Opinion
No. FST CV 05 4004621
May 30, 2006
MEMORANDUM OF DECISION RE MOTION TO STRIKE
On November 21, 2005, the plaintiff, Desrosier of Greenwich (Desrosier), filed a six-count amended complaint against the defendant, Shumway Capital Partners (Shumway). The plaintiff alleged that on or about September 25, 2003, the plaintiff and the defendant entered into a written managed technology agreement (the agreement) pursuant to which the plaintiff was to manage computer technology for the defendant and the defendant was to compensate the plaintiff. Additionally, either party had the right to terminate the agreement with a ninety-day prior written notice. The plaintiff provided these services to the defendant between September 25, 2003 and December 23, 2004, but was not properly compensated for its services according to the complaint. In addition, and in violation of the agreement the plaintiff further alleged that the defendant solicited and hired one of the plaintiff's employees, a systems network engineer, Jason Wisecup. In the fourth count, the plaintiff alleges a tortious interference with a contractual relationship, in the fifth count, a tortious interference with a business expectancy and in the sixth count, a violation of General Statutes § 42a-110a et seq., the Connecticut Unfair Trade Practices Act (CUTPA). Lastly, in its fourth prayer for relief, the plaintiff requests punitive damages and, in the fifth prayer for relief, attorneys fees and costs.
In count one the plaintiff alleges a breach of contract claim; in count two, a claim for promissory estoppel, and in count three, a claim of unjust enrichment. These three counts are not the subject of the defendant's motion to strike.
On December 9, 2005, the defendant filed motion #111 to strike the fourth, fifth and sixth counts of the plaintiff's amended complaint as well as the fourth and fifth prayers for relief. "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). Practice Book § 10-39 provides in relevant part: "(a) Whenever any party wishes to contest . . . (2) the legal sufficiency of any prayer for relief in [a] complaint, counterclaim or cross complaint . . . that party may do so by filing a motion to strike the contested pleading or part thereof." "The role of the trial court in ruling on a motion to strike is "to examine the [complaint], construed in favor of the [plaintiff], to determine whether the [pleading party has] stated a legally sufficient cause of action." (Internal quotation marks omitted.) Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 378, 698 A.2d 859 (1997). "In ruling on a motion to strike, the court is limited to the facts alleged in the complaint." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Greco v. United Technologies Corp., 277 Conn. 337, 347, 890 A.2d, 1289 (2006).
The defendant moves to strike as legally insufficient counts four, five and six and the request for relief for punitive damages, attorneys fees and costs under CUTPA. The defendant argues that in count four, a tortious interference with a contractual relationship, and five, a tortious interference with a business expectancy, the plaintiff has failed to allege facts showing that the conduct of the defendant was malicious or tortious and that the plaintiff sustained an actual loss. As to the sixth count alleging a CUTPA violation, the defendant argues it is also legally insufficient because it merely alleges a breach of contract without sufficient aggravating circumstances; it is based upon an employer-employee relationship dispute, and not one that resulted from the conduct of any trade or commerce; and it fails to allege facts that would constitute unfair or deceptive acts under the so-called "cigarette rule" or the Federal Trade Commission Act.
In response, the plaintiff argues that it has alleged sufficient facts to properly plead a claim of tortious interference with a contractual relationship. In its amended complaint as to count four, the plaintiff claims that (1) the defendant was aware or should have been aware of an employment/nonsolicitation/noncompete agreement between the plaintiff and Wisecup; (2) the defendant actively encouraged Wisecup to breach this agreement and advised him that the agreement with the plaintiff was nonbinding; (3) the defendant hired Wisecup for permanent employment on December 23, 2004; and, as a result, (4) the defendant unlawfully and intentionally interfered with the plaintiff's contractual relationship with Wisecup and suffered damages. The plaintiff argues further that the same allegations in count four are also sufficient for tortious interference with a business expectancy claim in count five, and, additionally, since the defendant interfered with the plaintiff's right to pursue its lawful business or occupation and secure itself the earning of the industry, it has suffered damages.
Finally, with respect to count six, the plaintiff contends that the defendant has breached the agreement by soliciting and hiring Wisecup permanently; that this action was unlawful and intentional; and along with the alleged tortious interference with a contractual relationship and business expectancy, that the defendant's actions were an unfair and deceptive act or practice in the conduct of trade or commerce as defined by CUTPA. Thus, the plaintiff maintains it has properly alleged a violation of CUTPA.
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 . . ."
I
"A claim for tortious interference with contractual relations requires the plaintiff to establish (1) the existence of a contractual or beneficial relationship, (2) the [defendant's] knowledge of that relationship, (3) the [defendant's] intent to interfere with the relationship, (4) the interference was tortious, and (5) a loss suffered by the plaintiff that was caused by the [defendant's] tortious conduct." (Internal quotation marks omitted.) Appleton v. Board of Education, 254 Conn. 205, 212-13, 757 A.2d 1059 (2000).
