Opinion
No. NNH CV 10-6012650
February 18, 2011
MOTION TO STRIKE #103
I
HISTORY
The plaintiffs, Paul Dispazio, Peter Loomis, Central Dispatch Solutions, LLC (Central Dispatch), and The Bullbag, LLC (The Bullbag), filed a five-count complaint in this action on July 7, 2010 against the defendants, Oakleaf Waste Management, LLC (Oakleaf Waste Management) and Oakleaf Global Holdings, Inc. (Oakleaf Global). The following facts are alleged in the complaint. At all relevant times, Central Dispatch and The Bullbag are limited liability companies registered and in good standing in Connecticut. At all relevant times, Oakleaf Waste Management is a domestic limited liability company registered and in good standing in Connecticut, and Oakleaf Global is a Delaware corporation.
The following facts are also alleged in the complaint. On November 14, 2006, Dispazio, Loomis and Central Dispatch entered into an asset purchase agreement (the agreement) whereby Dispazio, Loomis and Central Dispatch would convey their entire interest in TrashBeeGone, LLC, a wholly owned subsidiary of Central Dispatch. TrashBeeGone "was in the business of providing refuse container placement and pick-up brokerage services to retail and wholesale customers on a regional basis . . ." "TrashBeeGone contracted for an exclusive arrangement for dumpster services for Home Depot, Inc. . . ." The agreement included the assignment of the Home Depot contract.
As The Bullbag is not referenced in count one when Dispazio, Loomis and Central Dispatch are referred to as the plaintiffs, the court will refer to the latter three parties individually when referencing the complaint.
The following facts are further alleged in the complaint. Pursuant, to the agreement, Oakleaf Global "agreed to irrevocably and unconditionally guaranty the obligations of [Oakleaf Waste Management]." As per the agreement, the defendants were to pay Dispazio, Loomis and Central Dispatch an "earnout" payment which was to be 25 percent of the operating income of the business as defined in the agreement. In a letter dated February 9, 2010 and signed by Gregory A. Pastore, senior vice president and general counsel for the defendants, Dispazio, Loomis and Central Dispatch were told that there would be no earnout payment for either 2008 or 2009, the Home Depot dumpster rental program was terminated and no future earnout payments would be generated. "The [e]arnout provision was the central provision of the [a]greement and the primary incentive" for Dispazio, Loomis and Central Dispatch to enter into the agreement with the defendants.
Count one alleges a breach of contract and count two alleges fraudulent inducement. The third count sets forth a claim of gross negligence, while count four alleges tortious interference with contractual relations. Finally, the fifth count claims a violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq.
While a violation of General Statutes § 42-110(g) et seq. is alleged in the complaint, CUTPA begins with § 42-110a.
Count one alleges a breach of a contract in that the defendants, inter alia, "[d]espite repeated verbal and written requests," did not provide the 2008 earnout calculation for more than a year after it was contractually obligated to do so, and provided Dispazio, Loomis and Central Dispatch with a 2009 earnout calculation, which included costs and expenses that were intended to lower the earnout in contravention of the agreement. It also alleged that the defendants breached the agreement by engaging in "negligent and/or gross negligent conduct" which resulted in Home Depot's termination of the dumpster rental program and the elimination of the agreement's earnout provisions.
On September 9, 2010, the defendants filed a motion to strike counts two, three, four and five of the complaint accompanied by a memorandum of law in support thereof. The defendants move to strike on various grounds which will be discussed, infra. As an alternate ground for striking counts two through five, however is that "these counts are barred by the economic loss rule, which precludes recovery on tort based claims when only economic losses are claimed from transactions between sophisticated commercial parties where the fundamental claim sounds in contract and contract damages are appropriate." The defendants' ground for striking counts two through five as to Oakleaf Global is that Oakleaf Global's "only potential liability to the [p]laintiffs is based on its guaranty of [Oakleaf Global's] obligations under the [a]greement." The plaintiffs filed an objection to the motion to strike and a memorandum in support of their objection on October 20, 2010. Oral arguments were heard on the short calendar on November 8, 2010.
While the defendants assert in the motion to strike that the economic loss doctrine is the ground for striking count three of the complaint, later on in that motion, they assert that the economic loss doctrine is a ground for striking counts two through five.
II DISCUSSION
Practice Book § 10-39(a) provides in relevant part: "Whenever any party wishes to contest . . . the legal sufficiency of the allegations of any complaint, counterclaim or cross claim, or of any one or more counts thereof, to state a claim upon which relief can be granted . . . that party may do so by filing a motion to strike the contested pleading or part thereof." "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . Moreover . . . [w]hat is necessarily implied [in an allegation] need not be expressly alleged . . . It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted . . . Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, 295 Conn. 240, 252-53, 990 A.2d 206 (2010). "In ruling on a motion to strike, the court is limited to the facts alleged in the complaint. The court must construe the facts in the complaint most favorably to the plaintiff . . . If facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). "A motion to strike . . . consequently, requires no factual findings by the trial court." (Internal quotation marks omitted.) Lestorti v. DeLeo, 298 Conn. 466, 4 A.3d 269 (2010).
"It is well established that a motion to strike must be considered within the confines of the pleadings and not external documents . . . We are limited . . . to a consideration of the facts alleged in the complaint." (Internal quotation marks omitted.) Zirinsky v. Zirinsky, 87 Conn.App. 257, 268-69 n. 9, 865 A.2d 488, cert. denied, 273 Conn. 916, 871 A.2d 372 (2005). "A speaking motion to strike is one improperly importing facts from outside the pleadings." Mercer v. Cosley, 110 Conn.App. 283, 292 n. 7, 955 A.2d 550 (2008). "Where the legal grounds for . . . a motion [to strike] are dependent upon underlying facts not alleged in the plaintiff's pleadings, the defendant must await the evidence which may be adduced at trial, and the motion should be denied." (Internal quotation marks omitted.) Commissioner of Labor v. C.J. M. Services, Inc., 268 Conn. 283, 293, 842 A.2d 1124 (2004).
A
Economic Loss Doctrine
First, this court will examine whether the economic loss doctrine bars counts two, three, four and five. The defendants argue that counts two through five should be stricken as they are barred by the economic loss rule. The defendants acknowledge that Connecticut appellate courts have not addressed whether the economic loss doctrine applies to cases that do not involve the sale of goods and the Superior Court is split on the issue but contend that "[t]hose cases that hold that the economic loss rule is not and cannot be restricted to contracts for the sale of goods are most applicable to this case." The defendants maintain that the plaintiffs merely reframe their allegations from the breach of contract count into tort language. With regard to the CUTPA count, the defendants argue that as the plaintiffs do not allege "tortious conduct falling clearly outside the scope of the contract between sophisticated parties, the economic loss rule precludes recovery in these circumstances." The defendants also assert that the fraudulent inducement claim is basically "a claim that the [d]efendants breached their representation that they could perform the contract and should be similarly barred by the economic loss rule . . ."
The plaintiffs argue that the economic loss doctrine has not been recognized by Connecticut in a tort case by any appellate court. According to the plaintiffs, the Supreme Court, when dealing with the economic loss doctrine, limited its "application of the doctrine to cases involving defective performance in a contract for the sale of goods." The plaintiffs contend that while the defendants cite to various Superior Court cases that have extended the economic loss doctrine, there are a number of other Superior Court cases holding that the doctrine should not apply to circumstances not involving the sale of goods.
"[T]he economic loss doctrine . . . is a judicially created doctrine which prohibits recovery in tort where the basis for the tort claim arises from violation of a contract and damages are limited to purely economic losses as opposed to personal injury or property damages." (Internal quotation marks omitted.) Greenwich Interiors, LLC v. DCM Systems, LLC, Superior Court, judicial district of Stamford/Norwalk, Docket No. CV 08 5009200 (February 25, 2009, Downey, J.) ( 47 Conn. L. Rptr. 295, 296).
