Opinion
KNLCV166027306S
08-30-2017
V& M Construction, Inc. v. Cynthia A. Coelho, Trustee of the Cynthia A. Coelho Revocable Trust et al.
UNPUBLISHED OPINION
MEMORANDUM OF DECISION IN RE MOTION TO STRIKE (#111)
Hon. John J. Nazzaro, J.
FACTS
The plaintiff, V& M Construction, Inc., filed a revised complaint on September 29, 2016, against the defendants Cynthia A. Coelho, Trustee of the Cynthia A. Coelho Revocable Trust, and James Coelho. In counts one through four, the plaintiff alleges the following facts. The plaintiff constructed a garage addition on the defendants' property located at 38 Cove Road Stonington, Connecticut, and the defendants agreed to pay the plaintiff on a " cost plus basis." The cost of the renovations and improvements totaled $355, 732.33, of which the defendants have paid the plaintiff $285, 426.98, leaving a balance of $70, 286.35 due. In count one, the plaintiff alleges foreclosure of a mechanic's lien based on a lis pendens filed in the land records of the town of Stonington. In count two, the plaintiff alleges that the defendants were unjustly enriched by failing to pay for the service and materials rendered, yet enjoy the benefit of the same. Count three alleges that the defendants are obligated to compensate the plaintiffs based on quantum meruit . In count four, the plaintiff alleges damages on the basis of a breach of contract. The plaintiff requests damages and attorneys fees, and as to count one, the plaintiff requests foreclosure of the mechanic's lien, possession of the property, fees, and costs.
On October 27, 2016, the defendants filed a motion to strike counts one through four of the revised complaint because the claims were legally insufficient in that the plaintiff had not alleged sufficient facts to show compliance with General Statutes § 20-418 et seq., the Home Improvement Act (act), or the applicability of an exception to the act. The defendants' motion was granted by this court on January 11, 2017 (#105.50). On January 25, 2017, the plaintiff filed a request for leave to amend the complaint (#108), which was accompanied by the plaintiff's substituted complaint. The defendants filed an objection (#109) to the plaintiff's request for leave to amend the complaint. On March 13, 2017, the court overruled the defendants' objection (#109.02) to the plaintiff's substituted complaint.
The plaintiff's amended complaint (#108) is entitled " substituted complaint" and will be referred to as such in this memorandum of decision.
On April 12, 2017, the defendants filed a motion to strike counts one, two, three and four of the plaintiff's substituted complaint on the basis that the plaintiff has failed to sufficiently plead the bad faith exception to the act or, alternatively, counts one, three and four are legally insufficient because the plaintiff may only recover under the theory of unjust enrichment when bad faith is alleged. The defendants' motion is supported by a memorandum of law. On May 8, 2017, the plaintiff filed a memorandum of law in opposition to the defendants' motion. On May 24, 2017, the defendants filed a reply brief. The motion was argued during the foreclosure calendar on May 30, 2017. In its memorandum in opposition to the motion to strike and during oral argument, the plaintiff conceded that count four of the substituted complaint should be stricken. Therefore, the court will strike count four and only address the defendants' motion to strike as to counts one, two and three of the substituted complaint. For reasons set forth below, the court denies the motion to strike counts one, two, and three. The motion to strike count four, by consent, is granted.
DISCUSSION
" [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). " If any facts provable under the express and implied allegations in the plaintiff's complaint support a cause of action . . . the complaint is not vulnerable to a motion to strike." Bouchard v. People's Bank, 219 Conn. 465, 471, 594 A.2d 1 (1991).
The defendants first argue that the plaintiff's substituted complaint does not supply the missing essential allegation, which resulted in the plaintiff's previous amended complaint being stricken. The defendants further argue that the plaintiff has not asserted any facts that are materially different from those which were stricken by the court previously and that the allegations in the substituted complaint are legally insufficient to constitute bad faith. The plaintiff contends that it has sufficiently pleaded bad faith, which is an exception to the bar on a contractor's recovery under contracts that do not comply with the Home Improvement Act.
