Opinion
No. CV 02-813759
July 26, 2006
MEMORANDUM OF DECISION ON STATE DEFENDANTS' MOTION TO DISMISS
In this case, plaintiff Ronald Gold, an employee of the defendant State of Connecticut ("State") who procured health insurance coverage from defendant Anthem Health Care Plans, Inc. d/b/a Anthem Blue Cross and Blue Shield of Connecticut ("Anthem BC/BS"), a subsidiary of defendant Anthem Insurance Companies, Inc. ("Anthem Insurance"), from June 18, 2001 through November 2, 2001, has brought suit on his own behalf and that of all persons similarly situated (the plaintiff's "class" or "sub-class") to assert rights and recover damages in connection with the alleged misdelivery to and taking by the State of certain stock in defendant Anthem, Inc. ("Anthem"), the corporate parent of Anthem Insurance, which he claims that Anthem should have delivered to him and the other members of his class upon the conversion of Anthem Insurance from a mutual insurance company to a stock insurance company ("demutualization") on November 2, 2001. At present, the defendants in the action are: (1) the State and its former Governor, John G. Rowland ("the State defendants"), who allegedly caused the State to sell the misdelivered stock despite conflicting claims as to its ownership, and thereafter to retain all proceeds from its sale for the use of the State; and (2) four related Anthem Entities — including, as aforesaid, defendants Anthem, Anthem Insurance and Anthem BC/BS, as well as Anthem East, Inc. ("Anthem East"), a wholly-owned subsidiary of Anthem Insurance of which Anthem BC/BS is a wholly-owned subsidiary (collectively, "the Anthem defendants").
In his pleadings, the plaintiff has brought parallel claims on behalf of two groups of similarly situated persons. The first and larger group, which he refers to as his "class," includes
all persons similarly situated who:
a. were employed by or retired from employment by the State;CT Page 17150
b. procured health insurance from Anthem BC/BS from June 18, 2001 through November 2, 2001; and
c. were eligible to receive compensation as a result of the demutualization.
Complaint II-A, Counts I, ¶ 13; Count III, ¶ 11; and Counts V, VII, VIII, X, XII, XIV, XVI, ¶ 13. The second and smaller group, a portion of the class which he refers to as his "sub-class," includes
all persons similarly situated who:
a. were employed by or retired from employment by the State;
b. procured health insurance from Anthem BC/BS from June 18, 2001 through November 2, 2001;
c. contributed money to pay a portion or all of their health insurance premium; and
d. were eligible to receive compensation as a result of the demutualization.
Id., Count II, ¶ 15; Count IV, ¶ 13; Count VI, ¶ 13; Count VII, ¶ 13; Count IX, ¶ 13; Count XI, ¶ 13; Count XIII, ¶ 13; Count XV, ¶ 13; and Count XVII, ¶ 13. Except where a more particular meaning is required by the context, both groups will hereinafter be referred to as the plaintiff's "class." Neither the class nor the sub-class has yet been certified due to the pendency of this Motion challenging the Court's subject-matter jurisdiction.
The plaintiff unilaterally withdrew all claims against Equiserve Trust Company, N.A., one of the original defendants in the action, by the filing of his Third Amended Complaint ("Complaint III-A").
In his Second Amended Complaint dated November 4, 2002 ("Complaint II-A"), which is still operative against the State defendants, the plaintiff alleges that the demutualization of Anthem Insurance was completed in accordance with the terms of a Plan of Conversion; id., Counts I-XVII, ¶ 6; under which the plaintiff and his fellow class or sub-class members were assertedly entitled to receive compensation from Anthem, in the form of Anthem stock or its cash equivalent, as a result of the demutualization. Id., Counts I-XVII, ¶ 7. Notwithstanding this entitlement, neither the plaintiff nor any of his fellow class or sub-class members has ever received compensation from Anthem as a result of the demutualization. Id., Counts I-XVII, ¶ 8. Instead, the stock which should have been issued to them by Anthem was allegedly issued to the State; id., Counts I-XVII, ¶ 9; which later sold it, retaining all proceeds from the sale for its own use. Id., Counts I-II, ¶ 10. The State defendants' receipt and retention of the disputed stock and stock sales proceeds has allegedly converted property rightfully owned by the plaintiff and the members of his class or sub-class; id., Counts VIII, X, XII, XIV, XVI, ¶ 17; Counts IX, XI, XIII, XV and XVII, ¶ 19; and unjustly enriched the State. Id., Count III, ¶ 16; Counts IV, VI-VII, IX, XI, XIII, XV, XVII, ¶ 18. On the basis of these allegations, the plaintiff has made seventeen claims against the State defendants, which can usefully be divided into two related groups: common-law claims set forth in Counts One through Nine of Complaint II-A, and State and federal constitutional claims set forth in Counts Ten through Seventeen thereof.
Complaint II-A was superseded as to the Anthem defendants only by the plaintiff's filing of his Third Amended Complaint ("Complaint III-A") dated April 15, 2003. It was not superseded as to the State defendants because they timely objected to the further amendment of the operative pleadings during the pendency of their instant Motion to Dismiss.
The plaintiff's common-law claims are as follows. In Counts One and Two, he makes parallel claims in the nature of interpleader under General Statutes § 52-484 — one for himself and his class and the other, for himself and his sub-class — with respect to all proceeds from the sale of the disputed Anthem stock. Under each such Count, he seeks an order from this Court determining which of the parties has an ownership interest in those proceeds. In Counts Three and Four, he makes parallel claims of unjust enrichment on behalf of himself and his class or sub-class, respectively, based upon the State's allegedly wrongful retention of the disputed stock and stock sales proceeds. Under each such Count, he seeks an award of money damages. In Counts Five and Six, he makes parallel claims of constructive trust with respect to the disputed stock sales proceeds. Under each such Count, he seeks an order from this Court declaring that the State is holding those proceeds in constructive trust for himself and the members of his class or sub-class, and thus that the State must transfer those proceeds to him and his fellow class or sub-class members forthwith. In Count Seven, he makes a claim of resulting trust with respect to the disputed proceeds, under which he seeks an order from this Court declaring that the State is holding those proceeds in resulting trust for himself and the members of his class or sub-class, and thus that the State must transfer those proceeds to him and his fellow class or sub-class members forthwith. Finally, in Counts Eight and Nine, he makes parallel claims of conversion with respect to the disputed stock and stock sales proceeds, under each of which he seeks an award of money damages.
In each of the plaintiff's eight remaining Counts, he seeks relief from the State defendants, on the basis of the foregoing allegations, for alleged violations of their State or federal constitutional rights. Thus, in Counts Ten and Eleven, he makes parallel claims, for himself and his class or his sub-class, that the State defendants' sale of the disputed stock and continuing retention of all proceeds from its sale without paying them for it has resulted in the taking of their property for public use without just compensation, in violation of Article I, § 11 of the Connecticut Constitution. As a remedy for the alleged taking, the plaintiff seeks money damages. On that same factual basis, in Counts Fourteen and Fifteen, he further claims that the State defendants' taking of such stock and stock sales proceeds from himself and his class or his sub-class has violated, under color of State law, their rights under the Takings Clause of the Fifth Amendment as applied to the States through the Due Process Clause of the Fourteenth Amendment to the United States Constitution. On that basis, under each of those Counts, he seeks money damages and attorneys fees pursuant to 42 U.S.C. § 1983. In Counts Twelve and Thirteen, moreover, he makes parallel claims that the State took the disputed stock and stock sales proceeds from him and the members of his class or sub-class without notice or a hearing or other administrative or judicial process, thereby depriving them of their property without due process of law, in violation of Article I, § 10 of the Connecticut Constitution. As a remedy for this alleged due process violation, the plaintiff seeks an order from this Court voiding the transfer of the disputed stock from Anthem to the State. Similarly, in Counts Sixteen and Seventeen, he makes parallel claims that the State's alleged taking of his and his fellow class or sub-class members' private property without notice or a hearing or other legal process violated their rights under the Due Process Clause of the Fourteenth Amendment to the United States Constitution. On that basis, under each of those Counts, he seeks money damages, attorneys fees pursuant to 42 U.S.C. § 1983, and an order from this Court voiding the transfer of the disputed stock from Anthem to the State. On March 13, 2002, the State defendants filed a Motion to Dismiss all claims then pending against them in the plaintiff's First Amended Complaint dated March 13, 2002 ("Complaint I-A"). As grounds for that Motion, they asserted that this Court lacks subject-matter jurisdiction over any of the plaintiff's challenged claims because they all were brought without the consent of the State, in alleged violation of the sovereign immunity doctrine. The movants supported their Motion with an accompanying Memorandum of Law ("State's Initial Memorandum") and several attached exhibits. Thereafter, following the plaintiff's unobjected-to filing of his Second Amended Complaint dated November 4, 2002, the movants supplemented their Motion to Dismiss with an Addendum dated February 14, 2003. By their Addendum, they broadened their Motion to challenge, also under the sovereign immunity doctrine, all claims brought against them in Complaint II-A.
Although the plaintiff has since filed a Third Amended Complaint dated April 15, 2003, that pleading is not operative as to the State defendants because they objected to its filing prior to the adjudication of their Motion to Dismiss, as was their right.
The plaintiff first responded to the Motion to Dismiss, so supplemented, by filing a Memorandum in Opposition dated May 30, 2003 ("Plaintiff's Opposition") and several attached exhibits. The movants initially replied to the Plaintiff's Opposition by filing a Reply Brief dated August 28, 2003 ("Initial Reply Brief").
Over the next two years, however, while the Anthem defendants and the plaintiff were conducting discovery in preparation for, briefing and arguing, then awaiting decision on the Anthem defendants' Motion for Summary Judgment dated May 30, 2002, the Connecticut Supreme Court issued several new decisions which clarified certain relevant aspects of Connecticut sovereign immunity law. To take account of those new decisions in their arguments on this Motion, and consider the significance of this Court's intervening denial of the Anthem defendants' Motion for Summary Judgment, the parties agreed that further briefing on the Motion was required. Accordingly, the movants filed a Substituted Reply Brief in Support of Motion to Dismiss dated June 24, 2005 ("State's Substituted Reply Brief"), in which they formally withdrew their Initial Reply Brief. Thereafter, the Anthem defendants, although not parties to the Motion to Dismiss, filed an Objection to State's Motion to Dismiss dated November 17, 2005 ("Anthem Objection") and the plaintiff filed a Sur-Reply in Opposition to the Motion dated November 18, 2005 ("Plaintiff's Sur-Reply"). Finally, the movants responded to the Anthem Objection and the Plaintiff's Sur-Reply by filing their own Sur-Reply Brief in Support of Motion to Dismiss dated January 4, 2006 ("State's Sur-Reply"). Oral argument on the Motion was held on January 18, 2006. Thereafter, the 120-day deadline for submission of the Court's decision has been extended by agreement until July 26, 2006.
I. RULES AND STANDARDS FOR DECIDING MOTIONS TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION
"A motion to dismiss . . . properly attacks the jurisdiction of the court . . ." Gurliacci v. Mayer, 218 Conn. 531, 544, 590 A.2d 914 (1991); see also Sadloski v. Manchester, 235 Conn. 637, 645-46 n. 13, 668 A.2d 1314 (1995) ("[t]he motion to dismiss shall be used to assert . . . lack of jurisdiction over the subject matter"). "The motion to dismiss . . . admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone . . . Where, however, . . . the motion is accompanied by supporting affidavits containing undisputed facts, . . . the court may look to their content for determination of the jurisdictional issue and need not conclusively presume the validity of the allegations of the complaint." (Citation omitted; internal quotation marks omitted.) Barde v. Board of Trustees, 207 Conn. 59, 62, 539 A.2d 1000 (1988); see Amore v. Frankel, 228 Conn. 358, 366, 636 A.2d 786 (1994).
Ferreira v. Pringle, 255 Conn. 330, 346-47, 766 A.2d 400 (2001).
"[T]he doctrine of sovereign immunity implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss." (Internal quotation marks omitted). Kizis v. Morse Diesel International, Inc., 260 Conn. 46, 51, 794 A.2d 498 (2002).
II. FACTS
The record before this Court includes the following relevant facts:
1. Anthem, Inc. ("Anthem") was organized as a stock corporation under the Indiana Business Corporation Law, to be the parent corporation of Anthem Insurance Companies, Inc. ("Anthem Insurance") following the latter's conversion from a mutual insurance company to a stock insurance company under the Indiana Demutualization Law on November 2, 2001.
2. On July 31, 1997, when Anthem Insurance was still being operated as a mutual insurance company, it merged with Blue Cross Blue Shield of Connecticut, Inc. ("BCBS-CT"), a Connecticut corporation then being operated as a mutual insurance company, under a Plan and Joint Agreement of Merger ("Plan and Agreement") which designated Anthem Insurance as the company that would survive the Merger.
3. Mutual insurance companies such as Anthem Insurance and BCBS-CT are owned and operated by their "members," as defined in their respective articles of incorporation and by-laws.
4. Under Anthem Insurance's pre-Merger membership rules, each individual holder of a certificate of coverage under a fully insured group health insurance policy issued by Anthem Insurance was an individual member of the company. The pre-Merger membership of Anthem Insurance thus included all individual employees holding certificates of coverage under group health insurance policies procured for them from Anthem Insurance by their employers, but not the employer-procurers of such policies themselves.
5. At the time of the Merger between Anthem Insurance and BCBS-CT, membership in BCBS-CT was governed by Article II of its corporate by-laws, which provided in part as follows:
ARTICLE II
Members
Section 1. General. The Corporation shall have one class of members, known as Voting Members, and this class shall possess all the voting powers of the membership. A Voting Member shall be any policyholder of the Corporation as hereinafter defined. The term "policyholder" shall mean any of the following:
(a) An individual who has a direct-pay policy (including, but not limited to, medicare supplement policies) with the Corporation and who is considered a "Subscribing Member" or "Insured" under the terms of the contract. If the ownership of such policy is divided, the parties owning the policy shall be considered one Voting Member.
(b) In the case of a group insurance policy, the group as a whole shall be considered one policyholder, and such policyholder's rights as a Voting Member shall be exercised by the individual designated in, or pursuant to, such policy to act for the group for voting purposes. Individual members of the group who have been issued certificates shall not be considered Voting Members.
6. Anthem Insurance and BCBS-CT structured and implemented their Merger as follows: "On July 31, 1997, Anthem Insurance and BCBS-CT made final filings with governmental agencies in Connecticut and Indiana for a Plan and Joint Agreement of Merger ('Plan and Agreement') by which BCBS-CT and Anthem Insurance merged, with Anthem Insurance being the surviving company. Both before and after the Merger, Anthem Insurance was an Indiana mutual insurance company, and the [M]erger was expressly designed to be a `Qualified Membership Merger,' as that term was defined in [Section 7.6(a)(1) of] Anthem Insurance['s] Articles of Incorporation." Miller Aff., ¶ 6. A "Qualified Mutual Merger," under Section 7.6(a)(1) of the Anthem Articles, was defined as "a merger of a Qualified Mutual Insurer into the Corporation pursuant to a joint agreement of merger that expressly designates that merger as a Qualified Mutual Merger having the effects described in Sections 7.6, 8.4, 8.5, 8.6 and 8.7 of these . . . Articles." A "Qualified Mutual Insurer," in turn, was defined in Section 7.6(a)(2) of the Anthem Articles as "the mutual insurer or other mutual benefit of other membership insurer that is merging into the Corporation pursuant to a Qualified Membership Merger."
7. In connection with the Merger, BCBS-CT formed a Connecticut subsidiary, Anthem Health Care Plans, Inc. d/b/a Anthem Blue Cross Blue Shield of Connecticut ("Anthem BC/BS" or "New CT-Blue"), to resume the health insurance business of BCBS-CT after the Merger. Pursuant to Article I, Section 1.2 of the Plan and Agreement, Anthem BC/BS was considered a "Qualified Membership Subsidiary," as defined in Section 7.6(a)(3) of the Anthem Articles.
