Opinion
CV176011932S
12-13-2017
UNITED CONCRETE PRODUCTS, INC. v. NJR CONSTRUCTION, LLC et al.
UNPUBLISHED OPINION
OPINION
Farley, J.
The plaintiff, United Concrete Products, Inc. (" United"), commenced this action on February 6, 2017 against the defendants, NJR Construction, LLC (" NJR") and Aegis Security Construction Company (" Aegis"), asserting claims against NJR for breach of contract and for enforcement of payment by a general contractor pursuant to General Statutes § 49-41a. Against Aegis, the plaintiff asserts claims for breach of a payment bond and for bad faith. NJR filed its Answer, Special Defenses and Setoff/Counterclaim on May 4, 2017. NJR’s counterclaims allege breach of contract in Count One, breach of the covenant of good faith and fair dealing (" bad faith") in Count Two, and violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110 et seq. (" CUTPA") in Count Three. United has moved to strike NJR’s bad faith claim and the CUTPA claim. The issues have been fully briefed and the court heard oral argument on August 21, 2017. For the reasons that follow, United’s motion is granted as to Count Two and denied as to Count Three.
FACTUAL ALLEGATIONS
For purposes of United’s motion to strike, the court construes the allegations set forth in NJR’s counterclaims in NJR’s favor. The dispute between the parties arises out of a bridge construction project on Route 74 in Vernon. NJR was the general contractor on the project and United was a subcontractor responsible for supplying precast concrete abutments and deck beams. It was expected that a section of Route 74 would have to be closed for eight weeks in order to complete the project. The road closure was originally planned to begin on June 7, 2016 but, as a result of discussions between NJR and DOT the date was changed to June 13, 2016. NJR’s contract with the Connecticut Department of Transportation (" DOT") included " Incentive and Disincentive" provisions related to the length of time the road was actually closed, so it was important to avoid delays during the road closure period. NJR’s contract with United made this purpose clear and included a " time is of the essence" clause, as well as a term imposing " liquidated damages" on United if it failed to deliver on schedule.
As the date of the planned road closure approached, on May 5, 2016, United notified NJR of its progress and did not give NJR any reason to believe United was not on schedule. Subsequently, a United sales representative confirmed that all the precast products were ready. NJR scheduled delivery of the precast abutments for June 17, 2016 and delivery of the deck beams for June 29, 2016. It later emerged that NJR had experienced a number of production problems and had fired its production manager. The abutments did not actually arrive until June 21, 2016 and June 24, 2016 and, on June 27, 2016, United admitted that none of the deck beams were available to ship. The deck beams did not arrive until July 26, 2016. As a consequence of United’s failure to accurately represent its progress and its ability to deliver the products on schedule, and the resulting delays experienced on the project, the incentives in NJR’s contract with DOT were lost and the disincentive provisions were triggered.
NJR alleges that United’s conduct breached its implied duty of good faith and fair dealing and violated CUTPA. United maintains that these claims are legally insufficient because its conduct did not constitute " bad faith" and it does not present the " substantially aggravating circumstances" required to state a CUTPA claim. United argues that NJR’s claims fail to rise above the level of a simple breach of contract.
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). " A motion to strike challenges the legal sufficiency of a pleading, and consequently, requires no factual findings by the trial court." (Internal quotation marks omitted.) JP Morgan Chase Bank, N.A. v. Winthrop Properties, LLC, 312 Conn. 662, 670, 94 A.3d 622 (2014). " [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.) Coppola Construction Co. v. Hoffman Enterprises Ltd. Partnership, 309 Conn. 342, 350, 71 A.3d 480 (2013). " In ruling on a motion to strike the trial court is limited to considering the grounds specified in the motion." Meredith v. Police Commission, 182 Conn. 138, 140, 438 A.2d 27 (1980).
I. Breach of the Duty of Good Faith and Fair Dealing
" Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement." Warner v. Konover, 210 Conn. 150, 154, 553 A.2d 1138 (1989). To constitute a breach of this duty, " the acts by which a defendant allegedly impedes the plaintiff’s right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith." De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn. 424, 433, 849 A.2d 382 (2004) quoting Alexandru v. Strong, 81 Conn.App. 68, 80-81, 837 A.2d 875, cert. denied, 268 Conn. 906, 845 A.2d 406 (2004). " Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one’s rights or duties, but by some interested or sinister motive. Bad faith means more than mere negligence; it involves a dishonest purpose." (Internal citations omitted.) Habetz v. Condon, 224 Conn. 231, 237, 618 A.2d 501 (1992). " [B]ad faith is not simply bad judgment or negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity ... [I]t contemplates a state of mind affirmatively operating with furtive design or ill will." (Internal quotation marks omitted.) Hutchinson v. Farm Family Casualty Ins. Co., 273 Conn. 33, 42 n.4, 867 A.2d 1 (2005). " Absent allegations and evidence of a dishonest purpose or sinister motive, a claim for breach of the implied covenant of good faith and fair dealing is legally insufficient." Alexandru v. Strong, supra, 81.
