Connecticut

Here's a piece I wrote for the Connecticut Law Tribune regarding a Connecticut financier who alleges his Manhattan art dealer defrauded him:

The art world has become a big business, with more than $6 billion in modern art and $1.26 billion in contemporary art sold in 2011. And with big business comes big litigation.

Multiple lawsuits filed by a Connecticut financial executive alleging that his Manhattan art dealer defrauded him illustrates the stakes raised when buyers spend thousands, even millions, of dollars procuring art.

Richard C. McKenzie Jr., a Greenwich-based financier, has spent $200 million on art for his Seven Bridges Foundation, which aims to support up-and-coming artists by purchasing their work. The foundation also displays paintings by famous artists in order to inspire budding artists.

In a lawsuit pending in Connecticut federal court, McKenzie alleged that he was defrauded into buying an allegedly fake Pierre-Auguste Renoir painting, an Auguste Rodin sculpture and a Ernst Barlach bronze cast for a total of close to $570,000 by Manhattan gallery Forum Gallery. McKenzie asserts that Robert Fishko, the proprietor of Forum Gallery, befriended McKenzie's former wife and McKenzie himself, gained their trust and nurtured a business relationship that turned fraudulent.

McKenzie also is seeking punitive damages for $1.7 million.

In total, Forum Gallery and Fishko were paid $11.8 million during the dozen years Fishko was McKenzie's exclusive agent in finding art for his collection, according to the plaintiff's court papers.

In a separate lawsuit in New York federal court, McKenzie asserted that Forum Gallery and Fishko marked up the costs of procuring paintings by Norman Rockwell and other artists. McKenzie also alleged that Forum Gallery violated the contract it had with him on the terms on which it was to buy art for him on the primary and secondary markets.

McKenzie stated in court papers that a principal of a competing gallery told him that Fishko bought a Ralph Goings painting on his behalf at such a high price that the gallery pocketed $398,125, or a 114 percent profit. Fishko responded in court papers that the profit margin was only 13.1 percent.

In an interview, Fishko said that his long-time business relationship with McKenzie went sour after a California-based art dealer told McKenzie that Fishko's gallery had been overcharging him and misrepresenting the value of the art it had sold him. Fishko denies this. "I'm very proud of the work that I do for the artists that I represent and I'm very, very sure that Mr. McKenzie and the Seven Bridges Foundation … received everything that he bargained for and more," Fishko said.

There was no wrongdoing, fraud or violations of contractual or fiduciary obligations, Fishko added.

All the allegations in the New York case were struck down this month after U.S. District Judge Laura Taylor Swain, of the Southern District of New York, ruled against McKenzie's claims for fraud, breach of contract and breach of fiduciary duty. The judge said McKenzie could not show that Fishko misrepresented the prices at which sellers were willing to deal regarding the Rockwell and Goings paintings.

"Plaintiffs' evidentiary proffers fall far short of the clear and convincing showing required to demonstrate fraud," Swain said.

McKenzie has filed a third amended complaint in the Connecticut lawsuit pending before U.S. District Judge Janet Bond Arterton, but the judge has not yet made a decision on allowing the submission of the complaint. In the complaint, McKenzie set out a cloak-and-dagger scenario in which Fishko led him through Paris back alleys to a dimly lit apartment of a seller in financial straits to induce him to buy a fake Renoir painting. Fishko called that allegation an "absurd fabrication."

Even though McKenzie bought the Renoir painting in 2000, the Rodin sculpture in 2002, and the Barlach bronze cast in 2002, he alleges that he did not have reason to discover that the works were allegedly fake or inauthentic until 2014 when the various' artists committees decided to not include his property in their catalogs.

However, Fishko's counsel, Andrew Nevas, of Verrill Dana in Westport, said in court papers that his clients have provided proof of the authenticity of the artistic works. "McKenzie's willingness to advance knowingly inconsistent and false allegations is, sadly, not a surprise, as he is a serial and vexatious litigator," defense documents stated.

Forum Gallery's and Fishko's counsel maintain that the statute of limitations on all of McKenzie's claims have expired because he did not conduct due diligence about the authenticity of the Renoir and the two sculptures until 2014. "McKenzie, an extraordinarily sophisticated plaintiff who has purchased tens of millions of dollars of art, cannot evade the obvious fact that he had the means available to him to verify Forum's alleged representations himself," the defense said.

