Retirement Program for Employees of the Town of Fairfield et al. v. Bernard L. Madoff et al. (2011)

MEMORANDUM OF DECISION ON THE DEFENDANTS NOEL AND TUCKER'S MOTION TO DISMISS (# 247) & MOTION TO STRIKE (# 248)

Introduction

This litigation in the Connecticut Superior Court is part of the fallout from the massive fraudulent investment scheme perpetrated by Bernard L. Madoff.   The plaintiffs are the town of Fairfield and the two retirement plans funded by the town that provide pensions for current or former town employees.   This group includes members of the Fairfield police and fire departments and other municipal employees.   The plaintiff town brought this action against a number of individuals and entities in the securities industry to recover multi-million dollar losses from investments in hedge funds that allegedly acted as feeder funds ² for Bernard L. Madoff.   These significant losses were sustained by the town's retirement plans, allegedly as a result of actions attributable to these several defendants.

In general terms, a hedge fund is an aggressively managed portfolio of investments that uses advanced investment strategies in both domestic and international markets, with the goal of generating high returns to its investors.   A hedge fund is similar to a mutual fund in that investments in both types of funds are pooled and professionally managed, but they differ in that a mutual fund is subject to far more government regulation and oversight, and a hedge fund has far more flexibility in its investment strategies as it seeks to maximize return on investment.   Unlike mutual funds, which generally welcome investors of even modest means, hedge fund investors are invariably a sophisticated group of high net worth individuals or entities like the plaintiff pension funds in this case.   Legally, hedge funds are most often set up as private investment partnerships that are only open to a select group of investors, which investors may be individuals or entities which are themselves structured as limited partnerships, retirement plans or some other form of business organization.   Hedge funds also require a large initial minimum investment of capital from each limited partner investor.

A number of defendants have been named in this lawsuit.³  These include individuals and institutions that invested and/or managed and/or advised the affected town retirement plans for the benefit of or on behalf of the plaintiffs.   The defendants are alleged to have wrongfully participated in and benefited from Madoff's fraudulent scheme to some degree, all to the detriment of the plaintiff town's retirement plans.   The defendants may be summarized as follows.

1. The defendant Bernard L. Madoff (Madoff) was the former chairman of the NASDAQ and the former investment manager and founder of the market-making ⁴ firm Bernard L. Madoff Investment Securities, LLC (BLMIS).   In December 2008, Madoff surrendered to federal authorities and confessed to orchestrating one of the world's biggest instances of securities fraud.   Essentially, Madoff admitted to operating a massive Ponzi scheme, one in which the losses to investors were magnified by the staggering amounts of money that are typical of legitimate hedge fund operations.   A Ponzi scheme is “a pyramid scheme where earlier investors are paid from the investments of more recent investors, rather than from any underlying business concern, until the scheme ceases to attract new investors and the pyramid collapses.”  (Internal quotation marks omitted.)  Retirement Program for Employees of the Town of Fairfield v. Madoff, 130 Conn.App. 710, 713 n.3, 26 A.3d 93 (2011).   In Madoff's case, the huge pool of investors' capital entrusted to him was not actually invested in accordance with any legal strategy.   The monies were used instead to “feed” and fund the Madoff family's lifestyle, and were also used to make payments to earlier investors who filed requests for redemption of principal and profits.   Madoff is currently incarcerated, serving a 150–year prison term.

2. The defendant Maxam Capital Management, LLC (Maxam Capital) is a Connecticut company that provided investment management and consulting services to institutional and municipal investors like the town of Fairfield.   Maxam Capital formed a hedge fund in the form of a Delaware limited partnership called the Maxam Absolute Return Fund, LP (Maxam Fund).   Following a solicitation by Sandra Manzke, the founder of Maxam Capital, the plaintiffs invested as limited partners in the Maxam Fund, which was a fund whose assets were managed by Madoff.   Both the general partner of the Maxam Fund, Maxam Capital GP, LLC, and the administrator of that hedge fund, Maxam Capital Management Limited, are owned by Maxam Capital.   These entities have also been named as defendants.

3. The defendant Sandra Manzke created Maxam Capital and served as its chief executive officer.   Manzke also served on Maxam Capital's investment committee.   Prior to forming Maxam Capital, she was president of Tremont Partners, Inc.⁵ Manzke and the town of Fairfield apparently go way back, and its pension plans were her longtime clients.   Before she started Maxam, through her role at Tremont Partners, and even earlier than that, when Manzke worked prior to 1985 as a partner at yet another pension investment consulting firm (Rogers, Casey and Barksdale), Manzke was working with the town of Fairfield.   She was personally involved in providing pension consulting services and purportedly sound investment advice to the town fathers.   The plaintiffs refer to Manzke and Maxam Capital in their complaint as the “Maxam defendants.”

4. Other defendants are the moving parties here on this motion to strike.   They worked together in the securities industry before the Madoff fraud came to light.   They are Walter M. Noel, Jr. (Noel), Jeffrey H. Tucker (Tucker), and Andres Piedrahita (Piedrahita).⁶  Noel and Tucker have filed a combined motion to dismiss and to strike the complaint.   Both men were founding partners, principals and members of the executive committee or board of directors of a defendant company called Fairfield Greenwich Group.⁷  This defendant was an asset management company, and the plaintiff town claims that while its own pension funds were actually losing millions of dollars in Manzke's hedge fund, Noel and Tucker and Fairfield Greenwich Group made a fortune by aiding and abetting Manzke and Maxam Capital in the movement and/or investment of millions of dollars.   This was lost money that, directly or indirectly, allegedly profited these defendants while they aided and abetted Manzke and/or Maxam Capital in the service of Madoff's Ponzi scheme.   The plaintiffs refer to Noel, Tucker and Piedrahita as the “Fairfield Greenwich Group defendants.”   Together with the Maxam Defendants, the Fairfield Greenwich Group defendants are the “Feeder Fund defendants.”

Procedural History

Presently before the court is a combined motion to dismiss and motion to strike brought by the defendants Noel and Tucker.   Some procedural history is helpful to place these motions in context.   An earlier set of allegations filed in 2009 against these same defendants was dismissed by this court in its memorandum of decision dated April 16, 2010, a ruling which was affirmed on appeal.   Based on both the wording and the causes of action pleaded in the original version of the town's now-dismissed complaint as to these defendants, the court agreed with the defendants Noel and Tucker that the pleading as drafted against them was defective.   In Retirement Program for Employees of the Town of Fairfield v. Madoff, supra, 130 Conn.App. 718, the Appellate Court ruled that “the [trial] court properly determined that the plaintiffs' claims against the Fairfield Greenwich defendants ․ were derivative and, accordingly, the plaintiffs lack[ed] standing to bring those claims.”  Id., 719.   The Appellate Court also noted that “[a]lthough the plaintiffs' complaint is rich with allegations that the Fairfield Greenwich defendants [Noel and Tucker] acted in concert with Madoff or in furtherance of Madoff's fraudulent plan, it is devoid of any allegation that the Fairfield Greenwich defendants played any role in inducing the plaintiffs to invest in the Maxam Fund or in any other feeder fund, or with Madoff directly.”

With their complaint dated October 26, 2010 (# 233), the plaintiffs have sought to address the defect in their earlier complaint as identified and articulated by this court and the Appellate Court.   On February 7, 2011, Noel and Tucker filed a combined motion to dismiss (# 247) and motion to strike (# 248).   These motions attack all of eight of the new counts alleged against the Fairfield Greenwich Group in the plaintiffs' complaint.   These eight counts, all of which are discussed herein, are labeled as counts four, five, ten, eleven, sixteen, seventeen, twenty-two and twenty-four.⁸  The plaintiffs filed a second amended complaint dated March 24, 2011 (# 259).   The purpose of this second amended complaint was to set forth allegations as to other Manzke family members, Walker Manzke and April B. Manzke.   A motion to cite these parties in was granted by the court, and none of the defendants filed an objection to the plaintiffs' second amended complaint while their motion to dismiss was pending.   The plaintiffs then moved to file a third amended complaint dated May 6, 2011 (# 269), which motion was granted by the court over objection.   See Practice Book § 10–60.⁹

The court is mindful that once a motion to dismiss is pending before the court, it must be ruled on before the court can take any further action in the case.   However, it is important to note that any changes wrought by the second and third amended complaints have not been considered by the court in adjudicating Noel and Tucker's latest jurisdictional challenge.   In ruling on the defendants' motion to dismiss (# 247), the court emphasizes that it considered the legal sufficiency of only the plaintiffs' complaint dated October 26, 2010 (# 233), without regard to any amendments to the complaint filed after that date.   This is true even though the defendants did not object to the plaintiffs' second amended complaint while their motion to dismiss was already pending.   Indeed, the only noticeable difference between the second and third amended complaints is that the plaintiffs' third iteration alleges some additional specifics of Noel and Tucker's knowledge of the Maxam defendants' fraudulent behavior.   However, in analyzing the motion to dismiss, sufficient allegations of such knowledge on the part of Noel and Tucker are found by the court to exist in the complaint (# 233) as drafted, before any such amendment and before any motion to dismiss was filed by the defendant.   This makes the issue moot.

