Opinion
HHDCV166071728S
07-10-2017
Deitch Energy, LLC v. Ernest Johnson
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO STRIKE
Cesar A. Noble, Judge.
Absent proof of bad faith on the part of the homeowner, a contractor who has neglected compliance with the requirements of the Home Improvement Act (act), General Statutes § 20-418 et seq. by failing to observe the statute's written contract requirements, is not permitted recovery for work performed. The question presented by the present motion to strike of the defendants, Ernest and Gloria Johnson (defendants), is whether the bad faith exception to the bar on recovery under the act has been sufficiently pleaded such that the claims for payment of work performed on the defendants' home by the plaintiff contractor, Dietch Energy, LLC (Dietch), should survive a motion to strike. The court finds that bad faith has not been sufficiently pleaded and accordingly strikes the four counts directed against the defendants.
The plaintiff also named as a defendant Liberty Mutual Insurance Co. (Liberty Mutual)--alleged to have been the defendants' insurer--which is not a party to this motion.
Facts and Procedural History
The first four counts of Dietch's complaint are directed against the defendants. The common factual predicate is an agreement entered into by Dietch, co-defendant Liberty Mutual, and the defendants for repairs to the defendants' home in Hartford, Connecticut. The agreement, which was attached as Exhibit A to the complaint, covers " Duct Work Removal & Installation" at the defendants' home. The document is directed to a Jonathan Moody of Liberty Mutual (and in fact does not identify the defendants in any way), is unsigned, does not contain a start and completion date, and does not provide for any notice of an owner's rights of cancellation. Dietch provided labor and materials commencing on July 25, 2015, and completed its work on August 10, 2015. The defendants have not paid Dietch for the labor and materials provided, causing Dietch to serve and record a mechanic's lien. The first count seeks a foreclosure of the mechanic's lien. The second count claims damages on the basis of a breach of contract. The third count seeks damages on a theory of unjust enrichment. The fourth count adds the allegations that Liberty Mutual, the defendants' insurer, provided the defendants with payment for the sole purpose of paying the plaintiff for its labor and materials but the defendants failed to pay Dietch from these funds and wrongfully appropriated the funds to " himself." In consequence of these facts, the plaintiff claims statutory theft pursuant to General Statutes § 52-564.
¶ 17 of the fourth count states " Defendants Johnson wrongfully appropriated to himself these funds by withholding payment to the plaintiff." The use of the plural reference to Johnson at the beginning of the paragraph followed by the singular masculine is a source of confusion. The court interprets the allegation of misappropriation as being applicable to both Ernst and Gloria Johnson as the caption of the fourth count identifies both as the object of the claim therein.
The remaining three counts are directed to Liberty Mutual.
Defendants filed the present motion to strike on January 26, 2017. The essential claim is that Dietch's right of recovery under any of the theories alleged is barred by its failure to have provided a contract compliant with the requirements of the act, which include a contract signed by the owner and contractor; § 20-429(a)(2), a notice of the owner's cancellation rights in accordance with the provisions of Chapter 740, § 20-429(a)(6); and a starting date and completion date, § 20-429(a)(7).
General Statutes § 42-134 et seq., the relevant provisions of which require a three-day right of rescission, and notice thereof, to be provided to an owner. See General Statutes § § 42-135a and 42-137.
The plaintiff filed an objection on March 2, 2017, on the ground that a homeowner such as the defendants may not invoke the act in bad faith as a basis for the repudiation of a contract. The objection restates the allegation contained in the fourth count that the defendants have been paid money by their insurer, Liberty Mutual, for the work performed by Dietch. In the view of the plaintiff, receipt of this payment and the failure to pay Dietch for the work performed constitutes bad faith sufficient to overcome the obstacle presented by its failure to comply with the contractual requirements mandated by the act. The court disagrees.
Standard
" [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). A motion to strike admits all well pleaded facts alleged in the complaint. Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997).
" Where the legal grounds for [a motion to strike] are dependent upon underlying facts not alleged in the plaintiff's pleadings, the defendant must await the evidence which may be adduced at trial, and the motion should be denied." Liljedahl Bros., Inc. v. Grigsby, 215 Conn. 345, 348, 576 A.2d 149 (1990). However, " [i]n considering a motion to strike a complaint or count thereof the court must consider the exhibits since 'a complaint includes all exhibits attached thereto.'" Amity Partners v. Woodbridge Associates Ltd. Partnership, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-12-6025809-S, (2016 WL 551179, *1) (January 7, 2016, Genuario, J.), quoting Tracey v. New Milford Public Schools, 101 Conn.App. 560, 566, 922 A.2d 280, cert. denied, 284 Conn. 910, 931 A.2d 935 (2007).
