Opinion
No. X05 CV 10 6004577S
January 13, 2011
MEMORANDUM OF DECISION ON DEFENDANT UNITED ILLUMINATING COMPANY'S MOTION TO STRIKE (#110)
Introduction
This lawsuit arises from a dispute over certain work performed on a segment of the Middletown to Norwalk Transmission Project. This was a 345 kiloVolt transmission line project extending a total of sixty-nine miles though the state of Connecticut. It was designed to improve power delivery reliability and to meet the growing electricity needs of southwestern Connecticut. The project involved new overhead wiring, as well as lines buried underground which required extensive excavation. The United Illuminating Company (UI) and the Connecticut Light and Power Company (CLP) jointly ran the project. UI was responsible for a six-mile segment of underground transmission cable running from the city of Bridgeport to the town of Stratford. This part of the project involved the digging of a six-mile trench and the installation of a concrete-encased ductbank, which consists of a conduit intended to house electric transmission cables and fiber optic cables.
The defendant, J. William Foley, Inc. (Foley), was the general contractor of the project. Pursuant to the contract between Foley and UI, Foley was responsible for all of the work, with the exception of supplying and installing the actual transmission and fiber optic cables themselves. Pursuant to its contract with Foley, UI was to provide Foley with accurate and complete plans and specifications for the project. Foley in turn entered into an agreement with a subcontractor, A.M. Rizzo Electrical Contractors, Inc. (Rizzo) to furnish labor, materials and services in connection with the installation of a cable system on the project. Rizzo is the plaintiff in this action, and it claims that its actual work on the transmission project revealed that UI had failed to provide adequate site plans as it was required to do under UI's contract with Foley. As a result, Rizzo allegedly suffered financial harm, as it was required to seek an extension of the contract time and also incurred additional expenses to its economic detriment.
Rizzo has filed a multi-count complaint against UI and Foley. The defendant UI has now moved to strike all of the counts directed against it, which motion is the subject of this memorandum of decision. Rizzo has charged UI in count twelve with negligence; count thirteen with tortious interference with a contract; count fourteen with willful, wanton misconduct; count fifteen, a claim for interest and attorneys fees pursuant to General Statutes § 42-158j; count sixteen, a claim pursuant to § 42-158p et seq.; and in count seventeen, a violation of the Connecticut Unfair Trade Practices Act, § 42-110 et seq. (CUTPA). The court will first set forth the standards and considerations applicable to motions to strike, followed by an analysis of the pleadings themselves.
A third corporate entity named Lovece Holding Inc. has also been named as a defendant, allegedly as a result of a certain guaranty agreement it entered into with UI in connection with the completion of the transmission project.
Motion to Strike — Legal Standard
"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). "It is fundamental that in determining the sufficiency of a [pleading] challenged by a [party's] motion to strike, 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). "A motion to strike is the proper procedural vehicle . . . to test whether Connecticut is ready to recognize some newly emerging ground of liability." (Internal quotation marks omitted.) Ortiz v. Waterbury Hospital, judicial district of Waterbury, Docket No. CV 99 154112 (March 9, 2000, Pelligrino, J.) ( 26 Conn. L. Rptr. 547).
"A motion to strike . . . does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997). "[The court] construe[s] the complaint in the manner most favorable to sustaining its legal sufficiency . . . [I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Sullivan v. Lake Compounce Theme Park, Inc., CT Page 5881 277 Conn. 113, 117-18, 889 A.2d 810 (2006). "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. Further, our Supreme Court "will not uphold the granting of [a] motion to strike on a ground not alleged in the motion." Blancato v. Feldspar Corp., 203 Conn. 34, 44, 522 A.2d 1235 (1987).
"In ruling on a motion to strike, the court is limited to the facts alleged in the [challenged pleading]." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., supra, 240 Conn. 580. "Where the legal grounds for such a motion [to strike] are dependent upon underlying facts not alleged in the . . . pleadings, the [party that filed the motion] must await the evidence which may be adduced at trial, and the motion should be denied." (Citations omitted; internal quotation marks omitted.) Liljedahl Bros., Inc. v. Grigsby, 215 Conn. 345, 348, 576 A.2d 149 (1990).
As previously stated, for the purposes of a motion to strike, the court must restrict itself to the allegations contained in the complaint, and must accept those allegations as true.
Recognition of this principle of law avoids the repeated characterization of the plaintiff Rizzo's allegations as allegations in this memorandum of decision.
Discussion
On September 26, 2006, Foley entered into a contract with UI for construction of the project. Pursuant to this contract, UI agreed to provide engineering services for the project, which included designing the project and preparing accurate and complete plans for the project. On October 26, 2009, Foley, as the general contractor, and Rizzo, as subcontractor, entered into a contract whereby Rizzo agreed to furnish labor, material, and services in connection with the installation of the cable system on the project. The lump sum price of the contract between Foley and Rizzo was $4,145,073.10. As a result of certain change orders agreed to by the parties, the contract price was increased by an additional $187,112.05. To date, Foley has paid Rizzo on the contract all but the sum of $108,310.05.
