Opinion
No. 66719
March 15, 1993.
MEMORANDUM OF DECISION ON MOTION TO STRIKE
This case has a complex procedural history. In December, 1986, the plaintiff, Matthews Group, Inc., mortgagor, entered into a mortgage agreement with the defendant, Essex Savings Bank, mortgagee, concerning real property known as the "Boxwood" property, located on Lyme Street in Old Lyme, Connecticut. Subsequently, the plaintiff defaulted on the note.
The present case involves four legal proceedings which are listed in chronological order below, with the present action being number (4): (1) Essex Savings Bank v. Matthews Group. Inc.; New London J.D.: D.N. #51-37-92 (foreclosure of note and mortgage deed to Essex, dated December 29, 1986): Foreclosure action filed: April 3, 1990 Judgment of strict foreclosure: July 27, 1990 Value of property found by court: $1,165,000 Debt owed to Essex $1,600,000± Certificate of Foreclosure recorded: August 30, 1990 (2) Essex Savings Bank v. Matthews Group, Inc.; New London J.D.: D.N. 52-32-29 (application for discharge of claim of interest in real property): Notice of claim filed by Matthews: July 24, 1991 Application for discharge filed by Bank: June 12, 1992 Application granted, Walsh, J.: August 14, 1992 (Where the court ordered the discharge of the notice of claim, pursuant to General Statutes 47-33a(a), because the defendant failed to file suit and record notice of lis pendens within the one year statutory period, i.e., before March 27, 1992). (3) Essex Savings Bank v. Matthews Group, Inc.; Middlesex J.D.; D.N. 06-30-28 (declaratory judgment action interpreting the option agreement involving the repurchase of real property): Pending pleadings closed; discovery in progress; Original complaint dated: August 8, 1991 Return date: August 27, 1992 Plaintiff's motion for summary judgment denied: May 4, 1992 (4) Matthews Group. Inc., v. Essex Savings Bank; Middlesex J.D.: D.N. 06-67-19 (present action): Complaint dated: August 14, 1992 Lis Pendens filed: August 18, 1992 Return date: September 8, 1992 Application for discharge of lis pendens (pending): September 28, 1992
On April 3, 1990, Essex Savings Bank brought an action for strict foreclosure against the plaintiff. On April 30, 1990, the plaintiff entered into an option contract with the defendant to repurchase the Boxwood property with the understanding that the plaintiff would waive any defenses to the strict foreclosure action. The option agreement provided that the plaintiff could act on the agreement to repurchase the Boxwood Property within six months after the filing of the certificate of foreclosure with the closing to occur within thirty days after the plaintiff's election to exercise its option during the option period. The agreement also provided that the defendant would provide the requisite financing to the plaintiff. On July 27, 1990, a judgment for strict foreclosure was entered. On August 30, 1990, the certificate of foreclosure was filed which began the running of the six month option period.
On February 23, 1991, the plaintiff communicated by letter to the defendant that it was exercising its option. On March 26, 1991, the defendant prepared and signed the repurchase agreement. The plaintiff objected to the repurchase agreement's non-refundable origination fee of $19,000.00. The closing did not take place by March 27, 1991, the deadline set in the option agreement.
On September 3, 1992, the plaintiff filed a two count complaint against the defendant. In the first count, the plaintiff alleges that the defendant violated the provisions of General Statutes Sec. 42-110a, et seq., CUTPA. In the second count, the plaintiff seeks specific performance of the option agreement. The plaintiff also requests injunctive and monetary relief from the court. On August 18, 1992, the plaintiff filed its lis pendens. On September 11, 1992, the defendant filed its application for discharge of the plaintiff's lis pendens.
On December 3, 1992, the defendant timely filed the present motion to strike with supporting memorandum of law. The defendant argues that the allegations in the plaintiff's complaint are legally insufficient on the ground that: (1) CUTPA does not apply to banks; (2) the plaintiff's claim for specific performance is barred by the statute of limitations, pursuant to General Statutes Sec. 47-33a(a), and the doctrine of res judicata; and (3) the plaintiff failed to allege that it may suffer irreparable harm and a lack of an adequate remedy at law in its request for injunctive relief.