The parties deserve a chance to air out their claims in the pleading process.   There is both another time as well as other motions available to the defendants after the discovery process has been completed for them to once again challenge the factual and/or legal sufficiency of what has been alleged by the plaintiffs.   If the court granted the defendants' motion to dismiss the complaint (# 233), the merits of the motion to strike the complaint would not be reached, amendment or not.   The court therefore found it was in the interests of judicial economy to allow the third amended complaint only for purposes of the motion to strike, because the plaintiffs could simply re-plead the allegations in their current form if the court were to grant the motion to strike.   Such a procedure would add many months, and possibly a year or more, to the length of this litigation without any corresponding benefit, such as a timely decision by a judge or jury on the ultimate merits of these claims.¹⁰

The Allegations

The plaintiffs allege the following facts that are relevant to the disposition of the motions that are currently before the court.   For fifteen years prior to December 2008, Madoff, through his broker-dealer business BLMIS, perpetrated a massive Ponzi scheme that ultimately defrauded the plaintiffs and other investors out of billions of dollars.   Starting in the 1990s, Madoff purported to manage his investors' money through BLMIS's investment advisory business by using a “split-strike conversion” strategy.   It was explained by the Bankruptcy Judge in New York who is overseeing the orderly liquidation of BLMIS.  “Under this strategy, Madoff purportedly invested customer funds in a subset, or ‘basket,’ of Standard & Poor's 100 Index (“S & P 100 Index”) common stocks, and maximized value by purchasing before, and selling after, price increases.   Several times per year, customer funds would move ‘into the market,’ whereby a basket of stocks was supposedly purchased.   Customer funds were then moved entirely ‘out of the market’ to ‘invest’ in United States Treasury Bills, money market funds, and cash reserves until the next trading opportunity.   This continued until the end of each quarter, when all baskets would be sold and ‘invested’ in these ‘out of the market’ repositories.   Focusing on large cap stocks, the strategy evaded inquiry into the volume of stocks in which BLMIS was fictitiously trading.   Madoff's quarter-end liquidation of the split-strike security basket positions enabled him to avoid disclosure of the equities in the baskets required by SEC Form 13F. BLMIS also devised a hedging strategy to purchase and sell S & P 100 Index option contracts corresponding to the stocks in the baskets.   This allowed Madoff to appear to manage the downside risk associated with possible unfavorable price changes in the baskets and limit profits associated with increases in underlying stock prices.”  In re Bernard L. Madoff Investment Securities LLC, 424 B.R. 122, 129–30 (S.D.N.Y.2010), aff'd, 654 F.3d 229 (2d Cir.2011).

As is now known, Madoff never actually used any such strategy, nor made any trades.   In reality, Madoff was using the money from investors like the plaintiff retirement plans and others to pay off old investors and to fund his family's extravagant lifestyle, a fraud which continued until his arrest by federal agents in December 2008.   In order for Madoff's scheme to remain afloat and continue to operate successfully, he needed a continuous stream of investors to fund redemption requests.   As a result, Madoff allegedly entered into agreements with all of the Feeder Fund defendants for infusions of funds.   These were agreements in which the Feeder Fund defendants allegedly sold billions of dollars worth of limited partnership interests in different hedge funds to the plaintiffs and many others.   The assets from those funds—billions of dollars—were funneled into Madoff to keep his Ponzi scheme running.   The plaintiffs allege that all of the Feeder Fund defendants were aware that Madoff was conducting illegal activity, and knowingly agreed to participate in it.   The plaintiffs claim that the Feeder Fund defendants believed that Madoff was engaged in “front-running,” rather than the Ponzi scheme that eventually came to light.   Front running describes a practice of trading in securities by taking advantage of misappropriated information in advance of or “in front of” other investors.   See United States v. Royer, 549 F.3d 886, 891 (2d Cir.2008), cert. denied, 130 S.Ct. 85, 175 L.Ed.2d 237 (2009).   Noel and Tucker are charged with participating in this scheme as early as the mid–1990s.

In April 2005, the defendant Manzke formed Maxam Capital.   Manzke and Maxam Capital allegedly created the Maxam Fund for the purpose of generating a new pool of investors for Manzke and Madoff.   The general partner of the Maxam Fund was another entity also formed by Manzke called Maxam Capital GP. Sometime after July 2006, Manzke and the other Maxam defendants allegedly solicited the plaintiffs to purchase limited partnership interests in their Maxam Fund. The plaintiffs' money had previously been invested with Tremont Partners while Manzke had been an officer and director there.   Manzke served as the plaintiffs' trusted pension investment advisor, and they followed her recommendations.   Allegedly in reliance upon Manzke's advice, the plaintiffs withdrew their money from their account at Tremont Partners, and invested the retirement plans with the new Maxam Fund. By the time the Madoff fraud came to light, the plaintiffs' total investment in the Maxam Fund was reported to be nearly $38 million, which included some “profits” on their principal.

The plaintiffs allege that from the early 1990s to December 2008, the Fairfield Greenwich defendants, including Noel and Tucker, solicited billions of dollars of investments in feeder fund limited partnership interests, and placed these funds under Madoff's management.   Between 1995 and 2008, the Fairfield Greenwich defendants allegedly sent over $4.5 billion to Madoff for him to manage, conduct the plaintiffs claim was necessary in order to enable Madoff's criminal scheme to continue.   Additionally, the plaintiffs contend that the Fairfield Greenwich defendants falsely represented to investors in its feeder funds that Madoff was continuing to post successful investment returns in the range of 10 percent per year using his split-strike conversion strategy.   The Fairfield Greenwich defendants knew, or “wrongfully refused to know” that these representations were false, and helped Madoff to continue his fraudulent scheme.

In counts four and five, the plaintiffs allege that the defendants Noel and Tucker “materially assisted” the defendant Maxam Capital in the offering and sale of limited partnership interests in the Maxam Fund to the plaintiffs.   Specifically, the plaintiffs contend that “Fairfield Sentry ¹¹ and other hedge funds and investment vehicles created and owned by [the] Fairfield Greenwich Group materially assisted Maxam Capital in the offering and sale of limited partnership interests in the Maxam Feeder Fund to the plaintiff Plans, and [the] defendants[s] [Noel and Tucker] directly or indirectly controlled such entities, served as a partner, officer or director of such entities, and/or was employed by or served as the agent of such entities.”   Accordingly, in these counts the plaintiffs allege violations by Noel and Tucker of the Connecticut Uniform Securities Act (CUSA), General Statutes § 36b–29(a)(2) and (c).

Counts ten, eleven, sixteen and seventeen allege that the plaintiffs' lost investments were caused by Noel and Tucker's fraudulent and illegal conduct acting in concert with and pursuant to a common design with Madoff, the other Feeder Fund defendants and the Madoff Family defendants and others.   The plaintiffs contend that Noel and Tucker knew that Madoff and the other Feeder Fund defendants were breaching their duty owed to the individuals that had retained them as their investment managers.   It is the plaintiffs' position that Noel and Tucker “rendered substantial assistance and encouragement to Madoff and other Feeder Fund Defendants [including the Maxam Defendants] in that [they] helped obtain necessary funding to enable the criminal scheme to continue and to facilitate the continued concealment of the existence of the criminal scheme and in that [they] intentionally did not disclose the fraudulent nature of Madoff's trading activity, even though [they] had a duty to do so.”   Noel and Tucker reached this objective both by concealing Madoff and the other Feeder Fund defendants' fraudulent conduct, and by helping to induce new investors to place their money in this illegal operation.   Accordingly, in counts ten and eleven, the plaintiffs allege concerted causes of action against Noel and Tucker for theft and aiding and abetting theft.   In counts sixteen and seventeen, the plaintiffs charge both men with aiding and abetting fraudulent inducement.   Finally,¹² in count twenty-one, the plaintiffs allege a conspiracy on the part of all the defendants in this matter.

The Motion to Dismiss

The court will first address Noel and Tucker's motion to dismiss based on subject matter jurisdiction/standing because “[o]nce the question of subject matter jurisdiction has been raised, cognizance of it must be taken and the matter passed upon before [the court] can move one further step in the cause;  as any movement is necessarily the exercise of jurisdiction.”  (Internal quotation marks omitted.)  Schaghticoke Tribal Nation v. Harrison, 264 Conn. 829, 839 n.6, 826 A.2d 1102 (2003).   The legal standards for ruling on a motion to dismiss are well established.  “A motion to dismiss ․ properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court.”  (Internal quotation marks omitted.)  Gurliacci v. Mayer, 218 Conn. 531, 544, 590 A.2d 914 (1991).  “The motion to dismiss shall be used to assert (1) lack of jurisdiction over the subject matter ․” (Internal quotation marks omitted.)  Sadloski v. Manchester, 235 Conn. 637, 645–46 n.13, 668 A.2d 1314 (1995).   Because the court's subject matter jurisdiction is implicated, a finding of a lack of standing is therefore a proper basis for granting a motion to dismiss.   See May v. Coffey, 291 Conn. 106, 112–13, 967 A.2d 495 (2009).  “The plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised.”  Fink v. Golenbock, 238 Conn. 183, 199 n.13, 680 A.2d 1243 (1996).  “If a party is found to lack standing, the court is without subject matter jurisdiction to determine the cause ․ Subject matter jurisdiction [implicates] the authority of the court to adjudicate the type of controversy presented by the action before it ․ [A] court lacks discretion to consider the merits of a case over which it is without jurisdiction ․” Fort Trumbull Conservancy, LLC v. New London, 282 Conn. 791, 802, 925 A.2d 292 (2007).   As previously stated, the legal sufficiency of the complaint dated October 26, 2010 (# 233) is the operative complaint for purposes of the court's ruling on the motion to dismiss.

