Opinion
FSTCV185018551S
05-30-2019
Richard ETTINGER et al. v. Dennis VLAHAKIS et al.
UNPUBLISHED OPINION
TAGGART D. ADAMS, JUDGE TRIAL REFEREE
FACTS
This action arises out of a residential home improvement project for property located at 89 Hickok Road, New Canaan (the property), which is owned by Margaret Ettinger, the second named plaintiff On March 22, 2018, the plaintiffs, Richard Ettinger and Margaret Ettinger, commenced this action against the defendants, Dennis Vlahakis Construction Services LLC (DVCS) and Dennis Vlahakis (Vlahakis). The plaintiffs subsequently, filed a four-count amended and revised complaint, the operative complaint, alleging the following facts. On or about July 18, 2012, the plaintiffs and the first defendant, DVCS, executed a written contract pursuant to which DVCS was required to perform home improvement work at the property. Counts one through three of the complaint are against DVCS and allege that DVCS (i) breached the written contract with the plaintiffs, (ii) has been unjustly enriched, and (iii) violated the Connecticut Unfair Trade Practices Act (CUTPA). Count four of the complaint seeks to pierce the corporate veil of DVCS to hold the second defendant, Vlahakis, personally liable for the acts of the entity DVCS.
On October 15, 2018, DVCS filed its answer, revised special defenses and revised counterclaims. On January 15, 2019, Vlahakis filed his answer and special defenses. The plaintiffs filed a motion to strike directed at the defendants’ special defenses on December 4, 2018, and February 14, 2019, on the ground that the special defenses set forth are legally insufficient. The defendants filed a memorandum in opposition to the motion to strike on February 26, 2019, and the matter was argued before the court on March 4, 2019.
DISCUSSION
"[A] motion to strike challenges the legal sufficiency of a pleading and, consequently, requires no factual findings by the trial court ..." (Internal quotation marks omitted.) Geysen v. Securitas Security Services USA, Inc., 322 Conn. 385, 398 (2016). "[O]ur rules of practice provide that a party may challenge by way of a motion to strike the legal sufficiency of an answer, ‘including any special defenses contained therein ...’ Practice Book § 10-39; see also Practice Book § 10-6." GMAC Mortgage, LLC v. Ford, 144 Conn.App. 165, 179-80 (2013). "Generally speaking, facts must be pleaded as a special defense when they are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action." (Citations omitted; internal quotation marks omitted.) Almada v. Wausau Business Ins. Co., 274 Conn. 449, 456 (2005). "In ruling on a motion to strike, the court must accept as true the facts alleged in the special defenses and construe them in the manner most favorable to sustaining their legal sufficiency." (Internal quotation marks omitted.) Doe v. Hartford Roman Catholic Diocesan Corp., 317 Conn. 357, 398 (2015). "On the other hand, the total absence of any factual allegations specific to the dispute renders [the special defense] legally insufficient." (Internal quotation marks omitted.) Smith v. Jackson, Superior Court, judicial district of Waterbury, Docket No. CV-14-6024411-S (August 21, 2015, Roraback, J.) (60 Conn.L.Rptr. 864, 865).
The plaintiffs argue that the following special defenses set forth by the defendants are legally insufficient and should be stricken: i) special defense of unclean hands as to counts one, two and three; ii) special defense of laches as to counts one, three, and four; iii) special defense of waiver as to counts one, two, three, and four; iv) special defense of statute of limitations as to counts one, two, three, and four; and v) first special defense to count four; on the ground that these special defenses are legally insufficient. The defendants argue to the contrary.
I
Unclean Hands
The plaintiffs argue that the special defense of unclean hands as to counts one, two, and three is legally insufficient because the alleged conduct of making unforeseen changes to the project and failure to timely hire subcontractors does not rise to the level of wilful and wrongful misconduct on the part of the plaintiffs. The plaintiffs also argue that the allegation that the plaintiffs owe the defendants $55,000 is not a special defense that seeks to demonstrate that the plaintiffs have no cause of action, but rather alleges a counterclaim or setoff. The defendants counter argues that the plaintiffs’ claims for relief are improper due to their own unfair, inequitable and dishonest behavior. The defendants further argue that the plaintiffs failed to render full payment under the contract, intentionally caused delays, and failed to timely hire subcontractors, which conduct was wilful and related to this litigation.