Count Twelve — Negligence
In count twelve, Rizzo alleges that in order to fully perform its obligations under its contract with Foley, UI was required to properly perform its obligations and duties under UI's separate contract with Foley. Rizzo claims that UI provided defective and inadequate plans for the project. These defects and inadequacies were incorporated into and became a part of the contract between Rizzo and Foley. In addition, UI failed to make known to Rizzo the true nature of the soil and subsurface conditions; failed to make known to Rizzo that the contract documents were inaccurate, incomplete or inadequate for the purposes for which they were intended; failed to reasonably interpret contract documents; failed to provide specific design information and engineering services; failed to process change orders; delayed, disrupted and interfered with Rizzo's planned schedule and sequence of work; failed to make reasonable efforts to solve disputes; and actively and unreasonably interfered with Rizzo's performance of its work under the contract.
The defendant moves to strike this count on the ground that UI does not owe a duty of care to Rizzo, and thus, Rizzo has not sufficiently alleged this claim. The defendant contends that, at its core, the allegations against UI are simply breach of contract claims arising from UI's alleged breach of its contract with Foley — and Foley's subsequent breach of its contract with Rizzo. There is no contractual relationship between UI and Rizzo, and without such a relationship, the defendant contends that the plaintiff cannot allege that UI owed a duty to Rizzo. Further, the defendant argues that under Connecticut law, an owner of a construction contract (UI) does not owe a subcontractor (Rizzo) a duty of care.
In response, the plaintiff argues that UI owed a duty of care to Rizzo, just as any engineer or architect owes a duty to a contractor such that, by failing to supply proper documents and engineering plans called for under UI's contract with Foley, UI breached this duty and caused foreseeable harm. With respect to the test set forth below, the plaintiff argues that its allegations satisfy both prongs. Specifically, the plaintiff alleges that it entered into a subcontract with Foley to perform electrical services, and that UI was responsible for providing engineering plans to Foley. The plaintiff would then rely upon these plans to perform its work. The complaint alleges that UI knew that its primary contract with Foley anticipated the use of subcontractors, and UI therefore knew or should have known that the plans it provided would be incorporated into those subcontracts and relied upon to complete the underlying work on the project.
"The essential elements of a cause of action in negligence are well established: duty; breach of that duty; causation; and actual injury . . . The nature of the duty and the specific persons to whom it is owed are determined by circumstances surrounding the conduct of the individual . . . The statement that there is or is not a duty begs the essential question whether the plaintiff's interests are entitled to legal protection against the defendant's conduct . . . [T]he test for the existence of a legal duty of care entails (1) a determination of whether an ordinary person in the defendant's position, knowing what the defendant knew or should have known, would anticipate that harm of the general nature of that suffered was likely to result, and (2) a determination, on the basis of a public policy analysis, of whether the defendant's responsibility for its negligent conduct should extend to the particular consequences or particular plaintiff in the case . . . The first part of the test involves the question of foreseeability and the second part involves the question of policy . . . The test that is often applied in determining whether there exists a duty to use care is the foreseeability of harm. Would the ordinarily prudent man in the position of the defendant, knowing what he knew or should have known, anticipate the harm of the general nature of that suffered was likely to result? This does not mean foreseeability of any harm whatsoever or foreseeability that the particular injury which resulted would occur. It is, in short, the foreseeability or anticipation that harm of the general nature of that suffered would be likely to result, which gives rise to a duty to use due care, breach of which might constitute negligence. Foreseeability in this context is a flexible concept, and may be supported by reasonable reliance, impeding others who might seek to render aid, statutory duties, property ownership, or other factors." Doe v. Nelson, Superior Court, judicial district of Waterbury, Docket No. CV 05 5000575 (August 1, 2006, Matasavage, J.) ( 41 Conn. L. Rptr. 745, 747).
Whether a duty of care is owed by one party to another is a question of law. See Watts v. Chittenden, 115 Conn.App. 404, 411, 972 A.2d 770, cert. granted on other grounds, 293 Conn. 932, 981 A.2d 1077 (2009). "A duty of care may arise from a contract, from a statute, or from circumstances under which a reasonable person, knowing what he knew or should have known, would anticipate that harm of the general nature of that suffered was likely to result from his act or failure to act." Coburn v. Lenox Homes, Inc., 186 Conn. 370, 375 (1982). "There is no question that a duty of care may arise out of a contract, but when the claim is brought against a defendant who is not a party to the contract, the duty must arise from something other than mere failure to perform properly under the contract." D'Angelo Development Construction Corp. v. Cordovano, CT Page 5884 121 Conn.App. 165, 186 (2010).