Collateral Estoppel Law of the Case

Noel and Tucker's first argument is that all of the claims against them must be dismissed by the court pursuant to the doctrines of collateral estoppel and law of the case.   In summary, the defendants argue that this court has already determined that the causes of action alleged in the March 30, 2009 complaint were derivative in nature as to them.   Because the court had properly dismissed those earlier claims for lack of standing/subject matter jurisdiction, the defendants argue that same result is mandated here.   Noel and Tucker assert that the issues presented in the present complaint were already litigated when the court adjudicated their prior motion to dismiss, and as a result, the plaintiffs cannot maintain the current complaint.   In response, the plaintiffs contend that neither collateral estoppel nor the law of the case doctrine bars their newly asserted claims.   The plaintiffs assert that because the current complaint alleges different legal theories than those previously ruled upon by the court, the doctrines of collateral estoppel and the law of the case are both inapplicable.

“The common-law doctrine of collateral estoppel, or issue preclusion, embodies a judicial policy in favor of judicial economy, the stability of former judgments and finality ․ Collateral estoppel, or issue preclusion, is that aspect of res judicata which prohibits the relitigation of an issue when that issue was actually litigated and necessarily determined in a prior action between the same parties upon a different claim ․ For an issue to be subject to collateral estoppel, it must have been fully and fairly litigated in the first action.   It also must have been actually decided and the decision must have been necessary to the judgment.”  (Emphasis added;  internal quotation marks omitted.)  Lighthouse Landings, Inc. v. Connecticut Light & Power Co., 300 Conn. 325, 343–44, 15 A.3d 601 (2011).  “Collateral estoppel means simply that when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit.”  (Emphasis added;  internal quotation marks omitted.)   Gladysz v. Planning & Zoning Commission, 256 Conn. 249, 260, 773 A.2d 300 (2001).   Given this definition, it is apparent that the doctrine of collateral estoppel does not apply here.

Noel and Tucker are asking the court to apply its prior ruling, and they argue that the claims brought by the plaintiffs are the same as those already dismissed by the court.   However, the doctrine of collateral estoppel simply does not apply to prior rulings made in the same case.   See, e.g., Gadani v. Debrino Caulking Associates, Inc., 86 App.Div.3d 689, 691, 926 N.Y.S.2d 724 (2011) (stating that “[t]he equitable doctrine of collateral estoppel precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity” whereas “the law of the case doctrine is addressed to the potentially preclusive effect of judicial determinations made in the course of a single litigation before final judgment”).   It also should be noted that although the Connecticut Supreme Court has determined that the issue of collateral estoppel can be raised via a motion to dismiss;  Wilcox v. Webster Ins., Inc., 294 Conn. 206, 223, 982 A.2d 1053 (2009);  the law is clear that “the doctrine of collateral estoppel does not implicate the court's subject matter jurisdiction.”  State v. T.D., 286 Conn. 353, 360 n.6, 944 A.2d 288 (2008).   Consequently, even if the court were to determine that collateral estoppel applied to the present case, that doctrine would not strip the court of jurisdiction over these claims against Noel and Tucker.   Accordingly, the doctrine of collateral estoppel cannot be the basis to dismiss and/or strike the claims against them.

Nevertheless, the law of the case doctrine does apply to previous rulings of the court on point and made during the same case.   The issue then becomes does the new complaint with its new legal theories of liability run afoul of this doctrine.  “The law of the case doctrine expresses the practice of judges generally to refuse to reopen what [already] has been decided ․ New pleadings intended to raise again a question of law which has been already presented on the record and determined adversely to the pleader are not to be favored ․ Where a matter has previously been ruled upon interlocutorily, the court in a subsequent proceeding in the case may treat that decision as the law of the case, if it is of the opinion that the issue was correctly decided, in the absence of some new or overriding circumstance.”  (Internal quotation marks omitted.)  Brown & Brown, Inc. v. Blumenthal, 288 Conn. 646, 656, 954 A.2d 816 (2008).   Trial courts are rightfully hesitant to revisit rulings on issues that have already been decided during the course of litigation within the context of a single case.   However, when faced with a “new pleading which adds substantive factual allegations, the law of the case doctrine is not applicable.”  (Emphasis added.)   Distinctive Home Builders, LLC v. Copar Construction, LLC, Superior Court, judicial district of Hartford, Docket No. CV 05 4019423 (October 24, 2006, Freed, J.T.R.).

In the present matter, the court previously granted a motion to dismiss based on standing grounds and legally defective derivative claims.   However, those allegations are no longer a part of this case, and they are also not a part of the complaint (# 233).   The plaintiffs have re-pleaded a new complaint with some different substantive factual allegations.   More importantly for purposes of this analysis, the complaint also advances some new legal theories of civil liability, counts that were not previously asserted by the plaintiffs or adjudicated by the court.   Therefore, the law of the case doctrine does not mandate that the court automatically grant the present motion to dismiss.   Rather, the court will need to examine the arguments raised by Noel and Tucker within the context of the complaint (# 233), and thereby determine the merits of their motion to dismiss.

Standing

Noel and Tucker argue that the plaintiffs do not have standing to maintain any of the claims alleged.   Specifically, Noel and Tucker contend that all of the causes of action brought by the plaintiffs are derivative in nature, because the alleged harms and losses were experienced by all of the limited partners of the Maxam Fund generally, as opposed to the plaintiffs suffering any individualized harm.   Essentially, Noel and Tucker argue that the plaintiffs' allegations in the complaint are no different than those which were previously dismissed by this court.   In response, the plaintiffs argue that the claims in the complaint (# 233) are materially different than those claims that were previously dismissed.   The plaintiffs are now alleging that Noel and Tucker aided and abetted securities fraud by the Maxam defendants.   The plaintiffs argue that the court's previous determination that they have standing to bring direct claims against the Maxam defendants as principals necessarily implies that they have standing to maintain claims against the Fairfield Greenwich defendants, who stand accused of aiding and abetting those principals.

“Standing is the legal right to set judicial machinery in motion.   One cannot rightfully invoke the jurisdiction of the court unless [one] has, in an individual or representative capacity, some real interest in the cause of action ․ Standing is established by showing that the party claiming it is authorized by statute to bring suit or is classically aggrieved ․ The fundamental test for determining [classical] aggrievement encompasses a well-settled twofold determination:  first, the party claiming aggrievement must successfully demonstrate a specific personal and legal interest in the subject matter of the decision, as distinguished from a general interest, such as is the concern of all the members of the community as a whole.   Second, the party claiming aggrievement must successfully establish that the specific personal and legal interest has been specially and injuriously affected by the decision.”  (Emphasis added;  internal quotation marks omitted.)  St. Paul Travelers Cos. v. Kuehl, 299 Conn. 800, 809, 12 A.3d 852 (2011).  “There are two general types of aggrievement, namely, classical and statutory;  either type will establish standing, and each has its own unique features.   Statutory aggrievement exists by legislative fiat, not by judicial analysis of the particular facts of the case.   In other words, in cases of statutory aggrievement, particular legislation grants standing to those who claim injury to an interest protected by that legislation.”  (Internal quotation marks omitted.)  Soracco v. Williams Scotsman, Inc., 292 Conn. 86, 92, 971 A.2d 1 (2009).

In counts four and five, the plaintiffs allege that Noel and Tucker violated provisions of the statutory scheme known as the Connecticut Uniform Securities Act (CUSA).¹³  These causes of action were not alleged in the plaintiffs' original complaint, nor were they the subject of prior rulings by the court as to Noel or Tucker.   CUSA provides in relevant part:  “Any person who ․ offers or sells or materially assists any person who offers or sells a security by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, who knew or in the exercise of reasonable care should have known of the untruth or omission, the buyer not knowing of the untruth or omission, and who does not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the untruth or omission, is liable to the person buying the security, who may sue either at law or in equity to recover the consideration paid for the security, together with interest at eight per cent per year from the date of payment, costs and reasonable attorneys fees, less the amount of any income received on the security, upon the tender of the security, or for damages if he no longer owns the security.”  (Emphasis added.)  General Statutes § 36b–29(a)(2).   As explained by one trial court, “[This] section creates liability for anyone who ‘materially assists' in a violation of the securities laws.”   Berti v. Harlan, Superior Court, judicial district of Litchfield, Docket No. CV 99 80826 (September 21, 2000, Frazzini, J.).

The plaintiffs allege that both Noel and Tucker “materially assisted defendant Maxam Capital in the offering and sale of limited partnership interests in the Maxam Feeder Fund to the plaintiff Plans,” in that hedge funds created and owned by Noel and Tucker aided Maxam Capital in the sale of the security interests to the plaintiffs.   Furthermore, the plaintiffs allege that Noel and Tucker knew or “wrongfully refused to know” that certain representations made to the plaintiffs were false.   Pursuant to the plain language of § 36b–29(a)(2), one who materially assists in the sale of a security to another by false means is also liable to the individual who buys the security interest.   Consequently, the court finds that the plaintiffs have alleged sufficient facts that establish their standing to bring claims against Noel and Tucker under CUSA. The defendants' previously successful argument that the causes of action against them as alleged in the original complaint were derivative is essentially irrelevant here.   This section of CUSA is written quite broadly, and the language of the statute does not require that the plaintiffs allege that Noel and Tucker committed a harm directed towards them specifically.   In fact, CUSA specifically sweeps into its list of proscribed behaviors those who “materially assist” others in violating the securities laws.   Therefore, the court determines that the plaintiffs do have standing to allege violations of CUSA against Noel and Tucker in that capacity.

