Opinion
CV156024901S
11-08-2016
Elizabeth V. Fischer et al. v. Ulysses Partners, LLC et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE THE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (No. 234)
Hon. Charles T. Lee, J.
Before the court is the motion of defendant Catherine Sheridan for summary judgment. As set forth more fully below, the motion is denied in its entirety because of the presence of numerous genuine issues of material fact.
On March 26, 2015, the plaintiffs, Elizabeth Fischer, Nello Frattaroli, Kimberly Frattaroli, Christopher Frattaroli, Sharon Milne, and Peter Mathias, filed a seven-count complaint against the defendants, Ulysses Partners, LLC (Ulysses), James Neilsen, Catherine Sheridan, North South Capital, LLC (North South), P/E Investments, LLC (P/E), Tradition Asiel Securities, Inc. (Tradition), Longship Alternative Asset Management, LLC (Longship), and Dix Hills Partners, LLC (Dix Hills). Subsequently, on February 11, 2016, the court granted motions to dismiss of Longship, North South, P/E, and Dix Hills for lack of personal jurisdiction . On May 9, 2016, the court granted defendant Tradition's motion to strike the plaintiffs' claim as against Tradition. On May 17, 2016, the plaintiff, Elizabeth Fischer, withdrew her causes of action against all of the defendants.
On July 25, 2016, the remaining plaintiffs, Nello Frattaroli, Kimberly Frattaroli, Christopher Frattaroli, Sharon Milne, and Peter Mathias filed a third amended and revised complaint against the remaining defendants Ulysses, Neilsen, and Sheridan. As against Sheridan, the plaintiffs allege conspiracy to commit fraud, aiding and abetting fraud, conversion and civil theft, and unjust enrichment. Nello Frattaroli asserts these causes of action in count one, Christopher Frattaroli does so in count two, Kimberly Frattaroli in count three, Peter Mathias in count four, and Sharon Milne in count five. On August 1, 2016, the court granted Sheridan's motion for nonsuit against Mathias . On August 8, 2016, Sheridan filed the present motion for summary judgment, an accompanying memorandum of law, and evidence, including her affidavit with attachments. On August 22, 2016, the plaintiffs filed a memorandum of law in opposition to Sheridan's motion for summary judgment, accompanied by twenty-five exhibits and the affidavits of Sharon Milne, Sharon Milne's attorney, Nello Frattaroli, Kimberly Frattaroli, and Christopher Frattaroli, all with attachments. Sheridan filed her reply to the plaintiffs' opposition on September 2, 2016, accompanied by exhibits. On September 7 and 8, 2016, the plaintiffs filed additional affidavits in support of their opposition to Sheridan's motion. The court heard oral argument on September 12, 2016.
Counsel for defendant Sheridan filed an appearance on April 15, 2015. Counsel for defendant Neilsen filed an appearance on September 22, 2016. The defendant Ulysses has not appeared and the court granted the plaintiffs' motion for default for failure to appear on July 1, 2015.
The remaining plaintiffs are Nello Frattaroli, Kimberly Frattaroli, Christopher Frattaroli, and Sharon Milne.
I
BACKGROUND
In their third amended and revised complaint, the plaintiffs allege the following. In 2003, Neilsen and Sheridan formed Ulysses Partners, LLC for the purpose of introducing private investment funds to financial institutions and pension plans in exchange for a placement fee. Neilsen, a certified public accountant, was a founding member, chief financial officer, and treasurer of Ulysses and handled all of Ulysses' day-to-day financial decisions, including paying its bills. Sheridan was a founding member, chief executive officer, and a control person of Ulysses.
Despite Ulysses' stated purpose, the end result was a multi-million dollar fraudulent scheme which victimized more than forty investors, including the plaintiffs in this action, who were Neilsen's accounting clients and who relied on Neilsen for investment and financial advice. More specifically, between May of 2005 and at least September of 2012, Ulysses, Neilsen, and Sheridan swindled millions of dollars from the plaintiffs by inducing the plaintiffs to invest in various funds which the defendants later looted. On June 18, 2015, Neilsen was arrested and charged with wire fraud for the conduct that is at issue in this case. In January of 2016, Neilsen was sentenced by a federal judge to ninety-seven months in federal prison and ordered to pay restitution to the victims of his crimes in the amount of approximately $6 million.
The plaintiffs allege that Sheridan is also culpable for this conduct. Specifically, the plaintiffs allege that Sheridan orchestrated the formation of Ulysses, is listed as one of only two members of the limited liability company, is identified in the company's operating agreement as one of two members of its management committee, and, with Nielsen, had exclusive control over the company. Sheridan was named as the company's CEO in marketing materials and her experience and background were presented to potential investors. According to the plaintiffs, without their knowledge, Ulysses used a portion of offering proceeds to pay Sheridan a monthly draw of $45,000. Sheridan knowingly and recklessly took these monthly draws, totaling at least $2 million, never depositing any back into the company and using some for personal expenses. Of that $2 million, Sheridan received close to $500,000 in exchange for routing commissions that she earned from other investment business back to Ulysses after purportedly leaving Ulysses at the end of 2009. Sheridan's relationship with Ulysses and Neilsen was ongoing and extensive, so much so that her husband's company received $180,000 in unexplained payments from Ulysses.
