HAIGHT, Senior District Judge:
Plaintiff John Doe No. 1 (herein "Plaintiff") brings this action for damages arising from horrific sexual abuse he allegedly endured over a six-year period when he was a minor engaged in the activities of the Columbian Squires ("Squires"), the national youth program of defendant Knights of Columbus ("Defendant" or "KOC"). Specifically, Plaintiff alleges that he was sexually molested by Julian Rivera ("Rivera"), the adult leader assigned by KOC to supervise the Brownsville, Texas unit of the Squires, in which Plaintiff participated from 1978 to 1986.
Plaintiff's Complaint sets forth two counts: (1) negligence for KOC's alleged failure to ensure Plaintiff's safety and well being while he was in the custody and care of the Squires, particularly, inter alia, by failing in its duties of "placement, retention and supervision of Rivera as an adult leader," Doc. #1 (Complaint), ¶¶ 25-33; and (2) declaratory relief — a request for declaratory judgment that Plaintiff relied on the intentional, fraudulent misrepresentations of a KOC agent to execute the signature page later attached to the document entitled "Settlement Agreement and Full Release" ("Release"), rendering the Release void in that KOC procured it "by fraud," id., ¶¶ 34-42.
Pending before the Court is Defendant's motion to dismiss the Complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Doc. #17. Defendant sets forth three bases for dismissal: (1) Plaintiff's claim for negligence is barred by the Texas two-year statute of limitations; (2) Plaintiff fails to plead the required element of "foreseeability" to maintain a negligence action; and (3) Plaintiff fails to state a claim for fraud and misrepresentation with respect to Defendant's procurement of the Release in that (a) Plaintiff was not justified in relying on the alleged misrepresentations of KOC's agent when Plaintiff signed the Release, and (b) Plaintiff ratified the Release as a matter of law.
Also pending before the Court is Defendant's alternative motion to bifurcate pursuant to Federal Rule of Civil Procedure 42(b). Doc. #22. In that motion, Defendant requests "a separate trial" on each of the two counts set forth in Plaintiff's Complaint. Id., p. 1. KOC asserts that a preliminary trial of Plaintiff's declaratory relief claim, involving KOC's alleged fraud and misrepresentation in procuring the Release, should precede trial on his negligence claim. In support, KOC seeks a preliminary determination as to the validity of the Release because that determination: (1) would be "potentially dispositive," (2) may "save the Court and the parties valuable resources and time," and (3) would prevent KOC from suffering "unnecessary and undue prejudice" which would likely occur if the same jury determining the validity of the Release heard the "potentially graphic" evidence of sexual abuse Plaintiff will present with respect to his negligence claim. Doc. #23, p. 1-2.
The Court will first address Defendant's Motion to Dismiss to determine which, if any, of Plaintiff's actions states a valid claim upon which relief may be granted. Upon making this ruling, the Court will turn to Defendant's Motion to Bifurcate.
Plaintiff John Doe is an adult male resident of the State of Kansas who was born
Defendant KOC is a "Catholic fraternal benefit organization that was created as a social network intended to provide financial assistance to its members and engage in religious and charitable works." Id., ¶ 7. The president of KOC is known as the "Supreme Knight" and the organization is governed by a board of directors, known as the "Supreme Council." Id. Membership in KOC is open to men 18 years of age or older who are practicing Catholics committed to supporting the Catholic Church and improving their respective communities through "pro-life and youth activities." Id., ¶ 8. Since its inception in 1882 in New Haven, Connecticut, KOC has increased in size from several members, comprising one council, to more than 1.8 million members, constituting more than 14,000 councils throughout the United States and various other countries in the world. Doc. #18, p. 9-10. Each KOC council is directly subordinate, "under the direction and control," of the KOC headquarters in New Haven, Connecticut. Doc. #1, ¶ 9.
The Columbian Squires program, founded in 1925, is the official national youth program of KOC. Id., ¶ 10. The Columbian Squires recruit Catholic boys "between the ages of 10 and 18 who are committed to developing their leadership qualities and supporting the Roman Catholic Church." Id. Each Columbian Squires unit must operate within the structure and regulations of KOC. Id. Moreover, "[a]ccording to the [KOC] regulations, each Columbian Squires unit is overseen and supervised by at least one adult [KOC] member." Id.
In 1978, when Plaintiff was approximately ten years old, he was introduced to the Columbian Squires in Brownsville, Texas. Id., ¶ 11. Plaintiff alleges that between 1978 and 1986 he was subjected to "horrific child sexual abuse" by Juan "Julian" Rivera, who was appointed by KOC as adult leader of the Columbian Squires program in Brownsville, Texas. Id., ¶ 6. Plaintiff asserts that Rivera "actively solicited" him to join the Columbian Squires, "telling [Plaintiff] and his family that as a Squire, [Plaintiff] could do much to help people" and that "his involvement in the Squires would positively affect [Plaintiff's] growth and development as a person." Id., ¶ 11. According to Plaintiff, during his time as a Squire, Plaintiff was "groomed and sexually abused [by Rivera] at various locations throughout the United States," "including many local and national events for the Columbian Squires." Id., ¶¶ 6, 17.
In particular, during Plaintiff's first two years in the Squires, on at least ten occasions, Rivera allegedly provided Plaintiff with increasingly sexually graphic pornography to view with Rivera, including "graphic sexual depictions" of "homosexual activity." Id., ¶ 13. When Plaintiff was approximately twelve years old, Rivera allegedly took Plaintiff on an overnight trip and gave him "large amount[s] of whiskey and marijuana until [Plaintiff] became intoxicated and passed out."
Plaintiff maintains that over the next six years, Rivera continued "brutally and horrifically sexually abus[ing]" him. Id., ¶ 16. Plaintiff alleges that Rivera also continued issuing threats of bodily harm and death to Plaintiff and/or his family if Plaintiff spoke of Rivera's actions or refused to comply with his sexual demands.
Furthermore, according to Plaintiff, "[d]uring the years he was sexually abusing [Plaintiff], Rivera also bought him clothing, gave him money, took him out to dinners, and allowed him to drive Rivera's [motor] vehicle." Id., ¶ 18. In addition to such gifts, Rivera allegedly encouraged Plaintiff to date girls from school to prevent others from becoming suspicious about his own sexual activity with Plaintiff. Id.
With respect to locations of abuse, Plaintiff alleges that Rivera sexually abused him "in the local Knights of Columbus hall where the Columbian Squires met, as well as Rivera's office and apartment." Id., ¶ 17. Plaintiff also recounts that "[t]he horrible, nightmarish sexual abuse occurred at multiple locations in the United States on overnight trips, including many local and national events for the Columbian Squires." Id. During such trips, not only did Rivera allegedly give Plaintiff and other minor boys alcohol, he repeatedly took the intoxicated Plaintiff to a "hotel room to engage him in sexual contact." Id. Rivera also allegedly "shared" Plaintiff "with at least one other adult leader of the Columbian Squires in another city."
Having alleged frequent and pervasive activities of sexual abuse by Rivera and at least one other Columbian Squires leader, including activities within the Brownsville Squires unit and in the KOC hall, Plaintiff contends that KOC "was aware that adult leaders used the Columbian Squires to gain access to boys for purposes of pedophilia." Id., ¶ 21. Plaintiff further alleges that KOC "became familiar with the specific characteristics, patterns of behavior
Plaintiff ultimately left the Squires in Brownsville, Texas in approximately 1986 when he turned 18 years old.
In 2009, when plaintiff was forty-one years old, he informed KOC officials that he had been sexually abused by Rivera during Plaintiff's years as a Squire. Id., ¶ 23. Plaintiff was "contacted by chief legal counsel of the [KOC], the Supreme Advocate."
On December 23, 2009, a KOC agent and his wife met with Plaintiff.
Approximately one week later, Plaintiff "received a package in the mail with a copy of the document []he signed acknowledging receipt of the $200, along with an eight page document he had never seen before entitled `Settlement Agreement and Full Release.'"
Plaintiff filed the present action on December 14, 2010, in this Court. In his Complaint, he has set forth two claims against the KOC. Plaintiff's first count is a negligence action, alleging that KOC failed "to use reasonable care to ensure the safety, care, well being and health of the minor [Plaintiff] when he was under the care, custody or in the presence of the [KOC]." Doc. #1, ¶ 26. In conjunction with this duty of reasonable care, KOC allegedly failed in its duties of "placement, retention and supervision of Rivera as an adult leader" of the Squires. Id. In particular, KOC allegedly failed to protect Plaintiff from "sexual assault and lewd and lascivious acts committed by Rivera." Id., ¶ 27. Furthermore, "[a]t all relevant times, the [KOC] knew or in the exercise of reasonable care should have known that Rivera [possessed] the characteristics and behaviors of a person who would use the Columbian Squires as a means to gain access to boys for pedophilia, and that he was unfit, dangerous, and a threat to the health, safety and welfare of the minors entrusted to his counsel, care and protection." Id., ¶ 28.
In his second count, Plaintiff seeks "declaratory relief" — i.e. a declaratory judgment that the release document attached to his Complaint as Exhibit A, entitled "Settlement Agreement and Full Release," is void as "procured by fraud." Id., ¶ 42.
