Gould v. Mellick & Sexton

• Decision Date: 15 April 2003
• Docket Number: (SC 16659)
• Citation: 819 A.2d 216,263 Conn. 140
• Court: Connecticut Supreme Court
• Parties: ROGER GOULD ET AL. v. MELLICK AND SEXTON. NORMAN KEITH ET AL. v. MELLICK AND SEXTON.

263 Conn. 140

819 A.2d 216

ROGER GOULD ET AL. v. MELLICK AND SEXTON.

NORMAN KEITH ET AL. v. MELLICK AND SEXTON.

(SC 16659)

Supreme Court of Connecticut.

Argued December 6, 2002.

Officially released April 15, 2003.

Sullivan, C. J., and Katz, Palmer, Vertefeuille and Zarella, Js.¹ David J. Robertson, for the appellant (defendant).

Robert B. Cohen, with whom were Julia B. Morris and, on the brief, Steven H. Solomson, for the appellees (plaintiffs).

Jack G. Steigelfest, Claudia Baio and Constance Epstein filed a brief for the Connecticut Defense Lawyers Association as amicus curiae.

Opinion

SULLIVAN, C. J.

The defendant, the law firm Mellick and Sexton, appeals, following our grant of certification,² from the judgment of the Appellate Court reversing the trial court's grant of summary judgment in favor of the defendant and against the plaintiffs,³ individual investors in a real estate development partnership. We conclude that the Appellate Court improperly reversed the trial court's judgment. Accordingly, we reverse the judgment of the Appellate Court.

In their complaints, the plaintiffs⁴ have alleged the following facts. The plaintiffs purchased limited partnership interests in Wildomar Square Associates Limited Partnership (Wildomar), the purpose of which was to develop thirty-two acres of real property in Rancho California, California. The defendant served as legal counsel to Wildomar and, in that capacity, drafted various documents relating to Wildomar. These documents included, inter alia, a private placement memorandum, various preliminary summaries of the offering, a tax opinion, a securities compliance opinion and an escrow agreement.

Wildomar planned to sell forty-five limited partnership interests (units) for $100,000 each and reserved the right to sell half units. The purchaser of each unit was to pay $10,000 in cash and deliver to the partnership a promissory note in the amount of $90,000. Purchasers of half units were to pay $5000 in cash and deliver promissory notes in the amount of $45,000. These funds were held by the escrow agent, Mechanics and Farmers Savings Bank, FSB. Pursuant to the private placement memorandum, all cash payments and promissory notes were to be held in escrow until such time as the partnership and the defendant authorized the escrow agent to release the funds.

The private placement memorandum provided that the partnership would use the promissory notes as collateral to obtain a loan in the amount of $4,050,000, an amount equal to the aggregate face value of the notes. Owing to its inability to obtain a loan in this amount, the partnership had insufficient funds to carry out its objectives. As a result, the plaintiffs lost their entire investment.

The plaintiffs filed two separate actions against the defendant that were later consolidated and transferred to the complex litigation docket of the Superior Court. The complaint in each action contained three counts, one under the Connecticut Uniform Securities Act, General Statutes § 36b-29, one in negligence and one in contract. The plaintiffs' negligence claim alleged that the defendant violated a duty of care owed to them by, inter alia, failing to inform them of misrepresentations and omissions in the private placement memorandum, failing to inform them of material changes in circumstances that occurred after the private placement memorandum was issued, and permitting funds invested by the plaintiffs to be released from escrow in alleged violation of the terms and conditions of that memorandum. In support of their claim in contract, the plaintiffs alleged that the defendant "breached its obligations under the Escrow Agreement." The plaintiffs further alleged that they were intended third-party beneficiaries of that agreement, and that "[t]he purpose of the Escrow [agreement] was to protect the Plaintiffs from the release of the Notes and the proceeds unless all of the conditions of the Offering were met, including that the [private placement] Memorandum truly, fully and accurately stated the then present status and prospects of the Offering at the time the Plaintiffs' subscriptions were accepted and the Partnership closing occurred."

