# Appendix — Chartschlaa v. Nationwide Mutual Insurance

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0086%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 2009
- **Citation:** 129 U.S. 1534

## Text

Supreme Court US.

A (1)... 08-933 JAN 13 2009

RK

IN THE
Supreme Court of the Anited States

PETER CHARTSCHLAA and ANGELA SAWICKI KING, as
personal representatives of ALEX CHARTS, deceased, doing
business as Alex Charts Agency, Inc. and Charts
Insurance Associates, Inc.

Petitioners
Vv.

NATIONWIDE MUTUAL INSURANCE COMPANY, NATIONWIDE
MUTUAL FIRE INSURANCE COMPANY, NATIONWIDE LIFE
INSURANCE COMPANY, NATIONWIDE PROPERTY AND
CASUALTY COMPANY, NATIONWIDE VARIABLE LIFE
INSURANCE COMPANY AND COLONIAL INSURANCE COMPANY
OF CALIFORNIA

Respondents

On Petition for Writ of Certiorari
To The United States Court of Appeals for the Second
Circuit

APPENDIX

RAYMOND A. GARCIA, ESQ.
Counsel of Record
JANE I. MILAS, ESQ.
NICOLE LIGUORI MICKLICH, ESQ.
MICHAEL V. PEPE, ESQ.
GARCIA & MILAS, P.C.
44 TRUMBULL STREET
New HAVEN, CT 06510
(203) 773-3824
Jan. 13, 2009

erm ee ee oe —

Chartschlaa v. Nationwide Mut. Ins. Co., 538 F.3d
116 (2d Cir. 2008) (“Charts VI’)

United States Court of Appeals,
Second Circuit.

Peter CHARTSCHLAA and Angela Sawicki King as
personal representatives of Alex Charts, deceased, doing
business as Alex Charts Agency Inc. and Charts Insurance
Associates, Inc.,! Plaintiffs-Appellees-Cross-Appellants,

Vv.

NATIONWIDE MUTUAL INSURANCE COMPANY,
Nationwide Mutual Fire Insurance Company, Nationwide
Life Insurance Co., Nationwide Property and Casualty
Company, Nationwide Variable Life Insurance Company
and Colonial Insurance Company of California,
Defendants-Appellants-Cross-Appellees,

Helena Charts and Christopher L. Garcia, Plaintiffs.

Docket Nos. 05-5988-cv(1.), 05-6603-cv(xap).
Argued: Oct. 23, 2006.
Decided: Aug. 14, 2008.

Before: WINTER, McLAUGHLIN, and STRAUB, Circuit
Judges.

PER CURIAM:
Defendants-Appellants-Cross-Appellees Nationwide

1 Alex Charts died during the pendency of these proceedings, and by
order of this Court filed June 26, 2008, Peter Chartschlaa and Angela
Sawicki King were substituted as parties pursuant to Federal Rule of
Appellate Procedure 43(a)(1).

2

Mutual Insurance Company, Nationwide Mutual Fire
Insurance Company, Nationwide Life Insurance Company,
Nationwide Property and Casualty Company, Nationwide
Variable Life Insurance Company, and Colonial Insurance
Company of California (collectively, “Nationwide”), appeal
from a judgment entered by the United States District
Court for the District of Connecticut (Droney, J.) upon a
jury verdict in favor of Plaintiffs-Appellees-Cross-
Appellants Alex Charts and Charts Insurance Associates,
Inc. (““CIAI”). Charts and CIAI cross-appeal the district
court's denial of their motion for prejudgment interest and
grant of Nationwide's motion for judgment as a matter of
law on one of their claims.

Charts and CIAI, former sellers of Nationwide insurance
policies, sued on several claims arising out of Nationwide's
termination of their relationship. For the reasons that
follow, we hold that those claims belong to the bankruptcy
estate of Alex Charts and not to either of the plaintiffs.
Accordingly, we reverse the judgment of the district court
and direct that judgment be entered in favor of
Nationwide.

BACKGROUND

We assume familiarity with the district court's and our
prior decisions in this case. See Charts v. Nationwide
Mut. Ins. Co., 16 Fed.Appx. 44 (2d Cir.2001) (“ Charts I ”;)
Charts v. Nationwide Mut. Ins. Co., 300 B.R. 552
(D.Conn.2003) (“ Charts II”); Charts v. Nationwide Mut.
Ins. Co., 397 F.Supp.2d 357 (D.Conn.2005) (“ Charts IIT ”).
We recount here only those facts necessary for resolution
of this appeal.

Since at least 1979, Alex Charts has been in the business
of selling Nationwide insurance. He started as an

3

individual agent with an individual agent's agreement. In
1986, Charts entered into a new agency agreement (the
“Corporate Agency Agreement”) with Nationwide through
a corporation called Alex Charts Agency, *120 Inc. (the
“Old Agency”), of which Charts was the sole shareholder.
In October 1992, Charts formed CIAI as a new corporate
entity for his insurance business. That month, the officers
and directors of CIAI, including Charts, held an
organizational meeting. Charts prepared the incorporation
papers for CIAI, but delayed filing them.

In December 1992, Charts and his wife filed a Chapter 7
bankruptcy petition in the United States Bankruptcy
Court for the District of Connecticut. As required in a
Chapter 7 bankruptcy proceeding, Charts filed various
schedules of assets and liabilities. See1l U.S.C. § 521.
Charts listed the Old Agency as the name of his insurance
business. He did not list his interest in CIAI as an asset of
his estate.

In January 1993, Charts formally filed the certificate of
organization for CIAI with the Connecticut Secretary of
State.

In May 1993, while still in bankruptcy proceedings, Charts
executed a new agency agreement with Nationwide on
behalf of CIAI (the “CIAI Agreement”). The CIAI
Agreement, which had an effective date retroactive to
January 1, 1980, allowed CIAI to market and service
Nationwide insurance contracts as Charts had done in the
past individually and through the Old Agency.

In 1995, Nationwide launched an internal investigation
into potential misconduct by its Connecticut agents.
During that investigation, several agents alleged that
Charts engaged in prohibited business practices.

In January 1996, Nationwide terminated the CIAI
Agreement.

In February 1996, Charts obtained an order of discharge in
his bankruptcy proceedings, and the bankruptcy court
closed the case.

In August 1997, Charts and CIAI sued Nationwide in the
United States District Court for the District of Connecticut
(Droney, J.). The plaintiffs alleged that Nationwide
terminated the CIAI Agreement because of Charts's age
and in retaliation for Charts's own reporting of misconduct
by Nationwide employees to Nationwide management. The
plaintiffs contended that these actions violated the
covenant of good faith and fair dealing implied in the CIAI
Agreement as well as Connecticut statutory law.
Nationwide moved for summary judgment on the ground
that the CIAI Agreement and any cause of action based on
that contract were part of the bankruptcy estate.

In August 2000, a Magistrate Judge (Garfinkel, M.-J.)
recommended that the district court grant Nationwide's
motion, finding that Charts's claims belonged to the
bankruptcy estate and that his failure to disclose the
existence of CIAI in the bankruptcy case was “clearly not
inadvertent.” In September 2000, the district court
adopted this recommendation. Charts appealed that
judgment to this Court, and we vacated the judgment,
without reaching the merits, on the ground that the estate
should have been joined as a party to the suit. Charts J, 16
Fed. Ay ox. at 44.

On remand, the district court reopened the bankruptcy
case for the purpose of appointing a trustee to represent
the estate's interests in this litigation. Nationwide

5

thereafter renewed its motion for summary judgment,
iterating its position that the claims belonged to the
bankruptcy estate. The trustee then entered an
appearance and expressed his intent to abandon the
claims against Nationwide under 11 U.S.C. § 554(a) by
filing a notice of proposed abandonment. Nationwide
objected to the proposed abandonment.

*121 At a December 2002 hearing, the trustee informed
the district court that he had entered negotiations to sell
the claims to Nationwide, and soon planned to file a
proposed notice of sale of the claims. On that basis, the
trustee requested that the court take no action with
respect to the proposed abandonment.

In September 2003, the district court denied Nationwide's
renewed motion for summary judgment, reversing its
earlier position. This time, the district court held that
Charts owned the disputed claims after all, because the
claims arose after the bankruptcy fiiig and such “post-
petition” claims generally do not belong to the estate.
Charts II, 300 B.R. at 556-58. In its ruling, the district
court noted its understanding that the trustee had sold,
rather than abandoned, whatever interest it held in the
claims. Id. at 556 n. 5. Thus, the court observed, “if the
Court were to hold that these claims were property of the
estate, ... Charts would not have standing to assert them
because any claim owned by the estate is now held by
Nationwide.” Jd. In fact, however, the proposed sale of
the claims to Nationwide was never finalized.

The case proceeded to a jury trial. At trial, Charts testified
that CIAI was simply the new name and corporate identity
of the very same insurance business he had previously
operated through the Old Agency:

6

Q: So that business from Alex Charts Agency, Inc., the
Nationwide policies for which that company was receiving
commissions, that was all rolled over to the new company?

A: Everything stayed the samce....

Q@: When you say everything stayed the same, am I
characterizing this fairly by essentially saying-and tell me
if I'm wrong-that all of the business that you had been
doing as Alex Charts Agency, Inc. for which you were
receiving ongoing commissions, that ... was simply moved
over to the new company, Charts Insurance Associates,
Inc.?

A: Yes.

Q. Did you have employees of Alex Charts Agency, Inc.?

A. Yes.

Q. Did all of those incividuals who were employees of Alex
Charts Agency, Inc. at the time you wound down that
business, that corporation, become employees of Charts
Insurance Associat¢ s, Inc.?

A. Yes.

The jury returned a verdict for Charts on all counts,
awarding $2.3 million in « «mages.

Nationwide filed a post-verdict motion for judgment as a
matter of law. The plaintiffs moved for prejudgment
interest and for attorneys’ fees. The district court denied
Nationwide's motion except as to the plaintiffs’ claim for

7

breach of the implied covenant of good faith and fair
dealing; denied the plaintiffs' motion for prejudgment
interest; and awarded the plaintiffs $750,000 in attorneys'
fees. Charts III, 397 F.Supp.2d at 370, 372, 374, 385-86.

On appeal, Nationwide continues to press its argument
that the claims belong to Charts's bankruptcy estate, and
not to the plaintiffs. We agree. Because ownership of the
claims is a threshold issue, we need not reach the
numerous other arguments raised in the appeal and cross-
appeal.

DISCUSSION

This Court reviews de novo a district court's resolution of a
motion for *122 judgment as a matter of law under Federal
Rule of Civil Procedure 50(b), applying the same standard
that the district court was required to apply. Diesel v.
Town of Lewisboro, 232 F.3d 92, 103 (2d Cir.2000). Thus,
we “consider the evidence in tl e light most favorable to the
non-moving party and give that party the benefit of all
reasonable inferences from the evidence that the jury
might have drawn in that party's favor.” Jd. Whether a
cause of action belongs to a bankruptcy estate is a question
of Jaw, which we review de novo. See In re Swift, 129 F.3d
792, 795 (5th Cir.1997).

Our analysis begins with 11 U.S.C. § 541(a)(1), which
defines the »ankruptcy estate as including “all legal or
- equitable interests of the debtor in property as of the
commencement of the case.” “It would be hard to imagine
language that would be more encompassing” than this
broad definition. 4 Collier on Bankruptcy J 541.01 (15th
ed.2001). “[E]very conceivable interest of the debtor,
future, nonpossessory, contingent, speculative, and
derivative, is within the reach of § 541.” Jn re Yonikus,

8

996 F.2d 866, 869 (7th Cir.1993). Contractual rights
clearly fall within the reach of this section, see, e.g., Cohen
v. Drexel Burnham Lambert Group, Inc. (In re Drexel
Burnham Lambert Group, Inc.), 138 B.R. 687, 701
(Bankr.S.D.N.Y.1992), as do causes of action owned by the
debtor or arising from property of the estate, see Seward
v. Devine, 888 F.2d 957, 963 (2d Cir.1989)

Given the wide scope of § 541, the debtor's obligation to
disclose all his interests at the commencement of a case is
equally broad. Seell U.S.C. § 521(a)(1)(B)(i), (iii)
(requiring debtor to “file ... a schedule of assets and
liabilities ... and a statement of the debtor's financial
affairs”). Because full disclosure by debtors is essential to
the proper functioning of the bankruptcy system, the
Bankruptcy Code severely penalizes debtors who fail to
disclose assets: While properly scheduled estate property
that has not been administered by the trustee normally
returns to the debtor when the bankruptcy court closes the
case, undisclosed assets automatically remain property of
the estate after the case is closed. Seell U.S.C. § 554(c),
(d); Collier, supra, 9 554.03. “A debtor may not conceal
assets and then, upon termination of the bankruptcy case,
utilize the assets for [his] own benefit.” Kunica v. St.
Jean Fin., Inc., 233 B.R. 46, 53 (S.D.N.Y.1999).

Because assets within the estate are those that exist “as of
the commencement of the case,"11 U.S.C. § 541(a),
property acquired by the debtor after the filing of a
bankruptcy petition generally does not become part of the
estate. Benjamin Weintraub & Alan N._ Resnick,
Bankruptcy Law Manual § 5:6 (5th ed.2008). However,
“la]fter-acquired” property wil] vest in the estate if it is
derived from property that was part of the estate as of the
commencement of the bankruptcy. Seell U.S.C. §
541(a)(6) (making “[p]roceeds, product(s], offspring, rents

9

or profits of or from property of estate” part of bankruptcy
estate). Post-petition property will become property of the
estate only if it is “sufficiently rooted in the pre-
bankruptcy past.” Segal v. Rochelle, 382 U.S. 375, 380,
86 S.Ct. 511, 15 L.Ed.2d 428 (1966) (interpreting
Bankruptcy Act of 1898).

