ODP, LLC v. SHELTERLOGIC, LLC

Full title: ODP, LLC ET AL. v. SHELTERLOGIC, LLC ET AL

Court: Connecticut Superior Court Judicial District of Hartford, Complex Litigation Docket at Hartford

Date published: Dec 21, 2007

2007 Ct. Sup. 22330 (Conn. Super. Ct. 2007)

44 CLR 722

Opinion

No. X 09 CV 06 4020086

December 21, 2007

MEMORANDUM OF DECISION ON MOTION TO STRIKE

JOSEPH M. SHORTALL, JUDGE.

The defendants have moved to strike multiple counts of the First Revised Amended Complaint (complaint). The court has considered the motion and the plaintiffs' objection thereto, as well as the memoranda of law each have submitted in support of their respective positions.¹

1 Ordinarily, oral argument is a matter of right for a motion to strike, but neither the defendants nor the plaintiffs have indicated a desire for oral argument; therefore, the court has decided the motion on the papers submitted. See Practice Book § 11-18(a)(2) (3).

Counts 3, 4, 5 6

The plaintiffs having clarified that these counts seek relief only as to the parties named in the heading of each count, all of whom are signators to the contracts at issue, the motion to strike those counts as to the other defendants is MOOT.

Counts 7, 8, 9, 10 11

The court is satisfied from the submissions of the parties that Brian Goldwitz has actual notice of these proceedings, and his interests are adequately represented herein. Batte-Holmgren v. Commissioner of Public Health, 281 Conn. 277 (2007). The plaintiffs' failure to file the certificate of notice required by Practice Book § 17-56(b) is a matter of form not of substance and is not grounds for granting a motion to strike. § 17-56(c). The motion to strike is DENIED as to these counts.

Counts 17, 18 19 Each of these counts adequately alleges facts supporting the tort causes of action against the defendants Conlon and Kiarsis. The counts seek to recover not for breach of contract but for the tortious conduct in which they are alleged to have engaged. Therefore, it is irrelevant that they were not signators to the contracts which underlie this case. The motion to strike is DENIED as to these counts. Count 20

The conspiracy allegations are sufficiently joined with, at least, the tort of conversion alleged in count 17. See ¶ 144. The actions of the defendants Conlon and Kiarsis, however, were all taken in their roles as "members and co-managers" of the corporate defendants. See ¶ 142. There is no allegation that any personal benefit either one of them may have realized as a result of their alleged actions was separate and apart from the benefits they would have realized in their corporate roles. In other words, there are no allegations of "private acts done by persons who happen to work in the same place"; (Internal quotation marks and citations omitted.) Harp v. King, 266 Conn. 747, 777 (2003); or that either defendant had an "independent personal stake." Miller v. O.S. Shipping Trading Corp., Superior Court, judicial district of Waterbury, Docket No. X06 CV 01 0166810 (Nov. 7, 2001). Therefore, the "intracorporate conspiracy doctrine" bars this count. Accordingly, the motion to strike is GRANTED as to count 20.

Count 21

By incorporating the allegations of paragraphs 1 through 141, the plaintiffs have sufficiently alleged "substantial aggravating circumstances" which permit breaches of contract by the signators to those contracts to form the basis of a CUTPA count. As to the defendants Conlon and Kiarsis, this count, like counts 17, 18 and 19, seeks to recover not for breach of contract but for the tortious conduct in which they are alleged to have engaged. Therefore, it is irrelevant that they were not signators to the contracts. The motion to strike is DENIED as to this count.

Count 23

Although it nowhere refers to the statute, this count alleges all the elements of an action in replevin, pursuant to Conn. General Statutes § 52-515. Accordingly, the motion to strike is DENIED as to this count.

Counts 17, 18, 19 21

The defendants move to strike these counts, all of which sound in tort, on the basis of the economic loss doctrine.² "The economic loss doctrine is a judicially created doctrine which bars recovery in tort where the relationship between the parties is contractual and the only losses alleged are economic." CW Waterbury, LLC v. Keith Mahler et al., Superior Court, judicial district of Waterbury, Docket No. X02 CV 06 5001128 (Dec. 27, 2006).