8. The effect of the merger Plan and Agreement on BCBS-CT members was addressed in Article III of the Plan and Agreement, which provided that following the Merger, all BCBS-CT members would receive two new policies as follows: (1) an assumption certificate of an insurance policy or health care benefits contract from Anthem BC/BS (referred to in the Plan and Agreement as "New CT-Blue"), providing the same level of health benefits previously received from BCBS-CT; and (2) a new Anthem Insurance guaranty policy that gave former BCBS-CT members membership/ownership rights in Anthem Insurance equivalent to those they had in BCBS-CT. The issuance of such policies was designed and intended to secure the post-Merger rights of all former members of BCBS-CT, as required by Section 7.6(b) of the Anthem Articles, which provided as follows:
(b) Former Members of Qualified Mutual Insurers. Upon effectiveness of a Qualified Membership Merger, all of the members of the Qualified Mutual Insurer shall (1) retain their insurance and/or medical and health benefits under Qualified Contracts, and (2) become members of the Corporation pursuant to, and shall be entitled to receive guaranty insurance policies/membership certificates issued by the Corporation in respect to such Qualified Contracts. Each such guaranty insurance policy/membership certificate shall continue in effect and confer membership and other rights in the Corporation as long as (x) the related Qualified Contract is in effect, or has been renewed, amended, or replaced, without a lapse in coverage, by any insurance policy or health care benefits contract issued by a Qualified Membership Subsidiary for that Qualified membership Merger, and (y) the membership fees required under such guaranty insurance policy/membership certificate are paid when due to the terms of such guaranty insurance policy/membership certificate.
9. At the time of the Merger, the State of Connecticut maintained a self-funded employee health insurance plan that was administered by BCBS-CT under an Administrative Services-Only Agreement dated October 1, 1993 ("the ASO Agreement"). Under the ASO Agreement, BCBS-CT provided administrative services, such as claims processing, for tens of thousands of State employees and retirees who were enrolled in the Plan. By its terms, however, the ASO Agreement was not an insurance policy. Therefore, neither the State nor any of its employees or retirees became a member of BCBS-CT by entering into or receiving services from BCBS-CT under the ASO Agreement.
10. Also at the time of the Merger, a group of 571 State retirees were covered by a BCBS-CT group health insurance policy known as "Care Plus." The Care Plus Policy was a fully insured group HMO subscriber agreement through which State retirees could supplement their Medicare coverage. Between October of 1989 and March of 1996, the State procured Care Plus coverage for its retirees from Community Health Care Plan, Inc. ("CHCP"), a former BCBS-CT subsidiary. Thereafter, however, upon the dissolution of CHCP, BCBS-CT took over all contractual obligations of CHCP, and thus assumed full responsibility for providing continuing Care Plus coverage to State retirees who had previously maintained such coverage with CHCP.
11. Before the Merger could be finalized under the Plan and Agreement, it had to be approved not only by the Insurance Departments of the States of Connecticut and Indiana but by the Members and Boards of Directors of the two merging companies. To that end, the Board of Directors of BCBS-CT preliminarily approved the Merger on September 26, 1996, then scheduled a Special Meeting of the company's Voting Members for March 27, 1997, the date of the Annual Meeting. The record date for identifying all Voting Members entitled to notice of, or to vote at, the Special Meeting was established as the close of business on January 30, 1997.
12. Although an initial mailing list of BCBS-CT's Voting Members was compiled by its information agent, the D.F. King Company, Inc. ("D.F. King"), on or before February 11, 1997, it was soon learned that that list was incomplete and inaccurate in a number of ways. Accordingly, several changes were made to the list before the date of the Special Meeting "to more accurately reflect the membership status of certain groups and individuals as of the January 30, 1997 record date." Meade Aff., ¶ 10.
13. "In connection with Group policies," BCBS-CT recognized that "Voting Members were the fully insured groups for which premiums were fully paid as of January 30, 1997." Meade Aff., ¶ 7. One such group which was omitted from the February 11 mailing list was the group of State retirees who were covered by the Care Plus Policy, for the list neither referenced the group or its Policy in any way, by name, number, identity of employer or otherwise, nor included the name of any "individual designated in, or pursuant to" the Policy "to act for the group for voting purposes," as contemplated by Article II, Section 1(b) of BCBS-CT's By-Laws.
14. Sometime in late March of 1997, however, State Comptroller Nancy Wyman inquired of BCBS-CT, either personally or through her Division Director of Retirement Benefit Services, Steven Weinberger, if the State would have the right to vote on the proposed Merger. This inquiry was not animated by any special concern for the rights or interests of the State's Care Plus retirees, whose group was still not included in BCBS-CT's ever-changing list of Voting Members, but by more general concerns about the potentially negative effects of the proposed Merger on the State's taxpayers, including the anticipated transfer of large profits earned in Connecticut out of State.
15. On March 26, 1997, after initially responding in the negative to the Comptroller's inquiry, BCBS-CT abruptly decided that the State did indeed have the right to vote on the proposed Merger at the next day's Special Meeting, and so took several immediate steps to make that possible. First, shortly after noon on that day, BCBS-CT Vice President Peter Thorkelson sent a fax to the Company's information agent, D.F. King, instructing it to add a group identified as "00042-243, State of Connecticut, Office of Comptroller, 55 Elm Street, Hartford, CT 06106" to its official list of Voting Members of the Company. Contemporaneously with this communication, Mr. Thorkelson caused a member of his staff to make a new handwritten entry — "Connecticut, State, Steven Weinberger" — on his own working copy of the official membership list. Finally, three hours later, Mr. Thorkelson caused a proxy packet addressed to "Steven Weinberger, Director, Retirement Benefit Service Division, Office of State Comptroller, 55 Elm Street, Hartford, CT 06106" to be delivered by courier to the State Comptroller's Office. Inside the packet was a Proxy that read in material part as follows:
PROXY
The undersigned, being the individual authorized to exercise the voting rights of the policyholder named below, hereby constitutes and appoints John F. Croweak, Harry J. Torello and Robert T. Bown, and each of them, with full power of substitution, as attorneys and proxies for the undersigned to appear and vote as a Voting Member of Blue Cross Blue Shield of Connecticut, Inc. ("the Company") at both the Special Meeting of its Voting Members, including any adjournment or postponement thereof, and the Annual Meeting of its Voting Members, including any adjournment or postponement thereof, as follows:
* * * *
SPECIAL MEETING: PROPOSAL
To approve and adopt the Plan and Joint Agreement of Merger and the CT-Blue Transfer, together with all of the transactions contemplated thereby.
For ____ Against ____ Abstain ____
ANNUAL MEETING: PROPOSAL
To elect the following slate of four nominees to the class of the Board of Directors whose term of office expires at the 2000 Annual Meeting of Voting members: Barbara M. Carragher, Richard J. Grossi, Kenneth T. Johnson, M.D. and Victor Liss
For ____ Withheld ____
and further to vote in accordance with their discretion with respect to other matters, if any, as to which Voting members are or may be entitled to vote at said Special Meeting and said Annual Meeting. The Proxy, when properly executed, will be voted in the manner directed. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS. The Board of Directors recommends a vote FOR both the proposal to approve and adopt the Plan and Joint Agreement of Merger and the CT-Blue Transfer, together with all of the transactions contemplated thereby and FOR the proposal to elect the slate of four nominated Directors.
* * * *
The undersigned acknowledges receipt of the Information Circulars accompanying this Proxy.
Date:
___________________________ Signature of Voting Member:
___________________________ 00042-243
State of Connecticut Office of Comptroller 55 Elm St. Hartford, CT 06106
X__________________________ Please sign exactly as your name appears on this Proxy. If the member is a person other than a natural person, a duly authorized officer or agent should sign on behalf of such member.
On March 27, 1997, State Comptroller Nancy Wyman personally executed the Proxy by signing it in her own name on the line labeled "Signature of Voting Member" after checking the box marked "Against" below the "Special Meeting: Proposal" to approve and adopt the Plan and Joint Agreement of Merger and the CT-Blue Transfer, together with all of the transactions contemplated therein, and checking the box marked "Withheld" in the space below the "Annual Meeting: Proposal" to elect the Company's recommended slate to its Board of Directors. By timely delivering her Proxy to the Company, it was voted in the manner directed.
16. Following the Special Meeting, where over 90% of the Voting Members voted to approve the proposed Merger, Comptroller Wyman took legal action of two kinds. First, she attempted to halt the Merger by moving to intervene in the proceeding before the State Insurance Commissioner to approve it, then by appealing from the Commissioner's final decision to approve it after he denied her motion to intervene. Second, she filed in this Court a class action lawsuit entitled Wyman v. Croweak et al., CV 97-0576030, for the stated purpose of recovering, on behalf of all Connecticut BCBS-CT policyholders, the net surplus of approximately $270 million that BCBS-CT had allegedly realized by doing business in Connecticut prior to the Merger.
17. In her deposition in the class action lawsuit on September 2, 1998, Ms. Wyman offered several conflicting explanations as to the capacity in which she purported to act as the would-be class representative of all Connecticut BCBS-CT policyholders. Thus at times she referred to the State as the "policyholder" with respect to the Care Plus Policy; see, e.g., Wyman Depo., p. 103; at other times she described herself as the policyholder of the Policy, with the clarification that her status as such derived from her official position as State Comptroller; id. at 119, 144; and on still other occasions she stated that, as State Comptroller, she was actually the policyholder for the group of Care Plus retirees. Id. at 120. A review of her entire deposition testimony reveals that Ms. Wyman, a non-lawyer who expressly disclaimed any intent to offer an opinion on any legal subject, never offered any substantive evidence as to who was the true policyholder and Voting Member of BCBS-CT with respect to that Policy, or who, if anyone, had been designated in, or pursuant to, such Policy to act for the group for voting purposes.
18. Three months later, in a "Limited Offer of Proof" which was filed with the Court on December 11, 1998 in support of her own motion for class certification in above-referenced lawsuit, Ms. Wyman made the following additional representations, through her counsel, as to the capacity in which she sought to act as class representative on behalf of other Connecticut BCBS-CT policyholders:
1. That the Plaintiff is a policyholder of Blue Cross/Blue Shield ("BC/BS").
2. That she became a policyholder by virtue of her position as Comptroller for the State of Connecticut.
3. That there are approximately 571 retired state employees who are current policyholders of BC/BS.
4. That as a policyholder, the Plaintiff received ballots for the election of BC/BS officers and for approval of the merger with Anthem.
5. That the Plaintiff has previously been acknowledged by BC/BS as a member/policyholder when it sent her a proxy for the meeting of members/policyholders held March 27, 1997, convened for the purpose of voting on whether to proceed with the merger with Anthem.
6. That as Comptroller for the State of Connecticut, the Plaintiff represents the benefits interest of the approximately 571 retired state employees who are current policyholders of BC/BS.
The foregoing representations on behalf of the Comptroller, though made in a judicial pleading by her experienced legal counsel, are no less conflicting and ambiguous than the Comptroller's own testimony at deposition as to who was the true policyholder and Voting Member of BCBS-CT with respect to the Care Plus Policy, and who, if anyone, was designated in, or pursuant to, that Policy to act for the group for voting purposes.
19. The Care Plus Policy in force at the time of the Merger was never located by the parties, and thus it was not produced for the Court's inspection. Even so, there is substantial, uncontroverted evidence before the Court that that Policy, as originally issued to the State by CHCP, remained essentially the same from the time it was first issued through the time of Merger and beyond, until it expired in April of 2000. One such earlier version of the Policy which was produced for the Court's inspection provided in part as follows:
GROUP HEALTH MAINTENANCE ORGANIZATION MEMBERSHIP AGREEMENT
This Agreement entered into this 1st day of July 1992 by and between the State of Connecticut, the participating group, acting through the State Comptroller pursuant to Conn. Gen. Stat. Sections 3-112 and 5-259(a), 55 Elm Street, Hartford, Connecticut 06106, hereinafter referred to as the "Employer," and Community Health Care Plan, Inc., a health maintenance organization organized under the laws of the State of Connecticut and having a principal office of business at 221 Whitney Avenue, New Haven, Connecticut 06511, hereinafter referred to as "the HMO."CT Page 17103
WHEREAS, the Employer and the HMO have agreed that the HMO shall provide to State Employees holding a permanent position in State service (hereinafter referred to as "subscribers") a health care plan as an option to the State's standard hospitalization, medical and surgical insurance plan approved in accordance with the provisions of Conn. Gen. Stat. Section 5-259(a); and
WHEREAS, the Employer and the HMO have entered into a Group Services Agreement which sets forth the benefits, terms and conditions of the HMO sponsored health care plan option; and
WHEREAS, the Employer and the HMO now desire to enter into this Group Health Maintenance Organization Membership Agreement for the mutual benefit of the Employer, the HMO and the subscribers to the HMO health plan option.
NOW THEREFORE, The Employer and the HMO mutually covenant and agree as follows:
1. For the purposes of this Agreement, the Employer is the agent of the subscribers and not the agent of the HMO.
2. This Agreement shall have an initial term of one year commencing at 12:01 a.m., July 1, 1992, and terminating at 12:00 midnight June 30, 1993.
* * * *
15. Unless otherwise expressly provided to the contrary, any notices provided for hereunder shall be in writing and may be delivered personally or by mail. Notices will be effective if delivered personally or, if by mail, upon receipt to the following address:
EMPLOYER: Office of the Comptroller 55 Elm Street, 2nd Floor Hartford, CT 06106 Director, Special Services DivisionCT Page 17104
* * * *
20. Pursuant to and upon the effectiveness of the Merger, Anthem BC/BS, the Qualified Membership Subsidiary formed by Anthem Insurance in connection with the Merger, assumed all contractual obligations arising under the Care Plus Policy which the State had previously maintained with BCBS-CT. Thereafter, it renewed that Policy and continuously provided HMO coverage to State retirees thereunder that Policy until April of 2000.
21. In addition, contemporaneously with Anthem BC/BS's assumption, pursuant to the Merger, of BCBS-CT's contractual obligations to State retirees under the Care Plus Policy, Anthem Insurance issued the State a guaranty insurance policy/membership certificate ("Guaranty Policy"), under which the State ostensibly became a member of Anthem Insurance, with membership rights equivalent to those of a Voting Member of BCBS-CT. Such membership rights were set forth as follows in Article IV of the Guaranty Policy:
As long as this Policy is in effect, . . . all of the rights of membership in Anthem [Insurance] accorded to members of a mutual insurance company, under Indiana law, including the right to vote on all matters that come before the members of an Indiana domestic mutual insurance company under the Indiana Insurance Law and equity rights in the event of a liquidation, merger, consolidation or demutualization as provided in Anthem [Insurance]'s Articles of Incorporation from time to time in effect. Such equity rights are intended to be equivalent to the rights which the Anthem [Insurance] member would have as a member under the Anthem [Insurance] policy if Anthem [Insurance], rather than Anthem BC/BS, had issued the Anthem BC/BS Contract, and shall accrue solely to the Anthem [Insurance] Member. No Enrollee or dependent of an Enrollee shall receive any equity rights by virtue of being an Enrollee or dependent of an Enrollee . . .
Under Article VI of the Guaranty Policy, the policy was to remain in full force and effect, and thus the State's membership and associated voting and equity rights in Anthem Insurance were to continue CT Page 17105
for as long as the Anthem BC/BS Contract [to provide coverage under the Care Plus Policy, as assumed and renewed pursuant to the Merger by Anthem BC/BS] is in effect, or has been renewed, amended, or replaced by any Anthem BC/BS Contract without a lapse in coverage, and the Anthem [Insurance] Membership Fees are paid prior to the expiration of the Grace Period set forth in Article VII of this Policy.
