Flannery v. Singer Asset Fin. Co.

• Decision Date: 24 June 2014
• Docket Number: SC18821
• Court: Connecticut Supreme Court
• Parties: FLANNERY v. SINGER ASSET FINANCE COMPANY, LLC

FLANNERY v. SINGER ASSET FINANCE COMPANY, LLC

SC18821

Supreme Court of Connecticut

Dated: June 24, 2014

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NORCOTT, J., with whom EVELEIGH and ESPINOSA, Js., join, dissenting. I respectfully disagree with part II of the majority's opinion,¹ which concludes that the claims of the plaintiff, John D. Flanery,² alleging that the defendant, Singer Asset Finance Company, LLC,³ aided and abetted the plaintiff's attorney in the breach of his fiduciary duty and violated the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., were time barred on the admitted or undisputed facts of this case. Accordingly, the majority affirms the judgment of the Appellate Court upholding the trial court's grant of the defendant's motion for summary judgment. See Flannery v. Singer Asset Finance Co., LLC, 128 Conn. App. 507, 518, 17 A.3d 509 (2011). In my view, the plaintiff adduced sufficient evidence to raise a genuine issue of material fact that the continuing course of conduct doctrine was available to toll the statute of limitations because: (1) that doctrine tolled the running of the applicable three year statute of limitations, General Statutes § 52-577,⁴ against Glenn MacGrady, the attorney who had breached his fiduciary duties while representing the plaintiff during the sale of his lottery winnings to the defendant in exchange for a lump sum payment; and (2) the defendant had aided and abetted MacGrady's breach of that fiduciary duty, thereby rendering the continuing course of conduct toll applicable to the aiding and abetting claims against the defendant. I further agree with the plaintiff that the Appellate Court improperly relied on this court's decision in Fichera v. Mine Hill Corp., 207 Conn. 204, 541 A.2d 472 (1988), to conclude that, as a matter of law, the continuing course of conduct doctrine does not apply to the three year CUTPA statute of limitations, General Statutes § 42-110g (f).⁵ Because the plaintiff is entitled to a trial on these issues, I would reverse the judgment of the Appellate Court holding to the contrary. Accordingly, I respectfully dissent.

I

AIDING AND ABETTING CLAIMS

I begin by noting my agreement with the majority's statement of the relevant facts and procedural history, which I need not repeat here. By way of background, the defendant claims that the continuing course of conduct doctrine is inapplicable because it individually did not engage in any subsequent acts with respect to the plaintiff after the closing of the lottery winnings sale in September, 1999, and, further, lacked the requisite "special relationship" with him, in contrast to his fiduciary attorney-client relationship with MacGrady, the attorney who represented the plaintiff during the transaction. Relying heavily on a New York decision, Kaufman v. Cohen, 307 App. Div. 2d 113, 760 N.Y.S.2d 157 (2003),the defendant contends that the attorney-client fiduciary relationship between MacGrady and the plaintiff should not be attributed to it for purposes of tolling the statute of limitations, despite the derivative nature of the plaintiff's aiding and abetting claim against the defendant. Finally, the defendant contends that, even if the fiduciary relationship between MacGrady and the plaintiff is attributed to it as an aider and abettor, under Lee v. Brenner, Saltzman & Wallman, LLP, 128 Conn. App. 250, 15 A.3d 1215, cert. denied, 301 Conn. 926, 22 A.3d 1277 (2011), and Sanborn v. Greenwald, 39 Conn. App. 289, 664 A.2d 803, cert. denied, 235 Conn. 925, 666 A.2d 1186 (1995), the attorney-client relationship between MacGrady and the plaintiff ended after the closing of the sale in 1999, and MacGrady's act of referring the plaintiff to another attorney for defense following the issuance of a tax deficiency by the Internal Revenue Service (IRS) in 2002 did not constitute a continuing course of conduct for purposes of tolling the statute of limitations.