"The doctrine of unclean hands expresses the principle that where a plaintiff seeks equitable relief, he must show that his conduct has been fair, equitable and honest as to the particular controversy in issue ... Unless the plaintiffs conduct is of such character as to be condemned and pronounced wrongful by honest and fair-minded people, the doctrine of unclean hands does not apply." (Internal quotation marks omitted.) Thompson v. Orcutt, 257 Conn. 301, 310 (2001). "The party seeking to invoke the clean hands doctrine to bar equitable relief must show that his opponent engaged in wilful misconduct with regard to the matter in litigation." (Internal quotation marks omitted.) Monetary Funding Group Inc. v. Pluchino, 87 Conn.App. 401, 407 (2005). "Our Supreme Court defines wilful misconduct as intentional conduct with the design to injure either actually entertained or to be implied from the conduct and circumstances ... Not only the action producing the injury but the resulting injury must be intentional." (Internal quotation marks omitted.) Witczak v. Gerald, 69 Conn.App. 106, 116 (2002), quoting Ditbay v. Irish, 207 Conn. 518, 533 (1988).
"Where a plaintiff’s claim grows out of or depends upon or is inseparably connected with his own prior fraud, a court of equity will, in general, deny him any relief, and will leave him to whatever remedies and defenses at law he may have." (Internal quotation marks omitted.) Thompson v. Orcutt, supra, 257 Conn. 310. "The complainant ought not to be the transgressor himself, and then complain that by chance he has been injured on account of his own wrongful misconduct ... the equity court will not lend him its jurisdiction to right a wrong of which himself is the author." Boretz v. Segar, 124 Conn. 320, 323 (1938). "Courts apply [the] [doctrine of unclean hands] only when a plaintiff’s improper conduct relates in some significant way to the claim he [or she] now asserts. Otherwise, only those leading pristine and blameless lives would ever be entitled to equitable relief." Id., 311.
In the present case, the defendants allege that the plaintiffs come to court with unclean hands because of their failure to make full payment, their conduct of making unforseen changes and additions to the project, and their failure to timely hire subcontractors. The defendants in their special defense do not allege that the plaintiff’s actions constitute wilful or intentional misconduct with the design to injure the efforts of the defendant, so as to result in the alleged defective home. "Although a claim of wilful misconduct may be implied from the conduct and circumstances alleged, the defendant does not plead any facts to support the inference that the plaintiffs’ conduct [of failure to make full payment, making unforseen changes to the project and failure to timely hire subcontractors] was done wilfully or intentionally." Decian, Inc. v. Accustandard, Inc., Superior Court, judicial district of New Haven, Docket No. CV-13-6038398-S (February 25, 2014, Wilson, J.). Further, the facts pleaded by the defendants are without any factual description or explanation about how such conduct is of such a character as to be condemned and pronounced wrongfully by honest and fair-minded people. LaSalle Natonal Bank v. Freshfield Meadows, LLC, 69 Conn.App. 824, 836, 798 A.2d 445 (2002).
"Under our rules of practice, a counterclaim, if proper, is ... a cause of action existing in favor of a defendant against a plaintiff which a defendant pleads to diminish, defeat or otherwise affect a plaintiff’s claim and also allow recovery by the defendant." Home Oil Co. v. Todd, 195 Conn. 333, 341, 487 A.2d 1095 (1985). DVCS’ claim that the plaintiffs owe it approximately $55,000 is not a proper special defense such that the plaintiffs have no cause of action. Such a claim is more appropriately brought before the court as a counterclaim.
"It is well settled that [a]pplication of the doctrine of unclean hands rests within the sound discretion of the trial court. Absent allegations establishing the element of intentional or willful misconduct on the part of the plaintiffs, the special defense of [unclean hands] is legally insufficient." (Internal quotation marks omitted; citation omitted.) Decian, Inc. v. Accustandard, Inc., Superior Court, judicial district of New Haven, Docket No. CV-13-6038398-S (February 25, 2014, Wilson, J.). Accordingly, this court grants the motion to strike the defendants’ special defense of unclean hands as to counts one, two and three.
