BIRCH HILL RECOVERY CENTER, LLC v. HIGH WATCH RECOVERY CENTER, INC.
(AC 47452)
Appellate Court of Connecticut
Argued March 11, officially released June 10, 2025
Alvord, Clark and Seeley, Js.
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Syllabus
The plaintiff appealed from the trial court‘s judgment dismissing its action sounding in, inter alia, tortious interference with prospective business relations, following the court‘s grant of the defendant‘s special motion to dismiss filed pursuant to the anti-SLAPP statute (
The trial court did not err in granting the defendant‘s special motion to dismiss, as the court properly concluded that the plaintiff failed to establish probable cause that it would prevail on its claims in light of the defendant‘s first amendment defense and, accordingly, the plaintiff‘s claims were barred by the first amendment to the United States constitution.
This court concluded that the plaintiff‘s claim that the trial court applied the wrong legal standard and should have analyzed the issue of whether the defendant‘s conduct was protected activity under the sham litigation exception, established by California Motor Transport Co. v. Trucking Unlimited (404 U.S. 508), to the doctrine of immunity for petitioning activity pursuant to Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc. (365 U.S. 127) and United Mine Workers of America v. Pennington (381 U.S. 657), was unavailing, as the record showed that the defendant had an objectively reasonable basis for challenging the plaintiff‘s application seeking to open a substance abuse treatment facility.
Argued March 11-officially released June 10, 2025
Action to recover damages for, inter alia, tortious interference with prospective business relations, and for other relief, brought to the Superior Court in the judicial district of Litchfield at Torrington, where the court, Lynch, J., granted the defendant‘s special motion to dismiss and rendered judgment thereon, from which the plaintiff appealed to this court. Affirmed.
Christopher A. Klimmek, with whom was Jeffrey P. Mueller, for the appellant (plaintiff).
Opinion
CLARK, J. The action underlying this appeal arises from the efforts by the plaintiff, Birch Hill Recovery Center, LLC, to open a substance abuse treatment facility (facility) in Kent and the alleged efforts of the defendant, High Watch Recovery Center, Inc., to prevent the plaintiff from doing so. The plaintiff brought this action sounding in tortious interference with prospective business relations and a violation of the Connecticut Unfair Trade Practices Act (CUTPA),
On appeal, the plaintiff does not argue that the court erred in its determination that the defendant met its initial burden under the first prong of
The following facts and procedural history are relevant to this appeal.6 The plaintiff was formed in 2017 for the purpose of establishing the facility. The defendant has operated its own substance abuse treatment facility in Kent since the 1940s. On June 23, 2017, the plaintiff submitted a special permit and site plan application to the commission, seeking to convert a former convalescent home into a substance abuse treatment facility. On October 12,
Separately, in September, 2017, the plaintiff applied to the OHCA for a certificate of need.7 The defendant requested and was granted permission to intervene in the proceedings before the OHCA. On March 28 and May 10, 2018, the OHCA held hearings on the plaintiff‘s application. The defendant objected to the plaintiff‘s application on various grounds, including that there was no public need for the facility and that the facility would have a detrimental impact on the state‘s health care system generally. On November 6, 2018, the hearing officer issued a proposed final decision recommending the denial of the plaintiff‘s application. The plaintiff filed a brief and presented oral argument in opposition to the proposed final decision. Subsequently, on March 28, 2019, the plaintiff and the Department of Public Health (department) entered into an agreed settlement pursuant to which the plaintiff‘s application was approved, subject to certain conditions. As part of the agreed settlement, however, the department made findings of fact and conclusions of law in which it found that the plaintiff failed to satisfy ten of the twelve statutory factors it was required to consider in assessing the plaintiff‘s application.8
On May 8, 2019, the defendant appealed from the agreed settlement to the Superior Court pursuant to the Uniform Administrative Procedure Act,
During the pendency of the defendant‘s appeal from the certificate of need proceedings before the OHCA, the plaintiff has been unable to proceed with the construction of the facility. On October 6, 2023, the plaintiff commenced the present action, alleging that the defendant pursued “a multiyear and multifaceted effort to thwart [the plaintiff‘s] ability to develop its facility at every step of the process for fear of the perceived competition it would create.” The plaintiff alleged that the defendant “did not have a good faith belief to assert that [the plaintiff] did not meet the requirements for [a certificate of need], but instead [opposed the facility] simply because it did not want [the plaintiff] as a putative competitor.” To support that claim, the plaintiff alleged that, although the defendant objected to the plaintiff‘s proposal to include detoxification beds on the basis that there was no public need, the defendant later received approval to expand its own facility to add detoxification beds and then objected to the plaintiff‘s request to extend the expiration date of the agreed settlement, relying on its expanded capacity to serve the needed population. The plaintiff further alleged that, although the defendant objected to the facility in part on the basis that it “would be a drain on the town‘s emergency services,” when the defendant later sought permission from the commission to expand its own facility, the defendant represented that its expansion would not negatively affect the town‘s emergency services “because rehabilitation facilities do not have security issues like a prison, and they rarely need to call the police.”
