Opinion
No. CV05-4006714S
February 10, 2006
MEMORANDUM RE MOTION TO STRIKE #102
This is the defendants' motion to strike counts two and three of the plaintiff's complaint, sounding in tortious interference with a business expectancy and in CUTPA, respectively. The court, after review of the briefs and arguments, denies the defendants' motion to strike in its entirety.
FACTS
On July 27, 2005, the plaintiff, NEJ, Inc., filed a three-count complaint against the defendants, Kentucky Apparel, LLP (Kentucky), Greenberg, Grant Richards, Inc. (GGR) and Garrett Parks. Therein, the plaintiff alleges the following facts. The plaintiff is in the business of acquiring excess manufactured apparel and reselling that apparel to discounters and secondary markets. For some years, the plaintiff has purchased excess apparel from Kentucky. During July 2003, the plaintiff received a shipment of apparel from Kentucky that the plaintiff alleges did not conform to the plaintiff's request. The plaintiff and Kentucky subsequently began disputing what amounts, if any, were due and owing based on this shipment.
The plaintiff further alleges the following. GGR is either a law firm or a collections agency or a combination of the two. Parks is a member of GGR. Kentucky, through GGR and Parks, threatened the plaintiff to try to coerce the plaintiff to pay the amount in dispute. The defendants have threatened to contact the plaintiff's customers, vendors, banks, and state, local and federal authorities and have made at least one contact as of the date of this action with one of the plaintiff's business vendors. The defendants also threatened to continue to make such contacts to try to pressure the plaintiff to pay the amount in dispute. GGR and Parks appear to be attempting to embarrass, harass and interfere with the plaintiff's business in order to pressure the payment of such disputed funds all to the plaintiff's loss and damage. The defendants' actions are an attempt to interfere and do interfere with the plaintiff's business relations and expectancies and has and will cause damage to those relationships. The defendants' actions, and in particular those of GGR and Parks as agents of Kentucky, constitute unfair trade practices in violation of the Connecticut Unfair Trade Practices Act and have resulted in ascertainable losses to the plaintiff.
On September 29, 2005, the defendants, GGR and Parks, filed a motion to strike counts two and three of the plaintiff's complaint, sounding in tortious interference with a business expectancy and in CUTPA. The defendants filed a memorandum of law in support of the motion. On October 18, 2005, the plaintiff filed a memorandum of law in opposition to the motion to strike.
In count one, the plaintiff alleges a cause of action against Kentucky for breach of contract. Kentucky is not a part of the motion to strike.
DISCUSSION I
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC. v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "[A] motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual finding by the trial court." (Internal quotation marks omitted.) Larobina v. McDonald, 274 Conn. 394, 400, 876 A.2d 522 (2005). "It is fundamental that in determining the sufficiency of a [pleading] challenged by a [party's] motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted." (Internal quotations omitted.) Commission of Labor v. C.J.M. Services, Inc., 268 Conn. 283, 292, 842 A.2d 1124 (2004). "The court must construe the facts in the complaint most favorably to the plaintiff." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997).
II A Tortious Interference with a Business Expectancy CT Page 2921
The defendants first argue that it is unclear whether the plaintiff's second count is for tortious interference with a contractual relationship or for tortious interference with a business expectancy. The defendants argue, however, that regardless of which tort the plaintiff is asserting, the plaintiff's second count fails to state a claim upon which relief can be granted.
The defendants specifically argue that the plaintiff fails to plead the existence of any contractual or beneficial relationships or business expectancies with which the defendants allegedly interfered, in that the plaintiff only makes cursory mention of its "customers, vendors, banks, state, local, and federal authorities." The defendants then argue that the plaintiff fails to establish that the defendants had knowledge of the plaintiff's relationships with these third parties. The defendants also argue that count two of the plaintiff's complaint is insufficient on a fundamental level because the plaintiff merely alleges that the defendants threatened to contact the plaintiff's customers, vendors, banks, state, local and federal authorities and fails to allege that the defendants actually engaged in any tortious conduct. According to the defendants, the plaintiff merely asserts that the defendants have made at least one contact with one of the plaintiff's business vendors without additional facts that would constitute tortious conduct. The defendants argue that the plaintiff's assertion that the defendants " appear to be attempting to embarrass, harass and interfere with the plaintiff's business" does not bring the plaintiff's allegation into the realm of tortious conduct. (Emphasis in original.) The defendants finally argue that the plaintiff fails to allege facts satisfying the "actual loss" requirement for tortious interference with a business expectancy.
