Opinion
No. FST CV 09 5013109 S
September 28, 2011
MEMORANDUM OF DECISION RE MOTION TO STRIKE #142 AND OBJECTION #147
On October 31, 2009, the plaintiffs, Jesus Romero, Angela Morales, Angelica Garcia and Araceli Romero, commenced this action by service of process against the defendants Harold Gewirtz and Joan Torpey, also known as Joan Gewirtz. In the operative pleading, which is the plaintiffs'"final revised complaint" dated June 14, 2011, the plaintiffs allege the following facts relevant to the disposition of the motion that is currently before the court. Sometime in March 2001, the plaintiffs became interested in purchasing real property located at 17 Rachelle Avenue in Stamford for the purpose of using this property as their family residence. At this time, the subject property was owned by Arlene Moavero. Although the plaintiffs had enough funds for a down payment on the property, they could not obtain a sufficient mortgage in order to complete the purchase. Consequently, the parties entered into an oral contract in which they agreed that the defendants would use a down payment and closing costs paid solely by the plaintiffs to purchase the property and "become holders of fee simple title to the [p]roperty for the sole benefit of the [p]laintiffs." Specifically, the defendants agreed to enter into a written purchase and sale agreement with Moavero with a $300,000 purchase price and then proceed to pay the $30,000 required down payment deposit and obtain a mortgage for the premises. The plaintiffs would then reimburse the defendants for these costs. After the closing for the sale of the property, the defendants, "upon the request of the [p]laintiffs to be exercised at the sole option of the [p]laintiffs," would either convey fee simple title to the plaintiffs in exchange for consideration equal to the remaining principal on the mortgage or sell the property to a third party. If the property was sold to a third party, the defendants would give the plaintiffs all of the net proceeds from the sale.
In April 2001, the defendants entered into a purchase and sale agreement to buy the property from Moavero for $300,000. The defendants then paid Moavero a $30,000 deposit. In accordance with the parties' oral agreement, on April 16, 2001, the plaintiff Romero reimbursed the defendant Torpey $6,133.36. Similarly, on April 17, 2001, the plaintiff Morales paid the defendant Gewirtz $23,866.24, for a total equaling the $30,000 deposit. On June 4, 2001, the defendants completed the purchase of the property. In reliance on the terms of the parties' agreement, the plaintiff Garcia then paid Gewirtz $4,626.59 and Romero reimbursed Gewirtz $10,000 in order to cover closing costs. The plaintiffs then moved into the subject premises and began paying all of the money that they owed to the defendants. On June 4, 2007, the plaintiffs informed the defendants of their desire to exercise their option to purchase the subject property. Despite this fact, the defendants have refused to convey the property to the plaintiffs. In June 2009, the defendants sold the property to a third party for the sum of $400,000, and the defendants have refused to pay the plaintiffs the net proceeds from this sale. Accordingly, the plaintiffs' six-count complaint alleges the following claims against the defendants: (1) counts one and two — breach of contract; (2) count three — unjust enrichment; (3) count four — constructive trust; (4) count five — breach of the implied obligation of good faith and fair dealing and (5) count six — violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq.
On July 13, 2011, the defendants filed a motion to strike all six counts of the plaintiffs' complaint along with a memorandum of law in support of their motion. The plaintiffs filed a memorandum of law in opposition to the defendants' motion on August 24, 2011. On August 29, 2011, the parties appeared before the court and argued this matter at short calendar.
"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). In a motion to strike, "the moving party admits all facts well pleaded." RK Constructors, Inc. v. Fusco Corp., 231 Conn. 381, 383 n. 2, 650 A.2d 153 (1994). Therefore, "[i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Batte-Homgren v. Commissioner of Public Health, 281 Conn. 277, 294, 914 A.2d 996 (2007). Nevertheless, "[a] motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 498. When deciding a motion to strike, the court must "construe the complaint in the manner most favorable to sustaining its legal sufficiency." (Internal quotation marks omitted.) Sullivan v. Lake Compounce Theme Park Inc., 277 Conn. 113, 117, 889 A.2d 810 (2006).
