Opinion
FSTCV156026910S
08-31-2016
Pursuit Partners, LLC v. James Valentino
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTIONS FOR SUMMARY JUDGMENT (#120.00, #143.00, #145.00 AND #147.00)
Kenneth B. Povodator, J.
Background/Procedural Context
Currently before the court are four motions for summary judgment. The issues have been substantially narrowed by virtue of #163.00 whereby the plaintiffs withdrew all of the counts in the complaint except the 2nd and 4th counts, such that only the claims of abuse of process remain pending. In particular, the 2nd count asserts a claim of abuse of process based on the motion to intervene and related motion for injunction that were filed in connection with the Waterbury litigation involving the plaintiffs (and/or related entities) and UBS as the principal defendant (Pursuit Partners, LLC v. UBS AG, J.D. Waterbury, No. UWYCV084033148S), which motions were denied. The 4th count asserts a claim of abuse of process based on the still-pending case of Claridge Associates, LLC v. Pursuit Partners, LLC (J.D. Stamford, No. FSTCV156026069S).
In support of their motions, the defendants filed memoranda and affidavits. Initially opposing the motions, the plaintiffs filed memoranda in opposition to the motions; only later, after the defendants had filed replies pointing out the total absence of any affidavits or other documentary/evidentiary submissions by the plaintiffs, the plaintiffs filed affidavits in opposition to the motions for summary judgment. The affidavits were filed after the plaintiffs had withdrawn numerous counts, such that the affidavits were filed at a time when it was known that the only issues in the case related to the abuse of process claims.
Discussion
With respect to the 4th count and all defendants, little discussion is required. Based on a recent decision of the Appellate Court, all of the motions must be granted with respect to the 4th count.
Although abuse of process claims do not include favorable termination as an essential element, the cause of action is still considered premature until the underlying litigation has been completed Larobina v. McDonald, supra, 274 Conn. at 407-08. In Larobina, our Supreme Court concluded that an abuse of process claim was properly dismissed as premature when the underlying action was still pending. Id., 408. In reaching this conclusion, the court stated: " Although we do not suggest that success in the first action would be a prerequisite for an abuse of process claim . . . it is apparent that the eventual outcome of that action and the evidence presented by the parties therein would be relevant in litigating an abuse of process claim . . ."MacDermid, Inc. v. Leonetti, 158 Conn.App. 176, 185, 118 A.3d 158 (2015).
There is no question but that the Claridge litigation is pending. Any claim of abuse of process relating to that litigation, then, is, as a matter of law, premature.
The defendants have filed motions for summary judgment relating to this count. The court believes that technically, the proper disposition is that the 4th count should be dismissed; although in MacDermid the court had granted summary judgment, as mentioned in the quoted passage, dismissal appears to be the proper disposition, and that is consistent with the notion that prematurity (lack of ripeness) goes to the court's subject matter jurisdiction. Indeed, in affirming the granting of a motion for summary judgment, the MacDermid court cited Larobina v. McDonald in which the result is identified as having been a dismissal. Accordingly, the motions are granted, but the court orders that a judgment of dismissal rather than summary judgment (inferentially on the merits) be entered with respect to the 4th count, in favor of all defendants.
With respect to the 2nd count, no such almost-summary blanket disposition is possible. The court will instead aggregate the motions under 2 headings, New York counsel (Valentino--#145.00; all other New York counsel--#143.00) and investor parties/local counsel (local counsel--#120.00; investor parties--#147.00).
As to the investor parties/local counsel, their argument relies upon the contention that the unsuccessful motion to intervene cannot, as a matter of law, constitute an abuse of process. Although their extrapolation from other situations presents an attractive argument, the court cannot ignore a very recent decision that suggests at least potential viability of such a claim. In Diamond 67, LLC v. Oatis, 167 Conn.App. 659 (2016), the court treated intervention as the equivalent of a new action, for purposes of vexatious suit--the court explicitly held that it was not a preclusive factor that there had not been an initiation of a new proceeding. Although this case involves a claim of abuse of process, for many purposes, the analysis is analogous, as reflected in the above-discussed MacDermid case. To the extent that the defendants argue that they were filing an application to intervene rather than attempting to start a new proceeding, that cannot be deemed conclusive.
Before proceeding further, the court must note the asymmetry with respect to proof, depending on procedural context. In a trial on the merits, the plaintiffs would have the burden of proof (preponderance of the evidence); here, the defendants have the burden of establishing, essentially conclusively (no material issue of fact) that they are entitled to prevail. They may carry their burden by establishing, conclusively, that the plaintiffs cannot prove an essential element of the claim being challenged, or that the defendants have a conclusive defense to the claim. To the extent that the defendants largely advance arguments that seem to rely upon the extreme implausibility of the plaintiffs' claims, they are not meeting that burden.
