Opinion
HHDCV146052105S
07-06-2017
City of Hartford v. MDM Golf of Hartford, LLC et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
CESAR A. NOBLE, J.
Before the court is a motion to strike (#109.00) filed by the defendants, MDM Golf of Hartford, LLC (MDM Golf of Hartford); MDM Golf Enterprises, LLC (MDM Golf Enterprises); MDM Golf, LLC (MDM Golf); MDM Golf at Keney Park, LLC (MDM Golf at Keney Park); MDM Golf at Goodwin Park, LLC (MDM Golf at Goodwin Park) (collectively, corporate defendants); and Matthew Menchetti. The factual predicate common to all claims is a claimed breach of a lease agreement (lease) entered into by the plaintiff, city of Hartford, with MDM Golf of Hartford, granting the latter the exclusive right to manage and operate the Keney Golf Course and Goodwin Golf Course (collectively, golf courses) and to receive all of the profits and proceeds therefrom subject to the terms of the lease. The plaintiff has pleaded theories of breach of contract, unjust enrichment, and violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., as to MDM Golf of Hartford. The plaintiff has asserted the same theories of liability against Menchetti via a theory of traditional piercing of the corporate veil and against the corporate defendants via a theory of reverse piercing of the corporate veil through Menchetti. For the reasons outlined below, the court grants the motion to strike counts two through fifteen of the plaintiff's revised complaint.
The sequential use of these two theories will be referred to here as " triangular piercing" of the corporate veil.
FACTS
The plaintiff commenced this action on June 24, 2014. Thereafter, the plaintiff filed its original complaint on July 1, 2014, and a revised complaint on January 16, 2015: The plaintiff's revised complaint contains the following sixteen counts: (a) as to MDM Golf of Hartford, breach of contract (count one), unjust enrichment (count two), and violation of CUTPA (count three); (b) as to Menchetti, breach of contract (count four), unjust enrichment (count five), and misrepresentation (count six); (c) as to MDM Golf Enterprises, breach of contract (count eight), misrepresentation (count nine), and violation of CUTPA (count ten); (d) as to MDM Golf, breach of contract (count eleven) and violation of CUTPA (count twelve); (e) as to MDM Golf at Keney Park, breach of contract (count thirteen) and violation of CUTPA (count fourteen); and (f) as to MDM Golf at Goodwin Park, breach of contract (count fifteen) and violation of CUTPA (count sixteen). The plaintiff alleges the following facts.
At all relevant times, MDM Golf of Hartford was a limited liability corporation with its principal offices in Hamden, Connecticut. Menchetti was the sole principal/officer of the corporate defendants. Menchetti utilized the corporate defendants interchangeably in business communications with the plaintiff.
In 2009, MDM Golf of Hartford submitted a bid package to the plaintiff for the exclusive rights to the golf courses, and Menchetti conducted and/or engaged in the negotiation of the lease. On April 1, 2009, the plaintiff entered into the lease with MDM Golf of Hartford, which granted MDM Golf of Hartford the exclusive right to manage and operate the golf courses and to receive all of the profits and proceeds therefrom subject to the terms of the lease. Menchetti controlled the finances and business practices of MDM Golf of Hartford in general and with respect to the lease.
At the time that the plaintiff and Menchetti entered into the lease, the defendants, through Menchetti, represented Menchetti to be an experienced golf management operator with golf management companies in the state who had the sufficient experience, skill, and capital to perform the type of work required. Menchetti made these representations as principal to induce the plaintiff to accept his bid, but they were false.
Eventually, Menchetti, through his control of MDM Golf of Hartford, and the corporate defendants violated the lease by failing to pay for all utilities serving the golf courses; failing to make fifty percent of the capital improvements to the golf courses, even though Menchetti represented that the work would be completed by another one of his entities; failing to maintain the golf courses and ancillary structures; failing to maintain and possess the financial resources necessary to perform as required by the lease terms; and failing to maintain and provide a letter of credit to the plaintiff for any of the years subsequent to the initial term of the lease despite multiple requests by the plaintiff for such a letter.
Furthermore, MDM Golf Enterprises, its principal, agents, or employees, expressly represented to the plaintiff that a number of capital improvements had been performed on the golf courses in compliance with the lease terms. However, these representations were false at the time that they were made and were made to conceal the plaintiff's cause of action against MDM Golf Enterprises. The plaintiff relied on these representations to its detriment and delayed further investigation into whether the alleged improvements had been completed.
