Opinion
No. CV 09-5031857-S
January 18, 2011
MEMORANDUM OF DECISION ON MOTIONS TO STRIKE
On July 6, 2010, the plaintiffs, Kathryn Ballard, Susan Toce, Donald Ballard, John Ballard and Timothy Ballard, filed a third amended complaint against the defendants, Ameriprise Financial Services, Inc., (Ameriprise), Lyle Pennell and Hartford Life Insurance Company (Hartford Life) claiming breach of contract and breach of fiduciary duty as well as negligence and "intentional conduct" against Hartford Life. In addition a claim for punitive damages and attorneys fees.
The plaintiffs allege the following facts. In October of 1998, Kathryn Ballard entered into an "Individual Flexible Premium Variable Annuity Contract" (annuity contract) with Hartford Life, providing a monthly payment to herself and naming her children, as beneficiaries of a death benefit. In order to keep the death benefit, Kathryn Ballard was required to maintain a certain minimum balance in the annuity contract.
In October of 2006, Donald Ballard met with Pennell, a financial advisor that worked for Ameriprise. Pennell reviewed the investment choices of the annuity contract and suggested that the assets of the annuity contract should be transferred to Ameriprise, assuring Ballard that a transfer would not jeopardize the death benefit. Around the same time, Ballard spoke to a Hartford Life representative, who confirmed that the transfer of the account could be accomplished without jeopardizing the death benefit. The representative also told Donald Ballard that the minimum balance to maintain the annuity contract was $500 but suggested that the balance never get lower than $1,000.
The plaintiffs further allege that Ballard later directed Pennell to transfer the assets of the annuity contract from Hartford Life to Ameriprise on Kathryn Ballard's behalf. Pennell agreed to notify Hartford Life of the transfer and to make sure that the death benefit was not jeopardized. According to a contract between Ameriprise, Pennell and Kathryn Ballard dated October 30, 2007, she had the right "to receive competent, timely and courteous service." Pennell notified Hartford Life by telephone to discontinue the monthly payments to Kathryn Ballard. Hartford Life, however, denied receiving a request to cancel the monthly payments and continued to send payments to Kathryn Ballard which eventually brought the balance of the annuity contract below $1,000. Kathryn Ballard attempted to return those payments but Hartford Life refused to accept them. In May of 2008, Hartford Life terminated the death benefit because Kathryn Ballard had failed to maintain a minimum balance of $1,000.
As to Ameriprise and Pennell, the plaintiffs allege that the conduct between Donald Ballard and Pennell created a contractual relationship between Kathryn Ballard and Ameriprise; further, in receiving financial advice from Ameriprise and Pennell and in relying upon them to invest her assets in a professional manner, she entered into a relationship of trust with Ameriprise and Pennell, in which they owed her a fiduciary duty; and that Ameriprise and Pennell breached their contract and fiduciary duty they owed to her by either failing to inform or by improperly informing Hartford Life of her request to stop the monthly annuity payments, and by Pennell's failure to verify that Hartford Life had processed such request, all of which caused her to lose the death benefit of her annuity contract.
As to Hartford Life, the plaintiffs allege that Kathryn Ballard entrusted her assets to Hartford Life, that it had a duty to safeguard those assets and that it breached its duty by negligently managing her annuity contract. The plaintiffs also allege a claim of "intentional conduct," asserting that Hartford Life engaged in outrageous, intentional, willful, wanton and malicious conduct. In both of their claims against Hartford Life, the plaintiffs allege the same instances of specific conduct, some of which include: not providing sufficient safeguards to prevent the loss of her death benefit in the event of accidental over withdrawal; prematurely cancelling her policy; sending her erroneous payments; ignoring the instructions of her representatives; and giving her conflicting information regarding what minimum balance was required.
Ameriprise and Pennell on July 21, 2010, moved to strike (1) the breach of contract claim on the ground that the language of the contract relied upon by plaintiffs is too indefinite to enforce (2) the breach of fiduciary duty claim on the ground that the conduct alleged does not give rise to fiduciary duty and that the elements necessary were not alleged and (3) the request for attorneys fees on the ground that the plaintiffs have not alleged a contractual or statutory basis to award the fees and (4) the request for punitive damages on the ground that plaintiffs have not alleged reckless indifference or wanton violation of their rights.
Hartford Life filed the second motion to strike on September 16, 2010 claiming that the negligence claim is actually a contract claim couched in tort terms and that it improperly seeks punitive damages. Hartford Life also seeks to strike the "intentional conduct" claim on the ground that it is not sufficiently pleaded under Connecticut law and it improperly seeks punitive damages.
