Opinion
FBTCV176062299S
05-04-2018
Investment Strategies, LLC v. Laurie Quatrella
UNPUBLISHED OPINION
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Bellis, Barbara N., J.
MEMORANDUM OF DECISION RE MOTION TO DISMISS NO. 106
JUDGE BELLIS
The plaintiff, Investment Strategies, LLC, commenced this action against multiple defendants, Laurie Quatrella, Nicholas Coscia, Alexandra Daniel Company, LLC, and LADD Family Group Limited Partnership. The plaintiff alleges, inter alia, that Nicholas Coscia, the defendant, engaged in a scheme with others to lure elderly persons and investors into " stranger-oriented life insurance" (STOLI) investment transactions (the scheme). Specifically, the plaintiff alleges that the defendant and the defendant’s sister, Laurie Quatrella, identified elderly insureds for the transactions and that the defendant’s brother-in-law, David Quatrella, recruited his law firm clients to finance the premiums for the STOLI policies, making the law firm clients undisclosed investors. The plaintiff alleges that it was harmed by its involvement with and investment in a particular STOLI policy, the Donald Sherman STOLI policy (Sherman policy).
On June 16, 2017, the defendant filed a motion to dismiss counts two, six, ten, and fourteen of the plaintiff’s complaint for lack of personal jurisdiction along with a supporting memorandum of law and his affidavit. After filing a revised complaint on July 6, 2017, the plaintiff filed a memorandum of law in opposition to the motion to dismiss and two affidavits on August 2, 2017. The defendant filed a reply memorandum of law on November 20, 2017.
In its revised complaint, the plaintiff alleges that the defendant was part of a civil conspiracy to breach fiduciary duties owed to the plaintiff (count two), to commit fraud (count six), and to violate the Connecticut Unfair Trade Practices Act (count ten). The plaintiff also alleges that the defendant was unjustly enriched (count fourteen) as a consequence of the conspiracy.
DISCUSSION
" A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) MacDermid, Inc. v. Leonetti, 310 Conn. 616, 626, 79 A.3d 60 (2013). " A court deciding a motion to dismiss must determine not the merits of the claim or even its legal sufficiency, but rather, whether the claim is one that the court has jurisdiction to hear and decide." (Internal quotation marks omitted.) Hinde v. Specialized Education of Connecticut, Inc., 147 Conn.App. 730, 740-41, 84 A.3d 895 (2014). " Because a lack of personal jurisdiction may be waived by the defendant, the rules of practice require the defendant to challenge that jurisdiction by a motion to dismiss." (Footnote omitted; internal quotation marks omitted.) Golodner v. Women’s Center of Southeastern Connecticut, Inc., 281 Conn. 819, 825, 917 A.2d 959 (2007); see Practice Book § 10-30(a)(2) (motion to dismiss shall be used to assert lack of jurisdiction over the person).
To decide " a jurisdictional question raised by a pretrial motion to dismiss, [the court] must consider the allegations of the complaint in their most favorable light ... In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader ... The motion to dismiss ... admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone ... [But] [w]here ... the motion is accompanied by supporting affidavits containing undisputed facts, the court may look to their content for determination of the jurisdictional issue ..." (Citation omitted; internal quotation marks omitted.) Cogswell v. American Transit Ins. Co., 282 Conn. 505, 516, 923 A.2d 638 (2007).
" When a defendant challenges personal jurisdiction in a motion to dismiss, the court must undertake a two part inquiry to determine the propriety of its exercising such jurisdiction over the defendant. The trial court must first decide whether the applicable long-arm statute authorizes the assertion of jurisdiction over the [defendant]. If the statutory requirements [are] met, its second obligation [is] then to decide whether the exercise of jurisdiction over the [defendant] would violate constitutional principles of due process." (Internal quotation marks omitted.) Kenny v. Banks, 289 Conn. 529, 533, 958 A.2d 750 (2008). " If the defendant challenging the court’s personal jurisdiction is a foreign corporation or a nonresident individual, it is the plaintiff’s burden to prove the court’s jurisdiction." Cogswell v. American Transit Ins. Co., supra, 282 Conn. 515.