The plaintiffs argue that Charts had no duty to disclose
the existence of CIAI because it was not formally
incorporated until after the date of the bankruptcy
petition, and therefore is not part of the bankruptcy estate.
We disagree. Charts readily admitted in deposition
testimony that CIAI was formed in October 1992, *123
prior to filing his bankruptcy petition. Charts also
conceded that CIAI was incorporated simply to change the
name of his preexisting insurance business, and that this
change occurred in October 1992, when CIAI was
organized. The Bankruptcy Code is premised on full and
complete disclosure of the debtor's finances. A debtor who
“elects to avail himself of the benefits of the federal
bankruptcy laws by the filing of a petition ... can no longer
expect to have any financial secrets.” In re Trout, 108
B.R. 235, 238 (Bankr.D.N.D.1989). The existence of CIAI-
the formal incorporation of which Charts delayed until
soon after filing for bankruptcy and which was intended as
simply a renamed successor to Charts's Old Agency-should
have been disclosed to the bankruptcy trustee.2 And

2 When he filed for bankruptcy, Charts listed the Old Agency as an
exemption under 11 U.S.C. § 522(d)(5), valuing the business at a mere
$1. That provision allows debtors to exempt from the bankruptcy
estate up to $11,200 in estate property. 11 U.S.C. § 522(d)(5). The
plaintiffs have not argued that CIAI was subject to this exemption or
that the CIAI Agreement is not a product of the bankruptcy estate by
virtue of the exemption. In a dispute that has entered its second
decade, we will not take up this argument for them. See Norton v.
San's Club, 145 F.3d 114, 117 (2d Cir.1998) (issues not sufficiently

argued considered waived).

10

because CIAI's existence was not disclosed, it remains part
of the bankruptcy estate. See Kunica, 233 B.R. at 53.

Further, the CIAI Agreement is also an asset of the
bankruptcy estate, even though it was not signed until
May 1993. During his deposition, Charts conceded that
Nationwide issued a new contract to CIAI at his request
because of the change of his business's name. Even more
telling, the CIAI Agreement had a retroactive effective
date of January 1, 1980-the approximate date that Charts
began doing business with Nationwide. The parties thus
perceived the CIAI Agreement as merely a continuation of
their longstanding business relationship. See Weintraub
& Resnick, supra, § 5:6 n. 1 (“It is important to
distinguish between property that is acquired after the
case is commenced and property that merely changes in
form.”). Accordingly, tiie CIAI Agreement is deeply rooted
in the pre-bankruptcy past, and should be considered part
of the bankruptcy estate.

Because the claims asserted by the plaintiffs arose from
CIAI and the CIAI Agreement, they are also property of
the bankruptcy estate, and those claims may not be
brought by the plaintiffs.

Finally, we reject the plaintiffs’ argument that the rights
in Charts's insurance business were abandoned to Charts
after the trustee filed and served on creditors a notice of
proposed abandonment of the claims. Abandonment is not
a process to be taken lightly. Once an asset is abandoned,
it is removed from the bankruptcy estate, and this removal
is irrevocable except in very limited circumstances. See
Catalono v. Comm'r, 279 F.3d 682, 686 (9th Cir.2002). In
light of the impact of abandonment on the rights of
creditors, a trustee's intent to abandon an asset must be
clear and unequivocal. See In_re Sire Plan, Inc., 100 B.R.

11

690, 693 (Bankr.S.D.N.Y.1989).

Here, the trustee informed the district court that it
intended to sell the claims to Nationwide. This
representation was inconsistent with the _ trustee's
previously evinced intent to abandon the property to
Charts. Indeed, the trustee specifically requested that the
court take no action on the abandonment issue while the
negotiations were pending. Although the sale was never
consummated, there is no indication*124 that the trustee
ever renewed its request to abandon the claims. Under
these circumstances, the trustee's intent to abandon the
claims was ambiguous. Absent an unambiguous intent to
abandon estate property, the proposed abandonment is not
effective.

CONCLUSION

For the foregoing reasons, the judgment of the district
court is REVERSED. We direct the district court to enter
judgment for Nationwide.

12

Charts v. Nationswide Mut. Ins. Co., 397 F. Supp. 2d
357 (D. Conn. 2005) (“Charts IIT”)

United States District Court,
D. Connecticut.
Alex CHARTS and Charts Insurance Assuciates, Inc.

Plaintiffs,
V.
NATIONWIDE MUTUAL INSURANCE CO., et al.
Defendants

No. Civ.A. 397CV1621CFD.
Oct. 25, 2005.

DRONEY, District Judge.

The plaintiffs, Charts Insurance Associates, Inc. (“CIAI”)
and Alex Charts (collectively “Charts”), brought this three-
count action against Nativnwide,! alleging violations of the
Connecticut Franchise Act (“the Franchise Act”), Conn.
Gen. Stat. § 42-133e et seqg., the Connecticut Unfair *362
Trade Practices Act (““CUTPA”), Conn. Gen.Stat. § 42-110a
et seq., and the implied covenant of good faith and fair
dealing. Following a nine-day trial, the jury returned a
verdict in favor of Charts on all three counts and awarded
damages of $2,300,000. Judgment was entered on
December 13, 2004. Pending are three post-trial motions:
(1) Nationwide's motion for judgment as a matter of law on
all three counts pursuant to Fed.R.Civ.P. 50, or, in the
alternative, for a new trial pursuant to Fed.R.Civ.P. 59; (2)
Charts' motion for attorney's fees; and (3) Charts’ motion
for prejudgment interest. For the following reasons,

' The defendants are Nationwide Mutual Insurance Company,
Nationwide Mutual Fire Insurance Company, Nationwide Life
Insurance Company, Nationwide Property and Casualty Insurance
Company, Nationwide Variable Life Insurance Company, and Colonial
Insurance Company of California. They will be referred to collectively
as “Nationwide.”

13

Nationwide's motion is granted in part and denied in part.
Charts' motion for prejudgment interest is denied, and
Charts’ motion for attorney's fees is granted, as modified
by the Court.

The procedural background of this case has been recounted
in prior rulings. See Alex Charts and Charts Ins. Assoc.,
Inc. v. Nationwide Mutual Ins. Co., 16 Fed.Appx. 44 (2d
Cir.2001); Charts _v. Nationwide Mut. Ins. Co., 300 B.R.
552, 553 (2003). In order to frame the discussion of the
parties’ post-trial motions, however, the Court sets forth
the following hmited background: Charts brought this
action against Nationwide on August 11, 1997, claiming
various violations of Connecticut law arising from
Nationwide's termination of Charts' insurance agency.
After three years of contested motion practice, Magistrate
Judge William I. Garfinkel issued a recommended ruling
granting Nationwide's motion for summary judgment on
the ground that, inter alia, Charts' claims against
Nationwide were part of the bankruptcy estate of Alex and
Helena Charts, and as such could not be asserted here by
Alex Charts and CIAI.? On September 29, 2000, this Court
approved the recommended ruling on that ground, over
Charts’ objection, and judgment entered for Nationwide.
The Second Circuit, without addressing the merits of this
Court's ruling, remanded to the District Court, concluding
that the bankruptcy trustee was a necessary party in
making a determination as to standing. On remand,

2“On December 14, 1992, Alex Charts and his wife Helena filed their
voluntary petition under Chapter 7 of the Bankruptcy Code with the
United States Bankruptcy Court for the District of Connecticut. On
February 13, 1996, the Bankruptcy Court issued an Order of
Discharge of Debtor, and the bankruptcy case was closed on March 1,
1996.” Charts v. Nationwide Mut. Ins. Co., 300 B.R. 552, 553 (2003).

3 Judge Garfinkel also recommended that the action be dismissed on
the basis of judicial estoppel, but that ground was not adopted by the
District Court.

14

therefore, this Court vacated its prior ruling and the action
was consolidated with the bankruptcy action. Nationwide
then filed a new motion for summary judgment, essentially
relying on the same arguments presented in its first
motion. On September 30, 2003, after reconsidering the
parties’ arguments, and hearing from the trustee of
Charts' bankruptcy, the Court denied Nationwide's motion
for summary judgment, finding that the claims were not
property of the bankruptcy estate and Charts and CIAI
had standing to assert them in this_ case.

On November 29, 2004, the case proceeded to trial. At the
conclusion of Charts’ case-in-chief, Nationwide made an
oral motion for judgment as a matter of law pursuant to
Rule 50. The Court denied that motion without prejudice
to Nationwide renewing it at the conclusion of all the
evidence. Nationwide made a second motion for judgment
as a matter of law at the conclusion of all the evidence.
The Court reserved judgment until after the jury had
reached its verdict. On December*363 10, 2004, the jury
returned its verdict in favor of Charts on all three counts.
On December 13, 2004, the Court entered judgment in
accordance with the jury's verdict. On December 23, 2004,
Nationwide renewed its request for judgment as a matter
of law or a new trial by filing a motion with this Court.
Both parties subsequently submitted numerous
memoranda of law in response to Nationwide's motion.

On January 12, 2005, Charts filed a motion for attorney's
fees and a motion for prejudgment interest. Those motions
also have been fully briefed by the parties. The Court
heard arguments on all pos*-trial motions on July 20,
2005.4

4 Nationwide filed its post-verdict motion for a judgment as a matter of
law or, in the alternative, for a new trial, within the ten-day hmitation
set forth in Fed.R.Civ.P. 50(b). At that time, however, the transcript of

NATIONWIDE'S MOTION FOR JUDGMENT AS A
MATTER OF LAW, OR, IN THE ALTERNATIVE, FOR
A NEW TRIAL

Nationwide's post-verdict motion seeks judgment as a
matter of law as to all counts pursuant to Rule 50, or, in
the alternative, a new trial on all counts and/or damages
pursuant to Rule 59. The Court turns to the motion for
judgment as a matter of law firs’

I Motion for Judgment as a Matter of Law

A) Standard of Review

“If, for any reason, the court does not grant a motion for
judgment as a matter of law made at the close of all the
evidence, the court is considered to have submitted the
action to the jury subject to the court's later deciding the
legal questions raised by the motion. The movant may
renew its request for judgment as a matter of law by filing
a motion no later than 10 days after entry of judgment....”
Fed.R.Civ.P. 50(b). When ruling on such a post-verdict
motion for judgment as a matter of law, a district court
may allow the judgment to stand, order a new trial or
direct entry of judgment as a matter of law. /d.

A Court may properly grant a post-verdict Rule 50 motion
when “there can be but one conclusion as to the verdict
that reasonable men could have reached.” Merrill Lynch
Interfunding, Inc. v. Argenti, 155 F.3d 113, 120 (2d
Cir.1998) (quoting Samuels v. Air Transport Local 504,
992 F.2d 12, 14 (2d Cir.1993)). In other words, “a Rule 50
motion for judgment as a matter of law must be granted

this trial had not been completed. Consequently, the Court allowed the
parties additional time beyond the date when the transcript was
completed to file their memoranda.

16

where ‘(1) there is such a complete absence of evidence
supporting the verdict that the jury's findings could only
have been the result of sheer surmise and conjecture, or (2)
there is such an overwhelming amount of evidence in favor
of the movant that reasonable and fair minded men could
not arrive at a verdict against him.’ ” Hernandez v. Keane,
341 F.3d 137, 143-44 (2d Cir.2003) (quoting Newmont
Mines Ltd. v. Hanover Ins. Co., 784 F.2d 127, 132 (2d
Cir.1986)). In making such a determination, a court “must
view the evidence in a light most favorable to the
nonmovant and grant that party every reasonable
inference that the jury might have drawn in its favor.”
Samuels, 992 F.2d at 16. A court “cannot assess the weight
of conflicting evidence, pass on the credibility of the
witnesses, or substitute its judgment for that of the jury.”
Id. (quoting Mattivi_v. South African Marine Corp., 618
F.2d 163, 168 (2d Cir.1980)). Instead, a court “must defer
to the credibility assessments *364 that may have been
made by the jury and the reasonable factual inferences
that may have been drawn by the jury.” Williams uv.
County of Westchester, 171 F.3d 98, 101 (2d Cir.1999).

In considering the forgoing principles of law, it has been
noted that the moving party bears a “heavy burden” on a
post-verdict Rule 50 motion. Concerned Area Residents for
the Enu't v. Southview Farm, 34 F.3d 114, 117 (d
Cir.1994); Matthews v. Armitage, 36 F.Supp.2d 121, 124
(N.D.N.Y.1999); see also Holt v. Home Depot, U.S.A. Inc.,
2004 WL 178604 ‘D.Conn. Jan.22, 2004) (finding that the
“stringent standards that apply to” a post-verdict Rule 50
motion were not met). Moreover, “[blecause a judgment as
a matter of law intrudes upon the rightful province of the
jury, it is highly disfavored.” Sabir vu. Jowett, 214
F.Supp.2d 226, 236 (D.Conn.2002) (quotations and

citations omitted).

17

Nationwide's renewed motion for judgment as a matter of
law challenges the jury's verdict on each count separately.
Each argument will be addressed in turn.®

B) Connecticut Franchise Act

[3] The jury found that Nationwide violated the
Franchise Act when it terminated its contracts with
Charts and CIAI, and Nationwide now challenges this
finding on several grounds.

