Opinion
No. CV06-4008922S
September 5, 2006
MEMORANDUM OF DECISION RE MOTION TO STRIKE OF THE DEFENDANTS WELLS FARGO BANK MINNESOTA, N.A. AND OPTION ONE MORTGAGE CORPORATION
Before the court is the defendants' motion to strike counts two, three, four, seven, eight and nine of the plaintiff's complaint. For reasons stated below, the court grants the motion as to counts two, three and four, and denies the motion as to counts seven, eight and nine.
FACTS
On December 29, 2005, the plaintiff, DJFM Properties, LLC, filed a nine-count complaint against the defendants, Wells Fargo Bank Minnesota, N.A. (Wells Fargo), Option One Mortgage Corporation (Option One), Frank Stack and Beazley Company. The plaintiff alleges the following facts in the complaint. The plaintiff is a Connecticut limited liability company with a principal office located at Waterbury, Connecticut. The defendant, Wells Fargo Bank Minnesota, N.A. is a foreign corporation operating within the State of Connecticut through its agent codefendant, Option One Mortgage Corporation, which has a business address located at Irvine, California.
The codefendants Wells Fargo Bank, LLC and Option One Mortgage Corporation only, join in the present motion to strike, number 103. Throughout this memorandum Wells Fargo Bank, LLC and Option One Mortgage Corporation will be referred to collectively as the defendants.
On January 30, 2003, the plaintiff, acting through its member, Dias, entered into a written agreement pursuant to which the plaintiff agreed to buy and the defendants agreed to sell real property at Waterbury, Connecticut. The defendants agreed to convey the property to the plaintiff with a good and marketable title, free and clear of all encumbrances, by way of limited or special warranty deed. The plaintiff was at all times ready, willing and able to perform all the terms and conditions of the agreement. The plaintiff requested that the defendants convey the property, but the defendants refused to do so.
In count one the plaintiff alleges that the defendant, Wells Fargo, failed to convey the property and claims specific performance. In count two, the plaintiff alleges that the defendant, Option One, failed to convey the property and claims damages. In count three, the plaintiff alleges equitable estoppel against Wells Fargo. In count four, the plaintiff alleges equitable estoppel against Option One. In count five, the plaintiff alleges interference with a contractual relationship against Frank Stack. In count six, the plaintiff brings an interpleader claim against Beazley Company. In counts seven, eight and nine, the plaintiff alleges violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes §§ 42-110a et seq., against Option One.
DISCUSSION
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). The role of the trial court in ruling on a motion to strike is "to examine the [complaint], construed in favor of the [plaintiff], to determine whether the [pleading party has] stated a legally sufficient cause of action." (Internal quotation marks omitted.) Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 378, 698 A.2d 859 (1997). "In ruling on a motion to strike, the court is limited to the facts alleged in the complaint." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). "[G]rounds other than those specified should not be considered by the trial court in passing upon a motion to strike . . ." Gazo v. Stamford, 255 Conn. 245, 259, 765 A.2d 505 (2001).
COUNT TWO
The defendants argue, in support of the motion to strike count two, that both the principal and the agent cannot be liable for breach of contract when the title to the property at issue was held in the name of the principal alone. They contend that, pursuant to Connecticut law, a principal may be held liable for the acts of its agent if those acts are within the scope of the agent's authority. But the agent is not liable, if acting within the scope of authority, where it contracts with a third party for a known principal. The plaintiff counters that because Option One drafted a contract listing itself as both seller and attorney in fact, ambiguous contract language was created and it is proper to plead in the alternative regarding whether Option One is liable solely for the breach of contract. The plaintiff asserts that a question of fact exists as to whether Option One was acting as agent for Wells Fargo.
"An agent, by making a contract only on behalf of a competent disclosed or partially disclosed principal whom he has power so to bind, does not thereby become liable for its nonperformance . . . An authorized agent for a disclosed principal, in the absence of circumstances showing that personal responsibility was incurred, is not personally liable to the other contracting party . . . If a contract is made with a known agent acting within the scope of his authority for a disclosed principal, the contract is that of the principal alone, unless credit has been given expressly and exclusively to the agent, and it appears that it was clearly his intention to assume the obligation as a personal liability and that he has been informed that credit has been extended to him alone." (Citations omitted; internal quotation marks omitted.) Whitlock's, Inc. v. Manley, 123 Conn. 434, 437, 196 A. 149 (1937).
In the present case, the plaintiff alleges that Wells Fargo was the title owner of the property at issue. Additionally, the plaintiff alleges that Option One is an agent for Wells Fargo. The plaintiff attaches to its complaint a copy of a signed document purporting to be a contract for the sale of the property in question. The document is signed at the line designated for sellers, by "Option One Mortgage Corporation As Attorney-In-Fact."
