JOLEN, INC.
v.
BRODIE AND STONE, PLC, ET AL.
Argued
October 17, 2018
Procedural
History
Action
to recover damages for, inter alia, breach of fiduciary
duties, and for other relief, brought to the Superior Court
in the judicial district of Fairfield; thereafter, the court,
Krumeich, J., granted the defendants' motion for
summary judgment and rendered judgment thereon, from which
the plaintiff appealed to this court. Reversed;
further proceedings.
Frank
J. Silvestri, Jr., with whom was Kristen G. Rossetti, for the
appellant (plaintiff).
Edward
R. Scofield, with whom, on the brief, was Carolyn A. Trotta,
for the appellees (defendants).
Lavine, Keller and Bishop, Js.
OPINION
BISHOP, J.
The
plaintiff, Jolen, Inc., appeals from the summary judgment
rendered by the trial court in favor of the defendant, Brodie
& Stone, PLC, and Brodie & Stone International, PLC,
[1] on
the plaintiff's claim of breach of fiduciary duty. The
plaintiff claims on appeal that, in view of the court's
unchallenged determination that an agency relationship
existed between the parties, its subsequent failure to
conclude that such relationship was per se fiduciary in
nature was incorrect as a matter of law.[2] We agree and,
accordingly, reverse the judgment of the trial court.
The
following undisputed facts and procedural history are
relevant to this appeal. The plaintiff is a United States
based manufacturer of various products for the removal or
lightening of unwanted body hair, including a bleach product
that it produces in Connecticut.[3] The defendant is a United
Kingdom based manufacturer, distributor, and seller of
personal care products. By written agreement (distribution
agreement) executed by the parties in 1995, the defendant
agreed to act as the plaintiff's ‘‘sole and
exclusive [d]istributing [a]gent'' for the purposes
of selling and distributing the plaintiff's bleach
product[4] in the United Kingdom and the Republic of
Ireland, in exchange for a 20 percent sales commission.
Under
the distribution agreement, the plaintiff had its product
shipped to the defendant in the United Kingdom and thereafter
relied on the defendant to, inter alia, clear the
plaintiff's product through customs; warehouse the
product in the United Kingdom; advertise the product;
promptly inform the plaintiff of any factors likely to be
relevant to the distribution of the product; sell, ship, and
invoice the product to customers; and account to the
plaintiff for monies received and remit the funds to the
plaintiff via a designated bank account. The defendant also
was responsible for covering the costs associated with
clearing the product through customs and delivering it to
customers, albeit the plaintiff was required to reimburse the
defendant for these expenses. While vesting the defendant
with these broad responsibilities, the agreement concurrently
constrained the defendant's conduct in carrying out its
duties by requiring the defendant to, among other things,
‘‘at all times give proper consideration and
weight to the interests of the [plaintiff] in all dealings
and . . . abide by any rules and carry out any instructions
from the [plaintiff] as to the sale, storage, pricing,
distribution and advertising of the [p]roduct, and other
related matters.''
The
parties continually renewed the distribution agreement until
the plaintiff notified the defendant in October, 2014, that
it would not be renewing the agreement upon its
termination.[5] Thereafter, in October, 2015, the
plaintiff commenced the present action against the defendant
alleging multiple claims arising out of the parties'
business relationship. In count two of the operative
complaint, [6] the only count at issue in this appeal,
[7] the
plaintiff alleged, in essence, that by virtue of the
distribution agreement, the parties had a principal-agent
relationship pursuant to which the defendant owed the
plaintiff certain fiduciary duties and that the defendant
breached these duties in various respects, thereby causing
the plaintiff to suffer damages.
On May
5, 2017, the defendant moved for summary judgment on the
plaintiff's breach of fiduciary duty claim on the ground
that no fiduciary relationship existed between the
parties.[8] The plaintiff argued in opposition to the
motion that, under the operative terms of the distribution
agreement, the parties' relationship constituted an
agency relationship as a matter of law and that the defendant
was therefore a per se fiduciary of the plaintiff. At oral
argument on the motion on June 13, 2017, the defendant
responded that, even if the parties had a principal-agent
relationship, the court nevertheless needed to make an
independent determination as to whether this relationship was
fiduciary in nature.
The
following day, the court issued a memorandum of decision
granting the defendant's motion for summary judgment. The
court first addressed the issue of whether a principal-agent
relationship existed between the parties. The court began by
setting forth the well-established elements required to show
the existence of such relationship under Connecticut law: (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.[9] See Beckenstein v.
Potter & Carrier, Inc., 191 Conn. 120, 133, 464
A.2d 6 (1983). Regarding the standard by which courts
determine whether these elements have been met, the court
correctly noted that ‘‘the labels used by the
parties in referring to their relationship are not
determinative'' and that, therefore, ‘‘a
court must look to the operative terms of their agreement or
understanding.'' (Internal quotation marks omitted.)
Id., 133-34. The court then concluded that its
‘‘[r]eview of the operative [distribution]
agreement, ‘interpreted as a whole, with all relevant
provisions [considered] together'; [id., 134];
demonstrate[d] that [the defendant] was [the plaintiff's]
agent for the distribution of [the plaintiff's] products
to customers in the markets in which [the defendant was] the
exclusive distributer.''[10]
The
court further concluded, however, that ‘‘a
contractual duty to act as [a] distributer of a
manufacturer's product does not necessarily impose
fiduciary duties on a distributer to the
manufacturer'' and that ‘‘[m]erely
because the parties use the term agent does not deter- mine
whether the parties' relationship is [fiduciary in
nature, i.e., ] characterized by a unique degree of trust and
confidence between the parties, one of whom has superior
knowledge, skill or expertise . . . .'' (Internal
quotation marks omitted.) Consequently, notwithstanding its
determination that an agency relationship existed between the
parties, the court proceeded to consider whether such
relationship was fiduciary ...