Opinion
LLICV156012595S
12-07-2015
Mary Ann Ring v. Litchfield Bancorp
UNPUBLISHED OPINION
RULING RE THE DEFENDANT'S MOTION TO STRIKE (#101)
John D. Moore, J.
The defendant, Litchfield Bancorp, has moved to strike (#101 motion, #102-memorandum) the plaintiff, Mary Ann Ring's, one-count claim, on the ground that it is insufficient as a matter of law. The plaintiff has filed a memorandum in opposition to this motion (#103). The plaintiff argues that her allegations demonstrate that the defendant was placed on notice that certain monies had been misappropriated from the plaintiff, that Connecticut Unfair Trade Practice Act (CUTPA) claims may be brought against banks, and that the defendant's alleged actions constitute CUTPA violations. For the reasons stated infra, the court grants the defendant's motion to strike the complaint.
The plaintiff's complaint is a one-count complaint claiming violations of CUTPA. It alleges the following. The plaintiff's house sustained property damage and the plaintiff received a referral to a contractor. The contractor presented an estimate in the amount of $84,636 to the plaintiff and she accepted it. The parties did not execute a contract complying with the Connecticut Home Improvement Act because the proposal did not contain either a right of rescission or start and end dates. Pursuant to General Statutes § 20-429, the purported contract was void. The contractor never performed any work for the plaintiff and never furnished any materials to the plaintiff. At the contractor's demand, the plaintiff paid the following sums to him on the following dates: $10,000 on June 9, 2015, $10,000 on June 29, 2015, and $40,000 on July 30, 2015. The contractor deposited these checks into an account with the defendant bank. The plaintiff has filed a " claim for fraud and embezzlement with the Torrington Police Department" against the contractor, as well as a complaint against him under the Connecticut Home Improvement Act. On or about August 5, 2015, the contractor advised the plaintiff that the defendant had " appropriated the plaintiff's money for a debt owed to it by" the contractor. Eight days later, on August 13, 2015, and then again on August 14 and 17, the plaintiff, through counsel, demanded that the defendant return the $60,000 to the plaintiff, stating that, in light of the events described above, the checks that the plaintiff delivered to the contractor never became the contractor's funds and thus remained the funds of the plaintiff. The defendant has refused to return these funds. As a result, the plaintiff has suffered an ascertainable loss because $60,000 has been taken from her by the defendant. Further, the plaintiff will not be able to repair her home which will sustain further damage this winter. The plaintiff claims money damages, interest under General Statutes § 37-3, and attorneys fees and punitive damages under CUTPA.
LEGAL DISCUSSION
A motion to strike is used " 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). In determining whether or not a pleading's allegations are sufficient, " all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted." (Internal quotation marks omitted.) Gazo v. Stamford, 255 Conn. 245, 260, 765 A.2d 505 (2001). However, a " motion to strike . . . does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Emphasis omitted; internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997). As a result, a " motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotations marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, supra, 498.
CUTPA claims arise under General Statutes § 42-110a et seq. General Statutes § 42-110b(a) provides: " No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce."
" 'CUTPA is, on its face, a remedial statute that broadly prohibits unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce . . . To give effect to its provisions, [General Statutes] § 42-110g(a) of [CUTPA] establishes a private cause of action, available to [a]ny person who suffers an 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 [General Statutes § ]42-110b . . ." Marinos v. Poirot, 308 Conn. 706, 712-13, 66 A.3d 860 (2013)." Artie's Auto Body, Inc. v. Hartford Fire Ins. Co., 317 Conn. 602, 623, 119 A.3d 1139 (2015). " CUTPA imposes no requirement of a consumer relationship. In McLaughlin Ford, Inc. v. Ford Motor Co., 192 Conn. 558, 473 A.2d 1185 (1984), [our Supreme Court] concluded that 'CUTPA is not limited to conduct involving consumer injury' and that 'a competitor or other business person can maintain a CUTPA cause of action without showing consumer injury.' Id., 566, 567; see Della Construction, Inc. v. Lane Construction, Inc., 42 Conn.Supp. 202, 612 A.2d 147 (1991)." Larsen Chelsey Realty Co. v. Larsen, 232 Conn. 480, 496, 656 A.2d 1009 (1995). " Because CUTPA is a self-avowed 'remedial' measure, General Statutes § 42-110b(d), it is construed liberally in an effort to effectuate public policy goals. See Hinchliffe v. American Motor Corp., [184 Conn. 607, 617, 440 A.2d 810 (1981)], see also Kintner, A Primer on the Law of Deceptive Practices, pp. 30-31 (1971); Ormstedt & Langer, 'The Connecticut Unfair Trade Practices Act, ' 52 Conn. B. J. 116 (1978)." Sportsmen's Boating Corp. v. Hensley, 192 Conn. 747, 756, 474 A.2d 780 (1984), superseded in part by statute as stated in Fichera v. Mine Hill Corp., 207 Conn. 204, 541 A.2d 472 (1988).
