2011 Ct. Sup. 11462
No. CV 10 6005795Connecticut Superior Court Judicial District of New London at New London
May 19, 2011
MEMORANDUM OF DECISION RE MOTION TO STRIKE (NO. 114)
COSGROVE, J.
FACTS
On August 31, 2010, the plaintiff, Doherty, Beals Banks, P.C., filed a five-count complaint against the defendant, Sound Community Services, Inc., alleging the following facts. On May 28, 2009, the two parties entered into a contract whereby the plaintiff promised to provide audit services to the defendant, and the defendant agreed to remunerate the plaintiff for these services. The plaintiff performed the audit services, but the defendant has refused to pay the outstanding balance even after the plaintiff has sent itemized bills to the defendant and made repeated demands to pay the balance due. Count one alleges a breach of contract; count two alleges unjust enrichment. Count three alleges that the defendant’s actions and conduct constitute a violation of the Connecticut Unfair Trade Practices Act (CUTPA). Count four alleges fraud and detrimental reliance, while count five alleges fraudulent misrepresentation. Counts four and five further allege that defendant falsely represented to the plaintiff that the work would be paid for, a representation that was made to induce the plaintiff to act upon it.
On December 29, 2010, the defendant filed a motion to strike counts two, three, four and five, as well as the plaintiff’s prayer for attorneys fees, treble damages and punitive damages. The motion is accompanied by a memorandum of law. The plaintiff filed an objection and memorandum of law in support of its objection on January 11, 2011. The defendant filed a reply memorandum on March 15, 2011, and oral argument was heard on this matter on April 4, 2011.
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
CT Page 11463 (2003). “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.) Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, 295 Conn. 240, 252-53, 990 A.2d 293 (2010). “A motion to strike admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings.” (Emphasis in original; internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997). “A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged.” (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 498. “Practice Book . . . § 10-39, allows for a claim for relief to be stricken only if the relief sought could not be legally awarded.” Pamela B. v. Ment, 244 Conn. 296, 325, 709 A.2d 1089 (1998).
A. Count Two — Unjust Enrichment
First, the defendant argues that the plaintiff’s claim for unjust enrichment has been improperly pleaded in that it alleges the existence and breach of a written contract. In response, the plaintiff contends that count two properly serves as a “backup plan” should its breach of contract claim fail.
“Unjust enrichment applies whenever justice requires compensation to be given for property or services rendered under a contract, and no remedy is available by an action on the contract . . . Indeed, lack of a remedy under a contract is a precondition for recovery based upon unjust enrichment.” (Citation omitted; internal quotation marks omitted.) Gagne v. Vaccaro, 255 Conn. 390, 401, 766 A.2d 416 (2001). “While proof of an enforceable contract might preclude application of an unjust enrichment theory, the plaintiff may be unable to prove an enforceable contract and, at least in the early stages of the proceedings, is entitled to plead inconsistent theories.” (Internal quotation marks omitted.) William Raveis Real Estate v. Cendant Mobility Corp., Superior Court, judicial district of Ansonia-Milford, Docket No. CV 05 4002709 (December 6, 2005, Stevens, J.).
“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). “It has been held in several recent Superior Court cases that allegations of express contract between CT Page 11464 the parties incorporated into a count stating a claim for unjust enrichment cause a violation of the rule that those alternative causes of action must be pleaded in separate counts.” Burke v. Boatworks, Inc., Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 04 4001838 (July 26, 2005, Jennings, J.). In William Raveis Real Estate v. Cendant Mobility Corp., supra, Superior Court, Docket No. CV 05 4002709, the court concluded that by incorporating allegations of the previous counts, “the plaintiff clearly alleges the existence and breach of an express contract in the count seeking unjust enrichment, contrary to the rule that alternative causes of action must be pleaded in separate counts. In short, the plaintiff may plead unjust enrichment in the alternative, but this is not accomplished by incorporating into this count all the allegations of an express contract. Such a complaint does not involve alternative pleading, but involves legally inconsistent pleading.”
Several other Superior Court cases have dealt with similar inconsistent pleading and have all reached the same conclusion by striking the count alleging unjust enrichment. See, e.g., MBMB, LLC v. New Alliance Bank, Superior Court, judicial district of New Haven, Docket No. CV 10 6011842 (Dec. 9, 2010, Woods, J.); Thyssenkrupp Elevator v. Workstage, LLC, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 09 5005826 (August 19, 2010, Matasavage, J.) (50 Conn. L. Rptr. 512) Robinson Aviation, Inc. v. New Haven, Superior Court, judicial district of New Haven, Docket No. CV 09 5032399 (July 7, 2010, Zoarski, J.T.R.) JN Electric, Inc. v. Notkins, Superior Court, judicial district of New Haven, Docket No. CV 08 5020144 (May 20, 2009, Keegan, J.) (47 Conn. L. Rptr. 804); Silktown Roofing v. Haynes Construction, Superior Court, judicial district of Middlesex, Docket No. CV 05 4004864 (August 3, 2006, Dubay, J.) (41 Conn. L. Rptr. 770).