When the legal sufficiency of a bad faith claim is at issue, Superior Courts are split on the degree of specificity required in the allegations made in support of the claim. Marder v. Nationwide Ins. Co., Superior Court, judicial district of New Haven, Docket No. CV-13-6038355-S (November 12, 2015, Wilson, J.) (61 Conn.L.Rptr. 269, 2015 WL 7941608) (collecting cases). One line of cases requires specific allegations establishing a dishonest purpose or malice. A second line of cases requires only that a plaintiff allege facts sufficient to give rise to an inference of a dishonest purpose or malice. Even under this less stringent line of cases, however, courts require " allegations that the conduct at issue was engaged in purposefully." (citation omitted) Urban Apparel Plus, LLC v. Sentinel Ins. Co., Ltd., Superior Court, judicial district of New Haven, Docket No. CV-13-6035293-S (October 21, 2013, Fischer, J.) (57 Conn.L.Rptr. 124, 2013 WL 6171114). In this court’s view, the less stringent standard should apply, in keeping with the general proposition 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.) Coppola Construction Co. v. Hoffman Enterprises Ltd. Partnership, supra, 309 Conn. 350. In this case, however, it is immaterial which standard applies because the allegations are insufficient under either standard.
The key allegations made by NJR’s counterclaim are that on May 5, 2016, United notified NJR of its progress and did not give NJR any reason to believe United was not on schedule. Subsequently, following a representation by a United sales representative confirming that all the precast products were ready, NJR scheduled delivery of the precast abutments for June 17, 2016 and delivery of the deck beams for June 29, 2016. It later emerged that NJR had experienced a number of production problems and had fired its production manager. The abutments did not actually arrive until June 21, 2016 and June 24, 2016 and, on June 27, 2016, United admitted that none of the deck beams were available to ship. The deck beams did not arrive until July 26, 2016. The most significant allegation is that a United sales representative told NJR that everything was ready. They were not. The counterclaim, however, is bereft of any allegations from which a reasonable inference may be drawn that the sales representative knowingly and purposefully gave United information he or she knew to be false. Nor does the counterclaim allege facts from which one may reasonably infer that United had a sinister or malicious motive to make such a purposeful misrepresentation. No facts suggest that United had something particular to gain by causing NJR to lose the benefit of the performance incentives in its contract, nor is there any suggestion that United had a motive to harm NJR. While one can infer that United may have been trying to cover up its problems, hoping it would find a way to satisfy its contractual obligations, without an allegation that United deliberately misled NJR knowing the harm it would cause to NJR, this inference is legally insufficient to support a claim of bad faith and Count Two must be stricken.
II. CUTPA
United has also moved to strike Count Three of NJR’s counterclaim alleging a violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110 et seq. (" CUTPA"). United argues that the allegations of Count Three fail to satisfy the requirements of the " cigarette rule" and allege no more than a simple breach of contract unaccompanied by substantially aggravating circumstances. NJR argues that United’s repeated assurances that the products would be delivered on time, and its failure to do so, was a deceptive practice and a violation of public policy sufficient to constitute a violation of CUTPA. Count Three of NJR’s counterclaim incorporates the allegations of the preceding counts and adds the following:
34. At all times relevant herein, United engaged in a pattern of deceptive, unscrupulous and unethical practices as described above, including but not limited to:
a. Making false representations regarding the progress of its manufacturing process relating to the Project;
b. Failing to advise NJR on numerous occasions that the production and delivery of the precast concrete products were delayed; and
c. Failing to advise NJR in advance of United’s internal production issues.
While these actions may not have been taken in bad faith, the conclusion they do not violate CUTPA does not inexorably follow.
" It is well settled that in determining whether a practice violates CUTPA we have adopted the criteria set out in the cigarette rule by the [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, 310 Conn. 375, 409, 78 A.3d 76 (2013). While CUTPA does not provide an additional remedy for a simple breach of contract claim, " when the defendant’s contractual breach is accompanied by aggravating circumstances, " CUTPA does provide an additional remedy. Id., 411.
