Opinion
No. CV 02-0818366-S
February 18, 2004
MEMORANDUM OF DECISION ON MOTION TO STRIKE
On July 7, 2003, the plaintiffs, National Electric Coil, Inc. and National Electric Coil Co. L.P. (collectively "National"), filed a six-count revised complaint against the defendants, Schilberg Integrated Metals Corp. (SIMCO) and Bernard C. Schilberg, its C.E.O. alleging breach of contract, conversion, civil theft, negligent misrepresentation, intentional misrepresentation, and a violation of the Connecticut Unfair Trade Practices Act (CUTPA).
The revised complaint alleges the following facts:
In the spring of 2000, National entered into a contract with SIMCO, through Schilberg, in which SIMCO agreed to recycle used copper, sent to SIMCO by National on a per pound basis. Pursuant to the terms of the contract, SIMCO agreed to reprocess National's scrap copper into usable copper cathodes and release the cathodes to a third-party wire manufacturing company known as Southwire. On May 22, 2000, Bernard C. Schilberg represented to the plaintiff that cathodes or credits for cathodes would be sent by SIMCO to Southwire within thirty days of receipt of the scrap copper. From approximately May 21, 2001, through August 8, 2001 National shipped a total of 182,480 pounds of scrap copper, with a present value of $93,612, to SIMCO to be recycled. At Schilberg's direction and in violation of the contract, SIMCO failed to recycle the scrap copper; instead, it sold the copper on the open market without accounting to National for the proceeds or the copper. National further alleges that SIMCO used the proceeds to pay down SIMCO's debts. SIMCO is now in the process of winding up operations and closing down.
SIMCO and Schilberg now move to strike counts two through six of the revised complaint and the corresponding portions of the prayer for relief.
I
SIMCO moves to strike count two of the revised complaint alleging conversion on the ground that it fails to state a legally cognizable claim of conversion; in that National has failed to allege that National continued to own the copper after it delivered the copper to SIMCO or that National had a superior right to possession or to the proceeds of the sale of the copper, and that in order to do so, National would have had to allege a "bailment" relationship, or an "agency" relationship. In addition, SIMCO argues that National and SIMCO had a contract for the sale of goods under General Statutes §§ 42a-2-401(1) and 42a-2-401(2), and therefore, National no longer owned the goods because title to the scrap copper passed to SIMCO upon delivery; as such, the first element of conversion, which requires a showing that the scrap copper belonged to National, cannot be met.
Conversion occurs when one, without authorization, assumes and exercises ownership over property belonging to another, to the exclusion of the owner's rights. (Emphasis supplied.) Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 43 (2000). "The intent required for a conversion is merely an intent to exercise dominion or control over an item even if one reasonably believes that the item is one's own." Plikus v. Plikus, 26 Conn. App. 174, 180 (1991). To establish a prima facie case in conversion, National must establish that (1) the scrap copper National delivered to SIMCO belonged to National even after delivery; (2) SIMCO deprived National of the scrap copper for an indefinite period of time; (3) SIMCO's conduct was unauthorized and; (4) SIMCO's conduct harmed National. See Discover Leasing, Inc. v. Murphy, 33 Conn. App. 303, 309 (1993).
In a motion to strike, the court is limited to a consideration of the facts alleged in the complaint. A `speaking' motion to strike (one imparting facts outside the pleadings) will not be granted. Doe v. Marselle, 38 Conn. App. 360, 364 (1995), rev'd on other grounds, 236 Conn. 845 (1996); see also Rowe v. Godou, 209 Conn. 273, 278 (1988). Where the legal grounds for a motion [to strike] are dependent upon underlying facts not alleged in the plaintiff's pleadings, the defendant must await the evidence which may be adduced at trial, and the motion should be denied. Liljedahl Bros., Inc., v. Grigsby, 215 Conn. 345, 348, 576 A.2d 149 (1990).
Construing the facts alleged in the complaint in the manner most favorable to sustaining its legal sufficiency, National has properly alleged a claim against SIMCO for conversion. According to the allegations, SIMCO was not entitled to either keep or to sell the scrap copper and when SIMCO sold the scrap copper and failed to account to National, National was harmed in the amount of the lost scrap copper and whether the transaction is found to be a bailment or a contract for the sale of goods must await the evidence at trial.
Motion to strike count two for conversion is denied.
II
SIMCO moves to strike National's claim for civil theft under General Statutes § 52-564 on the ground that the third count of the revised complaint fails to state a legally cognizable claim of civil theft against SIMCO, because civil theft is equivalent to conversion plus intent and the claim for conversion is insufficient.
Section 52-564 provides that "[a]ny person who steals any property of another, or knowingly receives and conceals stolen property, shall pay the owner treble his damages."