5 Nationwide does make one argument directed at all three counts,
however: renewing the argument that it presented in its summary
judgment papers, Nationwide's post-verdict Rule 50 motion argues
that it is entitled to judgment as a matter of law on all three counts on
the ground that Charts lacked standing because the claims were part
of the bankruptcy estate. The Court rejected that argument when
ruling on Nationwide's second motion for summary judgment. The
Court need not revisit that decision at this time, however, because
Nationwide failed to make this argument in its original pre-verdict
Rule 50 motion for judgment = 1 matter of law. As the Second Circuit
recently has noted, a party may only “renew” an earlier “request for
judgment as a matter of law” in a post-verdict Rule 50 motion.
Broadnax v. City of New Haven, 415 F.3d 265, 268 (2d Cir.2005); see
also See Fed.R.Civ.P. 50 advisory committee's note (re 1991
Amendment, Subdivision (b)) (“A post-trial motion for judgment can be
granted only on grounds advanced in the pre-verdict motion”); Rand-
Whitney Containerboard Ltd. Partnership v. Town of Montville, 289
F.Supp.2d 62, 67 (D.Conn.2003) (A post-verdict Rule 50 motion
“cannot assert new grounds; the rules limit the grounds for post-
verdict judgment as a matter of law to those ‘specifically raised’ in the
pre-verdict motion”)(quoting Lambert v. Genesee Hosp., 10 F.3d 46, 53-
54 (2d Cir.1993)).The Second Circuit has indicated, however, “a [post-
verdict] Rule 50(b) motion should not be granted [on a ground not
raised previously] unless it is required to prevent manifest injustice.”
Broadnax, 415 F.3d at 268 (quotations omitted). Nationwide has not

responded to Charts' argument that this issue was not properly raised
in the pre-verdict Rule 50 motion, much less argued that the Court
should address it to prevent a “manifest injustice.” In any event, the
Court finds that such a result will not occur, as the evidence at trial
did not alter the Court's prior conclusion on the standing issue.

18

i) Jury Issue

Nationwide first claims that the Franchise Act claim
should not have gone to the jury. The Court rejects this
argument for several reasons. First, and most important, it
was not raised in the pre-verdict Rule 50 motion. See
Rand-Whitney _Containerboard Ltd. Partnership, 289
F.Supp.2d at 67; see also footnote 5 of this ruling. Second,
although Charts' complaint and jury demand was filed
August 11, 1997, at no subsequent time did Nationwide
object to the submission of the Franchise Act claim to the
jury.® See *365 Fed.R.Civ.P. 39(a)(2) (allowing for a party
to object to a jury demand). Indeed, although Nationwide
made several objections to the Court's proposed
instructions on the Franchise Act count at the charging
conference, none addressed the underlying question of
whether the Franchise Act claim should be submitted to
the jury. Only now, after the matter already has been
submitted to the jury and a plaintiffs' verdict returned,
Nationwide raises its objection. The Court finds that such
an objection has been waived.? Compare Thompson _v.
Parkes, 963 F.2d 885 (6th Cir.1992) (finding that the
district court improperly found that the claims were
equitable and took them from the jury one week after the
jury had returned its verdict) with Merex A.G. v. Fairchild
Weston Sys., Inc., 29 F.3d 821, 822 (2d Cir.1994) (finding
that the district court properly took an equitable claim
from the jury at the close of evidence, before the case was

6 Because the jury demand did not specify which counts should be
submitted to the jury, Charts was “deemed to have demanded trial by
jury for all the issues so triable.” Fed. R.Civ.P. 38(c).

? Nationwide also requests that the Court certify this question to the
Connecticut Supreme Court. This request is also rejected as untimely,
as this is the first time that Nationwide has made such a requcst.

19
given to the jury).8

Prior decisions from the Connecticut Supreme Court and
the United States Court of Appeals for the Second Circuit
buttress this conclusion. In Associated Investment Co. Ltd.
Partnership v. Williams Associates IV, 230 Conn. 148, 162,
645 A.2d 505 (1994), the Connecticut Supreme Court held
that plaintiffs were not entitled to a jury trial on CUTPA
claims.’ In a subsequently issued decision, however, that
Court stated: “A party who wishes CUTPA issues to be
tried to the court, therefore, need only move to strike such
a case from the jury list. Jf the parties fail to take such
action, however, CUTPA issues may be tried to the jury.”
Larsen Chelsey Realty Co. v. Larsen, 232 Conn. 480, 490 n.
13, 656 A.2d 1009 (1995) (emphasis added).

The Second Circuit recently addressed a similar issue,
which was also an issue of first impression in this circuit,
namely “whether, where one party requests a jury trial on
the lost wages issue [under Title VII] and the party's
opponents fail to object, the court is permitted, because the

8 In addition, the Court notes that the pretrial order indicated that
this case would be a jury trial, and that the jury would be comprised of
nine jurors. At no time did Nationwide object to the pretrial order, or
otherwise seek clarification that the Franchise Act claim would not be
submitted to the jury. See Fed.R.Civ.P. 16(e) (“[a pretrial order] shall
control the subsequent course of the action unless modified by a
subsequent order”); Cross & Cross Properties, Ltd. v. Everett Allied
Co., 886 F.2d 497, 503 (2d Cir.1989) (noting that, although “total
inflexibility is undesirable,” a “pretrial order[ } should not be changed
lightly”) (quoting Fed.R.Civ.P. 16(e) advisory committee notes and
Clark v. Pennsylvania R.R. Co., 328 F.2d 591, 594-95 (2d Cir.1964)).

9 The Connecticut legislature subsequently amended CUTPA to
provide a right to jury trial in such actions. See Conn. Gen.Stat. § 42-
110g (“In any action brought by a person under this section there shall
be a right to a jury trial....”); Lorenzetti v. Jolles, 120 F.Supp.2d 181,
187 _(1D.Conn.2000) (noting the legislature's response to Williams

Associates IV ).

20

opponents may be deemed to have consented, to submit
the issue for a non-advisory jury determination.”
Broadnax, 415 F.3d at 271. The Second Circuit, adopting
the positions taken by the Fifth and Seventh Circuits, held
that “that when a party demands jury consideration of lost
wages under Title VII and the party's opponent fails to
object, Rule 39(c) permits the district court to submit the
lost wages issue for a non-advisory jury determination.” Jd.
at 272. The Second Circuit *366 concluded that the district
court's submission of the issue of lost wages to the jury
was not reversible error because “the [defendant] failed to
object to sending the lost wages issue to the jury, despite
[plaintiff's including in her Complaint the statement that
‘[t]he plaintiff claims trial by jury of the issues in this
case.’ ” Id.

Although the Court believes that Nationwide has waived
its objection to the submission of the Franchise Act claim
to the jury, it nevertheless bears noting that there is no
decision from the Connecticut appellate courts addressing
the question of whether a Franchise Act claim may be
submitted to a jury, or holding that a Frauachise Act claim
was improperly submitted to a jury. There are, however,
conflicting trial court decisions on this issue. One judge on
the Connecticut Superior Court has found that a plaintiff
does not have a right to a jury trial on a Franchise Act
claim. Hartford Electric Supply Co. v. Allen-Bradley Co.,
Inc., 28 Conn. L.. Rptr. 447, 2000 WL _ 1918005
(Conn.Super.Ct., Dec.18, 2000) (“[n]o Connecticut cases
have accorded a right to trial by jury in a [Franchise Act]
case”). A judge in this District, however, has submitted
such a claim to a jury and entered judgment in accordance
with that jury's verdict. In Valentino v. S.B. Thomas, Inc.,
2001 WL 34118029 (D.Conn., Oct.28, 2001), after a five-
day trial, a jury found that there was a franchise
agreement between the parties and that the defendants

21

had violated the Connecticut Franchise Act when it
terminated the plaintiffs franchise and awarded the
plaintiff $60,000 in damages. Although the defendants
moved for judgment as a matter of law pursuant to Rule
50, it appears that their motion focused on the evidentiary
support for the jury's findings, and it did not raise the
preliminary issue of whether the Franchise Act claim
should have been submitted to the jury. Judge Eginton
denied the defendants' motion in its entirety, entered
judgment in accordance with the jury's verdict, and
awarded the plaintiff prejudgment interest and attorney's
fees.

In any event, because Nationwide failed to timely raise
this issue at any time during this litigation, much less in
its pre-verdict Rule 50 motion, it is not a proper ground for
a post-verdict Rule 50 motion for judgment as a matter of
law.

ii) The Connecticut Insurance Code

Nationwide next argues that because insurance companies
and their agents are subject to extensive regulation by the
Connecticut Insurance Code, § 38a-702 et seqg., the
Connecticut legislature could not have intended for
insurance agents to also be protected by the Franchise Act.
More specifically, Nationwide argues that because the
legislature has failed to enact a “good cause” termination
requirement within the Insurance Code, the legislature
could not have intended for the “good cause” requirement
set forth in the Franchise Act to apply to insurance agents.
See Conn. Gen.Stat. § 42-133f(a). This argument was
initially raised in Nationwide's Motion to Dismiss. See
“Reply to Plaintiff's Objection to Defendant's Motion to
Dismiss” [doc. # 15] at 2-4. The Court rejected that
argument in its Ruling on the Motion to Dismiss [doc. # 6].

22

Counsel also briefly raised this issue in its initial Rule 50
argument.

The Court reaffirms its decision denying the Motion to
Dismiss, and no evidence was presented at trial which
alters the Court's conclusion that the Connecticut
legislature did not intend to preclude insurance agents
from invoking the protections of the Connecticut Franchise
Act. The decisions from other jurisdictions cited by
Nationwide to support its view that the Connecticut
legislature intended its *367 franchise act to not cover
insurance agents concern factual settings and legislative
and regulatory schemes different from the Connecticut
statutes and regulations. Also, Nationwide's catalogue of
failed legislative attempts to impose a specified good cause
termination requirement for insurance agents’ in
Connecticut-submitted after trial was completed-shows no
clear indication that the Connecticut legislature intended
such preemption by the insurance statutes and
regulations. Finally, Nationwide has not made a
compelling argument in the absence of clear legislative
intent why an insurance agent should not be protected by
the Connecticut Franchise Act if a jury concludes that he
or she otherwise meets the tests for a _ franchise
relationship.

111) Evidentiary Support

The Court instructed the jury that a “franchise”
relationship exists only when both of two requirements are
met:

(1) There must be an oral or written agreement or
arrangement in which a franchisee is granted the right to
engage in the business of offering, selling, or distributing
services under a marketing plan or system prescribed in
substantial part by a franchisor; and

23

(2) The operation of the franchisee's business pursuant to
this marketing plan or system must be substantially
associated with the franchisor's trademark, service mark,
tradename, logotype, advertising, or other commercial
symbol designating the franchisor or its affiliate.

Nationwide claims that there was insufficient evidence
before the jury to find in favor of Charts on the first
element, and, therefore, it is entitled to judgment as a
matter of law on the Franchise Act count (Nationwide does
not challenge the jury's finding as to the second element).

As to the first element, the Court further instructed the
jury as follows: “The first element has a two step inquiry.
First, Charts must prove by a preponderance of the
evidence that there was an oral or written agreement or
arrangement in which it was granted the right to engage
in the business of offering, selling, or distributing
insurance policies offered by Nationwide.” It is undisputed
that Nationwide had entered into contracts with both Alex
Charts and CIAI. Moreover, according to the parties’
stipulation of facts, “Alex Charts was the President of
Charts Insurance Associates, Inc. (‘CIAI’), which was a
Connecticut corporation engaged in the b:'siness of selling
and servicing Nationwide insurance policies and other
related products within the State of Connecticut.” This
stipulation was read to the jury and was also supported by
other evidence at trial, including testimony from Ruben
Gainey, Nationwide's Vice President and _ Regional
Manager for New England, that an agent was in the
business of selling and servicing Nationwide polices.
(Trans.12/1/04, pg.109).!° Therefore, this admission and

10 Gainey was initially unavailable to testify at trial, and, therefore,
his deposition transcript was read into evidence, absent objection. At
that time, the Court instructed the jury as follows: “Ladies and

24

the consistent evidence gave the jury sufficient evidentiary
support for its finding that Nationwide had granted Charts
and CIAI “the right to engage in the business of offering,
selling, or distributing*368 services....". In addition,
although not discussed by either party, the Court notes
that the Franchise Act may apply if a party was granted a
right to “engage in the business of offering” services.
Although Nationwide disputes whether Charts had the
ability to bind it to a policy of insurance, and therefore
actually could “sell” such a policy, there is no dispute as to
Charts' ability to “offer” Nationwide policies to customers,
and to execute an initial, non-binding contract with
customer. Moreover, as to Charts’ ability to bind
Nationwide to a policy of insurance, Charts testified that,
based on his prior success with Nationwide, he was made a
“plus agent,” and therefore he did have the ability to bind
Nationwide. (Trans.12/01/04, pg.36-37). In sum, there was
substantial evidence from which the jury could have found
that Charts satisfied the first step of the first element.

As to the second step of the first element, namely whether
Charts offered, sold or distributed Nationwide policies
pursuant to a marketing plan or system which was
prescribed in substantial part by Nationwide, the Court
instructed the jury as follows:

This requirement focuses on the amount of control
exercised in the conduct of Charts' business as a
significant factor in determining whether a franchise was

Gentlemen of the jury, you will now be read a transcript of testimony
given previously by a witness in this case who is now unavailable to
testify in person at this trial. You are not to speculate as to why this
witness is unavailable and you are to regard this testimony in the
same way as if it were given at trial in person before you.” Gainey
testified by deposition during the Plaintiffs’ case, and personally
apneared to testify during the Defendants’ case. (Trans.11/29/04,

pg.62).

25

created. You should consider several factors to determine
whether the control, if any, exercised by Nationwide over
Charts rose to the level of a prescribed marketing plan or
syster.. You should consider whether it was Nationwide or
Charts that had the power to set the retail prices charged
to Charts' customers. Price is perhaps the most
fundamental aspect of a marketing plan, and the ability to
set prices is quite indicative of a franchisor's control.
However, fixing prices alone may not be determinative of a
franchisor's control. You also should consider, for example,
whether Nationwide had the power to control other
aspects of operation of Charts' insurance agency, including
its hours of operation, its days of operation, its advertising,
its lighting, its sales quotas and its hiring. In addition, you
should consider whether Nationwide provided Charts with
such things as financial support and management
training.

There is no precise formula as to how many of these
factors must be present to find the level of control
indicative of a franchise, or as to the weight each factor
should be given in each case. Instead, you should consider
these factors and give each the weight you believe it
deserves, considering the significance of each factor to the
business relationship between Nationwide and Charts.
(Emphasis added).