The defendants move to strike the First and Second Counts of the complaint since the claim is that, it rests upon a proported oral agreement for real property, and therefore falls within the statute of frauds. The court has reviewed the allegations of the First and Second Count and finds they are sufficient to establish part performance, justifiable reliance and establish an estoppel.
The defendants move to strike the Third Count claiming unjust enrichment. The court finds this count legally sufficient as it does not improperly allege a breach of contract by the plaintiff. It alleges sufficient facts to sustain a claim for unjust enrichment.
The defendants move to strike count four alleging a constructive trust on two grounds. First, the defendants argue that a constructive trust is not a valid independent cause of action in Connecticut. Rather, the defendants state that a constructive trust is an equitable remedy to prevent unjust enrichment. Second, the defendants contend that even if the court were to find that the plaintiffs can maintain a claim sounding in constructive trust, that the plaintiffs have failed to allege sufficient facts for such a cause of action because "[t]hey merely allege a breach of the purported oral agreement and state a legal conclusion that a constructive trust exists." In response, the plaintiffs argue that none of the authorities cited by the defendants compel the conclusion that they cannot state an independent cause of action for a constructive trust and that they allege sufficient facts for such a claim.
In a footnote in Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 623 n. 3, 804 A.2d 180 (2002), the Connecticut Supreme Court stated as follows: "The plaintiffs . . . requested that the trial court . . . impose a constructive trust over such moneys. Although the plaintiffs framed these requests as counts eleven and twelve of their complaint, these are issues to be addressed by the trial court upon remand because, rather than being substantive causes of action upon which the complaint is predicated, these counts request remedies, the appropriateness of which would be left to the discretion of the trial court if the plaintiffs, or either of them, were to prevail at trial." The defendants use this quotation as support for the conclusion that Connecticut law does not allow a plaintiff to state an independent claim for a constructive trust. As stated by one Superior Court judge, "[t]here exists no appellate authority clarifying the Macomber footnote . . . Connecticut courts, both before and after Macomber, have recognized claims for constructive trust by considering the merits of such claims," whereas other courts have stricken constructive trust counts. Heimbrock v. Heimbrock, Superior Court, judicial district of Litchfield, Docket No. CV 08 5004975 (May 18, 2009, Roche, J.). In his Heimbrock decision, Judge Roche cites a number of Superior Court cases that have decided the issue both ways.
In the following cases, the court determined that there was no independent cause of action for a constructive trust in Connecticut: Kosiorek v. Smigelski, Superior Court, judicial district of New Britain, Docket No. CV 07 4014607 (October 9, 2008, Gilligan, J.); Consiglio v. Consiglio, Superior Court, judicial district of New Haven, Docket No. CV 05 4010111 (November 7, 2006, Zoarski, J.T.R.); Cadle Co. v. Zubretsky, Superior Court, judicial district of Hartford, Docket No. CV 04 0832777 (February 23, 2006, Hennessey, J.T.R.); Pricelinecom, Inc. v. Mayes, Superior Court, complex litigation docket at Stamford, Docket No. X08 CV 03 0196820 (March 16, 2005, Adams, J.) ( 39 Conn. L. Rptr. 9). On the other hand, the court allowed a constructive trust cause of action to continue in the following cases: Cooke v. Cooke, Superior Court, judicial district of Fairfield, Docket No. CV 06 5001276 (April 23, 2007, Matasavage, J.) and Colodonato v. Hanson, Superior Court, judicial district of Hartford, Docket No. CV 04 4004755 (August 11, 2006, Miller, J.).
