Opinion
No. FST CV 08-5009085 S
November 25, 2009
MEMORANDUM OF DECISION MOTION TO STRIKE #128
BACKGROUND
The plaintiff filed a first revised first amended complaint (complaint) dated June 12, 2009, which is the subject of the motion to strike by the defendant, Cytec Industries, Inc. (Cytec Industries). The complaint alleges in count one that the parties entered into a written real property purchase agreement for nineteen acres of land in Stamford, Connecticut. The plaintiff, Home Depot, U.S.A., Inc. (Home Depot) alleges that the defendant, Cytec Industries, has failed to comply with its obligations and responsibilities pursuant to a purchase agreement and thus seeks damages for a breach of contract.
The defendant moves to strike paragraph 32(4) of the complaint. This paragraph states: "32. Home Depot is entitled to the return of the Earnest Money and Deposits because Cytec has failed to comply with its obligations and responsibilities under the Purchase Agreement, including its obligations to 1) loss of the Earnest Money and Deposits paid by Home Depot to Cytec under the Purchase Agreement; 2) loss of funds spent by Home Depot in connection with its attempted purchase of the Property; 3) loss of funds spent by Home Depot in seeking approvals from various boards or commissions of the City of Stamford; 4) loss of profits from the retail store that Home Depot anticipated constructing on the Property and which was the subject of the Purchase Agreement; and 5) costs, attorneys fees and expenses pursuant to the terms of the Purchase Agreement."
The defendant argues that lost profits from a retail store which the purchaser anticipated constructing on property may not be recovered in a breach of contract action against the seller of the property. In response, the plaintiff contends that the court cannot strike a paragraph within a count and, secondly, that there is a factual argument as to whether lost profits can be recovered in an action based on a breach of contract.
The parties have submitted memoranda in support of their arguments and on October 13, 2009, the court heard oral argument.
LEGAL DISCUSSION
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "It is fundamental that in determining the sufficiency of a [pleading] challenged by a [party's] motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted." (Internal quotation marks omitted.) Gazo v. Stamford, 255 Conn. 245, 260, 765 A.2d 505 (2001). "A motion to strike . . . does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997). "[The court] construe[s] the complaint in the manner most favorable to sustaining its legal sufficiency . . . [I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Sullivan v. Lake Compounce Theme Park, Inc., 277 Conn. 113, 117-18, 889 A.2d 810 (2006). "A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 498.
The defendant contends that the allegation of lost profits contained in paragraph 32(4) must be stricken because such damages are not permitted in a real estate contract. The defendant contends that the only claim for damages in this real estate property sale is "the difference between the contract price and the value of the property at the time of the breach of the contract." Rowan Construction Corp. v. Hassane, 17 Conn.App. 71, 80, 549 A.2d 1085 (1988) (Internal quotation marks omitted.) This argument ignores the recent decisions of the Connecticut courts and narrowly limits the claims of the complaint to a simple real estate contract. Additionally, the defendant's arguments do not consider the scope of permissible damages that the Supreme Court has considered in contract actions. In particular, the defendant has ignored any claim for consequential damages that may be awarded if the plaintiff satisfies its burden of proof. Consequential damages include any loss that "may fairly and reasonably be considered [as] arising naturally, i.e. according to the usual course of things, from such breach of contract itself." (Internal citations omitted.) Ambrogio v. Beaver Road Associates, 267, Conn. 148, 155, 836 A.2d 1183 (2003). The Supreme Court in Ambrogio considered and rejected an argument almost identical to that raised by the defendant in this action except the contract involved a breach of a construction contract. The court determined that the action should be analyzed as a breach of contract for which damages are "designed to place the injured party, so far as can be done by money, in the same position as that which he would have been in had the contract been performed." Id., 155. The fact that the development of this enterprise has been thwarted in the initial stages is not a basis for this court to determine that lost profits cannot be a part of the damages. In Message Center Management, Inc. v. Shell Oil Products Co., 85 Conn.App. 401, 857 A.2d 936 (2004), the court determined that lost profits could be awarded when properly proven with a reasonable certainty. The court stated: "Damages may be awarded on the basis of lost profits when the subject of the damages relates to an unestablished enterprise or if there is no other alternative in terms of the valuation of damages." (Internal citations omitted.) Id., 424. In particular, the court in Message Center, reiterated the opinion expressed in a number of courts that the damage theory may be based upon assumptions so long as those assumptions are reasonable in light of the record. Id. The ultimate determination of the reasonableness is for the trier of fact. Id. At this stage of the pleadings, it cannot be determined whether the parties contemplated other damages in the event of a default. The complaint alleges that the parties entered into a purchase agreement. The allegations in the complaint contain descriptions of work and permits that were a part of the final purchase agreement. In particular, paragraph seventeen of the complaint states:
"19. [The] Seller also agreed to `commence and to complete prior to the Closing Date, time being of the essence' environmental remediation work to `allow Seller to deliver the Land to Purchaser on the Closing Date in such condition as to allow the construction, opening and operation of the Project without impairment, interruption, interference, liability or additional cost or expense to Purchaser with respect to any Hazardous Material' (`Remediation Work')."
The complaint as a whole contains allegations of continuous involvement by the parties to reach a goal of sale of the property after completing a multitude of tasks relating to a specific result, here a Home Depot store. What the parties contemplated and whether a particular element of loss was reasonably foreseeable at the time a contract is entered into is a question of fact. Ambrogio, supra, 267 Conn. 162. The defendant, in argument to the court, indicated that additional discovery will be required if this element of damages is permitted to remain. This argument supports the position of this court, and others, that because it cannot be determined at this stage of the proceedings that the loss profits were not contemplated, it is a question of fact for the jury. Therefore, the motion to strike the claim of loss of profits in paragraph 32(4) is denied.
The ruling of this court that the motion to strike is denied resolves the motion and objection and therefore it is not necessary for the court to address the plaintiff's second argument that it is improper to strike a portion of a paragraph.