Opinion
HHDCV196109743S
09-17-2019
Debnath MAHATO v. Chetan K. KHADKA
UNPUBLISHED OPINION
September 18, 2019
Mark H. Taylor, Judge.
I
BACKGROUND
The defendant, Chetan Khadka, filed a motion to strike counts three and four of the plaintiff, Debnath Mahato’s amended complaint, dated June 12, 2019. The plaintiff objects and the parties were heard by the court on September 9, 2019. For the reasons set forth in this memorandum of decision, the motion to strike is granted.
The plaintiff’s complaint arises from a business dispute over the dissolution of the parties’ alleged limited liability company, in which the parties shared equally in the expenses and profits from the purchase and rehabilitation of residential properties. Am. Compl. ¶¶3-4. The parties subsequently "decided to part ways and negotiated a written agreement to make the Plaintiff whole and reimburse him for funds and profit share he was entitled to but [did] not [receive]." Id., ¶5.
Based upon these facts and the written agreement of the parties, the plaintiff alleges a breach of contract and unjust enrichment claim in the amount of $41,125. The plaintiff further alleges conversion and statutory theft in counts three and four, respectively, which are the subject of the defendant’s motion to strike. The defendant argues that conversion and statutory theft cannot arise from a claim for money owed on an alleged debt as a matter of law. The plaintiff counters that the complaint alleges more than a claim for a repayment of debt, that the facts will reveal that the parties owned business property in common, and that he sufficiently alleges that the defendant has "wrongfully taken, converted, obtained and/or withheld the profit and equity in the assets due to Plaintiff without compensation, permission or other lawful authority." Id., ¶¶8 (Counts 3-4).
In count four, the plaintiff additionally alleges that the defendant intended to permanently deprive him of property for purposes of statutory theft.
II
DISCUSSION
A
Motion to Strike
The legal standard applicable to motions to strike are well known. "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 ... A motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court ... We take the facts to be those alleged in the complaint ... 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 ... A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Citations omitted; internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498 (2003); see Practice Book § 10-39.
B
Conversion and Theft
The question presented in this matter is whether the complaint is based upon money owed for a debt or upon a claim of conversion or theft of specific property or money. "Although our case law is clear that a claim for money, not just tangible goods, may be the subject of conversion or statutory theft, a claim for money owed on a debt is not sufficient to establish such causes of action." Mystic Color Lab, Inc. v. Auctions Worldwide, LLC, 284 Conn. 408, 421 (2007). In Mystic Color Lab, the Supreme Court relied upon the holding and analysis of the then-recent case of Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745 (2006), which set forth the distinguishable nature of claims for debts owed and claims of conversion and statutory theft.
In Deming, the court stated that "[t]he 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 ... The term owner is one of general application and includes one having an interest other than the full legal and beneficial title ... The word owner is one of flexible meaning, and it varies from an absolute proprietary interest to a mere possessory right ... It is not a technical term and, thus, is not confined to a person who has the absolute right in a chattel, but also applies to a person who has possession and control thereof ...
"Statutory theft under § 52-564 is synonymous with larceny under General Statutes § 53a-119 ... Pursuant to § 53a-119, [a] person commits larceny when, with intent to deprive another of property or to appropriate the same to himself or a third person, he wrongfully takes, obtains or [withholds] such property from an owner ... Conversion can be distinguished from statutory theft as established by § 53a-119 in two ways. First, statutory theft requires an intent to deprive another of his property; second, conversion requires the owner to be harmed by a defendant’s conduct. Therefore, statutory theft requires a plaintiff to prove the additional element of intent over and above what he or she must demonstrate to prove conversion ...
"Under our case law, [m]oney can clearly be subject to conversion ... Similarly, money can be the subject of statutory theft ... The plaintiffs must establish, however, legal ownership or right to possession of specifically identifiable moneys ... In Macomber [v. Travelers Property & Casualty Corp., 261 Conn. 620, 650, 804 A.2d 180 (2002)] we cited approvingly case law from other jurisdictions setting forth the general rule that, [a]n action for conversion of funds may not be maintained to satisfy a mere obligation to pay money ... It must be shown that the money claimed, or its equivalent, at all times belonged to the plaintiff and that the defendant converted it to his own use ... Thus, [t]he requirement that the money be identified as a specific chattel does not permit as a subject of conversion an indebtedness which may be discharged by the payment of money generally ... A mere obligation to pay money may not be enforced by a conversion action ... and an action in tort is inappropriate where the basis of the suit is a contract, either express or implied ... Consistent with this rule, in our case law sustaining a cause of action wherein money was the subject of the conversion or theft, the plaintiffs in those cases at one time had possession of, or legal title to, the money ." Deming v. Nationwide Mutual Ins. Co., supra, 279 Conn. 770-72. (Citations omitted; emphasis added; internal quotation marks omitted.)
Although not entirely on point with the facts of the present case, Sullivan v. Thorndike, 104 Conn.App. 297 (2007) illustrates the problem with basing a conversion or statutory theft claim on the repayment of an alleged debt. In Sullivan, the parties agreed to form a limited liability company for the purpose of buying and selling certain pieces of real estate. Properties were bought and sold through the defendant’s separate limited liability company and the plaintiff lent $82,000 to that entity toward the purchase of the properties, later secured by a note. The defendant then mortgaged one of the properties without the consent of the plaintiff and converted the entire proceeds of the mortgage for his own use and benefit, while still owing the plaintiff $78,655.24 on the note. In Sullivan, the Appellate Court held that "[a] plaintiff must establish legal ownership or right to possession in the particular thing, the specifically identifiable [property], that the defendant is alleged to have converted." (Internal quotation marks omitted.) Id., 308-09.
In evaluating the pleadings of the parties in the present case, it is not specifically alleged that the plaintiff held title to the property converted, as is required for allegations of conversion and theft. Further, by agreement of the parties, the plaintiff’s interest in the business was transformed into a debt. The plaintiff’s claim is thus based upon a contract, either express or implied, and therefore cannot give rise to the tortious claims of conversion or theft. Although a contract may otherwise be fraudulently or deceptively induced, the agreement to transform an ownership interest in specific property into a debt appears to preclude the plaintiff’s allegations of conversion and statutory theft under our Supreme Court’s analysis in Deming.
III.
CONCLUSION
The motion to strike is granted.