Opinion
FBTCV156051819S
04-28-2017
U.S. Bank, N.A., Successor Trustee to Bank of America v. Theodore Fotos c/o Secretary of State 30 Trinity
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Edward T. Krumeich, J.
Defendants Theodore Fotos (" Fotos") and Kalliopi Fotou (" Fotou") have moved to strike Counts Seven and Eight of the Third Amended Complaint for failure to state a claim for negligent misrepresentation against Fotos in the Seventh Count and a claim for unjust enrichment against Fotou in the Eighth Count. Defendants have also moved to dismiss the Eighth Count for lack of subject matter jurisdiction arguing the claim is not ripe for adjudication. For the reasons stated below, the motion to strike the Seventh Count is denied and the motion to Strike the Eighth Count is granted.
Plaintiff has agreed that Counts 9-11 may be stricken by agreement.
The Standards for Deciding a Motion to Strike
" 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 findings by the trial court . . . [The court] construe[s] the complaint in the manner most favorable to sustaining its legal sufficiency . . . Thus, [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . Moreover, [the court notes] that [w]hat is necessarily implied [in an allegation] need not be expressly alleged . . . It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted . . . Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Coppola Construction Co. v. Hoffman Enterprises Ltd. Partnership, 309 Conn. 342, 350, 71 A.3d 480 (2013). " If any facts provable under the express and implied allegations in the plaintiff's complaint support a cause of action . . . the complaint is not vulnerable to a motion to strike." Bouchard v. People's Bank, 219 Conn. 465, 471, 594 A.2d 1 (1991). On the other hand, " [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.) Santorso v. Bristol Hospital, 308 Conn. 338, 349, 63 A.3d 940 (2013).
The Seventh Count States a Claim Against Fotos for Negligent Misrepresentation.
The Seventh Count alleges a negligent misrepresentation claim against Fotos. " Traditionally, an action for negligent misrepresentation requires the plaintiff to establish (1) that the defendant made a misrepresentation of fact (2) that the defendant knew or should have known was false, and (3) that the plaintiff reasonably relied on the misrepresentation, and (4) suffered pecuniary harm as a result." Nazami v. Patrons Mutual Ins. Co., 280 Conn. 619, 626, 910 A.2d 209 (2006).
Fotos is Fotou's father. Plaintiff alleges that Fotos had a second mortgage in the amount of $800,000 on his daughter's property (the " Second Mortgage") that was supposed to have been released so the original lender would have first lien priority when Fotou refinanced her loan in 2004 for $1,065,000 and again in 2005 when her loan was refinanced for $1,400,000. On January 12, 2004, Fotos executed a quit claim deed releasing the Second Mortgage that was lost prior to its recordation. In 2005 Fotos granted Fotou a release of his Second Mortgage that was not recorded. It is alleged Fotos and Fotou both represented to the lender before the 2004 refinance and again before the 2005 refinance " that there was a zero balance due on the Second Mortgage and/or that a Release of the Second Mortgage would be recorded on the land records and/or that the WAMU refinance mortgages would have a first priority position on the land records." It is further alleged that " the Note and Second Mortgage was never funded and/or are unenforceable due to failure of consideration." In 2011 Fotos' daughter, Fotou, filed a no asset Chapter 7 bankruptcy and later was discharged from personal liability on her outstanding unsecured debts. Fotou lost the property in foreclosure and plaintiff now owns the property. In her bankruptcy petition Fotou did not disclose the Second Mortgage nor any secured debt owed to her father; the only indebtedness to her father ever disclosed to the bankruptcy court was a $100,000 unsecured nonpriority loan claim. Fotos did not file a bankruptcy claim and did not disclose the Second Mortgage or any indebtedness relating thereto in the bankruptcy proceeding. Now that Fotou has been discharged in bankruptcy and lost the property in foreclosure Fotos has claimed there is a balance due and he has a priority lien on the property owned by plaintiff. In the Seventh Count Plaintiff alleges that Fotos' failure to file a proof of claim or to disclose the Second Mortgage and outstanding debt from Fotou " perpetuated a mis-representation [sic] by omission of material fact . . ."
Defendant asks the Court to treat the Seventh Count as if it states two separate claims against Fotos, one claim relating to his conduct when the bank's loan to Fotou, his daughter, was refinanced in 2004 for $1,065,000 and again in 2005 when it was refinanced for $1,400,000, and the second claim relating to his failure to act and omission to state material facts relating to the Second Mortgage in 2011 when his daughter filed a no asset Chapter 7 bankruptcy and was discharged from personal liability on her outstanding unsecured debts. Defendant argues that the second claim against Fotos must be stricken because no misrepresentations by Fotos are alleged in connection with the bankruptcy and no facts are alleged from which it can be concluded Fotos had a duty to speak to correct any misrepresentations by his daughter in her bankruptcy filings.