The plaintiff failed to file an opposing memorandum of law as required by Practice Book Sec. 155. However, on March 1, 1993, the plaintiff filed a memorandum in opposition to the defendant's motion to strike in which it argues that: (1) CUTPA does apply to banks; (2) the plaintiff's claim for specific performance is not barred by the statute of limitations, pursuant to General Statutes Sec. 47-33a(a); and (3) that the plaintiff is not required to allege that it may suffer irreparable harm and a lack of an adequate remedy at law in requesting injunctive relief.
On January 11, 1993, the defendant's motion to strike was argued before the court (Higgins, J.) at which time the defendant objected to the plaintiff's failure to comply with the mandatory provision of the Practice Book Sec. 155.
A motion to strike challenges the legal sufficiency of a pleading . . . [I]t admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings. . . . The allegations of the pleadings involved are entitled to the same favorable construction a trier would be required to give in admitting evidence under them and if the facts provable under its allegations would support a defense or a cause of action, the motion to strike must fail. (Citations omitted.)
Mingachos v. CBS, Inc., 196 Conn. 91, 108-109, 491 A.2d 368 (1985). Further, the court must construe the facts alleged in the pleadings most favorably to the pleader. Gordon v. Bridgeport Housing Authority, 208 Conn. 161, 170, 544 A.2d 1185 (1988). Practice Book Sec. 152 provides in relevant part that "[w]henever any party wishes to contest . . . the legal sufficiency of the allegations of any complaint, counterclaim or cross claim, or any one or more counts thereof, to state a claim upon which relief can be granted, or . . . the legal sufficiency of any prayer of relief . . ., that party may do so by filing a motion to strike the contested pleading or part thereof." Practice Book Sec. 155 requires that "[e]ach motion to strike . . . be accompanied by an appropriate memorandum of law citing the legal authorities upon which the motion relies." Practice Book Sec. 155 also states that "[i]f an adverse party objects to this motion he shall . . . file and serve in accordance with Sec. 120 a memorandum of law." Id. The failure to file a timely opposing memorandum of law will not necessarily be fatal. Pepe v. New Britain, 203 Conn. 281, 287-288, 524 A.2d 629 (1987) (where the Connecticut Supreme Court held that the failure to file a timely opposing memorandum could be excused at the discretion of the trial court if the moving party fails to raise an objection). "Although a timely opposing memorandum is required, the failure to so file can be [excused] by the trial court. See Southport Manor Convalescent Center, Inc. v. Foley, 20 Conn. App. 223, 226 (1990)." Fitzpatrick v. East Hartford B.P.O. Elks, 3 CTLR 209, 210 (January 25, 1991, Clark, J.).
Pursuant to Practice Book Sec. 155, filing of an opposing memorandum of law, at least five days before the motion to strike is to be argued at short calendar, is mandatory. The court has the discretion to address the merits of the motion despite the late filing of an opposing memorandum of law if the moving party fails to raise an objection to the opposing party's failure to comply with the Practice Book. See Pepe, supra. However, if a formal objection is filed, before the underlying motion to strike is argued at short calendar, the court is required to rule on the objection, and the court then lacks discretion to proceed to consideration of the merits of the motion. See id; see also Connolly v. Connolly, 191 Conn. 468, 475, 464 A.2d 837 (1983) (where the court states that "[o]ur rules of practice require that every motion directed toward pleading or procedure . . . be in writing."); Practice Book Sec. 196.
In the present case, the plaintiff failed to file a timely opposing memorandum of law as required by Practice Book Sec. 155. On January 11, 1993, the defendant raised an objection concerning the plaintiff's failure to comply with the mandatory provisions of the Practice Book Sec. 155 at oral argument at short calendar. In the present case the plaintiff's deadline for filing an opposing memorandum of law was January 6, 1993, five days before the matter was to be heard at short calendar. Although the court's receipt of the plaintiff's opposing memorandum of law, on March 1, 1993, did not correct its failure to comply with the Practice Book requirements, it is within the discretion of the court to entertain the merits of the motion to strike because the defendant did not file a written objection on which the court must rule.
