Opinion
No. CV 06 5000789
Memorandum Filed April 20, 2009
Contracts — New Home Construction Act — In General — Act Does Not Create a Private Cause of Action. The New Home Construction Contractor Act, CGS § 20-417b, does not create a private cause of action. A violation of the Act, however, is defined as a violation of CUTPA, CGS § 42-110a et seq., so that relief is available in a private action under the latter statute.
Factual Background
In this action Plaintiffs Scott Wells and Dottie Wells bring a nine-count amended complaint against the defendants, New House Resource Group, LLC (NHRG), Applegate Equity Planners, LLC, doing business as Applegate Group, LLC (Applegate Group), Chris Walker, Robert Stow, Spencer Classic Homes, LLC (Spencer Classic Homes), Barry Harvey and Michael Iacurci. In count one, which is the only count at issue, the plaintiffs allege a claim against all of the defendants for violation of the New Home Construction Contracts Act (act), General Statutes § 20-417a et seq.
The material facts, as alleged, are hereinafter articulated. On or about October 7, 2005, the plaintiffs entered into a purchase agreement with NHRG for the construction and purchase of a home at 9 Benjamin Lane in East Haddam, Connecticut (9 Benjamin Lane). Applegate Group engaged in negotiations and discussions with the plaintiffs relating to the agreement. Walker and Stow are principals, alter egos and/or agents of NHRG and Applegate Group. Stow was the owner of 9 Benjamin Lane and executed the purchase agreement.
The plaintiffs paid NHRG a deposit of $65,000 and were obligated to pay the purchase price upon completion. The purchase agreement provided that the real estate and improvements at 9 Benjamin Lane would be conveyed to the plaintiffs on or before November 15, 2005. The purchase agreement also provided that NHRG would furnish the plaintiffs with rent-free, temporary living arrangements at 4 Benjamin Lane, East Haddam, Connecticut (4 Benjamin Lane) from October 28, 2005 until the closing on 9 Benjamin Lane. On or about October 24, 2005, NHRG delivered to the plaintiffs a lease between the plaintiffs and Spencer Classic Homes, an entity listed as the owner of 4 Benjamin Lane. Harvey is the sole member and/or alter ego of Spencer Classic Homes. Iacurci, who is an attorney, represented NHRG and Spencer Classic Homes in the sale of 9 Benjamin Lane and the lease of 4 Benjamin Lane. On October 28, 2005, NHRG delivered possession of 4 Benjamin Lane to the plaintiffs.
On or about February 14, 2006, the plaintiffs discovered that substantial work at 9 Benjamin Lane was still not completed and that substantial defects existed, which would require further delays in completion. The plaintiffs discussed their dissatisfaction with Walker and Stow. On or about February 16, 2006, Walker informed the plaintiffs that NHRG would return the deposit to the plaintiffs, and it would give them time to find other housing. On or about March 7, 2006, the plaintiffs made a formal, written request for the return of the deposit to NHRG due to, inter alia, its failure to convey the real estate and improvements at 9 Benjamin Lane to them on November 15, 2005 or at any reasonable time thereafter.
It is alleged that NHRG, Walker and Stow have failed to return the deposit to the plaintiffs in violation of § 20-417d(d)(7). It is alleged further that the defendants were not registered as new home construction contractors at any relevant times in violation of §§ 20-417b(a) and 20-417d(d)(5), which also constitutes a violation of § 20-417e(a). In addition, it is alleged that the purchase agreement did not comply with the disclosures required by § 20-417d. In count three, the plaintiffs incorporate their previous allegations and further allege that, pursuant to § 20-417g, the defendants' violations of the New Home Construction Contracts Act constitute violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-119a et seq.
On September 10, 2008, NHRG, Walker, Stow and Applegate Group (the defendants), filed a motion to strike count one of the plaintiffs' amended complaint on the ground that count one fails to state a cause of action upon which relief may be granted. On the same day, the defendants filed a memorandum of law in support of their motion. On October 20, 2008, the plaintiffs filed an objection to the motion. On October 29, 2008, the defendants filed a reply.
Standard for deciding Motion to Strike
If a party wishes to test the legal sufficiency of a cause of action he or she may do so by way of a procedural vehicle called a motion to strike. See Section 10-39 of the Connecticut Rules of Court. "[F]or the purpose of a motion to strike, the moving party admits all facts well pleaded." RK Constructors, Inc. v. Fusco Corp., 231 Conn. 381. 383 n. 2. 650 A.2d 153 (1994). "A motion to strike is the proper procedural vehicle . . . to test whether Connecticut is ready to recognize some newly emerging ground of liability." (Internal quotation marks omitted.) Rich v. Foye, Superior Court, complex litigation docket at Waterbury, Docket No. X01 CV 06 5003443 (August 28, 2007, Cremins, J.) (44 Conn. L. Rptr. 184, 186).