Nonetheless, the court has concluded that the plaintiffs cannot prevail, as a matter of law, with respect to the abuse of process claim based on the concluded UBS litigation. The route to that conclusion, however, is not especially direct.
In their opposition to the motions filed by the investors and their local counsel, the plaintiffs summarize their position on numerous occasions (and the belatedly-filed affidavits incorporate some of the argumentative aspects of their position). Two of the recitations are especially useful in summarizing the position of the plaintiffs:
The PCM Partnership was never a party to or witness in the UBS Case. Despite this undisputed fact, the Investor Defendants have claimed in various litigations in different fora that they were entitled to control the UBS case and receive gross proceeds if any from the UBS Case. From 2008 to May 12, 2015, the Investor Defendants took no action in Connecticut to vindicate any claimed rights they had with respect to the UBS Case. Instead, they waited until the UBS Case was on the verge of trial, to cause maximum damage to Plaintiffs and improperly leverage their litigation tactics to extort from Plaintiffs what the Investor Defendants could never legally obtain-a direct interest in any gross proceeds of the UBS Case and/or control of the UBS Case.
And elsewhere:
In filing the Motion to Intervene and the UBS Injunction Motion, the Investor Defendants and Murtha Defendants used legal process against Plaintiffs in an improper manner or to accomplish a purpose for which it was not designed. Specifically, the Investor Defendants and Murtha Defendants knew that the Motion to Intervene and the UBS Injunction Motion are not the proper substantive or procedural vehicles to vindicate their claimed rights. Further, the Investor Defendants and Murtha Defendants knew that they had no relationship, contractual or otherwise, to any plaintiff or represented entity in the UBS Case. They filed their Motion to Intervene and the UBS Injunction Motion to exert maximum settlement leverage over Plaintiffs in order to procure money from them under the threat of interference with the UBS Case. They exhibited a conscious desire procedurally to misuse the process and intent to accomplish a result that they could not achieve by the proper use of the process.
The court believes that the appropriate and ultimate benchmark is the decision whereby the earlier trial court rejected the motion to intervene (and associated pleadings). The actual decision denying the motion to intervene in the UBS litigation states:
The motion to intervene is denied. Proposed Intervenors do not seek to join this action as plaintiffs in pursuing claims against the UBS defendants or Moody's. Indeed, they do not seek to participate in the prosecution of these claims in any manner. Rather, the proposed intervenors bring separate and distinct claims against the plaintiffs in which they assert an interest, right and entitlement to a portion of any judgment that may be entered in favor of the plaintiffs. Such is not a purpose of or basis upon which intervention can be sought or had.
The plaintiffs and the defendants have quoted and relied upon this order; the defendants in their initial submissions, and the plaintiffs in their briefs and in the affidavits submitted in opposition to the motions.
Thus, notwithstanding the attempt to characterize the attempted intervention as an effort to control the UBS litigation, the court, in denying the motion, made it clear that there was no such effort, and not even an effort to pursue any claims against the defendants in that action: " Proposed Intervenors do not seek to join this action as plaintiffs in pursuing claims against the UBS defendants or Moody's. Indeed, they do not seek to participate in the prosecution of these claims in any manner."
Instead, the court recognized that the only claims they sought to pursue were against these plaintiffs, seeking to " assert an interest, right and entitlement to a portion of any judgment that may be entered in favor of the plaintiffs." In essence, then, the court determined that they were trying to ensure that they were not deprived of whatever rights they might have to a portion of the proceeds. (Of course, that is the explicit purpose for which the pending Claridge litigation was commenced.)
Intervention may not often be utilized for such a purpose, but there is a well-recognized procedure in Connecticut that is analogous (albeit statutorily authorized): Pursuant to General Statutes § 31-293, an employer may intervene in a tort claim brought by an injured employee, in order to ensure its right of recovery from the proceeds of any settlement or judgment--without necessarily asserting any right to control the litigation. An alternate perspective is that this is a variation on an interpleader--instead of the stakeholder bringing in parties to allow a determination of the respective rights of the parties to a share of designated funds, the defendants sought to accomplish a similar end with respect to funds that the plaintiffs were about to receive but without any apparent willingness to acknowledge any rights in any of the parties. (The Claridge defendants are not the only parties in that situation; the Alpha Beta litigation also involves parties claiming a right to participate in the proceeds of the UBS litigation.) Indeed, to be more precise, the investors were not even seeking an actual determination of rights but rather an order to maintain the status quo (an injunction) to allow an opportunity to litigate the proper disposition of the proceeds--an eventual determination of rights to the proceeds.
