Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Kelly v. Kurtz

Court of Appeals of Connecticut

October 15, 2019

DORRANCE T. KELLY
v.
MARSHALL D. KURTZ ET AL.

          Argued May 23, 2019

         Procedural History

         Action for, inter alia, breach of contract relating to the sale of the plaintiff's oral surgery practice to the named defendant, and for other relief, brought to the Superior Court in the judicial district of Danbury, where the defendants filed a counterclaim; subsequently, the plaintiff withdrew four counts of the complaint and the defendants withdrew counts one through seven of their counterclaim; thereafter, the matter was tried to the jury before Truglia, J.; verdict in part for the plaintiff on the complaint and for the defendants on their counterclaim; subsequently, the trial court granted the defendants' motion to dismiss the plaintiff's claims of breach of the operating agreement and breach of the implied covenant of good faith and fair dealing in the operating agreement, and granted in part the defendants' motion to set aside the verdict for the plaintiff and rendered judgment on the complaint thereon, from which the plaintiff and the defendants filed separate appeals with this court, which consolidated the appeals. Affirmed.

          Dana M. Hrelic, with whom were Wesley W. Horton and, on the brief, Robert Flynn, for the appellants-appellees (defendants).

          Kara A.Lynch, pro hacvice, with whom were Nathan J. Buchock and, on the brief, Brian E. Spears, for the appellee-appellant (plaintiff).

          Keller, Moll and Devlin, Js.

          OPINION

          DEVLIN, J.

         In this case arising from the buyout of an oral surgery practice, the plaintiff, Dorrance T. Kelly, DDS, and the defendants, Marshall D. Kurtz, DMD, Marshall D. Kurtz, DMD, PC, and Danbury Oral and Maxillo-facial Surgery Associates, LLC (DOMSA), appeal from the judgment of the trial court rendered, following a jury trial, in favor of the plaintiff, in the amount of $2, 150, 000. To establish the terms of the buyout, the parties executed three documents: a purchase and sale agreement, an operating agreement, and a supplementary agreement.[1] On appeal, the defendants claim, in AC 41366, that the trial court erred in denying their motion to set aside the jury's verdict on the plaintiff's claims of breach of the supplementary agreement and breach of the implied covenant of good faith and fair dealing in the supplementary agreement on the grounds that (1) the evidence presented at trial was insufficient to sustain the jury's finding of breach of the supplementary agreement, and (2) the jury's awards of damages on the plaintiff's claims of breach of the supplementary agreement and breach of the implied covenant of good faith and fair dealing in the supplementary agreement were inconsistent. The plaintiff claims, in AC 41365, that the trial court erred in (1) granting the defendants' motion to set aside the jury's verdict on his claims of invasion of privacy by misappropriation of his name, tortious interference with his business expectancies, violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statues § 42-110a et seq., and unjust enrichment; and (2) dismissing his claim of breach of the operating agreement and breach of the implied covenant of good faith and fair dealing in the operating agreement on the ground that he lacked standing to bring those claims. We affirm the judgment of the trial court.

         The following facts, which the jury reasonably could have found, and procedural history are relevant to our disposition of these appeals. The plaintiff and Kurtz are oral surgeons, who began practicing together in 2004. From May, 2004 to July, 2008, Kurtz worked as a salaried employee for the plaintiff, who had been practicing since the early 1970s and had built a successful practice. On or about July 1, 2006, Kurtz entered into a ‘‘Purchase and Sale Agreement of Personal Goodwill of Dorrance T. Kelly, DDS and Assets of Dorrance T. Kelly, DDS, Oral Surgery, P.C.'' The purchase and sale agreement provided that the plaintiff would sell his practice to Kurtz for $1, 600, 000, to be paid to the plaintiff in two equal installments; the first installment to be paid on July 17, 2006, and the second on June 30, 2009. The agreement further provided that the existing practice would continue to operate through a newly formed limited liability company known as DOMSA.

