Opinion
No. CV05-4003083 S
October 7, 2008
MEMORANDUM OF DECISION RE MOTION TO STRIKE #143 BACKGROUND
The plaintiff, Medical Imaging Solutions Group, Inc., filed a five-count revised complaint on September 12, 2005, against the defendant, Housatonic Valley Radiological Associates, P.C. The plaintiff alleges the following facts in its complaint. From February 2003, through June 2004, the plaintiff "duly sold and delivered to the [d]efendant goods, wares, merchandise and/or services . . . on open account, in the sum of . . . $47,755.64 . . ." The defendant accepted these goods and services but has not paid the plaintiff the agreed-upon price or reasonable value.
The defendant filed its answer on September 30, 2005, including a three-count counterclaim in which it alleges the following facts. The plaintiff provided goods and services that "were not in accordance with the oral agreement between the parties and in breach of that agreement." The plaintiff further "failed to exercise reasonable care and competence and was negligent in the performance of those services and provision of those goods" and the defendant is entitled to reimbursement from the plaintiff.
The defendant alleged damages including lost profits but later withdrew the claim for lost profits.
On May 13, 2008, the plaintiff filed its second revised answer and special defenses to the defendant's counterclaims. In its second special defense, the plaintiff alleged that the defendant "made application to procure payment for the services rendered by [the plaintiff] and represented to its insurer that [the plaintiff's] services were satisfactory and appropriate." The plaintiff further alleged that the defendant received payment and retained such payments and thus now has "unclean hands" and "is barred from the assertion of any claims against [the plaintiff]." In its third special defense, the plaintiff alleged that the defendant "induced" the plaintiff to believe that it was satisfied with the services provided, that the plaintiff continued to render services on account of this inducement and therefore the defendant "is equitably estopped from asserting any claims against [the plaintiff]."
On August 12, 2008, the defendant filed a motion to strike the second and third special defenses because "(1) it is improper to plead allegations regarding receipt by a party of collateral source payments, and (2) the third special defense is not a legally cognizable special defense." The defendant has submitted a memorandum of law in support of the motion to strike and the plaintiff has submitted a memorandum of law in opposition to the defendant's motion. The matter was heard at short calendar on September 2, 2008.
DISCUSSION
"Whenever any party wishes to contest . . . (5) the legal sufficiency of any answer to any complaint, counterclaim or cross complaint, or any part of that answer including any special defense contained therein, that party may do so by filing a motion to strike the contested pleading or part thereof." Practice Book § 10-39(a). "In . . . ruling on the . . . motion to strike, the trial court recognized its obligation to take the facts to be those alleged in the special defenses and to construe the defenses in the manner most favorable to sustaining their legal sufficiency." Connecticut National Bank v. Douglas, 221 Conn. 530, 536, 606 A.2d 684 (1992). "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, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Violana v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006).
A. Collateral Source Payments
In its memorandum of law in support of its motion to strike the plaintiff's second special defense, the defendant argues that allegations of receipt of payments from a collateral source are improperly pleaded as a special defense. The defendant further argues that receipt of collateral payments is improperly couched as a special defense of unclean hands and that no allegations of willful or egregious misconduct were pleaded as is required in a special defense of unclean hands. In its opposition, the plaintiff argues that it is not the receipt of collateral source payments itself that is pleaded as a special defense, but rather the "willful misconduct" of the defendant in the acceptance and keeping "for its own use" such benefits in the "particular controversy in issue," which it claims is sufficiently pleaded in the second special defense to bar recovery on the defendant's counterclaim under the doctrine of unclean hands.
"Facts which are consistent with [a plaintiff's] statements but show, notwithstanding, that the plaintiff has no cause of action, must be specially alleged . . ." Practice Book § 10-50. "The purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action." (Internal quotation marks omitted.) Fidelity Bank v. Krenisky, 72 Conn.App. 700, 705, 807 A.2d 968, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002). "No pleading shall contain any allegations regarding receipt by a party of collateral source payments as described in General Statutes §§ 52-225a and 52-225b." Practice Book § 10-78.