In their complaint, the plaintiffs allege that Sheridan took a monthly draw of $45,000. In her testimony to the Connecticut Department of Banking, Sheridan stated that she received approximately $2 million over five years and that her " person burn rate" was $45,000 per month. In her deposition, Sheridan testified that she " never received $45,000 a month" and that instead she received " in the neighborhood of about $25,000 or $26,000 a month."
Nello, Christopher, and Kimberly Frattaroli (the Frattaroli plaintiffs) allege that Sheridan made false statements to them with the intention of inducing them not to take legal action against her. As late as April of 2012, Sheridan communicated with the Frattaroli plaintiffs about the company's financial status and plans to emerge profitable and repay investors. Sheridan participated in a conference call on April 11, 2012 with the Frattaroli plaintiffs and Neilsen, during which the Frattaroli family was first told that their investment was a high risk equity investment in an unproven business idea. Sheridan told the Frattaroli plaintiffs of her efforts to make Ulysses profitable again and various business opportunities in which Ulysses was engaged. Sheridan falsely represented that she had not touched any of the money associated with Ulysses for personal reasons and instead claimed that the money had been spent on infrastructure of the business. She claimed that Ulysses' inability to repay the Frattaroli plaintiffs was due to the poor performance of hedge funds and represented that Ulysses anticipated better performance in the short term. Based on the foregoing, the Frattaroli plaintiffs assert conspiracy to commit fraud, aiding and abetting of fraud, conversion and civil theft, and unjust enrichment claims against Sheridan.
Sharon Milne alleges that Neilsen first began soliciting Milne in 2007, when he provided her with marketing materials about Ulysses, which included a description of Sheridan's role with the company and her experience in the financial services industry. Neilsen represented that he and Sheridan were offering preferred investors the opportunity to get in on the ground floor of an excellent investment opportunity. Having a trusting relationship with Neilsen as her accountant, and based on Sheridan's background and credentials, Milne agreed to invest money in Ulysses. Between 2008 and 2009, after Sheridan signed Milne's first subscription agreement, Milne invested approximately $540,000 with Ulysses. In 2011, Milne asked to liquidate her interest, but Neilsen made alternative suggestions, lied to, and deceived Milne to avoid her attempts to withdraw her money. In September of 2012, in a letter to Milne's attorney, Sheridan claimed no responsibility for Milne's investment losses and advised her not to speak with authorities regarding her investment losses. Based on the foregoing, Milne brought suit against Sheridan sounding in conspiracy to commit fraud, aiding and abetting fraud, conversion and civil theft, and unjust enrichment.
II
CONTENTIONS OF THE PARTIES
Sheridan moves for summary judgment on the ground that there is insufficient evidence to support any claim of liability against her. Sheridan contends the following: There is no evidence that Sheridan knew of fraudulent conduct prior to the time when the plaintiffs themselves discovered it, no evidence that Sheridan conspired with Nielsen to enable such conduct, no evidence that Sheridan aided or abetted Nielsen, and no evidence that Sheridan herself had any fraudulent intent. The plaintiffs disagree.
In the alternative, Sheridan argues that this action is time barred. Specifically, Sheridan avers that the plaintiffs' civil conspiracy, aiding and abetting, and conversion and civil theft claims are torts that are governed by the three-year statute of limitations contained in General Statutes § 52-577. The plaintiffs' unjust enrichment claim sounds in contract and is therefore governed by the six-year statute of limitations as set forth in General Statutes § 52-576. Sheridan contends that Nello and Kimberly Frattaroli last invested in 2006, Christopher Frattaroli last invested in 2007, and Sharon Milne last invested in 2009. Therefore, their causes of action have expired. Furthermore, Sheridan had no knowledge of the plaintiffs until 2012.
In response, the plaintiffs claim that they have set forth an evidentiary foundation that demonstrates that Sheridan acted with respect to Ulysses well into 2012. Therefore, as this case was filed in March of 2015, the plaintiffs' causes of action are timely. The plaintiffs additionally contend that, even if Sheridan's last conduct took place in January of 2011, there still exists a genuine issue of material fact as to whether the statutes of limitations on their causes of action have been equitably tolled under the theory of fraudulent concealment or the continuing course of conduct doctrine.
III
DISCUSSION
A
Standard of Review
In Squeo v. Norwalk Hospital Ass'n, 316 Conn. 558, 593-95, 113 A.3d 932 (2015), the Supreme Court of Connecticut explained the standard of review for summary judgment as follows. The court stated: " Summary judgment shall be rendered forthwith if the 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 . . . In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party . . . Although the party seeking summary judgment has the burden of showing the nonexistence of any material fact . . . a party opposing summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact together with the evidence disclosing the existence of such an issue . . .
" As a general rule, then, [w]hen a motion for summary judgment is filed and supported by affidavits and other documents, an adverse party, by affidavit or as otherwise provided by . . . [the rules of practice], must set forth specific facts showing that there is a genuine issue for trial, and if he does not so respond, summary judgment shall be entered against him . . . [O]ne important exception exists . . . to [this] general rule . . . On a motion by [the] defendant for summary judgment the burden is on [the] defendant to negate each claim as framed by the complaint . . . It necessarily follows that it is only [o]nce [the] defendant's burden in establishing his entitlement to summary judgment is met [that] the burden shifts to [the] plaintiff to show that a genuine issue of fact exists justifying a trial . . . Accordingly, [w]hen documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue." (Citations omitted; emphasis omitted; internal quotation marks omitted.) Id.
