Opinion
No. CV 01 0186188
May 23, 2003
MEMORANDUM OF DECISION
The defendants in this action, Shorehaven Golf Club, Inc. (Shorehaven) and twelve members of its board of directors, who were sued in their official capacity only, have moved (#103) to strike count five of the complaint dated September 25, 2001, filed by the plaintiff, Crista M. DiTomaso. In that count, the plaintiff alleges that the defendants violated General Statutes § 42-110a et seq., the Connecticut Unfair Trade Practices Act (CUTPA).
The plaintiff is a member of the defendant Shorehaven, a private golf club located on Canfield Avenue in East Norwalk. In her complaint, the plaintiff alleges that she joined Shorehaven in 1990 and became a junior associate member. While the plaintiff was a member, Shorehaven had rules and policies in effect that permitted junior associate members to change their membership category to "junior golf" without having to pay an initiation fee. When junior golf members reached the age of thirty, they had to option to apply for either a "golf membership" or an "associate membership," although certain junior associates, such as the plaintiff, were not required to apply immediately for a change in category upon reaching thirty. According to the plaintiff, under Shorehaven's customary practices, the plaintiff would not have been required to pay an initiation fee to convert her membership from junior associate member to either golf or associate membership. The plaintiff alleges that when she turned thirty, there were no rules or policies in effect that required junior associates with special familial ties to golf memberships to apply immediately for a golf membership, or else lose their right to convert without incurring an initiation fee.
When the plaintiff reached the age of thirty, her membership was automatically converted to that of an "associate member." The plaintiff claims that she allowed the conversion under the belief, based on the past practices of Shorehaven's board of directors (the board), that she would be able to convert her membership to a golf membership at a later date without incurring any initiation fee. The plaintiff further alleges that in January 2000, the defendants changed their rules and policies to require an initiation fee if a member changed from one category of membership to another, and this initiation fee was 50% of the current initiation fee applicable to new members. After communication with the board, the plaintiff claims that one of the board members, John DeVito, "informed her that it was not the Board's intent to mandate that an existing club member be obligated to pay the current initiation fee if they changed their membership category" from associate to golf. Furthermore, the plaintiff alleges that DeVito told the plaintiff that she would be "grandfathered," whereby she would be allowed to change her membership category without being required to pay an initiation fee. After numerous communications with the board, the plaintiff claims that in a letter dated April 28, 2000, the board "acknowledged that although under Shorehaven's customary practices DiTomaso would have been permitted to change her membership status with no assessment of an initiation fee, the recent modifications of the Rules and Policies would require her to pay 50% of the current initiation fee."
In her memorandum in opposition to the defendants' motion to strike, the plaintiff claims that the board seeks to collect from the plaintiff $50,000 in initiation fees to switch membership categories.
In addition to counts claiming a declaratory judgment, breach of oral contract, promissory estoppel, breach of the covenant of good faith and fair dealing and unjust enrichment, the plaintiff also alleged in count five that the conduct and activities of the defendants were unfair or deceptive acts constituting a violation of CUTPA. Specifically, the plaintiff alleged that Shorehaven misrepresented that the plaintiff would be "grandfathered" and hence would not have to pay an initiation fee; failed to respond to her correspondence seeking clarification of her membership status as well as her request for a meeting with the board of directors to discuss her obligation to pay an initiation fee; applied the new rules regarding initiation fees retroactively, thus revoking rights held by the plaintiff under the club's customary practices; failed to provide the members with notice of the proposed change in the rules and policies; and failed to comply with the rules and policies excluding associate members with prior ties to golf from paying an initiation fee. The defendants have moved to strike count five and the corresponding prayer of relief for punitive damages and reasonable attorneys fees and costs.
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted . . . A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Citations omitted; internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . Thus, we assume the truth of both the specific factual allegations and any facts fairly provable thereunder." (Citation omitted; internal quotation marks omitted.) Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 629, 804 A.2d 180 (2002). "In ruling on a motion to strike, the court is limited to the facts alleged in the complaint. The court must construe the facts in the complaint most favorably to the plaintiff." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997).
