Opinion
No. HHD CV 09-6005182-S
November 3, 2011
Ruling on Motion for Summary Judgment
In this vexatious litigation suit, the defendant, KR Nursing Services, Inc. (KR), moves for summary judgment on the ground that it had probable cause and relied on the advice of counsel at the time it filed the underlying action for civil conspiracy and conversion. The court grants summary judgment for KR.
I
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." Practice Book § 17-49. The party moving for summary judgment has the initial burden to bring forward evidentiary facts showing the absence of any material factual dispute. See Doty v. Shawmut Bank, 58 Conn.App. 427, 430, 755 A.2d 219 (2000). "Correspondingly, the 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." (Internal quotation marks omitted.) Id. "Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court [in support of a motion for summary judgment]." (Internal quotation marks omitted.) United Services Automobile Assn. v. Marburg, 46 Conn.App. 99, 110, 698 A.2d 914 (1997). "To oppose a motion for summary judgment successfully, the nonmovant must recite specific facts in accordance with Practice Book . . . §§ 17-45 and 17-46 . . . which contradict those stated in the movant's affidavits and documents and show that there is a genuine issue for trial. If he does not so respond, summary judgment shall be entered against him." (Internal quotation marks omitted.) Doty v. Shawmut Bank, supra, 430. Only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment. See Practice Book § 17-46; see also CT Page 22985 United Services Automobile Assn. v. Marburg, supra, 110.
Practice Book § 17-45 provides in part: "A motion for summary judgment shall be supported by such documents as may be appropriate, including but not limited to affidavits, certified transcripts of testimony under oath, disclosures, written admissions and the like."
Practice Book § 17-46 provides: "Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto."
"In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party . . . The test is whether a party would be entitled to a directed verdict on the same facts." (Internal quotation marks omitted.) Doty v. Shawmut Bank, supra, 58 Conn.App. 431.
II
The procedural history of the case is undisputed. KR is an agency that supplies nurses to nursing homes. In December 2001, KR filed a civil action (the underlying action) against the plaintiffs here, Marc Beaulieu and his business entity, Liberty Nursing Services, Inc. (Liberty), as well as a third defendant, Emily Cruz d/b/a Nurse Cruz (the underlying defendants). Beaulieu and Cruz were former employees of KR who left to form their own nursing service companies. The underlying action alleged a breach of fiduciary duty and civil conspiracy based on allegations that the underlying defendants attempted to persuade KR's nurses to work for their own companies and used confidential KR information.
In September 2003, the court, Booth, J., denied the underlying defendants' motion for summary judgment on the civil conspiracy count. The case proceeded to trial in September 2006, before the court, Freed, J.T.R. In October 2006, the court rendered its decision. The court noted that, at the commencement of trial, KR withdrew the first count of breach of fiduciary duty and all allegations against Cruz. The court interpreted the second count to allege both civil conspiracy and conversion by Beaulieu and Liberty. The court ultimately rendered judgment on these claims for the underlying defendants.
Beaulieu and Liberty now sue for vexatious litigation.
III
"A vexatious suit is a type of malicious prosecution action, differing principally in that it is based upon a prior civil action, whereas a malicious prosecution suit ordinarily implies a prior criminal complaint. To establish either cause of action, it is necessary to prove want of probable cause, malice and a termination of suit in the plaintiff's favor . . . Probable cause is the knowledge of facts sufficient to justify a reasonable person in the belief that there are reasonable grounds for prosecuting an action . . . Malice may be inferred from lack of probable cause . . . The want of probable cause, however, cannot be inferred from the fact that malice was proven . . . [T]he existence of probable cause is an absolute protection against an action for malicious prosecution, and what facts, and whether particular facts, constitute probable cause is always a question of law." (Internal quotation marks omitted; citations omitted.) Falls Church Group, LTD v. Tyler Cooper and Alcorn, LLP, 281 Conn. 84, 94, 912 A.2d 1019 (2007). When the facts themselves are disputed, the resolution of that dispute is ordinarily for the jury. See DeLaurentis v. New Haven, 220 Conn. 225, 252-53, 597 A.2d 807 (1991).
There is no dispute that, as a result of Judge Freed's decision, the underlying action, at least insofar as it alleged civil conspiracy and conversion, terminated in favor of Beaulieu and Liberty. On the other hand, the breach of fiduciary duty count, having been withdrawn by KR, cannot be said to have terminated in favor of the plaintiffs here. See Miller v. Unger, 192 Ohio App.3d 707, 950 N.E.2d 241 (2011) (voluntary dismissal not a termination in favor of party).
The same is true of allegations against Cruz, which KR withdrew. Cruz, however, is not a plaintiff in this vexatious litigation suit.
The threshold issue, therefore, is whether there was probable cause to support the civil conspiracy and conversion allegations. KR asserts the additional argument that it relied on the advice of counsel and therefore was justified in bringing suit.