Counts ten, eleven, sixteen and seventeen allege common-law claims of aiding and abetting liability.¹⁴  In count eight of their original complaint, the plaintiffs had alleged that Noel and Tucker were liable to the plaintiffs because they aided and abetted Madoff's fraudulent schemes.   As previously noted, this court dismissed that contention as derivative in nature, and that decision was upheld by the Appellate Court.   However, in the complaint (# 233), the gravamen of the factual allegations found in counts ten, eleven, sixteen and seventeen is that Noel and Tucker aided and abetted both Madoff and the Maxam defendants.   Noel and Tucker argue that such claims are still derivative in nature, but the plaintiffs point out that this court has previously ruled that they have properly stated a direct claim against the Maxam defendants.   The plaintiffs therefore maintain that claims that Noel and Tucker aided and abetted the Maxam defendants are necessarily legally cognizable as a secondary direct claim.

When evaluating the parties' respective arguments, the Delaware Supreme Court's decision in Gatz v. Ponsoldt, 925 A.2d 1265 (Del.2007), is instructive.   The plaintiffs in Gatz were a group of minority stockholders who brought claims against multiple defendants in a recapitalization case involving a corporation called Regency.   Some defendants in that case acted in their primary capacity (Ponsoldt and Statesman), while others were relegated to a secondary role (Levy).   As stated by the Delaware Supreme Court, “the complaint pleads facts from which it can be inferred that at all relevant times Ponsoldt and Statesman controlled Regency, and that the Levy defendants aided and abetted a breach or breaches of duty by the Ponsoldt defendants and Statesman in conceiving and carrying out the Recapitalization.   Thus, if the claim(s) arising out of that transaction could have been brought directly against the Regency defendants, then those claims could have been brought directly against Statesman and the Levy defendants as well.”  Id., 1276.   The Gatz decision has also been cited with approval by Judge Posner of the Seventh Circuit Court of Appeals for the proposition that under Delaware law, “a third party may be liable for aiding and abetting a breach of a corporate fiduciary's duty to the stockholders if the third party knowingly participates in the breach ․ These defendants will of course avoid liability for aiding and abetting [, however,] if there was no misconduct by ․ [any of the principal defendants] to aid or abet ․” CDX Liquidating Trust v. Venrock Associates, 640 F.3d 209, 220 (7th Cir.2011).   This case also suggests that a cause of action brought against an alleged aider and abettor is a direct claim, so long as the plaintiff can state a direct claim against the primary tortfeasor.   Cf. Feldman v. Cutaia, 956 A.2d 644, 666 (Del.2007) (stating that “an aiding and abetting claim premised on a derivative cause of action is necessarily derivative itself).

Because the Maxam Fund is a Delaware limited partnership, this court applied Delaware law when ruling on the original motion to dismiss in order to determine the plaintiffs' standing to bring their common-law causes of action.   As Delaware law stands for the principle that an aiding and abetting claim brought against a party that is alleged to have provided assistance to a primary offender is direct, so long as the plaintiff can maintain a direct claim against the alleged primary offender, then the plaintiffs also have standing to sue Noel and Tucker for aiding and abetting the primary tortfeasor.   This court has already ruled that the plaintiffs' claims against the Maxam defendants are direct in nature.   The plaintiffs in the present case allege that Noel and Tucker aided and abetted the Maxam defendants.   That is sufficient to withstand the legal challenge to dismiss now mounted against the complaint (# 233) on standing grounds.   Accordingly, the court determines that the plaintiffs have demonstrated sufficient standing to bring counts ten, eleven, sixteen and seventeen.¹⁵

The Motion to Strike

The court will now turn to the defendants' motion to strike, where the law governing the court's consideration of such motions is well established.   Unlike the adjudication of the motion to dismiss, which considered only the sufficiency of the complaint dated October 26, 2010 (# 233), for purposes of this motion to strike, for the reasons previously stated, the court will also consider the claims asserted in the plaintiffs' third amended complaint dated May 6, 2011 (# 269).  “The purpose of a motion to strike is to contest ․ the legal sufficiency of the allegations of any complaint ․ to state a claim upon which relief can be granted.”  (Internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).   “It is fundamental that in determining the sufficiency of a [pleading] challenged by a [party's] motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted.”   (Internal quotation marks omitted.)  Gazo v. Stamford, 255 Conn. 245, 260, 765 A.2d 505 (2001).   Nevertheless, “[a] motion to strike admits all facts well pleaded;  it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings.”  (Emphasis in original;  internal quotation marks omitted.)  Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997).   When ruling on a motion to strike, the court “construe[s] the complaint in the manner most favorable to sustaining its legal suffiency ․ [I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied.”  (Internal quotation marks omitted.)  Sullivan v. Lake Compounce Theme Park, Inc., 277 Conn. 113, 117–18, 889 A.2d 810 (2006).

“In ruling on a motion to strike, the court is limited to the facts alleged in the complaint.”  (Internal quotation marks omitted.)  Faulkner v. United Technologies Corp., supra, 240 Conn. 580.  “A motion to strike challenges the legal sufficiency of a pleading ․ and, consequently, requires no factual findings by the trial court.”  (Internal quotation marks omitted.)  Batte–Holmgren v. Commissioner of Public Health, 281 Conn. 277, 294, 914 A.2d 996 (2007).   This court takes “the facts to be those alleged in the complaint ․ and ․ construe[s] the complaint in the manner most favorable to sustaining its legal sufficiency ․ Thus [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied ․ Moreover, [the court notes] that [w]hat is necessarily implied [in an allegation] need not be expressly alleged ․ It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted ․ Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically.”  (Internal quotation marks omitted.)   Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, 295 Conn. 240, 252–53, 990 A.2d 206 (2010).

CUSA

Noel and Tucker first move to strike counts four and five, in which the plaintiffs allege violations of CUSA. The defendants argue that these counts must be stricken on the grounds that the plaintiffs fail to allege:  (1) that Noel and Tucker had any knowledge of untrue statements made by the Maxam defendants;  (2) that Noel and Tucker rendered material assistance to the Maxam Fund;  and (3) facts that could establish control liability.   For all of these reasons, Noel and Tucker contend that these counts are legally insufficient.   In response, the plaintiffs argue that they have alleged sufficient facts to satisfy all of the pleading requirements for a CUSA cause of action.

In Connecticut National Bank v. Giacomi, 242 Conn. 17, 46, 699 A.2d 101 (1997),¹⁶ our Supreme Court outlined the contours of liability for defendants accused of aiding and abetting a violation of CUSA. The Supreme Court stated:  “First, there must be a primary violator.   To establish the liability of the primary violator, the buyer must prove:  (1) that the primary violator offered or sold a security by means of either an untrue statement of a material fact, or an omission to state a material fact necessary to make any statements made, in the circumstances of their making, not misleading;  and (2) that the buyer did not know of the untruth or omission.  Id., 46.  “In order for conduct to violate this section as ‘material assistance,’ to which we refer as aiding and abetting, it must also be proven that the aider or abettor materially assisted the primary violator:  (1) in the offer or sale;  and (2) in the violation by which the primary violator accomplished the offer or sale.   In addition to the foregoing elements of proof, the buyer must also meet a burden of production concerning the issue of whether the aider and abettor knew or should have known of the untruth or omission.”  Id., 47.  “[I]n order to survive a motion to strike, the plaintiff must plead the specific details of the knowledge of each aider and abettor of the primary fraud ․” (Internal quotation marks omitted.)   Rota v. Colonial Realty/USA Corp., Superior Court, judicial district of Hartford–New Britain at Hartford, Docket No. CV 92 0505840 (July 16, 1996, Aurigemma, J.).  “[T]he plaintiff has the burden of producing some evidence relevant to the aider and abettor's knowledge of the untruth or omission before that issue gets to the fact finder.”  (Internal quotation marks omitted.)  Berti v. Harlan, supra, Superior Court, Docket No. CV 99 80826, quoting Connecticut National Bank v. Giacomi, supra, 242 Conn. 17, 48 n.34.

In subsections of paragraph 131 of the third amended complaint, the plaintiffs allege numerous facts indicating that Noel and Tucker were aware of the Maxam defendants' illegal actions in the sale of securities to the plaintiffs.   For instance, the plaintiffs allege that “Noel and Tucker knew that other feeder funds, including the Maxam Defendants, were selling limited partnership interests in hedge funds placing money with Madoff and further knew that in order for defendants' criminal scheme to succeed it was necessary that other feeder funds, including the Maxam Defendants, be able to sell such limited partnership interests in hedge funds placing money with Madoff.”   Furthermore, the plaintiffs allege that Noel and Tucker “further knew that in order for the Maxam Defendants to be able successfully to sell limited partnership interests in hedge funds placing money with Madoff it was necessary that Madoff's illegality be concealed ․” and that “the Maxam Defendants were marketing limited partnership interests in hedge funds placing money with Madoff to prospective investors without disclosing the illegality of Madoff's operations ․” For the purposes of a motion to strike, these allegations are sufficient to state the requisite element of knowledge.   While Noel and Tucker argue to the contrary, it is important to remember that this case is only at the pleading stage, and even in a fact pleading state such as Connecticut, the plaintiffs are not required to specifically allege all of the evidence that they intend to rely upon to make out their claims.   Accordingly, the court rejects this argument.

