Opinion
No. X08 CV06-5002096S
July 22, 2008
Memorandum of Decision on Motion to Strike (No. 148)
Procedural and Factual Background
On April 3, 2006 the buildings on Canal Street in Stamford formerly known as the Yale Towne property and including a complex known as the Stamford Antique Center were destroyed by a raging fire (visible from the upper floors of this courthouse). The property had been purchased by the defendant Antares Yale Towne SPE, LLC in October 2005. This action is brought by four plaintiffs who had occupied stores within the premises where they operated antique, arts and crafts, and other businesses. The plaintiffs allege that they occupied their spaces within the premises by agreement with the "prime tenant" of the premises. The four named plaintiffs purport to be suing as class representatives of some 100 businesses which had occupied space within the Stamford Antique Center or nearby buildings. Although no motion for class certification has yet been filed, the plaintiffs allege in the First Count that they bring this action as class representatives pursuant to Conn. Gen. Stat. § 52-105, that they meet the numerosity, commonality, typicality, and adequacy of representation criteria of Practice Book § 9-7 for maintaining a class action, and that the class has suffered damages in excess of $10 million in the form of loss of their businesses, lost profits, and destruction of inventory, trade fixtures and business records.
References to the complaint are to the Complaint Filed Against the Newly Cited-In Defendant The Stamford Antique Center, Inc. a/k/a/ "Debbie's Stamford Antique Center, Inc." and "Stamford Antique Center" with New Return Date and Second Amended and Revised Complaint and Cross Complaint (Existing Docket Number, dated June 1, 2007, (Docket position No. 135) which is the operative complaint.
The defendants include the owner Antares Yale Towne SPE, LLC, Antares Manager Group, LLC and its individual manager James P. Cabrerra (alleged to be responsible for the management of the property) the alleged prime tenant, Stamford Antique Center, Inc., tenant Paul Haller, dba Paul Haller Piano, LLC (in whose space the fire is alleged to have started) and the moving parties on the motion to strike now before the court, Goldman Sachs Commercial Mortgage Capital, L.P. and Greenwich Capital Financial Products, Inc. who had provided the $103 million mortgage financing for the purchase of the premises by Antares Yale Towne SPE, LLC about six months before the fire. (There are also several apportionment defendants and cross-claim defendants including the former owner of the complex Heyman Associates No. 1, LLC and its managers. None of those parties are involved with the present motion to strike.) The plaintiffs make no allegation as to the initial cause of the fire within the Haller Piano premises, but claim that their losses and damages were proximately caused by the spread of that "small fire" which in turn was caused by numerous alleged fire code violations within the complex, including functional defects to the fire suppression sprinkler system in the portion of Buildings 15 and 15a where Haller Piano was located and the wrongful disconnection and capping off of that sprinkler system prior to the fire, and the wrongful storage of "large quantities of volatile chemicals" in the Haller Piano premises. The plaintiffs allege violations of the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110a, et seq., ("CUTPA") by the Antares Defendants (Second Count) the Haller Defendants (Third Count) and the defendant Stamford Antiques Center, Inc. (Ninth Count). They further allege negligence of the Antares Defendants (Fourth Count) the Haller Defendants (Fifth Count) and Stamford Antiques Center, Inc. (Eighth Count).
The "Antares Defendants" are Antares Yale Towne SPE, LLC, Antares Manager Group, LLC, and James P. Cabrerra.
The "Haller Defendants" are Paul A. Hailer dba Haller Piano, and Haller Piano, LLC.
The defendants Goldman Sachs Commercial Mortgage Capital L.P. and Greenwich Capital Financial Products, Inc. ("Lender Defendants") are implicated by the allegations of the (Sixth Count) (negligence of the Lender Defendants) and the Seventh Count (Gross Negligence and Common-Law Punitive Damages directed to the Lender Defendants as well as the Antares Defendants, and the Haller Defendants). The Lender Defendants have filed a Motion to Strike dated July 2, 2007 directed to Counts One, Six, and Seven as alleged against them. They claim that:
. . . the Sixth Count alleging negligence is legally insufficient in that Plaintiffs have failed to allege facts that would give rise to any duty owed to them by the Lender Defendants or that the Lender Defendants breached any such duty. Moreover, the First Count for "Class Action" and the Seventh Count for "Gross Negligence" also do not allege claims upon which relief may be granted.
For the reasons to be discussed, the court agrees with the Lender Defendants and grants their Motion to Strike.
Discussion
The purpose of a motion to strike is to contest the legal sufficiency of any complaint or any count thereof to state a claim upon which relief can be granted. Peter-Michael, Inc. v. Sea Shell Associates, 244 Conn. 269, CT Page 12468 270 (1998). In ruling on a motion to strike the court is limited to the facts alleged in the complaint and the court must construe the facts alleged in the complaint most favorably to the plaintiff. Waters v. Autuori, 236 Conn. 820, 825 (1996), and the court must accept as true the facts alleged in the complaint. Pamela B. v. Ment, 244 Conn. 296, 325 (1998). However, a motion to strike ". . . does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 588 (1997). A party may also use a motion to strike to attack the legal sufficiency of a prayer for relief. Practice Book § 10-39(a)(2). A court may strike a prayer for relief ". . . only if the relief sought could not be legally awarded." Pamela B. v. Ment, supra, 244 Conn. at 325. "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Bhinder v. Sun Co., 263 Conn. 358, 366 (2003).