B
The Undisputed Facts
The following undisputed facts are relevant to the resolution of this motion. Perhaps the most significant fact underlying this entire action is that Neilsen used Ulysses to perpetrate a criminal fraud on victims, including the plaintiffs. On January of 2016, the United States District Court for the District of Connecticut ordered Neilsen " to pay restitution to victims of his offense conduct." Neilsen was sentenced by a federal judge to ninety-seven months in federal prison. Later, in April of the same year, the District Court set the restitution amount at $5,757,086.38.
Also undisputed is that Sheridan is an experienced and knowledgeable financial professional. She holds two advanced degrees, including a master's degree in trading and financial management, and numerous securities-related licenses, including a general securities license and a license in management supervisory responsibilities. Sheridan also has a long history of employment in the securities field and accordingly has received compensation from a variety of securities companies. According to Sheridan, her " arrangements were always the same, salary plus a portion of the money that [she] generated as [a] trader."
The following facts pertaining to Sheridan's involvement in Ulysses are also undisputed, although their relevance is disputed. Sheridan and Neilsen formed Ulysses as a limited liability company and named Sheridan's husband, John T. Hanlon, as the LLC's agent for service of process. The purpose of Ulysses was to find various hedge funds that the company could introduce to institutional investors. According to Sheridan, " Ulysses Partners was never set up to be an investment fund in any way, shape, or form." Ulysses was initially funded pursuant to a " Cooperation Agreement" with Tradition Asiel Securities, Inc., which Sheridan and Neilsen signed on July 1, 2004. On the same date, Sheridan entered into an " Employment Agreement" with Tradition. Both agreements were to expire on June 30, 2007. Tradition did not pay Sheridan. Instead, Tradition invested $650,000 in Ulysses. According to Sheridan, throughout the relationship with Tradition, Ulysses was generating minimal, if any, revenue. Nonetheless, throughout this time, Sheridan took a draw each month from Ulysses.
In 2007, after Ulysses' relationship with Tradition ended, Sheridan and Neilsen agreed to continue Ulysses as an ongoing concern funded by Neilsen's personal capital. According to Sheridan, she believed that this personal capital was in the form of personal loans from friends and family of Neilsen; Sheridan did not think that these were equity investments. Sheridan continued to take her monthly draw from Ulysses until January 2011, despite knowing that the company was producing little to no revenue, purportedly leaving the company in 2009 after receiving a call from an angry investor demanding the return of his money, and knowing that the company owed between $2 and $3 million to investors. The plaintiffs were unaware that Sheridan was receiving compensation.
In April of 2012, Sheridan was contacted by a member of the Frattaroli family. The following day, April 11th, Sheridan, the Frattaroli plaintiffs, Neilsen, and a friend of the Frattaroli family spoke over the phone on a conference call. During this conversation, Sheridan failed to reveal that she was no longer a part of Ulysses or that she had received significant payments from Ulysses. Sheridan also explained that the reason that Ulysses' funds were so low was because hedge fund performance had been down and that she had hopes that a performance fee would be coming so that the investors could start to be paid by July of that year. Sheridan additionally stated: " As long as I continue to work, you will be paid back all of your principal and all of your interest relatively quickly" and " I am working--I'm out working because I owe you money." Finally, at the end of the phone call, Sheridan asked Neilsen to speak to her on an outside line.
On September 5, 2012, Milne's attorney sent letters to various parties, including Sheridan and Neilsen, seeking to collect a debt in the amount of $576,101.16 on behalf of Milne. On September 19, 2012, Milne's attorney received a responsive letter from Sheridan. In her letter, Sheridan disputed the validity of the debt as to Sheridan and stated that any involvement by regulatory bodies would impede the ability to repay the debt. On September 19, 2012, the partner of Milne's attorney received a responsive letter from Neilsen which stated that contacting regulatory agencies would impede Neilsen's ability to repay the debt.
C
Causes of Action
1
Conspiracy to Commit Fraud
In their conspiracy to commit fraud claims, the plaintiffs allege that Neilsen and Sheridan conspired to use the Ulysses platform, of which they were the sole and exclusive members, to defraud the plaintiffs. In furtherance of this conspiracy, both Neilsen and Sheridan committed fraudulent acts and neither took any affirmative acts to stop the conspiracy once it was in motion. As a consequence, the plaintiffs suffered economic damages, including the loss of their principal, and damage to their businesses. Sheridan argues there is no proof of intent or knowledge, no proof that Sheridan conspired with Neilsen, and no proof that Sheridan herself committed fraudulent acts.
" [T]he purpose of a civil conspiracy claim is to impose civil liability for damages on those who agree to join in a tortfeasor's conduct and, thereby, become liable for the ensuing damage, simply by virtue of their agreement to engage in the wrongdoing." Macomber v. Travelers Property & Casualty Corp., 277 Conn. 617, 636, 894 A.2d 240 (2006). " The [elements] of a civil action for conspiracy are: (1) a combination between two or more persons, (2) to do a criminal or an unlawful act or a lawful act by criminal or unlawful means, (3) an act done by one or more of the conspirators pursuant to the scheme and in furtherance of the object, (4) which act results in damage to the plaintiff." (Internal quotation marks omitted.) Harp v. King, 266 Conn. 747, 779, 835 A.2d 953 (2003). " [A] claim of civil conspiracy must be joined with an allegation of a substantive tort." Id., 779 n.37.