CUTPA provides that "no person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." General Statutes § 42-110b (a). "Trade" and "commerce" are defined in General Statutes § 42-110a (4) as "the advertising, the sale, or rent or lease, the offering for sale or rent or lease, or the distribution of any services and any property, tangible or intangible, real, personal or mixed and any other article, commodity or thing of value in this state." General Statutes § 42-110g (a) provides in relevant part: "Any person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a method, act or practice prohibited by section 52-110b, may bring an action . . . to recover actual damages. Proof of public interest or public injury shall not be required in any action brought under this section."
Our Supreme Court has held that "[i]n determining whether a practice violates CUTPA we have adopted the criteria set out in the cigarette rule by the federal trade commission for determining when a practice is unfair: (1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — in other words, it is within at least the penumbra of some common law, statutory or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers, [competitors or other businesspersons] . . . All three criteria do not need to be satisfied to support a finding of [a violation of CUTPA]." (Internal quotation marks omitted.) Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 644, 804 A.2d 180 (2002).
The defendants raise six issues in support of their motion to strike. They are: (1) the defendants' alleged actions are not and were not unfair or deceptive; (2) the plaintiff did not allege that the defendants' alleged acts were performed during trade or commerce, as defined by General Statutes § 42-110a (4); (3) the plaintiff has not alleged more than a single occurrence of unfair practice; (4) there is no public policy in issue; (5) the defendants' alleged acts are not and were not immoral, unethical, oppressive or unscrupulous, nor has the plaintiff alleged that they were or continue to be; and (6) the complaint contains no allegations of substantial injury. The court will address each argument in turn.
Alleged Acts Unfair or Deceptive
It is not for this court to decide on a motion to strike whether the defendants' alleged acts were unfair or deceptive. "It is well settled that whether a defendant's acts constitute . . . deceptive or unfair trade practices under CUTPA . . . is a question of fact for the trier . . ." Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P., 252 Conn. 479, 505, 746 A.2d 1277 (2000). "The facts found must be viewed within the context of the totality of circumstances which are uniquely available to the trial court." (Internal quotation marks omitted.) Ancona v. Manafort Bros., Inc., 56 Conn. App. 701, 715, 746 A.2d 184, cert. denied, 252 Conn. 954, 749 A.2d 1202 (2000).
Alleged Acts Performed During "Trade" or "Commerce"
"`Trade' and `commerce' means the advertising, the sale or rent or lease, the offering for sale or rent or lease, or the distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value in this state." General Statutes § 42-110a (4). The defendants argue that the plaintiff failed to expressly allege that the defendants were engaged in trade or commerce. CUTPA, however, "is remedial in character . . . and must be liberally construed in favor of those whom the legislature intended to benefit." (Internal quotation marks omitted.) Service Road Corp. v. Quinn, 241 Conn. 630, 637, 698 A.2d 258 (1997). The plaintiff has alleged that "Shorehaven owns and operates the Shorehaven Golf Club, "that "Shorehaven maintains a twelve (12) person Board of Directors . . . that is responsible for managing Shorehaven in accordance with its bylaws," that the individually named defendants are board members, that Shorehaven has "privileges and facilities . . . including . . . [a] golf course," and that the plaintiff is a member of Shorehaven. Although the complaint does not explicitly contain the words "the defendants are engaged in trade or commerce," the allegations contained therein "present a fact pattern that involves a potentially viable cause of action under CUTPA . . ." Larsen Chelsey Realty Co. v. Larsen, 232 Conn. 480, 493, 656 A.2d 1009 (1995).