The court will analyze separately the allegations of the challenged counts to see if they should be stricken under the foregoing criteria.
First Count — Class Action
The First Count contains the plaintiffs' class action allegations, that is, their claims that this case meets the criteria for granting a motion for class certification under Practice Book §§ 9-7 and 9-8. This count does not state a substantive cause of action against any defendant, nor does it claim substantive relief or damages from any defendant. In addition to setting up the basic factual allegations to be incorporated into subsequent counts, the First Count class action allegations (¶ 8-12) are procedural in nature and could just as well have been made as part of a motion for class certification instead of being pleaded in the complaint.
Since the court is granting the motion to strike all substantive allegations and claims for relief against the Lender Defendants as made by the four named plaintiffs, it follows that any claims that might be made against them by those plaintiffs as class representatives (should a motion for class certification hereafter be granted) would also be legally insufficient and subject to being stricken. The motion to strike is therefore granted insofar as is directed to the Lender Defendants, but may stay in the case insofar as it is directed to other defendants.
Sixth Count — Negligence
The Sixth Count allegations of negligence against the Lender Defendants are that they were ". . . in joint control [with the other defendants] of the premises; they controlled the mortgage loan proceeds and held back money from the financing of the property for `construction or repair' and had `sole discretion' as to whether to advance payments for those repairs which included code compliance repairs and general safety repairs. (¶¶ 7 and 10); that through their due diligence investigation and underwriting analysis "they knew or should have known of the condition of the premises and the safety and fire code violations set forth above (¶ 11); and that their recorded loan documents . . . indicate that they retained sole discretion to advance payments for the held back funding of repairs of the code violations and they were negligent in not diligently performing or compelling the performance by their borrower of the safety code violations as set forth above while they knew the plaintiffs were occupying the premises." (¶ 12.) As Lender Defendants point out, there is no allegation that the Lender Defendants were at any time in possession of the premises, or that the Lender Defendants acted in any way to prevent or impede the Antares Defendants from making any necessary repairs, or that their borrower (the owner Antares Yale Towne, SPE, LLC) ever made any request for funding to the Lender Defendants relating to the alleged code violations, or that Lender Defendants denied any such requests. To the contrary, plaintiffs affirmatively allege (First Count ¶ 1(d)) that "Antares did no repairs or code compliance because it planned to tear the buildings down."
"The essential elements of a cause of action in negligence are well established: duty; breach of that duty; causation; and actual injury . . ." Baptiste v. Better Val-U Supermarket, Inc., 262 Conn. 135, 138, (2002). "The issue of whether the defendant owed the plaintiff a duty of care is an appropriate one for a motion to strike because the question embodies a matter of law to be decided by the court." Bennett v. Connecticut Hospice, Inc., 56 Conn.App. 134, 137 (1999). The plaintiffs here have claimed a duty owed to them by the Lender Defendants flowing from (1) the general allegation that the Lender Defendants were "in joint control" of the premises; and (2) the control the mortgage loan documents gave the Lender Defendants over disbursement of loan proceeds held back or reserved for repairs to the premises. Taken separately or combined, these allegations are insufficient as a matter of law to establish an actionable duty of the Lender Defendants to the plaintiffs.
The allegation of "joint control" refers to the control over the premises by the owner and managers of the property — the Antares Defendants, and the tenant defendants — the Haller Defendants. In fact the plaintiffs allege that the defendant Antares Yale Towne SPE, LLC "was the owner of and in possession and control of the premises . . ." (First Count, ¶ 3(a)); that the defendant Antares Manager Group, LLC "was also in possession and control of the premises" (First Count, ¶ 3(b)); and that the defendant James P. Cabrera "was also individually in possession and control of the premises" (First Count, ¶ 5) and that the defendant Paul Haller "was in joint possession and control of his part of the premises (First Count, ¶ 6). It is significant that the plaintiffs have alleged that each of those other defendants was in "possession and control" of the premises but the allegation against the Lender Defendants is simply the conclusory word "control." It is well established that "[i]t is the possession of land that imposes the liability for injuries . . . [because] the person in possession is in a position of control and is best able to prevent harm . . ." Previs v. Spano, Docket No. CV95-0327537S, Superior Court, Judicial District of Fairfield at Bridgeport (March 20, 1998, Rush, J.) ( 1998 WL 142460; 21 Conn. L. Rptr. 539), quoting ultimately from D. Wright, J. Fitzgerald and W. Ankerman, Connecticut Law of Torts, Section 46 at 108 (1991). The word "control" has no legal or technical meaning distinct from that given in its popular acception and refers to the power or authority to manage, superintend, direct or oversee. Panaroni v. Johnson, 158 Conn. 92, 98 (1969). It is for this reason that the conclusory allegation of "control" or the even weaker allegation of "joint control" without an allegation of possession or other facts indicative of the power or authority to manage, superintend, direct, or oversee the premises must fall to the precept that "[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, Inc. v. The BOC Group, Inc., 2224 Conn. 210, 215 (1992).