" [T]he essence of a civil conspiracy [is] two or more persons acting together to achieve a shared goal that results in injury to another." Id., 779. In a conspiracy, " one party might have one function and one another in carrying it out" so long as each party acted with " the same fraudulent intent, and . . . had substantially the same knowledge of the fraudulent means and purposes as the other participants." Williams v. Maislen, 116 Conn. 433, 437-38, 165 A. 455 (1933) (upholding language from trial court's jury instruction).
In the present case, the plaintiffs' civil conspiracy claims are joined with the substantive tort of fraud. It is undisputed that Neilsen acted via Ulysses to perpetrate a criminal fraud and that such action resulted in damage to the plaintiffs. It is also undisputed that Neilsen and Sheridan combined to form Ulysses and acted together to run the business, although the two had different functions. Therefore, the only question is whether Sheridan has presented evidence that establishes that no genuine issues of material fact exist as to whether Sheridan and Neilsen combined for the purpose of carrying out the fraud. Only if Sheridan has done so are the plaintiffs required to present evidence to establish a genuine issue.
In support of her motion, Sheridan submitted her affidavit. In it, she alleges the following: The purpose of Ulysses was to solicit hedge funds. She had no part in Neilsen's interactions with his purported investors, which included the plaintiffs. She did not sign Milne's subscription agreement, it is not her signature that appears on the document, she had no knowledge of Milne until 2012, and she had no knowledge of the subscription agreement until later. In addition, Sheridan attests: " At no time did I conspire with Neilsen to carry out his fraud on the plaintiffs nor have I committed fraud in furtherance of such an objective . . ."
In response, the plaintiffs submitted Sheridan's deposition testimony in which she speaks about the time period following the lapse of Ulysses' agreement with Tradition. At that point, according to Sheridan, Neilsen represented that the company could continue to exist based on funds from Neilsen's family and friends. Sheridan agreed to continue to be a part of Ulysses and continued to accept compensation, even though she knew that the company was producing little, if any, revenue. The plaintiffs also submitted a copy of Milne's subscription agreement, dated April 24, 2008, which contains Sheridan's printed name and a signature. In addition, the plaintiffs have presented evidence that Sheridan became aware of Michael Byrne, another Ulysses investor, prior to 2009. The evidence demonstrates that Sheridan had two discussions with Byrne related to his investment in Ulysses.
Considering this evidence in light of the undisputed evidence, the court cannot conclude that no genuine issues of material fact exist. To the contrary, assuming that Sheridan's affidavit asserts that she did not join with Neilsen to carry out fraud, the plaintiff's evidence and the undisputed evidence calls this conclusion into question. More specifically, considering Sheridan's background, her involvement in the creation and initial funding of Ulysses, and her knowledge that Ulysses' agreement with Tradition had lapsed and that the company was being funded by private capital, it is unclear for what purpose Sheridan and Neilsen continued to work together. Furthermore, throughout her time with Ulysses and afterward, Sheridan took a monthly draw from Ulysses, despite knowing that she had generated no revenue for Ulysses and despite having received compensation in the past based on the amount of revenue that she generated. Finally, the plaintiffs have presented evidence that Sheridan signed Milne's 2008 subscription agreement and knew about Byrne's investments prior to 2009. Based on the totality of the evidence, it is unclear whether and to what extent Sheridan knew of the fraud at issue. Certainly, she knew or should have known that investors were entrusting substantial sums of money to the LLC. Accordingly, Sheridan's motion for summary judgment based on the plaintiffs' failure to provide evidence sufficient to support a claim for conspiracy to commit fraud is denied.
2
Aiding and Abetting Fraud
In their aiding and abetting fraud claims, the plaintiffs allege that Sheridan gave substantial assistance to Neilsen in his commission of fraud on the plaintiffs. In addition, the plaintiffs allege that Sheridan knew or was recklessly indifferent to the possibility that her assistance would aid Neilsen in his commission of fraud. Finally, the plaintiffs allege that their economic harm was the direct result of Sheridan's conduct. Sheridan contends that there is no evidence that she gave substantial assistance to Neilsen in his commission of fraud and no evidence that Sheridan knew or was recklessly indifferent to the possibility that her assistance would aid Neilsen in committing fraud.
" The primary distinction between civil conspiracy and aiding and abetting is that in the latter, unlike the former, the aider and abettor need not actually agree to bring about the tort. Instead, what must be proven for aider-abettor liability is that the individual gave substantial assistance to the tortfeasor in carrying out the tort with the knowledge--or reckless indifference to the possibility--that the assistance would aid in carrying out that tort." Master-Halco, Inc. v. Scillia, Dowling & Natarelli, LLC, 739 F.Supp.2d 109, 121 (D.Conn. 2010) (discussing Connecticut law). " [T]he elements of the aiding and abetting tort [are]: (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 . . ." Flannery v. Singer Asset Finance Co., LLC, 312 Conn. 286, 328, 94 A.3d 553 (2014).
