Opinion
KNLCV156023394S
11-27-2015
Justin Henry et al. v. Justin Olshan et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO STRIKE
Timothy Bates, J.
The defendants, Justin Olshan (hereinafter " Olshan") and QPO Properties, LLC (hereinafter " QPO") have moved to strike all five counts of the Revised Complaint filed by the plaintiffs, Justin Henry (hereinafter " Henry") and Tire Clinic, LLC for failure to plead causes of action for which relief can be granted. See P.B. § 10-39. The plaintiffs contest the motion, contending that all five counts establish legal and factual grounds for the court to provide the relief requested. Each count will be reviewed separately. In the assessment of their legal sufficiency, the court must assume that all pleaded facts and those facts necessarily implied from the allegations are admitted. See Parsons v. UTC, 243 Conn. 66, 100, 700 A.2d 655 (1997). Moreover, the court, in reviewing the facts alleged shall construe them broadly and realistically in favor of legal sufficiency. See New London County Mutual Insurance Co. v. Nantes, 303 Conn. 737, 747, 36 A.3d 224 (2012). That said, a motion to strike does not admit legal conclusions or the correctness of any opinion expressed in the complaint. Faulkner v. UTC, 240 Conn. 576, 588, 693 A.2d 293 (1997).
Count 1 Tortious Interference with Business Relationships
The parties agree that to establish liability for tortiously interfering with a business expectance, the Plaintiffs must establish: " . . . (1) a business relationship between the plaintiff and another party; (2) the defendant's intentional interference with the business relationship while knowing of the relationship; and (3) as a result of the interference, the plaintiff suffers actual loss." Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 27, 761 A.2d 1268 (2000).
The defendants assert that the plaintiffs fail to identify any relationship between themselves and another party, with which the defendant allegedly interfered. The defendants also argue that the plaintiffs fail to identify any actual economic loss resulting from the alleged interference, contending " (t)he tort is not complete unless there has been actual loss suffered." Goldman v. Feinberg, 130 Conn. 671, 675, 37 A.2d 355 (1944).
The complaint alleges that the defendant Olshan, in 2011, owned and operated a tire shop, named Tire Clinic Plus; that at that time, the plaintiff Henry served as an employee of the business; and that Olshan offered to sell the business to the Tire Clinic, LLC, an entity established by Henry; and that the sale occurred on October 13, 2014. Olshan, according to the complaint, did not sell the real estate occupied by the business, keeping control of it through his entity and co-defendant, QPO. Upon transfer of the business to Tire Clinic, LLC, QPO entered into a three-year lease with Henry, which, according to the complaint, included two three-year extension terms.
The complaint further alleges that in September 2014, Henry contacted Olshan and requested an extension of the lease. Rather than extending, however, the complaint states that Olshan evicted the plaintiff and, following the eviction, opened his own business, called " Tire Clinic, " on the site. Further it is alleged that Olshan then represented to the plaintiffs' clients and employees that Henry had stopped doing business and left the state. The plaintiffs further allege that Olshan, upon taking control, attempted to obtain Tire Clinic's customer phone numbers for use in his new business.
In support of the claim of tortious interference with a business relationship, the plaintiffs state that as part of the sale of the business, Olshan had transferred to them his customer list; that in addition to the former customers of Olshan, they had developed business contacts on their own, and that they had business expectations of continued service of those clients as well as future new clients. The plaintiffs alleged that by taking over the property and creating a new business entity operating under virtually the same name, the defendants had tortiously interfered with plaintiffs' business relations and expectations, causing them monetary loss.