“On the other hand, some [S]uperior [C]ourt opinions permit incorporating allegations so long as the allegation that the contract was breached does not appear in the count for unjust enrichment.” O’Malley v. Devito, Superior Court, judicial district of New Britain, Docket No. CV 09 4019885 (May 7, 2010, Trombley, J.) (49 Conn. L. Rptr. 801, 803). “[M]erely incorporating allegations regarding the existence of a contract into an unjust enrichment claim does not necessarily mean that the unjust enrichment claim should be stricken, so long as it has not been alleged that the contract was breached.” (Emphasis added.) The Final Cut, LLC v. Sharkey, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 08 5007365 (May 5, 2009, Adams, J.). See als Landeen Transport, LLC v. Tuccinardi Topsoil, Inc., Superior Court, judicial district of Waterbury, Docket No. CV 09 5013799 (November 2, 2009, Brunetti, J.); Fanion v. Radei, Superior Court, judicial district CT Page 11465 of Windham, Docket No. CV 07 5001250 (November 5, 2007, Martin, J.).
In the present case, by incorporating all of the allegations of count one into count two, the plaintiff specifically alleges both the existence of a written contract between the parties in paragraph three and a breach of that contract in paragraph nine of its unjust enrichment count. This is contrary to the rule of alternative pleading, and thus, count two of the complaint must be stricken.
B. Count Three — CUTPA Violation
Next, the defendant argues that the plaintiff’s CUTPA claim should be stricken on the ground that it alleges a mere breach of contract, which is legally insufficient. The plaintiff responds that it has properly alleged that the defendant’s breach was an unfair trade practice and/or deceptive act.
General Statutes § 42-110b provides in part that “[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” The Supreme Court has “adopted the criteria set out in the cigarette rule by the federal trade commission for determining when a practice is unfair: (1) Whether 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 business persons] . . . 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.” (Internal quotation marks omitted.) Ventres v. Goodspeed Airport, LLC, 275 Conn. 105, 155, 881 A.2d 937 (2005), cert. denied, 547 U.S. 1111, 126 S.Ct. 1913, 164 L.Ed.2d 664 (2006).
“A CUTPA claim may not be premised on a simple breach of contract, that is, one in which there are no aggravating factors under parts two or three of the cigarette rule . . . The burdens and risks inherent in contract formation would be intolerably increased if every simple breach of contract claim were to be made the basis of a CUTPA violation . . . [A] breach of contract claim can make out a legally sufficient CUTPA claim as long as there are substantial aggravating circumstances . . . Where the plaintiff alleges sufficient aggravating circumstances, beyond a mere breach of contract that may bring the case within the cigarette rule, the CUTPA claim may withstand a motion [to strike].” (Citations CT Page 11466 omitted; internal quotation marks omitted.) Alliance Food Management Corp. v. Gems Sensors, Inc., Superior Court, judicial district of Waterbury, Docket No. CV 06 5002996 (June 12, 2007, Gallagher, J.).
“Although there is a split of authority in the Superior Courts regarding what is necessary to establish a CUTPA claim for breach of contract, the vast majority of Superior Court decisions [conclude] that, absent allegations of sufficient aggravating circumstances, [a] simple breach of contract, even if intentional, does not amount to a violation of [CUTPA].” (Internal quotation marks omitted.) Centimark Corp. v. Village Manor Associates, Superior Court, judicial district of Windham, Docket No. CV 03 0070166 (June 21, 2007, Martin, J.), aff’d in part, rev’d in part on other grounds, 113 Conn.App. 509, 967 A.2d 550, cert. denied, 292 Conn. 907, 973 A.2d 103 (2009). “Moreover, [a] simple contract breach is not sufficient to establish violation of CUTPA . . . where a count simply incorporates the reference to the breach of contract claim and does not set forth how or in what respect the defendant’s activities are either immoral, unethical, unscrupulous, or offensive to public policy.” (Internal quotation marks omitted.) Bluezone Foundation v. Paradise Properties, Superior Court, judicial district of New London, Docket No. 555904 (July 24, 2001, Hurley, JT.R.).
In count three of the present case, the plaintiff incorporated by reference all of the paragraphs from count one, the breach of contract claim. The plaintiff further alleges that “the Defendant acting in the course of its trade or commerce as defined by Connecticut General Statutes § 42-110a;” that “[t]he actions and conducts [sic] of the Defendants [sic] . . . offend public policy” and “tend to cause substantial injury to consumers.” Beyond these mere legal conclusions, the plaintiff has not alleged any specific acts constituting aggravating factors as to the formation or the breach of the contract which are unfair or deceptive acts within the meaning of CUTPA. As a result, the defendant’s motion to strike count three must also be granted.
