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Jolen, Inc. v. Brodie & Stone PLC

Superior Court of Connecticut, Judicial District of Hartford, Hartford

June 14, 2017

JOLEN, INC.
v.
BRODIE & STONE PLC

          MEMORANDUM OF DECISION

          KRUMEICH, J.

         Defendants Brodie & Stone PLC and Brodie & Stone International PLC (" B& S) have moved for summary judgment to dismiss the Second and Third Counts of the Complaint of plaintiff Jolen, Inc. (" Jolen").

         The parties agreed that the Fourth Count alleging violation of the Connecticut Unfair Trade Practices Act (" CUTPA"), C.G.S. § 42-110a et seq., must be dismissed in light of the Supreme Court's recent decision in Western Dermatology Associates, P.C. v. Vitalworks, Inc., 322 Conn. 541, 153 A.3d 574 (2016), on the lack of extraterritorial application of CUTPA.

         The motion to dismiss the Second Count alleging breach of fiduciary duty requires examination of the relationship between the parties to determine whether defendants are plaintiff's agents and thus owed heightened duties as a fiduciary to protect plaintiff's interests in the commercial transactions at issue. For the reasons stated below, the motion for summary judgment on the Second Count is granted.

         The Standards for Deciding a Motion for Summary Judgment

         " The standards ... [for] review of a ... motion for summary judgment are well established. Practice Book [§ 17-49] provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.... In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.... The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law ... and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact.... A material fact ... [is] a fact which will make a difference in the result of the case...." DiPietro v. Farmington Sports Arena, LLC, 306 Conn. 107, 115-16, 49 A.3d 951 (2012), quoting H.O.R.S.E. of Connecticut, Inc. v. Washington, 258 Conn. 553, 558-60, 783 A.2d 993 (2001) (citations omitted).

         Defendants Did Not Owe Fiduciary Duties to Plaintiff.

         Plaintiff argues that defendants, as their distribution agents, owed Jolen fiduciary duties of an agent to its principal, which Judge, now Chief Justice, Rogers noted includes the obligation " to exercise the utmost good faith, loyalty and honesty toward his principal...." News America Marketing In-store, Inc. v. Marquis, 2003 WL 22904123 *5 (Conn. Super. 2003).[1]

         The three-prong test for establishing agency was set forth by the Supreme Court in Botticello v. Stefanovicz, 177 Conn. 22, 25, 411 A.2d 16 (1979), and reaffirmed in Beckenstein v. Potter & Carrier, Inc., 191 Conn. 120, 132-34, 464 A.2d 6(1983):

'" Agency is defined as 'the fiduciary relationship which results from manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act ....' Restatement (Second), 1 Agency § 1.' .... Thus, the three elements required to show the existence of an agency relationship include: (1) a manifestation by the principal that the agent will act for him; (2) acceptance by the agent of the undertaking; and (3) an understanding between the parties that the principal will be in control of the undertaking. Restatement (Second), 1 Agency § 1, comment b (1958).' .... The existence of an agency relationship is a question of fact.... Some of the factors listed by the Second Restatement of Agency in assessing whether such a relationship exists include: whether the alleged principal has the right to direct and control the work of the agent; whether the agent is engaged in a distinct occupation; whether the principal or the agent supplies the " instrumentalities, tools, and the place of work"; and the method of paying the agent. See Restatement (Second) 1 Agency § § 14, 220.... In addition, '[a]n essential ingredient of agency is that the agent is doing something at the behest and for the benefit of the principal' ... Finally, the labels used by the parties in referring to their relationship are not determinative; rather, a court must look to the 'operative terms' of their agreement or understanding." 191 Conn, at 132-34 (citations omitted).

         Review of the operative agreement, " interpreted as a whole, with all relevant provisions interpreted together", Beckenstein, 191 Conn, at 134, demonstrates that B& S was Jolen's agent for the distribution of Jolen's products to customers in the markets in which B& S is the exclusive distributer.[2] However, a contractual duty to act as distributer of a manufacturer's product does not necessarily impose fiduciary duties on a distributer to the manufacturer. See International Connectors Industries, Ltd. v. Lytton Systems, Inc., 1995 WL 253089 *6 (D. Conn. 1995) ( Cabranes, J. ) (Conn, law).[3] Other courts have concluded under the law of other states that the relationship between a manufacturer and distributer is not a fiduciary relationship. See Samsung Elecs. Am., Inc. v. Yang Kun Chung, 2017 WL 635031 *11 (N.D. Tex. 2017) (Tex. law); Alsa Corp. v. PPG Industries, Inc., 19 F.Supp.3d 335, 2014 WL 1921152 *10 (D. Mass. 2014) (R.I. law); Infinite Machines, LLC v. Hasbro, Inc., 2009 WL 2253212 *13-14 (D. Conn. 2009) (Pa. law); [4] Fitzpatrick v. Teleflex, Inc., 763 F.Supp.2d 224, 231 (D. Me. 2011) (Me. law). Accord, Ergowerx Intern'l, LLC v. Maxell Corp. of Am, 18 F.Supp.3d 430, 452 (S.D.N.Y. 2014) (N.J. law).

         Whether a party is held to be a fiduciary presents a question of law based on the particular facts of the case: " The fact driven nature of a question of law does not, however, transform it into a question of fact.... '[d]uty is a legal conclusion about relationships between individuals' that is 'determined by the circumstances surrounding the conduct of the individual' ...)." Iacurci v. Sax, 313 Conn. 786, 800, 99 A.3d 1145 (2014).

         Plaintiff argues that as its distribution agent B& S was per se a fiduciary of Jolen, citing primarily Iacurci v. Sax, 313 Conn. at 800 and Konover Development Corp. v. Zeller, 228 Conn. 206, 232, 635 A.2d 798(1994).

         In Iacurci, 313 Conn., at 800, the Supreme Court discussed how to ...


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