Opinion
LLICV166013981S
04-03-2017
PMI Shares, Inc. v. SIMA International, Inc.
UNPUBLISHED OPINION
MEMORANDUM OF DECISION ON DEFENDANT'S MOTION TO STRIKE PORTIONS OF AMENDED COMPLAINT (#105)
Hon. John D. Moore, J.
I
INTRODUCTION
The defendant, SIMA International, Inc. (SIMA or the defendant), moved to strike counts three through eight of the amended complaint, as well as, the plaintiff's claims for declaratory judgment and for a temporary and permanent injunction (#105) on September 12, 2016. The defendant filed a memorandum in support of this motion (#110) on September 13, 2016 and a reply brief (#113) on October 26, 2016. The plaintiff, PMI Shares, Inc. (PMI or the plaintiff), filed a memorandum in opposition to the motion to strike (#111) on October 12, 2016. The court heard argument on the motion to strike on December 19, 2016. For the reasons set forth below, the court grants the motion to strike in part and denies it in part.
II
DISCUSSION
To begin its analysis, the court will first review the familiar legal standards employed in considering a motion to strike. The court will then review the allegations of the counts and claims for relief that the defendant moves the court to strike. Finally, the court will consider the legal sufficiency of each such count and claim for relief seriatim.
A
The Motion to Strike
A motion to strike is used " 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). In determining whether or not a pleading's allegations are sufficient, " all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted." (Internal quotation marks omitted.) Gazo v. Stamford, 255 Conn. 245, 260, 765 A.2d 505 (2001). However, a " motion to strike . . . does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Emphasis omitted; internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997). Additionally, the court must " construe the complaint in the manner most favorable to sustaining its legal sufficiency . . . [and] [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Sullivan v. Lake Compounce Theme Park, Inc., 277 Conn. 113, 117-18, 889 A.2d 810 (2006).
B
Allegations Common to Counts Three through Seven
The plaintiff has alleged that the following relevant facts are common to counts three through seven.
Although not pertinent to the motion to strike, the plaintiff has also alleged that these allegations are common to counts one and two.
The parties are both corporations organized under the laws of Connecticut. The defendant originally called itself People Management International, Inc., but changed its name to SIMA on or about July 28, 2008. On May 24, 2005, the parties entered into a contract entitled, " Assignment of Intellectual Property Rights and Agreement Regarding Royalty Payments" (contract).
For simplicity's sake, this memorandum will refer to both the defendant and its predecessor, People Management International, Inc. as the defendant.
The contract contained the following provisions. The plaintiff agreed to transfer certain intellectual property to the defendant in exchange for royalty payments in the amount of four percent of annual " Gross Sales, " adjusted annually for inflation based upon the federal Consumer Price Index. Under the contract, " Gross Sales" were defined as " gross revenue from the sales or provisions of products and services of whatever type and nature, by Assignee or any of its licensees, affiliates, associates, members, directors, agents or other related entities or persons, made using the Intellectual Property . . ." The Royalty Payments were to be paid quarterly, within thirty days of the end of each fiscal quarter, beginning with the fiscal quarter of June 30, 2005. If the defendant were to default by failing to pay " any Royalty Payment on the due date, all of the Intellectual Property shall revert back to [plaintiff], and [defendant] shall execute an Assignment of Intellectual Property Rights, " in a form acceptable to the plaintiff, within ten days of receiving written notice from PMI of its exercise of the right of reversion. The defendant's board of directors was required to approve the reversion of the plaintiff's intellectual property under these circumstances.
To avoid confusion, the court will refer below to royalty payments owed by the defendant to the plaintiff as Royalty Payments and those owed to the defendant by its licensees or agents as royalty payments or royalties.
The contract contained additional provisions, including the following. The defendant agreed to use its best efforts to increase Gross Sales each year. The defendant also acknowledged that its failure to make Royalty Payments when due would result in irreparable harm to the plaintiff and would entitle the plaintiff to all equitable relief, including injunctive relief, as well as reasonable attorneys fees and costs necessary to enforce the contract.
Since the execution of the contract, the defendant has been involved in the business of entering into licensing agreements with entities interested in using the intellectual property in question for various business purposes in exchange for royalty payments paid by such licensees to the defendant. The amount of the defendant's Gross Sales, as that term is defined under the contract, and therefore, the amount of the plaintiff's Royalty Payments, which are based upon Gross Sales, is based upon the revenue generated by royalty payments made by the defendant's licensees to the defendant.
Counts three through seven incorporate all of the foregoing allegations.
C
Specific Allegations of Counts Three to Eight
In addition to the common allegations set forth above in section II. B., which are incorporated by reference into counts one through seven, counts three through eight respectively allege the following specific allegations.
1
Count Three
Count three claims a breach of fiduciary duty. Count three includes the following pertinent allegations.
The " nature of the contractual relationship between the Plaintiff and the Defendant" resulted in " a fiduciary relationship" between the plaintiff and the defendant. Under the contract, the defendant was obligated to (1) make Royalty Payments to the plaintiff based on defined Gross Sales and in accordance with contractual provisions, (2) ensure that its licensees, affiliates, associates, members, directors, agents or others were " accurately reporting Gross Sales, " (3) collect royalties based on accurate Gross Sales from its licensees and (4) act in good faith and make reasonable efforts to collect all such royalty payments owed to the defendant. The defendant violated these obligations in the following ways. The defendant failed to ensure accurate reporting of Gross Sales by its licensees and to accept and/or collect correct royalties from its licensees based on accurate Gross Sales. The defendant failed to report accurately its Gross Sales.
The defendant knew or should have known that these actions would harm the plaintiff as beneficial owner of the intellectual property at issue, and/or as intended beneficiary of the contract and the defendant's licensing agreements.
The defendant's actions have decreased Gross Sales, as that term is defined in the contract, resulting in lower Royalty Payments to the plaintiff. This amounts to a failure of the defendant to pay the plaintiff all of the Royalty Payments the plaintiff is owed under the contract. The defendant has, therefore, (1) knowingly, willfully and without justification or excuse, breached its fiduciary obligations to the plaintiff, and (2) maliciously and intentionally, or with conscious indifference, harmed the plaintiff. The plaintiff has suffered " financial injury" as a direct and proximate result of the defendant's breach of its fiduciary obligations to the plaintiff.
2
Count Four
Count four claims a tortious interference with contractual relations. Count four posits the following salient allegations.
The defendant owed the plaintiff the following obligations under the contract: (1) to insure that the defendant's licensees or other related, listed entities accurately reported Gross Sales, (2) to collect royalties from these listed entities based on correct Gross Sales figures, (3) to act in good faith and make reasonable efforts to collect or accept royalty payments from the defendant's licensees so as to increase Gross Sales, and (4) to make Royalty Payments to the plaintiff based on actual Gross Sales.
