Opinion
FSTCV166030430S
09-12-2018
Matthew WITTMAN v. INTENSE MOVERS, INC.
UNPUBLISHED OPINION
POVODATOR, JTR
Nature of the Proceeding
As described by the plaintiffs, this is an action in which the plaintiffs are "seeking judicial dissolution and winding up of Intense Movers, appointment of a receiver, and imposition of a constructive trust against Alex Leute and William Leute and for the benefit of Intense Movers." Intense Movers has been characterized as a closely-held corporation, with four owners. A counterclaim against the named plaintiff has been filed. The court already has denied two motions to dismiss (# 191.00); currently before the court is a motion that is based on a third motion to dismiss, a motion that was withdrawn immediately before scheduled argument. The circumstances and timing of that withdrawal are at the center of the current dispute.
In particular, the plaintiffs have moved for sanctions- attorneys fees- against the defendants, and specifically counsel for the defendants, based on the filing of the eventually-withdrawn motion to dismiss, and the failure/refusal to withdraw that motion until the Friday immediately preceding scheduled argument on the motion. The plaintiffs initially sought $16,301.50 reflecting the attorneys fees incurred by the plaintiffs prior to the scheduled date for argument, and subsequently have increased that claim to $25,707 by way of a supplemental affidavit (# 189.00), (The increment appears to represent the claimed costs associated with pursuing their claim for sanctions.)
Discussion
The various authorities cited by the plaintiffs relating to imposition of sanctions clearly recognize the trial court’s discretion as to if and when to impose sanctions, and the type of sanctions that would be appropriate under the circumstances. The court must note, however, that all of the appellate authorities cited seem to involve either discovery (where Practice Book § 10-14 specifically authorizes a broad range of sanctions, if appropriate) or a course of conduct rather than a single incident (especially as relates to a pleading). The court does not suggest that sanctions may not be appropriate for a single instance of pleading misconduct, but none of the appellate authorities cited address the propriety of a trial court doing so or the circumstances in which it might be appropriate.
The one arguable exception is Brunswick v. Statewide Grievance Committee, 103 Conn.App. 601, 931 A.2d 319 (2007), which is something of a hybrid- a trial court had ordered sanctions against the attorney, and the appellate decision related to subsequent disciplinary proceedings, also imposing sanctions. (In this regard, the court must note and recognize the distinction between an adversarial civil proceeding such as this, and a disciplinary proceeding.) The appellate decision, therefore, did not address the propriety of the sanctions that the trial court had imposed (during the course of proceedings), but rather the sanction imposed as a result of a disciplinary proceeding (effectively going to the ultimate merits of the proceeding). In that case, however, the transgression was blatant and seemingly indisputable:
"The evidence in the record establishes that the only evidence the [attorney] had ... was his client’s statement. Although the [attorney] initially may have had a good faith basis to make the allegation in the motion [to vacate the arbitration award], he certainly did not have a good faith basis to maintain the allegation before the court once his client refused to supply an affidavit in support of the statement." The [Statewide Grievance Committee] therefore concluded that the plaintiff’s violations of Rule 3.1 warranted a reprimand. 103 Conn.App. 605-06.
Millbrook Owners Association, Inc. v. Hamilton Standard, 257 Conn. 1, 776 A.2d 1115 (2001), another case cited by the plaintiffs, involved a history of discovery orders, such that the sanction of dismissal was justified both by a course of conduct and the authority of the court to impose appropriate sanctions for failure to comply with discovery obligations.
In CFM of Connecticut, Inc. v. Chowdhury, 239 Conn. 375, 685 A.2d 1108 (1996), also cited by the plaintiffs, there had been an identified pattern of pleading abuses, including a challenge to the ability of the judge to hear the case- seemingly for purposes of delay- coupled with commencement of a separate duplicate proceeding in another district, all of which were deemed to justify imposition of sanctions. (Actually, as with Brunswick, the appellate decision did not actually address the propriety of the imposition of sanctions, but rather, in CFM, the appellate decision addressed the finality of the initial order of sanctions with respect to another judge purporting to vacate that order of sanctions.)
Fattibene v. Kealey, 18 Conn.App. 344, 358, 558 A.2d 677 (1989) also involved a claimed abusive course of conduct:
The court must note that the undersigned was trial counsel (which included involvement in seeking sanctions against plaintiff’s counsel), and also was counsel of record for an initial appeal; see, Fattibene v. Kealey, 12 Conn.App. 212, 530 A.2d 206 (1987). The court is quoting from a subsequent appeal.
The defendant claimed in his motion for sanctions that the plaintiff, in his motions, had advanced certain procedural claims in bad faith, mischaracterized certain rulings by the referee, misstated evidence, pervasively disregarded the rules of evidence, attempted to prejudice the referee and the court against the defendant, made inappropriate references to the referee, and that the "sheer volume and repetitious nature of the [plaintiff’s] pleadings [were] indicative of an attempt to harass and delay."