Consequently, MDM Golf of Hartford and Menchetti benefitted from the exclusive rights to the golf courses by maintaining possession of the golf courses and/or by receiving revenues for work that was not completed or not completed as required by the lease even though they failed to perform all that was required by the lease.
On February 17, 2015, the defendants filed a motion to strike counts two through sixteen of the plaintiff's revised complaint on multiple grounds, and they also submitted a supporting memorandum of law. On April 16, 2015, the plaintiff filed a memorandum of law in opposition to the defendants' motion to strike.
On February 21, 2017, at short calendar, the court heard oral argument from both parties concerning the motion. At that time, counsel for the defendants expressed that he had been assigned to the case very recently and was not the attorney who had written the motion papers. Counsel for the defendants also put forth an additional ground for the motion to strike. The defendants relied heavily on this additional ground during oral argument but did not mention it in their motion papers; thus, the court permitted the plaintiff to file a reply memorandum by March 21, 2017, to address the defendants' new ground. The plaintiff later filed a reply memorandum on March 21, 2017.
STANDARD
" A motion to strike shall be used whenever any party wishes to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted . . ." Practice Book § 10-39(a). " The role of the trial court in ruling on a motion to strike is to examine the [complaint], construed in favor of the [plaintiff], to determine whether the [pleading party has] stated a legally sufficient cause of action." (Internal quotation marks omitted.) Coe v. Board of Education, 301 Conn. 112, 117, 19 A.3d 640 (2011). " 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). " 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.) Santoroso v. Bristol Hosp., 308 Conn. 338, 349, 63 A.3d 940 (2013). But " [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Coppola Construction Co. v. Hoffman Enterprises Ltd. Partnership, supra, 309 Conn. 350.
DISCUSSION
The defendants have put forth multiple grounds for their motion to strike counts two through sixteen of the plaintiff's complaint. First, the court will consider the additional ground raised by defendants at short calendar because it has the potential to be a dispositive basis for granting the motion to strike counts four, eight, eleven, thirteen, and fifteen. The court will then address the defendants' remaining grounds in support of their motion to strike.
I
Counsel for the defendants, who had not represented the defendants at the time the motion to strike was filed, advanced the argument at short calendar that the plaintiff's attempt to hold liable the other corporate defendants involved a so called " triangular piercing" of the corporate veil, a theory of liability not recognized in Connecticut. The defendants refer the court to Comm'r of Envtl. Prot. v. State Five Indus. Park, Inc., 304 Conn. 128, 37 A.3d 724 (2012) (State Five ).
A triangular piercing employs a sequential invocation of a reverse veil piercing and a traditional veil piercing. As the Supreme Court explained, " [i]n a traditional veil piercing case, a litigant requests that a court disregard the existence of a corporate entity so that the litigant can reach the assets of a corporate insider, usually a majority shareholder. In a reverse piercing action, however, the claimant seeks to reach the assets of a corporation or some other business entity . . . to satisfy claims or a judgment obtained against a corporate insider." (Internal quotation marks omitted.) Id., 139 (citing C.F. Trust, Inc. v. First Flight, Ltd. Partnership, 266 Va. 3, 10, 580 S.E.2d 806 [2003]).
The triangular piercing strategy sought in the present case consists of traditional veil piercing to impose liability on Menchetti and then reverse veil piercing to reach the non-MDM Golf of Hartford corporate defendants. In its reply memorandum, the plaintiff does not specifically address triangular piercing. Rather, the plaintiff argues that State Five is factually dissimilar to the present case and that both theories employed in triangular piercing, i.e., traditional and reverse veil piercing, are recognized in Connecticut. The court agrees with the plaintiff.
State Five involved the review of the trial court's decision to invoke reverse veil piercing principles to hold liable the corporate defendant, State Five Industrial Park, Inc. (State Five), for the liability of Joseph Farricielli (Joseph), a prior owner of the State Five, and then to apply traditional veil piercing to hold liable Jean Farricielli, Joseph's wife and the majority stock holder of State Five. The defendants argued on appeal that such " triangular piercing" was improper. The court did not reach this issue because it concluded that the trial court improperly applied reverse veil piercing to hold State Five liable for Joseph's debt. Id., 131 n.4. Significantly, the Supreme Court expressly declined to decide whether the reverse piercing theory, which was recognized by the Appellate Court in Litchfield Asset Management Corp. v. Howell, 70 Conn.App. 133, 151, 799 A.2d 298, cert. denied, 261 Conn. 911, 806 A.2d 49 (2002) (Howell ), and is required to complete a triangular piercing, was permissible in Connecticut because the facts proven did not support the application of the doctrine. State Five, supra, 304 Conn. 138.