Plaintiff asserts that this Court has federal diversity subject matter jurisdiction pursuant to 28 U.S.C. § 1332(a)(1), in that the matter in controversy exceeds $75,000, exclusive of interest and costs, and the action "is between citizens of different states." Doc. #1, ¶ 4. In an effort to set forth his State of citizenship, Plaintiff declares in his Complaint that he is a "resident of the State of Kansas." Id., ¶ 1. An individual's citizenship for diversity purposes, however, is determined by his "domicile," as opposed to residence. Palazzo v. Corio, 232 F.3d 38, 42 (2d Cir. 2000).
Although Plaintiff has inartfully pled his citizenship, stating his residence as opposed to his domicile, the Court gleans from his jurisdictional allegations that he considers himself a "citizen" of the state of Kansas for diversity purposes in this action. In the event, however, that Plaintiff resided in Kansas but was actually domiciled in a state other than Kansas when he commenced this action on December 14, 2010, he is directed forthwith to inform the Court and (1) seek leave to amend his Complaint and/or (2) file with the Court an affidavit regarding the state of his domicile, and hence citizenship at the commencement
Defendant KOC is a specially chartered corporation organized and existing under the laws of the State of Connecticut, with a principal place of business located at 1 Columbus Plaza, New Haven, Connecticut 06519. Id., ¶ 2. Pursuant to 28 U.S.C. § 1332(c)(1), "a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business." Accordingly, for diversity purposes in this action, defendant KOC is a citizen of the State of Connecticut.
In his Complaint, Plaintiff seeks damages "in excess of $5 million." Id., ¶ 3. Such damages arise from, inter alia, Plaintiff's ensuing "severe and permanent physical and psychological injuries, including, but not limited to, chemical addictions, nightmares, depression, anxiety, suicidal tendencies, lack of trust, anger, shame, embarrassment, guilt, and low self-esteem." Id., ¶ 22. In light of alleged damages well in excess of $75,000, the Court finds that the requisite jurisdictional amount under 28 U.S.C. § 1332(a)(1) has been met. Neither party has contested the alleged facts which give rise to the Court's subject matter jurisdiction over this matter.
"[T]he purpose of Federal Rule of Civil Procedure 12(b)(6) `is to test, in a streamlined fashion, the formal sufficiency of the plaintiff's statement of a claim for relief without resolving a contest regarding its substantive merits.'" Halebian v. Berv, 644 F.3d 122, 130 (2d Cir.2011) (quoting Global Network Commc'ns, Inc. v. City of New York, 458 F.3d 150, 155 (2d Cir.2006) (emphasis omitted)).
In deciding whether to grant a Rule 12(b)(6) dismissal, the court construes the complaint liberally, "accepting all well-pleaded factual allegations in the complaint as true and drawing all inferences in favor of the plaintiff."
"Although all allegations contained in the complaint are assumed to be true, this tenet is `inapplicable to legal conclusions.'" LaMagna v. Brown, 474 Fed. Appx. 788, 789 (2d Cir.2012) (quoting Iqbal, 556 U.S. at 678, 129 S.Ct. 1937). See also Amaker v. New York State Dept. of Corr. Servs., 435 Fed.Appx. 52, 54 (2d Cir.2011) (same). The Court is not "bound to accept conclusory allegations or legal conclusions masquerading as factual conclusions." Faber v. Metro. Life Ins. Co., 648 F.3d 98, 104 (2d Cir.2011) (quoting Rolon v. Henneman, 517 F.3d 140, 149 (2d Cir.2008) (Sotomayor, J.) (internal quotation marks omitted)). In sum, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955). Rule 8 of the Federal Rules of Civil Procedure simply "does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Iqbal, 556 U.S. at 678-79, 129 S.Ct. 1937. See also n. 15, supra.
Procedurally, "a defendant may raise an affirmative defense in a pre-answer Rule 12(b)(6) motion if the defense appears on the face of the complaint." Staehr v. Hartford Fin. Servs. Group, Inc., 547 F.3d 406, 425 (2d Cir.2008). With respect to timeliness of the complaint in particular, "the current trend in the cases is to allow [the statute of limitations defense] to be raised by motion to dismiss under Rule 12(b)(6) when the defect appears on the face of the complaint." Staehr, 547 F.3d at 425-26 (quoting 5 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1226 (3d ed. 2004)). This trend comports with the rule that allegations regarding time are "material when testing the sufficiency of a pleading." Staehr, 547 F.3d at 426 (quoting Fed.R.Civ.P. 9(f)).
Defendant KOC has moved this Court to dismiss Plaintiff's negligence action on the ground that it is barred by the Texas two-year statute of limitations for negligence claims.
The Court notes preliminarily, as Judge Underhill observed in Dennany v. Knights of Columbus, No. 3:10cv1961 (SRU), 2011 WL 3490039 (D.Conn. Aug. 10, 2011), that the "Texas Court of Appeals [has] held that the state's five-year limitations period applied in an action against a third party of negligently permitting an employee to sexually assault the plaintiff" — i.e., facts similar to those at hand. 2011 WL 3490039, at *3 (emphasis added) (citing Stephanie M. v. Coptic Orthodox Patriarchate Diocese of S. U.S., 362 S.W.3d 656,
Plaintiff counters, arguing that Connecticut's 30-year statute of limitations for intentional sexual abuse to a child applies to this action. Doc. #21, p. 15 (citing Conn. Gen. Stat. § 52-577d).
"When a federal district court sits in diversity, it generally applies the law of the state in which its sits, including that state's choice of law rules." In re Coudert Bros. LLP, 673 F.3d 180, 186-87 (2d Cir. 2012) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)). Accord Schwartz v. Liberty Mut. Ins. Co., 539 F.3d 135, 147 (2d Cir.2008) ("The district court was sitting in diversity, and so it properly applied the choice of law rules of... the forum in which it sits."). Because this Court sits in Connecticut, Connecticut is the relevant forum. Connecticut applies the substantive law of the state with the most significant relationship to the lawsuit. Jaiguay v. Vasquez, 287 Conn. 323, 349, 948 A.2d 955 (2008). See also Glenwood Systems, LLC v. Med-Pro Ideal Solutions, Inc., 438 Fed.Appx. 27, 29 (2d Cir.2011); Almonte v. New York Medical College, 851 F.Supp. 34, 39 (D.Conn.1994) (citing O'Connor v. O'Connor, 201 Conn. 632, 650, 519 A.2d 13 (1986) (quoting Restatement (Second) Conflicts of Laws § 145)).
To determine the forum with the most significant relationship in the context of a tort case, the court considers "(a) the place where the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the domicil, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered." O'Connor, 201 Conn. at 652, 519 A.2d 13 (quoting Restatement (Second) Conflicts of Law § 145(2) and citing id., § 6).
The Court must consider such contacts in the context of the relevant policies and interests of the jurisdictions involved. MM Global Servs., Inc. v. Dow Chemical Co., 283 F.Supp.2d 689, 703 (D.Conn.2003). The significance, rather than the quantity, of the contacts determines the choice of law under the Restatement § 145(2).
In the case at bar, there are contacts with both states, Texas and Connecticut. With respect to Texas, it is the state where Plaintiff was allegedly primarily subjected to injury from Rivera's sexual abuse.
In contrast, Connecticut contacts include the place of incorporation and the principal place of business of defendant KOC, the party who allegedly failed to use reasonable care to supervise Rivera and/or protect Plaintiff from being abused by him. According to Plaintiff, Connecticut is the state from which KOC administers all of its subordinate programs, including the units of its youth program, Columbian Squires, throughout the United States. Doc. #1, ¶ 9 ("Each council is a direct subordinate organization under the direction and control of the [KOC] headquarters in Connecticut."); id., ¶ 10 ("A Columbian Squires unit must operate within the structure and regulations of the [KOC].").
Connecticut is also the state from which the Supreme Advocate orchestrated the December 2009 "agreements" with Plaintiff. In fact, the purported "Settlement Agreement and Full Release," herein addressed as the "Release," states in its first paragraph that the agreement is between Plaintiff and "Knights of Columbus, a specially-chartered Connecticut Corporation with its principal place of business located at One Columbus Plaza, New Haven, Connecticut." Doc. # 1, Ex. A (introductory paragraph) (emphasis added). The KOC address in New Haven reappears in the "agreement" at paragraph 5 of the "Confidentiality" provisions, requiring the Plaintiff to "immediately contact the Knight[s] of Columbus Supreme Advocate at the Supreme Office in New Haven, Connecticut" if Plaintiff is ever "served or notified of a subpoena or other document request" with respect to the terms of the agreement at issue. Id., ¶ 5 (emphasis added).
In examining the location where the relationship between the parties was centered, it appears Plaintiff's relationship with Rivera was centered in Texas. However, the administration and/or supervision of the Columbian Squires Brownsville unit by the KOC was under the direction and control of the "Supreme Office" in New Haven, Connecticut.
Weighing the aforesaid factors in their entirety, the Court finds that the balance weighs in favor of Texas as the state with the most significant relationship to the tort at hand, the intentional sexual abuse of the minor Plaintiff. As stated above, Texas is the location where most of the allegedly abusive conduct occurred and thus the place where the injuries occurred. Under the most significant relationship test, I find that Texas substantive law applies.
