Opinion
Nos. CV04-4003402S, CV06-5007438S
June 17, 2009
MEMORANDUM OF DECISION ON MOTIONS FOR SUMMARY JUDGMENT
I
Motions for summary judgment have been filed in these two cases. The parties are different but some of the issues raised both factually and legally are interrelated.
The court has decided to issue one opinion for both cases since, as noted, the arguments and counter-arguments raised are interrelated as arc the claims raised in these cases.
The standards to be applied in deciding a motion for summary judgment are well known. If there is a genuine issue of material fact preventing its being granted the court should not do so since a party has a constitutional right to a trial. But if no such issue exists the court should decide the legal issues presented to avoid the parties having to bear the expense and troubles entailed by litigation. It is fair to say that the matters that have to be decided are legal in nature.
The court will try to discuss all the positions taken on the motions for summary judgment but not necessarily in the order discussed in the motions.
II CAN DAMAGES FOR EMOTIONAL DISTRESS BE AWARDED UNDER THE CONNECTICUT UNFAIR PRACTICES ACT
Basically as to the claims made under the Connecticut Unfair Trade Practices Act (CUTPA) in the Lichtenfels v. Crook case and in Deutsche Bank v. Lichtenfels the defendants argue that summary judgment should enter on these claims "to the extent they claim emotional distress damages on the CUTPA counts."
This argument raises substantive and procedural issues. The court will first discuss the substantive argument.
(a)
Section 42-110g of the General Statutes in subsection (a) provides that "(a) 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 § 42-110b, may bring an action in the judicial district in which the plaintiff or defendant resides or has his principal place of business, or is doing business, to recover actual damages."
A plain reading of the language would seem to indicate that a recovery for emotional distress is not included. In the later part of the subsection the words "actual damage" are included. But the qualifying language "ascertainable loss of money or property, real or personal" simply does not envisage or allow an interpretation that would permit a recovery for emotional distress, — it does not represent "a loss money or property" and this view is supported by the language that qualifies that phrase, i.e., money or property that is " real or personal." Obviously "property" loss is being discussed not emotional injuries.
To approach the problem from another perspective, let us examine another statute designed to protect consumers by means of federal legislation, the Fair Debt Collections Practices Act, 15 U. S. § 1692 et seq., FDCPA. Several federal cases have permitted recovery for emotional distress under that act Gervais v. O'Connell, Harris Associates, 297 F.Sup.2d 435, 439, 440 (D. Conn., 2003); Conboy v. AT T Corp., 84 F.Sup.2d 492, 507 (S.D.N.Y., 2000). Teng v. Metropolitan Retail Recovery Inc., 851 F.Sup. 61, 68, 69 (E.D.N.Y., 1994). Conboy quotes from Teng to the effect that emotional distress damages should be permitted because "the wrong sought to be punished by (the FDCPA) is similar in nature to a tort cause of action based on outrageous or reckless conduct and is the type of wrong in which damages for emotional distress have been traditionally permitted," Teng at 851 F.Sup. p. 69, Conboy at 84 F.Sup.2d p. 507. But in arriving at its position Teng did not paint with such a broad brush. It noted that Section 1692k of the FDCPA which provides for civil liability provides that debt collectors failing to comply with the acts provisions are liable to the aggrieved person for (a)(1) "any actual damage sustained by such person as a result of such failure." There is no qualifying language in the Federal act like that in CUTPA. Furthermore the Teng court referred to the acts legislative history. The Congressional findings and declaration of purpose of § 1692 states "(a) there is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of personal privacy," 851 F.Sup. at page 69.
Leaving aside whether the same general observation can be made about the ordinary CUTPA violation, keeping in mind that if such damages were allowed they would apply to all CUTPA cases, our statutory language is not that of the FDCPA. True CUTPA uses the term "actual damages" but that term is made in the context of a definition of "ascertainable loss" which as the court previously noted does not appear to envisage a recovery for emotional distress. As to legislative history, in Volume 12 of the Connecticut Practice Series, Unfair Trade Practices, Langer, Morgan and Belt § 6.8, page 440 the authors say that "it should be noted that neither the legislative history of CUTPA nor that of model legislation on which it was primarily based indicates whether the legislature intended for CUTPA to allow recovery for personal injuries or emotional distress."
Another point should be made. In Normand Josef Enterprises Inc. v. Conn. National Bank, 230 Conn. 486, 521 (1994), our court said:
Our conclusion to apply CUTPA to banks is particularly bolstered by the fact that the Supreme Judicial Court of Massachusetts reached a similar conclusion, . . . because the 'governing statutes in Massachusetts are virtually identical to our own,' Russell v. Dean Witter Reynolds Inc., supra, 200 Conn. 183. We have therefore, repeatedly looked to the reasoning and decisions of the Supreme Judicial Court of Massachusetts with regard to the scope of CUTPA, id.; Mead v. Burns, supra, 199 Conn. 663.
And Langer, Morgan and Belt have the following observation relative to the foregoing at § 6.8, page 445:
As amended in 1971, the Massachusetts act limited standing to persons who had suffered a "loss of money or property" — language similar to that in section 42-110g(a) of CUTPA. The Supreme Judicial Court of Massachusetts relied on this language (in Wolfgang v. Hunter, 432 N.E.2d 467, 472 (1982)) to hold that recovery of damages for emotional distress was not available under the Massachusetts Act. In 1979, however, the Massachusetts legislature amended the Act to make an action for damages available to "[a]ny person . . . who has been injured . . ." Decisions construing the amended act have held that damages for personal injuries and emotional distress are recoverable. Like the Supreme Judicial Court of Massachusetts decision in Wolfberg, other courts construing state unfair trade practices acts, which, like CUTPA, limit standing to those who have suffered a "loss of money or property," have held that the phrase also imposes a limitation on the kind of damages that may be recovered.
In Wolfberg v. Hunter, supra, the court said it agreed with the trial judge that the phrase 'loss of money or property' constitutes a limitation on the types of injuries for which recovery may be had under G.L. C93A § 9(1) as that statute existed at times relevant to this suit;" apparently putting a limitation on the language of an earlier case. Baldassari v. Public Finance Trust, 337 N.E.2d 701, 708-09 (Mass. 1975).
One important distinction must be kept in mind, however. Section 42-110b(b) of our statutes says that in interpreting subsection (a) as to what constitutes a violation of our act federal court decisions and FTC interpretations of Section 5(a)(1) of the Federal Trade Commission Act "shall guide" our courts. The federal act does not provide a damage remedy but as noted in § 6.8 of the Langer, Morgan and Belt work at page 441 "the FTC and the courts have recognized that physical injury and even emotional harm may be relevant to whether an unfair trade act or practice has caused substantial injury to consumers and can serve as a basis for liability under the FTC Act." But this is a different issue from the scope of damages or permissible aspects of a damage award.
In any event it is the court's opinion that emotional distress damages cannot be recovered under CUTPA.
(b)
Although the court is of the opinion that damages for emotional distress cannot be awarded under CUTPA, at least as a component of compensatory damages, summary judgment is not an appropriate vehicle to allow the court to take any action as a result of that conclusion. It certainly cannot be used as a basis to grant judgment on this claim. In Boucher Agency, Inc. v. Zimmer, 160 Conn. 404, 410 (1971), the court said a motion for summary judgment may be used to show that "a complaint . . . does not set forth a cause of action." That cannot result from the court's decision on the foregoing issue. Under P.B. § 10-43(2) a motion to strike can be used to contest the legal sufficiency of any prayer for relief and a prayer for relief can be stricken if it cannot be legally awarded. Pamela B. v. Ment, 244 Conn. 296, 325 (1998). But this of course is not a motion to strike and the CUTPA counts do not specifically ask for emotional distress damages in what might be considered a "prayer for relief." Furthermore, even as to a motion to strike, would the old admonition that it cannot be used to attack a particular aspect of a claim for relief as to, opposed to a claim in its entirety not apply?
III EMOTIONAL DISTRESS DAMAGES FOR BREACH OF CONTRACT CLAIM (a)
A breach of contract claim was set forth in an amended counterclaim to the Deutsche Bank suit filed by the Lichtenfels. Both sides invite the court to render a decision on this issue although the vehicle for doing so is a motion for summary judgment. Summary judgment cannot enter on such an issue for the same reasons discussed in the previous section where the court dealt with the propriety of emotional distress damages in CUTPA claims. In other words, even if the court were to agree with Deutsche Bank's position, judgment could not enter against the Lichtenfels' breach of contract claim.
The court will, however, accept the parties' invitation and render what is, after all, an advisory opinion for the reason that this litigation has gone on for quite some time. The two files consume four to five boxes, and motions in each file number well over 200. A decision, even on this limited question, may narrow and focus the issues for the trial, even though it is in the nature of an advisory opinion.
(b)
The Restatement (2d) Contracts sets forth the general rule:
§ 353. Loss Due to Emotional Disturbance.
Recovery for emotional disturbance will be excluded unless the breach also caused bodily harm or the contract or the breach is of such a kind that serious emotional disturbance was a particularly likely result.
There is no claim of bodily harm here and the second category is discussed in comment (a) to § 353: "common examples are contracts of carriers and innkeepers with passengers and guests, contracts for the carriage or proper disposition of dead bodies, and contracts for the delivery of messages concerning death," see for example Ross v. Forest Lawn Memorial Park, 153 Cal.App. 3d 988 (1984). The comment goes on to say breach of the type of contracts just mentioned "is particularly likely to cause serious emotional disturbance. Breach of other types of contracts, resulting for example in sudden impoverishment or bankruptcy, may by chance cause even more severe emotional disturbance, but, if the contract is not on where there was a particularly likely risk, there is no recovery for such disturbance."
The discussion in Dobbs Law of Remedies, 2d ed., addresses this issue; Dobbs is for the court always helpful. At § 6.12, page 251, Vol. 1 he states that: "The ordinary rule is that mere breach of contract does not warrant recovery of either punitive damages or mental distress damages. Such damages are regarded as elements of a tort, but not a contract recovery". What this means for the court is that the conduct causing the breach could form, in the appropriate case, the basis for intentional or negligent infliction of emotional distress but a breach of contract basis for such a claim is not appropriate.
Dobbs amplifies his views in this regard in Volume 3 at § 12.5, pp. 112-16. Talking of breach of contract actions where emotional distress damages can be claimed, he says: "Some contracts may be intended by the parties to provide for personal satisfaction and nothing else. Breach of such a contract might warrant emotional distress damages under the contemplation of the parties rule of Hadley v. Baxendale without resort to tort law at all. If a contract is made for the very purpose of providing physical or mental well-being, it is very likely that the defendant must have contemplated damages for a loss of that well-being in the event of breach."
The expectations of the parties at the time of contract formation is the proper test if contract recovery is not to merge into tort actions, and if parties are going to be able rationally to engage in contract formation — a process which necessitates the ability to access risks and the nature of loss upon breach. Dobbs has instructive remarks in this regard when he talks of the compensation due the wronged party upon breach when he says: "But if compensation refers to the plaintiff's rightful financial position (the plaintiff) is not under-compensated at all unless the defendant has acted tortiously or the emotional distress risk was implicitly allocated to the defendant by the contract. What Hadley recognizes is that the promisee often bargains to accept some of the costs of breach; only some, not all risks are assigned to the promisor. Assignment of emotional distress risks to promisors would be unusual and promisors would be likely to demand a premium for accepting risks of unknowable damages." Thus Dobbs goes on to say in situations involving for example the building of a home: "If building contractors must sometimes pay emotional distress damages when they are late in completing their work, they will very likely be required to raise their prices overall, or else refuse to set a completion date."