In Flagg Energy Development Corp. v. General Motors Corp., 244 Conn. 126, 709 A.2d 1075 (1998), the plaintiffs alleged, inter alia, misrepresentation and a breach of CUTPA against the defendant; id., 151; for allegedly delivering "defective gas turbine engines for a construction project." Id., 129. "[T]he plaintiffs alleged that the defendant had knowingly or negligently misrepresented the future performance of the engines, and that the plaintiffs had relied on these misrepresentations to their detriment." Id. The plaintiffs further "alleged that the defendant's misrepresentations had wrongfully induced them to purchase the engines produced by the defendant . . ." Id., 151-52. The defendant moved to strike these counts "because the plaintiffs are seeking recovery for commercial loss and, as a result, are limited to the remedies provided by the Uniform Commercial Code." (Internal quotation marks omitted.) Id., 152. The plaintiffs countered "that actions for fraud did not fall within the economic loss rule." Id. The plaintiffs further argued that even if their tort and unfair practice claims were barred by the economic loss rule, the savings provisions of the Uniform Commercial Code (UCC), General Statutes §§ 42a-1-103 and 42a-2-721 validated their claims. Id. The plaintiffs further contended "that their allegations of fraudulent inducement stated a valid claim under CUTPA." Id. The trial court granted the defendant's motion to strike, and on appeal, the plaintiffs argued that the trial court did not correctly apply the economic loss rule as, in the plaintiffs' view, "the rule does not apply to claims for negligent misrepresentation of information provided for the guidance of others or to claims for unfair trade practices." (Internal quotation marks omitted.) Id., 153. The Supreme Court stated: "We agree with the holdings of cases in other jurisdictions that commercial losses arising out of the defective performance of contracts for the sale of goods cannot be combined with negligent misrepresentation. See Duquesne Light Co. v. Westinghouse Electric Corp., 66 F.3d 604, 618 (3d Cir. 1995); Princess Cruises, Inc. v. General Electric Co., 950 F.Sup. 151, 155 (E.D.Va. 1996) ("The parties are sophisticated corporations familiar with the type of services rendered, and the consequences of a mechanical failure likely to result from a failure to perform the contract as promised. The parties were free to allocate the risks, insure against potential losses, and adjust the contract price as they deemed most wise. This Court sees `no reason to extricate the parties from their bargain'"); see also General Statutes § 52-572n(c); 1 Restatement (Third), Torts, Products Liability (proposed final draft) § 6, p. 303 (1996). These authorities are particularly persuasive in the circumstances of this case, in which the misrepresentation and CUTPA claims depend upon allegations of fact that are identical to those asserted in their claims." Flagg Energy Development Corp. v. General Motors Corp., supra, 153-54. The Supreme Court also rejected the plaintiffs' statutory arguments based on the UCC. Id., 154-55.
"Since the Flagg Energy case came down a split of authority has developed [within the Superior Court] as to whether or not the economic loss doctrine is limited to disputes between the buyer and seller of goods under Article 2 of the Uniform Commercial Code, or if it applies generally to other types of disputes between parties who are in a contractual relationship. There are multiple unreported decisions espousing both the narrow view and the broader view. The same debate is evident in cases coming from other states." Tunison v. Hollow Oak Properties, LLC, Superior Court, Complex Litigation Docket at Stamford, Docket No. CV X08 06 5001664 (October 1, 2010, Jennings, J.T.R.).
In Dart Chart Systems v. Farmington Care Center, LLC, Superior Court, judicial district of Hartford, Docket No. CV 09 5025870 (June 5, 2009, Aurigemma, J.) ( 47 Conn. L. Rptr. 900), the Superior Court adopted the broader view of the economic loss doctrine and applied it to strike a CUPTA count. In Dart Chart Systems, the plaintiff was a limited liability company that provided "web-based application programs . . . designed to improve nursing home assessments, documentation management and regulatory compliance under the Medicare Prospective Payment System." Dart Chart Systems v. Farmington Care Center, LLC, supra, 901. The plaintiff entered into a contract with the defendant to provide the defendant with such a "web-based application program." (Internal quotation marks omitted.) Id. In an addendum to this agreement, the parties agreed that the defendant would only be obligated to pay the plaintiff once the plaintiff could demonstrate a specific level of achievement. Id. The plaintiff alleged that they notified the defendant at the time the achievement goal was met but the defendant breached the contract by failing to pay for the system and "that [u]pon information and belief, [defendant] never intended to honor its commitment to pay [the plaintiff] for the System yet used the System for 13 months and that the intentional failure to pay for the System constituted an unfair and deceptive trade practice in violation of [CUTPA]." (Internal quotation marks omitted.) Dart Chart Systems v. Farmington Care Center, LLC, supra, 901.
The court in Dart Chart Systems noted that while the Supreme Court in Flagg Energy Development Corp., may have limited its holding to cases involving the sale of goods, the Princess Cruises, Inc. case, cited to in Flagg Energy Development Corp., emanated from claims arising from a contract that obligated the defendant to perform services. Dart Chart Systems v. Farmington Care Center, LLC, supra, 47 Conn. L. Rtpr. 902. The court in Dart Cart Systems observed that Princess Cruises, Inc. relied on the following language from East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 872-73, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986), which provided the following explanation for the economic loss rule: "Contract law, and the law of warranty in particular, is well suited to commercial controversies of the sort involved in this case because the parties may set the terms of their own agreements. The manufacturer can restrict its liability, within limits, by disclaiming warranties or limiting remedies . . . In exchange, the purchaser pays less for the product. Since a commercial situation generally does not involve large disparities in bargaining power . . . we see no reason to intrude into the parties' allocation of the risk." (Citations omitted.) East River S.S. Corp. v. Transamerica Delaval, Inc., supra, 872-73. The court in Dart Chart Systems observed that the Princess Cruises, Inc. opinion noted that courts have applied the economic loss doctrine to repair service contracts and contracts involving services as part of products' manufacture or construction. Dart Chart Systems v. Farmington Care Center, LLC, supra, 902. The Dart Chart Systems court stated that while the Princess Cruises, Inc. plaintiff asserted that because the defendant made negligent representations, the economic loss rule should not apply as the defendant committed a tort independent of breach of contract, the Princess Cruises, Inc. court rejected that argument. Dart Chart Systems v. Farmington Care Center, LLC, supra, 902.
The court in Dart Chart Systems also quoted the following language from Princess Cruises, Inc. v. General Electric Co., supra, 950 F.Sup. 155 in support of applying the economic loss doctrine: "Almost any contract breach can be conceived of in terms of a negligent or intentional tort claim. When, through the negligence of one of the parties, the subject of the transaction physically injures a person, or damages the property of someone not a party to the contract, the law of tort properly provides a cause of action. But to permit a party to a broken contract to proceed in tort where only economic losses are alleged would eviscerate the most cherished virtue of contract law, the power of the parties to allocate the risks of their own transactions."
Even where the Superior Court ruled that the economic loss doctrine was not merely confined to cases involving the UCC and the sale of goods, it has noted exceptions to the application of the doctrine. "Other jurisdictions that recognize the economic loss doctrine have found a number of exceptions: (1) damages that were not reasonably foreseeable at the time of contracting. SNA Inc. v. Hartzell Propeller, Inc., No. 95-1397, 1996 WL 283646 (E.D. Pa. May 29, 1996); (2) damages that far exceed the plaintiff's contractual expectations, such as damage to property other than that property that was the subject of the contract. Laidlaw Waste Systems, Inc. v. Mallinckrodt, Inc., 925 F.Sup. 624, 636 (E.D. Mo. 1996); (3) defendant's actions that are independent of the defendant's breach of contract. Bradley Factor Inc. v. United States, 86 F.Sup.2d 1140, 1146 (M.D. Fla. 2000); and (4) in negligent misrepresentation where the defendant must be in the business of supplying information and the defendant must provide this information for the guidance of others in their business relations with third parties. Gerdes v. John Hancock Mutual Life Ins. Co., 712 F.Sup. 692, 696 (N.D. Ill. 1989); See Trans States Airlines v. Pratt Whitney Canada, Inc., 682 N.E.2d 45, 48 (Ill. 1987) (discussing exceptions (1), (3) and (4))." Worldwide Preservation Services, L.L.C. v. The IVth Shea, L.L.C., Superior Court, Complex Litigation Docket at Stamford, Docket No. CV X05 98 0167154 (February 1, 2001, Tierney, J.) ( 29 Conn. L. Rptr. 1, 4-5).
