Summary
finding that an allegation of multiple breaches of contract was sufficient to state a claim under CUTPA
Summary of this case from Medpricer.Com Inc. v. Becton, Dickinson & Co.Opinion
No. CV 095013770
March 31, 2010
MEMORANDUM OF DECISION RE MOTION TO STRIKE NO. 101
This action was commenced by the plaintiff, Metropolitan Trucking, on November 12, 2009. The defendant, Rand-Whitney Containerboard, L.P., has now filed a motion to strike counts three and four of the plaintiff's complaint, as well as the corresponding portions of the prayer for relief. For the following reasons, the motion is denied in its entirety.
While neither the summons nor the caption of the complaint in this action provides the plaintiff's full organizational name, the allegations of the first count of the complaint identify the plaintiff as a New Jersey corporation.
I. Background
The plaintiff's complaint is comprised of four counts, the first setting forth a claim for breach of contract; the second for unjust enrichment; the third for violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110 et. seq.; and the fourth, brought pursuant to General Statutes § 52-564, for civil theft. In connection with the CUTPA claim, paragraph three of the plaintiff's prayer for relief seeks "monetary damages, punitive damages, and attorneys fees." Paragraph four of the prayer for relief seeks treble damages pursuant to the civil theft claim.
General Statutes § 52-564 provides: "Any person who steals any property of another, or knowingly receives and conceals stolen property, shall pay the owner treble his damages.
The complaint's general allegations are contained within counts one and two. In those counts, the plaintiff alleges that it is in the business of providing its customers with freight carrier services, and that in or around September 2008 it agreed to provide such services to the defendant. The plaintiff alleges that the parties' agreement required it to retrieve freight from the defendant's Montville, Connecticut manufacturing and distribution facility, and deliver it "to various destinations within the continental United States . . . in exchange for payment from the defendant." In conjunction with this agreement, the plaintiff maintains that the defendant issued it straight bills of lading, that it then performed by making the requested deliveries, and that it thereafter tendered invoices to the defendant reflecting completion of such services. However, despite receiving the benefit of these services, the plaintiff alleges that "[t]he defendant . . . breached its contractual obligations . . . inasmuch as it refused and neglected to tender payment for the freight carrier services . . ." The plaintiff contends that it notified the defendant of its breach and demanded payment, but that, to date, no such payment has been received.
Again, the defendant's motion to strike targets only counts three and four of the complaint, as well as the corresponding portions of the prayer for relief. Count three, which attempts to assert a violation of CUTPA, incorporates the allegations of counts one and two. It then further alleges that "[t]he defendant's refusal to tender payment for freight carrier services performed by the plaintiff pursuant to bills of lading issued by the defendant and in accordance therewith constitutes an unfair and/or deceptive act or practice on the part of the defendant, in violation of [General Statutes] § 42-110b." Count four, which attempts to set forth a claim for statutory theft, also incorporates the allegations of counts one and two, and then avers that "[t]he defendant never intended to pay for the services . . . and instead intended to permanently and wrongfully appropriate such services for its exclusive use." It contends that "[t]his permanent and wrongful appropriation of services on the part of the defendant . . . constitutes a theft of such services within the meaning of [§]52-564 . . ."
General Statutes § 42-110b provides in relevant part: "(a) No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce . . ."
The defendant filed the present motion to strike on December 22, 2009, arguing that counts three and four are legally insufficient as pleaded, and that they, along with the corresponding portions of the prayer for relief, must therefore be stricken. The plaintiff filed an objection on January 19, 2010, and the parties appeared before the court to present argument on that same day. The plaintiff filed a memorandum of law thereafter, on February 19, 2010.
II. 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). "[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). 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." (Internal quotation marks omitted.) CT Page 8108 Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).
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). "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Broadnax v. New Haven, 270 Conn. 133, 173, 851 A.2d 1113 (2004). "Moreover . . . [w]hat is necessarily implied [in an allegation] need not be expressly alleged . . ." (Citation omitted; internal quotation marks omitted.) Lombard v. Edward J. Peters, Jr., P.C., 252 Conn. 623, 626, 749 A.2d 630 (2000). Finally, Practice Book § 10-39 "allows for a claim for relief to be stricken . . . if the relief sought could not be legally awarded." Pamela B. v. Ment, 244 Conn. 296, 325, 709 A.2d 1089 (1998).