A
Judge Freed interpreted a claim of civil conspiracy to require proof of "a combination between two or more persons to do a criminal or unlawful act by criminal or unlawful means committed by one or more of the conspirators." (Plaintiff's Exhibit (Pl. Ex.) F, p. 2.) He concluded that "there can be no finding of conspiracy in this case because there was no evidence adduced at trial of any participation by Emily Cruz in any of the allegations made by the plaintiff [KR]." (Pl. Ex. F, p. 2.)
Freed cited Litchfield Asset Management Corp. v. Howell, 70 Conn.App. 133, 799 A.2d 298, cert. denied, 261 Conn. 911, 806 A.2d 49 (2002). In Litchfield, the court observed that "[u]nder Connecticut law, technically speaking, there is no such thing as a civil action for conspiracy. The action is for damages caused by acts committed pursuant to a formed conspiracy rather than by the conspiracy itself. Cole v. Associated Construction Co., 141 Conn. 49, 54, 103 A.2d 529 (1954); see also 16 Am.Jur.2d 275-76, Conspiracy § 50 (1998). A claim of civil conspiracy, therefore, is insufficient unless based on some underlying cause of action . . . Marshak v. Marshak, . . . 226 Conn. [652, 665, 628 A.2d 964 (1993), overruled on other grounds, State v. Vakilzaden, 251 Conn. 656, 660, 742 A.2d 767 (1999)]. Consequently, for a plaintiff to recover on a conspiracy claim, the court must find the facts necessary to satisfy the elements of an independent underlying cause of action. Id." (Internal quotation marks omitted.) Litchfield Asset Management Corp. v. Howell, supra, 140.
In the present action, KR has not produced any significant additional evidence of an agreement or combination between Beaulieu and Cruz. The most that KR offers is a statement in the affidavit of Sharon Kunz, the principal of KR, that Beaulieu and Cruz "made negative comments about me and/or KR Nursing in an attempt to persuade nurses to not work for KR Nursing." (Defendants' (Def.) Ex. K, p. 2.) In opposition, Beaulieu produces the deposition of Kunz in which she ultimately states that she has no personal knowledge that Beaulieu and Cruz conspired or agreed to do anything to harm her business. (Pl. Ex. G, pp. 55-56.) At the very least, this conflicting testimony produces a material fact issue on the element of agreement, thus precluding, for purposes of summary judgment, a finding that KR had probable cause to bring suit on the conspiracy allegations.
In Beaulieu's motion for summary judgment in the underlying action, Beaulieu argued that the allegations of the complaint failed to allege, and that the evidence failed to show, the underlying criminal or unlawful act necessary to maintain a civil conspiracy action. Judge Booth disagreed, and denied the motion on that ground. Judge Booth did not address the separate question of whether there was sufficient evidence of an agreement or combination. (Def. Ex. O.)
On the conversion allegations, KR presents the affidavit of Patti Silva, who worked as a scheduler at Kimberly Hall South, a nursing home that obtained nurses from KR. (See Def. Exs. C (Ex. A thereto); K, p. 1.) Silva avers that, in December 2000, someone broke into her desk and stole the confidential rate schedules of the nursing agencies supplying nurses to Kimberly Hall. Beaulieu was the only person who had access to her office. An internal investigation determined that Beaulieu was also the only person who had the opportunity and motive to break into her desk. Beaulieu later admitted that he had the rate schedule of KR and other agencies. (Def. Ex. C (Ex. A thereto).) This information, which Kunz essentially had when she initiated suit in 2001, meets KR's burden of showing probable cause to bring suit for conversion. (Def. Ex. K, p. 1.)
Beaulieu submits no affidavits or other evidence to contradict these allegations. Instead, Beaulieu relies on various findings in Judge Freed's decision denying relief on the merits. Thus, Judge Freed found that "the plaintiff did not prove by the required standard (nor in fact by any minimal standard) that Beaulieu committed a burglary or any theft whatsoever . . . There was no credible evidence that the stolen rate schedules were confidential . . . As previously discussed above, the uncontroverted evidence is that the rate schedules were the property of Kimberly Hall and not [KR]. The required element of ownership is therefore lacking." (Def. Ex. O, pp. 4-5.)
These findings do not negate probable cause. The standard of proof in the civil case was at least preponderance of the evidence, and quite probably clear and convincing evidence. The fact that KR did not prove the case to this higher standard does not mean it did not meet the lesser standard of probable cause to initiate the case. Indeed, were that the case, then every case that terminates in favor of the defendant could result in a vexatious litigation suit. As our Supreme Court has observed: "Favorable termination of the suit often establishes lack of merit, yet the plaintiff in [vexatious litigation] must separately show lack of probable cause." (Emphasis in original; internal quotation marks omitted.) Falls Church Group, LTD v. Tyler Cooper and Alcorn, LLP, supra, 281 Conn. 103 (quoting Roberts v. Sentry Life Ins. Co., 76 Cal.App.4th 375, 382, 90 Cal.Rptr.2d 408 (1999), review denied, 2000 Cal. Lexis 1059 (February 16, 2000)). Based on the foregoing, Beaulieu has not presented any evidence that would create a fact issue concerning whether KR lacked probable cause on the conversion allegations.