The defendants contend these allegations, if proven, fail to establish a cause of action of tortious interference. First, the defendants argue that the plaintiffs have not satisfied the first element of the cause of action--the existence of a business relationship between the plaintiff and another party. The court, however, finds that plaintiffs' allegations of three years of servicing customers--including some specifically referred by Olshan, the development of new customers during the three years of operation, and the claimed expectation of future new clients establish a relationship between the plaintiffs and their clientele. Combined with the defendants' alleged actions of not extending the lease, taking over the property, and setting up a competing business at the same site, the first element of the cause of action is satisfied. " [W]hen . . . the claimant seeks recovery for tortious interference with business relations, 'the plaintiff need not prove that the defendant caused the breach of an actual contract; proof of interference with even an unenforceable promise is enough.'" Swift v. Ball, No. CV-010344047S, 2003 WS 22413406, Sup.Ct., JD Danbury (2003), citing Biro v. Hirsch, 62 Conn.App. 11, 21, 771 A.2d 129, cert. den., 256 Conn. 908, 772 A.2d 601 (2001).
Second, the defendants assert that to pursue the claim of tortious interference the plaintiffs need to plead an " actual loss, " meaning presumably a specific loss of contract or customer or an identifiable monetary damage. Paragraph 31 of Count 1 states, " As a result of Olshan's tortious acts, the plaintiffs have suffered monetary loss, including but not limited to loss of business with their existing clients and loss of business opportunities with future clients, interest on the lost business value, and the cost of this action to recover the monies owed the plaintiffs, including attorneys fees and costs of litigation." The court finds these allegations of " actual damages" sufficient to satisfy the second element and overcome a motion to strike. See Hi-Ho Tower, Inc. v. Com-Tronics, Inc., supra at 255 Conn. at 31 , holding that allegations of generalized future loss are sufficient in tortious interference cases, where the impact of the interference is not always immediately measurable. Also see NEJ, Inc. v. Ky. Apparel, LLP, 2006 WL 438247, Sup.Ct., JD Waterbury at Waterbury (2006), citing Solomon v. Aberman, 196 Conn. 359, 493 A.2d 193 (1985) and recognizing that a claim of " . . . damage to a plaintiff's 'reputation can form a basis for compensation by way of damages' for tortious interference."
The defendants, in arguing that actual damages must be specifically pleaded, cited several authorities, which are not controlling. In Taylor v. Sugar Hollow Park, Inc., 1 Conn.App. 38, 467 A.2d 935 (1983), the court found tortious interference but no damage. However, it nonetheless awarded nominal damages of $3, 500, which the Supreme Court vacated as " actual damages" are a prerequisite to a finding of liability. In Herman v. Endriss, 187 Conn. 374, 446 A.2d 9 (1982), the tortious interference case had been nolle'd due to the death of the defendant, but the court ruled the dismissal inappropriate as the plaintiff should have an opportunity to pursue a claim against the estate for " actual damages." And the case of Goldman v. Feinberg, 130 Conn. 671, 37 A.2d 355 (1944) stands for the principal that if there are no damages, there is no tort.
The defendants' motion to strike Count 1 is denied.
Counts 2 and 3 re Conversion and Statutory Theft
Defendants have asked the court to strike Count 2 alleging conversion and Count 3 alleging statutory theft, arguing that the facts alleged in paragraphs 1-31 of the complaint do not establish a factual basis for either claim.
(a) Conversion
As noted in the defendants' brief, quoting Hi-Ho Tower, Inc. v Com-Tronics, Inc., supra, p. 43, " . . . conversion occurs when one, without authorization, assumes and exercises ownership over property belonging to another, to the exclusion of the owner's rights." To establish conversion, then, one must plead and prove " first the defendant retained the property in violation of the plaintiff's rights to immediate possession; secondly, the plaintiff demanded the property of him, and thirdly the defendant unqualifiedly refused to surrender it . . ." Connecticut Jury Instructions (Civil) 4th ed., v. 1; sec 201 Wright and Ankerman 1979.
In this case, the plaintiffs have alleged that they bought the tire repair business, including its name Tire Clinic from the defendants; that the company was legally formed under that name; that the defendants then refused to extend the lease of the property on which the business was located, forcing the plaintiffs to relocate; that the defendants then occupied the same property and established a tire repair business operating under essentially the same name that the plaintiffs had purchased and used; and that the defendants continue to refuse to renew the lease or cease using the plaintiffs' established business name. The court finds that these allegations, if proven, would establish a legal basis for a finding of conversion, whether the property converted is the real property subject to the lease or the corporate name.