In State v. Maximus, Inc., Superior Court, Complex Litigation Docket at Waterbury, Docket No. CV X06 07 5011488 (April 1, 2009, Stevens, J.) ( 47 Conn. L. Rptr. 642), the plaintiff alleged that, through the department of information technology, it entered into a contract with the defendant to upgrade the Connecticut Online Law Enforcement Communications Teleprocessing System (Collect System). Id., 643. The plaintiff alleged, inter alia, a breach of contract and negligent misrepresentation. Id. In the negligent misrepresentation count, the plaintiff alleged that the defendant made false representations as part of the contract proposal. Id. "These representations included the following: that the defendant had chosen the most experienced and best qualified personnel available at [the defendant and its subcontractor] to work on the project; that [the subcontractor] had the most advanced products in the public safety marketplace and provided unparalleled software development and customer services; that the [subcontractor's] staff would have the skills and experience to understand the subject matter of the Collect System, and would devote the time necessary to perform the services needed to develop the Collect System; and that the defendant would have a quality assurance and quality control program." Id. The complaint alleged that these representations were incorporated into the final contract. Id.
The defendant in Maximus, Inc. moved to strike the negligent misrepresentation count on the basis of the economic loss doctrine. Id. The court stated: "This court finds that the cases relied on by the plaintiff are more persuasive.
"[T]he precise issue presented in Flagg was whether the plaintiffs' recovery was limited to the remedies provided under the UCC. In answering this narrow question in the affirmative, the court did not address or expressly overrule its earlier decisions that did not involve the UCC, in which it held that negligence claims are not precluded solely because the claims seek economic losses arising from the parties' contractual relationship. Williams Ford, Inc. v. Hartford Courant Co., [ 232 Conn. 559, 579, 657 A.2d 212 (1995)]; D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, [ 202 Conn. 206, 218-19, 520 A.2d 217 (1987). In Flagg, the court noted its agreement with two out-of-state cases applying the economic loss doctrine in situations that did not involve the UCC. See Duquesne Light Co. v. Westinghouse Electric Corp., [ supra, 66 F.3d 618]; Princess Cruises, Inc. v. General Electric Co., [ supra, 950 F.Sup. 155]. The facts of Flagg, however, only involved the application of the UCC, and therefore, the issues presented in the case did not squarely call for the court to consider the application of the economic loss rule to a situation not involving the UCC. Consequently, in this particular context, the court's references to these out of state cases should be viewed as obiter dicta. The law is established that dictum does not represent binding authority. Remax Right Choice v. Aryeh, 100 Conn.App. 373, 378, 918 A.2d 976 (2007) (`It is well established that statements in prior cases that constitute dicta do not act as binding precedent'). Additionally, as a general rule, a trial court should proceed cautiously in concluding that dictum of a Supreme Court's decision overrules sub silento its prior, controlling precedent. Cf., W D Acquisition, LLC v. First Union National Bank, 262 Conn. 704, 714-15, 817 A.2d 91 (2003) (where lower court mistakenly relied on dictum of prior Supreme Court decision).
" Flagg stands for the proposition that, where a claim for damages arises out of the commercial sale of goods governed by the Uniform Commercial Code and the losses are purely economic, a plaintiff's remedies are limited to those available under the Code. See Santoro v. A.H. Harris Sons, Inc., Superior Court, [judicial district of Hartford] Docket No. CV 03 0828039, (September 23, 2004, Sheldon, J.) ( 38 Conn. L. Rptr. 4, [6]) ("Under close examination, [ Flagg] cannot reasonably be read to create a general rule barring all tort claims based in whole or in part upon alleged breaches of contract or alleged breaches of warranties of fitness and/or merchantability. Instead, it can only be read to bar such claims in the particular circumstances there at issue, to wit: where both the plaintiff and the defendant are sophisticated commercial parties, and their dispute arises from the defendant's allegedly defective performance under a contract for the sale of goods"). Such a limited construction is necessary in light of the language of Williams Ford, Inc. v. Hartford Courant Co., supra, [ 232 Conn. 579], rejecting a broader doctrine. It is also consistent with holdings in other states. See, e.g., Neibarger v. Universal [Cooperatives, Inc.], [ 439 Mich. 512], 486 N.W.2d 612, 618 (Mich. 1992) ("[W]e hold that where a plaintiff seeks to recover for economic loss caused by a defective product purchased for commercial purposes, the exclusive remedy is provided by the UCC, including its statute of limitations"), and Trinity [Industries, Inc.] v. McKinnon Bridge Co., 77 S.W.3d 159, 171 (Tenn.Ct.App. 2001) ("In a contract for the sale of goods where the only damages alleged come under the heading of economic losses, the rights and obligations of the buyer and seller are governed exclusively by the contract")." (Emphasis in original; internal quotation marks omitted.) State v. Maximus, Inc., supra, 47 Conn. L. Rptr. 645. As the court in Maximus held that the Flagg Energy Development Corp. holding was limited to UCC cases, and the contract in Maximus was "a services contract, and not a sales contract governed by the UCC, the economic loss doctrine is inapplicable." State v. Maximus, Inc., supra, 648.
In Milltex Properties v. Johnson, Superior Court, judicial district of New London, Docket No. CV 565866 (March 15, 2004, Hurley, J.T.R.) ( 36 Conn. L. Rptr. 780, 784), the court stated: "This court agrees with the reasoning in the line of cases restricting the applicability of the economic loss doctrine. No appellate court in Connecticut has held that a plaintiff may not recover for economic losses when the relationship is contractual in nature other than in actions where the claim is based on product liability and the sale of goods. Until such time when an appellate court does expand the so called economic loss doctrine, this court will limit its applicability to circumstances similar to the facts in Flagg . . ."
It is submitted that the court in the present case should adopt the holding of the Superior Court cases such as Maximus that construe Flagg Energy Development Corp. narrowly and confine its holding to UCC cases involving the sale of goods. Therefore, counts two, three, four and five should are not stricken on the ground that they are barred by the economic loss doctrine.
The plaintiffs do not assert any claims under the UCC in their complaint and the defendants do not make the argument that any of the plaintiffs' claims are governed by the UCC.
B
Oakleaf Global
Another ground in the defendant's motion to strike that applies to counts two, three, four and five as they relate to Oakleaf Global is that "Oakleaf [Global] has no other duty to [the] [p]laintiffs other than pursuant to this contractual guaranty." According to the defendants, the "[p]laintiffs do not allege another duty owed by [Oakleaf Global] or plead sufficient facts to infer any duty owed by Oakleaf [Global] to support their claims sounding in tort." In their memorandum of law in support of the motion to strike, the defendants argue that "[t]he [p]laintiffs lump both Oakleaf [Waste Management] and Oakleaf [Global] together in their claims sounding in tort. They allege no duty owed by Oakleaf [Global] to the [p]laintiffs other than pursuant to Article X of the [a]greement, nor do they allege any facts which would even infer any additional duty owed by Oakleaf [Global] or any conduct by Oakleaf [Global] which would breach such a duty."
In response, the plaintiffs argue that the defendants are simply offering a legal conclusion as to why Oakleaf Global should not be a party to this action. The plaintiffs state: "As the parent company and unconditional guarantor under the . . . [a]greement, Oakleaf [Global] is responsible for any and all activity, including [tortious] conduct, fraud, and violation of CUTPA, engaged in or caused by Oakleaf Waste Management. At all relevant times as contained in the [c]omplaint, both of the defendants acted simultaneously, through the same representatives, officers and agents, and therefore, both [d]efendants are potentially liable to the [p]laintiffs." The plaintiffs further assert that they are entitled to plead tort claims against the corporate guarantor and if necessary, seek "the equitable remedy of piercing the corporate veil." According to the plaintiffs, as these allegations involve questions of fact to be determined at trial, the defendants' motion to strike should be denied.
The plaintiffs did not affix a copy of the agreement to their complaint; therefore, the court does not have the benefit of being able to view it. As the court would have to look outside the pleadings to discern Oakleaf Global's obligation to Dispazio, Loomis and Central Dispatch under the agreement, this issue is not suitable for resolution via a motion to strike. See Commissioner of Labor v. C.J. M Services, Inc., supra, 268 Conn. 293. Therefore, the court denies the motion to strike counts two, three, four and five as to Oakleaf Global on the ground that Oakleaf Global's sole duty under the agreement is guarantor.
