Opinion
No. X06 CV-00-0158331-S
June 18, 2003
The Modzelewski and White defendants owned a commercial condominium property located in Southbury, Connecticut, consisting of approximately 2,000 square feet of office space, which was rented in 1996 by the plaintiff William Raveis Real Estate, Inc. (Raveis), and used as its Southbury real estate office. The defendants Ann Modzelewski and Gordon White also worked as real estate sales agents for Raveis from 1996 until December 13, 1999.
The lease on the commercial condominium was for a term commencing November 6, 1996 to November 5, 1999. The lease included a renewal option for two separate and successive extended terms, which options could be exercised by the tenant (Raveis) notifying the landlord in writing at least 6 months prior to the expiration of the then current term. This provision in the lease would have required Raveis to notify the Modzelewskis and Whites no later than May 5, 1999 of its intention to renew the lease for the extended period. Written notice was not provided until November 30, 1999, which was received by the landlord on December 4, 1999. The landlord rejected the notice of renewal as untimely and contracted to sell the premises to a third party, the defendant William Pitt Real Estate Limited Partnership (Pitt), a direct competitor of Raveis. The defendants Ann Modzelewski and Gordon White commenced employment with Pitt as sales agents on or about December 14, 1999, after their resignation from Raveis.
The Modzelewskis and Whites initiated a summary process action to evict Raveis from the property. This action, docket number CV 00 0158330 S, was transferred from the housing court to the complex litigation docket to be considered together with the instant action.
In its response to the summary process case, Raveis asserted several equitable defenses as well as a counterclaim seeking a declaratory judgment of constructive or actual notice. The counterclaim alleged that Gordon White and Ann Modzelewski were fiduciaries of Raveis because the Whites and Modzelewskis had constructive notice of Raveis' intent to renew the lease. On February 4, 2000, the Whites and Modzelewskis filed a motion to dismiss the counterclaim, which was granted by the court on March 1, 2000. On May 12, 2000, the Modzelewskis and Whites filed a motion for summary judgment in the summary process case, which was granted by the court in a memorandum of decision dated August 26, 2000.
Raveis appealed both the dismissal of the counterclaim and the entry of summary judgment. The appellate court in Modzelewski v. William Raveis Real Estate, Inc., 65 Conn. App. 708 (2001), upheld both judgments. The decision notes at 65 Conn. App. 714-15 that the delay by Ravies (over 6 months) in exercising its option to extend the lease could not be considered slight under Tartaglia v. RAC Corp., 15 Conn. App. 492, 545 A.2d 573, cert. denied, 209 Conn. 810, 548 A.2d 443 (1988). Accordingly, the appellate court affirmed the denial of equitable relief.
In this case, Raveis' fifth amended complaint asserts a claim against all defendants for violation of the Connecticut Unfair Trade Practices Act (count eight), and against Ann Modzelewski and Gordon White for breach of duties (count eleven). The Modzelewskis and Whites have moved for summary judgment on these two counts remaining against them. Raveis has opposed the motion and has moved for partial summary judgment against these defendants.
The CUTPA claim is based on the statutory provision of General Statutes § 42-110b (a): "No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." In determining what constitutes a violation of CUTPA, it has been held that "courts must apply the so-called cigarette rule, which asks (1) [w]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law or otherwise — whether, in other words, it is within at least the penumbra of some common law, statutory or other established concept of unfairness; (2) whether it is immoral; unethical, oppressive or unscrupulous; (3) whether it causes substantial injury to consumers (competitors or other businessmen . . ." (Citations omitted; internal quotation marks omitted.) Larson Chelsey Realty Co. v. Larson, 232 Conn. 480, 507, 656 A.2d 1009 (1995).