In the present case, the plaintiffs allege that Sheridan aided and abetted Neilsen in committing fraud. It is undisputed that Neilsen committed criminal fraud by using Ulysses as a mechanism to steal millions of dollars. As discussed previously in this opinion, the plaintiffs have presented evidence that calls into question whether and to what extent Sheridan aided Neilsen in committing such fraud and whether Sheridan was aware of her role as part of such fraud. Based on the evidence regarding Sheridan's education and experience, Milne's subscription agreement that contains Sheridan's signature, and the affidavit of Michael Byrne, which speaks to his conversations with Sheridan about his investments, the plaintiffs have at least established a question as to whether Sheridan was aware that she was partaking in illegal or tortious activity. The use of Sheridan's name on marketing material, her involvement in securing initial funding for Ulysses, and her conversation with the Frattaroli plaintiffs are examples of evidence that speak to whether Sheridan knowingly and substantially assisted the fraud. For these reasons, Sheridan's motion for summary judgment on the ground that the plaintiffs have failed to supply evidence to establish an aiding and abetting cause of action is denied.
3
Conversion and Civil Theft
In their conversion and civil theft claims, the plaintiffs allege that Sheridan wrongfully, and without authorization, took possession and control over their property, which the plaintiffs lawfully and rightfully owned. Sheridan knowingly received and concealed said property, deprived the plaintiffs of said property, and caused economic harm. Sheridan argues that the plaintiffs' conversion claims fail because there is no evidence that Sheridan wrongfully or without authority took any funds. As to the civil theft claims, Sheridan argues that the plaintiffs have not shown or alleged the requisite intent that a civil theft claim demands.
" The tort of [c]onversion occurs when one, without authorization, assumes and exercises ownership over property belonging to another, to the exclusion of the owner's rights." (Emphasis omitted; internal quotation marks omitted.) Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 43, 761 A.2d 1268 (2000). Thus, " [c]onversion is some unauthorized act which deprives another of his property permanently or for an indefinite time; some unauthorized assumption and exercise of the powers of the owner to his harm. The essence of the wrong is that the property rights of the plaintiff have been dealt with in a manner adverse to him, inconsistent with his right of dominion and to his harm." Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745, 770, 905 A.2d 623 (2006). " Under [Connecticut] case law, [m]oney can clearly be subject to conversion." (Internal quotation marks omitted.) Id., 771.
" Similarly, [s]tatutory theft under [General Statutes] § 52-564 is synonymous with larceny [as provided in] General Statutes § 53a-119." (Internal quotation marks omitted.) Hi-Ho Tower, Inc. v. Com-Tronics, Inc., supra, 255 Conn. 44. " A person commits larceny within the meaning of . . . § 53a-119 when, with intent to deprive another of property or to appropriate the same to himself or a third person, he wrongfully takes, obtains or withholds such property from an owner . . . [S]tatutory theft requires an intent to deprive another of his property . . . Therefore, statutory theft requires a plaintiff to prove the additional element of intent . . . Intent may be inferred by the factfinder from the conduct of the defendant . . . [I]t is well established that the question of intent is purely a question of fact . . . Intent may be, and usually is, inferred from the defendant's verbal or physical conduct . . . Intent may also be inferred from the surrounding circumstances . . . The use of inferences based on circumstantial evidence is necessary because direct evidence of the [defendant's] state of mind is rarely available . . . Intent may be gleaned from circumstantial evidence such as . . . the events leading up to and immediately following the incident." (Citations omitted; internal quotation marks omitted.) Fernwood Realty, LLC v. AeroCision, LLC, 166 Conn.App. 345, 359, 141 A.3d 965 (2016).
In the present case, it is undisputed that Neilsen wrongfully took the plaintiffs' money, that Neilsen used the plaintiffs' money to compensate Sheridan, that the plaintiffs believed that they were investing their money with Ulysses, that the plaintiffs did not believe that they were lending or giving money to Neilsen, and that the plaintiffs had no knowledge that their money was being used to compensate Sheridan. The sole questions in dispute, therefore, are whether Sheridan assumed and exercised ownership over those funds without authorization and whether Sheridan intended to deprive the plaintiffs of their money or appropriate their money to herself. Although Sheridan claims to have been authorized to have received payment from Neilsen, the plaintiffs have provided evidence that demonstrates that, based on her education and experience. Sheridan should have known that receiving $25,000 per month in return for working limited hours from a company that was not producing any revenue was wrongful. In addition, the plaintiffs have provided evidence that Sheridan was aware that Ulysses was receiving money from individual investors, even though, in her deposition, Sheridan testified that " Ulysses Partners was never set up to be an investment fund in any way, shape, or form" and has repeatedly stated that she was unaware of any investments, as opposed to loans, in the company. The plaintiffs have also provided evidence that Sheridan was aware that Ulysses was being funded by, at the least, lenders and that Ulysses owed these lenders millions of dollars. Still, Sheridan, and at some point Sheridan's husband's company, continued to receive payment from the company. Accordingly, the court finds that both questions are in dispute, namely whether Sheridan accepted the funds without authorization and whether Sheridan acted with the requisite level of intent that a civil theft cause of action demands. For these reasons, Sheridan's motion for summary judgment on the ground that the plaintiffs have failed to supply evidence to support a conversion and civil theft claim is denied.
4
Unjust Enrichment
In their unjust enrichment claims, the plaintiffs allege that Sheridan benefitted from having access to unauthorized draws on the plaintiffs' investments in Ulysses. Sheridan argues that the plaintiffs' unjust enrichment claims are not viable because there is no evidence of any property or services rendered by the plaintiffs to Sheridan. In fact, according to Sheridan, there is no direct relationship between her and the plaintiffs.
