Opinion
CV176075593S
04-03-2018
D2E HOLDINGS, LLC v. CORPORATION FOR URBAN HOME OWNERSHIP OF NEW HAVEN
UNPUBLISHED OPINION
Wilson, J.
STATEMENT OF CASE AND PROCEDURAL HISTORY
The plaintiff, D2E Holdings, LLC (plaintiff) commenced this breach of contract action by service of writ, summons and complaint on the defendant, Corporation For Urban Home Ownership of New Haven (defendant). The return date was December 12, 2017. The complaint dated November 21, 2017, which is the operative complaint was returned to court on November 28, 2017, and alleges the following facts. The plaintiff is a limited liability company and the defendant is a corporation, both organized under laws of the state of Connecticut. The defendant is the owner of certain pieces or parcels of land, together with building improvements thereon, situated in the city of New Haven, county of New Haven and state of Connecticut.
Pursuant to a Real Estate Contract (Agreement) dated October 3, 2017, the defendant agreed to sell and convey title for property to the plaintiff as described in Schedule A which is attached to the complaint, for the purchase price of two million dollars ($2,000,000). Pursuant to the Agreement, the plaintiff tendered to the defendant the sum of one hundred thousand dollars ($100,000) being the initial deposit applied to the purchase price at the closing. The plaintiff was ready, willing and able to fully perform its obligations under the Agreement, including the tendering of the purchase price. Pursuant to the Agreement and to the extent said documents existed the defendant was obligated to provide the plaintiff and/or its lender with certain documents as enumerated in count one, paragraphs 7(a)-(o). The defendant was aware that the information required in paragraphs 7(a)-(o) was necessary for the plaintiff to obtain a mortgage commitment and/or for the plaintiff’s lender to deliver funds equal to the outstanding purchase price. In an effort to prevent the plaintiff from obtaining financing and/or a mortgage commitment from its lender, the defendant has failed, refused, and/or neglected to provide the information set forth in paragraphs 7(a)-(o). In an effort to excuse its obligation to sell and transfer title to the property to the plaintiff, the defendant has failed, refused, and/or neglected to provide the information aforementioned in paragraphs 7(a)-(o). As a result of the defendant’s failure, refusal, and/or neglect, the plaintiff alleges that it is threatened with the loss of its bargained for consideration due under the Agreement including, inter alia, the property, the initial deposit, and other funds expended in furtherance of conveyance of the title to the property.
The complaint is in three counts. Count one is for breach of contract; count two is for a violation of CUTPA pursuant to General Statutes § 42-110a et seq.; and count three is for breach of the covenant of good faith and fair dealing. The defendant has filed a motion to strike count two on grounds that the plaintiff’s complaint fails to allege sufficient aggravating circumstances to substantiate a claim for a CUTPA violation arising out of a breach of contract action.
The plaintiff has filed an objection to the motion to strike on grounds that the motion is procedurally and fatally defective as it does not comply with the mandates of Practice Book § 10-39(b), and that even assuming that the defendant has set forth a proper motion to strike, the plaintiff argues that the allegations contained in count two are sufficient to establish a violation of CUTPA. The court heard oral argument on the motion at short calendar on March 26, 2018.
DISCUSSION
I
Standard of Review
" 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." (Citations omitted; 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 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." (Citations omitted; internal quotation marks omitted.) Asylum Hill Problem Solving Revitalization Ass’n v. King, 277 Conn. 238, 246, 890 A.2d 522 (2006). " [I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted). American Progressive Life & Health Ins. Co. of New York v. Better Benefits, LLC, 292 Conn. 111, 120, 971 A.2d 17 (2009). " Moreover ... [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). Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006).
II
Analysis
A
Plaintiff’s Procedural Argument
Preliminarily, the plaintiff argues that the defendant’s motion should be denied because it is procedurally and fatally defective because it does not set forth in the motion the specific grounds for striking count two. The plaintiff cites to Stuart v. Frieberg, 102 Conn.App. 857, 861, 927 A.2d 343 (2007) and other superior court decisions in support of this ground. This court has reviewed the cases cited by the plaintiff, including those cited in footnote one of the plaintiff’s memorandum of law in opposition, however, the court, after conducting its own research found Judge Sheridan’s decision in Cabot Addison 1, LLC v. U.S. Bank National Association, Superior Court, judicial district of Hartford, Docket No. CV-146055758S most persuasive, in light of the 2014 repeal of § 10-41 and amendment to the language in § 10-39(b). In addressing whether the defendant’s motion to strike was procedurally defective for failing to comply with Practice Book § 10-39(b), Judge Sheridan noted: " The plaintiffs argue that the defendants’ motion is procedurally defective in that it does not comply with Practice Book Section 10-39(b), citing Stuart v. Freiberg, 102 Conn.App. 857, 862, 927 A.2d 343 (2007); see also Barasso v. Rear Still Hill Road, LLC, 64 Conn.App. 9, 779 A.2d 198 (2001).