C
Fraudulent Inducement
Next, the court will turn to the grounds raised by the defendants to strike count two sounding in fraudulent inducement. Count two alleges fraudulent inducement and incorporates paragraphs one through eleven of count one. The following facts are alleged in count two. The defendants "initiated and engaged in negotiations" with Dispazio, Loomis and Central Dispatch to purchase the operations of TrashBeeGone and the Home Depot dumpster rental program. During the course of these negotiations, the defendants prepared marketing materials to exemplify "their ability to expand the operations and the Home Depot [d]umpster [r]ental [p]rogram." "On or about August 29, 2006 the defendants prepared detailed marketing materials and spreadsheets showing the strength of the company and their demonstrated track record for acquiring companies and operations and successfully integrating them into the [d]efendant's business." Also on or about August 29, 2006, the "[d]efendants prepared a detailed set of scenarios" where they showed Dispazio, Loomis and Central Dispatch "the profit figures and [e]arnout calculations that were anticipated with the [d]efendants' purchase of the business." Based on the defendants' statements and representations, Dispazio, Loomis and Central Dispatch agreed to sell their company for a price lower than market value, relying on the earnout provision.
The plaintiffs do not allege to which defendant they are referring. Based on the surrounding context, the court infers that the plaintiffs intend to actually refer to both defendants.
The second count further alleges the following. The defendants knew or should have known that the promises and representations they made to Dispazio, Loomis and Central Dispatch throughout the negotiations were fraudulent and were designed to induce these plaintiffs into selling the company for below market value. Dispazio, Loomis and Central Dispatch, in reliance on the defendants' representations and the earnout provision, sold their company for a below market value price.
The ground for the motion to strike count two is that "it is a mere allegation of fraud which fails to plead specific false representation made by the [d]efendants on which the plaintiffs relied to their detriment." The defendants argue that the plaintiffs do not plead with sufficient specificity the representations that the defendants made that were allegedly fraudulent. The defendants further assert that "[t]he majority of the paragraphs of [c]ount [t]wo of the [c]omplaint simply allege conduct or events which are not even further alleged to be false or fraudulent . . ." In addition the defendants maintain that "[c]ount [t]wo identifies no specific false representation which was allegedly made by the [d]efendants as a statement of fact. It merely alleges in paragraph 17 that unidentified `promises and representations' were `fraudulent in nature.'"
The defendants also argue that count two does not allege that the defendants knew that these "unidentified statements" were indeed false. The defendants contend that simply alleging that the defendants "`knew or should have known' is not sufficient to satisfy the first two elements of common law fraud."
On the face of the motion, the defendants merely state that count two of the complaint "is legally insufficient because it is a mere allegation of fraud which fails to plead specific false representation made by [the] [d]efendants on which the plaintiff relied to their detriment. Without pleading any specific false statements or misrepresentations, the [d]efendants are without sufficient notice of the claims being asserted against them and [cannot] adequately defend themselves." The motion makes no mention that the plaintiffs fail to allege that the defendants knew or should have known the representations they made were false.
Practice Book § 10-41 provides: "Each motion to strike raising any of the claims of legal insufficiency enumerated in the preceding sections shall separately set forth each such claim of insufficiency and shall distinctly specify the reason or reasons for each such claimed insufficiency." "Motions to strike that do not specify the grounds of insufficiency are fatally defective and, absent a waiver by the party opposing the motion, should not be granted . . . Our Supreme Court has stated that a motion to strike that does not specify the grounds of insufficiency is fatally defective . . . and that Practice Book § [10-42], which requires a motion to strike to be accompanied by an appropriate memorandum of law citing the legal authorities upon which the motion relies, does not dispense with the requirement of [Practice Book § 10-41] that the reasons for the claimed pleading deficiency be specified in the motion itself." (Internal quotation marks omitted.) Stuart v. Freiberg, 102 Conn.App. 857, 861, 927 A.2d 343 (2007). In the present case, as the plaintiffs have not objected to the defendants raising an argument in their memorandum of law that was not raised in their motion to strike, it is submitted that the court consider that argument as the court in Stuart stated: "If the plaintiffs had not objected to the form of the motion to strike, we would have considered the motion in the form presented to the trial court because Practice Book § 10-41 is not jurisdictional in nature. See Bouchard v. People's Bank, 219 Conn. 465, 468 n. 4, 594 A.2d 1 (1991); Blancato v. Feldspar Corp., 203 Conn. 34, 36 n. 3, 522 A.2d 1235 (1987); Morris v. Hartford Courant Co., 200 Conn. 676, 683 n. 5, 513 A.2d 66 (1986)." Stuart v. Freiberg, supra, 861-62.
The plaintiffs state: "Based upon the requirements of existing case law, the [p]laintiffs clearly alleged that the [d]efendants engaged in deceptive and fraudulent negotiations which induced the [p]laintiffs to sell their business at a discounted price based upon an earn-out formula that resulted in no future payments to the [p]lantiffs. The [p]laintiffs have alleged that the [d]efendants produced written materials exemplifying their ability to expand the current business operations and made verbal assertions to the [p]laintiffs. The [p]laintiffs allege that the [d]efendants knew, or ought to have known, that the statements were false; were made with the intent that the [p]laintiffs rely on said statements to induce them to enter into the business transaction; and the [p]laintiffs did, in, fact, rely on said statements to their detriment."
"The essential elements of an action in common law fraud, as we have repeatedly held, are that: (1) a false representation was made as a statement of fact; (2) it was untrue and known to be untrue by the party making it; (3) it was made to induce the other party to act upon it; and (4) the other party did so act upon that false representation to his injury . . . Under a fraud claim of this type, the party to whom the false representation was made claims to have relied on that representation and to have suffered harm as a result of the reliance . . . In contrast to a negligent representation, [a] fraudulent representation . . . is one that is knowingly untrue, or made without belief in its truth, or recklessly made and for the purpose of inducing action upon it . . . This is so because fraudulent misrepresentation is an intentional tort." (Citations omitted; internal quotation marks omitted.) Sturm v. Harb Development, LLC, 298 Coun. 124, 142, 2 A.3d 859 (2010).
In the present case, in count two, Dispazio, Loomis and Central Dispatch allege, inter alia, that "[o]n or about August 29, 2006, [the] [d]efendants prepared a detailed set of scenarios whereby they showed the [p]laintiffs the profit figures and [e]amout calculations that were anticipated with the [d]efendants' purchase of the business." Dispazio, Loomis and Central Dispatch further allege that throughout the negotiations, the defendants made representations to Dispazio, Loomis and Central Dispatch that they "knew or ought to have known, were fraudulent in nature . . ." Dispazio, Loomis and Central Dispatch also allege that in reliance on the defendants' representations, these plaintiffs "sold the company to the [d]efendants at a discounted price with the understanding that the [e]arnout provision would make up the difference for the sale of the company." In addition, Dispazio, Loomis, and Central Dispatch allege that Pastore later informed these plaintiffs that there would be no earnout payment for either 2008 or 2009 and that the Home Depot Dumpster rental program was terminated. Dispazio, Loomis and Central Dispatch also allege that they have suffered monetary damages as a result of the defendants' fraudulent inducement.
Dispazio, Loomis and Central Dispatch sufficiently allege the four elements of fraudulent inducement. The allegation that the defendants prepared scenarios that showed profits and earnout calculations anticipated with the defendants' acquisition of Dispazio's, Loomis's and Central Dispatch's company is a sufficiently specific representation to survive a motion to strike. The allegation that the defendants "knew or ought to have known" that their representations and promises were fraudulent is sufficient to withstand a motion to strike as "[a] fraudulent representation . . . is one that is knowingly untrue, or made without belief in its truth, or recklessly made and for the purpose of inducing action upon it." (Internal quotation marks omitted.) Sturm v. Harb Development, LLC, supra, 298 Conn. 142. Therefore, the motion to strike count two on the ground that "it is a mere allegation of fraud which fails to plead specific false representation made by the [d]efendants on which the plaintiffs relied to their detriment" is denied.