Nonetheless, such a determination does not resolve the issue of the applicable statute of limitations. "Where a statute of limitation is considered procedural, the law of the forum applies." Icahn v. Todtman, Nachamie, Spizz & Johns, P.C., No. 99 CIV 11783(WHP), 2001 WL 1160582, at *5 (S.D.N.Y. Oct. 1, 2001) (citing Somohano v.
Thus, even if the Court applies Texas substantive law with respect to the elements of the tort at hand, the Court must still determine the applicable procedural law, including the relevant statute of limitations. See Dennany, 2011 WL 3490039, at *3 ("Although it is clear that Texas law governs this case, it remains disputed whether Texas law controls the statute of limitations.").
Because statutes of limitations are labeled "procedural" under Connecticut law, Connecticut courts traditionally apply Connecticut's statute of limitations when the plaintiff pursues a common law cause of action
Moreover, under Connecticut law, "unless specifically tied to a statutory right of action or unless a contrary legislative intent is expressed, the statute of limitations in effect at the time an action is filed governs the timeliness of the claim." See Roberts, 224 Conn. at 488-89, 619 A.2d 844 (citing Andrulat v. Brook Hollow Associates, 176 Conn. 409, 413, 407 A.2d 1017 (1979) and Bohun v. Kinasz, 124 Conn. 543, 547, 200 A. 1015 (1938)).
With respect to the particular statute of limitations at issue for intentional sexual abuse, Conn. Gen. Stat. § 52-577d, a judge of this District has previously held that "§ 52-577d is not substantive, for it does not create a right of action to recover damages for sexual misconduct, but merely creates the appropriate statute of limitations for such [a] claim." Borawick v. Shay, No. 5:92 CV 00033 (TFGD), 1993 WL 127087, at *3 (D.Conn. Jan. 27, 1993) (Daly, J.). Similarly, "the Supreme Court of Connecticut has ruled that section 52-577d is procedural and not substantive." Bilodeau v. Vlack, No. 07-CV-1178 (JCH), 2009 WL 1505571, at *3 (D.Conn. May 20, 2009) (citing Roberts, 224 Conn. at 492, 619 A.2d 844 (finding section 52-577d as amended did not create a substantive change in the law that would preclude its retroactive application)).
Despite the cited case law, KOC urges this Court to follow "the emerging trend" discussed in Phillips v. Scott, 446 F.Supp.2d 70, 83, n. 25 (D.Conn.2006), of "select[ing] the state whose law will be applied to the issue of limitations by a process essentially similar to that used in the case of other issues of choice of law" — "a test similar to the most significant relationship test" in the Restatement (Second) [of Conflict of Laws] § 142."
An examination of Phillips v. Scott reveals that it was an exceptional case, based on extraordinary facts, rather than one designed to set new precedent. In Phillips, plaintiff brought an unjust enrichment claim which arose in California, involving an oral agreement he entered with his mother in California concerning his acquisition of California real estate. The only fact connecting the action with Connecticut was the mother's move to that state prior to her death. Under such extraordinary
Furthermore, the Court in Phillips specified that even if it had applied Connecticut law to the action at hand, the action would have remained time-barred. The Court thus explained: "Although California's governing statute of limitations is substantially shorter than the applicable statute of limitations in Connecticut, see CONN. GEN. STAT. § 52-576, even if Connecticut's six year statute of limitations were applied, plaintiff's claim would still be barred as his claim ..., accrued on May 2, 1998 and he did not initiate the current action until December 1, 2004. The foregoing notwithstanding, in light of the decision reached [herein], supra, further analysis of the application of Connecticut law need not be addressed." 446 F.Supp.2d at 84, n. 25 (emphasis added).
Defendant also cites Advest, Inc. v. Wachtel, 235 Conn. 559, 668 A.2d 367 (1995), in an attempt to persuade the Court that "[i]f a state has no constitutional or statutory directive as to its choice of law, the forum court should consider the following factors: `(a) the needs of the interstate and international systems, (b) the relevant policies of the forum, (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, (d) the protection of justified expectations, (e) the basic policies underlying the particular field of law, (f) certainty, predictability and uniformity of result, and (g) ease in the determination and application of the law being applied.'" Doc. # 18, p. 15 (quoting Advest, Inc., 235 Conn. at 568 n. 9, 668 A.2d 367, which in turn quoted 1 Restatement (Second), Conflict of Laws § 6 and cited O'Connor v. O'Connor, 201 Conn. 632, 650-51, 519 A.2d 13 (1986)).
The court in Advest, however, did not address the proper choice of procedural law in a Connecticut forum. In Advest, plaintiff securities dealers appealed from the trial court's judgment denying their application to permanently enjoin nine defendant investors from bringing an arbitration claim in the state of New York. The arbitration claim had been adjudicated in the trial court as precluded under the applicable Connecticut three-year statute of limitations, Conn. Gen. Stat. § 52-577. On appeal, in determining whether the trial court's denial of the injunction was an abuse of discretion, the Supreme Court discussed the issue of whether New York would thereafter permit the arbitration claim to proceed in New York. With respect to the state of New York, the Court thus mentioned the Restatement Conflict of Laws § 6 as it related to "whether the New York forum will apply Connecticut's statute of limitations" and concluded that it would "depend upon New York's choice of law." 235 Conn. at 568, 668 A.2d 367. The Connecticut Supreme Court ultimately affirmed the denial of the injunction, holding that the bar of Connecticut's statute of limitations was not final on the merits and thus did not preclude, under res judicata, an action in New York where the limitations period had not yet expired. Moreover, the Advest court made clear that "whether a final judgment in this state based upon the statute of limitations bars the maintenance of an action in the forum state that has a longer statute of limitations depends upon the forum state's choice of law." Id. at 569, 668 A.2d 367 (emphasis added).
In the present action, the applicable forum is Connecticut and this Court must therefore apply Connecticut's choice of law rules, which generally treat statutes of limitations as procedural in nature. No Connecticut case, including O'Connor v. O'Connor, 201 Conn. 632, 519 A.2d 13 (1986), cited as authority in footnote 9 by the Advest court, has given any indication that the present rule, treating statutes of
In Connecticut, the traditional choice of law rules distinguish between substantive and procedural law, with the law of the forum, or lex fori, controlling those issues which are construed as governing procedure. Morris Plan Industrial Bank v. Richards, 131 Conn. 671, 673, 42 A.2d 147 (1945); Orr v. Ahern, 107 Conn. 174, 176, 139 A. 691 (1928). Moreover, as stated supra herein, "[i]t is a well settled principal of law in Connecticut that `[a] statute of limitations is generally considered to be procedural, especially where the statute contains only a limitation as to the time with respect to a right of action and does not itself create the right of action.'" Champagne, 212 Conn. at 525, 562 A.2d 1100 (citations omitted).
The exception to that rule, where the action is created by the statute itself, is not present here. Negligence is a common law claim both in Texas and Connecticut. Applying the substantive law of either jurisdiction does not alter the fact that Connecticut procedural law applies. Absent the lone exception where the relevant action is created by statute and the foreign statute of limitations is essentially interwoven with the statute creating the action, "Connecticut federal courts have uniformly held that Connecticut's statutes of limitations ordinarily will govern in diversity actions such as the present case."
As Judge Kravitz concluded in Landry v. Potter:
2005 WL 293500, at *2. Accord Oy v. Hr Textron, Inc., No. 3:08-cv-1216 (WWE), 2008 WL 5214268, at *3 (D.Conn. Dec. 11, 2008) ("[T]he Connecticut Supreme Court observed that a statute of limitations is procedural with regard to a common law cause of action, as contrasted to a statutory cause of action in which it is a substantive element. Therefore, as to plaintiff's common law claims, the Connecticut statute of limitations will apply regardless of the substantive law that should govern the dispute.") (internal citations omitted); Davies v. Jindal, No. 3:03 CV 341(CFD), 2007 WL 1491305, at *4 (D.Conn. May 22, 2007) ("Connecticut federal courts have uniformly held that Connecticut's statutes of limitations ordinarily will govern in diversity actions.") (quoting Landry, 2005 WL 293500, at *1).
Accordingly, this Court, sitting in diversity, will apply Connecticut's 30-year statute of limitations for an "action for damages to [a] minor caused by sexual abuse, exploitation or assault" to the negligence action in suit.
Defendant next moves for dismissal of Plaintiff's negligence action on the grounds that he has failed "to allege any facts that would support a finding that the injuries to Plaintiff were foreseeable to the Knights [of Columbus]." Doc. # 18, p. 17 (emphasis in original). Under the substantive law of Texas, the state with the most significant relationship to the tort at hand, the requisite elements of a negligence action are: "1) a legal duty owed by one person to another; 2) a breach of that duty; and 3) damages proximately resulting from the breach." Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex.1990). See also Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 477 (Tex.1995). Thus, as Defendant contends, in order to establish a negligence claim against KOC, Plaintiff must plead that (1) KOC owed him a legal duty to protect him from Rivera's actions, (2) KOC breached that duty, and (3) Plaintiff sustained damages proximately caused by the breach. Doc. # 18, p. 17 (citing Houser v. Smith, 968 S.W.2d 542, 544 (Tex.App.-Austin 1998, no pet.)). See also Amaya v. Potter, 94 S.W.3d 856, 861 (Tex.App.-Eastland 2002) ("Tort liability depends on both the existence and the violation of a duty.").