The plaintiff counters that the defendants read the allegations in the complaint too narrowly. The plaintiff argues that the allegations that the defendants threatened to contact its business vendors and the defendants' one actual contact with one of its vendors support a claim for tortious interference with a business expectancy. The plaintiff adds that the defendants' conduct has caused and will continue to cause loss and damage to the plaintiff. The plaintiff argues that it sufficiently alleges that the defendants have knowingly and purposely contacted third parties who are instrumental to the conduct of the plaintiff's business about matters that have nothing to do with those third parties and, further, that the defendants have done so for the purpose of harassing, embarrassing and otherwise interfering with the plaintiff's business operations. The plaintiff further argues that it sufficiently alleges actual loss by stating that the defendants' acts have interfered with its business relations and expectancies and, as a result, it has suffered damage to those relationships. The plaintiff finally argues that this allegation provides support for its claim for injunctive relief because it has alleged conduct by the defendants that demonstrates a substantial likelihood of infringing upon the plaintiff's legal rights.
"It is well established that the elements of a claim for tortious interference with business expectancies are: (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 court finds that the plaintiff is asserting a cause of action in tortious interference with a business expectancy. Although the plaintiff mentions the phrase, "business relations," in addition to "business expectancies," the plaintiff only lists the elements for tortious interference with a business expectancy in the memorandum of law in opposition. In TMK Associates v. Landmark Development, Superior Court, judicial branch of New London, Docket No. CV 02 0562077 (August 21, 2003, Corradino, J.) ( 35 Conn. L. Rptr. 387), the court stated: "The clearest discussion of the [difference between the two causes of action] is located in 45 Am.Jur.2d, `Interference,' pp. 269, et seq. Also see Prosser Keeton on Torts, 5th ed., §§ 129, 130, pages 978, et seq. . . . As the Am.Jur. article points out, there are two or three subsets or categories of `interference' as a tort.
"The torts of intentional interference with contractual relations, with lawful business and with prospective business advantage are closely related. The tort of interference with contractual relations is merely a species of the broader tort of interference with prospective business advantage and the tort of interference with business advantage is merely interference with ongoing and existing rather than prospective business advantage." (Citation omitted.) TMK Associates v. Landmark Development, supra, 35 Conn. L. Rptr. 392-93, citing 45 Am.Jur.2d at § 36, page 301.
The defendants first argue that the plaintiff fails to plead the existence of any contractual or beneficial relationship or business expectancy with which the defendants interfered and, further, that the plaintiff fails to establish the defendants' knowledge of any such relationship. In the context of a motion to strike, the court must read the allegations in a light most favorable to the plaintiff, as well as consider facts that are necessarily implied from the allegations. Commission of Labor v. C.J.M. Services, Inc., supra, 268 Conn. 292. With such a reading, the court finds that the plaintiff has sufficiently plead the existence of its relationship with another party and that the defendants knew of that relationship. The plaintiff alleges that it is a corporation that resells apparel to secondary markets and that the defendants contacted the "plaintiff's business vendor." These allegations are sufficient to establish the existence of a business relationship between the plaintiff and another party. The plaintiff's allegations regarding the defendants' threats and the defendants' contact with the plaintiff's business vendor imply that the defendants intended to inject themselves into the plaintiff's business relationship with the intention of compelling the plaintiff to pay the disputed amount to the defendants. The plaintiff's allegations imply that the defendants knew of the plaintiff's business relationship because that knowledge was necessary to carry out the defendants' intention of compelling the plaintiff to pay the disputed amount.
The court also rejects the defendants' next argument that the plaintiff has failed to plead that the defendants engaged in any tortious conduct. In Blake v. Levy, 191 Conn. 257, 464 A.2d 52 (1983), the Supreme Court stated: "[F]or a plaintiff successfully to prosecute such an action it must prove that the defendant's conduct was in fact tortious. This element may be satisfied by proof that the defendant was guilty of fraud, misrepresentation, intimidation or molestation . . . or that the defendant acted maliciously . . .