The plaintiff also alleged that the defendant “embarked on a smear campaign as another attempt to thwart [the plaintiff‘s] development plans.” The plaintiff alleged that Jerry Schwab, the defendant‘s chief executive officer, “sent a letter to all residents of Kent . . . ostensibly ‘alerting’ them to [the plaintiff‘s] proposed plans in advance of the [commission] hearing at which the public could voice its concerns.” The plaintiff also alleged that “Schwab made false and misleading statements about [the plaintiff‘s] leadership” to the Republican-American (newspaper), which quoted him as saying that “the people who are applying and shopping this around town are investment fund people from Manhattan. They don‘t have one tiny speck of experience with a facility like this. These are venture capitalists that are looking at this. We need to make sure there are proper safety nets.” The plaintiff alleged that the defendant‘s actions “deprived
On November 22, 2023, the defendant filed a special motion to dismiss pursuant to
In support of its first amendment claim, the defendant argued that “speech that is objectively on a matter of public concern in light of its substance, form, and context is entitled to protection under the first amendment.” In support of that argument, the defendant cited Gleason v. Smolinski, 319 Conn. 394, 125 A.3d 920 (2015), in which our Supreme Court held that the first amendment protected the family of a missing person from liability for intentional infliction of emotional distress for its targeted campaign hanging missing person posters near the home and workplace of the missing person‘s former girlfriend because that conduct related to a matter of public concern. See id., 425. The defendant argued that the conduct at issue in the present case-namely, communicating with the public and the press and opposing the plaintiff‘s facility in administrative and judicial proceedings-was protected by the first amendment because “[t]he addition of a substance abuse facility in the middle of Kent, and the governmental approvals that would be required, is plainly a matter of public concern” that is entitled to “the strongest of first amendment protections, notwithstanding [the plaintiff‘s] bald and conclusory allegations about [the defendant‘s] motives.” The defendant further argued that the fact that this case involves a dispute between private businesses did not undermine its first amendment claim, citing the United States Supreme Court‘s decision in California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S. Ct. 609, 30 L. Ed. 2d 642 (1972), for the proposition that “the first amendment‘s protections apply even in the realm of commercial disputes between competitors . . . .”
