Fink v. Golenbock

Page 1243

680 A.2d 1243

238 Conn. 183

Theodore FINK v. Robert B. GOLENBOCK et al.

Nos. 15387, 15388.

Supreme Court of Connecticut.

Argued April 25, 1996.

Decided July 23, 1996.

Francis G. Pennarola, Danbury, for appellant in Docket No. 15387 (named defendant).

Mark R. Kravitz, with whom were Jeffrey R. Babbin, New Haven, and, on the brief, Bernard E. Jacques, Hartford, for appellant in Docket No. 15388 (defendant Joan A. Magner).

Warren Miller, with whom, on the brief, was Ronald E. Lasky, New London, for the appellee (plaintiff).

Before PETERS, C.J., and BORDEN, NORCOTT, KATZ and PALMER, JJ.

KATZ, Associate Justice.

The plaintiff, Theodore Fink, brought this derivative action suit on behalf of a professional corporation known as Theodore Fink, M.D., and Robert B. Golenbock, M.D., P.C. (corporation) against the defendants, Robert B. Golenbock and Joan A. Magner, claiming that they each had wrongfully converted the assets of the corporation, had tortiously interfered with the reasonable business expectancies of the corporation, had been unjustly enriched, and had violated the Connecticut Unfair Trade Practices Act (CUTPA). ¹ Additionally, the plaintiff claimed that Golenbock had violated his fiduciary duties to the corporation by misusing funds, assets, property and other benefits rightfully belonging to the corporation. All counts except the CUTPA claims were tried to a jury, which returned a verdict in favor of the plaintiff. The court then rendered judgment in favor of the plaintiff on the CUTPA counts. The defendants appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199(c). We reverse the judgment of the trial court as to Magner; we affirm the judgment of the trial court as to Golenbock.

The jury could reasonably have found the following facts. In 1977, the plaintiff and Golenbock formed the corporation, which became a successful pediatric practice in Bethel. The plaintiff and Golenbock each owned 50 percent of the corporation. At that time, the corporation employed the plaintiff and Golenbock, and, in 1984, it hired Magner.

In June, 1987, the plaintiff's wife brought a dissolution of marriage action against him. Days later, Magner, who had become good friends with the plaintiff's wife, informed the plaintiff that, based upon information she had received from his wife, Magner had filed a report with the department of children and youth services (department), ² alleging that the plaintiff had engaged in sexual conduct with his young adopted children. ³ Thereafter, Magner and Golenbock informed the plaintiff that, on the basis of these allegations, they could no longer practice medicine with him. On August 1, 1987, the plaintiff left the state for his parents' home in Pennsylvania. When he returned to the practice on August 24, 1987, Magner advised him that she did not believe it was a good idea for him to see patients. Golenbock informed the plaintiff that he would not be allowed to see patients and that the plaintiff was no longer part of the medical practice. Golenbock further informed the plaintiff that if he tried to return to the practice, Golenbock would have the plaintiff arrested and have his license taken away, whereupon the plaintiff returned to Pennsylvania, where he remained for four years. In August, 1987, the plaintiff and Golenbock had held preliminary discussions to consider the dissolution of the corporation, but were unable to reach an agreement to dissolve.

In October, 1987, Golenbock and Magner incorporated Stony Hill Pediatrics, P.C. (Stony Hill), a professional corporation operating a pediatric medical practice. ⁴ Stony Hill occupied the building owned by the corporation, used the same telephone number as that of the corporation, and used the equipment that belonged to the corporation. Furthermore, Golenbock took $10,000 from the corporation's checking account to establish Stony Hill. Additionally, the defendants did not pay the corporation either for the use of its equipment or for the use of its building. Finally, patients formerly treated by the corporation were told to make their payments for that treatment to Stony Hill.

In September, 1988, the plaintiff telephoned Golenbock in an attempt to return to the practice, but Golenbock rebuffed his approach. Golenbock again informed the plaintiff that if the plaintiff attempted to return to the practice, he would have him arrested.