In its memorandum of law in support of its motion for partial summary judgment in opposition to the motion for summary judgment by the Modzelewski and White defendants, Raveis asserts (at pages 33-34) its factual claims as to the liability of these defendants:
Ann Modzelewski and Gordon White anticipated moving their jobs to a competitor of Raveis, Pitt. In preparation for the switch, and without notifying Raveis, they engaged in a concerted plan to benefit themselves and the Pitt Defendants at Raveis' expense . . . Ann Modzelewski and Gordon White acted in concert with the Pitt Defendants for the purpose of securing lucrative financial benefits for themselves and to provide Pitt with Raveis Southbury office space. Additionally, Giordano, Modzelewski and White solicited other Raveis agents for the purpose of staffing Pitt's new Southbury operation, providing Pitt with listings and crippling Raveis' business. These acts were disloyal, outside the scope of the defendants' employment or association with Raveis, and deprived Raveis of a fair opportunity to compete for the Southbury Condominium or its agents. Consequently, there can be no question that these acts satisfy the "cigarette rule" criteria and constitute unfair trade practices in violation of CUTPA.
It should be noted that the issues relating to the exercise of the option to renew the lease were resolved by the court in its memorandum of decision filed March 28, 2001, as to counts nine (declaratory judgment) and ten (estoppel) of the Raveis then operative complaint. In that decision, the court held:
The defendants' motion for summary judgment having been heard and considered, is hereby granted.
On the merits of the claims relating to the lease renewal, see the court's decision of August 28, 2000, the matter of Ann Modzelewski v. William Raveis Real Estate, Inc., Docket Number X06 CV 00 0158330 S. The fiduciary claim is insufficient as a matter of law to establish fiduciary responsibilities for the Modzelewski and White defendants with respect to the lease renewal. See Hi-Ho Tower Inc. v. Com-Tronics, Inc. et al., 255 Conn. 20, 41 (2000).
At a hearing held on June 10, 2002, concerning the Modzelewski and White's objection to the request to amend the plaintiff's complaint, counsel for Raveis stated for the record that Raveis had abandoned the lease and lease-related issues as a basis for its claims against the defendants. In view of the court's earlier rulings on the lease renewal issue and the judicial admissions; see Kopacz v. Day Kimball Hospital of Windham County, Inc., 64 Conn. App. 263, 271-72, 779 A.2d 862 (2001); the court will not address any reference to the lease renewal issue in the plaintiff's briefs.
At the June 10, 2002, the following colloquy occurred between the court and counsel for Raveis: "The Court: Let me just ask you this one — one point. Are you — are you still pursuing the — the — breach of duty as to the lease? Mr. Albrecht: No. The Court (continuing): On the property? You're not doing that. Mr. Albrecht: I am not pursuing that. The Court: That's out of the case? Mr. Albrecht: We disposed of that . . . The Court: Alright, so Mr. Finn (counsel for the defendants Modzelewski and White) with that understanding that we're not talking about the fiduciary duty as to the leasing agreement, it's just with respect to the question: Did they breach any duty to the real estate firm by leaving it and going to the other firm? Mr. Finn: I understand that now, your honor . . . In light of counsel's comments that he will not be pursuing any of the lease renewal issues, I will not withdraw my objection, but defer to the court on that issue . . . The Court: [W]hy don't you talk about that so that it's clear that we're all clear that it's you know, that we're not talking about that other issue. What we're talking about is the issue of the, you know, leaving one firm and joining another and — Mr. Albrecht: And — And while they were in the employ of one firm, making an agreement to solicit their employees for a new firm. I mean, that's the — the gravamen of the claim. Mr. Finn: Your honor, I don't believe that's pled in the new count. I don't want to address those issues now. I think that's an evidentiary issue, but I believe that — Mr. Albrecht: It says that they agree they would resign and join Pitt sales — they would assist Pitt in soliciting Raveis Southbury agents and that agreement was made secretly."
The removal of the lease renewal issue resolves any claims with respect to the defendants Lenora White and Theodore Modzelewski. They were part owners of the commercial condominium and spouses of the sales agent defendants. There are no factual assertions of any kind alleged in the opertive complaint with respect to Lenora White and Theodore Modzelewski other than their ownership of the condominium. A landlord bears no fiduciary responsibility. See Hi-Ho Tower, Inc. v. Com-Tronics, Inc. et al, 255 Conn. 20, 41, 761 A.2d 1268 (2000). "The law will imply [fiduciary responsibilities] only where one party to a relationship is unable to fully protect its interests . . ." (Citations omitted; internal quotation marks omitted.) Id., 41.
