Opinion
No. CV 04-4006172S
June 9, 2005
MEMORANDUM OF DECISION ON MOTION TO STRIKE (No. 108)
This dispute arises from a construction project at the Wintonbury Hill Golf Course in Bloomfield. Defendant Encon Construction, Inc. ("Encon"), the general contractor for the project, entered into a written contract whereby plaintiff The Imperial Company ("Imperial") agreed to do the framing and roofing for two buildings at the golf course. Encon has allegedly failed to pay Imperial for the work it performed.
Plaintiff's Substituted Complaint dated February 1, 2005 is in six counts. The counts at issue here are counts five and six. In its Fifth Count, plaintiff alleges that defendant entered into the subcontract agreement with the intention of not paying plaintiff for its services and that this conduct constituted fraud. The Sixth Count alleges that defendant's conduct was an unfair trade practice under the Connecticut Unfair Trade Practices Act (CUTPA), Connecticut General Statutes § 42-110a et seq. Defendant moves to strike both counts, as well as the corresponding prayers for statutory and common law punitive damages and attorneys fees, for failure to state claims upon which relief maybe granted.
I. Count Five — Fraudulent Misrepresentation
The defendant contends that this count essentially does nothing more than restate plaintiff's breach of contract allegations (from its First Count) and allege that defendant's conduct was fraudulent. Defendant further submits that plaintiff has failed to state its fraud allegations with the required specificity.
It is well settled that fraud cannot simply be alleged, but must be shown by pleading the specific facts upon which the plaintiff claims it relied upon. Maruca v. Phillips, CT Page 9854 139 Conn. 79, 81 (1952). The defendant relies in particular on Judge Skolnick's decision in Chestnut v. Kent, Docket No. CV97-0346653 (April 17, 1998) ( 22 Conn. L. Rptr. 29), 1998 WL 203394. In Chestnut, the court found that plaintiff had alleged the four elements of a claim of fraud (see below), but failed to state specific facts "demonstrating what the representations were or how they were false." Chestnut v. Kent, supra, 1998 WL 203394, at *2. The plaintiff stated that the defendant would fulfill its obligations under the contract, but did not allege what defendant had agreed to do or how its promise to perform had been false. Id. The motion to strike the fraud claim was therefore granted.
Chestnut is distinguishable from the present case, as plaintiff here has alleged what Encon's false representations were and how they were false. First, plaintiff has alleged that "Encon falsely represented to Plaintiffs that Plaintiff would be paid full value for the work which Plaintiff performed on the Project. (Fifth Count, ¶ 15.) Second, plaintiff has alleged that Encon knew this representation was false. (Fifth Count, ¶ 15.) Third, Plaintiff alleges that the misrepresentation was made in order to induce it to perform the necessary work. (Fifth Count, ¶ 16.) Finally, Plaintiff alleges that it relied on defendant's misrepresentation to its detriment. (Fifth Count, ¶ 17.) These allegations go beyond a simple restatement of the required elements of the cause of action. The Court therefore finds that plaintiff has alleged all that it is required to allege to state a claim for fraudulent misrepresentation. Paiva v. Vanech Heights Construction Co., 159 Conn. 512, 515 (1970).
The Fifth Count contains two Paragraphs 15. This allegation appears in the second such paragraph.
The Motion to Strike the Fifth Count is therefore denied.
II. Count Six — Violation of CUTPA
Defendant contends that plaintiff has, in its Sixth Count, simply labeled an alleged breach of contract as an unfair trade practice without stating the necessary elements of a CUTPA claim. It is of course clear that "a simple contract breach is not sufficient to establish a violation of CUTPA." Boulevard Associates v. Sovereign Hotels, Inc., 72 F.3d 1029, 1039 (2nd Cir. 1995). Even an intentional breach of contract does not constitute an unfair trade practice, in the absence of "substantial aggravating circumstances." Emlee Equipment Leasing Corp. v. Waterbury Transmission, Inc., 41 Conn.Sup. 575, 580 (1991) (Blue, J.) ( 3 Conn. L. Rptr. 711).
In the present case, plaintiff has failed to state an actionable claim under CUTPA. The critical allegations are set forth in Paragraph 15 of the Sixth Count, where plaintiff alleges that
Defendant, Encon, violated public policy and was unethical by representing that it would pay Plaintiff, Imperial, fair value for work done by Plaintiff on the Project in a timely manner and by subsequently failing to pay Imperial amounts due to Imperial, including amounts which were not disputed by Encon.
There is no allegation in the Sixth Count that defendant entered into the contract with the intention not to pay plaintiff for its work. All that is alleged here is the breach of a promise to pay the contract price. This is simply insufficient to establish a CUTPA claim. See Designs on Stone, Inc., v. John Brennan Construction Co., Inc., No. CV97-059997, 1998 WL 182406 (April 9, 1998) (Corradino, J.) ( 21 Conn. L. Rptr. 659); A. Secondino Son, Inc. v. L.D. Land Co. No. CV94-0359726, 1994 WL 728775 (December 29, 1994) (Hadden, J.) ( 13 Conn. L. Rptr. 232).
The Motion to Strike the Sixth Count is therefore granted. III. The Economic Loss Doctrine
The defendant has also asserted the "Economic Loss Doctrine" as a basis for striking both the Fifth and Sixth Counts. This doctrine relates to breach of contract claims for which only economic loss is alleged and bars such claimants from bringing tort claims based on such conduct. Flagg Energy Development Corp. v. General Motors Corp., 244 Conn. 126, 153 (1998). The contract at issue in Flagg Energy involved the sale of goods and was governed by the Uniform Commercial Code, which provides remedies for such situations. There is a strong split of authority among Superior Court judges as to whether the "Economic Loss Doctrine" should be extended to construction contracts and other agreements not subject to the UCC.
This Court believes that the "Economic Loss Doctrine" should not be extended beyond situations where the UCC provides the parties to a contract with remedies for a breach thereof. The doctrine is particularly inapplicable to situations such as plaintiff has alleged in its Fifth Count, where the alleged tortious conduct occurred at the time the contract was entered into, to induce the plaintiff to agree to enter into it. Cocchiola Paving, Inc., v. Peterbilt of Southern Connecticut, No. CV01-0168579S, 2003 WL 1227557 (Gallagher, J.). Defendant's contentions regarding the "Economic Loss Doctrine" therefore will not impact the Court's ruling on the Motion to Strike.
The Motion to Strike the Fifth Count is denied. The Motion to Strike the Sixth Count is granted. As parts (iv) and (v) of the prayer for relief involve demand for damages based on the Sixth Count, these portions of the prayer for relief are also stricken.
Miller, J.