C. Counts Four and Five — Fraud and Misrepresentation
The defendant also argues that the tort claims alleged in counts four and five of the plaintiff must be stricken on the ground that they are precluded by the economic loss doctrine. The plaintiff contends that the economic loss doctrine does not apply.
“The economic loss doctrine, a judicially created principle, prohibits recovery in tort where the relationship between the parties is contractual in nature and the only losses alleged are purely economic.”First American Title Ins. Co. v. 273 Water Street, LLC, Superior Court, CT Page 11467 judicial district of Hartford, Docket No. CV 08 4041234 (August 30, 2010, Peck, J.). Our Supreme Court in Flagg Energy Development Corp. v. General Motors Corp., 244 Conn. 126, 709 A.2d 1075 (1998), discussed the economic loss doctrine. Flagg involved the plaintiffs’ claims for economic losses caused by defective engines sold by the defendant to the plaintiff. The trial court granted the defendant’s motion to strike the plaintiff’s claims based on misrepresentation and CUTPA. In affirming the lower court decision, the Supreme Court addressed the economic loss doctrine stating: “We agree with the holdings of cases in other jurisdictions that commercial losses arising out of the defective performance of contracts for the sale of goods cannot be combined with negligent misrepresentation.” Id., 153.
“There have been no appellate decisions subsequent to Flagg addressing the economic loss doctrine in Connecticut and considerable debate has arisen in the Superior Court regarding the doctrine’s reach. Some [S]uperior [C]ourts have found that the holding in Flagg warrants an extension of the economic loss doctrine well beyond cases involving the sale of goods [under the UCC] . . . Others have found either that the economic loss doctrine has not been recognized in Connecticut or that the application of the ruling in Flagg is limited to claims arising from the sale of goods.” (Internal quotation marks omitted.) Loureiro Contractors, Inc. v. Danbury, Superior Court, judicial district of New Britain, Docket No. CV 09 6002650 (November 18, 2010, Swienton, J.). “Most Superior Court cases hold that Flagg applies the economic loss doctrine broadly to preclude tort claims seeking economic losses emanating from any contractual transactions involving commercial or `sophisticated’ parties.” Ulbrich v. Groth, Superior Court, complex litigation docket at Waterbury, Docket No. X06 CV 08 4016022 (October 26, 2010, Stevens, J.) [50 Conn. L. Rptr. 822].
In the present case, the plaintiff and defendant are both Connecticut businesses that allegedly entered into a contract whereby the former would provide audit services to the latter. Even while viewing the allegations in the complaint in a manner most favorable to sustaining their legal sufficiency, the only “fraud” and “misrepresentations” alleged in counts four and five are that the defendant represented that it would pay for the plaintiff’s services but never intended to. What the plaintiff has alleged is conduct that, if proven, would establish the breach of a contract between two corporate, sophisticated parties. The plaintiff allegedly provided the services called for in the parties’ contract, while the defendant allegedly failed to perform its duty in the contract. While this case did not arise from a commercial transaction involving the sale of goods, there is a discernible and finite loss alleged by the plaintiff, and it is purely economic. Thus, this court CT Page 11468 concludes that under the specific circumstances presented in this case, it will follow the majority of Superior Courts in applying the economic loss rule and striking counts four and five of the plaintiff’s complaint.
D. Prayer for Relief
Finally, the defendant moves to strike the plaintiff’s prayer for attorneys fees, treble damages and punitive damages on the ground that these damages are not cognizable in a breach of contract matter. The defendant did not elaborate on this ground in its brief, and the plaintiff did not specifically object to it in its response to the defendant’s motion to strike. Line three of the prayer for relief asks for attorneys fees pursuant to the plaintiff’s CUTPA claim. Because the CUTPA claim has been stricken, so will this line in the prayer for relief. Further, line four seeks “treble damages in regard to the Count IV.” Because count four has been stricken, this line in the prayer for relief will be as well. Finally, line five asks for punitive damages. The only remaining claim left in the complaint after this court’s granting of the defendant’s motion to strike will be for breach of contract. “It is well settled that punitive damages generally are not recoverable for breach of contract.” Lydall, Inc. v. Ruschmeyer, 282 Conn. 209, 244 n. 24, 919 A.2d 421 (2007). “The flavor of the basic requirement to justify an award of punitive or exemplary damages has been repeatedly described in terms of wanton and malicious injury, evil motive and violence . . . [P]unitive damages may be awarded only for outrageous conduct, that is, for acts done with a bad motive or with a reckless indifference to the interests of others.” (Internal quotation marks omitted.) Id., 245. No such conduct has been alleged in the present case. Therefore, line five of the prayer for relief is hereby stricken.
CONCLUSION
For the foregoing reasons, the defendant’s motion to strike is granted with respect to counts two, three, four and five, as well as lines three, four and five of the complaint’s prayer for relief. CT Page 11469