enriched by cashing the check without the plaintiff's endorsement and retaining the proceeds in violation of other parties' rights. The assigned constructive trust claim therefore shares elements with the assigned claims of conversion, breach of fiduciary duty and breach of contract and should be subject to a public policy analysis because it does not sound firmly in either contract or tort.
The public policy issues that the defendant argues should preclude the plaintiff's pursuit of the assigned causes of action again are not prohibitive with respect to the assigned constructive trust claim. First, the traditional reasoning employed in disallowing assignments of personal injury-based tort claims is not applicable here for the same reasons as those articulated with respect to the assigned conversion and breach of fiduciary duty claims. Second, there is no basis for voiding the assignment because it would subject a party to liability for an injury in which it had no involvement or unnecessarily increase litigation. The defendant's participation in the situation giving rise to both the original and third-party actions is uncontested and well-established, and the assigned constructive trust claim is consistent with both the assigned conversion, breach of fiduciary duty and breach of contract claims, which the court deems are not void as against public policy, and the plaintiff's original conversion and misappropriation of funds claims against D.N.M. and its principals. Third, the consistency between the assigned constructive trust claim and other claims that the plaintiff may properly pursue demonstrates that the assignment would not result in a problematic role reversal. Finally, the plaintiff's pursuit of the assigned constructive trust claim would not result in excess recovery for reasons already discussed in parts II and III, supra. Therefore the court denies the defendant's motion for summary judgment on count five of the third revised third-party complaint.
VII. COUNT SIX: BREACH OF CONTRACT COUNT SEVEN: PROMISSORY ESTOPPEL
Connecticut courts generally look favorably upon the assignment of rights established by contract for reasons previously stated in part I, supra. "Under the law of contract, a promise is generally not enforceable unless it is supported by consideration . . . [The Supreme Court] has recognized, however, the development of liability in contract for action induced by reliance upon a promise, despite the absence of common-law consideration normally required to bind a promisor . . . Section 90 of the Restatement [(Second) of Contracts] states that under the doctrine of promissory estoppel [a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise." (Internal quotation marks omitted.) Stewart v. Cendant Mobility Services Corp., 267 Conn. 96, 104, 837 A.2d 736 (2003).
The plaintiff in the present case alleges in count six of the third revised third-party complaint that the defendant "contracted with Underwriters and Krar to take charge of, oversee and manage the handling of the Settlement Check" and committed a breach of such contract by virtue of the manner in which it handled the check. Alternatively, the plaintiff alleges in count seven that the defendant made a promise upon which it intended for Lloyd's and Krar to rely and upon which Lloyd's and Krar did rely detrimentally. The defendant in turn alleges that the assigned breach of contract claim sounds in tort. It has not specifically addressed the assigned promissory estoppel claim in its pleadings related to the present motion.
The defendant's classification of the assigned breach of contract claim is incorrect. An assignment of a contractual right may violate public policy when it is a right established by contract but asserted to recover an amount determined in accordance with an assignor's personal injury claim. See Yolda v. New London County Mutual Ins. Co., Superior Court, judicial district of Windham, Docket No. CV 06 5000227 (December 13, 2007, Booth, J.) ( 44 Conn. L. Rptr. 619). The plaintiff in the present case seeks, however, no such recovery by asserting the assigned breach of contract and promissory estoppel claims. Instead, as the court has already noted, the relief sought by the plaintiff with respect to the claims consists only of what it alleges to be its rightful share of the check's proceeds. The assignment of the claims is therefore proper under applicable precedent, and thus, the court denies the defendant's motion for summary judgment on counts six and seven of the plaintiff's third revised third-party complaint.
CONCLUSION
Accordingly, for the foregoing reasons, the court grants the defendant's motion for summary judgment on count three and denies the motion on counts two, four, five, six and seven of the plaintiff's third revised third-party complaint.