Both the plaintiff Rizzo and the defendant UI cite to cases in support of their respective positions. However, neither has provided the court with a Connecticut case that is directly on point — i.e. a trial court finding that an owner of a construction project owes a duty of care to a subcontractor with which it has no direct contractual relationship.
In support of the defendant's position, UI cites O'Connor Electric v. Thibodeau General Contractors, Inc., Superior Court, judicial district of Rockville, Docket No. CV 99 68608 (September 3, 1999, Zarella, J.) [ 25 Conn. L. Rptr. 413]. In O'Connor Electric, the plaintiff electrical contractor engaged in the installation and repair of electrical systems for commercial buildings. "The plaintiff contracted with the defendant general contractor, Thibodeau General Contractors Inc . . . to provide service for work necessary for the renovation and repair of a building owned by the defendant University [of Hartford] . . . The plaintiff invoiced Thibodeau on December 21, 1997 and February 13, 1998. Thibodeau has failed to pay either invoice . . . [The defendant] Travelers provided a policy of insurance to the University covering the fire loss. Travelers issued checks payable to Thibodeau and the University to pay for the loss in accordance with the invoices submitted by the subcontractors, including the plaintiff . . . The plaintiff further alleges that Thibodeau did not in turn make full payment to the plaintiff and retained a large portion of the funds for his own purposes. The plaintiff claims that the defendants were negligent in failing to determine whether the plaintiff had been paid for the goods and services supplied and in failing to obtain lien waivers from the subcontractors before issuing checks to the general contractor, Thibodeau." Id.
The defendant Travelers moved to strike the negligence claim in that case on the ground that Travelers did not owe a duty of care to the plaintiff subcontractor. With respect to whether the harm was foreseeable, the court stated: "No relationship existed between the defendant and the plaintiff. When making its payment under the policy it issued a joint check to its policy holder and to the general contractor. The Travelers could reasonably expect that Thibodeau would pay the subcontractors or, alternatively, that any unpaid subcontractor would avail itself of its statutory right to a mechanics lien. Under any reasonable limits on the concept of foreseeability, it cannot be said that the harm to the subcontractor was one that could have been reasonably anticipated by Travelers. This is particularly true in light of the lack of any relationship between the plaintiff and this defendant." Id.
In discussing the public policy considerations, the trial court stated that, "In making this determination the court considers a variety of factors including any statutory protections that the subcontractor is afforded, the burden that would be placed upon the defendant if a duty were found to exist, the practices of the industries which are involved in the dispute, and the relationship between the defendant's conduct and the consequences to and the identity of the plaintiff. Weighing all of these factors the court finds that the losses occasioned by the plaintiff are too remote from the conduct of the defendant Travelers to find, as a matter of policy, that a duty exists." Id.
Finally, in the present matter, the defendant UI argues that one of the long-standing practices of the construction industry is that owners enter into contracts with general contractors in order to avoid the burden of dealing directly with the multitude of possible subcontractors who will undoubtedly work on complex construction projects. The defendant UI argues that to impose a duty of care upon it running to Rizzo, an entity with whom it is not in privity, to prevent economic harm arising from Rizzo's performance of its separate contract would be contrary to the expectations of the parties, and defeat the purpose of the original parties' contractual arrangement. Especially is this so when a subcontractor bases its negligence claims on duties owed to the general contractor under a contract to which the subcontractor is not a party.
In its opposition to UI's motion to strike this count, the plaintiff Rizzo cites to United Steel, Inc. v. Spiegel, Zamecnik Shah, Inc., Superior Court, complex litigation docket at Hartford, Docket No. X09 CV 06 5001846 (March 27, 2007, Shortall, J.) [ 43 Conn. L. Rptr. 476]. The plaintiff contends that Connecticut courts have held that a duty can exist between various parties involved in a construction project, and that a negligence claim may lie against a third party for foreseeable harm resulting from defective plans. In United Steel Inc., the question before the court was whether a subcontractor on a construction project has remedies in tort for the negligence of the project architect and structural engineer. The plaintiff alleged that the defendants were retained to prepare all contract documents, plans and specifications, including the structural drawings necessary for the actual construction. Further, that these plans would be relied upon by both the general contractor and the subcontractors in estimating, bidding and building the project. The plaintiff alleged that the plans were defective and inadequate, and that these deficiencies cause substantial delays and cost overruns.
The defendants in that case moved to strike the negligence claims on the ground that no duty was owed to the plaintiff subcontractor because there was no contract between the parties. In denying the defendants' motion to strike, the trial court stated: "It is now the almost universal rule that the contractor is liable to all those who may foreseeably be injured by the structure, not only when he fails to disclose dangerous conditions known to him, but also when the work is negligently done. This applies not only to contractors doing original work, but also to those who make repairs, or install parts, as well as supervising architects and engineers. There may be liability for negligent design, as well as for negligent construction." W. Prosser W. Keeton, Torts (5th Ed.) 104A, p. 723. Zapata v. Burns, 207 Conn. 496, 517 (1988) . . . And, the complaint here contains ample allegations of fact creating a duty running from the defendants to the plaintiff . . . In short, [the plaintiff] was dependent on the plans and specifications prepared by the defendants . . . and the defendants knew this to be so." Id.
