United States District Court, D. Connecticut
RULING AND ORDER ON DEFENDANTS' MOTIONS TO
DISMISS AND CROSS MOTIONS FOR SANCTIONS
A. BOLDEN, UNITED STATES DISTRICT JUDGE.
and Eileen Rizvi (“Plaintiffs”) filed this
lawsuit on August 21, 2017. Compl., ECF No. 1. Defendants
variously moved to dismiss the Complaint. ECF Nos. 10, 14,
19. On October 25, 2017, Plaintiffs amended their complaint.
Am. Compl., ECF No. 22. They further amended their complaint
on November 15, 2017. Pl. Mot. to Amend/Correct Am. Compl.
ECF No. 38.
then variously moved to strike portions of Plaintiffs'
Amended Complaint. ECF Nos. 25, 27-30. On November 7, 2017,
Defendants Urstadt Biddle Properties Inc. and Willing L.
Biddle (collectively “UBP Defendants”) filed a
motion for sanctions under Federal Rule of Civil Procedure
11. Mot. for Sanctions Pursuant to Rule 11, ECF No. 26.
January 17, 2018, the Court convened a hearing on the motions
to dismiss and motions to strike. ECF No. 61. Following the
hearing, the Court held that Plaintiffs were entitled to
amend as of right, denied the motions to strike, and
dismissed, without prejudice, the motions to dismiss as moot.
Ruling on Def. Mot. to Strike Am. Compl., ECF No. 61.
February 1, 2018, Defendants Coles, Baldwin & Kaiser,
LLC, John B, Kaiser, and Spa Thea, LLC, dba Andrew Stefanou
Salon and Spa (collectively “Stefanou
Defendants”) filed a motion to dismiss the Amended
Complaint, and to incorporate their earlier motion to
dismiss. Stefanou Defendants Mot. to Dismiss Am. Compl., ECF
No. 66, incorp. ECF No. 19. That same day, UBP Defendants
filed a motion to dismiss the Amended Complaint, and to
incorporate their earlier motion to dismiss. UBP Defendants
Mot. to Dismiss Am. Compl., ECF No. 67, incorp. ECF No. 10.
On February 2, 2018, Defendants Hinckley Allen & Snyder
LLP and Noble Allen (collectively “HAS
Defendants”) filed a motion to dismiss the Amended
Complaint, and to incorporate their earlier motion to
dismiss. HAS Defendants Mot. to Dismiss Am. Compl., ECF No.
68, incorp. ECF No. 14. That same day, Tibbetts Keating &
Butler LLC filed a motion to dismiss the Amended Complaint.
Tibbetts Keating & Butler LLC Mot. to Dismiss Am. Compl.,
ECF No. 69. On April 27, 2018, Defendant Mario Cometti filed
a motion to dismiss the Amended Complaint, and to incorporate
the legal arguments in the Tibbetts Keating & Butler LLC
motion to dismiss, Cometti Mot. to Dismiss Am. Compl., ECF
No. 78, incorp. ECF No. 69.
reasons set forth below, the Court GRANTS
Defendants' motions to dismiss WITH
PREJUDICE, ECF No. 66, incorp. ECF No. 19, ECF No.
67, incorp. ECF No. 10, ECF No. 68, incorp. ECF No. 14, ECF
No. 69, ECF No. 78, incorp. ECF No. 69,
DENIES UBP Defendants and Plaintiffs'
cross-motions for sanctions, and orders the case closed.