"The threshold inquiry in a negligence case is duty." Greater Houston Transp. Co., 801 S.W.2d at 525. See also Graff v. Beard, 858 S.W.2d 918, 919 (Tex. 1993) ("It is fundamental that the existence of a legally cognizable duty is a prerequisite to all tort liability.") (citing Greater Houston Transp. Co., 801 S.W.2d at 525). See also Abalos v. Oil Dev. Co. of Texas, 544 S.W.2d 627, 631 (Tex.1976) ("[A]ny plaintiff must prove the existence and violation of a legal duty owed to him by the defendant to establish tort liability. The threshold question, therefore, is whether [defendant] was under a duty to [plaintiff]."); Rosas v. Buddie's Food Store, 518 S.W.2d 534, 536 (Tex.1975) ("Negligence is no more than breach of a legal duty; the tort becomes actionable when the breach causes injury.").
Whether a duty exists in a particular case "is a question of law for the court to decide from the facts surrounding the occurrence in question." Greater Houston Transp. Co., 801 S.W.2d at 525 (citing Otis Eng'g Corp. v. Clark, 668 S.W.2d 307, 312 (Tex.1983)). See also SmithKline Beecham Corp. v. Doe, 903 S.W.2d 347, 351 (Tex.1995) ("The existence of a legal duty is, of course, a question of law."). "In determining whether the defendant was under a duty, the court will consider several interrelated factors, including the risk, foreseeability, and likelihood of injury weighed against the social utility of the actor's conduct, the magnitude of the burden of guarding against the injury, and the consequences of placing the burden on the defendant." Greater Houston Transp. Co., 801 S.W.2d at 525 (citing Otis Eng'g Corp., 668 S.W.2d at 309). Accord Del Lago Partners, Inc. v. Smith, 307 S.W.3d 762, 770 n. 26 (Tex.2010). The Texas Supreme Court also considers public policy factors, described as "any other relevant competing individual and social interests implicated by the facts of the case." Tex. Home Mgmt., Inc. v. Peavy, 89 S.W.3d 30, 33-34 (Tex.2002). Of all requisite factors, "foreseeability of the risk is the foremost and dominant consideration." Greater Houston Transp. Co., 801 S.W.2d at 525 (internal quotations and citation omitted).
94 S.W.3d at 861 (internal citations omitted). As noted above, "foreseeability is a component of both duty and proximate cause." Id.
Foreseeability "requires that a person of ordinary intelligence should have anticipated the danger created by a negligent act or omission." Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d at 478. See also Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 549-50 (Tex.1985). "The danger of injury is foreseeable if its general character ... might reasonably have been anticipated." Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d at 478 (internal quotations and citation omitted).
An examination of foreseeability and proximate cause "generally involves a practical inquiry based on common experience applied to human conduct." Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d at 478 (internal quotations and citation omitted). The question thus becomes "whether the injury might reasonably have been contemplated as a result of the defendant's conduct." Id. Moreover, "[f]oreseeability requires more than someone, viewing the facts in retrospect, theorizing an extraordinary sequence of events whereby the defendant's conduct brings about the injury." Id. (citing Restatement (Second) of Torts § 435(2) (1965)).
With respect to the pending motion, KOC argues that "Texas courts have consistently rejected cases against organizations regarding the alleged sexual abuse of minors by an employee or volunteer when there was nothing in the record to indicate that the organization had a specific reason to know that its employee or volunteer was likely to commit the alleged abuse." Doc # 18, p. 18. In support KOC cites, inter alia, Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472 (Tex.1995), which focused on whether "if the Boys Club had investigated [its leader's] criminal record," the resulting information would have "caused the club reasonably to anticipate his subsequent sexual assaults on the minor plaintiffs." 907 S.W.2d at 478.
In Doe v. Boys Club of Greater Dallas, Inc., the plaintiffs, grandparents of abused minor boys, sought damages based on the
Plaintiffs appealed that decision to the Texas Supreme Court. Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472 (Tex.1995). The plaintiffs once again contended that the Boys Club was negligent in its failure to investigate Mullens because a background check would have revealed his two prior misdemeanor convictions for driving while intoxicated. They also argued that the Boys Club had negligently supervised Mullens in his work as a volunteer.
The Texas Supreme Court affirmed summary judgment for the Boys Club on the basis of proximate cause, concluding that Mullens' "prior DWI convictions did not indicate criminal conduct in any way akin to sexual assault of young boys." 907 S.W.2d at 478. Thus, even if the Boys Club breached its duty to investigate or screen Mullens, that failure was not the "proximate cause of the boys' injuries." Id. at 477. "There [was] no evidence that the Boys Club would not have taken Mullens as a volunteer if it had known he had been convicted for driving while intoxicated." Id. at 477-78. "Mullen's prior record could not have caused the Boys Club reasonably to anticipate the danger he presented to the plaintiffs." Id. at 478.
Furthermore, the Texas Supreme Court held that "since there [was] no evidence that Mullens molested or assaulted any boys at the club's premises, there [was] no evidence the Boys Club's alleged failure to supervise was a producing cause of the injuries to [the plaintiffs' grandsons]." Id. at 478 (emphasis added). Specifically, all alleged assaults on the boys took place outside of the premises of the Boys Club, on private fishing and camping trips that "were not Boys Club-sponsored events." Id. at 481.
Thus, in Doe v. Boys Clubs of Greater Dallas, Inc., the Texas Supreme Court reviewed the evidence presented on summary judgment in determining that, even "if the Boys Club breached a duty to investigate, screen, or supervise volunteers, this breach was not the cause in fact of the plaintiffs' injuries." Id. at 477.
KOC also cites Doe v. Catholic Soc. of Religious and Literary Educ., No. H-09-1059, 2010 WL 345926, at *10 (S.D.Tex. Jan. 22, 2010), as authority for a lack of foreseeability where the organization had no specific reason to know that its employee was likely to commit the alleged abuse. In that case, a Catholic high school was sued by a former student for negligent failure to protect him against the reasonably foreseeable harm of sexual abuse by his teacher, Beeler. The court granted summary judgment to the high school because there was "no evidence in the record that [the school] Strake Jesuit had actual
Both of KOC's cited cases, Doe v. Boys Clubs of Greater Dallas, Inc. and Doe v. Catholic Soc. of Religious and Literary Educ., are distinguishable from the one in suit on two grounds. First, neither court examined the adequacy of the complaint on a Rule 12(b)(6) motion, i.e., whether plaintiffs' allegations failed to state a claim for negligence. Rather, the courts addressed summary judgment motions and thus focused on the evidence presented to determine whether "there [was] no genuine dispute as to any material fact and the movant [was] entitled to judgment as a matter," Fed.R.Civ.P. 56(a). Here, KOC has moved for dismissal of Plaintiff's negligence action as inadequately pled so there is no issue regarding an adequate factual basis to sustain his claim. Discovery has not closed and KOC has not, in the context of a 12(b)(6) motion, filed any stipulated facts, affidavits, or extraneous materials for the Court's consideration.
Second, both cited cases are factually dissimilar from the present case in that the leaders in those cases assaulted the boys at private events. Mullens in Doe v. Boys Clubs of Greater Dallas, Inc. assaulted the boys on private camping and fishing trips; and Beeler, the offending teacher in Doe v. Catholic Soc. of Religious and Literary Educ., abused the plaintiff in his home. In contrast, in the case in suit, Plaintiff has alleged that Rivera abused him at the KOC hall and also on KOC-sponsored trips to local and national Squires events. Doc. #1, ¶ 17. Under the alleged circumstances, one could reasonably conclude that KOC knew or reasonably should have known of the general danger Rivera posed to the boys in the Brownsville Squires. Given the KOC-related settings of abuse, KOC's alleged failure to supervise or investigate Rivera, or to acknowledge what it may have learned, could have proximately caused Plaintiff's alleged injuries. In sum, the Texas common law has not foreclosed an action for negligent supervision where the injuries occurred at defendant-sponsored activities and locations, potentially creating the proximate cause that was lacking in both Doe v. Boys Clubs of Greater Dallas, Inc. and Doe v. Catholic Soc. of Religious and Literary Educ.
In Doe v. Norwich Roman Catholic Diocesan Corp., 268 F.Supp.2d 139, 148
268 F.Supp.2d at 148 (emphasis added).
As in the Norwich case, with respect to KOC's possible negligence, based on Plaintiff's allegations of pervasive sexual abuse at the KOC hall and KOC sponsored events, there is, as set forth in Part II.B. supra, "sufficient information [in the Complaint] from which knowledge [of the Defendant] could be inferred." 268 F.Supp.2d at 147. In the context of a Rule 12(b)(6) motion, rather than a motion for summary judgment, it may be premature, and in fact inappropriate, to dismiss Plaintiff's negligence claim.