The first three elements of a tortious interference with a contractual relationship have been satisfied and are not at issue. The defendant only challenges the sufficiency of the plaintiff's allegations to demonstrate that the defendant's conduct was tortious. "[The Supreme Court] has long recognized a cause of action for tortious interference with contract rights or other business relations . . . Nevertheless, not every act that disturbs a contract or business expectancy is actionable . . . [F]or a plaintiff to successfully prosecute such an action it must prove that the defendant's conduct was in fact tortious. This element may be satisfied by proof that the defendant was guilty of fraud, misrepresentation, intimidation or molestation . . . or that the defendant acted maliciously . . . [A]n action for intentional interference with business relations . . . requires the plaintiff to plead and prove at least some improper motive or improper means . . . [A] claim is made out [only] when interference resulting in injury to another is wrongful by some measure beyond the fact of the interference itself." (Citations omitted; internal quotation marks omitted.) Robert S. Weiss Associates, Inc. v. Widerlight, 208 Conn. 525, 535-36, 546 A.2d 216 (1988). "The plaintiff in a tortious interference claim must demonstrate malice on the part of the defendant, not in the sense of ill will, but intentional interference without justification . . . In other words, the [plaintiff] bears the burden of alleging and proving lack of justification on the part of the actor." (Internal quotation marks omitted.) McCormick v. McCormick, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV03 0196643 (January 19, 2005).
The plaintiff has alleged an employment contract with Wisecup of which the defendant knew or should have known and which the defendant encouraged Wisecup to breach by advising him that it was not binding. Thus, the first three elements of the plaintiff's claim for tortious interference with a contractual relationship have been satisfied.
In the present case, in count four, the plaintiff alleges that the defendant "knew or should have known that the plaintiff had entered into an Employment/Non-Solicitation/Non-Compete Agreement with Jason Wisecup . . . actively encouraged Jason Wisecup to breach the . . . Agreement and advised Jason Wisecup that the . . . Agreement was unenforceable and not binding." The allegation that the defendant encouraged Wisecup to breach his employment contract and subsequently hired him as a permanent employee sufficiently alleges intentional interference without justification. Furthermore, it shows an improper motive as to the defendant's actions in terminating its service contract with the plaintiff and subsequently hiring away the plaintiff's systems network engineer to perform similar work. The purpose of the clause in the agreement forbidding the defendant from hiring any of the plaintiff's employees was more than likely included to prevent just such an occurrence.
The fifth element of tortious interference with a contractual relationship requires a showing of actual loss, which the defendant also maintains has not been sufficiently alleged. "Unlike other torts in which liability gives rise to nominal damages even in the absence of proof of actual loss . . . it is an essential element of the tort of unlawful interference with business relations [and contractual relations] that the plaintiff suffers actual loss . . . [T]he tort is not complete unless there has been actual damage suffered." (Citations omitted; internal quotation marks omitted.) Appleton v. Board of Education, supra, 254 Conn. 213. "[P]roof that some damage has been sustained is necessary to [support a cause of action for tortious interference] . . . A major problem with damages of this sort, [however], is whether they can be proved with a reasonable degree of certainty . . . If the question is whether the plaintiff would have succeeded in attaining a prospective business transaction in the absence of [the] defendant's interference, the court may, in determining whether the proof meets the requirement of reasonable certainty, give due weight to the fact that the question was made hypothetical by the very wrong of the defendant. Sometimes, when the court is convinced that damages have been incurred but the amount cannot be proved with reasonable certainty, it awards nominal damages . . . Thus, an award of compensatory damages is not necessary to establish a cause of action for tortious interference as long as there is a finding of actual loss, and a finding of actual loss may support an award of punitive damages." (Citations omitted; internal quotation marks omitted.) Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 33-34, 761 A.2d 1268 (2000).
In the present case, the plaintiff has alleged it has suffered damages as a result of the defendant's interference with the contractual relationship between the plaintiff and Wisecup. Although the plaintiff has not specified the damages it suffered, the allegations are sufficient to show that it is reasonably certain that the plaintiff suffered a monetary loss since it was deprived of the benefit it would have received from the services of Wisecup.
II
"In order for [the plaintiff] to prevail on the [fifth count], namely, tortious interference with business expectancies, the [plaintiff] must prove that: (1) a business relationship existed between the [plaintiff] and [another party]; (2) the defendant intentionally interfered with that business relationship while knowing of its existence; and (3) the [plaintiff] suffered an actual loss as a result of that interference." Collins v. Anthem Health Plans, Inc., 275 Conn. 309, 334, 880 A.2d 106 (2005).
Based on the reasoning set forth in section I relating to a tortious interference with a contractual relationship, the defendant's motion to strike count five, for a tortious interference with a business expectancy, should also be denied. Specifically, the plaintiff has alleged that it had a business relationship with Wisecup; that they had an agreement employing Wisecup as a systems network engineer, who, in turn received compensation for his work; that the defendant was aware of this relationship, yet encouraged Wisecup to leave the plaintiff's employ, that it subsequently hired him as its employee, and, that the defendant's actions intentionally interfered with that relationship and the plaintiff's right to pursue its business. Since the plaintiff alleged that it lost a valuable and highly skilled employee and that he had a business expectancy in the value of this employee's skill and expertise with which the defendant interfered, and that the plaintiff suffered a loss as a result of the defendant's action, the plaintiff's allegations are legally sufficient.
