Opinion
No. CV 06 5004722.
December 1, 2006.
MEMORANDUM OF DECISION RE MOTION TO STRIKE #102 FACTS
On June 28, 2006, the plaintiff, Priscilla Farlow, filed a two-count complaint against the defendant, Barberino Brothers, Inc. In count one, the plaintiff alleges a violation of the Connecticut Unfair Trade Practice Act (CUTPA), General Statutes §§ 42-110a, et seq. In count two, the plaintiff alleges slander of credit.
The plaintiff alleges the following facts. The defendant is a car dealership in Wallingford, Connecticut. On November 15, 2004, the plaintiff sought to purchase a 2002 Durango sport utility vehicle. The plaintiff discussed financing options with the manager of the defendant, and informed him that she was unsure whether she would be eligible for financing, due to her present income. At the time, the plaintiff was employed as a bus monitor and earned an hourly wage of $11.10. The plaintiff was given a blank form to sign and was told that the form was needed to register and obtain license plates for the new vehicle. The form was actually a credit application, which the manager filled out on behalf of the plaintiff. While the manager accurately indicated the plaintiff's employer on the credit application, the annual income was falsely misrepresented on the report as $78,000. As a result of the information presented on the credit report, Wells Fargo Financial extended financing to the plaintiff, with a monthly payment due of $491.03. The plaintiff was unable to make such a large monthly payment and the car was soon repossessed. On or about November 23, 2005, the vehicle was resold at auction, resulting in a deficiency in the amount of $11,261.50. On March 15, 2006, the plaintiff paid this deficiency. The plaintiff claims that the act of misrepresenting her income to Wells Fargo, has resulted in a violation of CUTPA. As a result of this violation, the plaintiff has sustained a substantial financial injury. The plaintiff also alleges slander of credit and claims that the defendant's conduct has resulted in substantial damage to her reputation and credit.
On October 5, 2006, the defendant filed a motion to strike both counts of the plaintiff's complaint, supported by a memorandum of law. On October 13, 2006, the plaintiff filed a memorandum in opposition. The defendant filed a reply memorandum on October 30, 2006 and the plaintiff filed a reply memorandum on November 6, 2006.
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). "[When the] issues concern the granting of a motion to strike, [the court is] limited to and must accept as true the facts alleged in the . . . complaint." (Internal quotation marks omitted.) Craig v. Driscoll, 262 Conn. 312, 315 n. 4, 813 A.2d 1003 (2003). "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Rizutto v. Davidson Ladders, Inc., 280 Conn. 225, 229, 905 A.2d 1165 (2006).
1. Count One — CUTPA violation
In the memorandum in support of the motion to strike, the defendant argues that count one of the plaintiff's complaint should be stricken due to the plaintiff's failure to set forth a legally sufficient claim under CUTPA. Specifically, it is the defendant's argument that count one of the plaintiff's complaint does not allege facts necessary to support a finding that the defendant's misconduct was the proximate cause of any ascertainable loss by the plaintiff, and therefore, the defendant cannot be found liable under CUTPA. In response, the plaintiff counters that she has sufficiently alleged the essential elements of a CUTPA claim and the basis of an ascertainable loss.
Section 42-110b (a) provides, that "[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." This has been interpreted to create three relevant criteria. "It is well settled that in 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 cause substantial injury to consumers, [competitors or other businesspersons] . . . All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three." (Internal quotation marks omitted.) Hartford Electric Supply Co. v. Allen-Bradley Co., 250 Conn. 334, 367-68, 736 A.2d 824 (1999).
General Statutes § 42-110g(a) provides a private cause of action under CUTPA for "[a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a [prohibited] method, act or practice . . ." (Emphasis added.) The Supreme Court has interpreted this statutory language and concluded that "[i]n order to prevail in a CUTPA action, a plaintiff must establish both that the defendant has engaged in a prohibited act and that, as a result of this act, the plaintiff suffered an injury. The language `as a result of' requires a showing that the prohibited act was the proximate cause of a harm to the plaintiff." (Internal quotation marks omitted.) Abrahams v. Young Rubicam, Inc., 240 Conn. 300, 306, 692 A.2d 709 (1997). "[P]roximate cause is [a]n actual cause that is a substantial factor in the resulting harm . . . The question to be asked in ascertaining whether proximate cause exists is whether the harm which occurred was of the same general nature as the foreseeable risk created by the defendant's act." (Citations omitted; internal quotation marks omitted.) Id.