D
Gross Negligence
Next, the court will turn to the grounds raised by the defendants to strike count three sounding in gross negligence. Count three incorporates paragraphs one through nineteen of count two. The following facts are alleged in count three. Upon purchasing the company from Dispazio, Loomis and Central Dispatch, with the earnout provision as the main part of the business transaction, the defendants owed these plaintiffs "a continuing fiduciary duty . . . to operate the company in a proper business like manner." To pacify Dispazio, Loomis and Central Dispatch, Dispazio and Loomis were given employment contracts with the defendants, including making Dispazio the president of the defendants' TrashBeeGone division. Despite these employment contracts, the defendants "intentionally excluded [Dispazio, Loomis and Central Dispatch] from the business operations and management of the division." Although Dispazio, Loomis and Central Dispatch continued to offer assistance to the defendants, the defendants repeatedly declined these offers.
In addition, count three alleges the following. The defendants were grossly negligent in their management of the Home Depot dumpster rental program by, inter alia, renegotiating their contract with Home Depot and renaming the program "Home Depot Dumpster Rentals" after years of Dispazio, Loomis and Central Dispatch marketing the "TrashBeeGone" brand name throughout Home Depot stores in the eastern part of the United States. This change of name eliminated the defendants' own identity. Also, in the defendants' negotiation with Home Depot, they failed to include in their agreement "a signage plan which was essential for the survival of the brand" which Dispazio, Loomis and Central Dispatch had negotiated for in the original contract. Because of this lack of signage plan, Home Depot was able to eliminate signage in all of its stores. The defendants' gross negligence resulted in Home Depot terminating the Home Depot dumpster rental program as operated by the defendants.
The ground for the motion to strike count three is that "it fails to allege facts constituting gross negligence on the part of the defendants." The defendants argue that while Connecticut courts have recognized the existence of gross negligence, the plaintiffs have failed to allege in count three facts amounting to gross negligence. The defendants state that the "[p]laintiffs seek to transform [the] [defendants'] contractual obligations under the . . . [a]greement into `a continuing fiduciary duty' to `operate the business in a proper business like manner.' Such legal malapropism, however, [cannot] create causes of action where none exist." The defendants further contend that the plaintiffs' allegations do not remove the ability of business managers to exercise their business judgment in conducting company affairs. According to the defendants, they did not give a guarantee that they would operate the business in the same manner as the plaintiffs did when they owned it. The defendants maintain that if the plaintiffs wanted more restrictions on the business's operations after its assets were sold, they should have contracted for these restrictions instead of using a tort claim after the fact to rewrite the contract when both the plaintiffs' and defendants' assumption that the Home Depot contract would continue did not come to pass.
The defendants also argue that the conduct alleged is not even negligence, let alone gross negligence, a form of negligence heightened enough to overcome the good Samaritan law. According to the defendants, the terms of the renegotiation of the Home Depot contract were simply the defendants exercising their business judgment as it pertained to their relationship with Home Depot.
The defendants further maintain that the plaintiffs fail to allege causation as the plaintiffs were no longer entitled to a portion of the proceeds from the Home Depot contract due to the contract's termination and there is no allegation that changing the name of the program and the lack of signs caused Home Depot to terminate the contract.
The plaintiffs argue that they do allege sufficient facts to support a gross negligence count. According to the plaintiffs, to support a gross negligence count, that plaintiffs need to "allege that a duty was owed by the [d]efendants and said duty was breached by the [d]efendants which proximately caused the [p]laintiffs to suffer damages. The plaintiffs contend that the motion to strike is deficient because the defendants admit that Connecticut law recognizes gross negligence actions and "the [d]efendants do not argue that the pleadings are improper, but rather they seek to argue the facts themselves and infuse their own facts into their argument to try to negate the cause of action." The plaintiffs assert that while the defendants' arguments can be raised at trial, they are not appropriate to support a motion to strike.
"The essential elements of a cause of action in negligence are well established: duty; breach of that duty; causation; and actual injury . . . [T]he existence of a duty of care is an essential element of negligence . . . A duty to use care may arise from a contract, from a statute, or from circumstances under which a reasonable person, knowing what he knew or should have known, would anticipate that harm of the general nature of that suffered was likely to result from his act or failure to act." (Citations omitted; internal quotation marks omitted.) Sturm v. Harb Development, LLC, supra, 298 Conn. 139-40.
"To prevail on a negligence claim, a plaintiff must establish that the defendant's conduct legally caused the injuries . . . The first component of legal cause is causation in fact. Causation in fact is the purest legal application of . . . legal cause. The test for cause in fact is, simply, would the injury have occurred if it were not for the actor's conduct . . . The second component of legal cause is proximate cause . . . [T]he test of proximate cause is whether the defendant's conduct is a substantial factor in bringing about the plaintiff's injuries . . . Further, it is the plaintiff who bears the burden to prove an unbroken sequence of events that tied his injuries to the [defendant's conduct] . . . The existence of the proximate cause of an injury is determined by looking from the injury to the negligent act complained of for the necessary causal connection . . . This causal connection must be based upon more than conjecture and surmise . . . An actual cause that is a substantial factor in the resulting harm is a proximate cause of that harm . . . The finding of actual cause is thus a requisite for any finding of proximate cause." (Citation omitted; internal quotation marks omitted.) Winn v. Posades, 281 Conn. 50, 56-57, 913 A.2d 407 (2007).
The Supreme Court has "defined gross negligence as very great or excessive negligence, or as the want of, or failure to exercise, even slight or scant care or slight diligence . . . Hanks v. Powder Ridge Restaurant Corp., 276 Conn. 314, 338, 885 A.2d 734 (2005); see also id., 352 (Norcott, J., dissenting) ([t]his court has construed gross negligence to mean no care at all, or the omission of such care which even the most inattentive and thoughtless seldom fail to make their concern, evincing a reckless temperament and lack of care, practically [wilful] in its nature . . .); 57A Am. Jur.2d 296-97, Negligence § 227 (2004) (Gross negligence means more than momentary thoughtlessness, inadvertence or error of judgment; hence, it requires proof of something more than the lack of ordinary care. It implies an extreme departure from the ordinary standard of care, aggravated disregard for the rights and safety of others, or negligence substantially and appreciably greater than ordinary negligence)." (Internal quotation marks omitted.) 19 Perry Street, LLC v. Unionville Water Company, 294 Conn. 611, 631 n. 11, 987 A.2d 1009 (2010).
Nevertheless, the Supreme Court has stated that "gross negligence has never been recognized in this state as a separate basis of liability in the law of torts. We have never recognized degrees of negligence as slight, ordinary, and gross in the law of torts. Decker v. Roberts, 125 Conn. 150, 157, 3 A.2d 855 (1939); see also Film v. Downing Perkins, Inc., 135 Conn. 524, 526, 66 A.2d 613 (1949) ([w]e do not recognize a classification of standards of care into slight, ordinary, and gross, or the like, except in certain definite relationships)." (Internal quotation marks omitted.) Matthiessen v. Vanech, 266 Conn. 822, 833, n. 10, 836 A.2d 394 (2003).
The Superior Court has grappled with causes of action sounding in different forms of negligence, especially when pleaded in an attempt to overcome a statutory defense for ordinary negligence. See, e.g., Burgess v. State, Superior Court, judicial district of New Britain, Docket No. CV 03 0520679 (July 15, 2008, Gilligan, J.), (denying motion to strike allegation of wilful negligence pleaded to overcome statutory language of General Statutes § 52-557n); see, e.g., Audet v. Windham Hotel, Co., Superior Court, judicial district of Windham at Putnam, Docket No. CV 06 5000108 (November 15, 2006, Riley, J.) ( 42 Conn. L. Rptr. 377) (granting motion to strike count sounding in gross negligence against servers of alcohol); see, e.g., Glorioso v. Police Dept., 48 Conn.Sup. 10, 826 A.2d 271 [ 34 Conn. L. Rptr. 472] (2003) (denying motion to strike gross negligence counts pleaded to overcome statutory language of General Statutes § 52-557b). The court stated: "The text of § 52-557b suggests no effects on existing common-law causes of action other than the creation of an immunity limited to ordinary negligence. On its face, § 52-557b provides no immunity for greater breaches of the standard of care, namely, gross negligence, wilful or wanton negligence. The wording of the statute in no way suggests the abolition of any cause of action that existed at common law for gross, wilful or wanton misconduct; rather, its scope is limited to providing immunity for those persons defined in § 52-557b whose conduct in the course of rendering emergency care is below those levels of culpability; that is, for lapses that are merely negligent.
