Opinion
No. DBCV-10-5008825-S
April 29, 2011
RULING ON MOTION FOR SUMMARY JUDGMENT (#120.00)
The plaintiff, Lisa Bruno, commenced this action by summons and complaint dated August 26, 2010, against the defendants, Bruce Geller, Dalton Greiner Hartman Maher Co., LLC (DGHM) and Boston Private Financial Holdings, Inc. (BPFH), all former business partners or associates of her former husband Stephen Bruno. The defendants filed the instant motion for summary judgment on February 14, 2011, on the grounds that the action is barred by the doctrines of collateral estoppel and res judicata.
FACTS
The court finds the following relevant facts. The central and operative issue in the plaintiff's nineteen count, three hundred eighty paragraph long, complaint is succinctly stated in the opening paragraph, "This action arises out of a conspiracy between the Plaintiff's former husband, Stephen Bruno, his former employer [DGBH], the company holding a majority interest in his former employer [BPFH] and his attorneys, to devise, orchestrate and execute a fraudulent conveyance scheme with the actual intent to hinder, delay and/or defraud, the Plaintiff from receiving an equitable distribution of interests [Stephen] Bruno held in his former employer." The instant case is the plaintiff's third attempt to litigate her claim based on the existence of this alleged conspiracy.
The conspiracy was first alleged as the basis for a motion for contempt for violation of automatic orders in the matter of Bruno v. Bruno, Superior Court, judicial district of Danbury, Docket No. FA 05 4004906, the dissolution of marriage action between Lisa Bruno and Stephen Bruno. After discovery and depositions a lengthy series of hearings commenced before the court (Axelrod, J.) on May 30, 2007, and on March 17, 2008, the court denied Lisa Bruno's motion for contempt finding that she had "failed to present any credible evidence to substantiate her claims" as to the conspiracy and that "none of the allegations of a fraud scheme have been proven." Bruno v. Bruno, Superior Court, judicial district of Danbury, Docket No. FA 05 4004906 (March 17, 2008, Axelrod, J.). Subsequent to that proceeding on December 16, 2008, Lisa Bruno commenced an action in New York Supreme Court against Stephen Bruno, DGHM, BPFH and the law firm of Mintz Levin Cohen Ferris Glovsky and Popeo, PC (Mintz Levin), Stephen Bruno's legal counsel, asserting the same factual allegations of conspiracy which had been litigated in the Connecticut action. On September 1, 2009, the trial court entered an order dismissing the action. The court found that "the facts upon which the complaint here relies are that the Settlement Agreement was invalid, the termination of Mr. Bruno was not for cause, and that a fraud and/or fraudulent conveyance has occurred." The court further noted that "[i]n the Connecticut Matrimonial Action, the court determined that the Settlement Agreement was valid, that Mr. Bruno's termination was effected `for cause,' and that a `fraud scheme has not occurred.'" The New York Court dismissed Lisa Bruno's complaint "as collaterally estopped by the Connecticut Matrimonial Action." Bruno v. Bruno, Supreme Court of the State of New York, New York County, Index Number 116822/2008 (September 1, 2009). On September 25, 2009, Lisa Bruno appealed the New York trial court decision to the Appellate Court. On April 12, 2011, the New York Appellate Division affirmed the New York Supreme Court's dismissal of Lisa Bruno's New York action.
The New York appellate court recited the following findings which this court adopts and which are adequately supported by affidavits and documents submitted in connection with the motion for summary judgment in the instant action.
"Defendant Stephen Bruno and plaintiff Lisa Bruno were married in 1987. On December 12, 2005, Stephen commenced a divorce action against Lisa in the Superior Court of Connecticut. At the time the action was filed, Stephen was the co-president and a member of Dalton Greiner Hartman Meier Co., LLC (DGHM), which is managed by and 80% owned by defendant Boston Private Financial Holdings, Inc. (BPFH). While employed at DGHM, Stephen acquired equity interests in DGHM as well as in nonparty 1100 Fifth Avenue Partners, Inc. (FAP)."
