Opinion
CV155008533S
11-04-2016
Paul Edwards v. McMillen Capital, LLC
UNPUBLISHED OPINION
MEMORANDUM OF DECISION ON MOTION TO STRIKE
Julia L. Aurigemma, J.
The defendant, McMillen Capital, LLC, has moved to strike all counts of the plaintiff's Revised Amended Complaint, dated January 8, 2015 (" Complaint") on the grounds that they either do not exist under Connecticut law, fail to state a claim, or are barred by the applicable statute of limitations.
Allegations of the Complaint
The plaintiff alleges that he is the owner of a piece of real property known as 7 New Lane, Cromwell, Connecticut (" Property"). He further alleges that the defendant knew that the plaintiff intended to use the property as his primary residence. The parties executed a promissory note and mortgage for the property. The plaintiff has attached the Note and Mortgage as exhibits to the Complaint. The Note, entitled " One Year Term Interest Only Balloon Mortgage Note" states that plaintiff's address is 9-11 Colony Street, Meriden, CT 06450 and further states that it is secured by a mortgage on the Property. The defendant has not sought to foreclose on the Property, but the plaintiff has pled that the defendant has made demands for payment.
The plaintiff's main complaint appears to be that the Note was a Mortgage Note on residential property and, therefore, should not have contained a Prejudgment Remedy Waiver and a Jury Waiver. There are no allegations that the defendant has commenced any foreclosure proceedings against the Property or that the defendant attempted to enforce either waiver. The Note itself is clearly not a residential mortgage note, as it is for a term of one year only and on its face is secured by a property other than the one in which the plaintiff resides. The court will state additional facts as relevant to each particular count.
Discussion of the Law and Ruling
In American Progressive Life & Health Ins. Co. v. Better Benefits, LLC, 292 Conn. 111, 120, 971 A.2d 17 (2009), the court outlined the standard for a motion to strike:
[A] motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court . . . We take the facts to be those alleged in the complaint . . . and we construe 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 . . . Thus, we assume the truth of both the specific factual allegations and any facts fairly provable thereunder. In doing so, moreover, we read the allegations broadly, rather then narrowly.
The defendant argues that the First Count, Residential Mortgage Fraud, is not legally sufficient, because there is no cause of action known as Residential Mortgage Fraud in Connecticut. The plaintiff pleads violations of both Connecticut Abusive Home Loan Lending Practices Act (" CAHLLPA") and Truth-in-Lending Act in this claim. CAHLLPA is codified in Connecticut General Statutes § 36a-746 et seq. These statutes describe activities that are regulated by the Bank Commissioner under the Banking Law of Connecticut. Under CAHLLPA, the Bank Commissioner may seek civil penalties and remedies available at law for violations therein. Connecticut General Statutes § 36a-50. Three separate Superior Court cases affirm that there is no private right of action under CAHLLPA. Pantanella v. Rowe, 2009 WL 3740686, Judicial District of Middlesex (October 14, 2009, Bear, J.); U.S. Bank National v. Suvemay, 2010 WL 4352496, Judicial District of Fairfield (October 4, 2010, Hartmere, J.); Citimortgage, Inc. v. Tsoukalas, 2012 WL 3104592, Judicial District of Fairfield (June 29, 2012, Hartmere, J.) [54 Conn.L.Rptr. 264, ].
Pantanella states:
Given the focus on regulatory enforcement set forth above and the absence of any statutory indication that the legislature intended any private right of action, there are no genuine issues of material fact and the defendants . . . are entitled to summary judgment as a matter of law . . .Pantanella, supra, Id. at *14.
Based on the foregoing the First Count for Residential Mortgage Fraud is hereby stricken.
The defendant argues that the Second Count, Fraudulent Misrepresentation, fails to state a legal claim, because the plaintiff has not pled the necessary elements of a fraudulent misrepresentation claim.