Some jurisdictions do allow emotional distress damages simply when the actions leading to breach are extreme and outrageous or intentionally so, see Picogna v. Board of Education, 671 A.2d 1035 (N.J., 1996); Innes v. Howell Corp., 76 F.3d 702, 713 (CA6, 1996) citing Audiovox Corp. v. Moody, 737 S.W.2d 468, 469-71 (Ky.Ct.App. 1987). Colorado states the Dobbs view: "Under the willful and wanton rule, the allowance of noneconomic damages does not dispose of expectation interests. To the contrary, the rule properly limits the availability of non-economic damages to extraordinary contractual circumstances where such damages are in fact foreseeable at the time of contracting." Giampapa v. American Family Mutual Insurance Co., 64 P.3d 230, 240 (2003).
For a general discussion, see also 22 Am.Jur.2d, "Damages," Section 49, pp. 90-92.
Except for very limited types of cases such as those referred to in the Restatement where the breach can be expected to cause immediate harm to the most personal and private areas of life, this court believes 1) it is not appropriate and even harmful to overlay the contract formation process with the need to take into account non-calculable damage risks thus increasing contract prices; 2) also focusing the right to claim non-economic damages on how bad the conduct was leading to the breach, rather than what was contemplated by the parties at contract formation, overturns decades if not centuries of notions of appropriate damage considerations in contract breach cases, see Hadley v. Baxendale.
All of this is especially true in light of the fact that where conduct is conducive to causing emotional distress or outrageous and intentionally so, an action in tort for intentional or negligent infliction of emotional distress is available at least where it is not a glorified substitute for an action really lying in breach of contract, cf Dowling v. First Federal, 1995 Ct.Sup. 6337.
Furthermore, the legislature can be assumed to be aware of the limitations of recovery under contract law as to emotional distress damages and punitive damages. Any perceived problems with that law can be and has been addressed by ameliorative legislation such as the Fair Debt Collections Act, federal legislation providing for emotional distress recovery. The Connecticut Unfair Trade Practices Act provides for punitive damages, also see Home Improvement Act, § 20-418 et seq. which has been held by statute to constitute a CUTPA violation where the Home Improvement Act is violated.
Simply put, the court does not view a violation of these home mortgage agreements as being of the type that would suggest that parties at the time of contract formation would have contemplated emotional distress damages upon breach. They are not like the contracts referred to in the Restatement causing immediate harm upon breach. Claims for breach of these contracts must be prosecuted in court over weeks and sometimes months and the impact depends often on the financial situation of the mortgagee. They are no more entitled to special treatment regarding non-economic damages that for example a breach by a supplier of widgets whose failure to deliver the same causes a manufacturer to go out of business with harm to the owner and workers. There are tort mechanisms and legislation such as previously mentioned which can and should deal with those situations.
Frankly the court is also concerned with the prospect of dozens of trial judges and juries dealing with a variety of contract claims being given the green light to wade through those claims and willy nilly having the power to decide that one breach warrants non-economic damages and another one does not.
The Restatement limitation and Dobbs' limitation on the type of action where such contract recovery should be allowed is acceptable and understandable, the concept should not be expanded except by the legislature or by application of tort law.
IV INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS
There are counts of Intentional Infliction of Emotional Distress. The court will try to discuss the general law in this area and then try to apply its understanding of the law to the facts of this case to determine whether, in its opinion, the claim is viable.
Our state has recognized the tort of intentional infliction of emotional distress, Petyan v. Ellis, 200 Conn. 243, 253 (1986). The court's reference to Murray v. Bridgeport Hospital, 40 Conn.Sup. 56, 62 (1984), and its own discussion at pp. 253-54 indicates that the Restatement (Second) Torts § 46 requirements for the tort have been adopted by our court. Section 46 in paragraph (1) reads as follows:
(1) One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress, and if bodily harm to the other results from it, for such bodily harm"
As § 46 indicates, one of the necessary elements of the tort is that the alleged conduct of the defendant must be "extreme and outrageous" Id. p. 253. In footnote 5 on page 254, the court quotes from Prosser Keeton, Torts (5th ed.) § 12, page 60: "The rule which seems to have emerged is that there is liability for conduct exceeding all bounds usually tolerated by decent society, of a nature which is especially calculated to cause, and does cause, mental distress of a very serious kind." (Emphasis added by court.)
The Restatement at § 46, page 73, comment d, states: "liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious and utterly intolerable in a civilized community. Generally, the case is on in which the recitation of the facts to an average member of the community would arouse his (sic) resentment against the actor and lead him to exclaim 'Outrageous.' The liability clearly does not extend to mere insults, indignities, threats, petty oppressions or other trivialities." Can the issue of whether conduct is outrageous presented in a motion for summary judgment and relying on affidavits ever be treated as a question of law? The answer to this must be yes and the Restatement seems to think so. In comment h to § 46 it says:
It is for the court to determine, in the first instance, whether the defendants' conduct may reasonably be regarded as so extreme and outrageous as to permit recovery or whether it is necessarily so. Where reasonable men (sic) may differ, it is for the jury, subject to the control of the court, to determine whether, in the particular case, the conduct has been sufficiently extreme and outrageous to result in liability.
The necessary implication of the foregoing statement is that where reasonable people cannot differ in concluding the alleged conduct is not extreme or outrageous the court can so determine as a matter of law. If carefully read, the early and leading case of Brown v. Ellis, CT Page 10338 40 Conn.Sup. 165 (1984) makes this very analysis in a case where a motion for summary judgment was before the court.
It must be said, however, that one problem with the definition of outrageous given in the Restatement, see comment h, is that it is somewhat subjective. One commentator has said the following
The term 'outrageous' is neither value free or exacting. It does not objectively describe an act or series of acts rather it represents an evaluation of behavior. The concept thus fails to provide guidance either to those whose conduct it purports to regulate, or to those who evaluate that conduct . . . court may have no particular wisdom with respect to what is socially intolerable . . . courts cannot simply take refuge in their view of public sentiment when they face issues of outrageousness. First, there may be no community sentiment with respect to a vast number of issues and whatever sentiment there is may be deeply divided with respect to other issues. It would indeed be surprising to learn that the business 'community' shared the same views as the 'consumer' community with respect to collection practices or that employers and employees agreed about the employer's freedom of action to terminate an "at will" employee. Second, there are situations in which it literally does not matter what dominant community sentiment may be — courts are not polling agencies, they are expositors of social policy.
Givelber, The Right to Minimum Social Decency and the Limits of Evenhandedness: Intentional Infliction of Emotional Distress by Outrageous Conduct, 82 Columbia L.Rev. 42 (1982).
But there are some basic things the courts appear to agree upon. Even in the work context mere insults or verbal taunts do not rise to the level of extreme and outrageous conduct. McNeal v. City of Easton, 598 A.2d 638, 641 (Pa., 1991); Miller v. Equitable Life Assurance Soc., 537 N.E.2d 887, 889 (Ill., 1989); Brown v. Town of Allenstown, 648 F.Supp. 831, 839 (D.N.H. 1986); Dickerson v. Nichols, 409 N.W.2d 741 (Mich., 1987).
Also the cases distinguish between situations where a person merely accuses another of fraudulent or dishonest activity as opposed, for example, to actively encouraging or trying to bring about a false prosecution, cf. Peoples v. Guthrie, 404 S.E.2d 442, 443 (Ga., 1991), with Dean v. Ford Motor Credit Co., 885 F.2d 300, 306-07 (CA.5, 1989).
The context in which a statement is made also has a bearing on the decision of whether the making of it is extreme and outrageous. Thus in Dickerson v. International U.A.W Union et al., 648 N.E.2d 40 (Oh., 1994), the appellate court reversed a judgment in the plaintiff's favor for intentional infliction of emotional distress and concluded that extreme and outrageous behavior was not shown where a plaintiff who crossed a picket line was threatened with physical harm and called a "scab" on several occasions. The court reasoned that this was no more than robust language and a clash of strong personalities which did not attain the level of outrageous conduct in a labor strife context so as to support a claim of intentional infliction of emotional distress, id. page 47.
Turning to the creditor-debtor relationship such as presented by this case, another aspect of the context in which complained of activity has occurred is referred to in Margita v. Diamond Mortgage Corp., 406 N.W.2d 268, 272 (Mich. 1987), where the court said:
The extreme and outrageous character of the conduct may arise from the position of the actor or a relationship to the distressed party . . . For example, it may occur through an abuse of a relationship which puts the defendant in a position of actual or apparent authority over a plaintiff or gives a defendant power to affect a plaintiff's interest.
Also see Batson v. Shifflet, supra at 602 A.2d page 1217, cf. comment (d) of § 46 of Restatement (Second) Torts which indicates extreme outrage need not be shown for insults where there is a "special relationship" between the parties, referring to § 48.
In Margita the defendant's business involved lending money for mortgages. The court upheld the trial court's refusal to grant the defendant's motion for summary judgment where the debt the defendant company sought to collect was not and never had been overdue. Despite this the plaintiff was harassed through abusive phone calls and letters assessing late charges. Foreclosure was threatened on various occasions. The court noted that the defendant company had a great deal of power to affect plaintiff's credit rating and future ability to borrow funds and had engaged in continuous harassment for nearly two years on a false claim of non-payment. This to the court was clearly a case for the jury.
The Margita court also said that the "defendants could have done nothing more outrageous in attempting to collect this imagined overdue debt, short of actually instituting foreclosure," id. page 272. The plaintiff's made repeated efforts to try to rectify the problem but they were met with threats to foreclose on their home. Requests to have an audit were ignored and dunning letters were sent threatening foreclosure. Underlying facts noted by the court serve to further define its position. A person on behalf of the mortgage company, Mr. Pytak, would call twenty times a day often several times a week. The calls were laced with insulting remarks and profanity. The plaintiff's intelligence was questioned and he was called "ignorant, incompetent, and stupid." Pytak repeated to the wife the insulting remarks he made to the husband. Pytak was "snotty" and used profane language. Occasionally the plaintiffs would be told "it was all straightened out" but then the calls and letters would start again, id. pp. 269-70.
A perhaps more concise and accurate statement of the law in these creditor cases which is basically the type of case now before the court is found in Prosser and Keeton On Torts, 5th ed., § 12 at pp. 61-62 where speaking of this tort as applied to these type of cases and citing innumerable cases, Prosser says:
It is on this basis that the tort action has been used as a potent counter-weapon against the more outrageous high-pressure methods of collection agencies and other creditors. These are sufficiently well known, ranging from violent cursing, abuse, and accusations of dishonest, through a series of letters in lurid envelopes bearing a picture of lightning about to strike, which repeatedly threatened arrest, ruination of credit, or a suit which is never brought, or telephone calls around the clock, or attempts to pile up the pressure by involving the plaintiff's employer, relatives, neighbors or the public in the controversy, up to a call to a neighbor's telephone for an 'emergency message' which will be a 'great shock,' and a proposal to a woman to 'take it out in trade.' It is seldom that any one such item of conduct is found alone in a case; and the liability usually has rested on a prolonged course of hounding by a variety of extreme methods.