22. Although, on its face, the Guaranty Policy was issued only to the State, not to all or any part of the "group as a whole" of State retirees who were enrolled for health care insurance coverage under the assumed Care Plus Policy, pursuant to which it was issued, the Guaranty Policy specifically provided that "The Anthem Member is the fiduciary agent of the Covered Persons hereunder." Id., p. 8.
23. Also following the Merger, Anthem BC/BS proceeded to conduct other business, including the provision of administrative services to the State's self-funded employee health plan under the 1993 ASO Agreement and the sale of new insurance policies.
24. On or about July 1, 1999, after maintaining its ASO Agreement with Anthem BC/BS for nearly two full years after the date of the Merger, the State discontinued its self-funded employee health plan. On that same date, the State and Anthem BC/BS replaced the ASO Agreement with a new fully insured group health policy ("the 1999 Group Policy") which had a four-year term. Under the 1999 Group Policy, Anthem BC/BS began providing fully insured health benefits to substantially the same group of State employees and retirees who had previously been covered by the State's self-insured plan under the ASO Agreement.
25. The 1999 Group Policy, unlike the ASO Agreement, was a "group policy or contract," within the meaning of Section 7.6(c)(1) of the Anthem Articles, and each State employee and retiree who enrolled under the 1999 Group Policy, including the plaintiff, Ronald Gold, was a "holder of a certificate of coverage" thereunder. Therefore, all such employees and retirees were entitled to membership in Anthem Insurance, under Section 7.6(a)(1) of the Anthem Articles, unless their Policy came within one of the two exceptions to that rule which are set forth in subsections (2) and (3) of Section 7.6(a).
26. Section 7.6(c)(1) provided in relevant part that,
Except as set forth in Subsections 7.6(c)(2) and (3) below, . . . each holder of a certificate of coverage under a group insurance policy or health care benefits contract, which . . . group policy or contract is originally issued by a Qualified Membership Subsidiary for that Qualified Membership Merger after the effectiveness of such Merger, shall be entitled to receive a guaranty insurance policy or certificate of membership from the Corporation [Anthem Insurance]. Each such . . . certificate of membership issued under a group guaranty insurance policy shall grant the following rights: (1) voting rights on all matters that come before the members of an Indiana domestic mutual insurance company under Indiana Insurance Law and as provided in these Third Amended and Restated Articles of Incorporation; (ii) a guarantee of the benefits provided under the insurance policy or health care benefits contract issued by the Qualified Membership Subsidiary; and (iii) rights in the event of a liquidation, merger, consolidation, demutualization or conversion of the Corporation described in Section 8.1, as provided under the Indiana Insurance Law and as set forth in Article VIII.
27. Section 7.6(c)(3) of the Anthem Articles, however, made the following exception to the general rule granting membership rights in Anthem Insurance to most holders of certificates of coverage under group insurance policies:
Section 7.6(c)(1) . . . shall not apply with respect to Qualified Contracts (or certificates of coverage thereunder) as described in Section 7.6(b), or any Insurance policy or health care benefits contract issued as a renewal, amendment or replacement of such a Qualified Contract (or certificate of coverage thereunder) where there was no lapse of coverage
28. A "Qualified Contract," as defined in Section 7.6(a)(4) of the Anthem Articles, includes any of the following:
(i) any insurance policy or health care benefits contract issued by a Qualified Membership Subsidiary [such as Anthem BC/BS] pursuant to the Qualified Membership Merger [the Merger] in exchange for an insurance policy or health care benefits contract issued by the Qualified Mutual Insurer [BCBS-CT] which conferred membership rights in the Qualified Mutual Insurer prior to such Merger;
(ii) any insurance policy or health care benefits contracts, issued by a Qualified Mutual Insurer and which conferred membership rights in the Qualified Mutual Insurer, that is assumed by a Qualified Membership Subsidiary pursuant to the Qualified Membership Merger; and
(iii) any insurance policy or health care benefits contract, issued by a Qualified Membership Subsidiary prior to effectiveness of the Qualified Membership Merger and which conferred membership rights in the Qualified Mutual Insurer prior to such Merger, that remains in effect after effectiveness of the Qualified Mutual Merger.
28. The Anthem defendants claim that the State's Care Plus Policy was a Qualified Contract under subsection (ii) of Section 7.6(a)(4) of the Anthem Articles because it was originally issued by a Qualified Mutual Insurer, BCBS-CT, it assertedly conferred membership rights in BCBS-CT upon the State; and it was later assumed, pursuant to the Qualified Membership Merger between BCBS-CT and Anthem Insurance, by a Qualified Membership Subsidiary, Anthem BC/BS. On that basis, they further claim that the 1999 Group Policy, though not itself a Qualified Contract, is exempt from the general rule of Section 7.6(a)(1) of the Anthem Articles, granting membership in Anthem Insurance to individual holders of certificates of coverage under group insurance policies, because that Policy was assertedly "issued as a renewal, amendment or replacement of such a Qualified Contract (or certificate of coverage thereunder) where there was no lapse of coverage," within the meaning of Section 7.6(a)(3) of the Articles.
29. Although the Care Plus Policy remained in effect for approximately ten months after the 1999 Group Policy was first issued, and Michelle Zettergren of Anthem testified at her deposition that the 1999 Group Policy was not issued to replace the Care Plus Policy, the defendants have presented evidence that upon the elimination of the Care Plus Policy, all State retirees still covered under that Policy were given the option of replacing their Care Plus coverage, without lapse of coverage, with coverage under the 1999 Group Policy.
30. In addition, the defendants claim that even if the 1999 Group Policy was not "issued as a . . . replacement of a Qualified Contract [the Care Plus Policy]," the plaintiff and his fellow class members could still claim no membership rights in Anthem Insurance under the 1999 Group Policy, because the granting and exercise of such rights would be completely inconsistent with the State's own membership rights in the Company arising under the Guaranty Policy issued to it at the time of the Merger and Article 7.6(b) of the Anthem Articles. Under Article IV of the Guaranty Policy, to reiterate, the State was granted "all the rights of membership . . . accorded to members of a mutual insurance company under Indiana law[,]" including voting rights and equity rights in the event of a conversion or a demutualization. On this score, Article IV further provides as follows: "Such equity rights are intended to be equivalent to the rights which the Anthem [Insurance] Member would have as a member under an Anthem [Insurance] policy if Anthem [Insurance], rather than Anthem BC/BS, had issued the Anthem BC/BS Contract, and shall accrue solely to the Anthem [Insurance] Member. No Enrollee or dependent of an Enrollee shall receive any equity rights by virtue of being an Enrollee or dependent of an Enrollee." The State assertedly had those exclusive membership rights, moreover, both before and after the elimination of the Care Plus Policy, because the guaranty policy was to remain in full force and effect
for as long as the Anthem BC/BS Contract [to provide coverage under the Care Plus Policy, as assumed and renewed pursuant to the Merger by Anthem BC/BS] is in effect, or has been renewed, amended, or replaced by any Anthem BC/BS Contract without a lapse in coverage, and the Anthem [Insurance] Membership Fees are paid prior to the expiration of the Grace Period set forth in Article VII of this Policy.
(Emphasis added.) Under the underscored portion of this provision, contend the defendants, and parallel language in Section 7.6(b) of the Anthem Articles, the key question to be answered in deciding if the guaranty policy remained in effect after the elimination of the Care Plus Policy is not whether the 1999 Group Policy was "issued as a replacement of" the Care Plus Policy, but whether the Care Plus Policy was "replaced by any Anthem BC/BS Contract without a lapse of coverage." If it was, claim the defendants, then the State remained the sole and exclusive member of Anthem Insurance in connection with both the Care Plus Policy, as assumed by Anthem BC/BS following the Merger, and its own later replacement of that Policy by the 1999 Group Policy, also procured from Anthem BC/BS.
See ¶ 8, supra.
31. On June 18, 2001, the Board of Directors of Anthem Insurance approved a "Plan of Conversion to a Stock Insurance Company under Indiana Code § 27-15-2-2 (the "Plan of Conversion"). Indiana Code § 27-15-2-2(2) requires that any plan of conversion from a mutual insurance company to a stock corporation "provide that the membership interests in the converting mutual will be extinguished as of the effective date of the conversion." Indiana Code § 27-15-2-2(3), in turn, "require[s] the distribution to the eligible members, upon the extinguishing of their membership interests, of aggregate consideration equal to the fair value of the converting mutual . . ."
32. Indiana Code § 27-15-1-7 defines "eligible member" as an individual who "(1) is a member of the converting mutual on the date the converting mutual's board of directors adopts a resolution proposing a plan of conversion and an amendment to the articles of incorporation; and (2) continues to be a member of the converting mutual on the effective date of the conversion." The term "member" is defined under Indiana Code § 27-15-1-9 as "a person that, according to the (1) records; (2) articles of incorporation; and (3) by-laws; of a converting mutual, is a member of the converting mutual."
33. As explained by Cheryl Miller of Anthem in her initial Affidavit submitted in support of this Motion, "Under the provisions of the Plan of Conversion [Exhibit 7 to the Miller Aff.], all of the outstanding capital stock of Anthem Insurance would be issued to Anthem, Inc., a new parent corporation to be formed under the laws of Indiana, upon the effectiveness of the demutualization, and `Eligible Statutory Members' of Anthem Insurance [i.e., the Eligible Members under Indiana Code §§ 27-15-1-7 and 27-15-1-9], as defined in the Plan of Conversion, would become entitled to receive stock or cash of Anthem, Inc. on the date of the demutualization [the "Effective Date"] in exchange for the extinguishment of their ownership/membership interests in Anthem Insurance." Miller Aff., ¶ 15.
34. In accordance with Indiana Code §§ 27-15-1-7 and 27-15-1-9, the Anthem Plan of Conversion defined "Eligible Statutory Member" as follows:
"Eligible Statutory Member" shall mean a Person who (a) is a Statutory Member of Anthem Insurance on the Adoption Date [i.e., June 18, 2001] and continues to be a Statutory Member of Anthem Insurance on the Effective Date, and (b) has had continuous health care benefits coverage with the same company during the period between those two dates under any Policy or Policies without a break of more than one day.
35. The Effective Date of the Plan of Conversion, which is more fully described in Part IV of this Memorandum of Decision, infra, was November 2, 2001, the date on which the Indiana Commissioner of Insurance formally approved the Plan of Conversion.
36. During the entire period from June 18, 2001 through November 2, 2001 ("the "Eligibility Period"), the 1999 Group Policy remained in effect.
37. Plaintiff Ronald Gold and his fellow class members, tens of thousands of other State employees and retirees, continuously held certificates of coverage under the 1999 Group Policy during the Eligibility Period. On that basis, the plaintiff claims that he and the other members of his class were all Eligible Members of Anthem Insurance, entitled to a distribution in connection with the demutualization under the Plan of Conversion. Consistent with this claim, two Anthem Vice Presidents, David Frick and Cynthia Miller, both stated in their testimony at the Demutualization Hearing before the Indiana Commissioner of Insurance on October 2, 2001, that under the By-Laws and Articles of Incorporation of Anthem Insurance, it has always been understood that, in the case of group insurance policies, the members of the Company for all purposes are not the employers who procure or pay for their policies, but the individual employees who hold certificates of coverage thereunder, and thus any distribution in the event of a demutualization goes only to them.
38. Despite the above, Anthem did not distribute any cash or stock to any of the State employees or retirees who were Eligible Members under the 1999 Group Policy. Gold Aff. at ¶ 4.
39. Rather, Anthem Insurance distributed 1,645,773 shares of Anthem, Inc. stock to the State in late 2001 and early 2002. App. at Exh. 10 (Stipulation), p. 1. The State later sold the stock for $93,768,950. App. at Exh. 10 (Stipulation), at p. 2.
40. On January 14, 2002, Comptroller Nancy Wyman sent a letter to Governor John Rowland requesting the establishment of a "fiduciary agency fund" for the stock and any proceeds derived therefrom. App. at Exh. 11 (Wyman Letter); App. at Exh. 10 (Stipulation), p. 2. In the letter, Comptroller Wyman indicated that "the State has taken custody of an asset to which it does not have a clear and unfettered right of ownership," thus requiring that the disputed stock and/or proceeds be maintained in a fiduciary fund "pending the resolution of all ownership issues." App. at Exh. 11 (Wyman Letter). By letter dated January 18, 2002, Governor Rowland approved the establishment of the fiduciary fund (the "Fund"), and the State deposited the $93,768,950 therein, pending the resolution of stock ownership. App. at Exh. 12 (Rowland Letter); App. at Exh. 10 (Stipulation), p. 2.
III. THE PLAINTIFF'S COMMON-LAW CLAIMS
The State defendants' first major claim on this Motion is that all of the plaintiff's common-law claims against them must be dismissed for lack of subject-matter jurisdiction because they either seek money damages without the State's consent or seek declaratory and/or injunctive relief based upon alleged conduct by State officials not claims for declaratory and/or injunctive relief not falling within the narrow exception to sovereign immunity for alleged actions by State officials in excess of their statutory authority, as described in Miller v. Egan, 265 Conn. 301, 828 A.2d 549 (2003). The plaintiff has responded to this claim in three ways. First, as to his claims of interpleader, as pleaded in Counts One and Two, he contends that they are merely procedural vehicles for obtaining a final judicial determination as to who owns the disputed stock and stock sales proceeds, and thus that their viability depends upon the viability of at least one of his other, substantive claims. He thus proposes that if any of those substantive claims survives this jurisdictional challenge, then his interpleader claims should survive as well, whereas if none survives, they too should be dismissed. The State defendants agree with this position, as does this Court.
Second, as to his claims of unjust enrichment, as pleaded in Counts Three and Four, and his claims of conversion, as pleaded in Counts Eight and Nine, he concedes that they are all unconsented-to claims for money damages, which must therefore be dismissed. The State defendants also agree with this position, as does this Court.
Third, however, as to his remaining claims of constructive and resulting trust, the plaintiff claims, on divers grounds, that they are all saved from dismissal under either the narrow exception to the sovereign immunity doctrine described in Miller v. Egan or by another, broader exception to the doctrine assertedly articulated in Krozser v. New Haven and Pamela B. v. Ment but not overruled by Miller v. Egan. For the following reasons, the Court agrees with the State defendants that all three challenged counts must be dismissed.
A. State Defendants' Argument That Plaintiff's Constructive and Resulting Trust Claims Are Merely "Dressed Up" Claims for Money Damages
The State defendants' initial challenge to the viability of the plaintiff's constructive and resulting trust claims is that notwithstanding their equitable labels and accompanying demands for declaratory and equitable relief, they are nothing more than "dressed up" claims for money damages. This argument is based expressly upon an allegation in each of those Counts that the plaintiff has suffered and will continue to suffer damages as a result of the State's wrongful retention of their property, which causes the State to suggest that he will surely seek to recover those damages.
The plaintiff's response to this argument, not surprisingly, is that in each of the challenged counts, as distinct from certain others, he pled a purely equitable claim against the defendants in order to pursue the particular equitable remedy specified in his ad damnum. Hence, in lieu of seeking money damages, he has sought orders from this Court declaring that the State defendants are holding the disputed stock or its cash equivalent in constructive trust (Counts Five and Six) or resulting trust (Count Seven), in favor of himself and the members of his class and sub-class, and requiring the State defendants to transfer such stock or cash to them forthwith.