"The determination of proximate cause is ordinarily a question of fact for the trier; it becomes a question of law only when the mind of a fair and reasonable person could reach only one conclusion . . . The question should be submitted to the trier of fact if there is room for reasonable disagreement." (Citation omitted; internal quotation marks omitted.) Coste v. Riverside Motors, Inc., 24 Conn.App. 109, 114, 585 A.2d 1263 (1991). "[Q]uestions of fact are not properly determined on a motion to strike . . . When ruling on a motion to strike, the court does not decide questions of fact but only whether the plaintiff has alleged facts that, if proven at trial, would support a legally sufficient claim." (Citations omitted.) Johnson v. Burns, Superior Court, judicial district of Windham, Docket No. CV 044000144 (April 28, 2005, Foley, J.).
In count one of the complaint, the plaintiff alleges that the misconduct of the defendant amounts to immoral, oppressive and unscrupulous behavior, causing substantial injury to the plaintiff that could not have reasonably been avoided. The facts alleged would reasonably support a finding of causation in fact. The defendant falsely reported the plaintiff's income to Wells Fargo bank so that it could sell the plaintiff the motor vehicle. Without these misrepresentations, the plaintiff would not likely have secured the credit to purchase the vehicle, and therefore would not have sustained a substantial financial injury when the car was later repossessed. Since the purpose of a credit application is to determine what amount an applicant can afford to pay and whether the applicant is a viable candidate for an extension of credit of the amount requested, the damages sustained by the plaintiff are a reasonably foreseeable result of a monthly payment that is grossly disproportionate to the plaintiff's overall monthly income. The plaintiff has therefore sufficiently alleged the existence of a nexus between the conduct of the defendant and the losses claimed to support a finding of proximate cause. Viewing the facts in the light most favorable to the plaintiff, the court finds that the plaintiff has stated a legally sufficient claim under CUTPA and therefore, the motion to strike count one is denied.
2. Count Two — Slander of Credit
The defendant moves to strike count two of the plaintiff's complaint for failure to assert a claim upon which relief can be granted. In support of this motion, the defendant argues that the cause of action alleged, slander of credit, is not recognized in Connecticut jurisprudence. Furthermore, the defendant argues that even if the claim is addressed as purely a claim for slander, which is recognized in Connecticut, the plaintiff has failed to assert the facts necessary to support her allegations. In response, the plaintiff argues that slander is a valid cause of action in Connecticut and due to the evolution of tort law, slander of credit should now be recognized as a "logical, modem adaptation of [this] recognized tort."
Connecticut jurisprudence does not recognize slander of credit as a valid cause of action. See Fleet National Bank v. Cohen, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 97 0257327 (December 30, 1997, Dunnell, J.). This court, however, will look outside the confines of Connecticut jurisprudence to determine the form and substance of a valid claim alleging slander of credit in jurisdictions that do recognize such a cause of action. "A motion to strike is the proper procedural vehicle . . . to test whether Connecticut is ready to recognize some newly emerging ground of liability." (Internal quotation marks omitted.) Blue v. Renaissance Alliance, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 05 4001949 (May 12, 2006, Shluger, J.).
A survey of out-of-state cases reveals that most jurisdictions that recognize a specific cause of action for slander of credit, recognize the claim in the context of false statements made on credit reports or to credit agencies that result in harm to the plaintiff's reputation or credit. When recognized, strict standards apply.