The defense is also going to seek sanctions for the prosecution of "patently unfounded, insufficient and time-barred claims."

Eric Grayson, the founder of commercial law boutique Grayson & Associates in Greenwich, said in an interview that his client can prove the higher standard of clear and convincing evidence needed to show fraud in the Connecticut lawsuit. The true test of the authenticity of the Rodin, Barlach and Renoir artworks is whether Fishko would "buy the three pieces back if he's that convinced that they are authentic works," Grayson said.

Fishko "took advantage of relationships that he had with Mr. McKenzie," Grayson said. "We are going to pursue this diligently with vigilance."

As for the New York case, McKenzie is a considering an appeal, Grayson said.

Fishko said there has been a sea change in the art business in the last 20 years because many investors now "come into the art business because they feel it's either a good place to put money or invest money." But the whole reason for Seven Bridges Foundation and McKenzie's art procurement was not for investment but to promote art by inspiring art, Fishko said.

Outside art law expert Robert A. Darwell, the founder of Sheppard Mullin Richter & Hampton's art law practice and a senior partner at the firm, said that there has not been an increase in litigation specifically because there is a new wave of collectors entering the art market. But because the value of art has been rising and there are more investors in the art world, Darwell said "it tends to lead to heightened sensitivities and potential claims."

Art appraisers, museums and galleries are facing more litigation, including for speaking freely about the authenticity of works, Darwell said.

Here's an article I recently did for the Connecticut Law Tribune about a novel lawsuit: can the government take through eminent domain certificates that authorize bus companies to operate on certain routes?

Connecticut is no stranger to landmark eminent domain disputes, with the U.S. Supreme Court having ruled in 2005 that the city of New London could shift from one private owner to another in order to further economic development. Nor is the state Department of Transportation any stranger to such proceedings, as the agency often condemns land to make way for public roads.

Now, the Connecticut Appellate Court or the state Supreme Court is going to hear an apparent issue of first impression in condemnation law: can the Department of Transportation use its eminent domain power to take intangible property? In this case, can it withdraw certificates that authorize four bus companies to operate on certain routes?

The state wants to take away certificates for Collins Bus Service Inc., Dattco Inc., Nason Partners Inc., and the New Britain Transportation Co. for routes between Hartford and nearby towns. The court action preceeds the planned opening of the Harford-New Britain busway by just a few months, but state officials say the intent is not to eliminate competition for the busway but to allow competitive bidding for routes used by the four companies.

Counsel for DOT Commissioner James Redeker have successfully argued in Superior Court that the agency has the power to condemn "certificates of public convenience and necessity" that permit private bus companies to operate in certain parts of the state. The bus companies have lodged an appeal with the Appellate Court. Because the ruling would set precedent, the companies have asked the Supreme Court to directly take the case.

Under state law, the DOT can only take "land, buildings, equipment and facilities" under its eminent domain power. Since there is no definition for "facilities" in Chapter 242 of the General Statutes, Judge Trial Referee Joseph Shortall recently cited a 1942 decision from the U.S. Court of Appeals for the Second Circuit noting that "facilities" is an inclusive term "'embracing anything which aids or makes easier the performance of the activities involved in the business of a person or corporation."'

Shortall also cited a definition of facility from Merriam-Webster's Third New International Dictionary as "'something that makes an action, operation or course of conduct easier."'

As a result, Shortall said, in applying the dictionary definition of facility, that the bus certificates qualify as "facilities" that the DOT commissioner is entitled to condemn so long as it will be in the public interest. "Not only do they make the companies' activities in operating a bus service easier; they are essential to those operations," Shortall wrote.

State Control?

Jeffrey Mirman, a partner at Hinckley, Allen & Snyder and counsel for the four bus companies, said that there is "no language in any statute that would suggest that facilities ever have been to held to encompass intangible rights like franchises or certificates."

The bus companies are fighting the use of eminent domain to take their certificates because "ultimately, we believe that the state wants all bus service to be controlled and operated by the state with no private companies" in the municipal transportation sector, Mirman said.

Once the certificates are issued, the government only can only revoke them for "sufficient cause," Mirman argued.

