Matthew Kinell, Guardian of the Estate of Sebastian Marocola a Minor v. Citizens Bank (2015)

MEMORANDUM OF DECISION ON MOTION TO STRIKE # 106

Count three of the plaintiff's July 25, 2014 revised complaint asserts a cause of action for breach of fiduciary duty against the defendant, Citizens Bank. The defendant moves to strike count three.   On September 9, 2014, the plaintiff objected and attached an exhibit A.¹ The defendant filed a reply memorandum on September 11, 2014.   On October 8, 2014, the plaintiff filed a supplement to the plaintiff's objection to the motion to strike.

FACTS

The plaintiff initiated the present action against the defendant in connection with the unauthorized withdrawal of large sums of money from a restricted access account established with the defendant for the benefit of a minor child.   The sole count presently at issue, count three of the revised complaint,² alleges the following facts:  On October 27, 2013 the plaintiff was appointed by the Niantic Regional Probate Court to act as successor guardian of the estate of Sebastian Marocola (minor child).   Some years earlier, Lynn Marocola, the prior guardian of the minor child's estate, was authorized by the Probate Court to compromise a personal injury action in favor of the minor child's estate in the amount of $117,000.56.  “In said order, the Probate Court dispensed with the requirement of a bond and ordered the minor child's share [of the tort recovery] in the amount of $76,458.22 to be held in a restricted assets account.”   On October 16, 2007, the defendant entered into an “Authorization and Agreement RE Restriction on Assets” (the restriction agreement, see footnote 1) by and through its authorized agent, with the Probate Court and Lynn Marocola, the then guardian of the minor child's estate, wherein the defendant agreed to the following:  “a) to create a restricted account for the minor child;  and b) that no withdrawals shall be permitted from the account except by decree of the Probate Court;  and c) interest and dividends shall be retained in said restricted account.”   Allegedly the defendant did not set up the restricted account and instead, allowed, permitted, and/or authorized the prior guardian to remove all of the funds without approval from the Probate Court.  “Between October 2007 and March 2011, the defendant processed unauthorized transactions of funds rightfully belonging to the minor child in an amount in excess of $76,000.00.”   When the account was closed in March 2011, there was a negative balance of $94.77.

The plaintiff asserts that by accepting the request to create an account, subject to the Probate Court orders and signing the restrictive account agreement and returning the same to the Probate Court, the defendant created a fiduciary relationship with the minor child “to retain the money in a restricted account and not allow any withdrawals without authorization from the Probate Court(.)” and through its actions allowing such unauthorized withdrawals, the defendant breached its fiduciary duty harming the plaintiff.

LEGAL STANDARDS

“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).  “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.)   Simms v. Seaman, 308 Conn. 523, 529, 69 A.3d 880 (2012).

“[I]t 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 ․ The role of the trial court in ruling on a motion to strike is to examine the [complaint], construed in favor of the [plaintiff], to determine whether the [pleading party has] stated a legally sufficient cause of action.”  (Citation omitted;  internal quotation marks omitted.)  Coe v. Board of Education, 301 Conn. 112, 116–17, 19 A.3d 640 (2011).  “Moreover [the court notes] that [w]hat is necessarily implied [in an allegation] need not be expressly alleged.”   (Internal quotation marks omitted.)   Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, 295 Conn. 240, 252, 990 A.2d 206 (2010).   “[P]leadings are to be construed broadly and realistically, rather than narrowly and technically ․” (Internal quotation marks omitted.)  Downs v. Trias, 306 Conn. 81, 92, 49 A.3d 180 (2012).  “If any facts provable under the express and implied allegations in the plaintiff's complaint support a cause of action ․ the complaint is not vulnerable to a motion to strike.”  Bouchard v. People's Bank, 219 Conn. 465, 471, 594 A.2d 1 (1991);  see also Santorso v. Bristol Hospital, 308 Conn. 338, 349, 63 A.3d 940 (2013) (motion must be denied where provable facts support a cause of action).

The defendant moves to strike count three of the plaintiff's revised complaint because, as a matter of law, there can be no fiduciary duty between a bank and its depositors and therefore, none of the facts alleged in the revised complaint can support a cause of action for breach of fiduciary duty against the defendant.   The plaintiff counters in its objection to the motion to strike that the facts alleged in the revised complaint do support a cause of action for breach of fiduciary duty because of the defendant's voluntarily entering into a restrictive account agreement, with restrictions imposed by Probate Court order, and involving an account created for the benefit of a minor child distinguishes the instant relationship from the ordinary bank-depositor relationship.   Alternatively, the plaintiff argues that a motion to strike is not appropriate to challenge the existence of a fiduciary relationship because such relationship is fact determinative and discovery is necessary.   In its reply memorandum, the defendant asserts that the motion to strike is the proper vehicle to contest the legal sufficiency of the pleadings.