Analysis
General Statutes § 20-429(a) provides in relevant part: " No home improvement contract shall be valid or enforceable against an owner unless it: (1) Is in writing, (2) is signed by the owner and the contractor . . . (6) contains a notice of the owner's cancellation rights in accordance with the provisions of chapter 740, [and] (7) contains a starting date and completion date . . ." The express terms of the statute thus bar recovery by a contractor for work performed under a contract that does not comply with the act. Moreover, the Supreme Court has determined that, as a general rule, failure to adhere to the act also bars recovery under quasi-contractual methods of recovery, such as unjust enrichment. MacMillan v. Higgins, 76 Conn.App. 261, 270, 822 A.2d 246, cert. denied, 264 Conn. 907, 826 A.2d 177 (2003), citing Liljedahl Bros., Inc. v. Grigsby, supra, 215 Conn. 350. Bad faith on the part of the owner may provide a contractor with relief from the harsh provisions of the act. See Habetz v. Condon, 224 Conn. 231, 237, 618 A.2d 501 (1992).
Public Acts 2016, No. 16-35, § 3 amended § 20-429 effective January 1, 2017. The amendments do not affect this decision and all references herein are to the act and the application numbering of the subsections in effect at all times relevant to the operative facts in the present case.
See footnote 4 of this opinion.
Upon construing all well pleaded facts as admitted; Faulkner v. United Technologies Corp., supra, 240 Conn. 588; the court finds, as a threshold matter, that the work performed by Dietch for which it seeks payment is subject to the provisions of the act, which defines a home improvement contract as an agreement between a contractor and an owner or an agent thereof for the " repair, replacement, remodeling, alteration . . . improvement, [or] rehabilitation . . . of . . . any land or building or that portion thereof which is used or designed to be used as a private residence, dwelling place or residential rental property . . ." § 20-419(4), (5) and (6). This conclusion is based on the allegation contained in paragraph 5, incorporated by reference in all four counts at issue, that the work was done to the defendants' home. Further, the court finds that the " agreement, " attached as Exhibit A to the complaint, does not satisfy the requirements of the act because it is not signed, does not provide for a three-day right of rescission and notice thereof or a start date and completion date as required by § 20-429(a)(2), (6) and (7). While the plaintiff asserts that it may prove facts at trial which would establish bad faith, it has not even attempted to plead any in the first three counts. Accordingly, the court holds that the allegations of the first, second and third counts of the complaint, which contain no allegation of bad faith whatsoever, fail to state a claim upon which relief may be granted because the complaint asserts a claim barred by the act.
The remaining issue is whether the allegations of the fourth count of the complaint claiming statutory theft pursuant to § 52-564 sufficiently allege bad faith so as to afford Dietch relief from the operation of the act. This court may conduct such an analysis because the Supreme Court has recently determined that " whether undisputed facts meet the legal standard of bad faith is a question of law." Burns v. Adler, 325 Conn. 14, 33, 155 A.3d 1223 (2017). It is in fact this decision which informs the court whether Dietch has sufficiently pleaded bad faith in the fourth count.
The central thrust of the fourth count, which does not mention the term bad faith, claiming recovery under a theory of statutory theft pursuant to § 52-564, is the Johnsons' retention of funds paid to them by their insurer allegedly provided to them for the sole purpose of paying Dietch for its work. Our Appellate Court has long held that " [s]tatutory theft under § 52-564 is synonymous with larceny under General Statutes § 53a-119 . . . A person commits larceny within the meaning of . . . § 53a-119 when, with intent to deprive another of property or to appropriate the same to himself or a third person, he wrongfully takes, obtains or withholds such property from an owner." (Internal quotation marks omitted.) Fernwood Realty, LLC v. AeroCision, LLC, 166 Conn.App. 345, 359, 141 A.3d 965, cert. denied, 166 Conn.App. 345, 141 A.3d 965 (2016). The court need not decide if indeed the Johnsons' retention of insurance proceeds is a deprivation of property or an appropriation of same belonging to the plaintiff as this was not an issue presented to it.
Dispositive to this decision is the holding in Burns that " the bad faith exception to the bar on a contractor's recovery under contracts that do not comply with § 20-429 does not apply when a homeowner receives goods and services from a contractor in the belief that they ultimately will have to be paid for, but then repudiates the contract because the contractor's noncompliance with the act gave rise to a genuine, good faith dispute about the scope of the work or the contract price." Burns v. Adler, supra, 325 Conn. 36. A central part of the application of the bad faith defense to the bar on recovery imposed by the act is receipt by a homeowner of goods and services from a contractor with the intent of invoking § 20-429 to avoid paying for them. See id., 44. No such factual claim is asserted in the fourth count. The plaintiff's assertion that the retention of funds received from Liberty Mutual for the purpose of paying Dietch is a misappropriation of Dietch's property does not assert a claim that the defendants received goods and services from the plaintiff with the intent of invoking § 20-249 to evade an obligation to pay under a non-compliant contract. It thus fails to state a claim upon which relief may be granted.
Conclusion
For the foregoing reasons the defendants' motion to strike the first, second, third and fourth counts of the complaint is granted.