Along these lines, even the trial court decision cited by the plaintiffs, Wise v. Town of Simsbury, No. CV 0850172535, 2011 WL 4347194, at *1 (Conn.Super.Ct. Aug. 26, 2011), is described as involving a "pattern of persistent, repetitious and futile pleadings borders on obsession and has been done in bad faith ..."
Finally, the court must address another consideration in connection with imposition of sanctions. In Ridgaway v. Mount Vernon Fire Insurance Co., 328 Conn. 60, 71-74, 176 A.3d 1167 (2018), although focusing on dismissals/nonsuits, the Supreme Court held that proportionality is always a consideration in an imposition of sanctions.
The court will not go into great detail as to the arguments of the parties with respect to the underlying facts and their application to the issue of the suitability of the plaintiffs to advance corporate interests in this derivative action. The parties clearly disagree on which facts are relevant, how they reflect on the suitability of the plaintiffs to pursue a derivative action, what steps could have been taken to resolve the issue short of filing and short of arguing the motion to dismiss, etc.
The plaintiffs specifically focus, however, on the fact that once one of the defendants had filed a formal election to purchase the plaintiffs’ shares in the company, in lieu of dissolution, the issue of suitability of the plaintiffs became moot. (The defendants contend, in part, that the plaintiffs could/should have narrowed their claims in the litigation, for the same reason, prior to the filing of the motion to dismiss.)
The plaintiffs essentially contend that the coup de grace was their bringing to the attention of the defendants the decision in Bragoni v. Francalangia, J.D. Hartford, X 03HHDCV176079494S, 2017 WL 5642275, (October 25, 2107) .
Giving the Intense Movers Counsel the benefit of doubt, for the sake of argument, concerning the good-faith factual and legal bases for the Motion to Dismiss at the time it was filed, they certainly lacked good faith in maintaining and refusing to withdraw the Motion when Attorney Order brought to Attorney Grant’s attention the Bragoni decision and multiple other reasons for withdrawing the Motion on January 30. Not only did Attorney Order send Attorney Grant a copy of the decision, but he also highlighted pertinent passages and made annotations in the margins ... Attorney Order explained these specific illustrations of baseless this to Attorney Grant both on the telephone and in a letter prior to drafting plaintiffs’ Memorandum in Opposition. (# 186.00 at page 12.)
In that letter dated January 30, 2018, sent by counsel for the plaintiffs (submitted in support of this motion), the points articulated clearly were advocacy-oriented, addressing the plaintiffs’ perspective as to certain facts. Most of the letter, other than addressing interpretation and importance of facts, was directed to Bragoni. The plaintiffs seem to treat Bragoni as effectively conclusive or dispositive; while it may be persuasive, nothing prevented the defendants from arguing that the decision was incorrectly decided or that it does not necessarily apply to the specific facts in this case. Trial courts often disagree on the proper application of law to a certain set of facts and a party is not bound by an earlier trial court decision (in a different case) in any way.
Even if Bragoni were somehow binding, an attorney is permitted to take a good faith position seeking modification or reversal of existing law; see, Rule 3.1 of the Rules of Professional Responsibility. Parties often raise an issue on appeal to the Appellate Court, notwithstanding settled law on the issue, as a means of preserving the right to seek relief from the Supreme Court; see, e.g., State v. Hudson, 122 Conn.App. 804, 811 n.2, 998 A.2d 1272 (2010).
The court notes that the defendants relied on the same type of analysis as performed by the court in Bragoni - reaching an opposite conclusion. To the extent that the plaintiffs rely on the additional fact of the offer to buy the shares of the plaintiffs, the plaintiffs have not demonstrated how that additional fact makes the defendants’ position thereby frivolous (rather than just dubious), especially given the existing state of the pleadings- the operative complaint.
The court is concerned about a number of aspects of this motion for sanctions. First, as already noted, this is not part of any claimed course of conduct; the motion appears to relate solely to one motion to dismiss. There also is an issue of proportionality, particularly with respect to the almost 60% "surcharge" as an increment to the amount claimed based on the cost of pursuing sanctions. The fact that the issue also implicates varying interpretations of the facts, and a claimed need to address issues presented by the operative complaint which defendants contend could have been narrowed by the plaintiffs, somewhat undercuts the "obviousness." of the inappropriateness of the motion to dismiss. A party treating a trial court decision as essentially dispositive, no matter how close on the facts, cannot transform a challenge to what amounts to the standing of parties with at least some factual and legal support, into a frivolous motion.