By way of the supplement to the plaintiff's objection to the motion to strike, the plaintiff offers Saint Bernard School of Montville, Inc. v. Bank of America, 312 Conn. 811, 95 A.3d 1063 (2014), in support of its objection.   The plaintiff argues that in Saint Bernard, the court recognized, in special circumstances, a fiduciary duty may be established between a depositor and a bank.   Plaintiff argues that the present case is an example of such special circumstances.

The defendant replies that the facts of the Saint Bernard case are inapplicable to the present case, and instead relies on Cappellino v. People's United Bank, Superior Court, judicial district of New Britain, Docket No. CV–09–6002124–S (October 13, 2010, Pittman, J.).   The movant is correct in analogizing between the instant matter and Cappellino.   Judge Pittman succinctly described the allegations:

The plaintiff Annette Cappellino and the defendant Peter Cappellino, Jr., were formerly coexecutors of the estate of their late mother Sue Ann Cappellino.   Pursuant to an order of the Probate Court of Southington, the defendant Peter Cappellino opened a restricted account for estate funds at Peoples United Bank. The terms of the account were that no funds were to be withdrawn without an order of the probate court approving the withdrawal of funds.   Unbeknownst to the plaintiff, her brother the defendant began to withdraw funds from the account without probate court approval until all of the funds in the account were depleted.

In Cappellino, the plaintiff sued, inter alia, the People's United Bank alleging breach of fiduciary duty.   Judge Pittman, citing Murphy v. Wakelee, 247 Conn. 396, 400, 721 A.2d 1181 (1998), held that although Connecticut recognizes a cause of action for breach of fiduciary duty, such a breach, when considering the shifting burden of proof described in Murphy v. Wakelee, supra, requires an allegation of fraud, self-dealing or conflict of interest.   “Although we have not expressly limited the application of these traditional principles of fiduciary duty to cases involving only fraud, self-dealing or conflict of interest, the cases in which we have invoked them have involved such deviations.”  (Emphasis in original.)  Id., 400.   However, this court believes that Murphy v. Wakelee, supra, 397, addressed the issue of “whether, when breach of a fiduciary duty has been alleged, the burden to prove fair dealing by clear and convincing evidence shifts to the defendant in cases that do not involve claims of fraud, self-dealing or conflict of interest.   We conclude that unless the allegation involves such claims, the burden does not shift.”   Implicitly the Court recognized that a cause of action for breach of fiduciary duty not involving claims of fraud, self-dealing or conflict of interest, however that action would not cause the shift in the burden of proof described in Murphy.   There is no claim of fraud, self-dealing or conflict of interest alleged in the instant case, and hence no burden of proof shifting will occur consistent with Murphy, however the fiduciary duty may be breached by other than fraud, self-dealing or conflict of interest.

“[A] fiduciary or confidential relationship is characterized by a unique degree of trust and confidence between the parties, one of whom has superior knowledge, skill or expertise and is under a duty to represent the interests of the other.”  (Emphasis in original;  internal quotation marks omitted.)   Biller Associates v. Peterken, 269 Conn. 716, 723, 849 A.2d 847 (2004).   Here the relationship between the bank and the estate of the minor child is characterized by a unique degree of trust and confidence as the bank had agreed, in writing, to comply with the Probate Court order restricting withdrawals from the estate's account and the Probate Court, in reliance upon that agreement, waived the necessity of the guardian obtaining, and expending estate funds to purchase, a fiduciary bond sufficient to protect the interests estate of the minor from defective performance by the guardian.   Clearly the bank had superior knowledge, skill and expertise with respect to the creation and maintenance estate's account and withdrawals therefrom.   Lastly the bank, by virtue of its voluntary and written agreement to abide by the order of the Probate Court regarding withdrawals of funds from the minor's account, had a duty to represent and protect the interests of the minor against any unauthorized withdrawals from the account that the bank maintained for the minor.  “Connecticut courts have specifically refused to define a fiduciary relationship in precise detail and in such a manner as to exclude new situations ․ Instead, a fiduciary relationship exists where there is justifiable trust confided on one side and a resulting superiority and influence on the other.”  (Citation omitted;  internal quotation marks omitted.)  Southbridge Associates v. Garofalo, 53 Conn.App. 11, 18, 728 A.2d 1114, cert. denied, 249 Conn. 919, 733 A.2d 229 (1999).  “In the seminal cases in which this court has recognized the existence of a fiduciary relationship, the fiduciary was either in a dominant position, thereby creating a relationship or dependency, or was under a specific duty to act for the benefit of another.”  Hi–Ho Tower, Inc. v. Com–Tronics, Inc., 255 Conn. 20, 38, 761 A.2d 1268 (2000).

