Opinion
UWYCV176034449S
08-23-2018
Samnang PHAL v. Maximus B. MAM et al.
UNPUBLISHED OPINION
OPINION
Brazzel-Massaro, J.
The Plaintiff brought this action by way of complaint, writ and summons dated April 3, 2017. The original complaint named as the only defendant Maximus Mam. Thereafter, the Plaintiff requested to cite in Sereyvuth Mam and Mam & Phal, LLC as defendants. The court granted the motion to cite in on August 14, 2017 and the return of service for these defendants was filed on August 31, 2017. The Amended Complaint naming all three defendants with the separate counts was dated July 6, 2017. The defendant filed a Request to Revise and the plaintiff filed a Revised Complaint dated December 6, 2017. This is the operative complaint for purposes of the present motion to strike which was filed by the defendants on December 7, 2017. The motion addresses counts Eight and Thirteen of the Revised Complaint. The defendant contends that the claim of CUTPA alleged in these counts is inapplicable in a claim concerning purely intracompany matters between alleged members of a limited liability company. The plaintiff has filed a memorandum in opposition dated January 3, 2018.
FACTUAL BACKGROUND
The plaintiff, Samnang Phal, has filed this action alleging thirteen separate causes of action in the Revised Complaint which are based upon the formation and operation of a liquor store known as Northridge Wines and Liquors. The plaintiff and defendant are related in that the defendant is Phal’s Brother-in-law. The plaintiff alleges the following facts. On or about April 24, 2006 the plaintiff and Mam entered into an agreement to form, organize and operate a Connecticut limited liability company for the purpose of owning and operating a retail liquor store known as Northridge Wines and Liquors. The agreement provided for 10% interest in the LLC in addition to 10% of the yearly gross sales and a salary of $20.00 per hour for his work in the store. Phal allowed Mam to handle all paperwork concerning the LLC and the operation of the retail store. Phal worked in the store from the formation in 2006 until September 2015. He alleges that during the period of time he worked the defendant did not address his requests for information concerning the gross sales and his interest in the LLC as well as the salary deficiencies, and responded that his monies were being held for him. The plaintiff never received an accounting for payments in accordance with the agreement and alleges the defendant continually promised to pay the monies due and owing but had no intention of providing full salary and interest for sales and his percentage of ownership.
Counts one through eight are directed to the defendant Maximus Mam. They are: Count one is a claim of Breach of Contract, count two is a claim of tortious intentional misrepresentation, count three is a claim of breach of fiduciary duties, count four is a claim of tortious conversion, count five alleges theft, count six alleges fraud, count seven alleges breach of implied covenant of good faith and fair dealing, and count eight alleges a claim pursuant to CUTPA. Count nine alleges that the defendant Seryvuth Mam engaged in fraud. Counts ten, eleven, twelve and thirteen are directed to Seryvuth Mam, Maximus Mam and Mam and Phal, LLC. They allege conversion (count ten), unjust enrichment (count eleven), theft (count twelve) and CUTPA (count thirteen).
Counts eight and thirteen which are the subject of the motion to strike each incorporate the allegations of the prior counts and add one paragraph in relation to the claim of violation of CUTPA, that is, "As a result of the aforementioned unfair and/or deceptive acts and or practices that were committed by the Defendant Mam and Phal, LLC and the Defendant Seryvuth Mam, the defendants have violated the Connecticut Unfair Trade Practices Act (CUTPA)."
DISCUSSION
"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." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "[T]he moving party admits all facts well pleaded." RK Constructors, Inc. v. Fusco Corp. et al., 231 Conn. 381, 383 n. 2, 650 A.2d 153 (1994). "If facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Batte-Holmgren v. Commissioner, of Public Health, 281 Conn. 277, 294, 914 A.2d 996 (2007). "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, supra, 498.
"[A] motion to strike challenges the legal sufficiency of a pleading and, consequently, requires no factual findings by the trial court ... [The court] construe[s] the complaint in the manner most favorable to sustaining its legal sufficiency ... Thus, [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied ... Moreover, [the court notes] that [w]hat is necessarily implied [in an allegation] need not be expressly alleged ... 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 ... Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Geysen v. Securitas Security Services USA, Inc., 322 Conn. 385, 398, 142 A.3d 227 (2016). "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.) Santoroso v. Bristol Hospital, 308 Conn. 338, 349, 63 A.3d 940 (2013).
In this action, the defendant argues that the allegations in counts eight and thirteen do not state a cause of action pursuant to C.G.S. § 42-110 et seq. as a violation of the Connecticut Unfair Trade Practices Act. This statute provides: "no 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 Section 42-110b. The test used in determining whether a defendant’s action constitutes an unfair or deceptive trade practice is the three-part criteria known as the "cigarette rule." McLaughlin v. Ford Motor Co., 192 Conn. 558, 567-68, 473 A.2d 1185 (1984). The three criteria are: "(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 businessmen]." (Internal quotation marks omitted.) Journal Publishing Co. v. Hartford Courant Co., 261 Conn. 673, 695, 804 A.2d 823 (2002).
The defendants do not address the three-part test because they allege that the CUTPA claim in this action involves intra-corporate actions and thus is not a basis for a CUTPA violation. The defendant argues that the factual allegations in the Revised Complaint are simply an intra-corporate dispute and not the commercial or competitive activity which is a requirement for such a claim. In support of their position the defendants refer to and rely upon a number of Superior Court and federal decisions. The plaintiff argues that the facts and allegations in the complaint support the opposition to the motion to strike. The plaintiff relies upon Spector v. Konover, 57 Conn.App. 121, 747 A.2d 39, cert. denied, 254 Conn. 913, 759 A.2d 507 (2000), for his position that the CUTPA claim is not precluded because there is an intra-corporate dispute. The Appellate Court in Spector does not specifically define the basis of the decision to make a finding of a CUTPA violation. However, viewing the facts in Spector, it is clear that the background is far different than the factual background in this action. In Spector, there was a tremendous amount of interplay between the Tri Town partnership and many other businesses with testimony and specific evidence of inter use of accounts and monies that were part of Tri Town for other entities. There was no specific account for Tri Town to determine the appropriate distributions, taxing implications, expenses, etc. Instead there were twenty to thirty properties formed by the defendants which operated with the funds of Tri Town and thus the plaintiff was unable to recoup costs and receive any distribution or payments consistent with the formation. In this case there is an allegation of diversion of some of the funds and the elimination of the plaintiff from the LLC but the involvement and the diversion are not at all similar or as extreme as the facts in the Spector case. The defendant has relied upon a number of Superior Court and Appellate cases as well as district court cases which support the position that CUTPA does not apply to intracompany or internal corporate actions. See Metcoff v. Lebovics, 123 Conn.App. 519 (2010); Russell v. Russell, 91 Conn.App. 647 (2005); Adler v. Snoddy, Superior Court, judicial district of Fairfield, Docket No. CV 02 0399008 (October 7, 2003, Doherty, J.); and Jalbert v. Stanziale, Superior Court, judicial district of New Haven, Docket No. CV 010454543 (January 7, 2002, Fracasse, J.). Based upon the allegations in this action as set forth in the complaint and particularly counts eight and thirteen, there are insufficient facts to take this out of the realm of internal corporate disputes. Given the facts of the Revised Complaint and the law as set forth in the defendant’s memorandum of law the motion to strike counts eight and thirteen is granted.