The defendant failed to perform these aforementioned duties. The defendant's failure to do so has resulted in the plaintiff receiving lower Royalty Payments than it should. The plaintiff is, therefore, receiving a smaller amount of Royalty Payments than what is owed under the contract. The defendant has, additionally, failed to accurately report its Gross Sales to the plaintiff as required under the contract. The defendant knew or should have known that these failures would directly harm the plaintiff as beneficial owner of the intellectual property assigned under the contract and/or as the intended beneficiary of the contract and the defendant's licensing agreements. The defendant undertook these actions maliciously and with intent to damage the plaintiff or with conscious indifference to the consequences of these actions.
As a result of the foregoing, the defendant has interfered with the plaintiff's rights under the contract.
3
Count Five
Count five sounds in negligence. Count five alleges the following relevant facts.
The defendant owed the plaintiff duties under the contract, including the duty to make sure the defendant's licensees and other listed entities were accurately reporting Gross Sales, to collect royalties from such entities based on correct sales figures and agreements between the defendant and such entities, to accurately calculate Gross Sales owed under the contract to the plaintiff and to use best efforts to increase Gross Sales each year. The defendant negligently failed to discharge these duties. The defendant's negligence has proximately caused Gross Sales to have decreased more than 38 percent since 2005, and the plaintiff has been damaged thereby.
4
Count Six
Count six sounds in fraudulent misrepresentation. Count six alleges the following salient facts. The defendant did not insure that its licensees or other listed entities accurately reported Gross Sales. The defendant refused to accept and/or collect all monies it was owed by such entities pursuant to its licensing agreements.
The defendant knew it was not paying the plaintiff all Royalty Payments owed under the contract. The defendant also knew that its licensees were not accurately reporting their Gross Sales and the defendant was not collecting all royalties owed to it by its licensees.
The defendant recklessly represented to the plaintiff that the defendant was paying to the plaintiff all Royalty Payments owed under the contract. The defendant recklessly represented to the plaintiff that the Gross Sales figures from the defendant's licensees were correct.
These two representations were false. The defendant knew they were false or reckless in regard to their truth. The defendant made these representations to induce the plaintiff to believe that the defendant was complying with its contractual duty to pay Royalty Payments and to appease the plaintiff so that it would neither seek accountings nor pursue legal remedies.
The plaintiff relied on the defendant's representations to its detriment and has been damaged as a result.
The actions of the defendant alleged in this count constitute a continuing course of conduct running from the effective date of the contract.
5
Count Seven
Count seven claims negligent misrepresentation. The factual allegations of count seven are mostly identical to those of count six, including the incorporation of the facts discussed in section II.B, supra ; the only difference lies in the allegations concerning the defendant's state of mind. Instead of alleging that the defendant knew that (1) it was not paying proper contractual Royalty Payments to the plaintiff, (2) its licensees were not accurately reporting their Gross Sales, and (3) it was not collecting all monies owed to the defendant by the licensees, as did count six, count seven alleges that the defendant " knew or should have known" these facts. Instead of claiming that the false representations had been made " recklessly, " as in count six, count seven alleges simply that these representations were made. Instead of averring that the representations at issue were false or made in reckless disregard of the truth, as did count six, count seven describes the representations as negligent and alleges that the defendant " knew or should have known that they were false."
Count seven, like count six, alleges that the negligent misrepresentations constitute a course of conduct that began when the contract became effective.
6
Count Eight
As previously mentioned, count eight does not incorporate the common factual allegations set forth in section II.B, above. Count eight, instead, posits the following salient factual allegations.
The plaintiff and defendant entered into negotiations in 2005 for the transfer of intellectual property from the plaintiff to the defendant in exchange for, among other things, Royalty Payments by the defendant to the plaintiff. During these negotiations, the defendant promised (1) that it would pay the plaintiff four percent of the defendant's gross sales, adjusted annually for inflation, (2) that, if the defendant failed to pay all such royalties, the intellectual property would revert to the plaintiff, and (3) that the defendant would voluntarily execute an assignment of the intellectual property back to the plaintiff within ten days of receiving written notice from the plaintiff of its exercise of the right to such reversion.
The defendant knew or should have known that its promises to the plaintiff would induce the plaintiff to enter into a contract transferring the intellectual property to the defendant. The plaintiff justifiably relied on the defendant's promises and transferred the intellectual property to the defendant on May 24, 2005. The defendant has failed to make all of the promised Royalty Payments. On March 8, 2016, the plaintiff gave formal notice to the defendant of its exercise of the right to reversion of the intellectual property. The defendant has failed to effectuate the transfer of the intellectual property back to the plaintiff. Because of the damage sustained by the plaintiff, the court must enforce the defendant's promises.
7
The Plaintiff's Claim for Declaratory Judgment
The plaintiff has sought a declaratory judgment as to count one, sounding in breach of contract, count two, which claims breach of the covenant of good faith and fair dealing, as well as to counts three (breach of fiduciary duty), four (tortious interference with contractual relations), six (fraudulent misrepresentation), seven (negligent misrepresentation) and eight (promissory estoppel). For each of these counts, the plaintiff asks the court to declare that the plaintiff is the rightful owner of the intellectual property pursuant to the contract.
8
The Plaintiff's Claim for a Temporary and a Permanent Injunction
The plaintiff has requested temporary and permanent injunctive relief for its claims in counts one, two, three, four and eight. For each of these counts, the plaintiff asks the court to grant both a temporary and a permanent injunction (1) prohibiting the defendant from using the intellectual property at issue, and (2) ordering the defendant to execute the documents necessary to convey the intellectual property to the plaintiff.
D
Legal Analysis
1
Count Three
As discussed above, count three claims breach of a fiduciary duty. The defendant moves to strike count three, claiming that it is legally insufficient because the facts alleged do not give rise to a fiduciary relationship between the defendant and the plaintiff. Specifically, the defendant first argues that no Connecticut court has ever recognized a fiduciary relationship between parties to a contract for the use of intellectual property in exchange for royalty payments. The defendant then argues that, even if the court were willing to consider that such a relationship could give rise to a fiduciary duty, the specific facts alleged in count three do not allege a fiduciary duty owed by the defendant to the plaintiff. The plaintiff counters by arguing, correctly, that the fact that no Connecticut court has ever found a fiduciary relationship under a similar contract is not dispositive of whether such a relationship may exist. The plaintiff then contends that the court must scrutinize the relationship alleged through the lens of binding precedent that identifies the kind of allegations that may, in a legally sufficient manner, posit a fiduciary duty. The court, after conducting such a review, finds that the facts alleged do not support the existence of a fiduciary relationship and, for the reasons set forth below, grants the defendant's motion to strike count three.