In the Complaint at issue, Plaintiff alleges that KOC failed to protect him "from sexual assault and lewd and lascivious acts committed by Rivera" by, inter alia, failing to supervise Rivera in his position.
Accepting as I must on this motion the truth of the well-pleaded factual allegations in the Complaint, I conclude that, in general, KOC owed Plaintiff a duty of care to ensure his welfare as a Brownsville Squire. That duty included, inter alia, the responsibility to properly supervise the Squires' leader, Rivera. KOC, as a renowned and long-established religion-based organization, urges parents to entrust the welfare of their boys, and actively recruits those boys, to dedicate their formative years to the Columbian Squires, an organization committed to developing leadership qualities and supporting the Roman Catholic Church. Doc. # 1, ¶ 10. Having made such representations, KOC owed the Squires, such a Plaintiff, a duty to exercise reasonable care to prevent foreseeable injury by overseeing their leader.
Under Plaintiff's allegations, it is thus plausible that KOC's alleged failure to detect and thereafter prevent Rivera's abusive behavior "proximately caused" Plaintiff's injuries. In other words, had KOC undertaken reasonable supervision of Rivera at Squires events, his alleged extensive abusive behavior, involving drugs, alcohol and pedophilia, would have come to light, resulting in Rivera's termination. In short, Plaintiff would not have been injured.
Furthermore, I have examined the enunciated "interrelated factors" of Texas courts, Greater Houston Transp. Co., 801
Moreover, the magnitude of KOC's burden to guard against Plaintiff's injury was manageable in light of the location of much of the abuse, KOC's hall and events, and KOC's massive size and numerous resources. Unscheduled supervisory visits by KOC officials to meetings and events and/or interviews with Squires would have sufficiently monitored Rivera's leadership. Under such circumstances, KOC should not be allowed to profess ignorance of Rivera's activities in the Brownsville Squires to excuse KOC's failure to prevent abuse, especially where much of the alleged abuse occurred at KOC meetings and events. Just as a multi-national corporation cannot disclaim any and all liability for conduct committed in its outlying offices and locations, neither should an organization of KOC's sophistication, size, and organized structure be allowed to avoid liability by claiming an inability to supervise those running its programs at satellite locations.
Finally, considering public policy factors — described by the Texas Supreme Court as "other relevant competing individual and social interests implicated by the facts of the case," Peavy, 89 S.W.3d at 33-34 — where the Squires were minors, ranging in age, by Plaintiff's account, from 10 to 18 years old, KOC had a particular duty to ensure their welfare in the program. KOC recruited the boys to assist in "developing their leadership qualities" and "supporting the Roman Catholic Church." Doc. # 1, ¶ 10. Furthermore, "[a] Columbian Squires unit [was required to] operate within the structure and regulations of the [KOC]." Id. Once minor boys became members of the Squires program in Brownsville, KOC should have supervised their activities and leadership to ensure the boys' welfare and determine whether the Squires were in fact operating according to KOC regulations.
Children, as vulnerable members of society, are owed greater care than their adult counterparts, who, in contrast, possess the maturity necessary to remove themselves from harmful situations.
In sum, balancing Texas' relevant factors regarding the multi-faceted issue of the legal duty of care, Peavy, 89 S.W.3d at 33-34, and pursuant to Iqbal, 556 U.S. at 678, 129 S.Ct. 1937, Plaintiff has pled sufficient factual matter, when accepted as true, "to state a claim to relief that is plausible on its face." At this preliminary pleading stage, construing the Complaint liberally, accepting all well-pleaded factual allegations as true and drawing all inferences in Plaintiff's favor, Plaintiff has stated a plausible claim for negligence with respect to the element of foreseeability as to both duty and proximate cause.
Finally, Defendant seeks dismissal of Plaintiff's Complaint on the grounds that the "Settlement Agreement and Full Release" bars his claims for both negligence and declaratory relief. Defendant argues that (1) when Plaintiff signed the alleged release, he was not justified in relying on the alleged misrepresentations by the KOC agent; and, (2) in any event, Plaintiff later ratified the release as a matter of law. Doc. # 18, p. 25-33.
In Count Two for "declaratory relief," Plaintiff requests this Court to render declaratory judgment in his favor, thereby declaring the release at issue "void as procured by fraud." Doc. #1, ¶ 42. "The Declaratory Judgment Act ["DJA"] by its express terms vests a district court with discretion to determine whether it will exert jurisdiction over a proposed declaratory action." Dow Jones & Co., Inc. v. Harrods Ltd., 346 F.3d 357, 359 (2d Cir. 2003) (per curiam). See also 28 U.S.C. § 2201(a).
The district court thus retains discretion under the DJA to determine whether to exercise jurisdiction over the action at issue, Dow Jones & Co., Inc., 346 F.3d at 359, then considers "the litigation as a whole" and whether "practicality and wise judicial administration will predominate," U.S. Underwriters Ins. Co. v. Kum Gang, Inc., 443 F.Supp.2d 348, 352-53 (E.D.N.Y.2006) (citing, inter alia, Wilton, 515 U.S. at 288, 115 S.Ct. 2137).
An action for declaratory judgment must meet the "case or controversy" requirement in that it "must be sufficiently real and immediate, allowing specific and conclusive relief ... and be ripe for adjudication." Dow Jones & Co., Inc. v. Harrods Ltd., 237 F.Supp.2d 394, 406 (S.D.N.Y. 2002) (citing Pub. Serv. Cmm'n v. Wycoff Co., Inc., 344 U.S. 237, 244, 73 S.Ct. 236, 97 L.Ed. 291 (1952)), aff'd, 346 F.3d 357 (2d Cir.2003); accord U.S. Underwriters Ins. Co., 443 F.Supp.2d at 352. In sum, declaratory relief "is available only for a `concrete case admitting of an immediate and definite determination of the legal rights of the parties.'" Pub. Serv. Comm'n, 344 U.S. at 243, 73 S.Ct. 236 (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 241, 57 S.Ct. 461, 81 L.Ed. 617 (1937)). The "simple test" articulated by the Second Circuit asks "(1) whether the judgment will serve a useful purpose in clarifying or settling the legal issues involved; and (2) whether a judgment would finalize the controversy and offer relief from uncertainty." Dow Jones & Co., 346 F.3d at 359 (citing Broadview Chem. Corp. v. Loctite Corp., 417 F.2d 998, 1001 (2d Cir.1969)).
In the case at bar, there exists, as Plaintiff contends, "an active controversy" between the parties with respect to the validity of the Release. Doc. # 1, ¶ 42. If as KOC asserts, the Release is valid, Plaintiff has broadly released "all claims against KOC, the Dioceses of Brownsville and Laredo, Texas, and all of their past, present, and future agents from any and all obligations, causes of action, or claims in law or in equity." Doc. # 1, p. 11-12. Specifically, if valid, the Release encompasses and bars all of Plaintiff's claims in suit. If, however, the Release was in fact procured by KOC agents through fraud, the Release is invalid and comprises no bar to the actions herein. Because of this core controversy between the parties, the Court concludes, at the outset, that the matter of the Release is appropriately the subject of requested declaratory relief.
In seeking declaratory relief, Plaintiff alleges that "[t]here is an actual controversy
In its pending motion to dismiss, KOC asserts that Plaintiff has failed to state a valid claim for fraud and misrepresentation in that "(1) Plaintiff was not justified in relying on the alleged misrepresentation [when he signed the Release] and (2) Plaintiff has waived his right to assert fraud as a ground to avoid the Release because he ratified the transaction by accepting its benefits after gaining full knowledge of the alleged fraud." Doc. # 18, p. 23. KOC reasons that because "[t]he Release is valid," it "precludes Plaintiff's negligence claim." Id., p. 34. As a result, KOC urges the Court to "dismiss Plaintiff's Complaint in its entirety." Id., p. 23.
The facts Plaintiff has alleged regarding his signature with respect to the Release are as follows. In December 2009, Plaintiff reported abuse by Rivera to KOC officials, "disclosed his long history of chemical addiction as a result of Rivera plying him with drugs and alcohol," and informed them "that he wanted to enter a treatment program." Doc. #1, ¶ 23. Plaintiff specifically asked the KOC Supreme Advocate for assistance in paying for treatment for his addictions. Id. According to Plaintiff, the Supreme Advocate agreed that KOC would pay for such treatment and never discussed or mentioned that the financial assistance would be given "to settle [Plaintiff's] claims" against the KOC. Id.
Thereafter, on December 23, 2009, when a KOC agent and his wife met with Plaintiff, they allegedly told him that "they wanted to give him $200 to pay for his travel expenses to the rehabilitation facility." Id., ¶ 24. However, before giving Plaintiff the money, the agent requested that he sign a document to acknowledge receipt of the $200. Id. Plaintiff complied by signing. Id. The KOC agent then gave Plaintiff an additional, single piece of paper and asked Plaintiff "to sign it to acknowledge that [KOC] would pay for his [rehabilitation] treatment." Id. Plaintiff alleges that he then signed that sheet and the agent's wife notarized the document. Id. The agent then allegedly "gave [Plaintiff] $200 in cash and quickly left." Id.