The plaintiff's CUTPA claim against Gordon White and Ann Modzelewski is undercut by the January 9, 2001 deposition testimony of the Raveis representative Mary Ann Evick. Ms. Evick testified that the real estate sales agents were employed "at will" and had the right to terminate their employment at any time, just as Raveis had the right to terminate their employment at any time. Ms. Evick also testified about an incident occurring in 1999, in Trumbull, Connecticut, with respect to the Raveis recruitment of a Ken Martin, who owned a real estate office and who, with approximately 10 other real estate sales persons, worked as a real estate agent for DeWolfe Real Estate Company. Raveis recruited Mr. Martin, who then ceased his affiliation with DeWolfe, and he and 5 or 6 of the other approximately 10 persons located in that office joined Raveis. What had been the DeWolfe office and DeWolfe staff became in very short order the Raveis staff and Raveis office at the same location in Trumbull, Connecticut. In addition to confirming the factual situation of the Ken Martin scenario, Ms. Evick acknowledged that such solicitation of another real estate office's agents was commonly done in the real estate industry.
Raveis cites the decision in Custard Insurance Adjusters v. Nardi, Superior Court, judicial district of Waterbury, Docket No. 162270 (February 23, 2001, Rogers, J.), as finding a breach of fiduciary duty and CUTPA violation in an employment situation. The facts in Custard Insurance v. Nardi are clearly distinguishable from this case. Mr. Nardi was in an executive/managerial position and an officer of the plaintiff. He had an employment contract containing a non-compete clause. He actively solicited his co-employees to work for a competitor while still employed by Custard. He made misleading and false statements to his co-employees to entice them to join the competitor. While still employed by Custard, he contacted its customers and inquired of their desire to terminate their relationship with Custard and join the competitor. Ann Modzelewski and Gordon White were not in managerial or executive positions with Raveis. There is no evidence that they solicited other Raveis employees while employed with Raveis.
Similarly, there are no factual assertions to support the claim that White and Modzelewski did anything specifically to disrupt Raveis' relationships with its customers or sales agents. White and Modzelewski resigned from their association with Raveis on December 13, 1999. On December 14, 1999, they attended a conference where they, along with other Raveis sales agents, were solicited by Pitt. There is no evidence that Pitt misstated any information about Raveis or the status of its lease.
Raveis in its opposition papers asserts with respect to its claimed breach of "common law duties of faithfulness, honesty and loyalty" that:
[w]hile still acting as Raveis' agents, Modzelewski and White conspired with Giordano and the Pitt Defendants to secure beneficial association for themselves as Pitt agents and supplant Raveis in the Southbury real estate market. In furtherance of the defendants' plan, Modzelewski and White disclosed sensitive information about Raveis' lease to Pitt, and they surreptitiously negotiated an agreement for Pitt, a competitor of Raveis, to purchase the Southbury Condominium while they were still associated with Raveis. Although Modzelewski and White knew or had reason to know that Raveis intended to stay in the Southbury Condominium and would want to renew its lease, they failed to inform Raveis of the lease expiration or otherwise after Raveis an opportunity to negotiate for the lease. These acts and omissions by Modzelewski and White, while they were still Raveis agents, were disloyal and anti-competitive and constituted a breach of their fiduciary duty to exercise the utmost good faith, loyalty and honesty toward Raveis.
Raveis brief dated October 11, 2002, pages 22-23.
The claims with respect to the lease renewal have previously been addressed and pursuant to plaintiff's counsel are not part of this case. The argument about the sale of the condominium to Pitt is disingenuous because there is no dispute that Raveis was not interested in purchasing the condominium. There is also no dispute that the Modzelewskis and Whites wanted to sell the condominium. There is no legal basis for claiming that the Modzelewskis and Whites were obliged to advise Raveis that they wished to sell their condominium, or otherwise advise Raveis when it failed to exercise its lease renewal option. A right of first refusal is something that is negotiated and contracted for; it is not implied in an at-will sales agent relationship or by landlord/tenant status.
The motion for summary judgment filed on behalf of Ann Modzelewski, Theodore Modzelewski, Lenora White and Gordon White (#169) is granted. The motion by Raveis for summary judgment as to these defendants (#172) is denied.
Judgment enters for the defendants Ann Modzelewski, Theodore Modzelewski, Lenora White and Gordon White.
Robert F. McWeeny, J.