II
Laches
The plaintiffs argue that the special defense of laches as to counts one, three and four are legally insufficient because the doctrine of laches cannot be imputed to a party who has brought an action within the statutory period, which the plaintiffs have done, as a breach of written contract claim has a six-year statute of limitations. The defendants argue that their special defenses are legally sufficient because the plaintiffs waited an unreasonable amount of time to commence the action, as a result of which the defendants would be significantly prejudiced. The defendants further argue that the special defense of laches is applicable in this case as the plaintiffs seek equitable relief from the court.
"Laches consists of an inexcusable delay which prejudices the defendant ... Laches consists of two elements. First, there must have been a delay that was inexcusable, and, second, that delay must have prejudiced the defendant ... Absent prejudice to the defendant, the mere lapse of time does not constitute laches." (Citations omitted; internal quotation marks omitted) Giordano v. Giordano, 39 Conn.App. 183, 213, 664 A.2d 1136 (1995). "A laches defense is not ... a substantive right that can be asserted in both legal and equitable proceedings. Laches is purely an equitable doctrine, is largely governed by the circumstances, and is not to be imputed to one who has brought an action at law within the statutory period." Id., 214. "[S]uch claims are already governed by statute of limitations that have been decided upon by the legislature. An express limitations period reflects a legislative value judgment striking the appropriate balance between the interests promoted by the statute and countervailing interests of repose." Doe v. Hartford Roman Catholic Diocesan Corp., 317 Conn. 357, 494 (2015). Pursuant to practice Book § 10-27 "[a] party seeking equitable relief shall specifically demand it as such, unless the nature of the demand itself indicates that the relief sought is equitable relief." See also Giulietti v. Giulietti, 65 Conn.App. 813, 859, cert. denied, 258 Conn. 946, 947, 788 A.2d 95, 97 (2001).
In the present case, the plaintiffs’ claims for breach of written contract, violation of CUTPA, and piercing the corporate veil are causes of action based in law. The plaintiffs’ claims do not indicate that equitable relief is sought as the plaintiffs specifically seek: compensatory damages, costs, interest, punitive damages, attorneys fees, and such other relief as the Court deems just and proper. The first five claims are based in law, the last claim "such other relief as the Court deems just and proper, is not a specific demand for equitable relief, but rather merely permits the court to fashion a remedy as is just and equitable if no remedy at law is available." (Internal quotation marks omitted.) Florian v. Lenge, 91 Conn.App. 268, 282 (2005); see also Milbauer v. Milbauer, 54 Conn.App. 304, 317 (1999). The special defense of laches cannot be imputed against these claims. In addition, the plaintiffs’ complaint is based on an alleged breach of written contract, the applicable statutory time period is six years after the right of action accrues, the parties allegedly entered into a written contract on July 18, 2012 and commenced this action on January 23, 2018, which was well within the statutory limitation period. The special defense of laches cannot be imputed against a plaintiff that brings an action within the statutory period. Because the plaintiffs’ claims are based in law, did not allege a cause of action for equitable relief, and were commenced within the applicable statutory time period, the special defense of laches is legally insufficient. The court grants the motion to strike the special defense of laches as to counts one, three and four.
General Statutes § 52-576(a).
The plaintiffs’ third count is a CUTPA violation claim, which must be brought within three years of a violation. See § 42-110g(f). The plaintiffs’ CUTPA violation claim here was brought well after three years of the alleged violation. However, because CUTPA violation is based on law and no equitable relief is claimed, the special defense of laches is still not available to this claim. Also, the defendants have not specifically pleaded this issue in their special defense of laches, neither have they raised it in their opposition to the motion to strike relating to special defense of laches, the defendants rely on the alleged fact that the plaintiffs’ unreasonable delay in commencing this action will prejudice them.
III
Waiver
The plaintiffs argue that the special defense of waiver as to counts one, two, three and four is legally insufficient because it is not reasonable to believe that the plaintiffs by moving back into the property forfeited their right to sue the defendants for damages. The plaintiffs also argue that the special defense of waiver does not allege any facts demonstrating that the plaintiffs acted in a manner that implies waiver. The defendants contend that the special defense of waiver is legally sufficient as the plaintiffs demonstrated an intention to relinquish the right to sue by voluntarily moving into the property, utilizing the property and residing there for more than three years without taking any steps to express dissatisfaction.