The Home Improvement Act (act), General Statutes § 20-418 et seq., was passed to protect homeowners from substandard work and to ensure homeowners understand the terms of home improvement contracts. Wright Bros. Builders, Inc. v. Dowling, 247 Conn. 218, 231, 720 A.2d 235 (1998). General Statutes § 20-429(a)(1)(A) provides in relevant part: " No home improvement contract shall be valid or enforceable against an owner unless it: (i) Is in writing, (ii) is signed by the owner and the contractor, (iii) contains the entire agreement between the owner and the contractor, (iv) contains the date of the transaction, (v) contains the name and address of the contractor and the contractor's registration number, (vi) contains a notice of the owner's cancellation rights in accordance with the provisions of chapter 740, (vii) contains a starting date and completion date, [and] (viii) is entered into by a registered salesman or registered contractor . . ." The language of General Statutes § 20-429(a), does not provide a bad faith exception to compliance with the act, but our courts have created an exception to the requirements of the statute, and it is well settled that " proof of bad faith . . . serves to preclude a homeowner from hiding behind the protection of the act." (Internal quotation marks omitted.) Burns v. Adler, 325 Conn. 14, 34, 155 A.3d 1223 (2017); see also Habetz v. Condon, 224 Conn. 231, 237, 240, 618 A.2d 501 (1992) (concluding that a contractor could recover damages from a homeowner who acted in bad faith for work performed under contract, even though the contract did not comply with the act). " 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." (Citation omitted; internal quotation marks omitted.) Habetz v. Condon, supra, 224 Conn. 237. Our Supreme Court has " recognized that proof of bad faith on the part of the homeowner is an exception to what would otherwise be a harsh lesson to the home improvement contractor unable to recover due to a violation of the act. The central element giving rise to this exception is the recognition that to allow the homeowner who acted in bad faith to repudiate the contract and hide behind the act would be to allow him to benefit from his own wrong, and indeed encourage him to act thusly." Id.
Recently, our Supreme Court further articulated that it " [does] not conclude that the bad faith exception is applicable only to cases in which the homeowner accepted goods and services from a contractor knowing that the act would provide an 'escape hatch' and to cases in which the contractor has detrimentally relied on the homeowner's bad faith conduct in providing goods and services." Burns v. Adler, supra, 325 Conn. 38-39 n.16. Accordingly, it follows that a sufficiently pleaded allegation of bad faith on the part of the homeowner gives rise to a cause of action against the homeowner, despite the contractor's noncompliance with the act. See id.
Applying the applicable standard for bad faith to the present case, the court must address whether the plaintiff sufficiently alleges bad faith. In paragraph three of count one of the substituted complaint, which is also paragraph three in counts two and three, the plaintiff alleges that, " [a]t the time the contract was signed, the defendant, Cynthia Coelho, was an employee or a former employee of [a] law firm . . . and based upon her employment she was aware of the contractual requirements of the Home Improvement Act and was aware that the contract . . . was not in compliance with the Act and that as such it could be deemed invalid and unenforceable . . ." Furthermore, in paragraph four of count one, which is the same as paragraph four in counts two and three, the plaintiff alleges that the defendant " entered into the contract in bad faith knowing she would have the option of repudiating the agreement." The defendants argue that alleged knowledge of unenforceability is insufficient to support a claim of bad faith. However, the plaintiff alleges knowledge of unenforceability at the time of signing the contract, and the substituted complaint includes allegations that go beyond asserting mere knowledge of unenforceability. The plaintiff alleges that the defendants had knowledge of the requirements under the act, knew the contract did not comply, and despite this alleged knowledge, chose to enter into the contract, knowing it would not be enforceable against the defendants. See Burns v. Adler, supra, 325 Conn. 38-39 n.16. For purposes of a motion to strike, the court must take facts alleged as true and whether the bad faith exception is sufficiently alleged is a question of law. Taking the allegations as true and construing the complaint in the manner most favorable to sustaining its legal sufficiency, the plaintiff alleges facts to support the bad faith exception to the act.
Next, the defendants assert that the plaintiff alleges bad faith on the part of Cynthia Coelho in her individual capacity, in which she is not a party to this case, and, thus, the claims must fail because the knowledge was not acquired by Cynthia Coelho as a trustee. The plaintiff counters that the distinction between Cynthia Coelho as an individual versus a trustee is inconsequential because the plaintiff has sufficiently alleged that the defendant, Cynthia Coelho, had knowledge of the unenforceability of the contract at the time of signing.