It should be noted that Practice Book § 10-51 requires special defenses to be "preceded by a designation of the cause of action which it is designed to meet . . ." when the complaint or counterclaim contains more than one cause of action. The plaintiff has merely stated that the special defenses are "to all counts" in its second revised answer and special defenses to the defendant's counterclaims.
Section 52-225a details reduction in economic damages for collateral source payments and provides in relevant part: "(a) In any civil action, whether in tort or in contract, wherein the claimant seeks to recover damages resulting from (1) personal injury or wrongful death . . . or (2) personal injury or wrongful death, arising out of the rendition of professional services by a health care provider . . . and where liability is admitted or is determined by the trier of fact and damages are awarded to compensate the plaintiff, the court shall reduce the amount . . ." (Emphasis added.)
Section 52-225b defines collateral source payments and provides in relevant part: "For purposes of sections 52-225a to 52-225c, inclusive: `Collateral sources' means any payments made to the claimant, or on his behalf, by or pursuant to: (1) Any health or sickness insurance, automobile accident insurance that provides health benefits, and any other similar insurance benefits . . . or (2) any contract or agreement of any group, organization, partnership or corporation to provide, pay for or reimburse the costs of hospital, medical, dental or other health care services. `Collateral sources' do not include amounts received by a claimant as a settlement."
Section 52-225c details the prohibition of recovery of collateral source benefits in personal injury and wrongful death actions by insurers or other persons providing collateral source benefits under insurance contracts.
In Thomas v. Patriot General Ins. Co., 46 Conn.Sup. 188, 189-90, 743 A.2d 174 (1999) [ 25 Conn. L. Rptr. 7], the plaintiff brought suit to claim uninsured motorist benefits. The defendant filed three special defenses, wherein the second special defense claimed "an offset for basic reparations benefits paid to the plaintiff in effect claiming collateral source offset." Id. The court stated that "Practice Book § 10-78 specifically prohibits the pleading of collateral source payments as described in General Statutes §§ 52-225a and 52-225b . . . The defendant has properly pleaded policy limitation in the first special defense. The second special defense, however, is not a policy limitation but rather a collateral source payment. Under Practice Book § 10-78, such a special defense is prohibited." (Citation omitted.) Id.; see also Neary v. McCarthy, Superior Court, judicial district of Litchfield, Docket No. CV 95 0063412 (February 2, 1995, Pickett, J.) (granting motion to strike special defense based on Practice Book § 10-78). Thus, a collateral source payment which falls within the ambit of §§ 52-225a and 52-225b may not be pleaded as a special defense.
However, § 52-225a only applies to tort and contract actions where the claimant seeks to recover damages for personal injury or wrongful death where liability is admitted or established by the trier of fact. The present matter is not based upon a personal injury or wrongful death action which would bring the collateral source payment allegations within the penumbra of § 52-225a or § 52-225b. Rather, the special defenses are directed towards the defendant's counterclaims for damages arising out of the alleged breach of contract and negligent performance of services relative to the maintenance of an MRI machine sold to the defendant by the plaintiff. Reference to a collateral source payment in a special defense may be allowed when it is not prohibited by §§ 52-225a and 52-225b. Here, the plaintiff's allegation in its second special defense that the defendant's insurer paid a portion of the plaintiff's payments for services rendered did not involve a claim for personal injury or wrongful death.
In Hassett v. New Haven, 49 Conn.Sup. 7, 10, 858 A.2d 922 (2004) [ 37 Conn. L. Rptr. 735], aff'd, 91 Conn.App. 245, 880 A.2d 975 (2005), the court determined that a voluntarily forgiven debt by a medical provider is not a collateral source within the meaning of § 52-225b because it was not made pursuant to any insurance, contract or agreement to pay for or reimburse the costs of health care services.