" Unjust enrichment applies wherever justice requires compensation to be given for property or services rendered under a contract, and no remedy is available by an action on the contract . . . A right of recovery under the doctrine of unjust enrichment is essentially equitable, its basis being that in a given situation it is contrary to equity and good conscience for one to retain a benefit which has come to him at the expense of another . . . With no other test than what, under a given set of circumstances, is just or unjust, equitable or inequitable, conscionable or unconscionable, it becomes necessary in any case where the benefit of the doctrine is claimed, to examine the circumstances and the conduct of the parties and apply this standard . . . Unjust enrichment is, consistent with the principles of equity, a broad and flexible remedy . . . Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefited, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiffs' detriment." (Citations omitted; internal quotation marks omitted.) Hartford Whalers Hockey Club v. Uniroyal Goodrich Tire Co., 231 Conn. 276, 282-83, 649 A.2d 518 (1994). " [U]njust enrichment results when it is contrary to equity and good conscience for the defendant to retain a benefit which has come to him at the expense of the plaintiff." (Internal quotation marks omitted.) Stratford v. Castater, 136 Conn.App. 522, 534, 46 A.3d 945, cert. denied, 314 Conn. 911 (2012).
In the present case, it is undisputed that Sheridan was benefitted. Namely, in her deposition, Sheridan stated that Neilsen and/or Ulysses paid Sheridan $25,000 each month. In addition, it is undisputed that this compensation was made up, at least in part, of the plaintiffs' money. Further, it is undisputed that Sheridan has not paid the plaintiffs for this benefit and that the failure to do so has been to the plaintiffs' detriment. Therefore, the only issue in dispute is whether Sheridan's not paying the plaintiffs for the benefit is unjust. In her deposition testimony, Sheridan repeatedly states that she feels a moral obligation to repay the plaintiffs. In her April 2012 phone conversation with the Frattaroli plaintiffs, Sheridan echoed this sentiment and told the Frattaroli plaintiffs that she owed them money. Accordingly, the plaintiffs have provided evidence that creates a genuine issue of material fact, to say the least, as to whether Sheridan's failure to repay the plaintiffs is unjust. For these reasons, Sheridan's motion for summary judgment on the ground that the plaintiffs have failed to set forth evidence to establish an unjust enrichment claim is denied.
D
Statute of Limitations
In the present case, the plaintiffs commenced this suit against Sheridan by service of process on March 10, 2015. In her memorandum in support of her motion for summary judgment, Sheridan argues that the time within which each plaintiff could have brought suit expired three years from the date on which each respective plaintiff last invested with Ulysses, which occurred sometime in or before 2010. In the alternative, and at best for the plaintiffs, the statute of limitations began running on the day when Sheridan received her last payment from Ulysses in January of 2011 and, therefore, their causes of action expired in January of 2014. The plaintiffs do not dispute these dates. Instead, the plaintiffs assert that their claims are timely because Sheridan remained an active participant in Ulysses well into 2012. Further, the plaintiffs argue that their claims are timely pursuant to a theory of fraudulent concealment or, in the alternative, the continuing course of conduct doctrine, as discussed below.
" The question of whether a party's claim is barred by the statute of limitations is a question of law . . ." (Internal quotation marks omitted.) Watts v. Chittenden, 301 Conn. 575, 582, 22 A.3d 1214 (2011). " [I]n 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. See, e.g., Zielinski v. Kotsoris, 279 Conn. 312, 330, 901 A.2d 1207 (2006) (no genuine issue of material fact as to whether statute of limitations was tolled under continuing course of treatment or continuing course of conduct doctrine); Witt v. St. Vincent's Medical Center, 252 Conn. 363, 369-70, 746 A.2d 753 (2000) (genuine issue of material fact as to whether continuous course of conduct doctrine tolled statute of limitations in medical malpractice claim)." (Internal quotation marks omitted.) Flannery v. Singer Asset Finance Co., LLC, supra, 312 Conn. 310-11.
In the present case, the parties do not dispute that the plaintiffs' claims of conspiracy to commit fraud, aiding and abetting fraud, and conversion and civil theft are governed by the three-year tort statute of limitations set forth in General Statutes § 52-577. The court agrees. See Beizer v. Goepfert, 28 Conn.App. 693, 702, 613 A.2d 1336 (" conspiracy to defraud is generally classified as a tort claim"), cert. denied, 224 Conn. 901, 615 A.2d 1044 (1992), cert. denied, 507 U.S. 973, 113 S.Ct. 1416, 122 L.Ed.2d 786 (1993); Flannery v. Singer Asset Finance Co., LLC, supra, 312 Conn. 307 n.23 (limitations period on a cause of action for aiding and abetting a tort is same as limitations period for underlying tort); Giulietti v. Giulietti, 65 Conn.App. 813, 833, 784 A.2d 905 (" [s]ection 52-577 applies . . . to those actions alleging fraud" [citation omitted]), cert. denied, 258 Conn. 946, 788 A.2d 95, cert. denied, 258 Conn. 947, 788 A.2d 96 (2001); Jarvis v. Lieder, 117 Conn.App. 129, 146-47, 978 A.2d 106 (2009) (conversion claim limited by § 52-577).