After the two actions were consolidated and transferred to the complex litigation docket, the parties filed cross motions for summary judgment. In support of its motion for summary judgment on the contract claim, the defendant submitted an affidavit of one of its partners stating that "subscription payments for all of the units had been received by or for the account of the limited partnership" prior to his authorizing the escrow agent to release the funds to the partnership, and that, therefore, all conditions of the escrow agreement had been met. The plaintiffs did not file a counteraffidavit disputing this assertion.

The trial court denied the plaintiffs' motion for summary judgment and granted the defendant's motion for summary judgment with regard to all three counts. Specifically, the trial court concluded that the plaintiffs' statutory claim was barred by the statute of limitations, that the defendant was not liable in negligence to the plaintiffs because it owed them no duty of care, and that the defendant was not liable to the plaintiffs for alleged breach of its obligations under the escrow agreement because it was not a party to that agreement. The trial court further concluded, with respect to the contract count, that the contract did not support the claim as a matter of law even if the defendant had been a party to it. In their appeal to the Appellate Court, the plaintiffs did not challenge the trial court's ruling against them on the statutory claim, but they challenged that court's rulings against them with regard to the other two counts.

The Appellate Court ordered the parties to submit supplemental briefs addressing the following question: "`Did the trial court have the authority to render summary judgment under the circumstances of this case? See Practice Book §§ 17-44 through 17-50.'" Gould v. Mellick & Sexton, 66 Conn. App. 542, 551, 785 A.2d 265 (2001). The Appellate Court concluded that, "[b]ecause these appeals concern complicated financial transactions, the interpretation of various documents, the intent and motives of the parties as well as an issue of public policy, the trial court should not have resolved the dispute by means of summary judgment. Furthermore, our review of the documents and the court's memorandum of decision reveals that the court went beyond determining whether there were genuine issues of material fact and actually decided certain factual issues." Id., 557. The Appellate Court therefore reversed the judgment as to both the negligence and contract counts. Id. We granted the defendant's petition for certification to appeal, limited to the following issue: "Did the Appellate Court properly conclude that the trial court lacked authority to render summary judgment because: (1) the case was complex; and (2) there were disputed questions of facts?" Gould v. Mellick & Sexton, 259 Conn. 902, 789 A.2d 990 (2001).

I

We first address the defendant's claim that the Appellate Court improperly reversed the trial court's rendering of summary judgment with regard to the count sounding in contract. We agree with the defendant. "The standard of review of a trial court's decision granting summary judgment is well established. Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the 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. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.... The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law.... Our review of the trial court's decision to grant the defendant's motion for summary judgment is plenary." (Citations omitted; internal quotation marks omitted.) LaFlamme v. Dallessio, 261 Conn. 247, 250, 802 A.2d 63 (2002).

In its opinion, the Appellate Court stated that "[s]ummary judgment should not be used in cases that are complex"; Gould v. Mellick & Sexton, supra, 66 Conn. App. 556; and that "[t]he simple fact that these cases were consolidated on the complex litigation docket might have given the parties some indication that the claims were not appropriate for summary judgment." Id., 556 n. 15. The Appellate Court's opinion cites Miller v. United Technologies Corp., 233 Conn. 732, 752, 660 A.2d 810 (1995), for the proposition that summary judgment "should not be used in cases that are complex." Gould v. Mellick & Sexton, supra, 556. In Miller, we stated: "We note that summary judgment is not well suited to the disposal of complex cases ... and that this case presents an extraordinarily technical and multifarious factual labyrinth. Thus, in order to decide whether the trial court improperly concluded as a matter of law that [summary judgment was appropriate], we must go deeper into the labyrinth to find the Minotaur." (Citation omitted.) Miller v. United Technologies Corp., supra, 752. In Miller, we cited United Oil Co. v. Urban Redevelopment Commission, 158 Conn. 364, 375, 260 A.2d 596 (1969), in which we stated that "[summary judgment] is ... apt to be ill adapted to cases of a complex nature...." Miller v. United Technologies Corp., supra, 752. Although we recognized in these opinions that, in complex cases, it may be more difficult to determine in advance of trial whether there exist any disputes regarding material facts, the opinions do not stand for the proposition that summary judgment is inappropriate in complex cases where the absence of disputes regarding material facts can be established. Succinctly stated, as a matter...