The plaintiff filed an opposition to the special motion to dismiss on December 26,
The plaintiff then claimed that, even if the defendant had met its initial burden under
On January 8, 2024, the court, Lynch, J., held a hearing on the special motion to dismiss. On the morning of the hearing, the plaintiff filed a motion for continuance and a motion for leave to amend the complaint to add new factual allegations based on information it claimed to have received the day before. The court denied the motion for continuance on the record and indicated it would defer ruling on the motion for leave to amend until after it ruled on the special motion to dismiss. Prior to hearing oral argument, the court inquired whether either party had evidence to present in connection with the special motion to dismiss. The defendant noted that it intended to rely on the exhibits it had attached to its memorandum in support of the special motion to dismiss; see footnote 12 of this opinion; but neither party presented evidence during the hearing.14
The court then addressed whether the plaintiff established probable cause that it would prevail on the merits of its complaint. In assessing the defendant‘s first amendment defense, because the parties’ briefs and arguments focused almost exclusively on whether the defendant‘s alleged speech and conduct related to a matter of public concern, the court began its analysis with a discussion of the United States Supreme Court‘s opinion in Snyder v. Phelps, 562 U.S. 443, 131 S. Ct. 1207, 179 L. Ed. 2d 172 (2011). It noted that, in Snyder, the court held that the first amendment shielded from tort liability church members who picketed near a soldier‘s funeral with “signs reflect[ing] the church‘s view that the United States is overly tolerant of sin and that God kills American soldiers as punishment“; id., 447; because that speech related to a matter of public concern. The court quoted from Snyder, which explained that “[s]peech deals with matters of public concern when it can be fairly considered as relating to any matter of political, social, or other concern to the community . . . or when it is a subject of legitimate news interest; that is, a subject of general interest and of value and concern to the public. . . . Deciding whether speech is of public or private concern requires [the court] to examine the content, form, and context of that speech, as revealed by the whole record.” (Citations omitted; internal quotation marks omitted.) Id., 453.
Applying that standard, the court determined that “[t]he development of a new substance abuse treatment facility relates to the broad societal concerns of the community in which the facility plans to operate, and, thus, just as in Snyder, the defendant‘s alleged conduct relates to a matter of public concern.” The court also rejected the plaintiff‘s contention that the defendant‘s alleged anticompetitive purpose precluded a determination that its speech and petitioning activity related to a matter of public concern. As the court explained, “the allegations that the defendant in the present case is motivated by a personal desire to harm its competitor does not transform its speech regarding the substance abuse treatment facility into a purely private matter. . . . Even if the defendant acted solely with a business
On appeal, the plaintiff does not argue that the court erred in concluding that the defendant met its initial burden under the first prong of
With respect to the first amendment defense, the plaintiff claims that the court applied the wrong legal standard in analyzing whether the defendant‘s conduct was protected activity. Specifically, the plaintiff contends that the court should have analyzed the first amendment defense under the Noerr-Pennington doctrine; see United Mine Workers of America v. Pennington, 381 U.S. 657, 85 S. Ct. 1585, 14 L. Ed. 2d 626 (1965); Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S. Ct. 523, 5 L. Ed. 2d 464 (1961) (Noerr); and the “sham litigation” exception thereto, established by the United States Supreme Court in California Motor Transport Co. v. Trucking Unlimited, supra, 404 U.S. 508. The plaintiff claims that, analyzed under that standard, there was probable cause that the defendant‘s conduct falls within the sham litigation exception and, therefore, that the plaintiff‘s complaint was not barred by the first amendment. The defendant contends that the plaintiff cannot prevail on its sham litigation claim because the record does not support a finding of probable cause that the defendant‘s challenges to the facility were objectively baseless, as required to establish that the sham exception applies. We agree with the defendant.17
In the present case, the plaintiff challenges only the court‘s conclusion that it failed to establish probable cause that it would prevail under the second prong of
In assessing whether the plaintiff established probable cause that it would prevail under the second prong of