This court is persuaded by the holding in United Steel, Inc., and adopting (as it must) a construction of the complaint most favorable to sustaining its legal sufficiency, the defendant's motion to strike count twelve is denied.
Count Thirteen — Intentional Interference with Contractual Relations
In count thirteen, the plaintiff alleges that the previously mentioned acts and omissions were undertaken in bad faith, with the intention and purpose of interfering with Rizzo's contractual relations with Foley, and preventing Rizzo from performing under its contract with Foley. The defendant moves to strike this count on the ground Rizzo fails to state a legally cognizable claim. Specifically, UI argues that Rizzo is attempting to "take an alleged breach between UI and Foley, extend it to downstream entities, and convert it into a tort." According to the defendant, Rizzo is alleging that UI interfered with its work by breaching duties arising under UI's contract with Foley. In response, the plaintiff argues that no privity is required to allege a claim of intentional interference with contractual relations, and that the allegations set forth clearly satisfy the elements required to plead a cause of action for intentional interference with contractual relations.
"A claim for intentional interference with contractual relations requires the plaintiff to establish: (1) the existence of a contractual or beneficial relationship; (2) the defendant's knowledge of that relationship; (3) the defendant's intent to interfere with the relationship; (4) that the interference was tortious; and (5) a loss suffered by the plaintiff that was caused by the defendant's tortious conduct . . . [N]ot every act that disturbs a contract or business expectancy is actionable . . . [A]n action for intentional interference with business relations . . . requires the plaintiff to plead and prove at least some improper motive or improper means . . . [A] claim is made out [only] when interference resulting in injury to another is wrongful by some measure beyond the fact of the interference itself . . . However, it is well-settled that the tort of interference with contractual relations only lies when a third party adversely affects the contractual relations of two other parties." (Citations omitted; internal quotation marks omitted.) Metcoff v. Lebovics, 123 Conn.App. 512, 520 (2010).
Adopting a construction of the complaint most favorable to sustaining its legal sufficiency, the court denies the defendant's motion to strike count thirteen.
Count Fourteen — Willful, Wanton Misconduct
In count fourteen, the plaintiff incorporates the prior allegations against UI, and alleges that UI's acts and omissions were willful, wanton, reckless, malicious and oppressive and undertaken with full knowledge of the serious economic harm which would be caused. Rizzo claims UI undertook these acts with total disregard of Rizzo's rights — and as a result, Rizzo is entitled to damages. The defendant moves to strike on two grounds: (1) because the plaintiff must allege a duty, and because Rizzo's negligence count fails for lack of pleading a cognizable duty, this count must also fail; and (2) that the plaintiff fails to adequately allege any wrongful conduct that rises to the level of willful or wanton behavior. Having previously denied the motion to strike the negligence count, the court will confine its discussion to the second argument advanced by UI: whether there are sufficient allegations of conduct rising to the level of willful or wanton behavior.
"Our Supreme Court set forth the distinctions between negligence and recklessness in Craig v. Driscoll, 262 Conn. 312, 813 A.2d 1003 (2003). In that case, the [c]ourt held, `To determine whether . . . [a] complaint states a cause of action sounding in recklessness, [the court looks] . . . first to the definitions of wilful, wanton and reckless behavior . . . The result is that willful, wanton, or reckless conduct tends to take on the aspect of highly unreasonable conduct, involving an extreme departure from ordinary care, in a situation where a high degree of danger is apparent . . . It is at least clear . . . that such aggravated negligence must be more than any mere mistake resulting from inexperience, excitement, or confusion, and more than mere thoughtlessness or inadvertence, or simply inattention.' . . . Put another way, `[r]ecklessness requires a conscious choice of a course of action either with knowledge of the serious danger to others involved in it or with knowledge of facts which would disclose this danger to any reasonable man, and the actor must recognize that his conduct involves a risk substantially greater . . . than that which is necessary to make his conduct negligent . . .'" (Citations omitted; internal quotation marks omitted.) Hutchinson v. Turdubaev, Superior Court, judicial district of Tolland, Docket No. CV 10 6001160 (October 18, 2010, Bright, J.). "The mere use of the words `reckless' and wanton' is insufficient to raise an actionable claim of reckless and wanton misconduct . . . To be legally sufficient, a count based on reckless and wanton misconduct must, like an action in negligence, allege some duty running from the defendant to the plaintiff." Sheiman v. Lafayette Bank Trust Co., 4 Conn.App. 39, 46 (1985).
The plaintiff argues that it has adequately pleaded allegations sufficient to support its claim. Specifically, the plaintiff contends that the defendant's acts and omissions were "undertaken with total disregard of Rizzo's rights." These allegations, the plaintiff argues, rise above mere negligence by alleging not only the egregiousness of UI's actions, but also by its elevated reckless state of mind.