In their motion to strike, the defendants argue that the New Home Construction Contractors Act does not provide a private cause of action, other than a claim under CUTPA, and therefore, count one fails to state a claim for which relief may be granted. The plaintiffs concede that, to date, Connecticut courts have not recognized an independent cause of action under the act. They argue, however, that the courts have the inherent power to recognize new tort causes of action, and that a violation of the New Home Construction Contractors Act can constitute a separate cause of action, such as a claim for negligence per se. In reply, the defendants argue that because the act specifically provides for a private cause of action based in CUTPA, there is no need for the court to expand the remedies available under the act, as the plaintiffs request. The defendants further assert that the act creates and defines the limits of both the duties of the contractors and remedies available against them because the duties the act imposes upon new home construction contractors are derived from the statute, and not from common law.
It is noted that in at least two cases, judges of the Superior Court have determined that a consumer cannot bring a private cause of action against a contractor who have violated the New Home Construction Contractors Act, other than a claim under CUTPA. See Boyd Building v. Brewster, Superior Court, judicial district of New London, Docket No. CV 06 5001652 (July 8, 2008, Martin, J.) (45 Conn. L. Rptr. 751); Sturm v. Harb Development, LLC, Superior Court, judicial district of New Britain, Docket No. CV 07 6001058 (January 2, 2008, Pittman, J.). The Connecticut Appellate Courts have not, however, considered the question.
This court must interpret the legislation to see whether it harbors a private cause of action. "When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature . . . In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply . . . In seeking to determine that meaning, General Statutes § 1-2z directs us first to consider the text of the statute itself and its relationship to other statues. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered . . . The test to determine ambiguity is whether the statute, when read in context, is susceptible to more than one reasonable interpretation." (Internal quotation marks omitted.) State v. Marsh McLennan Cos., 286 Conn. 454, 464 65, 944 A.2d 315 (2008).
The Supreme Court discussed the penalty provisions of the New Home Construction Contractors Act in D'Angelo Development Construction Co. v. Cordovano, 278 Conn. 237, 897 A.2d 81 (2006), in which the court decided that a contractor's failure to comply with the requirements of the New Home Construction Contractors Act should not be subjected to the additional penalties of being precluded from enforcing his contract with the consumer or maintaining a lien on the consumer's property. As the court noted, "[t]he New Home Construction Contractors Act, which took effect on October 1, 1999, regulates the activities of new home construction contractors." D'Angelo Development Construction Co. v. Cordovano, supra, 278 Conn. 243. "The act . . . provides three distinct penalties for a violation of its provisions. First, the act empowers the commissioner to impose a civil penalty on . . . `any person who violates any of the provisions of [the act]. . .' General Statutes § 20-417f. Second, the act provides that `any person who violates any provision of subsection (d) of section 20-417d shall be guilty of a class A misdemeanor.' General Statutes § 20-417e. Finally, the act provides that a violation of any of its provisions `shall be deemed an unfair or deceptive trade practice under subsection (a) of section 42-110b': General Statutes § 20-417g; thereby exposing the violator to a private lawsuit under the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq." D'Angelo Development Construction Co. v. Cordovano, supra, 278 Conn. 244-45.
The act requires a contractor to obtain a certificate of registration from the commissioner of consumer protection (commissioner) before he or she may `engage in the business of new home construction or hold himself or herself out as a new home construction contractor . . .' General Statutes § 20-417b(a). The act also specifies the circumstances under which the commissioner may revoke, suspend or refuse to issue or renew a certificate of registration. See General Statutes § 20-417c." D'Angelo Development Construction Co. v. Cordovano, supra, 278 Conn 243-44. "General Statutes § 20-417d(b) requires that such contracts contain `a provision advising the consumer that the consumer may be contacted by such contractor's prospective consumers concerning the quality and timeliness of such contractor's new home construction work, unless the consumer advises such contractor, in writing, at the time the contract is executed, that the consumer prefers not to be contacted.' Section 20-417d(c) sets forth the form that the written advice and disclosures required by § 20-417d(a) must take." D'Angelo Development Construction Co. v. Cordovano, supra, 278 Conn. 244 n. 12. In addition, section 20-417d(d) of the act provides in relevant part: "No person shall . . . (7) fail to refund a deposit paid to a new home construction contractor not later than ten days after a written request mailed or delivered to the new home construction contractor's last known address" and lists four conditions, all of which must be met for this provision to apply.