Accordingly, because Howell sets forth binding precedent on this court and, further, because it is beyond cavil that the remaining theory required to effect a triangular piercing, i.e., traditional veil piercing, is valid, this court must conclude that triangular piercing is permissible. Cf. McKay v. Longman, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-10-6007056-S, (April 17, 2017, Povodator, J.) (noting State Five acknowledged criticism of reverse piercing doctrine but Supreme Court's failure to reject doctrine leaves Howell as binding precedent). Therefore, this court declines on this ground to strike the triangular piercing methodology employed by the plaintiff in counts four, eight, eleven, thirteen, and fifteen.
II
A. Counts Four, Eight, Eleven, Thirteen & Fifteen: Breach of Contract
In their supporting memorandum of law, the defendants argue that the court should strike counts four, eight, eleven, thirteen and fifteen, which allege breach of contract against the defendants not party to the lease, because the plaintiff has not alleged sufficient facts to allow the court to pierce the corporate veil under either the instrumentality or the identity rule. In its opposition memorandum, the plaintiff argues that the facts alleged in the complaint are necessary and sufficient for the court to pierce the corporate veil under the instrumentality or the identity rule to allow recovery from the defendants.
The defendants also argue that Menchetti and the corporate defendants, except for MDM Golf of Hartford, are not alleged as being parties to the lease, and, thus, the plaintiff's breach of contract claims against those defendants are insufficient because the plaintiff has not alleged a critical element of the cause of action for breach of contract, namely, the formation of an agreement between the parties. As the plaintiff's breach of contract claims are based upon the existence of the lease, and the plaintiff has only alleged that the plaintiff entered into the lease with MDM Golf of Hartford, the court agrees with the defendants. See Meyers v. Livingston, Adler, Pulda, Meiklejohn & Kelly, P.C., 311 Conn. 282, 291, 87 A.3d 534 (2014) (" [t]he elements of a breach of contract claim are the formation of an agreement, performance by one party, breach of the agreement by the other party, and damages"). Therefore, the viability of the plaintiff's breach of contract claims against all the defendants, except for MDM Golf of Hartford, depends upon whether the plaintiff has alleged sufficient facts to pierce the corporate veil.
" [G]enerally, a corporation is a distinct legal entity and [its] stockholders are not personally liable for the acts and obligations of the corporation . . . or vice versa. Courts will, however, disregard the fiction of a separate legal entity to pierce the shield of immunity afforded by the corporate structure in a situation in which the corporate entity has been so controlled and dominated that justice requires liability to be imposed on the real actor . . . " In a traditional veil piercing case, a litigant requests that a court disregard the existence of a corporate entity so that the litigant can reach the assets of a corporate insider, usually a majority shareholder. In a reverse piercing action, however, the claimant seeks to reach the assets of a corporation or some other business entity . . . to satisfy claims or a judgment obtained against a corporate insider . . . In either circumstance, veil piercing is not lightly imposed. [C]orporate veils exist for a reason and should be pierced only reluctantly and cautiously. The law permits the incorporation of businesses for the very purpose of isolating liabilities among separate entities . . . Accordingly, the corporate veil is pierced only under exceptional circumstances, for example, where the corporation is a mere shell, serving no legitimate purpose, and used primarily as an intermediary to perpetuate fraud or promote injustice." (Citations omitted; internal quotation marks omitted.) State Five, supra, 304 Conn. 139. " When determining whether piercing the corporate veil is proper, our Supreme Court has endorsed two [rules]: the instrumentality [rule] and the identity [rule]." (Internal quotation marks omitted.) Hersey v. Lonrho, 73 Conn.App. 78, 87, 807 A.2d 1009 (2002).
i. Instrumentality Rule
The defendants argue that the plaintiff has not alleged sufficient facts to demonstrate a fraud or wrong on the part of Menchetti, such as alleging that Menchetti formed MDM Golf of Hartford, or any of the corporate defendants, for illegitimate purposes or that the plaintiff was unaware of the structure of the corporate defendants when it entered into the lease. The defendants argue that merely alleging that Menchetti had control over the corporate defendants is insufficient to pierce the corporate veil. According to the defendants, the plaintiffs simply allege that a contract was made through Menchetti and that failures to perform were due to Menchetti's actions or inactions, which is not enough to satisfy the instrumentality rule. In opposition, the plaintiff argues that the revised complaint contains allegations indicating that Menchetti exercised complete control over MDM Golf of Hartford and the other corporate defendants in an inappropriate manner. The plaintiff also argues that Menchetti had positive legal duties to perform under the terms of the lease and to not take profits for work not rendered. The plaintiff contends that it has pleaded sufficient facts to satisfy the instrumentality rule.