General Statutes § 52-59b provides in relevant part that " (a) As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nonresident individual ... who in person or through an agent: (1) Transacts any business within the state; (2) commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act ..." The plaintiff contends that the court has personal jurisdiction over the defendant pursuant to § 52-59b(a)(1) and (2), because the defendant transacted business in Connecticut, and, by engaging in the scheme, the defendant engaged in tortious conduct through co-conspirators who carried out acts in Connecticut as part of a conspiracy.
I. Transacting Business
The plaintiff argues that the defendant transacted business in Connecticut during the relevant time period by assisting David Quatrella, a Connecticut attorney, in setting up multiple insurance investment deals for Connecticut residents. The plaintiff’s arguments focus largely on the existence of the acts taken by the defendant as part of the conspiracy, however, as a means of connecting the plaintiff to the forum state.
" [U]nder § 52-59b(a)(1), a court possesses personal jurisdiction over a nonresident individual with respect to a cause of action arising from any business transacted in this state by that individual." Ryan v. Cerullo, 282 Conn. 109, 118, 918 A.2d 867 (2007). " [A]lthough the term ‘[t]ransacts any business’ is not defined by statute, [the Supreme Court previously has] ... construed the term ‘to embrace a single purposeful business transaction.’ " Id., 119. " Moreover, a nonresident individual who has not entered this state physically nevertheless may be subject to jurisdiction in this state under § 52-59b(a)(1) if that individual has ‘invoked the benefits and protection of Connecticut’s laws’ by virtue of his or her ‘purposeful Connecticut-related activity ...’ " Id., 120.
" The transmission of communications between an out-of-state defendant and a plaintiff within the jurisdiction does not, by itself, constitute the transaction of business in the forum state." Bross Utilities Service Corp. v. Aboubshait, 489 F.Supp. 1366, 1371-72 (D.Conn. 1980), aff’d, 646 F.2d 559 (1980); see also Mitchell v. Patterson, Superior Court, judicial district of New Haven, Docket No. CV-4001501 (June 21, 2005, Levin, J.) (39 Conn.L.Rptr. 560) (collecting cases). But, the combined acts of communicating with the plaintiff in Connecticut via telephone, mail, and fax, and meeting in Connecticut with the plaintiff about a project from which the plaintiff’s injuries allegedly arose has been deemed sufficient to satisfy § 52-59b(a)(1). Hudson Park Investors, LLC v. Chris Anastos, P.E., Superior Court, judicial district of Stamford-Norwalk, Complex Litigation Docket, Docket No. X05-CV-03-0198484-S (April 8, 2005, Rogers, J.).
With respect to the present case, Pearsall Holdings, LP v. Mountain High Funding, LLC, United States District Court, Docket No. 3:13CV437 (JBA) (D.Conn. December 10, 2013), is particularly persuasive. In Pearsall Holdings, LP, the defendants were planning to issue a rated life settlement bond based on aggregated viatical settlements via entities controlled by their two companies, and the plaintiff decided to invest $750,000 in these companies with the expectation that it would eventually receive proceeds from the sale of the bond. The plaintiff filed suit after failing to receive any monies and after the defendants refused to provide the plaintiff with an accounting. One defendant, a Texas resident, moved to dismiss the plaintiff’s complaint for lack of personal jurisdiction, arguing that he never transacted business in Connecticut because his only connection to the state consisted of a handful of telephone calls. The District Court agreed and granted the defendant’s motion to dismiss because the defendant did not enter into a contractual relationship with the plaintiff, the defendant did not negotiate a transaction during the telephone calls with the plaintiff, and the only Connecticut-related assistance that the defendant provided to the proposed sale was to join a handful of conference calls with the plaintiff. The District Court also noted that the defendant had never been to, had no business in, and derived no profit from Connecticut; did not enter into a contractual relationship with the plaintiff in Connecticut; and had no other contact with the state outside of the alleged phone calls. Finally, the District Court added that the plaintiff did not even allege that the defendant knew the plaintiff was located in Connecticut when the calls were made, and, therefore, there was no basis for the court to infer that the defendant knew he was materially assisting an offer to sell securities in Connecticut even if he did materially assist such an offer.
