Opinion
No. CV 08-5005405-S
October 27, 2009
MEMORANDUM OF DECISION ON MOTION TO STRIKE
On January 3, 2008, the plaintiff, Beonne Liebig filed a seven-count complaint against the defendants, Andrew Farley and Ameriprise Financial Services, Inc., dba Ameriprise Financial, Inc., fka American Express ("Ameriprise"). The plaintiff alleges the following facts in her complaint. Ameriprise is a financial services company, which employed Farley as an agent and/or employee. Farley was a financial planner/advisor and at all times was acting within the course and scope of that agency and employment. After reading an article in The Day newspaper in July 1995 about elderly homeowners who were in financial trouble and which featured the plaintiff, Farley contacted and convinced the plaintiff to take out a reverse mortgage with TransAmerica HomeFirst, Inc. (predecessor to Financial Freedom Senior Funding Corp.) on her property at 122 School House Road in Mystic. Thereafter, Farley entered into an oral contract with the plaintiff to become her financial advisor. From approximately 1995 through May 2007, the plaintiff relied exclusively on Farley for financial advice whose representation of her between these dates was continuous. Not only did he assist the plaintiff in obtaining a reverse mortgage in the original principal amount of $383,098, but also he "attended the closing" and "serv[ed] as a witness on the Note and Mortgage Deed."
The plaintiff further alleges that Farley invested some of the money from her reverse mortgage with Ameriprise from which he benefitted. At some point in time he rented, below market value, a portion of her house. After the plaintiff's health began failing and she was diagnosed with Parkinson's Disease, Farley set up an online bill paying system for her through Ameriprise. He used the system to pay her bills and manage her investments. A class action lawsuit, which without the plaintiff's knowledge included her, was commenced against TransAmerica on September 2, 2002 alleging fraud, negligent misrepresentation, and unfair and fraudulent business practices as to these reverse mortgages. Farley deposited into her account $6000 from the settlement of the suit, but never disclosed this to her. On June 17, 2007, the plaintiff sold her house for approximately $2.4 million. At the closing, the lender, now Financial Freedom, provided the money to pay off her reverse mortgage for $383,098.54. In addition, the plaintiff paid $1,781,337.05 for noncontingent interest, contingent interest and maturity fees.
The plaintiff further claims that even though Farley had a duty to do so, he did not disclose to her facts about any of his financial benefits from her investments, the unconscionable nature of the reverse mortgage, his below market rental of her property and her unknowing participation in the reverse mortgage settlement lawsuit. Furthermore, the plaintiff alleges that Farley and, by extension, Ameriprise, intentionally withheld the foregoing facts as well as others enumerated in the complaint which constitute fraudulent concealment of causes of action pursuant to General Statutes § 52-595. Finally, the plaintiff alleges in the introductory paragraphs of the complaint which are incorporated by reference into each of the seven counts and within the text of several of the substantive counts themselves that Farley's actions constituted a continuous course of conduct.
As set forth in her complaint, the plaintiff has alleged the following claims: count one (breach of fiduciary duty), count two (breach of contract), count three (breach of the covenant of good faith and fair dealing), count five (negligent handling of investments), and count six (violation of the Connecticut Unfair Trade Practices Act (CUTPA); General Statutes § 42-110a et seq.), against both defendants. In counts four and seven, the plaintiff alleges claims of conversion and unjust enrichment, respectively, against Farley only. In addition, in several paragraphs throughout the complaint including introductory paragraph 19 which is incorporated by reference into each of the seven counts, the plaintiff alleges variations of the terms concealment or fraudulent concealment in connection with the actions of one or both of the defendants.