Although there is a split of Superior Court authority on this issue, the cases concluding that a plaintiff cannot bring an independent cause of action sounding in constructive trust are better reasoned. Under Connecticut law, "[a] constructive trust is an equitable remedy imposed to prevent unjust enrichment." (Emphasis added.) Gulack v. Gulack, 30 Conn.App. 305, 311, 620 A.2d 181 (1993). "The imposition of a constructive trust by equity is a remedial device designed to prevent unjust enrichment . . . Thus, a constructive trust arises where a person who holds title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it." (Emphasis added; internal quotation marks omitted.) Gold v. Rowland, 296 Conn. 186, 210 n. 22, 994 A.2d 106 (2010). Given the Supreme Court's language in the Macomber case indicating that a constructive trust is properly pleaded as a remedy as opposed to a separate cause of action, and the general case law stating that a constructive trust is an equitable remedy for unjust enrichment, count four is legally insufficient and is stricken. Nevertheless, while the plaintiffs cannot maintain a separate count for a constructive trust, they still will be able to obtain the equitable remedy of a constructive trust via their unjust enrichment count. As the defendants have not moved to strike the prayer for relief seeking a constructive trust, this equitable remedy will still be available to the plaintiffs under their unjust enrichment claim. See, e.g., Priceline.com, Inc. v. Mayes, Superior Court, complex litigation docket at Stamford, Docket No. X08 CV 03 0196820 (March 16, 2005, Adams, J.) ( 39 Conn. L. Rptr. 9, 12) (striking counts alleging constructive trust and an accounting "with the proviso that they may be sought in prayers for relief associated with appropriate causes of action").
Having determined that Connecticut law does not allow the plaintiffs to bring an independent cause of action for a constructive trust, it is unnecessary to examine the defendants' second argument that this count is legally insufficient because the plaintiffs failed to allege all of the elements to maintain such a claim.
Next, the defendants move to strike count five alleging violations of the "implied obligation of good faith and fair dealing" on the ground that the plaintiffs fail to include any allegations of dishonest purpose or sinister motive. The defendants contend that count five is legally insufficient without such an allegation. According to the defendants, the allegations found in count five simply repeat those located in the breach of contract counts and assert a legal conclusion that the defendants violated the implied covenant of good faith and fair dealing. The plaintiffs respond that count five alleges facts indicating that the plaintiffs reimbursed all of the money owed to the defendants in order to purchase the subject premises and that the defendants reneged on their oral contractual obligation to sell the property to the plaintiffs. It is the plaintiffs' position that the allegations in count five satisfy the pleading standards for a claim sounding in breach of the implied covenant of good faith and fair dealing.
"[I]t is axiomatic that the . . . duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship . . . In other words, every contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement . . . The covenant of good faith and fair dealing presupposes that the terms and purpose of the contract are agreed upon by the parties and that what is in dispute is a party's discretionary application or interpretation of a contract term . . . To constitute a breach of [the implied covenant of good faith and fair dealing], the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith." (Internal quotation marks omitted.) Renaissance Management Co. v. Connecticut Housing Finance Authority, 281 Conn. 227, 240, 915 A.2d 290 (2007). "Bad faith has been defined in our jurisprudence in various ways. Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive . . . Bad faith means more than mere negligence; it involves a dishonest purpose . . . [B]ad faith may be overt or may consist of inaction, and it may include evasion of the spirit of the bargain . . ." (Internal quotation marks omitted.) Brennan Associates v. OBGYN Speciality Group, P.C., 127 Conn.App. 746, 759-60, 15 A.3d 1094, cert. denied, 301 Conn. 917, 21 A.3d 463 (2011). "Absent allegations and evidence of a dishonest purpose or sinister motive, a claim for breach of the implied covenant of good faith and fair dealing is legally insufficient." Alexandru v. Strong, 81 Conn.App. 68, 81, 837 A.2d 875, cert. denied, 268 Conn. 906, 845 A.2d 406 (2004).
"[T]here is a split of authority among Superior Courts as to what factual allegations are sufficient to constitute the element of bad faith . . . The first line of cases requires specific allegations establishing a dishonest purpose or malice. In alleging a breach of the covenant of good faith and fair dealing, courts have stressed that such a claim must be alleged in terms of wanton and malicious injury [and] evil motive . . . The second line of cased generally holds parties to a less stringent standard requiring that a plaintiff need only allege sufficient facts or allegations from which a reasonable inference of sinister motive can be made . . . Even where courts have used an inference analysis, however, they have looked to allegations that the conduct at issue was engaged in purposefully." (Internal quotation marks omitted.) Seven Oaks Partners, LP v. Vigilant Ins. Co., Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 09 5012672 (July 7, 2010, Adams, J.).