These debt collection cases as they apply to this tort are collected in 47 Am. Jur. Proof of facts 2d in an article appropriately entitled, "Debt Collection — Intentional Infliction of Emotional Distress," 47 A J Proof of Facts, at pages 357 et seq. (there is a 2006 Supplement also).
Another aspect of a claim that may be made under this tort and which has some bearing on issues raised in the case is reflected in comment (f) of § 46.
That comment (f) of § 46 of the Restatement says that "the extreme and outrageous character of the conduct may arise from the actor's knowledge that the other is peculiarly susceptible to emotional distress, by reason of some physical or mental condition or peculiarity. The conduct may become heartless, flagrant, and outrageous when the actor proceeds in the face of such knowledge, where it would not be so if he did not know." Immediately the language is qualified: "It must be emphasized again, however, that major outrage is essential to the tort; and the mere fact that the actor knows that the other will regard the conduct as insulting, or will have his feelings hurt is not enough.
The court will end its general discussion by reviewing the four matters that must be shown to establish the tort. An Appellate Court case adopting the formulation set forth in Petyan v. Ellis, supra, states that to establish this tort four factors must be established: "(1) that the actor intended to inflict emotional distress or that he knew or should have known that emotional distress was the likely result of his conduct (2) that the conduct was extreme and outrageous (3) that the defendant's conduct was the cause of the plaintiff's distress and (4) that the emotional distress sustained by the plaintiff was severe," Angiolillo v. Buckmiller et al., 102 Conn.App. 697, 706 (2007). Oddly enough, although Petyan refers to the Restatement Section 46 its state of mind definition seems to differ. If one looks at comment I to Section 46, which discusses "intention and recklessness," it says the rule stated in Section 46 "applies, where the actor desires to inflict severe emotional distress and also where he knows that such distress is certain or substantially certain to result from the conduct. It applies also where he acts recklessly, . . ." The "should have known" language in Angiolillo which restates what was said in Petyan could be said to be a negligence standard. This cannot be, since it would conflate two separate torts — intentional and negligent infliction of emotional distress. The court will adhere to the Restatement requirements since this is what Petyan really intended as it refers specifically to § 12 of Prosser which discusses this tort as being an intentional tort.
(B)
Applying the foregoing to the facts of this case it is difficult to see how an intentional infliction of emotional distress claim can be maintained against the law firm or the corporate defendants. This is so even if the court were to accept the claims that gross errors were made in the actions of the bank acting through Litton and their attorney agents in their demands for payment, claims of arrearage, and default.
Section 46 of the Restatement adopted by our Court in Petyan indicates that requires the actor to cause "severe emotional distress" by intentional or reckless actions. A reading of the Lichtenfels' affidavit indicates what Attorney Hausman underlined in a May 26, 2005 letter to Attorney Crook: "It would appear that at best the Bank has severe administrative problems and at worst it is acting with malice or reckless disregard with respect to my clients. "Intentional disregard translating into an actual intent to cause severe emotional distress is not established through anything that has been submitted. As to recklessness the predicate to the tort is the extreme and outrageous conduct. We have nothing here coming close to the conduct in the Margita case. There the court talked of an "imagined overdue debt" which giving the plaintiffs the benefit of the doubt may be the case here. But in that case dozens and dozens of harassing phone calls were made coupled with demeaning insults and profanity; insults were hurled directly at the plaintiff — "ignorant, incompetent, and stupid" by the representative of the lending institution attempting to have the imagined debt repaid.
If the Lichtenfels' affidavit is examined closely the great majority of calls, demands and complaints were quite understandably initiated by Mr. Lichtenfels. The main gist of the affidavit is that Litton Representatives did not get back to Lichtenfels after indicating they would in situations where he claims to have brought to their attention matters indicating Litton had erred and there was no default on payments owed. The complaint also alleges Attorney Crook at some point said the Lichtenfels were "deadbeats." Even taking this allegation of a one-time statement at face value, coupled with all the other allegations in Lichtenfels' affidavit, none of this approached to the level of outrageous conduct noted in the Margita case, also see Turman v. Central Billing Bureau, 568 P.2d 1382 (Ore., 1979); Sherman v. Field Clinic, 392 N.W.2d 154 (Ill.App. 1979); cf. Moore v. Savage, 359 S.W.2d 95 (Tex.Civ.App., 1962); Vargas v. Ruggiero, 17 Cal. Rptr. 568 (1961); Bowden v. Spiegel, 216 P.2d 571 (Cal.App., 1950); Delta Finance Co. v. Ganakas, 91 S.E.2d 383 (Ga.App., 1950).
But to return to the allegation that Attorney Crook called the plaintiffs deadbeats query what if any weight the court can give to this. The response to the defendants' motions does not set forth the context of the statement as to where it was made, exactly to whom it was said, when, etc. Counsel for the firm when discussing this issue refers generically to statements made "in court and in the context of lawsuits," there is an indication it was made during a pretrial.
Without the context being given the court cannot determine if the statement was "pertinent to the subject of the controversy" so it is difficult to apply let alone rebut the claim of absolute privilege for statements by counsel during litigation, McKinney v. Chapman, 103 Conn.App. 446, 451-53 (2007), which quoted 3 Restatement (2d) Torts § 587. The opposition to the motion does not allude to this particular issue. There is a request, generally, that the court refrain from ruling on the emotional distress claims until discovery is completed but the information surrounding and relating to this "deadbeat" matter was available to the parties when the statement was allegedly made. Discovery would not appear to be of any assistance in setting forth the underlying facts which were known to all sides when the motions were made and the objections to them filed concerning this issue.
In any event, the statement does not appear to be related to matters outside the litigation so it cannot be considered on the claim of intentional infliction of emotional distress but is protected by the privilege cf. Heim v. California Federal Bank, 78 Conn.App. 351, 369 (2003). But again, even if this statement was not protected by a privilege, it, along with other allegations of unwarranted behavior, do not lead the court to make a finding of outrageous behavior.
Heim also defeats any claim that the actual bringing of the two foreclosure actions can be regarded as a separate factor in weighing whether or not this tort has been committed. At page 371 the court says "The act of filing a lawsuit, even if wrongfully motivated, does not transgress the bounds of socially tolerable behavior or make the average member of the community raise their hand and exclaim "Outrageous." At first this doctrine seems overly harsh but at one point Heim, id., p. 368 indicates any other policy would interfere with the right to initiate litigation or put too heavy a price on that right. The better solution is to leave any warranted correction of such behavior to the common law doctrine of vexatious litigation and the disciplinary procedures provided by the Rules of Professional Conduct.
But the foregoing does not resolve entirely the issue of the viability of this claim based on what has been presented to the court. As previously discussed, comment (f) of Section 46 of the Restatement states that a finding of extreme and outrageous conduct "may arise from (the alleged tortfeasor's) knowledge that the other is peculiarly susceptible to emotional distress by reason of some physical or mental condition or peculiarity." The comment goes on to say: "The conduct may become heartless, flagrant, and outrageous when the actor proceeds in the face of such knowledge where it could not be so if he did not know. It must be emphasized again, however, that major outrage is essential to the tort; and the mere fact that the actor knows that the other will regard the conduct as insulting, or will have his feelings hurt, is not enough." Two illustrations to the comment are instructive:
11. A, who knows that B is pregnant, intentionally shoots before the eyes of B a pet dog, to which A knows that B is greatly attached. B suffers severe emotional distress, which results in a miscarriage. A is subject to liability to B for the distress and for the miscarriage.
12. A is in a hospital suffering from a heart illness and under medical orders that he shall have complete rest and quiet. B enters A's sick room for the purpose of trying to settle an insurance claim. B's insistence and boisterous conduct cause severe emotional distress, and A suffers a heart attack. B is subject to liability to A if he knows of A's condition, but is not liable if he does not have such knowledge.
The special circumstance advanced by the plaintiff in this case are in part contained in the Lichtenfels' affidavit:
37. Prior to and after the commencement of that suit, Litton had sent numerous letters and/or notices to us, each stating different alleged arrearages. Our counsel at the time, Raymond Lemley, attempted to resolve the issue and correct the record, and received numerous assurances from Litton that it would correct the situation.
38. Because my wife is ill with multiple sclerosis and suffered from anxiety and stress, our attorney attempted to obtain a reinstatement amount from Litton, and pay that amount upon the condition that Litton and Deutsche Bank would conduct a retrospective interest accounting to determine the appropriate interest rate and to credit or reimburse them for all overpayments. (See Lemley Affidavit.)
The court is aware of the fact that there is a dispute as to whether the Lemley affidavit should be considered. The court is not relying on what he did or did not do to try to resolve the dispute; it only quotes these paragraphs in full to indicate the Lichtenfels' claim as to her condition in light of the bank's position as to alleged arrearages.
60. Throughout the course of his dealings with us, and particularly with respect to the Second Foreclosure, Mr. Crook, the Firm and Litton were told of my wife's illness and how having to defend a baseless foreclosure severely exacerbated her stress and anxiety. Although these representations were stated orally and in the many letters referenced above, Mr. Crook and the Firm failed and/or refused to verify the alleged incidents of default and allowed the Second Foreclosure to continue.
Arguably the following two paragraphs are relevant to the plaintiff's claim.
74. As evidenced by Litton's and Deutsche Bank's repeated failures to provide accurate statements of account and repeated refusals to verify the debts owed, and Hunt Leibert's refusal to verify the debts claimed or to insure reinstatement pursuant to the reinstatement letter issued by Attorney Crook from its office and on behalf of Hunt Leibert, we have never since Deutsche Bank's acquisition of our note and mortgage received an accurate accounting of our loan. Consequently, we have lived with fear and anxiety of losing our home, despite our knowledge and belief that we were never truly in default.
75. My wife has been severely affected by the Defendants' conduct, as have I. The Defendants' course of conduct was extreme and outrageous.
In a May 26, 2005 letter from counsel for the plaintiffs to Attorney Crook, a lawyer for the Firm representing Litton, their lawyer referred to the bank's errors and mistakes underlying their conduct referred to in the letter. He said: "In any case the bank's conduct has been egregious. Mrs. Lichtenfels, who as you know is quite ill with multiple sclerosis, was beside herself over this latest gaffe." An April 12, 2005 letter referred to this condition "which makes her particularly physically reactive to stress."
The court could find only one case nationally involving an intentional infliction of emotional distress claim in a creditor debtor context where multiple sclerosis factored into the determination of whether the tort had been established, Dawson v. Associates Financial Services Co. 529 P.2d 104 (Kan., 1974), which has been cited in Bundren v. Superior Court, 145 Cal.App.3d 784, 798 (1983); Vinson v. Linn-Mar Community School District, 360 N.W.2d 108, 119 (Iowa, 1984); Drejza v. Vaccaro, 650 A.2d 1308, n. 12 (D.C.Ct.App., 1983), but not for its specific reference to a multiple sclerosis condition. In Dawson the Kansas Supreme Court reversed the trial court's granting of a directed verdict in favor of the creditor. The court adopted the Restatement § 46 intentional infliction of emotional distress tort and in doing so at one point said, as indicated, "Nonetheless, methods of collecting debts which might be reasonable in some circumstances, might be regarded as outrageous in others where it is known that the debtor is particularly susceptible to emotional distress due to a disease such as multiple sclerosis," 529 P.2d page 113. In that case, however, a doctor had testified the appellant debtor did suffer from the disease, had severe physical impairment because of it and had to be hospitalized. It was in that context that dunning by the creditor commenced and a Doctor Lee testified that thereafter she suffered "an acute relapse of her condition;" he also testified that stress aggravated the underlying condition and her condition "was permanently impaired by the relapse," 529 P.2d pp. 107-08.