"In October 2006, Stephen was terminated from DGHM for cause on the ground that he manipulated his performance attribution number in order to receive a more favorable bonus. Stephen contested the termination, but, rather than litigate the issue, he retained the law firm of Mintz Levin to negotiate the terms of his departure. Pursuant to these negotiations, Stephen entered into a settlement agreement with DGHM, BPFH, and FAP whereby, among other things, Stephen's termination would be treated as one "for cause," and as a result, would forfeit certain equity interests in DGHM and FAP. In return, Stephen would be released from certain noncompete provisions, and DGHM would not publicly disclose the reasons for his termination."
"By motion dated February 12, 2007, Lisa moved in the Connecticut action to hold Stephen in contempt of that court's order. Specifically, Lisa alleged that Stephen violated "Automatic Order #1," which prohibited the parties from disposing of any property without the consent of the other or approval by the court. According to Lisa, Stephen was not actually terminated for cause, did not actually forfeit his equity interests, would ultimately receive monetary consideration for his equity interests, and devised a fraudulent scheme with DGHM, BPFH and Mintz Levin in order to deprive her of assets that would otherwise have been available to her in equitable distribution."
"In connection with her motion, Lisa subpoenaed and received documents from DGHM and Mintz Levin and deposed Stephen, DGHM's CEO, Bruce Geller, and an attorney from Mintz Levin. After several months of discovery, the Connecticut court held an evidentiary hearing over the course of five days. During the hearing, both Stephen and Geller testified regarding the settlement agreement and Stephen's termination."
"On March 17, 2008, the Connecticut court denied Lisa's contempt motion. The court found that `the reason advanced by [DGHM] for [Stephen's] termination would have constituted valid grounds for the termination of [Stephen] for cause if a settlement agreement had not been arrived at between the parties and would have constituted wilful or gross misconduct on the part of [Stephen].' Moreover, the Court found: `A fraud scheme has not occurred and . . . none of the allegations of a fraud scheme have . . . been proven. The plaintiff will not receive any money from DGHM or BPFH other than is disclosed in the separation agreement . . . Further, no person or entity will be receiving anything of value on behalf of [Stephen] as the result of his termination.'"
"The court further determined that Lisa failed to present credible evidence of any act of bad faith by DGHM or Mintz Levin to substantiate her claim that Mintz Levin was retained to "mastermind" the fraudulent conveyance of marital property and help negotiate DGHM's participation in the fraud and subsequent cover up."
"Thereafter, Lisa filed this action in the Supreme Court of New York, alleging that there was a conspiracy between Stephen and the other defendants to devise and execute a "fraudulent conveyance scheme" with the intent of hindering, delaying, or defrauding plaintiff from receiving equitable distribution of Stephen's equity interests in DGHM. In her complaint, Lisa repeated all of the allegations that she made in the Connecticut action, including that Stephen was not actually terminated for cause, that he did not actually forfeit his equity interests, and that he conveyed his interests to deny plaintiff her equitable share."
"In February 2009, the defendants each moved to dismiss the complaint on the ground that the claims are collaterally estopped by the decision in the Connecticut action. Stephen and Mintz Levin also sought sanctions. The motion court dismissed the complaint and denied the motion for sanctions." Bruno v. Bruno, Docket No. 116822/08, 2011 N.Y. Slip. Op. 02933 (1st Dept., April 12, 2011).
The differences between the New York action (second action) and the instant action (third action) are the deletion of Mintz Levin as a defendant in the instant suit and the addition of Bruce Geller as a defendant. The New York suit was framed in six counts; the instant suit is framed in nineteen. There are, however, no significant additional factual allegations. All nineteen counts revolve around and depend on, as did the six counts in the New York action, the existence of the conspiracy.
DISCUSSION
"Summary judgment is a method of resolving litigation when 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 . . . The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried." (Citations omitted.) Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989). "Summary judgment is an appropriate method for resolving issues of res judicata or collateral estoppel." Zanoni v. Lynch, 79 Conn.App. 325, 338, 830 A.2d 314 (2003) (quoting Dontigney v. Roberts, 73 Conn.App. 709, 809 A.2d 539 (2002)).
