Opinion
No. CV-08-5024593
April 8, 2009
MEMORANDUM OF DECISION ON DEFENDANT'S MOTION TO STRIKE (#105)
The defendants have filed a motion to strike the plaintiffs' counts thirteen and fourteen of the complaint, which counts allege "defamation of credit," on the grounds that this cause of action is not recognized in Connecticut and the plaintiffs have not alleged the essential elements of an ordinary defamation claim. In the plaintiffs' operative counts, they allege that the defendants — Partyka Chevrolet, Inc. (Partyka), d/b/a Lee Partyka Chevyland-Mazda, and its employee, Seth Brown — defrauded the plaintiffs into leasing a 2008 Chevrolet Impala from Partyka based on the understanding that the plaintiffs were trading in their 2006 Nissan Pathfinder; that the defendants falsely represented that Partyka would pay off the remainder of the Pathfinder lease and return it to Nissan-Infiniti LT NILT, Inc. (Nissan-Infiniti); and that, as a result, Mrs. Johns defaulted on the lease for the Pathfinder, which negatively affected her credit rating on her credit report. For the reasons stated herein, the court grants the defendants' motion to strike counts thirteen and fourteen of the complaint.
FACTS
The plaintiffs, Morgan Johns and Maria Johns, filed a sixteen-count complaint against the defendants claiming for fraud, negligent misrepresentation, violation of the Connecticut Unfair Trade Practices Act (CUTPA), civil theft, conversion, defamation of credit and unjust enrichment as to both defendants, as well as claims for negligent supervision and breach of contract as to Partyka. The plaintiffs allege the following facts, which are common to all counts and pertinent to the motion at issue.
In April 2008, the plaintiffs visited Partyka and inquired about trading in their 2006 Nissan Pathfinder, which Mrs. Johns was leasing from Nissan-Infiniti, for a 2008 Chevrolet Impala. At that time, Brown, a salesman for Partyka, informed the plaintiffs that Partyka would accept the Pathfinder as a trade-in, that the plaintiffs would be reducing their monthly payments from $433.00 per month to $395.00 per month by purchasing the Impala and that Partyka would return the Pathfinder to Nissan-Infiniti. The plaintiffs then executed several documents with Partyka, including a credit application and a purchase and sales agreement for the Impala, which specifically noted that the Pathfinder would be traded in as part of the purchase of the Impala.
On or about April 29, 2008, after being informed that they had been approved for a loan, the plaintiffs returned to Partyka and met with Partyka's finance manager who informed them that they were approved at a higher interest rate than previously expected because the lease for the Pathfinder was factored into the loan application. Due to the increase in the interest rate on their loan, the plaintiffs were required to execute another purchase and sale agreement and retail installment contract in order to purchase the Impala. Neither document reflected that the plaintiffs were trading in the Pathfinder. Brown then contacted the plaintiffs' insurance agent and instructed him to add the Impala to the plaintiffs' insurance policy and drop the Pathfinder from the policy. The plaintiffs left the Pathfinder at Partyka, provided Brown with its keys, and left the dealership in the Impala. At that time, the Pathfinder's odometer registered approximately 25,000 miles.
In June 2008, the plaintiffs received a "late notice" from Nissan-Infiniti, informing them that they were delinquent on the lease payment for the Pathfinder. Brown informed Mrs. Johns that there must have been a mix up with the paperwork somewhere at Nissan-Infiniti and, subsequently, that Partyka had attempted to pay off the wrong vehicle and that it would take a few days to "clear up." The plaintiffs began receiving phone calls from Nissan-Infiniti informing them that Mrs. Johns had defaulted on her lease agreement by failing to insure the Pathfinder and failing to pay the required lease payments. Mrs. Johns contacted Brown, and he informed her that the problem arose due to Partyka's inadvertent forwarding of a check in the wrong amount to Nissan-Infiniti and that he would send the remainder of the money to Nissan-Infiniti by Western Union. He thereafter provided Mrs. Johns with a copy of a Western Union payment in the amount of $890.00 sent by Partyka to Nissan-Infiniti and dated July 11, 2008.