Noel and Tucker also contend that the plaintiffs fail to sufficiently allege that they materially assisted in selling limited partnership interests to the plaintiffs.   As stated by our Supreme Court, “the aider and abettor must materially assist the primary violator in the offer or sale of the securities and in the violation by which the primary violator accomplished the offer or sale, which in this case is the selling of a security by means of an untrue statement of material fact ․ [A]id is material if it has a natural tendency to influence, or was capable of influencing, the decision of the purchaser.”   (Citation omitted;  internal quotation marks omitted.)  Connecticut National Bank v. Giacomi, supra, 242 Conn. 52–53.   The plaintiffs allege that “Noel and Tucker ․ knew that the size of the reported returns on the limited partnership investments in the hedge funds of the entities which the Fairfield Greenwich Group Defendants controlled placing money with Madoff would be relied upon by the investment community in determining whether to invest in other feeder funds operated by the Maxam Defendants.”   The plaintiffs further allege that “Noel and Tucker further knew and intended that their conduct ․ in concealing the illegality of Madoff's operations and/or through the use of misrepresentations that they had conducted proper due diligence ․ would materially assist the Maxam Defendants in fraudulently selling limited partnership interests in Maxam hedge funds placing money with Madoff by means of untrue statements of material fact and omissions of information material to prospective investors ․” If construed in a manner most favorable to the pleader, as the court must on a motion to strike, these allegations set forth a sufficient factual predicate to support the plaintiffs' conclusion that Noel and Tucker materially assisted in the sale of securities at issue to the town.

Next, Noel and Tucker argue that counts four and five must be stricken because the plaintiffs fail to allege control liability pursuant to General Statutes § 36b–29(c) of CUSA. That statute provides:  “Every person who directly or indirectly controls a person liable under subsections (a) and (b) of this section, every partner, officer or director of such a person, every person occupying a similar status or performing similar functions, every employee of such a person who materially aids in the act or transaction constituting the violation and every broker-dealer or agent who materially aids in the act or transaction constituting the violation are also liable jointly and severally with and to the same extent as such person, unless the person who is so liable sustains the burden of proof that he did not know, and in exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist.   There shall be contribution as in cases of contract among the several persons so liable.”   The plaintiffs contend that they do not need to establish control liability, because the third amended complaint makes clear that the defendants accomplished their material assistance of the Maxam defendants' CUSA violations through their own individual conduct—or to the extent that the conduct was mediated through the actions of other entities, such conduct was undertaken through the Fairfield Greenwich Group entities that they controlled.   The plaintiffs contend that their CUSA counts are sufficient, because they allege that Noel and Tucker rendered material assistance to a primary CUSA violation committed by the Maxam defendants, and that they are stating an aiding and abetting claim, as opposed to a control liability claim.   The plaintiffs are correct in their assessment of the law on this point.   As stated by our Supreme Court, “[§ 36b–29](c) expressly creates two types of secondary liability for securities fraud:  control person liability;  and aiding and abetting liability.”  Connecticut National Bank v. Giacomi, supra, 242 Conn. 61.   Consequently, in light of the remedial purposes of CUSA recognized by the Supreme Court in Giacomi, Id., 66–67, and the court's determination that the plaintiffs have adequately stated a cause of action for aiding and abetting liability under CUSA, the plaintiffs do not have to also allege a control liability claim to survive this motion.   Accordingly, Noel and Tucker's motion to strike counts four and five is denied.

Civil Conspiracy

Count twenty-one of the third amended complaint alleges a claim for civil conspiracy.   Noel and Tucker move to strike this count on the grounds that the plaintiffs:  (1) do not allege an agreement to induce fraudulently the plaintiffs' purchase of limited partnership interests from the Maxam Fund;  (2) do not allege any conduct on the part of Noel and Tucker in furtherance of the fraudulent agreement and (3) fail to allege an agreement as to the actual misconduct committed by Madoff.   Noel and Tucker argue that in order to state a legally cognizable civil conspiracy claim, there must be an agreement between Noel and Tucker and the Maxam defendants to commit a tort against the plaintiffs.   Noel and Tucker further contend that the plaintiffs fail to allege that there was an agreement between themselves and Madoff, because Noel and Tucker believed that Madoff was engaged in front-running, as opposed to a Ponzi scheme.   As a result, Noel and Tucker argue that they could not have formed a conspiracy with Madoff, because they did not agree on the same objective.

The plaintiffs respond that it is not necessary to allege that all of the participants in a conspiracy made a specific agreement with all of the other parties in the conspiracy, or that they even be aware of all of the members of the conspiracy.   In support of this contention, the plaintiffs cite a number of criminal law cases from the Second Circuit Court of Appeals.   Moreover, the plaintiffs contend that their allegations support a conspiracy claim in that the defendants Noel and Tucker were aware of the part they played along with the Maxam defendants in the overall success of the effort to solicit investments in hedge funds feeding money to Madoff.   The plaintiffs have clearly alleged that the feeder fund defendants engaged in a conspiracy among themselves and with Madoff to solicit and funnel investor monies to Madoff by the use of fraudulent representations and omissions, with the goal of earning millions of dollars in management fees for both Madoff and the Feeder Fund defendants.   The plaintiffs contend that it is not necessary for them to allege that Noel and Tucker intended to conspire to induce a particular victim to purchase the securities at issue, because the plaintiff Plans in this case were clearly within the class of investors that was the intended target of the conspiracy.   Additionally, the plaintiffs argue that Noel and Tucker's contention that their conspiracy claim is insufficient because they fail to allege an agreement as to the particular form of fraud committed by Madoff is without merit.   This is because the object of the conspiracy was to solicit and funnel investor monies to Madoff, with the goal of obtaining millions of dollars of (unearned) management fees.   The plaintiffs contend that the tortious conduct in furtherance of the conspiracy was the repeated use of fraudulent representations and omissions, which wrongfully induced investors such as the plaintiffs to believe that Madoff's claimed returns were legitimate, when the conspirators knew that they were not.

Noel and Tucker characterize the plaintiffs' argument as a “hub-and-spoke” or “wheel” conspiracy, one in which Noel and Tucker shared a common agreement with Madoff at the center.   Noel and Tucker contend that the plaintiffs' conspiracy theory is defective because of a lack of common agreement between the alleged participants.  “Pursuant to Connecticut's jurisprudence, there is, precisely speaking, no independent claim for civil conspiracy.   Rather, [t]he action is for damages caused by acts committed pursuant to a formed conspiracy rather than by the conspiracy itself ․ [T]he purpose of a civil conspiracy claim is to impose civil liability for damages on those who agree to join in a tortfeasor's conduct and, thereby, become liable for the ensuing damage, simply by virtue of their agreement to engage in the wrongdoing.”  (Citation omitted;  internal quotation marks omitted.)  Chapman Lumber, Inc. v. Tager, 288 Conn. 69, 100–01, 945 A.2d 1 (2008).  “Thus, to state a cause of action, a claim of civil conspiracy must be joined with an allegation of a substantive tort ․ [T]he essence of a civil conspiracy ․ [is] two or more persons acting together to achieve a shared goal that results in injury to another.”   (Citation omitted;  internal quotation marks omitted.)  Macomber v. Travelers Property & Casualty Corp., 277 Conn. 617, 636, 894 A.2d 240 (2006).   “The [elements] of a civil action for conspiracy are:  (1) a combination between two or more persons, (2) to do a criminal or an unlawful act or a lawful act by criminal or unlawful means, (3) an act done by one or more of the conspirators pursuant to the scheme and in furtherance of the object, (4) which act results in damage to the plaintiff.”  (Internal quotation marks omitted.)   Chapman Lumber, Inc. v. Tager, supra, 100 n.34.

At the outset, the basic flaw in the defendants' argument should be noted.   The fact that the plaintiffs do not allege that these defendants themselves committed a specific act in furtherance of the conspiracy is not a sufficient reason to grant a motion to strike.   Under Connecticut law, it is not necessary for each and every co-conspirator to themselves commit an overt act in furtherance of the conspiracy, because “all conspirators are civilly liable for the damage resulting from any overt act committed by one of them pursuant to the combination.”  (Internal quotation marks omitted.)  Biro v. Hirsch, 62 Conn.App. 11, 17, 771 A.2d 129, cert. denied, 256 Conn. 908, 772 A.2d 601 (2001).   To be a member of a conspiracy, it is the intent to agree that must be alleged by all members, but all members need not be alleged to have committed an overt act themselves.   Consequently, so long as one of the co-conspirators committed an overt act in furtherance of the conspiracy, then the defendants Noel and Tucker could be held liable under a conspiracy theory.

The remaining question is whether Noel and Tucker's other two grounds in support of their motion to strike the conspiracy count are meritorious.   In count twenty-one, the plaintiffs simply incorporate most of the factual allegations from the rest of the complaint, and then allege that “[t]he defendants combined together, and with Bernard L. Madoff, to commit the wrongful conduct described herein, causing plaintiffs to sustain the economic losses described herein.   Consequently, it is somewhat difficult to determine the precise scope of the plaintiffs' conspiracy allegations.   Nevertheless, in paragraph 132 of count one, which is incorporated by reference into count twenty-one, the plaintiffs allege that “[t]he Fairfield Greenwich Group Defendants' conduct was undertaken in concert with Madoff and the other defendants in this action in order to further defendants' goal of obtaining corrupt monies through illegal investment management activities.”