General Statutes § 42-110b(a) provides: "No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce."
General Statutes § 42-110g(a) provides in relevant part: "Any person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a method, act or practice prohibited by section 42-110b, may bring an action . . . to recover actual damages. Proof of public interest or public injury shall not be required in any action brought under this section . . ."
The statute's express provision permitting a consumer to bring a private cause of action against a contractor under CUTPA may imply that this is a consumer's sole private cause remedy under the act. In addition, in evaluating other statutory penalties, our Supreme Court has noted that when a statute expressly provides that violators will be subject to fines or criminal penalties, and does not mention other penalties, this "has frequently been regarded as a significant indication of a purpose that the penalty expressed should be exclusive." Sagal v. Fylar, 89 Conn. 293, 297, 93 A. 1027(1915). On the other hand, as the Supreme Court noted in D'Angelo Development Construction Co. v. Cordovano, "the act contains no provision addressing the enforceability of contracts that fail to comply with the statutory requirements. Furthermore, there is nothing in the act to suggest that its enumeration of penalties excludes all other remedies. We therefore conclude that the text of the act is ambiguous . . ." D'Angelo Development Construction Co. v. Cordovano, supra, 278 Conn. 245.
Like the New Home Construction Contractors Act, the Home Improvement Act also contains a provision that provides that "a violation of any of the provisions of this chapter shall be deemed an unfair or deceptive trade practice under subsection (a) of section 42-110b." General Statutes § 20-427(c). Again, the Supreme Court has not decided whether a consumer is precluded from bringing a private cause of action against a home improvement contractor other than pursuant to a CUTPA claim under § 20-427(c), although it has used language that indicates that it would be inclined to hold that a consumer cannot do so. See Hees v. Burke Construction, Inc., 290 Conn. 1, 12-13, 961 A.2d 373 (2009) ("the history of the act, more broadly, indicates that § 20-429(a) [which specifies requirement for Home Improvement Act contracts] was intended to protect homeowners, rather than to serve as a tool for them to enhance their own interests at the expense of contractors . . . Moreover, the only cases disclosed by our research in which § 20-429(a) has be used offensively by a homeowner arise in the context of CUTPA claims, wherein that statute provides the basis for recovery, not § 20-429(a) itself"). Moreover, this court and numerous other judges of the Superior Court have "held that the Home Improvement Act does not provide an independent cause of action." Mastroanni v. Frankson Fence Co., Superior Court, judicial district of New Haven, Docket No. CV 04 4000598 (July 25, 2007, Jones, J.); see also Kaczynski v. Videira's Paving, LLC, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 05 4003257 (January 23, 2008, Levin, J.); Belic v. Cavo, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 05 4004795 (July 26, 2006, Taylor, J.); CCMS, LLC v. Hills Condominium Ass'n., Inc., Superior Court, judicial district of Fairfield, Docket No. CV 03 0408122 (July 11, 2005, Radcliffe, J.) [39 Conn. L. Rptr. 618]; Bossier v. Oliver, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 98 0062305 (December 17, 1998, Flynn, J.) (23 Conn. L. Rptr. 406, 406-07); LaRoche v. Kaylor, Superior Court, judicial district of Litchfield, Docket No. CV 02 0086757 (May 22, 2002, Walsh, J.); Liguori v. GVA Inc., Superior Court, judicial district of New Haven, Docket No. CV 0446483 (September 19, 2001, Zoarski, J.T.R.) (30 Conn. L. Rptr. 448, 449-50); Reilly v. Benoit, Superior Court, judicial district of New London, Docket No. 551426 (October 12, 2000, Hurley, J.T.R.) (28 Conn. L. Rptr. 390, 391); Faragasso v. DeGeorge Home Alliance, Inc., Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 97 0162664 (December 7, 1998, D'Andrea, J.); McClain v. Byers, Superior Court, judicial district of Fairfield, Docket No. CV 93 0301761 (April 19, 1995, Hauser, J.) (14 Conn. L. Rptr. 99, 100). But see Scrivani v. Vallombroso, 99 Conn.App. 645, 652 n. 5, 916 A.2d 827 (2007) ("It is possible to use CUTPA as a vehicle through which to bring a claim, regardless of whether the Home Improvement Act provided a private right of action that could stand alone").
