Opinion
No. HHD CV 09 5028121S
March 10, 2010
MEMORANDUM OF DECISION RE ON MOTION TO STRIKE SECOND COUNT OF DEFENDANT'S COUNTERCLAIM
This case involves the alleged breach of a contract between plaintiff Wes-Garde Components Group, Inc., a distributor of electrical components, and defendant Carling Technologies, Inc., a manufacturer of such components. The basis for that claim is set forth as follows in the plaintiff's one-count Complaint dated March 13, 2009.
On December 31, 1979, the plaintiff and the defendant entered into a contract pertaining to the plaintiff's distribution of the defendant's electrical components. Pursuant to the contract, the defendant agreed to provide the plaintiff with a permanent favorable pricing structure for its electrical components so long as the plaintiff maintained threshold purchasing levels of such components on an annual basis. At all relevant times, the plaintiff has maintained the requisite threshold purchasing levels of the defendant's components, thus entitling it to favorable pricing for them under the contract. Nevertheless, on June 19, 2008, the defendant advised the plaintiff that it considered the contract to be unenforceable and thereafter, since December 1, 2008, has breached the contract by failing to provide the plaintiff with favorable pricing for its components as agreed to therein. Such breach of contract has caused the plaintiff damage and will continue to cause it damage in the future.
The Complaint alleges that the contract was subsequently amended on January 1, 1988.
The Complaint provides: "Pursuant to the Agreement, the defendant agreed to provide the plaintiff with a permanent favorable pricing structure for certain electrical components purchased by the plaintiff from the defendant as long as the defendant maintained favorable pricing levels on an annual basis.
"From January 1, 1980 through the present, the plaintiff has always maintained the threshold purchasing levels entitling the plaintiff to the aforesaid favorable pricing from the defendant." (Emphases added.)
Despite the complaint's inconsistency regarding who was required to maintain threshold purchasing levels under the contract, it is clear that the plaintiff was required to do so.
On July 10, 2009, the defendant filed an answer, special defenses and counterclaim. The second count of the defendant's two-count counterclaim alleges a violation of the Connecticut Unfair Trade Practices Act, ("CUTPA"), General Statutes § 42-110a et seq., In support of its CUTPA counterclaim, the defendant makes the following allegations.
The defendant's first special defense alleges that the provisions of the agreement "whereby [the p]laintiff was to receive permanent favorable pricing treatment is an agreement in violation of the law and is unenforceable." The defendant's second special defense alleges that the provision at issue "whereby [the p]laintiff was to receive permanent favorable pricing treatment creates an unreasonable restraint of trade and is unenforceable." The defendant's third and fourth special defenses concern other aspects of the parties' contractual obligations, while its fifth special defense asserts simply that the plaintiff's complaint fails to state a claim upon which relief can be granted.
The plaintiff has known for a long time that the permanent favorable pricing provision of its agreement with the defendant is in violation of the law and unenforceable. Counterclaim, Count II, ¶ 1. Notwithstanding such knowledge, the plaintiff has sought to enforce the agreement "through this litigation and through threats of litigation." Id., ¶ 2. The plaintiff's attempt to enforce the agreement has occurred in the course of trade or commerce, as defined by General Statutes § 42-110a(4). Id., ¶ 3. By engaging in the above-described conduct, the plaintiff "has engaged and is engaging in unfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce in violation of [General Statutes] § 42-110b." Id., ¶ 4. "As a result of [such] violations of [General Statutes] § 42-110b, [the defendant] has suffered an ascertainable loss of money." Id., ¶ 5.
On August 24, 2009, the plaintiff filed a motion to strike the second count of the counterclaim on the ground that the CUTPA claim therein pleaded is essentially a claim of vexatious litigation, which assertedly cannot be prosecuted until the plaintiff's underlying breach-of-contract claim has terminated favorably to the defendant. The plaintiff initially supported its motion to strike with an accompanying memorandum of law, to which the defendant replied with its own memorandum in opposition on September 28, 2009. The matter was heard on the short calendar on October 13, 2009. Thereafter, on October 23, 2009, in response to the Court's invitation for further briefing on matters discussed in oral argument, the parties submitted letters describing the results of their further research efforts. On the basis of these written and oral arguments, the Court has decided, for reasons previously summarized in a memorandum order dated February 22, 2010, that the plaintiff's motion to strike must be granted. As promised in that memorandum order, this decision articulates more completely the legal analysis upon which the prior order was based.