On August 1, 2008 at approximately 6 a.m., a towtruck driver knocked on Mrs. Johns' door, informing her that he was there to repossess the Pathfinder and inquiring as to its location. Mrs. Johns immediately contacted Brown, who informed her that Partyka was still in possession of the Pathfinder because, while Partyka had planned on turning in the Pathfinder as an "early lease termination," Nissan-Infiniti would not "take it back." Brown also explained that that the "deal" on the Impala was already completed when he discovered that Nissan-Infiniti would not accept the Pathfinder, but that he would pay the remaining balance on the Pathfinder "out of his own pocket."
After speaking with Mrs. Johns on August 1, 2008, Brown contacted an agent at Nissan-Infiniti, Alison Jennings, and obtained a payoff figure for the Pathfinder. Subsequently, Brown informed Mrs. Johns that he had paid off the Pathfinder and provided her with a copy of a FedEx Airbill addressed to Nissan-Infiniti and an accompanying receipt. Nissan-Infiniti thereafter contacted Mrs. Johns and indicated that they had not received payment. Brown informed Mrs. Johns that, at the request of Alison Jennings, he had placed a stop payment on the check and reissued a new check. Rather than mailing a check to Nissan-Infiniti, Brown simply mailed envelopes containing nothing but his business card.
On September 23, 2008, Mrs. Johns received a certified letter from Nissan-Infiiti indicating that the Pathfinder was repossessed from Partyka on September 19, 2008. At this time, the mileage on the Pathfinder was 34,601 miles, which plaintiffs allege suggests that Partyka allowed others to use the Pathfinder for personal transportation after it was traded in on April 29, 2008.
After discovering the repossession of the Pathfinder, Mrs. Johns attempted to contact Brown, but he did not answer the phone or return her calls. She then contacted Joseph Gallagi, general manager of Partyka, who denied that Partyka had ever accepted the Pathfinder as a trade-in. On or about October 28, 2008, Mrs. Johns received notice from Nissan-Infiniti that the Pathfinder was sold at an auction and that the she was responsible for a $10,757.96 deficiency judgment due to her default on the lease.
In the defamation of credit counts, the plaintiffs further allege that Brown and Partyka or its agents "knew or should have known" that their "actions and/or inactions would cause Mrs. Johns to default on the lease for the Pathfinder" and that "such a default would be published and appear on Mrs. Johns' credit report, thereby negatively affecting her credit rating;" that "Mrs. Johns' credit report sufficiently identifies her as well as her perceived creditworthiness to current and potential creditors; "; and that "Mrs. Johns' credit rating, and by consequence her reputation, have been harmed by the publication of the default on the Pathfinder lease."
On January 15, 2009, the defendants filed a motion to strike the plaintiffs' claims for "defamation of credit" on the grounds that such a claim is not recognized in Connecticut and the plaintiffs have not alleged the essential elements of an ordinary defamation claim. On February 17, 2009, the plaintiffs filed an objection to the motion and a memorandum of law in support of the objection.
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). "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.) Rich v. Foye, Superior Court, complex litigation Docket at Waterbury, Docket No. X01 CV 06 5003443 (August 28, 2006, Cremins, J.) (44 Conn. L. Rptr 184, 186).
The court must "construe the complaint in the manner most favorable to sustaining its legal sufficiency." (Internal quotation marks omitted.) Sullivan v. Lake Compounce Theme Park Inc., 277 Conn. 113, 117, 889 A.2d 810 (2006). "[F]or the purpose of a motion to strike, the moving party admits all facts well pleaded." RK Constructors, Inc. v. Fusco Corp., 231 Conn. 381, 383 n. 2, 650 A.2d 153 (1994); see also Ferryman v. Groton, 212 Conn. 138, 142, 561 A.2d 432 (1989). Accordingly, "[i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Batte-Holmgren v. Commissioner of Public Health, 281 Conn. 277, 294, 914 A.2d 996 (2007).