Florida recognizes credit slander as a cause of action in tort originating from the common law. See Musto v. Bell South Telecommunications Corp., 748 So.2d 296, 298 (Fla.Dist.Ct.App. 1999). In Musto, the court cited to the Florida Supreme Court opinion, Caldwell v. Personal Finance Co., 46 So.2d 726 (Fla. 1950), which set forth the requirements for credit slander. Although the opinion of Caldwell does not specifically refer to the cause of action, credit slander, the Caldwell opinion is used by the Musto court to establish the grounds for slander of credit. "In Caldwell v. Personal Finance Co., 46 So.2d 726 (Fla. 1950), the court recognized slander of credit as a cause of action established on proof the defendant finance company willfully and maliciously made a false statement to another finance company regarding the plaintiff's indebtedness, which statement was known by the defendant to be false when made, and was made with the intent of preventing the plaintiff from procuring credit." Musto v. Bell South Telecommunications Corp., supra, 297 n. 1. In Matthews v. Deland State Bank, 334 So.2d 164, 166 (Fla.Dist.Ct.App. 1976), a plaintiff sued a bank for credit slander as a result of false credit reporting. The court found that "[a] disregard for the truth in reporting credit transactions, especially when coupled with the failure to correct the inaccuracies, constitutes libel per se . . . Where words are libelous per se, malice is presumed as a matter of law." (Citation omitted; internal quotation marks omitted.) Id. The court went on to find that "[i]n order to award punitive damages . . . ill will, hostility or an evil intention to defame and injure, must be present." Id.
The Supreme Court of Texas also recognizes the need for a showing of actual malice in order to sustain a claim under libel for false reports to a credit agency. In Dun Bradstreet, Inc. v. O'Neil, 456 S.W.2d 896, 899-900 (Tex. 1970), the Texas Supreme Court denied recovery to a plaintiff for damages resulting from a false report filed by a credit agency. The credit agency had sent multiple reports to business associates of the plaintiff, stating that the plaintiff had filed for voluntary bankruptcy. Realizing this mistake shortly thereafter, the credit agency sent a redaction to the original recipients. The court found that a conditional privilege applied to the credit agency, due to its role as a credit agency, and then found the requisite malice to overcome this privilege to be absent. Id. "[The] [p]laintiff's evidence may establish that [the] defendant was negligent in failing to verify the bankruptcy information but the evidence does not raise a fact issue regarding whether or not the defendant acted with knowledge that it was false or with reckless disregard of whether it was false or not." (Internal quotation marks omitted.) Id., 901.
New York recognizes an action for slander of credit and a review of the relevant case law demonstrates that for slander of credit to be actionable, there must be a showing of malice or willful intent. In Rodrigues v. R.H. Macy Co., 391 N.Y.S.2d 44, 45 (N.Y. Civ. Ct. 1977), the court stated, "[a]t common law, it was an actionable tort to injure by libel or slander the financial standing and business credit of an individual . . . However, on April 25, 1971, the Fair Credit Reporting Act became Federal law. (US Code, tit. 15, § 1681 et seq.) Section 1681t of title 15 of the United States Code states that where inconsistent with State law, it shall take precedence over such State law. Subdivision e of section 1681h of the United States Code states in pertinent part: `no consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, and user of information or any person who furnishes information to a consumer reporting agency, based upon information disclosed except as to false information furnished with malice or willful intent to injure such consumer.'" (Citation omitted.) Id.
All of the above cases deal with a cause of action arising from false reports to credit agencies or by credit agencies. In the present case, the plaintiff has alleged that as a result of the defendant's actions, the plaintiff has been brought into contempt and ridicule and her credit and reputation greatly damaged. This claim has been categorized by the plaintiff as a cause of action for slander of credit. Applying the elements of slander of credit developed in the above jurisdictions, the plaintiff has not pleaded sufficient facts to establish a claim for slander of credit. The defendant's misrepresentation of the plaintiff's annual income may have placed the plaintiff in the position to be subject to repossession. The actual repossession of the car as the result of her failure to make payments, however, is the ultimate cause of any negative credit implications.
Other jurisdictions extend liability under the cause of action of slander to circumstances involving slander of credit without specifically categorizing the cause of action as such. In South Carolina, a claim involving allegations amounting to slander of credit is treated as a defamation action. See WeSav Financial Corp. v. Lingefelt, 450 S.E.2d 580, 582 (S.C. 1994) (action involving "libelous and slanderous statements to local credit agencies regarding their nonpayment of loan installments . . . The truth of the matter is a complete defense to an action based on defamation"). In New York, statements made about another's credit can be actionable as slander. See GTP Leisure Products, Inc. v. B-W Footwear, 55 App.Div.2d 1009, 391 N.Y.S.2d 489 (1977) (finding that a "statement alleged . . . [in] the complaint to the effect that [the] plaintiff was a `credit risk' [is] slanderous per se.").
