United States District Court, D. Connecticut
MEMORANDUM OF DECISION ON DEFENDANT'S MOTION FOR
W. EGINTON, SENIOR UNITED STATES DISTRICT JUDGE
action, plaintiff Harrier Technologies alleges that defendant
Kenyon & Kenyon breached its fiduciary duty and committed
fraud by concealing that Harrier's Saudi patent
application for an oil extraction pump design had irrevocably
lapsed. Harrier had retained Kenyon to oversee its patent
renewals in various jurisdictions, and Harrier contends that
Kenyon failed to pay the Kingdom of Saudi Arabia's annual
renewal fee in 2006, which resulted in the loss of the
patent. Thereafter, Kenyon concealed the lapse in payment and
its corresponding responsibility for the lapse from Harrier.
Harrier did not learn the full extent of Kenyon's
responsibility until revealed through discovery in this
has now moved for summary judgment. For the following
reasons, summary judgment will be granted in part and denied
of Proximate Cause
argues that its breach of fiduciary duty or fraud was not the
proximate cause of Harrier's loss of the Saudi patent
application, as both causes of action stem from concealment
that occurred after the patent application had lapsed.
Harrier responds that it incurred damages after the Saudi
patent application lapsed, and that Kenyon breached its
fiduciary duty not only by concealing the lapse but also by
failing to make the 2006 payment in the first place.
Court agrees that Harrier has adequately demonstrated damages
resulting apart from lapse itself, based on Kenyon's
concealment of the lapse. As detailed by Harrier:
Harrier was damaged by Kenyon's covering up the
patent's lapse because it continued to pay annuity fees
on the Saudi Arabia PHG Patent after it had irrevocably
Kenyon's actions caused [Harrier] to waste valuable time
and resources in a fruitless investigation to determine
whether the patent could be restored, and delayed and
complicated the instant litigation by obscuring Kenyon's
culpability and attempting to have Harrier's claims
against it dismissed based upon the fraudulent release and
Harrier's delay in bringing suit against Kenyon. If
Kenyon had informed Harrier in 2009 that it had already
investigated what restoration procedures were available and
had determined in 2006 that there were none, Harrier would
not have spent time investigating this issue in 2009.
Additionally, had Harrier known the full extent of
Kenyon's knowledge and responsibility for paying the
missed annuity, it would have brought suit against Kenyon at
the same time it filed its initial complaint against CPA.
Because Kenyon lied to Harrier and hid relevant information,
Harrier did not file a lawsuit against Kenyon initially and
was forced to later bring a contested motion to amend its
complaint against Kenyon.
replies that the “American rule” proscribes
Harrier from collecting damages based on the burdens of
litigation. See Rizzo Pool Co. v. Del Grosso, 240
Conn. 58, 72 (1997). But the rule, employed by Connecticut,
merely disallows attorneys' fees to the successful party
as a general principle of litigation. Id. It does
not speak to the instant case, where Harrier alleges that
Kenyon, in an effort to deflect, intentionally and
fraudulently induced Harrier to sue another party.
Considering that Harrier did not learn the extent of
Kenyon's actions until discovery in this case revealed
it, Harrier will be permitted to supplement or correct its
damage disclosures. The parties may have additional time for
discovery if necessary, and Harrier shall be permitted to
demonstrate its concealment-based damages at trial.
next argues that Kenyon's failure to make the 2006
annuity payment itself was a breach of Kenyon's fiduciary
duty because it resulted from Kenyon placing its own
interests before those of Harrier.
characterizes Kenyon's failure of care as resulting from
a failure of loyalty. Virtually any failure to use reasonable
care could be framed rhetorically as a failure to adequately
consider the interests of others, but Connecticut courts
differentiate between a negligence claim - which implicates a
duty of care, and a breach of a fiduciary duty - which
implicates a duty of loyalty. See Beverly Hills Concepts,
Inc., v. Schatz and Schatz, Ribicoff and Kotkin, 247
Conn. 48, 57 (1998). Here, Harrier's own valuation
expert, Rosenfarb, explains in his executive summary that he
calculated the damages “caused by the alleged
negligence of Kenyon . . . for failure to pay the
required annuity . . .” “This alleged
negligence caused the irrevocable loss of
Harrier's Saudi patent rights . . .” (emphasis
breach of fiduciary duty claims, professional negligence
claims implicate only a duty of care, rather than a duty of
loyalty and honesty.” Short v. Connecticut
Community Bank, N.A., 2012 WL 1057302 *11 (D. Conn.
March 28, 2012). Here, there is no allegation or evidence
that Kenyon deliberately allowed Harrier's patent
application to lapse or that Kenyon benefited from the lapse.
Disloyalty was not the proximate cause of the patent
application loss, as Kenyon did not advance its own interests
by failing to pay the annuity. See Bozelko v.
Papastavros, 323 Conn. 275, 283 n. 10 (2016) (“[A]
plaintiff alleging a breach of fiduciary duty must show that
any damages sustained were proximately caused by the
fiduciary's breach of his or her fiduciary duty.”).
alleged incompetence, not its disloyalty, was the substantial
factor that caused the Saudi patent application to lapse.
See 2 Nat. Place, ...