In connection with their submission of a supplemental affidavit seeking additional fees, the plaintiffs have not cited any authority for the proposition that the court, in awarding sanctions, can or should include the cost of the motion for sanctions itself. By analogy, a claim for vexatious suit may include attorneys fees in the proceeding found to have been vexatious as an element of damages, but not the fees incurred in pursuing the vexatious suit claim; see, e.g., Szekeres v. Szekeres, 126 Conn.App. 829, 854, 16 A.3d 713 (2011). The court notes that Practice Book § 10-14(b)(2) provides explicit authority for seeking costs of a motion seeking sanctions in the discovery context; when relying on the court’s inherent authority, almost by definition there is no explicit authority for awarding attorneys fees.
The court also is concerned about more general factors. Aside from what appears to be undue reliance on a trial court decision, the court also must be mindful of the potential for deterrence of parties from abandoning or withdrawing motions seemingly at the last moment (or at all). If the court were to "punish" a withdrawal on the Friday before argument by imposition of sanctions, that would only encourage parties to argue motions that otherwise might have been abandoned. In other words, instead of adopting a "cut your losses" approach by not investing further time and effort into argument, parties might feel obligated to argue the motions so as to demonstrate that whatever the merits, there was a good faith basis for pursuing the motions, and no implied recognition of the untenability of the position advanced. Not only would such an approach result in incurred additional costs for the parties, but also would require the court to invest time in hearing the motions and ultimately deciding them. Correspondingly, the court does not wish to encourage parties to threaten or use motions for sanctions whenever confronted with an adversary advancing an argument perceived to be "obviously" fatally weak or defective.
Consistent with the obligation of proportionality, the court believes that sanctions such as sought here, directed to counsel, are reserved for clearly egregious conduct, and in the absence of something in the nature of a course of conduct, the fewer in number the acts, the more egregious they need to be. A single incident, if sufficiently blatant, might warrant sanctions (e.g., pursuing a factual contention without any factual/evidentiary support and especially after an affirmative refusal of the client to provide an affidavit in support of the contention, as in Brunswick ). In this case, however, the parties rely on different facts, the motion was addressed to the then-current complaint (with a pending application to amend the complaint), and the defendants were not obligated to accept a then-recent trial court decision as rendering their position clearly-wrong much less baseless/frivolous.
Conclusion
The court understands the frustration that a party may feel in having to respond to a motion that it perceives to be a clear loser. The problem is that such an assessment is made from the perspective of an advocate, and sanctions are appropriate only for true (extreme) outliers. When parties file cross motions for summary judgment, and one of them is granted, does that mean that the other was necessarily frivolous- and should not even have been argued? Or. in most instances is it merely (at most) a matter of counsel having an unduly optimistic- and insufficiently objective- perspective on the evidence (consistent with the presumed role as zealous advocate)? Just as a party has as much of a right to submit a weak case as a strong case to a factfinder, Mankert v. Elmatco Products, Inc., 84 Conn.App. 456, 463, 854 A.2d 766 (2004), so too a party has the right to submit a legal argument that, by some measure is perceived to be weak (but an adversary cannot be the ultimate arbiter of how weak or baseless an argument might be).
Ultimately, in order for the court to conclude that the motion to dismiss was sufficiently frivolous to warrant sanctions, and should have been withdrawn prior to the Friday prior to argument, the court would have to- in effect- reach a tentative decision as to the merits and, assuming that it were to conclude that the plaintiffs are correct on the merits, would then have to determine whether the position advanced by the defendants was sufficiently untenable as to warrant sanctions. (The court could not rely solely on the claimed-to-be-belated withdrawal and the plaintiffs’ arguments, even as supplemented by the Bragoni decision, without a careful review of the defendants’ arguments on the merits of the underlying motion as countered by the plaintiffs’ arguments as to the merits as set forth in their opposition to the motion, if the court is to determine whether the motion truly was baseless/frivolous.) The plaintiffs have not satisfied the court that the approach taken by the defendants- including a detailed analysis as to how the facts fit within the framework of what is claimed to be controlling law (similar to that undertaken by the court in Bragoni )- was sufficiently unreasonable on a facial level as to warrant that type of detailed review of the parties’ submissions (all but deciding the underlying (withdrawn) motion without the benefit of argument).
If the court had been required to decide the motion to dismiss, Bragoni might have been persuasive, and the additional factor of the offer to buy the plaintiffs’ interests in the company may have accentuated that persuasiveness. The court cannot conclude, however, on this record, that the defendants’ "last-minute" abandonment of the motion to dismiss, coupled with these facts/considerations, warrant imposition of sanctions. On a single-incident basis, even accepting everything claimed by the plaintiffs as undisputed, this does not approach the level of egregiousness to warrant or possibly warrant sanctions.
For all of the foregoing reasons, the motion is denied.