Opinion
No. X08 CV01 0183603
August 15, 2003
MEMORANDUM OF DECISION RE MOTION TO STRIKE (165.00) AND MOTION FOR PARTIAL SUMMARY JUDGMENT (166.00)
I. Background
This civil action involves various claims primarily between two former business associates and owners of a business known as Guardian Systems, Inc. (Guardian Systems). Several litigations have been pursued by these parties against each other over the past few years. In this case the plaintiff Robert Rossman has sued his former associate Jerome Terracino, and others, on various claims regarding the transfer of certain assets from Guardian Systems to another corporation called Guardian Alarm Services, Inc. (Guardian Alarm).
The defendants have filed an answer and counterclaims. In April 2002, portions of the counterclaim were ordered stricken by Judge Rogers. The defendants subsequently filed a revised answer and counterclaim dated May 10, 2002, and Rossman has moved to strike the first, second, third, fourth, sixth and seventh counts of the counterclaim and has simultaneously moved for partial summary judgment dismissing the fifth count.
II. The Motion To Strike
In the first count of the counterclaim Terracino alleges that Rossman, as an employee, officer, director and shareholder of Guardian Systems owed a fiduciary duty to both Terracino and Guardian Systems which he breached by various allegedly disloyal and wrongful acts such as inter alia misappropriating customer lists, confidential information and other assets of Guardian Systems, and making disparaging and false statements about Guardian Systems and Terracino in an effort to switch Guardian Systems customers to a competing business established by Rossman. These allegations are similar to those set forth in the counts stricken by Judge Rogers on the grounds that they were claims that belonged to Guardian Systems which is not a party to this suit. In an effort to emphasize the injuries he individually suffered, Terracino now claims that, as a result of these alleged acts, he has suffered (1) a loss of reputation in the community, (2) a diminution of the value of his ownership interest in Guardian Systems and (3) that he has had to loan money to, and pay legal expenses of, Guardian Systems to protect his investment.
As pointed out by Judge Rogers in the earlier decision striking a similar counterclaim, the second and third claims are based on injuries to a non-party Guardian Systems, and are not injuries to Terracino personally. The new allegation, that he suffered a loss of reputation, is intertwined with the alleged loss of business by Guardian Systems . . . Furthermore, that allegation is unable to stand alone as a claim for defamation as there is no specifications as to what was said or how it was untrue. The first count is stricken.
In the second, third and fourth counts the claims are made against Rossman on behalf of Guardian Alarms. In the earlier counts stricken by Judge Rogers these claims had been made on behalf of Guardian Systems. Rossman contends the claims are still made on behalf of Guardian Systems but the plain reading of the counterclaim indicates otherwise. The motion to strike these counts is denied.
The sixth and seventh counts allege a violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a (CUTPA) and unjust enrichment respectively. These claims are brought by Terracino and Guardian Alarms. The claims on behalf of Terracino are based on a reiteration of the allegations of the first count. For the reasons stated above in striking the first count, the sixth and seventh counts made on behalf of Terracino are stricken. The claims in the sixth and seventh counts on behalf of Guardian Alarms are based on the allegations of the second count, and the motion to strike these counts is denied.
III. The Motion for Partial Summary Judgment
The fifth count of the counterclaim makes the following allegations: that Rossman, Terracino and Guardian Systems were guarantors of a certain promissory note made by Mutual Communication, Inc.; that Rossnan and Terracino, in early 1997, were negotiating with the note holder to purchase the note at a discounted rate in order to pay it off and retire their guarantor obligation; that in June 1997 Rossman began to negotiate for purchase of the note individually and that the note was subsequently sold to Rossman's attorney Andrew Buzzi, Trustee, for $30,000.00 and later assigned to a company formed by Buzzi and Rossman's wife; that the note was then sold to Fairway Asset Management for $40,000.00 which pursued its collection and obtained judgment against Rossman, Terracino and Guardian Systems in the amount of approximately $325,000.00; that in the meantime, Rossman disposed of all his assets to become judgment proof; and that by his failure to obtain or pay off the note Rossman breached his fiduciary duty to Terracino and exposed the latter to the large judgment.