Assistant Attorneys General Alan Ponanski and Charles Walsh said in court papers that the bus companies want the Connecticut judiciary to "declare that the the commissioner lacks the authority to take their certificates … Rather than allow the commissioner to implement legislative policy to develop and improve mass transportation series by taking the certificates and competitively procuring bus service at the best price for the Connecticut taxpayers over the routes covered by those certificates, the bus companies want this court to tie the commissioner's hands and require him to contract with them and subsidize their services infinitely into the future."

Shortall added that interpreting the statute otherwise would limit the DOT's ability to implement the busway. "As long as the companies' franchises remained in their hands, they would continue to hold the exclusive right to provide bus service over the routes in question," he stated.

The court cited two cases from other jurisdictions on whether the term "facilities" in the field of eminent domain law includes the exclusive right to provide services held by a utility company. The Mississippi Supreme Court addressed the issue in a 1973 case and the Tennessee Court of Appeals addressed it in a 1990 case.

Mirman said he thinks the "trial court recognized the decision was a toss-up and could have gone the either way" by permitting a temporary injunction to stay in place until the Appellate or Supreme court can take up the case.

Here's a piece I did for the Connecticut Law Tribune about a new call for Connecticut to cut its prison population:

It's not every day that red-state Texas is pointed out as a paragon for reform that blue-state Connecticut should emulate.

But the author of a new book calling for a mass overhaul of Connecticut's criminal justice system says that Connecticut should adopt some of the best practices that have helped Texas reduce its prison population. Texas has reduced the number of inmates so much that the Lone Star State is closing prisons.

Brian Moran, a partner at Robinson & Cole in Stamford, is the principal author of the book: "The Justice Imperative: How Hyper-Incarceration Has Hijacked the American Dream."

Moran notes that Connecticut's prison population has grown from 3,800 inmates in 1980 to almost 17,000 as of January 2014. Meanwhile, the state spends more than $1 billion annually on incarceration costs, but well more than half the prisoners who are released end up back behind bars.

Federal prisons and state correctional facilities all have seen their populations explode because of the 40-year war on drugs, Moran said. It is estimated that in that time period, the penal population in the U.S. grew from 300,000 to more than 2 million.

But other states are further along in enacting reforms to steer more nonviolent offenders away from prison or to establish programming that helps ex-cons reintegrate into society after they finish doing their time, Moran said. "The 40-year war on drugs … is potentially affecting another generation of kids," Moran said. "We think it's long overdue for Connecticut to get onboard with this battle."

Linda Meyer, a Quinnipiac University School of Law professor and who was on the book's writing committee, said "everyone's intuition is that the more people you incarcerate, the less crime you have. We're trying to get the message out that is wrong."

The Connecticut juvenile justice system has taken steps that could offer guidance to the adult justice system, the authors argue. Even as the state has transferred more young lawbreakers from adult courts into the juvenile system, it has placed fewer juveniles in detention facilities and put a greater emphasis on rehabilitative programs. That focus has lowered recidivism rates, Moran says.

Similarly, the book says, the state should expand nonincarceration programs for adult offenders, ranging from transitional housing units for ex-cons to treatment programs for people with substance abuse issues and mental illness.

Moran and the coalition that backed his book project suggest that Connecticut should strive to cut its prison population in half in the next five years, close half of its prisons in five years, reduce recidivism rates by 30 percent in five years and reduce state spending on the prison system by half.

The books makes 30 recommendations for alternatives to incarceration, improving the reentry process, new legislation, new policies the executive branch could undertake and initiatives the Department of Correction could undertake.

Some of the recommendations include:

• Eliminate the requirement that inmates must serve 85 percent of a sentence for crimes classified as violent.

• Adopt reforms that allow for early parole and more time off for good behavior.

• Allocate one-third of any cost savings realized from reducing the prison population toward educational programs and vocational training aimed at reducing recidivism.

• Give judges more discretion in handing out sentences, "including the use of … offender-based data systems, sentencing-support analytics and mandatory offender family impact statements to facilitate informed decision-making."

• Provide employers who hire ex-offenders with tax incentives as well as immunity from liability.

When states such as Texas have enacted these sorts of reforms, and have reinvested savings in treatment, education and providing support to former inmates, they have also seen a reduction in the rate of crime, Moran said. Orienting Connecticut's criminal justice system in this way would provide a "trifecta of benefits: lower costs, lower recidivism and improved public safety," Moran said.