The collateral source payment is also brought into issue by the plaintiff's additional allegation that "[the defendant] made application to its insurer to procure payment for the services rendered by [the plaintiff]" and "[i]n reliance upon [the defendant's] representations, its insurer validated [the defendant's] claims and issued a portion of the requested payments to [the plaintiff]." Whether the alleged collateral source payment falls within that which is described by §§ 52-225a and 52-225b must be determined by the court. The plaintiff alleges that the defendant's "insurer" issued a portion of the requested payment for the plaintiff's services described in the defendant's first amended counterclaim as "maintenance services for an MRI machine." Within the definition of collateral sources under § 52-225b(1) are payments made under "health or sickness insurance, automobile accident insurance that provide health benefits, [or] any other similar insurance benefits . . ." Neary v. McCarthy, supra, Superior Court, Docket No. CV 95 0063412 (finding the alleged collateral source payment not within § 52-225b where no allegations made that payment was received pursuant to insurance or contract).
The court must accept as true the facts alleged in the special defense for purposes of deciding the motion to strike. Connecticut National Bank v. Douglas, supra, 221 Conn. 536.
It is also to be noted that § 52-225b(2) secondarily defines collateral sources as "any contract or agreement of any group, organization, partnership or corporation to provide, pay for or reimburse the costs of hospital, medical, dental or other health care services . . ." On its face, the second special defense merely alleges that payment was made from the defendant's "insurer." Cf. Seguro v. Cummiskey, Superior Court, judicial district of Hartford, Docket No. CV 99 0591124 (September 12, 2001, Hale, J.T.R.) (finding that the defendant did properly allege a special defense of collateral source payment where he "failed to allege that the Seguros received the settlement pursuant to any insurance or contract" under § 52-225a). The plaintiff has not alleged in the second special defense that the defendant has an agreement or contract with an insurer to reimburse the defendant for "hospital, medical, dental or other health care services" as provided in § 52-225b. Further, nowhere in the pleadings is it alleged that the defendant provides any of these services. "In deciding a motion to strike . . . a trial court must take the facts to be those alleged in the [pleadings] . . . and cannot be aided by the assumption of any facts not therein alleged." (Citations omitted; internal quotation marks omitted.) Liljedahl Bros., Inc. v. Grigsby, 215 Conn. 345, 348, 576 A.2d 149 (1990). As such, the defendant has not shown, for purposes of its motion to strike, that the plaintiff has improperly alleged collateral source payments within the meaning of §§ 52-225a and 52-225b.
B. Unclean Hands
The plaintiff also alleges in its second special defense that the doctrine of unclean hands applies in the present matter because "[the defendant] retained the remaining portion of the insurance benefits paid by its insurer, but has neither remitted them to [the plaintiff], nor returned them to its insurer, notwithstanding its present claim that the services rendered by [the plaintiff] were insufficient."
"The Superior Court may administer legal and equitable rights and apply legal and equitable remedies in favor of either party in one and the same civil action so that legal and equitable rights of the parties may be enforced and protected in one action . . ." General Statutes § 52-1. "It is . . . well settled that equitable defenses or claims may be raised in an action at law." Kerin v. Udolf, 165 Conn. 264, 269, 334 A.2d 434 (1973) (examining whether equitable relief could be granted in a special defense where it was not specially pled as being in equity).
In First Fairfield Funding, LLC v. Goldman, Superior Court, judicial district of New Haven, Docket No. CV 02 0465799 (November 3, 2003, Thompson, J.) ( 35 Conn. L. Rptr. 726), a third-party defendant alleged unclean hands in a special defense. The court denied the motion to strike on the grounds that: (1) "[t]he doctrine of unclean hands exists to safeguard the integrity of the court . . . [which] is no less worthy of protection in [an] action at law, than in actions in equity" and (2) "[w]hether the doctrine of unclean hands should or should not be applied must be determined by the trier and cannot be determined on a motion to strike." (Citation omitted; internal quotation marks omitted.) Id. Similarly, in Fleet National Bank v. Squillacote, Superior Court, judicial district of New Britain, Docket No. CV 99 0497487 (October 30, 2003, Cohn, J.) ( 36 Conn. L. Rptr. 270), the defendant raised the general defense of unclean hands in a collection action. The court stated that "[c]ourts consider foreclosure actions to be in equity while collection actions are at law . . . However, the . . . Supreme Court has allowed equitable defenses to be raised in an action at law . . . [I]t is a sound principle that in a foreclosure case, equitable relief can be accorded even when the [collection] action is solely to collect the mortgage note." (Citations omitted; internal quotation marks omitted.) Id.
