Opinion
No. CV-06-5000728
May 24, 2007
MEMORANDUM RE MOTION TO STRIKE — #114
ISSUE
The issue before the court is whether the plaintiff's claims for breach of fiduciary duty, breach of contract and breach of contractual duty owed to a third-party beneficiary should be stricken. This court grants the motion to strike as to all three of these claims, as the plaintiff's allegations are legally insufficient to support them.
PROCEDURAL AND FACTUAL HISTORY
On December 11, 2006, the plaintiff, doctor Sin Hang Lee, filed a five-count, third revised complaint against four defendants, the law firm of Brenner, Saltzman and Wallman, LLP, and attorneys Alice Mick, David Schaefer, and Stephen Saltzman.
In count one of the complaint, the plaintiff alleges the following facts. The plaintiff was a member of a group medical practice, Pathology Associates and Consultants, P.C. (the Group). In January 1997, the members of the Group, acting on behalf of themselves and the Group, retained the defendants to revise the members' existing employment and stockholder agreements. In January 1997, the defendants delivered a copy of the new employment agreement (new agreement) to the plaintiff and promised that they would tailor it to the plaintiff's "specific situation." Pursuant to the previous employment agreement (former agreement), members of the Group could only be discharged for cause, as that term was defined therein. The new agreement materially altered the rights of the members in that it allowed them to be discharged without cause. The defendants delivered a second copy of the new agreement to the plaintiff in March 1998, and asked him to review the document in preparation for signing it.
The plaintiff received legal advice from the defendants in that they gave him a copy of the new agreement and indicated that they would provide him with further advice. The defendants did not disclose to the plaintiff that the new agreement materially altered his rights regarding termination, nor did they tailor it to his needs by providing him with the protection that existed in the former agreement. Furthermore, the defendants did not take any other steps to remedy the plaintiff's loss of rights or advise him of his legal rights.
The defendants continued to represent the plaintiff and the other members of the Group in corporate and employment matters until May 5, 2003. On that date, the plaintiff received a written notice from the defendants that they would no longer represent him. On May 15, 2003, the Group discharged the plaintiff without cause.
The plaintiff subsequently commenced this action. In counts one through five of the operative complaint, the plaintiff alleges claims against all of the defendants for legal malpractice, breach of fiduciary duty, negligent misrepresentation, breach of contract and breach of their duty to the plaintiff as a third-party beneficiary. On December 27, 2006, the defendants filed a motion to strike counts two, four and five, arguing that the complaint does not allege all of the elements of a claim for breach of fiduciary duty, that the two contract claims are actually claims sounding in negligence, and that the defendants did not owe a contractual duty to the plaintiff as a third-party beneficiary. The plaintiff objects to the motion on the ground that he has alleged adequate facts to support each claim. Both parties have filed memoranda of law regarding this motion.
DISCUSSION
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted . . . [The court takes] the facts to be those alleged in the complaint . . . and [construes] the complaint in the manner most favorable to sustaining its legal sufficiency . . . Thus, [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . [On the other hand, a] motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Citations omitted; internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).
I
In count two, the plaintiff incorporates the allegations of count one and adds that the defendants entered into a fiduciary relationship with him in agreeing to draft the new employment agreement on his behalf. He alleges that they breached this agreement in that they did not fully and honestly inform him that the new agreement took away his right not to be terminated absent cause, did not disclose that they could not represent him and did not inform him that he should seek independent counsel.
The defendants argue that the court should strike this count because the plaintiff has not alleged that they engaged in conduct involving fraud, self-dealing or a conflict of interest, and that in this count, the plaintiff merely relies on allegations of negligent conduct. According to the defendants, these allegations implicated standard of care, but not the duty of loyalty, which is a required element of a claim for breach of fiduciary duty. The plaintiff counters that his allegations regarding the defendants' lack of honesty are sufficient.
Because the defendants do not contest that they owed a fiduciary duty to the plaintiff, this court will assume that they did owe him such a duty. The plaintiff does not, however, sufficiently allege that the defendants breached that duty. "Although an attorney-client relationship imposes a fiduciary duty on the attorney . . . not every instance of professional negligence results in a breach of that fiduciary duty. [A] fiduciary or confidential relationship is characterized by a unique degree of trust and confidence between the parties, one of whom has superior knowledge, skill or expertise and is under a duty to represent the interests of the other. Professional negligence implicates a duty of care, while breach of a fiduciary duty implicates a duty of loyalty and honesty." (Citations omitted; internal quotation marks omitted.) Beverly Hills Concepts, Inc. v. Schatz Schatz, Ribicoff Kotkin, 247 Conn. 48, 56-57, 717 A.2d 724 (1998).