In their written brief the plaintiffs rely on the comment (f) Restatement analysis because of Mrs. Lichtenfels' medical condition but only rely on statements by Mr. Lichtenfels as to her condition and the alleged stress caused by the defendants in light of that condition and on a statement by their lawyer in a letter to the creditor's attorney. In the opposition brief itself as regards the distinct element of the tort — the emotional distress must be severe. The brief merely says: "On the summary judgment record the plaintiffs have already filed the expert disclosure of Lloyd Price, M.D., a Board Certified Forensic Psychiatrist detailing Mrs. Lichtenfels' condition and the causation issue. Surely, this is sufficient to survive a summary judgment on this issue." Even if this information could be applied to the outrageous conduct claim and whether that definition could be met, this is not appropriate under summary judgment procedure. In Home Ins. Co. v. Aetna Life Casualty Co., 235 Conn. 185, 202-03 (1995), the court said that "only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment," also see New Haven v. Panini, 89 Conn.App. 675, 678-80 (2005). For example affidavits by medical experts in a malpractice case can be considered by the court in summary judgment procedure. An expert disclosure is not an acceptable substitute for authenticated documentation or affidavits.
For the foregoing reasons the court cannot find a genuine issue of fact not only on the outrageous conduct element of this tort, that any conduct somehow exacerbated Mrs. Lichtenfels' stress due to her medical condition and that any such stress was severe in the case of Mrs. Lichtenfels.
As to Mr. Lichtenfels' claim the court also finds the outrageous conduct element has not been met; there is nothing to indicate beside his statement to that effect that even if this prior hurdle could be met his stress was so severe as to warrant a finding of responsibility under this tort and not material issue of fact prevents the court from reaching these conclusions.
The intentional infliction of emotional claims in these actions are dismissed.
CT Page 10347
NEGLIGENT INFLICTION OF EMOTIONAL DISTRESS
The plaintiffs have asserted claims of negligent infliction of emotional distress. To prevail on such a claim the plaintiff must prove the following elements "(1) the defendant's conduct created an unreasonable risk of causing the plaintiff emotional distress (2) the plaintiff's distress was foreseeable (3) the emotional distress was severe enough that it might result in illness or bodily harm and (4) the defendant's conduct was the cause of plaintiff's distress," Carrol v. Allstate Ins. Co., 262 Conn. 433, 444 (2003).The response by the plaintiffs to the motions for summary judgment is to cite Angiolillo v. Buckmiller, 102 Conn.App. 697, (2007), for the proposition that the alleged facts in response to the motion establish that it should be a jury question as to whether the Carrol elements have been met and there is certainly an issue of fact concerning this which should be decided by the jury.
To address this issue it is necessary to examine the factual allegations of the negligent infliction of emotional distress count or allegation. The first 41 paragraphs of the Second Amended complaint set forth those acts by the defendants which in effect constituted a violation of the contractual obligations created by the original mortgage debt. Every contract, including one that is based on a debt owed contains a covenant of good faith and fair dealing. In Magnan v. Anaconda Industries, Inc., 193 Conn. 558, 560 (1984), the court said, quoting from Restatement (2d) Contracts, § 205, comment (c): "Good faith performance or enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party. A cursory reading of the allegations of the 41 introductory paragraphs to this tort underlines the basis of the negligent infliction claim as lying in "negligent" failure to comply with contractual obligations. Paragraph 42 and 43 of the actual negligent infliction claim make this clear.
42. At the time Crook and Litton acting as consumer debt collectors engaged in the foregoing conduct, they knew or should have known that their conduct created an unreasonable risk of causing great psychological harm and severe emotional distress to Plaintiffs, particularly in that these Defendants were aware that there was no valid basis for commencing or prosecuting the foreclosures, and because they were aware that Mrs. Lichtenfels suffers from advance multiple sclerosis and accordingly suffers severe physical symptoms in response to stress.
43. Paragraph 43 of the First Count is repeated and realleged as Paragraph 43 of this Fourth Count as though fully set forth herein.
Paragraph 43 states that "In addition to the conduct set forth above Crook told the plaintiffs they were deadbeats and on information and belief did so in his capacity as a consumer debt collector.
The court has previously discussed its opinion that emotional distress damages in our state cannot be made in a breach of contract action. What is the difference between saying that as a result of a breach of contract claim I can claim monetary and emotional distress damages and on the other hand claiming damages for emotional distress because of a breach of contractual and implied contractual obligations? The same conduct that caused the breach of contractual obligations claim can form the basis for an infliction of emotional distress claim but the breach of contractual obligations allegations is an inappropriate basis for such a claim.
That leaves the "deadbeat" allegation. For reasons previously discussed that cannot be considered on this claim. In any event it seems conduct which is alleged to be directly involved with the breach of contractual obligations.
It might be said that this analysis is faulty because certainly a claim for intentional as opposed to negligent infliction of emotional distress which is based on actions evincing a breach of contractual obligations is justified if the requirements of that tort are met. But the intentional tort is not based on an analysis which encompasses concern with the enforcement of contractual rights and the emotional fallout for failure to respect those rights. The tort would lie even if the tortfeasor was correct in asserting a debt was owed. With the intentional tort, the concern is with conduct so outrageous that it violates norms of civilized behavior apart from the rights or wrongs of underlying contractual disputes. The law has an interest in punishing such extreme conduct that transcends the importance of confining claims under contract law to their proper ambit. In any event the court dismisses all claims based on the alleged negligent infliction of emotional distress.
FAIR DEBT COLLECTION PRACTICES ACT
Claims have been made under the Fair Debt Collection Practices Act (FDCPA). All one could ever want to know about litigation under this act is contained in 173 A.L.R. Fed. 223 "What Constitutes 'Debt Collector' For Purposes of Fair Debt Collection Practices Act ( 15 U.S.C.A. § 169Za(6)," 41 P.O. F.3d 159 "Liability of Debt Collector to Debtor Under Fair Debt Collection Practices Act"; and perhaps most helpfully in 29 C.O. A.2d 1, "Cause of Action for Violation of Fair Debt Collection Practices Act ( 15 U.S.C.A. §§ 1692- 1692o)," also see 17 Am. Jur.2d, §§ 192 et seq.
(1)
Suit has been brought pursuant to this act against the law firm of Hunt, Liebert and Attorney Crook, formerly associated with that firm.
(a)
An issue that immediately arises is whether suit under the act can be brought against lawyers who have attempted to collect a debt owed to their client, here the client being a bank and a financial institution holding a mortgage.
The 173 A.L.R. Fed. article succinctly answers this question in section 2(a) at page 239
"Until 1986, the statute contained an express exemption for lawyers. That exemption stated that the term "debt collector" did not include "any attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client." In 1986, however, Congress repealed this exemption in its entirety, and in 1995 the Supreme Court expressly held that an attorney who regularly engages in consumer debt collection activity may be a "debt collector" for purposes of the Fair Debt Collection Act, even if the activity is litigation. The lack of any remaining implied exemption for attorneys, whether litigating or otherwise, has been generally recognized, but these attempts have been largely unsuccessful in the courts . . .
Also see 41 P.O. F.3d article at section 4 pp. 171-72 and 17 Am.Jur.2d 1, "Consumer and Borrower Protection" at § 192, pp. 167-68 for a similar statement of the law and 29 C.O. A.2d at Section 11.
The Supreme Court case referred to is Heintz et al. v. Jenkins, CT Page 10350 514 U.S. 291 (1995), a unanimous opinion of the court written by Justice Breyer. The head note concisely states the opinion of the court "Held: The Act must be read to apply to lawyers engaged in consumer debt-collection litigation for two rather strong reasons. First, a lawyer who regularly tries to obtain payment of consumer debts through legal proceedings meets the acts definition of 'debt collector': one who 'regularly collects or attempts to collect, directly or indirectly (consumer) debts owed . . . another,'" 15 U.S.C. § 1692a(6). Second, although an earlier version of that definition expressly excluded 'any attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client,' Congress repealed this exemption in 1986 without creating a narrower, litigation-related, exemption to fill the void," id. p. 291. The court succinctly stated at page 299 . . ."we agree with the Seventh Circuit that the Act applies to attorneys who 'regularly' engage in consumer-debt-collection activity, even when that activity consists of litigation."
Several cases take the position that an attorney bringing a foreclosure action based on failure to pay a debt falls under the Act. Thus for example in Shapiro and Meinhold v. Zartman, 823 P.2d 120 (Colo., 1992), the court held: "If the definition of debt collectors is construed liberally, with the remedial purpose of the statute in mind, the attorneys are not exempt merely because their collection activities are primarily limited to foreclosures . . . Since a foreclosure is a method of collecting a debt by acquiring and selling secured property to satisfy a debt, those who engage in such foreclosures are included within the definition of debt collectors if they otherwise fill the statutory definition," id. page 124. The court in part, relied on Crossley v. Lieberman, 868 F.2d 566 (CA. 3, 1989), in which the attorney was held to be a debt collector where "twenty two of the thirty two cases the attorney filed in the Court of Common Pleas were mortgage foreclosures," 823 P.2d at page 824. Also see Fox v. Citicorp Credit Services Inc., 15 F.3d 1507 (CA. 9, 1993), where the act was held to apply to an attorney who provided purely legal services; he filed a writ of garnishment on behalf of his client who held the debt, id. page 1513.
The defendants' position is that an attorney enforcing a security interest is not a "debt collector" under the act because "this is not the same as collection of a debt." Two district court cases are cited, Rosado v. Taylor, 324 F.Sup.2d 917, 924 (N.D. Ind., 2004); Hulse v. Ocwen Fed. Bank FSB, 195 F.Sup.2d 1188, 1204 (D.Or., 2002). The defendant law firm could also have cited Heinemann v. Jim Walter Homes Inc., 47 F.Sup.2d 716, 722 (N.D. W.Va., 1998), and a 1988 opinion of the FTC which stated that: "Because the FDCPA's definition of 'debt collection' includes parties whose principle business is enforcing security interests for . . . § 1692f(6) purposes, such parties (if they do not otherwise fall within the definition) are subject only to this provision and not to the rest of the FDCPA," 50 Fed. Reg. 50097. The defendant law firm here goes on to argue that it is only subject to § 1692f(6) concerning which no claim is made in this case.
The FTC position is not persuasive, it precedes the holding in Heintz and the regulation, contrary to the later holding in Heintz also opined that litigation activity of lawyers is not subject to the act, see reg. at 50, 100-02.
Let us look at the statutory language § 1692a(6) defines a "debt collector" as . . . "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of debts or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due to another." (Underlining by this court.) If we stop there and take account of Heintz, the statute does not even have to be liberally read to apply to attorneys enforcing security interests, see the previously quoted language of Shapiro.