" The essential elements of an action in common law fraud, as we have repeatedly held, are that: (1) a false representation was made as a statement of fact; (2) it was untrue and known to be untrue by the party making it; (3) it was made to induce the other party to act upon it; and (4) the other party did so act upon that false representation to his injury . . . Under a fraud claim of this type, the party to whom the false representation was made claims to have relied on that representation and to have suffered harm as a result of the reliance." (Citation omitted; internal quotation marks omitted.) Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 777-78, 802 A.2d 44 (2002). " In contrast to a negligent representation, [a] fraudulent representation . . . is one that is knowingly untrue, or made without belief in its truth, or recklessly made and for the purpose of inducing action upon it." (Internal quotation marks omitted.) Kramer v. Petisi, 285 Conn. 674, 684 n. 9, 940 A.2d 800 (2008). " This is so because fraudulent misrepresentation is an intentional tort." Id., at 684, 940 A.2d 800.Sturm v. Harb Development, LLC, 298 Conn. 124, 141, 2 A.3d 859 (2010).
The Second Count never alleges that the defendant made any untrue statements. The plaintiff states that by " inserting commercial clauses in a contract where the agreed-upon term and the interceded purpose were for a loan for personal, family, or household use is alleged fraud in the note and mortgage." Plaintiff basically repeats the above-quoted allegation throughout the First Count, which is incorporated by reference in the Second Count.
The plaintiff never alleges that the defendant made any misrepresentation of any statement of fact, or that said misrepresentations were made to induce the plaintiff to enter into the mortgage and/or promissory note. For the foregoing reasons, the Second Count, Fraudulent Misrepresentation, must be stricken.
The defendant argues that the plaintiff has not pled the necessary elements of a breach of contract claim and, therefore, the Third Count, Breach of Contract, must be stricken.
The necessary elements of a breach of contract action are: (1) the formation of an agreement; (2) performance by one party; (3) breach of the agreement by the other party; and (4) damages. Presidential Capital Corp. v. Reale, 231 Conn. 500, 506-07, 652 A.2d 489 (1994); Dunham v. Dunham, 204 Conn. 303, 313, 528 A.2d 1123 (1987); 1 A. Corbin, Contracts (Rev.Ed. 1996) § 4.1, p. 525.
The plaintiff has alleged that the defendant performed its obligations under the Note in that it advanced him money. Count One ¶ 47. The plaintiff has not alleged any facts that he has performed under the Note. In fact, he has in effect alleged that he has not performed. The plaintiff has made the defendant's demand letter to him an exhibit to the Complaint. This demand letter states that the plaintiff owes the entire principal balance of the Note plus interest. Thus the plaintiff has not and cannot honestly plead that he has performed on the Note, and, therefore, he cannot allege a breach of contract.
The plaintiff further pleads in the Third Count a breach of the implied covenant of good faith and fair dealing. Our Supreme Court has stated that to constitute a breach of the implied covenant of good faith and fair dealing, the acts of the defendant must impede the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract and must have been taken in bad faith. Capstone Building Corp. v. American Motorists Ins. Co., 308 Conn. 760, 794-95, 67 A.3d 961 (2013).
Capstone states:
Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive . . . Bad faith means more than mere negligence; it involves a dishonest purpose. Id.
The plaintiff has not pled any dishonest purpose or any actions that defendant tried to block the plaintiff's ability to receive any benefits under the Note. Plaintiff has not pled that he did not receive any benefits under the note. In short, the plaintiff has failed to plead any facts that show that the defendant acted with a sinister motive.
Based on the foregoing, the Third Count, Breach of Contract, is hereby stricken.
The defendant argues that the Fourth Count, Violation of Truth in Lending Act, is barred by the applicable statute of limitations. The federal Truth in Lending Act, as amended in particular by the Truth-in-Lending Simplification Reform Act of 1980, was enacted as part of the Consumer Credit Protection Act of 1968, and is codified at 15 U.S.C. § 1601 et seq. Cheshire Mortgage Service, Inc. v. Montes, 223 Conn. 80, 96-97, 612 A.2d 1130 (1992).
Our legislature has enacted the Connecticut's own truth in lending act, which is codified at Connecticut General Statutes § 36a-675 et seq. Connecticut General Statutes § 36a-683(e) provides that any action under Connecticut TILA shall be brought within one year from the date of the occurrence of the violation, except in an action to collect the debt which was brought more than one year from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action.