"Although [the Supreme Court has] not expressly limited the application of these traditional principles of fiduciary duty to cases involving only fraud, self-dealing or conflict of interest, the cases in which [the court has] invoked them have involved such deviations." Murphy v. Wakelee, 247 Conn. 396, 400, 721 A.2d 1181 (1998). Moreover, in Sherwood v. Danbury Hospital, 278 Conn. 163, 196-97, 896 A.2d 777 (2006), where the Supreme Court assumed that the defendant hospital owed the plaintiff patient a fiduciary duty regarding a blood transfusion, it affirmed the trial court's judgment granting the defendant's motion for summary judgment because "beyond her contention that the defendants should have warned her of the risks of the transfusion and failed to do so, the plaintiff has not alleged any facts that would support a claim of fraud, self-dealing, conflict of interest or the like."
In several recent Superior Court cases, the court has interpreted language similar to that used by the court in Murphy and other cases to require plaintiffs asserting claims for breach of fiduciary duty to allege that the defendants engaged in some form of fraudulent or immoral behavior beyond simple negligence or legal malpractice. See Memoli v. Galpin, Superior Court, judicial district of Litchfield, Docket No. CV 04 4001269 (June 30, 2006, Pickard, J.) ( 41 Conn. L. Rptr. 564) (granting motion to strike where allegations did not assert "dishonesty, disloyalty, or immorality"); J.S.T Development Corp. v. Vitrano, Superior Court, judicial district of New Britain, Docket No. CV 03 0521186 (June 22, 2004, McWeeny, J.) ( 37 Conn. L. Rptr. 590) (granting motion to strike where "[n]othing in the allegation implicates the defendant's loyalty, honesty, or morality"); Nosik v. Bowman, Superior Court, judicial district of Fairfield, Docket No. CV 00 0379089 (July 12, 2002, Doherty, J.) ("to survive a motion to strike framed as a breach of fiduciary duty, a pleader must allege facts which implicate the morality of counsel's conduct").
The problem with the plaintiff's argument that his allegation that the defendants acted dishonestly is sufficient to support his claim that they breached a duty of loyalty is that he has not alleged facts that establish that the defendants were either dishonest or disloyal. The plaintiff's allegations that the defendants failed to explain to him how the agreement had been revised, that they indicated that they would provide him with further legal advice regarding the new agreement and did not do so, that they failed to tailor the new agreement to his needs and that they did not take steps to remedy the loss of his termination rights under the new agreement, do not implicate the defendant's morality or honesty.
The defendants also argue that, to the extent the plaintiff's complaint can be read to allege that the defendants engaged in conduct that involved a conflict of interest, the conflict is not the type that is required to support a claim for breach of fiduciary duty. Specifically, they contend that the only potential conflict in this situation would be one between the interests of the plaintiff and the interests of the Group. They argue that, to allege a conflict of interest that would give rise to a claim for breach of fiduciary duty, the plaintiff would have to allege that a conflict existed between his own interests and those of the defendants and that it arose out of the defendants' representation of him. The plaintiff counters that, because the defendants were retained to revise the agreement on behalf of both the Group and its individual members, their representation amounted to a conflicting duty of loyalty in that he received less than the defendants' undivided loyalty.
Assuming that the defendants owed the plaintiff a duty of loyalty, the defendants are correct in arguing that their representation of the Group as well as its individual members does not suggest that they had the type of conflict of interest that is sufficient to support a breach of fiduciary duty, as required by the Superior Court in recent cases. In Lavitt v. Meisler, Superior Court, complex litigation docket at New London, Docket No. X04 CV 0127150 (July 15, 2003, Quinn, J.) ( 35 Conn. L. Rptr. 133), for example, the court considered a situation in which the defendants drafted a will for the decedent which was identical to an earlier will, except that it provided for a transfer of funds to an account the decedent shared with his wife. The plaintiffs, the decedent's estate and his two children, claimed that the defendants had a conflict of interest that gave rise to their claim for breach of fiduciary duty, as the defendants had previously represented the decedent's wife and had allegedly declined to represent the decedent. Id., 134. The court, in granting the defendants' motion to strike that claim, stated that, "[w]hen the attorney's professional duty of care without any aspect of self-dealing is implicated, no actionable breach of duty has occurred . . . And in those cases analyzing breach of fiduciary duty generally, an actionable breach is based on a conflict of interest the fiduciary himself has with the purpose of his duties on behalf of his client." (Emphasis in original.) Id.