" The instrumentality rule requires, in any case but an express agency, proof of three elements: (1) Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) that such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of [the] plaintiff's legal rights; and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of." (Internal quotation marks omitted.) Naples v. Keystone Building & Development Corp., 295 Conn. 214, 232, 990 A.2d 326 (2010); see, e.g., Campisano v. Nardi, 212 Conn. 282, 292-94, 562 A.2d 1 (1989) (upholding trial referee's finding that instrumentality rule did not apply because plaintiffs failed to prove second element even though first element was satisfied).
" The second element of the instrumentality [rule] addresses the kind of misconduct that will impose personal liability on an individual who has exercised complete domination over a corporation in total disregard of its existence as a separate entity. [The Supreme Court has] found such misconduct, even absent fraud or illegality, when the individual in control has used a corporate instrumentality to avoid personal liability that he had previously assumed . . . What other circumstances will demonstrate [a] fraud or wrong . . . the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of plaintiff's legal rights . . . must depend upon the factual background of the particular case." (Citations omitted; internal quotation marks omitted.) Campisano v. Nardi, supra, 212 Conn. 292-93. Even so, " in the absence of a claim that the corporation was formed for an improper purpose, or that the [plaintiff] [was] improperly induced to enter into a contract with the corporation, the mere breach of a corporate contract cannot of itself establish the basis for application of the instrumentality rule." (Footnote omitted.) Id., 294.
The plaintiff has not alleged sufficient facts in counts four, eight, eleven, thirteen, and fifteen to satisfy the second element of the instrumentality rule because the plaintiff essentially alleges that MDM Golf of Hartford, and the other corporate defendants, breached the lease due to Menchetti's failure to comply with the lease terms; in other words, the plaintiff alleges that a mere breach of contract occurred. Moreover, although the plaintiff contends in its reply memorandum that a fact question exits as to whether Menchetti may have filtered funds from MDM Golf of Hartford to the other corporate defendants, the plaintiff's revised complaint contains no such allegations, and the court is restricted to consideration of the allegations in the complaint on a motion to strike. Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997) (" In ruling on a motion to strike, the court is limited to the facts alleged in the complaint" [internal quotation marks omitted]).
This court's determination that the second element has been insufficiently pleaded eliminates the need for the court to consider the other elements of the instrumentality rule. See, e.g., Naples v. Keystone Building & Development Corp., supra, 295 Conn. 232 (stating instrumentality rule requires proof of three elements). Accordingly, counts four, eight, eleven, thirteen, and fifteen should be stricken unless the plaintiff has sufficiently pleaded liability under the identity rule.
ii. Identity Rule
The defendant argues that the court should strike counts four, eight, eleven, thirteen, and fifteen because the plaintiff simply alleges that the corporate defendants acted through Menchetti or that Menchetti acted on their behalf and contends that the plaintiff must allege more to satisfy the identity rule. The plaintiff argues that it has alleged sufficient facts to satisfy the identity rule.
The identity rule compliments the instrumentality rule. Zaist v. Olson, 154 Conn. 563, 575, 227 A.2d 552 (1967). " The identity rule primarily applies to prevent injustice in the situation where two corporate entities are, in reality, controlled as one enterprise because of the existence of common owners, officers, directors or shareholders and because of the lack of observance of corporate formalities between the two entities." (Footnote omitted.) Angelo Tomasso, Inc. v. Armor Construction & Paving, Inc., 187 Conn. 544, 560, 447 A.2d 406 (1982). Under the identity rule, " [i]f [the] plaintiff can show that there was such a unity of interest and ownership that the independence of the corporations had in effect ceased or had never begun, an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise." (Internal quotation marks omitted.) Zaist v. Olson, supra, 154 Conn. 575. In a breach of contract action, evidence that an individual acted on behalf of a corporate entity alone does not demonstrate that declining to pierce the corporate veil would serve to defeat justice as such evidence " is no more than a reflection of the reality that all corporations act through individuals." (Internal quotation marks omitted.) Naples v. Keystone Building & Development Corp., supra, 295 Conn. 237.