TILA falls within an exception to the general rule that statutes of limitations arguments are not properly before a court on a motion to strike, because the right of a person to bring a civil action for liability against a creditor that does not comply with the requirements imposed by TILA is not a right that existed at common law. Wells Fargo Bank, N.A. v. Caldrello, Judicial District of New London, Id. -20 (Jan. 5, 2016, Cosgrove, J.); Larobina v. First Union National Bank, 2001 WL 1681842, Judicial District of Stamford-Norwalk at Stamford (Dec. 13, 2001, Karazin, J.).
The plaintiff alleges that the Note was executed on April 30, 2012, and he was aware that he did not receive the high cost mortgage disclosure to which he was allegedly entitled in December 2013. The plaintiff's own pleadings clearly show that he was aware of a TILA violation in December 2013, eighteen months before filing suit in this matter. Therefore, pursuant to Connecticut General Statutes § 36a-683(e), the plaintiff's TILA action is barred and the Fourth Count is hereby stricken.
The defendant argues that the Fifth Count, Predatory Lending, fails to state a legal claim. While the Appellate Court recently held that predatory lending could constitute a valid special defense in Bank of America v. Aubut, 167 Conn.App. 347, 143 A.3d 638 (2016), no court in this state has recognized predatory lending as a cause of action.
In Claude v. Wells Fargo Home Mortgage, (D.Conn. 2014), the U.S. District Court of Connecticut found that predatory lending was not a cause of action, refusing to recognize that the plaintiff's amalgamation of TILA and RESPA claims resulted in a cause of action.
Here, the plaintiff pleads allegations of violations of Real Estate Settlement Procedures Act (" RESPA") and CAHLLPA. As held by the court in Claude, a grouping of the allegations of violations of such statutes does not constitute a cause of action for predatory lending. For the foregoing reasons, the Fifth Count, Predatory Lending, is ordered stricken.
The defendant argues that the Sixth Count, Unclean Hands and Count Seven--Unconscionability, fail to state legal claims, as neither unclean hands nor unconsciounability is a valid cause of action in Connecticut. Our Supreme Court has stated, " the equitable defense of unclean hands bars only equitable relief." Weiss v. Smulders, 313 Conn. 227, 265 n.19, 96 A.3d 1175 (2014). Here the plaintiff attempts to use the doctrine of unclean hands not as a special defense, but as a legal cause of action. There is no authority that unclean hands constitutes a cause of action and, therefore, the Sixth Count, Unclean Hands, is ordered stricken.
In Deutsche Bank National Trust Co. v. Ofili, Judicial District of Waterbury (July 2, 2015, M. Taylor, J.), the court stated:
The purpose of the doctrine of unconscionability is to prevent oppression and unfair surprise . . . As applied to real estate mortgages, the doctrine of unconscionability draws heavily on its counterpart in the Uniform Commercial Code which, although formally limited to transactions involving personal property, furnishes a useful guide for real property transactions . . . As Official Comment 1 to § 2-302 of the Uniform Commercial Code suggests, [52] [t]he basic test is whether, in the light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract . . . Unconscionability is determined on a case-by-case basis, taking into account all of the relevant facts and circumstances." (Internal quotation marks omitted.)
In Deutsche Bank the court struck the defendant's counterclaim of unconscionability, because " unconscionability does not give rise to a cause of action for damages." Id. Here, the plaintiff does not use the doctrine of unconscionability as a special defense in response to surprise or injustice, but as a legal cause of action. The Seventh Count is hereby ordered stricken because " unconscionability" is not a legal cause of action in Connecticut.
The defendant argues that the plaintiff has not pled the necessary elements of a cause of action for intentional infliction of emotional distress in the Eighth Count. The key elements of an action for intentional infliction of emotional distress are: (1) that the actor intended to inflict emotional distress or that he knew or should have known that emotional distress was the likely result of his conduct; (2) that the conduct was extreme and outrageous; (3) that the defendant's conduct was the cause of the plaintiff's distress; and (4) that the emotional distress sustained by the plaintiff was severe. Petyan v. Ellis, 200 Conn. 243, 253, 510 A.2d 1337 (1986).