If construed in a manner most favorable to the pleader and proven at trial, this allegation could lead a trier of fact to conclude that Noel and Tucker made an agreement with the Maxam defendants and Madoff to obtain money through illegal activities.   In other areas of the third amended complaint, the plaintiffs allege that the Maxam defendants solicited the plaintiffs to invest in the Maxam Fund through material misrepresentations, and that Noel and Tucker were aware of the conduct of the Maxam defendants.   In ruling on a motion to strike, these allegations are sufficient to maintain a civil conspiracy claim, as the plaintiffs have set forth all of the basic elements for a civil conspiracy cause of action as articulated by our Supreme Court.   Noel and Tucker advance intricate arguments that such a conspiracy was impossible, because these defendants could not have possibly agreed to the same scheme.   These claims may very well prove persuasive at trial, but such arguments are more appropriate in the context of a motion for summary judgment, when the court can evaluate all of the parties' evidence after discovery is completed.   When ruling on a motion to strike, however, the court is limited to allegations of the pleadings, which must be accepted as true.   The law of conspiracy provides that an agreement can be inferred from the acts of individuals.   Because the plaintiffs have alleged the necessary elements to maintain a civil conspiracy claim, the motion to strike that cause of action must therefore be denied.

Aiding and Abetting Liability

Next, Noel and Tucker move to strike counts ten, eleven, sixteen and seventeen that allege aiding and abetting liability on the grounds that:  (1) the plaintiffs do not allege that Noel and Tucker either knew of Madoff's Ponzi scheme or the Maxam defendants' alleged fraudulent inducement;  (2) the plaintiffs do not allege that Noel and Tucker breached a duty owned to the plaintiffs;  (3) the plaintiffs do not allege that Noel and Tucker substantially assisted the Maxam defendants;  and (4) the alleged conduct by Noel and Tucker did not proximately cause the plaintiffs' alleged harms.   At the outset, the court notes that two of these grounds have already been addressed in substance in earlier portions of this memorandum of decision.   Although the previous version of the complaint may not have directly alleged that Noel and Tucker had knowledge of Madoff's scheme and the actions taken by the Maxam defendants, the plaintiffs now explicitly allege that Noel and Tucker “knew that Madoff was acting in breach of his duty to persons who retained him as their investment manager and that the other Feeder Fund Defendants were acting in breach of their duty to persons who invested in Feeder Funds operated by the Feeder Fund defendants” and that “Noel and Tucker knew that other feeder funds, including the Maxam Defendants, were selling limited partnership interests in hedge funds placing money with Madoff and further knew that in order for defendants' criminal scheme to succeed it was necessary that other feeder funds, including the Maxam Defendants, be able to sell such limited partnership interests in hedge funds placing money with Madoff.”   Consequently, the plaintiffs have alleged knowledge of the actions of the primary offenders that is sufficient to survive a motion to strike.   Additionally, as described in the discussion of CUSA, the plaintiffs do allege that Noel and Tucker “substantially assisted” the Maxam defendants.   Accordingly, the court need only address the remaining two grounds raised by the defendants.

“The Connecticut Supreme Court recognized a civil cause of action for aiding and abetting in Carney v. DeWees, 136 Conn. 256, 262, 70 A.2d 142 (1949).   Today, liability for this cause of action is based on the principle[s] articulated in section 876 of the Restatement (Second) of Torts (1979) ․” Katcher v. 3V Capital Partners, LP, Superior Court, complex litigation docket at Stamford, Docket No. X05 CV 08 5008383 (February 1, 2011, Blawie, J.), citing, Connecticut National Bank v. Giacomi, supra, 242 Conn. 63.   This section of the Restatement (Second) of Torts provides:  “For harms resulting to a third person from the tortious conduct of another, one is subject to liability if he ․ (a) does a tortious act in concert with the other or pursuant to a common design with him, or ․ (b) knows that the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself, or ․ (c) gives substantial assistance to the other in accomplishing a tortious result and his own conduct, separately considered, constitutes a breach of duty to the third person.”   As further stated by our Supreme Court, “[a]iding-abetting includes the following elements:  (1) the party whom the defendant aids must perform a wrongful act that causes an injury;  (2) the defendant must be generally aware of his role as part of an overall illegal or tortious activity at the time that he provides the assistance;  (3) the defendant must knowingly and substantially assist the principal violation ․” (Internal quotation marks omitted.)  Efthimiou v. Smith, 268 Conn. 499, 505, 846 A.2d 222 (2004).   In order to be legally sufficient under Connecticut law, an aiding and abetting claim must be based upon a valid underlying cause of action.  Marshak v. Marshak, 226 Conn. 652, 668, 628 A.2d 964 (1993).

With respect to whether the plaintiffs need to allege that Noel and Tucker breached an independent duty owed to the plaintiffs in order to state a claim for aiding and abetting, the plaintiffs argue in opposition to the motion to strike that they do not need to allege such a duty, because only § 876(c) has such a requirement.   The plaintiffs contend that they are bringing their aiding and abetting claims pursuant to § 876(b), not § 876(c).  In their reply memorandum, Noel and Tucker contend that with this argument the “[p]laintiffs continue their shell game with § 876(b) of the Restatement.   The Complaint contains no reference to § 876(b) of the Restatement.   Moreover, the plaintiffs' appellate papers argue that their dismissed aiding and abetting claims were based on § 876(c), which expressly requires breach of an independent duty.”   Noel and Tucker further argue that any claim brought under § 876(b) of the Restatement (Second) would be “defective,” because the plaintiffs failed to allege any facts establishing that Noel and Tucker had actual knowledge that the Maxam defendants owed a duty to the plaintiffs, and breached that duty.

According to the plain language of the Restatement (Second), only § 876(c) requires that the alleged aider and abettor have an independent legal duty to the plaintiffs.   Significantly, there is no similar mandate found in § 876(b).  See, e.g., Federico v. Maric, 224 Ariz. 34, 36, 226 P.3d 403 (2010) (stating that “Arizona recognizes aiding and abetting as embodied in Restatement § 876(b), that a person who aids and abets a tortfeasor is himself liable for the resulting harm to a third person ․ [A]iding and abetting liability does not require the existence of, nor does it create, a pre-existing duty of care ․ Rather, aiding and abetting liability is based on proof of a scienter ․ the defendants must know that the conduct they are aiding and abetting is a tort”).   Although the third amended complaint may not precisely identify under which subsection of § 876 of the Restatement (Second) that the plaintiffs are proceeding, § 876 is clearly written in the disjunctive.   Therefore, the plaintiffs can state a legally cognizable aiding and abetting cause of action under any of these three subsections.   Moreover, even though the plaintiffs' brief on their appeal of the court's earlier ruling may have indicated a reliance upon § 876(c) in the initial complaint, there is nothing that prevents the plaintiffs from slightly changing their legal theory, especially away from one whose defects are now apparent, and alleging a cause of action grounded in § 876(b) in the third amended complaint.¹⁷  Additionally, even though the defendants' argument that the plaintiffs do not allege that Noel and Tucker had actual knowledge that the Maxam defendants owed and breached a duty to the plaintiffs might have some merit, this argument was only initially raised in the defendants' reply memorandum.   It is not listed as one of the multitude of grounds in their motion to strike.   Under Connecticut procedure, it is inappropriate for a trial court to grant a motion to strike on a ground that is not stated on the face of the motion.   See Blancato v. Feldspar Corp., 203 Conn. 34, 44, 522 A.2d 1235 (1987) (stating that the Connecticut Supreme Court “will not uphold the granting of [a] motion to strike on a ground not alleged in the motion nor relied upon by the trial court”).   Consequently, the court should not consider this argument, and, as a result, Noel and Tucker cannot succeed on their contention that the plaintiffs' aiding and abetting claims are legally insufficient under § 876(b) of the Restatement (Second) of Torts.

Finally, Noel and Tucker move to strike the aiding and abetting counts on the ground that they are not the proximate cause of the harm allegedly suffered by the plaintiffs.   Noel and Tucker argue that the theft of the plaintiffs' money by Madoff was not “reasonably foreseeable” or within the “scope of risk” created by their alleged conduct.   In their memorandum of law, Noel and Tucker note that the plaintiffs allege that the defendants believed that Madoff was engaged in front-running, whereas he was actually conducting a Ponzi scheme.   Noel and Tucker contend that front-running is not the same general type of conduct as theft and does not present the same risks.   As a result, they claim that the harms experienced by the plaintiffs were not reasonably foreseeable.   Furthermore, Noel and Tucker argue that the class of potential victims was different, because had Madoff actually been engaged in front-running, the plaintiffs' alleged losses would have occurred, regardless of any acts alleged on the part of Noel and Tucker.   In response, the plaintiffs argue that their losses are within the scope of the risk created by Noel and Tucker, because they assisted the Maxam defendants' fraudulent inducement of the plaintiffs' investments in Maxam/Madoff related hedge funds by knowingly making false statements regarding Madoff's claimed investment returns.   The plaintiffs argue that it was certainly reasonably foreseeable that they would experience harm as the result of Noel and Tucker's actions.   Additionally, the plaintiffs contend that they would not have invested with the Maxam defendants but for the representations made by Noel and Tucker, because the two men created a “critical mass of favorable press” that was integral to the plaintiffs' decision to invest with the Maxam defendants.

