Flannery v. Singer Asset Fin. Co.
Decision Date | 24 June 2014 |
Docket Number | No. 18821.,18821. |
Citation | 94 A.3d 553,312 Conn. 286 |
Court | Connecticut Supreme Court |
Parties | John D. FLANNERY v. SINGER ASSET FINANCE COMPANY, LLC, et al. |
OPINION TEXT STARTS HERE
Thomas P. Willcutts, Hartford, for the appellant (plaintiff).
Eliot B. Gersten, with whom was Richard C. Robinson, Hartford, for the appellee (named defendant).
ROGERS, C.J., and NORCOTT, PALMER, ZARELLA, EVELEIGH, ESPINOSA and LAVINE, Js.*
This case concerns the availability of the continuing course of conduct doctrine to toll the statute of limitations on a claim of aiding and abetting a principal accused of breach of a fiduciary duty when the alleged aider and abettor has no special relationship with the injured party and engages in no subsequent wrongful behavior related to the original wrong. The plaintiff, John D. Flanery,1 appeals, upon our grant of his petition for certification,2 from the judgment of the Appellate Court affirming the trial court's rendering of summary judgment in favor of the defendant Singer Asset Finance Company, LLC.3Flannery v. Singer Asset Finance Co., LLC, 128 Conn.App. 507, 508–509, 17 A.3d 509 (2011). The plaintiff alleged that the defendant had aided and abetted the plaintiff's former attorneys in breaching their fiduciary duties to the plaintiff, and further, that the defendant's actions in this regard constituted a violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42–110a et seq. In response to the defendant's invocation of the applicable three year statutes of limitations,4 the plaintiff argued that, because the aiding and abetting claim alleged against the defendant was derivative of the breach of the fiduciary duty claims he had alleged against the attorneys, the limitations period should be tolled as to the defendant on the basis of a continuing course of conduct by the attorneys, even though the defendant itself owed no fiduciary duty to the plaintiff and did not engage in any further activities that would trigger tolling. After concluding for various reasons that tolling was inapplicable and, therefore, that the plaintiff's action was time barred, the trial court rendered summary judgment in favor of the defendant. The Appellate Court subsequently affirmed that judgment.
On appeal, the plaintiff contends that the Appellate Court improperly determined that: (1) his causes of action against the defendant were time barred because he failed to allege sufficient facts in his pleadings before the trial court to invoke the continuing course of conduct doctrine; and (2) under Fichera v. Mine Hill Corp., 207 Conn. 204, 541 A.2d 472 (1988), the continuing course of conduct doctrine does not apply to toll the statute of limitations set forth in CUTPA. The defendant contends otherwise and posits, as an alternative ground for affirming the judgment of the Appellate Court, that the undisputed facts in this case preclude the operation of the continuing course of conduct doctrine as a matter of law. We agree with the plaintiff that he sufficiently invoked the continuing course of conduct before the trial court. We agree with the defendant, however, that equitable tolling pursuant to that doctrine is not available on the undisputed facts of this case and, accordingly, we affirm the judgment of the Appellate Court.5
For purposes of the summary judgment proceedings and the subsequent appeal only, the following relevant facts and procedural history were not disputed by the parties.6 In 1988, the plaintiff won $3 million in the Iowa state lottery, to be paid in twenty annual installments of $150,000. The defendant then was engaged in the business of, inter alia, purchasing the installment payments of lottery winners by providing those winners with discounted lump sum payments. Prior to March, 1999, the defendant had contacted the plaintiff numerous times in unsuccessful attempts to convince him to sell his installment payments. At some point before March 23, 1999, the defendant formed a business relationship with Attorney Glenn MacGrady for the purpose of having MacGrady provide what was purported to be independent professional advice to lottery winners. The purportedly independent advice, however, was tainted by a conflict of interest. Specifically, MacGrady was acting at the behest of the defendant to induce lottery winners to sell their installment payments to it by falsely advising them that they could gain significant tax advantages.7 Consistent with this strategy, the defendant arranged for MacGrady to communicate with the plaintiff, deliver the misleading advice and attempt to induce him to sell his installment payments to the defendant.8
On March 23, 1999, the plaintiff entered into a retainer agreement with MacGrady's law firm, Pepe & Hazard, LLP (Pepe & Hazard), pursuant to which MacGrady and Pepe & Hazard agreed to represent the plaintiff in connection with the sale of his lottery installment payments. The retainer agreement executed by the plaintiff provided that the agreed upon scope of representation was limited to the sale transaction, and that the parties' attorney-client relationship would terminate upon completion of the services associated with the transaction and final billing for that work.9 In May, 1999, MacGrady and Pepe & Hazard signed an additional retainer agreement with the defendant, agreeing to provide it legal services in connection with its lottery purchase endeavors.10 On June 24, 1999, on the advice of MacGrady, the plaintiff executed a sale agreement whereby he agreed to sell his eight remaining installment payments, which would have totaled $1.2 million, to the defendant for a discounted lump sum payment of $868,500.