See Complaint, Introduction, ¶ 19; "First Count — Breach of Fiduciary Duty and Fraudulent Concealment Thereof (As to All Defendants)," ¶¶ 24, 25 and 26; "Second Count — Breach of Contract and Fraudulent Concealment Thereof (As to All Defendants)," ¶¶ 24 and 25; "Third Count — Breach of the Covenant of Good Faith and Fair Dealing and the Fraudulent Concealment Thereof (As to All Defendants)" ¶ 27; "Fourth Count — Conversion and Fraudulent Concealment Thereof (As to the Defendant Andrew T. Farley)" ¶¶ 32 and 33; "Fifth Count — Negligent Handling of Investments and Fraudulent Concealment Thereof (As to All Defendants) ¶ 29;" "Sixth Count — Violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq. (As to All Defendants)" ¶ 29; "Seventh Count — Unjust Enrichment and Fraudulent Concealment Thereof (As to the Defendant Andrew T. Farley)" ¶¶ 32 and 33.
On May 29, 2009, the defendants filed a motion to strike "all fraudulent concealment claims under . . . § 52-595;" counts one through three against Ameriprise, count four against Farley and counts five and six against both defendants on the ground that the plaintiff failed "to sufficiently plead the necessary elements of the respective causes of action." In support of their motion, they submitted a memorandum of law to which the plaintiff filed a responsive memorandum. The matter was heard at short calendar on June 29, 2009. At the suggestion of the court, the defendants filed a supplemental memorandum on July 13, 2009, on the issue of whether a motion to strike may address individual paragraphs or allegations of a complaint.
The defendants have not moved to strike count seven claiming unjust enrichment as to Farley.
"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). Consequently, "[t]he proper method to challenge the legal sufficiency of a complaint is to make a motion to strike prior to trial." Gulack v. Gulack, 30 Conn.App. 305, 309, 620 A.2d 181 (1993), citing Practice Book § 152, now § 10-39. "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.) Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006). Therefore, "[i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) American Progressive Life Health Ins. Co. of New York v. Better Benefits, LLC, 292 Conn. 111, 120, 971 A.2d 17 (2009). On the other hand, "[a] motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." Novametrix Medical Systems v. BOC, Group, Inc., 224 Conn. 210, 215, 618 A.2d 25 (1992).
Fraudulent Concealment
The defendants move to strike portions of each of the seven counts as "legally insufficient [as to] all fraudulent concealment claims under . . . § 52-595" on the ground that the paragraphs in question fail "to allege that the conduct alleged to give rise to such claim was directed to the point of obtaining a delay in the filing of the [c]omplaint." The defendants argue that "[u]nderlying all of [the plaintiff's] claims is her assertion that Farley's conduct constituted `fraudulent concealment,'" which pursuant to § 52-595 "permits the tolling of the applicable statutes of limitations." The defendants point out, however, that the claims of fraudulent concealment fail to allege that the defendants concealed such facts for the purpose of delaying her from bringing suit beyond the applicable statute of limitations. Further, in their supplemental memorandum of law, the defendants argue that the motion to strike is proper in the present case to challenge the plaintiff's claim of fraudulent concealment in each of the seven counts even though that claim was not set forth as a separate cause of action.
Section 52-595, entitled "[f]raudulent concealment of cause of action," provides: "If any person, liable to an action by another, fraudulently conceals from him the existence of the cause of such action, such cause of action shall be deemed to accrue against such person so liable therefor at the time when the person entitled to sue thereon first discovers its existence." If established, a claim of fraudulent concealment, in effect, tolls the statute of limitations. See Savings Institute v. Connecticut Financial Network, Inc., Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. CV 93 530735 (September 30, 1994, Corradino, J.). In actions involving allegations of fraudulent concealment, "[t]he question before [the court] is whether the [plaintiff] [has] adduced any credible evidence that any of the defendants fraudulently concealed the existence of the [plaintiff's] cause of action. To meet this burden, it [is] not sufficient for the [plaintiff] to prove merely that it was more likely than not that the defendants had concealed the cause of action. Instead, the [plaintiff] [has] to prove fraudulent concealment by the more exacting standard of clear, precise, and unequivocal evidence." (Internal quotation marks omitted.) Bartone v. Robert L. Day Co., 232 Conn. 527, 532-33, 656 A.2d 221 (1995). The plaintiff must show that the defendants "(1) had actual awareness, rather than imputed knowledge, of the facts necessary to establish the [plaintiff's] cause of action; (2) intentionally concealed these facts from the [plaintiff]; and (3) concealed the facts for the purpose of obtaining delay on the [plaintiff's] part in filing a complaint on [her] cause of action." Falls Church Group, Ltd. v. Tyler, Cooper Alcorn, LLP, 281 Conn. 84, 105, 912 A.2d 1019 (2007).