A. Count Three: Violation of CUTPA
The defendant moves to strike count three on the ground that the plaintiff fails to allege facts to support a CUTPA claim. Specifically, the defendant argues that the plaintiff has merely alleged a simple breach of contract, which, standing alone, is insufficient to support a claim for violation of CUTPA.
"[General Statutes §] 42-110b(a) provides 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. It is well settled that in determining whether a practice violates CUTPA we have 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 businesspersons] . . . 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, 154-55, 881 A.2d 937 (2005), cert. denied, 547 U.S. 1111, 126 S.Ct. 1913, 164 L.Ed.2d 664 (2006).
In the present case, the defendant, quoting Greene v. Orsini, CT Page 8109 50 Conn.Sup. 312, 315, 926 A.2d 708 (2007), notes that while "[t]here is a split of authority in Superior Court decisions regarding what is necessary to establish a CUTPA claim for breach of contract, the majority of courts [hold] that a simple breach of contract, even if intentional, does not amount to a violation of CUTPA in the absence of substantial aggravating circumstances." (Internal quotation marks omitted.) This is because "[a] simple breach of contract does not offend traditional notions of fairness and, standing alone, does not offend public policy so as to invoke CUTPA. A CUTPA claim lies where the facts alleged support a claim for more than a mere breach of contract. Depending upon the nature of the assertions, however, the same facts that establish a breach of contract claim may be sufficient to establish a CUTPA violation. Lester v. Resort Camplands International, Inc., 27 Conn.App. 59, 71, 605 A.2d 550 (1992). That generally is so when the aggravating factors present constitute more than a failure to deliver on a promise." Id. In support of its motion to strike count three, then, the defendant argues that the plaintiff has merely relied upon the same allegations that support its breach of contract claim, and that, without accompanying allegations of substantial aggravating circumstances, count three is legally insufficient and must be stricken.
The plaintiff agrees that in order for count three to pass muster, it must contain allegations of "substantial aggravating circumstances" beyond a mere breach of contract. It maintains, however, that count three is legally sufficient because it essentially alleges "a pattern of multiple breaches on the part of the defendant . . ." This is because "[a] bill of lading operates both as a receipt and as a contract. It is a receipt for the goods shipped and a contract to transport and deliver them." 13 Am.Jur.2d 618, Carriers § 337 (2000). Thus, the defendant reasons that it has effectively alleged multiple breaches of contract because count three alleges the existence of multiple bills of lading. The plaintiff contends that it has therefore alleged a pattern of breaches that, if proven, would qualify as a substantial aggravating circumstance capable of supporting a CUTPA claim. In support of this argument, the defendant cites Greene v. Orsini, supra, 50 Conn.Sup. 312, and Webster Financial Corp. v. McDonald, Superior Court, judicial district of Waterbury, Docket No. CV 08 4016026 (January 28, 2009, Brunetti, J.).
The plaintiff also cites Ameripride Services, Inc. v. U.S. Food Service, Inc., Superior Court, judicial district of Hartford, Docket No. CV 04 0835453 (June 7, 2006, Tanzer, J.). In that case, the court did acknowledge that "[m]ultiple breaches of contract may . . . raise a breach of contract claim to the level of a CUTPA violation." Nevertheless, the court found that the CUTPA claim in question was legally insufficient because it did not allege "aggravating circumstances such as misrepresentations or repeated contract breaches which satisfy or even implicate a prong of the cigarette rule." Id.
In Greene, the plaintiffs alleged that, as part of an agreement for the purchase of the defendants' deli, sausage and bakery business, the plaintiffs agreed to buy sausages exclusively from the defendants for two years, and "the defendants agreed not to compete with the plaintiffs' . . . business within the geographic scope of twenty-five miles for a period of ten years." Greene v. Orsini, supra, 50 Conn.Sup. 313. The plaintiffs further asserted that the defendants misrepresented their intention to abide by the noncompetition agreement, then repeatedly breached its terms despite the plaintiffs' repeated complaints. Id., 316. The plaintiffs relied on these allegations to set forth a breach of contract claim as well as a claim for violation of CUTPA. Id., 313. The defendants moved to strike the CUTPA claim on the basis that it did not sufficiently allege a violation of the cigarette rule. Id. The court disagreed, holding that both the allegations of misrepresentations and those of "multiple breaches, if proven, could satisfy the third prong of the cigarette rule, causing substantial injury to a competing business." Id., 316.