Following the June, 1999 lottery sale, the defendant had no further contact with the plaintiff. It no longer engaged in the lottery purchase business sometime in 2000 or 2001.11
On September 15, 1999, Pepe & Hazard sent the plaintiff a final bill for the services it had rendered, thereby terminating the attorney-client relationship. Thereafter, the plaintiff filed a 1999 tax return listing the full amount of the lump sum payment as the proceeds of a sale of a capital asset, paying only the capital gains tax rate on the amount received. In October, 2002, the Internal Revenue Service (IRS) notified the plaintiff that it did not agree with his treatment of the lump sum payment, and it concluded that the plaintiff owed a tax deficiency of $163,523.
At that time, the plaintiff contacted MacGrady, who no longer was employed by Pepe & Hazard. MacGrady continued to maintain the correctness of the tax advice, and encouraged the plaintiff to join a group of similarly situated lottery winners who also were challenging the IRS' treatment of their lump sum payments. MacGrady provided assistance to, and received a referral fee from, a Florida attorney who ran the tax appeal group. The plaintiff joined this group, which ultimately was unsuccessful with its appeal.
Throughout the entire time over which the foregoing events occurred, from 1999 through 2002, MacGrady never disclosed to the plaintiff his business relationship with the defendant. Moreover, the defendant did not disclose to the plaintiff its relationship with MacGrady.
On July 22, 2005, the plaintiff brought the present action, claiming, in relevant part, that the defendant's conduct amounted to (1) aiding and abetting in the breach of a fiduciary duty 12 by MacGrady,13 and (2) a violation of CUTPA.14 In its answer to the complaint, the defendant set forth two special defenses, namely, statutes of limitations and waiver. The plaintiff denied the special defenses and pleaded, by way of avoidance as to the statutes of limitations defenses, estoppel and fraudulent concealment. 15 After considerable discovery, the defendant filed a motion for summary judgment, which the plaintiff opposed. On June 30, 2009, the trial court granted the defendant's motion for summary judgment on the basis that the action was time barred.
Specifically, the trial court reasoned, the breach of the fiduciary duty alleged consisted of a conflict of interest, namely, MacGrady's dual representation of the plaintiff and the defendant. That dual representation ceased to exist, however, when Pepe & Hazard sent the plaintiff its final bill on September 15, 1999, more than three years prior to the plaintiff filing this action in 2005. According to the trial court, “[o]nce the [dual] representation ended any breach of fiduciary duty ended,” and, therefore, the statute of limitations, as to both MacGrady and the defendant, as an aider and abettor, began to run on September 15, 1999. The court reasoned additionally that, although MacGrady, as a fiduciary, had an obligation to disclose the dual representation to the plaintiff, the defendant, as a mere purchaser of the lottery payments, owed no such duty to the plaintiff. On the basis of similar reasoning, the trial court also found the plaintiff's claim of fraudulent concealment unavailing.
The trial court further found that the continuing course of conduct doctrine was inapplicable to toll the running of the statutes of limitations. According to the court, the plaintiff had failed to plead a continuing course of conduct in reply to the defendant's special defenses, and “[c]ontinuing course of conduct is a principle that is required to be specially pleaded.” Finally, the court held, the statute of limitations on the plaintiff's CUTPA claim was not subject to tolling pursuant to this court's decision in Fichera v. Mine Hill Corp., supra, 207 Conn. at 204, 541 A.2d 472.
The plaintiff appealed from the judgment of the trial court to the Appellate Court claiming, inter alia, that the trial court improperly determined that the three year statutes of limitations for his aiding and abetting the breach of a fiduciary duty and CUTPA claims; see footnote 4 of this opinion; were not tolled by the continuing course of conduct doctrine.16Flannery v. Singer...
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