Opinion
FSTCV145014241S
11-05-2015
Edan Park et al. v. Anthony DeVito, LLC et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION ON MOTION TO STRIKE
Donna Nelson Heller, J.
On May 14, 2014, the plaintiffs Edan Park and Bon Park filed an application for prejudgment remedy (#100.31), together with a proposed writ, summons, and complaint (#100.32), in which they sought a prejudgment attachment to secure the sum of $400,000 on the assets of the defendants Anthony DeVito, LLC (the LLC) and Anthony DeVito (DeVito). On or about July 28, 2014, by agreement of the parties and until further order of the court, the defendants agreed that they would not encumber, sell or transfer any personal or business assets other than in the ordinary course of business without the plaintiffs' consent (#100.87). The plaintiffs withdrew the application for prejudgment remedy on September 29, 2014 (#110.00).
The plaintiffs filed their original seven-count complaint (#106.00) on June 17, 2014. In response to the defendants' request to revise (#117.00), filed on January 16, 2015, the plaintiffs filed a revised eleven-count complaint (#118.00) on February 13, 2015. The plaintiffs' revised complaint asserts claims for breach of contract (first count, against the LLC); conversion (second count, against the LLC); statutory theft (third count, against the LLC); statutory theft (fourth count, against DeVito); negligence (fifth count, against the LLC); negligence (sixth count, against DeVito); violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a, et seq. (seventh count, against the LLC); violation of CUTPA (eighth count, against DeVito); fraudulent misrepresentation (ninth count, against DeVito); alter ego liability (tenth count, against DeVito); and an accounting (eleventh count, against the LLC).
Although the sixth count bears the caption " Negligence Against Anthony DeVito, LLC, " it is clear from the allegations that the sixth count is directed against DeVito individually.
On April 2, 2015, the defendants moved to strike all but the first count of the revised complaint, as well as any corresponding prayers for relief for treble damages, punitive damages, attorneys fees, and costs (#120.00). The defendants also filed a memorandum of law in support of their motion (#121.00). The plaintiffs filed a memorandum in opposition to the motion to strike (#124.00) on May 1, 2015. The defendants filed a reply memorandum (#126.00) on June 4, 2015.
The defendants' motion to strike was before the court on the short calendar for arguable matters on June 8, 2015. At that time, the plaintiffs consented to the motion with respect to the fifth and eleventh counts of the revised complaint. The court heard argument from counsel on the remaining counts and reserved decision on the motion.
I
The plaintiffs allege the following in the first count of the revised complaint, which is against the LLC for breach of contract. The plaintiffs allege that they entered into a contract with the LLC to perform certain alterations, improvements and other work (the renovations) on their property located at 222 Round Hill Road in Greenwich, Connecticut (the Round Hill Road property). The plaintiffs allege that the LLC agreed to furnish all labor and materials for the renovations in accordance with (i) certain drawings, specifications, and descriptions of the project, prepared by an architect and a professional engineer, and (ii) a proposal and a spreadsheet that had been personally prepared by DeVito.
The contract price for the renovations to the Round Hill Road property was $1,127,440.79. Pursuant to the contract, the plaintiffs paid a total of $560,000 to the LLC, comprised of an initial payment and additional payments that the LLC solicited from them. The plaintiffs also paid $50,000 directly to a subcontractor. The total amount of money that they paid for the renovations to be performed by the LLC was $610,000.
The plaintiffs allege that after the LLC began the renovations at the Round Hill Road property--and after the plaintiffs had paid a total of $610,000--the LLC " walked off the job." The LLC ceased performing any work at the Round Hill Road property, and it did not complete the work that was required of it pursuant to the contract. They contend that DeVito made the decision not to complete the renovations and to abandon the project. The plaintiffs claim that the amount of work that the LLC actually performed at the Round Hill Road property prior to leaving the project did not equal the $610,000 that the plaintiffs paid to the LLC or its subcontractor; to the contrary, the amount of work that the LLC actually performed at the Round Hill Road property amounted to no more than approximately $150,000.
The plaintiffs allege that the LLC breached the contract by stopping all work and activity at the Round Hill Road property before it had completed the work required of it pursuant to the contract and work that was commensurate with the $610,000 that the plaintiffs had already paid. They claim that the LLC's breach of contract was intentional; that the LLC deliberately failed to pay all of the subcontractors; and that DeVito falsely represented to them that all of the subcontractors had been paid. In particular, the plaintiffs allege that DeVito falsely represented to them that the LLC had paid a deposit of $38,000 for windows when it had not done so, and he falsely told them that the LLC had paid $57,000 for all lumber required for the project, when in fact it had not paid anything for the lumber, thereby intending to deceive the plaintiffs into paying more money. They state that the lumber company refused to deliver lumber to the Round Hill Road property unless it was paid upon delivery. The plaintiffs allege that these misrepresentations and others were made by the LLC, acting by and through its owner and manager DeVito, in order to induce the plaintiffs to pay it more money, even though DeVito and the LLC knew that they would be abandoning the project and would not be satisfying their subcontractors.
The remaining counts of the revised complaint incorporate by reference the allegations of the first count for breach of contract. In the second count of the revised complaint, for conversion against the LLC, the plaintiffs allege that the LLC converted over $400,000 of their money by taking possession of the money, and thereby assuming and exercising control over it, without providing labor or materials in return, thus interfering with the plaintiffs' right of possession of the money. They claim that the LLC intentionally converted their money, and that it intentionally solicited and accepted their money even though it knew that it did not intend to complete the work required under the contract. The plaintiffs allege that the LLC's conversion of their money was made with behavior that evinced reckless indifference to their rights, thereby entitling them to punitive damages.