The defendants argue that Connecticut does not recognize a cause of action for defamation or slander of credit; and furthermore, applying a standard defamation analysis to these causes of action, the plaintiffs have not alleged that the defendants published a defamatory statement regarding Mrs. Johns to a third party. The plaintiffs argue that the court should "either adopt the plaintiffs' cause of action for defamation of credit or alternatively extend the `classic' definition of defamation to encompass the element of causation as a replacement for the element of publication."
"Defamation is comprised of the torts of libel and slander. Defamation is that which tends to injure reputation in the popular sense; to diminish the esteem, respect, goodwill or confidence in which the plaintiff is held, or to excite adverse, derogatory, or unpleasant feelings or opinions against him . . . Slander is oral defamation . . . Libel . . . is written defamation." Lowe v. Shelton, 83 Conn.App. 750, CT Page 6394 765, 851 A.2d 1183, cert. denied, 271 Conn. 915, 859 A.2d 568 (2004). "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.) Hopkins v. O'Connor, 282 Conn. 821, 838, 925 A.2d 1030 (2007).
"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. "`Publication,' . . . is a word of art, which includes any communication by the defendant to a third person." Pickering v. St. Mary's Hospital, Superior Court, judicial district of Waterbury, Docket No. CV 05 4002947 (June 29, 2005, Eveleigh, J.) (quoting 3 Restatement (Second), Torts § 652D, comment (a) (1971)).
The plaintiffs argue that the court should recognize a new cause of action for "defamation of credit" and hold that their claim is valid because "there are a variety of other . . . jurisdictions that have adopted causes [of] action based on slander of credit." However, the decisions that have recognized a cause of action for "slander of credit" have made clear that it requires proof of, at a minimum, all the elements of an ordinary slander or defamation cause of action. See, e.g., Federal Deposit Ins. Corp. v. Bathgate, 27 F.3d 850, 871 (3d Cir. 1994) ("The torts of trade libel, slander of credit, and slander of title require `the publication, or communication to a third person, of false statements concerning the plaintiff, his property, or his business.'"); Regent National Bank v. K-C Ins. Premium Finance Co., United States District Court, Docket No. 96-8615, 1997 U.S. Dist. LEXIS 18072, *6 (E.D. Pa. November 13, 1997) ("Slander of credit requires `the publication, or communication to a third person, of false statements concerning the plaintiff, his property, or his business.'"); Musto v. Bell South Telecommunications Corp., 748 So.2d 296, 297 n. 1 (Fla.App. 1999) ("slander of credit [is] 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"); Layton v. Florida Dept. of Highway Safety Motor Vehicles, 676 So.2d 1038, 1040 n. 2 (Fla.App.), review denied, 686 So.2d 579 (1996) ("victims of a false credit report can bring a common law action for defamation").
Moreover, because "[c]redit investigation and reporting agencies enjoy [a] qualified privilege" with regard to credit reports, courts have also required proof of malice in slander of credit cases. (Internal quotation marks omitted.) County Vanlines Inc. v. Experian Information Solutions, Inc., 317 F.Sup.2d 383, 390 (S.D.N.Y. 2004) (applying New York law), aff'd, United States Court of Appeals, Docket No. 04-2982-cv, 2005 U.S. App. LEXIS 25422 (2d Cir. November 22, 2005), cert. denied, 549 U.S. 826, 127 S.Ct. 349, 166 L.Ed.2d 44 (2006); see also Dun Bradstreet, Inc. v. O'Neil, 456 S.W.2d 896, 899 (Tex. 1970) (holding "conditional or qualified" privilege applies, "[t]he effect of [which] is to justify the communication when it is made without actual malice"); Weir v. Equifax Services, Inc., 210 App.Div.2d 944, 620 N.Y.S.2d 675, 677 (1994) ("It is the very function of the qualified privilege to protect the conduct of a credit investigative reporting company."); L. Dietz, 15A Am.Jur.2d 210, Collection and Credit Agencies § 28 (2000) ("reports of mercantile or other credit-reporting agencies, furnished in good faith to one having a legitimate interest in the information, are privileged"). Even were this court inclined to recognize a new cause of action, the plaintiffs have not alleged the requisite malice.