I. MOTION TO STRIKE
Practice Book § 10-39(a) provides in relevant part as follows: "Whenever any party wishes to contest (1) the legal sufficiency of the allegations of any . . . counterclaim . . . that party may do so by filing a motion to strike the contested pleading or part thereof." See also JP Morgan Chase Bank, Trustee v. Rodrigues, 109 Conn.App. 125, 131, 952 A.2d 56 (2008) ("[a] motion to strike tests the legal sufficiency of a cause of action and may properly be used to challenge the sufficiency of a counterclaim"). The Court must "construe the [counterclaim] in the manner most favorable to sustaining its legal sufficiency." (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). In determining the sufficiency of a counterclaim 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). Accordingly, "[i]f facts provable in the [counterclaim] 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, supra, 120.
II. THE PARTIES' CLAIMS
The plaintiff moves to strike the CUTPA count of the defendant's counterclaim on the ground that it is essentially a claim of vexatious litigation, which cannot properly be asserted as a counterclaim in the same litigation that is claimed to be vexatious. See Somers v. Chan, 110 Conn.App. 511, 955 A.2d 667 (2008) (holding that trial court properly struck a counterclaim alleging statutory vexatious litigation under General Statutes § 52-568, based upon the plaintiff's allegedly groundless prosecution of his own claim in that same action). The holding in Somers, claims the plaintiff, derives from the long-standing rule of policy that no claim of vexatious litigation can be maintained, either at common law or under statute, until the litigation therein claimed to have been vexatious has terminated in favor of the claimant. The favorable termination rule, in turn, has been applied to other civil claims based upon the allegedly groundless prosecution of underlying litigation, because the considerations of public policy that support its application to claims of vexatious litigation — avoiding conflicting judgments on the merits of issues common to such claims and to the underlying litigation thereby claimed to be groundless and encouraging the vigorous, good-faith prosecution of uncertain but potentially meritorious legal claims — apply with equal force to other civil claims or causes of action based upon the allegedly groundless prosecution of other legal claims.
Against this background, the plaintiff here argues that those same considerations of public policy also support the application of the favorable termination rule to claims under CUTPA which are based upon the allegedly groundless prosecution of litigation in the conduct of trade or commerce. Such an application of the rule would compel the conclusion that no litigation-based CUTPA claim can properly be pleaded as a counterclaim in the same litigation whose prosecution is therein claimed to have been brought without probable cause.
The plaintiff has also argued that the pleading and proof requirements for litigation-based CUTPA claims are identical to those for common-law and statutory vexatious litigation because such CUTPA claims are constitutionally limited, under the Noerr-Pennington doctrine, as adopted by our Appellate Court in Zeller v. Consolini, 59 Conn.App. 545, 758 A.2d 326 (2000) ( Zeller II), to claims based upon litigation that is both objectively baseless, in the sense that no reasonable litigant could realistically expect success on its merits, and brought as a sham, in the sense that is not genuinely aimed at procuring favorable governmental action in any form. The Zeller II Court expressly analogized claims that may appropriately be brought within the narrow, sham litigation exception to the Noerr-Pennington doctrine to claims of vexatious litigation and intentional interference with business relations that may be brought under Connecticut law. Id. at 553 n. 5.
The defendant responds that, at least in the present context, the scope of CUTPA liability is not constitutionally limited to claims of sham litigation under the Noerr-Pennington doctrine because that doctrine is designed to protect citizens in the exercise of their First Amendment right to petition the government with grievances, but the present lawsuit involves a private claim between two private parties which does not involve petitioning activity of any kind. Although the Court is inclined to agree with the defendant that the Noerr-Pennington doctrine, which is otherwise applicable to litigation-based CUTPA claims under Suburban Restoration Co., Inc. v. ACMAT Corp., 700 F.2d 98 (2d. Cir. 1983), has no application to this claim because the underlying litigation here at issue does not involving petitioning activity, it need not reach and decide that issue in this case in light of its analysis of and reliance upon the plaintiff's other legal arguments.
The defendant here argues that the pleading requirements for litigation-based claims under CUTPA are substantially different from those for claims of vexatious litigation or other equivalent causes of action. Specifically, it contends that a CUTPA claim, when brought against a party who has allegedly pursued or is allegedly pursuing groundless litigation against him on the theory that such conduct constitutes an unfair trade practice, does not require any allegation or proof that such litigation has already terminated in the claimant's favor. The bases for this argument are as follows: first, that the CUTPA statute contains no such pleading or proof requirement; and second, that that statute has been authoritatively construed to have a remedial purpose and a resulting substantive scope that is broad enough to reach all forms of unfair and deceptive acts and practices in the conduct of trade or commerce, including many that do not independently subject the persons who engage in them to other forms of common-law or statutory civil liability. Pursuit of a groundless civil claim against a consumer, a competitor, or another business person in the conduct of trade or commerce is assertedly sufficient to establish a violation of CUTPA even if all the elements of the related tort of vexatious litigation — particularly the favorable termination element — have not been pleaded or proved.
