Opinion
No. 567613
September 16, 2004
MEMORANDUM OF DECISION RE DEFENDANT'S MOTION TO STRIKE #115
The plaintiff, Matrix Investment Corporation, has filed a seven-count complaint alleging, respectively, tortious interference with a business relationship, usurpation of corporate opportunities, breach of a fiduciary duty, wilful and malicious misappropriation of trade secrets, unjust enrichment, conspiracy to commit torts, and a violation of the Connecticut Unfair Trade Practices Act (CUTPA) General Statutes § 42-110a et seq.
The defendant, Ron Ward, has filed a motion to strike counts one, two, three, five, six and seven of the plaintiff's complaint on the ground that the plaintiff has failed to state a claim upon which relief can be granted. The plaintiff has filed a memorandum of law in objection to the motion to strike.
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted . . ." (Citations omitted; internal quotation marks omitted.) Fort Trumbull Conservancy, LLC, v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "For the purpose of ruling upon a motion to strike, the facts alleged in a complaint, though not the legal conclusions it may contain, are deemed to be admitted." (Internal quotation marks omitted.) Murillo v. Seymour Ambulance Assn., Inc., 264 Conn. 474, 476, 823 A.2d 1202 (2003). "A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged . . ." (Citation omitted; internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). Nevertheless, "if facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Commissioner of Labor v. C.J.M Services, 268 Conn. 283, 292, 842 A.2d 1124 (2004). "The court must construe the facts in the complaint most favorably to the plaintiff." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997).
Count One — Tortious Interference with Business Relationship
The plaintiff, a Connecticut corporation licensed to conduct mortgage banking, employed the defendant between 1998 and 2000, and again for two months in 2001. The plaintiff alleges the following in count one of its complaint. In his capacity as operations manager for the plaintiff, the defendant had access to sensitive and proprietary company documents. The defendant left the employ of the plaintiff, and in 2001 opened up a competing mortgage lending company. The defendant intentionally misappropriated the confidential information that he was privy to during his term of employment, and improperly interfered with the plaintiff's business relations by revealing confidential information and by unlawfully persuading the plaintiff's customers to terminate their business dealings with the plaintiff. The plaintiff alleges that it had received monetary deposits from customers and had expected to receive revenue from those customers, but due to the defendant's actions, it did not and suffered a loss.
It is well established that the elements of a claim for tortious interference with business relationships are: (1) a business relationship between the plaintiff and another party; (2) the defendant's intentional interference with the business relationship while knowing of the relationship; and (3) as a result of the interference, the plaintiff suffers actual loss. Solomon v. Aberman, 196 Conn. 359, 364, 493 A.2d 193 (1985).
The allegations in the complaint have established the elements of a cause of action for tortious interference with a business relationship and the motion to strike the first count is, therefore, denied.
Count Two — Usurpation of Corporate Opportunities
In count two, the plaintiff incorporates the allegations from count one, claiming that the plaintiff was in a position of trust with the defendant and had access to proprietary and confidential information. The plaintiff alleges that customers who were ready to close deals with the defendant were persuaded by unlawful means to terminate their business relationship with the plaintiff. The plaintiff incurred damages in that it was unable to close on deals it expected to make because of the actions of the defendant.
"To prevail on a claim of usurpation [of a corporate opportunity] a plaintiff bears the burden of establishing: (1) a fiduciary relationship between the corporation and the alleged wrongdoers; and (2) the existence of a corporate opportunity." Murphy v. Wakelee, 247 Conn. 396, 404, 721 A.2d 1181 (1998). "[O]ne who occupies a fiduciary relationship to a corporation may not acquire, in opposition to the corporation, property in which the corporation has an interest or tangible expectancy." (Internal quotation marks omitted.) Katz Corp. v. T.H. Canty Co., 168 Conn. 201, 208, 362 A.2d 975 (1975).
The plaintiff has alleged facts which constitute a legally sufficient cause of action for usurpation of a corporate opportunity, and therefore, the motion to strike count two is denied.
Count Three — Breach of Fiduciary Duty
In count three, the plaintiff incorporates the allegations from count one, claiming that the defendant was in a position of trust, and as such the defendant had access to confidential and proprietary information. The plaintiff claims that the defendant owed a fiduciary duty to the plaintiff, and that he breached such duty by stealing sales leads from the plaintiff and persuading the plaintiff's employees to file fabricated and frivolous labor complaints.
To assert a claim for breach of a fiduciary duty the plaintiff has the burden of proving the existence of a fiduciary relationship. See Murphy v. Wakelee, supra, 247 Conn. 404. "[A] fiduciary or confidential relationship is characterized by a unique degree of trust and confidence between the parties, one of whom has superior knowledge, skill or expertise and is under a duty to represent the interests of the other . . . The superior position of the fiduciary or dominant party affords him great opportunity for abuse of the confidence reposed in him." (Internal quotation marks omitted.) Konover Development Corp. v. Zeller, 228 Conn. 206, 219, 635 A.2d 798 (1994). "The fiduciary duty comprises two prongs: a duty of care, and a duty of loyalty . . . While the duty of care requires that the . . . fiduciaries exercise their best care and judgment . . . the duty of loyalty derives from the prohibition against self-dealing that inheres in the fiduciary relationship." (Internal quotation marks omitted.) Gurski v. Rosenblum Filan, LLC, Superior Court, Docket No. 179063 (February 23, 2001, D'Andrea, J.) ( 28 Conn. L. Rptr. 717).