In the third count of the revised complaint, for statutory theft against the LLC, the plaintiffs allege that, by taking the plaintiffs' money while not intending to complete the work required under the contract, the LLC committed larceny. They claim that the LLC schemed to defraud the plaintiffs by obtaining their money upon express misrepresentations that it or its subcontractors would engage in the work required of it, while knowing that the work would not be completed, and by misrepresenting to them that they had to pay open orders when they did not.
The plaintiffs allege that the LLC intended to take their money without fully performing the work required or paying the subcontractors, and, therefore, it had larcenous intent. They contend that the LLC, acting by and through its owner and manager DeVito, repeatedly misrepresented to them that it was current on payments to subcontractors. When the misrepresentations were made, the LLC knew that the misrepresentations were untrue, and it intentionally made the misrepresentations to induce the plaintiffs to continue making payments under the contract. In addition, the LLC refused to provide lien waivers from the subcontractors and/or other proof that the payments to the subcontractors had been made. The plaintiffs claim that DeVito lied to them about the status of payments to the subcontractors, misrepresenting that the LLC had paid its subcontractors and had paid for supplies, when it had not done so.
The plaintiffs also allege that the LLC, acting by and through its owner and manager DeVito, provided a spreadsheet to the plaintiffs, listing payments purportedly made to subcontractors, that was false because many of the subcontractors listed as having been paid had not, in fact, been paid. The plaintiffs allege that the LLC provided the spreadsheet to them to induce them to pay more money toward the contract price and to cover up the fact that it had misappropriated the money it had solicited from the plaintiffs. The plaintiffs claim that the LLC wrongfully withheld funds and property belonging to them with the intent to deprive them of those funds, retaining for its own use the money that should have been applied to payments to the subcontractors on the project and should otherwise have been used to fulfill the LLC's obligations under the contract.
In the fourth count, for statutory theft against DeVito, the plaintiffs claim that the LLC committed larceny by taking the plaintiffs' money while not intending to complete the work required under the contract. The plaintiffs allege that DeVito, acting as the sole owner and manager of the LLC, schemed to defraud them by obtaining their money on express misrepresentations that the LLC or its subcontractors would engage in the work required of it, while knowing that the work would not be completed. The plaintiffs allege that DeVito intended to take their money without fully performing the work required of the LLC and, therefore, had larcenous intent. They contend that DeVito repeatedly misrepresented to them that the LLC was current on its payments to the subcontractors, when he knew that such representations were untrue and intentionally made to induce the plaintiffs to continue making payments under the contract. The plaintiffs also allege that DeVito provided a spreadsheet to them which listed payments he claimed to have made to subcontractors, but the spreadsheet was false because many of the subcontractors he listed as having been paid had not, in fact, been paid. The plaintiffs claim that DeVito wrongfully withheld funds and property belonging to them, with the intent to deprive them of the funds, by retaining for his own use the funds that should have been applied to payments to the subcontractors on the project and should have otherwise been used to fulfill the LLC's obligations under the contract.
The allegations of the fifth count are not before the court, because the plaintiffs consented to the motion to strike with respect to that count prior to the argument on June 8, 2015.
In the sixth count of the revised complaint, for negligence against DeVito, the plaintiffs allege that DeVito directed the work performed at the Round Hill Road property in a negligent and substandard manner. They claim that DeVito allowed, or failed to prevent, the placement of a large pile of dirt and debris on top of the septic system, contrary to well-known and sensible standards within the construction industry, thus causing the septic system to become compromised. They allege that DeVito failed to direct the installation of a berm at the perimeter of the Round Hill Road property, which was required by the plans and specifications to keep water off the property, also thereby causing the septic system to become compromised. They contend that DeVito failed to ensure that vents were installed in the foundation that the LLC poured, contrary to the plans and specifications for the foundation, as well as to well-known and sensible standards within the industry; he failed to ensure that a slab was poured under a crawl space; he failed to make sure that decking on top of the foundation was properly squared; and he committed other negligent acts and defalcations. The plaintiffs claim that these acts and others were negligent in that DeVito fell below the standard of care required of a reasonably prudent owner and manager of a home improvement contractor in his position and of a reasonably prudent person overseeing a home improvement renovation and construction project. The plaintiffs allege that DeVito personally directed the negligent acts and omissions that caused damage to them, and he is, therefore, liable to them for all of the damages they suffered as a result of his substandard and faulty work and supervision at the Round Hill Road property.
In the seventh count of the revised complaint, the plaintiffs allege that the LLC violated CUPTA. They claim that the LLC was and is engaged in trade and commerce by offering for sale and providing home improvement services to consumers, including the plaintiffs, and that, in offering for sale and providing the trade and commerce services to them, the LLC engaged in unfair and deceptive acts and practices, including but not limited to: intentionally soliciting additional monies from the plaintiffs, while knowing (i) that it would not complete the required work, and (ii) that the amounts that it solicited and received from the plaintiffs far exceeded the value of the labor and materials actually performed; intentionally lying to the plaintiffs and misrepresenting that it had paid subcontractors when it had not done so; intentionally lying to the plaintiffs and misrepresenting that it had paid a deposit of approximately $38,000 for windows and paid $57,000 for lumber when it had not, as well as other misrepresentations; being deceitful as to the status of the work performed; intentionally walking off the job prior to completing the project; and failing to satisfy and pay all subcontractors, thereby intentionally or recklessly exposing the plaintiffs to mechanics liens and potential liability to the subcontractors. The plaintiffs allege that as a result of the LLC's unfair and deceptive acts or practices, they have suffered an ascertainable loss of money.
