MacDermid, Inc. v. Cookson Group, PLC

Citations: 149 Conn. App. 571; 89 A.3d 447; 2014 WL 1464325; 2014 Conn. App. LEXIS 164Docket: AC35541

Court: Connecticut Appellate Court; April 22, 2014; Connecticut; State Appellate Court

Original Court Document: View Document

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In the case of MacDermid, Inc. v. Cookson Group, PLC, the plaintiff appeals a trial court judgment that dismissed three counts of its complaint based on the prior pending action doctrine. The plaintiff acknowledges that its current allegations (MacDermid II) closely mirror those in an earlier pending case (MacDermid I) but argues that the defendants should be judicially estopped from seeking dismissal. The court agrees and reverses the trial court's decision. Relevant facts include that MacDermid I began in June 2009, alleging the Cookson defendants breached agreements, misappropriated trade secrets, committed computer crimes, and violated the Connecticut Unfair Trade Practices Act related to stock sales. The plaintiff claims the defendants used confidential information to submit a competitive bid, resulting in financial harm. In February 2012, the plaintiff attempted to amend its complaint in MacDermid I to include additional claims of fraud and tortious interference, but the court denied this motion without providing reasons.

The plaintiff's motion for reconsideration and reargument was denied by the court. Subsequently, in August 2012, the plaintiff sought to amend the MacDermid I complaint to add similar factual allegations but with a new cause of action for breach of contract that was not affected by the statute of limitations, which the court allowed. Following the denial of the reconsideration motion, the plaintiff initiated MacDermid II, reiterating the same facts and breach of contract claims from MacDermid I, along with a new claim under Connecticut’s Uniform Securities Act. The court noted that the allegations in both cases were virtually identical and analyzed the plaintiff’s equitable claims against the prior pending action doctrine, including judicial estoppel. The plaintiff argued that the defendants should be estopped from seeking dismissal based on the prior action's arguments, but the court disagreed and granted the defendants' dismissal motion. The prior pending action doctrine allows for the dismissal of a second case that presents issues already before the court, aiming to prevent redundant litigation. The court determined that the two actions were exactly alike regarding the first two counts, mandating dismissal of those counts in MacDermid II. The trial court's findings on the cases' similarities are subject to plenary review, and it must follow specific steps based on those findings to decide whether to dismiss the second action.

The court dismissed the remaining three counts of the MacDermid II complaint—fraud, tortious interference with business expectancies, and violations of CUSA—based on the prior pending action doctrine, finding them substantially similar to claims in MacDermid I. The court rejected the plaintiff’s argument for judicial estoppel, determining that the defendants' positions in the two cases were distinct and did not pose a risk of inconsistent outcomes that would undermine judicial integrity. The plaintiff did not appeal the dismissal of the first two counts but argued that the dismissal of the last three counts was an abuse of discretion, asserting that the defendants should be barred from invoking the prior pending action doctrine due to their inconsistent arguments in MacDermid I. Judicial estoppel, which prevents parties from adopting contradictory positions in different proceedings to protect judicial integrity, was discussed as applicable under certain conditions, including clear inconsistency and judicial adoption of the earlier position. The court, recognizing judicial estoppel as an equitable doctrine applied at its discretion, conducted a review for abuse of discretion regarding its decision not to apply the doctrine. The analysis necessitated a comparison of the defendants' arguments in both cases.

On February 21, 2012, the plaintiff sought to amend its complaint in MacDermid I, asserting that the new counts stemmed from the same incident involving the Cookson defendants' misuse of confidential information during the bidding process for the plaintiff’s stock. The plaintiff contended that the amendment would facilitate a complete resolution of the dispute and would not prejudice the defendants or delay the case, as the new information was uncovered during discovery. The defendants opposed the motion on March 7, 2012, arguing that the proposed amendments introduced new causes of action based on different factual allegations not previously included in the prior complaints. They maintained that this prevented the application of the relation back doctrine. The court denied the plaintiff’s motion to amend and its subsequent motion to reargue, indicating that the allegations of fraudulent concealment did not alter the determination that the amendments related to a new cause of action. Although the court did not provide a detailed memorandum explaining its denial, it appeared to accept the defendants' position that the new allegations were substantially different from the original complaint.

Subsequently, on October 25, 2012, the defendants filed a motion to dismiss the complaint in MacDermid II, arguing that it pertained to the same transaction, arose from the same factual background, and sought identical relief as the claims in MacDermid I. They characterized the allegations in MacDermid II as redundant and asserted that despite the plaintiff's use of different legal theories, the wrongful conduct and relief sought were the same as those in MacDermid I.

The defendants contended that the plaintiff's allegations in MacDermid II were simply a restatement of claims from MacDermid I, disguised as new legal theories. They successfully argued against the plaintiff’s motion to amend in MacDermid I, asserting that the proposed changes introduced new causes of action based on new facts, leading the court to deny the amendment. However, the defendants later shifted their stance, claiming the additional allegations in MacDermid II were redundant and based on the same factual background as those in MacDermid I. This inconsistency was characterized as duplicitous conduct, meriting the application of judicial estoppel. The court concluded that the defendants should have been estopped from seeking dismissal based on the prior pending action doctrine, ruling that the trial court abused its discretion in dismissing the plaintiff’s action. The judgment was reversed and the case remanded for further proceedings. Although the court also dismissed two other counts from the plaintiff’s complaint, this ruling was not contested by the plaintiff. The appeal focused on the remaining three counts. The plaintiff argued that the application of the prior pending action doctrine was inappropriate, asserting a right to have their claims heard on their merits. The trial court acknowledged that the plaintiff's filing of MacDermid II was not intended to harass but still dismissed it, viewing it as an attempt to circumvent the earlier denial of the motion to amend in MacDermid I. The court decided not to address the plaintiff's additional claims since the defendants were found to be judicially estopped. MacDermid I included claims against a former consultant, David North, who was not named in MacDermid II, and the defendants argued that the tort amendments were barred by the statute of limitations. At the time of MacDermid II's filing, the trial court had not yet ruled on the motion to amend in MacDermid I regarding a second breach of contract claim, and the defendants did not assert that their arguments were based on any mistake or unintentional error.

Defendants opposed the amendment request by arguing that the court lacked subject matter jurisdiction over the plaintiff’s proposed securities claim and that the new claims were barred by the statute of limitations. The trial court dismissed the plaintiff’s complaint based on the precedent set in *Sandvig v. A. Dubreuil Sons, Inc.*, which affirmed the application of the relation back doctrine due to the introduction of new facts in the amended complaint, despite similar pleadings. This case differs from *Sandvig* because the defendants claimed that the current complaint is based on the same facts as in *MacDermid I*, rendering the allegations redundant. Additionally, *Sandvig* did not consider the doctrine of judicial estoppel, which was not recognized in Connecticut until 2010. The trial court rejected the plaintiff’s judicial estoppel argument, noting that the two proceedings (the amendment in *MacDermid I* and the motion to dismiss in *MacDermid II*) were distinct, thus failing to meet the first requirement for judicial estoppel. The Supreme Court has indicated that the transaction or occurrence test for determining the relation back of newly pleaded claims is consistent across both amendment requests and motions to dismiss based on the prior pending action doctrine. Consequently, allegations cannot be deemed separate in the context of an amendment request while being regarded as identical in a motion to dismiss based on prior pending actions.