In conclusion, the court agrees with the Fourth Circuit's opinion in Wilson v. Draper Goldberg, 443 F.3d 373 (2000). At page 376 the court rejected the defendant law firms argument "that foreclosure by a trustee under a deed of trust is not the enforcement of an obligation to pay money or a 'debt' but is a termination of the debtor's equity of redemption relating to the debtor's property." It rejected the opinions in Hulse and Heinemann and said a debt remains a debt even after foreclosure proceedings commence. The court noted that "furthermore, defendants' actions surrounding the foreclosure proceedings were attempts to collect (the) debt." Here, it is the court's understanding a sum of money was paid on the debt during the pendency of the first foreclosure action to reinstate the mortgage and it is the court's understanding that this is not an uncommon practice after foreclosure actions are brought. Banks do not desire to turn themselves into real estate empires. If the property has to be foreclosed on to collect on the portion of the debt, that is fine from their perspective, if during the litigation new terms can be negotiated for repayment or payment made on the debt to reinstate the mortgage, that is a viable alternative — all of this sounds in debt collection.
Wilson convincingly argues that defendant's arguments that the act would not apply to them since they were proceeding against a security interest . . . "would create an enormous loophole in the Act immunizing any debt from coverage if that debt happened to be secured by a real property interest and foreclosure proceedings were used to collect the debt. We see no reason to make an exception to the act when the debt collector uses foreclosure instead of other methods, see ( Piper v. Portnoff Law Associates, 396 F.3d 227 (CA.3, 2005) at page 326). We agree with the District Court that if a collector were able to avoid liability under the (act) simply by choosing to proceed in rem rather than in personam, it would undermine the purpose of the act,' "443 F.3d at page 376.
The court concludes that attorneys enforcing security interests are subject to the act.
(b)
The next question is how much of the lawyer's business has to be given over to debt collection for the act to apply. This question is discussed in the 41 P.O. F.3d article at § 4, page 172.
"A difficult issue is how much of a lawyer's business has to be devoted to debt collection before the lawyer is subject to the FDCPA. The Act defines a collector as one who 'regularly' collects debts of another, but does not say precisely what the term 'regularly' means. It appears that most courts apply a practical standard to exclude lawyers who only occasionally handle collection matters. But in one case, the court held that a firm whose collection work amounted to only 4 percent of its total practice was subject to the FDCPA. The obvious difficulty with even a practical standard is that it is subjective, requiring case-by-case resolution. It may require litigation through at least the summary judgment stage in order to extricate a lawyer from an action under the statute."
The cases discussing this issue are gathered in the 173 A.L.R. Fed. 223 article at section 6 pages 255-64. In Garrett v. Derbes, 110 F.3d 317 (CA. 5, 1997), an attorney was sued under the act and the court held . . . "a person may regularly render debt collection services, even if these services are not a principal purpose of his (her) business. Indeed if the volume of a person's debt collection services is great enough, it is irrelevant that these services only amount to a small fraction of his (her) total business activity; the person still renders them regularly," id. page 318 (court interpreting "regularly" prong of § 1692a(6).
On the other hand there is a de minimis cut off in these FDCPA suits against lawyers. In Von Schmidt v. Kratter, 9 F.Sup.2d 100 (D.Conn., 1997) the court found that a claim under the act did not lie where only 6 percent of the firms new cases in a two-year period were debt collection matters and it only had one client for whom it supplied these services and that relationship lasted only three years, and the revenues from this activity only constituted a very small percentage of the firm's total revenues, id. page 102 (good discussion at pages 102-04). Also see Argenteiri v. Fisher Landscapes, 27 F.Sup.2d 84 (D.Mass., 1998). An instructive discussion of attorney liability under the act, at least for the court, is contained in Schroyer v. Frankel, 197 F.3d 1170, 1173-77 (CA. 6, 1999).
The court will not address the second issue often raised in suits under the act against attorneys — how much of the lawyer's business has to be given over to debt collection for the FDCPA to apply. The defendant law firm does not raise this issue and the attachments to the plaintiffs' opposition to the motion for summary judgment seem to dispel the possibility of making such an argument especially given the court's just stated conclusion that attorneys enforcing security interests are subject to the act.
(2)
The court will now discuss separately the claims under the act as they are directed against the law firm and Attorney Crook.
(a)
In the complaint against the law firm and Attorney Crook the allegation is made that they are debt collectors under the act; the court for the reasons stated agrees. The amended complaint also asserts that the note and mortgage involved in this case "constitute a consumer debt." This seems to be incontrovertible in light of the definition of "debt" in 15 U.S.C. § 1692a(5). The claims against these defendants are contained in the Eleventh and Twelfth Counts. In the Eleventh count as to the First Foreclosure the following is set forth
44. In commencing and prosecuting the First Foreclosure, Crook and the Firm were pursuing a consumer debt they knew or had reasons to know was not in default, as reflected by Litton's loan file.
45. Litton's conduct in issuing a notice of default prior to the First Foreclosure constitutes a violation of the FDCPA in that it repeatedly misrepresented the character, amount of legal status of this debt and communicated credit information that they knew was disputed, without disclosing that the debt was disputed.
46. The Firm's and Crook's conduct in pursuing a foreclosure of a consumer mortgage under the circumstances set forth hereinabove constitutes a violation of the FDCPA.
In the Twelfth Count as to the Second Foreclosure it is claimed that:
44. In commencing and prosecuting the Second Foreclosure, Crook and the Firm were pursuing a consumer debt they knew or had reason to know was not in default, as reflected by Litton's loan file.
45. Litton's conduct in issuing an erroneous notice of default prior to the Second Foreclosure constitutes a violation of the FDCPA in that it repeatedly misrepresented the character, amount or legal status of this debt and communicated credit information that they knew was disputed, without disclosing that the debt was disputed.
46. The Firm's and Crook's conduct in pursuing a foreclosure of a consumer mortgage under the circumstances set forth hereinabove constitutes a violation of the FDCPA.
The Thirteenth Count is seemingly also directed against the firm and Crook under the act it is alleged as follows:
44. In commencing and prosecuting the Second Foreclosure, Crook and the Firm were pursuing a consumer debt they knew or had reason to know was not in default, as reflected in Litton's loan file.
45. On or around December 2006, Litton on behalf of itself and Deutsche Bank issued another notice of default they knew or had reason to know was false.
46. The issuance of this notice constitutes violations of the FDCPA, for which these defendants are liable for statutory fees and penalties.
The Firm and Crook in their motion raise several grounds which the defendants claim bars the FDCPA action against them:
(1) Any claim under the act is barred by the statute of limitations.
(2) No vicarious liability may be asserted. The counts against the firm and Attorney Crook are based on actions taken by Litton.
(3) An affirmative defense — the bona fide error defense — under § 1692k(c) of the act insulated them from liability.
The plaintiffs have responded to these assertions.
(I) Statute of Limitations
The defendants' argument is straight forward. Section 1692k(d) of the act provides that an action to enforce liability may be brought "in any appropriate federal district court . . . or in any other court of competent jurisdiction, within one year of the date on which the violation occurs." In Johnson v. Riddle, 305 F.3d 1107, 1113 (CA. 10, 2002), the court held that "no violation occurs within the meaning of § 1692k(d) until the plaintiff has been served." Thus the one year period under the subsection runs from that date.
The defendants point out that the lawsuit was first served on October 6, 2006 thus any violation of the act occurring before October 6, 2005 is barred by the statute. The First Foreclosure suit was served in June 2004 and was withdrawn August 19, 2004 — "thus all activity regarding the First Foreclosure occurred well before October 6, 2005" it is argued and summary judgment must be granted on the Eleventh Count.
The second foreclosure suit was served in October 2004. The argument proceeds as follows: "The motion for non suit was granted on November 22, 2005 effectively ending that action. Any 'violation' of (the act), to be actionable, would have had to occur between October 6, 2005 and November 22, 2005 and would not include the filing of the lawsuit which is time barred. The plaintiffs have raised no specific violation of the act that occurred in a time frame less than one year prior to filing this lawsuit which is time barred. The plaintiffs have raised no specific violation of the act that occurred in a time frame less than one year prior to the filing of this lawsuit" so that summary judgment should enter on the Thirteenth Count.
The plaintiffs' response to this argument is to argue that the statute of limitations is tolled. They rely on fraudulent concealment, "continuing course of conduct and/or (the defendants') aiding or abetting the other defendants."
Preliminary to discussing this issue the court must address a consideration not discussed by the parties. There is an excellent discussion in 29 C.O. A.2d, "Fair Debt Collection Practices Act" on the issue of whether the time period in § 1692k(d) is procedural or jurisdictional. If it is jurisdictional then equitable tolling or estoppel arguments to toll the statute cannot be raised. One circuit has held that § 1692k(d) is jurisdictional in nature Mattson v. U.S. West Communications, 967 F.2d 259 (CA. 8, 1992). However, a more persuasive opinion for this court is Clark v. Bonded Adjustment Co., 176 F.Sup.2d 1062, 1067 (E.D. Wash., 2001), which cites Irwin v. Dept. Of Veteran Affairs, 498 U.S. 89, 95-96 (1990), in stating that: "There is a 'rebuttable presumption' that statutory time limits are not jurisdictional, and therefore equitable tolling or estoppel is available in suits against private defendants and suits against the United States." The section in question is entitled "Jurisdiction" but as Clark points out that codification in the U.S. Code cannot prevail over statutory language, 176 F.Sup.2d page 1067 and the heading "Jurisdiction" as enacted and printed in the statutes at large does not include this heading, id. p. 1068. In effect the language of § 1692k(d) reads like an ordinary run of the mill statute of limitations and is thus not jurisdictional, id. p. 1068. The court finally noted that "the presumption that statutory time limits are not jurisdictional has not been rebutted by anything in the language or the legislative history of the FDCPA," id. p. 1068. This court agrees with Clark; in fact it would be odd, given the remedial nature of the FDCPA, that equitable tolling arguments pointing to unfair or deceptive practices of debt collectors which argue for tolling must be ignored when the whole act is aimed at actions by debt collectors deemed not fair to debtors. Also see Somin v. Total Community Management, 494 F.Sup.2d 153, 158 (E.D. NY 2007)
As will be discussed, allowing equitable tolling does not dictate plaintiffs can easily prevail under the doctrine. As Irwin v. Dept. of Veteran Affairs, supra, pointed out: "Federal courts have typically extended equitable relief only sparingly." Speaking of fraudulent concealment the Court noted equitable tolling has for example been permitted where a plaintiff has been induced or tricked by the defendant's misconduct into allowing a filing deadline to pass. But the court went on to say it had been "less forgiving" where a claimant failed to exercise due diligence in preserving his legal rights," 498 U.S. at p. 96, also see Somin v. Total Care Management, supra and Chapman v. Choicecare, 288 F.3d 506, 512 (CA. 2, 2002).
The plaintiffs set forth their position initially as follows: "While the FDCPA is governed by a one-year statute of limitations pursuant to 15 U.S.C. § 1692k, the FDCPA is subject to equitable tolling." This would appear to concede that apart from the application of equitable tolling principles the limitations statute was not complied with.
(a)
Under equitable tolling the plaintiffs rely on § 52-295 and its definition of fraudulent concealment as one basis for equitable tolling. The statute provides that to rely on this concept the plaintiff must show the defendant (1) had actual awareness rather than imputed knowledge of facts necessary to establish plaintiff's cause of action (2) intentionally concealed these facts from the plaintiff and (3) concealed the facts for purpose of obtaining delay on plaintiff's part in filing complaint on the cause of action."