I
In their motion to strike, Ameriprise and Pennell argue that language promising to provide "competent, timely and courteous service" is not definite enough to constitute a valid contract and that it fails to provide a basis for determining the existence of a breach.
Although "a contract must be definite and certain as to its terms and requirements;" Dreambuilders Constructions, Inc. v. Diamond, 121 Conn.App. 554, 559, 997 A.2d 553 (2010); the definiteness of a contract is a question of fact, not law. See Augeri v. C.F. Wooding Co., 173 Conn. 426, 430-31, 378 A.2d 538 (1977) (stating whether contract is too indefinite to be enforced is question for trier of fact); Co-Options, Inc. v. News America Marketing Instore, Inc., Superior Court, complex litigation docket at Waterbury, Docket No., X01 CV 00-0163095 (February 27, 2002, Hodgson, J.) ("Whether a contract is definite enough to enforce is a question of fact"). The facts as alleged show that Pennell agreed to transfer the annuity contract from Hartford Life to Ameriprise and to inform Hartford Life of Kathryn Ballard's request to stop the monthly annuity payments, that Kathryn Ballard had the right "to receive competent, timely and courteous service," that Pennell either improperly notified Hartford Life of Kathryn Ballard's request or did not notify Hartford Life at all and that he did not confirm that Hartford Life had received such request. It appears that the facts as alleged support a claim for breach of contract. See Keller v. Beckenstein, CT Page 2941 117 Conn.App. 550, 558, 979 A.2d 1055, cert. denied, 294 Conn. 913, 983 A.2d 274 (2009).
II
In their motion to strike, Ameriprise and Pennell argue that the plaintiff's claim for breach of fiduciary duty should be stricken because the plaintiffs have not sufficiently alleged facts; that no facts have been pleaded that would show they were in a position of control over the annuity contract, that they were in a unique position of trust regarding the death benefit or that they had any superior knowledge or expertise in communicating to Hartford Life that Kathryn Ballard wanted to stop receiving payments from the annuity contract. They further argue that even if a duty existed, the miscommunication over informing Hartford Life of Kathryn Ballard's request would not implicate the duty of loyalty or the duty to act in good faith, both of which are essential to an action for breach of fiduciary duty. Finally, they argue that the plaintiffs fail to allege that Ameriprise and Pennell advanced their own interests to the detriment of the plaintiffs, another required element of a breach of fiduciary duty claim.
The essential elements to pleading a cause of action for breach of fiduciary duty under Connecticut law are: (1) That a fiduciary relationship existed which gave rise to (a) a duty of loyalty on the part of the defendant to the plaintiff, (b) an obligation on the part of the defendant to act in the best interests of the plaintiff, and (c) an obligation on the part of the defendant to act in good faith in any matter, relating to the plaintiff;(2) That the defendant advanced his or her own interests to the detriment of the plaintiff; (3) That the plaintiff sustained damages; [and] that the damages were proximately caused by the fiduciary's breach of his or her fiduciary duty." T. Merritt, 16 Connecticut Practice Series: Elements of an Action (2010) § 8:1, p. 534. These elements have received widespread support in our Superior Court decisions: see Wilcox v. Schmidt, Superior Court, judicial district of Windham, Docket Nos. CV 04-4001126, CV 05-4001851 (June 3, 2010, Swords, J.); Employees of the Town of Fairfield v. Madoff, Superior Court, complex litigation docket at Stamford-Norwalk at Stamford, Docket No., X05 CV 09-5011561 (April 16, 2010, Blawie, J.); Ives Brothers, Inc., v. Keeney, Superior Court, judicial district of Windham, Docket No., CV 06-4004952 (October 27, 2009, Swords, J.).
Although the plaintiffs have pleaded facts that would establish that Pennell and Ameriprise were in a position of trust that created a duty of loyalty requiring them to act in good faith in that they were working as financial advisors for Kathryn Ballard and handling the transfer her annuity contract, they have alleged no facts that would establish that Ameriprise and Pennell advanced their own interests to the detriment of Kathryn Ballard's while transferring her annuity contract. The facts alleged are not sufficient to establish a breach of fiduciary duty.
III
Ameriprise and Pennell move to strike plaintiffs' request for attorneys fees from the prayer for relief because the plaintiffs have failed to allege a statute or contract provision that authorizes the plaintiffs to seek such damages and have failed to allege facts to establish that the defendants acted with reckless indifference to the rights of others. The plaintiffs argue that attorneys fees and punitive damages are available in a breach of fiduciary duty claim, but that claim appears to be insufficient.
