Freiberg v. Stuart

          RULING AND ORDER

          Robert N. Chatigny United States District Judge

         Plaintiff Richard Freiberg brings this suit against defendants William and Jonathan Stuart and their attorney, Sandra Akoury, seeking damages for vexatious litigation. Freiberg prevailed in a case the Stuarts brought against him while represented by Attorney Akoury. In that underlying case, the Superior Court granted summary judgment in favor of Freiberg, the Appellate Court reversed, and the Supreme Court then upheld the grant of summary judgment over a dissent. See Stuart v. Freiberg, 116 A.3d 1195, 1197-98 (Conn. 2015). Defendants have moved for summary judgment against Freiberg, contending that the underlying suit against him was supported by probable cause. William and Jonathan also rely on an affirmative defense of advice of counsel. For reasons that follow, the motions for summary judgment are granted.

         I. Background

         Kenneth Stuart Sr. created a living trust and will to benefit his three sons, Kenneth, William and Jonathan. After his death, his son Kenneth became the trustee of his estate and, in that capacity, began sending financial summaries to William and Jonathan. William and Jonathan soon realized that Kenneth had created a limited partnership with their father and used it to transfer estate assets to himself. Id. ¶¶ 5, 8. Attorney Akoury assisted them in bringing suit against Kenneth for breach of fiduciary duty.

         After the suit was filed, Kenneth hired Freiberg, an accountant. Id. ¶ 12. Freiberg prepared financial statements and tax returns for Kenneth personally and for the estate. Id. While providing services for the estate, Freiberg realized that Kenneth was improperly paying personal expenses and commingling his funds with estate funds. Id. ¶ 14. Even so, he continued to prepare financial statements for the estate and sent them to beneficiaries of the estate, including William and Jonathan. Id. ¶ 16-20. Freiberg does not dispute that his reports were reviewed by Jonathan. It is also undisputed that William and Jonathan spoke with Freiberg about his reports and accounting work. William and Jonathan hired accountants of their own, including a forensic accountant, to review Freiberg’s reports. The forensic accountant found that Freiberg had created a fictitious credit of $490, 755, which benefitted Kenneth.

         The suit against Kenneth was eventually successful, resulting in an award of damages to the estate. William and Jonathan then consulted with Attorney Akoury about the possibility of bringing a suit against Freiberg for conspiring with Kenneth or aiding and abetting his conversion of estate funds. William and Jonathan subsequently authorized her to sue Freiberg.

         Attorney Akoury filed a complaint against Freiberg in Connecticut Superior Court asserting claims for fraud, negligent misrepresentation, accountant malpractice and violations of CUTPA. Freiberg moved for summary judgment on all the claims. The Court granted the motion on the ground that William and Jonathan could not prove they relied on Freiberg’s accounting statements as they claimed. Stuart v. Freiberg (“Stuart I”), No. FSTCV0402005085, 2011 WL 3671904 (Conn. Super. Ct. July 15, 2011). The Appellate Court reversed on the ground that genuine issues of material fact existed with regard to the claims of fraud, negligent misrepresentation, and malpractice. Stuart v. Freiberg (“Stuart II”), 69 A.3d 320, 334 (Conn. App. Ct. 2013). The Connecticut Supreme Court reversed, with one justice dissenting. Stuart v. Freiberg (“Stuart III”), 116 A.3d at 1197-98.

         II. Legal Standard

         Summary judgment may be granted when the movant “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). When the motion tests the plaintiff’s ability to sustain his burden of proof at trial, the movant can prevail by showing that the plaintiff lacks evidence to support an element of his claim. To avoid summary judgment, the plaintiff must point to evidence that would support a verdict in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). “[M]ere conclusory allegations or denials” are not enough. Podell v. Citicorp Diners Club, 112 F.3d 98, 101 (2d Cir. 1997).

         To prevail on his claim of vexatious litigation, Freiberg must establish four elements: (1) a suit was brought against him, (2) the suit lacked probable cause, (3) the suit was brought with malice, and (4) the suit terminated in his favor. See Falls Church Grp. v. Tyler, Cooper, and Alcorn, LLP, 912 A.2d 1019, 1026-27 (Conn. 2007). Vexatious litigation suits often turn on the element of probable cause. This one is no exception.

         Probable cause “is the knowledge of facts sufficient to justify a reasonable person in the belief that there are reasonable grounds for prosecuting an action.” Id. at 1027. Reliance on advice of counsel is a complete defense even when the advice was “unsound or erroneous.” Evans v. Testa Dev. Assocs., No. CV01806425, 2002 WL 725483, at *3 (Conn. Super. Ct. Mar. 26, 2002) (quoting Vandersluis v. Weil, 407 A.2d 982, 987 (Conn. 1978)). Reliance on the advice of counsel is an affirmative defense with respect to which the defendant bears the burden of proof. Verspyck v. Franco, 874 A.2d 249, 253 (Conn. 2005). The defendant must show that he relied on advice of counsel “after a full and fair statement of all facts within his knowledge, or which he was charged with knowing.” Id. (quoting Vandersluis, 407 A.2d at 987).

         III. Discussion

         A. Probable Cause

         Defendants argue that there is no genuine issue of material fact with regard to whether probable cause existed to sue Freiberg on the ...