Misrepresentations, even when unintentional or innocent, may be sufficient to give rise to a cause of action under CUTPA. See, e.g., Web Press Services Corp. v. New London Motors, Inc., 203 Conn. 342, 362-63, 525 A.2d 57 (1987) (common-law claims for fraud, deceit and misrepresentation require proof that defendant knew of falsity of representation, whereas CUTPA claimant need not prove defendant’s knowledge that representation was false); Hinchliffe v. American Motors Corp., 184 Conn. 617, 440 A.2d 810 (1981) (CUTPA proscribes broader range of conduct than common-law action for innocent misrepresentation). Moreover, " [t]he CUTPA plaintiff need not prove reliance or that the representation became part of the basis of the bargain." Id. Because CUTPA removes these common-law obstacles to recovery, " the private cause of action created by CUTPA reaches conduct well beyond that proscribed by any common-law analogue[.]" Associated Investment Co. v. Williams Assoc., 230 Conn. 148, 155-58, 645 A.2d 505 (1994).
In Milford Paintball, LLC v. Wampus Milford Associates, LLC, 156 Conn.App. 750, 115 A.3d 1107 (2015), cert. denied, 317 Conn. 912, 115 A.3d 1107 (2015), the plaintiff entered into a lease of commercial space to open an indoor paintball business. The defendant landlord undertook certain " fit up" obligations in the lease. It was essential to the plaintiff’s business that the landlord fulfill those obligations by September when the season for indoor paintball began. The court upheld the trial court’s conclusion that the defendant had violated CUTPA by repeatedly assuring the plaintiff it would perform its contractual obligations in a timely fashion, knowing that timely performance was critically important to the plaintiff’s business, and then failing to do so causing damages to the plaintiff. The trial court found that the misrepresentations, which it characterized as negligent, satisfied the second prong of the cigarette rule. The Appellate Court, citing Hinchliffe v. American Motors Corp., supra, 184 Conn. 617, affirmed the trial court, noting that CUTPA does provide a remedy for unintentional misrepresentations. Milford Paintball, LLC v. Wampus Milford Associates, LLC, supra, 765. It is up to the factfinder to decide whether misrepresentations violate CUTPA, as long as there is a " nexus with a public interest, some violation of a concept of what is fair, some immoral, unethical, oppressive or unscrupulous business practice or some practice that offends public policy." Id., 765 n.11, quoting Gaynor v. Hi -Tech Homes, 149 Conn.App. 267, 276, 89 A.3d 373 (2014). In this case that nexus exists. It was unfair to NJR for United to be misleading or evasive about the timeliness of its performance when NJR was relying on United to be forthright about the timeliness of its performance, with significant associated economic ramifications that were known to United. NJR also was not given an opportunity to try and adjust to United’s delays in advance and possibly avoid losing its performance incentives.
The only distinction between this case and Milford Paintball, is the fact that the alleged misrepresentations in this case all occurred after the contract was executed, whereas in Milford Paintball the misrepresentations occurred both prior to the execution of the lease and afterwards. It was unnecessary, therefore, for the court to reach the defendant’s argument that post-execution misrepresentations about the timeliness of performance could not support a CUTPA claim. Milford Paintball, LLC v. Wampus Milford Associates, LLC, supra, 156 Conn.App. 763 n.9. The significance of this distinction to the defendant in Milford Paintball is unclear. Here, as in many CUTPA cases arising out of a contract, the unfair or deceptive conduct is alleged to have occurred in the performance of the contract. There is more to NJR’s claim than an allegation that United merely reaffirmed the promises made in the original contract. It may be reasonably inferred from the allegations of the counterclaim that NJR, aware that delays do occur in the production of construction products, was anxious to adjust to contingencies as they arose in order to stay within the eight-week road closure period. For example, NJR alleges that United’s delivery date under the original contract was " no later than June 7, 2016." Based on discussions with DOT, however, NJR adjusted the delivery date to June 17, 2016. Had NJR known that United was behind schedule, it might have made further adjustments in order to keep the road closure to eight weeks and thus earn the performance incentives in its contract with DOT. Although reliance is not an essential element of a CUTPA claim based on misrepresentation, here it is United’s awareness of NJR’s reliance on its representations, as well as the associated potential economic consequences, that could lead a factfinder to conclude that United’s misrepresentations, even if they were unintentional, were an unfair or deceptive business practice.
CONCLUSION
United’s motion to strike is granted as to the bad faith claim (Count Two) and denied as to the CUTPA claim (Count Three).