In the present case, although the plaintiff has sufficiently alleged that there was little distinction between Menchetti and the corporate defendants with respect to the lease, the plaintiff has not pleaded sufficient facts to indicate that a failure to pierce the corporate veil of MDM Golf of Hartford, or a failure to reverse pierce the corporate veil of the other corporate defendants, would prevent the plaintiff from obtaining the monetary damages that it seeks due to MDM Golf of Hartford's alleged breach of the lease terms. As noted previously, although the plaintiff contends in its reply memorandum that a fact question exits as to whether Menchetti may have filtered funds from MDM Golf of Hartford to the other corporate defendants, the plaintiff's revised complaint contains no such allegations. Accordingly, the plaintiff has not alleged sufficient facts to satisfy the identity rule.
In summary, the plaintiff has not alleged sufficient facts to satisfy the instrumentality or the identity rule and, thus, has not alleged sufficient facts to pierce the corporate veil of MDM Golf of Hartford or to reverse pierce the corporate veil of the other corporate defendants through Menchetti. Thus, the defendants' motion to strike counts four, eight, eleven, thirteen, and fifteen is granted.
B. Counts Two & Five: Unjust Enrichment
The defendants move to strike count two and count five on the ground that the plaintiff has not pleaded unjust enrichment in the alternative but, instead, has improperly incorporated the breach of contract allegations from counts one and four into counts two and five, exclusively relying on the allegations pertaining to the lease to support its unjust enrichment claims. In response, the plaintiff argues that counts two and five are permissible as an alternative to the breach of contract claims, and they contain a separate and distinct claim for damages beyond those in the breach of contract counts.
" Unjust enrichment applies whenever justice requires compensation to be given for property or services rendered under a contract, and no remedy is available by action on the contract . . . Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefited, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of the payment was to the plaintiffs' detriment." (Internal quotation marks omitted.) Culver v. Culver, 127 Conn.App. 236, 249, 17 A.3d 1048, cert. denied, 301 Conn. 929, 23 A.3d 724 (2011). " Parties routinely plead alternative counts alleging breach of contract and unjust enrichment, although in doing so, they are entitled only to a single measure of damages arising out of these alternative claims . . . Under this typical belt and suspenders approach, the equitable claim is brought in an alternative count to ensure that the plaintiff receives some recovery in the event that the contract claim fails." (Citations omitted; internal quotation marks omitted.) Stein v. Horton, 99 Conn.App. 477, 485, 914 A.2d 606 (2007).
" Although our Appellate Court and Supreme Court have yet to decide whether it is sufficient to merely incorporate allegations of an express contract into a claim for unjust enrichment, several judges of the Superior Court have addressed this matter. 'Allegations of express contract between 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, Docket No. CV-04-4001838-S, (July 26, 2005, Jennings, J.). '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.' William Raveis Real Estate v. Cendant Mobility Corp., Superior Court, judicial district of Ansonia-Milford, Docket No. CV-05-4002709-S, (December 6, 2005, Stevens, J.); see also Bridgeport Harbor Place, I, LLC v. Ganim, Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket No. X06-CV-04-0184523-S, (October 5, 2007, Stevens, J.) [(same)]; Ravski v. Conn. State Med. Soc'y, IPA, Inc., Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket No. X01-CV-04-4000582-S, (January 26, 2005, Sheedy, J.) [(same)]." Rosenay v. Taback, Superior Court, judicial district of Ansonia-Milford, Docket No. CV-15-6019447-S, 2016 WL 1621649 (April 4, 2016, Markle, J). Notably, in Robinson Aviation, Inc. v. New Haven, Superior Court, judicial district of New Haven, Docket No. CV-09-5032399-S, 2010 WL 3025803 (July 7, 2010, Zoarski, J.T.R.), the trial court granted the defendant's motion to strike the plaintiffs' claim of unjust enrichment on the basis that the plaintiffs' unjust enrichment claim relied exclusively on the alleged lease agreement in their breach of contract count.
In the present case, the plaintiff incorporates all of count one, which claims breach of contract as to MDM Golf of Hartford, into count two and count five. The plaintiff also incorporates all of count four, which claims breach of contract as to Menchetti, into count five. In both counts, the plaintiff additionally alleges that it provided the defendants with exclusive rights to the golf course and receipt of the profits therefrom pursuant to the lease, that the defendants benefited from the exclusive rights but failed to perform under the lease, and that the defendants have, therefore, been unjustly enriched. These allegations demonstrate that the plaintiff has failed to plead in the alternative because the plaintiff's unjust enrichment claims rely exclusively on the alleged lease and the defendants' alleged breaches of the lease. Therefore, the defendants' motion to strike counts two and five is granted.