By its very nature, a constructive trust imposes a lien on particular property in the hands of one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy. Aetna Life Casualty Co. v. Union Trust Co., 230 Conn. 779, 791, 646 A.2d 799 (1994). The lien, of course, is in favor of the owner of the particular property, to protect his interests in it, and ultimately to ensure its safe return. Accordingly, it is not a lien on the holder's general estate, but only on the property itself, or on any new and different property in which the wrongly withheld property may have been reinvested. 3 Pomeroy, Equity Jurisprudence (5th ed.) § 1058e, pp. 152-53. Here, then, if the plaintiff can establish grounds for imposing a constructive trust on all proceeds from the sale of the disputed stock, it will encumber only the monies now held by the State in the segregated Fund, not the State's General Fund.
A resulting trust arises "by operation of law at the time of a conveyance when the purchase money for property is paid by one party and the legal title is taken in the name of another." Farrah v. Farrah, 187 Conn. 495, 500, 446 A.2d 1075 (1982). It "arises to enforce presumed or inferred intent, usually in the absence of any element of fraud . . ." Zack v. Guzauskas, supra.
When a resulting trust arises as to particular property, it recognizes the parties' intent that title to the property vest in the one who paid the purchase price therefor. Hence, it affords a basis for establishing legal title to the property upon which the trust is imposed, not to support a claim for damages for any losses the beneficiary may have suffered by reason of not having possession of the property from the time of purchase until the time the resulting trust is imposed upon it. For all of these reasons, the Court concludes that the claims presented in Counts Five, Six and Seven of Complaint II-A are not "dressed-up" claims for money damages, but proper claims for equitable relief.
B. Plaintiff's Claim That His Constructive and Resulting Trust Claims Are Saved From Dismissal Under a Broad Exception to the Sovereign Immunity Doctrine for Declaratory and Injunctive Relief Claims, Whose Successful Prosecution Will Not Undermine the Purposes of Sovereign ImmunityIn 2003, the Connecticut Supreme Court was called upon to determine if the established exception to the sovereign immunity doctrine for claims against the State based upon alleged actions by State officials in excess of their statutory authority applied to claims for money damages as well as to claims for declaratory and/or injunctive relief. The issue had arisen in three separate cases in which trial judges had denied motions to dismiss damages claims against State officials under the apparent authority of Antinerella v. Rioux, 229 Conn. 479, 642 A.2d 699 (1994), and Shay v. Rossi, 253 Conn. 134, 749 A.2d 1147 (2000).
In that time frame, Shay and Antinerella were Connecticut's two leading cases on the "in excess of statutory authority" exception to the sovereign immunity doctrine, for they were the first cases in which the Court had been called upon to articulate the standard by which a State actor's alleged conduct was to be evaluated to determine if it was in excess of his statutory authority. Unfortunately, however, since both Shay and Antinerella were cases in which the plaintiff sought money damages as well as injunctive relief, and neither any party nor the Court thought to raise the issue as to whether the exception applied at all to damages claims, the Court's newly minted standard clearly seemed to apply to damages claims as well.
Upon revisiting the development of the "in excess of statutory authority" exception to the sovereign immunity doctrine prior to Antinerella and Shay, the Miller Court found evidence of a common understanding that the exception should only apply to claims for declaratory and/or injunctive relief. This understanding was based upon the underlying rationale of the sovereign immunity doctrine, which was to avoid subjecting State officials to "private litigation[, which] might constitute a serious interference with the performance of their functions and with their control over the respective instrumentalities, funds and property." Miller v. Egan, supra, 265 Conn. at 314 ( quoting Pamela B. v. Ment, 244 Conn. 296, 328, 709 A.2d 1089 (1998)). "Because," said the Miller Court, "a Court may tailor declaratory and injunctive relief so as to minimize any such interference, and in order to `afford an opportunity for voluntary compliance with the judgment,' actions that seek injunctive or declaratory relief against a state officer acting in excess of statutory authority or pursuant to an unconstitutional statute do not conflict with the policies underlying the doctrine of sovereign immunity. Doe v. Heintz, 204 Conn. 17, 32, 526 A.2d 1318 (1987)." Miller v. Egan, supra, 265 Conn. at 314. Actions for money damages, by contrast, were found to pose far graver threats to the operations of State government because awards in those cases were "directly enforceable [against the State], without further court intervention, [and could be enforced] against any property of the judgment debtor that is not statutorily exempt . . ." Doe v. Heintz, supra, 204 Conn. at 32. For that reason, and in light of the legislature's enactment of a comprehensive statutory scheme detailing under what circumstances and with what limitations, an injured person might bring an action for money damages against an individual State employee, the Court concluded that the exception to sovereign immunity for actions in excess of statutory authority or pursuant to an unconstitutional statute applied only to actions seeking declaratory or injunctive relief, not to those seeking monetary damages. Id. at 321. Hence, it overruled its prior decisions in Shay and Antinerella, "to the extent that each of those cases holds that sovereign immunity does not bar monetary damages actions against State officials acting in excess of their statutory authority"[;] Miller v. Egan, supra, 265 Conn. at 325; and it modified the substantive standard under which it would be decided whether or not challenged conduct by a State official was in excess of his statutory authority.
"[B]ecause[,]" the Court observed, the exception is limited to actions seeking declaratory or injunctive relief, it is sufficiently narrow and there is simply no danger that the exception will swallow the rule. Therefore, we now conclude that when a process of statutory interpretation establishes that the state officials acted beyond their authority, sovereign immunity does not bar an action seeking declaratory or injunctive relief."
Miller v. Egan, supra, 265 Conn. at 327.
Against this background, and in light of one critical comment by our Supreme Court as to the State's "overly expansive" reading of Miller v. Egan in a footnote to its recent decision in 184 Windsor Avenue, LLC v. Connecticut, 274 Conn. 302, 875 A.2d 498 (2005), the plaintiff has urged the Court to find that the Miller Court left standing a related but completely independent exception to the sovereign immunity doctrine under two cases cited in Miller but not overruled. Chronologically, they are Krozser v. New Haven, 212 Conn. 415, 562 A.2d 1080 (1989), and Pamela B. v. Ment, supra, 244 Conn. 296. Those cases, he claims, stand for the general proposition that any action for declaratory or injunctive relief may properly be brought against the State or a State official without the State's consent, as long as neither the prosecution of the action nor the granting of the relief requested in it will undermine the essential purposes of the doctrine — again, to protect the State's fiscal resources and to avoid serious interference with State officials' performance of their governmental functions and/or their control over their respective instrumentalities, funds and property. If that were true, then the plaintiff would have no need to establish, by a process of statutory construction or otherwise, that the State officials he has sued acted in excess of their statutory authority.
The full text of that footnote is set forth in Part IV.A of this Memorandum of Decision, supra at 29.
For the following reasons, the Court is not persuaded by this aspect of the plaintiff's argument. First, if the plaintiff's claim were correct, one would expect to find support for it in the text of the two cited opinions. However, apart from one misleading piece of dictum in the Krozser opinion, which is readily refuted, there is not.
The Krozser Court had before it a case in which the trial court had dismissed the plaintiff's federal civil rights claim against the State Commissioner of Correction, to recover damages for alleged violation of his son's federal constitutional rights before he died while incarcerated at the New Haven Community Correctional Center, for failing to obtain permission from the Claims Commissioner to file suit. The plaintiff's claims on appeal were that he had no obligation to obtain the State's consent before filing a § 1983 action, that the trial court had the authority to grant him permission to bring the action, and that the Claims Commission statute discriminated against the assertion of his decedent's federal rights under 42 U.S.C. § 1983.
At the beginning of its decision, as background for its ultimate conclusion that damages claims under § 1983 are not exempt from the general rule requiring consent by the State before suit may be brought against the State or a State official, the Court gave the following brief description of the then current state of Connecticut sovereign immunity law: CT Page 17117
The absolute bar of actions against the state on the ground of sovereign immunity has been modified by statute and by judicial decisions. Sovereign immunity does not bar suits against state officials acting in excess of their statutory authority or pursuant to an unconstitutional statute. Horton v. Meskill, [ 172 Conn. 615, 624, 376 A.2d 359 (1977)]." Doe v. Heintz, 204 Conn. 17, 31, 526 A.2d 1318 (1987). In addition, the state cannot use sovereign immunity as a defense in an action for declaratory or injunctive relief. Id. However, in the absence of legislative authority . . . we have declined to permit any monetary award against the state or its officials. Fettermen v. University of Connecticut, [ 192 Conn. 539, 550, 473 A.2d 1176 (1984)]; State v. Chapman, 176 Conn. 362, 365, 407 A.2d 987 (1978)." Id. 32. Further, "`[s]tatutes in derogation of sovereignty should be strictly construed in favor of the state, so that its sovereignty may be upheld and not narrowed or destroyed.' Berger, Lehman Associates, Inc. v. State, 178 Conn. 352, 356, 422 A.2d 268 (1979); quoting Spring v. Constantino, 160 Conn. 563, 570, 362 A.2d 871 (1975)." Duguay v. Hopkins, 191 Conn. 222, 232, 464 A.2d 45 (1983).
Krozser v. New Haven, supra, 212 Conn. at 420-21. (Emphasis added.)
On first reading, this paragraph, though not material to the Court's decision on any of the specific claims before it, appears to stand for the proposition that when it was written, there were two separate exceptions to the requirement of the sovereign immunity doctrine that the State must consent before it can be sued — one for "suits against state officials acting in excess of their statutory authority or pursuant to an unconstitutional statute" and the other for "actions for declaratory or injunctive relief." Id. In fact, however, this dictum was inconsistent with the law at the time, as evidenced most tellingly by the one case referenced in Krozser as the source of its information. In that case, Doe v. Heintz, which was issued just two years before the decision in Krozser, Justice Shea gave the following, more detailed and accurate description of the then-current state of sovereign immunity law upon which the above-quoted Krozser dictum was based: CT Page 17118
"We have . . . recognized that because the state can act only through its officers and agents, a suit against a state officer concerning a matter in which the officer represents the state is, in effect, against the state." Sentner v. Board of Trustees, 184 Conn. 339, 342, 439 A.2d 1033 (1981). In its pristine form the doctrine of sovereign immunity would exempt the state from suit entirely, because the sovereign could not be sued in its own courts and "there can be no legal right as against the authority that makes the law on which the right depends." Kawananakoa v. Polyblank, 205 U.S. 349, 353, 27 S.Ct. 526, 51 L.Ed. 834 (1907); Bergner v. State, 144 Conn. 282, 284-85, 130 A.2d 293 (1937). This absolute bar of actions against the state has been greatly modified both by statutes effectively consenting to suit in some instances as well as by judicial decisions in others. "In a constitutional democracy sovereign immunity must relax its bar when suits against the government complain of unconstitutional acts." Sentner v. Board of Trustees, supra, 343. Sovereign immunity does not bar suits against state officials acting in excess of their statutory authority or pursuant to an unconstitutional statute. Horton v. Meskill, 172 Conn. 615, 624, 376 A.2d 359 (1977). This court has accordingly entertained suits like the present action, in which declaratory relief is sought as well as related injunctive relief; Rogan v. Board of Trustees for State Colleges, 178 Conn. 579, 424 A.2d 274 (1979); and also suits seeking only to enjoin state officers from illegal or unconstitutional acts. Sentner v. Board of Trustees, supra, 344-45; see University of Connecticut Chapter, CUP v. Governor, 200 Conn. 386, 388, 512 A.2d 152 (1986); Duguay v. Hopkins, 191 Conn. 222, 227 n. 4, 464 A.2d 45 (1983). With respect to the declaratory and injunctive relief sought by the plaintiffs and ordered by the court in this case, these precedents plainly establish that sovereign immunity is unavailable as a defense, nor does the state claim otherwise.
Doe v. Heintz, supra, 204 Conn. at 31-32 (emphasis added). The crucial difference between this passage and the Krozser dictum that purports to summarize it is obviously that the former, unlike the latter, describes the connectedness between suits against State officials acting in excess of their statutory authority and suits for declaratory or injunctive relief. What the Doe Court clearly stated is that suits for declaratory and injunctive relief may be brought without the consent of the State when they are brought against the State officials acting in excess of their statutory authority, or pursuant to an unconstitutional statute. Hence, the two stated exceptions to sovereign immunity doctrine were and are really one and the same.
The cases cited by the Court in Doe v. Heintz moreover, well illustrate the development of the rule it described. In Rogan v. Board of Trustees, 178 Conn. 579, 424 A.2d 274 (1979), for example, the Court noted that most suits brought against State officials for alleged constitutional violations had been for declaratory relief only, as suits for money damages or for coercive injunctive relief risked unduly controlling or interfering with the activities of the State. Id. at 585. In Sentner v. Board of Trustees, 184 Conn. 339, 344, 439 A.2d 1033 (1981), the Supreme Court abandoned the Rogan rule disallowing suits for injunctive relief for alleged constitutional violations without the State's consent, on the theory that as a practical matter, a declaratory judgment interpreting a constitutional provision should be no less effective in enforcing the Court's decision than an injunction to accomplish that purpose. Id. at 344. Indeed, the Court observed that the issuance of injunctive relief actually gave the Court the opportunity to soften the blow of its decision as to the meaning of a misunderstood or misapplied statute by establishing a time line for achieving compliance with its declaratory order. Id. at 345. Having cited these cases as illustrations of the developing state of the law, the Court in Doe v. Heintz depicted a slow and careful move towards permitting unconsented-to claims for declaratory and injunctive relief in the special situation where State officials had allegedly acted in excess of their statutory authority or to enforce an unconstitutional statute. There was no wide-open exception to sovereign immunity for declaratory and injunctive claims of any other kind, whether or not they could be projected to have an adverse impact on achieving the goals of the sovereign immunity doctrine.
Looking next to Pamela B. v. Ment, supra, 244 Conn. 296, one again finds no sound basis in the Court's decision for concluding that a second exception to the sovereign immunity doctrine had been developed for claims of declaratory and/or injunctive relief which did not defeat the purpose of the sovereign immunity doctrine in any other context than a challenge to a State actor's alleged actions in excess of his statutory authority. This is certainly not surprising, because Pamela B. v. Ment involved a host of alleged statutory and constitutional violations allegedly caused by the manner in which the defendant, as Chief Court Administrator, ran the Judicial Branch of State government. Id. Hence it was not a case in which any other exception to sovereign immunity needed to be considered.
Of final note, of course, is Miller v. Egan itself, for according to the plaintiff, it was the Miller Court's failure to overrule Krozser and Pamela B. that left intact the alternative exception to the sovereign immunity doctrine which he claims they support. Logically, however, since the purported rule finds no support in Krozser or Pamela B. except for the misparaphrase of Doe v. Heintz in the Krozser dictum, the Miller Court could hardly have been expected to comment on it. Instead, however, the Miller Court traced the root of the doctrine it sought to clarify back to Doe v. Heintz, and in so doing cited both Krozser and Pamela B. as cases decided consistently with that doctrine. By so doing, the Court clearly established that the rule it sought to enforce was that of Doe v. Heintz. Because Shay and Antinerella were irreconcilable with "the Doe line of cases," they were overruled to the extent that they held that sovereign immunity does not bar monetary damages actions against State officials acting in excess of their statutory authority. Miller v. Egan, supra, 265 Conn. at 325.
C. Plaintiff's Argument That His Constructive and Resulting Trust Claims Are Saved From Dismissal Under the Narrow Exception to Sovereign Immunity Described in Miller v. Egan for Declaratory and Injunctive Relief Claims Based Upon Alleged Conduct By State Officials Acting in Excess of Their Statutory AuthorityIn light of the Court's foregoing conclusion that the only exception to sovereign immunity upon which the plaintiff can save his common-law claims from dismissal for lack of subject-matter jurisdiction is that specified in Miller v. Egan, the Court must now examine the parties' conflicting arguments on whether the plaintiff's constructive and resulting trust claims fall within that exception. The State defendants' principal claim, of course, is that no statute is referenced anywhere in the plaintiff's Complaint II-A, and thus no allegation of a statutory violation is at all supportable on this record. It is axiomatic that the Court's subject-matter jurisdiction over a challenged complaint depends upon the state of the record before the Court, when viewed in the light most favorable to the plaintiff. The threshold question posed by the movant's first argument is whether there is anything on this record to even hint at such a statutory violation.