Single Occurrence of Unfair Practice CT Page 7172
The defendants maintain that "a single instance or even isolated instances or unfair practices will not support action under CUTPA." Koehm v. Kahn, 41 Conn. Sup. 130, 139, 558 A.2d 1042, aff'd., 18 Conn. App. 313, 557 A.2d 933 (1987). The defendants' reliance on Koehm v. Kahn, supra, however, is misplaced, as the holding is based on Mead v. Burns, 199 Conn. 651, 509 A.2d 11 (1986), involving a claim for an unfair claim settlement practice which the plaintiff maintained violated the Connecticut Unfair Insurance Practices Act (CUIPA) and CUTPA. After analyzing General Statutes §§ 38-60 and 38-61 (6) (d), the court held "that claims of unfair settlement practices under CUIPA require a showing of more than a single act of insurance misconduct." Id., 659. Because the plaintiff did not allege more than a single act of insurance misconduct, the plaintiff was not entitled to recover under CUIPA. When discussing the CUTPA claim, the court explained that in Griswold v. Union Labor Life Ins. Co., 186 Conn. 507, 519-21, 442 A.2d 920 (1982), it "held that a litigant complaining of unfair insurance practices was entitled to maintain a private right of action under CUTPA for alleged unfair trade practices, as defined by [General Statutes §] 38-61 . . . The definition of unacceptable insurer conduct in § 38-61 reflects the legislative determination that isolated instances of unfair insurance settlement practices are not so violative of the public policy of this state as to warrant statutory intervention. Under CUTPA, as under CUIPA, a litigant is bound by this legislative determination." (Citation omitted; internal quotation marks omitted.) Mead v. Burns, supra, 199 Conn. 665-66.
The present case, however, has nothing to do with CUIPA or unfair insurance settlement practices; therefore, Mead v. Burns, supra, 199 Conn. 651, is not controlling, and Koehm v. Kahn, supra, 41 Conn. Sup. 130, is unpersuasive. Even if this court agreed with the defendants that the plaintiff is only alleging a single act on which to base her CUTPA claim, the majority of trial court judges who have considered this issue have held that a single act is sufficient to maintain a cause of action under CUTPA. Moreover, after reviewing the statutory language and legislative history of CUTPA, our Appellate Court recently held in Johnson Electric Co. v. Salce Contracting Assoc., 72 Conn. App. 342, 805 A.2d 735, cert. denied, 262 Conn. 922, 812 A.2d 864 (2002), that CUTPA is applicable to a single act of misconduct. "If there were any plausible doubt about the conduct that the statute makes actionable, the remedial purpose of the statute persuades us that such doubts should be set aside to permit recovery by the plaintiff." Id., 353.
"See Levins v. Conlon, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 343997 (November 4, 1997, Ronan, J.); Four Beaches Condo v. W.C. Brescia Plumbing, Superior Court, judicial district of New Haven at New Haven, Docket No. 384124 (May 23, 1997, Licari, J.) ( 20 Conn.L.Rptr. 442); Slitz v. Pyramid Custom Home Corp. of Connecticut, Superior Court, judicial district of Danbury (April 4, 1997, Stodolink, J.); Lichstein v. Yankee Coach Trailer Sales Inc., Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. 565882 (March 27, 1997, Lavine, J.) (3 Conn.Ops. 844); Glaser Realty Assoc. v. Joshua Morris Publ., Superior Court, judicial district of Danbury, Docket No. 322785 (January 15, 1997, Moraghan, J.); Bonnell v. United Parcel Service, Superior Court, judicial district of Danbury, Docket No. 315927 (February 7, 1997, Grogins, J.) ( 18 Conn.L.Rptr. 646;); Diversified Financial Systems v. Muslein, Superior Court, judicial district of Litchfield, Docket No. 06876 (April 23, 1996, Pickett, J.); Hernandez v. King, Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. 536321 (January 29, 1996, Hennessey, J.) ( 16 Conn.L.Rptr. 65); Jokl v. Watt, Superior Court, judicial district of New Haven at New Haven, Docket No. 372000 (February 28, 1996, Gray, J.); and Becher v. Seifel, Superior Court, judicial district of Litchfield, Docket No. 068680 (November 27, 1995, Pickett, J.)." Yost v. A-1 Oil Co., Superior Court, judicial district of Tolland at Rockville, Docket No. CV 97 63256 S (March 16, 1998, Sullivan, J.).