Similarly, in Thier v. Kenyon, Superior Court, judicial district of Hartford, Docket No. CV 05 4007354 (August 22, 2006, Wagner, J.T.R.) the court denied a motion to strike a claim for breach of fiduciary duty where the plaintiffs alleged that the defendants, an architectural firm, had an undisclosed personal relationship with the contractors they hired, and hired the contractors despite knowing that they were not qualified to work on the project. The allegations that the defendants' relationship with the contractors affected the defendants' choice in selecting contractors to perform work and that the defendants made misrepresentations to the plaintiffs about the contractors' work for the purpose of inducing the plaintiffs to pay for the work were sufficient to survive the defendants' motion to strike. Id.
The plaintiff points out that in DiStefano v. Milardo, 276 Conn. 416, 420 n. 3, 886 A.2d 415 (2005), the trial court's jury instruction on the plaintiff's claim of breach of fiduciary duty against his attorney contained language referring to the attorneys' alleged conflict of loyalty between the plaintiff and a third party. As the defendant points out, however, the Supreme Court did not discuss that aspect of the jury instruction, as the sole issue before it was whether "the trial court properly had instructed the jury that no attorney-client relationship existed between the named defendant . . . and [the plaintiff]." (Internal quotation marks omitted.) Id., 420-21.
In the present case, the plaintiff's allegations that a conflict of interest existed between the defendants' representation of the Group and its representation of the Group's individual members do not give rise to a breach of fiduciary duty because the allegations do not suggest that the defendants were involved in fraud or self-dealing of any kind. To the extent that the plaintiff contends that his claim is premised on the defendants' failure to explain that a conflict might arise in the circumstances, it is noted that his complaint does not contain adequate factual allegations on this issue. Accordingly, this the court grants the defendants' motion to strike as to count two.
II
In counts four and five, which the plaintiff labels as claims for breach of contract and breach of contractual duty to a third-party beneficiary, respectively, the plaintiff incorporates the allegations of count one. In count four, the plaintiff adds the following allegations. The plaintiff, both as an individual and as a member of the Group, offered to retain the defendants to protect his interest in drafting the new agreement; the defendants accepted the offer and were paid for their services, but failed to protect the plaintiff's interest; and the defendants' conduct caused the plaintiff damages. In count five, which is pleaded in the alternative, the plaintiff adds the following allegations. The Group offered to retain the defendants; the parties intended that the defendants would represent the interests of the members of the Group in drafting the new agreement; the defendants accepted the offer, but failed to protect the plaintiff's interest; and the defendants' conduct caused the plaintiff damages.
The defendants argue that these counts should be stricken as legally insufficient because they are premised on the defendants' negligent provision of legal services, and are not contract claims. In response, the plaintiff argues that he is not alleging negligence in counts four and five, but rather, that the defendants made a specific promise to tailor the new agreement more towards his "specific situation," and that they did not fully perform according to that promise.
A
The first issue is whether the plaintiff's allegations sound in tort law or contract law. "[A]lthough one may bring against an attorney an action sounding in both negligence and contract . . . one [cannot] bring an action in both negligence and contract merely by couching a claim that one has breached a standard of care in the language of contract." (Internal quotation marks omitted.) Alexandru v. Strong, 81 Conn.App. 68, 79, 837 A.2d 875, cert. denied, 268 Conn. 906, 845 A.2d 406 (2004). As the Appellate Court has explained, "[n]otwithstanding that embedded in the language of the plaintiff's claim are the contractual rudiments of promise and breach, [w]here the plaintiff alleges that the defendant negligently performed legal services and failed to use due diligence the complaint sounds in negligence, even though he also alleges that he retained or engaged [the attorney's] services." (Internal quotation marks omitted.) Id., 79-80. "[A] claim that a defendant promised to work diligently or in accordance with professional standards is not made a contract claim simply because it is couched in the contract language of promise and breach." Caffery v. Stillman, 79 Conn.App. 192, 197, 829 A.2d 881 (2003). Such a claim "is distinguishable from a true contract claim in which a plaintiff asserts that a defendant who is a professional breached an agreement to obtain a specific result." Id.