In the present case, the defendant states in his affidavit that his sole connection with the alleged transactions is that he referred his brother-in-law to the broker located and licensed in California who placed the Sherman policy; the agent in California was paid a commission for placing the policy; the commission funds were paid to the broker in California; and the defendant received a portion of that sum as a consulting fee, which was paid to him in California in early 2009. The defendant also states, inter alia, that California has been his residence for over thirty-three continuous years; the last year that he was a resident of Connecticut was in 1976; he does not own any real or personal property in Connecticut and has not for forty-one years; he is rarely in Connecticut, but, occasionally, he visits family that resides there; he does not own, operate, manage, or work for a company in Connecticut or that does business in Connecticut; he does not have any employees or clients in Connecticut; he does not and has never had any business in Connecticut; he does not advertise in Connecticut; he does not earn any income from or out of Connecticut; he did not introduce or lure anyone into any transactions to purchase insurance or speak to any person in Connecticut about having a policy of insurance placed on their life; he never met or spoke to any of the members of the plaintiff about their decision to invest in the Sherman policy; he did not participate in a scheme concerning investments of any nature at any time with anyone in Connecticut; he never entered Connecticut in connection with the Sherman policy or any other life insurance policy; and he never communicated with the plaintiff or its members in regards to their decision to invest in the Sherman policy in any form.
Contrary to the statements in the defendant’s affidavit, the admissible portions of the affidavits and emails submitted by the plaintiff indicate that the defendant communicated periodically with his brother-in-law and the California insurance broker about the Sherman policy and other transactions well into 2013. Notably, the plaintiff’s e-mails evidence one instance where the defendant reached out to his brother-in-law to offer his assistance with communications regarding the Sherman policy being " in grace" and another instance where it appears the defendant asked his brother-in-law what " the split" would be between " heirs, investors, us" if " Don Sherman matures ..." Furthermore, the allegations in the plaintiff’s complaint and the plaintiff’s e-mails fairly imply that the defendant was aware that the Sherman policy was meant for a Connecticut resident. Even so, the plaintiff’s affidavits and emails do not show that the defendant ever visited Connecticut in connection with the Sherman policy and fail to show that the defendant ever communicated directly with the plaintiff, the plaintiff’s members, or with Donald Sherman in general or in relation to the Sherman policy.
Therefore, the complaint and the evidence submitted by the parties demonstrate that, similar to the defendant in Pearsall Holdings, LP, the defendant has almost no ties to the forum state, except for his family, which he visits occasionally, and that, although he communicated with his Connecticut brother-in-law and the California insurance broker about the Sherman policy, he was never involved in communications with the plaintiff, the plaintiff’s members, or Donald Sherman. Moreover, even if this court were to classify the defendant’s referral of his Connecticut brother-in-law to the California broker as a single, purposeful business transaction, this alleged transaction appears to have occurred in California, not Connecticut, because the defendant avers that he made the referral while he was in California and was later paid a consulting fee in California by the California broker. Thus, it appears that the defendant benefitted from California law in connection with the referral. Finally, although the plaintiff’s e-mails show that the defendant hoped to benefit from the sale of the Sherman policy itself, there is no allegation or evidence showing that he did. Accordingly, the plaintiff has not established that the defendant transacted business in Connecticut in accordance with § 52-59b(a)(1).
II. Committing a Tortious Act Within the State
Next, the plaintiff argues that the defendant participated in tortious conduct within the state by actively participating in a conspiracy with his brother-in-law and others to exploit his brother-in-law’s fiduciary duties and defraud elderly Connecticut insureds and investors in a STOLI scheme. The plaintiff contends that, though no Connecticut court has reached the issue, a number of courts in other jurisdictions have upheld long-arm jurisdiction over participants in a civil conspiracy where an act in furtherance of the conspiracy was committed in the forum state.