Properly framed, then, there was nothing improper (abusive) in the process used. Whether it was a sound strategy, whether it was timely, whether it could be legally justified in a procedural sense, all are issues relating to the merits and/or plausibility of an attempted approach. These considerations have nothing to do with misuse or abuse of process. At the risk of oversimplification, the earlier court found, consistent with the allegations of the goals articulated in the pending Claridge litigation, that the defendants wanted to be present and have a say over the disposition of the proceeds, whatever they might be, when the UBS litigation was resolved whether by litigation or settlement, and more immediately, wanted to prevent disposition of assets prior to such a determination. The earlier trial court decision established that the court found no ulterior motive behind the motion to intervene as being claimed here; the court found that the investor defendants filed their motion to accomplish precisely what they said they wanted to accomplish and the arguable legal inefficacy of that avenue is not and cannot constitute abuse of process. Abuse of process does not rely upon success or failure in that which is sought to be accomplished by the pleading; it focuses on actual versus ulterior motives (in a predominating sense).
As the defendants correctly framed the point, " a claim that the Motion to Intervene lacked merit, and the merits of the supposedly improper process are immaterial to an abuse of process claim." Indeed, as noted at pp. 22-23 of #116.00, even if the motion to dismiss had been determined to be frivolous, that would have no probative value with respect to determining whether there was an abuse of process.
Taking the plaintiffs' claims one step further, they assert: " Further, the Investor Defendants and Murtha Defendants knew that they had no relationship, contractual or otherwise, to any plaintiff or represented entity in the UBS Case." To the extent that this focuses on the purported inability of the defendants to identify the correct Pursuit Partners parties in the UBS litigation or any other litigation, that goes to the merits of the motion rather than the abusive quality of the motion.
Given the history of the litigation, such an accusation is especially inapt. In the UBS litigation, in a decision dated July 3, 2014, the court discussed expert testimony that had been proffered by the Pursuit Partners entities, in connection with an attempt to reargue a motion to dismiss that had focused on the plaintiffs themselves, and their seemingly having misidentified the proper parties to assert the claims in that litigation. The decision talks about the plaintiffs' contentions that transparency was almost anathema to the operation of a hedge fund such as Pursuit Partners, and seemingly accepts the notion that all of the technically-separate entities actually form a unitary hedge-fund entity, so as to justify a less-than-fatal outcome arising from the then-existing situation. Any claimed misidentification or misunderstanding as to identification of proper parties, then, particularly given the absence of any attempt to control the litigation, has no possible malicious/abusive quality.
In response to the defendants' submissions, the plaintiffs' affidavits recite the history of the attempted intervention and couple the factual recitation with advocacy arguments of a purely conclusory nature. There is no evidence presented of an ulterior--improper--motive behind the unsuccessful intervention.
Accordingly, the court finds that the investors and local counsel have established their right to summary judgment with respect to the 2nd count.
Turning attention to New York counsel, the court need not rely upon the foregoing analysis to determine that the motions (#143.00 and #145.00) must be granted with respect to the 2nd count. These defendants have relied upon their factual non-involvement with the UBS litigation, and the plaintiffs have not created factual issue. The affidavits submitted in opposition to the motion for summary judgment by New York counsel do not even mention the UBS litigation history.
Specifically, the plaintiffs have offered no proof even suggesting that defendant Valentino had any involvement in the earlier UBS litigation--which the defendant has affirmatively denied in his affidavit.
In their memorandum in support of their motion, the other N.Y. counsel defendants assert that " no acts of the Harris, O'Brien defendants are even alleged" and that the relevant application to appear pro hac vice was never granted but instead was returned." In that latter respect, they rely on the Knag affidavit submitted in connection with a previously-filed motion and the court can take judicial notice of the status of appearances in UBS litigation (J.D. Waterbury, UWYCV084033148S); the attempted interveners (identified as P-05 through P-08) were only represented by the Murtha Cullina law firm, confirming that no motion to appear PHV was granted on behalf of these parties. These defendants had no role in any cognizable respect in that earlier litigation. They did not and could not have signed any motion or other " process" that might have been (allegedly) abusive, absent a cognizable presence before the court.
This, of course, is in addition to the analysis applicable to local counsel and the investors. (There also is the almost trivial observation that the only documents that the non-Valentino N.Y. counsel might have signed--which might be considered process--related to the PHV application, and there is no suggestion that the PHV paperwork was prepared and submitted for anything other than the intended purpose of being allowed to appear as pro hac vice counsel.)
Accordingly, all New York counsel are entitled to summary judgment with respect to the 2nd count.
Conclusion
As set forth in the discussion above, the court believes that each of the defendants is entitled to judgment in his/its favor, a judgment of dismissal with respect to the 4th count and summary judgment with respect to the 2nd count.
Summary judgment is granted as to all defendants with respect to the 2nd count. The 4th count is dismissed as premature. (All other counts have been withdrawn.)