The plaintiff has responded to this challenge by suggesting that there are two separate statutes which the defendants may have violated by their alleged conduct in relation to the misdelivered Anthem stock. The first is General Statutes § 5-259, which the plaintiff claims to establish a prohibition against the State acquiring interests in the equity of any health care benefits plan it establishes for State employees. The plaintiff claims that by a process of interpretation of Section 5-259, the conduct of the State in taking possession of, selling and retaining to this day all proceeds from the sale of the stock issued to it upon the demutualization of Anthem Insurance, the State has acted in excess of its statutory authority under the statute. The second is General Statutes § 4-31a, pursuant to which the State Comptroller, with permission from the defendant Governor, established a fiduciary agency fund into which all proceeds from the sale of the disputed Anthem stock was deposited for the purpose of ensuring that its true ownership might be judicially determined before it was finally disposed of. By pursuing this Motion to Dismiss and opposing the plaintiff's right to obtain such a judicial determination of ownership, claims the plaintiff, the State is acting in excess of its statutory authority under that statute.
General Statutes § 5-259 provides, in relevant part, as follows:
(a) The Comptroller, with the approval of the Attorney General and of the Insurance Commissioner, shall arrange and procure a group hospitalization and medical and surgical insurance plan or plans for (1) state employees, (2) members of the General Assembly who elect coverage under such plan or plans, (3) participants in an alternate retirement program who meet the service requirements of section 5-162 or subsection (a) of section 5-166, (4) anyone receiving benefits under section 5-144 or from any state-sponsored retirement system, except the teachers' retirement system and the municipal employees retirement system, (5) judges of probate and Probate Court employees, (6) the surviving spouse, and any dependent children until they reach the age of eighteen, of a state police officer, a member of an organized local police department, a firefighter or a constable who performs criminal law enforcement duties who dies before, on or after June 26, 2003, as the result of injuries received while acting within the scope of such officer's or firefighter's or constable's employment and not as the result of illness or natural causes, and whose surviving spouse and dependent children are not otherwise eligible for a group hospitalization and medical and surgical insurance plan, (7) employees of the Capital City Economic Development Authority established by section 32-601, and (8) the surviving spouse and dependent children of any employee of a municipality who dies on or after October 1, 2000, as the result of injuries received while acting within the scope of such employee's employment and not as the result of illness or natural causes, and whose surviving spouse and dependent children are not otherwise eligible for a group hospitalization and medical and surgical insurance plan. For purposes of this subdivision, "employee" means any regular employee or elective officer receiving pay from a municipality, "municipality" means any town, city, borough, school district, taxing district, fire district, district department of health, probate district, housing authority, regional work force development board established under section 31-3k, flood commission or authority established by special act or regional planning agency. For purposes of subdivision (6) of this subsection, "firefighter" means any person who is regularly employed and paid by any municipality for the purpose of performing firefighting duties for a municipality on average of not less than thirty-five hours per week. The minimum benefits to be provided by such plan or plans shall be substantially equal in value to the benefits that each such employee or member of the General Assembly could secure in such plan or plans on an individual basis on the preceding first day of July. The state shall pay for each such employee and each member of the General Assembly covered by such plan or plans the portion of the premium charged for such member's or employee's individual coverage and seventy per cent of the additional cost of the form of coverage and such amount shall be credited to the total premiums owed by such employee or member of the General Assembly for the form of such member's or employee's coverage under such plan or plans. On and after January 1, 1989, the state shall pay for anyone receiving benefits from any such state-sponsored retirement system one hundred per cent of the portion of the premium charged for such member's or employee's individual coverage and one hundred per cent of any additional cost for the form of coverage. The balance of any premiums payable by an individual employee or by a member of the General Assembly for the form of coverage shall be deducted from the payroll by the State Comptroller. The total premiums payable shall be remitted by the Comptroller to the insurance company or companies or nonprofit organization or organizations providing the coverage. The amount of the state's contribution per employee for a health maintenance organization option shall be equal, in terms of dollars and cents, to the largest amount of the contribution per employee paid for any other option that is available to all eligible state employees included in the health benefits plan, but shall not be required to exceed the amount of the health maintenance organization premium.
(b) The insurance coverage procured under subsection (a) of this section for active state employees, employees of the Connecticut Institute for Municipal Studies, anyone receiving benefits from any such state-sponsored retirement system and members of the General Assembly, who are over sixty-five years of age, may be modified to reflect benefits available to such employees or members pursuant to Social Security and medical benefits programs administered by the federal government provided any payments required to secure such benefits administered by the federal government shall be paid by the Comptroller either directly to the employee or members or to the agency of the federal government authorized to collect such payments.
(c) On October 1, 1972, the Comptroller shall continue to afford payroll deduction services for employees participating in existing authorized plans covering state employees until such time as the employee elects in writing to be covered by the plan authorized by subsection (a) of this section.
(d) Notwithstanding the provisions of subsection (a) of this section, the state shall pay for a member of any such state-sponsored retirement system, or a participant in an alternate retirement program who meets the service requirements of section 5-162 or subsection (a) of section 5-166, and who begins receiving benefits from such system or program on or after November 1, 1989, eighty per cent of the portion of the premium charged for his individual coverage and eighty per cent of any additional cost for his form of coverage. Upon the death of any such member, any surviving spouse of such member who begins receiving benefits from such system shall be eligible for coverage under this section and the state shall pay for any such spouse eighty per cent of the portion of the premium charged for his individual coverage and eighty per cent of any additional cost for his form of coverage.
General Statutes § 4-31a provides as follows:
Sec. 4-31a. Gifts, contributions, trust income placed in General Fund.
(a) Any gift, contribution, income from trust funds, or other aid from any private source or from the federal government, except federal aid for highway and bridge purposes or federal funds in the possession of the Board of Control of the Connecticut Agricultural Experiment Station, the Board of Trustees of the University of Connecticut, the Board of Trustees of the Connecticut State University System, the Board of Trustees of the Community-Technical Colleges, or the Employment Security Division of the Labor Department, or any other gift, grant or trust fund in the possession of any of said boards, shall be entered upon the records of the General Fund in the manner prescribed by the Secretary of the Office of Policy and Management. When so recorded, such amounts shall be deemed to be appropriated to the purposes of such gift, contribution or other aid and shall be allotted in accordance with law. No gift, contribution, income from trust funds, or other aid from any private source or from the federal government that is subject to this subsection shall require allotment except upon a notice by the Secretary of the Office of Policy and Management that the state agency receiving such funding has failed to consistently provide the notifications required in subsection (e) of section 4-66a.
(b) No fund shall be created and set up on the books of the state except by act of the General Assembly or upon the approval of the Governor.
The State defendants reject the foregoing arguments for several reasons, as does the Court. Looking at the second argument first, there is simply nothing in Section 4-31a which could conceivably be at issue under the plaintiff's constructive or resulting trust claims. On its face, the statute simply authorizes the separate recording upon the records of the General Fund or of certain types of funds received by the State from particular outside sources for particular purposes in order that they might appropriately be recorded and accounted for on the State's books. It further provides that no fund shall be created and set up on the books of the State except by act of the General Assembly or upon the approval of the Governor. What the statute does not do, however, is prescribe the purpose for which any such fund could be set up or the manner in which it was to be administered. In short, no issue is presented here as to whether the statute was somehow violated.
As for the plaintiff's claim under General Statutes § 5-259, that claim is based upon the parallel construction of that statute with another sister statute, General Statutes § 5-257, which was originally passed as a separate part of the same Public Act — Public Act 67-657, a comprehensive personnel act for State employees. Section 64 of that Act, which was later codified as General Statutes § 5-257, imposes an obligation upon the State Comptroller to procure and maintain life insurance for State employees. Subsection (c) of the statute expressly provides that, "Any dividend or other refunds or rate credits shall inure to the benefit of the State and shall be applied to the cost of such insurance." Identical language is also contained in subsection (e) of the statute, which pertains to optional group life insurance coverage that may be purchased at the employee's sole expense.
By contrast, Section 66 of Public Act 67-657, which was later codified as General Statutes § 5-259, sets forth the State Comptroller's obligation to arrange and procure one or more group hospitalization and medical and surgical insurance plans for State employees. That statute, however, contains no language indicating how or for whom any dividends, other refunds, rate credits or other benefits realized in relation to any such group insurance plan should be applied. Based upon the parallel construction of these two statutes, the plaintiff urges the Court to find that the legislature has expressed the clear intention not to authorize the State to acquire an equity interest in any benefits realized in relation to any of its employee health insurance plans. Instead, he argues, any such benefit must be considered part of the "minimum benefits" which the State must provide for each State employee as part of his "individual coverage" thereunder. Those "minimum benefits," he continues, must be "substantially equal in value to the benefits which each such employee . . . could secure in such plan or plans on an individual basis on the preceding first day of July[.]" General Statutes § 5-259(a). Therefore, because an individual holder of a certificate of coverage under an Anthem Insurance group health insurance policy on the first day of July immediately preceding the demutualization would assertedly have been entitled, as an Anthem policyholder, to receive stock or cash upon the demutualization of Anthem Insurance, the "minimum benefit" to which he was assertedly entitled under his State health care insurance plan necessarily included the right to obtain such benefits when they were received by the State after the demutualization.
Although this argument is inventive, it is flawed in several ways. First, the right therein asserted is obviously a statutory right, whereas the right claimed in the plaintiff's Complaint II-A is a contractual right under the Plan of Conversion. It is axiomatic that a plaintiff cannot avoid dismissal for lack of subject-matter jurisdiction based upon matters he has not pleaded and relied upon as the basis for his claims in his challenged complaint.
Second, the claim he advances under that statute is obviously predicated upon the statute's silence as to whether or not the State could retain benefits realized in relation to health insurance policies, and if so, to what costs or expenses it might apply them. Thus there is no prohibition of particular conduct by the State, nor is there any indication anywhere that the legislature committed itself on this issue, one way or the other. Perhaps, the reason for such silence was sheer oversight by the legislature. Perhaps it was an unspoken understanding among the legislators as to how such matters were traditionally handled in the administration of life and health insurance plans. Perhaps it was an open-eyed decision to postpone the decision until a later date, or not to decide the issue at all. All that was certain about the state of the law on that subject after the passage of the two statutes is that the answer was completely uncertain.
Even, moreover, if it could reasonably be inferred from the parallel construction of the two statutes that the State was not authorized to apply the benefits realized under health insurance policies in the same way it was permitted to use comparable benefits realized under group life insurance policies, this would not necessarily establish that the employees enrolled for coverage under those policies could use those benefits themselves. Such utter speculation is not the solid foundation upon which legitimate property interests are established. Nor, for that reason, does it raise a colorable claim that what is at issue before the Court on the plaintiff's challenged constructive and resulting trust claims is whether the State defendants acted in excess of their statutory authority under Section 5-259 by claiming ownership of the stock delivered to it by Anthem upon the demutualization of Anthem Insurance.
For all of the foregoing reasons, the Court concludes that the plaintiff's constructive and resulting trust claims, as pleaded in Counts Five, Six and Seven of Complaint II-A, must be dismissed for lack of subject-matter jurisdiction under the sovereign immunity doctrine.
III. THE PLAINTIFF'S FEDERAL CONSTITUTIONAL CLAIMS
The State defendants' second major claim on this Motion is that all of the plaintiff's federal constitutional claims against them, wherein he seeks to recover money damages, attorneys fees and other equitable relief under 42 U.S.C. § 1983, must be dismissed for lack of subject-matter jurisdiction because claims under that statute can only be brought against "person[s]" and neither a Sovereign State nor its Governor, when acting in his official capacity, is a "person" within the meaning of that statute. See Howlett v. Rose, 496 U.S. 356, 376 (1990); Accord, Miller v. Egan, supra, 265 Conn. at 311 (the rule of Howlett "also extends to state officers sued in their official capacities"). Although the plaintiff disagrees with the movants that the appropriate judicial remedy for such an incurable pleading deficiency against the State is a dismissal for lack of subject-matter jurisdiction, it has nonetheless agreed to the dismissal of the four relevant Counts — Counts Fourteen through Seventeen — because it does not intend to prosecute them in this case. See Plaintiff's Sur-Reply, p. 2 n. 2.
IV. THE PLAINTIFF'S STATE CONSTITUTIONAL TAKINGS CLAIMS
The third major thrust of the State defendants' Motion to Dismiss is that the plaintiff's State constitutional takings claims against them — based, as they are, upon the State's alleged taking of Anthem, Inc. stock belonging to the plaintiff and his fellow class members, which was assertedly misdelivered to the State upon the demutualization of Anthem, then sold by the State, which has since retained all proceeds from the sale for its own use — must also be dismissed for lack of subject-matter jurisdiction under the sovereign immunity doctrine. The movants advance three basic reasons for this claim.
First, in an admitted departure from controlling Connecticut case law as to the applicability of the sovereign immunity doctrine to constitutional takings claims, they argue that since each claim here challenged is a claim for money damages, none can lawfully be prosecuted where, as here, the State has not consented to be sued, either by the enactment of a pertinent statute or by permission from the Claims Commissioner under General Statutes § 4-160. Second, they argue that, even if a constitutional claim for money damages can lawfully be brought against the State or a State official without the State's consent, the claims here at issue are not saved from dismissal under the sovereign immunity doctrine because they are not based, as assertedly they must be, upon allegations of a taking in the constitutional sense. Third, they insist that even if one or more of the plaintiff's challenged claims is properly based upon allegations of a taking in the constitutional sense, they are not based upon allegations that the plaintiff and his fellow class or sub-class members had a legitimate entitlement to a discrete property interest in the taken property at the time of the alleged taking.
The plaintiff has responded to this argument by asserting that he has in fact alleged, and on this record can establish, that the State has taken discrete property in which he and his fellow class members had and still have a legitimate property interest — specifically, all of the stock that was delivered to the State upon the demutualization of Anthem Insurance in exchange for the extinguishment of all membership rights in Anthem Insurance pursuant to the 1999 Group Policy under which they were then insured.
For the following reasons, the Court concludes that this portion of the defendants' Motion to Dismiss must be GRANTED IN PART and DENIED IN PART.
A. Assertion That a Constitutional Takings Claim Cannot Be Brought Against the State Without Its Consent
As for the movants' initial argument that a constitutional claim for money damages for the alleged taking of private property for public use without just compensation cannot lawfully be brought against the State or a State official without the State's consent, the plaintiff rightly responds, and the movants candidly admit, that this Court must reject that argument at this time under controlling Connecticut case law. As explained by our Supreme Court in Tamm v. Burns, 222 Conn. 280, 283-84, 610 A.2d 590 (1992), which predated this Motion by a decade, the established rule governing the applicability of the sovereign immunity doctrine to constitutional takings claims is as follows:
"We have long recognized the common-law principle that the state cannot be sued without its consent . . . We have also recognized that because the state can act only through its officers and agents, a suit against a state officer concerning a matter in which the officer represents the state is, in effect, against the state . . . Therefore, we have dealt with such suits as if they were solely against the state and have referred to the state as the defendant." (Citations omitted.) Sentner v. Board of Trustees, 184 Conn. 339, 342, 439 A.2d 1033 (1981). Nevertheless, "[i]n a constitutional democracy sovereign immunity must relax its bar when suits against the government complain of unconstitutional acts." Id., 343; Horton v. Meskill, 172 Conn. 615, 624, 376 A.2d 359 (1977). "[T]he doctrine of sovereign immunity is not available to the state as a defense to claims for just compensation arising under article first, 11, of the Connecticut constitution." Textron, Inc. v. Wood, 167 Conn. 334, 342, 355 A.2d 307 (1974). "When possession has been taken from the owner, he is constitutionally entitled to any damages which he may have suffered . . ." Trumbull v. Ehrsam, 148 Conn. 47, 55-56, 166 A.2d 844 (1961); see also Simmons v. Parizek, 158 Conn. 304, 307, 259 A.2d 642 (1969); Anselmo v. Cox, 135 Conn. 78, 81-82, 60 A.2d 767, cert. denied, 335 U.S. 859, 69 S.Ct. 132, 93 L.Ed. 405 (1948).