Query whether a state's statement of the equitable tolling exception to a statute of limitations defines the ambit of the federal statute as opposed to federal case law defining such a doctrine. This does not appear to be a problem here since as Irwin and Somin make clear, the state and federal doctrine of equitable tolling for fraudulent concealment mirror each other.
An affidavit of one of the plaintiffs' attorneys is referred to. In paragraph 5 a payment by the plaintiffs in conjunction with the first foreclosure with the aim of reinstating the mortgage is mentioned. It then says despite the payment, a second foreclosure action was initiated and the following is stated: "In discussing this foreclosure in juxtaposition to the foregoing payment Attorney Crook acknowledged that day that the second foreclosure had been commenced in error." Previous paragraphs of the affidavit indicate "that day" was January 6, 2006. Paragraph 6 indicates that prior to that date the lawyer had frequent communications with Crook concerning the "wrongfulness of the foreclosure." It is then said that "up until that point in the litigation, plaintiffs had no reason to believe that the Firm knew of the errors and was complicit in the violation of the FDCPA." It is then said "Indeed even to this day (3/31/08, date of brief), the plaintiffs have been denied an opportunity to fully investigate the nature and scope of the misrepresentations as the defendants continue to hide behind the attorney-client privilege. The plaintiffs still do not know when (the law firm) became aware that the lawsuits were erroneous, and, yet, continued to pursue them in the court in violation of the act." Earlier it was said "these defenses are not ripe for summary adjudication."
But summary judgment procedure cannot be used as a vehicle to obtain a preliminary opinion from the court setting the stage for a possible rebuttal through newly discovered and presented evidence to rebut a position the court has taken. The court also finds the foregoing argument difficult to understand in the sense that the plaintiffs' objection to the summary judgment motion was filed March 31, 2008, over a year ago. Attorney Liebert of the defendant law firm was deposed over a month before the March 31st date and Attorney Crook, no longer with the firm but who handled the case during the events in question, was deposed. In December 2008 the court held as to certain matters the attorney-client privilege did apply. The court has not been presented with any supplemental information procured by the plaintiffs since the filing of the March 31st brief. More to the point is a statement made in one of the defendants' briefs which for reasons that will be stated shortly, does not appear to be refutable. In the brief it says:
Litton has never denied giving the figures to the attorneys: on which the foreclosure actions were based. There is no issue introduced into the case by the defendants which would make the attorney-client communications germane to the litigation; the actual figures are available to the litigants. Litton is the holder of the privilege and it is unclear to the court how Litton could be said to have put the communications in issue. If anything, the defendants are basically being charged as collaboratively causing harm to the Lichtenfels based on wrong information or information incorrectly applied which they do not apparently deny was available to all defendants.
In other words the court has before it a lengthy and detailed affidavit by Attorney Lichtenfels setting forth in great detail why he claims he was wrongly treated. A detailed complaint was filed by able lawyers obviously familiar with the act which in many respects mirrors the allegations of the complaint and which were obviously known to the plaintiffs before the commencement of litigation. There is nothing to indicate that the defendant law firm would not have had possession of the information in the Litton loan file at the time, and after the filing of the foreclosure actions. Why would they not and on what basis can the defendants have assumed anything else? The court has concluded a "debt" under the act is involved here and that the defendant law firm and its lawyer were "debt collector." In fact, in letters commencing December 9, 2004, Attorney Hausman ably laid out the basis on which he claimed Litton improperly asserted a default had occurred and the invalidity of the foreclosure actions. The plaintiff did not need to await Crook's January 2006 comment to bring a FDCPA suit against these defendants.
The court respectfully suggests the plaintiffs are confusing what may be an "admission" by Attorney Crook that could be used in a suit properly brought under the act with an analytically predicate requirement for a fraudulent concealment claim that the intentional concealment of facts in fact excused the failure to begin suit.
Also, based on what has been offered the plaintiffs have not presented anything which could form the basis for the court to find that there is a material issue of fact. In Connecticut and presumably under federal law fraudulent concealment must be proven by "clear, concise, and unequivocal evidence," a more likely than not standard is not sufficient even if it were taken to have been established here, Bound Brooks Assoc. v. Norwalk, 198 Conn. 660, 666 (1986). There is nothing to indicate "the defendants intended to conceal this cause of action from the plaintiffs," id. as opposed to Crook just making a statement that suit was brought in error. Furthermore why would Crook have made this statement, if concealment was afoot, when in an April 12, 2005 letter from Hausman to Crook, Attorney Hausman raised the spectre of the FDCPA at least as to the action of Litton in sending out a notice of default.
In summary, Macomber v. Travellers, 277 Conn. 617, 629 (2006), refers to Bound Books and the "heavy burden" under Connecticut law necessary to establish fraudulent concealment. The federal standard has been discussed and in Falls Church Group Ltd. v. Tyler, Cooper and Alcorn, 281 Conn. 84, 107 (2007), the court noted "it has not been yet decided whether affirmative acts of concealment are always necessary to satisfy the requirements of § 52-295" absent a fiduciary relationship. There is no fiduciary relationship here so that the court need not concern itself with whether there is a similar rule in federal case law. And it is difficult to understand what affirmative acts it is alleged the firm took to conceal anything regarding a FDCPA cause of action beyond factual information already available to the plaintiffs — a factor which would rule out a non-disclosure basis for a § 52-295 fraudulent concealment claim.
In a more concise manner than this writer is capable of the article in 32 P.O. F.3d, Proving Fraudulent Concealment to Toll Statutory Limitations," at § 7 page 146 says, citing numerous cases:
Fraudulent concealment can exist only if the plaintiff lacked the requisite knowledge pertinent to its cause of action until the time that the applicable limitations period expired. Thus, a court will not toll the statute of limitations to the extent the plaintiff had actual knowledge of the defendant's wrongdoing and its own injury when they happened, and yet failed to file suit before the limitations period expired.
Nor may the plaintiff rely on the doctrine of fraudulent concealment simply because its knowledge was somewhat delayed or incomplete. On the contrary, the statutory limitations period begins running as soon as the plaintiff has sufficient actual knowledge to be aware of its claim, even though it lacks some of the details of its cause of action and does not discover the full enormity of the defendant's wrongdoing until later.
The citations are to federal case law but the very notion of "concealment" implies that a reasonable actor in the hypothetical plaintiff's position, because of the concealment, could not comply with the limitations statute. In other words a person even under Connecticut law must show that it was the concealment by the defendant that led to the plaintiffs' failure to meet the statutory deadline. A plaintiff trying to rely on the doctrine must show "he was prejudiced by a deceptive act of the defendant that kept him from filing his action," Campbell v. Plymouth, 74 Conn.App. 67, 83 (see also fn.9), (2002).
(b)
The second basis for the equitable tolling argument is that "the defendants engaged in a continuing course of conduct, namely maintaining the Second Foreclosure action," Fichera v. Mine Hill Corp., 207 Conn. 204, 208 (1988), is cited. In that case, as the plaintiffs note, the court said that "to support a finding of 'continuous course of conduct' that may toll the statute of limitations, there must be evidence of the breach of a duty that remained in existence after commission of the original wrong related thereto," id., p. 209. What is not referenced is the later language of Fichera where the court says: "Where we have upheld a finding that a duty continued to exist after the cessation of the 'act or omission' relied upon, there has been evidence of either a special relationship between the parties or some later wrongful conduct of a defendant relating to the prior act," id. p. 210. Cases mentioned are course of treatment cases by a doctor, inherently dangerous articles, repeated instructions concerning equipment left in defective state. This is not the Fichera case. There is no special relationship here.
Another Connecticut case is cited, Rosato v. Mascardo, 82 Conn.App. 396 (2004). That case however, has interesting things to say not necessarily supportive of the plaintiffs' position. It cites Connell v. Colwell, 214 Conn. 242, 255 (1990), for the proposition that the "statute of limitation (was) not tolled because defendant had no duty to warn after plaintiff discovered injury": 82 Conn.App. p. 404. at pp. 404-05 the court quotes from an earlier Appellate Court case to the effect that:
Actionable harm occurs when the plaintiff discovers or should discover, through the exercise of reasonable care, that he or she has been injured and that the defendant's conduct caused such injury." The statute begins to run when the plaintiff discovers some form of actionable harm, not the fullest manifestation thereof. The focus is on the plaintiff's knowledge of facts, rather than on discovery of applicable legal theories.
Or more to the point, "the continuing course of conduct doctrine does not apply at any time after the plaintiff discovers the harm," id. at page 323. The plaintiffs then argue here, "the plaintiffs did not have any knowledge of Hunt Leibert's mindset until January of 2006 . . . For reasons previously discussed, the court cannot accept this argument. The "harm" here was the filing of the Second Foreclosure suit, the default on which it was based being in error. But the court has held a "debt" was involved under the act, it has also disagreed with the defendants to the extent it has found the firm is a "debt collector." The court has further held that enforcing a security interest does not mean a law firm is not a debt collector, no acts violative of the act are alleged following the filing of the suit, continuing the suit merely supplements the filing of the suit which, by that very act, is violative of the act. In the complaint itself, it alleges as to both the First and Second foreclosures that the firm knew or had reason to know in commencing and prosecuting these suits, it knew there was no default — why was Crook's 2006 admission needed to reveal the firm's mindset if these allegations are true. Besides, in their March 31st brief, plaintiffs argue as to another point that: "Crook admitted at his deposition that the interest on all mortgages is paid in arrears, . . . meaning that the first payment would not be due after reinstatement until September 1, 2004 . . . Despite this, Litton issued a default letter which was part of the file at the time the foreclosure was initiated, dated August 12, 2004. Attorney Lemley (counsel for plaintiffs at the time) notified Crook in August 2004 after the issuance of the default letter but prior to the initiation of the lawsuit that the default was in error . . . it appears Crook did nothing with the notice and the suit was instituted on October 24, 2004."
(c)
An aiding and abetting reference is made as part of the argument that the statute should be tolled. This was not briefed and perhaps refers to the thirteenth count. If so, the mere allegations, even if credited, would not support a tolling argument under any theory the court can invent.
(d)
As indicated § 1692k(d) provides for a one-year statute of limitations. This suit which alleges a violation of the act was filed on October 6, 2006. A somewhat technical issue must be addressed. The First Foreclosure was withdrawn on August 19, 2004; obviously a date over one year before October 5, 2006. The Second Foreclosure suit was served in October, 2004. A motion for non-suit was granted on November 22, 2005 effectively ending that litigation. A violation of the act to avoid the bar of the limitations section of the FDCPA as to the second foreclosure would have had to occur between October 6 and November 22, 2005.
The plaintiffs argue that merely prosecuting the Second Foreclosure action is a violation of the act and the case was non-suited in November 2005, placing this action within the one-year limitation period. The court has looked at Sections 1692b through 1692g of the federal act. Assuming, as the court has, that an attorney can be a debt collector and that filing of a foreclosure action can be considered as a means to collect on the debt, the two applicable sections given the allegation here concerning the filing of the suit would appear to be § 1692e(2)(A) or § 1692F. See first sentence and subsection (1).