"Whether the plaintiff's cause of action is one for malpractice depends upon the definition of that word and the allegations of the complaint . . . Malpractice is commonly defined as the failure of one rendering professional services to exercise that degree of skill and learning commonly applied under all the circumstances in the community by the average prudent reputable member of the profession with the result of injury, loss, or damage to the recipient of those services . . . The elements of a breach of contract action are the formation of an agreement, performance by the party, breach of the agreement by other party and damages." (Citation omitted; internal quotation marks omitted.) Rosato v. Mascardo, 82 Conn.App. 396, 410-11, 844 A.2d 893 (2004).
In the present case, the plaintiff does allege that the defendants made a specific contractual promise, that they failed to perform according to that promise and that this caused damages to the plaintiff. Strictly read, these allegations, if proven, would give rise to a claim for breach of contract. The requirement that the court must view the plaintiff's allegations in the manner most favorable to sustaining them, however, is not unlimited. "Although ordinarily — indeed, in most cases — in reviewing a motion to strike, the court must take the plaintiff's allegations at face value, that rule is not absolute. [The court has], on occasion, looked beyond the specific language of a pleading to discern its real underlying basis." Gazo v. Stamford, 255 Conn. 245, 262, 765 A.2d 505 (2001). In Gazo, the court decided to "look beyond the language used in the complaint to determine what the plaintiff really seeks. Just as [p]utting a constitutional tag on a nonconstitutional claim will no more change its essential character than calling a bull a cow will change its gender . . . putting a contract tag on a tort claim will not change its essential character." (Citation omitted, internal quotation marks omitted.) Id., 263.
In the present case, the underlying factual allegations indicate that the plaintiff's claim that he was injured as a result of the deficient nature of the legal services the defendants provided to him, is a personal injury claim. "An action in contract is for the breach of a duty arising out of a contract; an action in tort is for a breach of duty imposed by law. [W]hen the claim is one for personal injury, the decision usually has been that the gravamen of the action is the misconduct and the damage, and that it is essentially one of tort, which the plaintiff cannot alter by his pleading." (Internal quotation marks omitted.) Id., 263.
"Since the ruling in Gazo, [the Appellate Court], in interpreting whether a statutory provision sounded in tort or in contract, has restated the principle that it is the nature of the relief sought and not the nature [of] the parties' relationship that determines the character of the action." (Internal quotation marks omitted.) Pinette v. McLaughlin, 96 Conn.App. 769, 774, 901 A.2d 1269, cert. denied, 280 Conn. 929, 909 A.2d 958 (2006). "The general rule of damages in a breach of contract action is that the award should place the injured party in the same position as he would have been in had the contract been performed Damages for breach of contract are to be determined, as of the time of the occurrence of the breach." (Internal quotation marks omitted.) Gazo v. Stamford, supra, 255 Conn. 264-65. Here, "[p]utting the plaintiff in as good a position as he would have been in had the contract been performed would not compensate this plaintiff. The usual recovery for breach of a contract is the contract price or the lost profits therefrom." Id., 265.
In his prayer for relief, the plaintiff does not request that the portion of the agreement concerning discharge be revised to reflect his interests, nor does he seek the value of the contract with the defendants as money damages. Rather, the plaintiff is, like the plaintiff in Gazo, requesting unspecified money damages to compensate him for lost income, lost opportunity, loss of privileges and emotional distress. In this context, such damages suggest that, while the plaintiff has written counts four and five of the complaint in contractual language, he is seeking, in essence, a tort recovery.
Counts four and five of the plaintiff's complaint sound in tort and not in contract.
Accordingly, this court grants the defendants' motion to strike as to these counts on this ground.
B
The defendants also move to strike count five on the ground that they did not owe a contractual duty to the plaintiff, as an individual partner or investor in the Group. The plaintiff counters that this argument is invalid, as it pertains to negligence law and count five sounds in contract law. As this court has already determined that the plaintiff's complaint sounds in tort, rather than in contract, it need not reach this issue in order to resolve the defendants' motion.
CONCLUSION
For the aforementioned reasons, this court grants the defendants' motion to strike in its entirety.