The Tamm Court's holding is unambiguous. It is, simply stated, that a constitutional takings claim for money damages may properly be brought against the State or a State official without the State's consent.
That holding, in fact, was reaffirmed by our Supreme Court just last year in 184 Windsor Avenue, LLC v. Connecticut, 274 Conn. 302, 319 n. 18, 875 A.2d 498 (2005). There, the Court rejected as follows the State's argument that Tamm had been overruled by its intervening decision in Miller v. Egan, supra, 265 Conn. 301, which is more fully discussed for a different purpose in Part IV of this Memorandum of Decision:
[T]he state's reliance on Miller v. Egan, supra, 265 Conn. 301, for the proposition that, "[a]bsent permission to sue from the claims commissioner, the [c]ourt lacks subject matter jurisdiction for any damages claim, even one alleging a constitutional taking" is misplaced. Miller does not overrule Tamm v. Burns, 222 Conn. 280, 610 A.2d 590 (1992). Its central holding with respect to the issue of the exception to sovereign immunity is only that," when a process of statutory interpretation establishes that the state officials acted beyond their authority, sovereign immunity does not bar an action seeking declaratory or injunctive relief." Miller v. Egan, supra, 327. The state's interpretation of Miller is, therefore, overly expansive.
184 Windsor Avenue, LLC v. Connecticut, supra, 274 Conn. at 319 n. 18. Because this Court is bound by Supreme Court precedent, it must reject the State defendants' initial challenge to its subject-matter jurisdiction over the plaintiff's constitutional takings claims.
B. Assertion That, on the Record Before This Court, None of the Plaintiff's Takings Claims Is Based Upon Allegations of a Taking in the Constitutional SenseThe movants' second challenge to this Court's subject-matter jurisdiction over the plaintiff's takings claims is that even if a takings claim can lawfully be brought against the State or a State official without the State's consent, the claims here challenged are legally insufficient and thus are not saved from dismissal under takings exception to the sovereign immunity doctrine, because, on this record, they are not based upon allegations of a taking in the constitutional sense. The basis for this argument is as follows.
A plaintiff cannot avoid the bar of sovereign immunity simply by pleading, as a legal conclusion, that an uncompensated loss he allegedly suffered at the hands of the State or a State official constituted a taking of his property for public use without just compensation. Upson v. State, 190 Conn. 622, 626, 461 A.2d 991 (1983). Instead, he must plead facts which establish that the State took his property in a constitutional sense, either by formally condemning it or by interfering with it so substantially, in the exercise of its police or legislative powers, as to bring about its inverse condemnation. "A constitutional taking occurs when there is a `substantial interference with private property which destroys or nullifies its value or by which the owner's right to its use or enjoyment is in a substantial degree abridged or destroyed.'" Tamm v. Burns, supra, 222 Conn. at 284 (1992) (quoting Textron, Inc. v. Wood, supra, 167 Conn. at 346).
On this record, claim the movants, the plaintiff has not alleged and cannot establish that the State took affirmative action of any kind with respect to the disputed stock or stock sales proceeds. Here, instead, all the State is alleged to have done with the disputed stock was to receive it passively from defendant Anthem — which had unilaterally determined, based upon a review of its own records, that the State was entitled to receive it — then to treat it as its own by selling it and retaining all the proceeds from its sale for its own use. Such conduct, which was assertedly not directed towards the plaintiff or his fellow class members, obviously did not involve the formal condemnation of any property. Nor, claim the movants, did it have any effect, let alone a substantial one, upon any property in which the plaintiff and his fellow class members had a private ownership interest. To the contrary, they argue, the facts of record clearly establish: (1) that the plaintiff and his class had no right, under the Anthem Plan of Conversion, to receive any stock or cash from Anthem upon its demutualization; and (2) that, even if they did, their only claimed entitlement under the Plan of Conversion was to receive generic stock or cash from Anthem, not to receive the particular shares of stock which were allegedly misdelivered to the State, then sold and thereby taken. In light of the latter argument, in particular, they insist that the State's receipt and sale of such stock and later retention of all proceeds from its sale have not deprived the plaintiff and his fellow class members of anything — either the disputed stock and stock sales proceeds themselves, in which they assertedly never had a legal interest or their claimed contractual entitlement under the Plan of Conversion to receive stock or cash from Anthem upon the demutualization of Anthem Insurance, which has not been burdened or compromised in any way, let alone destroyed or substantially interfered with, by the State's alleged conduct. Indeed, they assert, even the plaintiff recognizes the continuing viability of his contractual claim against Anthem, for he has brought and is still vigorously pursuing that claim in this very case, having already persuaded this Court, in successfully opposing the Anthem defendants' Motion for Summary Judgment, that genuine issues of material fact must still be resolved before that claim can be decided on the merits. In sum, the movants conclude that the plaintiff has not alleged a constitutional taking because all that was allegedly taken from him and his fellow class members — their alleged right under the Plan of Conversion to receive a distribution of generic stock or its cash equivalent from Anthem — either does not exist or remains fully intact.
The plaintiff has responded to these arguments as follows. First, although he concedes that a constitutional takings claim is subject to dismissal under the sovereign immunity doctrine if it fails to allege a taking in the constitutional sense; see, e.g., Tamm v. Burns, supra, 222 Conn. at 284; he correctly argues that a constitutional taking of private property can occur, with or without the institution of formal condemnation proceedings, in two ways. First, and most obviously, it occurs when the State makes a full seizure of private property for public use by taking actual physical possession of it from its owner. Textron, Inc. v. Wood, supra, 167 Conn. at 346 ("Actual physical possession of the property by the state, of course, constitutes a taking"). Second, it occurs when the State, although not taking actual physical possession of the property, engages in conduct which interferes with it so substantially as to destroy or nullify its value or to abridge or destroy in a substantial degree the owner's right to use and enjoy it. Id. Either of these actions, when engaged in by the State for a public purpose, constitutes a taking of property in the constitutional sense, which by definition involves: "the exclusion of the owner from his private use and possession, and the assumption of the use and possession for the public purpose by the authority exercising the right of eminent domain." Id. at 347.
Consistent with these principles, the plaintiff rightly claims that he has alleged a taking of his property in the constitutional sense in this case. He has pleaded, more particularly, that all the stock which the State received from Anthem and ultimately sold, as well as all proceeds from the sale of that stock which the State has since retained, belong exclusively to himself and the members of his class, and thus that the State's retention and control of such property have put it in "actual physical possession of [their] property . . . [, which,] of course, constitutes a taking." Id. at 346.
2. Claimed Inability to Establish Any Entitlement Under the Plan of Conversion to Receive Any Stock or Cash Upon the Demutualization of Anthem InsuranceAs for the second prong of the movants' argument that the plaintiff has failed to allege a taking in the constitutional sense — that notwithstanding the plaintiff's claim to the contrary, the plaintiff and the members of his class had no legitimate entitlement under the Plan of Conversion to receive any stock or cash from Anthem upon the demutualization of Anthem Insurance — the plaintiff notes initially that he is pursuing his constitutional takings claims under two different theories of entitlement to receive such stock or cash.
a. Plaintiff's First Theory of Entitlement
Under the first such theory, the plaintiff claims that he and his fellow class members were individually entitled to receive personal distributions of stock or cash from Anthem upon the demutualization of Anthem Insurance because, as individual holders of certificates of coverage under the 1999 Group Policy from June 18, 2001 through November 2, 2001, they all became Eligible Statutory Members of Anthem Insurance, to whom the right to receive such distributions was expressly given under the Plan of Conversion. Under his second theory of entitlement, by contrast, he claims that even if he and his fellow class members were not Eligible Statutory Members of Anthem Insurance, or thus individually entitled to receive personal distributions of Anthem stock or cash upon the demutualization of Anthem Insurance, their "group as a whole" was collectively entitled to receive a single joint distribution of such stock or cash because, as a former Voting Member of BCBS-CT before its merger with Anthem Insurance, the "group as a whole" was contractually entitled, under the Plan and Agreement which governed that merger, to have post-merger membership rights in Anthem Insurance equivalent to those it had in BCBS-CT. For the following reasons, the Court concludes that the plaintiff has sufficiently alleged an entitlement to receive stock or cash from Anthem upon the demutualization of Anthem Insurance under either of these alternative theories.
Under the Anthem Plan of Conversion, the only persons entitled to receive stock or cash upon the demutualization of Anthem Insurance were its Eligible Statutory Members, who were entitled to "receive aggregate consideration equal to the fair value of Anthem Insurance at the time of the Conversion." Id., Article IV. To determine who qualified as an Eligible Statutory Member of Anthem Insurance, one must, of course, start by examining the language of the Plan of Conversion.
The Plan of Conversion defines the term "Eligible Statutory Member" to
mean a Person who (a) is a Statutory Member of Anthem Insurance on the Adoption Date and continues to be a Statutory Member of Anthem Insurance on the Effective Date, and (b) has had continuous health care benefits coverage with the same company between those two dates under any Policy or Policies without a break of more than one day.
Id., Section 13.2. As used in this definition and elsewhere in the Plan of Conversion, the term "Statutory Member" was defined to "mean as of any specified date any Person who, in accordance with the records, articles of incorporation and by-laws of Anthem Insurance, is a Holder of an In-Force Policy." Id., Article 13.2. The term "Adoption Date" was defined as the date on which the Board of Directors of Anthem Insurance approved the proposal to demutualize the Corporation under the Plan of Conversion; id.; whereas the term "Effective Date" was defined as the date on which demutualization became effective under Indiana law. Id. With these definitions in mind, the first step in proving that a person was an Eligible Statutory Member of Anthem Insurance, and thus entitled to receive stock or cash from Anthem upon the demutualization of Anthem Insurance, is to establish that between the Adoption Date and the Effective Date of the demutualization — that is, between June 18 and November 2, 2001 — he was the "Holder" of an "In-Force Policy," under which he had continuous health care benefits coverage with a single Anthem Insurance company.
Continuing, the term "Policy" was defined in the Plan of Conversion to include, inter alia, each of the following documents or instruments establishing or evidencing a Holder's insurance coverage with an Anthem Insurance company:
(b) any certificate issued by Anthem Insurance under a group insurance policy or health care benefits contract under which certificate the Holder thereof is a member of Anthem Insurance with Membership Interests; or (c) certificates of membership issued by Anthem Insurance in or under Guaranty Policies under which certificate the Holder thereof is a member of Anthem Insurance with Membership Interests.
Id. A Policy was deemed to be "In Force" whenever, on or after its effective date, the required premium for it had been received by the Corporation, and it had not expired or otherwise been surrendered or terminated. Id., Section 12.2(a). Where the Policy in question took the form of a "certificate of coverage issued under a group insurance agreement," its "Holder" was defined as "the Person specified in the certificate of coverage as the holder thereof[.]" Id., Sections 12.1(d), 13.2. Finally, the Holder of an In-Force Policy was deemed to have "Membership Interests" in Anthem Insurance when he had
(i) the voting rights of Statutory Members of Anthem Insurance as provided by law and by Anthem Insurance's Articles of Incorporation and Bylaws; and (ii) the rights of Statutory Members of Anthem Insurance to receive cash, stock or other consideration in the event of a conversion to a stock insurance company under the Indiana Demutualization Law or a dissolution under Ind. Code 27-1-10, as provided by those laws and Anthem Insurance's Articles of Incorporation and Bylaws.
Id., Section 13.2. In light of these further definitions, a person can establish that he was the Holder of an In-Force Policy affording him health care benefits coverage with a single Anthem Insurance company if he can prove that he held a certificate of coverage under a group insurance policy or health care benefits contract issued by such a company, and that that certificate made him a member of Anthem Insurance with the above-specified rights of Statutory Members therein, including voting rights and the right to receive stock, cash or other consideration in the event of a demutualization.
The 1999 Group Policy, under which the plaintiff and his fellow class and sub-class members all held individual certificates of coverage and had continuous health care benefits coverage from June 18 through November 2, 2001, was issued by Anthem BC/BS, a wholly-owned subsidiary of Anthem Insurance which had operated since 1997 as a "Qualified Membership Subsidiary" of Anthem Insurance in relation to the "Qualified Membership Merger" between itself and BCBS-CT, a "Qualified Mutual Insurer." In light of that designation, Anthem BC/BS was responsible, under the Plan and Agreement under which BCBS-CT and Anthem Insurance merged, for continuing all or part of BCBS-CT's insurance and/or health care financing business after the Merger, either by assuming pre-existing BCBS-CT insurance policies or health care benefits contracts conferring pre-Merger membership rights in BCBS-CT and/or by issuing new insurance policies or health care benefits contracts in exchange for such pre-existing BCBS-CT policies or contracts. The Plan and Agreement designated any pre-existing BCBS-CT policy or contract so assumed by Anthem BC/BS, as well as any new policy or contract issued by Anthem BC/BS in exchange for such a pre-existing BCBS-CT policy, as a "Qualified Contract," and entitled the members of BCBS-CT under such pre-existing policies both to retain their insurance and/or medical and health benefits under such Qualified Contracts and to become members of Anthem Insurance thereunder, with rights equivalent to those they had in BCBS-CT before the Merger.
As used in the Anthem Insurance Articles of Incorporation, a "Qualified Membership Merger" was defined as "a merger of a Qualified Mutual Insurer into the Corporation pursuant to a joint agreement of merger that expressly designates the merger as a Qualified Membership Merger[;]" id., Section 7.6(a)(1); the term "Qualified Mutual Insurer," in turn, was defined as "the mutual insurer . . . that is merging into the Corporation pursuant to a Qualified Membership Merger"; id., Section 7.6(a)(2); and, finally, the term "Qualified Membership Subsidiary" was defined as
any stock insurance company or health maintenance organization (i) that is or will become a direct or indirect wholly owned subsidiary of the Corporation upon effectiveness of a Qualified Membership Merger, (ii) that, in accordance with an agreement between the Corporation and the Qualified Mutual Insurer in that Qualified Membership Merger, will continue all or part of such Qualified Mutual Insurer's insurance and/or health care financing business . . ., and (iii) that is expressly designated as a Qualified Membership Subsidiary in the joint agreement of merger relating to that Qualified Membership Merger.
Id., Section 7.6(a)(3).
On this score, Section 7.6(b) of the Anthem Insurance Articles of Incorporation provided as follows:
Upon effectiveness of a Qualified Membership Merger, all of the members of the Qualified Mutual Insurer shall (1) retain their insurance and/or medical and health benefits under Qualified Contracts, and (2) become Members of the Corporation pursuant to, and shall be entitled to receive guaranty insurance policies/membership certificates issued by the Corporation in respect of such Qualified Contracts. Each such guaranty insurance policies/membership certificate shall continue in effect and confer membership and other rights in the Corporation as long as (x) the related Qualified Contract is in effect, or has been renewed, amended or replaced, without a lapse in coverage, by any insurance policy or health care benefits contract issued by a Qualified Membership Subsidiary for that Qualified Membership Merger, and (y) the membership fees required under such guaranty insurance policies/membership certificate are paid when due in accordance with the terms of such guaranty insurance policies/membership certificate.