Finally, the defendant contends that the plaintiff's motion to strike must be denied because it fails to challenge each pleaded basis for establishing the plaintiff's liability under CUTPA. It claims, in particular, that the plaintiff has failed to challenge the legal sufficiency of its alternative claim that the plaintiff violated the statute by attempting to enforce the disputed provision of the parties' agreement "through threats of litigation." The plaintiff rejects this argument on the ground that where, as here, a party who is alleged to have made threats of litigation is further alleged to have acted on those threats by bringing such litigation, its alleged threats are typically pleaded, and thus appropriately analyzed, as parts of a single course of conduct which is actionable as a single claim rather than as a series of separate legal claims. Insisting that that is how the defendant has pleaded its CUTPA counterclaim in this case, the plaintiff argues that its motion to strike properly challenges that counterclaim in its entirety.
III. FAVORABLE TERMINATION OF A WRONGFULLY PROSECUTED LAWSUIT AS AN ELEMENT OF VEXATIOUS LITIGATION
To evaluate the merits of the plaintiff's motion, the Court will first examine the favorable termination element of the tort of vexatious litigation in light of the public policy considerations which gave rise to it and are claimed to warrant its application to litigation-based claims under CUTPA. "The cause of action for vexatious litigation permits a party who has been wrongfully sued to recover damages." Bernhard-Thomas Building Systems, LLC v. Dunican, 286 Conn. 548, 553, 944 A.2d 329 (2008). "In Connecticut, the cause of action for vexatious litigation exists both at common law and pursuant to [General Statutes § 52-568]." Id. at 554. "[A common-law] claim for vexatious litigation requires a plaintiff to allege that the previous lawsuit was initiated maliciously, without probable cause, and terminated in the plaintiff's favor." (Internal quotation marks omitted.) Label Systems Corp. v. Aghamohammadi, 270 Conn. 291, 299 n. 7, 852 A.2d 703 (2004). Pleading and proof of such a claim entitles the plaintiff to recover both compensatory and punitive damages. A statutory claim for vexatious litigation, by contrast, requires only that plaintiff allege that his previous lawsuit was initiated without probable cause and that it terminated in his favor. Such a claim, if proved at trial, entitles the plaintiff to recover double damages. Proof of malice is not necessary to establish a statutory claim for vexatious litigation, but if it is so pleaded and proved at trial, it will entitle the claimant to recover treble damages.
"In suits for vexatious litigation, it is recognized to be sound policy to require the plaintiff to allege that prior litigation terminated in his favor. This requirement serves to discourage unfounded litigation without impairing the presentation of honest but uncertain causes of action to the courts . . . The requirement furthermore serves the interest of finality of judicial decisions, by preventing a person who was unsuccessful in the original proceeding from relitigating the same issues in a subsequent action for vexatious litigation." (Citation omitted; internal quotation marks omitted.) Zeller v. Consolini, 235 Conn. 417, 424, 667 A.2d 64 (1995) ( Zeller I).
Because of the favorable termination requirement, "under Connecticut law, a counterclaim alleging vexatious litigation may not be brought in the same action as that which the defendant claims is vexatious." Somers v. Chan, supra, 110 Conn.App. at 542. These principles apply regardless of whether the action is brought under statute or at common law. See Rutenberg v. Rosenblit, Superior Court, judicial district of Hartford, Docket No. CV 88 0353700 (March 14, 1994, Hennessey, J.) ( 11 Conn. L. Rptr. 161).