In the eighth count of the revised complaint, the plaintiffs reiterate the allegations of the CUTPA claim that were set forth against the LLC in the seventh count and assert a claim for violation of CUTPA against DeVito individually. They allege that as a result of DeVito's unfair and-deceptive acts or practices, they have suffered an ascertainable loss of money.
In the ninth count of the revised complaint, the plaintiffs assert a claim for fraudulent misrepresentation against DeVito individually. They claim that during the course of the renovation project, DeVito made a number of false representations to them, including that the LLC had paid all subcontractors, that the LLC had placed a deposit of approximately $38,000 for windows, and that the LLC had paid $57,000 for lumber. The plaintiffs allege that DeVito was deceitful with the plaintiffs as to the status of the work performed by the LLC. They contend that DeVito prepared and gave to them a spreadsheet that stated that the LLC had already paid a number of subcontractors, when it had not, and indicated that there were open orders in the amount of $564,533 to be paid, when in fact there were no open orders. According to the plaintiffs, the statements on the spreadsheet were untrue, and DeVito knew that they were untrue at the time that he made them and when he gave the spreadsheet to the plaintiffs. They claim that the statements on the spreadsheet were made for the purpose of inducing the plaintiffs to pay more money to the LLC, even though DeVito knew that the LLC had not used the money that it had received from the plaintiffs to satisfy the subcontractors and knew that the LLC did not have open orders that had to be paid. The plaintiffs allege that they reasonably relied upon DeVito's false statements when they provided the LLC with additional funds, and that they reasonably relied upon the false statements to their detriment.
The allegation that the plaintiffs relied upon DeVito's false statements when they provided additional funds to the LLC is not included in the other counts of the revised complaint.
The tenth count of the revised complaint is for alter ego liability against DeVito. The plaintiffs allege that DeVito is the sole owner of the LLC, holding all of the ownership and membership units. They contend that DeVito has complete control and dominion over the finances of the LLC and complete control and dominion over the policies and business practices of the LLC. The plaintiffs allege that all of the acts and omissions set forth in the revised complaint were perpetrated by DeVito personally, and that he was personally involved in all of the conversions, misrepresentations, and statutory violations set forth in the revised complaint. The plaintiffs allege that DeVito's control of the finances, policies and business practices of the LLC was used by him to commit fraud and wrongs upon them, to perpetrate the violation of statutory and other legal duties that the LLC owed to them, and to commit dishonest or unjust acts in contravention of their rights. They claim that DeVito's control over the LLC proximately caused their injury and unjust loss.
The plaintiffs allege that the LLC is the alter ego of DeVito personally and that it has no separate mind, will or existence of its own. They claim that the LLC is the instrumentality or agent of DeVito, who owns all of its ownership interest, and the LLC serves no legitimate purpose other than as an intermediary to perpetrate a fraud upon the plaintiffs and thereby promote an injustice. The plaintiffs seek to have the court disregard the fiction of the separate entity of the LLC and hold DeVito individually liable to satisfy any and all liabilities attributed to the LLC.
The allegations of the eleventh count are not before the court, because the plaintiffs consented to the motion to strike with respect to that count prior to the June 8, 2015 argument on the defendants' motion.
II
" 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." (Citation 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 . . . The role of the trial court in ruling on a motion to strike is to examine the [complaint], construed in favor of the [plaintiff], to determine whether the [pleading party has] stated a legally sufficient cause of action." (Citation omitted; internal quotation marks omitted.) Coe v. Board of Education, 301 Conn. 112, 116-17, 19 A.3d 640 (2011). " A motion to strike attacks the legal sufficiency of the allegations in a pleading . . . In reviewing the sufficiency of the allegations in a complaint, courts are to assume the truth of the facts pleaded therein and to determine whether those facts establish a valid cause of action." (Citation omitted; internal quotation marks omitted.) Kortner v. Martise, 312 Conn. 1, 47-48, 91 A.3d 412 (2014). " 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.) Santorso v. Bristol Hospital, 308 Conn. 338, 349, 63 A.3d 940 (2013). " In ruling on a motion to strike, the court is limited to the facts alleged in the complaint." (Citation omitted; internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997).
A
The defendants move to strike the second count of the plaintiffs' revised complaint--the conversion claim against the LLC--on the ground that the claim involves an indebtedness that may be discharged by the payment of money generally and is, therefore, not properly the subject of an action for conversion. The defendants also contend that the LLC was authorized to receive the money from the plaintiffs pursuant to the contract; thus its receipt does not constitute a conversion. In response, the plaintiffs argue that they have properly pleaded a claim for conversion because the defendants solicited funds from them in an initial wrongful taking, in that the money was solicited under false pretenses. They also claim that the taking constituted a conversion because the money was not used for its intended purpose.
