Harp v. King

• Decision Date: 09 December 2003
• Docket Number: (SC 16759)
• Citation: 835 A.2d 953,266 Conn. 747
• Court: Connecticut Supreme Court
• Parties: WENDELL C. HARP v. GARY E. KING ET AL.

266 Conn. 747

835 A.2d 953

WENDELL C. HARP v. GARY E. KING ET AL.

(SC 16759)

Supreme Court of Connecticut.

Argued October 25, 2002

Officially released December 9, 2003

Sullivan, C. J., and Borden, Katz, Palmer and Pellegrino, Js. Charles D. Ray, with whom were Ingrid L. Moll, John R. Williams and, on the brief, Vanessa D. Roberts, for the appellant (plaintiff).

Nicole Fournier, with whom, on the brief, was Hugh F. Keefe, for the appellees (named defendant et al.).

David M. Sheridan, with whom, on the brief, was John F. Droney, Jr., for the appellee (defendant Vincent J. Flynn).

Linda L. Yoder, with whom, on the brief, was Sheila A. Huddleston, for the appellee (defendant Regina Rentz).

Opinion

PALMER, J.

The plaintiff, Wendell C. Harp, an African-American real estate developer and architect who owns and manages seven low and moderate income housing developments¹ financed by the Connecticut Housing Finance Authority (CHFA),² appeals³ from the judgment of the trial court rendered in favor of the defendants, Gary E. King, Vincent J. Flynn, Lawrence C. Pilcher and Regina Rentz, who are all employees of CHFA. The plaintiff initiated this action against the defendants alleging, inter alia, that, during the course of the defendants' employment with CHFA, they jointly agreed: (1) to defame him; (2) to place him in a false light in violation of his right to privacy; (3) to interfere tortiously with his business expectancies; and (4) intentionally to cause him emotional distress.⁴ The trial court, Devlin, J., granted the defendants' motions for summary judgment, concluding, inter alia, that the plaintiff was barred, under the intracorporate conspiracy doctrine,⁵ from maintaining his claims against the defendants.⁶

On appeal, the plaintiff maintains that the trial court improperly granted the defendants' motions for summary judgment. In support of his claim, the plaintiff contends that: (1) the trial court improperly concluded that two internal CHFA memoranda are protected by the attorney-client privilege even though those documents inadvertently were disclosed to the plaintiff; (2) the trial court improperly determined that the plaintiff's claims were barred by the intracorporate conspiracy doctrine even though the plaintiff has not alleged a conspiracy; and (3) even if the intracorporate conspiracy doctrine prohibits him from maintaining his other claims, it does not apply to his claim of tortious interference with business expectancies. We conclude that the trial court properly granted the defendants' motions for summary judgment and, accordingly, affirm the judgment of the trial court.

The record reveals the following pertinent facts. The plaintiff owns seven low and moderate income housing developments (developments), six of which are located in New Haven and one of which is located in Ansonia. The developments are managed by Renaissance Management Company (Renaissance), an entity wholly owned by the plaintiff.⁷ From 1980 to 1991, CHFA loaned the plaintiff a total of approximately ten million dollars for the construction of those developments. At all times relevant to this appeal, King was the president and executive director of CHFA. Flynn and Pilcher each served as assistant counsel to CHFA and Regina Rentz was an internal auditor for CHFA.

Beginning in or around 1991, the developments began to encounter some financial instability. By 1994, several of the developments did not generate enough income to meet expenses. The plaintiff addressed the shortfall by loaning the developments in excess of one million dollars. Nonetheless, all mortgage payments were made to CHFA in a timely manner.

Although it is not disputed that the developments were in financial distress, the parties disagree as to the cause of the problem. The plaintiff claims that the financial difficulties stemmed from circumstances beyond his control. The primary reasons that the plaintiff offered for those problems include the following: (1) the developments are not located in one discrete area but, rather, comprise thirty-two buildings scattered throughout New Haven and Ansonia,⁸ thereby making them particularly expensive to operate and maintain; (2) the operating budgets of the developments were inadequate because of a high fixed debt-to-income ratio; and (3) the interest rates on the loans on the plaintiff's developments were appreciably higher than the rates paid by other developers of similar housing financed by CHFA.⁹ By contrast, CHFA and the defendants contended that the relatively poor financial condition of the developments was due in large part to mismanagement by the plaintiff and Renaissance.