"For the purpose of ruling upon a motion to strike, the facts alleged in a complaint, though not the legal conclusions it may contain, are deemed to be admitted." (Internal quotation marks omitted.) Murillo v. Seymour Ambulance Ass'n., Inc., 264 Conn. 474, 476, 823 A.2d 1202 (2003). Furthermore, "[j]udicial admissions are voluntary and knowing concessions of fact by a party or a party's attorney occurring during judicial proceedings . . . A judicial admission is, in truth, a substitute for evidence, in that it does away with the need for evidence . . . A party is bound by a judicial admission unless the court, in the exercise of its discretion, permits the admission to be withdrawn, explained or modified." (Citation omitted; internal quotation marks omitted.) Levine v. Levine, 88 Conn.App. 795, 804, 871 A.2d 1034 (2005).
The plaintiff alleges in count one of the complaint that Wells Fargo acted through its agent Option One. Furthermore, the plaintiff attached a document supporting its complaint that contains a signature whereby Option One, through its representative, signed as attorney-in-fact. It is clear that Option One was acting as an agent for Wells Fargo, a disclosed principal. Option One is not liable for the acts of its disclosed principal, Wells Fargo. Accordingly, the defendants' motion to strike count two of the plaintiff's complaint is granted.
COUNTS THREE AND FOUR
The defendants argue in support of striking counts three and four that the allegation of equitable estoppel is not a distinct cause of action under Connecticut law. The defendants assert that even if it is determined that the counts should stand, the plaintiff has failed to allege the necessary elements to establish a claim under equitable estoppel. The plaintiff counters that, although labeled equitable estoppel, counts three and four actually allege quasi-contract or a contract implied in law. The plaintiff further counters that the joinder of equitable remedies with legal remedies is proper and necessary given the confused nature of Option One's status in signing the contract at issue.
In Dickau v. Glastonbury, 156 Conn. 437, 242 A.2d 777 (1968), our Supreme Court discussed an appeal from an alleged wrongful valuation of real estate for tax purposes. The court considered, inter alia, the plaintiffs' contention that, "the town was estopped from altering the preexisting valuation by the action of the assessor in dissuading the plaintiffs from applying for the benefits afforded by General Statutes (Rev, to 1964) § 12-107c." Id., 440. The court found no merit in the plaintiffs' estoppel claim and stated, "[e]stoppel rests upon the misleading conduct of one party to the prejudice of the other." (Internal quotation marks omitted.) Id., 441. The court went on to say: "Its two essential elements are: one party must do or say something which is intended or calculated to induce another to believe in the existence of certain facts and to act on that belief; and the other party, influenced thereby, must change his position or do some act to his injury which he otherwise would not have done." Id. After failing to determine a basis for the estoppel claim, the court stated, "equitable estoppel is available only for protection and cannot be used as a weapon of assault." Id., 442.
In counts three and four, the plaintiff alleges equitable estoppel against Wells Fargo and Option One respectively. In addition to the fact, that Connecticut does not recognize a cause of action for equitable estoppel, the plaintiff has not alleged the necessary elements of equitable estoppel.
The plaintiff alternatively asserts that counts three and four allege quasi-contract. "Under our pleading practice, a plaintiff is permitted to advance alternative and even inconsistent theories of liability against one or more defendants in a single complaint.' (Internal quotation marks omitted.) Danko v. Redway Enterprises, Inc., 254 Conn. 369, 379, 757 A.2d 1064 (2000). Notwithstanding permitted alternative pleading under our rules of practice, "[a]n implied contract can only exist where there is no express one." Biller Associates v. Rte. 156 Realty Co., 52 Conn.App. 18, 30, 725 A.2d 398 (1999), aff'd, 252 Conn. 400, 746 A.2d 785 (2000).
In the present case, the plaintiff has, in counts three and four incorporated paragraphs one through eight of the first and second counts respectively. In paragraph three of count one, the plaintiff alleges that it entered into a written agreement with Wells Fargo whereby the plaintiff agreed to buy and Wells Fargo agreed to sell the property in question here. In paragraph three of count two, the plaintiff alleges that it entered into a written agreement with Option One whereby the plaintiff agreed to buy and Option One agreed to sell the property. It is submitted in so doing, the plaintiff has alleged the existence of an express contract. In accordance with Biller Associates v. Rte. 156 Realty Co., the implied contract alternatively argued here cannot coexist with the express contract alleged in the complaint.
Based upon the foregoing, the defendants' motion to strike is granted as to counts three and four.