         Also on July 1, 2006, the parties entered into an ‘‘Amended and Restated Operating Agreement of Dan-bury Oral & Maxillofacial Surgery Associates, LLC'' (operating agreement). The operating agreement, which was signed by Dorrance T. Kelly, DDS, Oral Surgery, P.C. and Marshall D. Kurtz, DMD, P.C., provided that each member professional corporation would hold a 50 percent ownership interest in DOMSA, with the plaintiff initially acting as the manager with full authority for day-to-day management and control of the practice. After Kurtz paid the second installment of the purchase price, Kurtz would become the manager of DOMSA and assume full authority for its management, control and direction. The operating agreement further provided: ‘‘In instances where a [m]ember is a [p]rofessional [c]orporation, a limited liability company, a [l]imited liability [m]embership or other entity, the term ‘[m]ember' shall include for all purposes all stockholders, members, [m]embers or other owners thereof, of whatever nature.'' It required that the hiring of additional staff, including associates, be made by an affirmative vote of all members. The operating agreement also provided that the plaintiff would retire on June 30, 2009, upon his receipt from Kurtz of the second installment of the purchase price of the practice, and that upon retirement, he ‘‘shall have the right to . . . continue [working] as an associate of [DOMSA] until the age of [eighty] at a rate of compensation of fifty [percent] (50%) of his net collections upon such other terms and conditions as the parties hereto shall agree.'' The operating agreement provided that ‘‘[t]he [m]anager shall direct, manage and control the business of [DOMSA] to the best of [his] ability. Except for situations in which the approval of the members is expressly required by this Operating Agreement or by nonwaivable provisions of applicable law, the [m]anager shall have the full and complete authority, power and discretion to manage and control the business, affairs and properties of [DOMSA], to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of [DOMSA's] business.''

         On June 30, 2009, the parties, individually, and as members of their respective professional corporations, entered into a ‘‘Supplementary Agreement, '' which modified certain provisions of the purchase and sale agreement and the operating agreement. The supplementary agreement modified the plaintiff's obligations with respect to working days and on call responsibilities, and provided that he would work a reduced part-time schedule of his choosing. It further modified the requirement that the plaintiff retire on June 30, 2009, and provided that he could retire at a time of his choosing, but maintained that he would retire and ‘‘discontinue the practice of dentistry'' when he reached the age of eighty, and that the plaintiff would continue to own a one percent interest in DOMSA until Kurtz paid the full purchase price.

         Over time, the plaintiff and Kurtz's relationship became strained. At some point in the latter part of 2009, the plaintiff threatened to leave DOMSA if Kurtz did not pay him 65 percent of his net collections. Kurtz acquiesced and agreed to pay the plaintiff the 65 percent that he demanded, but reverted to paying him 50 percent in December, 2012, in accordance with the operating agreement.

         In late 2012, and continuing into early 2013, the Department of Social Services conducted an audit of DOMSA's Medicaid billing records and determined that DOMSA had received overpayments of approximately $212, 000 for Medicaid patients who had been treated between 2008 and 2010. To reimburse the Department of Social Services for the overpayment received by DOMSA, Kurtz agreed, without informing the plaintiff, to continue to treat Medicaid patients without compensation until the full amount of the overpayment was satisfied. This agreement, however, did not affect the plaintiff, who continued to treat Medicaid patients and received 50 percent of the amount that he billed for his patients.

         At some point prior to the summer of 2013, the plaintiff and Kurtz discussed hiring an associate. To that end, Kurtz, as the manager of DOMSA, placed an advertisement for that position and began speaking with applicants. Although the operating agreement expressly provided that ‘‘an affirmative vote of all [m]embers'' was required for the ‘‘[h]iring of additional staff inclusive of [a]ssociates, '' Kurtz and the plaintiff did not discuss the hiring process as it progressed.