" A claim under CUTPA must be pleaded with particularity to allow evaluation of the legal theory upon which the claim is based." (Internal quotation marks omitted.) Keller v. Beckenstein, 117 Conn.App. 550, 569 n.7, 979 A.2d 1055, cert. denied, 294 Conn. 913, 983 A.2d 274 (2009).
Our courts have turned to the Federal Trade Commission to determine if commercial acts or practices are unfair under CUTPA. " '[I]n determining whether a practice violates CUTPA we have adopted the criteria set out in the cigarette rule by the [F]ederal [T]rade [C]ommission for determining when a practice is unfair: (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--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 business persons] . . . All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.' . . . Harris v. Bradley Memorial Hospital & Health Center, Inc., 296 Conn. 315, 350-51, 994 A.2d 153 (2010)." Artie's Auto Body, Inc. v. Hartford Fire Ins. Co., supra, 317 Conn. 609 n.9.
Although the continued applicability of the cigarette rule has been questioned in light of the fact that the Federal Trade Commission no longer uses this test, our Supreme Court has declined to abandon the cigarette rule in favor of the Federal Trade Commission's substantial unjustified injury test. Artie's Auto Body, Inc. v. Hartford Fire Ins. Co., supra, 317 Conn. 622 n. 13; see also Glazer v. Dress Barn, Inc., 274 Conn. 33, 82 n.34, 873 A.2d 929 (2005).
Other Supreme Court and Appellate Court cases have put a finer point on the requirement of proving unfair acts or practices in the conduct of trade or commerce.
In Ulbrich v. Groth, 310 Conn. 375, 78 A.3d 76 (2013), our Supreme Court gave a gloss on the first prong of the cigarette rule, a violation offending public policy. Ulbrich held that the jury could have reasonable found that the mortgagee's failure to ensure that a buyer at a foreclosure sale was warned that certain personal property was leased, and therefore would not be conveyed as part of the sale, " was not merely negligent or incompetent, but involved a conscious departure from known, standard business norms and was therefore unscrupulous, within at least the penumbra of some . . . statutory, or other established concept of unfairness . . . and resulted in an ascertainable loss to the plaintiffs." (Citation omitted; footnote omitted; internal quotation marks omitted.) Id., 436-47.
Our appellate courts have also commented on the second tine of the cigarette rule, proof of immoral, unethical, oppressive, or unscrupulous behavior. " A trade practice that is undertaken to maximize the defendant's profit at the expense of the plaintiff's rights comes under the second prong of the cigarette rule. See Johnson Electric Co. v. Salce Contracting Associates, Inc., 72 Conn.App. 342, 357, 805 A.2d 735 (defendant general contractor held liable for CUTPA violation under second prong of cigarette rule after listing plaintiff subcontractor as successful bidder but failing to honor contract), cert. denied, 262 Conn. 922, 812 A.2d 864 (2002)." Votto v. American Car Rental, Inc., 273 Conn. 478, 485, 871 A.2d 981 (2005) (unfair trade practice for rental car company to charge customer's credit card for damages to rental vehicle when customer did not authorize company to charge his credit card for damages and the amount charged exceeded the estimated cost to repair damages prepared by company).