General Statutes Sec. 42-110a provides that ". . . no person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." General Statutes Sec. 42-110b(a). In the present case, count I of the plaintiff's complaint alleges a CUTPA violation by the defendant bank. Whether mortgage agreements and other property related transactions constitutes conduct of trade commerce, within the usage and meaning of CUTPA, is unsettled by the Connecticut courts. The issue of whether CUTPA applies to banks has not been addressed by a Connecticut appellate court. Gaynor v. Union Trust Co., 216 Conn. 458, 582 A.2d 190 (1990); Peterson v. People's Bank, 1 CTLR 73, 75 (December 5, 1989, Freed, J.).
A split of authority exists at the superior court level as to whether CUTPA applies to banks and other lending institutions. See TIE/Communications, Inc. v. Kopp, Middlesex Judicial District, D.N. 64938, (August 18, 1992, Higgins, J.) (where the court recognized that CUTPA does not apply to securities transactions); Andrus v. Maloney, 5 CTLR 313, 314 (December 9, 1991, Maiocco, J.) (where the court held that CUTPA does not apply to banks nor its officers or employees); Bristol Savings Bank v. Sattler, 4 CSCR 351 (March 29, 1989, Aronson, J.) (where the court held that the argument against CUTPA applying to banks is essentially that the Federal Trade Commission Act (FTCA), 15 U.S.C. § 45(a)(1), which is the basic for CUTPA, explicitly exempts banks from its application); People's Bank v. Horesco, 1 CSCR 62 (January 22, 1986, Jacobson, J.). aff'd. on other grounds, 205 Conn. 319 (1987) (where the superior court held that CUTPA does not apply to banks); Bridgeforth v. Fleet Bank of Connecticut, 7 CTLR 27 (June 29, 1992, Hadden, J.) (where the court held that since banks are already subject to pervasive federal and state regulations, the provisions of CUTPA do not apply to banks and banking transactions); but cf. People's Bank v. Smulley, 7 CTLR 607 (November 20, 1992, Leheny, J.) (where the court held that banks are subject to CUTPA with respect to credit card transactions); Connecticut National Bank v. Anderson, 5 CTLR 60, 62 (October 1, 1991, Pickett, J.) (where the court held that CUTPA applied to banks); Faitella v. North Atlantic Planning Corp., 5 CTLR 431 (January 6, 1992, Byrne, J.) (where the court in holding that CUTPA applied to banks stated that ". . . the Legislature could have specifically exempted banks from CUTPA if such an exemption had been intended."); Eylward v. Bank of Boston Connecticut, 4 CTLR 504 (August 26, 1991, Burns, J.) (where the court in holding that CUTPA applied to banks stated that ". . . the burden of proving an exemption from CUTPA . . . is on the party claiming the exemption."); Economic Development Associates v. Cititrust. 6 CSCR 400 (March 27, 1991, Dranginis, J.) (where the court held that when a bank is engaged in consumer-orientated activities, CUTPA should apply).
In Cititrust, the court provides an in-depth statement as to the applicability of CUTPA to banks. The court in Cititrust provides that [i]n determining whether a practice violates CUTPA, a court should employ the following criteria: (1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers [(competitors or other businessmen)]. Sanghari v. Paul Revere Life Ins. Co., 214 Conn. 303, 311-312 (1990). All three criteria need not be satisfied to support a finding of unfairness and a practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser degree it meets all three. Atlantic Richfield Co. v. Canaan Oil Co., 202 Conn. 234, 242 (1987). Economic Development Associates v. Cititrust, 6 CSCR 400, 402 (March 27, 1991, Dranginis).
The legislature did not intend to have CUTPA's application extended to banking and other non-consumer related transactions, such as mortgage and land purchase agreements.
Therefore, the court grants the defendant's motion to strike count I of the plaintiff's complaint because the allegations of the plaintiff's CUTPA claim are legally insufficient to support the cause of action.
In the present case, the defendant argues that the statute of limitations, under General Statutes Sec. 47-33a(a), and the doctrine of res adjudicata bars the plaintiff's present action seeking specific performance on the option agreement for the repurchase of real property.