In order to maintain a claim for breach of a fiduciary duty, a plaintiff must first " prove the existence of a fiduciary relationship." (Emphasis omitted.) Golek v. Saint Mary's Hospital, Inc., 133 Conn.App. 182, 196-97, 34 A.3d 452 (2012). " [A] fiduciary duty determination is a question of law." Iacurci v. Sax, 313 Conn. 786, 796, 99 A.3d 1145 (2014). Although a court cannot decide a question of fact on a motion to strike, " [i]t is appropriate . . . for this court to decide whether the plaintiff . . . has [pleaded] sufficient facts to allege a fiduciary relationship." (Internal quotation marks omitted.) Charter Oak Fire Ins. Co. v. Blue Sky Partnership, Superior Court, judicial district of Hartford, Docket No. CV-00-0596646, (August 30, 2001, Berger, J.). Therefore, the court must decide if, as a matter of law, the plaintiff has sufficiently pleaded facts to support a fiduciary relationship.
Certain relationships clearly give rise to a fiduciary relationship. " [Our Supreme Court] has recognized that some actors are per se fiduciaries by nature of the functions they perform. These include agents, partners, lawyers, directors, trustees, executors, receivers, bailees and guardians." (Internal quotation marks omitted.) Iacurci v. Sax, supra, 313 Conn. 800. The contractual relationship between the parties in this case, however, is not one of these kinds of relationships. Therefore, the court must drill deeper and examine the nature of the business relationship spawned by the contract.
When the court is not dealing with one of the per se fiduciary categories, " a flexible approach determines the existence of a fiduciary duty, which allows the law to adapt to evolving situations wherein recognizing a fiduciary duty might be appropriate." Id. " [O]ur cases considering whether ad hoc fiduciary duties existed in business relationships have turned on the presence of a special vulnerability." Id., 801. More particularly, " [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." (Internal quotation marks omitted.) Id., 800. These principles " are typically necessary, but not always dispositive, conditions giving rise to a fiduciary duty in business settings. Rather, particular attention is given to whether there is a great opportunity for abuse of the confidence reposed in the hired party." (Internal quotation marks omitted.) Id., 801. " The superior position of the fiduciary or dominant party [must] afford[ ] him great opportunity for abuse of the confidence reposed in him." (Internal quotation marks omitted.) Id., 800.
" With these principles in mind, we have recognized that not all business relationships implicate the duty of a fiduciary." (Internal quotation marks omitted.) Id. The court must " avoid assigning the serious, significant duties that are expected of a fiduciary to every business arrangement. Ostensibly, any time one party hires another to perform a service on their behalf, trust and confidence is placed in the latter party. Likewise, most customers and clients invariably rely on a service provider's superior knowledge, skill, or expertise in their trade. The unique element that inheres a fiduciary duty to one party is an elevated risk that the other party could be taken advantage of--and usually unilaterally. That is, the imposition of a fiduciary duty counterbalances opportunities for self-dealing that may arise from one party's easy access to, or heightened influence regarding, another party's moneys, property, or other valuable resources. All of this precludes us from unduly extending the scope of fiduciary obligations to all ordinary business relationships." (Emphasis in original; internal quotation marks omitted.) Id., 801-02.
" Moreover, [a]lthough we have not expressly limited the application of these traditional principles of fiduciary duty to cases involving only fraud, self-dealing or conflict of interest, the cases in which we have invoked them have involved such deviations." (Emphasis in original; internal quotation marks omitted.) Sherwood v. Danbury Hospital, 278 Conn. 163, 196, 896 A.2d 777 (2006).
" Finally, [p]rofessional negligence alone . . . does not give rise automatically to a claim for breach of fiduciary duty . . . [Thus] not every instance of professional negligence results in a breach of [a] fiduciary duty . . . Professional negligence implicates a duty of care, while breach of a fiduciary duty implicates a duty of loyalty and honesty." (Internal quotation marks omitted.) Id.
Bearing these principles in mind, the court finds, as a matter of law, that the allegations of count three concerning the business relationship established by the contract do not set forth a fiduciary relationship between the plaintiff and the defendant. Rather, these allegations establish a relatively straightforward contractual relationship.
Count three alleges the following facts. In consideration of the plaintiff's transfer of intellectual property to the defendant, the defendant agreed to collect royalty payments from its agents and licensees and to forward a designated portion of defined Gross Sales to the plaintiff. The defendant also agreed to use its best efforts to grow the business.
The allegations of count three do not comprise an allegation of a fiduciary relationship between the defendant and the plaintiff for the following reasons. There is no factual allegation supporting a claim that the defendant had knowledge, skill or expertise superior to that of the plaintiff. A claim that the defendant may have had access to information, e.g., the amounts of royalties collected from its licensees, does not constitute a claim of superior knowledge, skill or expertise. Further, count three does not allege that the defendant agreed to represent the plaintiff or serve as its agent. Rather, by agreeing to forward a portion of the royalties generated by agreements with its own agents and licensees to the plaintiff, the defendant represented only itself. Moreover, the plaintiff did not place trust or confidence in the defendant. Instead, the plaintiff executed a contract with a clear and highly significant remedy for the defendant's breach: if the defendant did not perform, ownership of the intellectual property would revert to the plaintiff. This substantial remedy diminished the possibility that the defendant would abuse the contractual relationship and defraud, or take advantage of, the plaintiff. Additionally, count three does not allege facts giving rise to a conflict of interest. If the defendant were to have, as alleged by the plaintiff, failed to collect royalties owed to the defendant by its licensees, the defendant would suffer more harm than the plaintiff, since the defendant was only required to forward a small portion of these royalties to the plaintiff. If the defendant were to have, as alleged, failed to properly account for royalties, it faced the undesirable prospect of losing the intellectual property. Finally, the argument that a fiduciary relationship was created because the defendant assumed a contractual duty to use its best efforts to grow the business is unavailing. This contractual obligation only restates the implied duty of good faith and fair dealing found in every contract. Geysen v. Securitas Security Services USA, Inc., 322 Conn. 385, 399, 142 A.3d 227 (2016) (" every contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement" [internal quotation marks omitted]).
2
Count Four
Count four alleges tortious interference with contractual relations. The defendant claims that this count is legally insufficient because this cause of action cannot be brought against someone who is a party to the contractual relations at issue. The plaintiff argues that the fourth count alleges that the plaintiff was an intended beneficiary of the defendant's licensing agreements with third parties and that the defendant tortiously interfered with this beneficial relationship. The court agrees with the defendant, and strikes count four.