" The tort of [c]onversion occurs when one, without authorization, assumes and exercises ownership over property belonging to another, to the exclusion of the owner's rights." (Emphasis in original; internal quotation marks omitted.) Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 43, 761 A.2d 1268 (2000). " Conversions may be grouped into two general classes: (1) those where the possession is originally wrongful, and (2) those where it is rightful and subsequently becomes wrongful. Under the first class, wrongful use and the unauthorized dominion constitute the conversion; therefore no demand for the return of the personal property is required. Under the second class, since the possession is rightful and there is no act of conversion, there can be no conversion until the possessor refuses to deliver up the property upon demand." Label Systems Corp. v. Aghamohammadi, 270 Conn. 291, 331 n.30, 852 A.2d 703 (2004). " The essence of the wrong is that the property rights of the plaintiff have been dealt with in a manner adverse to him, inconsistent with his right of dominion and to his harm." (Internal quotation marks omitted.) Id. at 329.
The plaintiffs allege that the LLC wrongfully obtained their money because DeVito, on behalf of the LLC, intentionally misrepresented that the subcontractors had been paid and open orders for materials existed in order to solicit funds from them, despite knowing that the LLC would not complete the renovations. The plaintiffs claim that the LLC interfered with their right of possession of the money by taking the money and assuming and exercising control over it, without providing labor or materials in return.
" [M]oney can clearly be subject to conversion . . . The plaintiffs must establish, however, legal ownership or right to possession of specifically identifiable moneys." (Citations omitted; internal quotation marks omitted.) Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745, 771-72, 905 A.2d 623 (2006). " [T]he requirement that the money be identified as a specific chattel does not permit as a subject of conversion an indebtedness which may be discharged by the payment of money generally . . . Consistent with this rule, in our case law sustaining a cause of action wherein money was the subject of the conversion or theft the plaintiffs in those cases at one time had possession of, or legal title to, the money." (Citations omitted; internal quotation marks omitted.) Id. at 772.
In addressing the question of whether, and under what circumstances, money may be subject to conversion, one of the primary considerations is whether other factors are present that make the claim more than one for breach of contract. In Bratter v. Nova 22 Construction, Inc., Superior Court, judicial district of Hartford, Docket No. CV-12-6033502-S (March 27, 2014, Huddleston, J.), the plaintiff alleged that she entered into a home improvement contract with the defendants and paid them $14,800 pursuant to the contract. She claimed that the defendants did not complete the work under the contract and left their work unprotected from the elements, thus causing severe property damage. The plaintiff contended that the defendants' breach of contract and their acceptance of money from her for work they promised to complete constituted a conversion, because the defendants assumed and exercised ownership over her money without authority and to the exclusion of her right to the money or with reckless indifference to her rights. The court found that the plaintiff had failed to state a claim for conversion because she paid the money to the defendants in accordance with the contract, and she alleged that some work was completed pursuant to the contract. The court determined that the plaintiff's cause of action was for breach of contract, not conversion, and granted the defendants' motion to strike. See Valencis v. Nyberg, 160 Conn.App. 777 (2015) (affirming trial court determination of probable cause on application for prejudgment remedy for, inter alia, conversion claim where defendants failed to account for or return the monies despite knowledge that funds had not been expended as promised); Miller v. Guimaraes, 78 Conn.App. 760, 829 A.2d 422 (2003) (affirming trial court finding that defendants had committed conversion where deposits were solicited in advance of entering into contract by false pretenses); Altorelli v. Sawyer, Superior Court, judicial district of Danbury, Docket No. CV-07-5002713-S (February 19, 2009, Shaban, J.) (court awarded damages to plaintiff on conversion count where plaintiff alleged that defendant refused to return advance payment, and defendant admitted that money should be returned).
The court granted the motion to strike on the additional ground that a claim for conversion of money must refer to " specifically identifiable moneys" and that a claim of conversion is inappropriate where the basis of the suit is in contract. Bratter v. Nova 22 Construction, Inc., supra, Superior Court, Docket No. CV-12-6033502-S.
The plaintiffs incorporate the allegation of their claim for breach of contract into their claim for conversion and allege that the funds paid to the LLC pursuant to the contract were converted because DeVito, on behalf of the LLC, solicited the funds from them through trickery and deception, in an initial wrongful taking. In their contract claim, however, the plaintiffs allege that they entered into a home improvement contract with the LLC in the amount of $1,127,440.79 and paid the LLC $560,000 pursuant to the contract. The plaintiffs also allege, as in Bratter, that some of the work that the LLC was to perform under the contract had been completed. There is no allegation in the first count or the second count that the plaintiffs were induced to pay additional monies to the LLC by DeVito's misrepresentations.
Accordingly, because the plaintiffs allege that they paid the money at issue to the LLC pursuant to the contract, and they do not contend in their claim for conversion that they paid the LLC any additional funds as a result of DeVito's misrepresentations, the plaintiffs have not sufficiently pleaded that the LLC wrongfully solicited or received the money. The plaintiffs have, therefore, failed to state a cause of action for conversion. The motion to strike the second count of the revised complaint is granted.
B
The defendants move to strike the third count of the revised complaint--against the LLC for statutory theft under General Statutes § 52-564--and any related prayer for relief on the ground that a claim for statutory theft cannot stand without an underlying claim for conversion. The defendants also claim that the plaintiffs failed to sufficiently plead the element of intent. The plaintiffs maintain that a claim for conversion is not a precondition to a claim for statutory theft, and that, in any event, they have properly pleaded both their conversion claim and their statutory theft claim.