In light of the above, the plaintiff's assertion of the equitable doctrine of unclean hands in its second special defense is legally sufficient and the defendant's motion to strike is denied.
CT Page 16342
C. Equitable estoppel
In support of its motion to strike the plaintiff's third special defense, the defendant argues that the plaintiff has not alleged a "legally cognizable special defense." The defendant further argues that in paragraphs six through nine of the third special defense the plaintiff has not pleaded any facts consistent with the defendant's counterclaims or that demonstrate a cause of action. In its opposition, the plaintiff argues that the two elements of the doctrine of equitable estoppel have been pleaded sufficiently and the special defense "is legally cognizable because it alleges that the defendant's inequitable conduct should act to preclude it from recovering on its counterclaim." The plaintiff further argues that equitable defenses may be asserted in an action at law in Connecticut."The doctrine of equitable estoppel is well established. [W]here one, by his words or actions, intentionally causes another to believe in the existence of a certain state of things, and thereby induces him to act on that belief, so as injuriously to affect his previous position, he is concluded from averring a different state of things as existing at the time . . . Our Supreme Court . . . stated, in the context of an equitable estoppel claim, that [t]here are two essential elements to an estoppel: the party must do or say something which is intended or calculated to induce another to believe in the existence of certain facts and to act upon that belief and the other party, influenced thereby, must actually change his position or do something to his injury which he otherwise would not have done. Estoppel rests on the misleading conduct of one party to the prejudice of the other . . . Broadly speaking, the essential elements of an equitable estoppel . . . as related to the party to be estopped, are: (1) conduct which amounts to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) the intention, or at least the expectation, that such conduct shall be acted upon by, or influence, the other party or other persons; and (3) knowledge, actual or constructive, of the real facts." (Citations omitted; emphasis added; internal quotation marks omitted.) Johnnycake Mountain Associates v. Ochs, 104 Conn.App. 194, 208-09, 932 A.2d 472 (2007), cert. denied, 286 Conn. 906, 944 A.2d 978 (2008). "Moreover, it is the burden of the person claiming the estoppel to show that be exercised due diligence to ascertain the truth and that he not only lacked knowledge of the true state of things but had no convenient means of acquiring that knowledge." (Internal quotation marks omitted.) Boyce v. Allstate Ins. Co., 236 Conn. 375, 385-86, 673 A.2d 77 (1996).
In the present matter, the plaintiff has not alleged that the defendant made an intentional or calculated misrepresentation to the plaintiff which induced it to change its position to its detriment. To the contrary, the plaintiff alleges that "as a consequence of [ its own] belief, it was induced to continue to render services [to the defendant]." More specifically, the plaintiff does not allege that the defendant withheld its disclosure of dissatisfaction with the plaintiff's services with the intent of causing the plaintiff to believe that such services were satisfactory and act upon that belief to its detriment by providing further services when it otherwise would not have done so. The plaintiff's third special defense is not legally cognizable as it has not alleged the requisite elements of equitable estoppel.
CONCLUSION
The defendant's motion to strike the plaintiff's second special defense is denied as the plaintiff's reference to collateral source payments is not, under the facts alleged, prohibited by, or applicable to, the language of General Statutes §§ 52-225a and 52-225b. Further, the doctrine of unclean hands, as alleged, is a legally sufficient special defense in an action of this nature.
The motion to strike the plaintiff's third special defense is granted as the plaintiff has failed to allege the requisite elements of equitable estoppel.