Public Policy Not Alleged or in Issue CT Page 7173
The defendants' argument that the complaint "does not set forth how or in what respect the defendants' activities are offensive to public policy" invokes the first prong of the cigarette rule. As set out above, the cigarette rule provides the criteria to be used in determining whether a practice is unfair or deceptive. Our Supreme Court has held, however, that "[a]ll three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three . . . Thus a violation of CUTPA may be established by showing either an actual deceptive practice . . . or a practice amounting to a violation of public policy . . . Furthermore, a party need not prove an intent to deceive to prevail under CUTPA." (Internal quotation marks omitted.) Journal Publishing Co. v. Hartford Courant Co., 261 Conn. 673, 695, 804 A.2d 823 (2002). It should also be noted that the Supreme Court is "unpersuaded that there is any special requirement of pleading particularity connected with a CUTPA claim, over and above any other claim." Macomber v. Travelers Property Casualty Corp., supra, 261 Conn. 644. Therefore, the argument that the plaintiff failed to include in the complaint that the defendants' alleged acts are violative of public policy does not automatically merit granting the motion to strike.
In Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 644, 804 A.2d 180 (2002), the Supreme Court rejected the defendants' "pleading particularity" argument: "The defendants make no claim that the plaintiffs' allegations, if taken as true, fail to satisfy this test. Rather, the defendants suggest that, because the plaintiffs, in count four of their complaint, did not rephrase their pleadings to conform to the three prongs of the cigarette rule, we should consider their CUTPA cause of action as factually unsupportable."
This court finds, however, that the allegations in the complaint sufficiently set forth a fact pattern upon which a jury could find that the defendants' acts were offensive to public policy. The plaintiff has incorporated by reference into count five paragraphs one through seventy-eight of the complaint; count five begins with paragraph seventy-nine. Through paragraphs one through seventy-eight, the plaintiff alleges facts to support claims for breach of oral contract, promissory estoppel, and breach of the covenant of good faith and fair dealing. For example, "a breach of contract claim may be sufficient to establish a CUTPA violation . . ." (Citation omitted.) Lester v. Resort Camplands International, Inc., 27 Conn. App. 59, 71, 605 A.2d 550 (1992). As these are recognized causes of action in Connecticut, the activities, if proved, offend public policy "as it has been established by statutes, common law or otherwise . . ." Journal Publishing Co. v. Hartford Courant Co., supra, 261 Conn. 695.
Lester v. Resort Camplands International, Inc., supra, 27 Conn. App. 59, frequently cited by the plaintiff, lends more support to this conclusion, and is worthy of detailed review. The case, which is at least somewhat factually similar to the present case, involves two plaintiffs who entered into a sales and membership agreement with one of the defendants, a camping club (Stateline). The agreement allowed the plaintiffs to use Stateline's facilities as provided in the club rules. The agreement and the member handbook provided other promises and rules; the rules set forth in the member handbook were "subject to change at any time by the Board of Directors of Resort Camplands International, Inc." Id., 61. One of the provisions in the membership agreement was that Stateline "will sell no more than six memberships for each Club campsite at anytime . . ." Id., 61. Within the member handbook was a rule that "[n]o member may camp in excess of fourteen . . . consecutive days on the same resort-site or area." Id., 61. A representative of the defendants told the plaintiffs this rule required the plaintiffs "to move their camping trailer from resort site to resort site within the campground once every two weeks." Id., 62.