C. Count Six: Misrepresentation as to Menchetti
The defendants move to strike count six on the grounds that the plaintiff has failed to allege specific acts constituting fraudulent misrepresentation and that the alleged failure to perform under the lease does not amount to a misrepresentation without an allegation that Menchetti had the present intent not to perform under the lease. The plaintiff argues that it has alleged sufficient facts to satisfy the elements of fraudulent misrepresentation.
" The essential elements of an action in common-law fraud . . . are that: (1) a false representation was made as a statement of fact; (2) it was untrue and known to be untrue by the party making it; (3) it was made to induce the other party to act upon it; and (4) the other party did so act upon that false representation to his injury . . . Under a fraud claim of this type, the party to whom the false representation was made claims to have relied on that representation and to have suffered harm as a result of the reliance . . . In contrast to a negligent representation, [a] fraudulent representation . . . is one that is knowingly untrue, or made without belief in its truth, or recklessly made and for the purpose of inducing action upon it . . . This is so because fraudulent misrepresentation is an intentional tort." (Citations omitted; internal quotation marks omitted.) Sturm v. Harb Development, LLC, 298 Conn. 124, 142, 2 A.3d 859 (2010).
The plaintiff has pleaded sufficient facts to satisfy the first, third, and fourth elements because the plaintiff alleges that the defendants, through Menchetti, falsely represented that Menchetti was an experienced golf management operator with golf management companies who had the requisite experience, skills, and capital to perform the type of work necessary on the golf courses in order to induce the plaintiff to accept MDM Golf's bid package, and the plaintiff relied upon those false representations to its detriment. However, although the plaintiff alleges that Menchetti's representations were false, the plaintiff does not allege that Menchetti knowingly or recklessly made such representations. Because the plaintiff has not alleged that Menchetti knew that his representations were untrue at the time that he made them or that he recklessly made such representations, the plaintiff has not sufficiently pleaded " an essential element of a cause of action for fraudulent misrepresentation, " and, thus, the defendants' motion to strike count six is granted. Id., 143.
D. Count Nine: Misrepresentation as to MDM Golf Enterprises
The defendants move to strike count nine on the ground that the plaintiff has improperly alleged fraudulent concealment of a cause of action as an independent cause of action. The defendants contend that fraudulent concealment is not a cause of action in itself but, rather, is used to toll the statute of limitations where said concealment prevented a party from bringing a cause of action. The defendants argue that the plaintiff does not appear to be using fraudulent concealment to avoid the statute of limitations and that it is unclear what cause of action the plaintiff is alleging was fraudulently concealed. In response, the plaintiff argues that it has alleged a legally sufficient cause of action for fraud.
" Fraudulent concealment is discussed [in] General Statutes § 52-595, which states [that] '[i]f any person, liable to an action by another, fraudulently conceals from him the existence of the cause of such action, such cause of action shall be deemed to accrue against such person so liable therefore at the time when the person entitled to sue thereon first discovers its existence.' In discussing this section, it has been held that [§ 52-595] is the codification of the common-law rule that fraudulent concealment is an avoidance of an affirmative defense of the statute of limitations. It gives rise to neither an independent cause of action nor an enhancement of damages." (Internal quotation marks omitted.) Schifano v. Bank of N.Y. Co., Superior Court, judicial district of Danbury, Docket No. CV-12-5009097-S, 2013 WL 1715731 (April 1, 2013, Doherty, J.); see, e.g., Bartone v. Robert L. Day Co., 232 Conn. 527, 531-32, 656 A.2d 221 (1995) (analyzing plaintiffs' argument that defendants' statute of limitations grounds fail because § 52-595 applies to toll statute of limitations); see also Liebig v. Farley, Superior Court, judicial district of New London, Docket No. CV-08-5005405-S, 2009 WL 6499423, *3 n.3 (October 27, 2009, Peck, J.) (noting, based on plain language of § 52-595, fraudulent concealment is not cause of action but rather a statutory mechanism that permits plaintiff to toll statute of limitations).