National alleges in count three of the revised complaint that SIMCO, "through its employee(s), agent(s), and/or representatives, has wrongfully assumed and exercised the right of ownership over said copper, with the intent of depriving [National] of said copper."
Construing the facts alleged in the complaint in the manner most favorable to sustaining its legal sufficiency, National has alleged sufficient facts to satisfy the requirements of a claim of civil theft. Motion to strike Third count denied.
III
Schilberg moves to strike the fourth count of the revised complaint alleging negligent misrepresentation by him on the grounds that National fails to allege the making of a false statement or any legally cognizable claim against him. Schilberg argues that no fiduciary relationship or agent relationship existed, and that any statement made by Schilberg was not false at the time he made it.
In response, National argues that Schilberg falsely represented to National that SIMCO would send cathodes or credits for cathodes to Southwire within thirty days of receipt of the scrap copper, and thereafter, when Schilberg silently deviated from the contract by not crediting National's account, Schilberg was under a duty to disclose that material fact because a fiduciary relationship existed between Schilberg and National.
It is well settled that 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 all business relationships implicate the duty of a fiduciary. If the plaintiff and defendant have only a contractual relationship, the complaint must allege that the relationship was "marked by the unique degree of trust and confidence typically characteristic of a fiduciary relationship." Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 640, 804 A.2d 180 (2002).
There is no allegation in count four that Schilberg knew that his statement was false at the time he made it or that a fiduciary relationship existed between Schilberg and National. National's allegations claiming negligent misrepresentation simply repeat allegations in support of conversion.
Motion to strike count four and the corresponding portions of the prayer for relief are granted.
IV
Schilberg moves to strike the fifth count of the revised complaint on the ground that National fails to state any legally cognizable claim of intentional misrepresentation against Schilberg, namely that Schilberg transmitted any false information to National. Schilberg argues that National has failed to allege fraud because the complaint contains no allegation of "bad faith or deliberate lying for example, or other dishonest purpose" citing Muller v. Olympus Healthcare Group, Inc., Superior Court, judicial district of Tolland at Rockville, Docket No. CV 00 72945 (January 14, 2003, Klaczak, J.T.R.) ( 33 Conn. L. Rptr. 609).
The essential elements of a cause of action in fraud are: (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. All of these ingredients must be found to exist; and the absence of any one of them is fatal to a recovery. Anastasia v. Beautiful You Hair Designs, 61 Conn. App. 471, 477 (2001). The intentional withholding of information for the purpose of inducing action has been regarded as equivalent to a fraudulent misrepresentation. 1 Restatement (Second), Contracts § 161; Morgera v. Chiappardi, 74 Conn. App. 442, 451 (2003).
National alleges that Schilberg committed intentional misrepresentation when "he failed to notify or inform [National] that he was no longer going to send the proceeds from the sale of the scrap copper to . . . Southwire and failed to notify or inform [National) that he intended to use the proceeds from the sale of the copper [in an unauthorized manner.]" National, however, has failed to allege an essential element of the tort, i.e., that at the time that Schilberg made the alleged false statement Schilberg knew that it was untrue.
Motion to strike National's fifth count for intentional misrepresentation and the corresponding portion of the prayer for relief is granted.
V
Both defendants move to strike National's sixth count claiming a CUTPA violation because National merely alleges a breach of contract without alleging substantial aggravating circumstances attending to the breach to recover under CUTPA. SIMCO moves to strike on the additional grounds that CUTPA does not apply where the alleged wrongs may be remedied under other bodies of law.
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 — whether, 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 businessmen]. All thee 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. Thus a violation of CUTPA may be established by showing either an actual deceptive practice or a practice amounting to a violation of public policy. Journal Publishing Co. v. Hartford Courant Co., 261 Conn. 673, 695-96 (2002).
In this action, National alleges that Schilberg was a person engaged in trade or commerce; that Schilberg's actions constituted trade and or commerce; that the action constituted a pattern of unfair, unethical, immoral and deceptive acts in the conduct of his business; and that National has suffered general and specific damages as a result. It appears that National has alleged sufficient facts to support a claim for a violation of CUTPA particularly since National has alleged conversion and statutory theft counts deemed to be legally sufficient and claiming damages resulting from the lost value of the scrap copper, well beyond National's claim for breach of contract damages. See Associated Investment Co. Ltd. Partnership v. Williams Associates IV, 230 Conn. 148, 158, 645 A.2d 505 (1994).
Since National has alleged substantial aggravating circumstances which fit under at least one leg of the cigarette rule. Motion to strike count six is denied.
In summary, motion to strike counts four and five is granted. Motion to strike counts two, three and six is denied.
Wagner, J. Judge Trial Referee