IV. APPLICATION OF THE FAVORABLE TERMINATION RULE TO OTHER CLAIMS AND CAUSES OF ACTION BASED UPON THE GROUNDLESS PROSECUTION OF CIVIL LITIGATION
The Court must next examine the manner in which our courts have applied the pleading rules for claims of vexatious litigation to other claims and causes of action to determine the appropriateness of applying them to claims under CUTPA based upon the pursuit of groundless litigation. In Blake v. Levy, 191 Conn. 257, 464 A.2d 52 (1983), our Supreme Court had occasion to consider whether, and if so under what circumstances, a party could bring an action for intentional interference with business relations based upon the allegedly groundless prosecution of civil litigation. The Court there decided that, in defining the essential elements of such a claim, it must be guided by its prior analysis of the torts of malicious prosecution and vexatious litigation, "because those kindred torts have also had to address the competing policies of deterrence of groundless litigation and protection of good faith access to the courts." Id. at pp. 262-63. On this score, the Blake Court first noted that:
In suits for vexatious litigation, it is recognized to be sound policy to require the plaintiff to allege that prior litigation terminated in his favor. This requirement serves to discourage unfounded litigation without impairing the presentation of honest but uncertain claims . . . The requirement furthermore serves the interest of finality of judicial decisions, by preventing a person who was unsuccessful in the original proceeding from relitigating the same issues in a subsequent action for vexatious litigation.
Id., pp. 263-64 (footnotes omitted). One consequence of this favorable termination requirement, the Court continued, is that no claim for vexatious litigation can be based upon the bringing of litigation that has been resolved by a negotiated settlement. When a party chooses to settle a claim brought against him instead of defending himself against the suit until it terminates in his favor, he must accept the results of his own agreement as the final resolution of that claim. Thus, he cannot later attempt to litigate that claim in a lawsuit claiming vexatious litigation or its equivalent. "This conclusion[,]" wrote the Court, "recognizes that the law favors settlements, which conserve judicial resources and minimize the parties' transaction costs, and avoids burdening such settlements with the threat of future litigation." Id. at p. 264. The Blake Court thus determined that neither a claim of intentional interference with business relations nor a claim of vexatious litigation "can be maintained when the underlying lawsuit whose propriety is at issue terminated in a good faith negotiated settlement . . . In these circumstances, there is no basis of policy for distinction between the two torts[']" Id.
The upshot of Blake is that in any civil action based upon the allegedly groundless prosecution of another claim or lawsuit, the claimant must plead and prove, as a matter of public policy, that the underlying claim or lawsuit has terminated in his favor before that action can properly be maintained. Only then can a claim of vexatious litigation or its equivalent be prosecuted without risk of disturbing the finality of a prior judgment or settlement, producing conflicting judgments on the merits of common claims presented in the lawsuit challenging allegedly groundless litigation and in the underlying litigation itself, or chilling litigants in the good-faith exercise of their rights to prosecute their underlying claims.
Another case in which our Supreme Court confirmed its commitment to fostering the vigorous prosecution of pending claims in the actions where such claims were made rather than in other claims or actions challenging the good faith of those who brought such underlying claims came in the recent case of Larobina v. McDonald, 274 Conn. 394, 876 A.2d 522 (2005). There, the plaintiff brought an action against several lawyers who had represented and were still representing a bank in another pending action, claiming that the defendant lawyers, by their conduct before and during that other action, had abused judicial process. The trial court struck the abuse of process claim for failure to state a claim upon which relief could be granted, ruling that the acts there complained of did not involve the use of judicial process, and thus could not found to constitute the abuse of such process. In reviewing that determination, the Supreme Court provisionally took a broader view of the term process than had the trial court, noting that other states had broadly construed that term to encompass at least some of the actions by which the defendant attorneys were claimed to have abused process in the underlying case. Rather, however, than deciding if any such alleged conduct actually constituted the use or abuse of process in Connecticut, the Court decided that the plaintiff's abuse of process claim was properly stricken for a different reason, to wit: that the underlying action in which such abuses of process were allegedly committed was still pending, and thus the claims presented in the action before it were "premature." Id. at p. 407. In reaching this result, the Larobina Court reasoned as follows:
Although we do not suggest that success in the first action would be a prerequisite for an abuse of process claim by the plaintiff, it is apparent that the eventual outcome of that action and the evidence presented by the parties therein would be relevant in litigating an abuse of process claim. The plaintiff has not yet established that First Union is not legally entitled to the money that he claims the defendants are attempting to extort from him by their allegedly oppressive litigation tactics, or that First Union has no good faith reason to believe that it is entitled to the money. Those very issues are in dispute in the first action. If the abuse of process claim were allowed, the trial court would be required to litigate these issues twice. Moreover, allowing the claim could subject the courts to a flood of similarly duplicative claims and effectively chill the vigorous representation of clients by their attorneys. Accordingly, we need not determine in the present case the scope of the term process as used in this context. Even if it is assumed that the term is broad enough to cover a wide range of legal procedures beyond the improper prosecution of a legal action, we conclude that the trial court properly rendered judgment for the defendants on the ground that the claim is duplicative and premature.