Even considering the allegations in the light most favorable to the plaintiff, the court finds that the conclusory language used in this count of the complaint is insufficient to withstand challenge. The motion to strike count fourteen is granted.
Count Fifteen — General Statutes § 42-158j(d) CT Page 5889
In count fifteen, the plaintiff twice specifically pleads the provision of § 42-158j(d), and alleges that on December 21, 2009, Rizzo demanded payment of $1,899,604.40 for labor and materials furnished on the project, and to date, UI has failed and refused to make such payment. The defendant moves to strike the portion of this count that seeks attorneys fees and interest. Specifically, the defendant contends that while other subsections of General Statutes § 42-158j allow a subcontractor to recover fees and interest against those with whom the subcontractor is not in a direct contractual relationship, fees and interest are not available to Rizzo under subsection (d) of the statute. Neither the plaintiff nor the defendant has provided the court with any prior appellate or trial court decisions construing this exact statutory provision in this circumstance.
"When analyzing the text of a statute, the court is guided by the following well-established principles when interpreting a statute. In construing a statute, common sense must be used, and courts will assume that the legislature intended to accomplish a reasonable and rational result." (Internal quotation marks omitted.) King v. Board of Education, 203 Conn. 324, 332-33 (1987), quoting Stoni v. Wasicki, 179 Conn. 372, 376-77 (1979). "General Statutes § 1-2z provides: The meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered." (Internal quotation marks omitted.) Viera v. Cohen, 283 Conn. 412, 421, 927 A.2d 843 (2007). It is clear that Connecticut courts cannot read into legislation provisions that clearly are not contained therein. See Glastonbury Co. v. Gillies, 209 Conn. 175, 181, 550 A.2d 8 (1988) (stating that "it is not the province of a court to supply what the legislature chose to omit. The legislature is supreme in the area of legislation, and courts must apply statutory enactments according to their plain terms")." Johnson v. Gibbs Wire Steel Co., Inc., Superior Court, complex litigation docket at Stamford, Docket No. X05 CV 09 5013295 (July 20, 2010, Blawie, J.) [ 50 Conn. L. Rptr. 635].
Section 42-158j(d) relied upon by the plaintiff provides: "This section shall not be construed to prohibit progress payments prior to final payment of the contract and is applicable to all subcontractors and suppliers for material or labor whether they have contracted directly with the contractor or with some other subcontractor on the work. Each owner that enters into a contract under this section and fails or neglects to make payment to a contractor for labor and materials supplied under a contract, as required pursuant to this section, shall, upon demand of any person who has not been paid by the contractor for such labor and materials supplied in the performance of the work under the contract, promptly pay the person for such labor or materials. Demand for payment shall be served on the owner and a copy of each demand shall be sent to the contractor by certified mail, return receipt requested to any address at which the owner and contractor conduct business. If the owner fails to make such payment, the person shall have a direct right of action against the owner in the superior court for the judicial district in which the project is located. The owner's obligations for direct payments to the contractor, subcontractors or suppliers giving notice pursuant to this section shall be limited to the amount owed to the contractor by the owner for work performed under the contract at the date such notice is provided."
General Statutes § 42-158j provides: "(1) A requirement that the owner pay any amounts due any contractor, subcontractor or supplier in a direct contractual relationship with the owner, whether for labor performed or materials furnished, not later than thirty days after the date any written request for payment has been made by such contractor, subcontractor or supplier; (2) a requirement that the contractor pay any amounts due any subcontractor or supplier, whether for labor performed or materials furnished, not later than thirty days after the date the contractor receives payment from the owner which encompasses labor performed or materials furnished by such subcontractor or supplier; and (3) a requirement that the contractor shall include in each of its subcontracts a provision requiring each subcontractor and supplier to pay any amounts due any of its subcontractors or suppliers, whether for labor performed or materials furnished, not later than thirty days after the date such subcontractor or supplier receives a payment from the contractor which encompasses labor performed or materials furnished by such subcontractor or supplier.
(b)(1) If payment is not made by an owner in accordance with the requirements of subdivision (1) of subsection (a) of this section or any applicable construction contract, such contractor, subcontractor or supplier shall set forth its claim against the owner through notice by registered or certified mail.
(2) If payment is not made by a contractor in accordance with the requirements of subdivision (2) of subsection (a) of this section or any applicable construction contract, the subcontractor or supplier shall set forth its claim against the contractor through notice by registered or certified mail.
(3) If payment is not made by a subcontractor or supplier in accordance with the provisions of subdivision (3) of subsection (a) of this section, the subcontractor or supplier to whom money is owed shall set forth its claim against the subcontractor or supplier who has failed to comply with the provisions of said subdivision (3) through notice by registered or certified mail.