In the specific context of the liability of a mortgagee with respect to defects at the mortgaged property, it is established that where a mortgagee is not in possession of the premises, it does not owe a duty of care over the condition of the property. NationBanc Mortgage Corp. of New York v. Correll, Docket No 108152, Superior Court, (Judicial District of New London at New London, (Jan. 26, 1999, Mihalakos, J.) ( 1999 WL 68550; 24 Conn. L. Rptr. 52), where the court said:
. . . a mortgagee not in possession is under no duty to disclose the existence of known lead paint. Although it is well settled that there is a duty on the part of a seller or broker to disclose the existence of known lead paint, there is no common law or statutory duty for a mortgagee not in possession to inspect for, or to disclose the existence of, lead paint. This lack of duty stems from the nature of the mortgage transaction itself, and the relationship between mortgagee and mortgagor. (Citation omitted.); . . . [and]
The purpose of the mortgage transaction was simply to provide money to the defendants so that they can fulfil their obligations under a contract to purchase a home . . . Within that narrow transaction there are no duties on the part of the mortgagee than to follow traditional contract principles concerning the terms of the note, security and obligations . . . This court cannot find any ground in common law or statute to support the theory that a mortgagee not in possession has any obligation to bring to the mortgagor's attention the presence of any defects . . . in the collateral. (Citation omitted.)
There are no allegations in this case that the Lender defendants exercised any control over the management of the property, which was left to the discretion of its borrower or the borrower's designated managers. Nor is there any allegation that the Lender defendants interfered with or impeded repairs at the property. The power to control disbursements loan proceeds reserved for the purpose of repairs can hardly be equated with the power to implement or manage those repairs which would be the essence of the control necessary to impose liability. Control over disbursement of loan proceeds is not control over the property collateralizing that loan. There is no allegation that the mortgage was in default, or that the mortgage documents granted the mortgagees the power or right to go onto the property, hire contractors, or effect repairs. In the absence of any such allegations the initiative on effecting repairs would rest with the Antares Defendants as the owners and managers of the property. The Lender Defendants might have had a duty to advance loan proceeds to pay for such repairs if a proper request for disbursement had been submitted. But there is no allegation of any such request made by the Antares Defendants to the Lender Defendants. Nor is there any allegation that the mortgage documents gave the Lender Defendants the power to "compel" the mortgagor/owner-manager to perform any particular repairs under any circumstances or within any time limit. In Connecticut Bank and Trust Co. v. Carriage Lane Associates, 219 Conn. 772, 781-82 (1991) the construction loan at issue in that case, as in this case, provided that the lender could advance loan proceeds as construction progressed, but that "the time and amount of each advancement [would be at the sole discretion and upon the estimate] of the construction lender." (Quoting from the construction mortgage.) The Supreme Court held that these provisions were for the lender's own benefit and that, even if the loan provision had been violated, the construction lender did not owe any duty to a third party (the holder of a junior mortgage) allegedly damaged by the negligent disbursement of loan proceeds.
The conclusory allegation of "joint control" over the premises, without an allegation of possession or more specific factual allegations of control, and the allegation of discretionary control over disbursements of mortgage loan proceeds, then, are insufficient as a matter of law to create a duty of the Lender Defendants toward occupants of the mortgaged property in the positions of the plaintiffs. The cases cited by the plaintiffs in opposition to this motion are inapposite, all having to do with the liability of landlord or tenant. Issues of which portions of a property are under the control of the landlord, or the tenant, or both, are fact driven and governed by statute or lease provisions which would have no bearing on the entirely different issue of a lender's control over mortgaged property. The motion to strike the Sixth Count of the complaint is therefore granted.
Seventh Count — Gross Negligence
The motion to strike the Seventh Count, sounding in gross negligence, is granted for the same reasons that the court has stricken the Sixth Count. Whether or not there is a recognized cause of action for gross negligence under Connecticut jurisprudence (which it is not necessary for this court to decide) there would in any event have to be a duty of care of the allegedly grossly negligent defendant toward the plaintiffs. For the same reasons as there is no such duty under the allegations of the Sixth Count, there is likewise no actionable duty of care under the allegations of the Seventh Count, which essentially incorporates the allegations of the Sixth Count and alleges no additional facts relating to the control of the Lender Defendants over the premises. The motion of the Lender Defendants to strike the Seventh Count is therefore granted as it applies to them, but it may remain in the case to the extent that it is directed to other defendants.
Order
The Motion to Strike (No. 148) is granted as to the Sixth Count of the complaint. It is also granted as to the First and Seventh Counts of the complaint to the extent that those counts are directed to the defendants Goldman Sachs Commercial Mortgage Capital, L.P. and Greenwich Capital Financial Products, Inc., but those counts may remain in the complaint to the extent that they are directed at other defendants.
So Ordered,