The legislative history of the New Home Construction Contractors Act does not provide any guidance on the issue of whether the legislature intended the act to provide consumers with an independent cause of action for violations thereof, apart from a claim under CUTPA.
As to the plaintiffs' argument regarding the courts' inherent power to recognize a new tort cause of action, the Connecticut Supreme Court has stated that "[w]e do have the inherent authority, pursuant to the state constitution, to create causes of action . . . Moreover, it is beyond dispute that we have the power to recognize new tort causes of action, whether derived from a statutory provision or rooted in the common law . . .
"When we acknowledge new causes of action, we also look to see if the judicial sanctions available are so ineffective as to warrant the recognition of a new cause of action. To determine whether existing remedies are sufficient to compensate those who seek the recognition of a new cause of action, we first analyze the scope and applicability of the current remedies under the facts alleged by the plaintiff . . . Finally, we are mindful of growing judicial receptivity to the new cause of action, but we remain acutely aware of relevant statutes and do not ignore the statement of public policy that such statutes represent." (Citations omitted.) ATC Partnership v. Coats North America Consolidated, Inc., 284 Conn. 537, 552-53, 935 A.2d 115 (2007). When the court determines that a cause of action provides more than adequate vehicles of recovery for the plaintiff, the court will "decline to recognize the new cause of action sought by the plaintiff." Id., 553-54.
In D'Angelo Development Construction Co. v. Cordovano, the court specifically concluded that "[t]he New Home Construction Contractors Act's existing penalties cumulatively are adequate to deter noncompliance with the act's provisions . . . Moreover . . . the act exposes a person who violates its provisions to a private lawsuit under CUTPA. General Statutes § 20-417g. Whereas the imposition of civil or criminal penalties on a person who violates the act will not inure to the benefit of the aggrieved consumer, any consequent liability under CUTPA directly benefits the consumer and is correlated to the consumer's loss. See General Statues § 42-110g(a) (permitting recovery of `actual damages,' as well as punitive damages, and provision of equitable relief). The act's existing scheme of multiple, cumulative and qualitatively different penalties well serves the underlying public policy of the act to protect consumers against unscrupulous new home construction contractors." (Citation omitted.) D'Angelo Development Construction Co. v. Cordovano, supra, 278 Conn. 250-51. "[T]he act's penal and remedial scheme provides sufficient recourse to aggrieved consumers to effectuate the act's underlying public policy." Id., 248 n. 17. Accordingly, the sufficient remedies provided by the act do not necessitate the recognition of an independent cause of action for violation of the statute, as requested by the plaintiffs.
Furthermore, this conclusion is consistent with the following principles of statutory construction. "[T]he existence of express remedies within a statute indicates that the legislature knows how to create remedies under the statute and, more importantly, that the legislature would have provided the remedy sought by the plaintiff if it had intended to do so. See, e.g., Fedus v. Planning Zoning Commission, 278 Conn. 751, 770-71 n. 17, 900 A.2d 1(2006) (legislature knows how to enact legislation consistent with its intent) . . . see also Hatt v. Burlington Coat Factory, 263 Conn. 279, 295, 819 A.2d 260 (2003) (applying `tenet of statutory construction known as expressio unius est exclusio alterius, translated as the expression of one thing is the exclusion of another . . .'); Bridgeport Hospital v. Commission on Human Rights Opportunities, 232 Conn. 91, 101, 653A.2d 782 (1995) f[u]nless there is evidence to the contrary, statutory itemization indicates that the legislature intended the list to be exclusive . . .')." (Citation omitted.) Rollins v. People's Bank Corp., 283 Conn. 136, 151-52, 925 A.2d 315 (2007).
Here, "the court must assume that if the legislature had intended to create a direct right of action under [New Home Construction Contractors Act], it would have done so explicitly." Boyd Building v. Brewster, Superior Court, supra, 45 Conn. L. Rptr. 752. Instead, "[the] act is devoid of any language providing a [direct] private right of action to consumers. In fact the text of the act provides a right of action only by reference to the Connecticut Unfair Trade Practices Act (CUTPA) . . ." (Internal quotation marks omitted.) Id. Therefore, the plaintiffs' right of action under the act is limited to a CUTPA claim. This conclusion should not be changed merely because the plaintiffs couch their new private cause of action in the terms of negligence per se. Accordingly, the court finds that count one of the plaintiffs' amended complaint fails to state a cause of action.
Conclusion
For the foregoing reasons, the defendants' motion to strike count one is granted.
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