Id. at pp. 407-08.
The upshot of Larobina, for present purposes, is that whenever a legal claim is based upon an allegation that one's opponent has engaged in litigation misconduct — whether by wrongfully bringing a claim or lawsuit or by abusing legal process in so doing — the claim is "premature," and must therefore be stricken, if the underlying claim or lawsuit thereby challenged is still pending. To the degree that issues raised by such litigation-misconduct claims overlap with issues raised in the underlying litigation, the striking of such claims while the underlying litigation is still pending fosters the final resolution of such common issues in the underlying litigation, where they first were raised and can best be understood and decided in their proper context. The eventual outcome of the underlying litigation and the evidence presented by the parties concerning it will ultimately be relevant in litigating the misconduct claim, presumably at a later time.
In addition, by preventing the prosecution of litigation-misconduct claims while the underlying litigation is still pending, the rule announced in Larobina promotes the vigorous prosecution of the underlying litigation in two ways. First, it unburdens the parties from the need to engage in costly, time-consuming litigation in two forums at once, thereby eliminating the risk of producing inconsistent judgments in separate trials. Second, it eliminates the chilling effect on claimants of having to defend themselves against allegations of litigation misconduct while attempting to prove their own claims on the merits. For the reasons that follow, the latter effect would be particularly debilitating if litigation-misconduct claims could be brought as counterclaims in the very same lawsuit where such litigation — misconduct allegedly occurred.
If a party were required, in the course of prosecuting his own claims against an opponent on the merits, to defend himself against a counterclaim contending that his prosecution of those claims was groundless, and thus constituted litigation misconduct, he would be forced in that lawsuit not only to establish those claims with competent evidence but to rebut the opponent's allegation against him that he had pursued or was pursuing those claims without probable cause. This would raise the issues of when, how and on what factual and legal bases he determined that his claims were meritorious, which in turn would expose him to discovery by his opponent of at least three types of information he would otherwise be privileged not to reveal. The first is his attorney's investigative work product. The second are the confidential communications that he has made to his attorney concerning the facts of the case in order to seek his attorney's advice as to the viability of his underlying claims. The third are the confidential communications made to him by his attorney concerning the legality of pursuing such claims on the basis of the facts he provided the attorney and such other facts as his attorney learned in preparing the case. Though such information and communications are privileged, and thus not disclosable, in a case involving only the merits of the plaintiff's own claims, it would be discoverable with respect to the opponent's litigation-misconduct counterclaim, of vexatious litigation or its equivalent, because they bear upon central issues raised by such a claim, to wit: whether the plaintiff acted with probable cause when he brought his underlying claims; whether, in the absence of probable cause, he brought such claims in good-faith reliance upon the advice of counsel after making a full disclosure to counsel of all facts known to him concerning the matters at issue. Plainly, one major benefit to be gained by insisting that claims of litigation misconduct not be brought on any legal theory until after the completion of the underlying litigation in which the misconduct allegedly occurred is that that would relieve plaintiffs of the burden of making such disclosures of otherwise privileged information, which could obviously otherwise have a profoundly chilling effect upon the exercise of their right to consult in confidence with and make full and effective use of the services of their attorneys in the prosecution of their claims.
Another significant benefit to be gained by postponing the bringing of any claim based upon the allegedly groundless prosecution of a lawsuit until after the lawsuit in question is completed is to avoid the risk of creating conflicts of interest between clients and their attorneys if the latter become material witnesses to their clients' defenses to claims of litigation misconduct against them. If the client testifies as to the information he gave to his attorney before suit was filed and to the attorney's advice to him to support his defense of good-faith reliance upon the advice of counsel, the attorney will at a minimum be required to defend both his client's conduct and the nature and soundness of his own legal advice. If the client is challenged as to his testimony on that subject, moreover, the attorney may become a material witness to the attorney-client discussions upon which the client claims to rely, and thus may be required to withdraw from the representation of the client in order to testify personally in the client's defense. In fact, the lawyer might become a critical witness not only as to the substance of his own advice to his client but as to the completeness of the information given to him by the client as a basis for formulating and offering such advice. Surely, there can be no effect more chilling upon the right to prosecute a legal claim than the prospect of losing one's right to continue using the services of one's chosen counsel simply because one's opponent might decide to bring a counterclaim of vexatious suit or its equivalent against him in the case.