"Waiver is the intentional relinquishment or abandonment of a known right or privilege ... Waiver is based upon a species of the principle of estoppel and where applicable it will be enforced as the estoppel would be enforced ... Estoppel has its roots in equity and stems from the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which might perhaps have otherwise existed ... Waiver does not have to be express, but may consist of acts or conduct from which waiver may be implied ... In other words, waiver may be inferred from the circumstances if it is reasonable to do so." (Citations omitted; internal quotation marks omitted.) AFSCME, Council 4, Local 704 v. Department of Public Health, 272 Conn. 617, 623, 866 A.2d 583 (2005). "There cannot be a finding of waiver unless the party has both knowledge of the existence of the right and intention to relinquish it." (Internal quotation marks omitted.) Merrimack Mutual Fire Insurance Co. v. Selby, judicial district of New Haven, Docket No. CV-07-4008234-S (September 10, 2008, Taylor, J.). "Because waiver is a knowing relinquishment of a known right, the defendant must plead facts indicating that a plaintiff has intentionally waived a known right." SNET Information, Inc. v. Prime One/Prime Direct, Inc., Superior Court, judicial district of New Haven, Docket No. CV-07-5008131-S (August 7, 2009, Robinson, J.)." [T]here can be no waiver of a right if the person sought to be charged with waiver says or does nothing inconsistent with an intent to rely upon such right ... Waivable rights are not extinguished by inaction alone ... the failure to object immediately to a party’s unlawful act does not constitute waiver of a right to bring legal action." Carpender v. Sigel, 142 Conn.App. 379, 388, 67 A.3d 1011 (2013).
In the present case, the defendants’ special defense of waiver does not allege any facts indicating that the plaintiffs intentionally waived a known right, to bring a claim against them. The defendants merely assert that the plaintiffs’ claims are barred by the doctrine of waiver because the plaintiffs voluntarily moved back into the property and utilized it, without taking any action to resolve the purported dissatisfaction. This court finds the assertion of inaction on the part of the plaintiffs does not adequately support an intentional relinquishment of a known right by the plaintiffs as "the failure to object immediately to a party’s unlawful act does not constitute the waiver of a right to bring legal action." Carpender v. Sigel, 142 Conn.App. 379, 388 (2013). The special defense of waiver as to counts one, two, three and four is legally insufficient, and it is stricken.
IV
Statute of Limitations
The plaintiffs argue that the special defense of statute of limitations should be stricken because it alleges facts inconsistent with the complaint. The plaintiffs argue that the complaint alleges breach of written contract and not oral contract as alleged by the defendant. The plaintiffs also argue that this action was brought within the applicable six-year statute of limitations. The defendants counter-argue that not all services were provided under the written contract, thus the work performed by the defendants was subject to a three-year statute of limitations, which expired before the plaintiffs initiated their action, thereby operating as a bar to the plaintiffs’ claims.
"As a general rule, facts must be pleaded as a special defense when they are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action ... The fundamental purpose of a special defense, like other pleadings, is to appraise the court and opposing counsel of the issues to be tried, so that basic issues are not concealed until the trial is underway." (Citations omitted.) Bennett v. Automobile Ins. Co. of Hartford, 230 Conn. 795, 802 (1994); see also Practice Book § 10-50 (special defenses must include "[f]acts which are consistent with [the plaintiff’s statement of facts] but show, notwithstanding, that the plaintiff has no cause of action, must be specially alleged"). "When the facts alleged in the defendant’s special defense are inconsistent with facts alleged in the complaint, the defense is legally insufficient and the court should grant the motion to strike." (Internal quotation marks omitted.) Complete Energy, Inc. v. Fox, Superior Court, judicial district of Tolland, Docket No. CV-11-6004252-S (January 25, 2013, Sferrazza, J.) (55 Conn.L.Rptr. 443, 445). General Statutes § 52-576(a) provides in relevant part: "No action for an account, or any simple or implied contract, or on any contract in writing, shall be brought but within six years after the right of action accrues."