"[B]eginning in the last quarter of the nineteenth century, all but two American jurisdictions, Georgia and Idaho, adopted the theory of qualified privilege for credit reporting agencies in defamation suits." V. Maurer, Common Law Defamation and the Fair Credit Reporting Act, 72 Geo. L.J. 95, 100 (1983). Moreover, § 1681h(e) of the federal Fair Credit Reporting Act ( 15 U.S.C. § 1681 et seq.), "states that a consumer who brings any action or proceeding for defamation, invasion of privacy, or negligence based on information in credit reports [must] prove malice or willful intent to injure on the part of the credit agency in order to recover." (Emphasis added.) Marekh v. Equifax, 2 Fed. Appx. 155, 156 (2d Cir.), cert. denied, 533 U.S. 916, 121 S.Ct. 2522, 150 L.Ed.2d 694 (2001); Benson v. Trans Union, LLC, 387 F.Sup.2d 834, 844 (N.D. Ill. 2005) ("Section 1681h makes consumer reporting agencies qualifiedly immune from state law defamation claims unless a plaintiff can show that the credit reporting agency acted with malice or willful intent to injure.").
The question thus becomes whether the plaintiffs have alleged the required elements of a defamation claim. The plaintiffs' defamation claims allege that the defendants "knew or should have known" that their "actions and/or inactions would cause Mrs. Johns to default on the lease for the Pathfinder" and that "such a default would be published and appear on Mrs. Johns' credit report, thereby negatively affecting her credit rating;" that "Mrs. Johns' credit report sufficiently identifies her as well as her perceived creditworthiness to current and potential creditors;" and that "Mrs. Johns' credit rating, and by consequence her reputation, have been harmed by the publication of the default on the Pathfinder lease."
"While Connecticut jurisprudence has not expanded its interpretation of slander to create a separate cause of action for this specific context, a defamatory statement implicating a plaintiff's credit may still be actionable according to the current interpretation of the tort in Connecticut." Ullerup v. Miezejeski, Superior Court, judicial district of New Haven, Docket No. CV 06 5004625 (May 3, 2007, Cosgrove, J.).
The plaintiffs claim that the defendants' fraudulent conduct caused Mrs. Johns to default on the Pathfinder lease, that Nissan-Infiniti reported the default to one or more credit agencies and that, as a result, those agencies reduced Mrs. Johns' credit rating. However, while the plaintiffs' allegations imply that Nissan-Infiniti and/or one or more credit agencies, nonparties to the present action, published a defamatory statement regarding Mrs. Johns' creditworthiness, the plaintiffs do not allege that the defendants published any defamatory statement. Therefore, the plaintiffs' defamation claims are legally insufficient.
"[A] complaint for defamation must, on its face, specifically identify what allegedly defamatory statements were made, by whom, and to whom." (Internal quotation marks omitted.) Ullerup v. Miezejeski, Superior Court, judicial district of New Haven, Docket No. CV 06 5004625 (May 3, 2007, Cosgrove, J.) (granting defendant's motion to strike). [I]n defamation actions especially, words count, and a premium is placed on the precise words employed . . . Although it is not necessary to allege the exact words of the defamatory statement, the complaint must apprise the defendants of the specific statements that are alleged to be defamatory." (Internal quotation marks omitted.) Id.
The plaintiffs argue that the court must recognize a cause of action for defamation of credit in the present case because Mrs. Johns has no other adequate remedy to "appropriately compensate" her "for the injury she suffered." However, this is not a sufficient basis for this court to adopt an entirely new cause of action.
CONCLUSION
Accordingly, for all the reasons stated herein, the defendants' motion to strike counts thirteen and fourteen of the complaint is GRANTED.