The conclusion to which the foregoing analysis naturally leads is that, in fairness to parties wishing to resort to our courts to present legal claims of any kind, it is essential that no claims based upon alleged litigation misconduct in the bringing or prosecution of such underlying claims be brought against them until the underlying claims are finally resolved. Therefore, no claim based upon alleged litigation misconduct in the bringing or prosecution of an underlying claim may be brought as a counterclaim in the same lawsuit that is claimed to have been improperly brought or prosecuted. This is equally true for claims of vexatious suit and intentional interference with business relations, of which the favorable termination requirement has been made an essential element, and for claims of abuse of process, where favorable termination has not been made an element, but the pursuit of such a claim has nonetheless been disallowed as premature until the completion of the underlying litigation. The plaintiff argues, on this basis of these authorities, that CUTPA claims based upon alleged misconduct in the pursuit of underlying litigation — here, particularly, the allegedly groundless prosecution of the plaintiff's breach-of-contract claim — must be stricken as premature because the underlying, allegedly groundless litigation is still pending in this lawsuit.
V. LIMITATIONS IMPOSED UPON CUTPA CLAIMS BASED UPON ALLEGATIONS OF LITIGATION MISCONDUCT IN LIGHT OF PUBLIC POLICY CONSIDERATIONS
The defendant's essential argument in opposition to this motion is that CUTPA is a broad, remedial statute that has been held to apply to many different types of unfair and deceptive acts and practices in the conduct of trade or commerce, including the bringing of groundless lawsuits and other litigation misconduct, but that the elements of claims under CUTPA have never been held to include the prior termination or prior favorable termination of the underlying lawsuit. On this score, the defendant relies upon cases decided by judges of this Court who, on the basis of that argument, refused to strike CUTPA counterclaims based upon the alleged bringing and prosecution without probable cause of the very lawsuit in which the counterclaim was filed. See, e.g., Olympia Sales, Inc. v. Robers Enter., Inc., 2006 WL 1391217 (Conn.Super. 2006) at *3.
General Statutes § 42-110b(a) provides as follows: "No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." CUTPA actions are commonly asserted as counterclaims. See, e.g., Gianetti v. Siglinger, 279 Conn. 130, 138-39, 900 A.2d 520 (2006) (affirming trial court's judgment in favor of defendants on their CUTPA counterclaims). "[A] violation of CUTPA may be established by showing either an actual deceptive practice . . . or a practice amounting to a violation of public policy . . . Whether a practice is unfair and thus violates CUTPA is an issue of fact." (Internal quotation marks omitted.) De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn. 424, 434, 849 A.2d 382 (2004).
"[O]ur General Assembly . . . deliberately chose not to define the scope of unfair or deceptive acts proscribed by CUTPA so that courts might develop a body of law responsive to the marketplace practices that actually generate such complaints . . . Predictably, [therefore], CUTPA has come to embrace a much broader range of business conduct than does the common law tort action . . . Moreover, [b]ecause CUTPA is a self-avowed remedial measure, General Statutes § 42-110b(d), it is construed liberally in an effort to effectuate its public policy goals . . . Indeed, there is no . . . unfair method of competition, or unfair [or] deceptive act or practice that cannot be reached [under CUTPA.]" (Citations omitted; internal quotation marks omitted.) Associated Investment Co. Ltd Partnership v. Williams Associates IV, 230 Conn. 148, 157-58, 645 A.2d 505 (1994). Furthermore, "[b]ecause CUTPA removes . . . common law obstacles to recovery . . . the private cause of action created by CUTPA reaches conduct well beyond that proscribed by any common law analogue." Id. at 158-59. Thus it has been held that a violation of CUTPA does not "necessarily have to be based on an underlying actionable wrong." Hartford Electric Supply Co. v. Allen-Bradley Co., 250 Conn. 334, 369, 736 A.2d 824 (1999).
"It is well settled that in determining whether a practice violates CUTPA [the 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; [and] (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.) Updike, Kelly Spellacy, P.C. v. Beckett, 269 Conn. 613, 655-56, 850 A.2d 145 (2004).
Notwithstanding the important remedial purposes of CUTPA, however, and the broad scope that the statute has appropriately been accorded by our courts, this Court is persuaded, as a matter of public policy, that CUTPA claims based upon allegations of litigation misconduct must be subject to the same constraints as other common-law and statutory claims based upon the same misconduct. In particular, they must be subject to the requirements that the underlying litigation in which the misconduct allegedly occurred has already been completed and, if so, that it terminated favorably to the claimant, before such claims can be maintained.