" A fundamental premise of the plaintiffs’ argument is that the pertinent Practice Book provision in effect at the time Stuart v. Freiberg was decided, Section 10-41, is the functional equivalent of the present Section 10-39(b). Upon close examination, that appears to be a false premise. Section 10-41 read as follows:
Each motion to strike raising any of the claims of legal insufficiency enumerated in the preceding sections shall separately set forth each such claim of insufficiency and shall distinctly specify the reason or reasons for each such claimed insufficiency.
" Effective January 1, 2014, Section 10-41 was repealed in its entirety and the following language was added to subsection (b) of the existing Section 10-39:
(b) Each claim of legal insufficiency enumerated in this section shall be separately set forth and shall specify the reason or reasons for such claimed insufficiency.
" There is a subtle, but significant, difference in the wording of the two provisions. The mandatory requirement that the motion (as opposed to the supporting memorandum) set forth the reasons for each claimed legal insufficiency has been (apparently purposefully) eliminated. Consequently, the court does not view Stuart and Barasso as controlling authority and deems the supporting memorandum in this instance as sufficient compliance with Section 10-39(b)’s requirement that claims of legal insufficiency be separately set forth and supported by specific reasons." Cabot Addison 1, LLC v. U.S. Bank National Association, supra, Superior Court, Docket No. CV-146055758S. This court finds Judge Sheridan’s reasoning persuasive, and as such, deems the supporting memorandum submitted in the present case sufficient. The court will therefore address the merits of the motion.
The court notes that none of the superior court decisions cited in footnote one of the plaintiff’s memorandum, which were decided after the 2014 repeal of § 10-41 and amendment to § 10-39(b), address the subtle but significant difference between the wording of the two Practice Book provisions.
B
Legal Sufficiency of Count Two- CUTPA
The defendant argues that count two, which alleges a violation of CUTPA is legally insufficient. The defendant argues that a mere breach of contract allegation is insufficient to support a CUTPA violation absent allegations of sufficient aggravating circumstances. The defendant claims that the second count incorporates the first count which sounds in breach of contract and then provides minor additional details which do not rise to the level of a CUTPA violation.
The plaintiff argues that it has sufficiently alleged a violation of CUTPA in that it has pled purposeful and specific actions taken by the defendant; unlawful conduct which offends public policy; and an ascertainable economic loss as a result thereof. As such, the plaintiff claims that the motion should be denied.
" ‘[General Statutes § ]42-110b(a) provides that [n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce. 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].’ ... Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 18-19, 938 A.2d 576 (2008). ‘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.’ ... Willow Springs Condominium Ass’n, Inc. v. Seventh BRT Development Corp., 245 Conn. 1, 43, 717 A.2d 77 (1998)." IN Energy Solutions, Inc. v. Realgy, LLC, 114 Conn.App. 262, 273-74, 969 A.2d 807 (2009).
In the present case, the plaintiff bases its CUTPA claim on the same set of alleged facts it asserts for its breach of contract claim set forth in count one, and alleges the additional following facts in count two: " 12. Defendant is a ‘person’ as defined by C.G.S. § 42-110a(3)[; ] 13. Defendant is engaged in ‘commerce’ as defined by C.G.S. § 42-110a(4)[; ] 14. Defendant is engaged in unfair or deceptive acts or practices in the conduct of any trade or commerce as follows and in violation of C.G.S. § 42-110a et seq. (hereinafter ‘CUTPA’): a. Purposefully failing to and/or refusing to turn over various documents so as to prevent Plaintiff from obtaining a mortgage commitment; b. Purposefully accepting the initial deposit of One Hundred Thousand and 00/100 Dollars ($100,000.00) without actual intent to transfer title to the Property; and/or c. Purposefully retaining the initial deposit of One Hundred Thousand and 00/100 Dollars ($100,000.00)[; ] 15. The actions of the Defendant were unlawful and offend public policy as set forth by statute and by the common law [; ] 16. As a result of the unlawful actions by Defendant, Plaintiff has suffered an ascertainable loss[; and] [a]s a result of the foregoing, Plaintiff is entitled to recover its action damages, plus, in the Court’s discretion, costs, attorneys fees, and punitive damages, pursuant to C.G.S. § 42-110g." Pl. Compl., Second Count, ¶ 12-17.
It is well settled that a CUTPA cause of action may arise from a breach of contract, however " not every contractual breach rises to the level of a CUTPA violation." Naples v. Keystone Building & Development Corp., 295 Conn. 214, 228, 990 A.2d 326 (2010). " 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." Boulevard Associates v. Sovereign Hotels, Inc., 72 F.3d 1029, 1039 (2d Cir. 1995).