Whether a defendant's conduct is sufficient to satisfy the requirement that it be extreme and outrageous is initially a question for the court to determine. Bell v. Board of Education, 55 Conn.App. 400, 410, 739 A.2d 321 (1999). Liability has only been found where the conduct has been, as follows:
" Outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community. Generally, the case is one in which the recitation of the facts to an average member of the community would arouse his resentment against the actor, and lead him to exclaim, 'Outrageous!'" 1 Restatement (Second), Torts § 46, comment (d), p. 73 (1965). " Conduct on the part of the defendant that is merely insulting or displays bad manners or results in hurt feelings is insufficient to form the basis for an action based upon intentional infliction of emotional distress."Mellaly v. Eastman Kodak Co., 42 Conn.Supp. 17, 19, 597 A.2d 846 (1991).
The plaintiff has pled that the defendant allegedly made phone calls to the plaintiff to sell his home, turnover the deed to his home, and the defendant threatened foreclosure of the Property.
In Appleton v. Board of Education, 254 Conn. 205, 210-12, 757 A.2d 1059 (2000), the court found as a matter of law that the defendant board of education's actions, including condescending comments to that plaintiff in front of her fellow colleagues questioning her vision and ability to read, were not extreme and outrageous. That defendant also allegedly telephoned the plaintiff's daughter, representing that the plaintiff " had been acting differently" and should take a few days off from work; telephoned the police, who came to the school and escorted the plaintiff out of the building to her car; and the plaintiff also asserted in her affidavit that she was subjected to two psychiatric examinations at the request of the board, and that she was forced to take a suspension and a leave of absence and, ultimately, forced to resign. The court found defendant's behavior inappropriate, but not extreme and outrageous. Appleton, supra, 254 Conn. at 212 fn.1.
The alleged conduct of the defendant here does not rise even to the level of the defendant in Appleton . The defendant had loaned the plaintiff over $100,000 and the plaintiff had not repaid either principal or interest. It was entitled to take legal action to try to collect the money it had loaned. It did not act in any way that would lead any average member of the community to exclaim, " Outrageous!"
For the foregoing reasons the Eighth Count, Intentional Infliction of Emotional Distress, is ordered stricken.
The Ninth Count, Negligent Infliction of Emotional Distress, argues the defendant, fails to state a legal claim because the plaintiff has not pled the necessary elements.
The elements of an action for negligent infliction of emotional distress are: (1) the defendant's conduct created an unreasonable risk of causing the plaintiff emotional distress; (2) the plaintiff's distress was foreseeable; (3) the emotional distress was severe enough that it might result in illness or bodily harm; and (4) the defendant's conduct was the cause of the plaintiff's distress. Carrol v. Allstate Ins. Co., 262 Conn. 433, 444, 815 A.2d 119 (2003).
It is not foreseeable that the attempts to collect on the debt described in the complaint would cause emotional distress. " The foreseeability requirement in a negligent infliction of emotional distress claim is more specific than the standard negligence requirement that an actor should have foreseen that his tortious conduct was likely to cause harm." Olson v. Bristol-Burlington Health District, 87 Conn.App. 1, 5, 863 A.2d 748, cert. granted on other grounds, 273 Conn. 914, 870 A.2d 1083 (2005) (appeal withdrawn May 25, 2005). Olson further states, " in order to state a claim for negligent infliction of emotional distress, the plaintiff must plead that the actor should have foreseen that her behavior would likely cause harm of a specific nature, i.e., emotional distress likely to lead to illness or bodily harm." Id.
In Olson, that defendant made statements that were intended to lead the judge to recuse himself, which led to a mistrial. The plaintiff argued that because he was forced to re-litigate the matter, he suffered emotional distress. Olson did not find that argument persuasive, as it was foreseeable that litigation itself would result in emotional distress.