The defendants contend that the plaintiffs' claims for damages from conversion are too general and speculative. However, the plaintiffs in Para. 35 of the complaint ask for the difference in the value of the property converted at the time of conversion and the time of the trial. While this amount may be uncertain and somewhat speculative at this time, plaintiffs have the right and obligation to substantiate it at time of trial. See Kuzemka v. Gregory, 109 Conn. 117, 123, 146 A. 17 (1929).
(b) Statutory Theft
As to Count 3, the defendants argue that the plaintiffs have failed to allege with specificity any intent on the part of the defendants to steal the plaintiffs' property, citing Deming v. Nationwide Mut. Ins. Co., 279 Conn. 745, 771, 905 A.2d 623 (2006). While paragraphs 36-39 of the complaint alleging statutory theft are somewhat conclusory, they are premised on the facts alleged in paragraphs 1-35 which adequately establish a basis for finding that the defendants, in effect, stole the plaintiffs' business, after selling it to them. The specific steps alleged by the plaintiffs that the defendants took to take over the business were inherently intentional and if proven would satisfy the " intentionality" element required for a finding of liability for statutory theft. The holding in Deming, supra, is not applicable to this case as the claim in that case was for deferred compensation, and it was not clear when the payment was owed. In this case, the date of the alleged theft, being the date of the eviction, is established.
Defendants Motion to Strike Counts 2 and 3 is denied.
Count 4 CUTPA
In Count 4, the plaintiffs allege that Olshan violated the Connecticut Unfair Trade Practices Act C.G.S. § 42-110a et seq., by, among other activities, wrongfully using the name " Tire Clinic, " attempting to divert phone numbers belonging to the plaintiffs, and making false representations to clients and employees regarding the status of Henry and his business. The defendants seek to strike this count, citing Kenly v. Don Beach Movers of New London, Inc., No. KNLCV13-6017631S, 2014 WL 1283040, Conn.Super., and February 27, 2014, which states: " To make out a claim for a violation of CUTPA, the plaintiff must allege conduct that violates some legally established concept of unfairness or is immoral, unethical, oppressive or unscrupulous." Olshan specifically objects to this charge, because the pleading alleges a violation of the act based on what he intended to do, not his conduct.
However, while Olshan may have a legitimate concern regarding whether his " attempt" to divert phone numbers constituted by itself a CUTPA violation, his focus on that one phrase ignores the other allegations in the Count, including, but not limited to, appropriating the use of the name " Tire Clinic" after having sold that name and misrepresenting the actions and status of the plaintiffs to clients and employees.
Having already held that the complaint adequately pleads tortious interference with a business expectation, conversion and statutory theft, it would be difficult, if not impossible, to hold that the activities of the defendants as pled do not constitute actions that offend public policy as it has been established by statute or the common law in ways that violate concepts of fairness, or are unethical, oppressive or unscrupulous, or cause substantial injury to competitors or other businesspersons. See Hudson United Bank v. Cinnamon Ridge Corp., 81 Conn.App. 557, 571, 845 A.2d 417 (2004), finding whether a specific contract violation qualifies as a CUTPA violation.
Defendants' Motion to Strike Count 4 is denied.
Count 5 Breach of Contract
The breach of contract count rests on the refusal of the defendants to extend the lease upon request of the plaintiff tenant. In challenging this count, the defendants assumed that the complaint did not allege a refusal to renew on behalf of the landlord. However, as is set forth in the plaintiffs' brief and as is apparent in Paragraph 19 of the revised complaint, the plaintiff alleged, " In September 2014, with the intent to renew the lease, Henry contacted Olshan and requested a renewal lease." Instead of receiving such an extension, the complaint alleges they " received an eviction notice and a cease and desist letter from Olshan." Construing these allegations " . . . broadly and realistically in favor of legal sufficiency . . ." the court finds the allegations in Count 5 constitute a legal claim of breach of contract. See New London County Mutual Insurance Co. v. Nantes, supra .
Defendants' Motion to Strike Count 5 is denied.