Assuming filing of this suit was a violation of the act there are no acts the court has been made aware of that would constitute violations of the act after October 5, 2005 until the date the case was non-suited. Mere pendency of the suit without any action taken in the suit to advance it or enforce its claims in the court's opinion does not easily fit into a specific violation of the act the court can identify. The court is not aware even of any attempt to resist the granting of the non-suit. Neiss v. Stolman, 130 F.3d 892, 893 (CA 10, 1997), held that when the alleged violation of the act is the filing of a lawsuit, the statute of limitations begins to run when the complaint is filed (suit against creditor and attorneys). Johnson v. Riddle, 305 F.3d 1107, 1103 (CA 10, 2002) held the statute begins to run from the date the defendant is served. In Tucker v. Bracken (M.D. Pa. 1-21-09), several district court opinions are cited that follow the rule in Johnson v. Riddle. Interestingly the court in Tucker did not base its ruling on Neiss v. Stolman saying "The allegations before the court in this matter do not concern FDCPA claims arising from the commencement of a collection lawsuit. Here the plaintiffs have alleged FDCPA claims based on a series of telephone calls.
In any event, under the Neiss v. Stolman or Johnson v. Riddle approach, the "course of litigation is not, in itself, a continuing violation of the FDCPA," Schaffhauser v. Burton Neil Associates, P.C. (M.D. Pa. 3-27-2008) at page 5, which cites several district court opinions supporting this view. As the Schaffhauser court said, "For conduct during litigation to be actionable, a plaintiff must allege . . . that the conduct is a violation of the FDCPA independent of the act of filing suit"; the court relied for this view on Nutter v. Messerli Kramer, 500 F.Sup. 1219, 1223 (D. Minn. 2007).
The claims under the FDCPA as to the First and Second Foreclosure action against the law firm are dismissed.
CONNECTICUT UNFAIR TRADE PRACTICES ACT
In the second amended complaint the plaintiffs allege a violation of the Connecticut Unfair Trade Practices Act § 42-110a et seq. (CUTPA). The fifteenth count lies against Litton, the sixteenth count lies against the law firm and Attorney Crook.
Against Litton the following substantive allegations said to violate the act:
56. On information and belief, this defendant has engaged in a pattern of predatory consumer lending and collection practices, including the issuing of default notices in the absence of actual defaults and the issuance of notices of lapses in homeowners' insurance coverage in the absence of actual insurance lapses.
57. In fact, this defendant has on two occasions set forth hereinabove attempted to foreclose a note and mortgage that were not in default, issued several notices of lapsed homeowners' insurance when the plaintiffs' policies were at all times current and sent out multiple notices of default even during the pendency of the foreclosures set forth above.
58. The foregoing conduct was unfair, unethical, immoral, oppressive, unscrupulous and violative of public policy, and is the kind that causes substantial injuries to customers, all in violation of CUTPA.
Against the law firm and Attorney Crook, the following is alleged:
56. On information and belief, these defendants have engaged in a pattern of conduct including attempts to collect consumer debts, including consumer mortgages; that are not in default; and in fact, these defendants attempted twice to collect through foreclosure they knew or had reason to know what not in default.
57. The foregoing conduct was unfair, unethical, immoral, oppressive, unscrupulous and violative of public policy, and is the kind that causes substantial injuries to customers, all in violation of CUTPA.
Other counts as to all defendants allege they were engaged in trade or commerce, the collection or attempted collection of consumer debts. Also incorporated by reference in each of the foregoing counts are numerous paragraphs of "general allegations."
(1)
The court will first discuss and set forth the defendant law firm's arguments on the motion. Ramirez v. Health Net, 285 Conn. 1, 18-19 (2007), is cited which sets forth the statutory allegations under § 42-110b and the so-called "cigarette rule" which contains the three components of that rule used to determine if a violation of the act has occurred. Ramirez also cites well-settled law to the effect that under certain circumstances, all three criteria need not be met.The defendants claim they have violated no statutory or common law rule that would support a CUTPA violation. Larson v. Chelsea Realty, 232 Conn. 480 (1995), Beverly Hill Concepts v. Schatz Schatz, 247 Conn. 48 (1998), Haynes v. Yale New Haven Hospital, 243 Conn. 17, 34-35 (1997); and Anderson v. Schoenhorn, 89 Conn.App. 666, 674 (2005), are cited for the proposition that although "CUTPA can apply to the entrepreneurial aspects of the practice of law, it does not apply to claims of professional negligence."
Moreover, it is argued Connecticut law is "clear that CUTPA does not apply to claims against an adversary's attorney." A Superior Court case is cited, Elliot v. Household Credit Services, 15 Conn. L. Rptr. 496 (Teller, J., 1995). The court held that "CUTPA does not provide a cause of action against an adversary's attorney" in a case where the FDCPA count was not stricken and the court held the defendant law firm, which was sued along with the creditor, was a "debt collector" under the federal act. The court relied on Larson and Jackson v. Whipple, 225 Conn. 705, 729 (1993).
The plaintiffs concede that "ordinarily CUTPA does not provide a cause of action against an adversary's attorney. However, in this case the plaintiff's claim against defendants Hunt, Leibert and Crook are not derivative of the claims against Litton or Deutsche Bank. Rather . . . these defendants are being sued based upon an independent duty they owed to plaintiffs based upon the standards set forth in the FDCPA for all debt collectors." It is also true that a violation of FDCPA can also violate CUTPA insofar as it offends "public policy or could otherwise be considered immoral, unethical, oppressive or unscrupulous." Machado v. SNET, 2004 WL 3130546 (Martin, J., 2004), is cited for the latter proposition. Interestingly Machado does not really support the notion that an FDCPA violation, by reason of the finding of such a violation, can support a CUTPA violation. In fact the court specifically found no FDCPA violation could be established. But given the nature of debt collection practices found violative of the federal act, it certainly can be shown in the appropriate case that a CUTPA violation has occurred under its own terms.
The plaintiffs really miss the thrust of cases like Larson, Beverly Hill Concepts, and Jackson v. Whipple. Much time is spent on how the firm and Attorney Crook violated the act but when examined closely, these allegations are all related to their activity as attorneys in bringing the lawsuits as to the First and Second Foreclosure. In their first rendition of the substantive basis for the claim, they say the law firm and its lawyer "could not have reasonably relied on Litton because they had independent knowledge about the reinstatement and the fact that Litton's claimed date and amount of default in connection with the Second Foreclosure were wrong." Then it is argued as officers of the court, these defendants had a duty to make a reasonable review of each Litton file prior to putting the action into suit.
Inotherwords, the plaintiffs, as to the CUTPA claim, rely on the defendant's status as attorneys and the actions they took as attorneys in initiating the litigation. The court was prepared to grant the defendant's motion for summary judgment as to this claim based on the previously mentioned position of our court that CUTPA only applies to the entrepreneurial actions of attorneys; see Heslen v. Connecticut Law Clinic, 190 Conn. 510 (1983), Haynes v. New Haven Hospital, 243 Conn. 17 (1997), and Beverly Hills Concepts, Inc. v. Schatz Schatz, Ribicoff Kotkin, 248 Conn. 48 (1998), all culminating in Suffield Development Associates v. National Loan Investors, 260 Conn. 766 (2002). In Suffield Development the plaintiff sued the defendant attorney and law firm for allegedly violating CUTPA. The plaintiff alleged "that the defendants engaged in an unfair and deceptive practice when they obtained an execution in excess of the amount provided in the stipulated judgment between the parties," id. pp 780-81. The court reiterated that "only the entrepreneurial aspect of the practice of law are covered by CUTPA," id. 781.
The court went on to say that the defendant lawyers engaged in unfair and deceptive practices in obtaining the excessive execution that they did and said: "Although that may be actionable professional malpractice, we conclude that these allegations do not support a CUTPA claim because obtaining an execution on a judgment relates to the representation by the defendant attorney and law firm of their client and not to the entrepreneurial aspect of practicing law. Obtaining an execution to collect on a court judgment is the heart of an attorney's representation of a client because it is a means by which the attorney secures actual compensation for the judgment obtained by the client," id. pp. 781-82. More to the point for the present analysis, the court noted that: "The plaintiff attempts to draw a distinction between the present case and the cases previously set forth (court had cited Heslin, Haynes, Beverly Hill Concepts) by emphasizing that the amended complaint in the present case alleges intentional misconduct." The court said it was "unpersuaded" — "the entrepreneurial exception is just that, a specific exemption from CUTPA immunity for a well-defined set of activities — advertising and bill collecting for example." The court concluded consideration of this argument by saying: "Therefore, the mere fact that the actions of the attorney and the law firm might have deviated from the standards of their profession does not necessarily make the actions entrepreneurial in nature." How are the allegations in Suffield different from the allegations here that the defendants filed and continued to prosecute foreclosure actions they knew to be baseless. The court in this case was prepared to grant this motion based on the foregoing. But then came a July 2008 case which post-dated the briefing in this case and which this court at least has difficulty reconciling with prior case law but must be followed as the latest decision of our court, Chapman Lumber, Inc. v. Tager, 288 Conn. 69 (2008). The court said, citing to the Rules of Professional Conduct: "However far the duty of an attorney to zealously represent his client extends, it necessarily falls short of the point at which the representation constitutes a fraud on a third party or the assistance in the perpetration of such a fraud, whether by affirmative misrepresentations or knowing non-disclosures." Prior decisions limiting the ambit of CUTPA claims against attorneys cannot be interpreted "as affording blanket immunity to attorneys for tortious acts they commit against third parties while representing clients." The court said in the case before it "the evidence shows that the defendant negotiated and directed his client to execute a note and mortgage relating to property that the defendant knew the client did not own," id. pp. 95-96. What all of this has to do with entrepreneurial activity is not easily ascertainable and drawing distinctions between intentionally wrongful actions by attorneys in litigation a la Suffield Development and the actions in Chapman Lumber is a task this court finds difficult to perform by means of summary judgment. A material issue of fact remains preventing granting of summary judgment on CUTPA count against the law firm and Attorney Crook see allegations at pp. 19-20 of plaintiffs' March 31, 2008 objection to motion for summary judgment wherein it is stated that: "(Attorney Crook) admitted at his deposition that the interest on all mortgages is paid in arrears . . ., meaning that the first payment would not be due after reinstatement until September 1, 2004 . . . Despite this, Litton issued a default letter which was part of the file at the time the foreclosure was initiated, dated August 12, 2004. Attorney Lemley notified (Attorney) Crook in August 2004, after the issuance of the default letter but prior to the initiation of the lawsuit (Second Foreclosure suit) that the default was in error . . . It appears that (Attorney) Crook did nothing with this notice and this suit was instituted in October 2004." It is also said that the lawyer at his deposition said he knew that the second default and foreclosure were being pursued in error because the claimed date of default was wrong and the claimed arrearage could not possibly be accurate. Is this more like Suffield Development? It certainly seems so, but on the other hand, it sounds a lot like Chapman Lumber too — is not the claim here that if believed, the lawyer brought a claim for the client he knew was not supported by the facts?