" Statutory theft under § 52-564 is synonymous with larceny under General Statutes § 53a-119 . . . Pursuant to § 53a-119, [a] person commits larceny when, with the intent to deprive another of property or to appropriate the same to himself or a third person, he wrongfully takes, obtains or [withholds] such property from an owner . . . Conversion can be distinguished from statutory theft as established by § 53a-119 in two ways. First, statutory theft requires an intent to deprive another of his property; second, conversion requires the owner to be harmed by a defendant's conduct. Therefore, statutory theft requires a plaintiff to prove the additional element of intent over and above what he or she must demonstrate to prove conversion." (Internal quotation marks omitted.) Deming v. Nationwide Mutual Ins. Co., supra, 279 Conn. at 771. " [I]ntent may be inferred by the [trier of fact] from the conduct of the defendant." (Internal quotation marks omitted.) Masse v. Perez, 139 Conn.App. 794, 799, 58 A.3d 273 (2012), cert. denied, 308 Conn. 905, 61 A.3d 1098 (2013).
" In order for the plaintiff to maintain a cause of action for statutory theft, he must prove all elements of conversion. Conversion is closely related to statutory theft, in that statutory theft requires the pleading of similar elements, with the addition of the element of intent." Fiume v. Wiremold Co., Superior Court, judicial district of Hartford, Docket No. CV-05-4014882 (September 29, 2006, Tanzer, J.) (42 Conn. L. Rptr. 94); see also News America Marketing In-Store, Inc. v. Marquis, 86 Conn.App. 527, 546, 862 A.2d 837 (2004), aff'd on other grounds, 276 Conn. 310, 885 A.2d 758 (2005) (" Because liability for conversion is a precondition to a finding of liability for treble damages under § 52-564 and because the plaintiff failed to establish a prima facie case for its claim of conversion, we also conclude that the court properly determined that § 52-564 did not apply in this case").
As set forth above, the plaintiffs have failed to plead a legally sufficient cause of action for conversion against the LLC. Because the elements of conversion, plus intent, must be adequately alleged in order to maintain a cause of action for statutory theft under General Statutes § 52-564, the plaintiffs have also failed to plead a legally sufficient cause of action against the LLC for statutory theft. The motion to strike the third count of the revised complaint is granted.
C
The defendants move to strike the fourth count of the revised complaint--against DeVito individually for statutory theft under General Statutes § 52-564 and any related relief on the ground that a claim for conversion is a prerequisite for a claim for statutory theft, and the plaintiffs have not asserted a conversion claim against DeVito. The defendants also argue that even if the conversion claim set forth in the second count against the LLC is imputed to DeVito, it fails to state a claim for which relief can be granted in any event--as the court has so found in part II, A above.
The plaintiffs assert that they have adequately pleaded the statutory theft claim against DeVito. The plaintiffs allege that the acts that gave rise to their claim for statutory theft against DeVito were committed by him on behalf of the LLC. They maintain that DeVito did not act simply in his capacity as a corporate officer, but rather was personally engaged in the fraudulent acts, and, therefore, he may be held individually liable for damages.
The statutory theft claim against DeVito suffers from the same shortcomings as the conversion claim and the statutory theft claim against the LLC. As discussed above, the plaintiffs allege that they entered into a contract with the LLC for renovations to the Round Hill Road property, and that they made payments to the LLC pursuant to that contract. They do not claim in the fourth count that they paid additional monies to DeVito on the basis of his alleged misrepresentations, or that they demanded that DeVito return their money, and he refused to do so. The allegations are legally insufficient to establish a claim for statutory theft against DeVito under General Statutes § 52-564. The motion to strike the fourth count of the revised complaint is granted.
D
The defendants move to strike the sixth count of the revised complaint--against DeVito individually for negligence--on the ground that it is barred by the economic loss doctrine. They also claim that the plaintiffs fail to allege any duty that DeVito owed to them. Additionally, the defendants argue that because the plaintiffs agreed that the court should strike the negligence claim against the LLC set forth in the fifth count, and the allegations in that count are similar to those alleged against DeVito in the sixth count, the negligence claim against DeVito should be stricken as well.
" [T]he essential elements of a cause of action in negligence are well established: duty; breach of that duty; causation; and actual injury . . . Duty is a legal conclusion about relationships between individuals, made after the fact, and [is] imperative to a negligence cause of action . . . Thus, [t]here can be no actionable negligence . . . unless there exists a cognizable duty of care . . . [T]he test for the existence of a legal duty of care entails (1) a determination of whether an ordinary person in the defendant's position, knowing what the defendant knew or should have known, would anticipate that harm of the general nature of that suffered was likely to result, and (2) a determination, on the basis of a public policy analysis, of whether the defendant's responsibility for its negligent conduct should extend to the particular consequences or particular plaintiff in the case . . ." (Citation omitted; internal quotation marks omitted.) Cannizzaro v. Marinyak, 312 Conn. 361, 366, 93 A.3d 584 (2014). " To survive a motion to strike, the court must determine that the defendants owed a duty to the [plaintiffs] . . . The existence of [a] duty is a matter for the court to decide, not a jury." Gordon v. Bridgeport Housing Authority, 208 Conn. 161, 171, 544 A.2d 1185 (1988). " Since the existence of a duty raises a question of law, the question of whether a defendant owed a duty of care to an injured party is properly decided in the context of a motion to strike." Granja v. Middlebury Congregational Church, Superior Court, judicial district of Waterbury, Docket No. CV-12-6012892-S (October 31, 2012, Shapiro, J.) (54 Conn. L. Rptr. 917).