The plaintiff claims that the 1999 Group Policy gave him and his fellow class members Membership Interests in Anthem Insurance pursuant to Section 7.6(c) of the Anthem Insurance Articles of Incorporation ("Anthem Articles"), which established the following rules controlling the post-merger membership rights in Anthem Insurance of all persons who procured or enrolled for coverage under any insurance policy or health care benefits contract originally issued by one of its Qualified Membership Subsidiaries after the effectiveness of the Qualified Membership Merger for which it was so designated and/or established:
(1) Except as set forth in Subsections 7.6(c)(2) and (3) below, each holder of an individual insurance policy or health care benefits contract, and each holder of a certificate of coverage under a group insurance policy or health care benefits contract, which individual or group policy or contract is originally issued by a Qualified Membership Subsidiary for that Qualified Membership Merger after the effectiveness of such Merger, shall be entitled to receive a guaranty insurance policy or certificate of membership from the Corporation. Each such individual guaranty insurance policy and each such certificate of membership issued under a group guaranty insurance policy shall grant the following rights: (i) voting rights on all matters that come before the membership of an Indiana domestic mutual insurance company under Indiana Insurance Law and as provided in these Third Amended Articles of Incorporation; (ii) a guarantee of the benefits provided under the insurance policy or health care benefits contract issued by the Qualified Mutual Subsidiary; and (iii) rights in the event of a liquidation, merger, consolidation, demutualization or conversion of the Corporation described in Section 8.1, as provided under the Indiana Insurance Law and as set forth in Article VIII.
* * * *
(3) Section 7.6(c)(1) shall apply only with respect to insurance policies and health care benefits contracts, and certificates of coverage thereunder, issued by a Qualified Membership Subsidiary after the effectiveness of a Qualified Membership Merger and shall not apply with respect to Qualified Contracts (or certificates of coverage thereunder) as described in Section 7.6(b), or any insurance policy or health care benefits contract issues as a renewal, amendment or replacement of such Qualified Contracts (or certificates of coverage thereunder) where there was no lapse of coverage.
So written, Section 7.6(c) generally established, under subdivision (1) thereof, that each holder of a certificate of coverage under a group insurance policy originally issued by a Qualified Membership Subsidiary after the effectiveness of a Qualified Membership Merger between Anthem Insurance and a Qualified Mutual Insurer would have Membership Interests in Anthem Insurance, including the voting rights of Statutory Members of the Corporation and the rights of Statutory Members to receive stock, cash or other consideration in the event of a demutualization. The only relevant exception to that rule, as set forth in subdivision (3) thereof, was for any Qualified Contract or other insurance policy or health care benefits contract issued as a renewal, amendment or replacement of a Qualified Contract (or certificates of coverage thereunder), where had been no lapse of coverage. The obvious purpose of this exception was to protect the continuing membership rights in Anthem Insurance of former members of Qualified Mutual Insurers such as BCBS-CT, agreed to as aforesaid under the terms of the Qualified Membership Merger by which it had merged with Anthem Insurance.
The plaintiff claims that he and his fellow class and sub-class members all acquired "Membership Interests" in Anthem Insurance under Section 7.6(c)(1) because, as holders of certificates of coverage under the 1999 Group Policy — a group insurance policy issued by Anthem BC/BS, a Qualified Membership Subsidiary of Anthem Insurance, after the effectiveness of the Qualified Membership Merger between Anthem Insurance and BCBS-CT — all rights comprising such Membership Interests, including the right to receive stock, cash or other consideration in the event of a demutualization, were expressly given to them thereunder. The movants oppose this claim on the ground that the 1999 Group Policy was exempted from the application of Section 7.6(c)(1) under Section 7.6(c)(3), because the 1999 Group Policy was assertedly "issue[d] as a . . . replacement of [a] Qualified Contract[,]" to wit: a BCBS-CT group insurance policy known as Care Plus, which originally covered a small group of State of Connecticut retirees before the Merger between BCBS-CT and Anthem Insurance, but later became a Qualified Contract when it was assumed by Anthem BC/BS pursuant to the Merger.
The movants claim that the 1999 Group Policy was issued as a replacement of the Care Plus Policy, as assumed by Anthem BC/BS, because in the year 2000, when the Care Plus Policy expired, the remaining Care Plus retirees were permitted to enroll for coverage and continue their health care insurance benefits under the 1999 Group Policy. The plaintiff disputes this claim, here as in opposing an identical claim made by the Anthem defendants on their earlier Motion for Summary Judgment, on grounds that the 1999 Policy could not have been "issued as a replacement" of the Care Plus Policy assumed by Anthem BC/BS because it was issued as an "original" policy, to cover a new and different set of State employees which at first did not include any of the Care Plus retires, one year before the Care Plus Policy expired, and thus before any of the Care Plus retirees enrollees were permitted, or had any reason, to enroll for coverage and continue their health care insurance benefits thereunder.
This Court has previously ruled, in denying the Anthem defendants' Motion for Summary Judgment on essentially the same record that is now before it on this Motion, that when that record is viewed in the light most favorable to the plaintiff, there is at least a genuine issue of material fact as to whether the 1999 Group Policy is exempt from the application of Section 7.6(c)(1) of the Anthem Articles under Section 7.6(c)(3) thereof. MOD/MSJ, p. 37. On that same basis, the Court must find in this context that there is also at least a genuine issue of material fact as to whether the plaintiff and his fellow class and sub-class members acquired individual Membership Interests in Anthem Insurance under that Policy, and thus were individually entitled, under the Plan of Conversion, to receive personal distributions of Anthem stock or cash upon the demutualization of Anthem Insurance. Accordingly, the Court must reject the second prong of the State defendants' argument that the plaintiff has not pleaded facts which, if proved at trial, would establish a taking in the constitutional sense under his first theory of entitlement to receive Anthem stock or cash upon the demutualization of Anthem Insurance.
b. Plaintiff's Second Theory of Entitlement
The second theory upon which the plaintiff claims that he and his fellow class members were entitled, under the Plan of Conversion, to receive Anthem stock or cash upon the demutualization of Anthem Insurance is based not upon their alleged individual rights to receive such distributions personally, but upon their alleged collective right to receive one such distribution jointly, as "the group as a whole" — assertedly, a single member of Anthem Insurance comprised of all persons who held certificates of coverage under either the 1999 Group Policy or the Care Plus Policy, as assumed by Anthem BC/BS, which it is claimed to have replaced. The basis for this alternative claim is that if, as the movants have argued, the 1999 Group Policy conferred no individual membership rights in Anthem Insurance upon the holders of certificates of coverage thereunder because it was issued to replace a Qualified Contract — the Care Plus Policy, as assumed by Anthem BC/BS upon the effectiveness of the Merger between BCBS-CT and Anthem Insurance — then the one true member of Anthem Insurance in relation to the 1999 Group Policy was necessarily the original member of BCBS-CT which, upon the effectiveness of that Merger, became a member of Anthem Insurance in relation to the assumed Care Plus Policy, with rights in Anthem Insurance equivalent to those it had BCBS-CT, both as to that Policy and as to any other policy that would later be issued by Anthem BC/BS to renew, amend or replace it without a lapse of coverage. If, claims the plaintiff, the one true owner of all membership rights in BCBS-CT with respect to the original Care Plus Policy was the "group as a whole," then that group became collectively entitled, under the Plan and Agreement of Merger between Anthem Insurance and BCBS-CT and Section 7.6(b) of the Anthem Articles, to have all equivalent membership rights in Anthem Insurance with respect to that Policy, including the right to receive stock or cash in exchange for those rights in the event of a demutualization.
Under Article II of the BCBS-CT By-Laws, BCBS-CT had only one class of members at the time of its merger with Anthem Insurance. That class, known as "Voting Members," included all "policyholders of the Corporation." The By-Laws specified that, although each individual holder of a direct-pay policy with the Corporation was considered a policyholder thereof, multiple owners of a single direct-pay policy were considered a single Voting Member. Consistent with this "one policy, one membership" approach, Article II of the By-Laws further provided that
the group as a whole shall be considered one policyholder, and such policyholder's rights as a Voting Member shall be exercised by the individual designated in, or pursuant to, such policy to act for the group for voting purposes. Individual members of the group who have been issued certificates shall not be considered Voting Members.
Under this language, claims the plaintiff, the one true policyholder and Voting Member of BCBS-CT in relation to the Care Plus Policy was unquestionably the "group as a whole," an undefined term which most logically means all persons who had been issued certificates of coverage under the Policy, not their common employer or "the individual designated in, or pursuant to, such policy to act for the group for voting purposes." Hence, then, although State Comptroller Nancy Wyman was ultimately designated, pursuant to the Care Plus Policy, to act for the group for voting purposes, that designation, which occurred on the very eve of the membership vote by BCBS-CT to approve its merger with Anthem Insurance, did not change in any way the State's and the group's relative rights and/or responsibilities under the Care Plus Policy. Instead of thereby becoming a policyholder and Voting Member of BCBS-CT in its own right and for its own benefit, the State, through the State Comptroller, merely became the group's designated representative for voting purposes only.
Against this background, when the merger of BCBS-CT into Anthem Insurance became effective, the "group as a whole" assertedly became a member of Anthem Insurance pursuant to its Qualified Contract — the Care Plus Policy, as assumed by Anthem BC/BS — and thus became entitled to receive a guaranty insurance policy/membership certificate in respect of that Qualified Contract. On that score, Section 7.6(b) of the Anthem Articles provided as follows:
Upon effectiveness of a Qualified Membership Merger, all of the members of the Qualified Mutual Insurer shall (1) retain their insurance and/or medical and health benefits under Qualified Contracts, and (2) become Members of the Corporation pursuant to, and shall be entitled to receive guaranty insurance policies/membership certificates issued by the Corporation in respect of such Qualified Contracts. Each such guaranty insurance policies/membership certificate shall continue in effect and confer membership and other rights in the Corporation as long as (x) the related Qualified Contract is in effect, or has been renewed, amended or replaced, without a lapse in coverage, by any insurance policy or health care benefits contract issued by a Qualified Membership Subsidiary for that Qualified Membership Merger, and (y) the membership fees required under such guaranty insurance policies/membership certificate are paid when due in accordance with the terms of such guaranty insurance policies/membership certificate.
Instead, when the Merger became effective and the Care Plus Policy was assumed by Anthem BC/BS, Anthem Insurance issued a guaranty insurance policy/membership certificate ("Guaranty Policy") with respect to that Policy to the State. Under the Guaranty Policy, the State was designated the Statutory Member of Anthem Insurance in relation to the Care Plus Policy, ostensibly with full rights of membership in Anthem Insurance.
The State defendants argue that, under the Guaranty Policy, the State was the one true member of Anthem Insurance in relation to the Care Plus Policy at the time of the demutualization, and thus, as well, its one true member in relation the 1999 Group Policy, which had been issued to replace it without a lapse of coverage. Moreover, they insist that the plaintiff's claim to the contrary under the Plan of Conversion is expressly defeated by the Plan of Conversion itself, which, like the Guaranty Policy, expressly identified the employer as the Statutory Member of Anthem Insurance in relation to any employer group insurance policy originally issued by a Qualified Mutual Insurer which was assumed by a Qualified Membership Subsidiary of Anthem Insurance pursuant to a Qualified Membership Merger between itself and Anthem Insurance.
In light of the foregoing, it is certainly not unfair for the State to argue that the plaintiff cannot prove, under his second theory of entitlement in this case, that his "group as a whole" was entitled, under the Plan of Conversion, to receive stock or cash from Anthem upon the demutualization of Anthem Insurance. That argument, however, is not dispositive on this issue, for it misapprehends the roles of the Guaranty Policy and the Plan of Conversion in establishing the plaintiff's and his fellow class members' membership rights in Anthem Insurance.
The plaintiff's second theory of entitlement, to reiterate, is that if the 1999 Group Policy conferred no individual membership rights in Anthem Insurance upon him because it was issued to replace a Qualified Contract — the Care Plus Policy, as assumed by Anthem BC/BS pursuant to the Merger between BCBS-CT and Anthem Insurance — then his "group as a whole," including all persons who held certificates of coverage under either such Policy, jointly acquired collective membership rights in Anthem Insurance equivalent to those they had before the Merger in BCBS-CT. The conferral of such rights, they claim, was expressly guaranteed under the terms of the Plan and Agreement pursuant to which the Merger took place. Their existence, moreover, was expressly restated and acknowledged in Section 7.6(b) of the Anthem Articles, which specified that they included the rights of Statutory Members to vote and to receive stock, cash or other consideration in the event of a demutualization.
Under that analysis, by the time the Plan of Conversion became effective, the plaintiff's group's membership rights in Anthem Insurance, including their right to receive stock or cash or other consideration in exchange for the extinguishment of such rights in the event of a demutualization, were already fully established, notwithstanding any claim or suggestion to the contrary that might later be made by Anthem Insurance, either in issuing the Guaranty Policy or in drafting or implementing the Plan of Conversion. Accordingly, although Anthem Insurance admittedly assumed that the State was entitled to become the Statutory Member of the Corporation pursuant to the Care Plus Policy, based perhaps upon the mistaken threshold assumption that the State, not the "group as a whole," was the one true policyholder and Voting Member of BCBS-CT in relation to that Policy before the Merger, it had no power to alter, by acting on that allegedly mistaken assumption or otherwise, the established rights of the plaintiff's group vis-a-vis the State with respect to the ultimate ownership and right to benefit from the sale of membership rights in the Corporation.
In fact, the record before this Court does not show that the intent of the Plan of Conversion was to alter established ownership or membership rights in Anthem Insurance. Instead, the Plan's discussion of who would be considered a Statutory Member of Anthem Insurance in relation to an employer group insurance policy issued by one of three Predecessor Companies which had merged into the Corporation was simply as follows:
For AICI originally, and for Anthem Insurance after the mergers, Statutory Members are individual primary insureds, whether their coverage is individual coverage or coverage as a participant in an insured employer or association group plan. For the three Predecessor Companies, Statutory Members were defined as (a) individual primary insureds if they had individual coverage, or (b) the employer (or association) if the coverage was insured on a group basis. Employer and association groups with membership in a Predecessor Company in effect as of the date of merger into Anthem Insurance have their membership rights continued in Anthem Insurance. These groups are referred to as "Grandfathered Groups" in this Exhibit. Individual primary insureds within a Grandfathered Group are not themselves Statutory Members.
Plan of Conversion, Exhibit F, p. 6.
This provision is significant for three reasons. First, it expressly acknowledges what the plaintiff has argued all along under his second theory of entitlement, to wit: that the Grandfathered Groups themselves, not their common employers, had membership rights in BCBS-CT prior to its Merger into Anthem Insurance. Second, it clearly states, as the plaintiff has also argued, that Anthem Insurance agreed to continue those very membership rights in itself following the merger, and thus that the Grandfathered Groups became new members of Anthem Insurance, not their common employers. Third, notwithstanding the Groups' established membership rights in Anthem Insurance following the merger, their employers were "defined as" the Statutory Members of the Corporation in relation to all group insurance policies issued to them. The implication of this provision is that, although the employers of Grandfathered Groups would be "defined as" Statutory Members of Anthem Insurance in relation to group insurance policies issued to provide health care benefits coverage to such Groups, and thus they could exercise the rights of Statutory Members on behalf and for the benefit of such Groups, they did not thereby become "members" of the Corporation in their own right, or acquire the right to have or use what they received in their representative capacity for their own benefit. Not surprisingly, then, even the Guaranty Policy issued to the State by Anthem Insurance upon the effectiveness of the merger between itself and BCBS-CT specified that "The Anthem Member is the fiduciary agent of the Covered Persons hereunder." Guaranty Policy, p. 8.