In count four, the plaintiff alleges that the defendant tortiously interfered with the plaintiff's right, as an intended third-party beneficiary, to receive financial benefits from agreements that the defendant had with its licensees.
To prove tortious interference with contractual relations, a " plaintiff [must] establish: (1) the existence of a contractual or beneficial relationship; (2) the defendant's knowledge of that relationship; (3) the defendant's intent to interfere with the relationship; (4) that the interference was tortious; and (5) a loss suffered by the plaintiff that was caused by the defendant's tortious conduct." Rioux v. Barry, 283 Conn. 338, 351, 927 A.2d 304 (2007). However, " 'it is well-settled that the tort of interference with contractual relations only lies when a third party adversely affects the contractual relations of two other parties.' (Emphasis in original; internal quotation marks omitted.) Wellington Systems, Inc. v. Redding Group, Inc., 49 Conn.App. 152, 168, 714 A.2d 21, cert. denied, 247 Conn. 905, 720 A.2d 516 (1998). '[T]here can be no intentional interference with contractual relations by someone who is directly or indirectly a party to the contract.' (Internal quotation marks omitted.) Appleton v. Board of Education, 53 Conn.App. 252, 267, 730 A.2d 88 (1999), rev'd in part on other grounds, 254 Conn. 205, 757 A.2d 1059 (2000)." Metcoff v. Lebovics, 123 Conn.App. 512, 520-21, 2 A.3d 942 (2010).
The only exception to this general rule is when an agent induces its principal to breach the principal's contract with a third party under circumstances in the agent is not acting " legitimately within his scope of duty but used the corporate power improperly for personal gain." Metcoff v. Lebovics, 123 Conn.App. 512, 520-21, 2 A.3d 942 (2010). The fourth count does not present such allegations.
As mentioned above, the plaintiff alleges that the defendant tortiously interefered with the plaintiff's beneficial right to receive financial consideration from the defendant's licensing contracts with third parties. Under the holding of Appleton, supra, cited in Metcoff, supra, a party to a contract cannot be sued for tortiously interfering with that contract. Therefore, the plaintiff's claim that the defendant tortiously interfered with the plaintiff's rights to receive benefits under a contract to which the defendant itself was a party is legally insufficient, and the court strikes count four.
3
Count Five
Count five sounds in negligence. The defendant moves to strike this count under the economic loss doctrine, which the defendant claims bars negligence claims that arise out of and are dependent on breach of contract claims that cause solely economic loss. The plaintiff argues that economic loss is not the only kind of loss claimed. The court finds that the complaint sets forth only economic loss claims and strikes the fifth count.
Count five alleges that the defendant negligently failed to discharge duties it owed the plaintiff under the contract. Specifically, this count avers that the defendant negligently failed (1) to insure that its licensees accurately reported their sales, (2) to collect royalties based on proper sales figures, (3) to accurately calculate the amount of Royalty Payments owed to the plaintiff, and (4) to use its best efforts to increase Gross Sales each year. Count five alleges that Gross Sales have decreased 38 percent since 2005 and that, as a result, the plaintiff has suffered damage.
" [T]he 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. 375, 410, 78 A.3d 76 (2013). Stated another way, " the economic loss doctrine bars negligence claims for commercial losses arising out of the defective performance of contracts." (Internal quotation marks omitted; citation omitted.) Id., 390, n.14. " Our Supreme Court adopted the economic loss doctrine when it stated, 'commercial losses arising out of the defective performance of contracts for the sale of goods cannot be combined with negligent misrepresentation.' Flagg Energy Dev. Corp. v. GMC, Allison Gas Turbine Div., 244 Conn. 126, 153, 709 A.2d 1075 (1998), overruled on other grounds by Ulbrich v. Groth, 310 Conn. 375, 410, 78 A.3d 76 (2013). In Ulbrich, our Supreme Court expanded the economic loss doctrine to include contracts that did not deal with the sale of goods. The Supreme Court stated that '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, supra, 310 Conn. at 410, 78 A.3d 76." Wang v. Beta Pharma, Inc., Superior Court, judicial district of New Haven, Docket No. CV-14-6050848-S, (March 9, 2016, Fischer, J.). Trial courts have fleshed out this doctrine. " The Superior Courts have further clarified that [t]he economic loss doctrine is a judicially created principle which prohibits recovery in tort when the basis for that tort claim arises from violation of a contract and damages are limited to purely economic losses as opposed to personal injury or property damage ." (Emphasis in original; internal quotation marks omitted.) Mastrobattisto, Inc. v. Nutmeg Utility Products, Inc., Superior Court, judicial district of New Britain, Docket No. CV-15-6028626-S (February 23, 2016, Wiese, J.) [61 Conn.L.Rptr. 864, ]. " Loss of profits, consequential economic loss, interruption of business and other damages to business are commercial or economic losses as opposed to property damage and personal injuries." Worldwide Preservation Services, L.L.C. v. IVth Shea, L.L.C., Superior Court, judicial district of Stamford-Norwalk, Complex Litigation Docket, Docket No. X05-CV-980167154-S (February 1, 2001, Tierney, J.) [29 Conn.L.Rptr. 1, ].
The only exception to the operation of the economic loss doctrine is under a narrow band of circumstances arising from negligent misrepresentation claims in which the defendant's " negligent misrepresentations induced the plaintiff to enter into a contract." Ulbrich v. Groth, supra, 310 Conn. 406.
Count five alleges negligence arising out of the contract, namely, the defendant's failure properly to discharge duties it owed the plaintiff under the contract. Count five does not allege any form of personal injury or property damage. The plaintiff's argument that the defendant's negligence harmed the plaintiff because the defendant did not use its best efforts to grow the business seeks, at best, a different category of economic loss, but seeks economic loss nonetheless. Count five does not allege negligent misrepresentation at all, and therefore the exception referred to in the preceding paragraph does not apply. In sum, count five alleges only economic damage arising from the negligent performance of a contract. As a result, the operation of the economic loss doctrine renders count five legally insufficient. Therefore, the court strikes count five.
4
Count Six
Count six claims fraudulent misrepresentation. The defendant moves to strike this count because it does not allege either that (1) SIMA made false representations to induce the plaintiff to act or that, (2) the plaintiff, in fact, was induced to act or to change its position based upon such fraudulent misrepresentations. The plaintiff argues that it has sufficiently alleged that the defendant misrepresented to the plaintiff that the plaintiff was receiving proper Royalty Payments, even though the defendant knew this statement to be false for several reasons, and that the defendant's false representations induced the plaintiff not to seek accountings or pursue legal remedies. The court agrees with the defendant and strikes count six.