"About a week later," Plaintiff "received a package in the mail with a copy of the document [he had] signed acknowledging receipt of the $200, along with an eight page document he had never seen before entitled `Settlement Agreement and Full Release.'" Id. Plaintiff alleges that attached to the "strange" eight-page document was "the second signature page" that the KOC agent had instructed Plaintiff to sign. Id. As described by Plaintiff, the document facially "purports to be a release of [Plaintiff's] claims against the Knights of Columbus arising from his sexual abuse by Rivera." Id.
Defendant KOC counters that Plaintiff cannot "avoid the clear consequences of the Release" because the facts "show as a matter of law" that Plaintiff "was not justified in relying on the alleged misrepresentation" and, in any event, Plaintiff "ratified the transaction by accepting its benefits after gaining full knowledge of the alleged fraud." Doc. # 18, p. 23.
Before addressing the parties' arguments — that is, the legal sufficiency of Plaintiff's claim with respect to declaratory relief for fraud and/or misrepresentation — the Court must determine the state law applicable to that claim. It is well-established that a district court sitting in diversity jurisdiction "must apply the choice of law rules of the forum state." Brandewiede v. Emery Worldwide, 815 F.Supp. 60, 63 (D.Conn.1992) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)). In the forum state of Connecticut, the Court must determine whether there is more than one potential choice of law and whether "the laws of competing jurisdictions are actually in conflict." In re Helicopter Crash Near Wendle Creek, British Columbia on Aug. 8, 2002, 485 F.Supp.2d 47, 55 (D.Conn.2007) (quoting Int'l Bus. Mach. Corp. v. Liberty Mut. Ins. Co., 363 F.3d 137, 143 (2d Cir.2004)).
With respect to the case in suit, the purported release contains a "Governing Law" provision that states that any dispute arising under it will be governed by Texas law. In general, Connecticut law follows the Restatement (Second) of Conflict of Laws § 187 (1971), holding that, absent limited exceptions, "[t]he law of the state chosen by the parties to govern their contractual rights and duties will be applied."
Furthermore, under Connecticut law, "[t]he fact that a contract was entered into by reason of misrepresentation, undue influence or mistake does not necessarily mean that a choice-of-law provision contained therein will be denied effect." Elgar, 238 Conn. at 848, 679 A.2d 937. Rather, "[t]his will only be done if the misrepresentation, undue influence or mistake was responsible for the complainant's adherence to the provision." Id. (citing Restatement (Second) of Conflict of Laws § 187, Comment [b] and Illustrations 1 and 2).
Here Plaintiff makes no specific claim that the "choice of law provision" was obtained by improper means. Rather he contends that the entire contract was obtained through fraud and deception. Accordingly, he claims that prior to signing the contract, he never saw any page or provision apart from the signature page. Although Plaintiff does not specify that KOC's alleged deception was directed specifically toward the choice of law provision in the Release, the alleged deception essentially encompasses all provisions, including choice of law.
Under Connecticut law, where a party alleges fraud in the execution of the contract, the court applies the most significant relationship test in evaluating the choice-of-law question. See Economu v. Borg-Warner Corp., 652 F.Supp. 1242, 1247-49 (D.Conn.1987), aff'd, 829 F.2d 311 (2d Cir.1987); Am. States Ins. Co. v. Allstate Ins. Co., 282 Conn. 454, 461-62, 922 A.2d 1043 (2007); Restatement (Second) of Conflict of Laws § 187 cmt. b, § 188
Examining the factors to be analyzed in the most significant relationship test, the facts surrounding the execution of the Release are not fully established in Plaintiff's Complaint. For example, Plaintiff does not specify in which state he executed his signature.
The Court need not, however, perform an in-depth choice of law analysis because the laws of all possible applicable states — Kansas, Missouri, Texas and Connecticut — are consistent on the issue of whether Plaintiff has properly pled fraud and misrepresentation with respect to the alleged release.
KOC asserts that, as a matter of law, Plaintiff has failed to plead a viable claim for fraudulent misrepresentation because Plaintiff could not have justifiably relied on the purported misrepresentation that the one-page document he signed was simply an acknowledgment that KOC would pay for his treatment. Doc. # 18, p. 25. KOC cites case precedent, quoting the Restatement (Second) of Torts, to argue that a recipient of a fraudulent representation cannot justifiably rely upon its truth "if he knows that it is false or if its falsity is obvious to him." Id. (citing Restatement (Second) of Torts § 541 (1977)). See, e.g., Slaymaker v. Westgate State Bank, 241 Kan. 525, 536, 739 P.2d 444 (Kan.1987) ("[I]f the recipient of a fraudulent representation has information which would serve as a danger signal to a person of ordinary intelligence and experience, he is not justified in relying upon that representation") (internal quotations and citation omitted); Dyrssen v. Union Elec. Light & Power Co., 317 Mo. 221, 227, 295 S.W. 116 (Mo.1927) ("The common law affords to every one reasonable protection against fraud in dealing; but it does not go to the romantic length of giving indemnity against the consequences of indolence and folly or a careless indifference to the ordinary and accessible means of information.") (internal quotations and citation omitted); Hanson v. Acceptance Finance Co., 270 S.W.2d 143, 149 (Mo.App.1954) ("The principle is well established that in order to secure relief on the ground of fraud, the complainant must have been justified, under the circumstances of the case, in relying upon the misrepresentation which is sought to be made the basis of the charge of fraud."); Lewis v. Bank of America NA, 343 F.3d 540, 546 (5th Cir. 2003) ("a person may not justifiably rely on a representation if there are `red flags' indicating that such reliance is unwarranted") (internal quotations omitted), cert. denied, 540 U.S. 1213, 124 S.Ct. 1426, 158 L.Ed.2d 141 (2004); Werner v. Int'l Bank of Commerce, 71 F.3d 879, 1995 WL 727545, at *2 (5th Cir.1995) ("Texas law requires `justifiable as well as actual' reliance
Furthermore, KOC relies on United States Supreme Court precedent that although the recipient of a fraudulent misrepresentation is not barred from recovery based on negligent failure to discover its falsity, he must "use his senses, and cannot recover if he blindly relies upon a misrepresentation the falsity of which would be patent to him if he had utilized his opportunity to make a cursory examination or investigation." Field v. Mans, 516 U.S. 59, 71, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995) (quoting Restatement (Second) of Torts § 541 (1977)). For state precedent, see, e.g., Slaymaker, 241 Kan. at 536, 739 P.2d 444, Hanson, 270 S.W.2d at 149; Lewis, 343 F.3d at 546; Gen. Motors Corp. v. Courtesy Pontiac, Inc., 538 S.W.2d 3, 6 (Tex.App.-Tyler 1976, no writ).
"On the other hand, [this] rule ... applies only when the recipient of the misrepresentation is capable of appreciating its falsity at the time by the use of his senses." Field, 516 U.S. at 71, 116 S.Ct. 437. In sum, "[i]t is only where, under the circumstances, the facts should be apparent to one of his knowledge and intelligence from a cursory glance, or he has discovered something which should serve as a warning that he is being deceived, that he is required to make an investigation of his own." Id. (quoting W. Prosser, Law of Torts § 108, p. 718 (4th ed. 1971)) (emphasis added).
"[W]hat constitutes reasonable prudence and diligence with respect to such reliance, and what constitutes a reckless failure to exercise such prudence" differs from case to case. Hanson v. Acceptance Finance Co., 270 S.W.2d 143, 149 (Mo.App.1954). Courts "consider the various circumstances involved, such as the nature of the transaction, the form and materiality of the representation, the relation of the parties, the respective intelligence, experience, age, and mental and physical condition of the parties, and the respective knowledge and means of knowledge of the parties." Id., citing, inter alia, 37 C.J.S., Fraud, § 30. Accordingly, each case must be decided upon its own facts.
In the case at hand, KOC argues that "[e]ven a cursory glance" at the single piece of paper signed by Plaintiff "would have alerted him [to the fact] that he was not signing a simple acknowledgment" of payment for treatment. Doc. # 18, p. 27. KOC points to the five lines above Plaintiff's signature on that paper and states that "[t]his incomplete paragraph refers to `this Agreement' and also references an earlier `paragraph 4' that is not contained on the page."
Plaintiff counters, arguing that he was justified in relying on the false statements of the KOC agent and his wife that he was being asked solely to sign an acknowledgment of his "receipt of a $200 payment and Defendant's promise to pay for his rehabilitation." Doc. # 21, p. 22. Plaintiff was not presented with the text of the Release and "had no idea that there were other pages." Id.; see also Doc. # 1, ¶ 23. Furthermore, even if he should have been aware that "there was more to the document than what he had seen, he had no reason to believe that the remainder of the document was intended to extinguish a substantial legal claim through the general release of all liability."
Most importantly, Plaintiff asserts that "[t]he falsity of Defendant's representations was not known or obvious to him." Id., p. 23. As Plaintiff states, "[i]t has long been the law in Connecticut that the victim of a misrepresentation has no duty to investigate the truthfulness of the deceit... no authority can be found to warrant the doctrine, that a man must use diligence to prevent being defrauded, otherwise he shall be entitled to no remedy." Chapman Lumber v. Tager, No. CV010086006S, 2003 WL 22080469, at *4 (Conn.Super.Ct. Aug. 22, 2003) (quoting Sherwood v. Salmon, 5 Day 439, 448 (1810) (Swift, J.)). That is because a duty to investigate arises "only when the recipient of the misrepresentation is capable of appreciating its falsity at the time by the use of his senses." 3 Restatement (Second) Torts § 541 (1977), comment a.
