Opinion
No. X06-CV04-4003573 S
November 8, 2005
MEMORANDUM OF DECISION
The defendants Severin Hills, LLC (Severin Hills) and The Native American Gaming Fund, Inc. (The Gaming Fund) have moved to strike in its entirety the substituted complaint dated June 17, 2005 filed by the plaintiff Eastlander Group, LLC (Eastlander). The defendants seek to strike the first and second counts which assert claims of tortious interference with business expectancy against Severin Hills and The Gaming Fund, respectively, and the third count which asserts a claim of civil conspiracy against both defendants. The defendants contend that the tortious interference counts should be stricken because those counts fail to allege improper conduct on the part of the defendants. The defendants further maintain that, since the tortious interference claim underlies the plaintiff's civil conspiracy claim, the civil conspiracy claim fails once the tortious interference count fails. The plaintiff argues that it has pled the essential elements of both tortious interference and civil conspiracy. I agree with the defendants that the tortious interference counts must be stricken because they fail to allege that the defendants engaged in improper conduct and the civil conspiracy count must be stricken because the underlying tortious interference cause of action fails to state a valid claim.
Both Severin Hills and The Gaming Fund also argue that the tortious interference counts should be stricken because they fail to allege that any actions by the defendants caused actual loss to the plaintiff. The Gaming Fund further asserts that the plaintiff has failed to allege that The Gaming Fund actually interfered with a business expectancy and has failed to add a necessary party. In light of my determination that the tortious interference counts are deficient due to a failure to allege improper conduct, it is not necessary that I address the defendants' remaining claims.
The law governing the court's consideration of a motion to strike is well established. "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. 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." (Citations and internal quotation marks omitted.) Novametrix Medical Systems v. BOC Group, Inc., 224 Conn. 210, 214 (1992). "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." Suffield Devel. Assoc. L.P. v. National Loan Inv., 64 Conn.App. 192, 197 (2001). CT Page 14064-fe "The role of the trial court is to examine the complaint, construed in favor of the plaintiffs, to determine whether the pleading party has stated a legally sufficient cause of action." Dodd v. Middlesex Mutual Assurance Company, 242 Conn. 375, 378 (1997).
The plaintiff's substituted complaint contains the following allegations. Since May 1997, the plaintiff and the Schaghticoke Tribal Nation have been partners in a joint venture to secure federal recognition for the Tribe so that the parties could thereafter plan and develop a gaming facility and other related business endeavors. The plaintiff's role was to provide financing and business and legal expertise to the venture. On or about May 1, 2000, the plaintiff and the Tribe entered into a new agreement that governed their relationship. In or around July 2001, the plaintiff and the Tribe became locked in a dispute concerning expenditures for the project. At that time, the Tribe attempted to terminate its agreement with the plaintiff, whereupon the parties submitted their dispute to arbitration. Approximately one year later, on June 13, 2002, while the arbitration was pending and when the Tribe and the plaintiff were actively engaged in negotiations in an attempt to settle their dispute, the Tribe entered into a contract with Severin Hills pursuant to which Severin Hills agreed to finance the Tribe's efforts to achieve federal recognition and thereafter construct a gaming facility. The purpose of the Tribe's contract with Severin Hills was to replace the plaintiff as the Tribe's primary investor. The plaintiff's complaint further alleges that The Gaming Fund provided or attempted to provide capital for the purpose of financing Severin Hills' performance of the Severin Hills contract with the Tribe.
This court has previously granted the defendants' motion to strike the plaintiff's tortious interference with contract claims because those claims failed to allege that the defendants' conduct caused the Tribe to terminate its contract with the plaintiff. See Eastlander Group, LLC v. Severin Hills, LLC, Superior Court, Complex Litigation Docket at Waterbury, Docket No. X06-CV04-4003573 S (June 2, 2005) (Alander, J.). The plaintiff's substituted complaint, rather than alleging tortious interference with contract, now alleges tortious interference with business expectancy. Specifically, the plaintiff alleges that the defendants interfered with the plaintiff's expectancy that their business relationship with the Tribe would continue notwithstanding their dispute over their existing contract.
"[I]n order to recover for a claim of tortious interference with business expectancies, the claimant must plead and prove that: (1) a business relationship existed between the plaintiff and another party; (2) the defendant intentionally interfered with the business relationship CT Page 14064-ff while knowing of the relationship; and (3) as a result of the interference, the plaintiff suffered actual loss." Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 32-33 (2000). "[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. The burden is on the plaintiff to plead and prove at least some improper motive or improper means on the part of the defendants." (Citations and internal quotation marks omitted.) Solomon v. Aberman, 196 Conn. 359, 364 (1985).