         On August 1, 2013, the plaintiff and Kurtz had a meeting, which Kurtz secretly recorded, in the plaintiff's office. At that meeting, Kurtz told the plaintiff that he had hired a new associate, Daniel Traub, who would begin working at DOMSA on October 1, 2013. The plaintiff expressed his displeasure of Kurtz' hiring of Traub without the plaintiff's consent. Kurtz told the plaintiff that, by the time Traub started working in October, he would own 100 percent of DOMSA, and could manage it ‘‘as he saw fit.'' He told the plaintiff that he would have ‘‘the right to change anything that I want in the contracts . . . I can amend anything'' and the right to ‘‘make the hours be whatever I want . . . make the staff do whatever I want, and the office space be whatever I want, and the office open and close.'' Kurtz told the plaintiff that he wanted him to retire before Traub commenced his employment at DOMSA, and suggested September 15, 2013, as his retirement date. The plaintiff told Kurtz that he did not want to retire and that he had the right to work at DOMSA for as long as he wished until he reached the age of eighty. Later that day, in an unrecorded conversation, Kurtz told the plaintiff that his last day would be September 17, 2013.

         The plaintiff took a medical leave from DOMSA from August 2 to August 20, 2013. On August 15, 2013, Kurtz paid the final installment due under the purchase and sale agreement. When the plaintiff returned from medical leave on August 21, 2013, he instructed the staff not to schedule any new patients for him beyond September 12, 2013. On August 22, 2013, Kurtz's attorney, Steven Smart, informed the plaintiff's attorney, Kara Lynch, that the plaintiff had not been terminated or forced to retire, and that he could continue to work at DOMSA as an associate.

         When the plaintiff arrived at the office on September 17, 2013, he was told that he had no patients on his schedule and that Kurtz would direct patients to him as he saw fit. The plaintiff left the office without seeing any patients that day.

         The plaintiff arrived at the office the next day to find that the locks on the doors of the practice had been changed. He confronted Kurtz in the office parking lot, where they argued about the breakdown of their professional and personal relationship. Believing that he had been terminated by Kurtz, the plaintiff did not return to work at DOMSA after this argument.

         On September 21, 2013, Lynch sent an e-mail to Smart indicating that the plaintiff had been terminated by Kurtz. Smart responded that the plaintiff had not been terminated or forced to retire, and that the plaintiff could continue to work at DOMSA and receive his previously agreed upon 50 percent of fees that he generated.

         Believing that he had been terminated by Kurtz, the plaintiff began seeing patients in Norwalk and West Hartford. Despite the plaintiff's absence from DOMSA, Kurtz ordered a new street sign for DOMSA that included the plaintiff's name. Kurtz also did not remove the plaintiff's name from DOMSA's website or patient referral cards for approximately six months after he left the practice.

         The plaintiff thereafter commenced this action, and by way of a nineteen count revised complaint, alleged the following: four counts of breach of contract (purchase and sale agreement, operating agreement and supplementary agreement); three counts of breach of the implied covenant of good faith and fair dealing; one count of successor liability; one count of violation of the Connecticut Fair Employment Practices Act (CFEPA), General Statutes § 46a-51 et seq.; one count of breach of fiduciary duty; one count of failure to pay wages to an employee in violation of General Statutes § 31-71b; one count of invasion of privacy by misappropriation of name; one count of tortious interference with business expectancies; one count of violation of CUTPA; one count of unjust enrichment; one count of slander; one count of intentional infliction of emotional distress; one count of negligent infliction of emotional distress; and one count seeking a declaratory judgment that the plaintiff is no longer bound by the restrictive covenant contained in the operating agreement.

         The defendants filed an answer, one special defense, and an eleven count counterclaim alleging, inter alia, that the plaintiff had breached the operating agreement and the lease agreement between the plaintiff, as the owner of the building in which the Danbury office of DOMSA is located, and DOMSA.