As evidenced by that charge, the second step of the first
factor is a balancing test, and the jury had considerable
discretion to consider evidence concerning the business
relationship between the parties. After reviewing the
transcripts and the parties’ memoranda of law, the Court
is unable to find that, when exercising this discretion, the
jury employed “sheer surmise and conjecture.” Hernandez,
341 F.3d at 143-44. Indeed, there was considerable
testimony from Mr. and Mrs. Charts, as well as other

26

Nationwide employees, that supports the jury's finding
that Charts operated pursuant to a marketing plan or
system prescribed in substantial part by Nationwide. For
example, when asked if agents operated under a
marketing plan prescribed by Nationwide, Gainey
answered “yes.” In addition, Gainey testified that
Nationwide employed Agency Managers to ensure that
agents met Nationwide's standards, that Nationwide
provided agents with samples *369 to use as local
advertisements and that Nationwide had to sign off on any
use of the Nationwide logo in local advertisements.
(Trans.12/1/05, pg.103-05). An Agency Manager that was
assigned to the Charts franchise, Mark Kapatoes, testified
that, as part of his job, he would “sit down with [the
agents] and go through what they had in plans as far as
advertising, marketing, really anything that you would do

to run a good business.” (Trans.11/30/2004, pg.47)
(emphasis added).'! In addition, in response to a question
asking “in what sorts of matters would you act as a liaison
between the agents and Nationwide,” Kapatoes replied
that, for example, “we would run through marketing
plans.” ( /d. at 48) Although Nationwide contends that it
presented evidence to refute a finding that Charts
operated pursuant to a marketing plan or system
subscribed in substantial part by Nationwide, the Court
“cannot assess the weight of conflicting evidence” at this
stage of the litigation. Sarmuels, 992 F.2d at 16; Mattivi,
618 F.2d at 168. Thus, Nationwide's post-verdict Rule 50
motion on this ground is denied.

ili) “Good Cause” Shown

Finally, Nationwide argues that, even if Charts was a
franchise, it had “good cause” to terminate that franchise.
See Conn. Gen.Stat. 42-133fla). Specifically, Nationwide

'' Kapatoes was unavailable to testify at trial, and, therefore, his
deposition transcript was read into evidence, absent objection

27

contends that Charts violated the Connecticut Insurance
Code by paying for the policies of at least two individuals,
and, therefore, they had “good cause” to terminate him. As
Charts notes in response, however, at no time during the
trial did Nationwide introduce the appropriate provisions
of the Insurance Code into evidence, or elicit testimony
from any witness stating that the reasons underlying the
termination of the franchise were violations of state law.
Indeed, in the opening statement made by Nationwide's
counsel, the jury was told that Nationwide “investigated
the allegations that the Charts had engaged in [rebating]”
and “conclud[ed] that he had violated company policy and
practice.” In conformance with this opening statement,
Nationwide failed to present any evidence to the jury that
Charts had violated the provisions of the Insurance Code,
and that this was the reason for his termination. It was
not until after the evidence was concluded and when
Nationwide filed a proposed supplemental jury instruction
on the Insurance Code and rebating that this issue was
raised before the Court. For that reason, the Court denied
the supplemental request, and the provisions of the
Insurance Code were never presented to the jury.

Moreover, the jury could have found that the evidence
submitted by Nationwide on this ground was _ not
persuasive. Nationwide's argument essentially is that
because Alex Charts paid the premiums on policies for the
policy holder, he engaged in illegal “rebating,” and,
therefore, it had “good cause” to terminate his franchise.
There appear to be three incidents in which Alex Charts
initially paid the premiums for the policy holder. In the
first incident, Charts paid the $54 premium for the first
year of a policy issued to Anne Elizabeth Turoczi, the niece
of Missy Brayton, a woman who worked for CIAI.
Although Brayton testified at trial that Charts had paid
the premium on her niece's policy, she admitted on cross-

28

examination that she was unaware that her niece's
parents had reimbursed Charts the full premium amount
a short time thereafter, and a copy of the Turoczis' check to
*370 Charts was submitted into evidence. (Trans. 12/2/04,
pg. 137-38, and Plaintiffs' Ex. 81). Charts also testified
that he was reimbursed for this advance of the Turoczi
premium. (Trans.12/01/04, pg.48).

In the second incident, it appears that Charts paid some
premiums on a $1,000,000 life insurance policy issued to
Mario Boccarossa, his Nationwide Agency Manager at the
time. At trial, Alex Charts testified that: “|Wjhen
(Boccarossa] came to me, I reminded him that I didn't
want to get involved in paying any premiums. Okay. He
was responsible for all the premiums. Okay. Like even
when we started the policy, and he assured me that would
be the case.” (Trans.12/01/04, pg.61). Charts further
testified that, although Boccarossa had paid some of the
premiums a “few months” later, he was then replaced by
Kapatoes as Agency Manager. Boccarossa asked Charts to
pay some of the outstanding premiums, in the amount of
$6,000, and “he would make it up as soon as he could.”
(Id). Although Boccarossa failed to pay that money back,
Charts testified that he did not sue for the money because
he didn't think he was at the “stage” to sue “his manager,”
and, moreover, “[it] wasn't enough money for me to bother
payl[ing] a lawyer and going after.” (Id. at 62).

In the third incident, Charts paid the first year premiums
for two policies issued for the twin sons of Linda Mello,
soon after Mello's husband had died. Mello was a secretary
in Nationwide's district office, and she worked for both
Kapatoes and Boccarossa when those individuals served as
the Agency Manager for the Charts franchise. The total
amount advanced by Charts’ for those policies totaled
$250. Although Mello never repaid that amount, she has

29

kept those policies active and has paid all of the remaining
premiums herself. Charts testified that he expected to
receive the advanced premium back from Mello, but that
he did not “see any reason to chase her for it” and that he
considered it a “charitable gift.” (Trans. 12/1/04, pg.45-46).

Nationwide may be correct in arguing that the evidence
concerning these three incidents could provide the jury
with enough evidentiary support for a finding that
Nationwide had “good cause” terminate the franchise.
However, the jury also had enough evidentiary support to
find that there was not “good cause” for termination. For
example, the termination letter sent by Nationwide to
Charts, which was entered into evidence, fails to mention
the “rebating” incidents as a ground for the termination.
(Plaintiffs Ex. 49). In addition, other Nationwide
employees testified that they had engaged in similar
actions when selling Nationwide policies. Because a court
“cannot assess the weight of conflicting evidence” at this
stage of the litigation, Samuels, 992 F.2d at 16, the motion
for judgment as a matter of law on this ground must be
denied.

In sum, Nationwide's post-verdict Rule 50 motion for
judgment as a matter of law on the Franchise Act count is
denied.

C) Connecticut Unfair Trade Practices Act
Nationwide challenges the jury's finding on the CUTPA
count on several grounds.

i) Applicability of CUTPA

CUTPA provides that “|nlo person shall engage in unfair
methods of competition and unfair or deceptive acts or
practices in the conduct of any trade or commerce.” Conn.
Gen.Stat. § 42-110b(a). Nationwide first argues that it is

30

entitled to judgment as a matter of law on the CUTPA
count because the acts complained of by Charts did not
occur “in the conduct of any trade *371 or commerce.”
Instead, Nationwide contends that the parties’
relationship was similar to a traditional
employer/employee relationship-to which CUTPA does not
apply. See Fenn v. Yale University, 283 F.Supp.2d 615, 639
(D.Conn.2003) (citing cases).

CUTPA defines trade and commerce as “the advertising,
the sale or rent or lease, the offering for sale or rent or
lease, or the distribution of any services and any property,
tangible or intangible, real, personal or mixed, and any
other article, commodity, or thing of value in this state.”
Conn. Gen.Stat. § 42-110a(4). Again, one of the facts
stipulated to by the parties was that “Alex Charts was the
President of Charts Insurance Associates, Inc. (‘CIAI’),
which was a Connecticut corporation engaged in the
business of selling and servicing Nationwide insurance
policies and other related products within the State of
Connecticut.” (emphasis added). This — stipulation
demonstrates that the plaintiffs are a Connecticut
corporation and its president, not employees of Nationwide
or similar to employees of Nationwide. Indeed, the jury
specifically found that they were not employees when it
found that the plaintiffs were Nationwide franchisees.
Therefore, there was sufficient evidence from which the
jury could have found that the acts complained of occurred
in the conduct of trade or commerce. In so finding, the
Court notes that the Connecticut state courts read CUTPA
broadly, and the Connecticut Supreme Court has rejected
the argument that CUTPA claims may only be brought by
a consumer, and not a business. See, e.g., Larsen, 232
Conn. at 492, 656 A.2d 1009 (““CUTPA, by its own terms,
applies to a broad spectrum of commercial activity,” and,
because it is “remedial in nature,” it must “be liberally

31

construed in favor of those whom the legislature intended
to benefit”) (citations omitted). Therefore, the Court finds
that the stipulated fact, as well as the evidence presented
at trial conforming to that stipulation, provided the jury
with a sufficient evidentiary basis for finding that the acts
complained of occurred in “the conduct of any trade or
commerce.” § 42-110b(a).

ii) Evidentiary Support

Nationwide's next argument can be summarized as
follows: (1) for the reasons set forth in its memorandum, it
is entitled to judgment as a matter of law on both the
Franchise Act count and the good faith and fair dealing
count; (2) the CUTPA count is derivative of those two other
counts; and, therefore (3) it is also entitled to judgment as
a matter of law on the CUTPA count, as there is no other,
independent basis for the jury's verdict. This argument is
flawed, however, because the Court has found that
Nationwide is not entitled to judgment as a matter of law
on the Franchise Act claim. The jury was instructed that
in order for it to find that Nationwide engaged in unfair or
deceptive trade practices, it may find that “(t]he practices
proved by Cha-:ts, without necessarily having been
previously considered unlawful, offend public policy as it
has been established by statutes, the common law, or
otherwise-in other words, it is within at least the
penumbra of some common law, statutory, or other
established concept of unfairness.” (emphasis added).!2
*372 Thus, a finding that Nationwide violated the

12 Further, the Court instructed the jury that it could find that
Nationwide engaged in unfair or deceptive trade practices if “the
practices proved by Charts are immoral, unethical, or unscrupulous”
and “the practices proved by Charts cause unjustified, substantial
injury to consumers, competitors, or other businessmen.” The Court
also instructed the jury that “a practice can be unfair under CUTPA
because of the degree to which it meets one of the ciiteria or because,
to a lesser degree, it meets all three.”

32

Franchise Act, and the public policy expressed therein,
could support a finding that Nationwide also violated
CUTPA. See Hartford Electric Supply Co. v. Allen-Bradley
Co., 250 Conn. 334, 368, 736 A.2d 824 (1999) (concluding
that the trial court's properly found that the defendant
had violated CUTPA, because “the defendant's conduct in
attempting to terminate the plaintiffs franchise without
good cause is a practice that offends the public policy of
Connecticut to promote fairness among businesses behind
the franchise act”). Consequently, tiie Court finds that the
conduct underlying the Franchise Act count provided the

jury with a basis for finding that Nationwide also violated
CUTPA.}3

13 Because the Court has found that the Franchise Act violation
provides a sufficient evidentiary basis for the jury finding in regard to
CUTPA, it need not reach the question of whether the jury's finding in
regard to the implied covenant of good faith and fair dealing also could
support a finding that Nationwide violated CUTPA.Alex Charts also
alleged in his complaint that Nationwide discriminated against him on
the basis of age and disability when it terminated his agency, thereby
violating CUTPA. In its post-verdict Rule 50 motion, Nationwide
argues that this claim was either abandoned by Charts or not
supported by sufficient evidence. Because the Court has found that the
jury's CUTPA verdict was supported by its finding on the Franchise
Act, Nationwide's argument need not be addressed. The Court notes,
however, that the instruction given to the jury did not include age or
disability discrimination references. Finally, Nationwide claims that
the allegations of “computer crimes” by Nationwide employees should
not have been considered because that alleged conduct was outside of
the limitations period. However, in its portion of the jury charge
concerning unfair trade practices, the Court specifically instructed the
jury that it could not consider “any actions taken by Nationwide or its
employees prior to August 11, 1994 [three years before the suit was
brought] on Charts' CUTPA claim.” The evidence presented at trial of
the “computer crime” concerned events in May, 1994. ‘“hus, the jury
could not have based its CUTPA decision on that evidence, in light of
the charge.

33

In sum, Nationwide's motion for judgment as a matter of
law on the CUTPA count is denied.

D) Good Faith and Fair Dealing

The jury found that Nationwide had violated the covenant
of good faith and fair dealing implied into the parties'
contracts. As with the previous counts, Nationwide
advances several grounds upon which it claims it is
entitled to judgment as a matter of law on this count. Each
will be addressed in turn.

i) Good Cause for Termination

Nationwide first argues that the evidence adduced at trial
conclusively demonstrates that it terminated its
relationship with Charts for good cause, and, therefore, it
is entitled to judgment as a matter of law. More
specifically, Nationwide argues: that, because it had good
cause to terminate the franchise relationship under the
Franchise Act, it also had good cause to terminate the
parties' relationship for purposes of the implied covenant
of good faith and fair dealing. The Court has rejected,
however, Nationwide's argument that it is entitled to
judgment as a matter of law on the issue of “good cause”
under the Franchise Act. Consequently, its related
argument concerning “good cause” under the implied
covenant of good faith and fair dealing must also be
rejected.

ii) No Good Cause Requirement

Nationwide next argues that it did not need to
demonstrate good cause to terminate its contracts with
Charts and CIAI, as both contracts provided that they
were terminable “at any time after written *373 notice.”
More specifically, Nationwide argues that the implied
covenant of good faith and fair dealing cannot incorporate
a “good cause” termination requirement into the parties’

34

contracts because it would be counter to the express terms
of those contracts. Charts argues that there was sufficient
evidentiary support for the jury to find that, despite the
language in the agreements, the parties’ agreements
contained an implied promise that they would only be
terminated for good cause. The Court agrees with
Nationwide, and finds that it is entitled to judgment as a
matter of law on the implied covenant of good faith and
fair dealing count.