With respect to Severin Hills, the substituted complaint alleges that Severin Hills secured its contract with the Tribe through a "payoff" to the Chief of the Tribe and his inner circle, that is that Severin Hills obtained the contract by agreeing to pay excessive salaries and compensation to the Chief, his relatives, the Tribe's business manager and its counsel. The complaint also alleges that Severin Hills acted with the intent of injuring the plaintiff and "settling a score" resulting from the plaintiff having previously replaced Severin Hills as the Tribe's financial backer. With respect to The Gaming Fund, the plaintiff alleges that The Gaming Fund also acted with an intent to injure the plaintiff and used "illicit means" by relying upon the knowledge of Dean Markham, the Tribe's business manager. The plaintiff contends that these allegations are sufficient to constitute the allegations of improper motive and improper means necessary for a claim of tortious interference of business expectancies. I do not agree.
In its substituted complaint, the plaintiff describes the actions of the defendants as constituting a "payoff" and being "illicit." But the characterization of the defendants' conduct as improper does not make it so. In ruling on a motion to strike, it is only the facts, not the legal conclusions, contained in the complaint that are deemed admitted. Maloney v. Conroy, 208 Conn. 392, 394 (1988). Stripped of its conclusory labels, the defendants' conduct is far from sinister. Severin Hills is alleged to have paid pursuant to its contract with the Tribe excessive compensation to the Chief, other members of the tribe and its employees. While arguably unwise, the plaintiff offers no authority for a finding that such payments were either illegal or improper. The Gaming Fund is alleged to have used improper means by obtaining information from Dean Markham, the Tribe's business manager, that the plaintiff and the Tribe were engaged in negotiations in an attempt to settle a dispute that had arisen between them. Again, the plaintiff fails to cite any basis to conclude that communications between an employee of the Tribe and The Gaming Fund were improper. CT Page 14064-fg
Severin Hills and The Gaming Fund are also alleged to have acted with the intent of injuring the plaintiff, with Severin Hills' intent to injure flowing from a desire to avenge the plaintiff's previous arrogation of the Tribe as a client. The plaintiff argues that such an intent constitutes malice and forms a sufficient basis for a claim of tortious interference. While such malice may form the basis for a claim of tortious interference with an existing contract, it is not sufficient to support a claim, as in this case, of tortious interference with business expectancy. 4 Restatement (Second), Torts § 768 (1979). In its substituted complaint, the plaintiff is not claiming that the defendants tortiously interfered with the plaintiff's existing contract with the Tribe. The Tribe had taken steps to terminate that contract prior to any conduct by Severin Hills or The Gaming Fund. Rather, the plaintiff alleges that the defendants, by funding the pending arbitration proceedings and by entering into a contract that replaced the plaintiff as the financier of the Tribe's federal recognition efforts, interfered with the plaintiff's expectation that it would resolve its dispute with the Tribe and continue as its primary investor. As competitors of the plaintiff, each of the defendants had the privilege to induce third persons to do their business with it rather than with its competitors and it could seek to do so by express inducement as well as by attractive offers of its own services. Id., comment (b). Accordingly, one who intentionally causes a third person not to enter into a prospective contractual relation with another who is his competitor does not interfere improperly with the other's relation if "(a) the relation concerns a matter involved in the competition between the actor and the other and (b) the actor does not employ wrongful means and (c) his action does not create or continue an unlawful restraint of trade and (d) his purpose is at least in part to advance his interest in competing with the other." 4 Restatement (Second), Torts § 768(1)(a) to (d) (1979). Here, it is clear from the allegations of the complaint that the defendants were competing with the plaintiff regarding the financing of the Tribe's attempt to obtain federal recognition and that their objective was to replace the plaintiff as the primary investor of that effort. The plaintiff also makes no claim that the defendants' action involved an unlawful restraint of trade. The only issue is whether, under these circumstances, an allegation of malice is sufficient to impose liability on the defendants. It is not. If a competitor acts, at least in part, to advance his competitive interest, "the fact that he is also motivated by other impulses, as, for example, hatred or a desire for revenge is not alone sufficient to make his interference improper." Id., comment (g).
The plaintiff argues that the court cannot take note of the fact that the defendants are competitors of the plaintiff because there is no such allegation in the complaint. The defendants' status as competitors however is reasonably inferred from the express allegations of the complaint. The complaint states that Severin Hills had an agreement to fund the Tribe's federal recognition efforts both prior and subsequent to the plaintiff assuming that role and that Severin Hills' intent was to replace the plaintiff as the primary investor and manager of the project. The complaint further alleges that The Gaming Fund provided capital to Severin Hills and acted in concert with Severin Hills to replace the plaintiff as the primary investor of the Tribe. From these allegations, it is clear that the plaintiff and the defendants were competitors as it related to funding the Tribe's federal recognition efforts.
Since the plaintiff's claims of tortious interference underlie its civil conspiracy claim, the civil conspiracy claim must fall with the CT Page 14064-fh tortious interference claims. See Eastlander Group, LLC v. Severin Hills, LLC, Superior Court, Complex Litigation Docket at Waterbury, Docket No. X06-CV04-4003573 S (June 2, 2005) (Alander, J.).
In light of the above, the motions to strike the first, second and third counts of the substituted complaint filed by the defendants Severin Hills and The Gaming Fund are hereby granted.