A " [d]uty of care is an essential element of negligence and may arise from a contract, a statute or circumstances. When negligent construction is alleged the plaintiff must prove that the defendant knew or should have known of the circumstances that would foreseeably result in the harm suffered . . . Accordingly, a builder is under a duty to exercise that degree of care that an ordinary builder of ordinary prudence would have exercised under similar circumstances." (Citations omitted; internal quotation marks omitted.) Liguori v. GVA, Inc., Superior Court, judicial district of New Haven, Docket No. CV-04-46483-S (September 19, 2001, Zoarski, J.T.R.) (30 Conn. L. Rptr. 448). " The law imposes on builders the duty of care of a similarly situated builder." Id.
In Liguori, the defendant moved to strike the plaintiffs' claim for negligence on the ground that the plaintiffs failed to plead a duty. The plaintiffs alleged that the home improvements were completed " in a negligent and unworkmanlike manner in breach of [the] duty [of care of a similarly situated builder]" and that as a result the plaintiffs' home suffered water damage. Id. The court determined those allegations were legally sufficient and denied the motion to strike.
In the sixth count of the revised complaint, the plaintiffs allege that DeVito directed the labor and work of the LLC " in a negligent and substandard manner." They further allege that DeVito's negligence caused damage to the Round Hill Road property's septic system, resulted in the foundation being poured contrary to industry standards and not properly squared, and caused the LLC to fail to follow the plans and specifications for the renovations. The plaintiffs specifically allege that DeVito's actions " fell below the standard of care required of a reasonably prudent owner and manager of a home improvement contractor in its position, and of a reasonably prudent person overseeing a home improvement renovation and construction project." The court finds that the plaintiffs have alleged a duty owed by DeVito to the plaintiffs sufficient to state a cause of action for negligence.
The defendants next argue that the economic loss doctrine is applicable and bars the plaintiffs' negligence claim against DeVito. " The economic loss doctrine bars negligence claims for commercial losses arising out of the defective performance of contracts . . . The rationale for the doctrine is that, because parties to a contract are free to allocate the risks, insure against potential losses, and adjust the contract price as they [deem] most wise . . . courts will not extricate them from their bargain and substitute a common-law tort remedy." (Citations omitted; internal quotation marks omitted.) Ulbrich v. Groth, 310 Conn. 375, 390 n.14, 78 A.3d 76 (2013). The economic loss doctrine does not bar tort claims that are independent of a contract claim. Id. at 404. Whether the plaintiffs' negligence claim against DeVito individually is barred by the economic loss doctrine depends on whether the claim is independent of the breach of contract claim.
The plaintiffs incorporate the allegations of the breach of contract claim into their negligence claim against DeVito, but they do not allege that DeVito personally entered into a contract with them or that he individually was required to perform specific affirmative obligations under the contract. The negligence claim asserted against DeVito is independent of the breach of contract claim against the LLC; therefore, the economic loss doctrine is not applicable here. The motion to strike the sixth count of the complaint is denied.
E
The defendants move to strike the seventh count of the revised complaint--against the LLC for violation of CUTPA, General Statutes § 42-110a, et seq.--and any related relief on the grounds that the conclusory allegations lack the specificity and nexus required to show that the alleged acts rise to the requisite level of unfairness and deceptiveness; the allegations amount to a simple breach of contract claim, without any aggravating circumstances; and the claim is barred by the economic loss doctrine. The plaintiffs respond that they have pleaded specific aggravating factors, including the LLC's intentional misrepresentation, deceptive solicitation of monies, deceit in discussing the status of the project, and abandoning the work before completion. These aggravating factors, the plaintiffs argue, are sufficient to satisfy the " cigarette rule" articulated by the Federal Trade Commission, and, therefore, they have stated a claim for violation of CUTPA against the LLC. The plaintiffs also contend that the economic loss doctrine does not bar a CUTPA claim that is accompanied by aggravating factors.
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." General Statutes § 42-110b(a). As our Supreme Court has observed, " [i]t is well settled that in determining whether a practice violates CUTPA we have adopted the criteria set out in the cigarette rule by the [F]ederal [T]rade [C]ommission 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] . . . 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 . . . 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 . . ." Ulbrich v. Groth, supra, 310 Conn. at 409. " Conduct that has been held to be substantial aggravating circumstances sufficient to support CUTPA claims includes fraudulent representations, fraudulent concealment, false claims . . . and multiple breaches of contract." (Internal quotation marks omitted.) Sires v. Linden Shores Ass'n, Superior Court, judicial district of Hartford, Docket No. X04-CV-14-6054149-S (January 28, 2015, Sheridan, J.).
The plaintiffs allege that the LLC deliberately breached the contract with the intent to deceive the plaintiffs. They claim that the LLC intentionally sought additional money from the plaintiffs despite knowing that it would not complete the project and that the amounts sought exceeded the value of their work. They also allege that the LLC intentionally lied and misrepresented the status of the project, including misrepresenting that orders for materials had been placed and subcontractors had been paid, thus exposing the plaintiffs to liability to the subcontractors. Examining the allegations of the complaint in a light most favorable to the plaintiffs, the court finds that the plaintiffs have alleged sufficient aggravating factors to state a cause of action for a violation of CUTPA.