In January, 1995, the plaintiff requested that CHFA agree to restructure the financing of four of the seven developments. Specifically, he asked CHFA for a reduction in the interest rate on the loans on those developments or, alternatively, for an extended term within which to satisfy the loans, thereby reducing his monthly debt service obligation. Although CHFA had the discretion to restructure loans, CHFA also maintained a policy against any such restructuring if, in its opinion, the need for restructuring was due to mismanagement of the development.

CHFA performed financial audits and management reviews of all seven developments in connection with the plaintiff's request to restructure the loans. In particular, Rentz performed a detailed audit and review of the developments for fiscal year 1994 and for the first six months of 1995.¹⁰ Upon conclusion of her evaluation of the developments, Rentz submitted two reports to King, dated June 5, 1995, and August 4, 1995, in which she expressed concern about the accounting methods used to document certain expenses. Rentz also questioned whether the plaintiff was overcharging the developments for goods and services.

Joseph L. Marsan, CHFA's asset manager, also expressed concerns regarding the management of the developments in a July 6, 1995 memorandum to Bruce H. Perry, CHFA's vice president of asset management and loan servicing.¹¹ In that memorandum, Marsan characterized the management of the developments as "ineffective," and described Renaissance as "financially unstable . . . ." Marsan also observed that the developments were being subject to "systematic and deliberate overcharging" for services rendered by other entities controlled by the plaintiff. In addition, Marsan concluded that the physical condition of the developments was "deteriorating at an alarming rate . . . ." Finally, Marsan recommended that Renaissance be terminated immediately as the managing agent for two of the developments.

Neither Rentz' audit reports nor Marsan's memorandum was disclosed to the plaintiff. In fact, in her August 4, 1995 report to King, Rentz wrote that "none of the findings noted in this or the previous report ha[s] been discussed with [the plaintiff]. This was done so that [the plaintiff] would not have the opportunity to take actions harmful to CHFA's interests prior to a . . . decision on a plan of action [by the board of directors]." The report goes on to state, however, that the plaintiff should be afforded an opportunity to respond to the findings, but "only after [CHFA] consult[s] with counsel."

The plaintiff disputes the fairness and accuracy of Rentz' audit reports and Marsan's memorandum. He notes, for example, that: (1) a memorandum written by Rentz to King indicates that her audit of the developments uncovered no financial improprieties, and only one invoice of $58 could not be verified; (2) in February, 1995, King approved the plaintiff's request for a loan from certain escrow funds after concluding that "[t]he annual budget and operating expenses of the [plaintiff's] development[s] [were] adequately accounted for," and, further, that "[t]he physical condition of the [developments] [was] satisfactory"; (3) an accounting firm conducted an independent audit of the developments and concluded that the "amounts charged to [each of the developments from 1995 through 1998] were reasonable";¹² (4) the accounting firm also reported no "material findings" as to either the internal controls utilized by the plaintiff or his compliance with the programs and guidelines of the federal Department of Housing and Urban Development (HUD); (5) two former CHFA employees, including King's predecessor, Orest T. Dubno, stated that the developments were in "good" or "relatively good" condition during their tenure at CHFA; (6) the developments had received no citations or notices of building code violations; and (7) previous inspections by CHFA personnel working under the supervision of independent property evaluators hired by CHFA contradict Marsan's opinion that the developments were in poor physical condition.

In response to the plaintiff's refinancing request, CHFA contracted with an independent property management consultant, Rockwell Management Group, Inc. (Rockwell), to assist in reviewing the management procedures and systems employed by Renaissance. On August 16, 1995, Rockwell submitted a preliminary report to CHFA in which it highlighted certain deficiencies in those areas.

On August 29, 1995, the board of directors of CHFA passed a resolution, in response to the plaintiff's request for loan restructuring, directing CHFA personnel to draft and implement a "supplemental management agreement" concerning the plaintiff's developments within thirty days. The resolution also directed CHFA's asset management staff to set performance standards for the developments. Finally, the resolution further required that Renaissance correct the maintenance deficiencies in the developments within seven months.

On September 30, 1995, Rockwell submitted its final report regarding the management of the developments. The report recommended certain changes to enable Renaissance to function more efficiently. Although some of the conclusions in the report were positive,¹³ the overall conclusion was that, "if...