In affirming the judgment of the trial court the New York Appellate Court applied the doctrine of collateral estoppel as it has developed in the Connecticut courts and made the following ruling.
The motion court properly noted that New York courts apply the law of the rendering jurisdiction to determine the preclusive effect of the decisions of sister states (see e.g. Schultz v. Boy Scouts of Am., 65 N.Y.2d 189, 204 [1985]). Under Connecticut law, collateral estoppel precludes a party from relitigating an issue that has been "fully and fairly litigated" in a prior suit ( Aetna Cas. Sur, Co. v. Jones, 220 Conn. 285, 296, 596 A.2d 414, 421 [1991] [internal quotation marks omitted]). Application of the doctrine is appropriate where, in a prior action between the same parties or those in privity with them, the issues and facts were actually litigated and necessarily determined (see Efthimiou v. Smith, 268 Conn. 499, 506, 846 A.2d 222, 227 [2004]). "An issue is actually litigated if it is properly raised in the pleadings or otherwise, submitted for determination, and in fact determined . . . An issue is necessarily determined if, in the absence of a determination of the issue, the judgment could not have been validly rendered" ( Cumberland Farms, Inc. v. Town of Groton, 262 Conn. 45, 58 n. 17, 808 A.2d 1107, 1116 n. 17 [2002], quoting Dowling v. Finley Associates, Inc., 248 Conn. 364, 373-74, 727 A.2d 1245 [1999]).
Applying these principles, the motion court correctly found that plaintiff is collaterally estopped by the determination in the Connecticut action from asserting her claims in this action. The main issues raised in this action, relating to the central allegation that defendants conspired to create a fraud scheme to deprive plaintiff of assets in equitable distribution, were actually litigated and necessarily determined in the Connecticut action. Indeed, the Connecticut court was required to consider those allegations in order to determine whether Stephen had willfully disobeyed one of its orders.
Lisa's argument that the motion court erred in giving preclusive effect to the Connecticut proceeding since it did not involve the same parties in this action or those in privity with them, is unavailing. The motion court correctly noted that "collateral estoppel precludes a party from relitigating issues and facts actually and necessarily determined in an earlier proceeding between the same parties or those in privity with them upon a different claim." Although only Stephen was a party to the Connecticut action, the Connecticut court specifically found that there was no evidence that the other defendants in this case committed any acts in bad faith or were part of a fraudulent scheme. Morever, under Connecticut law mutuality of parties in a subsequent action is not necessary to invoke collateral estoppel ( see Aetna Cas. Sur. Co. v. Jones, 220 Conn. at 302, 596 at 424 [1991] ["To allow a party who has fully and fairly litigated an issue at a prior trial to avoid the force of a ruling against him simply because he later finds himself faced by a different opponent is inappropriate and unnecessary"]; see also Efthimiou, 268 Conn. at 507, 846 A.2d at 227-28 [when the liability of a defendant in an action is derivative of the liability of a defendant in a prior action, and the liability of the prior defendant was "properly raised in the pleadings or otherwise, submitted for determination, and in fact determined" and "that determination was essential to the judgment in the companion case, and it remains unchallenged," the plaintiff in the present action is collaterally estopped from relitigating that issue in the present action)). Similarly here, the liability of the remaining defendants is derivative of Stephen's liability, and since Stephen was found not to have engaged in a fraud scheme with DGHM, BPFH and Mintz Levin in the Connecticut action, Lisa is collaterally estopped from bringing her claims against the remaining defendants in the present action.