"Like the definition that emerges from our own cases, the Restatement (Second) of Torts defines intentional interference with business relations to cover a broad range of behavior. Every act of interference is not, however, made tortious. In the terminology of the Restatement, the test is whether the actor's behavior is `improper.'" (Citation omitted; internal quotation marks omitted.) Blake v. Levy, supra, 191 Conn. 261, citing 4 Restatement (Second) Torts c. 37, introductory note (1979). Thus, as the Supreme Court also stated in Blake, "[i]n an action for intentional interference with business relations we think the better reasoned approach requires the plaintiff to plead and prove at least some improper motive or improper means." Id., 262.
In the present case, the plaintiff pleads "at least some improper motive or improper means." Blake v. Levy, supra, 191 Conn. 262. The plaintiff's allegations in total imply that the defendants engaged in threats and intended to at least inject themselves into the plaintiff's business relationships with third parties and did so in a manner sufficient to compel the plaintiff to pay the disputed amount to the defendants. The plaintiff's allegations thus imply that the defendants were acting under an improper motive or by improper means.
The defendants' final argument is that the plaintiff has failed to plead "actual loss." The court also finds no merit to this argument. In Hi-Ho Tower, Inc. v. Com-Tronics, Inc., supra, 255 Conn. 20, the Supreme Court stated: "Unlike other torts in which liability gives rise to nominal damages even in the absence of proof of actual loss . . . it is an essential element of the tort of unlawful interference with business relations that the plaintiff suffered actual loss . . . [P]roof that some damage has been sustained is necessary to [support a cause of action for tortious interference] . . . A major problem with damages of this sort, [however], is whether they can be proved with a reasonable degree of certainty . . . If the question is whether the plaintiff would have succeeded in attaining a prospective business transaction in the absence of [the] defendant's interference, the court may, in determining whether the proof meets the requirement of reasonable certainty, give due weight to the fact that the question was `made hypothetical by the very wrong' of the defendant. Sometimes, when the court is convinced that damages have been incurred but the amount cannot be proved with reasonable certainty, it awards nominal damages." (Citation omitted; internal quotation marks omitted.) Id., 33-34.
As the Supreme Court stated in Solomon v. Aberman, 196 Conn. 359, 493 A.2d 193 (1985), damage to a plaintiff's reputation "can fom a basis for compensation by way of damages" for tortious interference. Id., 380. Moreover, in Esposito v. Kahn, Superior Court, judicial district of New Haven, Docket No. CV 01 0447427 (December 13, 2002, Arnold, J.), wherein "the plaintiff's sole allegation [was] that the plaintiff suffered permanent and irreparable harm to his standing and reputation at his place of employment," the court rejected the defendant's argument that the plaintiff's allegations were conclusory and held that the allegations were sufficient to state a cause of action in tortious interference with a business expectancy. Id., citing Hi-Ho Power, Inc. v. Com-Tronics, Inc., supra, 255 Conn. 33-34.
Similar to the plaintiff in Esposito, the plaintiff in the present case alleges that the defendants' actions "appear to be attempting to embarrass, harass and interfere with the plaintiff's business to pressure the payment of such disputed funds all to the plaintiff's loss and damages." The plaintiff also alleges that the defendants' actions have and will cause damage to the plaintiff's business relations. The plaintiff thus sufficiently pleads the "actual loss" element of tortious interference with a business expectancy. The defendants' motion to strike the plaintiff's complaint as to count two in tortious interference with a business expectancy is denied.
B Connecticut Unfair Trade Practices (CUTPA)
Regarding the plaintiff's third count, the defendants argue that the claim is insufficiently pleaded for two reasons. First, because the CUTPA claim is based on the plaintiff's defectively pleaded tortious interference claim in count two, the plaintiff's CUTPA claim must fail. Second, the defendants argue that the plaintiff's CUTPA claim cannot stand alone because the plaintiff cannot allege the necessary elements. The defendants specifically argue that the plaintiff makes conclusory allegations that the defendants' actions constitute unfair trade practices in violation of CUTPA. The defendants then argue that the plaintiff fails to allege any facts to satisfy the "ascertainable loss" requirement under CUTPA.