He added that there is a fourth benefit: Better success at achieving the "holy grail of corrections," which is to rehabilitate inmates and restore them to their families.

Moran, who practices in commercial litigation with an emphasis on antitrust, intellectual property and licensing disputes, was drawn to the topic of criminal justice because of his friend William Fox's involvement with the Malta Justice Initiative. The Southport-based group has an active prison ministry providing support to people who are incarcerated. It is overseen by a Roman Catholic religious order called The Sovereign Military Hospitalier Order of St. John of Jerusalem of Rhodes and of Malta.

John Santa, who is chairman of the initiative, said the gist of the book is about "more effective and compassionate treatment when [inmates are] in and more effective support when they're out and reentering." The group says that while Moran is the main author, the book is a collaborative effort, including the input from a bipartisan coalition of businesspeople, correctional professionals, legislators, judges, law enforcement professionals, lawyers, ministers and academics in Connecticut.

Moran also was drawn to the book because of reading Michelle Alexander's book, "The New Jim Crow: Mass Incarceration in the Age of Colorblindness," in which she argued that young black men, who go to prison for drug crimes 20 to 50 times more often than young white men do, are "part of a growing undercaste, permanently locked up and locked out of mainstream society."

The racial disparity in the criminal justice system is no different in Connecticut than it is nationally, Moran said. Blacks and Latinos make up 24 percent of Connecticut's overall population but they comprise 66 percent of the prison population.

That is another reason for criminal justice reform in Connecticut, Moran said. "There are two Connecticuts," he said, "the inner cities and what is happening outside of the bigger cities."

For more information on "The Justice Imperative: How Hyper-Incarceration Has Hijacked the American Dream," visit http://thejusticeimperative.org.

A few weeks ago, an appellate attorney told me that the Connecticut Supreme Court has been taking longer to issue its decisions, but that the court's jurisprudence has become more scholarly. That conversation led me to look into the appellate-court process for the Connecticut Law Tribune, including examining the speed with which Connecticut Supreme Court handles its cases. You can look at the data behind the story here: 2013-2014SupremeCourtTerm.xlsx.

The story:

It may be the most comment lament of litigants when they appeal their cases: "When will the court decide my case?"

Often, appellate advocates wonder the same thing. "There is a general sense that opinions take too long to come out," says Linda Morkan, counsel at Robinson & Cole, who is cochairwoman of the Connecticut Bar Association's appellate advocacy section but emphasized she was speaking in her individual capacity.

At the same time, many appellate lawyers say they understand that the court is tasked with digging into difficult legal matters and coming up with decisions that set precedent. There is ample praise for the depth of scholarship among the current seven justices.

Chief Justice Chase Rogers said the court's goal is to work as efficiently as possible to give anxious parties a resolution to their disputes. But some cases take longer to resolve if there are multiple legal issues in need of examination. Sometimes decisions change, as what was initially the majority becomes the dissent. Moreover, decisions won't be released until all the justices are satisfied. "The bottom line is we're a court of last resort," Rogers says.

Given the interest in the matter among many Connecticut lawyers, the Law Tribune took an in-depth look at some statistics regarding the timing of decisions reached by the Supreme Court. Some may find it surprising that the current court isn't really any slower to release decisions than its recent predecessors.

Between 2005 and 2010, the average time between oral argument and the publication of decisions in the Supreme Court was 157 days, according to the Judicial Branch. Over the next three years, the average was 158 days.

During the 2013-14 term, which is officially drawing toward an end, the Supreme Court seems to have issued opinions faster than in the recent past, according to the Law Tribune's analysis. Of the 118 cases in which the justices have heard oral argument this term, 54 cases have been decided and it took 136 days on average for the court to issue decisions after oral argument. The shortest wait was 27 days and the longest 292 days.

There were still 64 cases pending as of Aug. 7, and it is unknown if any of those cases involve the type of factors that tend to delay the issuance of opinions.

At least three of those still-pending cases were heard last September—LaPointe v. Commission of Correction; Gilmore v. Pawn King; and Connecticut v. Carrion.

In contrast, the state Appellate Court took an average of 104 days after oral argument to release decisions between 2005 and 2010, according to the Judicial Branch. For the past three years, it has been 94 days.