Our courts have also provided guidance as to when a commercial act or practice is deceptive under CUTPA. " '[A] party need not prove an intent to deceive to prevail under CUTPA.' . . . Normand Josef Enterprises, Inc. v. Connecticut National Bank, 230 Conn. 486, 522-23, 646 A.2d 1289 (1994)." Willow Springs Condominium Assn., Inc. v. Seventh BRT Development Corp., 245 Conn. 1, 43, 717 A.2d 77 (1998). Although " [a] violation of CUTPA may be shown by proof of deceptive conduct . . . [i]t is not necessary to prove that the defendant intended to deceive. Web Press Services Corp. v. New London Motors, Inc., 203 Conn. 342, 363, 525 A.2d 57 (1987). An act or practice is deceptive if three requirements are met. 'First, there must be a representation, omission, or other practice likely to mislead consumers. Second, the consumers must interpret the message reasonably under the circumstances. Third, the misleading representation, omission, or practice must be material--that is, likely to affect consumer decisions or conduct.' . . . Caldor, Inc. v. Heslin, 215 Conn. 590, 597, 577 A.2d 1009 (1990), cert. denied, 498 U.S. 1088, 111 S.Ct. 966, 112 L.Ed.2d 1053 (1991), citing Figgie International, Inc., 107 F.T.C. 313, 374 (1986)." Freeman v. A Better Way Wholesale Autos, Inc., Superior Court, judicial district of Hartford, Docket No. CV-13-6045900-S, (April 1, 2015, Huddleston, J.) (failure of auto dealer to disclose financing terms before requiring a nonrefundable deposit was a deceptive practice that violated all three prongs of cigarette rule).
Under the cases cited above, " a violation of CUTPA may be established by showing either an actual deceptive practice . . . or a practice amounting to a violation of public policy." (Internal quotation marks omitted.) Glazer v. Dress Barn, Inc., supra, 274 Conn. 82-83.
In sum, to be legally sufficient, a CUTPA complaint brought by a consumer or a person who is not a competitor of the defendant must plead (1) either (a) an unfair act or practice in the conduct of trade or commerce, an element that may be satisfied by alleging (i) a violation of public policy as established under statutes, common law or otherwise, within, at least, some penumbra of unfairness as set forth in a statute, under common law or otherwise; (ii) an immoral, unethical, oppressive, or unscrupulous act or practice; or (iii) an act or practice that causes substantial injury to consumers; or (b) a deceptive act or practice, meaning a material representation, omission, or other practice likely to mislead consumers, which such communication a consumer must have interpreted reasonably under the circumstances and (2) that such unfair or deceptive act or practice caused an ascertainable loss of money or property. The plaintiff's complaint fails to set forth these necessary allegations.
" [T]he banking industry . . . is governed by CUTPA." Normand Josef Enterprises, Inc. v. Connecticut National Bank, supra, 230 Conn. 521 (" Banks are not so comprehensively regulated under state law as to be exempted from CUTPA." [Footnote omitted.] Id., 517.) Even so, however, the plaintiff's claims are insufficient to state a claim under CUTPA. One major problem for the plaintiff is that she pleads not only facts, but also two critical legal conclusions unsupported by the facts alleged. As stated above, for purposes of a motion to strike, the court accepts all facts pleaded, as well as all necessary implications arising from these facts, as admitted. The same is not true, however, for unsupported opinions and legal conclusions. " [A] motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotations marks omitted). Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 498.
The allegations of the plaintiff's complaint purporting to trigger CUTPA rely extensively on the legal conclusions pleaded. To help us understand this fact, we shall first examine the well-pleaded facts and the implications necessarily arising from those facts and then contrast them with the unsupported legal conclusions on which the plaintiff relies.
The plaintiff has pleaded the following facts or legal conclusions that are supported by the facts alleged. The plaintiff sustained property damage to her home and sought the services of a contractor to repair her home. The contractor presented a proposal to her, which she accepted, to do the work for $84,636. The agreement between the plaintiff and the contractor did not contain a right of rescission or a start and end date. As a result, the contract between the plaintiff and the contractor was void under General Statutes § 20-429. The plaintiff paid the contractor $60,000 by means of three checks, $10,000 on June 9, 2015, $10,000 on June 29, 2015, and $40,000 on July 30, 2015. The contractor deposited these checks into an account at the defendant bank. The contractor never provided the plaintiff with either goods or services pursuant to the agreement. On or about August 5, 2015, the contractor informed the plaintiff that the defendant had taken money from his account for a debt owed by the contractor to the defendant. The plaintiff has brought claims against the contractor, still pending, for fraud and embezzlement with the Torrington police department and under the Connecticut Home Improvement Act. The plaintiff, through counsel, demanded on August 13, 14, and 17, 2015, that the defendant return $60,000 to the plaintiff. The defendant has refused to do so. The plaintiff has suffered an ascertainable loss of $60,000, and the plaintiff will be unable to repair her home which will sustain further damage this winter.
The plaintiff has alleged the following two legal conclusions, which are unsupported by the facts alleged and which the court does not accept as well-pleaded.