Our Supreme Court has distinguished between individuals and trustees with respect to liability. See Joseph v. Donovan, 116 Conn. 160, 166, 164 A. 498 (1933) (in a suit brought against a person in his individual capacity, a judgment cannot be rendered against him as a trustee); see also Bock v. Meriden Trust & Safe Deposit Co., 135 Conn. 94, 97, 60 A.2d 918 (1948). In the present case, however, the substituted complaint does not allege that Cynthia Coelho, in her individual capacity, is liable to the plaintiff. Rather, the plaintiff alleges that Cynthia Coelho entered the contract with knowledge of the unenforceability of the agreement and ability to repudiate the same. It is irrelevant that Cynthia Coelho allegedly obtained this knowledge through employment with a law firm because she would have the alleged knowledge irrespective of her capacity. The distinction as to liability is not germane to the issue presently before the court because the plaintiff specifically alleges that Cynthia Coelho possessed knowledge and entered into the agreement knowing it would be unenforceable as to both signatories to the contract. Further, the substituted complaint is devoid of any allegation that Cynthia Coelho is liable to the plaintiff in her individual capacity. If part of a count is viable, it is not subject to a motion to strike. Farago v. Pfizer, Inc., Superior Court, judicial district of New London, Docket No. 524911, (May 17, 1993, Teller, J.). Therefore, that the plaintiff does not specifically allege James Coelho also possessed knowledge will not impair the legal sufficiency of the claims. Nevertheless, viewing the facts in the most favorable light, the court can infer from the allegations that both defendants signed the contract based on Cynthia Coelho's knowledge of unenforceability and ability to repudiate the agreement. Construing the pleadings broadly and realistically, the plaintiff alleges facts that would support a claim that the defendant had knowledge of the contract's unenforceability against the defendants, and this knowledge was relied upon in an attempt to evade the defendants' obligations under the contract.
The additional cases cited by the defendants are distinguishable from the present case. In Wadia Enterprises, Inc. v. Hirschfeld, 224 Conn. 240, 618 A.2d 506 (1992), the court examined whether the plaintiff contractor produced sufficient evidence of the defendant homeowners' alleged bad faith so as to survive the defendant's motion for summary judgment. Id., 242. There, the court concluded there was not any evidence of a dishonest purpose as there was no allegation or proof that the defendant-property owner's attorneys had intentionally omitted contract requirements delineated in the act " in order to have an escape hatch." Id., 248-49. The court reasoned that, " [t]here is nothing dishonest or sinister about homeowners proceeding on the assumption that there is a valid contract . . . and later . . . upon learning that the contract is invalid . . . [repudiating] it." (Emphasis added.) Id., 249. Similarly, in Lucien v. McCormick Construction, LLC, 122 Conn.App. 295, 998 A.2d 250 (2010), the court concluded that the plaintiff did not act with a dishonest purpose as there was nothing in the facts to show that the plaintiff knew of the violation earlier or that the contract was drafted to avoid an obligation to pay. Id., 302-03. Unlike Wadia and Lucien, here, the plaintiff alleges that Cynthia Coelho knew of the unenforceability at the time the defendants signed the contract and knew the agreement could be repudiated on this basis.
The defendants' argument that the plaintiff has failed to supply the missing allegation which resulted in the amended complaint being stricken is unpersuasive because the plaintiff has amended the original complaint to sufficiently assert bad faith, a judicially created exception to the act. See Habetz v. Condon, supra, 224 Conn. 237. The interpretation of pleadings is a question of law for the court. Boone v. William W. Backus Hospital, 272 Conn. 551, 559, 864 A.2d 1 (2005). The plaintiff's substituted complaint provides additional allegations, not alleged in the previous complaint, which if proven, support a claim pursuant to the bad faith exception to the act.
With respect to count one, the defendants are correct that Caulkins v. Petrillo, 200 Conn. 713, 720, 513 A.2d 43 (1986), and several trial court decisions have held that where a contract violates the Home Improvement Act a mechanic's lien must be discharged, however, the issue in Caulkins and similarly decided Superior Court cases did not involve allegations of bad faith. Because the bad faith exception to the act is sufficiently alleged in count one, the defendant's motion to strike count one for foreclosure of the mechanic's lien is denied as to this ground. See Davis v. Lawrence Hogan, LLC, Superior Court, judicial district of New Haven, Docket No. CV-13-6043789-S, (December 30, 2014, Corradino, J.) (denying motion to discharge or reduce the mechanic's lien where there was bad faith reliance on the Home Improvement Act). Similarly, the plaintiff has sufficiently alleged facts in counts two and three of the substituted complaint, which if proven, would support a claim of bad faith. Therefore, the motion to strike counts two and three is not granted on this ground.
Lastly, there is an alternative ground to strike counts one and three, namely that if the court concludes that the plaintiff has sufficiently alleged bad faith, counts one and three must still be stricken because when a contractor has proven bad faith, he may only recover under a claim for unjust enrichment. The plaintiff counters that it has sufficiently alleged that the defendants acted in bad faith under the " escape hatch theory, " and, therefore, the claims for foreclosure of the mechanic's lien and quantum meruit remain viable, in addition to the claim for unjust enrichment.