In Connecticut the implied covenant of good faith and fair
dealing cannot be used “to achieve a result contrary to the
clearly expressed terms of a contract, unless, possibly,
those terms are contrary to public policy.” Verrastro_uv.
Middlesex Ins. Co., 207 Conn. 179, 190, 540 A.2d_ 693
(1988) (quoting Magnan v. Anaconda Industries, Inc., 193
Conn. 558, 566, 479 A.2d 781 (1984)).

Charts presented the following evidence in support of the
argument that, despite the plain language of the
agreements, there was an implied promise that the agency
would not be terminated without good cause: Gainey, who
worked for Nationwide for over thirty-five years, testified;
“I do not recall any agent being terminated without cause.”
(Trans.11/19/04, pg.100). Helena Charts testified that, in
her experience, the types of things that lead to agents
being terminated were taking clients’ money or stealing.
(Trans.11/30/04, pg.134).!4 Finally, Charts entered
Nationwide's Agency Administration Handbook (the
“Handbook”) into evidence, which provides that company-
initiated termination of an agency would be “primarily
limited” to circumstances involving, inter alia, “criminal
acts,” “dishonesty or fraud” and “breach of contract,” and
that termination on non-enumerated grounds would be

14 Helena Charts was unavailable to testify at trial, and, therefore, her
deposition testimony was read into evidence, absent objection.

35

“rare.” (Plaintiffs' Ex. 83, pg. 21). This Handbook also sets
forth the procedure for the Agency Review Board, which
was an internal Nationwide procedure for agents to appeal
“problems which have not been solved to the agent's
satisfaction.” (Id. at 154).15 None of this evidence, however,
altered or amended the plain language of the parties’
agency agreements, which provide that they are
terminable “at any time after written notice.” The
testimony of Gainey and Helena Charts was based on their
general experience, and failed to address the specific
agreements between the Charts and Nationwide. Aithough
the Handbook does seem to imply that a heightened
standard will apply to possible agency terminations, it also
states in bold type on the cover page that: “The contents of
the Handbook are presented as a matter of information
only. The only contractual matters are those expressed in
your Agent's Agreement and specifically incorporated by
reference made within that contract.” (Id. at cover). It also
provides that “|the] language used in this handbook is not
intended to create nor it is *874 to be construed to
constitute a contract between Nationwide and any or all of
its employees, agents or officers.” (Id.) Finally, the Court is
not convinced that Nationwide's provision of an internal
appeal process, the Review Board, serves to modify the
termination language in the agency agreements, or
imposes a good cause requirement for termination.

15 More specifically, the Handbook provides that: “The purpose of the
Agent Administrative Review Board is to ensure’ mutual
understanding and good communication between the agents and the
Companies. To this end, the Review Board only hears one party at a
time, does not permit attorneys for the Companies or the agent to
attend, not is there any written or electronic record kept. These
procedures have been developed over time to enhance and freely
encourage the open communication by all participants as well as
involvement of the members of the Review Board.”

iittala

36

The Court finds that this evidence is insufficient to alter or
amend the plain language of the parties' agreements.
Consequently, Nationwide is entitled to judgment as a
matter of law on this count.

E) Conclusion

Nationwide's motion for judgment as a matter of law [Doc.
# 254] is GRANTED as to the implied covenant of good
faith and fair dealing count, and DENIED as to the
Franchise Act count and the CUTPA count.

II Motion for a New Trial
Nationwide next argues that it is entitled to a new trial
pursuant to Rule 59.

A) Standard of Review

Fed.R.Civ.P. 59 provides, in relevant part, that: “A new
trial may be granted to all or any of the parties and on all
or part of the issues ... in an action in which there has been
a trial by jury, for any of the reasons for which new trials
have heretofore been granted in actions at law in the
courts of the United States....” Thus, a motion for a new
trial may be based on, inter alia, an argument that “the
trial was not fair to the party moving,” or on “questions of
law arising out of alleged substantial errors in admission
or rejection of evidence or instructions to the jury.”

Montgomery Ward & Co. v. Duncan, 311 U.S. 243, 251, 61
S.Ct. 189, 85 L.Ed. 147 (1940).

“A motion for a new trial should be granted when, in the
opinion of the district court, ‘the jury has reached a
seriously erroneous result or ... the verdict is a miscarriage
of justice.’ ” Song v. Ives Labs., Inc., 957 F.2d 1041, 1047
(2d Cir.1992) (quoting Smith v, Lightning Bolt Prods., Inc.,
861 F.2d 363, 370 (2d Cir.1988)). Unlike with a post-
verdict Rule 50 motion for judgment as a matter of law, a

37

Rule 59 motion for a new trial “may be granted even if
there is substantial evidence to support the jury's verdict
... land] a trial judge hearing a motion for a new trial is
free to weigh the evidence himself and need not view it in
the light most favorable to the verdict winner.” Jd.
(quotations and citations omitted). “A court considering a
Rule 59 motion for a new trial must bear in mind,
however, that the court should only grant such a motion
when the jury's verdict is egregious.... Accordingly, a court
should rarely disturb a jury's evaluation of a witness's
credibility.” Sabir, 214 F.Supp.2d at 244 (quoting DLC

Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 133 (2d
Cir.1998)); see also Dunlap-McCuller__v. Riese

Organization, 980 F.2d 153, 158 (2d Cir.1992) (“the grant
of a new trial on weight of evidence grounds should be
reserved for those occasions where the jury's verdict was
egregious”).

Nationwide sets forth several arguments in support of its
request for a new trial, each of which will be addressed in
turn.

B) Failure to Preclude Expert Testimony

Nationwide first argues that the Court erred in permitting
Charts' damages expert to testify as to the daiiayes
allegedly sustained by Charts. This argument, which was
set forth in a footnote to its memorandum in support of its
motion, merely cites to objections it raised previously*375
in the context of its pre-trial motion in limine to preclude
the expert, John Allen Kosowsky, from testifying, as well
as some of the relevant legal authorities. This footnote
fails to raise any arguments that have not been considered
by the Court previously. Consequently, to the extent
Nationwide's motion seeks a new trial on the ground that
Kosowsky should not have been permitted to testify as an
expert, it is denied for the same reasons set forth in the

38

ruling on Nationwide's motion in limine. See Ford_uv.
Nationwide Mut. Fire Ins. Co., 214 F.Supp.2d 11, 15-16
(D.Me.2002) (denying a Rule 59 motion because “the record
supports my decision as gatekeeper under Daubert, Kumho
Tire, and Evidence Rule 702 to let the jury hear his
testimony and to let the jury decide what weight to give it.
No more need be said”).

C) Insufficiency of the Evidence Concerning Damages

Nationwide next argues that Kosowsky's testimony was
insufficient to establish Charts' damages to a reasonable
degree of certainty, and, therefore, it is entitled to a new

“iy on rang A at the = See Expressway Associates Ll

e Jorp. of Connectic
476 71, 590 ‘A2d 431 431 ( 1991) (“It is axiomatic that the
burden of proving damages is on the party claiming
them.... When damages are claimed they are an essential
element of the plaintiffs proof and must be proved with
reasonable’ certainty”) (citations omitted). More
specifically, Nationwide maintains that there were four
major errors in the analytical method used by Kosowsky.
Again, this argument already was presented to the Court
through the pre-tria! motion in limine, which was denied.
Kosowsky's testimony at trial was fully consistent with the
methodology at issue in the motion in limine. Moreover,
Nationwide conducted a thorough cross-examination of
Kosowsky at trial and highlighted what it claimed were
deficiencies in his methodology and conclusions.'® Because

16 For example, Nationwide argues that Kosowsky was unqualified as
an expert on lost future earnings for Mr. Charts, and his resulting
calculations of lost future earnings were flawed, because Kosowsky's
experience primarily involved valuing businesses. Nationwide had an
opportunity to present this argument to the jury, which was free to use
it when determining what weight to give Kosowsky's testimony. See,
e.g., Bohus v. Beloff, 1991 WL 21654 (b&.D.Pa.) (fact that expert
witness had participated in “relatively few complete podiatric
evaluations goes to the weight of his testimony and opinions, not to the

39

Kosowsky testified to a reasonable degree of certainty that
Charts' damages were $2,316.857, and the jury awarded
Charts actual damages of $2,300,000, it appears that the
jury found Kosowsky credible, and credited his testimony
accordingly.'? The Court concurs with the jury's apparent
credibility determination, and notes that Kosowsky's
testimony at trial was more specific, detailed and informed
than even anticipated, and fully supported the jury's
finding concerning damages. See Song, 957 F.2d at 1047
(“a trial judge hearing a motion for a new trial is free to
weigh the evidence himself and need not view it in the
light most favorable to the verdict winner”). Therefore,
Nationwide's motion for a new trial is denied. See Braun

Elevator Co. v. Thyssenkrupp Elevator Co., 379 F.Supp.2d
993 (W.D.Wis.2005) (“the challenged factual

determinations [of lost profits] were the subject of genuine
factual dispute at trial and there was ample support for
the jury to have resolved those disputes in plaintiff's*376
favor based on the evidence presented”).

D) Insufficiency of Jury Instructions

Nationwide next argues that the Court's final instruction
to the jury was insufficient because it: (1) failed to instruct
the jury that Charts’ admitted payment of the premiums
for insurance policies for unrelated persons constituted
“good cause” for termination; (2) failed to instruct the jury
as to “the proper standard for finding the existence of a
franchise” under the Frarchise Act; and (3) failed to
instruct the jury as to the “proper standard for ‘good cause’
" under the Franchise Act. These claims are all without
merit. Nationwide was accorded ample time to review the
Court's proposed jury instructions and was allowed to
make objections to such instructions at the charging

issue of his qualifications as an expert witness”), reversed on other
grounds, 950 F.2d 919 (3d Cir.1991).
'? Nationwide did not provide its own expert at trial.

40

conference. See Fed.R.Civ.P. 51(b)(2). To the extent that
Nationwide already raised some of these objections at the
charging conference, the Court considered them before
issuing the final jury instruction and believes that they
were properly decided at that time. As to the new
objections to the jury instruction raised in Nationwide's
Rule 59 motion, the Court believes that it fairly and
accurately charged the jury on the appropriate law in this
case and, therefore, finds the new objections to be without
merit. Accordingly, Nationwide is not entitled to a new
trial on the ground of improper jury instruction.

E) Inconsistent Verdicts

Finally, Nationwide argues that it is entitled to a new trial
because the jury's verdict was inconsistent in that it found:
(1) that Nationwide had acted in bad faith when it violated
the implied covenant of good faith and fair dealing; yet
also found (2) that Nationwide should not be held liable for
punitive damages under CUTPA. Once again, any
substantive merit to Nationwide's argument is precluded
from consideration by the Court due to Nationwide's
failure to raise a proper objection at an earlier stage of the
litigation. Although not phrased as an attack on the
sufficiency of the Court's instructions and verdict form, it
is properly construed as such because both the instructions
and the verdict form allowed the jury to find as it did. The
Second Circuit recently construed a similar argument as
an attack on the sufficiency of the instructions and verdict
form:

Although defendants frame their challenge to the verdict
as a challenge to the sufficiency of the evidence, any
problem with the verdict is a result of the charge and
verdict sheet, which allowed the jury to find in favor of
defendants on all of the common law claims, but also in
favor of plaintiffs on the CUTPA claim.

41

Fabri_v. United Technologies Intl., Inc., 387 F.3d 109, 121
(2d Cir.2004). Consequently, Nationwide was required to
raise this objection to the verdict form and instructions,
namely that they would permit an inconsistent verdict,
prior to their submission to the jury. Jarvis v. Ford Motor
Co., 283 F.3d 33, 56-57 (2d Cir.2002) (“When a charge or
verdict sheet may lead to inconsistent verdicts, a party
must object before the jury begins its deliberations”) (citing
Fed.R.Civ.P. 51). In addition, once the jury returned with
the allegedly inconsistent verdict, Nationwide was
required to raise its objection while that jury was still
empaneled. DiBella v. Hopkins, 403 F.3d 102, 117 (2005)
(“It is well settled that if a party does not challenge the
consistency of jury verdicts while the jury is still
empaneled, the objection is waived”) (citing cases). At no
time prior to their submission to the jury did Nationwide
object to either the verdict form or the jury instruction on
the ground that they would permit an inconsistent verdict.
Indeed, Nationwide's proposed jury instructions*377 and
verdict form fail to include any language that would guard
against the allegedly inconsistent verdict reached by the
jury. Moreover, once the jury returned its verdict,
Nationwide failed to raise any inconsistency objection.

Even if this argument were properly before the Court,
however, it would be rejected. The Court instructed the
jury that, in order to award punitive damages, it must find
that “Nationwide acted with reckless indifference to the
rights of others or an intentional and wanton violation of
those rights.” As to “bad faith,” however, the Court
instructed the jury that: “Bad faith in general implies both
actual or constructive fraud, or a design to mislead or
deceive another, or a neglect or refusal to fulfill some duty
or some contractual obligation, not prompted by an honest
mistake as to one's rights or duties, but by some interested

42

or sinister motive. Bad faith means more than mere
negligence; it involves a dishonest purpose.” The Court
does not interpret these standards as being harmonious,
and believes that a jury could properly find that
Nationwide's actions met the standard for “bad faith,” yet
did not meet the standard for punitive damages.

