Opinion
No. LLI CV 09 4008690
January 7, 2011
MEMORANDUM OF DECISION RE MOTION TO STRIKE #149
ISSUE
At issue is whether the court should grant the third-party defendants' motion to strike counts three and four of the third-party complaint on the ground that the counts fail to state a claim upon which relief can be granted. The Court denies the motion to strike as to count three and grants the motion to strike as to count four.
FACTS
On July 20, 2009, the plaintiff, Charles Fisher, filed a two-count complaint against the defendant, Countrywide Home Loans, Inc. (Countrywide). Fisher alleges that he retained the services of Affirmative Mortgage Group, LLC (AMG) assist him in locating mortgage loan financing. Fisher further alleges that AMG was acting as Countrywide's business partner. According to Fisher, AMG, without his knowledge or consent, submitted a loan application to Countrywide containing misrepresentations as to Fisher's financial condition, failed to provide him with various disclosures required under federal and state law, and made representations to Fisher regarding the terms of the mortgage loan, which he discovered to be false at the time of the closing. Fisher further alleges that AMG steered him towards retaining Mendelsohn Law Offices (MLO) and Attorney Deborah Dombek to handle the closing. Fisher alleges that MLO and Dombek were acting as settlement agents for Countrywide. According to Fisher, MLO and Dombek conducted the closing without adequately explaining the contents of the loan documents, made false assurances to him regarding the contents and terms of the loan documents, and failed to properly acknowledge and/or witness the open-end mortgage deed signed by Fisher. Fisher alleges that, as a result of the conduct of AMG, MLO and Dombek, Countrywide engaged in willful misconduct and violated the Connecticut Unfair Trade Practices Act (CUTPA).
Countrywide Financial Corporation, Countrywide Home Loans, Inc., Bank of America Home Loans, and Countrywide Home Loans Servicing LP were all named as defendants. Countrywide Financial Corporation (Countrywide Home Loans, Inc.) is a wholly owned subsidiary of Bank of America Corporation and is now known as Bank of America Home Loans. All defendants being one in the same will hereinafter be referred to collectively as "the defendant" or "Countrywide."
Fischer did not bring suit against AMG.
Fisher alleges that he was assisted by AMG's owner and/or employee Debra Bishop. Bishop is hereinafter included in all references to AMG.
On August 12, 2009, Countrywide filed a motion to implead AMG, MLO and Dombek as third-party defendants. The court, Pickard, J., granted the motion on September 9, 2009. Countrywide then filed a third-party complaint against AMG, MLO and Dombek on September 10, 2009. Counts one and two allege contractual and common-law indemnification against AMG. Counts three and four allege contractual and common-law indemnification against MLO and Dombek. On September 10, 2009, Fisher filed an amended complaint adding a third count alleging a violation of the banking laws of the state of Connecticut. On February 1, 2010, MLO and Dombek filed the present motion to strike counts three and four of the third-party complaint along with a supporting memorandum of law. Countywide filed an objection on March 2, 2010. The matter was heard on the December 20, 2010 short calendar.
A second amended complaint was filed on February 3, 2010 and a revised complaint on November 12, 2010. For purposes of the present motion to strike, the amended complaint filed on September 10, 2009, was the operative complaint at the time the motion to strike was filed.
DISCUSSION
I
LEGAL STANDARD
"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 court takes] the facts to be those alleged in the complaint that has been stricken and we construe the complaint in the manner most favorable to sustaining its legal sufficiency . . . Thus [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . Moreover . . . [w]hat is necessarily implied [in an allegation] need not be expressly alleged . . . It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted . . . Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, 295 Conn. 240, 252-53, 990 A.2d 206 (2010).
II
ANALYSIS
A
Count three: Contractual Indemnification
Count three of Countrywide's third-party complaint alleges contractual indemnification against MLO and Dombek based on the written closing instructions. MLO and Dombek seek to strike count three alleging that it is based on alleged contractual indemnity language that does not exist. MLO and Dombek argue that the closing instructions do not clearly provide for indemnification. Countrywide objects arguing that the closing instructions indisputably contain indemnification language.