In the present case, the defendants' motion to strike is an improper mechanism to strike the paragraphs claiming fraudulent concealment within the seven substantive counts of the complaint for several reasons. First, a claim of fraudulent concealment does not constitute a separate, self-contained cause of action is not properly subject to a motion to strike. Second, although the defendants filed a total of forty-four (44) requests to revise in a ninety-three (93) page document, which included requests to separate the claims against Farley and Ameriprise, the defendants never sought to separate out the claim(s) of fraudulent concealment although separation of claims is one of the specific purposes of a request to revise. See Practice Book § 10-35(3) ("separation of causes of action which may be united in one complaint when they are improperly combined in one count"). Not having made this request, the defendants have waived their right to seek such a revision by way of a motion to strike. Denominating a pleading a motion to strike does not make it any less of a request to revise. See Practice Book § 10-38. Finally, it is not apparent on the face of the complaint that any of the seven substantive counts may be barred by the statute of limitations necessitating the pleading and proof of fraudulent concealment because the plaintiff has alleged, in the introductory paragraphs incorporated by reference into each count, Farley's continuous representation of her and that his actions constituted a continuous course of action from approximately 1995 to May 2007. Therefore, with the possible exception of the CUTPA count, the defendants must raise any defense of statute of limitations only by way of answer and special defense pursuant to Practice Book § 10-50, and not by way of a motion to strike.
"Connecticut courts have held that it is generally improper to attack specific paragraphs of a pleading on a motion to strike." (Internal quotation marks omitted.) Morgan v. Hartford Hospital, Superior Court, complex litigation docket of Hartford, Docket No. X03 CV 07 5009731 (July 21, 2008, Langenbach, J.T.R.). "Although there is a split of authority, most trial courts follow the rule that a single paragraph of a pleading is subject to a motion to strike only when it attempts to set forth all of the essential allegations of a cause of action or defense . . . [O]nly an entire count of a counterclaim or an entire special defense can be subject to a motion to strike, unless the individual paragraph embodies an entire cause of action or defense . . . Prior to the 1978 Practice Book revision, a motion to strike . . . individual portions or paragraphs of a count did not lie if the count as a whole stated a cause of action . . . Arguably under the present rules, a motion to strike may properly lie with respect to an individual paragraph in a count . . . However, the weight of authority in the Superior Court is that the motion does not lie, except possibly where the subject paragraph attempts to state a cause of action." (Internal quotation marks omitted.) Wright v. 860 Main, LLC, Superior Court, judicial district of Hartford, Docket No. CV 06 5007079 (May 21, 2007, Tanzer, J.) ( 43 Conn. L. Rptr. 458). In fact, based on the plain language of § 52-595, fraudulent concealment is not a cause of action at all. Rather, it is a statutory mechanism which permits a plaintiff to toll the statute of limitations.
Section 10-38 of the Practice Book provides as follows: "Whenever any party files any request to revise or any subsequent motion or pleading in the sequence provided in Sections 10-6 and 10-7, that party thereby waives any right to seek any further pleading revisions which that party might then have requested."
The court notes that the return day of the complaint is January 22, 2009, well within two years of the end date of the continuous course of conduct alleged.