The plaintiff argues that the court erred in concluding that the first amendment barred its claims because the court should have analyzed the first amendment defense under the Noerr-Pennington doctrine and determined that there was probable cause that the sham litigation exception to that doctrine applies. As this court previously has explained, the Noerr-Pennington doctrine stems from a trio of federal antitrust cases: California Motor Transport Co. v. Trucking Unlimited, supra, 404 U.S. 508, United Mine Workers of America v. Pennington, supra, 381 U.S. 657, and Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., supra, 365 U.S. 127; see Zeller v. Consolini, 59 Conn. App. 545, 550, 758 A.2d 376 (2000); in which the United States Supreme Court held that the first amendment “shields from the Sherman [Antitrust] Act [
The protection afforded by the Noerr-Pennington doctrine, however, “is not limitless,” as it does not apply to “petitioning activity . . . [that] is a mere sham or pretense to interfere with no reasonable expectation of obtaining a favorable ruling.” Zeller v. Consolini, supra, 59 Conn. App. 551-52. “In Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49, 60-62, 113 S. Ct. 1920, 123 L. Ed. 2d 611 (1993), the court outlined a two part test to define sham litigation. First, the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits. Id., 60. Second, the court should focus on whether the baseless lawsuit conceals an attempt to interfere directly with the business relationships of a competitor . . . through the use [of] the governmental process-as opposed to the outcome of that process-as an anticompetitive weapon . . . . Id., 60-61.” (Internal quotation marks omitted.) Zeller v. Consolini, supra, 552. “This two-tiered process requires the plaintiff to disprove the challenged lawsuit‘s legal viability before the court will entertain evidence of the
The objective prong of the sham litigation exception is a high bar. As the court explained in Professional Real Estate Investors, Inc., a plaintiff invoking the sham exception must show that the challenged litigation was “so baseless that no reasonable litigant could realistically expect to secure favorable relief“; id., 62; and “[t]he existence of probable cause to institute legal proceedings precludes a finding that [a] . . . defendant has engaged in sham litigation.” Id. In other words, a plaintiff “[cannot] pierce [a defendant‘s] [Noerr-Pennington] immunity without proof that [the challenged] action was . . . frivolous.” Id., 65. Moreover, because “a party‘s action cannot be objectively baseless when at least one claim in the action has merit“; Procurement, LLC v. Ahuja, supra, 197 Conn. App. 720; the plaintiff must show that all claims in the challenged litigation were frivolous. Thus, under the objectively baseless standard, “[a] defendant will be entitled to Noerr-Pennington immunity if it enjoyed virtually any success in the underlying litigation, unless [that success is] tainted by fraud.”18 (Emphasis added.) 8 P. Halle & J. Everett, Business & Commercial Litigation in Federal Courts (R. Haig ed., 5th Ed. 2024) § 87:68. This demanding standard is warranted because “even unsuccessful but reasonably based suits . . . allow the public airing of disputed facts . . . and raise matters of public concern.” (Citation omitted; internal quotation marks omitted.) BE&K Construction Co. v. National Labor Relations Board, 536 U.S. 516, 532, 122 S. Ct. 2390, 153 L. Ed. 2d 499 (2002); see also Zeller v. Consolini, supra, 59 Conn. App. 553-54 (“[t]he Noerr-Pennington doctrine subordinates . . . commercial expediency to the constitutional rights of individuals and groups to petition their government . . . [and] failure to apply [it] aggressively may create a chilling effect on the first amendment right to petition in zoning and other matters” (internal quotation marks omitted)).
In the present case, the complaint alleged that the defendant participated in
As an initial matter, we note that, in arguing on appeal that the sham litigation exception applies, the plaintiff primarily directs its arguments toward the defendant‘s intervention in the proceedings before the OHCA. Although the plaintiff makes one passing reference to the proceedings before the commission in connection with its argument regarding the subjective prong of the sham exception, the plaintiff otherwise focuses exclusively on the proceedings before the OHCA. Similarly, before the trial court, the plaintiff did not make any allegations or present any evidence concerning the factual or legal bases of the defendant‘s claims before the commission or in its ensuing administrative appeal from the commission‘s decision.20 Nor did the plaintiff present any information about the legal basis for the
With respect to the OHCA proceedings themselves, although the record does include information about at least some of the arguments that the defendant presented to the OCHA, it does not support the plaintiff‘s claim that the defendant‘s challenge was objectively baseless. To the contrary, the information that was presented to the court about the OHCA proceedings supports the conclusion that the defendant had an objectively reasonable basis for challenging the plaintiff‘s application for a certificate of need.21