"Indemnity involves a claim for reimbursement in full from one who is claimed to be primarily liable." Atkinson v. Berloni, 23 Conn.App. 325, 326, 580 A.2d 84 (1990). "A party may bring an indemnification claim based on the terms of an indemnity agreement . . . [A]llegations of contractual indemnification must be supported by the terms of the contract or the contract itself . . . Under Connecticut law, to state a contract-based indemnification claim, the claimant must allege either an express or implied contractual right to indemnification . . . There is no requirement that a party seeking indemnification must assert allegations of exclusive control (or any of the other elements of a claim for indemnification based on active-passive negligence) in order to state a legally sufficient claim for contractual indemnification." (Internal quotation marks omitted.) Lopez v. Chemical Abuse Services, Superior Court, judicial district of New Haven, Docket No. CV 07 5010516 (May 7, 2008, Holden, J.)
"As a general rule, contractual indemnification claims that are based on written agreements are construed in accordance with the principles of contract law." (Internal quotation marks omitted.) Lopez v. Chemical Abuse Services, supra, Superior Court, Docket No. CV 07 5010516. "Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms." (Internal quotation marks omitted.) Ogiba v. Tanger Properties, Superior Court, judicial district of Middlesex, Docket No. CV 08 5003697 (December 1, 2008, Jones, J.).
In the present case, Countrywide alleges in the third-party complaint that it is being sued by Fisher, in part, because of MLO's and Dombek's alleged failure to properly conduct the closing. According to Countrywide, pursuant to the terms of the written closing instructions, MLO and Dombek agreed to comply with and satisfy all conditions of the closing instructions and indemnify and hold Countrywide harmless from any and all losses resulting from MLO and Dombek's failure to do so. Countrywide alleges that if Fisher is found to have incurred any loss or damages, the loss or damages were caused by the conduct of MLO and Dombek and their violation of and/or noncompliance with the closing instructions. As such, if Fisher prevails on his claims against Countrywide, then Countrywide is entitled to indemnification from MLO and Dombek.
The closing instructions, a contract between Countrywide as lender and MLO and Dombek as settlement agents for Countrywide, state in relevant part: "B.3 Agreement to Comply. By conducting the Closing, Settlement Agent affirms that Settlement Agent has read, understands and agrees to strictly comply with and satisfy all conditions of these Closing Instructions, including all attachments. Lender will hold Settlement Agent liable for any losses results from Settlement Agent's failure to follow these Closing Instructions."
Countrywide did not attach a copy of the closing instructions to its third-party complaint and did not reproduce the language in the body of the pleading. An unauthenticated copy of the closing instructions was attached, as supporting evidence, to MLO and Dombek's motion to strike.
Though Countrywide's third-party complaint does not quote directly from the closing instructions, it paraphrases the relevant portion in detail. In construing the facts alleged by Countrywide in the light most favorable to sustaining the legal validity of the third-party complaint, if each of Countrywide's allegations were proven, then, according to the contractual language of the closing instructions, Countrywide would be entitled to indemnification for its liability to Fisher. Accordingly, the court denies the motion to strike count three of the third-party complaint alleging contractual indemnification.
B
Count Four: Common-Law Indemnification
Count four of Countrywide's third-party complaint alleges common-law indemnification against MLO and Dombek. A claim for common-law indemnification has four elements: "(1) the party against whom the indemnification is sought was negligent; (2) that party's active negligence, rather than the defendant's own passive negligence, was the direct, immediate cause of the . . . injuries . . .; (3) the other party was in control of the situation to the exclusion of the defendant seeking reimbursement; and (4) the defendant did not know of the other party's negligence, had no reason to anticipate it, and reasonably could rely on the other party not to be negligent." Smith v. New Haven, 258 Conn. 56, 66, 779 A.2d 104 (2001); see Kaplan v. Merberg Wrecking Corp., 152 Conn. 405, 416, 207 A.2d 732 (1965); ATC Partnership v. Coats North America Consolidated, Inc., 284 Conn. 537, 551-52, 935 A.2d 115 (2007).
Countrywide alleges that, at all relevant times, MLO and Dombek were in exclusive control of the mortgage loan closing with Fisher, and Countrywide did not know or have any reason to know of or anticipate MLO and Dombek's alleged misconduct. Countrywide alleges that if Fisher is found to have incurred any loss or damages, the loss or damages were caused by the conduct of MLO and Dombek, not Countrywide. As such, if Fisher prevails on his claims against Countrywide, then MLO and Dombek, as a consequence of their conduct, are liable to Countrywide for any damages. Countrywide alleges that it is entitled to indemnification and/or exoneration from MLO and Dombek.