COUNTS SEVEN, EIGHT AND NINE
Finally, the defendants argue that counts seven, eight and nine should be stricken because, pleaded as CUTPA violations, they are all based on breach of contract claims. The defendants assert that an alleged CUTPA violation cannot be maintained on a single breach of contract absent sufficient aggravating circumstances. The plaintiff counters that counts seven, eight and nine are justified based upon the specific allegations and represent a recognized pleading method.
CUTPA provides that "[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." General Statutes § 42-110b(a). "It is well settled that in determining whether a practice violates CUTPA [Connecticut has] adopted the criteria set out in the cigarette rule by the [F]ederal [T]rade [C]ommission 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 business persons] . . . All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three." (Internal quotation marks omitted.) Updike, Kelly Spellacy, P.C. v. Beckett, 269 Conn. 613, 655-56, 850 A.2d 145 (2004). "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 . . . Whether a practice is unfair and thus violates CUTPA is an issue of fact." (Internal quotation marks omitted.) De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn. 424, 434, 849 A.2d 382 (2004).
"[N]ot every contractual breach rises to the level of a CUTPA violation." Hudson United Bank v. Cinnamon Ridge Corp., 81 Conn.App. 557, 571, 845 A.2d 417 (2004). "[A] [claimant] must show substantial aggravating circumstances attending the breach to recover under the Act . . . [A] misrepresentation can constitute an aggravating circumstance that would allow a simple breach of contract claim to be treated as a CUTPA violation; it would in effect be a deceptive act." (Internal quotation marks omitted.) Dunleavy v. Paris Ceramics USA, Inc., Superior Court, judicial district of Fairfield, Docket No. CV 02 0395709 (April 20, 2005, Richards, J.). "In enforcing CUTPA our courts look to the actions of the Federal Trade Commission for guidance. Under federal precedents and CUTPA decisions, a CUTPA plaintiff is not bound by the limitations on the common law action for misrepresentation when making that the basis of his or her claim. Such a plaintiff for example need not prove reliance on the misrepresentation or that the representation became part of the basis for the bargain . . . and knowledge of falsity either constructive or actual need not be shown." (Citation omitted.) Designs on Stone, Inc. v. John Brennan Construction Co., Inc., Superior Court, judicial district of Ansonia-Milford, Docket No. CV 97 059997 (April 9, 1998, Corradino, J.) (21 Conn L. Rptr. 659, 660).
"[D]efendants [do] not violate CUTPA by failing to disclose information when they [are] under no legal obligation to disclose that information." Downes-Patterson Corp. v. First National Supermarkets, 64 Conn.App. 417, 427, 780, A.2d 967, cert. granted, 258 Conn. 917, 782 A.2d 1242 (2001). "CUTPA liability should not be imposed . . . when a defendant merely has not delivered on a promise unless the defendant made a representation as to a future fact coupled with a present intent not to [fulfill] the promise . . . The court is not aware of a case that holds that a statement predictive of future conduct . . . somehow becomes a misrepresentation for CUTPA purposes simply when the party making the representation cannot deliver on the promise." (Internal quotation marks omitted.) Tinian Trust Holdings v. International Paper Company, Inc., Superior Court, judicial district of Hartford, Docket No. CV 05 4007049 (August 12, 2005, Shapiro, J.).
In the present case, in count seven, the plaintiff alleges that Option One's conduct constituted a material misrepresentation or omission likely to mislead a consumer. In count eight, the plaintiff alleges that Option One's conduct constituted an intentional and wanton violation of the plaintiff's rights and was done with a reckless indifference to those rights in that Option One knew that its representations or omissions were false or misleading or was recklessly indifferent to their truth or completeness. In count nine, the plaintiff alleges that Option One, through its alleged conduct, violated public policy, is immoral, unethical or unscrupulous and is substantially injurious to consumers, including the plaintiff.
The plaintiff's allegations of misrepresentation, when read in the light most favorable to sustaining the complaint's legal sufficiency, are enough to withstand a motion to strike a CUTPA claim. "Courts have found that a misrepresentation is a deceptive act that can constitute an aggravating circumstance that would allow a simple breach of contract action to be treated as a CUTPA violation." LESMSD, LLC v. RJ Properties, LLC, Superior Court, judicial district of Waterbury, Docket No. CV 03 0177537 (November 22, 2005, Gallagher, J.). The plaintiff in the present case does not specifically allege what the representations were and how they were false, but "a CUTPA plaintiff is not bound by the limitations on the common law action for misrepresentation when making that the basis of his or her claim." Id. Accordingly, the defendants' motion to strike counts seven, eight and nine is denied.
CONCLUSION
In sum and based on the foregoing, the defendants' motion is granted as to counts two, three and four and denied as to counts seven, eight and nine.