"A plaintiff who seeks to make a claim under the exception from immunity for gross, wilful and wanton negligence faces a definite problem in pleading. If that plaintiff pleads only negligence, with the intention of proving that the acts or omissions actually constituted gross, wilful or wanton negligence, the claim is at risk under the immunity provision set forth. If the plaintiff pleads the words of the exception, as the plaintiff has done in the present case, the response, made by [one of the defendants], is that Connecticut does not recognize distinct causes of action for gross negligence." Glorioso v. Police Dept., supra, 48 Conn.Sup. 15. "Our Supreme Court can hardly be expected to have been using gross negligence as a point of comparison if gross negligence does not exist." Id., 16. "[This defendant's] argument that there is no cause of action for gross negligence would lead to the absurd conclusion that in enacting the good Samaritan law, the legislature was providing immunity for a cause of action that did not exist anyway. Tenets of statutory construction require that a statute not be interpreted in a manner that creates an absurd result. Commissioner of Transportation v. Kahn, 262 Conn. 257, 275, 811 A.2d 693 (2003); Hartford Courant Co. v. Freedom of Information Commission, 261 Conn. 86, 101, 801 A.2d 759 (2002). No legislative enactment is to be viewed as surplusage. Westport Taxi Service, Inc. v. Westport Transit District, 235 Conn. 1, 40, 664 A.2d 719 (1995); Rydingsword v. Liberty Mutual Ins. Co., 224 Conn. 8, 16, 615 A.2d 1032 (1992)." Glorioso v. Police Dept., supra, 16-17.
In the present case, the defendants do not raise as a ground that Connecticut does not recognize gross negligence as a separate cause of action, and the Supreme Court has stated: "In ruling on a motion to strike the trial court is limited to considering the grounds specified in the motion . . .
"A trial court in passing upon a motion to strike should not consider grounds other than those specified." (Citations omitted.) Meredith v. Police Commission, 182 Conn. 138, 140-41, 438 A.2d 27 (1980). Therefore, this court will not consider as a ground for the motion to strike that Connecticut does not recognize gross negligence as a cause of action.
Although the defendants argue that the plaintiffs are attempting to transfer the defendants' contractual obligations into "a `continuing fiduciary duty' to `operate the business in a proper business like manner,'" the Appellate Court has stated that "[a] party may be liable in negligence for the breach of a duty that arises out of a contractual relationship. Neiditz v. Morton S. Fine Associates, Inc., 199 Conn. 683, 688, 508 A.2d 438 (1986). Even though there may not be a breach of contract, liability may arise because of injury resulting from negligence occurring in the course of performance of the contract. Johnson v. Flammia, 169 Conn. 491, 496, 363 A.2d 1048 (1975)." (Internal quotation marks omitted.) Bonan v. Goldring Home Inspections, Inc., 68 Conn.App. 862, 870, 794 A.2d 997 (2002). Therefore, as a duty can arise from a contract, it is submitted that count three adequately alleges a duty that the defendants owed to Dispazio, Loomis and Central Dispatch given that these plaintiffs alleged that they entered into an asset purchase agreement with Oakleaf Waste Management and Oakleaf Global agreed to guaranty Oakleaf Waste Management's obligations.
While the defendants characterize the allegations of Dispazio, Loomis and Central Dispatch with regard to the defendants' renegotiation of the Home Depot dumpster rental program as the exercise of business judgment not on par with gross negligence, it is submitted that Dispazio, Loomis and Central Dispatch assert allegations sounding in gross negligence as defined by the Supreme Court and outlined earlier in this memorandum sufficient to withstand a motion to strike. Dispazio, Loomis and Central Dispatch allege that because of the defendants' handling of the Home Depot dumpster rental program, Home Depot terminated the program. As stated earlier, when ruling on a motion to strike, "all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted;" Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, supra, 295 Conn. 253; and the trial court does not make any factual findings when ruling on a motion to strike. Lestorti v. DeLeo, supra, 298 Conn. 466.
The defendants also argue that the plaintiffs do not plead sufficient facts with regard to causation as the plaintiffs were no longer entitled to a portion of the proceeds of the Home Depot contract due to the contract's termination and because there is no allegation that renaming the Home Depot dumpster rental program or not having a signage plan caused Home Depot to terminate the contract. Dispazio, Loomis and Central Dispatch do sufficiently allege causation. These plaintiffs allege that the defendant's handling of the Home Depot dumpster rental program caused the termination of the program and that the termination of the program caused them monetary losses. Therefore, as Dispazio, Loomis and Central Dispatch allege that the defendants' conduct with respect to the Home Depot dumpster rental program caused the termination of the Home Depot contract, those allegations are sufficient to withstand a motion to strike. Therefore, count three of the complaint is not stricken on the ground that "it fails to allege facts constituting gross negligence on the part of the defendants."
E
Tortious Interference with Contractual Relations
Next, the court will turn to the grounds raised by the defendants to strike count four sounding in tortious interference with contractual relations. Count four incorporates paragraphs one through twenty-four of count three of the complaint. The Bullbag is mentioned as a plaintiff for the first time in this count. The following facts are alleged in count four. At all relevant times, The Bullbag "engages in the waste business by providing customers with a [nonmetal] dumpster for trash removal of less than seven . . . yard capacity." Throughout Dispazio's, Loomis's and Central Dispatch's negotiations with the defendants regarding the agreement, these plaintiffs were informed verbally and in writing, as memorialized in the agreement, that The Bullbag was an asset excluded from the transaction. The defendants also verbally offered assistance to Dispazio, Loomis and Central Dispatch pertaining to The Bullbag's operations and confirmed that following the agreement's execution, they would neither "interfere nor impact [T]he Bullbag's business operations . . ." The defendants were aware that The Bullbag's operations were included in the original Home Depot contract and that the contract gave The Bullbag the exclusive right to provide the smaller containers to Home Depot.
Count four also alleges that before the agreement was executed, "the [d]efendants negotiated a new contract with Home Depot, contingent upon their acquisition of [Dispazio's, Loomis' and Central Dispatch's] business, which intentionally and/or negligently omitted all dumpster rentals less than seven . . . cubic yards in capacity." This omission was intentional and the effect was that Dispazio, Loomis and Central Dispatch lost their exclusivity with Home Depot for dumpster rentals less than seven cubic yards. The defendants' conduct and omission severely harmed [T]he Bullbag by terminating its exclusivity and allowing a direct competitor to negotiate with Home Depot for the exclusive relationship to rent these smaller dumpsters within the Home Depot chain of stores."
"[The Supreme Court] has long recognized a cause of action for tortious interference with contract rights or other business relations . . ." (Internal quotation marks omitted.) Daley v. Aetna Life Casualty Co., 249 Conn. 766, 805, 734 A.2d 112 (1999). "A claim for intentional interference with contractual [or business] 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) that the interference was tortious; and (5) a loss suffered by the plaintiff that was caus[ed] by the defendant's tortious conduct." (Internal quotation marks omitted.) Rioux v. Barry, 283 Conn. 338, 351, 927 A.2d. 304 (2007).
"[The Supreme Court has held], however, that] not every act that disturbs a contract or business expectancy is actionable . . . [F]or a plaintiff successfully to 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 . . . 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 . . . 4 Restatement (Second), Torts § 766, comment (s) (1979). In other words, the employee bears the burden of alleging and proving lack of justification on the part of the actor. Id." (Citations omitted; internal quotation marks omitted.) Daley v. Aetna Life Casualty Co., supra, 249 Conn. 805-06.