By asserting this argument, the defendants have conceded that the plaintiff's claim for unjust enrichment will not be stricken if the court does in fact find that the bad faith exception to the Home Improvement Act was sufficiently pleaded in the substituted complaint (#108). See Reply Brief (#114). As discussed above, this court concludes that the plaintiff has alleged facts sufficient to support the bad faith exception to the act. With respect to count two of the substituted complaint, the plaintiff alleges that the defendant, Cynthia Coelho, entered the agreement knowing the contract was unenforceable against the defendants and knew it could later be repudiated. Further, paragraph ten of count two alleges that the defendants withheld payment for benefits received on this basis. Accordingly, having concluded bad faith is sufficiently alleged, the defendant's motion to strike count two of the substituted complaint is denied.
The defendants rely on Burns v. Adler, which states, " when a contractor has proved bad faith, he may only recover under a theory of unjust enrichment, not breach of contract." Burns v. Adler, supra, 325 Conn. 29 n.10. The defendants assert that Burns precludes the plaintiff from pleading additional theories of relief, specifically, quantum meruit and foreclosure of a mechanic's lien. Although a claim for breach of contract is expressly prohibited when bad faith is proven under Burns v. Adler, this court does not interpret Burns so broadly as to preclude a claimant from alleging facts to support other claims for relief. See id. The Burns court decided, as between unjust enrichment and breach of contract, a claimant may not assert a breach of contract claim when bad faith has been proven. Id. The court does not explicitly prohibit other claims for relief. Id. Furthermore, in Davis v. Lawrence Hogan, supra, Superior Court, Docket No. CV-13-6043789-S, the court denied the motion to discharge or reduce the mechanic's lien, despite noncompliance with the act, because the court found there to be bad faith reliance on the act. Therefore, with respect to count one, having concluded that the bad faith exception to the act is sufficiently alleged, and declining to adopt the defendant's interpretation of Burns, particularly, when our rules of practice permit pleading alternative causes of action, the defendant's motion to strike count one is denied as to this ground. See Davis v. Lawrence Hogan, supra, Superior Court, Docket No. CV-13-6043789-S; see also Practice Book § 10-26.
With respect to count three, quantum meruit is an alternative claim to count two for unjust enrichment, and courts have addressed both theories under the bad faith exception. Alternative, even inconsistent, pleading is permitted. See United Coastal Industries v. Clearheart Construction Co., 71 Conn.App. 506, 511, 802 A.2d 901 (2002); see also Practice Book § § 10-25 and 10-26. " [I]n Habetz v. Condon, supra, 224 Conn. 240, the court held that contractors may recover in restitution despite noncompliance with § 20-429(a), when homeowners invoke the protections of the act in bad faith." Walpole Woodworkers, Inc. v. Manning, 307 Conn. 582, 586, 57 A.3d 730 (2012). " Quantum meruit and unjust enrichment are noncontractual means of recovery in restitution. Quantum meruit is a theory of recovery permitting restitution in the context of an otherwise unenforceable contract ." (Emphasis added.) Id., 587 n.9. " [C]ases decided under the bad faith exception after Habetz have invoked both quantum meruit and unjust enrichment." Id. That the contract is mentioned in the substituted complaint will not deprive the claim of its legal sufficiency as the plaintiff specifically alleges that the contract was unenforceable under the act and relied upon in bad faith by the defendant, thus giving rise to a claim based on restitution. See id. Therefore, the defendant's motion to strike count three is denied as to this ground.
In its reply brief (#114), the defendants argue for the first time that the allegations in count three are insufficient to support a claim of quantum meruit because it fails to plead facts supporting an implied promise to pay. The court need not address arguments raised for the first time in a reply memorandum, but for purposes of completeness, the court finds that count three will not be stricken on this basis. See Reardon v. Zoning Board of Appeals, 311 Conn. 356, 367-68 n.10, 87 A.3d 1070 (2014) (" we note the general rule that claims may not be advanced for the first time in a reply brief"). The plaintiff's substituted complaint alleges that the agreement provided for payment to the plaintiff, services were rendered by the plaintiff, and a balance remains outstanding for the labor and materials utilized in conjunction with the services. Therefore, the plaintiff has sufficiently alleged facts to support an alternative claim of quantum meruit . See Walpole Woodworkers, Inc. v. Manning, supra, 307 Conn. 587 n.9.
Accordingly, the allegations of counts one, two and three of the complaint sufficiently allege the bad faith exception to the Home Improvement Act. Furthermore, a claimant is not limited to alleging a claim for unjust enrichment when alleging bad faith. Therefore, the defendants' motion to strike counts one, two and three of the substituted complaint is denied.
CONCLUSION
For the foregoing reasons, the defendants' motion to strike counts one, two and three of the plaintiff's substituted complaint is denied. Further, the court strikes count four as the plaintiff conceded that this count fails to state a legally sufficient claim upon which relief can be granted.
It is so ordered.