In Connecticut, trial courts are required by law to issue their decisions within 120 days, and at least two Superior Court judges have been sanctioned in recent years for long-delayed decisions. Although some have suggested the Supreme Court adopt the same four-month deadline, Rogers said it's not workable. All sides deserve a full reading of the trial transcripts, which can be voluminous in cases with complex issues, she said. "You're not going to get a fair decision … covering all the issues in 120 days," Rogers said.

Pamela Meotti, the chief administrative officer for the Supreme Court, said the three staff offices that serve the appellate and the supreme courts are under the same imperative to be efficient. The clerk's office keeps the files and handles all communications with the parties and the public regarding cases. The staff attorney's office prepares summaries of pending cases, coordinates the court's preargument conference program that encourages settlement, and tracks issues that are coming before the court more frequently. The reporter's office checks the facts in cases, drafts the headnotes and publishes the cases when they are ready.

"Both courts aim to release the opinions as quickly as possible with the overarching goal that the opinions are decided in the right way," Meotti said.

Brendon Levesque, a partner at Horton, Shields & Knox whose practice includes appellate law, said that he tells clients it will typically take 18 months from filing their appeal to get to a decision, including taking three to six months for decisions to come out after oral argument. In fact, it takes a bit longer than that. Of the 54 cases decided so far in the term, it took 724 days on average—just shy of two years—between when the appeals were filed and the Supreme Court released its decision.

That time period can be affected by a number of factors. For example, some cases come to the Supreme Court after Appellate Court review. And some come straight from the trial courts. Chief Appellate Judge Alexandra DiPentima said the court has a panel of judges that looks for cases that should be sent straight to the Supreme Court for review.

The chief justice also receives petitions for cases involving urgent matters of public interest, such as election law cases that have to be decided quickly. Other expedited matters include child protection cases. Otherwise, cases get put on a list as they become ready for Supreme Court review, and "we just go down the list" and schedule arguments, Rogers said.

Attorneys noted that the U.S. Court of Appeals for the Second Circuit uses an informal process to issue "unpublished" decisions that come out a matter of weeks after oral arguments. The decisions serve to resolve the disputes between the parties. More in-depth published opinions are issued later. Those are the decisions that will be cited by lawyers in future cases.

In Connecticut, appellate court decisions seem to be lengthier of late, said Robinson & Cole's Morkan. In her opinion, that's a positive development for several reasons. The added depth often offers more thorough reasoning by the court, which is important for the development of the law and public policy. And the added heft helps a litigant "believe that you have been heard and the court has understood the issues."

James Streeto, a veteran assistant Connecticut public defender who regularly appears in the appellate courts, said that earlier in his career decisions seem to have come out a little more quickly. He said he thinks the quality of appellate lawyering has improved and that the courts have responded with more scholarly opinions. All that takes more time, he said. "I'd rather have a result that is careful and scholarly … than have a quick decision that's wrong."

Still, Streeto has mixed feelings. On one hand, well-crafted opinions develop the law and may help many more people down the road. On the other hand, he is representing clients who are doing very long stints in prison and "the only thing that matters to your client is if it is affirmed or reversed. The client doesn't care if 40 pages of scholarly" analysis follows their loss, he said.•

A lawsuit over a historical post office in my local community of Stamford, Connecticut, exemplifies the clash between the United States Postal Service's efforts to modernize and downsize its facilities and laws meant to protect America's historical heritage and the local environment. I wrote about the dispute for the Connecticut Law Tribune: 

 In the early 1900s, federal buildings tended to be monumental—beautifully designed and built with high-quality construction materials so they would last. One hundred years later, the result is an inventory of historic post offices that are often larger than the U.S. Postal Service requires due to the declining volume of mail and increased automation.

Federal court litigation over the Stamford Main Post Office, built in 1916, is just the latest example of how the USPS's modernization efforts are putting the quasi-public agency in conflict with laws meant to preserve history and protect the environment.

The postal service closed the building last September and is transferring it functions to other postal facilities in the city. The USPS wants to sell the building to the Cappelli Organization for $4.3 million. The White Plains, N.Y., developer wants to demolish part of the post office and erect two 20-story luxury apartment towers behind the building.

A group of plaintiffs went to court on the day the developer and the postal service were ready to close the deal, arguing that the "postal service seeks to pass title to a developer without obtaining from it sufficient protections for the historically and culturally important features of the property."