The extensive recitation of the allegations in the fifth count is necessary because Rossman moves for summary judgment on this count on the basis of res judicata. He contends this claim was already decided against Terracino in an earlier action, FDIC v. Mutual Communications, Superior Court, judicial district of Lichfield, CV95 0067158 (October 20, 1999), aff'd., 66 Conn. App. 397 (2001), pp. dismissed, 262 Conn. 358 (2003).
Terracino contends that the claims in the FDIC case and the instant case are different. He asserts that in FDIC he sought equitable relief including a declaratory judgment that the promissory note was unenforceable against him, and in this case he seeks money damages.
Summary judgment may be granted when there is no issue as to any material fact and the moving party is entitled to prevail as a matter of law. Practice Book § 17-49. In this case, there are no contested material facts. Rossman, the moving party, has submitted an affidavit which brings to this court's attention certain pleadings in the FDIC case. Terracino and the other defendants have not filed any affidavits in support of their objection to the motion. As pointed out below, determining whether res judicata applies involves a review of the pleadings in the prior and present cases to ascertain whether the same subject matter is involved. The pleadings and prior judgment are matters of public record and their content is not subject to dispute in this case. As a result, the Connecticut Supreme Court has noted that summary judgment is an appropriate means to resolve res judicata claims. Joe's Pizza, Inc. v. Aetna Life Casualty Co., 236 Conn. 863, 867, n. 8 (1996); Jackson v. R.G. Whipple, Inc., 225 Conn. 705, 712 (1993).
The doctrine of res judicata holds that a final judgment rendered on the merits, without fraud or collusion, by a court of competent jurisdiction is conclusive of causes of action and of facts and issues litigated by the parties in the same or any other court of concurrent jurisdiction. If the same cause of action is sued on again, the prior judgment is a bar to any claims relating to that cause of action which were actually made or could have been made. Richards v. Richards, 67 Conn. App. 381 (2001). In determining whether the earlier judgment was on the same claim, the Connecticut Supreme Court has adopted the so-called "transactional test." In applying that test the court should compare the pleadings which the movant attempts to bar by application of the res judicata doctrine to the pleadings of the case in which final judgment was entered. Delahunty v. Massachusetts Mutual Life Ins., Co., 236 Conn. 582, 590 (1996).
In FDIC Terracino served a cross claim against Rossman which essentially, through the adoption of allegations contained in a special defense, set out the same transactions and facts as are contained in the counterclaim herein, albeit in the context of a foreclosure and deficiency action in which Terracino and Rossman were co-defendants. The cross claim alleged that Rossman had breached his fiduciary duty to Terracino and Guardian Systems and sought, among other claims for relief money damages. At the trial court level findings were made against the Terracino cross claim, and it was dismissed for failure to meet the burden of proof. This decision was affirmed on appeal. It should be noted that subsequent to the final judgment in FDIC v. Mutual Communications, supra, Terracino petitioned for a new trial on the basis of newly discovered evidence. That petition was denied. Terracino v. Fairway Asset Management, Superior Court, judicial district of Litchfield, CV00 0082928 (March 8, 2001), aff'd., 75 Conn. App. 63 (2003).
The court is mindful that in certain cases it may be inappropriate to apply res judicata to bar a claim even though the same facts had been previously litigated in a different court. See e.g. Delahunty v. Massachusetts Mutual Life Ins., Co., supra (refusing to bar a tort claim by one ex-spouse against the other even though the same facts had been litigated in a divorce action, noting that in a divorce action the court was without power to award the remedies sought in the tort claim). However, this case does not present the same issues raised in Delahunty. While FDIC was a foreclosure action, the case also involved claims for money damages; most importantly, Terracino's cross claim against Rossman sought money damages from Rossman, the remedy sought in the fifth count of the counterclaim. Also, unlike Delahunty, the cross claim in FDIC was actually litigated and determined on its merits.
The transaction set forth in Terracino's cross claim against Rossman in the FDIC action is the same transaction and set of facts alleged in the fifth count of Terracino's counterclaim against Rossman in this case. The matter has been fairly litigated on its merits. The doctrine of res judicata applies, and the fifth count is dismissed.
TAGGART D. ADAMS SUPERIOR COURT JUDGE