Moreover, as Charts notes in its opposition memorandum,
the Court instructed the jury that if it found in favor of
Charts on any of the claims, it “may also make a separate
and additional award of punitive damages.” (emphasis
added). Consequently, even if Nationwide is correct that
the standard for a finding of “bad faith” under the implied
covenant of good faith and fair dealing and the standards
for awarding punitive damages under both CUTPA and
the common law are substantially similar, the jury's
discretion to award punitive damages renders its
inconsistency challenge meritless.!8 See Wright v. Hoover,
329 F.2d 72, 76 (8th Cir.1964) (“fixing damages is
peculiarly a jury function”); Lee v. Coss, 39 F.Supp.2d 170
172 (D.Conn.1999) (“It is well settled that calculation of
damages is the province of the jury”) (quoting /smail_v.
Cohen, 899 F.2d 183, 186 (2d Cir.1990)); see also Bennett v.
Rhodes, 34 Fed.Appx. 963 (5th Cir.2002) (“The failure to
render an award of punitive damages does not render the
jury verdict inconsistent, and Bennett does not otherwise
persuade us that an award of punitive damages was
compelled by the evidence”). Charts has not challenged the

18 The Supreme Court has instructed that a facially inconsistent
verdict in a civil action is not an automatic ground for vacating the
verdict, Fuizmnount Glass Works v. Cub Fork Coal Co., 287 U.S. 474,
485, 53 S.Ct. 252, 77 L.Ed. 439 (1933), and that a court “must attempt

to reconcile the jury's findings, by exegesis if necessary ... before [it is]
free to disregard [them].” Gallick v. Bultimmore & Ohio R. Co., 372 U.S.
108, 119, 83 S.Ct. 659, 9 L.Ed.2d 618(1963).

43

jury's failure to award punitive damages in a post-trial
motion.

Consequently, to the extent the motion for a new trial
claims that the jury's verdict was inconsistent, it is denied.

F) Remittitur

Rule 59(e) also provides that a party may move “to alter or
amend a judgment....” Therefore, “[w|lhen a defendant's
Rule 59 motion contests the size of a damage award, a
court must decide whether or not the verdict is excessive ...
If a district court finds that a verdict is excessive ... under
the practice of remittitur [it] may condition a denial of a
motion for a new trial on the plaintiff's accepting damages
in a reduced amount ... It may not, however, reduce the
damages without offering the prevailing party the option
of a new trial.” 7d. (quotations and citations omitted). “A
jury verdict is excessive if it *378 is so high as to ‘shock
judicial conscience.’ ” Schneider _v. Nat'l R.R. Passenger
Corp., 987 F.2d 132, 136 (2d Cir.1993) (quoting Nairn v.
Nat'l R.R. Passenger Corp., 837 F.2d 565, 567 (2d
Cir.1988). In addition, “[a] damage award is excessive if it
is the result of a miscarriage of justice and represents a
windfall to the plaintiff without regard to [his] injury.”
Sabir, 214 F.Supp.2d at 245 (quoting Oliver v. Cole Gift
Ctrs., Inc., 85 F.Supp.2d 109, 114 (D.Conn.2000)). In other
words, “[t]he court is ‘not ... justified’ in substituting its
judgment for that of the combined experience of twelve
jurors ... unless it conscientiously believe[s] that the jury
has exceed the bounds of propriety.” Pace v. National R.R.
Passenger Corp., 291 F.Supp.2d 93, 104 (D.Conn.2003)
(quoting Earl v. Bouchard Transp. Co., 917 F.2d 1320,
1329 (2d Cir.1990)).

Although Nationwide briefly requested that this Court
order a remittitur in its original Rule_59 motion, it has

a

44

failed to address this issue in its subsequently filed
memoranda of law. Rather, it has only challenged the
damages award on the ground that Kosowsky's testimony
failed to prove Charts' damages with reasonable certainty.
Nationwide has not explained why, in the event that the
Court finds that damages were proved with reasonable
certainty, that the amount awarded was _ excessive.
Consequently, Nationwide's request for remittitur is
denied. See Broadnax v. City of New Haven, 2004 WL
491069 (D.Conn., Mar.2, 2004) (“The Court concurs with
plaintiffs counsel that the issue of remittitur is not
briefed, save for the heading, and the Court will not
address this issue except to concur with the plaintiff that
the sums returned by the jury are reasonabie and
consistent with the evidence, and reflect calm deliberation
by the jury”), aff'd on other grounds, Broadnax, 415 F.3d at
265.19

- Even if it were properly briefed and presented, however,

the Court finds that the amount awarded by the jury had a
proper factual basis and was not excessive as a matter of
law. “It is well settled that calculation of damages is the
province of the jury.” Lee, 39 F.Supp.2d at 172 (quoting
Ismail, 899 F.2d at 186). The jury heard the following
evidence concerning Charts' alleged damages: testimony
from Mr. Charts as to his prior in ome stream from his
Nationwide franchise; testimony from Kosowsky as to how
that income could be projected out into the future; and
testimony from Gainey and Kapatoes as to how much
income they had earned from Nationwide. Moreover, the
jury heard counsel for Nationwide conduct thorough cross-
examinations on the issue of damages, and, more
particularly, on the issue of Charts' mitigation of his

19 See also Broadnax v. City of New Haven, 2005 WL 1691545 (2d Cir.,
Jul 20, 2005) (summary order analyzing several other issues raised on
appeal that presented no novel questions of Second Circuit law)

45

damages. Nationwide, however, did not present its own
damages expert. Given this testimony, the Court finds that
that jury's decision to award Charts $2,300,000 in
damages is adequately supported in the record, and that
the amount awarded is not excessive as a matter of law.
Schneider, 987 F.2d at 136 (“A jury verdict is excessive if it
is so high as to shock judicial conscience”); see also, Holt,
2004 _ WL 178604 (defendant challenged, inter alia, the
jury's “rejection of their argument on mitigation of
damages”; the court found that “[eJach of these decisions
required findings of fact. The jury's findings in favor of the
plaintiff may make their award seem generous in the eyes
of [the defendant], but the award is not excessive as a
matter of law, and must therefore be preserved”).

*379 IIT Conclusion
Nationwide's motion for judgment as a matter of law or, in

the alternative, motion for a new trial [Doc. # 254] is
DENIED in part and GRANTED in part.

CHARTS' MOTION FOR ATTORNEY'S FEES

Charts has moved for attorney's fees based on the
provisions for such fees set forth in the Franchise Act and
CUTPA. More specifically, Charts seeks attorney's fees in
the amount of $1,283.013.55 for work performed through
December 31, 2004 and in the amount of $98,204 for
subsequent work performed on the post-trial motions.
Finally, Charts requests that the Court increase the award
by doubling it due the nature and complexity of this case.
In response, Nationwide sontends that Charts' attorneys
should be limited to the amount of attorney's fees
established by the contingency fee agreement they entered
into with Charts, and that no additional fees are
warranted. In the event that the Court decides that Charts

46

is not limited to the contingency fee amount, Nationwide
argues that the fees submitted by Charts’ attorneys are
excessive.

1) Statutory Fee Provisions

Connecticut follows the American Rule for attorney's fees,
awarding fees only where explicitly permitted by the terms
of a contract or a statute. See, e.g., Doe v. State, 216 Conn.
85, 106, 579 A.2d 37 (1990); Marsh, D Calhoun uv.
Solomon, 204 Conn. 639, 653, 529 A.2d 702 (1987);
Lorenzetti v. Jolles, 120 F.Supp.2d 181, 189 (D.Conn.2000).
Both parties agree that an award of attorney's fees in this
matter is permitted by both the Franchise Act and
CUTPA. The parties dispute, however, the extent to which
those statutes permit such an award. Moreover, the
parties dispute whether attorney's fees should be awarded
to Charts pursuant to the Franchise Act, CUTPA or both.

2) The Franchise Act

A franchisee bringing an action under the Franchise Act,
“if successful, shall be entitled to costs, including, but not
limited to, reasonable attorneys’ fees.” Nationwide
concedes that, if its post-trial Rule 50 motion is denied,
Charts is entitled to attorney's fees under the Franchise
Act. See, e.g., Virzi Subaru, Inc. vu. Subaru of New
England, Inc., 742 F.2d 677 (1st Cir.1984) (“The
Connecticut [Franchise Act] provides that a franchisee
who brings an action for substantive violations is entitled
to reasonable attorney's fees ‘if successful’ ”) (emphasis
added) Nationwide argues, however, that such an award is
limited to the amount established by the contingency fee
agreement Alex Charts entered into with counsel. In
response, Charts contends that a contingency fee
agreement is only a floor, and not a ceiling, to a reasonable
award of attorney's fees pursuant to the Franchise Act.

47

In Sorrentino v. All Seasons Services, Inc., 245 Conn. 756,
717 _ A.2d 150 (1998), the plaintiff entered into a
contingency fee agreement that called for his counsel to
receive one-third of any recovery. Based on the jury's
award, therefore, the appropriate award would have been
$48,643.57. Id. at 773-74. 717 A.2d 150. The trial court
reduced the award of attorney's fees to $30,000, however,
based on its finding that the higher (one-third) amount
was not justified by the billing records submitted by
plaintiffs counsel. On appeal, the ~onnecticut Supreme
Court reversed, holding that “a trial court should not
depart from a reasonable fee agreement in the absence of a
persuasive demonstration that enforcing the agreement
would result in substantial unfairness to the defendant.”
Id. at 776, 717 A.2d 150.

*380 In Schoonmaker v. Lawrence Brunoli, Inc., 265 Conn.
210, 828 A.2d 64 (2003), the Connecticut Supreme Court

expanded on its decision in Sorrentino, concluding that:

[Wlihen a contingency fee agreement exists, a two step
analysis is required to determine whether a trial court
permissibly may depart from it in awarding a reasonable
fee pursuant to statute or contract. The trial court first
must analyze the terms of the agreement itself ... If the
agreement is, by its terms, reasonable, the trial court may
depart from its terms only when necessary to prevent
“substantial unfairness” to the party, typically a
defendant, who bears the u!timate responsibility for
payment of the fee ... By contrast, if the trial court
concludes that the agreement is, by its terms,
unreasonable, it may exercise its discretion and award a
reasonable fee in accordance with the factors enumerated
in rule 1.5(a) of the Rules of Professional Conduct.

48

Id. at 270-72, 828 A.2d 64 (citations omitted).
Consequently, the Court reversed the judgment of the trial
court, which had made an award of attorney's fees greater
than called for by the terms of the contingency fee
agreement, concluding that the trial court “violated both
the spirit and the letter of Sorrentino by not giving the

existing contingency fee agreement its due regard.” Jd at
272, 828 A.2d 64.

Therefore, pursuant to the teachings of Schoonmaker and
Sorrentino, Nationwide argues that an award of attorney's
fecs to Charts under the Franchise Act is capped by the
amount established by the contingency fee agreement.
This argument was rejected previously by a judge in this
District, however, in Fabri v. United Techs, International,
Inc., 193 F.Supp.2d 480, 484-85 (D.Conn.2002). In Fabri,
the Court first distinguished the holding of Sorrentino on
the ground that CUTPA, the statute at issue in Fabri, has
important differences from § 31-290a, the statute at issue
in Sorrentino. Id. at 484. Moreover, the Court found that,
“(elven construing Sorrentino to apply to all state fee
statutes, it holds at best that contingent fee agreements
are a floor to a reasonable award.” Id. at 484. After
reviewing the policy behind Sorrentino's holding, the
Court then noted that “!t}here is no parallel need to make
contingent fee agreements into a ceiling to protect a
plaintiffs jury award. As such, Sorrentino need not be
extended beyond its facts as Defendants would do.” Jd. at
485. In Schoonmaker, the Connecticut Supreme Court
explicitly noted that it “agree{d) with the recent
characterization of Sorrentino by the United States
District Court for the District of Connecticut” in Fabri, and
quoted that Court's finding that, “[e]ven construing
Sorrentino to apply to all state fee statutes, it holds at best
that contingent fee agreements are a floor to a reasonable
award.” Schoonmaker, 265 Conn. at 271, 828 A.2d 64.

49

Consequently, the Court finds that the Connecticut
Supreme Court's decisions in Sorrentino and Schoonmaker
mean that a contingency fee agreement only limits the
floor for an award of “reasonable” attorney's fees under
statutes suc as the Franchise Act, and do not limit the
top range for such an award.

Accordingly, the bottom range of the award the Court
“shall” make to Charts pursuant to the Franchise Act is
the amount established by the contingency fee agreement
Alex Charts entered into with his attorneys, which
provides that his attorney's fee “will be one quarter (25%)
of any recovery obtained in the case, after deduction of
expenses, either by way of settlement, trial or appeal.” At a
minimum, this provisions requires an award of $575,000
($2,300,000 x.25) pursuant to the *381 Franchise Act.?°
The question becomes, therefore, whether the Court
should depart upwards from that agreement and award
the full amount requested by Charts: $1,381,217.55, which
was derived through Charts invoking the “lodestar”
method of multiplying the reasonable hours worked by a
reasonable hourly rate. See, e.g., Hensley v. Eckerhart, 461
U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983).

As recounted in the introductory portion of this ruling, this
case has a long and protracted history. Charts successfully
challenged an adverse summary judgment ruling before
the Second Circuit, obtained a favorable ruling on a second

20 Nationwide has not argued that, pursuant to Schoonmaker, the
Court should award /ess than that amount in order to prevent it from
suffering “substantial unfairness.” For example, Nationwide has not
argued that, because this was a three count complaint, an award of the
full contingency fee under the Franchise Act fee provision would
include fees for time that was not spent on the Franchise Act count,
but rather was spent on either the CUTPA or the implied covenant of
good faith and fair dealing count.