Nor did, as plaintiff urges, the motion court err by conflating the doctrines of res judicata and collateral estoppel and by applying res judicata to this case. Citing to Delahunty v. Massachusetts Mut. Life Ins. Co. ( 236 Conn. 582, 674 A.2d 1290 (1996)), plaintiff argues that the motion court misapplied Connecticut law as the doctrine of res judicata does not bar the litigation of tort claims that might have been made in a prior marital dissolution action. Initially, the motion court specifically noted that while the doctrines of res judicata and collateral estoppel are related, they are distinct. The court then went on to apply the doctrine of collateral estoppel to this action. In any event, in Weiss v. Weiss ( 297 Conn. 446, 464, 998 A.2d 766 [2010]), the Connecticut Supreme Court clarified that its holding in Delahunty was that tort actions are not required to be litigated in a divorce action, but noted that those issues that are litigated in a divorce proceeding generally are precluded from subsequently being relitigated.
Plaintiff also relies on Delahunty to argue that Connecticut public policy prohibits the application of "preclusion principles" to divorce proceedings, and that the divorce proceeding did not provide her a fair and adequate forum to litigate. Her argument is based on the power of New York Supreme Court to award legal, rather than only equitable relief. Thus, according to plaintiff, collateral estoppel is "inapplicable to a marital dissolution proceeding because of the unique circumstances and jurisdictional limitations such a proceeding presents." These arguments are flawed and are a misreading of Connecticut law.
In Weiss ( 297 Conn. 446, 998 A.2d 766), during divorce proceedings, a dispute arose about the meaning of an agreement executed by the parties to divide their law practice. Almost two years after the dispute was resolved, the wife filed a complaint alleging breach of contract and breach of fiduciary duty claims against the husband in connection with the same agreement. The Connecticut Supreme Court rejected the wife's argument that collateral estoppel did not bar a subsequent proceeding to the divorce action involving claims founded in tort or contract, holding, as noted, that tort actions do not have to be litigated in the marital dissolution proceedings, but when a claim was actually litigated in the divorce proceedings, that decision has preclusive effects.
For this Court to reach a different result would be to go against the significant public policy considerations of collateral estoppel. As the Connecticut Supreme Court noted in Cumberland, the decision to apply collateral estoppel should be made upon a consideration of the doctrine's underlying purpose, namely, "(1) to promote judicial economy by minimizing repetitive litigation; (2) to prevent inconsistent judgments which undermine the integrity of the judicial system; and (3) to provide repose . . ." ( 262 Conn at 59, 808 A.2d at 1117, quoting Isaac v. Truck Serv., Inc., 253 Conn. 416, 422, 752 A.2d 509, 513 [2000]).
Bruno v. Bruno, Docket No. 116822/08, 2011 N.Y. Slip. Op. 02933 (1st Dept., April 12, 2011).
The distinctions between the New York suit and the instant suit are of no consequence in the application of the doctrine of collateral estoppel. The court finds the reasoning, and the application of the law to the facts, by the New York appellate court persuasive and that the plaintiff in this matter is collaterally estopped from re-litigating the claims asserted in this action by the judgment rendered by the court (Axelrod, J.) in the action for the dissolution of the marriage of Lisa Bruno and Stephen Bruno.
The defendants claim that summary judgment in their favor on the plaintiff's complaint is also appropriate on the grounds of res judicata in light of the final judgment entered in the New York action. "[A] valid, final judgment rendered on the merits by a court of competent jurisdiction is an absolute bar to a subsequent action between the same parties, or those in privity with them, upon the same claim or demand. Furthermore, the doctrine of claim preclusion . . . bars not only subsequent relitigation of a claim previously asserted, but subsequent relitigation of any claims relating to the same cause of action which were actually made or which might have been made." (Internal quotations marks omitted. Internal citations omitted.) Gaynor v. Payne, 261 Conn. 585, 596, 804 A.2d 170 (2002). The defendants assert that the doctrine of res judicata bars the re-litigation of the claims raised in the previous New York action, as well as the litigation of any claims that could have been made in that action, in the instant action before this court. In other words the New York court's judgment that the plaintiff's claims could not be re-litigated because of the doctrine of collateral estoppel is binding on this court. Because this court finds the plaintiff's claims barred by the doctrine of collateral estoppel it does not address the defendants' alternate grounds of res judicata.
CONCLUSION
For the foregoing reasons the court finds that no genuine issues as to material facts exist. The defendants' motion for summary judgment is therefore ordered GRANTED.