Significantly, count six does not allege that the defendant's false representations induced the plaintiff to enter into the contract. Rather, count six focuses solely on alleged fraudulent misrepresentations that occurred after the contract was executed. Specifically, count six alleges the following facts.
Since the effective date of the contract, the defendant has engaged in a continuing course of conduct to fail to pay the plaintiff all Royalty Payments owed. The defendant failed to confirm that all its licensees were accurately reporting their sales and/or failed to collect such sums. Even though the defendant knew that its licensees were not accurately reporting their sales and/or that the defendant was not collecting all royalties that its licensees owed the defendant, the defendant " recklessly represented" to the plaintiff that the reported licensee sales were correct and that the plaintiff was receiving all Royalty Payments it was owed. The representations were false. The defendant knew that they were false or was reckless as to their truth. The defendant made these false representations to the plaintiff " to induce the Plaintiff to believe that the Defendant was complying with its obligation to pay Royalty Payments under the Contract and to appease the Plaintiff so it would not seek accountings from the Defendant or pursue its legal remedies." The plaintiff relied on these false representations to its detriment and has sustained damage as a result.
" Fraud consists in deception practiced in order to induce another to part with property or surrender some legal right, and which accomplishes the end designed." (Internal quotation marks omitted.) Billington v. Billington, 220 Conn. 212, 217, 595 A.2d 1377 (1991); see also Spears v. Elder, 124 Conn.App. 280, 287, 5 A.3d 500 (2010), cert. denied, 299 Conn. 913, 10 A.3d 528 (2010) (fraud defined as " [d]eceit, deception, artifice, or trickery operating prejudicially on the rights of another, and so intended, by inducing him to part with property or surrender some legal right" [internal quotation marks omitted]). " [A] fraudulent representation . . . is one that is knowingly untrue, or made without belief in its truth, or recklessly made and for the purpose of inducing action upon it . . . [A]t common law, fraudulent misrepresentation and intentional misrepresentation are the same tort." (Citation omitted; internal quotation marks omitted.) Kramer v. Petisi, 285 Conn. 674, 684 n.9, 940 A.2d 800 (2008). " To assert a claim for intentional misrepresentation or fraudulent inducement, the buyers must prove that (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." Biro v. Matz, 132 Conn.App. 272, 288, 33 A.3d 742 (2011). The element of inducing one to act in reliance on the fraudulent representation may also be satisfied if one refrains from acting in reliance on the false statement. 3 Restatement (Second) Torts § 525, p. 55 (1977); see also Egan v. Hudson Nut Products, Inc., 142 Conn. 344, 347-48, 114 A.2d 213 (1955) (in context of fraudulent nondisclosure).
" [A] plaintiff cannot make general assertions of fraudulent misrepresentations, but must plead particular facts demonstrating what the representations were and how they were false." (Internal quotation marks omitted.) Bozelko v. Venditto, Superior Court, judicial district of New Haven, Docket No. CV-13-5034695-S, (June 23, 2014, Wilson, J.).
The fatal weakness of count six is that it does not claim that the plaintiff either gave up a legal right or parted with property. As explained above, the plaintiff's allegations of fraud focus entirely on events that occurred after the contract was effective. Count six is devoid of allegations that the defendant fraudulently induced the plaintiff to enter into the contract. Rather, count six alleges that the defendant made various false statements to the plaintiff in regard to the amounts and correctness of Royalty Payments owed to the plaintiff, and that the plaintiff was induced thereby to refrain from seeking accountings or pursuing legal remedies from the defendant. Our Supreme Court, however, in Billington v. Billington, supra, 220 Conn. 212, has held that, to be actionable, fraudulent misrepresentations must cause a claimant to give over property or surrender a legal right. Read liberally, count six, at best, alleges that the plaintiff may have postponed a legal right. This action itself stands as a testament to the fact that the plaintiff did not forego its legal right to seek redress by means of a lawsuit. Indeed, the plaintiff seeks legal redress in this action. The plaintiff's claimed damages for count six confirm this conclusion. For this fraudulent misrepresentation count, the plaintiff seeks not only monetary and punitive damages, but also pre- and postjudgment interest. In the common facts section of the amended complaint, incorporated into count six, the plaintiff seeks attorneys fees and costs. The common facts allegations section also requests an award of " any and all equitable relief, " which is certainly broad enough to include an accounting when considered in conjunction with the allegations found in count six that the defendant incorrectly reported its licensees' sales data to the plaintiff. Because the plaintiff, in this lawsuit, seeks the recovery of all legal and equitable damages that it may have postponed as a result of the alleged fraudulent misrepresentations, it has not surrendered its legal right to recover these damages.
Similarly, the plaintiff has not parted with property. At best, the allegations of count six claim that the defendant may, under the contract, owe sums to the plaintiff.
For all of these reasons, the court finds that count six has not alleged that the plaintiff has either transferred property to the defendant or surrendered a legal right. Therefore, the court finds count six to be legally insufficient and strikes count six.
5
Count Seven
Count seven sounds in negligent misrepresentation. The defendant moves to strike count seven because of the operation of the economic loss doctrine, for the same reasons set forth in section II.D.3, supra . The plaintiff disagrees, contending that the negligent misrepresentation claim is independent of the breach of contract claim and that count seven has alleged the necessary elements of a negligent misrepresentation claim. The plaintiff also argues that the Ulbrich, supra, case, on which the defendant relies, is limited to its facts, which were grounded in Uniform Commercial Code article 9 claims. Largely for the reasons set forth above in C.3., the court strikes count seven as legally insufficient.
As mentioned in section II.C.5, supra, count seven alleges the same facts as does count six, the fraudulent misrepresentation count, but alleges, in essence, that the misrepresentations were made negligently, rather than intentionally. As with count six, all of the claimed misrepresentations arose after the contract became effective, and sprang from claims that the defendant made misrepresentations associated with the collection of royalties from its licensees, and the distribution of Royalty Payments to the plaintiff.
The legal analysis set forth section II.D.3, supra, concerning the application of the economic loss doctrine to the negligence count applies with equal force to the negligent misrepresentation claims. The court will not re-state that legal analysis in this section, but will, rather incorporate it by reference into this section. Suffice it to say that unless the plaintiff alleged that the negligent misrepresentation claim induced the plaintiff to have entered into the contract or that the negligent misrepresentation claim were independent of the breach of contract claim, the operation of the economic loss doctrine renders this count legally insufficient for the reasons set forth supra in section II.D.3. The court will consider these two items seriatim.