Under Connecticut law, “[a] plaintiff must establish that the defendant's conduct legally caused the injuries ․ The first component of legal cause is causation in fact.   Causation in fact is the purest legal application of ․ legal cause.   The test for cause in fact is, simply, would the injury have occurred were it not for the actor's conduct ․ The second component of legal cause is proximate cause ․ [T]he test of proximate cause is whether the defendant's conduct is a substantial factor in bringing about the plaintiff's injuries ․ Further, it is the plaintiff who bears the burden to prove an unbroken sequence of events that tied his injuries to the [defendants' conduct] ․ The existence of the proximate cause of an injury is determined by looking from the injury to the negligent act complained of for the necessary causal connection ․ This causal connection must be based upon more than conjecture and surmise.”  (Internal quotation marks omitted.)  O'Donnell v. Feneque, 120 Conn.App. 167, 172, 991 A.2d 643, cert. denied, 297 Conn. 909, 995 A.2d 637 (2010).

In the specific context of aiding and abetting claims, courts have held that although “[a]n aiding-and-abetting claim requires proof of a causal connection between the defendant's assistance or encouragement and the primary tortfeasor's commission of the tort ․ ‘but for’ causation is not required ․ The test is whether the assistance makes it ‘easier’ for the violation to occur, not whether the assistance was necessary.”  (Citation omitted;  internal quotation marks omitted.)  Security Title Agency, Inc. v. Pope, 219 Ariz. 480, 491, 200 P.2d 977 (2008),¹⁸ citing Restatement (Second) of Torts § 876 comment d, which states:  “If the encouragement or assistance is a substantial factor in causing the resulting tort, the one giving it is himself a tortfeasor and is responsible for the consequences of the other's act.”   “There is some debate about whether proximate cause and substantial assistance ought to be equated in the aiding and abetting context ․ A person can make a meaningful contribution to a fraudulent scheme without being understood to have legally caused the scheme or its results ․ Nevertheless ․ the Second Circuit has utilized the proximate cause standard in the context of aiding and abetting securities fraud.”  (Citations omitted;  internal quotation marks omitted.)  Fraternity Fund, Ltd. v. Beacon Hill Asset Management, LLC, 479 F.Sup.2d 349, 371 n.113 (S.D.N.Y.2007).

As both Connecticut and Second Circuit law require the plaintiffs to demonstrate proximate cause, the court will also do the same.   Despite this, it is important to note that “[a]n issue of proximate cause is ordinarily a question of fact for the trier ․ It becomes a conclusion of law only when the mind of a fair and reasonable [person] could reach only one conclusion ․” (Citation omitted;  internal quotation marks omitted.)  B & D Associates, Inc. v. Russell, 73 Conn.App. 66, 77, 807 A.2d 1001 (2002).   Consequently, it is sufficient for the plaintiffs to allege facts indicating proximate cause in order to survive a motion to strike.   See, e.g., Petronio v. Bunch, Superior Court, judicial district of New Britain, Docket No. CV 01 0509130 (April 23, 2002, Wiese, J.) (32 Conn. L. Rptr. 156, 157) (stating that “[w]hether the plaintiff can ultimately establish through evidence proximate cause is a question of fact not appropriately decided on a motion to strike”).

In the aiding and abetting counts, the plaintiffs allege that their “lost investments, lost investment opportunities and losses from payment of unwarranted fees were caused by the fraudulent and illegal conduct of defendant [s] Noel [and Tucker] ․ acting in concert with and pursuant to a common design with Madoff, the other Feeder Fund Defendants and the Madoff Family Member Defendants and others.”   The third amended complaint outlines a chain of events where Noel and Tucker rendered substantial assistance to the Maxam defendants in that Noel and Tucker knew that Madoff and the Maxam defendants were engaged in unlawful solicitation of investments and “facilitate[ed] the concealment of their illegal conduct by promoting the success of investments with Madoff and Madoff Feeder Funds.”   If these factual allegations are accepted by the court as true, as they must be on a motion to strike, the plaintiffs have sustained their burden of demonstrating causation.   Whether the plaintiffs can ultimately connect the dots and make such a factual showing cannot be decided within the context of a motion to strike.   Such an argument is more appropriately addressed via a motion for summary judgment or during a trial before a finder of fact.   Noel and Tucker's motion to strike counts ten, eleven, sixteen and seventeen is denied.

Conclusion

While the court agrees with the defendants' observation in their brief that the allegations here are founded on the same common nucleus of operative facts as before, it cannot agree with their argument that these allegations are grounded in the same legal theories of recovery.   The defendant Manzke allegedly had a longstanding and ongoing pension consulting services relationship with the plaintiffs.   Pension funds require the application of the most prudent investment philosophies when fiduciaries do their due diligence and discharge their duty properly.   There was an alleged breach of that duty owed to the plaintiffs by Manzke and the Maxam defendants, and further allegations that tie the Fairfield Greenwich Group defendants into that breach, including allegations that they financially benefitted thereby.   The issue is not whether the claims have been recast;  they clearly have, but that does not necessarily render them, in the defendants' words, “spurious.”   It is their legal sufficiency as currently drafted, and whether they state claims upon which relief can be granted that is the standard.   While millions of dollars are at stake in this case, regardless of the dollar amount of damages sought, properly pleaded and actionable claims of secondary liability are not the same as improper derivative claims.

For the reasons stated herein, the defendants Walter M. Noel, Jr. and Jeffrey H. Tucker's combined motion to dismiss and motion to strike is DENIED.

IT IS SO ORDERED,

Blawie, J.

FOOTNOTES

FN2. A feeder fund is a hedge fund that invests in a “master fund.”   Self Regulatory Organizations Order Relating to Restrictions on the Purchases and Sales of Initial Public Offerings of Equity Securities, 68 Fed.Reg. 62, 126, 62, 130 (Oct. 24, 2003), available at http:// www.finra.org/web/groups/industry/@ip/@reg/ @rulfil/documents/rulefilings/p000159.pdf..  FN2. A feeder fund is a hedge fund that invests in a “master fund.”   Self Regulatory Organizations Order Relating to Restrictions on the Purchases and Sales of Initial Public Offerings of Equity Securities, 68 Fed.Reg. 62, 126, 62, 130 (Oct. 24, 2003), available at http:// www.finra.org/web/groups/industry/@ip/@reg/ @rulfil/documents/rulefilings/p000159.pdf.

FN3. The plaintiffs' original complaint named sixteen defendants.   Five of those defendants have been removed from the case, and a sixth, Mark Madoff, is now deceased.   Consequently, the remaining defendants in this matter are:  (1) Bernard L. Madoff, (2) Maxam Capital Management, LLC;  (3) Maxam Capital GP, LLC;  (4) Maxam Capital Management, Ltd.;  (5) Sandra L. Manzke;  (6) Walter M. Noel, Jr.;  (7) Jeffrey M. Tucker;  (8) Andres Piedrahita (9) Peter B. Madoff and (10) Andrew H. Madoff.   Bernard L. Madoff and Piedrahita are non-appearing defendants.   On April 13, 2009, the court received notice that an involuntary bankruptcy petition was filed against Bernard L. Madoff in the United States Bankruptcy Court for the Southern District of New York, and as a result, all proceedings against him have been stayed.   Furthermore, on February 25, 2011, this court was notified by the Bankruptcy Court that the claims brought against all of the Madoff defendants are stayed.   Two additional defendants were eventually added to this case on April 4, 2011.   They are Walker Manzke and April B. Manzke, as well as Sandra Manzke in her capacity as trustee of the Sandra L. Manzke revocable trust..  FN3. The plaintiffs' original complaint named sixteen defendants.   Five of those defendants have been removed from the case, and a sixth, Mark Madoff, is now deceased.   Consequently, the remaining defendants in this matter are:  (1) Bernard L. Madoff, (2) Maxam Capital Management, LLC;  (3) Maxam Capital GP, LLC;  (4) Maxam Capital Management, Ltd.;  (5) Sandra L. Manzke;  (6) Walter M. Noel, Jr.;  (7) Jeffrey M. Tucker;  (8) Andres Piedrahita (9) Peter B. Madoff and (10) Andrew H. Madoff.   Bernard L. Madoff and Piedrahita are non-appearing defendants.   On April 13, 2009, the court received notice that an involuntary bankruptcy petition was filed against Bernard L. Madoff in the United States Bankruptcy Court for the Southern District of New York, and as a result, all proceedings against him have been stayed.   Furthermore, on February 25, 2011, this court was notified by the Bankruptcy Court that the claims brought against all of the Madoff defendants are stayed.   Two additional defendants were eventually added to this case on April 4, 2011.   They are Walker Manzke and April B. Manzke, as well as Sandra Manzke in her capacity as trustee of the Sandra L. Manzke revocable trust.

FN4. As defined by the Financial Industry Regulatory Authority (FINRA), a market maker is a firm that maintains a firm bid and offer price in a given security by standing ready to buy or sell at publicly-quoted prices.   The NASDAQ stock market is a decentralized network of competitive market makers.   Market makers process orders for their own customers, and for other broker-dealers.   All NASDAQ securities are traded through market maker firms.   Market makers also will buy securities from issuers for resale to customers or other broker-dealers.   See FINRA, Glossary, http:// www.finra.org/Glossary..  FN4. As defined by the Financial Industry Regulatory Authority (FINRA), a market maker is a firm that maintains a firm bid and offer price in a given security by standing ready to buy or sell at publicly-quoted prices.   The NASDAQ stock market is a decentralized network of competitive market makers.   Market makers process orders for their own customers, and for other broker-dealers.   All NASDAQ securities are traded through market maker firms.   Market makers also will buy securities from issuers for resale to customers or other broker-dealers.   See FINRA, Glossary, http:// www.finra.org/Glossary.