(4) Ten days after the receipt of any notice specified in subdivisions (1), (2) and (3) of this subsection, the owner, contractor, subcontractor or supplier, as the case may be, shall be liable for interest on the amount due and owing at the rate of one per cent per month. Such interest shall accrue beginning on the date any such notice is received. In addition, such owner, contractor, subcontractor or supplier, upon written demand from the party providing such notice, shall be required to place funds in the amount of the claim, plus such interest of one per cent per month, in an interest-bearing escrow account in a bank in this state, provided such owner, contractor, subcontractor or supplier may refuse to place the funds in escrow on the grounds that the party making such demand has not substantially performed the work or supplied the materials according to the terms of the construction contract. In the event that such owner, contractor, subcontractor or supplier refuses to place such funds in escrow and such owner, contractor, subcontractor or supplier is found to have unreasonably withheld payment due a party providing such notice, such owner, contractor, subcontractor or supplier shall be liable to the party making demand for payment of such funds and for reasonable attorneys fees plus interest on the amount due and owing at the rate of one per cent per month. In addition, any owner, contractor, subcontractor or supplier who is found to have withheld payments to a party providing such notice in bad faith shall be liable for ten per cent damages.
(c) No payment may be withheld from a subcontractor or supplier for work performed or materials furnished because of a dispute between a contractor and another contractor, subcontractor or supplier."
The plaintiff points to other provisions of § 42-158j in support of its opposition to the motion to strike, as well as some legislative history in connection with certain amendments pursuant to Public Act 04-202. Specifically, the plaintiff references § 42-158j(b)(4), which states in pertinent part: "Ten days after the receipt of any notice specified in subdivisions (1), (2) and (3) of this subsection, the owner, contractor, subcontractor or supplier, as the case may be, shall be liable for interest on the amount due and owing at the rate of one per cent per month. Such interest shall accrue beginning on the date any such notice is received. In addition, such owner, contractor, subcontractor or supplier, upon written demand from the party providing such notice, shall be required to place funds in the amount of the claim, plus such interest of one per cent per month . . . [If] . . . such owner, contractor, subcontractor or supplier is found to have unreasonably withheld payment due a party providing such notice, such owner, contractor, subcontractor or supplier shall be liable to the party making demand for payment of such funds and for reasonable attorneys fees plus interest on the amount due and owing at the rate of one per cent per month." The plaintiff argues that the language contained in the statute makes it clear that any person who provides labor and materials on a project, regardless of the person's contractual relationship, may make a direct demand for payment upon the owner of the project and initiate a lawsuit against that owner and may seek interest and attorneys fees.
Additionally, the plaintiff cites to the legislative history which states: "The bill requires each owner who has failed or neglected to pay a contractor for labor or materials as required by a construction contract to pay promptly when demanded to do so by someone who has not been paid by the contractor for such labor or materials . . . If the owner fails to make the payment, the bill gives the person making the demand a direct right of action against the owner in the Superior Court for the judicial district in which the construction project is located." Public Act 04-202. Given this policy, the plaintiff contends that it would be illogical to limit a subcontractor's right to interest and attorneys fees provided under § 42-158j(b)(4).
It is clear that pursuant to § 42-158j(b)(4) interest and attorneys fees can be claimed in certain instances. Section 42-158j(b)(4) provides in pertinent part: "Ten days after the receipt of any notice specified in subdivisions (1), (2) and (3) of this subsection, the owner, contractor, subcontractor or supplier, as the case may be, shall be liable for interest on the amount due and owing at the rate of one per cent per month." Subdivisions (b)(1), (b)(2) and (b)(3) reference claims brought under subsection (a) of § 42-158j. Subsection (a) states: "Each construction contact shall contain the following provisions: (1) A requirement that the owner pay any amounts due any contractor, subcontractor or supplier in a direct contractual relationship with the owner, whether for labor performed or materials furnished, not later than thirty days after the date any written request for payment has been made by such contractor, subcontractor or supplier; (2) a requirement that the contractor pay any amounts due any subcontractor or supplier, whether for labor performed or materials furnished, not later than thirty days after the date the contractor receives payment from the owner which encompasses labor performed or materials furnished by such subcontractor or supplier; and (3) a requirement that the contractor shall include in each of its subcontracts a provision requiring each subcontractor and supplier to pay any amounts due any of its subcontractors or suppliers, whether for labor performed or materials furnished, not later than thirty days after the date such subcontractor or supplier receives a payment from the contractor which encompasses labor performed or materials furnished by such subcontractor or supplier."
In the present matter, the plaintiff does not bring a claim pursuant to § 42-158j(a). Further, none of the instances set forth in § 42-158j(a) appear applicable to the present situation. Therefore, in light of the plain reading of the statute, the court cannot find that the statutory interpretation posited by the plaintiff is reasonable. Accordingly, the plaintiff cannot bring a claim under § 42-158j(d) and seek interest and attorneys fees under § 42-158j(b)(4).