MLO and Domek seek to strike count four arguing that Countrywide cannot establish active/passive negligence because Fisher's complaint does not sound in negligence but rather it is a claim for fraud and a violation of CUTPA based on the intentional misconduct and planned scheme by Countrywide to sell defective loans in the secondary market. MLO and Dombek further argue that Countrywide cannot establish that MLO and Dombek were in exclusive control of the situation.
Countrywide objects arguing that the third-party complaint is sufficient because Fisher's complaint does sound in negligence. According to Countrywide, the amended complaint alleges that Countrywide, "by accepting the fraudulent application . . . negligently exposed [Fisher] to potential prosecution for making a false statement on a loan application" and Countrywide "negligently [allowed] Fisher to be exposed to potential bank fraud charges by knowingly accepting a fraudulent application from their business partner, AMG." Additionally, Countrywide argues that Fisher's amended complaint alleges that MLO and Dombek were the active tortfeasors and in exclusive control of the closing. Specifically, the amended complaint alleges that "Dombek assured Fisher that she had reviewed the documents and that they provided what was promised, and were legally safe for him to sign when she knew that they were not . . ." [AMG and MLO] presented the loan package to Fisher too late for Fisher to do anything but accept it. AMG/[MLO]/Dombek knew that there would be no other practical choice for him but to sign . . ."; and "[t]he acknowledgement was taken by Attorney Dombek, in contradiction of proper procedure . . . making a false statement, and . . . false acknowledgment . . ."
Countrywide also cites to allegations in Fisher's revised complaint. Because the revised complaint was not the operative complaint at the time the motion to strike was filed, the court will disregard Countrywide's arguments relating to allegations in Fisher's revised complaint.
Countrywide cites to allegations in Fisher's revised complaint. The court will look only to any corresponding or related allegations in Fisher's amended complaint.
Although Fisher's amended complaint makes passing reference to Countrywide's negligence in exposing him to potential prosecution for making a false statement on a loan application and bank fraud, this court cannot find that Fisher's amended complaint sounds in negligence. Fisher brings three counts alleging willful conduct, a violation of CUTPA, and a violation of the state's banking laws. There is no negligence count setting forth facts that support a negligence claim and Fisher does not plead the four elements of negligence: duty, breach, causation and actual injury. Moreover, the amended complaint does not use language explicit enough to inform the court and counsel that Fisher is asserting a separate claim of negligence.
Finally, Countrywide argues that common-law indemnification claims are not limited to negligence actions. Countrywide relies on Shelby Insurance Company v. Castellon, Superior Court, judicial district of New Haven, Docket No. CV 98 0416779 (May 26, 2000, Devlin, J.), for the proposition that if common-law indemnification is permitted against a party who acted recklessly, then this court should extend common-law indemnification to other claims.
Countrywide cites to additional counts for fraud, intentional misrepresentation, and civil conspiracy alleged in Fisher's revised complaint. The court will disregard this portion of Countrywide's argument as only the amended complaint is relevant to the motion to strike.
This court, however, declines to extend Kaplan and its progeny to claims alleging intentional tortious conduct. "[A] fair reading of Shelby Insurance . . . reveals that, in that case, the court granted summary judgment to the defendant on the plaintiff's indemnification claim based on an exclusive control issue and merely commented on the cases cited by the defendant as not having `explicitly' limited common law indemnification to negligence actions. In Starview Ventures v. Acadia Insurance, 46 Conn. L. Rptr. 342 (2008), the court granted the third-party defendant's motion to strike an indemnification claim by the first-party defendant in a conversion action. In Lassow v. Jefferson Pilot Financial Insurance Co., 35 Conn. L. Rptr. 496 (2003), the court granted the third-party defendant's motion for summary judgment on an indemnification claim premised on CUTPA . . . In the absence of any controlling Appellate authority, this court agrees with the majority view that there is no common law action for indemnification for intentional tortious conduct. Moreover, this court believes that the denial of indemnification claims where the only allegation against the claimant is premised on intentional misconduct serves to discourage such misconduct and is consistent with sound public policy." Martel v. Burkamp, Superior Court, judicial district of Hartford, Docket No. CVH 7684 (July 23, 2009, Gilligan, J.) [ 48 Conn. L. Rptr. 285].
Accordingly, the motion to strike count four of Countrywide's third-party complaint alleging common-law indemnification is granted.