"In two limited situations . . . [the court] will allow the use of a motion to strike to raise the defense of the statute of limitations. The first is when [t]he parties agree that the complaint sets forth all the facts pertinent to the question whether the action is barred by the Statute of Limitations and that, therefore, it is proper to raise that question by [a motion to strike] instead of by answer . . . The second is where a statute gives a right of action which did not exist at common law, and fixes the time within which the right must be enforced, the time fixed is a limitation or condition attached to the right — it is a limitation of the liability itself as created, and not of the remedy alone." (Citation omitted; internal quotation marks omitted.) Forbes v. Ballaro, 31 Conn.App. 235, 239-40, 624 A.2d 389 (1993). Neither exception applies to any of the counts except the CUTPA count (six), a statutory cause of action which did not exist at common law which fixes the time as three years within which it must be enforced. However, because the plaintiff has also alleged a continuous relationship with Farley and Ameriprise and a course of conduct by them until May 2007 as to all seven counts of the complaint which would toll the statute of limitations, even as to the CUTPA claim, a motion to strike is not proper. See White Oak Corp. v. American International Group, Inc., Superior Court, judicial district of Hartford, Docket No. 4027319 (Shortall, J., July 6, 2009) [ 48 Conn. L. Rptr. 198] (even in a CUTPA action a statute of limitations claim can be addressed in a motion to strike where a plaintiff alleges facts in support of a continuing course of conduct). For some or all of the foregoing reasons, even though there may be nuances that may apply to the various counts which were not raised by the defendants, the motion to strike the paragraphs as to fraudulent concealment must be denied.
"The purpose of the general rule prohibiting the use of a motion to strike to raise a statute of limitations defense is to give the plaintiff an opportunity to plead fraudulent concealment in avoidance of the statute of [limitations]." (Internal quotation marks omitted.) Cassidento v. Mathis, Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. 537124 (January 24, 1996, Aurigemma, J.). A plaintiff need not "plead facts in anticipation of the defense of statute of limitations." Forbes v. Ballaro, supra, 31 Conn.App. 241 n. 9. In addition, where the claim of tolling of the statute of limitations raises facts outside the pleadings, it cannot be resolved by a motion to strike. Savings Institute v. Connecticut Financial Network, Inc., supra, Superior Court, Docket No. CV 93 530735.
Count One — Breach of Fiduciary Duty against Ameriprise
Ameriprise moves to strike count one on the ground that the plaintiff has not sufficiently alleged any fiduciary duties it owed to the plaintiff other than a "bald assertion that Ameriprise . . . employed Mr. Farley and [that they] were [the plaintiff's] fiduciaries" and that as "a direct and proximate result of the breach of fiduciary duty and fraudulent concealment thereof by the [d]efendants, the plaintiff has sustained damages . . ." Ameriprise argues that all of the allegations in count one relate only to Farley's alleged conduct and that there are no allegations concerning conduct by Ameriprise at all "except for the merely conclusory allegation that Mr. Farley's `concealment' of his alleged breaches constituted a continuous course of conduct that prevented Plaintiff's discovery of the Defendants' breach of fiduciary duty." (Emphasis original.) (Defendants' Memorandum in Support of Motion to Strike, p. 11.) In response, the plaintiff counters that Farley, as the plaintiff's financial advisor, was acting within the scope of his employment as an agent, servant or employee of Ameriprise, and, as a consequence, she has sufficiently set forth the allegations that constitute a breach of fiduciary duty against Ameriprise.
"To assert a claim for breach of a fiduciary duty the plaintiff has the burden of proving the existence of a fiduciary relationship." (Internal quotation marks omitted.) Golek v. St. Mary's Hospital, Superior Court, judicial district of Waterbury, Docket No. CV 08 5007118 (August 22, 2008, Roche, J.). In addition, our supreme court has purposefully left open the definition of a fiduciary noting that "[i]t is well settled that a fiduciary or confidential relationship is characterized by a unique degree of trust and confidence between the parties, one of whom has superior knowledge, skill or expertise and is under a duty to represent the interests of the other . . . Although this court has refrained from defining a fiduciary relationship in precise detail and in such a manner as to exclude new situations . . . we have recognized that not all business relationships implicate the duty of a fiduciary . . . in particular instances, certain relationships, as a matter of law, do not impose upon either party the duty of a fiduciary." (Citations omitted; internal quotation marks omitted.) Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 38, 761 A.2d 1268 (2002).
