Opinion
No. CV03-0824985S
May 31, 2006
MEMORANDUM OF DECISION ON MOTION TO STRIKE ( No 139)
The plaintiff, acting by and through State Treasurer Denise L. Nappier, has brought this action against the defendant law firm and its principals seeking the return of a $5,000 payment which it made to Mihaly Kascak, LLC as a late payment penalty in a workers' compensation case. The State alleges that this payment was made in error and that the defendants' retention of the funds constitutes unjust enrichment.
Plaintiff has moved to strike defendants' "Amended Fifth Special Defense," dated October 4, 2005. Defendants allege therein that plaintiff's claim is barred by the doctrine of promissory estoppel. An earlier version of this special defense was stricken by Judge Shapiro on September 15, 2005, on the ground that defendants had failed to allege facts supporting the essential allegation that "the action in question [was] induced by an agent having authority in such matters." State v. Mihaly Kascak, Docket No. CV 03 0824985 (J.D. of Hartford, September 20, 2005).
Plaintiff submits that the amended special defense is still legally insufficient because the defendants did not allege that the attorney general's office possessed the requisite statutory authority to promise or to make payments on behalf of the Second Injury Fund.
"[E]stoppel against a public agency is limited and may be invoked: (1) only with great caution; (2) only when the action in question has been induced by an agent having authority in such matters; and (3) only when special circumstances make it highly inequitable or oppressive not to estop the agency . . . [A] claim for promissory estoppel will not lie against the state unless the party claiming estoppel would be subjected to substantial loss if the public agency were permitted to negate the acts of its agents." (Citation omitted; internal quotation marks omitted.) In re Michacla Lee R., 253 Conn. 570, 604 (2000). Furthermore, "[for the Second Injury Fund to be liable for payment of an award, the award must have been made pursuant to the Workers' Compensation Act, or some other express statutory authorization for fund liability is required." McNulty v. Stamford, 37 Conn.App. 835, 845 (1995). See also Going v. Cromwell Fire District, 159 Conn. 53, 61 (1970) (explaining that "[p]ayment of an award from a special fund such as the second injury . . . fund . . . should be made only in accordance with express statutory authority . . . in order to protect that special fund and prevent unwarranted diversions of it from the specific purpose for which it was created"). (Citations omitted.) Accordingly, allegations of inducement by an agent having authority to represent the Second Injury Fund must be accompanied by allegations of statutory authorization for fund liability. See In re Michaela Lee R., supra, 604; Chotkowski v. State, 240 Conn. 246, 268-69 (1997).
In this case, the defendants allege that the attorney general's office had authority to negotiate workers' compensation settlement agreements and allege that it held itself out as representing the Second Injury Fund. The defendants, however, do not allege that the contested late payment penalty was approved by the workers' compensation commissioner or statutorily authorized. See McNulty v. Stamford, supra, 37 Conn.App. 845. Because the defendants' promissory estoppel allegations are devoid of statutory authorization to bind the Fund, an essential element of promissory estoppel against that public agency is not satisfied. As a result, the fifth special defense remains legally insufficient. See Carothers v. Ferruolo, Docket No. 370888 (J.D. of Hartford-New Britain, May 2, 1990) (Hennessey, J.) ( 1 Conn. L. Rptr. 572) (striking special defenses of estoppel against public agency absent allegations that "action in question [was] induced by an agent having authority in such matters").
The motion to strike is therefore granted.