FACTUAL AND PROCEDURAL BACKGROUND
initially alleged that UBP Defendants and Andrew Stefanou
conspired to reduce the sale price of their business, the
Lanphier Spa, id. ¶ 15,  and that a host
of individuals and organizations, including a number of
attorneys, conspired to deprive Plaintiffs of their
livelihood and rights.
in their Amended Complaint, ECF No. 22, allege: (1) tortious
interference with contract, Am. Compl. ¶ 66-75; (2)
breach of contract, id. at ¶ 76-80; (3)
misappropriation, id. at ¶ 81-96; (4)
conspiracy to engage in a pattern of racketeering activity,
id. at ¶ 97-127; (5) violations of unfair
business practices and Connecticut Business &
Professional Code, id. at ¶ 128-146; (6) breach
of the covenant of good faith, id. at ¶
147-167; (7) intentional infliction of emotional distress,
id. at ¶ 168-186; (8) fraud, id. at
¶ 187-199; (9) violation of the False Claims Act, 13
U.S.C. § 3729(A)(1)(B) and (A)(2), and using a false
record or statement to get a false claim paid material to a
false claim, id. at ¶ 200-203; (10) violation
of Connecticut Unfair Trade Practices Act
(“CUTPA”), Conn. Gen. Stat. § 42-110a, et
seq., id. at ¶ 204-209; (11) civil conspiracy,
id. at ¶ 210-215; (12) forgery, Conn. Gen.
Stat. § 53a-139, id. at ¶ 216-224; and
(13) mail fraud, id. at ¶ 225-235. Plaintiffs
allege additional facts in a motion to amend/correct the
amended complaint. Pl. Mot. to Amend/Correct Am. Compl., ECF
case principally concerns the Plaintiffs' loss of their
business, “The Spa.” Plaintiffs operated The Spa
for twenty years, from 1992 until 2012. Compl. at ¶ 15.
Plaintiffs entered into a five-year lease of the underlying
property in 1997. Id. at ¶ 16. Urstadt Biddle
Properties Inc. acquired the underlying property in 1998,
id. at ¶ 19, and granted Plaintiffs a five-year
lease extension lasting until November 30, 2011. Id.
at ¶ 20. Plaintiffs allege that the new lease agreement
contained a non-compete clause. Am Compl. at ¶ 41. In
2009, Plaintiffs “invested $3 million dollars into
business premises improvements.” Id. at ¶
43. Shortly thereafter, they began discussing the sale of The
Spa to the spa's manager, Defendant Stefanou.
Compl. ¶ 24. In January 2011, Plaintiffs
notified UBP that they intended to renew the 2006 lease
extension. Id. at ¶ 25. After an exchange of
documents, UBP informed Plaintiffs that Mr. Stefanou's
signature would be required. Id. at ¶ 33.
weeks that followed, Plaintiffs allege that UBP kept adding
restrictions to the lease renewal, and Mr. Stefanou kept
lowering his offering price in an “underhanded
manipulation of the negotiations.” Id. ¶
34-38. Plaintiffs allege that they confronted Mr. Stefanou
and terminated his employment as a result, but UBP refused to
negotiate further and rented the facility to Mr. Stefanou
instead. Id. ¶¶ 37, 39-41. According to
Plaintiffs, that rental and subsequent proceedings in court
demonstrate that “[t]he Defendants embarked on the
‘concerted' efforts to steal the Plaintiff[s']
business and earned ‘good will.'” Am. Compl.
at ¶ 47.
allege that Defendants have acted “collectively [to]
create an elaborate artifice using multiple corporate
entities and existing businesses and established
professionals to unlawfully induce Plaintiff[s] to assign
their business and earned good will over to the control of
the Defendants.” Id. at ¶ 48. Plaintiffs
focus on a January 10, 2012 settlement as the key
“proof of the ‘conspiracy' and evidence of
the ‘illegal' acts of the Defendants.”
Id. at ¶ 64. On that day, Plaintiffs and UBP
reached a settlement agreement that “enabled
Plaintiff[s] to remain in possession [of their business
rental property] for a period of six months.”
Id. at ¶ 64b. Plaintiffs allege that Defendants
“forged Plaintiff[s] name[s] on a full release of all
claims” that day. Id. at ¶ 64j.