(2)
As noted, a CUTPA claim is asserted in the second amended complaint against Litton. On March 11, 2008, Litton filed a motion for summary judgment against this court which is the Fifteenth Count of the second amended complaint. The court has already given an opinion on whether emotional distress damages are recoverable under CUTPA, but has expressed concern that a decision on this by means of a motion for summary judgment is not appropriate under our practice. If the court were to consider Litton's motion on this claim, a motion to strike it could not do so because facts outside the pleadings would have to be examined. Besides, this is not federal court so that specific paragraphs or requests for relief cannot be subject to a motion to strike on the basis of legal insufficiency.
The Litton briefs do not make any explicit references to the CUTPA count on a substantive basis although the April 14, 2008 brief contains a lengthy discussion as to why none of Litton's actions were improper or illegal and were in fact justified under the ordinary understanding of parties to contracts such as the one before the court. But the plaintiffs March 31, 2008 brief, in turn, sets forth specific factual claims to indicate that Litton did not act in good faith and/or made negligent errors in their relations with the plaintiffs prior to litigation and that perhaps more to the point, litigation was instituted in error as even acknowledged by counsel for Litton, also see the affidavit of Attorney Lichtenfels.
The court cannot decide this by way of summary judgment.
ACCORD AND SATISFACTION AS TO CLAIMS ARISING OUT OF FIRST FORECLOSURE ACTION
The defendants argue that the "plaintiffs themselves alleged that they made a payment in resolution of the First Foreclosure action, and that case was settled and subsequently withdrawn." Thus any "further claims arising out of the fist foreclosure are barred by the doctrine of accord and satisfaction." The relevant portions of the second amended complaint addresses the First Foreclosure action in the following way:
16. That foreclosure, Deutsch Bank National Trust Company v. Lichtenfels et al., CV04 0491510S ("First Foreclosure"), was commenced by the defendants based on Deutsche Bank's and/or Litton's miscalculation of interest under the Note and Mortgage as set forth above.
17. Prior to and after the commencement of that suit, Litton had sent numerous letters and/or notices to the plaintiffs, each stating different alleged arrearages.
CT Page 10369
18. Because Mrs. Lichtenfels was ill with multiple sclerosis, the plaintiffs elected to obtain a reinstatement figure from Litton, and to pay that amount upon the condition that Litton and Deutsche Bank would conduct a retrospective interest accounting to determine the appropriate interest rate and to credit or reimburse them for all overpayments.
19. Litton and Deutsche Bank agreed to do so, but failed to provide a reinstatement amount when asked to do so in writing by plaintiffs' counsel on multiple occasions.
20. Ultimately, Litton instructed plaintiffs' counsel to obtain the reinstatement figures from Hunt Leibert, which likewise initially failed to provide said figures when requested.
21. Plaintiffs, through their counsel, requested the reinstatement figures from Hunt Leibert on numerous occasions and finally received a purported reinstatement amount in or around late June of 2004 from Hunt Leibert and Crook in their capacity as debt collectors. The reinstatement amount, which was incorrect even by Litton's erroneous accounting, claimed an arrearage of $10,849.46, including the payment for August 2004.
22. On July 28, 2004, plaintiffs' counsel forwarded a trustee check in the amount of $10,849.46 to Crook and the Firm, who were acting as debt collectors, which payment was made without admission of liability and conditioned upon Litton's and Deutsche Bank's obligation to perform a retrospective interest accounting and reimburse or credit the plaintiffs for all overpayments and to provide payment stubs or coupons reflecting the proper monthly payment, which Litton and/or Deutsche Bank has never provided.
23. Subsequently, on August 19, 2004, Crook and the Firm withdrew the First Foreclosure in acknowledgment of the plaintiffs' reinstatement.
These allegations basically track the Lichtenfels affidavit at paragraphs 31 through 47.
In B B Bail Bonds Agency of Connecticut v. Bailey, 256 Conn 209, 213 (2001), the court quoted from earlier case law and defined the doctrine of accord and satisfaction as follows:
When there is a good faith dispute about the existence of a debt or about the amount that is owed, the common law authorizes the debtor and the creditor to negotiate a contract of accord to settle the outstanding claim . . . An accord is a contract under which an obligee promises to accept a stated performance in satisfaction of the obligor's existing duty . . . Upon acceptance of the offer of accord, the creditor's receipt of the promised payment discharges the underlying debt and bars any further claim relating thereto, if the contract is supported by consideration . . . Although the case law presents the more usual use of accord and satisfaction as a defense by the debtor against the creditor, it is evident that accord and satisfaction equally applies to both parties. Accord and satisfaction is a method of discharging a claim whereby the parties agree to give and accept something other than that which is due in settlement of the claim and to perform the agreement. Indeed, a validly executed accord and satisfaction precludes a party from pursuing any action involving the original, underlying claim.
In its brief the defendant Litton makes the candid observation that "a question that may be raised is whether the principle of accord and satisfaction can be said to apply in the absence of proof that "something other than that which is due in settlement of the claim has been the subject of the exchange." Here it appears undisputed that the Lichtenfels paid the exact amount demanded to reinstate the claim. What all of this is saying is that an accord and satisfaction, like any other contract, requires consideration and the just-mentioned comments would seem to negate an accord and satisfaction. But Litton's reply appears to be well taken. Litton's action had been brought upon acceleration of the entire debt — the acceptance of reinstatement was for an amount less than the entire debt.
The court has problems with accord and satisfaction in this case, however, for other reasons. The Lichetenfel affidavit states the full amount required by Litton was paid but it was "conditioned" upon Litton and the bank performing a retrospective interest accounting and reimbursing or crediting the plaintiffs for all overpayments plus providing records showing the monthly payments. It is the court's understanding that these matters, as set forth in the Lichtenfel affidavit, were not complied with. If that is the case, why is the doctrine of accord and satisfaction a bar to any action based on the First Foreclosure whether it be in breach of contract or CUTPA. By way of analogy, it can be categorized as a form of executory accord that is not enforceable, cf. Restatement (2d) Contracts, § 281(2), 1 Am.Jur.2d, "Accord and Satisfaction," § 44 et seq., pp. 569 et seq. Also see a case like Zenith Drilling Corp. v. Interworth, Inc., 869, F.2d 360, 563 (CA 10, 1989).
In any event, given the Lichtenfel claim of what Litton agreed to do besides just reinstating the mortgage but assuming there was an accord and satisfaction in any event, how can Litton insulate itself from a claim under federal statutory law (the FDCPA) by application of some state law doctrine. Or more to the point, how can the doctrine limit consideration of the First Foreclosure and the events leading up to it from a CUTPA analysis if continuing pattern of activity is alleged?
LIBEL AND SLANDER COUNT AGAINST LAW FORM AND ATTORNEY
In a fifth count to the second amended complaint the plaintiffs make a claim that as consumer debt collectors, the defendants "disseminated and published to third parties false information about the plaintiffs." The alleged nature of the false statements is then set forth — that plaintiffs were in default which said false statement was published in the Commercial Record, "par. 43, a periodical published for, delivered to, and read by third party." As a result they claim to have suffered harm. The nature of these torts is such that both libel and slander require publication; "a publication of the defamatory matter is essential to liability," Restatement (2d) Torts, § 577, comment (a), page 201. The only specific allusion to publication in the complaint is the appearance of the alleged defamatory statements in the "Commercial Record." Attorney Crook and Attorney Leibert who is a partner in the Firm deny publishing or reporting any information regarding the Lichtenfels in the "Commercial Record." Attorney Leibert also represents that it is his understanding and belief that, similarly, no employee of the Firm did so; he represents this as managing attorney. No counter affidavits or documents have been submitted contradicting these assertions. Apart from the "Commercial Record" specification, no other publication is offered except what might be inferred from the Lichtenfel affidavit regarding the filing of the lawsuits and the judicial proceedings flowing therefrom. As noted in Connecticut Law of Torts, Wright, Fitzgerald, Anberman § 156 at page 420: "It is generally held that lawyers have an absolute privilege in the courtroom in the preparation of all pleadings and other memoranda related to litigation, and in conference with their clients," see McKinny v. Chapman, 103 Conn.App. 466, 451-52 (2007), Petyan v. Ellis, 200 Conn. 243, 245 (1986), cf. DeLaurentis v. New Haven, 220 Conn 225, 241-42 (1991). This is the accepted law as regards absolute, privilege to attorneys, see Restatement (2d) Torts, § 586; 50 Am.Jur.2d, "Libel Slander," § 257, pp. 597-98; Prosser Keeton on Torts, 5th ed., § 114(1), page 817. Peyton v. Ellis describes this absolute privilege as a "longstanding common law rule" stating that the policy underlying the privilege is that in certain situations the public interest in having people speak freely outweighs the risk that individuals will occasionally abuse the privilege by making false and malicious statements . . ." 200 Conn. at pp. 245-46.
The plaintiffs' rejoinder is to cite Sayyed v. Wolpoff Abramson, 485 F.3d 226 (CA 4, 2007). This is another well-reasoned Fourth Circuit case which involved a suit against a law firm based on an alleged violation of the FDCPA because of certain interrogatories and a summary judgment motion. The Firm moved to dismiss, arguing it could be subject to a FDCPA claim "because an absolute common law immunity attaches to 'any statements made during the course of judicial proceedings.'" The court rejected this argument upon reviewing the act and said for a variety of reasons that "the statutory text makes clear that there is no blanket common law litigation immunity from the requirements of the FDCPA," id. pp. 229-30. The court relied in part on Heintz v. Jenkins, 514 US 291, 293 (1995).
But this response is not relevant, at least in the court's opinion, to the motion for summary judgment. What is being asserted here is a common law tort under Connecticut law. Nothing in the supremacy clause of the Federal Constitution requires a state to modify or deny privileges to liability under state law. This is especially so since Connecticut courts are otherwise open to and obligated to entertain actions brought under the federal statute. To import, by some federal mandate, the barring of the assertion of this privilege in a state common law action because of the policy and language of a federal statute is thus unnecessary and would raise eleventh amendment issues.
In any event, for the foregoing reasons the court dismisses the libel and slander count against the Law Firm and Attorney Crook.
CONCLUSION
The court's understanding is that the plaintiffs are not pursuing claims under the Fair Credit Reporting Act or on the Slander of Title Counts. Litton has not filed a motion for summary judgment as to the FDCPA count or the Libel and Slander Count.
As a result of this decision the court has dismissed the Negligent and Intentional Infliction of Emotional Distress claims against all defendants and the FDCPA count against the defendant law firm and Attorney Crook but has not dismissed the CUTPA claims. The court has also given its opinion on the ability or right to collect emotional distress damages in a breach of contract or CUTPA case but with expressed reservations about the effect of its ruling in that this is a motion for summary judgment and the appropriate ambit of damages cannot be considered.
The court is admittedly somewhat confused about the discussion of the litigation privilege in the plaintiffs' June 11, 2008 supplemental brief, wherein it is said Litton argues that it cannot be held vicariously liable under the FDCPA for the debt collection activities of its attorneys. It is then argued that the privilege cannot be raised by Litton with regard to any CUTPA claims. Where were these issues raised by Litton? The summary judgment motions the court has are two March 11, 2008 summary judgment motions by Litton and the bank, a March 31, 2008 motion, and a supplemental June 9, 2008 motion. In addition, it has two opposition motions to summary judgment by the plaintiffs dated March 31, 2008 and June 11, 2008. It also has the two summary motions on behalf of the Firm and Attorney Crook; one is dated March 7, 2008, the other is dated April 18, 2008.