"Fraudulent misrepresentations are also ordinarily a wrongful means of interference and make an interference improper. A representation is fraudulent when, to the knowledge or belief of its utterer, it is false in the sense in which it is intended to be understood by its recipient . . . In some circumstances one who is liable to another for intentional interference with economic relations by inducing a third person by fraudulent misrepresentation not to do business with the other may also be liable under other rules of the law of torts . . . The tort of intentional interference thus overlaps other torts. But it is not coincident with them. One may be subject to liability for intentional interference even when his fraudulent representation is not of such a character as to subject him to liability for the other torts." 4 Restatement (Second), Torts § 767, comment (c) (1979).
The defendants' ground for striking count four of the complaint is that the plaintiffs do not plead all the elements of the cause of action as they fail to plead that the defendants "acted with an improper motive or by improper means." In their memorandum of law, the defendants argue that "it is insufficient to merely plead interference as the plaintiffs have done here." According to the defendants, the plaintiffs must allege that the defendants' conduct was "wrongful beyond the interference itself." The defendants further assert that the improper motive or means cannot be inferred from the plaintiffs' fraud or gross negligence claims as those claims are not sufficiently pleaded themselves.
In the plaintiffs' memorandum of law, they argue that they sufficiently plead the allegations necessary for tortious interference. The plaintiffs contend that their allegations "clearly indicate that the [d]efendants had the ability, the motive and the means to interfere with the contract between" Home Depot and The Bullbag. According to the plaintiffs, the defendants, both verbally and in writing, told the plaintiffs that The Bullbag would not be included in the transaction and the defendants would not do anything to "interfere or harm [The Bullbag] and its operations." The plaintiffs maintain that the defendants, prior to purchasing the plaintiffs' business assets, through a contract renegotiation with Home Depot, eliminated all dumpster rentals less than seven cubic yards. According to the plaintiffs, the defendants' conduct with regard to its contract renegotiation with Home Depot was intentional and resulted in The Bullbag losing its exclusive dumpster business with Home Depot, causing an "actual loss" to the plaintiff.
The plaintiffs do not indicate to which plaintiff they are referring. The plaintiffs may have meant to reference all the plaintiffs but due to a typographical error, wrote "Plaintiff" instead of "Plaintiffs" or the plaintiffs may have intended to just refer to one plaintiff in this instance, namely The Bullbag.
In the present case, the plaintiffs do sufficiently allege the existence of a contract between The Bullbag and Home Depot and that the defendants knew of the existence of this contract. While the plaintiffs sufficiently allege intentional interference with this contract, the plaintiffs fail to allege that the interference was tortious as they do not allege malice, improper motive, improper means, intimidation or molestation as outlined by the court in Daley beyond the interference itself. Although Dispazio, Loomis and Central Dispatch allege gross negligence on the part of the defendants following the execution of the asset purchase agreement, the plaintiffs fail to allege any factors to make the interference with the contract between The Bullbag and Home Depot tortious. Further, while Dispazio, Loomis and Central Dispatch allege fraudulent misrepresentation on the part of the defendants to induce these plaintiffs to enter into the asset purchase agreement, none of the plaintiffs allege that the defendants committed fraudulent misrepresentation in inducing Home Depot to no longer contract exclusively with The Bullbag for dumpster rentals of less than seven cubic yards. See 4 Restatement (Second), Torts § 767, comment (c) (1979). Therefore, count four of the complaint is stricken on the ground that "it fails to plead that the [d]efendants acted with an improper motive or by improper means."
F
CUTPA
Next this court will turn to the grounds to strike count five of the complaint. Count five, which alleges a violation of CUTPA incorporates paragraphs one through thirty-two of count four of the complaint. The following is alleged in count five. "All of [the] [d]efendants' conduct was unfair and deceptive within the meaning of" CUTPA. Dispazio, Loomis and Central Dispatch "have sustained an ascertainable loss of money and/or property as a result of the [d]efendants' unfair and deceptive trade practices."
The defendants move to strike count five on the ground that this count is "legally insufficient because it fails to identify specifically the conduct of the defendants that they claim is unfair and deceptive within the meaning of [CUTPA.]" The defendants argue that not only do the plaintiffs fail to allege specific actions that would constitute "an unfair or deceptive practice," the plaintiffs fail to allege "sufficient `aggravating facts' in the [c]omplaint to turn a basic breach of contract claim into a CUTPA violation." The defendants maintain that although a misrepresentation can be considered such an aggravating factor, the plaintiffs neither allege any specific misrepresentation that the defendants made nor allege "any conduct that is in breach of a duty arising other than from the [c]ontract." The defendants also contend that the plaintiffs do not plead specific damages arising from the alleged violation of CUTPA.
The plaintiffs argue that count five does allege sufficient facts to meet the requirements of alleging a CUTPA violation. The plaintiffs assert that in the first four counts of the complaint, which are incorporated into count five, they plead sufficient facts to support an allegation of a CUTPA violation on the part of the defendants as the plaintiffs sufficiently plead "fraudulent conduct, misrepresentations and unfair and unscrupulous conduct throughout the [c]omplaint . . ." The plaintiffs further maintain that they allege damages arising out of the defendants' conduct.
"[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 . . . Thus a violation of CUTPA may be established by showing either an actual deceptive practice . . . or a practice amounting to a violation of public policy . . . In order to enforce this prohibition, CUTPA provides a private cause of action to [a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a [prohibited] method, act or practice . . ." (Emphasis added; internal quotation marks omitted.) Harris v. Bradley Memorial Hospital and Health Center, Inc., 296 Conn. 315, 350-51, 994 A.2d 153 (2010).
"The cigarette rule, however, refers only to practices that are not deceptive. `[A] violation of CUTPA may be established by showing . . . an actual deceptive practice . . . De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn. 424, 434, 849 A.2d 382 (2004). A deceptive practice is a CUTPA violation by definition. Moreover, one of the primary categories of practices which the FTC has prohibited as unfair is the withholding of material information." (Citation omitted; internal quotation marks omitted.) Mauriello v. ACJC, LLC, Superior Court, judicial district of Waterbury, Docket No. CV 07 5003345 (November, 7, 2007, Upson, J.) ( 44 Conn. L. Rptr. 499, 500).
Nevertheless, it has been noted in the Connecticut Practice Series that the Supreme Court, in dealing with CUTPA causes of action based on misrepresentation, has alternated between utilizing the deception criteria or the cigarette rule criteria attendant with an unfairness analysis. R. Langer, J. Morgan D. Belt, 12 Connecticut Practice Series: Unfair Trade Practices, Business Torts and Antitrust (2010) § 2.3, p. 59-61. For example, Web Press Services Corp. v. New London Motors, Inc., 203 Conn. 342, 525 A.2d 57 (1987) dealt with causes of action sounding in CUTPA premised on alleged misrepresentations utilizing the deception analysis while the court in Web Press Services Corp. v. New London Motors, Inc., 205 Conn. 479, 533 A.2d 1211 (1987) utilized an unfairness analysis. R. Langer, J. Morgan D. Belt, supra, 12 Connecticut Practice Series: Unfair Trade Practices, Business Torts and Antitrust § 2.3.
"A significant number of cases that would appear to have been susceptible to resolution, at least in part, based upon a deception standard . . . may have been analyzed instead utilizing an unfairness methodology for various reasons. Such an approach may reflect a tendency to focus upon the ubiquitous `cigarette rule' criteria without considering deception. Among the well-considered justifications for the approach is the desire to attack a broader range of conduct than an allegedly deceptive statement. In any event, the history of deception analysis under CUTPA is somewhat limited, including its use as an analysis separate and distinct from unfairness analysis." R. Langer, J. Morgan D. Belt, supra, 12 Connecticut Practice Series: Unfair Trade Practices, Business Torts and Antitrust § 2.3.
Given the fact that the Supreme Court has utilized the cigarette rule criteria when analyzing CUTPA causes of action based on misrepresentation and given that both the plaintiffs and defendants in the present case utilize the cigarette rule attendant to analyzing CUTPA violations under the unfairness standard, this court will analyze the sufficiency of the CUTPA count using the cigarette analysis.