In its request to intervene in the certificate of need proceeding, the defendant stated that it intended to present evidence that “(1) the [plaintiff] has failed to establish a clear public need for the facility; (2) the proposed facility will have a significant and detrimental impact on existing residential substance use disorder treatment facilities located in Connecticut, including the [defendant‘s] facility; and (3) the proposed application will not be in the best interests of the statewide health care delivery system.” As the plaintiff acknowledges, the hearing officer agreed with the defendant and issued a proposed final decision recommending that the department deny the plaintiff‘s application. Although the department did not adopt the proposed final decision and instead granted the plaintiff‘s application by way of the agreed settlement, the department‘s findings that accompanied the agreed settlement were consistent with many of the arguments the defendant made in its motion to intervene. Specifically, the department found that “[t]he [plaintiff] has not sufficiently demonstrated that there is a clear public need for the [facility]“; that “[t]he [plaintiff] did not provide any evidence that its proposal would not have a negative economic impact on facilities like [the defendant‘s] or the behavioral health care system in Connecticut“; that “[t]he [plaintiff‘s] proposal . . . will have a negative impact on the financial strength of the behavioral health care system in the state“; and that the plaintiff “failed to provide credible evidence that its program would be a high quality, cost-effective model that would avoid negatively impacting the financial well-being of nonprofit substance abuse treatment facilities in Connecticut.” Moreover, as discussed previously; see footnotes 8 and 9 of this opinion and accompanying text; the department found against the plaintiff on ten of the twelve statutory factors that it was required to consider in assessing the plaintiff‘s application. Even though the defendant ultimately was not successful in convincing the department to deny the plaintiff‘s application, the defendant‘s initial success before the hearing
The plaintiff nevertheless points to two arguments that the defendant made in the OHCA proceedings that, the plaintiff contends, show that the defendant‘s challenge to the plaintiff‘s certificate of need application was baseless. First, the plaintiff notes that the defendant “told the OHCA that there was no public need for [the plaintiff‘s] substance abuse treatment services, but then sought to expand its own facility to provide the same services and serve the need it claimed did not exist.”22 Second, the plaintiff relies on the fact that the defendant “told the OHCA that [the] facility would increase emergency services costs, but then dismissed these same concerns when raised about its proposed expansion.” The plaintiff argues that this “incongruity” between the defendant‘s arguments to the OHCA and its subsequent conduct “at least provides good reason to believe . . . that those objections were disingenuous and baseless.” We disagree.
First, the mere fact that the defendant took a position in later proceedings that arguably was inconsistent with certain arguments it previously had made to the OHCA does not mean that those arguments were objectively meritless at the time that they were made. To satisfy the sham litigation exception, the plaintiff was required to show that the defendant‘s challenge to the plaintiff‘s application was “frivolous“; Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., supra, 508 U.S. 65; in that “no reasonable litigant could realistically [have] expect[ed]” to prevail. Id., 62. The plaintiff did not present any evidence to indicate that the defendant did not have a good faith basis for its arguments at the time it presented them to the OHCA. That the defendant later took a position in a different proceeding that differed with respect to some of the arguments it made to the OHCA does not mean that those arguments were objectively baseless. Cf. Diamond 67, LLC v. Oatis, 167 Conn. App. 659, 688-89, 144 A.3d 1055 (2016) (evidence supported claim that defendants lacked good faith basis for claim that proposed construction project would pollute groundwater, so as to satisfy sham exception, based on emails indicating defendants were aware their claims were false when they made them), cert. denied, 323 Conn. 926, 150 A.3d 230 (2016), and cert. denied, 323 Conn. 927, 150 A.3d 228 (2016), and cert. denied, 323 Conn. 927, 150 A.3d 228 (2016), and cert. denied, 323 Conn. 927, 150 A.3d 229 (2016), and cert. denied, 323 Conn. 927, 150 A.3d 230 (2016).23
On the basis of the foregoing, we conclude that the plaintiff failed to establish probable cause that it would prevail on its claims in light of the defendant‘s first amendment defense and, accordingly, that the court did not err in concluding that the complaint was barred by the first amendment. Because the court‘s conclusion in that regard, standing alone, was sufficient to justify its dismissal of the complaint, we further conclude that the court did not err in dismissing the plaintiff‘s complaint.
The judgment is affirmed.
In this opinion the other judges concurred.