The first potential exception to the operation of the economic loss doctrine deserves only short shrift. As mentioned above, all of the misrepresentation claims arise out of alleged actions undertaken after the contract was executed. As a result, the plaintiff cannot claim that it was induced to enter into the contract by the alleged negligent misrepresentation.
The second potential exception to the operation of the economic loss doctrine deserves more analysis. The plaintiff argues that the negligent misrepresentation claim is independent of the breach of contract claim. The plaintiff's argument in this regard is that it could prove negligent misrepresentation even in the absence of the contract, based upon misrepresentations related to the royalties paid to the defendant by its licensees and the subsequent payments made by the defendant to the plaintiff.
While this argument may have some persuasive appeal in a factual vacuum, the court must consider this argument in the context of the facts alleged by the plaintiff. When the court conducts a review of the facts supporting the negligent misrepresentation count, the court finds that this count is entirely dependent on the contract. Each factual paragraph of count seven (paragraphs 1-6, inclusive), refers to obligations arising from the contract, the distribution of Royalty Payments, a defined term under the contract, the reporting of Gross Sales, another defined term under the contract, or two or three of these categories. Similarly, the common facts section, incorporated into count seven, is entirely premised on the contract and the alleged breach thereof. For these reasons, the facts alleged by the plaintiff as to the claim of negligent misrepresentation are entirely dependent on the contract, rather than independent thereof. Therefore, for the reasons articulated in this section and in section II.D.3, the court finds count seven to be legally insufficient and strikes it.
6
Count Eight
Count eight relies on the theory of promissory estoppel. The defendant moves to strike this count, arguing that the plaintiff cannot assert a claim for promissory estoppel simultaneously with a claim for breach of contract. The plaintiff counters by claiming that this limitation only applies when the promissory estoppel claims are joined in the same count with breach of contract claims, and arguing that it has not alleged both claims within the same count. While the plaintiff is correct on the law, the court finds that the plaintiff has joined the promissory estoppel claim in the same count with breach of contract claims. As a result, the court strikes count eight.
Count eight essentially alleges the same underlying facts as did the previous counts, but stops short of alleging that the contract was finalized. Count eight posits that the negotiations revolved around the same provisions as those found in the contract: the plaintiff would transfer its intellectual property to the defendant in exchange for royalty payments. The payment terms were to be payment of royalties in the amount of four percent, adjusted annually for inflation. Failure to make payments would result in the intellectual property reverting to the plaintiff. The plaintiff justifiably relied on the promises discussed during the negotiations and transferred the intellectual property to the defendant on May 24, 2005. The defendant has failed to fulfill its promises. The plaintiff has been damaged as a result.
Promissory estoppel arises from an understanding that certain promises, even those made outside of an executed contract, deserve to be enforced. " [P]romissory estoppel . . . is not a separate cause of action . . . but rather serves to allow enforcement of an otherwise validly formed contractual commitment that lacks traditional consideration." Pavliscak v. Bridgeport Hospital, 48 Conn.App. 580, 592 n.5, 711 A.2d 747, cert. denied, 245 Conn. 911, 718 A.2d 17 (1998). " Under the law of contract, a promise is generally not enforceable unless it is supported by consideration . . . [Our Supreme Court] has recognized, however, the development of liability in contract for action induced by reliance upon a promise, despite the absence of common-law consideration normally required to bind a promisor . . . Section 90 of the Restatement [(Second) of Contracts] states that under the doctrine of promissory estoppel, [a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. [1 Restatement (Second), Contracts § 90, p. 242 (1981).] A fundamental element of promissory estoppel, therefore, is the existence of a clear and definite promise which a promisor could reasonably have expected to induce reliance. Thus, a promisor is not liable to a promisee who has relied on a promise if, judged by an objective standard, he had no reason to expect any reliance at all." (Internal quotation marks omitted.) Stewart v. Cendant Mobility Services Corp., 267 Conn. 96, 104-05, 837 A.2d 736, 742 (2003).
" [B]reach of contract and promissory estoppel are inconsistent theories of recovery, as promissory estoppel is appropriate only when there is an absence of consideration to support a contract." Meadowbrook Center, Inc. v. Buchman, 149 Conn.App. 177, 194, 90 A.3d 219 (2014).
Our Supreme Court has, of course, held that a party may allege alternative theories of recovery. " 'Under our pleading practice, a plaintiff is permitted to advance alternative and even inconsistent theories of liability against one or more defendants in a single complaint.' Dreier v. Upjohn Co., 196 Conn. 242, 245, 492 A.2d 164 (1985); see also Practice Book § 10-25 ('The plaintiff may claim alternative relief, based upon an alternative construction of the cause of action')." Bratter v. Nova 22 Construction, Inc., judicial district of Hartford, Docket No. CV-12-6033502-S, (March 27, 2014, Huddleston, J.). Although no appellate court has addressed this issue, several persuasive Superior Court cases have examined the issue of when, and under what circumstances a plaintiff may seek recovery under a promissory estoppel theory while alleging a valid contract. " While the plaintiffs may be entitled to plead counts with alternative legal theories they cannot allege promissory estoppel within the same count that alleges a binding contract for which there was consideration paid." (Emphasis in original.) Pourmaleki v. Eskierski, Superior Court, judicial district of New Britain, Docket No. CV-07-5004715-S, (March 28, 2008, Pittman, J.). Several other Superior Court decisions have also cited Judge Pittman's decision in Pourmaleki, supra, for the proposition that alleging a binding contract and promissory estoppel in the same count is impermissible. See, e.g., Bratter v. Nova 22 Construction, Inc., supra judicial district of Hartford, Docket No. CV-12-6033502-S, (March 27, 2014, Huddleston, J.) (citing Pourmaleki ); Katz v. JFB Firth Rixson, Inc., Superior Court, judicial district of Hartford, Docket No. CV-12-6027996-S, (July 2, 2012, Woods, J.) (same); Golek v. St. Mary's Hospital, Superior Court, judicial district of Waterbury, Docket No. CV-08-5007118-S, (August 22, 2008, Roche, J.) (same).
Other courts have also struck promissory estoppel counts that incorporated the existence of a valid contract. In Winters v. Concentra Health Services, Inc., Superior Court, judicial district of New Haven, Docket No. CV-07-5012082-S, (March 5, 2008, Thompson, J.), the court granted a motion to strike where the plaintiff had " incorporated into [his promissory estoppel] count . . . his assertion that he had a valid employment contract, " stating: " [A] party cannot plead promissory estoppel when contemporaneously alleging the existence of a valid contract. 'It is axiomatic that a party is entitled to rely upon its written contract as the final integration of its rights and duties.' Levine v. Massey, 232 Conn. 272, 279, 654 A.2d 737 (1995). Indeed, [w]here the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms.' Leonard Concrete Pipe Co. v. C.W. Blakeslee & Sons, Inc., 178 Conn. 594, 598, 424 A.2d 277 (1979)."