"After the plaintiffs had purchased their membership, Resort Camplands sold `universal' memberships on a ten to one ratio . . . In April 1984, the board of directors . . . informed the members advisory board that it intended to modify the fourteen day rule." Lester v. Resort Camplands International, Inc., supra, 27 Conn. App. 63. The members strongly opposed the rule change and after numerous inquiries to the vice president and general counsel of the board of directors, in 1987, the vice president and general counsel "indicated that the rule would not be put into effect." Id., 63. Although there was conflicting evidence at trial regarding whether the rule was in fact new, whether it had been in existence since Stateline opened, or whether the "new rule" was effective in 1984 or 1987, the "new" fourteen-day rule prohibited the members from staying more than fourteen consecutive days; after the fourteenth day, the members were not allowed to return to the camp until seven days later. Id., 63-64.
In 1988, the plaintiffs stayed at the camp for fourteen consecutive days, after which the defendants enforced the fourteen-days-on, seven-days-off, rule. "The defendants did, however, offer the plaintiffs the opportunity to purchase a new gold card membership. This gold card membership would allow the plaintiffs to remain at Stateline for more then fourteen days at a time if they paid an additional charge per season. Also, the gold card membership would double their maintenance fee and remove the existing cap on maintenance fees which limited their increase to the equivalent of the increase in the cost of living." Lester v. Resort Camplands International, Inc., supra, 27 Conn. App. 64. The defendants' president testified at trial that "the defendants were looking for alternative ways to generate revenue, and the gold card membership was designed to convince members voluntarily to increase their maintenance fees." Id., 64. The plaintiffs sought damages for breach of contract and violation of CUTPA.
Following a trial, the jury returned a verdict for the plaintiffs for both claims. The defendants asked the trial court to set aside the verdict and argued that the evidence was insufficient to support a finding of liability under either cause of action. After the trial court's refusal, the defendants appealed to the Appellate Court, which affirmed the trials court's denial and stated that "there were ample facts that could lead the jury to the conclusion that the defendants breached their contract with the plaintiffs." Lester v. Resort Camplands International, Inc., supra, 27 Conn. App. 70. The court also upheld the jury's finding that the defendants violated CUTPA. After reviewing the cigarette rule, the court explained that "[a] CUTPA violation need not involve fraud on the part of the violator, but, in this case, the jury expressly found that the defendants intentionally engaged in unfair or deceptive acts or trade practices in dealing with the plaintiffs. The defendants in the present case unilaterally altered that portion of their contract with the plaintiffs that allowed them unlimited access to the campground, providing there was space available, unless they paid additional sums and agreed to increase their maintenance fees by purchasing a gold card membership." Id., 71-72. The court concluded that "[f]rom all the evidence presented at trial, the jury could have reasonably inferred that the reason for the implementation of the fourteen day rule was to force members such as the plaintiffs to pay additional sums of money to receive what they had already purchased: the right to use Stateline as often as they wanted on a first come, first served basis. The actions of the defendants in the present case is a prime example of the type of conduct which CUTPA seeks to remedy. The jury could reasonably have determined that the defendants' actions violated any one or all of the cigarette rule criteria . . . Breach of contract has long been condemned as a matter of law, economics, and public policy . . ." (Internal quotation marks omitted.) Id., 72.
In light of the allegations contained in the complaint and the Appellate Court's holding in Lester v. Resort Camplands International, Inc., supra, 27 Conn. App. 59, the defendants' argument that the plaintiff's CUTPA claim does not invoke public policy is without merit.
Acts Immoral, Unethical, Oppressive or Unscrupulous
The defendants also argue that the "acts complained of . . . are not immoral, unethical, oppressive or unscrupulous, nor has the plaintiff alleged that they were." This argument pertains to the second prong of the cigarette rule. Whether the acts complained of were immoral, unethical, oppressive or unscrupulous, however, is a question for the trier of facts. The real issue here is whether the plaintiff has alleged that the acts in question were immoral, unethical, oppressive or unscrupulous, so that, at trial, the plaintiff may offer evidence to prove the second prong of the cigarette rule, if she so desires. The allegations in the complaint set forth a fact pattern that a jury could find to contain acts that are immoral, unethical, oppressive or unscrupulous. This part of the defendants' argument is, therefore, unpersuasive.