The motion to strike count fifteen is, therefore, granted.
Count Sixteen — General Statutes § 42-158p
In count sixteen, the plaintiff alleges that pursuant to General Statutes § 42-158p, UI was required to establish a retainage escrow fund in a savings and loan or bank domiciled in the State of Connecticut and to pay all fees and expenses relation to maintaining that escrow account, and that UI has failed to do so. Further, the plaintiff alleges that as a result of UI's failure to deposit retainage as it was being withheld from Foley's progress payments, UI is obligated to pay Foley for the benefit of Rizzo an additional one and one-half percent (1 1/2 %) of the amount not deposited in the retainage escrow account for each moth or fraction of amount, until Rizzo's retainage is paid in full.
UI moves to strike this count on the ground that the unambiguous language of § 42-158p states that it is the contractor's responsibility to establish an escrow retainage account. Thus, as Rizzo is a subcontractor, UI owes no direct retainage to it under the statute. Therefore, Rizzo has failed to plead a legally cognizable claim against UI. The principles of statutory construction previously discussed in the analysis of count fifteen also apply to this claim. Section 42-158p only provides that an owner must establish an escrow retainage account. In its opposition to the motion to strike, Rizzo asks this court to read into the statute provisions that are not contained therein.
General Statutes § 42-158p provides: "An escrow account shall be established for all retainage, subject to the following: (a) An escrow account shall be established in state or national banks domiciled in this state or in savings and loan associations domiciled in this state. (b) The owner shall provide a monthly report to the contractor as to the value of the retainage being held in the escrow account and any additions to or payments from the escrow account. Upon request by a subcontractor, the contractor shall make such monthly report available for review by the subcontractor. Withdrawals from the escrow account shall be made only subject to approval of the owner. (c) If the owner has entered into more than one construction contract with the same contractor requiring the maintenance of escrow accounts, the owner may elect to combine the amounts held as retainage under each contract into one or more escrow accounts or may establish a separate escrow account for each contract. (d) The escrow account shall be terminated upon substantial or final completion of all work in accordance with the terms of the construction contract and full payment to the contractor. (e) All fees and expenses related to maintaining the escrow account shall be paid by the owner. (f) The form and provisions of the escrow account shall be included in all solicitations for construction services and shall be provided to the contractor and subcontractor prior to entering into a contract with the owner. Upon request by a subcontractor, the contractor shall make such form and provisions available for review by the subcontractor. Failure to comply with the provisions of this subsection shall not give rise to a defense to the enforcement of a contract. (g) If an owner fails to deposit retainage that is withheld or to release retainage as required by public act 03-167*, the owner shall pay to the contractor an additional one and one-half per cent of the amount not deposited or released for each month or fraction of a month, until the retainage amount is paid in full. (h) An owner may accept securities in lieu of retainage from a contractor and a contractor may accept securities in lieu of retainage from a subcontractor. (i) For the purposes of this section, "owner" means "owner," as defined in subdivision (1) of section 42-158i.
Because the court finds that this statute by its terms is not applicable to Rizzo's relationship with UI under the allegations of this case, the motion to strike count sixteen is granted.
Count Seventeen — CUTPA
In count seventeen, the plaintiff alleges that UI engaged in unfair, deceptive, immoral and oppressive acts that caused substantial injury to Rizzo, and thus, seeks damages under CUTPA. The defendant moves to strike this count on the ground that because all of Rizzo's claims against UI are legally deficient, they cannot form a basis for a CUTPA claim. In addition, the defendant argues that a simple breach of contract, without aggravating circumstances, cannot establish a CUTPA claim.
Connecticut Unfair Trade Practices Act, General Statutes § 42-110 et seq. 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 . . . In order to enforce this prohibition, CUTPA provides a private cause of action to [a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a [prohibited] method, act or practice . . . Thus, in order to prevail in a CUTPA action, a plaintiff must establish both that the defendant has engaged in a prohibited act and that, as a result of this act, the plaintiff suffered an injury." (Citations omitted; emphasis in original; internal quotation marks omitted.) Stevenson Lumber Co.-Suffield, Inc. v. Chase Associates, Inc., 284 Conn. 205, 213-14, 932 A.2d 401 (2007).
"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 federal trade commission 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 thee." (Internal quotation marks omitted.) Ventres v. Goodspeed Airport, LLC, 275 Conn. 105, 155, 881 A.2d 937 (2005). "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.) S.M.S. Textile Mills, Inc. v. Brown, Jacobson, Tillinghast, Lahan King, P.C., 32 Conn.App. 786, 797, 631 A.2d 340, cert. denied, 228 Conn. 903, 634 A.2d 296 (1993).
