Opinion
CV166028734
08-28-2017
Jon A. Jagodzinski v. Albert Jagodzinski et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE DEFENDANT'S MOTION TO STRIKE (#114)
Irene P. Jacobs, J.
FACTS
This action, brought by the plaintiff on June 1, 2016, arises out of a claimed oral partnership agreement between the plaintiff and the two individual defendants Albert and Heather Jagodzinzki. The individual defendants were the owners of the defendant auto body repair business (RAB). They took over another auto body repair business (Camp), which business had been managed by the plaintiff. The plaintiff alleges that he and the individual defendants entered into an oral partnership agreement, and that the individual defendants reneged on the agreement. In counts twenty-one through twenty-three of the plaintiff's revised complaint [#110], the plaintiff alleges that the defendants' conduct constitutes violations of General Statutes § 42-110a et seq., the Connecticut Unfair Trade Practices Act (CUTPA).
On December 9, 2016, the defendants filed the current motion to strike counts twenty-one through twenty-three from the plaintiff's revised complaint. The defendants' motion was accompanied by a supporting memorandum of law [#115]. On January 30, 2017, the plaintiff filed a memorandum of law in opposition to the defendants' motion to strike [#117]. This matter was heard at short calendar on May 1, 2017.
In counts twenty-one through twenty-three, the plaintiff alleges the following relevant facts. In late 2011, the defendants Albert and Heather Jagodzinski formed RAB for the purposes of acquiring Camp Services, Ltd. (Camp). The plaintiff was the vice president of Camp and ran its daily business. Prior to the acquisition of Camp by RAB, the defendants Albert and Heather Jagodzinski requested that the plaintiff contribute funds to pay the existing debts of Camp until the acquisition was completed. The plaintiff agreed to contribute the requested funds based on the oral assurances given by Albert and Heather Jagodzinski that he would become an equal partner in RAB.
Counts twenty-one through twenty-three incorporate all of the facts alleged in count one, or incorporate counts that incorporate count one.
The acquisition of Camp by RAB was completed in February 2012. Following the acquisition, the plaintiff invested $10,000 into RAB's operating account to allow the business to continue smoothly, at the request of defendants Albert and Heather Jagodzinski. Albert and Heather Jagodzinski then requested that the plaintiff continue to run the day-to-day operations of RAB. The plaintiff agreed, based on the representations made by Albert and Heather Jagodzinski that he would become an equal partner in RAB. Albert Jagodzinski was not involved in the daily business of RAB because he was the principal owner of another automobile repair business, Riverside Service, Inc.
The plaintiff continued to contribute his tools, assets, and additional funds into RAB throughout 2012 and 2013. In the fall of 2013, Albert Jagodzinski informed the plaintiff that there were insufficient funds to issue payroll checks to him. The plaintiff agreed to forego receiving payments until RAB had sufficient funds to administer payments in reliance on the eventual ownership interest in RAB the plaintiff would receive. The plaintiff continued to run RAB until May 2, 2014, when Albert and Heather Jagodzinski informed the plaintiff that his employment with RAB was terminated. The plaintiff filed this action, alleging in counts twenty-one through twenty-three that the defendants violated CUTPA by diverting the assets and resources of RAB to other business entities in which the defendants had interests.
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, 815 A.2d 1188 (2003). " A motion to strike admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Emphasis omitted; internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 693 A.2d 293 (1997). " The role of the trial court in ruling on a motion to strike is to examine the [complaint], construed in favor of the [plaintiff], to determine whether the [pleading party has] stated a legally sufficient cause of action." (Internal quotation marks omitted.) Coe v. Board of Education, 301 Conn. 112, 19 A.3d 640 (2011). In ruling on a motion to strike, the court is limited to the facts alleged in the complaint." Faulkner v. United Technologies Corp., supra, 580.
General Statutes § 42-110b(a), the Connecticut Unfair Trade Practices Act (CUTPA), states, " [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." CUTPA provides for 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 . . ." General Statutes § 42-110g(a). " CUTPA, by its own terms, applies to a broad spectrum of commercial activity." Larsen Chelsey Realty Co. v. Larsen, 232 Conn. 480, 656 A.2d 1009 (1995). To establish a CUTPA violation, a " claimant's evidence must establish that the conduct at issue falls within one of three criteria. A court must decide whether the conduct (1) offends public policy, (2) is immoral, unethical, oppressive or unscrupulous or (3) causes substantial injury to consumers, competitors or other businessman." Johnson Electric Co. v. Salce Contracting Associates, Inc., 72 Conn.App. 342, 805 A.2d 735, cert. denied, 262 Conn. 922, 812 A.2d 864 (2002). " All three criteria do not need to be satisfied to support a finding of unfairness." Harris v. Bradley Memorial Hospital & Health Center, Inc., 296 Conn. 315, 994 A.2d 153 (2010).