In Carter v. Willert Home Products, Inc., 714 S.W.2d 506 (Mo. 1986), the Supreme Court of Missouri allowed recovery for slanderous statements made by the plaintiff's employer that negatively affected the plaintiff's credit, but did not specifically recognize the cause of action for slander of credit. The Carter court found that the plaintiff had alleged sufficient special damages to support a non per se slander action. Specifically, the special damages alleged were the "depriv[al] of the benefit of an impending agreement . . . to obtain a loan without the additional security of a co-obligor." The court then went on to discuss the issue of damages. "Once it is established that a slander is actionable, either as a slander per se or upon proof of special damage, the plaintiff is entitled to recover such actual damages as may have resulted from the slander, including damages for emotional distress." Id., 510.
New Jersey also treats a cause of action alleging slander of credit as a defamation claim but has recognized an amorphous category of torts that involve defamation in the business context. The court in Henry V. Vacarro Construction Co. v. A.J. DePace, Inc., 137 N.J.Super. 512, 514, 349 A.2d 570 (Law Div. 1975), does not specifically address slander of credit. Instead, the court recognizes that "[t]here is a tort which passes by many names. Sometimes it is called slander of title, sometimes slander of goods, or disparagement of goods, or trade libel, or unfair competition, or interference with prospective advantage, or whatever else the fancy of the particular Judge or writer may lead to select. Under whatever name, the essentials of the tort appear to be the same. It consists of the publication, or communication to a third person, of false statements concerning the plaintiff, his property, or his business." Id., 514.
The plaintiff in Biederman v. Mitsubishi Credit, 332 N.Y.Super. 583, 753 A.2d 1251 (2000), relied on the elements set forth in Henry V. Vacarro Construction Co., to establish a claim for slander of credit alleging that the premature termination of her car lease negatively affected her credit. Assessing the validity of the slander of credit claim, the court stated, "[i]n order to prevail on a defamation claim, the [p]laintiff must prove that there was a defamatory statement of fact concerning [p]laintiff made by [the defendant] which was false. Also, this statement must have been communicated to a person or persons other than [p]laintiff with actual knowledge by [the defendant] that the statement was false, or with reckless disregard of the statement's truth or falsity, or with negligence in failing to determine the falsity of the statement." After acknowledging the basic requirements of a defamation action, the court then recognized that the plaintiff has set forth an alternative set of criteria, relying upon the amorphous category of business defamation torts recognized in Henry V. Vacarra Construction Co. The court did not address which set of criteria would apply to a slander of credit action, but instead granted summary judgment after finding, in favor of the defendant, that a material issue of fact does not exist concerning the falsity of the defendant's statement. As previously stated, Connecticut has not specifically recognized slander of credit to be a valid cause of action. Even if this court followed the same path as jurisdictions that allow recovery for defamatory statements that ultimately affect a party's credit, without recognizing a distinct cause of action for slander of credit, the plaintiff has not alleged legally sufficient facts to support a cause of action of slander or oral defamation under Connecticut law.
Recently, the Connecticut Supreme Court set forth the basic requirements of defamation. "To establish a prima facie case of defamation, the plaintiff must demonstrate that: (1) the defendant published a defamatory statement; (2) the defamatory statement identified the plaintiff to a third person; (3) the defamatory statement was published to a third person; and (4) the plaintiff's reputation suffered injury as a result of the statement." (Internal quotation marks omitted.) Cwelinsky v. Mobil Chemical Co., 267 Conn. 210, 217, 837 A.2d 759 (2004). "A defamatory statement is defined as a communication that tends to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him." (Internal quotation marks omitted.) Id. In the present case, the plaintiff has not alleged any facts to support a finding that a defamatory statement was made by the defendant to a third person. The only false statement made by the defendant was the misrepresentation of income on the credit application. While false, this is not a negative statement intended to harm the plaintiff's reputation, and, therefore, is not defamatory.
For the reasons set forth above, the motion to strike the second count of the complaint, alleging slander of credit, is granted.