In light of the foregoing, the Court concludes that when this record is viewed in the light most favorable to the plaintiff, there is at least a genuine issue of material fact as to whether the plaintiff can establish that his and his fellow class members' "group as a whole" had a collective right under the Plan of Conversion to receive stock or cash upon the demutualization of Anthem Insurance. He can succeed on that claim at trial if: (1) as this Court has already found possible, he can establish that the "group as a whole" was the true owner of all pre-Merger membership rights in BCBS-CT pursuant to the Care Plus Policy, and thus that it acquired equivalent membership rights in Anthem Insurance upon the effectiveness of the Merger between Anthem Insurance and BCBS-CT; and (2) he can further establish, as this record also makes possible, that although the State was "defined" in the Guaranty Policy and the Plan of Conversion as the Statutory Member of Anthem Insurance in relation to the Care Plus and 1999 Group Policies, it was not entitled to exercise the rights of a Statutory Member in its own right and for its own benefit, but only as the representative of the "group as a whole," to whom those rights were expressly given under the Plan and Agreement of Merger between BCBS-CT and Anthem Insurance. Because those matters must be decided at trial, the Court hereby rejects the movants' second challenge to the legal sufficiency of the plaintiff's constitutional takings claims under his second theory of entitlement. CT Page 17142
3. Claim That Plaintiff Cannot Establish Any Property Interest in any of the Disputed Stock Delivered to the State
Turning finally to the third prong of the State defendants' argument that the plaintiff has not pleaded sufficient facts to establish a taking in the constitutional sense — that even if he was entitled, under either of his alternative theories of entitlement, to receive stock or cash from Anthem upon the demutualization of Anthem Insurance, he cannot establish any entitlement to receive, or thus any personal property interest in, the particular shares of stock which were delivered to and allegedly taken from him by the State — that argument must also be separately considered under each of his alternative theories of entitlement.a. Plaintiff's First Theory of Entitlement
Under the plaintiff's first theory of entitlement to the property allegedly taken from him by the State — that he and his fellow class members were individually entitled to receive stock or cash from Anthem upon the demutualization of Anthem Insurance under Section 7.6(c)(1) of the Anthem Articles because they held certificates of coverage under the 1999 Group Policy, which was not a Qualified Contract or a policy issued to renew, amend or replace a Qualified Contract — the movants argue persuasively that the plaintiff cannot establish that he and the members of his class were personally entitled to receive any particular shares of Anthem stock as a result of the demutualization, but only to receive generic shares of such stock or their cash equivalent, in amounts generally reflecting the values of their respective individual contributions to the equity of the demutualizing Corporation. Thus, the plaintiff assertedly cannot establish that he and his fellow class members have any claim to, or resulting property interest in, the particular shares of stock which were delivered to the State, or thus to the particular funds which the State received as proceeds from the sale of such stock and has since retained. In fact, claim the movants, the plaintiff's true claim is now and has always been against defendant Anthem — a claim for generic Anthem stock or cash which Anthem still allegedly owes him and his fellow class members under the Plan of Conversion but has not yet delivered to them.
If the plaintiff is correct in his assertion that he and the members of his class were all individually entitled, under the Plan of Conversion, to receive personal distributions of stock or cash from Anthem upon the demutualization of Anthem Insurance, they would logically have expected that such distributions would be made to them directly, not through the State or any other third-party intermediary. As individual members of the Corporation, they had not designated the State to serve as their representative for this purpose. Hence, Anthem's delivery of stock or cash to the State, even if done with the intent or expectation that it would thereby come into their hands, would not in any way satisfy Anthem's unmet responsibility to make the required delivery to them or lessen their plenary right to compel Anthem to make that delivery. For this reason, nothing the State did or failed to do with the property misdelivered to it could in any way affect their rights against Anthem.
Because nothing the State has done with the disputed stock or stock sales proceeds since receiving them has in any way affected the plaintiff's entitlement, if any, to receive the stock or cash from Anthem, the Court must agree with the movants that, on this record, the plaintiff cannot establish a taking in the constitutional sense of the disputed stock or stock sales proceeds under his first theory of entitlement. Accordingly, insofar as the plaintiff's challenged takings claims are based upon that first theory of entitlement, such claims must be dismissed for lack of subject-matter jurisdiction under the sovereign immunity doctrine.
b. Plaintiff's Second Theory of Entitlement
Under the second theory of entitlement upon which the plaintiff bases his constitutional takings claims, however — that, if the 1999 Group Policy did not give him and his fellow class members individual membership rights in Anthem Insurance because it was issued in replacement of the assumed Care Plus Policy, a Qualified Contract, then their "group as a whole" received collective membership rights in Anthem Insurance pursuant to that Policy, including the right to receive a single joint distribution stock or cash from Anthem upon the demutualization of Anthem Insurance — a different result obtains. If that theory, unlike the plaintiff's first theory of entitlement, were proved at trial, as this Court's prior denial of Anthem's Motion for Summary Judgment suggests that it may be, then the plaintiff and his fellow class members would have established that their "group as a whole" was collectively entitled to receive all of the stock which Anthem delivered to the State in exchange for the State's assumed membership rights in Anthem Insurance pursuant to the Care Plus Policy and the 1999 Group Policy, provided only that they also proved that the relationship between the "group as a whole" and the State with respect to those Policies was that of principal and agent. In that event, the State's receipt of the disputed stock would not have been in its personal capacity, in own right or for its own benefit, but in its representative capacity, as the Statutory Member of Anthem Insurance on behalf of and for the benefit of the "group as a whole." If such facts are proved at trial, then the State's sale of the disputed stock and continuing retention of all proceeds from its sale for its own use would clearly constitute a taking, in the constitutional sense, of the plaintiff's and his fellow class members' private property.
Because the State's liability under this alternative theory cannot be resolved without a full trial on the merits of the plaintiff's claim of ownership as to the distributed stock and stock sales proceeds, the Court agrees with the plaintiff that, under his second theory of entitlement, he has sufficiently pleaded a taking of property in the constitutional sense to survive the defendants' second challenge to this Court's subject-matter jurisdiction over his constitutional takings claims under the sovereign immunity doctrine.
C. Assertion That the Plaintiff Has Not Based His Takings Claims Upon a Legitimate Entitlement to a Discrete Property Interest
The State defendants' third challenge to the legal sufficiency of the plaintiff's constitutional takings claims, and thus to this Court's subject-matter jurisdiction over those claims under the takings exception to the sovereign immunity doctrine, is that they are not based, as assertedly they must be, upon the State's alleged substantial interference with a legitimate entitlement to a discrete property interest, but merely with a unilateral expectation of receiving an undefined and undefinable benefit. Here, claim the movants, the only property interest asserted by the plaintiff and his fellow class members is their alleged right, under the Plan of Conversion, to receive an unknown quantity of Anthem stock or cash from Anthem upon the demutualization of Anthem Insurance. Because, however, the Plan of Conversion expressly assumed that the Statutory Member of Anthem Insurance in relation to any employer group insurance policy issued by a Qualified Mutual Insurer, such as BCBS-CT, which later merged into Anthem Insurance, was the group's employer, Anthem did not assume that the plaintiff or any of his fellow class members was entitled to receive such a distribution, either individually or collectively, and so never calculated what, if anything, would be due them if they were so entitled. As a result, claim the movants, the plaintiff has not alleged, does not know and cannot prove how much stock or cash he and/or his fellow class members were entitled to receive under the Plan of Conversion, under any theory of entitlement he has advanced in this case. Indeed, they claim that that amount cannot be ascertained by anyone but Anthem, because the Plan of Conversion contemplated that Anthem itself would make all such determinations under a complex formula described only generally in the Plan of Conversion. Therefore, because the establishment of a valid takings claim assertedly requires the claimant to prove substantial interference by the State with known property rights, the instant claims, which identify no such rights, are legally insufficient to avoid dismissal for lack of subject-matter jurisdiction under the takings exception to the sovereign immunity doctrine.
The plaintiff responds to this argument, very simply, by contending that he has indeed alleged a taking of discrete property from himself and his fellow class members, to wit: all of the Anthem stock delivered to the State instead of himself and his fellow class members upon the demutualization of Anthem Insurance.
It is, of course, axiomatic that a constitutional claim for just compensation must be based upon the State's alleged taking of the claimant's private property. Thus, to prevail on such a claim, the claimant must prove that at the time of the alleged taking, he had an established property interest in the particular property allegedly taken, not merely a unilateral hope or expectation that he would one day acquire such an interest in that or other related property. The property in question can be of any type. Hence, it can either be corporeal or incorporeal, and may consist of stock or the right to receive a payment or another financial benefit. See, e.g., Tuchman v. State, 89 Conn.App. 745, 878 A.2d 384 (2005) (a takings claim can be asserted against the State for disallowing the foreclosure of a lien on a State-owned building to raise money to pay property taxes to the City of Bridgeport). Even so, it must be of such a discrete nature and definite description as to make it both identifiable as the claimant's property and subject to a non-speculative determination that the State, by its alleged conduct, has so substantially interfered with it as to destroy or nullify its value to the claimant or to deprive him of his use and/or enjoyment of it to a substantial degree.
Notwithstanding the claimant's obligation to plead and prove the identity of the particular property allegedly taken from him in order to establish a valid takings claim, he has no obligation to plead and prove the precise value of that property, so identified, in order to establish that it was taken. Instead, he need only undertake the task of establishing its value to prove his damages, and thus the amount he should receive as just compensation for the taking once a taking is otherwise established.
Here, the property allegedly taken from the plaintiff's and his fellow class members' group as a whole under the plaintiff's second, and sole potentially viable theory of entitlement against the State, was an allocation of stock which Anthem delivered to the State upon determining that it constituted that portion of the total equity of Anthem Insurance which was attributable to all membership interests in the Corporation under the Care Plus Policy and the 1999 Group Policy which was allegedly issued to replace it. Under that theory, which this Court has ruled sufficient, if proved at trial, to establish a taking in the constitutional sense of the property of the "group as a whole," one critical element which the plaintiff must prove is that the stock in question was received by the State in its representative capacity, on behalf and for the benefit of the group in whose interests it served as the Statutory Member of Anthem Insurance with respect to the group's insurance policies. If, of course, the plaintiff succeeds in this proof, he will thereby establish that that particular property, which was always intended for distribution to the true owner of membership interests in Anthem Insurance in relation to those policies, had in fact been delivered to the owner through its representative.
The movants claim that, on this record, Anthem's earlier determination as to how much stock the State should receive in exchange for its assumed membership interests in Anthem Insurance pursuant to the Care Plus Policy and the 1999 Group Policy was necessarily different from any determination it now would make or would have made at the time of the demutualization had it assumed that the "group as a whole" was the true and only member of Anthem Insurance under those Policies instead of the State. This claim, however, is unsupported by the record, which in fact reveals that when Anthem made its determination as to how many shares should be received by each Statutory Member, it made a separate allocation with respect to each separate insurance policy or set of related insurance policies which it then attributed to the State, including the Care Plus and 1999 Group Policies, which it considered together. Therefore, since apart from a fixed component of twenty-one shares per Statutory Member, the size of each Statutory Member's allocation of stock for any insurance policy or related set of insurance policies was based upon the separate profit and loss experience of the Corporation under that particular policy or related set of policies, logic suggests that the allocation of stock to the group as a whole for those two policies — again, apart from establishing the size of the fixed component, which might well have changed if the number of Statutory Members changed — would have been no different from the original allocation of stock to the State. The reason for this conclusion, very simply, is that the underlying experience to be evaluated was one and the same, regardless of who was the member or Statutory Member of the Corporation at that time. See Plan of Conversion, Exhibit F, II.A.1.
Against this background, this Court concludes that, under the plaintiff's second theory of entitlement, he has indeed identified a discrete property interest of his "group as a whole" in all of the stock delivered to the State in exchange for its assumed membership interests in Anthem Insurance pursuant to the Care Plus and the 1999 Group Policies, less any part of that allocation, up to twenty-one shares, which is attributable to the fixed component the State may otherwise have been entitled to receive based upon its ownership of other unrelated Anthem Insurance policies.
V. THE PLAINTIFF'S STATE CONSTITUTIONAL DUE PROCESS CLAIMS
The fourth and final claim by the State defendants on this Motion is that the plaintiff's State constitutional claims — that the State took the disputed stock and stock sales proceeds from him and the members of his class or sub-class without notice or a hearing or other administrative or judicial process, thereby depriving them of their property without due process of law — must also be dismissed for lack of subject-matter jurisdiction under the sovereign immunity doctrine. The movants advance three basic reasons for this claim.
First, they repeat and adopt all of the arguments they previously made in support of their challenge to the plaintiff's takings claims. The underlying logic of these arguments, here as on the takings claims, is that a person who has no legitimate entitlement to discrete property cannot suffer the "taking" of that property in the constitutional sense or be deprived of his property without due process of law. Second, they claim that insofar as the plaintiff claims that his property was taken from him for public use without just compensation, he has no right to object to the Sovereign State's act of taking the property from him ab initio, or to require that any particular procedures be utilized before the property is seized or encumbered, but instead the right to demand just compensation for the taken property, and to that end to have a fair hearing to determine the amount of such compensation subsequent to the taking to receive just compensation. See, e.g., Bailey v. Anderson, 326 U.S. 203, 204-05 (1945) ("But it has long been settled that due process does not require the condemnation of land to be in advance of its occupation by the condemning authority, provided only that the owner have opportunity, in the course of the condemnation proceedings, to be heard and to offer evidence as to the value of the land taken . . . Its value may be fixed by viewers without a hearing, after entry upon the land, if their award is subject to a review where a trial upon evidence may be had").
The plaintiff has responded to the movants' first set of arguments exactly as he did when responding to those same arguments in defense of his takings claims. Logically, the Court's resolution of those issues in this context must be the same as it was before, to wit: The Court finds that the plaintiff and his fellow class or sub-class members have a valid and sufficient legal basis for asserting a property interest in the disputed stock and stock sales proceeds under their second, but not their first, theory of entitlement in this case.
In response to the defendants' second argument, the plaintiff acknowledges that in the situation of a constitutional taking, such as here alleged, their first opportunity to have their proverbial day in court may not come until after the taking has already occurred. Here, they insist, it is high time for that day to come as they have waited five years already and yet their right to be heard at all is still being hotly contested. It is true, of course, that the State may be able to establish at trial that the plaintiff's true and only opportunity to have a hearing to contest the challenged taking has already come and gone, through Anthem's claimed good-faith compliance with detailed statutory procedures designed to ensure that all members of the Corporation receive notice of their rights upon the completion of the conversion. Whether the use of such procedures were effective in communicating those rights to the plaintiff and the members of his class, instead of merely the State, will have to be determined at that time.
Against this background, the State defendants' Motion to Dismiss must be granted in part and denied in part with respect to the plaintiff's State constitutional due process claims, as pleaded in Counts Twelve and Thirteen of Complaint II-A.
VI. CONCLUSION
For the foregoing reasons, the Court hereby ORDERS that the State Defendants' Motion to Dismiss dated June 14, 2002, as supplemented by an Addendum dated February 14, 2003, be:
GRANTED as to all claims presented in Counts Three, Four, Five, Six, Seven, Eight, Nine, Fourteen, Fifteen, Sixteen and Seventeen of Complaint II-A;
GRANTED as to all claims based upon the plaintiff's first (individual) theory of entitlement to the disputed stock and stock sales proceeds in Counts Ten, Eleven, Twelve and Thirteen of Complaint II-A;
DENIED as to all claims based upon the plaintiff's second (group as a whole) theory of entitlement to the disputed stock and stock sales proceeds, in Counts Ten, Eleven, Twelve and Thirteen of Complaint II-A; and
DENIED as to the plaintiff's claims in the nature of interpleader, as pleaded in Counts One and Two of Complaint II-A.
IT IS SO ORDERED.