Further, "[a] CUTPA claim may not be premised on a simple breach of contract, that is, one in which there are no aggravating factors under parts two or three of the cigarette rule." (Internal quotation marks omitted.) Heaven v. Timber Hill, LLC, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 02 0188007 (October 21, 2004, Lewis, J.). "Where the plaintiff alleges sufficient aggravating circumstances, beyond a mere breach of contract that may bring the case within the cigarette rule, the CUTPA claim may withstand a motion [to strike]." Morris v. Brookside Commons Ltd. Partnership, Superior Court, judicial district of Hartford, Docket No. 581130 (February 2, 2000, Stengel, J.). "The burdens and risks inherent in contract formation would be intolerably increased if every simple breach of contract claim were to be made the basis of a CUTPA violation . . . [A] breach of contract claim can make out a legally sufficient CUTPA claim as long as there are `substantial aggravating circumstances.'" (Citation omitted.) Production Resources Group, LLC v. Distributed Media Corp., complex litigation docket at Waterbury, Docket No. X06 CV 01 0170391 (February 25, 2003, McWeeny, J.).
"Although there is a split of authority in the Superior Courts regarding what is necessary to establish a CUTPA claim for breach of contract, the vast majority of Superior Court decisions [conclude] that, absent allegations of sufficient aggravating circumstances, [a] simple breach of contract, even if intentional, does not amount to a violation of [CUTPA]." (Emphasis added; internal quotation marks omitted.) Presence Studios Westport v. Freelife International, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 990360617 (August 2, 2002, Melville, J.).
"Moreover, [a] simple contract breach is not sufficient to establish violation of CUTPA, where a count simply incorporates the reference to the breach of contract claim and does not set forth how or in what respect the defendant's activities are either immoral, unethical, unscrupulous, or offensive to public policy." (Emphasis added; internal quotation marks omitted.) Bluezone Foundation v. Paradise Properties, Superior Court, judicial district of New London, Docket No. 555904 (July 24, 2001, Hurley, J.T.R.). "[A] CUTPA claim cannot be made where claim of breach merely sets forth breach without particularizing how or in what respect defendant's activities are either immoral, unethical, unscrupulous or offensive to public policy . . ." Designs on Stone, Inc. v. John Brennan Construction Co., Inc., Superior Court, judicial district of Ansonia-Milford, Docket No. CV 97 059997 (April 9, 1998, Corradino, J.) ( 21 Conn L. Rptr. 659).
"In essence, the evidence before the court amounts to a breach of contract claim, without sufficient aggravating circumstances to elevate it to a CUTPA claim. In the absence of evidence of conduct which would come under CUTPA's purview, there is no reason to provide [the plaintiff] an additional remedy, beyond those to which the parties allegedly agreed. As Judge Corradino stated, if Connecticut courts interpreted CUTPA otherwise, "[t]he burdens on and risks inherent in contract formation would be intolerably increased and simple breach of contract claims would turn into windfalls in every case. The reasoning behind this rule is well stated by Judge Calabresi [in Boulevard Associates v. Sovereign Hotels, Inc., 72 F.3d 1029, 1039 (2d Cir. 1995),] where he says: A rule to the contrary — that a company violates CUTPA whenever it breaks an unprofitable deal — would convert every contract dispute into a CUTPA violation. We cannot assume that the Connecticut legislature, in enacting CUTPA, intended such an extraordinary alteration of the common law." (Internal quotation marks omitted.) Tinian Trust Holdings v. International Paper Co, Inc., Superior Court, judicial district of Hartford, Docket No. CV 05 4004079 (August 12, 2005, Shapiro, J.).
"[T]o find a violation of CUTPA grounded in negligence, the plaintiff must prove that the act violated public policy and caused substantial unjustified injury to consumers, competitors, or other business people." (Internal quotation marks omitted.) Thames River Recycling, Inc. v. Gallo, CT Page 5896 50 Conn.App. 767 787, 720 A.2d 242 (1998). "In order for an act or practice to have caused substantial unjustified injuries to consumers, competitors, or other business persons, the following three factors must be found; one, the injury caused must have been substantial; two, the injury caused must not have been outweighed by any countervailing benefits to consumers or by competition that the practice produces; and three, that the injury caused must have been an injury that the consumer, competitor, or other business person could not reasonably have avoided." (Internal quotation marks omitted.) Id., 785.
The plaintiff asserts that the complaint sufficiently alleges a CUTPA claim, as its CUTPA claim is based on, among other allegations, its claims of negligence and intentional interference with contractual relations. Having previously found these allegations to be legally sufficient, the CUTPA claim cannot be said to be based solely on a breach of contract allegation. Therefore, the motion to strike count seventeen is denied.
Conclusion
The defendant's motion to strike count twelve (negligence), count thirteen (tortious interference with a contract) and count seventeen (CUTPA) is DENIED.
The defendant's motion to strike count fourteen (willful, wanton misconduct), count fifteen (claim for attorneys fees and interest pursuant to § 42-158j) and count sixteen (claim pursuant to § 42-158p et seq.) is GRANTED.
IT IS SO ORDERED.