Unfortunately for the plaintiff, although it has scrupulously attempted to avoid any mention of the contract in count eight itself, and has clearly alleged that the common facts section of the amended complaint does not inform count eight, the plaintiff's count eight prayer for relief relies on the contract. In the count eight prayer for relief, paragraph 2 seeks a declaratory judgment that the plaintiff owns the intellectual property " pursuant to the Contract; " and paragraph 5 asks for " [r]escission of the Contract . . ." As result, the plaintiff has, in count eight, sought to recover under both contract claims and pursuant to a theory of promissory estoppel. Under the holdings of the persuasive Superior Court cases cited in the previous paragraph, this renders count eight legally deficient. Therefore, the court strikes count eight.
7
Claims for Declaratory Relief
The defendant moves to strike the plaintiff's claim for declaratory relief. The defendant contends that the court should not entertain a claim for declaratory relief when an ordinary action would afford an effective, convenient and complete remedy and that the legal claims in the amended complaint would afford such remedies. The defendant also argues that the plaintiff has not complied with § 17-56(c) of the Practice Book by not providing a certificate that all interested persons have been joined or given notice of the action. The plaintiff (1) posits that the court has the discretion to permit the claim for declaratory relief, (2) insists that the court needs to declare which entity is the rightful owner of the intellectual property, and (3) claims that the defendant's invocation of § 17-56(c) elevates form over substance, as the plaintiff and defendant are the only two interested parties. The court agrees with the defendant and strikes the claims for declaratory relief.
" '[D]eclaratory relief is a mere procedural device by which various types of substantive claims may be vindicated.' (Internal quotation marks omitted.) Bysiewicz v. Dinardo, 298 Conn. 748, 756, 6 A.3d 726 (2010). 'The purpose of a declaratory judgment action, as authorized by General Statutes § 52-29 and Practice Book § [17-55], is to secure an adjudication of rights [when] there is a substantial question in dispute or a substantial uncertainty of legal relations between the parties . . . [The] declaratory judgment statute provides a valuable tool by which litigants may resolve uncertainty of legal obligations.' (Citation omitted; internal quotation marks omitted.) New London County Mutual Ins. Co. v. Nantes, 303 Conn. 737, 747-48, 36 A.3d 224 (2012). Connecticut's 'declaratory judgment statute is unusually liberal . . . [Although] the declaratory judgment procedure may not be utilized merely to secure advice on the law . . . it may be employed in a justiciable controversy where the interests are adverse, where there is an actual bona fide and substantial question or issue in dispute or substantial uncertainty of legal relations which requires settlement, and where all persons having an interest in the subject matter of the complaint are parties to the action or have reasonable notice thereof.' (Citations omitted; internal quotation marks omitted.) Id., at 748. 'Implicit in [§ 52-29 and Practice Book § 17-55] is the notion that a declaratory judgment must rest on some cause of action that would be cognizable in a nondeclaratory suit.' (Internal quotation marks omitted.) Milford Power Co., LLC v. Alstom Power, Inc., 263 Conn. 616, 625, 822 A.2d 196 (2003).
" 'The complaint must state facts sufficient to set forth a cause of action entitling the plaintiff to a declaratory judgment . . . To state a cause of action for such relief, facts showing the existence of a substantial controversy or uncertainty of legal relations which requires settlement between the parties must be alleged. Ordinarily, there should be an assertion in the pleadings by one party of a legal relation or status or right in which he has a definite interest, together with an assertion of the denial of it by the other party, thus setting forth a substantial dispute.' (Citation omitted; internal quotation marks omitted.) Bombero v. Planning & Zoning Commission, 40 Conn.App. 75, 85, 669 A.2d 598 (1996). 'Fully to carry out the purposes intended to be served by [declaratory] judgments, it is sometimes necessary to determine rights which will arise or become complete only in the contingency of some future happening. Even if the right claimed . . . is a contingent one, its present determination may well serve a very real practical need of the parties for guidance in their future conduct.' (Internal quotation marks omitted.) George v. Watertown, 85 Conn.App. 606, 613-14, 858 A.2d 800, cert. denied, 272 Conn. 911, 863 A.2d 702 (2004), quoting Sigal v. Wise, 114 Conn. 297, 301-02, 158 A. 891 (1932)." (Footnote omitted.) O& G Industries, Inc. v. Litchfield Ins. Group, Inc., Superior Court, judicial district of Litchfield, Docket No. CV-12-6006448-S, (July 1, 2013, Pickard, J.).
" [W]hether a court should grant declaratory relief is properly decided by a motion to strike." Aetna Casualty & Surety Co. v. Jones, 220 Conn. 285, 293, 596 A.2d 414 (1991). " [A] successful motion to strike an action for a declaratory judgment upon the ground of available alternative means of redress . . . must show that the court could not in the exercise of sound discretion permit the action to proceed." (Internal quotation marks omitted.) Id., 293-94. " [T]he Practice Book allows the trial court wide discretion to render a declaratory judgment unless another form of action clearly affords a speedy remedy as effective, convenient, appropriate and complete." (Footnote omitted.) England v. Coventry, 183 Conn. 362, 365, 439 A.2d 372 (1981); see also O& G Industries, Inc. v. Litchfield Ins. Group, Inc., supra, Superior Court, Docket No. CV-12-6006448-S, (" [w]hile a trial court is afforded . . . wide discretion to render a declaratory judgment, a court should not entertain an action for a declaratory judgment when an ordinary action affords a remedy as effective, convenient and complete" [internal quotation marks omitted]).