The court further finds that the plaintiffs' CUTPA claim against the LLC is not barred by the economic loss doctrine. " [T]he economic loss doctrine does not bar claims arising from a breach of contract . . . when the plaintiff has alleged that the breach was accompanied by intentional, reckless, unethical or unscrupulous conduct." Ulbrich v. Groth, supra, 310 Conn. at 412. The motion to strike the seventh count of the revised complaint is denied.
F
The defendants move to strike the eighth count of the revised complaint--against DeVito individually for violation of CUTPA--and any related relief on the same grounds as asserted in support of striking the seventh count against the LLC under CUTPA. The plaintiffs allege that DeVito committed substantially similar intentional acts as those alleged against the LLC, and that he did so as a representative of the LLC. A principal of a corporate entity can be held individually liable under CUTPA for the corporation's acts in violation of the statute. Joseph General Contracting, Inc. v. Couto, 317 Conn. 565, 119 A.3d 570 (2015). The motion to strike the eighth count of the revised complaint is denied.
G
The defendants move to strike the ninth count of the revised complaint--against DeVito individually for intentional misrepresentation--on the ground that the claim is barred by the economic loss doctrine. As discussed above, " the economic loss doctrine bars negligence claims that arise out of and are dependent on breach of contract claims that result only in economic loss." Ulbrich v. Groth, 310 Conn. at 410. The plaintiffs do not allege that they had a contractual relationship with DeVito personally; therefore, the economic loss doctrine has no application here. The motion to strike the ninth count of the revised complaint is denied.
In the motion to strike, the defendants identify the economic loss doctrine as the only ground for the motion to strike the ninth count. In their memorandum in support, however, the defendants include one sentence and a footnote in which they contend that the allegations in the ninth count are conclusory and upon this ground alone the count fails. " Where an issue is merely mentioned, but not briefed beyond a bare assertion of the claim, it is deemed waived." Bridgeport Hospital v. Commission on Human Rights & Opportunities, 232 Conn. 91, 115, 653 A.2d 782 (1995). Accordingly, the court will consider only the defendants' argument with respect to the economic loss doctrine.
H
The defendants move to strike the tenth count of the revised complaint--against DeVito for alter ego liability--on the grounds that the allegations are merely legal conclusions and lack a sufficient factual basis to support piercing the corporate veil. Specifically, the defendants contend that the plaintiffs have failed to plead any facts to show how DeVito dominated and controlled the LLC; how DeVito's control injured the plaintiffs; how the LLC as a company served no legitimate purpose and how DeVito failed to adhere to corporate formalities or maintain separate identities between himself and the LLC. The plaintiffs maintain that they have adequately alleged sufficient facts to satisfy the elements of the instrumentality and the identity rules, and, therefore, have stated a cause of action for piercing the corporate veil.
" A court may pierce the corporate veil only under exceptional circumstances . . ." KLM Industries, Inc. v. Tylutki, 75 Conn.App. 27, 31, 815 A.2d 688, cert. denied, 263 Conn. 916, 821 A.2d 770 (2003). As our Appellate Court explained, " [w]hen determining whether piercing the corporate veil is proper, our Supreme Court has endorsed two tests: the instrumentality test and the identity test. The instrumentality rule requires, in any case but an express agency, proof of three elements: (1) Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) that such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of plaintiff's legal rights; and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of . . . The identity rule has been stated as follows: If a plaintiff can show that there was such a unity of interest and ownership that the independence of the corporations had in effect ceased or had never begun, an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise." Id. at 31-32.
A claim for alter ego liability must allege, at a minimum, a sufficient factual basis for the court to pierce the corporate veil, whether the claim is asserted under the instrumentality rule or the identity rule. In either case, a motion to strike a claim seeking to pierce the corporate veil will be granted where a plaintiff has alleged legal conclusions rather than facts. Although the plaintiffs have combined their allegations as to DeVito's alter ego liability under the instrumentality rule with their allegations under the identity rule in the tenth count of the revised complaint, the court will address each rule in turn.
Under the instrumentality rule, " [t]he corporate veil will be pierced when the corporate entity has been so controlled and dominated that justice requires liability to be imposed on the real actor." (Citation omitted; internal quotation marks omitted.) United Electrical Contractors, Inc. v. Progress Builders, Inc., 26 Conn.App. 749, 755, 603 A.2d 1190 (1992). In Harris v. Kupersmith, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-08-6000995-S (August 31, 2009, Adams, J.), the plaintiff claimed that the individual defendant diverted the assets of two limited liability companies for his own personal use; employed the plaintiff to handle his private mail, bank accounts and other personal matters; paid the plaintiff with corporate assets; purchased a share in a private jet with corporate assets and then used this jet to provide transportation for his family and friends; and personally decided not to pay the plaintiff the deferred compensation at issue. The court denied a motion to strike and found the allegations were sufficient to show a sufficient factual basis to pierce the corporate veil. See also Presti v. Sorbo, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-96-0151172-S(December 18, 1996, Ryan, J.) (denying motion to strike counts seeking to pierce corporate veil when plaintiff alleged that individual defendant, acting as corporate president, hired him, promised him payment, failed to pay him, and spent corporate assets to purchase vehicle, all of which resulted in specified injury to plaintiff).