"In discussing the third criterion, the federal trade commission has stated: The independent nature of the consumer injury criterion does not mean that every consumer injury is legally unfair, however. To justify a finding of unfairness the injury must satisfy three tests. It must be substantial; it must not be outweighed by any countervailing benefits to consumers or competition that the practice produces; and it must be an injury that consumers themselves could not reasonably have avoided. Letter from Federal Trade Commission to Senators Ford and Danforth (Dec. 17, 1980) (reprinted in Averitt, The Meaning of Unfair Acts or Practices in 5 of the Federal Trade Commission Act, 70 Geo. L.J. 225, 291 [1981]) . . . McLaughlin Ford, Inc. v. Ford Motor Co., 192 Conn. 558, 569-70, 473 A.2d 1185 (1984). This test is equally applicable when a business person or competitor claims substantial injury. Id., 570." (Internal quotation marks omitted.) Williams Ford, Inc. v. Hartford Courant Co., supra, 232 Conn. 592.
"Even though § 42-110g(a) authorizes the award of compensatory and punitive damages for a CUTPA violation, the statute is not self-executing. Litigants who seek to recover damages under CUTPA must meet two threshold requirements. First, they must establish that the conduct at issue constitutes an unfair or deceptive trade practice. Second, they must present evidence providing a basis for a court to make a reasonable estimate of the damages that they have suffered . . . There is no automatic entitlement to damages." (Citation omitted.) New England Custom Concrete, LLC v. Carbone, 102 Conn.App. 652, 666, 927 A.2d 333 (2007).
"Although CUTPA is primarily a statutory cause of action; see General Statutes § 42-110b; it equally is recognized that CUTPA claims may arise from underlying causes of action, such as contract violations or torts, provided the additional CUTPA elements are pleaded." Sturm v. Harb Development, LLC, supra, 298 Conn. 139. "[N]ot every contractual breach rises to the level of a CUTPA violation." Hudson United Bank v. Cinnamon Ridge Corp., 81 Conn.App. 557, 571, 845 A.2d 417 (2004). "[A] simple breach of contract does not amount to a violation of CUTPA in the absence of substantial aggravating circumstances." IN Energy Solutions, Inc. v. Realty, LLC, 114 Conn.App. 262, 274, 969 A.2d 807 (2009).
"[A] misrepresentation can constitute an aggravating circumstance that would allow a simple breach of contract claim to be treated as a CUTPA violation; it would in effect be a deceptive act . . ." (Internal quotation marks omitted.) Place v. Connecticut College, Superior Court, judicial district of New London, Docket No. CV 10 6003543 (September 8, 2010, Cosgrove, J.). "In addition to establishing a standard of conduct more flexible than traditional common law claims, the expansive language of CUTPA prohibits unfair or deceptive trade practices without requiring proof of intent to deceive, to defraud or to mislead. See, e.g., Web Press Services Corp. v. New London Motors, Inc., 203 Conn. 342, 362-63, 525 A.2d 57 (1987) (common law claims for fraud, deceit and misrepresentation require proof that defendant knew of falsity of representation, whereas CUTPA claimant need not prove defendant's knowledge that representation was false); Sportsmen's Boating Corp. v. Hensley, [ 192 Conn. 747, 754-57, 474 A.2d 780 (1984)] (unlike tort claim for interference with business expectancies, which requires proof of malicious or deliberate interference with competitor's business expectations, CUTPA liability may be based solely on proof of unfair or deceptive acts); Hinchliffe v. American Motors Corp., [ 184 Conn. 607, 617, 440 A.2d 810 (1981)] (CUTPA proscribes broader range of conduct than common law action for innocent misrepresentation). Moreover, [t]he CUTPA plaintiff need not prove reliance or that the representation became part of the basis of the bargain. Id.; see also Conaway v. Prestia, CT Page 5357 191 Conn. 484, 493, 464 A.2d 847 (1983) (collection of rents by landlord prior to obtaining certificate of occupancy, although not prohibited by landlord-tenant statutes, constituted unfair trade practice as violation of public policy). Because CUTPA removes these common law obstacles to recovery; Hinchliffe v. General Motors Corp., supra, 617; the private cause of action created by CUTPA reaches conduct well beyond that proscribed by any common law analogue." (Internal quotation marks omitted.) Associated Investment Co. Ltd. Partnership v. Williams Associates IV, 230 Conn. 148, 158, 645 A.2d 505 (1994). The Superior Court has often quoted a variation of the following language from Paiva v. Vanech Heights Construction Co., 159 Conn. 512, 271 A.2d 69 (1970) in stating which form of misrepresentation is actionable under CUTPA: "Although the general rule is that a misrepresentation must relate to an existing or past fact, there are exceptions to this rule, one of which is that a promise to do an act in the future, when coupled with a present intent not to fulfill the promise, is a false representation." Id., 515.
While the defendants in the present case argue that the plaintiffs fail to sufficiently plead allegations amounting to a CUTPA violation, Dispazio, Loomis and Central Dispatch do sufficiently allege a CUTPA violation as they allege a breach of contract and aggravating circumstances surrounding the alleged breach including fraudulent misrepresentation. Count five of the complaint, the CUTPA count, incorporates all of the other counts including count one sounding in breach of contract and count two sounding in fraudulent inducement. While "[a] claim under CUTPA must be pleaded with particularity to allow evaluation of the legal theory upon which the claim is based"; (internal quotation marks omitted) S.M.S. Textile Mills, Inc. v. Brown, Jacobson, Tillinghast, Lahan King, P.C., 32 Conn.App. 786, 797, 631 A.2d 340, cert. denied, 228 Conn. 903, 634 A.2d 296 (1993); "[the Supreme Court] is unpersuaded that there is any special requirement of pleading particularity connected with a CUTPA claim over and above any other claim." Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 644, 804 A.2d 180 (2002).
As stated earlier, Dispazio, Loomis and Central Dispatch allege facts sufficient to support an allegation of intentional misrepresentation as they allege that the defendants prepared scenarios that showed profits and earnout calculations anticipated with the defendants' acquisition of the company of Dispazio, Loomis and Central Dispatch and the defendants "knew, or ought to have known" that these representations were false. "Intentional misrepresentation, or fraud, is unquestionably a practice that offends public policy." Leonard-Anthony Associates, LLC v. Sherman Gardens, LLC, Superior Court, judicial district of New Haven, Docket No. CV 08 5018651 (June 29, 2009, Cronan, J.). Therefore, Dispazio, Loomis and Central Dispatch sufficiently allege facts to support the first prong of the cigarette rule. Further, these plaintiffs sufficiently allege that the conduct of the defendants with regard to the misrepresentation was "immoral, unethical, oppressive, or unscrupulous," thus satisfying the second prong of the cigarette rule. It is submitted that these plaintiffs sufficiently allege a CUTPA violation as they allege facts that satisfy the first and second prongs of the cigarette rule.
While the defendants argue that the plaintiffs do not sufficiently claim damages arising out of a CUTPA violation, it is submitted that in the earlier counts of the complaint, which are incorporated into count five, sufficient facts are alleged to make a claim for damages under CUTPA that could survive a motion to strike. It is alleged in the earlier counts of the complaint that Dispazio, Loomis and Central Dispatch suffered damages because of the defendants' conduct in that these plaintiffs entered into an asset purchase agreement with the defendants, selling their interest in TrashBeeGone, namely the Home Depot dumpster rental contract, in exchange for earnout payments that never came due to the subsequent termination of the Home Depot dumpster rental contract, based on the defendants' representations of the defendants' ability to successfully acquire companies and integrate these companies into the defendants' own business. Dispazio, Loomis and Central Dispatch allege that based on the defendants' representations, they sold the company to them at a discounted price, relying on earnout payments to make up for the difference between the company's worth and the amount for which it was sold. While the defendants cite to A. Secondino Son, Inc. v. LoRicco, 215 Conn. 336, 343, 576 A.2d 464 (1990) in support of their argument regarding the plaintiffs' requirement to claim specific damages related to an alleged CUTPA violation, in A. Secondino Son, Inc. the case had gone to trial, while the present case is still in the motion to strike phase. Therefore, the motion to strike count five of the complaint is not stricken on the ground that it is "legally insufficient because it fails to identify specifically the conduct of the defendants that they claim is unfair and deceptive within the meaning of [CUTPA]."
III
CONCLUSION
For the foregoing reasons, the motion to strike count four is granted as to both defendants and the motion to strike counts two, three, and five is denied as to both defendants.