The parties additionally do not dispute that the plaintiffs' unjust enrichment claim is governed by the six-year contract statute of limitations set forth in General Statutes § 52-576. However, the court notes that " [i]n an equitable proceeding, a court may provide a remedy even though the governing statute of limitations has expired, just as it has discretion to dismiss for laches an action initiated within the period of the statute . . . Although courts in equitable proceedings often look by analogy to the statute of limitations to determine whether, in the interests of justice, a particular action should be heard, they are by no means obliged to adhere to those time limitations." (Internal quotation marks omitted.) Vaccaro v. Shell Beach Condominium, Inc., 169 Conn.App. 21, 31 (2016). " The situation is different, however, where a party asserts a cause of action, pursuant to which it rightfully could seek both legal and equitable relief. [W]here a party seeks equitable relief pursuant to a cause of action that would also allow that party to seek legal relief, concurrent legal and equitable jurisdiction exists, and the statute of limitations that would be applicable to bar the legal claim also applies to bar the equitable claim." (Internal quotation marks omitted.) Id., 32. When a plaintiff " plead[s] the same essential facts in each of the counts on which he bases his claims for legal and equitable relief . . . the court has concurrent equitable and legal jurisdiction, and the running of the applicable limitation period would bar both the plaintiff's legal and equitable claims . . ." (Emphasis in original.) Id., 32-33. For example, in Certain Underwriters at Lloyd's, London v. Cooperman, 289 Conn. 383, 957 A.2d 836 (2008), the Supreme Court " conclude[d] that the trial court properly determined that, because [the plaintiffs'] legal claims [of statutory theft and conversion] [were time] barred, the plaintiffs' equitable claims [of unjust enrichment and for an accounting and a constructive trust] based on the same facts also [were] time barred." Id., 411. Accordingly, the court does not agree that the applicable statute of limitations for the plaintiffs' unjust enrichment claim is six years as set forth within § 52-576. Instead, because, in the present case, the plaintiffs have pleaded the same essential facts in each of their claims, all of the plaintiffs' claims--legal and equitable--are governed by the three-year statute of limitations as set forth in § 52-577.
" Section 52-577 provides: 'No action founded upon a tort shall be brought but within three years from the date of the act or omission complained of.' In construing our general tort statute of limitations . . . [the Supreme Court] ha[s] concluded that the history of that legislative choice of language precludes any construction thereof delaying the start of the limitation period until the cause of action has accrued or the injury has occurred . . . The date of the act or omission complained of is the date when the . . . conduct of the defendant occurs." (Citation omitted; internal quotation marks omitted.) Watts v. Chittenden, supra, 301 Conn. 583.
In the present case, the plaintiffs allege that Sheridan's failure to wind down Ulysses, her continuing to use the Ulysses brand to raise money for a separate entity, her misleading the Frattaroli plaintiffs in April of 2012, and her continued relationship with Nielsen constitute wrongful conduct of the defendant. Accordingly, the plaintiffs argue, the statutes of limitations on their claims did not begin to run until sometime in April of 2012 or early 2013. The court disagrees. The plaintiff's causes of action arise from Sheridan's alleged involvement in the plaintiffs' investing money in Ulysses and her being compensated in part by money from such investments. It is undisputed that the plaintiffs last invested with Ulysses prior to 2010, that Sheridan received her final payment from Ulysses in 2011, and that the plaintiffs commenced this suit in March of 2015. Therefore, unless the statutes of limitations on the plaintiffs' causes of action are tolled, the plaintiffs' claims expired in, at the latest, 2014.
1
Fraudulent Concealment
The plaintiffs allege that, as of 2009, Sheridan was aware that Ulysses owed investors millions of dollars. Still, she did nothing to alert investors, did not properly wind down the business, and did not attempt to pay back Neilsen in any meaningful way so that investors could be made whole. Furthermore, she actively misled the Frattaroli plaintiffs in their conference call, failed to alert them to the amount of money that Ulysses owed to other investors, and did not reveal that Ulysses was a dead entity. Likewise, when contacted by Milne's attorney, Sheridan stonewalled any attempt to recoup Milne's money and warned against the impact of involving regulatory authorities. Sheridan argues that there is no question that she did not know of Neilsen's wrongdoing until April 2012, at the same time the Frattaroli plaintiffs claim to have found out about it. As such, Sheridan could not have concealed facts prior to that time. Sheridan contends that her actions in April 2012, on the Frattaroli conference call, and in September 2012, in her letter to Milne's attorney, were not tortious.
" [T]o prove fraudulent concealment, the plaintiffs [are] required to show: (1) a defendant's actual awareness, rather than the imputed knowledge, of the facts necessary to establish the plaintiffs' cause of action; (2) that defendant's intentional concealment of the facts from the plaintiffs; and (3) that defendant's concealment of the facts for the purpose of obtaining delay on the plaintiffs' part in filing complaint on their cause of action." Bartone v. Robert L. Day Co., 232 Conn. 527, 533, 656 A.2d 221 (1995); see also Connell v. Colwell, 214 Conn. 242, 250-51, 571 A.2d 116 (1990). The Supreme Court " has not yet decided whether affirmative acts of concealment are always necessary to satisfy the requirements of § 52-595." (Internal quotation marks omitted.) Falls Church v. Tyler, Cooper & Alcorn, LLP, 281 Conn. 84, 107, 912 A.2d 1019 (2007).