" An allegation that the individual defendant is a high-ranking official within a company, or even its controlling or sole shareholder, is not sufficient to demonstrate the complete domination of the company required to satisfy the first element of the instrumentality test." (Citation omitted; internal quotation marks omitted.) Ward v. RAK Construction, LLC, Superior Court, judicial district of Ansonia-Milford, Docket No. CV-09-5010067-S (April 8, 2010, Bellis, J.). In Ward, the plaintiffs alleged that the corporate defendant had been completely dominated in policy and business practices by the individual defendant; it was a mere shell for the individual defendant and served no legitimate purpose; and it was used primarily as an intermediary to perpetrate fraud or to promote injustice. They also alleged that the individual defendant used such control in contravention of the plaintiffs' legal rights. The court found that allegations that the individual defendant owned 100 percent of the interest in the corporate defendant and was its sole member were " insufficient to satisfy the first element of the instrumentality test because these allegations do not establish that [the individual defendant's] control reached the necessary level of complete domination. Moreover, the plaintiffs . . . failed to allege facts which show how [his] control and domination of [the corporate defendant] proximately caused the injuries or unjust losses complained of. The plaintiffs' remaining allegations constitute little more than a recital of some of the elements of the instrumentality rule." Id. The court granted the motion to strike on the ground that the plaintiffs alleged mere conclusions of law that were unsupported by the facts set forth in the complaint. See also Fischer v. Bella-Vin Development, LLC, Superior Court, judicial district of Danbury, Docket No. CV-07-5003012-S (October 10, 2008, Shaban, J.) (allegations that individual defendant was controlling member of the corporate defendant at all relevant times, and that any act or omission by the corporate defendant was done by the individual defendant, did not satisfy instrumentality rule; allegations did not establish that individual defendant's control reached necessary level of complete domination).
A plaintiff seeking to pierce the corporate veil under the identity rule must allege facts to show that there was such a " unity of interest and ownership that the independence of the corporation had in effect ceased or had never begun." Pompilli v. Pro-Line Painting, Superior Court, judicial district of New Haven, Docket No. CV-04-4001774-S (May 13, 2005, Lopez, J.) (39 Conn. L. Rptr. 347). In Pompilli, the plaintiff alleged that the sole member of a limited liability company was the alter ego of the corporate defendant through commingling corporate funds with his own funds and failing to observe the legal formalities required of a limited liability company and was, therefore, liable for the debts of the corporate defendant. The court granted the defendants' motion to strike, finding that the plaintiff had set forth no facts to support these legal conclusions.
The court granted a motion to strike in Girouard v. R.I. Pools, Inc., Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-07-5004474-S, (January 6, 2009, Adams, J.) on similar grounds. In Girouard, the plaintiff alleged that the individual defendant was the president and sole shareholder of the corporation; that at all relevant times, he was in complete domination of the finances, policy and business practices of the corporation, and that all representations concerning the proposals and contract for the construction of the pool were made by and through the individual defendant. The court found that these allegations were " insufficient to show a unity of interest and ownership such that the line between corporate officer and corporation is so barely visible that piercing the corporate veil is justified; . . . no specific facts [were] alleged to demonstrate how the [individual defendant] disregarded corporate formalities or failed to maintain separate identities." Id.
The plaintiffs allege that DeVito is the sole owner of the LLC; that he owns all of the ownership and membership units of the LLC; and that he has complete control and domination over the finances, policies, and business practices of the LLC. They claim that all of the acts and omissions alleged in the revised complaint were perpetrated by DeVito, individually, and he was personally involved in all of the thefts, conversions, misrepresentations, and statutory violations set forth therein. They contend that DeVito's control of the finances, policies and business practices of the LLC was used by him to commit a fraud or wrong upon the plaintiffs, to perpetrate the violation of statutory and other legal duties that the LLC owed to the plaintiffs, and to commit dishonest or unjust acts in contravention of the plaintiffs' rights. The plaintiffs further allege that DeVito is the alter ego of the LLC, and it has no separate mind, will or existence of its own. They claim that the LLC is the mere instrumentality or agent of DeVito, and it serves no legitimate purpose other than as an intermediary to perpetrate fraud upon the plaintiffs and thereby promote and injustice. They allege that DeVito's control over the LLC proximately caused their injury and loss.
These conclusory allegations constitute nothing more than a recital of the elements of the instrumentality and identity rules. No facts are alleged in the revised complaint to support these legal conclusions. " Courts have repeatedly granted motions to strike piercing the corporate veil counts where legal conclusions rather than facts are alleged." Jannetty Racing Enterprises, Inc. v. Site Development Technologies, LLC, Superior Court, judicial district of Waterbury, Docket No. CV 05 4004820, (January 31, 2006, Brunetti, J.). Accordingly, the motion to strike the tenth count of the revised complaint is granted.
III
For the reasons set forth above, the defendants' motion to strike (#120.00) is GRANTED IN PART and DENIED IN PART, as follows:
1. The motion to strike the second count of the revised complaint is granted.
2. The motion to strike the third count of the revised complaint is granted.
3. The motion to strike the fourth count of the revised complaint is granted.
4. The motion to strike the fifth count of the revised complaint is granted by agreement.
5. The motion to strike the sixth count of the revised complaint is denied.
6. The motion to strike the seventh count of the revised complaint is denied.
7. The motion to strike the eighth count of the revised complaint is denied.
8. The motion to strike the ninth count of the revised complaint is denied.
9. The motion to strike the tenth count of the revised complaint is granted.
10. The motion to strike the eleventh count of the revised complaint is granted by agreement.