         Following several days of trial, the court submitted to the jury interrogatories on ten distinct claims by the plaintiff against the defendants: breach of the operating agreement and breach of the implied covenant of good faith and fair dealing in that agreement; breach of the supplementary agreement and breach of the implied covenant of good faith and fair dealing in that agreement; violation of CFEPA; breach of fiduciary duty; invasion of privacy by appropriation of name; tortious interference with business expectancies; violation of CUTPA; and unjust enrichment.[2] The court also submitted to the jury interrogatories on the defendants' claims for damages related to the plaintiff's alleged violation of the lease agreement: unjust enrichment; breach of the implied covenant of good faith and fair dealing in the lease agreement; and violation of CUTPA.[3] The jury returned a verdict in favor of the plaintiff on nine of his ten claims against the defendants, awarding him damages on seven of those ten claims, for a total award of $3, 150, 000 in compensatory damages.[4] The jury also found that the plaintiff was entitled to punitive damages on five of those seven claims. The jury found in favor of the defendants on the remaining counts of their counterclaim, awarding damages in the amount of $175, 000.

         The defendants thereafter filed a motion to set aside the jury's verdict on the complaint and a motion to dismiss the plaintiff's claims of breach of the operating agreement and breach of the implied covenant of good faith and fair dealing in that agreement. The trial court denied in part and granted in part the defendants' motion to set aside, and granted their motion to dismiss. The court rendered judgment in favor of the plaintiff in the amount of $2, 150, 000, and these appeals followed. Additional facts will be set forth as necessary.

         Because the bulk of the claims raised in these appeals arises from the trial court's rulings on the defendants' motion to set aside the jury's verdict, we begin by setting forth the well settled standard of review governing the court's judgment on those claims. ‘‘The trial court possesses inherent power to set aside a jury verdict which, in the court's opinion, is against the law or the evidence . . . . [The trial court] should not set aside a verdict where it is apparent that there was some evidence upon which the jury might reasonably reach [its] conclusion, and should not refuse to set it aside where the manifest injustice of the verdict is so plain and palpable as clearly to denote that some mistake was made by the jury in the application of legal principles . . . . Ultimately, [t]he decision to set aside a verdict entails the exercise of a broad legal discretion . . . that, in the absence of clear abuse, we shall not disturb.'' (Internal quotation marks omitted.) Kumah v. Brown, 160 Conn.App. 798, 803, 126 A.3d 598, cert. denied, 320 Conn. 908, 128 A.3d 953 (2015). With these principles in mind, we address the parties' claims in turn.

         I

         AC 41366

         We begin with the defendants' appeal challenging the jury's verdict in favor of the plaintiff and the trial court's denial of their motion to set aside the verdict. In response to the interrogatories submitted, the jury found that the defendants breached the supplementary agreement and breached the implied covenant of good faith and fair dealing in the supplementary agreement, by wrongfully terminating the plaintiff before he reached the age of eighty and by failing to allow the plaintiff to work a schedule of his choosing. The jury awarded the plaintiff $2, 000, 000 in compensatory damages for breach of the supplementary agreement, and $150, 000 in compensatory damages for breach of the implied covenant of good faith and fair dealing in the supplementary agreement.[5] The trial court denied the defendants' motion to set aside these portions of the jury's verdict.

         A

         The defendants first argue that the evidence was insufficient to support the jury's finding of breach of the supplementary agreement because the plaintiff was not terminated from his employment at DOMSA or prevented from working a schedule of his choosing. We are not persuaded.[6]

         ‘‘[I]t is not the function of this court to sit as the seventh juror when we review the sufficiency of the evidence . . . rather, we must determine, in the light most favorable to sustaining the verdict, whether the totality of the evidence, including reasonable inferences therefrom, supports the jury's verdict . . . . In making this determination, [t]he evidence must be given the most favorable construction in support of the verdict of which it is reasonably capable. . . . In other ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.