Similarly, in Webster Financial Corp. v. McDonald, supra, Superior Court, Docket No. CV 08 4016026, the plaintiff, an insurance company, filed a nine-count complaint against the defendants, a former employee and his new employer. The plaintiff alleged, in relevant part, that the former employee breached noncompete and nonsolicitation clauses in their employment agreement by going to work for his new employer, the plaintiff's competitor, and by repeatedly soliciting and accepting business from the plaintiff's past and current clients. Id. In addition to counts alleging breach of these covenants, the complaint also set forth a count for violation of CUTPA, which the defendants moved to strike on the ground that the relevant "allegations at best allege[d] a breach of contract, and a mere breach of contract does not violate CUTPA." Id. Relying in part on the rule that multiple contractual breaches may constitute a substantial aggravating circumstance, the court found that the CUTPA claim was legally sufficient because the plaintiff alleged the former employee repeatedly breached the covenants in the employment contract. Id.
Returning to the present matter, the court is mindful that "in determining the sufficiency of a complaint challenged by a . . . motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted"; (internal quotation marks omitted) Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006); and that 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., supra, 277 Conn. 117. To this end, the court finds that the plaintiff has alleged breaches upon multiple contracts, insomuch as it has alleged the existence of multiple bills of lading. Under the rule established in cases like Greene and Webster Financial Corp., count three therefore adequately sets forth a claim for violation of CUTPA. The court notes that whether the plaintiff will ultimately be able to prove breaches so numerous that one or more prongs of the cigarette rule are satisfied is irrelevant for purposes of resolving the motion to strike currently at issue. Such a question is best resolved on a motion for summary judgment or at trial. The defendant's motion to strike is therefore denied as it pertains to count three and the corresponding portion of the plaintiff's prayer for relief.
B. Count Four: Civil Theft
The defendant argues that a claim for civil theft, also commonly referred to as statutory theft, is to be gauged against Connecticut's larceny statute, and that count four must therefore be stricken because the plaintiff has not sufficiently alleged facts that would implicate the crime of larceny, as it is defined within the General Statutes.
"Statutory theft under § 52-564 is synonymous with larceny under General Statutes § 53a-119." (Internal quotation marks omitted.) Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745, 771, 905 A.2d 623 (2006). The court therefore must look to § 53a-119 to determine whether count four sufficiently sets forth allegations capable of maintaining a cause of action for civil theft. "General Statutes § 53a-119 defines larceny as attaching when `[a] person . . . with intent to deprive another of property or to appropriate the same to himself or a third person . . . wrongfully takes, obtains or withholds such property from an owner.' Then follows a non-exclusive list of specific examples of larceny, including § 53a-119(7), theft of services." Delta Capital Group, LLC v. Smith, Superior Court, judicial district of Hartford, Docket No. CV 97 0571407 (March 31, 1998, Hale, J.); see also Deming v. Nationwide Mutual Ins. Co., supra, 279 Conn. 771.
The parties in the present action agree that subsection (7) is the only one potentially applicable to the allegations of the plaintiff's complaint. Section 53a-119(7) is further divided into three subsections. Subsection (A) clearly is not applicable, as it pertains only to theft of services rendered "at a hotel, motel, inn, tourist cabin, rooming house or comparable establishment . . ." Similarly, § 53a-119(7)(B)(i) is not applicable, as it pertains only to theft of public transportation services. It is unclear, however, which of the remaining two provisions — subdivision (ii) of subsection (B), or subsection (C) — is applicable.