In count nine, the plaintiff alleges that MDM Golf Enterprises, its principal, agents and/or employees, knowingly made false representations to the plaintiff " to conceal the [p]laintiff's cause of action against the [d]efendant." It does not appear that the plaintiff meant to invoke the doctrine of fraudulent concealment in avoidance of a potential statute of limitations defense; rather, it appears that the plaintiff meant to allege fraudulent concealment as a separate cause of action because the plaintiff alleges that the defendants' false representations caused it to delay further investigation into whether the capital improvements had been completed, not that they caused the plaintiff to fail to bring a cause of action within the applicable time period. Therefore, the defendants' motion to strike count nine is granted.
The court presumes that the allegedly concealed cause of action is that of breach of contract because the plaintiff incorporates the breach of contract allegations from count one and count eight into count nine, and the plaintiff alleges that the defendants falsely represented that " a number of capital improvements had been performed" on the golf courses in compliance with the lease.
E. Counts Three, Seven, Ten, Twelve, Fourteen, & Sixteen: CUTPA
The defendants move to strike counts three, seven, ten, twelve, fourteen, and sixteen on the grounds that the plaintiff merely incorporates its breach of contract allegations into its CUTPA claims without alleging how the defendants' conduct was immoral, unethical, unscrupulous, or offensive to public policy or how the defendant's conduct caused substantial injury to consumers, competitors, or other business people. Furthermore, the defendant argues that, even though the plaintiff incorporates its misrepresentation counts into counts seven and ten, counts seven and ten fail because the misrepresentation counts are insufficiently pleaded, and, thus, the plaintiff merely alleges breach of contract in both counts. In opposition, the plaintiff argues that it has alleged sufficient facts to support its CUTPA claims.
Section 42-110b(a) provides 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." To determine when a practice is unfair, Connecticut courts have adopted the criteria set out by the federal trade commission in the " cigarette rule": " (1) [w]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statues, 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; [and] (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." (Internal quotation marks omitted.) Naples v. Keystone Building & Development Corp., supra, 295 Conn. 227-28. " A violation of CUTPA, therefore, may be established by showing either an actual deceptive practice . . . or a practice amounting to a violation of public policy." (Internal quotation marks omitted.) Hudson United Bank v. Cinnamon Ridge Corp., 81 Conn.App. 557, 570, 845 A.2d 417 (2004).
The Superior Court has recognized that " [a] simple breach of contract, even if intentional, does not amount to a violation of [CUTPA]; a [claimant] must show substantial aggravating circumstances attending the breach to recover under [CUTPA]." (Internal quotation marks omitted.) Emlee Equip. Leasing Corp. v. Waterbury Transmission, Inc., 41 Conn.Supp. 575, 580, 595 A.2d 951 (1991) ; see also A. Secondino & Son, Inc. v. L.D. Land Co., Superior Court, judicial district of New Haven, Docket No. CV-94-0359726-S (December 29, 1994, Hadden, J.) (13 Conn.L.Rptr. 232, ) (simply incorporating breach of contract allegations into CUTPA claim without setting forth how or in what respect defendant's alleged activities are immoral, unethical, unscrupulous, or offensive to public policy is insufficient to establish CUTPA violation).
At times, the Superior Court has concluded that, in the aggregate, a defendant's contract breaches may constitute a substantial aggravating circumstance, thereby raising the plaintiff's breach of contract claim to the level of a CUTPA violation. See, e.g., Metropolitan Trucking v. Rand-Whitney Containerboard, LP, Superior Court, judicial district of New London, Docket No. CV-09-5013770-S (March 31, 2010, Cosgrove, J.) (49 Conn.L.Rptr. 584, ) (denying motion to strike plaintiff's CUTPA claim where plaintiff alleged many breaches of contract occurred). Notably, in such cases, the plaintiffs allege more than the defendants' commission of multiple contract breaches; they also allege, inter alia, that they notified the defendants of their breaches, that the defendants had no intention of complying with the terms of the agreement at issue, or that the defendants' breaches consisted of misrepresentations. See MedPricer.com, Inc. v. Olympus Am., Inc., Superior Court, judicial district of New Haven, Docket No. CV-13-6039193-S, 2014 WL 7714345 (December 24, 2014, Wilson, J.) (alleging defendant repeatedly failed to compensate plaintiff pursuant to their supplier agreement and had no intention of honoring its terms); Metropolitan Trucking v. Rand-Whitney Containerboard, LP, supra, 49 Conn.L.Rptr. 584, (alleging plaintiff notified defendant of contract breaches and demanded payment but never received payment); Webster Fin. Corp. v. McDonald, Superior Court, judicial district of Waterbury, Docket No. CV-08-4016026-S, 2009 WL 416059 (January 28, 2009, Brunetti, J.) (alleging defendant spread false rumors and violated noncompetition agreement several times); Greene v. Orsini, 50 Conn.Supp. 312, 316, 926 A.2d 708 (2007) (alleging defendants breached noncompetition agreement several times despite plaintiffs' repeated complaints).
