Opinion
No. X03 CV 06 5009721 S
May 7, 2008
MEMORANDUM OF DECISION ON MOTION TO STRIKE
The defendants, Accuride Corporation ("Accuride") and Gunite Corporation ("Gunite") filed a motion to strike all six counts of the plaintiff's revised complaint. The plaintiff has filed a memorandum of law in opposition to the defendants' motion. In the memorandum, the plaintiff notes that it does not oppose the motion to strike all the counts directed to Accuride (counts one, three and five), or the claims for common-law breach of contract (counts three and four). Accordingly, the motion to strike is granted as to counts one, three, four and five. The parties dispute the legal sufficiency of the allegations of count two, in which the plaintiff alleges that Gunite breached a provision of the Uniform Commercial Code ("UCC"), General Statutes § 42a-1-101 et seq. and count six, in which the plaintiff alleges that Gunite violated the Connecticut Unfair Trade Practices Act ("CUTPA"), General Statutes § 42a-110 et seq.
A motion to strike challenges the legal sufficiency of a pleading. Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 629, 804 A.2d 180 (2002). The court must take the facts alleged in the amended complaint and construe them in the manner most favorable to sustaining this complaint's legal sufficiency. Id. The court assumes the truth of both the specific factual allegations and any facts fairly provable thereunder. Id. In doing so, the court reads the allegations broadly, rather than narrowly. Id.
Gunite argues that the plaintiff has not alleged that Gunite acted in bad faith when it reduced its purchase to zero, which it claims is an essential element that must be alleged and proven to recover for a breach of a requirements contract under General Statutes § 42a-2-306. The plaintiff argues that there is nothing in the language of the UCC and no judicial ruling in Connecticut that makes bad faith a material element of a breach of UCC claim based on General Statutes § 42a-2-306, and even if it is a necessary element, the factual allegations in the plaintiff's revised complaint are sufficient to show bad faith. The court agrees that, regardless of whether bad faith is a required element, the plaintiff's allegations in count two of the revised complaint are sufficient to show bad faith.
In paragraph seventeen of count two, the plaintiff alleges that the defendants "fraudulently represented to the Plaintiff that the Defendants' substitution of other bearings was pursuant to the request and/or specifications by the Defendants' customers." In paragraph eighteen, the plaintiff alleges that the defendants' refusal to purchase the plaintiff's products and the substitution of other bearings were done without any such request or specification by their customers. In paragraph twenty, the plaintiff alleges that the defendants intended to discontinue their purchase of the plaintiff's product and substitute bearings from another supplier well before they disclosed this to the plaintiff, but they "fraudulently concealed their illegal discontinuations of purchases by falsely claiming that such discontinuations were in response to the request and/or specifications of their customers." While the plaintiff did not specifically use the term "bad faith" in its description of the defendants' alleged conduct, the element of bad faith can certainly be inferred from the facts alleged in the complaint and the plaintiff's use of terms such as "fraudulently" and "falsely." The motion to strike is denied with respect to count two.
Gunite argues with respect to count six that the plaintiff has failed to sufficiently allege a violation of CUTPA. Gunite claims that the plaintiff has alleged nothing more than a breach of contract, which is insufficient to support a CUTPA claim, and that the plaintiff's CUTPA claim is barred by the economic loss rule. In count six, the plaintiff incorporates the same factual allegations from the first five counts, including the breach of contract count, then alleges that Gunite's "conduct as aforesaid was unfair, deceptive, unethical, unscrupulous and contrary to the public interest in violation of" CUPTA. (Revised Complaint, Count 6, ¶ 36.) "The same facts that establish a breach of contract claim may be sufficient to establish a CUTPA violation. Lester v. Resort Camplands International, Inc., 27 Conn.App. 59, 71, 605 A.2d 550 (1992). Not every contractual breach rises to the level of a CUTPA violation. Hudson United Bank v. Cinnamon Ridge Corp., 81 Conn.App. 557, 571, 845 A.2d 417 (2004). There is a split of authority in Superior Court decisions regarding what is necessary to establish a CUTPA claim for breach of contract, [with] the majority holding that a simple breach of contract, even if intentional, does not amount to a violation of CUTPA in the absence of substantial aggravating circumstances." (Citation omitted; internal quotation marks omitted.) Greene v. Orsini, 50 Conn.Sup. 312, 315, 926 A.2d 708 (2007). In this case, the allegations described above regarding fraudulent representations, fraudulent concealment and false claims, viewed in the light most favorable to the plaintiff, constitute sufficiently aggravating circumstances to support a CUTPA claim.
With respect to the economic loss rule, there is a split of authority in the Superior Court as to whether the ruling in Flagg Energy Development Corp v. General Motors Corp., 244 Conn. 126, 709 A.2d 1075 (1998), bars claims for economic loss in non-product liability cases. See Dunleavey v. Paris Ceramics USA, Inc., Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 02 0395709 (April 20, 2005, Richards, J.). "The split of authority essentially revolves around the issue of whether Flagg Energy overruled sub silento D'Ulisse Cupo [v. Board of Directors of Notre Dame High School, 202 Conn. 206, 520 A.2d 217 (1977)] and Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 657 A.2d 212 (1995)." Hoydic v. BE Juices, Inc., Superior Court, Complex Litigation Docket at Stamford, Docket No. X08 CV 03 4010104 (February 27, 2008, Jennings, J.) The economic loss rule is a judicially created rule that bars recovery in tort when the relationship between the parties is contractual and the only losses alleged are economic. Milltex Properties v. Johnson, Superior Court, judicial district of New London at New London, Docket No. CV 0565866 (March 15, 2004, Hurley, J.T.R.) ( 36 Conn. L. Rptr. 780). As noted above, the court has found that the facts alleged in the plaintiff's revised complaint are sufficient to support a CUTPA claim. The plaintiff argues that the harm it suffered as a result of Gunite's misrepresentation and fraud is not only a commercial loss arising out of the contract terms, but include losses that go beyond the contract terms, including its costs in entering the agreement, its investment in preparing the products that Gunite knew it would not purchase and its loss of other business opportunities. (See Revised Complaint, Count 6, ¶¶ 22, 24.) Given that there has been no appellate resolution of this issue, in an abundance of caution, the court will agree at this stage of the proceedings with those cases that have restricted the applicability of the economic loss rule. See Milltex Properties v. Johnson, supra, 36 Conn. L. Rptr. 780; Dunleavey v. Paris Ceramics USA, Inc., supra, Docket No. 02 0395709; Cocchiola Paving, Inc. v. Peterbilt of Southern Connecticut, Superior Court, judicial district of Waterbury, Docket No. CV 01 0168579 (March 3, 2003, Gallagher, J.); Reynolds, Pearson Co. v. Miglietta, Superior Court, judicial district of Hartford, Docket No. CV 00 0801247 (March 27, 2001, Berger, J.) ( 29 Conn. L. Rptr. 481). Until there is a clarification at the appellate level regarding the applicability of the economic loss rule to cases such as this one, the court will not read Flagg Energy as extending the economic loss rule beyond cases involving products liability and the sale of goods. See Milltex Properties v. Johnson, supra, 36 Conn. L. Rptr. 780. Accordingly, the motion to strike count six is denied.
So ordered,