Plaintiffs have alleged highly similar claims in several
state court proceedings.
this filing, this litigation had a substantial history in the
Connecticut state courts. See, e.g., Lanipher
Day Spa, Inc., et al. v. Urstadt Biddle Properties,
Inc., FST-CV16-6029248-S (Conn. Super. Ct. 2017),
Tibbetts Keating & Butler, LLC v. Lanipher Day Spa,
Inc., et al. v. Lanipher Day Spa, Inc., et al.,
FST-CV12-5013946-S (Conn. Super. Ct. 2017). Superior Court
Judge Kenneth Povodator summarized the litigation history in
his June 2, 2017 Memorandum of Decision:
This is second generation litigation arising from incidents
that primarily occurred in the 2011-12 time frame. The
earlier round of litigation was resolved or withdrawn in
2012-13 (with a vestige dismissed in 2015). Virtually the
entire current dispute arises from the prior litigation and
circumstances surrounding the termination of the prior
litigation, including claims relating to execution (or
non-execution) of a formal release of claims in the
courthouse on January 10, 2012.
Lanipher Day Spa, Inc., et al., FST-CV16-6029248-S
at *1. Judge Povodator then held that Defendant UBP was
entitled to summary judgment on the issues of tortious
interference, conversion, fraud and misrepresentation, and
CUTPA, Id. at *18, that Defendant HAS was entitled
to summary judgment on the issues of tortious interference,
conversion, fraud and misrepresentation, CUTPA, and all other
counts directed at the Defendant, Id. at *20, and
that Defendant Stefanou was entitled to summary judgment on
the issues of tortious interference, conversion, fraud and
misrepresentation, CUTPA, and all other counts directed at
the Defendant. Id. at *22.
STANDARD OF REVIEW
every case, a court must determine whether it has subject
matter jurisdiction. In evaluating a motion under Rule
12(b)(1) for lack of subject matter jurisdiction, the Court
“must accept as true all material factual allegations
in the complaint but need not draw inferences favorable to
the party asserting jurisdiction.” Shipping Fin.
Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir.
1998). The plaintiff bears the burden of showing that subject
matter jurisdiction is proper based on facts existing at the
time he or she filed the complaint. Scelsa v. City Univ.
of New York, 76 F.3d 37, 40 (2d Cir. 1996) (citations
cases involving prior litigation between or among the
parties, a court must determine if it is precluded from
adjudicating some or all of the claims on account of prior
rulings on the merits of those claims. The doctrine of
res judicata, or claim preclusion, generally
dictates that “a judgment on the merits in a prior suit
bars a second suit involving the same parties or their
privies based on the same cause of action.”
Parklane Hosiery Co. v. Shore, 439 U.S. 322, 327, 99
S.Ct. 645, 649, 58 L.Ed.2d 552 (1979). “In considering
the preclusive effect of a state court judgment on a
subsequent federal action, under the Full Faith and Credit
Act, 28 U.S.C. § 1738, [Second Circuit courts] usually
consult the preclusion laws of the state in which the
judgment was issued.” Nestor v. Pratt &
Whitney, 466 F.3d 65, 71 (2d Cir. 2006) (holding that
the typical approach is not appropriate for administrative
appeals under Title VII).
Connecticut law, the doctrine of res judicata is
based on the policy that a party should not be allowed to
relitigate a claim which it already had an opportunity to
litigate. Accordingly, a former adjudication of a claim on
its merits is an absolute bar to a subsequent action on the
same claim or on any claim based on the same operative facts
that might have been made in the prior action.”
Sekor v. Capwell, 1 F.Supp.2d 140, 145 (D. Conn.
1998) (internal citation omitted). The party asserting the
defense of res judicata bears the burden of proving
that the prior action resulted in a ruling of the claim on
its merits, and that res judicata applies to the current
case. Ventres v. Goodspeed Airport, LLC, 301 Conn.
194, 205, 21 A.3d 709, 716 (2011).
matters of subject matter jurisdiction and claim preclusion
are addressed, a court will evaluate any claims that the
complaint fails “to state a claim upon which relief can
be granted.” Fed.R.Civ.P. 12(6). In reviewing a
complaint under Rule 12(b)(6), the court applies “a
‘plausibility standard, '” ...