The Supreme Court " has set forth a three-part test for satisfying the substantial injury criterion: [1] [the injury] must be substantial; [2] it must not be outweighed by any countervailing benefits to consumers or competition that the practice produces; and [3] it must be an injury that consumers themselves could not have reasonably avoided." (Internal quotation marks omitted.) Hudson United Bank v. Cinnamon Ridge Corp., supra, 81 Conn.App. 570.
i. Count Three: CUTPA Violation as to MDM Golf of Hartford
The court concludes that the plaintiff has not alleged sufficient facts to establish a CUTPA claim against MDM Golf of Hartford. In count three, the plaintiff incorporates its breach of contract allegations from count one and its unjust enrichment allegations from count two. Additionally, the plaintiff alleges that MDM Golf of Hartford's " representations" regarding the ability to maintain the golf courses and its finances were false, fraudulent, and/or misleading; that said representations were made to induce the plaintiff to accept MDM Golf of Hartford's bid package; and that such conduct constitutes a violation of CUTPA. Upon review of counts one through three, the court is unsure as to which representations the plaintiff is referring because those counts do not contain any allegations that MDM Golf of Hartford claimed to have the ability to maintain the golf courses or its finances while knowing that such claims were untrue, fraudulent, or misleading.
Moreover, although the plaintiff alleges that MDM Golf of Hartford breached the lease in a multitude of ways, which negatively affected the ability of consumers to play on the golf courses and caused the plaintiff to suffer substantial monetary damages, the plaintiff does not allege, for example, that MDM Golf of Hartford never intended to comply with the lease terms or that it notified MDM Golf of Hartford of its numerous breaches of the lease to no avail. The only allegations of that sort are the plaintiff's allegations that it sent two requests to MDM Golf of Hartford for a letter of credit over a period of a few months and that the plaintiff did not receive a letter of credit from MDM Golf of Hartford. This is insufficient.
Finally, as previously noted, it is unclear what false, fraudulent, or misleading representations, if any, the plaintiff is referencing. Without more, the plaintiff has not alleged sufficient facts to support a claim against MDM Golf of Hartford for a violation of CUTPA. Accordingly, the defendant's motion to strike count three is granted.
ii. Counts Twelve, Fourteen, & Sixteen: CUTPA Violation as to MDM Golf, MDM Golf at Keney Park, & MDM Golf at Goodwin Park
For similar reasons, the plaintiff has not alleged sufficient facts to state a CUTPA claim against MDM Golf, MDM Golf at Keney Park, and MDM Golf at Goodwin Park. In all three counts, the plaintiff incorporates all of the allegations from count one, and, in each respective count, the plaintiff incorporates the corresponding breach of contract allegations from count eleven, count thirteen, and count fifteen. The plaintiff also alleges that the " representations" made by each defendant regarding their ability to maintain the golf courses and their finances were false, fraudulent, and/or misleading; that said representations were made to induce the plaintiff to accept MDM Golf of Hartford's bid package; and that such conduct constitutes a CUTPA violation. As with the allegations in count three, the allegations in counts twelve, fourteen, and sixteen do not allege with particularity the false, fraudulent, and/or misleading representations made by the defendants regarding their ability to manage and maintain the golf courses and their finances. Thus, the defendants' motion to strike counts twelve, fourteen, and sixteen is granted.
iii. Counts Seven & Ten: CUTPA Violation as to Menchetti & MDM Golf Enterprises
In light of the foregoing determinations granting the defendants' motion to strike counts two, three, four, five, six, eight, nine, eleven, twelve, thirteen, fourteen, fifteen, and sixteen, and because the plaintiff incorporates counts four, five, six, eight, and nine, into counts seven and ten, the court concludes that the plaintiff has not alleged sufficient facts to establish a violation of CUTPA against Menchetti and MDM Golf Enterprises. The court agrees with the defendants that essentially all that remains in counts seven and ten are breach of contract allegations. Therefore, the defendants' motion to strike counts seven and ten is granted.
CONCLUSION
In sum, the defendants' motion to strike counts two through sixteen of the plaintiff's revised complaint is granted.