1. The money used to set off the debt owed by the contractor to the defendant was the plaintiff's money. Complaint, para. 9. This legal conclusion was not supported by the alleged facts. The plaintiff alleged that she paid $60,000 in three checks, written on June 9, 2015, on June 29, 2015, and on July 30, 2015, to the contractor and that the contractor deposited these checks with the defendant. The plaintiff further alleged that after deposit, on or about August 5, 2015, the contractor informed her that the defendant " had appropriated the plaintiff's money for a debt" owed to the defendant by the contractor. The plaintiff has failed to allege how the bank's setoff of a debt against funds in the contractor's account would constitute " appropriation" of the plaintiff's money, particularly since the plaintiff has not alleged that she ordered a stop payment on the check. " Connecticut law, like law generally, treats a deposit in a bank as a promise to pay from the bank to the depositor. If the depositor is also indebted to the bank, such debts of the depositor and the bank are mutual, and the bank may set off a past due debt with deposits held by the bank, provided there is no express agreement to the contrary and the deposit is not specifically applicable to some other particular purpose. Southington Savings Bank v. Rodgers, 40 Conn.App. 23, 29, 668 A.2d 733 (1995), cert. denied, 236 Conn. 908, 670 A.2d 1307 (1996); Vic Gerard Golf Cars, Inc. v. Citizen's National Bank of Fairfield, 528 F.Supp. 237, 241 (D.Conn. 1981)." In re Colonial Realty Co., 208 B.R. 616. 618 (Bankr.D.Conn. 1997). The plaintiff has not alleged that the contractor was trustee for the plaintiff or that any special relationship existed beyond the contractual relationship between a customer and a home improvement contractor that would make the deposits " applicable to some other particular purpose" beyond general deposits in the contractor's account with the defendant bank. Id. Therefore, the plaintiff has failed to allege facts that would support the conclusion that the funds in the contractor's account with the defendant actually belonged to the plaintiff and were not available for the defendant to set off a debt owed by the contractor to the defendant bank.
This legal conclusion is echoed in para. 12 of the Complaint where the plaintiff alleges that, " the defendant has refused to return the plaintiff's funds."
2. As a result of the defendant's actions, " the sum of $60,000.00 has been appropriated by the defendant from the plaintiff." For the reasons set forth in (1) supra, if the money were not the plaintiff's, the defendant could not have misappropriated it from her.
The court also notes that the following, potentially relevant facts have not been alleged. The complaint is devoid of allegations that, during the relevant time period, the plaintiff was a customer of the defendant. The complaint does not allege that the plaintiff presented the defendant with a copy of the agreement between the plaintiff and the contractor. Further, the complaint does not allege whether the plaintiff, at any time, issued or attempted to issue stop-payment orders as to the three checks paid by her to the contractor. Moreover, the complaint does not aver that the plaintiff was a co-owner of or signatory to the contractor's account with the defendant. Finally, the complaint does not allege that the funds that the plaintiff paid to the contractor were earmarked in any way that the defendant could have perceived as being held in trust or for the benefit of the plaintiff.
In sum, the plaintiff's factual allegations essentially aver that: (1) the plaintiff, a person without a business or other kind of relationship with the defendant and a person not a party to the contractor's account, approached the defendant eight, nine, and twelve days after being informed that the defendant had set off debts owed to it by the contractor with funds that had been placed into the contractor's account, and demanded, without providing any alleged documentary proof, that the defendant pay the plaintiff $60,000; (2) that the defendant refused to do so; and (3) that these allegations rise to the level of a CUTPA violation.