Having reviewed the parties' arguments, the Court finds that it need not decide the merits of whether Plaintiff should have appreciated the falsity of the KOC agents' statements on December 23, 2009. Rather, construing the Complaint liberally, accepting all well-pleaded factual allegations in the Complaint as true and drawing all inferences in Plaintiff's favor, the Court assesses his fraud/misrepresentation claim as to whether it contains sufficient factual matter to state a claim for fraud, and hence declaratory relief, that is plausible on its face. I find that it does.
Granted, as KOC emphasized, the signature page Plaintiff executed contained a reference to "this Agreement, as shall be determined by a court of competent jurisdiction," and a designation at the bottom of the page that it is number "7." Doc. # 1, p. 17. Nowhere on that page, however, is there any indication that such an agreement constituted a release of KOC's liability. Even if a more worldly or discerning individual, upon being asked to sign, would have inquired regarding the text on possible additional pages, it remains a question of fact as to whether Plaintiff should have recognized the falsity of the KOC agents' representations and performed an investigation before signing. With only four and a half lines of incomplete text referring to an "Agreement," Plaintiff could plausibly have believed that the entire document was drafted to evidence Plaintiff's acknowledgment
In light of the facts pled by Plaintiff, the Court finds that Plaintiff has stated a valid legal claim upon which relief may be granted. Particularly with respect to justifiable reliance, Plaintiff claims that he was presented with a sole signature page and told that "the document he was being asked to sign pertained only to their agreement regarding treatment, which was false and made as a matter of fact." Doc. #1, ¶ 24. Nothing on that signature page mentioned a release, evidenced a direct falsehood and/or directly contradicted the Defendant's representations at the signing.
Lastly, KOC argues that even if Plaintiff had justifiably relied on the alleged misrepresentations at the December 23, 2009 execution of the signature page, he "waived his right to assert fraud as a ground to avoid the Release because he ratified the transaction by accepting its benefits after gaining full knowledge of the alleged fraud." Doc. # 18, p. 30. As Defendant asserts, at common law, the question of ratification is a matter of law if the supporting evidence is clear. Doc. # 18, p. 23. See, e.g., Old Rep. Ins. Co. v. Fuller, 919 S.W.2d 726, 728 (Tex.App.-Texarkana 1996, writ denied) ("The question of ratification of a contract may be determined as a matter of law if the pertinent evidence is uncontroverted or uncontrovertible."). See also Young v. Data Switch Corp., 231 Conn. 95, 103, 646 A.2d 852 (1994) (trial court did not abuse its discretion in concluding former employee ratified severance agreement as matter of law by accepting benefits and by allowing 17 months to expire before raising basis for disaffirming contract).
Under the laws of all four potentially relevant state jurisdictions (Kansas, Missouri, Texas, and Connecticut), a party waives his right to avoid a contract for misrepresentation if he manifests to the other party his intent to affirm the contract, acts in a manner inconsistent with disaffirmance, or fails within a reasonable time to disclose his intention to avoid the contract. See e.g., Moore v. Farm & Ranch Life Ins. Co., 211 Kan. 10, 505 P.2d 666, 672-73 (1973); Anselmo v. Mfrs. Life Ins. Co., 771 F.2d 417, 420 (8th Cir.1985); Cordero v. Tenet Healthcare Corp., 226 S.W.3d 747, 750 (Tex.App.-Dallas 2007, pet. denied); E. Devoe Tompkins, Inc. v. Bridgeport, 100 Conn. 147, 123 A. 135, 137-38 (1923) ("one who was led into a contract by fraud was privileged to repudiate the contract if, and only if, he proceeded to do so promptly upon his discovery of it, or within a reasonable time thereafter"). Specifically, by retaining the benefits of a
With respect to a Rule 12(b)(6) motion to dismiss, the Court treats all well-pled facts in the Complaint as true. See Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). KOC argues that in the present case, the facts pled by Plaintiff show "a ratification of the alleged fraud as a matter of law." Doc. # 18, p. 32. In particular, Plaintiff alleged that he was fraudulently induced to sign the signature page on December 23, 2009 and did not see the other pages comprising the "Settlement Agreement and Full Release" until "[a]bout a week later," when he received it in the mail. Doc. # 1, ¶ 24. According to KOC, Plaintiff did not, however, "make any mention of an alleged fraud or attempt to challenge the validity of the Release until the filing of this lawsuit" almost a "full year later." Doc. # 18, p. 32. Defendant thus contends that "[a]ccording to Plaintiff's own allegations, he gained full knowledge of the alleged fraud only a week after it allegedly occurred, but instead of taking action to rescind the Release, he remained silent and accepted the full benefits of the Release." Id., p. 33. Defendant thus urges that, based on the year that expired between Plaintiff's discovery of the Release and the filing of this lawsuit, Plaintiff should not be allowed to avoid the obligations under the Release. Id.
Plaintiff disagrees with this characterization of his post-signing behavior as "ratification" of the fraudulently created release. He accepts that he "discovered the fraud in approximately late-December 2009" and "filed this lawsuit on December 14, 2010." Doc. # 21, p. 24 (citing Complaint, Doc. # 1, ¶ 24). Nonetheless, he claims that he "never vacillated from his position that he was duped nor has he remained silent and accepted the full benefits of the Release." Id. (internal quotations omitted). Plaintiff contends that he never bargained with KOC to enter into the Release and therefore did not accept the benefit of a bargain and repudiate it.
The Court examines the dates, as set forth in the Complaint, and Plaintiff's alleged actions to determine whether he may have ratified the release at issue as a
If the Release accurately represents the dates of Plaintiff's initial treatment for chemical dependency as December 26, 2009, he likely did not receive the Release documents in hand prior to his departure for Antigua for treatment. Plaintiff alleged that he did not receive the full release document until at least "[a]bout a week" after signing on December 23, 2009." Doc. # 1, ¶ 24. Consequently, according to Plaintiff's Complaint, he would not have received the Release in hand until approximately December 30, 2009, by which time he would have already begun his chemical dependency treatment. Once in this program in Antigua, it is unknown whether Plaintiff was allowed to communicate with those in the outside world, such as KOC, and/or to seek legal assistance. Because Plaintiff alleges he was unaware of the purported Release at the time of signing — did not connect the $200 in pocket expenses and/or the tuition for his treatment with release of all of his potential claims prior to his entry into treatment — he could not repudiate such "benefits" prior to treatment.
The facts as pled leave open a number of factual issues — e.g., what were the actual and exact dates and programs of Plaintiff's chemical dependency treatment in Antigua or elsewhere; on what exact date and in what location did Plaintiff receive the Release in the mail; did Plaintiff contact KOC to discuss the contents or possible significance of the Release and, if so, when; what disbursements were made from KOC to Plaintiff and/or to any rehabilitation program provider, and when did such payments occur; did Plaintiff refuse or attempt to return funds received from KOC after learning of the Release. Such evidence could clearly bear on the outcome of the ratification issue, but does not appear on the face of the Complaint.
Finally, KOC relies on the filing date of this action — almost one year after Plaintiff allegedly learned of the alleged fraud and/or misrepresentation by KOC — as the sole basis for arguing that Plaintiff ratified the Release.
Absent specific evidence supporting ratification and in the context of a Rule 12(b)(6) motion, as opposed to summary judgment, the Court does not deem the Complaint's filing date as sufficient evidence, standing alone, of ratification. At the pleading stage, in the absence of incontrovertible facts on the face of Plaintiff's Complaint that ratification occurred, and given that Plaintiff filed his fraud/misrepresentation claim within the requisite limitations period, the Court will not dismiss the claim for declaratory relief as a matter of law. Whether there was fraud or misrepresentation with respect to the Release, and Plaintiff's actions thereafter, must be investigated during discovery and ultimately found by the trier of fact. KOC's motion to dismiss Count Two will be denied.
Under Federal Rule of Civil Procedure 42(b), a district court has broad discretion to try issues and claims separately in order to "further convenience, avoid prejudice, or promote efficiency."
Because "the general practice is to try all the issues in a case at one time," Miller v. Am. Bonding Co., 257 U.S. 304, 307, 42 S.Ct. 98, 66 L.Ed. 250 (1921), bifurcation
"In establishing that bifurcation is warranted, the burden falls squarely on the party seeking bifurcation." Guidi v. Inter-Continental Hotels Corp., No. 95 Civ. 9006(LAP), 2003 WL 1846864, at *1 (S.D.N.Y. April 8, 2003) (citing Dallas, 143 F.Supp.2d at 315). "[T]he movant must justify bifurcation on the basis of the substantial benefits that it can be expected to produce." Svege, 329 F.Supp.2d at 284.
Bifurcation is within the district court's discretion and decided on a case-by-case basis. Idzojtic v. Pennsylvania R.R. Co., 456 F.2d 1228, 1230 (3d Cir. 1972).