In O& G Industries, Inc., the court granted a motion to strike a declaratory judgment count in an action also involving a breach of contract, holding that, " [a]s the plaintiff's claim [in that case wa]s based upon a breach of the Aon Service Agreement, there is no need for this court to declare the rights of the parties because the court's interpretation of the contract under the plaintiff's breach of contract claim will determine the parties' rights and, thus, the breach of contract claim provides immediate and complete relief to the plaintiff. Therefore, a declaratory judgment is unnecessary and the motion to strike count two is granted." Id. Similarly, the court in Falcigno v. Falcigno, Superior Court, judicial district of New Haven, Docket No. CV-12-6033535-S (December 5, 2014, Wilson, J.) (59 Conn.L.Rptr. 453, ), struck a count seeking declaratory relief because " the defendant's prayer for declaratory relief rest[ed] on its claim that the plaintiff breached the certificate of satisfaction. In deciding the defendant's breach of contract claim, the court must interpret the certificate of satisfaction. By interpreting the certificate of satisfaction under the breach of contract claim, the court will determine the rights of the parties. Thus, a decision on the breach of contract claim will afford a remedy as speedy, convenient, and effective as a declaration of the parties' rights. Therefore, the motion to strike the defendant's prayer for declaratory relief is granted because resolution of the breach of contract claim will provide the defendant with immediate and complete relief." On the other hand, the court in Greenpoint Mortgage Corp. v. Olympia Mortgage Corp., Superior Court, Docket No. CV-99-0334589-S, (July 12, 2001, Moraghan, J.), denied a motion to strike a declaratory judgment action because " [t]he breach of contract claims against Commonwealth and Olympia will not determine the rights of all parties as to the issue of title to the property and, thus, is not a complete and adequate remedy."
After the court grants this motion to strike, only counts one and two will remain. Count one sounds in breach of contract and count two in breach of the covenant of good faith and fair dealing. The prayer for relief for these counts includes a claim for specific performance of the contract. The contractual provisions pertaining to the reversion of the intellectual property will have to be construed during the court's consideration of that claim. That analysis will, of necessity, determine the rightful owner of the intellectual property. As a result, a declaratory judgment as to which entity owns the intellectual property would be duplicative of those efforts. Therefore under the holding of England, supra, and its progeny, cited above, another aspect of the existing legal action, the claim for specific performance of the contract, clearly affords a speedy remedy which will be as effective, convenient, appropriate and complete as a declaration as to the rightful owner of the intellectual property. The court grants the motion to strike the claims for declaratory relief on this basis. As a result, there is no need for the court to consider the § 17-56(c) argument.
8
Claims for Temporary and Permanent Injunctions
The defendant moves to strike the plaintiff's request for temporary and permanent injunctions. In so doing, the defendant argues that the plaintiff has not complied with statutory prerequisites for a prejudgment remedy under Connecticut General Statutes § 52-278c. The defendant also contends that the plaintiff asks for temporary injunctive relief as to what appear to be permanent elements of relief. The plaintiff asserts that the prejudgment remedy statute is not relevant to claims for injunctive relief. The motion to strike the claim for temporary injunction has been overtaken by events and is, therefore, moot. The court denies the motion to strike the claim for permanent injunctive relief.
To begin, the court will examine the claims for a temporary and permanent injunction that will survive this memorandum of decision. After the court, in this memorandum, orders stricken counts three through eight, inclusive, the only remaining counts, one and two, each seek a " temporary and permanent injunction prohibiting the Defendant from using the intellectual property" and a " temporary and permanent injunction ordering the Defendant to execute any and all documents necessary to convey the intellectual property to the Plaintiff . . ." The court shall review separately the motion to strike the request for a temporary injunction and the motion to strike the request for a permanent injunction.
The court has already heard and denied the plaintiff's motion for a temporary injunction (memorandum of decision #114.10). Therefore, the motion to strike the temporary injunction has been mooted, and is denied. Permanent injunctions are significantly different in nature than prejudgment remedies. Injunctions are either mandatory or prohibitory. " A prohibitory injunction is an order of the court restraining a party from the commission of an act. A mandatory injunction, on the other hand, is a court order commanding a party to perform an act." Tomasso Bros. v. October Twenty-Four, Inc., 230 Conn. 641, 652, 646 A.2d 133, 139 (1994). " The purpose of a temporary injunction is to [maintain] the status quo while the rights of the parties are being determined, " while " a permanent injunction effects a final determination of [those] rights." (Internal quotation marks omitted.) Bozrah v. Chmurynski, 303 Conn. 676, 682, 36 A.3d 210 (2012). " A party seeking injunctive relief has the burden of alleging and proving irreparable harm and a lack of an adequate remedy at law . . . The extraordinary nature of injunctive relief requires that the harm complained of is occurring or will occur if the injunction is not granted. Although an absolute certainty is not required, it must appear that there is a substantial probability that but for the issuance of the injunction, the party seeking it will suffer irreparable harm . . . Additionally, " [a] decision to grant or deny an injunction must be compatible with the equities in the case, which should take into account the gravity and willfulness of the violation, as well as the potential harm to the defendant." (Citation omitted; emphasis omitted; internal quotation marks omitted.) Steroco, Inc. v. Szymanski, 166 Conn.App. 75, 87-88, 140 A.3d 1014 (2016).
" The fact that the pleadings [a]re not closed restricts the authority of the trial court to render permanent judgments on pending claims . . . A trial court may not sua sponte transform applications that request temporary injunctions into proceedings on the merits of issuance or denial of permanent injunctions . . . [A]lthough under certain circumstances a temporary injunction may be transformed into a permanent injunction with the consent of the parties . . . the trial court does not have authority to render permanent judgments on pending claims where the pleadings are not yet closed." (Citations omitted; internal quotation marks omitted.) Gattoni v. Zaccaro, 52 Conn.App. 274, 281, 727 A.2d 706 (1999).
By contrast, a " '[p]rejudgment remedy' means any remedy or combination of remedies that enables a person by way of attachment, foreign attachment, garnishment or replevin to deprive the defendant in a civil action of, or affect the use, possession or enjoyment by such defendant of, his property prior to final judgment . . ." General Statutes § 52-278a(d). " A prejudgment remedy is available upon a finding by the court that 'there is probable cause that a judgment in the amount of the prejudgment remedy sought, or in an amount greater than the amount of the prejudgment remedy sought, taking into account any defenses, counterclaims or set-offs, will be rendered in the matter in favor of the plaintiff . . .' General Statutes § 52-278d(a)(1)." (Internal quotation marks omitted.) TES Franchising, LLC v. Feldman, 286 Conn. 132, 137, 943 A.2d 406 (2008).
A prejudgment remedy is, as one can clearly see, a procedural device used to attempt to provide security for a potential award of damages. A prejudgment remedy is awarded prior to final judgment. It has no legal relationship to a permanent award of equitable relief, either mandating a party to do something or prohibiting a party from doing something. As a result, the defendant's attempt to strike the plaintiff's request for permanent injunctive relief by invoking statutory requirements for a prejudgment remedy misses the mark badly. Therefore, the court denies the defendant's motion to strike the plaintiff's claim for permanent injunction relief.
III
CONCLUSION
The court grants the defendant's motion to strike counts three through eight, inclusive and denies the defendant's motion to strike the plaintiff's claim for permanent injunctive relief. The defendant's motion to strike the plaintiff's claim for temporary relief is moot, and is therefore, denied as well.
SO ORDERED.