The Superior Court has recognized that " [t]he conspiracy theory of jurisdiction posits that the jurisdictionally sufficient acts of one conspirator may be attributed to his coconspirators. Although the conspiracy theory has gained some popularity, courts that use it have not addressed the difficulties it presents. Because a conspirator may be liable for acts that do not confer jurisdiction over him, the conspiracy theory often causes confusion and may lead to unconstitutional results. Courts have failed to recognize that a state’s jurisdiction over conspirators is not necessarily coextensive with the liability of conspirators as a matter of substantive law. The theory should be replaced with an analysis based on minimum contacts that looks to each defendant’s contacts with the forum without extraneous conceptual frameworks." (Internal quotation marks omitted.) Cece-York v. Saturn of Stamford, Inc., Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket No. X10-CV-09-5016395-S (February 6, 2013, Dooley, J.) (55 Conn.L.Rptr. 562), quoting Comment, The Long Arm and Multiple Defendants: The Conspiracy Theory of In Personam Jurisdiction, 84 Columbia L.Rev. 506 (1984); see also The Use of Conspiracy Theory to Establish In Personam Jurisdiction: A Due Process Analysis, 52 Fordham L.Rev. 234 (1983).
" The earliest cases discussing the concept of conspiracy in attributing jurisdictional ties properly used the term merely to describe the relationship of the parties. When the facts demonstrated that the out-of-state defendant agreed to a plan whereby another person would act on his behalf in the forum state, courts needed to indulge in little analysis to justify attribution of contacts to the defendant. The term ‘conspiracy’ served to describe the agreement and explain these facts, but did not short-circuit the due process analysis. In later cases, however, courts began to assume that an independent conspiracy theory existed and that it could be used as a device to bridge a gap they could not otherwise close." (Footnotes omitted.) The Use of Conspiracy Theory to Establish In Personam Jurisdiction: A Due Process Analysis, 52 Fordham L.Rev. 234, 253 (1983).
According to the Superior Court, Dooley, J., " the conspiracy theory of jurisdiction has never been adopted or applied by any Connecticut Court," and " there is contrary Superior Court authority" for doing so. (Internal quotation marks omitted.) Cece-York v. Saturn of Stamford, Inc., supra, 55 Conn.L.Rptr. 562 (quoting Jennings, J.). Citing West Hartford v. Taubman Centers, Inc., Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket Nos. X02-CV-07-5007876-S, X02-CV-07-50007877-S (May 9, 2008, Eveleigh, J.), in support, Judge Dooley explained that, in that case, " the developer of a shopping center had alleged that resident and nonresident defendants had collectively participated in a tortious, anti-competitive campaign conceived and implemented to forestall the developer’s project to protect the competitive position of a larger shopping mall in which they all held an interest. Although the term ‘conspiracy theory of jurisdiction’ is not expressly stated, the plaintiff was claiming jurisdiction over the nonresident defendants based on alleged collective tortious activity in Connecticut by one of the resident defendants. The court disagreed, granting the motions to dismiss filed by the nonresident defendants, holding that ... each defendant’s contacts with the forum state must be assessed individually, and the court’s inquiry is whether [the nonresident defendant] engaged in activities within the state so as to confer jurisdiction, not whether any other defendant engaged in activities within the state." (Internal quotation marks omitted.) Id. (quoting Jennings, J.).
The court finds the reasoning of these prior decisions and secondary sources persuasive. Thus, in the absence of Connecticut appellate authority to the contrary, the court will not apply the conspiracy theory of jurisdiction in the present case. Consequently, the court lacks jurisdiction over the defendant under § 52-59b(a)(2).
CONCLUSION
The plaintiff has not met its burden of establishing that Connecticut’s long-arm statute provides a basis upon which the court may exercise personal jurisdiction over the defendant. Therefore, the court need not proceed to the second step of the jurisdictional analysis. Cosgwell v. American Transit Ins. Co., supra, 282 Conn. 516-17 (" [i]t is axiomatic that courts do not engage in constitutional analysis if a nonconstitutional basis upon which to resolve an issue exists" [internal quotation marks omitted] ). Accordingly, the defendant’s motion to dismiss for lack of personal jurisdiction is granted.