The imposition of these requirements for litigation-misconduct claims under CUTPA, as for claims of vexatious litigation, intentional interference with business relations, and abuse of process, would foster the vigorous litigation of the claimant's underlying claims in the forum where such claims are first brought without chilling the exercise of his right to counsel by requiring the divulgence of privileged information or materials that would not be disclosable to his opponent in the absence of such counterclaims, or thus potentially creating irreconcilable conflicts of interest between claimants and their attorneys as to the nature of the claimants' disclosures to the attorneys and of the attorneys' advice to the claimants as to the merits of their claims, or threatening the claimants with the loss of their attorneys of choice if the attorneys become material witnesses to defenses they must raise to CUTPA counterclaims based on alleged litigation misconduct.
In fact, our Supreme Court's prior analysis of CUTPA has amply demonstrated its willingness to construe that otherwise broad statute in ways designed to accommodate important concerns of public policy of the very sort which have caused it to impose the above-described requirements for claims of vexatious litigation, intentional interference with business relations and abuse of process. As for the application of CUTPA to litigation misconduct, in particular, the Court has carefully limited the scope of CUTPA claims against lawyers to claims brought against them by their own clients, to ensure that lawyers not be chilled in the vigor of their advocacy on behalf of their clients by the threat of CUTPA claims brought against them by others who are not interested in the vigorous prosecution of their clients' claims. Jackson v. R.G. Whipple, Inc., 225 Conn. 705, 627 A.2d 374 (1993). On that score, the Jackson Court flatly stated that, notwithstanding the facial breadth of CUTPA,
it strains credulity to conclude that CUTPA is so formless as to provide redress to any person, for any ascertainable harm, caused by any person in the conduct of any "trade" or "commerce." . . . [I]mportant policy considerations transcend CUTPA and its remedial intent. "Determining when attorneys should be held liable to parties with whom they are not in privity is a question of public policy." Krawczyk v. Stingle, 208 Conn. 239, 245, 543 A.2d 733 (1988), citing 3 F. Harper, F. James O. Gray, Torts (2d Ed. 1986) § 18.6, p. 730. Providing a private cause of action to a supposedly aggrieved party for the actions of his or her opponent's attorney would stand the attorney-client relationship on its head and would compromise an attorney's duty of undivided loyalty to his or her client and thwart the exercise of the attorney's independent professional judgment on his or her client's behalf.
Jackson v. R.G. Whipple, Inc., supra, 225 Conn. at 725-27. So stating, the Court concluded that, "Imposing liability under CUTPA on attorneys for their representation of a party opponent in litigation would not comport with a lawyer's duty of undivided loyalty to his or her client." Id. at 729.
In addition, the Supreme Court has held that lawyers are not subject to liability under CUTPA, even to their own clients, for conventional acts of malpractice, whether negligent or intentional, but only for unfair or deceptive acts or practices in conducting the entrepreneurial aspects of the practice of law. Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 802 A.2d 44 (2002). The imposition of this significant limitation on the more broadly worded scope of CUTPA is also designed to ensure that lawyers advance and support their clients' claims and defenses with vigor, courage and undivided loyalty, not desisting from the use of all appropriate tools of advocacy on behalf of their clients for fear of incurring civil liability beyond that imposable upon them in malpractice actions for breaching prevailing professional standards of care. Id. at 783-84. The Court explained the logic of imposing this limitation on CUTPA liability as follows:
[O]ur justification for exempting negligent malpractice from CUTPA claims — that liability would have a chilling effect on lawyers' duty of robust representation applies equally to intentional misconduct . . . By shielding attorneys from CUTPA liability for professional conduct, we do not intend to protect intentional malpractice, just as we never have intended to protect negligent malpractice. Rather, protecting professional conduct from CUTPA liability ensures that no attorney is discouraged from intentional and aggressive actions, believed to be in the interest of a client, by fear of being held liable under CUTPA in the event that the action is later deemed to have been an intentional deviation from the standards of professional conduct. "[W]e must . . . take care not to adopt rules which will have a chilling and inhibitory effect on would-be litigants of justiciable issues . . . [We seek] to avoid any rule that would interfere with the attorney's primary duty of robust representation of the interests of his or her client." (Citation omitted; internal quotation marks omitted.) Id., 728. Accordingly, we conclude that the defendants' motion to strike the plaintiff's CUTPA claim was properly granted.
Id. at 783-84.