Judge Freed observed that "[t]he standard of proof required for civil cases involving allegations of fraud or some other quasi-criminal wrongdoing is that of clear and convincing evidence." (Def. Ex. O, pp. 3-4.) While the court did not specifically state that it would apply that standard, it clearly implied that it would do so.
Although Judge Freed's statement that KR did not prove "by any minimal standard" that Beaulieu committed a burglary is of concern, it still does not establish lack of probable cause at the time that KR initiated the suit. The fact that KR did not produce sufficient evidence or credible witnesses at trial does not prove that KR lacked "knowledge of facts sufficient to justify a reasonable person in the belief that there are reasonable grounds for prosecuting an action . . ." (Citations omitted; internal quotation marks omitted.) Falls Church Group, LTD v. Tyler Cooper and Alcorn, LLP, supra, 281 Conn. 94. The issue of probable cause was simply not specifically contested in the prior action, and therefore Judge Freed's findings are not dispositive of that issue. See Ancona v. Manafort Bros., Inc., 56 Conn.App. 701, 705-08, 746 A.2d 184, cert. denied, 252 Conn. 953, 749 A.2d 1202 (2000).
B
KR asserts as an alternative argument on the conspiracy allegations that it reasonably relied on the advice of counsel. "Advice of counsel is a complete defense to an action of . . . vexatious suit when it is shown that the defendant . . . instituted his civil action relying in good faith on such advice, given after a full and fair statement of all facts within his knowledge, or which he was charged with knowing . . . The defendant has the burden of proof with respect to this special defense . . . Whether there was a full and fair disclosure of material facts as required by the advice of counsel defense is a question of fact . . ." (Citations omitted; internal quotation marks omitted.) Verspyck v. Franco, 274 Conn. 105, 112, 874 A.2d 249 (2005).
KR does not rely on the advice of counsel defense for the conversion allegations, nor do any of its affidavits supply any evidence that would support such a defense.
In this case, KR submits the affidavit of Sharon Kunz asserting that she relied upon the advice of attorney Wesley Spears in filing the civil conspiracy action and the affidavit of Spears averring that he advised Kunz that she had a valid civil conspiracy action against Beaulieu, Liberty, and Cruz. In response, Beaulieu contends that the affidavits do not adequately disclose that Kunz provided Spears "a full and fair statement of all facts within [her] knowledge, or which [she] was charged with knowing . . ." (Internal quotation marks omitted.) Id.
The court disagrees with Beaulieu's position. Paragraph thirteen of Kunz's affidavit states that she provided Spears with "all of the information I had learned . . ." In paragraphs six through eleven, Kunz details the information she had learned. This information includes the fact or belief that Beaulieu had stolen KR's nursing rate schedule, that shortly thereafter Beaulieu lowered his rates just below the rates of KR, that this action hurt KR's business with Kimberly Hall South, that Cruz had formed her own nursing company and had attempted to enter into a contract with Kimberly Hall to supply nurses, and that Beaulieu and Cruz had made negative comments about Kunz or KR in an attempt to persuade nurses not to work for the latter. (Def. Ex. K.)
Separately, Spears states in his affidavit that Kunz "provided me with information surrounding this matter. The information Ms. Kunz provided me at that time is consistent with the information outlined on pages 11-13 of the Memorandum of Law in support of Defendant's Motion for Summary Judgment in the above referenced action." (Pleading #113.) Spears then adds that "I advised Sharon Kunz that it was my opinion, based on the information she provided, that KR Nursing Services, Inc. had a valid civil conspiracy cause of action against Marc Beaulieu, Liberty Nursing Services and Emily Cruz." ( Id.)
While pages 11-13 of KR's memorandum contain only part of the facts actually relied upon by KR to support its underlying complaint, the factual recitation there does at least partly corroborate Kunz's affidavit. Thus, based on Spears's affidavit and the contents of page 13 of the memorandum, Spears learned from Kunz that Beaulieu and Cruz had been working for KR in 2000, that Beaulieu broke into Silva's desk and stole KR's rate schedules in December 2000, and that, shortly after the break-in, Beaulieu lowered Liberty's rates to just below those of KR, thus causing a loss of business to KR.
KR's counsel represented at oral argument that Spears was referring to an earlier draft of KR's memorandum that had different pagination. The court, however, cannot accept this representation, as it is not evidence. Nonetheless, the court can rely on whatever information pages 11-13 of KR's current memorandum does contain. Pages 11 and 12 contain legal argument, but page 13 recites the facts stated above.
Beaulieu does not point to any material facts that Kunz failed to disclose to Spears. Cf. Verspyck v. Franco, supra, 274 Conn. 113-14. Essentially, Kunz's affidavit, as partially corroborated by Spears's affidavit, provides undisputed evidence that Kunz made a full and fair disclosure of all known facts to Spears when Spears advised Kunz that she had a valid civil conspiracy action against Beaulieu and Liberty. Therefore, KR is entitled to summary judgment on the civil conspiracy allegations based on the defense of advice of counsel.
V
Accordingly, the court grants the defendants' summary judgment motion. It is so ordered.