III
As to count six, the defendant argues that CUTPA does not apply for three reasons: (1) the complaint merely alleges a breach of contract which is insufficient to demonstrate unfair or deceptive acts; (2) the underlying cause of action was an employer-employee dispute, which does not constitute a trade or commerce that implicates CUTPA; and (3) under either the Federal Trade Commission Act or the "cigarette rule," the plaintiff has failed to allege an unfair practice. The plaintiff counters that it has sufficiently pleaded a CUTPA claim.
Section 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 terms trade and commerce are defined in § 42-110a to mean "the advertising, the sale or rent or lease, the offering for sale or rent or lease, or the distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value in this state."
"It is well settled that in determining whether a practice violates CUTPA [the Connecticut 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 penubra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers, [competitors or other business persons] . . . All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three." (Internal quotation marks omitted.) Ventres v. Goodspeed Airport, LLC, 275 Conn. 105, 155, 881 A.2d 937 (2005), cert. denied, 2006 U.S. LEXIS 3458 (U.S. May 1, 2006).
"[T]o recover under CUTPA for a simple breach of contract, the plaintiff must show substantial aggravating circumstances intending to breach." (Internal quotation marks omitted.) Thames River Recycling, Inc. v. Gallo, 50 Conn.App. 767, 784, 729 A.2d 242 (1998). In the present case, the plaintiff has alleged not only that the defendant hired one of its employees in violation of the agreement, but also that the defendant unlawfully and intentionally encouraged Wisecup to breach his contract with the plaintiff and advised him that the contract was nonbinding. In other words, the defendant's actions of encouraging and soliciting an important member of the plaintiff's staff to come into its employment to likely perform the same services that he was providing for the plaintiff are sufficient aggravating circumstances to render the defendant's actions more than a mere breach of contract.
Second, the defendant argues that the underlying action is an employer-employee dispute, which is outside the ambit of CUTPA. In Connecticut, "[c]laims arising from the employer-employee relationship fall outside the ambit of the phrase trade or commerce and, thus, cannot constitute a cognizable CUTPA violation." Lawrenece v. Harrington, Superior Court, complex litigation docket at Tolland, Docket No. X07CV 040084752 (June 15, 2005). In United Components, Inc. v. Wdowiak, 239 Conn. 259, 264-54, 684 A.2d 693 (1996), the Connecticut Supreme Court upheld the trial court's finding that, since the claim involved an employer-employee relationship and did not rise to the level of trade and commerce cognizable under CUTPA, CUTPA was inapplicable. In Quimby v. Kimberly Clark Corp., 28 Conn.App. 660, 670-71, 613 A.2d 838 (1992), the court explained that, because the plaintiff had not alleged that the defendant's actions were committed in the conduct of any trade or commerce, there was no CUTPA claim. The court stated that the employer-employee relationship was insufficient for a CUTPA claim. "[A]lthough an employer may engage employees for the purpose of promoting trade or commerce, the actual employment relationship is not itself trade or commerce for the purpose of CUTPA." (Internal quotation marks omitted.) Id., 670; but see CT Page 10216 Larsen Chelsey Realty Co., v. Larsen, 232 Conn. 480, 494, 656 A.2d 1009 (1995) (allegations that lie outside the narrow confines of the employer-employee relationship may constitute a violation of CUTPA).
In the present case, the plaintiff's allegations that the defendant acted unlawfully in soliciting its employee for employment following the defendant's termination of its service contract with the plaintiff are outside the boundaries of the employer-employee relationship. As in Larsen Chelsey Realty Co. v. Larsen, supra, 232 Conn. 480, the plaintiff's claim does not solely arise out of an employer-employee relationship, but is legally sufficient to implicate an unfair business practice.
Third, the defendant argues that the plaintiff has failed to adequately allege a consumer injury, or any deceptive or unfair acts under either the Federal Trade Commission Act or the "cigarette rule." In the present case, as noted previously, the defendant's alleged actions of encouraging and advising Wisecup to leave the plaintiff's corporation, and the subsequent hiring of him by the defendant in contravention of the agreement between the defendant and the plaintiff, satisfy the second prong of the cigarette rule as unscrupulous behavior sufficient to support a finding of unfairness. Since the sixth count alleging a violation of CUTPA is viable, then the fourth and fifth prayers for relief for punitive damages, attorneys fees and costs pursuant to General Statutes §§ 42-110g(a) and (d) are also viable.
General Statutes §§ 42-110g(a) and (d) provide in relevant part: "(a) Any person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a method, act or practice prohibited by section 42-110b, may bring an action . . . The court may, in its discretion, award punitive damages and may provide such equitable relief as it deems necessary or proper. (d) In any action brought by a person under this section, the court may award, to the plaintiff, in addition to the relief provided in this section, costs and reasonable attorneys fees based on the work reasonably performed by an attorney and not on the amount of recovery."
The defendant's motion to strike counts four, five and six and the fourth and fifth prayers for relief of the plaintiff's amended complaint is therefore denied.
So Ordered.