In response, the plaintiff relies upon Anderson v. Pine South Capital, LLC, 177 F. Supp. 2d 591, 604 (W.D. Ky. 2001), for his argument that "the liability of one who aids and abets a fiduciary in breaching their fiduciary duty is not only derivative of the fiduciary's duty, but also coextensive with the liability of the fiduciary, including as to the application of limitations defenses." In his reply brief, the plaintiff then contends that the New York decision in Kaufman is factually distinguishable and, further, stands for the proposition that, because the plaintiffs' allegations in that case against the aiders and abettors "were insufficient to support the claim that . . . [they] actively support[ed] [the fiduciary's] scheme, the only way that limitations could be tolled as to those defendants would be if they owed independent and direct fiduciary duties to the plaintiffs," similar to the fiduciary. The plaintiff then cites evidence in the record to contrast with Kaufman, including the defendant's telephone logs and sales notes documenting the defendant's attempt to woo the plaintiff, which demonstrates the defendant's active role in aiding and abetting MacGrady's breach of his fiduciary duty, thereby rendering MacGrady's continuous course of conduct during and after the legal representation attributable to the defendant. The plaintiff further cites the deposition testimony of Stephen Hazard, the managing partner of Pepe & Hazard, LLP (Pepe & Hazard), MacGrady's employer, and rule 1.7 of the Rules of Professional Conduct,⁶ in support of the proposition that MacGrady's unsatisfied obligation to disclose his conflict of interest continued indefinitely past the conclusion of his retained representation of the plaintiff, which created a continuing duty under which the statute of limitations was extended as to MacGrady; that extension was imputed to the defendant. I agree with the plaintiff, and conclude that there is sufficient evidenceto create a genuine issue of material fact as to whether the continuous course of conduct doctrine tolled the running of the statute of limitations on his claim that the defendant had aided and abetted the breach of a fiduciary duty owed to him by MacGrady, his attorney.

A

Background Legal Principles

In the context of the summary judgment motion that forms the basis for this appeal, the "question of whether a party's claim is barred by the statute of limitations is a question of law, which this court reviews de novo." (Internal quotation marks omitted.) Watts v. Chittenden, 301 Conn. 575, 582,22 A.3d 1214 (2011). Beyond the well established general standard for granting summary judgment; see, e.g., Zielinski v. Kotsoris, 279 Conn. 312, 318-19, 901 A.2d 1207 (2006); as the majority aptly notes, this court has recently held that, "in the context of a motion for summary judgment based on a statute of limitations special defense, a defendant typically meets its initial burden of showing the absence of a genuine issue of material fact by demonstrating that the action had commenced outside of the statutory limitation period. . . . When the plaintiff asserts that the limitations period has been tolled by an equitable exception to the statute of limitations, the burden normally shifts to the plaintiff to establish a disputed issue of material fact in avoidance of the statute." (Citation omitted.) Romprey v. Safeco Ins. Co. of America, 310 Conn. 304, 321, 77 A.3d 726 (2013).

The statute of limitations issue in this appeal is informed by the derivative nature of the plaintiff's claim that the defendant aided and abetted MacGrady in the breach of his fiduciary duty; the viability of the aiding and abetting claim is intertwined with that of the underlying cause of action. See, e.g., Efthimiou v. Smith, 268 Conn. 499, 504-505, 846 A.2d 222 (2004) (concluding in aiding and abetting case that plaintiffs were collaterally estopped from relitigating underlying finding in related case with respect to breach of fiduciary duty). In Efthimiou, this court quoted Halberstam v. Welch, 705 F.2d 472, 477 (D.C. Cir. 1983), for the elements of the aiding and abetting tort, namely: "(1) the party whom the defendant aids must perform a wrongful act that causes an injury; (2) the defendant must be generally aware of his role as part of an overall illegal or tortious activity at the time that he provides the assistance; [and] (3) the defendant must knowingly and substantially assist the principal violation . . . ." (Internal quotation marks omitted.) Efthimiou v. Smith, supra, 505.

Because of the derivative nature of the cause of action, if the underlying claim for aiding and abetting the breach of a fiduciary duty is time...