The plaintiff has alleged facts which constitute a legally sufficient cause of action for breach of a fiduciary duty, and therefore, the motion to strike to strike count three is denied.
Count Five — Unjust Enrichment CT Page 13976
In count five, the plaintiff incorporates the allegations from count one, and claims that the defendant had access to confidential information regarding the plaintiff's pending business deals. When the defendant left his position of employment, he took confidential information regarding the plaintiff's customers for his own personal use. The defendant used this information to benefit his own company, and he retained the proceeds from this misappropriation of information.
"Unjust enrichment is a very broad and flexible equitable doctrine that has as its basis the principle that it is contrary to equity and good conscience for a defendant to retain a benefit that has come to him at the expense of the plaintiff . . . The doctrine's three basic requirements are that (1) the defendant was benefited, (2) the defendant unjustly failed to pay the plaintiff for the benefits, and (3) the failure of payment was to the plaintiff's detriment." (Citation omitted.) Gagne v. Vaccaro, 255 Conn. 390, 409, 766 A.2d 416 (2001).
The plaintiff has alleged facts which constitute a legally sufficient cause of action for unjust enrichment, and therefore, the motion to strike count five is denied.
Count Six — Conspiracy to Commit Torts
In count six, the plaintiff incorporates the allegations from count one, and claims further that the defendant contacted current and former employees of the defendant, with the purpose of making plans to damage the defendant. The defendant and others made plans to convince current and former customers to take their business away from the plaintiff. Also, pursuant to these plans, the defendant and conspirators assisted former employees to fabricate and file overtime and fraudulent wage claims against the plaintiff.
The tort of civil conspiracy requires "(1) a combination between two or more persons, (2) to do a criminal or unlawful act or a lawful act by criminal or unlawful means, (3) an act done by one or more of the conspirators pursuant to the scheme and in furtherance of the object, (4) which act results in damage to the plaintiff." Williams v. Maislen, 116 Conn. 433, 437, 165 A. 455 (1933). See also Talit v. Peterson, Superior Court, judicial district at Hartford, Docket No. CV 54320 (November 6, 1995, Blue, J.) ( 15 Conn. L. Rptr. 167).
The plaintiff has alleged facts which constitute a legally sufficient cause of action for civil conspiracy, and therefore, the motion to strike count six is denied.
Count Seven — Connecticut Unfair Trade Practices Act (CUTPA)
In count seven, the plaintiff incorporates the allegations from count one, and claims that the acts of the defendant offend public policy and are oppressive and unscrupulous, and as such violate CUTPA, General Statutes § 42-110a et seq. The plaintiff claims that the defendant has violated the Uniform Trade Secrets Act (UTSA), General Statutes § 35-50 et seq., and that the defendant has caused substantial injury to the plaintiff. The defendant argues in support of his motion to strike that a claim for a violation of CUTPA cannot be made out in addition to a claim for a violation of the UTSA. The defendant argues that the UTSA was intended to supersede Connecticut law that pertains to the subject matter of trade secrets, and as such the plaintiff's CUTPA count cannot stand
Section 42-110b(a) of CUTPA 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." Willow Springs Condominium Assn., Inc. v. Seventh BRT Development Corp., 245 Conn. 1, 42, 717 A.2d 77 (1992). It is well settled that to determine whether a practice violates CUTPA, a court will need to examine "(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 business persons] . . . 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." (Internal quotation marks omitted.) Id., 43. See also MVB Custom Design Construction v. Jones, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. CV01 0183779 (January 29, 2002, Lewis, J.T.R.).
"CUTPA . . . provides a broad remedy for unfair trade practices, and does not affect the subject matter of trade secret law . . . CUTPA provides a parallel remedy to [the] UTSA and . . . a plaintiff may assert both claims together." Mushroom Tray Research Group, LLC v. Nobile, Superior Court, judicial district at Stamford, Docket No. CV99 0173380 (May 29, 2000, Mintz, J.) ( 26 Conn. L. Rptr. 612). Thus, the defendant's argument that a cause of action for CUTPA cannot be made out in conjunction with a cause of action for UTSA does not persuade this court. Accordingly, the plaintiff has alleged facts which constitute a legally sufficient cause of action for a violation of CUTPA, and therefore, the motion to strike count seven is denied.
The defendant has also made the argument that counts one, two, three, five and six cannot be maintained since the plaintiff's underlying complaint is that the defendant misappropriated trade secrets, and as such the UTSA supersedes all of the plaintiff's claims. The defendant misconstrues Connecticut law in making this argument. Section 35-57(a) of the UTSA provides in relevant part that the provisions of the UTSA "supersede any conflicting tort, restitutionary, or other law of this state pertaining to civil liability for misappropriation of a trade secret." (Emphasis added.) This has been interpreted to abolish only the common-law misappropriation of trade secrets claim See Mushroom Tray Research Group, LLC v. Nobile, Superior Court, supra. The defendant does not cite to any case whereby the common-law causes of action pleaded by the plaintiff in counts one, two, three, five and six have been abolished in favor of the UTSA.
Conclusion
The plaintiff has pleaded all the necessary elements to support a cause of action for the tortious interference with business relationships, usurpation of a corporate opportunity, breach of fiduciary duty, unjust enrichment, civil conspiracy, and a violation of CUTPA, and therefore, the defendant's motion to strike is denied in its entirety.
D. Michael Hurley, JTR