50

motion for summary judgment in this Court and obtained
a favorable jury verdict at a trial conducted eight years
after the case was initially filed. Given these factors, the
Court finds that Charts is entitled to an attorney's fee
award that is greater than the one provided for by the
contingency fee agreement. In determining what amount is
warranted, the Court has considered the twelve factors
generally relevant to an award of reasonable attorney's
fees that were first set forth in Johnson vu. Georgia
Highway Express, Inc., 488 F.2d 714, 717-19 (5th
Cir.1974):

(1) the time and labor required;
(2) the novelty and difficulty of the questions;
(3) the skill requisite to perform the legal service properly;

(4) the preclusion of other employment by the attorney due
to acceptance of the case;

(5) the customary fee for similar work in the community;
(6) whether the fee is’ fixed or _ contingent;

(7) time limitations imposed by the client or the
circumstances;

(8) the amount involved and the results obtained;
(9) the experience, reputation and ability of the attorneys;

(10) the “undesirability” of the case;

51

(11) the nature and length of the professional relationship
with the client; and

(12) awards in similar cases.

See Hernandez _v. Monterey Village Associates Ltd.
Partnership, 24 Conn.App. 514, 517 n. 3, 589 A.2d 888

re. (adopting the Johnson factors); see also Steiger v.
uilders, Inc., 3 663 A.2d 432

1905) (applying the Johnson factors in CUTPA context);
Sabir v. Jowett, 214 F.Supp.2d 226, 249 (D.Conn.2002))
(applying Johnson factors after favorable jury verdict on
28 U.S.C. § 1983 claim and intentional infliction of
emotional distress claim); Here, after consideration of
those twelve factors, the Court awards Charts $750,000 in
attorney's fees. This amount, although substantially
higher that called for by the contingency fee agreement,
also is substantially less than requested by Charts. The
following factors were among those contributing to the
Court's decision concerning the size of the award: Charts'
request was based on current rates, rather than the rates
billed at the time the work was conducted-which is some
instances was ten years' prior.2! Moreover, many of *382
the entries in the billing record appeared to be duplicative,

2) Nationwide's argument that the current fees submitted by Charts
are excessive, however, is rejected, The current hourly fee charged by
Attorney Garcia, Charts' lead attorney, is $375.00. Given the
qualifications set forth in Attorney Garcia's affidavit, as well as this
Court's observation as to the caliber of representation provided by him
in this matter, this fee is not excessive. See, e.g., Kaplan v. Gruder,
2000 WL 767679 (Conn. Super., May 25, 2000) (finding that a
requested fee of $450 and $480 per hour, which were “the rates
prevailing in New York City,” are “are considerably different. fram the
rates here in Connecticut,” and, therefore, the attorney was only
entitled to $350 per hour), Moreover, as Charts notes, this fee, as well
as the others charged by Charts' attorneys, appears to be comparable
to, or even less then, the fees charged attorneys at the firm
representing Nationwide jn this matter.

52

excessive or unrelated to this case. Charts' attorneys also
set their recovery percentage at twenty-five percent in the
contingency fee agreement, and this factor must be
considered along with the remaining eleven Johnson
factors. Nevertheless, the novelty and difficulty of the
questions presented by this case, the skill required to
perform the legal service properly, the amount involved
and the results obtained and the experience, reputation
and ability of the attorneys all counsel heavily in favor of
an award above the contingency fee amount.

As the Court noted in Fabri, “!a] fee award is an obligation
of a defendant to a plaintiff. A contingent fee agreement is
an agreement between a plaintiff and his or her counsel,
an agreement to which a defendant is not a party, and
which should not be permitted to alter the purpose of the
statutory award.” The Franchise Act is a remedial statute,
and courts read it accordingly. See, e.g., Hartford Electric
Supply Co., 250 Conn. at 345, 736 A.2d 824 (the
“(F]ranchise [AlJct's remedial purpose, to prevent a
franchisor from unfairly exerting economic leverage over a
franchisee, indicates that the statute should be read
broadly in favor of the plaintiff’). The Franchise Act
provides that a_ successful plaintiff is entitled to
“reasonable attorney's fees,” and, given the procedural
history of this case, as well as all of the Johnson factors,
an award of $750,000 represents “reasonable attorney's
fees.”

2) CUTPA

Charts also has moved for attorney's fees under CUTPA,
which provides: “In any action brought by a person under
this section, the court may award, to the plaintiff, in
addition to the relief provided in this section, costs and
reasonable attorneys’ fees based on the work reasonabiy
performed by an attorney and not on the amount of

’
.

53

recovery.” Conn. Gen.Stat. § 42-110g(d). As both parties
recognize, an award of attorney's fees under CUTPA is
discretionary. See, e.g.,; Riggio v. Orkin Exterminating Co.,
Inc., 58 Conn.App. 309, 317, 753 A.2d 423 (2000) (“[t)he
trial court has discretion whether to award attorney's fees
unter CUTPA”) (emphasis added). Exercising its
discretion, the Court finds that the same award of
$750,000 also is appropriate under § 42-110g(d).

CUTPA explicitly provides that an award of attorney's fees
must not be based on “the amount of recovery.” § 42-
110g(d). Thus, a contingency fee agreement does not limit
the amount a court may award to a successful CUTPA
plaintiff. See, e.g., Fabri, 193 F.Supp.2d at 484-85. Instead,
the Court must look to the work “reasonably performed” by
an attorney on the CUTPA claim. and claims related to the
prosecution of the CUTPA claim, in order to determine a
fee award. Jacques All Trades Corp. vu. Brown, 57
Conn.App. 189, 200, 752 A.2d 1098 (2000). Turning the to
the work performed by Charts’ attorneys *383 in this case,
the Court first notes that the factual basis for the CUTPA
count and the Franchise Act count were inextricably
intertwined, as evidenced by the Court's ruling on
Nationwide's motion for judgment as a matter of law on
the CUTPA count. More generally, this Court previously
has stated: “Where a particular case involves several legal
theories relating to a common core of underlying facts, a
court need not analyze fees on a claim-by-claim basis, but
instead ‘should focus on the significance of the overall
relief obtained by the plaintiff in relation to the hours
reasonably expended on the litigation.’ ”" Sabir, 214
F.Supp.2d at 249 (quoting Hensley, 461 U.S. at 435, 103
S.Ct. 1933), Thus, although Nationwide argues that

Charts has not identified the work which was related
solely to the CUTPA claim, the facts of this case made
such a task very difficult. Consequently, the Court may

54

look to the total amount of effort expended by Charts’
attorneys when determining what fee is appropriate under
CUTPA.

In the section of this ruling addressing attorney's fees
under the Franchise Act, the Court determined that an
award of $750,000 accurately reflects the reasonable hours
worked by Charts’ attorney, and is based on a reasonable
billing rate that is adjusted for present value, as well as
affected by the other factors. Such an award limits billings
submitted for duplicative, excessive or unrelated work,
while at the same time recognizes that the complex and
novel legal issues presented by this case required a
significant amount of effort and billings. In sum, the Court
finds that an award of $750,000 provides compensation for
work “reasonably performed by [Charts'| attorneyls|” on
this case.

C) Multiplier

Charts’ counsel also vequests that the award of attorney's
fees be adjusted upwards by a multiplier of 2.0 due to the
“extreme risk” they undertook in this case, the “superior”
representation they provided and the “exceptional” results
they achieved through the “unprecedented” jury verdict.
See Hensley, 461 U.S. at 434, 103 S.Ct. 1933 (“other
‘onsiderations ... may lead the district court to adjust the
fee upward or downward, including the important factor of
the ‘results obtained’ ”). Although the Court agrees that
Charts' attorneys provided able representation, the Court
nevertheless declines to double the attorney's fee award.
All of the factors cited by Charts were considered by the
Court in determining the “lodestar” amount to award, and
they do not justify an additional enhancement. “The party
asking the court to depart from the lodestar amount bears
the burden of proving that such a departure is necessary to

the calculation of a reasonable fee.” Evans vu. State of

50

Connecticut, 967 F.Supp. 673, 692 (D.Conn.1997). Charts
has not met that burden here.

D) Conclusion on Attorney's Fees

In sum, whether made pursuant to the provision in the
Franchise Act for attorney's fees, to the provision in
CUTPA for attorney's fees or pursuant to both provisions,
the Court finds that an award of $750,000 in attorney's
fees to Charts is reasonable and _ appropriate.

E) Costs

Charts also has requested $30,341.41 in expenses incurred
in the prosecution of this action, covering expenses such as
copying costs, messenger fees and expert witness fees.
Nationwide objects to the amount of expenses claimed by
Charts, maintaining that there is no statutory basis for
particular expenses submitted by Charts. As_ the
Connecticut Supreme Court has explained: “It is a *384
settled principle of our common law that parties are
required to bear their own litigation expenses, except as

otherwise provided by statute ... Furthermore, because
costs are the creature of statute ... unless the statute

clearly provides for them courts cannot tax them.” M.
DeMatteo Construction Co. v. New London, 236 Conn. 710,
674 A.2d 845 (1996) (citations and quotations omitted).

Both the Franchise Act and CUTPA allow the Court to
award Charts “costs,” with the only difference being that
the Court “shall” make such an award under the Franchise
Act, and “may” make such an award under CUTPA. Of the
$30,341.41 requested, $26,618.63 related to expenses
incurred for items such as messenger services, copies,
travel and court’ reporter services. Reviewing those
expenses, the Court finds that they should be reduced by
one third to el’minate’§ duplicative, unrelated or

56

unnecessary expenses.** Therefore, the Court awards
Charts $17,745.75 in costs pursuant to the Franchise Act
and CUTPA. See Gerner _v. Applied Industrial Materials
Corp., 2005 WL 1805670 at *10 (Conn.Super.Ct., June 30,
2005)(awarding forty percent of claimed costs for “readily
understandable costs of litigation such as copying charges,
delivery expenses and transcript costs”); Bristol
Technology, Inc. v. Microsoft, 127 F.Supp.2d 64, 84
(D.Conn.2000) (awarding as “costs” pursuant to § 42-
110g(d) for “disbursements for delivery services” and “{c]
for travel, deposition transcripts, and expert witness fees”).

The Court will not award Charts the requested $1,579.78
fee for Kitty Koenig, a “trial analyst” employed by the law
firm representing Charts. The remaining portion of the
requested amount, $2,143, was a fee paid to Kosowsky for
his expert witness testimony. There is some dispute about
whether fees paid to an expert accountant are recoverable
under statutes such as the Franchise Act and CUTPA, as
both of those statutes fail to define what “costs” are
recoverable. More specifically, there is a dispute over
whether any expert fee may be awarded under such
statutes, or only fees paid to an expert listed in
Connecticut's general fee provision statutes, Conn.
Gen.Stat. §§$ 52-257 and 52-260.23 The Connecticut

22 For example, there are numerous entries for “Westlaw research,”
however there is no indication as to what this research was related to,
which count it was related to or for what motion or stage of the
litigation it related.

2* Generally, Connecticut courts interpret “cost” provisions narrowly.
See M. DeMatteo Construction Co. v. New London, 236 Conn. 710, 674
A.2d 845 (1996) (concluding that Conn. Gen.Stat. § 12-117a did not
mention appraisal costs, and, therefore, such costs only allowable if
provided by the general fee statutes $$ 52-527 and 52-560). In the
context of fees for expert witnesses, the Connecticut Appellate Court
has applied the teachings of M. DeMatteo Construction Co. and found
that experts not listed in § 52-260 may not have their fees taxed as

o7

Appellate*385 Court has held that such experts' fees are
not within the “costs” provided by the CUTPA statute.
Miller _v. Guimaraes, 78 Conn.App. 760, 829 A.2d 422
(2003) (finding that the trial court improperly awarded
taxable costs for the fees paid to an attorney serving as an
expert on the legal fees that should be awarded to the
plaintiff). This Court assumes that Connecticut courts
would find the same as to permitted costs under the
Franchise Act. Thus, no experts’ fees will be awarded by
virtue of the “costs” references in CUTPA and the
Franchise Act.

In sum, the Court awards Charts $750,000 in attorney's
fees and $17,745.75 in costs.

CHARTS' MOTION FOR PREJUDGMENT
INTEREST

costs. Arnone _v. Town of Enfield, 79 Conn.App. 501, 831 A.2d 260
(2003) (reversing award of $6,479 in costs for payment of expert
witness fees on the ground that, because § 31-51m does not expressly
provide for expert witmess fees, such fees may only be awarded if
provided for in § 52-260(f), the Connecticut statute addressing fees for
witnesses, and that an economist is not a listed expert witness whose
cost may be reimbursed under § 52-260(f)); Miller v. Guimaraes, 78
Conn.App. 760, 829 A.2d 422 (2003) (concluding that the trial court
improperly awarded a successful CUTPA plaintiff $1,000 as a taxable
cost for an expert who was an attorney, as that type of expert was not
covered by the provision for payment of expert witness fees in § 52-
260). Those decisions, however, have been subject to criticism. See,
e.g., Gerner v. Applied Industrial Materials Corp., 2005 WL 1805670
(Conn.Super.Ct., June 30, 2005) (citing cases, distinguishing Miller,
and finding that the plaintiff was entitled expert fees as a “cost”
pursuant § 42-110g(d), without regard to § 52-260); see also Duerr v.
Dicesare, 37 Conn. L. Rptr. 909, 2004 WL 2361833 (Conn Super., Oct
1, 2004) (disagreeing with Miller, yet “follow |ing! the rule set forth
therein”); Bristol Technology, Inc., 127 ¥. Supp.2d at 82 (“In state
court, Conn. Gen Stat. Sec. 52-257(b) provides for taxable costs

CUTPA, however, authorizes the award of costs over and above these
taxable cost provisions”).