"In the seminal cases in which this court has recognized the existence of a fiduciary relationship, the fiduciary was either in a dominant position, thereby creating a relationship of dependency, or was under a specific duty to act for the benefit of another." Hi-Ho Tower, Inc. v. Com-Tronics, Inc., supra, 255 Conn. 38. On the other hand, "[i]n the cases in which this court has, as a matter of law, refused to recognize a fiduciary relationship, the parties were either dealing at arm's length, thereby lacking a relationship of dominance and dependence, or the parties were not engaged in a relationship of special trust and confidence." Id., 39. Furthermore, "[t]he law will imply [fiduciary responsibilities] only where one party to a relationship is unable to fully protect its interests [or where one party has a high degree of control over the property or subject matter of another] and the unprotected party has placed its trust and confidence in the other." (Internal quotation marks omitted.) Id., 41. "The fact that one business person trusts another and relies on [the person] to perform [its obligations] does not rise to the level of a confidential relationship for purposes of establishing a fiduciary duty." (Internal quotation marks omitted.) Id.
It is inappropriate to decide a question of fact on a motion to strike . . . It is appropriate, however, for this court to decide whether the plaintiff . . . has [pleaded] sufficient facts to allege a fiduciary relationship." (Internal quotation marks omitted.) Charter Oak Fire Ins. Co. v. Blue Sky Partnership, Superior Court, judicial district of Hartford, Docket No. CV 00 0596646 (August 30, 2001, Berger, J.). The plaintiff has alleged that Ameriprise is a financial services business that employed Farley as a financial advisor which resulted in Ameriprise and Farley becoming her fiduciaries; that at "all times relevant hereto Mr. Farley was an agent and/or employee of Ameriprise . . . and at all times was acting within the scope of that agency and employment" and that as "a direct and proximate result of the breach of fiduciary duty and the fraudulent concealment thereof by Defendants as set forth above, the Plaintiff has sustained damages in a sum presently unascertained, but in an amount to be shown according to proof at the time of trial." Interpreting the plaintiff's claims broadly as the court is required to do, the allegations of count one, including the introductory paragraphs incorporated therein, demonstrate that she was a passive investor and relied on the expertise and knowledge of Farley as her financial planner and/or advisor who was working for Ameriprise. By claiming that Farley acted in the scope of his employment and was employed by Ameriprise, she has adequately set forth factual allegations to demonstrate that Ameriprise is liable for the alleged breaches of duty and misconduct of Farley. In addition, her relationship with Ameriprise through Farley is one involving a unique degree of trust and confidence, and superior knowledge, skill or expertise of Ameriprise in relation to her. As such, the plaintiff has adequately pleaded the basis of a fiduciary relationship with Ameriprise. Therefore, the motion to strike count one must be denied.
Although paragraph 4 of the introductory portion of the complaint says "financial planner," throughout the complaint, it is clear that the plaintiff claims that Farley is a "financial advisor as well. For purposes of the motion to strike, any distinction is immaterial.