" Our Supreme Court, in Lydall v. Ruschmeyer, 282 Conn. 209, 247-48, 919 A.2d 421 (2007), in reversing a trial court’s finding of a CUTPA violation based upon a breach of an employment agreement, cited approvingly of the general rule that ‘absent substantial aggravating circumstances, [a] simple breach of contract is insufficient to establish [a] claim under CUTPA.’ Id., 248, citing Lawrence v. Richman Group Capital Corp., 358 Sup.2d 29, 42 (D.Conn. 2005). Consequently, in order to sufficiently allege aggravating factors to bring a breach of contract claim into the auspices of CUTPA, the aggravating factors alleged must ‘constitute more than a failure to deliver on a promise.’ Greene v. Orsini, 50 Conn.Supp. 312, 315, 926 A.2d 708 (2007)." Metromedia Energy, Inc. v. 21 Century Management, Inc., Superior Court, judicial district of New Haven, Docket No. CV136043097S (Oct. 2, 2014, Wilson, J.).
Aggravating circumstances must be shown " particularly where the count alleging CUTPA simply incorporates by reference 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." (Internal quotation marks omitted.) Boulevard Associates v. Sovereign Hotels, Inc., supra, 72 F.3d at 1039.
Connecticut case law demonstrates that the aggravating factors alleged must involve bad faith conduct or a violation of some concept of fairness in order to sufficiently plead a CUTPA claim by way of a breach of contract. Compare Landmark Investment Group, LLC v. Chung Family Realty Partnership, LLC, 125 Conn.App. 678, 708, 10 A.3d 61 (2010); cert. denied, 300 Conn. 914, 13 A.3d 1100 (2011) (upholding finding of aggravating factors sufficient to prove a violation of CUTPA where, in addition to a breach of an employment contract, the defendant engaged in multiple false misrepresentations and other acts exhibiting " a pattern of bad faith conduct, seeking to escape its contractual obligations unfairly while negotiating a more favorable offer with ... a third party" ), with Naples v. Keystone Building & Development Corp., supra, 295 Conn. at 227-29, 990 A.2d 326 (upholding finding of no aggravating factors where defendant performed unworkmanlike construction per the contract, but its conduct " lacked the unethical behavior" necessary for a CUTPA claim since the defendant attempted to remedy the problem and " [i]n the absence of aggravating unscrupulous conduct, mere incompetence does not by itself mandate a trial court to find a CUTPA violation" ), and IN Energy Solutions, Inc. v. Realgy, LLC, 114 Conn.App. 262, 274-75, 969 A.2d 807 (2009) (upholding finding that no aggravating factors accompanied breach of contract so as to constitute CUTPA violation where plaintiff failed to show that the defendant’s " conduct in failing to pay commissions [pursuant to the contract] was unethical, unscrupulous, wilful or reckless" ).
The plaintiff has incorporated the allegations of its breach of contract claim into the count alleging a violation of CUTPA. Although the plaintiff adds the words " purposefully" in count two, paragraphs 14(a)-(c), the allegations are merely conclusory and fail to demonstrate how the defendant engaged in purposeful, intentional, unethical, or unscrupulous conduct. Neither does the plaintiff allege facts to demonstrate that the defendant made any misrepresentations when the defendant allegedly " failed, refused, and/or neglected" to provide the information enumerated in paragraphs 7(a)-(o). Thus, viewing the complaint broadly, and in a light most favorable to the plaintiff, the allegations contained in count two allege a simple breach of a purchase and sale agreement which does not rise to the level of a CUTPA violation.
The court also notes that since the plaintiff’s cause of action appears to be based on a single real estate transaction, CUTPA is inapplicable. See Biro v. Matz, 132 Conn.App. 272, 33 A.3d 742 (2011) (" Section 42-110b(a) provides in relevant part that ‘[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.’ Whether the defendant is subject to CUTPA is a question of law, not fact.’ (Internal quotation marks omitted.) Muniz v. Kravis, 59 Conn.App. 704, 712, 757 A.2d 1207 (2000). However, claims made against noncommercial sellers of real property may fail on a determination that CUTPA does not apply to such transactions. 1 R. Langer, J. Morgan & D. Belt, Connecticut Unfair Trade Practices Act (1994) § 4.7, p. 142. ‘Moreover, a CUTPA violation may not be alleged for activities that are incidental to an entity’s primary trade or commerce.’ (Internal quotation marks omitted.) Sovereign Bank v. Licata, 116 Conn.App. 483, 494, 977 A.2d 228, cert. granted on other grounds, 293 Conn. 935, 981 A.2d 1080 (2009). In McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., supra, 93 Conn.App. at 523, 890 A.2d 140, this court held that a transaction to sell real property by an automobile dealership did not implicate any violation of CUTPA because the transaction was merely incidental to the sellers’ primary business of the sale and servicing of automobiles and the sellers were ‘not in the business’ of selling real property. Because the sellers in the present case are not in the business of selling real property, CUTPA is inapplicable to the transaction in this case."
CONCLUSION
For the foregoing reasons, the defendant’s motion to strike count two of the plaintiff’s complaint is granted.
Biro v. Matz, supra, 132 Conn.App. 289-90. In the present case, it is demonstrably clear that the allegations in the second count relate to the purchase and sale agreement between the plaintiff and the defendant which relates to the one-time sale of the defendant’s property. There are no allegations contained in the complaint that the defendant’s primary trade or business involves the sale of real estate.