Charts also has moved for prejudgment interest on the
jury's award of $2.3 million in damages. It is well settled
that “[w]hen the court's jurisdiction is based upon
diversity, an award of prejudgment interest is governed by
state law.” Brandewiede v. Emery Worldwide, 890 F.Supp.
79, 82 (D.Conn.1994). The relevant Connecticut statute
provides: “Except as provided in sections 37-3b, 37-3e and
52-192a, interest at the rate of ten percent a year, and no
more, may be recovered and allowed in civil actions ... as
damages for the detention of money after it becomes
payable.” Conn. Gen.Stat. § 37-3a.24 However, this Court
previously has found that, “[als such interest is an element
of [the plaintiff's] damages, ‘the determination of whether
interest pursuant to § 37-3a should be awarded is a
question for the trier of fact.’” Neptune Group, Inc. v. MKT,
Inc., 205 F.R.D. 81, (D.Conn.2002) (emphasis added)
(quoting Foley v. Huntington Co., 42 Conn.App. 712, 682
A.2d 1026 (1996)). Similarly, in Retepromaca
Representaciones Tecnicas Proyectos Y Sistemas, C.A. v.
The Ensign-Bickford Co., 2004 WL 722231 at *8 (D. Conn.,
Mar 30, 2004), Judge Underhill concluded, “after a
thorough review of relevant state and federal cases .. that
the question of whether to award prejudgment interest
pursuant to section 37-3a must be decided by the trier of

24 Charts also moved for prejudgment interest pursuant to 28 U.S.C. §
196\(a). As Nationwide notes in its memorandum in opposition,
however, § 1961 only provides for postjudgment interest. See § 1961(a)
(providing that “interest shall be calculated from the date of the entry
of the judgment”); Mobil Exploration & Producing North America, Inc.
vu. Graham Royalty Ltd.,_910 F.2d 504 (8th Cir.1990) (in a diversity
case, concluding that “28 U.S.C. § 1961 must be applied to calculate

the rate of post-judgment interest” (emphasis added). Charts failed to
respond to Nationwide's memorandum in cwposition, and has not
requested that this Court award postjudgmeri interest pursuant to §
1961. Consequently, the Court declines to construe Charts’ motion as
one seeking both pre and postjudgment interest.

o9

fact-in this case the jury.” Consequently, because the issue
of prejudgment interest was not raised until after
judgment had entered, and, therefore, was not charged to
the jury, Judge Underhill rejected the plaintiffs argument
that he had discretion to award such interest. Charts'
attempt to distinguish those two cases, and the clearly
established law that they rely on, is unpersuasive.
Although Charts did request prejudgment interest
pursuant to § 37-3a in the amended*386 complaint, the
issue was not submitted to the jury for consideration.
Indeed, Charts failed to raise that issue during trial, the
charging conference or in a motion before the jury was
discharged. Consequently, the Court is without the ability
to award such damages, and the motion for prejudgment
interest |Doc. # 260] is DENIED.*5

CONCLUSION

1) Nationwide's motion for judgment as a matter of law or,
in the alternative, motion for a new trial [Doc. # 254] is

DENIED in part and GRANTED in part.

2) Charts' motion for attorney's fees |[Doc. # 262] is
GRANTED, and Charts is awarded $750,000 in attorney's
fees and $17,745.75 in costs.

3) Charts' motion for prejudgment interest [Doc. # 260] is
DENIED.

25 Nationwide also argues that prejudgment interest is not appropriate
in this case because the jury's award of damages was not an award of
“damages for the detention of money after it be[came] payable ....” §
37-3a. Rather, Nationwide claims it was an award for lost profits, as
argued by Charts, and, therefore, it cannot support an award of
preyudgyment interest pursuant to § 37-3a. Because the Court has
found that the question of prejudgment interest was not properly
submitted to the jury, and such an award is therefore inappropriate,
this argument need not be addressed.

SO ORDERED.

61

Charts v. Nationwide Mut. Ins. Co., 300 B.R. 552 (D.
Conn. 2003) (“Charts IT’)

United States District Court,

D. Connecticut.
Alex CHARTS, et al., Plaintiffs,
V.
NATIONWIDE MUTUAL INSURANCE CoO., et al.,
Defendants.

No. CIV.A.3:97CV1621(CFD).

Sept. 30, 2003.

Former Chapter 7 debtor asserted claims against
insurance companies for breach of implied covenant of
good faith and fair dealing, violation of the Connecticut
Franchise Act, and violation of the Connecticut Unfair
Trade Practices Act (CUTPA). The United States District
Court for the District of Connecticut, Droney, J., adopting
the recommendation of Garfinkel, United States
Magistrate Judge, granted defendants’ motion for
summary judgment based on former debtor's alleged lack
of standing to pursue these claims, and former debtor
appealed. The Court of Appeals, 16 Fed. Appx. 44, vacated
and remanded, with jimstructions to join bankruptcy
trustee as indispensable party. On remand, the District
Court, Droney, J., held that claims that accrued
postpetition, when corporation that had entered into
postpetition corporate agency agreement with Chapter 7
debtor allegedly breached that agreement while
bankruptcy case was pending, was not sufficiently rooted
in debtor's prebankruptcy past to be included in “property
of the estate,” though provision in corporate agency
agreement purported to make agreement retroactive to
date before bankruptcy petition was filed.

Motion denied.

62

RULING ON DEFENDANTS' MOTION FOR
SUMMARY JUDGMENT

DRONEY, District Judge.

Pursuant to Fed.R.Civ.P. 56, the defendants, Nationwide
Mutual Insurance Company, Nationwide Mutual Fire
Insurance Company, Nationwide Life Insurance Company,
Nationwide Property and Casualty Insurance Company,
Nationwide Variable Life Insurance Company, and
Colonial Insurance Company of California (collectively
“Nationwide’) filed a Motion for Summary Judgment
and/or For Order Limiting the Issues to be Tried [Doc. #
127]. For the following reasons the defendants' motion is

DENIED.

I. Background!

Plaintiff Alex Charts first entered into an insurance
agent's agreement with Nationwide on February 1, 1979.
Charts operated his insurance agency as a corporation
named “Alex Charts Agency, Inc.” In late 1992 or early
1993, around the time that Charts and his wife filed for
personal bankruptcy, Charts formed “the Charts
Insurance Agency, Inc.” (“CIAI”).2 CIAI, which is also a
plaintiff in this action, entered into a Corporate Agency
Agreement with Nationwide on May 10, 1993. That
agreement identified Charts as the principal of CIAI. The
agreement also provided that it could be terminated by
either party upon written notice, without cause.

' The facts are taken from the parties Local Rule 9(c) statements and
motion papers. (The Local Rules have been renumbered since the
parties filed their papers. The new Local Rule number is 56). Disputed
facts are indicated

2 The parties dispute the precise date on which this entity was formed,
but agree that the Certificate of Organization and the First Biennial
Report were filed with the Connecticut Secretary of State's Office on
January 20, 1993.

63

On December 14, 1992, Alex Charts and his wife Helena
filed their voluntary petition under Chapter 7 of the
Bankruptcy Code with the United States Bankruptcy
Court for the District of Connecticut. On February 13,
1996, the Bankruptcy Court issued an Order of Discharge
of Debtor, and the bankruptcy case was closed on March 1,
1996. The plaintiffs concede that the bankruptcy petition
did not include any references to CIAI and that its
existence was never raised in the bankruptcy proceedings,
but they maintain that because CIAI was formed after the
petition was filed, it need not have been disclosed. Charts
did disclose his ownership of the shares of Alex Charts
Agency, Inc. in his bankruptcy schedules.

By letter dated January 11, 1996, Nationwide cancelled
the Corporate Agency Agreement with CIAI. After Charts
requested an internal review of that decision, Nationwide's
review board endorsed the termination. Charts and CIAI
filed this action on August 11, 1997. The amended
complaint |[Doc. # 62] asserts three counts.? Count one
alleges that in terminating*554 the Corporate Agency
Agreement with CIAI, Nationwide breached its implied
covenant of good faith and fair dealing. Count two asserts
that the termination of the agreement was in violation of
the Connecticut Franchise Act. Count three asserts that
the termination resulted in a violation of the Connecticut
Unfair Trade Practices Act (“CUTPA”), Conn. Gen.Stat. §§
42-110b, et seg. Nationwide's summary judgment motion
addresses all three counts.

Before reaching the merits of the summary judgment
motion filed by Nationwide, the Court will recount more of
3 This Court has jurisdiction over this case pursuant to 28 U.S.C. §
1332, as there is complete diversity of citizenship between the
opposing parties

64

the procedural history of this case, particularly its
intersection with the Charts' bankruptcy petition and
discharge.

II. Additional Procedural History of this C*se

On December 6, 1999, Nationwide filed its first motion for
summary judgment [Doc. # 85] claiming that because
Charts did not disclose the existence of CIAI in his
bankruptcy proceedings, he did not have standing to
pursue this lawsuit and should be judicially estopped from
pursuing any undisclosed claim. On August 8, 2000,
Magistrate Judge William 1. Garfinkel issued a
recommended ruling [Doc. # 97] granting the summary
judgment motion and concluding that Charts’ claims
against Nationwide were part of the Charts’ bankruptcy
estate and as such could not be asserted here by Charts.
On September 29, 2000, this Court approved, in part, the
recommended ruling [Doc. # 102], over the plaintiffs’
objection, and judgment entered for Nationwide [Doc. #
103].4

The plaintiffs appealed the ruling and judgment and on
July 11, 2001, the Second Circuit issued a Summary Order
remanding the case to this Court [Doc. # 110]. While not
commenting on the merits of this Court's conclusion that
the plaintiffs’ claims were property of the bankruptcy
estate, the Second Circuit held that the bankruptcy trustee
was a necessary party in making such a determination.
The mandate directed this Court “to vacate the judgment”
and “reopen|[ | t»« proceeding and join[ | the [bankruptcy]
estate as a party.” :t further stated that “withdrawal of the
reference would seem to be the most practical and
expeditious way of handling the matter.”

4 The Court did not approve that part of the decision which concluded
that Charts was also precluded by the doctrine of judicial estoppel.

65

In accordance with the mandate, on July 12, 2002, this
Court entered an Order [Doc. # 126] vacating its ruling on
the motion for summary judgment. The Order also
directed the Clerk of the Bankruptcy Court for the District
of Connecticut to withdraw the reference in the Charts
Bankruptcy case. Further, it directed the Clerk of this
Court to add the bankruptcy estate as a plaintiff in this
case, and directed the trustee of the estate to file an
appearance.

On July 26, 2002, the defendants filed this motion for
summary judgment [Doc. # 127], which closely mirrors
their original motion. A hearing on the defendants’ motion
was held following tne formal consolidation of this action
with the bankruptcy action.

til. Summary Judgment Motion

In its new Motion for Summary Judgment [Doc. # 127],
Nationwide asserts the same standing and _ judicial
estoppel arguments that were the basis of the
recommended*555 ruling on the first motion for summary
judgment-that is, that Charts does not have standing to
assert these claims, or that he is judicially estopped from
asserting them, because he had not disclosed the existence
of CIAI during the bankruptcy proceedings.

Nationwide also claims that, even if Charts has standing
and is not judicially estopped from asserting these claims,
it is entitled to summary judgment on the merits of the
first, second, and third counts of the amended complaint

Regarding count one, Nationwide argues that its
termination of CLAI cannot violate the implied covenant of
good faith and fair dealing because the Corporate Agency
Agreement expressly provides that it was terminable at

66

will by Nationwide. Regarding the Connecticut Franchise
Act claims in count two, Nationwide asserts that, based on
the undisputed facts, the Corporate Agency Agreement did
not create a “franchise” and therefore that the plaintiffs do
not fall within the Act. Finally, Nationwide asserts two
independent bases for summary judgment on the plaintiffs’
CUTPA claims in count three: 1) to the extent that it
incorporates the earlier counts, it must fail “as they do”
and 2) that the additional CUTPA violation aileged-

involving a “computer crime”-is time-barred.

IV. Standard

In a summary judgment motion, the burden is on the
moving party to establish that there are no genuine issues
of material fact in dispute and that it is entitled to
judgment as a matter of law. See Fed.R.Civ.P. 56(c);
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106
S.Ct. 2505, 91 L.Ed.2d 202 (1986). A court must grant
summary judgment “ ‘if the pleadings, depositions,
answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact.’ ” Miner v. City of
Glens Falls, 999 F.2d 655, 661 (2d Cir.1993) (citation
omitted). A dispute sceneaiie a material fact is genuine “
‘if the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.’ ” Aldrich_v. Randolph
Cent. Sch. Dist., 963 F.2d 520, 523 (2d Cir.1992) (quoting
Anderson, 477 U.S. at 248, 106 S.Ct. 2505). After
discovery, if the nonmoving party “has failed to make a
sufficient showing on an essential element of [its] case
with respect to which [it] has the burden of proof,” then
summary judgment is appropriate. Celotex Corp. v. Catrett,
477 U.S. 317, 323, 106 8.Ct. 2548, 91 _L.kd.2d 265 (1986).

67

The Court resolves “all ambiguities and drawls] all
inferences in favor of the nonmoving party in order to
determine how a reasonable jury would decide.” Aldrich
963 F.2d at 523. Thus, “{o]nly when reasonable minds
could not differ as to the import of the evidence is
summary judgment proper.” Bryant v. Maffucci, 923 F.2d
979, 982 (2d Cir.1991); see also Suburban Propane uv.
Proctor Gas, Inc., 953 F.2d 780, 788 (2d Cir.1992).

V. Discussion

A. Property of the Estate

As noted above, the recommended ruling on_ the
defendants’ original motion for summary judgment,
approved by this Court, found that the claims asserted by
the plaintiffs here belonged to the bankruptcy estate of
Alex Charts and his wife. Therefore, the Court held, the
Charts’ failure to disclose CIAI's existence and to list their
claims on the schedule of assets in the bankruptcy
proceeding deprived them of standing to pursue these
claims here. The Second Circuit's Summary Order |Doc. #
110] remanding this case did not address the merits of this
Court's determination that the claims were property of the
*556 bankruptcy estate, but held that “the district court
erred in adjudicating the property rights and claims at
issue without joining the debtor's estate as a party.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0086%3A2. Public record. Not legal advice.