Here, the plaintiff's allegations as to defendant's conduct are that the plaintiff failed to repay the Note when it came due, that the defendant tried to collect on the Note (short of foreclosure), for which the plaintiff's primary residence was collateral, so the plaintiff suffered emotional distress. Any distress caused to the plaintiff was not caused by the defendant's conduct, but by his own failure to make payments due under the Note. The defendant never did institute a foreclosure action. The defendant's statements that it might exercise its legal right to foreclose on the Property might have caused distress, but such statements were clearly not unreasonable. As a matter of the law the defendant's alleged conduct could not have created a forseeable risk of emotional distress to the plaintiff and, therefore, the Ninth Count is ordered stricken.
The Tenth Count alleges that the defendant was negligent. The elements of a negligence action are: duty; breach of that duty; causation; and actual injury. Rawls v. Progressive Northern Ins. Co., 130 Conn.App. 502, 507, 23 A.3d 100 (2011). Generally, there is no fiduciary relationship between a bank and its customer. Saint Bernard School of Montville, Inc. v. Bank of America, 312 Conn. 811, 836, 95 A.3d 1063 (2014). This is because " [a] lender has the right to further its own interest in a mortgage transaction and is not under a duty to represent the customer's interest." Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 19, 728 A.2d 1114 (1999).
The plaintiff has alleged no facts other than the plaintiff and the defendant had a borrower-lender relationship and certainly no facts from which any trier could find a unique degree of trust and confidence between the parties, so as to constitute a fiduciary relationship. See Iacurci v. Sax, 313 Conn. 786, 800, 99 A.3d 1145 (2014). Therefore, the plaintiff has failed to allege a cognizable cause of action for negligence and the Tenth Count, Negligence, is hereby ordered stricken.
The defendant argues that the Eleventh Count, Breach of Implied Covenant of Good Faith and Fair Dealing, should be stricken because it fails to state a cognizable claim. An action for breach of the covenant of good faith and fair dealing requires proof of three elements: (1) that the plaintiff and the defendant were parties to a contract under which the plaintiff reasonably expected to receive certain benefits; (2) that the defendant engaged in conduct that injured the plaintiff's right to receive benefits it reasonably expected to receive under the contract; and (3) that when committing the acts by which it injured the plaintiff's right to receive under the contract, the defendant was acting in bad faith. Austrian v. United Health Group, Inc., Judicial District of Waterbury, 43 Conn.L.Rptr. 852, (July 17, 2007, Stevens, J.).
The plaintiff has failed to plead the second element of breach of implied covenant of good faith and fair dealing " that the defendant engaged in conduct that injured the plaintiff's right to receive benefits it reasonably expected to receive under the contract." The plaintiff received all the benefits he was entitled to under the Note. He has not pled that the defendant's actions denied him the benefit of the Note. The plaintiff has also failed to plead that the defendant committed any acts that stopped the plaintiff from receiving benefits under the Note in bad faith.
For the foregoing reasons the Eleventh Count, Breach of Covenant of Good Faith, is ordered stricken.
The defendant argues that the Twelfth Count, Unfair Trade Practices, is barred by statute as it is not timely. Connecticut General Statutes § 42-110g(e). The statute of limitations defense for CUTPA actions falls under an exception to the general rule that the statute of limitations may not be raised on a motion to strike, because CUTPA is a statutory cause of action which did not exist at common law. Forbes v. Ballaro, 31 Conn.App. 235, 239-40, 624 A.2d 389 (1993).
The applicable statute of limitations for CUTPA is three years from date of a violation. Connecticut General Statutes § 42-110g(e). The plaintiff pleads that the defendant's alleged unfair trade practices were misstatements at a real estate closing and misstatements in the Note. The plaintiff alleges that the note was executed April 30, 2012, more than three years before this case was served on the defendant on June 13, 2015.
The plaintiff has not timely filed this action within the three years from the alleged execution of the Note in question, and, therefore, the Twelfth Count is barred by Connecticut General Statutes § 42-110g(e) and is ordered stricken.
In summary, for the reasons set forth more fully above, all of the counts of the Complaint are stricken.