(September 10, 2012, Wilson, J.) (54 Conn. L. Rptr. 731) (depositor successfully brought CUTPA claim against bank for improper setoff of plaintiff's social security disability benefits), Shemitz Lighting, Inc. v. Shawmut Bank Connecticut, N.A., Superior Court, judicial district of Ansonia-Milford, Docket No CV-95-0052242-S (February 28, 1996, Ripley, J.) (court denied motion to strike CUTPA claim made by bank customer against bank for failing to take adequate steps to detect forged checks resulting in improper payments). At bottom, however, each attempt to plead a CUTPA violation must rise or fall based upon its own individual allegations. The court is aware that one does not have to be a consumer to allege a CUPTA violation, McLaughlin Ford, Inc. v. Ford Motor Co., supra, 192 Conn. 565, but mentions this fact for the following reason. Many of the cases in which a plaintiff has successfully claimed or proved that a bank has violated CUTPA have taken place in the context of a consumer relationship. See Odell v. Wallingford Municipal Federal Credit Union, Superior Court, judicial district of New Haven, Docket No CV-10-6012228-S
While the plaintiff has claimed an ascertainable loss under CUTPA, the plaintiff has not alleged, with the particularity required under Keller v. Beckenstein, supra, 117 Conn.App. 569 n.7, an unfair or deceptive trade act or practice. Nothing in the facts set forth above alleges an act or practice that offends public policy, or any penumbra thereof, or an act or practice that is immoral, unethical, oppressive or unscrupulous, or an act or practice that causes substantial injury to consumers. Nothing in the facts set forth above constitutes a trade practice to maximize profits at the expense of the plaintiff's rights. Votto v. American Car Rental, Inc., supra, 273 Conn. 485. Nothing in the facts set forth above constitutes a " conscious departure from known, standard business norms . . ." Ulbrich v. Groth, supra, 310 Conn. 436. Ironically, if a bank, as a one-time commercial act, or as a practice over time, were to pay tens of thousands of dollars out of one person's account or out of the bank's funds, to a person who demanded such a payment under an unproven claim of right, such an act or practice may well both cause substantial injury to consumers and constitute a " conscious departure from known, standard business norms." Moreover, nothing in the facts set forth above alleges an act or practice comprising a material representation or practice likely to mislead consumers.
The court notes that the plaintiff has not alleged that the defendant violated any statute or regulation applicable to negotiable instruments or any other banking practice. While the court is aware that a party does not need to allege a statutory violation to sufficiently plead a claim under CUTPA, whether a practice violates a statute is a relevant consideration in determining whether a practice offends public policy. Peterson v. McAndrew, 160 Conn.App. 180, 207 (2015) (A practice is unfair if it " offends public policy as it has been established by statutes, the common law, or otherwise--in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness." [Internal quotation marks omitted.])
The plaintiff argues that Fairfield v. Southport National Bank, 80 Conn. 92, 67 A. 471 (1907), supports her claim that her complaint sufficiently sets forth a CUTPA violation. This case, however, is readily distinguishable on the facts, as it involves a defalcation by the defendant's employee of the plaintiff's bonds which were held by the defendant in its capacity as bailee. Id., 93-94. While it is true that Fairfield relies upon Norhtrop's Ex'rs v. Graves, 19 Conn. 548, 555 (1849), for the proposition that " one who holds money which he ought in equity and good conscience to pay over to another is subject to a legal duty to make such a payment, " Fairfield v. Southport National Bank, supra, 102, not every claimed breach of duty, as explained above, gives rise to a CUTPA violation and, more significantly, the plaintiff has not, to date, pleaded facts that support the necessary legal conclusion to trigger this axiom, e.g., that the defendant is holding money that, in equity and good conscience it ought to pay over to the plaintiff, namely, money that belongs to the plaintiff. As explained above, once a check has been endorsed, has cleared, and has been deposited into an account, absent a seasonal stop-payment order or a designation known to the bank on the account or the money held therein that informs the bank that the money is being held for the benefit of a person other than the account owner, the deposited money becomes the money of the account owner. After that time, the bank may treat it as the account owner's money and exercise its right to set off.
Bailees, of course, hold the property of others for a particular purpose, as mere possessors, and owe a duty to redeliver the property to the bailor when the particular purpose has been fulfilled. State v. Smith, 148 Conn.App. 684, 707-08, 86 A.3d 498 (2014) (a bailment is " [a] relationship . . . [that] arises when the owner, while retaining general title, delivers personal property to another for some particular purpose upon an express or implied contract to redeliver the goods when the purpose has been fulfilled, or to otherwise deal with the goods according to the bailor's directions . . . In a bailment, the owner or bailor has a general property [interest] in the goods bailed . . . The bailee, on the other hand, has mere possession of the items left in its care pursuant to the bailment." [Internal quotation marks omitted.]) aff'd by, 317 Conn. 338, 118 A.3d 49 (2015).
The court notes that the plaintiff has not alleged facts that would support the conclusion that a constructive trust was created. " The elements of a constructive trust are the intent by a grantor to benefit a third person, the transfer of property to another who stands in a confidential relationship to the grantor with the intent that the transferee will transfer the property to the third person, and the unjust enrichment of the transferee if the transferee is allowed to keep the property. A constructive trust is created by operation of law when these elements are present." Gulack v. Gulack, 30 Conn.App. 305, 310, 620 A.2d 181 (1993).
For the reasons set forth above, the court grants the defendant's motion to strike. So ordered.