In the present case, the plaintiffs have submitted the following evidence, which calls into question whether Sheridan was actually aware of the facts discussed in the preceding sections: (1) Milne's initial subscription agreement, signed in 2008, containing a signature which reads " Catherine Sheridan"; (2) the affidavit of Michael Byrne, averring that Byrne invested $50,000 with Ulysses, spoke to Sheridan twice about his investment, hired an attorney who contacted Sheridan in 2009 in an effort to recover Byrne's $50,000 that Byrne had invested in Ulysses and threatened her with legal action, and that Sheridan agreed to pay back Byrne's principal and guaranteed interest; (3) Sheridan's deposition testimony indicating that, at the time of the Frattaroli conference call in April of 2012, she was aware that " some kind of debt ha[d] been incurred because of activity in Ulysses" and that there was no money in the Ulysses account; (4) Sheridan's deposition testimony that, as of 2009, she knew that Ulysses owed " under $2 million" to people that had supplied Neilsen with " personal loans"; and (5) Sheridan's September 19, 2016 letter to Milne's attorney, in which Sheridan warns against involving regulatory bodies.
Based on this evidence, whether and to what extent Sheridan knew of the facts discussed in the preceding sections are in dispute. Reading the evidence in favor of the plaintiffs, it appears that Sheridan knew that Milne had invested in Ulysses in 2008. Furthermore, Sheridan was actively involved in Byrne's investment and, as of 2009, was aware that he was demanding his money back and threatening legal action. At this time, Sheridan also knew that Ulysses owed approximately $2 million to people that had supplied Neilsen with funds. Despite having this knowledge, Sheridan did not reveal any of this information to the Frattaroli plaintiffs during their conference call nor to Milne's attorney in her letter. Instead, she admittedly intentionally refrained from telling the Frattarolis certain information in an attempt to avoid inflaming an already heated situation. She also denied liability to Milne's attorney and told him to refrain from contacting authorities. The purpose behind this concealment and, more specifically, whether it was to delay the plaintiffs from filing suit, is unclear from contacting authorities. The purpose behind this concealment and, more specifically, whether it was to delay the plaintiffs from filing suit, is unclear.
For these reasons, the court finds that the plaintiffs have established genuine issues of material fact as to whether the theory of fraudulent concealment tolls the statutes of limitations to their causes of action. The Frattaroli plaintiffs have established that genuine issues of material fact exist as to whether the statute of limitations on their causes of action did not begin running until April 2012, the time of the conference call. Milne has established genuine issues of material fact as to whether the statute of limitations on her causes of action did not begin running until September 2012, the time of Sheridan's letter to Milne's attorney. Accordingly, Sheridan's motion for summary judgment is denied on this ground.
2
Continuing Course of Conduct
The plaintiffs' argument in favor of application of the continuing course of conduct doctrine is similar to their fraudulent concealment argument. Further, the plaintiffs allege that, given the complexity of the situation and the enormity of the lies and deception, the plaintiffs had no way to identify the acts of fraud prior to the time when the regulatory bodies became involved. Sheridan argues that the plaintiffs are unable to show that Sheridan committed any initial or subsequent wrong against them or that Sheridan had a duty to them.
" In certain circumstances . . . [the Supreme Court] ha[s] recognized the applicability of the continuing course of conduct doctrine to toll a statute of limitations. Tolling does not enlarge the period in which to sue that is imposed by a statute of limitations, but it operates to suspend or interrupt its running while certain activity takes place . . . Consistent with that notion, [w]hen the wrong sued upon consists of a continuing course of conduct, the statute does not begin to run until that course of conduct is completed." (Citation omitted; internal quotation marks omitted.) Flannery v. Singer Asset Financial Co., LLC, supra, 312 Conn. 311. " [A] precondition for the operation of the continuing course of conduct doctrine is that the defendant must have committed an initial wrong upon the plaintiff . . . A second requirement for the operation of the continuing course of conduct doctrine is that there must be evidence of the breach of a duty that remained in existence after commission of the original wrong related thereto . . . [The Supreme Court] has held this requirement to be satisfied when there was wrongful conduct of a defendant related to the prior act . . . Such later wrongful conduct may include acts of omission as well as affirmative acts of misconduct." (Citation omitted; internal quotation marks omitted.) Id., 312-13.
Accordingly, in resolving the subject motion for summary judgment, the court " must determine if there is a genuine issue of material fact with respect to whether the defendant: (1) committed an initial wrong upon the plaintiff; (2) owed a continuing duty to the plaintiff that was related to the alleged original wrong; and (3) continually breached that duty." (Internal quotation marks omitted.) Id., 313.
In the present case, the court finds that genuine issues of material fact exist as to each of these three elements. Whether Sheridan committed an initial wrong against the plaintiffs and whether she committed later wrongful conduct related to the prior act are in dispute. As the court has already explained, the plaintiffs have presented evidence that raise questions as to the extent of Sheridan's involvement in the fraudulent conduct from the establishment of Ulysses as an entity until at least 2012. Accordingly, Sheridan's motion for summary judgment is denied on this ground.
IV
CONCLUSION
By reason of the foregoing, Sheridan's motion for summary judgment is DENIED in its entirety. It is undisputed that Neilsen used Ulysses to commit criminal fraud and that the plaintiffs are among the victims of such fraud. Genuine issues of material fact exist as to Sheridan's knowledge of and involvement in such fraud. In addition, genuine issues of material fact exist as to the ways in which Sheridan benefited from such fraud. Finally, genuine issues of material fact exist as to if and how Sheridan acted in a way to toll the statutes of limitations on the plaintiffs' claims. Accordingly, Sheridan is not entitled to judgment as a matter of law on the plaintiffs' claims of conspiracy to commit fraud, aiding and abetting fraud, conversion and civil theft, and unjust enrichment.