Diamond 67, LLC v. Oatis
144 A.3d 1055
Conn. App. Ct.2016Background
- Diamond 67, LLC sought to develop a Home Depot in Vernon and entered a sale-leaseback with Home Depot requiring "final approvals" by March 9, 2010 (approvals must be valid, irrevocable and no longer subject to appeal).
- Various neighbors and environmental advocates (including Montigny, Batchelder and others, represented by Oatis / Lobo & Associates) filed verified petitions to intervene in the plaintiff’s mandamus and administrative proceedings under Conn. Gen. Stat. § 22a-19, asserting environmental harms near Walker Reservoir.
- The parties negotiated a settlement; intervenor motions and appeals proceeded through multiple rounds of litigation and remand; some intervenors were ultimately found to have abdicated participation and their appeals were deemed moot. Related appellate decisions include Diamond 67, LLC v. Planning & Zoning Commission and Batchelder v. Planning & Zoning Commission.
- Home Depot declined to extend the approval deadline after the traffic commission issued a certificate with extensive conditions; Home Depot terminated the contract and sold the property. The plaintiff claimed the intervenors’ litigation delayed final zoning approval past the contract deadline and caused Home Depot’s abandonment.
- Diamond sued the intervenors for common-law and statutory vexatious litigation (treble/double damages under Conn. Gen. Stat. § 52-568), alleging lack of probable cause, malice, and that the interventions caused its losses and litigation costs. Defendants moved for summary judgment.
- Trial court granted summary judgment for defendants, holding Home Depot’s refusal to accept traffic commission conditions, not defendants’ interventions, caused the deal to fail. The Appellate Court reversed in part, finding genuine issues of material fact remained as to (a) whether defendants caused plaintiff to incur litigation costs and (b) several affirmative defenses and elements (probable cause, sham/Noerr, advice of counsel, initiation/procurement). The case was remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether summary judgment was appropriate on causation of Home Depot abandonment | Def.: defendants’ interventions delayed final planning & zoning approval past contract deadline and caused Home Depot to abandon | Defs.: Home Depot abandoned due to traffic commission conditions and economic downturn, not defendants’ conduct | Trial court erred to the extent it disposed of plaintiff’s claim for litigation costs; genuine issues exist as to causation of litigation costs. Court declined to accept defendants’ no-causation finding as dispositive for all claims. |
| Whether plaintiff may recover fees/costs for defending against the interventions even if Home Depot independently walked away | Plaintiff: fees/costs are recoverable if defendants prosecuted actions without probable cause and actions terminated in plaintiff’s favor | Defendants: plaintiff didn’t plead or present evidence of attorney’s fees/costs; fees are irrelevant if no causation of contract loss | Appellate Court: fees/costs are recoverable in vexatious litigation claims; plaintiff’s complaint and Hayes affidavit raise genuine factual disputes about incurred litigation costs, so summary judgment improper on that ground. |
| Whether defendants can be liable for vexatious litigation when they did not initiate the underlying suits | Plaintiff: Restatement and Connecticut precedent permit liability for initiation, continuation or procurement; defendants coordinated interventions and emails show group participation | Defendants: they did not initiate suits; thus vexatious litigation elements lacking | Held: initiation not required for vexatious litigation; record raises triable issues as to each defendant’s role in procuring/continuing interventions. |
| Applicability of Noerr-Pennington (sham litigation) defense | Plaintiff: defendants’ petitions contained known false factual assertions (e.g., Walker Reservoir as public water source) and lacked expert support—could be sham | Defendants: petitioning to government is protected speech; sham exception inapplicable | Held: genuine factual disputes exist about objective baselessness and intent (sham), so Noerr-Pennington not resolvable for summary judgment. |
| Advice-of-counsel defense | Defendants: relied in good faith on counsel (Oatis) after full disclosure; that advice shields them | Plaintiff: disputes credibility and good-faith disclosure (emails and alleged misstatements) | Held: affidavits of defendants insufficient to negate factual dispute; genuine issue remains on good-faith reliance. |
| Whether the prior proceedings terminated in plaintiff’s favor as to intervenors | Defendants: settlement between plaintiff and commission shows no favorable termination | Plaintiff: the relevant claims are the intervenors’ interventions, which were not successful and thus did not terminate in defendants’ favor | Held: defendants’ interventions were not successful; termination rule does not bar plaintiff—triable issue remains. |
Key Cases Cited
- Bernhard-Thomas Building Systems, LLC v. Dunican, 286 Conn. 548 (2008) (elements of vexatious litigation: want of probable cause, malice for common-law, and termination in plaintiff’s favor)
- Bhatia v. Debek, 287 Conn. 397 (2008) (distinguishing malicious prosecution initiation element from vexatious litigation)
- DeLaurentis v. New Haven, 220 Conn. 225 (1991) (Restatement-based liability for initiation, continuation or procurement of proceedings)
- Vandersluis v. Weil, 176 Conn. 353 (1978) (attorney’s fees are compensable damages in common-law vexatious litigation)
- Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49 (1993) (Noerr-Pennington sham litigation two-part test)
- Batchelder v. Planning & Zoning Commission, 133 Conn. App. 173 (Conn. App. 2012) (related appellate decision resolving intervenor appeals as moot)