In opposition, the plaintiff first argues that its CUTPA count rests on the allegations in support of the tortious interference claim in the second count and that it is well settled that a sufficiently pleaded tortious interference claim supports a CUTPA claim. The plaintiff then states that the "ascertainable loss" requirement is satisfied so long as the allegations demonstrate that the defendants' conduct probably had a negative impact on the plaintiff's business. The plaintiff further argues that proof of specific damages is not necessary to successfully make out a violation of CUTPA, and that the "ascertainable loss" is supported by its allegation that the defendants have harassed the plaintiff's customers and vendors in a purposeful effort to embarrass the plaintiff with its customers and suppliers.
"Our jurisprudence regarding CUTPA is well settled. It is remedial in character . . . and must be liberally construed in favor of those whom the legislature intended to benefit . . . [We have] reaffirmed the principle . . . that CUTPA was designed to provide protection to businesses as well as to consumers. CUTPA is not limited to conduct involving consumer injury . . . [A] competitor or other business person can maintain a CUTPA cause of action without showing consumer injury . . . CUTPA, by its own terms, applies to a broad spectrum of commercial activity. The operative provision of [CUTPA], § 42-110b(a) states merely that [n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce . . . The purpose of CUTPA is to protect the public from unfair practices in the conduct of any trade or commerce, and whether a practice is unfair depends upon the finding of a violation of an identifiable public policy . . . A CUTPA claim may be brought in the Superior Court by [a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a method, act or practice prohibited by section 42-110b." (Citations omitted; internal quotation marks omitted.) Eder Bros., Inc. v. Wine Merchants of Connecticut, Inc., 275 Conn. 363, 379-80, 880 A.2d 138 (2005).
"[T]he essential difference between a tort claim for interference with business expectancies and a claim under CUTPA is the standard by which the alleged acts are measured. While liability in tort is imposed only if the defendant maliciously or deliberately interfered with a competitor's business expectancies, CUTPA liability is premised on a finding that the defendant engaged in unfair competition and unfair or deceptive trade practices." Sportsmen's Boating Corp. v. Hensley, 192 Conn. 747, 755, 474 A.2d 780 (1984). "Predictably, CUTPA has come to embrace a much broader range of business conduct than does the common-law tort action." Id., 756. "A trial court must guard against considering business tort claims and CUTPA claims in the same light. Conduct that might be actionable under CUTPA may not rise to a level sufficient to invoke tort liability. The reverse of that proposition, however, is seldom true . . . [I]t is difficult to conceive of a situation where tortious interference would be found but a CUTPA violation would not." Id., 756-57.
In Sportsmen's Boating Corporation v. Hensley, supra, 192 Conn. 756-57, the Supreme Court stated: "Provided a plaintiff shows that his or her [private action] claim is cloaked with the necessary public interest, it is difficult to conceive of a situation where tortious interference would be found but a CUTPA violation would not." (Emphasis added.) This court did not cite the italicized language referencing a public interest requirement because the public interest requirement was eliminated by an amendment to General Statutes § 42-110g(a) that became effective on June 8, 1984. Fichera v. Mine Hill Corporation, 207 Conn. 204, 207 n. 2, 541 A.2d 472 (1988). The applicable remaining law in Sportsmen's Boating Corp. v. Hensley, however, is still good and applies squarely to the present case.
In the present case, the plaintiff incorporates all of the allegations in counts one and two of the complaint into the third count for CUTPA. The plaintiff adds in the third count that "the actions of the defendants and in particular those of defendants, GGR and Parks as agents of Kentucky, constitute unfair trade practices in violation of [CUTPA] resulting in ascertainable losses to the plaintiff as set forth herein." Following the Supreme Court's conclusion in Sportsmen's Boating Corp. v. Hensley, supra, 192 Conn. 755-57, the court finds that the plaintiff's valid claim for tortious interference with a business expectancy supports the plaintiff's claim of a CUTPA violation. Therefore, the defendants' motion to strike the plaintiff's third count in CUTPA is denied.
III CONCLUSION
For the foregoing reasons, the defendants' motion to strike is denied in its entirety. Reading the plaintiff's allegations in a light most favorable to the plaintiff and considering facts necessarily implied from the allegations, the court finds the plaintiff has plead sufficient facts to sustain a cause of action for tortious interference with a business expectancy and for a violation of CUTPA.