FN5. Tremont Partners, Inc. was originally named as party defendant, but it has been removed..  FN5. Tremont Partners, Inc. was originally named as party defendant, but it has been removed.

FN6. Piedrahita is a non-appearing defendant..  FN6. Piedrahita is a non-appearing defendant.

FN7. The defendants state that Fairfield Greenwich Group is not an entity, but rather the marketing name for Fairfield Greenwich Limited, and its affiliate companies worldwide..  FN7. The defendants state that Fairfield Greenwich Group is not an entity, but rather the marketing name for Fairfield Greenwich Limited, and its affiliate companies worldwide.

FN8. The plaintiffs' conspiracy count as to all defendants is number twenty-four in the complaint (# 233).   It has been moved to count twenty-one in the third amended complaint (# 269)..  FN8. The plaintiffs' conspiracy count as to all defendants is number twenty-four in the complaint (# 233).   It has been moved to count twenty-one in the third amended complaint (# 269).

FN9. Practice Book § 10–60 provides in relevant part:  “a party may amend his or her pleadings ․ at any time ․ in the following manner:(1) By order of judicial authority;  or(2) By written consent of the adverse party;  or(3) By filing a request for leave to file such amendment, with the amendment appended, after service upon each party as provided in Sections 10–12 through 10–17, and with proof of service endorsed thereon.   If no objection thereto has been filed by any party within fifteen days from the date of the filing of said request, the amendment shall be deemed to have been filed by consent of the adverse party ․.  FN9. Practice Book § 10–60 provides in relevant part:  “a party may amend his or her pleadings ․ at any time ․ in the following manner:(1) By order of judicial authority;  or(2) By written consent of the adverse party;  or(3) By filing a request for leave to file such amendment, with the amendment appended, after service upon each party as provided in Sections 10–12 through 10–17, and with proof of service endorsed thereon.   If no objection thereto has been filed by any party within fifteen days from the date of the filing of said request, the amendment shall be deemed to have been filed by consent of the adverse party ․

FN10. For the sake of investors and investment advisors alike, both plaintiffs and defendants, Madoff-related litigation should not become the twenty-first century version of what Charles Dickens, a former court reporter, condemned in his savage portrayal of the old English Courts of Chancery.   That was the venue for interminable legal proceedings which were memorably described in the novel Bleak House, and the fictional case of Jarndyce and Jarndyce.   Moreover, counsel for the defendants themselves explicitly recognized the desirability of saving litigation time and expense by noting in their brief the plaintiffs' agreement to allow the defendants to combine their motion to dismiss with their motion to strike..  FN10. For the sake of investors and investment advisors alike, both plaintiffs and defendants, Madoff-related litigation should not become the twenty-first century version of what Charles Dickens, a former court reporter, condemned in his savage portrayal of the old English Courts of Chancery.   That was the venue for interminable legal proceedings which were memorably described in the novel Bleak House, and the fictional case of Jarndyce and Jarndyce.   Moreover, counsel for the defendants themselves explicitly recognized the desirability of saving litigation time and expense by noting in their brief the plaintiffs' agreement to allow the defendants to combine their motion to dismiss with their motion to strike.

FN11. Fairfield Sentry was allegedly a feeder fund, a limited partnership hedge fund created, marketed and sold by the Fairfield Greenwich Group that invested directly or indirectly with Madoff..  FN11. Fairfield Sentry was allegedly a feeder fund, a limited partnership hedge fund created, marketed and sold by the Fairfield Greenwich Group that invested directly or indirectly with Madoff.

FN12. While an additional count, number twenty-two in complaint (# 233) had stated a cause of action under CUTPA against both Noel and Tucker, the plaintiffs have withdrawn this specific claim, and all CUTPA counts have been removed from the third amended complaint.   Consequently, the court will not reach the merits of any CUTPA claims..  FN12. While an additional count, number twenty-two in complaint (# 233) had stated a cause of action under CUTPA against both Noel and Tucker, the plaintiffs have withdrawn this specific claim, and all CUTPA counts have been removed from the third amended complaint.   Consequently, the court will not reach the merits of any CUTPA claims.

FN13. When ruling on the first motion to dismiss, the parties agreed that the court should analyze the issue of the plaintiffs' standing under Delaware law, because the Maxam Fund is a Delaware limited partnership.   Although the application of Delaware law could lead to the conclusion that the plaintiffs cannot maintain their CUSA claim because it is based on a Connecticut statute, this court has previously ruled that due to the broad language of the buyers' remedies enshrined in § 36b–29i, it will not bar a CUSA claim even though the law of another state may be applicable to other aspects of the case.   See Pursuit Partners, LLC v. UBS AG, Superior Court, complex litigation docket at Stamford, Docket No. X05 CV 08 4013452 (September 8, 2009, Blawie, J.) (48 Conn. L. Rptr. 557).   Moreover, as noted by the Appellate Court in its decision on the first motion to dismiss, “[r]egardless of the appropriate choice of law, the parties also agree that Connecticut law and Delaware law as to this issue are substantially the same.”  Retirement Fund for Employees of the Town of Fairfield v. Madoff, supra, 130 Conn.App. 717 n.8. Consequently, any dispute over whether the court should apply Delaware or Connecticut law to determine the plaintiffs' standing is largely academic..  FN13. When ruling on the first motion to dismiss, the parties agreed that the court should analyze the issue of the plaintiffs' standing under Delaware law, because the Maxam Fund is a Delaware limited partnership.   Although the application of Delaware law could lead to the conclusion that the plaintiffs cannot maintain their CUSA claim because it is based on a Connecticut statute, this court has previously ruled that due to the broad language of the buyers' remedies enshrined in § 36b–29i, it will not bar a CUSA claim even though the law of another state may be applicable to other aspects of the case.   See Pursuit Partners, LLC v. UBS AG, Superior Court, complex litigation docket at Stamford, Docket No. X05 CV 08 4013452 (September 8, 2009, Blawie, J.) (48 Conn. L. Rptr. 557).   Moreover, as noted by the Appellate Court in its decision on the first motion to dismiss, “[r]egardless of the appropriate choice of law, the parties also agree that Connecticut law and Delaware law as to this issue are substantially the same.”  Retirement Fund for Employees of the Town of Fairfield v. Madoff, supra, 130 Conn.App. 717 n.8. Consequently, any dispute over whether the court should apply Delaware or Connecticut law to determine the plaintiffs' standing is largely academic.

FN14. Specifically, counts ten and eleven allege “concerted action to commit theft and aiding and abetting theft” and counts sixteen and seventeen allege “aiding and abetting fraudulent inducement,” respectively.   Count twenty-one is the plaintiffs' conspiracy cause of action..  FN14. Specifically, counts ten and eleven allege “concerted action to commit theft and aiding and abetting theft” and counts sixteen and seventeen allege “aiding and abetting fraudulent inducement,” respectively.   Count twenty-one is the plaintiffs' conspiracy cause of action.

FN15. Notably, although Noel and Tucker argue that the plaintiffs' conspiracy claim should be dismissed pursuant to the doctrines of collateral estoppel and the law of the case, they do not argue that the plaintiffs lack standing to sue them for conspiracy.   Consequently, the court will not reach such arguments..  FN15. Notably, although Noel and Tucker argue that the plaintiffs' conspiracy claim should be dismissed pursuant to the doctrines of collateral estoppel and the law of the case, they do not argue that the plaintiffs lack standing to sue them for conspiracy.   Consequently, the court will not reach such arguments.

FN16. When the Supreme Court decided Giacomi, it was interpreting an earlier version of § 36b–29 that was codified as General Statutes (Rev. to 1993) § 36–498.   CUSA was moved to its current chapter in 1995, but despite this change in number and some other changes to CUSA, this court sees no reason to question the continued validity of the holding in Giacomi..  FN16. When the Supreme Court decided Giacomi, it was interpreting an earlier version of § 36b–29 that was codified as General Statutes (Rev. to 1993) § 36–498.   CUSA was moved to its current chapter in 1995, but despite this change in number and some other changes to CUSA, this court sees no reason to question the continued validity of the holding in Giacomi.

FN17. Additionally, although the plaintiffs may have argued in their appellate briefs that they had alleged a conspiracy cause of action in their initial complaint, that in fact was not the interpretation or understanding of the court, either at the trial level or the Appellate Court.   See Retirement Program for the Employees of the Town of Fairfield v. Madoff, supra, Superior Court, Docket No. X05 CV 09 5011651 n.19, and Retirement Program for the Employees of the Town of Fairfield v. Madoff, supra, 130 Conn.App. 718 n.10..  FN17. Additionally, although the plaintiffs may have argued in their appellate briefs that they had alleged a conspiracy cause of action in their initial complaint, that in fact was not the interpretation or understanding of the court, either at the trial level or the Appellate Court.   See Retirement Program for the Employees of the Town of Fairfield v. Madoff, supra, Superior Court, Docket No. X05 CV 09 5011651 n.19, and Retirement Program for the Employees of the Town of Fairfield v. Madoff, supra, 130 Conn.App. 718 n.10.

FN18. The Arizona Supreme Court declined to review the Arizona Court of Appeals' decision in Security Title Agency, Inc. via an unpublished decision dated January 6, 2009..  FN18. The Arizona Supreme Court declined to review the Arizona Court of Appeals' decision in Security Title Agency, Inc. via an unpublished decision dated January 6, 2009.

Blawie, John F., J.