The plaintiffs are the National Post Office Collaborate, a nonprofit formed two years ago to fight to preserve the historic post office in Berkeley, Calif., and now fighting to preserve historic post offices nationally; the Stamford-based Center for Art and Mindfulness, which tried unsuccessfully to buy the building as an arts center; and Stamford resident Kaysay Abrha.

Jacquelyn McCormick, executive director of the collaborate, said since her group and the other plaintiffs filed their lawsuit last fall, the postal service has not closed any post offices elsewhere in the country. The legal dispute over the Stamford building could be a test case for how the postal service handles the disposition of its historically significant properties, she said.

Historical post offices in Derby and New London are also for sale, according to a congressional report from the Advisory Council on Historical Preservation published earlier this year.

The USPS' "intention is to use their quasi-public status … and turn their back on it when it suits them," McCormick said.

The Stamford Main Post Office, which has been on the National Register of Historic Places for almost 30 years, is set on a pink granite base. Granite steps lead to a terrace bordered by two wings of the building. The plaza has two bronze-and-glass lantern fixtures. The interior has high ceilings and the lobby floor is trimmed in pink and white marble.

The plaintiffs challenging the plan argue that the "building is a spectacular example of American-Italianate architecture and represents a piece of American history from a bygone era."

Despite the historical features, the defendants claim the post office, also known as the Atlantic Street Station, is in poor condition and poses health risks from falling plaster, lead paint, mold and a lack of hot running water. A deal reached with a previous private bidder was scuttled, in part because of costs related to removing asbestos and lead paint, according to the USPS.

The USPS argued in court papers that it has no money available to fix the building, as it has already borrowed the $10 billion maximum available to it for capital expenditures nationwide.

The plaintiffs argue that the USPS only gave two days notice that the post office would be closed. The plaintiffs also argued that the USPS failed to follow Section 106 of the National Historic Preservation Act, which requires federal agencies to consider the effect of selling historic properties. Further, the plaintiffs alleged the USPS failed to conduct an environmental assessment or obtain an environmental impact statement as required under the National Environmental Policy Act. That federal law requires agencies to consider the effect of major federal actions on the "quality of the human environment."

Last October, U.S. District Judge Janet Bond Arterton granted a preliminary injunction barring the sale of the property on the grounds that the post office's compliance with the environmental review law was deficient.

The USPS categorically excludes from the environmental review process any sale or real property that "does not involve an increase in volumes, concentrations, or discharge rates of wastes, air emissions, or water effluents." But Arterton expressed skepticism that the construction of two high-rise apartment buildings would have the same impact on the neighborhood environment as the day-to-day operations of a post office that has already been built.

"At oral argument, USPS was unable to point to any evidence in the record showing that USPS specifically considered Cappelli's plans to develop two high-rise residential apartment buildings at the site," Arterton wrote. "The only evidence of USPS's consideration of the categorical exclusion was a simple unelaborated 'yes' response on a checkbox form completed over two years prior to the contemplated action."

Arterton noted the USPS' difficult financial circumstances, including a mandate to pay $5.5 billion into a health fund for future retirees. However, the judge said, the USPS cannot evade compliance with the environmental review law just because compliance is time-consuming or inconvenient.

David Friedman and Kristen Zaehringer, of Murtha Cullina in Stamford, and Barry Trilling, of the Trilling Environmental Law Firm in Fairfield, are representing the plaintiffs.

The U.S. Postal Service is represented by the U.S. Attorney's Office for Connecticut and the U.S. Department of Justice's Environmental & Natural Resources Division. One of the attorneys involved, Assistant U.S. Attorney Ann Nevins, based in Bridgeport, declined to comment on the pending litigation.

The case in Stamford also could test the contours of the public trust doctrine, a principle which holds that certain resources are preserved for public use and that the government is required to maintain them for the public's reasonable use.

In this case, the plaintiffs argued that while the USPS actively manages its post offices, the public retains the superior right of collective ownership of those buildings. The postal service says the plaintiffs are misinterpreting the law.

The federal lawyers said the U.S. Supreme Court has held that the public trust doctrine is a creature of state law and applies only to the states in some dealings with private parties.

Oral arguments were held in May on the public trust doctrine claim and another claim. No ruling has been issued yet.