Defendant is correct that the allegations must show a duty to speak when the misrepresentation claim is based on an omission to disclose material fact. " [A] failure to disclose can be deceptive only if, in light of all the circumstances, there is a duty to disclose." Olson v. Accessory Controls & Equipment Corp., 254 Conn. 145, 180, 757 A.2d 14 (2000).
It is well-settled that voluntary disclosure by a defendant will impose a duty to make " full and fair disclosure as to the matters about which he assumes to speak." Duksa v. Middletown, 173 Conn. 124, 127, 376 A.2d 1099 (1977).
" Liability for negligent misrepresentation may be placed on an individual when there has been 'a failure to disclose known facts and, in addition thereto, a request or an occasion or a circumstance which imposes a duty to speak . . . Such a duty is imposed on a party insofar as he voluntarily makes disclosure. A party who assumes to speak must make full and fair disclosure as to the matters about which he assumes to speak.'" Johnnycake Mt. Assocs. v. Ochs, 104 Conn.App. 194, 206, 932 A.2d 472 (2007), quoting Duksa, 173 Conn. at 127.
The Court does not agree that the Seventh Count alleges two different causes of action. Rather, the count alleges a continuing course of action by defendants that culminated in Fotou's discharge in bankruptcy without disclosure of Fotos' claim that the Second Mortgage had not been released and any related indebtedness from daughter to father was still outstanding. Although Fotos is not alleged to have done anything in the bankruptcy except keep silent with knowledge of its filing, by affirmative conduct and representations in 2004 and 2005 he is alleged to have induced the original lender to believe that the Second Mortgage would be released and there was a " zero balance" due on any related debt from daughter to father. Fotos had a duty to correct the belief he helped to create in the lender that there was no balance due and the Second Mortgage would be released by affirmatively disclosing to plaintiff as the successor in interest to the lender he helped induce to refinance in 2004 and 2005 that, contrary to the impression he created, Fotos was claiming an interest in the subject property through the Second Mortgage and there was outstanding indebtedness. Fotos' representations and conduct in 2004 and 2005 are alleged to have induced the lender to believe it would have the first priority on the mortgaged property and that Fotos had no claim against Fotou when it refinanced in 2004 and 2005, which also misled plaintiff as its successor in determining its course of action in the bankruptcy. The bankruptcy proceeding, of which Fotos had notice, presented an occasion to speak and to correct the misimpression he helped to create. See Southport Crossing, LLC v. RBC Capital Mkts. Corp., 2013 WL 5442204 *10 (D.Conn. 2013) (Thompson, J.). Fotos' failure to do so would support the claim for negligent misrepresentation. See Teal Associates v. Alfin, 2012 WL 6924426 * (Conn.Super. 2012) (Miller, J.) (" defendants, in a transaction in which they had pecuniary interest, allegedly supplied the plaintiff with false information to guide his business transaction"). The motion to strike the Seventh Count is denied.
" [T]he interpretation of pleadings is always a question of law for the court . . . We have pointed out that [t]he burden [is] upon the pleaders to make such averments that the material facts should appear with reasonable certainty." (Citations omitted; internal quotation marks omitted.) Cahill v. Board of Education, 198 Conn. 229, 236, 502 A.2d 410 (1985). " [U]nder modern rules of pleading, slight linguistic ambiguity should not be fatal to a cause of action . . . pleadings should be read broadly and realistically, rather than narrowly and technically . . . [But] [t]hat does not mean . . . that the trial court is obligated to read into pleadings factual allegations that simply are not there or to substitute a cognizable legal theory that the facts, as pleaded, might conceivably support for the noncognizable theory that was actually pleaded." Pane v. Danbury, 267 Conn. 669, 677, 841 A.2d 684 (2004). " [E]ssential allegations may not be supplied by conjecture or remote implication." Cahill v. Board of Education, 198 Conn. at 236. The Court does not feel bound by the law of the case doctrine to construe the Seventh Count as alleging a single cause of action based on its sustaining the objection to the request to revise.
Either the statements in 2004 and 2005 that there was a " zero balance" were false or the statements post-bankruptcy that there was a balance due and owing was false; either way Fotos had a duty to correct the misimpression he created in the lender, and its successor in interest, by his statements and conduct in 2004 and 2005 that the bank's mortgage had priority, Fotos had no secured claim to the mortgaged property and the Second Mortgage would be released, and there was no balance owing on the loan from father to daughter secured by the Second Mortgage.
Plaintiff alleges that had it received notice of Fotos' claim to lien priority and assertion of the outstanding debt it would have objected to the discharge of Fotou and challenged Fotos' claim and the Second Mortgage in the bankruptcy proceeding.