On the basis of these facts, the jury found that both defendants had wrongfully misappropriated and converted the business assets of the corporation, had tortiously interfered with the reasonable business expectancies of the corporation, had been unjustly enriched, and that Golenbock had violated his fiduciary duties. ⁵ The court then ruled in favor of the plaintiff on the CUTPA counts. ⁶ Additional facts will be provided as needed.

I

The defendant Magner asserts six claims on appeal, namely that: (1) the trial court improperly awarded punitive damages against her; (2) there was insufficient evidence to support a judgment finding her liable for conversion, interference with business expectancies and unjust enrichment; (3) the trial court improperly rendered judgment in favor of the plaintiff on the CUTPA claims; (4) the trial court improperly limited her testimony concerning the circumstances of her report of the plaintiff's alleged sexual misconduct; (5) the trial court improperly awarded prejudgment interest; and (6) the trial court improperly awarded judgment in favor of the plaintiff because all of the plaintiff's claims are barred by res judicata. Because we agree with Magner that all the plaintiff's claims were or could have been previously adjudicated in an arbitration proceeding, we conclude that the claims are barred by res judicata.

The following additional facts are relevant to the resolution of Magner's res judicata claim. Magner was hired by the corporation in December, 1984. In September, 1986, Magner entered into a new employment contract with the corporation. This contract contained a clause that prohibited Magner from competing with the corporation in a medical practice for a specified period of time. The contract also contained an arbitration clause that provided that "[a]ny disputes arising under this Agreement (except if Corporation seeks injunctive relief as herein provided) shall be submitted to the American Arbitration Association in Hartford, Connecticut." In October, 1988, the plaintiff submitted a demand for arbitration claiming that Magner had breached her employment contract and the covenant not to compete. The plaintiff's demand for arbitration stated that "[c]laimant entered into an Employment Agreement with respondent.... Respondent unilaterally and wrongfully terminated her employment with claimant. Respondent also breached her agreement not to compete by engaging in the practice and business of medicine and doing other contractually prohibited acts within a geographic area and time frame as agreed in her employment agreement." After an arbitration hearing held on April 6, 1989, the panel of arbitrators issued an award denying the plaintiff's claims. ⁷

Thereafter, the plaintiff continued to trial with various claims against Magner, including tortious interference with business expectancies, conversion, unjust enrichment, and violation of CUTPA. Before trial, Magner moved for summary judgment, claiming that all of the plaintiff's claims were barred by res judicata. The trial court never formally ruled on this motion. Subsequently, Magner filed a motion in limine to preclude the introduction of evidence relating to the claims previously adjudicated at the arbitration, which motion was denied. Following the trial, at which the plaintiff had prevailed on all counts, Magner filed a motion to set aside the verdict and requested that judgment be rendered in her favor, which motion was similarly denied.

Magner argues on appeal that the plaintiff's claims are barred by res judicata because these claims were or could have been adjudicated in the arbitration proceeding. We agree.

" '[T]he doctrine of res judicata, or claim preclusion, [provides that] a former judgment on a claim, if rendered on the merits, is an absolute bar to a subsequent action [between the same parties or those in privity with them] on the same claim. A judgment is final not only as to every matter which was offered to sustain the claim, but also as to any other admissible matter which might have been offered for that purpose. Cromwell v. County of Sac, 94 U.S. 351, 352-53, 24 L.Ed. 195 (1876); 1 Restatement (Second), [Judgments] §§ 19, 25; James & Hazard, Civil Procedure (2d Ed.) § 11.3.' State v. Aillon, 189 Conn. 416, 423-24, 456 A.2d 279, cert. denied, 464 U.S. 837, 104 S.Ct. 124, 78 L.Ed.2d 122 (1983). The rule of claim preclusion prevents reassertion of the same claim regardless of what additional or different evidence or legal theories might be advanced in support of it.

" 'We have adopted a transactional test as a guide to determining whether an action involves the same claim as an earlier action so as to trigger operation of the doctrine of res judicata. [T]he claim [that is] extinguished [by the judgment in the first action] includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose. What factual grouping constitutes a "transaction," and what groupings constitute a "series," are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage.... Orselet v. DeMatteo, [206 Conn. 542, 545-46, 539 A.2d 95 ...