In the present case, the defendant argues that the plaintiff's claim for specific performance is barred by the statute of limitations, pursuant to General Statutes 47-33a(a). General Statutes 47-33a(a) provides that [n]o interest in real property existing under an executory agreement for the sale of real property or for the sale of an interest in real property or under an option to purchase real property shall survive longer than one year after the date provided in the agreement for the performance of it or, if the date is not so provided, longer than eighteen months after the date on which the agreement was executed, unless the interest is extended as provided herein or unless action is commenced within the period to enforce the agreement and notice of lis pendens is filed as directed by section 52-325. General Statutes 47-33a(a). In the present case, the defendant argues that the plaintiff's action for specific performance of the option agreement for the repurchase of the Boxwood property was barred as of March 27, 1992, one year following the deadline for performance of the option agreement. Further, the defendant argues that the plaintiff's claim for specific performance is barred by the doctrines of res judicata and collateral estoppel where, in the prior decision of Essex Savings Bank v. Matthews Group, Inc., New London Judicial District, D.N. 52-32-29, (August 14, 1992, Walsh, J.), Judge Walsh made a finding, in discharging Matthews' claim of interest in the Boxwood property, that the aforementioned statute barred any claim that Matthews could raise under the option agreement for the repurchase of the Boxwood property, that the aforementioned statute barred any claim that Matthews could raise under the option agreement for the repurchase of the Boxwood property.
Practice Book Sec. 164 provides in relevant part that "the statute of limitations and res judicata must be specially pleaded [as special defenses]." Practice Book Sec. 164; see Mac's Car City, Inc. v. DeNigris, 18 Conn. App. 525, 528, 559 A.2d 712 (1989), cert. denied, 212 Conn. 807, 563 A.2d 1356 (1989). In the present case, the defendant is attempting to raise these special defenses as a test of the legal sufficiency of the plaintiff's claim for specific performance. This would require the court to look beyond the pleadings in determining the legal sufficiency of the plaintiff's claim which is prohibited under Connecticut practice. Morrisette v. Archambault, 31 Conn. Sup. 302, 303, 329 A.2d 622 (1974). However, the court in Morrisette provides exceptions in which a court will address the statute of limitations defense on a motion to strike. Id. The court in Morrisette provides that
When the parties agree that the complaint contains all the pertinent facts, the issue may be raised by [a motion to strike]. Vilcinskas v. Sears, Roebuck Co., 144 Conn. 170. A [motion to strike] is also the proper device to raise the issue when the plaintiff anticipates the Statute of Limitations and endeavors to overcome its effect by appropriate allegations in the complaint. Radezky v. Sargent Co., 77 Conn. 110.
Id.
The present complaint does not contain all the pertinent facts to support the defendant's argument that the plaintiff's action for specific performance is barred by the special defenses of the statute of limitations and res judicata. Further, the plaintiff's complaint does not anticipate the defendant's special defenses.
Therefore, the defendant's motion to strike count II of the plaintiff's complaint seeking specific performance is denied by the court on the ground that the statute of limitations and the doctrine of res judicata should be pleaded as special defenses, pursuant to Practice Book Sec. 164, and not as devices to challenge the legal sufficiency of the plaintiff's claim for specific performance.
"`A party seeking injunctive relief has the burden of alleging and proving irreparable harm and a lack of an adequate remedy at law.'" Hartford v. American Arbitration Assn., 174 Conn. 472, 476, 391 A.2d 137 (1978).
In the present case, the plaintiff has failed to allege irreparable harm and a lack of an adequate remedy at law. In count I, paragraph 16(d), of the plaintiff's complaint, it states "[a]s and for its remedy, the plaintiff demands the following: d) Injunctive relief prohibiting the defendant from conveying Boxwood to any other person or entity and requiring it to convey Boxwood to the plaintiff pursuant to the option agreement." No other allegations are made concerning irreparable harm or a lack of an adequate remedy at law.
The court grants the defendant's motion to strike plaintiff's request for injunctive relief under count because the facts pleaded in support of the relief sought are legally insufficient on the ground that the plaintiff has failed to allege that it may suffer irreparable harm and that there is a lack of an adequate remedy at law.
It is so ordered.
HIGGINS, J.