In the present case, paragraph three of the complaint alleges that the parties entered into a written contract dated July 18, 2012. The plaintiffs’ cause of action in all counts arises from breach of the said written contract, as alleged in the complaint. The defendants in their respective answers admit that DVCS LLC entered into the written contract referenced in paragraph three of the complaint, however, the defendants in their special defenses allege some of the work performed was under an oral contract. The defendants do not allege which specific work was performed under the alleged oral contract. The facts as alleged in the special defense relating to the oral contract are inconsistent with written contract facts asserted by the plaintiffs in their complaint, the special defense of statute of limitations is therefore legally insufficient due to inconsistency. In addition, the plaintiffs and DVCS LLC entered into the alleged written contract on July 18, 2012, and commenced this action on January 23, 2018, which is within the six year statutory limitation period applicable to written contracts. The court grants the plaintiffs’ motion to strike the special defense of statute of limitations as to counts one, two, three, and four.
The defendants in their memorandum of opposition raise an alternative argument that their special defense of statute of limitations relating to the CUTPA violation count is legally sufficient because the plaintiffs claim is barred by § 42-110g(f), which provides that an action for damages under CUTPA may not be brought more than three years after occurrence of the violation of CUTPA. The defendants, however, do not assert this in their special defense relating to CUTPA violation. In a motion to strike the court is limited to the pleadings and cannot look beyond the pleadings for facts not alleged. Beck & Beck, LLC v. Costello, 159 Conn.App. 203, 207, 122 A.3d 269 (2015). The court cannot consider the defendants’ alternative argument which is outside the special defense as pleaded.
V
Vlahakis’ First Special Defense as to Count Four
The plaintiffs argue that Vlahakis’ first special defense as to count four, stating that the plaintiffs’ claim is barred because Vlahakis did not personally enter into an agreement with them, is legally insufficient as it belies the concept of piercing the corporate veil. The defendant, Vlahakis, argues that his special defense is legally sufficient as the plaintiffs have failed to state a cognizable claim to pierce the corporate veil, and are improperly using a motion to strike to determine the merit of their claims.
"The assets of a corporation or limited liability company ... typically are not available to creditors seeking to recover amounts owed by a stockholder or member of that corporation or limited liability company. Nonetheless, courts will ... disregard the fiction of a separate legal entity to pierce the shield of immunity afforded by the corporate structure in a situation in which the corporate entity has been so controlled and dominated that justice requires liability to be imposed." (Internal quotation marks omitted.) Connecticut Light & Power Co. v. Westview Carlton Group, LLC, Superior Court, judicial district of New Haven, Docket No. CV-020469715-S (December 6, 2006, Hadden, J.T.R.), aff’d, 108 Conn.App. 663 (2008). "[T]he general rule, which recognizes the individuality of corporate entities and the independent character of each in respect to their corporate transactions, and the obligations incurred by each in the course of such transactions, will be disregarded, where ... the interests of justice and righteous dealing so demand." Hersey v. Lonrho, Inc., 73 Conn.App. 78, 86, 807 A.2d 1009 (2002). "The circumstance that control is exercised merely through dominating stock ownership, of course, is not enough ... There must be such domination of finances, policies and practices that the controlled corporation has, so to speak, no separate mind, will or existence of its own and is but a business conduit for its principal." Zaist v. Olson, 154 Conn. 563, 574 (1967). "The concept of piercing the corporate veil is equitable in nature and courts should pierce the corporate veil only under exceptional circumstances." (Internal quotation marks omitted.) KLM Industries, Inc. v. Tylutki, 75 Conn.App. 27, 33, 815 A.2d 688, cert. denied, 263 Conn. 916, 821 A.2d 770 (2003).
Piercing the corporate veil by its very nature entails the court going beyond the corporate structure to hold officers of a corporation or limited liability company personally liable for acts of the corporation. The second defendant’s special defense that the plaintiffs’ claim is barred because he did not personally enter into a contract with the plaintiffs, is inconsistent with the principle of piercing the corporate veil, and, is therefore, legally insufficient. The court grants the motion to strike Vlahakis, ’ first special defense to count four.
CONCLUSION
For the reasons set forth above, the plaintiffs’ motion to strike is granted.