In support of its motion to strike, the defendant argues that § 53a-119(7)(B)(ii) is the relevant provision. It provides that "[a] person is guilty of theft of services when . . . with intent to obtain the use of equipment, including a motor vehicle, without payment of the lawful charge therefor, or to avoid payment of the lawful charge for such use which has been permitted him, he obtains such use or avoids such payment therefor by means of any false or fraudulent representation, fraudulent concealment, false pretense or personation, trick, artifice or device, including, but not limited to, a false representation as to his name, residence, employment, or driver's license." The defendant contends that the plaintiff has not sufficiently pleaded a claim for theft of services pursuant to this provision because nothing in count four alleges that the defendant avoided payment "by means of any false or fraudulent representation, fraudulent concealment, false pretense or personation, trick, artifice or device, including, but not limited to, a false representation as to [its] name, residence, employment, or driver's license."
The court disagrees with this interpretation of the allegations contained in count four. In it, the plaintiff alleges that the defendant requested and contracted for freight carrier services even though, at that time, it did not intend to pay for those services. The plaintiff further alleges that, in fact, the defendant "intended to permanently and wrongfully appropriate such services for its exclusive use." The natural import of these allegations is that the defendant obtained the plaintiff's services through a knowingly false representation; namely, that the defendant would pay for the services once they were provided. As the plaintiff points out in its memorandum of law, Superior Court decisions "have consistently denied motions to strike [statutory theft claims] when intent is pleaded." Today's Kids, LLC v. Bach, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 08 5009121 (October 1, 2009, Adams, J.).
Furthermore, because, as alleged, the agreement between the parties could be interpreted as a contract for the use of the defendant's labor and/or commercial equipment, the court believes § 53a-119(7)(C) may be applicable in the present case. That provision provides that "[a] person is guilty of theft of services when . . . obtaining or having control over labor in the employ of another person, or of business, commercial or industrial equipment or facilities of another person, knowing that he is not entitled to the use thereof, and with intent to derive a commercial or other substantial benefit for himself or a third person, he uses or diverts to the use of himself or a third person such labor, equipment or facilities." "Under General Statutes § 53a-119(7)(C), the court asks: (1) whether labor in the employ of another was used or diverted to benefit oneself or a third party, or (2) whether equipment or facilities of another were used to benefit oneself or a third party." Delta Capital Group, LLC v. Smith, supra, Superior Court, Docket No. CV 97 0571407; see also Jalbert v. Mulligan, Superior Court, judicial district of Waterbury, Docket No. CV 08 6001044 (August 25, 2009, Brunetti, J.); Swift v. Ball, Superior Court, judicial district of Danbury, Docket No. CV 01 0344047 (February 22, 2005, Bellis, J.).
It is true, as the plaintiff points out in its memorandum of law, that in Delta Capital Group, LLC v. Smith, supra, Superior Court, Docket No. CV 97 0571407, the court observed that these are the lone circumstances in which Connecticut courts have found theft of services pursuant to subsection (C), and that "[n]o court has expanded the definition . . . to include a situation . . . where a party to a contract has failed to honor his contractual obligation to pay for services." However, unlike count four in the present case, the statutory theft claim examined in Delta Capital Group did not include an allegation that the defendant procured the plaintiff's labor or commercial equipment by virtue of a false statement regarding intent to pay. Again, where intent is properly pleaded within a count for statutory theft, Superior Court decisions have found such counts legally sufficient to survive a motion to strike. Today's Kids, LLC v. Bach, supra, Superior Court, Docket No. CV 08 5009121; see also DeHart v. Crossen, Superior Court, judicial district of Windham, Docket No. CV 04 4000241 (June 3, 2005, Riley, J.). "[T]he court is mindful that whether the [plaintiff] can substantiate this claim is irrelevant to the present motion. A motion to strike merely requires the court to consider the sufficiency of the allegations." DeHart v. Crossen, supra, Superior Court, Docket No. CV 04 4000241.
Thus, regardless of whether the court's attention is properly cast upon subdivision (ii) of subsection (B) or upon subsection (C), count four adequately sets forth a claim for statutory theft. As such, the defendant's motion to strike is denied as to count four and the corresponding portion of the prayer for relief.
III. Conclusion
For the foregoing reasons, the defendant's motion to strike is denied in its entirety.