CT Page 8836
Count Two — Breach of Contract and Count Three — Breach of Good Faith and Fair Dealing against Ameriprise
The defendants move to strike the second and third counts on the ground that they fail to state a claim for breach of contract and covenant of good faith and fair dealing, respectively, against Ameriprise because the plaintiff does not allege the existence of a contract between herself and Ameriprise. The plaintiff asserts that her allegations in the complaint of an oral contract with Farley who, at all times, was acting within the scope of his employment with Ameriprise, sufficiently state the existence of a contract with Ameriprise.The required elements of a common-law "breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages." (Internal quotation marks omitted.) Rosato v. Mascardo, 82 Conn.App. 396, 411, 844 A.2d 893 (2004). Further "it is axiomatic that the . . . duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship . . . In other words, every contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement . . . The covenant of good faith and fair dealing presupposes that the terms and purpose of the contract are agreed upon by the parties and that what is in dispute is a party's discretionary application or interpretation of a contract term." (Internal quotation marks omitted.) Landry v. Spitz, 102 Conn.App. 34, 42, 925 A.2d 334 (2007). "[A]n action for breach of the covenant of good faith and fair dealing requires proof of three essential elements, which the plaintiff must duly plead: first, that the plaintiff and the defendant were parties to a contract under which the plaintiff reasonably expected to receive certain benefits; second, that the defendant engaged in conduct that injured the [plaintiff's] right to receive some or all of those benefits; and third, that when committing the acts by which it injured the [plaintiff's] right to receive benefits it reasonably expected to receive under the contract, the defendant was acting in bad faith." ShareAmerica, Inc. v. Ernst Young, Superior Court, judicial district of Waterbury, Docket No. CV 93 0150132 (July 2, 1999, Sheldon, J.).
Count two, including paragraphs incorporated therein, alleges that by entering into an oral contract with Farley he became her financial advisor and that she relied on him exclusively for financial advice. She further alleges that he derived financial benefit from their agreement and that he breached his contractual duties to her in one or more of several ways detailed in the paragraphs of this count. The plaintiff also alleges that, at all times, the actions of Farley occurred during the course and scope of his employment with Ameriprise, and, as a consequence, Ameriprise is also liable for breach of contract. Finally, since the plaintiff has sufficiently alleged a cause of action for breach of her contract with defendants and further alleges that she expected to receive a financial benefit from that contract but was financially injured by acts that constitute bad faith, she has also sufficiently stated a claim of breach of the covenant of good faith and fair dealing as to both Farley and Ameriprise. Therefore, the defendants' motion to strike counts two and three must also be denied.
Count Four — Conversion Against Farley
The defendants move to strike count four (conversion) against Farley on the ground that it fails to allege that Farley "assumed and exercised the right of ownership over goods belonging to her or that his actions deprived her of her property permanently for an indefinite time. Specifically, the defendants argue that other than using the word conversion, this count lacks allegations that Farley "was not authorized to invest the proceeds of the Reverse Mortgage and/or to occupy the premises at the rent agreed to." In response, the plaintiff claims count four alleges that Farley "unlawfully misappropriated and converted both proceeds from [the] plaintiff's reverse mortgage and the difference in the below market rent he paid, to his own personal advantage . . . [which is] the very heart of a conversion claim."
"The tort of [c]onversion occurs when one, without authorization, assumes and exercises ownership over property belonging to another, to the exclusion of the owner's rights . . . Thus, [c]onversion is some unauthorized act which deprives another of his property permanently or for an indefinite time; some unauthorized assumption and exercise of the powers of the owner to his harm. The essence of the wrong is that the property rights of the plaintiff have been dealt with in a manner adverse to him, inconsistent with his right of dominion and to his harm." (Citation omitted; internal quotation marks omitted.) Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745, 770-71, 905 A.2d 623 (2006). "The intent required for a conversion is . . . an intent to exercise dominion or control over an item . . ." Plikus v. Plikus, 26 Conn.App. 174, 180, 599 A.2d 392 (1991).
The plaintiff essentially alleges in count four, and the paragraphs therein incorporated by reference, that Farley convinced her to purchase a reverse mortgage which was detrimental to her financial well-being, invested the proceeds of the mortgage with Ameriprise from whom he derived a personal advantage in the form of a commission, bonus or other compensation, the details of which he did not disclose to her; that he gained personal advantage by paying below-market rent to her for a property she owned and that he received $6,000 from the settlement of a reverse mortgage class action lawsuit which he deposited into her Ameriprise account. Although the factual allegations allege financial detriment to the plaintiff caused by the actions of Farley on her behalf, there are no factual allegations to support her conclusory claims that he misappropriated, assumed or exercised ownership over her property or with her right to dominion over the property in question. Because there are insufficient facts stated to support her claim of conversion, the motion to strike count four is granted.