The Eighth Count Fails to State a Claim Against Fotou for Unjust Enrichment
In Schirmer v. Souza, 126 Conn.App. 759, 763-64, 12 A.3d 1048 (2011), the Appellate Court stated the well-settled elements of a claim for unjust enrichment:
We begin by setting forth the legal principles that govern a claim of unjust enrichment. " A right of recovery under the doctrine of unjust enrichment is essentially equitable, its basis being that in a given situation it is contrary to equity and good conscience for one to retain a benefit which has come to him at the expense of another . . . With no other test than what, under a given set of circumstances, is just or unjust, equitable or inequitable, conscionable or unconscionable, it becomes necessary in any case where the benefit of the doctrine is claimed, to examine the circumstances and the conduct of the parties and apply this standard . . . Unjust enrichment is, consistent with the principles of equity, a broad and flexible remedy . . . Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefited, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiffs' detriment . . ."
" This doctrine is based upon the principle that one should not be permitted unjustly to enrich himself at the expense of another but should be required to make restitution of or for property received, retained or appropriated . . . The question is: Did [the party liable], to the detriment of someone else, obtain something of value to which [the party liable] was not entitled? . . ." Id. at 763-64.
Defendant seeks to strike the unjust enrichment claim against Fotou in the Eighth Count because plaintiff failed to allege any benefit to Fotou from the encumbrance of her former property now owned by plaintiff by the Second Mortgage. The complaint alleges that Fotou's debts were discharged in bankruptcy and she no longer owns the property. The only benefit to Fotou alleged is that " her indebtedness to [Fotos] was secured by the Property but the Property is no longer owned by her but is owned by plaintiff . . . The reasonable value of the benefit received by [Fotou], for which she is unreasonably enriched, is the amount of moneys [sic] that plaintiff will be required to pay [Fotos] in exchange for a discharge or release of the Second Mortgage from the Property if the court finds that the Second Mortgage is enforceable and has an outstanding balance." According to plaintiff, " [t]he retention of this benefit by [Fotou], without making payment thereon, absent an adjustment of the priorities of the plaintiff's ownership in the Property and the Second Mortgage to [Fotos], would result in unjust enrichment to [Fotou] to the detriment of plaintiff." The linguistic gymnastics designed to make a payment to the father a benefit to a daughter discharged in bankruptcy, with no interest in the encumbered property, fall short of landing and cannot sustain an unjust enrichment claim missing a necessary element: a benefit to the daughter. There is no allegation that any portion of the monies that would be paid Fotos will be paid over to Fotou. Without allegation of facts showing a benefit to Fotou from the alleged misconduct by defendants the unjust enrichment claim must fail and the Eighth Count must be stricken.
At oral argument plaintiff's counsel asserted the defendants were acting in concert as part of a conspiracy to extort money from plaintiff. There are no allegations in the Third Amended Complaint from which the Court may infer such conspiracy and the Court declines to infer such a critical allegation from the facts alleged. " '[E]ssential allegations may not be supplied by conjecture or remote implication.' . . . Cahill v. Board of Education, supra, at 236, 502 A.2d 410." Durante v. Martinez, 2010 WL 1052083 *5 (Conn.Super. 2010) (Martin, J.) (court would not infer agency).
The Unjust Enrichment Claim is Ripe for Adjudication
Defendant Fotou asserts the unjust enrichment claim in the Eighth Count is not ripe for adjudication and therefore the Court lacks subject matter jurisdiction because the damages complained of have not yet occurred and are contingent on a future event. See Chapman Lumber, Inc. v. Tager, 288 Conn. 69, 86, 952 A.2d 1 (2008).
" [J]usticiability comprises several related doctrines, namely, standing, ripeness, mootness and the political question doctrine, that implicate a court's subject matter jurisdiction and its competency to adjudicate a particular matter." . . . " Justiciability requires (1) that there be an actual controversy between or among the parties to the dispute . . . (2) that the interests of the parties be adverse . . . (3) that the matter in controversy be capable of being adjudicated by judicial power . . . and (4) that the determination of the controversy will result in practical relief to the complainant . . ."Cadle Co. v. D'Addario, 111 Conn.App. 80, 83, 957 A.2d 536 (2008) (citations omitted).
Ripeness is the doctrine based on whether the matter is ready for adjudication:
" [T]he rationale behind the ripeness requirement is to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements . . . Accordingly, in determining whether a case is ripe, a trial court must be satisfied that the case before [it] does not present a hypothetical injury or a claim contingent upon some event that has not and indeed may never transpire."Id. at 83, quoting Chapman, 288 Conn. at 86-87 (2008).
Based on the allegations in the Eighth Count defendant Fotou has not been benefitted by the alleged misconduct from the facts alleged. This is not a case where the benefit from the facts alleged is contingent or hypothetical; it simply cannot be inferred from even a broad and liberal interpretation of the Eighth Count.
Conclusion
The motion to strike the Seventh Count against Fotos is denied; the motion to strike the Eighth Count against Fotou is granted.