2 The defendants also moved to strike count 20 on this ground, but the court has already ordered it stricken on the basis of the "intracorporate conspiracy doctrine." See pp. 2-3, supra.

The statement of the rule makes it clear that the doctrine would not lead to striking these counts insofar as the defendants Conlon and Kiarsis are concerned. As they have pointed out numerous times in their submissions, these defendants were not signators to any of the contracts executed among the other parties; therefore, the plaintiffs have no contractual relationship with or remedies against them, and the economic loss doctrine does not apply. See United Steel, Inc. v. Spiegel, Zamecnik Shah, Inc., Superior Court, judicial district of Hartford, Docket No. X 09 CV 06 5001846, 13-14 (Mar. 27, 2007) [43 Conn. L. Rptr. 476].

But, what of the other defendants, against whom the plaintiffs have and have asserted contract-based remedies. See counts 1 through 6 and 12 through 14? The very same conduct alleged to have constituted the tortious behavior for which relief is sought in counts 17, 18 and 21³ is that for which relief is sought in the contract-related counts. This demonstrates that the essential relationship between the parties is contractual. Since the only losses alleged are economic, the economic loss rule should apply.

3 The only defendants in count 19 are Messrs. Conlon and Kiarsis, to whom the economic loss rule does not apply.

It is true, as the plaintiffs argue, that the Supreme Court has applied the rule only in the context of the sale of goods. Flagg Energy Development Corp. v. General Motors Corp., 244 Conn. 126, 153 (1998). While the court's holding in Flagg concerned a sale of goods governed by provisions of the Uniform Commercial Code (UCC), its reliance on cases which recognized the existence of the economic loss rule in a broader commercial context has led to a debate among Superior Court judges, carried on through decisions addressing a variety of factual and legal circumstances, whether the economic loss rule applies only to UCC transactions.

This court finds persuasive the reasoning and holding of Judge Munro in American Progressive Health Life Insurance Co. v. Better Benefits, LLC, Superior Court, judicial district of Waterbury, Docket No. X 10 CV 02 401221 (Jan. 4, 2007) [42 Conn. L. Rptr. 618], that, when all the conduct claimed to give rise to the tort causes of action is the same conduct which gives rise to the contract causes of action, applying the economic loss rule to bar the tort counts "is a logical and principled extension of the reasoning which supported the Supreme Court's recognition of the economic loss doctrine in Flagg Energy." To paraphrase Judge Munro, "the marketplace allowed [ODP and ShelterLogic] to negotiate the allocation of the risks in the contract[s] between them. They were free to anticipate any type of situation that could arise and impede the performance of the contract as well as alter the contract to account for unintended events."

The court sees no necessary conflict between this application of the economic loss rule and the Supreme Court's decision in Williams Ford, Inc. v. Hartford Courant, 232 Conn. 559 (1995) There, while they were made "during the course of a contractual relationship"; Id., 579; the negligent misrepresentations which the jury found were made by the Courant's representatives were misrepresentations about advertising rates which may have led the plaintiffs to enter into the contracts they had with the Courant. Id., 566-67. They were not conduct which would have constituted a breach of those contracts. Here the foundation for the tort counts is the exact conduct which the plaintiffs allege as violative of their contracts with the defendants.

Accordingly, based on the economic loss rule, the motion to strike is GRANTED as to counts 17, 18 and 21 insofar as they allege tort claims against the defendants Shelterlogic, SLI and NAA. It is DENIED as to count 19, in which the only defendants are Mr. Conlon and Mr. Kiarsis, and as to counts 17, 18 and 21 insofar as they allege tort claims against those two individuals.

To recapitulate, the motion to strike is GRANTED as to count 20 and as to counts 17, 18 and 21 insofar as they affect the defendants Shelterlogic, SLI and NAA. In all other respects the motion to strike is DENIED.