“In the context of a claim between a depositor and a bank under the UCC, we conclude that it is appropriate to look to cases considering whether such parties have established a fiduciary or confidential relationship.   It is well settled, however, that [g]enerally there exists no fiduciary relationship merely by virtue of a borrower-lender relationship between a bank and its customer ․ The fact that a bank is indebted to its account holders for the amount of funds that they have deposited ․ imposes no special duty of care for the safekeeping of the funds on deposit ․ Accordingly, the plaintiff must assert and demonstrate additional circumstances that establish more than a bank-depositor relationship.”  (Citations omitted;  internal quotation marks omitted.)  Saint Bernard School of Montville, Inc. v. Bank of America, supra, 312 Conn. 836–37.  “The mere fact that an account holder has deposited funds into a bank does not automatically create a fiduciary relationship between the bank and the customer ․ In fact, such relationships rarely give rise to a fiduciary duty ․ A fiduciary duty may arise only in exceptional circumstances, such as when there is a long history of dealings between the parties and the bank acts as an advisor or when the bank gains the confidence of the account holder.”  (Internal quotation marks omitted.)   McGuire v. Hudson Valley Bank, N.A., Superior Court, judicial district of Stamford–Norwalk, Docket No. CV–13–6018303–S (November 20, 2013, Truglia, J.), citing Marino v. Bank of America, N.A., Superior Court, judicial district of Litchfield, Docket No. CV–07–5001571–S (July 11, 2007, Pickard, J.) (43 Conn. L. Rptr. 751, 752).

This court finds that here, the plaintiff has adequately pleaded exceptional circumstances beyond that of a typical bank-depositor relationship that adequately allege facts that, if proved, impose of a fiduciary duty of loyalty and honesty on the movant vis-a-vis the interests of the minor.   In Saint Bernard the Court instructs that determining whether a fiduciary duty exists between a bank and its customer should be decided on an individual, case-by-case basis and the plaintiff must assert and demonstrate additional circumstances that establish more than a bank-depositor relationship.   See Saint Bernard School of Montville v. Bank of America, supra, 312 Conn. 836–37.   The instant plaintiff has asserted facts that, if proved, demonstrate additional circumstances that establish more than a bank-depositor relationship.   See Ahern v. Kappalumakkel, 97 Conn.App. 189, 194, 903 A.2d 266 (2006) (“Our Supreme Court has chosen to maintain an imprecise definition of what constitutes a fiduciary relationship in order to ensure that the concept remains adaptable to new situations”).

The plaintiff has alleged that by voluntarily signing the account restriction required by the Probate Court for the protection of the minor child's estate, and by agreeing to open an account for the benefit of the minor child in accordance with such court orders, the bank created and assumed a fiduciary duty to the minor child.   In signing the account restriction and thereby agreeing to not allow withdrawals from the account without prior authorization from the probate court, the bank voluntarily undertook a specific duty to act for the benefit of the minor child's estate.   See Hi–Ho Tower, Inc. v. Com–Tronics, Inc., supra, 255 Conn. 38.   Further, by way of the bank's decision to willingly enter into an agreement which is not germane to a typical account holder relationship, the bank heightened the level of trust present between itself and the depositor.