In count five, the plaintiffs incorporate the first fourteen paragraphs from count one alleging breach of contract and then add some additional narrative regarding the factual underpinnings of this case. There are no allegations relating to the defendants' motives or state of mind. Consequently, in effect, the plaintiffs have merely re-alleged a breach of contract cause of action with the legal conclusion that the defendants violated the implied covenant of good faith and fair dealing. Such a course of action is not proper in a fact pleading state such as Connecticut. Without any factual allegations regarding whether the defendants acted with a dishonest purpose or sinister motive, the plaintiffs have failed to establish even the pleading requirements of the less stringent line of Superior Court cases. Therefore, count five is legally insufficient and is stricken by the court.
Finally, the defendants move to strike six, CUTPA, because: (1) count six is premised solely upon allegations of a simple breach of contract; (2) the plaintiffs fail to allege any aggravating factors indicating that they engaged in unfair or deceptive conduct and (3) the plaintiffs do not allege any facts indicating that the defendants acted in "the conduct of any trade or commerce." For each of these reasons, the defendants contend that the plaintiffs' CUTPA count is legally insufficient, and, as a result, that it should be stricken. In response, the plaintiffs argue that they allege facts that could satisfy all of the criteria enunciated in the "cigarette rule," and, therefore, they have alleged a legally sufficient CUTPA claim.
CUTPA 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 § 42-110b(a). "It is well settled that in 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 businesspersons] . . . 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." (Internal quotation marks omitted.) Naples v. Keystone Building Development Corp., 295 Conn. 214, 227-28, 990 A.2d 326 (2010). Although "[t]here is a split of authority in Superior Court decisions regarding what is necessary to establish a CUTPA claim for breach of contract, the majority of courts [hold] that a simple breach of contract, even if intentional does not amount to a violation of CUTPA in the absence of `substantial aggravating circumstances.'" (Internal quotation marks omitted.) Ward v. Rak Construction, LLC, Superior Court, judicial district of Ansonia-Milford at Derby, Docket No. CV 09 5010067 (April 8, 2010, Bellis, J.). Nevertheless, the Appellate Court has determined that "the same facts that establish a breach of contract may be sufficient to establish a CUTPA violation . . ." Lester v. Resort Camplands International, Inc., 27 Conn.App. 59, 71, 605 A.2d 550 (1992).
Additionally, "[t]o state a claim under CUTPA, the plaintiff must allege that the actions of the defendant were performed in the conduct of trade or commerce . . . Moreover, a CUTPA violation may not be alleged for activities that are incidental to an entity's primary trade or commerce." (Citations omitted; internal quotation marks omitted.) Sovereign Bank v. Licata, 116 Conn.App. 483, 493-94, 977 A.2d 228, cert. granted on other grounds, 293 Conn. 935, 981 A.2d 1080 (2009). The general rule among Superior Court judges is that "a single sale of a personal residence does not entail an act in the conduct of a trade or business such as to be regulated by CUTPA." Zarikos v. Mannetti, Superior Court, complex litigation docket at Stamford, Docket No. X08 CV 03 0196069 (October 4, 2004, Adams, J.); see also Henesy v. Quinn, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 02 0192664 (March 26, 2004, Lewis, J.); Perugini v. Simo-Kinzer, Superior Court, judicial district of Waterbury, Docket No. CV 03 0180724 (February 2, 2004, Alvord, J.) ( 36 Conn. L. Rptr. 489) (same).
In count six, the plaintiffs incorporate the first fourteen paragraphs of their breach of contract count. The remaining seven paragraphs found in that count provide further factual background regarding the plaintiffs' theory of the case, but they do not mention any aggravating factors beyond an ordinary breach of contract. The plaintiffs allege that the defendants violated the terms of an oral agreement when they sold the subject property to a third party and did not provide the plaintiffs with the net proceeds of the sale. Additionally, the plaintiffs contend that the defendants breached this contract when they refused to allow the plaintiffs the opportunity to purchase the property pursuant to the terms of the agreement. These types of allegations do not rise to the level of those sufficient to sustain a CUTPA claim. Moreover, there is no indication in the complaint that the defendants were engaged in the conduct of trade or commerce when they committed these alleged malfeasances. Accordingly, the court strikes the plaintiffs' CUTPA cause of action.
Counts 1, 2 and 3 are not stricken. Counts 4, 5 and 6 are stricken.
SO ORDERED.