In light of these cases, and mindful in particular of the obvious willingness of our Supreme Court, as expressed in them, to limit the broad scope of CUTPA in order to enforce the strong public policy of ensuring that litigants have the loyal and vigorous assistance of their lawyers when prosecuting their legal claims in court, this Court concludes that CUTPA claims based upon the alleged bringing of groundless litigation, no less than claims of vexatious litigation and intentional interference with business relations based upon similar allegations, must not be brought until the underlying litigation in which misconduct allegedly occurred is terminated favorably to the CUTPA claimant. The bringing of such a CUTPA claim as a counterclaim in the same litigation whose prosecution is claimed to groundless undermine the ability of counsel to communicate effectively with his client because it exposes their communications to disclosure due to the relevance of such communications, as aforesaid, to any defense of good-faith reliance upon the advice of counsel which the client might interpose. Such a rule would also avoid placing counsel in the untenable situation of having to argue to the fact finder about the nature and sufficiency of his own legal advice to his client or worse, of having to withdraw from the representation of the client in order to testify a material witness on the client's behalf. Applying that salutary rule to this case, the Court concludes that the defendant's CUTPA counterclaim must be stricken.
VI. CLAIMED INSUFFICIENCY OF PLAINTIFF'S MOTION FOR ALLEGED FAILURE TO CHALLENGE ALTERNATIVE BASIS FOR ESTABLISHING CUTPA LIABILITY BASED UPON THREATS OF LITIGATIONTurning finally to the plaintiff's alleged failure to challenge, on this motion, each and every pleaded basis for establishing its liability under CUTPA — in particular, the defendant's claim that it violated the statute by seeking to enforce the favorable-pricing provision of the parties' agreement "through threats of litigation" — the Court must begin by agreeing with defendant that, at least in certain circumstances, the act of threatening litigation can constitute an independent basis for establishing a CUTPA violation. See Zeller II, supra, 59 Conn.App. at 552 n. 7 (wherein the Court observed that "a party's use of its economic powers in an attempt to stifle individual citizens' use of valid governmental processes by threat of expensive litigation potentially constitutes a violation of CUTPA"). To establish liability on that theory, however, in a case where it is claimed that the party who threatened litigation ultimately brought such litigation, the claimant must plead and prove not only that the threat was made "in the conduct of trade or commerce"; General Statutes § 42-110b; but that it caused the claimant to suffer "an ascertainable loss of money or property:" General Statutes § 42-110g; separate and apart from any loss allegedly resulting from the eventual bringing of the threatened litigation itself.
Here, the plaintiff claims that the defendant's allegations against it, of bringing and threatening to bring this lawsuit, describe a single course of conduct which allegedly caused a single ascertainable loss, not separate and distinct acts of threatening litigation, all causing a separate and distinct losses, followed by the bringing of this lawsuit and within the causation of a new and different loss. The plaintiff thus argues that its motion to strike properly challenges the defendant's entire CUTPA counterclaim, not just a portion of it.
This Court agrees with the plaintiff that on the facts here alleged, there is no basis for concluding that the defendant has made separate claims of liability under CUTPA based upon the actual and threatened bringing of its underlying breach of contract claim. All of the defendant's allegations have been pleaded in a single count of its counterclaim. In fact, they have all been pleaded in a single clause of a single sentence, with threats of litigation curiously mentioned after the bringing of this lawsuit, suggesting that the threats were merely parts of a single course of conduct culminating in this lawsuit, not separate claims. With respect to the plaintiff's alleged threats of litigation, moreover, no further allegations describe them, or state how, when, where or to whom they were communicated, or note any special loss or damage allegedly occasioned by their utterance. Indeed, the plaintiff's entire alleged course of conduct is alleged to have caused but a single, indivisible "ascertainable loss."
Consistent with the foregoing analysis, the plaintiff has duly noted in its post-argument letter brief that in other cases based upon allegations of threatening then bringing suit, our Supreme Court has treated the defendant's entire course of conduct as a single basis for seeking relief under CUTPA, not as multiple claims for multiple recoveries, each based upon a separate legal analysis. See Ventres v. Goodspeed Airport, LLC, 275 Conn. 105, 881 A.2d 537 (2005) (in which the Court offered no separate analysis of threatening to sue, then bringing suit, when alleged as the basis for a CUTPA claim). Because the defendant's CUTPA counterclaim has been so pleaded here, the Court will treat it as a single claim which the plaintiff has properly challenged on its motion to strike.
VII. CONCLUSION
For all of the foregoing reasons, the Court has ordered that the second count of the defendant's counterclaim must be stricken.