Count Five — Negligent Handling of Investments Against Both Defendants
Research reveals no cause of action entitled negligent handling of investments. Rather the cause of action is negligence. See Miller v. Inverness Corp., Superior Court, complex litigation docket at Tolland, Docket No. X__ CV 98 0071530 (October 18, 2000, Bishop, J.).
The defendants move to strike count five on the ground that the plaintiff has insufficiently alleged the element of duty. The plaintiff counters that she has alleged that the "defendants negligently handled all of [the] plaintiff's investments"; and that Farley, with whom she had a fiduciary relationship, which extended to Ameriprise, had a duty to provide her with financial advice and that this duty encompassed any and all dealings regarding her house, the reverse mortgage, the resulting class action lawsuit and damages.
The "essential elements of a cause of action in negligence are well established: duty; breach of that duty; causation; and actual injury." (Internal quotation marks omitted.) Right v. Breen, 277 Coun. 364, 372, 890 A.2d 1287 (2006). "A duty to use care may arise from a contract, from a [s]tatute, or from circumstances under which a reasonable person, knowing what he knew or should have known, would anticipate that harm of the general nature of that suffered was likely to result from his act or failure to act." Coburn v. Lenox Homes, 186 Conn. 370, 375, 441 A.2d 620 (1982). In count five, and the paragraphs incorporated by reference therein, the plaintiff has alleged that the defendants owed her a duty of care as her financial advisor, that they breached that duty by recommending a reverse mortgage and in their investment of the proceeds therefrom, and that as a result of this breach she has suffered substantial financial damage. Viewing the allegations of the complaint in the light most advantageous to the plaintiff and in favor of sustaining the legal sufficiency of count five, the plaintiff has sufficiently stated a claim of negligence. Therefore, the defendants' motion to strike count five is denied.
Count Six — CUTPA Against Both Defendants CT Page 8839
The defendants move to strike count six based on the ground that the plaintiff's allegation "[b]y breaching their contractual duties to Ms. Liebig, the Defendants committed unfair and deceptive acts of trade practices as defined in General Statutes § 42-110b," does not amount to a violation of CUTPA without allegations of aggravating circumstances. The defendants assert that the plaintiff's failure to include an allegation of any wrongdoing, other than a breach of contract, is legally insufficient. In the alternative, the defendants assert that the complaint fails to allege when the claimed CUTPA violations occurred and, since CUTPA provides for a three-year statute of limitation, any violation of CUTPA prior to December 17, 2004 is time barred. The plaintiff counters that she has sufficiently pleaded a claim under CUTPA because she is one of those persons who the legislature intended CUTPA to benefit. In addition she argues that she has pleaded that the amount owed on her reverse mortgage at the time of the sale of her house was over $1.7 million dollars with interest and maturity fees, that she unknowingly participated in the reverse mortgage class action lawsuit and that Farley moved into her house paying less than market value rent for it, which when taken together "constitute aggravating circumstances."General Statutes § 42-110b provides in part 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." "A CUTPA claim may not be premised on a simple breach of contract, that is, one in which there are no aggravating factors under parts two or three of the cigarette rule . . . The burdens and risks inherent in contract formation would be intolerably increased if every simple breach of contract claim were to be made the basis of a CUTPA violation . . . [A] breach of contract claim can make out a legally sufficient CUTPA claim as long as there are substantial aggravating circumstances . . . Where the plaintiff alleges sufficient aggravating circumstances, beyond a mere breach of contract that may bring the case within the cigarette rule, the CUTPA claim may withstand a motion [to strike]." (Citations omitted; internal quotation marks omitted.) Alliance Food Management Corp. v. Gems Sensors, Inc., Superior Court, judicial district of Waterbury, Docket No. CV 06 5002996 (June 12, 2007, Gallagher, J.).