Exercising its discretion, the Court examines such factors as: (1) whether the pertinent issues are significantly different from one another; (2) whether the issues are to be tried before a jury or to the court; (3) whether the posture of discovery on the issues favors a single trial or bifurcation; (4) whether the evidentiary issues overlap; and (5) whether the party opposing bifurcation will be prejudiced if it is granted. See, e.g., Strychasz v. Maron Const. Co., Inc., No. Civ. 3:01CV2063(PCD), 2002 WL 32500874, at *4 (D.Conn. July 16, 2002); Guidi, 2003 WL 1846864, at *1.
In the case in suit, Defendant seeks bifurcation for the following "three reasons: (1) "final determination on the validity of the Release is potentially dispositive;" (2) "a preliminary determination as to the validity of the Release has the potential to save the Court and the parties valuable resources and time," especially
Examining each of the Defendant's bases for bifurcation in turn, the Court finds that Defendant has met the burden of establishing that bifurcation is merited. First, preliminary adjudication of the issue regarding the validity of the Release may entirely eliminate the need to litigate Plaintiff's negligence claim. As Defendant asserts, "[t]he course of this case ... hinges on the validity of Plaintiff's Release of his claims." Doc. # 23, p. 1. Given the sweeping language of the Release's provisions, if that agreement is found to be valid, Plaintiff's remaining negligence action may be barred. Disposition of the validity of the Release will thus potentially prevent unnecessary expenditure of resources by the parties and promote judicial economy.
Examining judicial economy, the Court notes that bifurcation will result in limited, evidentiary overlap. The majority of facts pertaining to the validity of the Release, especially the testimony regarding negotiations and signing of the Release, are separate and distinct from the facts relevant to Plaintiff's negligence claim stemming from his alleged sexual abuse by Rivera. It is thus unlikely that bifurcation of discovery and trial would result in multiple witnesses being recalled or evidence being presented repeatedly.
Furthermore, considering undue prejudice to Defendant, segregation of the issue of validity of the Release will prevent one jury from considering that issue simultaneously with the negligence claim arising from the alleged horrific sexual abuse of Plaintiff. Because the evidence regarding negligence is likely emotionally disturbing
Plaintiff objects to Defendant's Motion to Bifurcate "on two grounds." Doc. # 30, p. 1. He argues that "[f]irst, the evidence of sexual abuse that Defendant contends would prejudice the jury in deciding the release issue, is in fact relevant to both Counts in the Complaint, and thus bifurcation would not materially reduce any potential prejudice." Id. "Second, separating issues with overlapping evidence into two completely separate trials would inconvenience the Court and the parties, and would not be in the best interest of judicial economy or justice." Id., p. 1-2.
With respect to prospective prejudice to KOC and overlapping evidence, Plaintiff states that "the testimony underlying sexual abuse is relevant to both the Negligence Count and the Release Count" such that there will be "substantial overlap in the proof of both claims." Id., p. 2. Thus, "[i]n proving that Defendant deceptively induced Plaintiff into signing a purported release document, Plaintiff intends to present testimony and evidence relating to the motive and intent of Defendant to deceive Plaintiff" — that is, "to fraudulently evade a claim for substantial damages arising from child sexual abuse, and instead only pay the nominal amount of $200 and the costs of psychological treatment."
Granted, the elements of fraud at common law in either Connecticut or Texas, two states with significant relationships to the action, include an intent by the defendant to induce the plaintiff to act and damage to the plaintiff as a result of his reliance on defendant's knowingly or recklessly false statements. However, the Court is unpersuaded that Plaintiff will have to present all detailed evidence of his sexual abuse in order to prove KOC's intent. Rather, with respect to KOC's motive, Plaintiff need only present evidence of what KOC knew regarding the alleged
With respect to damages, Plaintiff may provide evidence of damages he sustained as a result of the alleged sexual abuse, which may include, inter alia, his out-of-pocket costs of treatment for narcotics addiction and/or resulting emotional damage. Plaintiff may thus present a reasonably approximate calculation of the amount he seeks to recover by pursuing his negligence action. Once again, all details of Plaintiff's sexual abuse need not be presented.
In sum, although there is necessarily a limited amount of evidentiary overlap with respect to Plaintiff's negligence and declaratory relief/release claims, such overlap does not negate the fact that adjudication on the validity of the Release may dispose of this action, thereby preventing further proceedings and testimony.
Lastly, holding an initial trial on the validity of the Release will not prejudice Plaintiff or delay resolution of his claims, but rather streamline any subsequent trial on his negligence action. The facts surrounding the signing of the Release, including the documents and testimony of the handful of witnesses who were then present, may be presented at the first, and potentially only, trial. Moreover, according to KOC, "[d]iscovery can be completed in weeks, not months or years." Doc. # 23, p. 2.
In sum, the Court finds it in the best interest of both parties to grant Defendant's Motion to Bifurcate pursuant to Federal Rule of Civil Procedure 42(b). Doc. #22. Bifurcation will further convenience, avoid prejudice, and likely promote efficiency. The validity of the Release will be addressed first, both in discovery and subsequently, if necessary, at trial. Should the Release be held invalid — that is, procured fraudulently via misrepresentations by KOC's agent — the remaining discovery and trial on the negligence claim will follow.
The Court thus ORDERS that, on or before
For all of the foregoing reasons, Defendant's Motion to Dismiss for Failure to State a Claim (Doc. # 17) is DENIED in its entirety. Defendant's Motion to Bifurcate Counts One and Two of Plaintiff's Complaint for trial (Doc. # 22) is GRANTED. Bifurcation of these claims will further convenience of the parties and witnesses, avoid prejudice to Defendant, and promote judicial efficiency in potentially disposing of the entire action or moving expeditiously forward. Consequently, discovery and trial will be held first on Plaintiff's second claim for declaratory relief with respect to whether the release document attached to Plaintiff's Complaint as Exhibit A, entitled "Settlement Agreement
It is the Court's understanding from the papers that Plaintiff was a citizen of the state of Kansas at the commencement of this action, and thus his citizenship is diverse from that of Defendant, as a Connecticut corporate citizen. Such diversity of citizenship confers subject matter jurisdiction on this Court. 28 U.S.C. § 1332(a)(1). If, however, Plaintiff was a citizen of (i.e., domiciled in) a state other than Kansas at the action's commencement, he must so inform the Court by affidavit on or before
Finally, both parties are directed to confer and submit their joint recommendations for updated case deadlines for discovery and trial of Count Two, regarding the validity of the Release, on or before
The parties may wish to consider waiving a jury with respect to the bifurcated trial of Count Two, and consenting to a bench trial on that issue.
It is So Ordered.
Doc. #1, ¶ 16.
Doc. #1, p. 12, ¶ 2 ("Full Release of Liability") (emphasis added); see also id., ¶ 1 ("Settlement Amount"). On its face, this self-styled "agreement" and "release" explicitly lists the office of the "Knights of Columbus Headquarters, 1 Columbus Plaza, New Haven, CT 06510" as the address of the Supreme Advocate of the KOC, who is the KOC "contact" to be notified by Plaintiff in the event that there is an impending breach of "confidentiality" under the agreement. Id., p. 14-15, ¶ 5.
Tex. Civ. Prac. & Rem. Code § 16.0045(a)(1)-(3).
See also Bilodeau, 2009 WL 1505571, at *5 (recognizing that Baxter post-dates "Rest.2d, § 142, comment g" and citing Baxter, 230 Conn. at 340, 644 A.2d 1297, to "hold[] that the traditional rule — that the law of the forum state governs on matters of procedure — applies here").
See also Fed.R.Civ.P. 57 (stating that "[t]hese rules govern the procedure for obtaining a declaratory judgment under 28 U.S.C. § 2201").
Elgar v. Elgar, 238 Conn. 839, 679 A.2d 937, 942 (1996) (quoting Restatement (Second) of Conflicts of Laws § 187(2)(a)-(b)).
Under Restatement (Second) of Conflicts of Laws § 188, "[t]he rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction." Restatement (Second) of Conflict of Laws § 188(1). In the absence of "an effective choice of law by the parties," courts look to such factors as: the place of contracting, the place of negotiation of the contract, the place of performance, the location of the subject matter of the contract, and the domicile, residence, nationality, place of incorporation and place of business of the parties. Id. § 188(2).
1 Restatement (Second) of Conflict of Laws § 187, Comment b (1971).
Doc. # 1, p. 17.
Moreover, even when a claim is considered equitable in nature, a jury may be used in an advisory capacity to find the facts, after which the Court enters the declaratory judgment. See, e.g., (American) Lumbermens Mut. Casualty Co. of Illinois v. Timms & Howard, 108 F.2d 497, 500 (2d Cir. 1939) (In equitable declaratory judgment action concerning obligation of automobile liability insurer under policy, court found "no reason why the parties, with the approval of the judge, should not agree that an advisory verdict be taken as in equity and with the same weight as such a verdict had in equity.").
Here the declaratory judgment sought involves a determination as to whether common law fraud and/or misrepresentation has been employed to procure a release agreement. Such actions have traditionally been cognizable at common law, making them subject to determination by a jury, as Plaintiff has demanded.