" To state a claim under CUTPA, the plaintiff must allege that the actions of the defendant were performed in the conduct of trade or commerce." (Internal quotation marks omitted.) Muniz v. Kravis, 59 Conn.App. 704, 757 A.2d 1207 (2000). " [A] CUTPA violation may not be alleged for activities that are incidental to an entity's primary trade or commerce." McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn.App. 486, 890 A.2d 140, cert. denied, 277 Conn. 928, 895 A.2d 798 (2006). In McCann, the court held that a transaction to sell real property by an automobile shop did not implicate CUTPA because the transaction was merely incidental to the sellers' primary business of the sale and servicing of automobiles. Id., 523; see also Biro v. Matz, 132 Conn.App. 272, 33 A.3d 742 (2011) (a CUTPA violation may not be alleged when two warehouse owners sold real estate because the owners were not in the business of selling real property).
In the instant case, the defendants assert that the actions alleged in counts twenty-one through twenty-three were not actions conducted in the automobile repair business, the defendants' primary trade or commerce. However, the plaintiff alleges that RAB was formed for the purpose of purchasing Camp and its assets, property, and other holdings. The plaintiff further alleges that Albert and Heather were the principal owners of RAB and had complete dominion and control over the finances and assets of RAB. Lastly, in paragraph eighteen of the complaint, the plaintiff alleges that Albert and Heather diverted the assets of RAB into another business entity or personal cause in which they held an interest. These allegations, construed in favor to the plaintiff, are related to the primary trade or commerce of the defendants, the acquisition and management of automobile businesses. The defendants' motion to strike is denied on these grounds.
" It is well settled that purely intracorporate conflicts do not constitute CUTPA violations." Metcoff v. Lebovics, 123 Conn.App. 512, 2 A.3d 942 (2010). Our Supreme Court " has distinguished, however, such internal corporate actions that also have the effect of usurp[ing] the business and clientele of one corporation in favor of another . . ." (Internal quotation marks omitted.) Russell v. Russell, 91 Conn.App. 619, 882 A.2d 98, cert. denied, 276 Conn. 924, 888 A.2d 92 (2005). CUTPA applies when the defendant's actions go well beyond the governance of an entity and place them in direct competition with the interests of the entity. Id.; see also Fink v. Golenbock, 238 Conn. 183, 680 A.2d 1243 (1996).
In Larsen Chelsey Realty v. Larsen, supra, 232 Conn. 480, the defendant accepted a job offer with a competing real estate broker and subsequently took actions that the plaintiff alleged harmed the plaintiff. These actions included mailing letters to the plaintiff's clients advising them that the plaintiff's firm would be ceasing operations and merging personnel with the competing firm. Id., 494. The court found that the defendant's alleged conduct was outside the employment relationship and may have constituted a CUTPA violation. The court held that the anti-competitive actions of the defendant were outside the employment relationship and, therefore, constituted a potential CUTPA violation. Id., 493-94.
In Fink v. Golenbock supra, 238 Conn. 214, the court emphasized " that it [is] not the employment relationship that [is] dispositive, but the defendant's conduct." In Fink, the court examined the actions of a defendant whose conduct included informing the plaintiff's clients that they should take their business to the new corporation and taking the corporation's assets, equipment, and employees to establish a new one. Id., 214. The court determined that the defendant's actions went well beyond the governance of the corporations and amounted to competitive moves designed to usurp all of the corporation's operations. Id., 213-14. See also Ostrowski v. Avery, 243 Conn. 355, 703 A.2d 117 (1997) (CUTPA claim appropriate when defendants used corporation's own resources for competitive purposes and interfered with corporation's business relationships with clients).
In Spector v. Konover, 57 Conn.App. 121, 747 A.2d 39, cert. denied, 254 Conn. 913, 759 A.2d 507 (2000), the plaintiff was the successor in interest to an individual who had entered into oral agreements with the defendants to build a shopping center and form a partnership. The plaintiff alleged, and the defendants admitted, that the defendants diverted partnership funds to other properties owned by the defendants. The Appellate Court held that defendants' diversion of partnership funds for other properties owned by the defendants " clearly placed the defendants in direct competition with the interests of the [plaintiffs], " and constituted a violation of CUTPA.
In the instant action, the defendants assert that the plaintiff has alleged a purely intracorporate dispute, which is outside the purview of CUTPA. The plaintiff alleges in paragraph eighteen of the complaint that " Albert and Heather diverted [the] assets and resources of [RAB] to one or more business entities or personal causes in which they held an interest in but [the plaintiff] did not, including Riverside Service, Inc., thereby reducing RAB's profits." The plaintiff alleges that the profits and resources of RAB decreased, causing personal loss to the plaintiff and personal benefit to Albert and Heather Jagodzinski. The court finds that the plaintiff's allegations contain conduct that goes beyond purely intracorporate matters and allege conduct that places Albert and Heather Jagodzinski in direct competition with the interests of the plaintiff. The plaintiff has alleged facts to show that Albert and Heather's conduct extended beyond purely intracorporate matters. The defendants' motion to strike is denied on this ground as well.
CONCLUSION
For the foregoing reasons, the court denies the defendants' motion to strike.