"Our Supreme Court has 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 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.) Ventres v. Goodspeed Airport, LLC, 275 Conn. 105, 155, 881 A.2d 937 (2005), cert. denied, 547 U.S. 1111, 126 S.Ct. 1913, 164 L.Ed.2d 664 (2006).
"Although there is a split of authority in the Superior Courts regarding what is necessary to establish a CUTPA claim for breach of contract, the vast majority of Superior Court decisions [conclude] that, absent allegations of sufficient aggravating circumstances, [a] simple breach of contract, even if intentional, does not amount to a violation of [CUTPA]." (Internal quotation marks omitted.) Centimark Corp. v. Village Manor Associates, Superior Court, judicial district of Windham, Docket No. CV 03 0070166 (June 21, 2007, Martin, J.). "Moreover, [a] simple contract breach is not sufficient to establish violation of CUTPA . . . where a count simply incorporates the reference to the breach of contract claim and does not set forth how or in what respect the defendant's activities are either immoral, unethical, unscrupulous, or offensive to public policy." (Internal quotation marks omitted.) Bluezone Foundation v. Paradise Properties, Superior Court, judicial district of New London, Docket No. 555904 (July 24, 2001, Hurley, J.T.R.).
In Mungham v. Prudential Home Mortgage Co., Superior Court, judicial district of Fairfield, Docket No. CV 96 03056 (July 3, 1996, Tierney J.), the court set forth the following guidelines on how to properly allege a CUTPA count: "1) A recitation of one of the three statutory prohibitions claimed under Connecticut General Statutes § 42-110b(a), i.e.; a) unfair methods of competition, or b) unfair acts or practices in the conduct of any trade or commerce, or c) deceptive acts or practice in the conduct of any trade or commerce. 2) If a) state the specifics of the `competition.' 3) If either b) or c) state the specifics of the `trade' or `commerce.' 4) The statutory citations must be referred to as required by Practice Book [§ 10-3] including other statutory references that by definition are per se CUTPA violation . . . 5) A factual statement of the specific acts alleged to be either unfair competition, unfair acts or deceptive acts taking into consideration the specific requirements of the case law relating thereto (the incorporation by reference of prior allegations in prior counts should not be sufficient to comply with this requirement). Web Press Services [Corp.] v. New London Motors, Inc., [ 203 Conn. 342, 355, 525 A.2d 57] (1987). 6) An allegation of an `ascertainable loss of money or property, real or personal Connecticut General Statutes § 42-110a(a). 7) The specific facts upon which that ascertainable loss can be measured. Hinchiffe v. American Motors [Corp.], 184 Conn. 607, 613, 440 A.2d 810] (1981)."
In count six of the present case, the plaintiff incorporated by reference all of the paragraphs from count two, the breach of contract claim. The plaintiff further alleges that "the Defendants were engaged in trade or commerce within the meaning of General Statutes § 42-110a(4);" that [b]y breaching their contractual duties to [the plaintiff], the Defendants committed unfair and deceptive acts of trade practices as defined in General Statutes § 42-110b;" and that "[a]s a direct and proximate result of [the] Defendants' misconduct and fraudulent concealment thereof as set forth above, the Plaintiff has sustained damages in a sum presently unascertained, but in an amount to be shown according to proof at the time of trial." The plaintiff has not alleged any specific acts constituting aggravating factors as to the formation or in the breach of contract which are unfair or deceptive acts within the meaning of CUTPA. As a result, the defendants' motion to strike count six as to both defendants must be granted.
CONCLUSION
Accordingly, for all the foregoing reasons, the motion to strike the portions of each count alleging fraudulent concealment and the motion to strike counts one, two, three and five are hereby denied. The motion to strike counts four and six are hereby granted.