Allegation of Substantial Injury
Finally, the defendants argue that the "plaintiff has neither alleged nor shown that the defendants' acts caused substantial injury to her." The plaintiff, however need not prove all three prongs of the cigarette rule for the trier fact to conclude that the defendants have violated CUTPA. See Journal Publishing Co. v. Hartford Courant Co., supra, 261 Conn. 673. Furthermore, the Appellate Court has held that because a plaintiff need only establish one criteria of the cigarette rule, proving, and therefore alleging, substantial injury is not necessary. Meyers v. Cornwell Quality Tools, Inc., 41 Conn. App. 19, 36, 674 A.2d 444 (1996). Suffering an ascertainable loss, however, is required.
Our Appellate Court recently reviewed the requirement of ascertainable loss. See General Statutes § 42-110g (a), supra." `The ascertainable loss requirement is a threshold barrier which limits the class of persons who may bring a CUTPA action seeking either actual damages or equitable relief.' Hinchliffe v. American Motors Corp., 184 Conn. 607, 615, 440 A.2d 810 (1981). Thus, to be entitled to any relief under CUTPA, a plaintiff must first prove that he has suffered an `ascertainable loss' due to a CUTPA violation. Id. `[T]he words " any ascertainable loss" [however] . . . do not require a plaintiff to prove a specific amount of actual damages in order to make out a prima facie case.' (Emphasis added; internal quotation marks omitted.) Johnson Electric Co. v. Salce Contracting Associates, [ 72 Conn. App. 342, 354-55, 805 A.2d 735, cert. denied, 262 Conn. 922, 812 A.2d 864 (2002).]" Larobina v. Home Depot, USA, Inc., 76 Conn. App. 586, 593 (2003). In other words, "under our case law, proof of an ascertainable loss does not require quantification of the loss that a CUTPA claimant has suffered." Johnson Electric Co. v. Salce Contracting Assoc., supra, 72 Conn. App. 354. Moreover, "[u]nder CUTPA, there is no need to allege or prove the amount of the ascertainable loss." (Internal quotation marks omitted.) Beverly Hills Concepts, Inc. v. Schatz Schatz, Ribicoff Kotkin, 247 Conn. 48, 79, 717 A.2d 724 (1998).
"`[L]oss' has a broader meaning than the term `damage.'" Beverly Hills Concepts, Inc. v. Schatz Schatz, Ribicoff Kotkin, supra, 247 Conn. 79. "For purposes of CUTPA, `[a]n ascertainable loss is a deprivation, detriment, [or] injury that is capable of being discovered, observed or established.' (Internal quotation marks omitted.) Service Road Corp. v. Quinn, 241 Conn. 630, 638, 698 A.2d 258 (1997)." Larobina v. Home Depot, USA, Inc., supra, 76 Conn. App. 593.
Throughout her complaint, the plaintiff has alleged that as a result of the defendants' acts and/or omissions, she has lost her right to receive benefits accorded to her through her contract and membership with the defendants. The plaintiff, in effect, claims that the defendants unilaterally altered their contract with the plaintiff, thereby denying her the right she allegedly has to change her membership category without incurring additional initiation fees. "On its face, the loss of a contract is an ascertainable loss." Larobina v. Home Depot, USA, Inc., supra, 76 Conn. App. 593. Lester v. Resort Camplands, Inc., supra, 27 Conn. App. 59, also supports this conclusion. Therefore, this court holds that the plaintiff has sufficiently alleged an ascertainable loss due to the acts or omissions of the defendants.
Conclusion
Based on the allegations in the complaint, viewed in the light most favorable to the plaintiff, the plaintiff has sufficiently stated a claim for a CUTPA violation. The defendants' motion to strike count five and the corresponding prayer for relief is therefore denied.
So Ordered.
Dated at Stamford, Connecticut, this 23rd day of May 2003.
William B. Lewis, Judge