Nowhere in the third amended complaint do the plaintiffs allege facts that would establish that they are entitled to attorneys fees pursuant to a statute or contract or evidence that shows wanton or wilful malicious misconduct. Language contained in the pleadings must be sufficiently explicit to inform the court and opposing counsel that such damages are being sought." Label Systems Corp. v. Aghamohammadi, 270 Conn. 291, 335, 852 A.2d 703 (2004).
IV
In its motion to strike, Hartford Life relies on Gazo v. Stamford, 255 Conn. 245, (2001), in arguing that the negligence claim should be stricken because it is a contract claim couched in negligence terms and that although a plaintiff may assert a breach of contract and a negligence claim arising out of the same facts, a plaintiff cannot merely restate a contract claim and seek tort remedies.
Although our courts have held that plaintiffs may not bring tort claims couched in contract terms; see Caffery v. Stillman, 79 Conn.App. 192, 197, (2003); no decision has held that a negligence claim cannot arise out of a breach of contract. The Gazo court, in considering what type of relief was sought in order to determine whether the plaintiff had properly pleaded a contract claim or a tort claim, noted: "It is true, of course, that out of a contractual relationship a tort liability, as in negligence, may arise." Gazo v. Stamford, supra, 255 Conn. 263. Our Supreme Court has stated:
[N]egligence may be the outgrowth of precedent contractual relationship, but that it may also arise in situations where there is no thought of any such underlying relationship . . . In other words, the particular facts which bring two persons into a relationship to each other are not necessarily controlling, but the true test is, speaking generally, being in that relationship, are the circumstances such that one, in the performance of some act within the scope of that relationship, unless he uses proper care, is likely to do injury to the person, property or rights of the other . . . Where there is a precedent relationship, all that is necessary to furnish a basis for an action of negligence is that there be present the elements necessary to establish such a cause of action, and if that is so, that relationship is one of contract is no sound reason why the action should not lie. Dean v. Hershowitz, 119 Conn. 398, 408-09, 177 A.262 (1935).
The plaintiffs have alleged that Hartford Life had a duty to protect Kathryn Ballard's assets and ensure they were not accidentally diminished and that Hartford Life negligently managed Kathryn Ballard's annuity contract in that it did not provide sufficient safeguards to prevent the loss of her death benefit in the event of accidental over withdrawal and that it prematurely cancelled her policy, sent erroneous payments to her, ignored the instructions of her representatives and gave her conflicting information regarding what minimum balance was required. Finally, the plaintiffs allege that due to Hartford Life's negligent actions, they were injured.
It is concluded that the plaintiffs have sufficiently pleaded a claim of negligence.
V
Hartford Life argues that the plaintiff's claim of "intentional conduct" is not a recognizable cause of action and is therefore insufficient as a matter of law. Also, that claim should fail because the plaintiffs fail to allege that Hartford Life owed a duty to Kathryn Ballard.
The plaintiff's claim of "intentional conduct" is akin to the "prima facie tort," which attaches liability to an individual "who intentionally causes injury to another . . . 4 Restatement (Second), Torts § 870, p. 279 (1979). In Connors v. Connolly, 86 Conn. 641, 647, 86 A. 600 (1913), a case in which a plaintiff brought a cause of action against the defendants for intentionally causing the plaintiff's wrongful discharge, the court recognized the existence of the prima facie tort, stating: "These facts shown, a prima facie cause of action was made against those who, thus acting with intent, caused the damage." Recent Superior Court cases have affirmed the validity of the prima facie tort in Connecticut. See Choy v. Boyne, Superior Court, judicial district of Hartford, Docket No., CV 06-5005693 (November 30, 2006, Wiese, J.) ( 42 Conn. L. Rptr. 411, 411-12); Brandt v. Walker Digital, LLC, Superior Court, complex litigation docket at Stamford-Norwalk, Docket No. X08 CV 0194566 (November 1, 2004, Taggart, J.) ( 38 Conn. L. Rptr. 182, 185-86).
In order to assert the prima facie tort, however, no other traditional torts must be available for the plaintiff to assert. See Choy v. Boyne, supra, 42 Conn. L. Rptr. 411-12 (striking prima facie tort from complaint because defamation claim was still available to plaintiff); Brandt v. Walker Digital, LLC, supra, 38 Conn. L. Rptr. 185-86) (striking prima facie tort from complaint because tortious interference claim was available to plaintiff).
Since the plaintiffs in this case have alleged that Hartford Life is liable for the same conduct under a negligence theory, it appears that the claim based on intentional conduct is insufficient.
Ameriprise's and Pennel's motion to strike the breach of fiduciary duty claim and the plaintiffs' request for attorneys fees and punitive damages is granted. The motion to strike the breach of contract claim is denied.
Hartford Life's motion to strike the "intentional conduct" claim and the request for punitive damages is granted. The motion to strike the negligence claim is denied.