The defendant's reliance on Cappellino v. People's United Bank, supra, Superior Court, Docket No. CV–09–6002124–S, a case decided in 2006, years before our Supreme Court issued the Saint Bernard decision, is misplaced.   Although Cappellino also involved a restrictive deposit contract, the Cappellino depositor was not a minor child.   The United States Court of Appeals for the Second Circuit and Connecticut courts, in assessing the existence of a fiduciary relationship, have placed significance on a party's status as a minor child.   See Martinelli v. Bridgeport Roman Catholic Diocesan Corp., 196 F.3d 409 (2d Cir.1999) (finding fiduciary relationship existed between fourteen-year-old minor and the diocese);  Ahern v. Kappalumakkel, supra, 97 Conn.App. 197 (attaching significance to whether a plaintiff is a minor in evaluating existence of fiduciary relationship in clergy-parishioner context);  Golek v. St. Mary's Hospital, Inc., Superior Court, judicial district of Waterbury, Docket No. CV–08–5008961–S (March 12, 2010, Eveleigh, J.) (noting the significance courts have placed on a plaintiff's status as a minor and declining to find a fiduciary relationship between a student and his teacher where the student was an adult participating in a residency program);  Doe v. Baker, Superior Court, judicial district of New Haven, Docket No. CV–99–0427137–S (January 10, 2000, Meadow, J.) (in denying the adult plaintiff's application for prejudgment remedy in action for breach of fiduciary duty, distinguished Martinelli on the grounds that the Martinelli plaintiff was “a minor child who entrusted his teachings and moral authority to the [d]iocese”);  DeCorso v. Watchtower Bible & Tract Society of New York, Inc., Superior Court, judicial district of Waterbury, Docket No. CV–98–0145296–S (October 16, 2000, Wiese, J.) (granting the defendant's motion to strike claim for breach of fiduciary duty holding that “because the present case does not involve a minor child, it does not involve a justifiable trust confided on one side and resulting superiority and influence on the other.”  [Internal quotation marks omitted.] )   While this court is unaware of a decision assessing a claim for breach of fiduciary duty between the estate of a minor child depositor and a bank, the significance of status as a minor in other contexts (student-teacher, clergy-parishioner) persuades this court to extend that status to the bank-depositor relationship.   The minority of a party is an important consideration when measuring the degree of dependence, reliance, trust and confidence placed in the other party in this bank-depositor relationship.   The complaint alleges here that the bank agreed “to create a restricted account for the minor child” and therefore, taking the allegations of the complaint as true;  Coe v. Board of Education, supra, 301 Conn. 116–17;  the bank implicitly had knowledge that the depositor was a minor when the deposit contract was entered into.

The allegations of this case show that the bank undertook a specific duty for the benefit of the minor child and allowed justifiable trust to be placed in it to protect funds for a minor who could not protect his own interests.   See Hi–Ho Tower, Inc. v. Com–Tronics, Inc., supra, 255 Conn. 41 (“The law will imply [fiduciary responsibilities] only where one party to a relationship is unable to fully protect its interests ․ and the unprotected party has placed its trust and confidence in the other.”  [Internal quotation marks omitted.] )   Therefore, the allegation that the bank voluntarily entered into a restrictive account agreement in accordance with the Probate Court orders and then ignored the restriction it acknowledged, when joined with the allegation that the account was in favor of a minor child, are sufficient to allege the fiduciary relationship existed between the parties.

ORDER

For the foregoing reasons, the court denies the motion to strike count three of the revised complaint.

Zemetis, J.

FOOTNOTES

FN1. A one-page document, Probate Court Form # PC–411 “AUTHORIZATION AND AGREEMENT RE RESTRICTION ON ASSETS,” In Re the Matter of Sebastian Marocola, wherein the Probate Court ordered that the fiduciary, Lynn Marocola, create a restricted account for the estate of Sebastian Marocola at Citizens Bank and further ordered:  “No withdrawals shall be permitted from the account(s) except by decree of this Court ․” The exhibit lists an account number and is signed by an “authorized agent” of the institution, dated October 16, 2007.   The document, just above the “authorized agent's” signature states, “This institution agrees that no withdrawals will be permitted, except as provided herein or upon future order of this Court.”.  FN1. A one-page document, Probate Court Form # PC–411 “AUTHORIZATION AND AGREEMENT RE RESTRICTION ON ASSETS,” In Re the Matter of Sebastian Marocola, wherein the Probate Court ordered that the fiduciary, Lynn Marocola, create a restricted account for the estate of Sebastian Marocola at Citizens Bank and further ordered:  “No withdrawals shall be permitted from the account(s) except by decree of this Court ․” The exhibit lists an account number and is signed by an “authorized agent” of the institution, dated October 16, 2007.   The document, just above the “authorized agent's” signature states, “This institution agrees that no withdrawals will be permitted, except as provided herein or upon future order of this Court.”

FN2. The revised complaint contains the following three counts:  1) unauthorized account transactions;  2) negligence;  and 3) breach of fiduciary duty..  FN2. The revised complaint contains the following three counts:  1) unauthorized account transactions;  2) negligence;  and 3) breach of fiduciary duty.

Zemetis, Terence A., J.