Opinion
HHDCV166068019S
09-20-2017
Robley T. Leth v. Halloran & Sage, LLP
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO STRIKE REVISED COMPLAINT
Cesar A. Noble, J.
The present motion to strike raises the novel issue of whether an attorney's fraudulent concealment of, and intentional failure to disclose, misconduct arising out of the attorney client relationship implicates the entrepreneurial aspect of the practice of law where the attorney was motivated by a desire to retain the client's present and future business. The claim of the plaintiff, Robley Leth, against the defendants, her former attorney and his firm, Lawrence Weisman and Halloran & Sage, LLP, that such action violated the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a, et seq., is legally sufficient only if the answer is in the affirmative. The court concludes that because the alleged omission and concealment arouse out of the representation of the plaintiff, as a client, by the defendants, as counsel, the plaintiff has failed to state a claim upon which relief may be granted and thus, the motion to strike is granted.
Lawrence Weisman and Halloran & Sage, LLP are herein referred to collectively as the " defendants" and individually as Halloran & Sage and Weisman. Weisman is alleged to have been employed by Halloran & Sage at all times relevant to the claims against them.
Facts and Procedural History
This action was the subject of the court's prior decision striking portions of the original complaint which detailed the factual and procedural history. Leth v. Halloran & Sage, LLP, Superior Court, judicial district of Hartford, Docket No. CV-16-6068019-S (2017 WL 1194321) (February 21, 2017, Noble, J.) [64 Conn. L. Rptr. 34, ] ( Leth I ). Familiarity with that decision and facts recited therein is presumed. In short, the defendants represented the plaintiff and her then husband, Peter Romano (Romano), with whom Weisman had both a professional and personal relationship. Weisman is alleged to have represented the plaintiff in her purchase of property to which he took title to as trustee. Thereafter Weisman allegedly executed a quitclaim deed transferring ownership of the property from himself as trustee to Romano and the plaintiff as joint tenants (the transfer). The defendants allegedly never informed the plaintiff of the transfer and, indeed, concealed it from her even though they continued to jointly represent her and Romano in other real estate transactions. The transfer of the property impacted adversely the financial resolution of the plaintiff's subsequent divorce from Romano. Subsequent to the striking of the counts claiming a violation of CUTPA the plaintiff filed the operative revised complaint, pursuant to Practice Book § 10-44, which restates the aforementioned claims.
The revised complaint contains additional allegations of the various types of legal services which Weisman rendered to the plaintiff. The plaintiff alleges that Weisman's acts were done with the intention of retaining the plaintiff as a client as well as furthering his relationship with Romano in order to benefit financially. The factual predicate for the misconduct alleged in the revised complaint centers not on the actual performance of the transfer but on the circumstances surrounding the transfer, namely, the defendants' failure to inform or disclose the transfer and the resulting conflict of interest as well as the subsequent fraudulent concealment of the transfer. The defendants move to strike the CUTPA violations asserted in the revised complaint and the corresponding paragraphs three and four of the prayer for relief on the grounds that the allegations concerning the defendants' wrongdoing do not relate to the entrepreneurial aspects of the practice of law and are thus not within the scope of CUTPA. In response, the plaintiff argues that the allegations sufficiently implicate the entrepreneurial aspects of the practice of law because the defendants engaged in the misconduct for purposes of retaining the plaintiff as their client for real estate, corporate and business transactions and therefore, the claim comes within the ambit of CUTPA. The court is not persuaded.
The present motion also seeks to strike paragraph five of the prayer for relief which requests " statutory interest." The plaintiff conceded at oral argument that this prayer is properly stricken.
Standard of Review
" 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). See Practice Book § 10-39(a)(1). " [A] motion to strike challenges the legal sufficiency of a pleading and, consequently, requires no factual findings by the trial court . . . [The court] construe[s] the complaint in the manner most favorable to sustaining its legal sufficiency . . . Thus, [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . Moreover, [the court notes] that [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." (Internal quotation marks omitted.) Geysen v. Securitas Security Services USA, Inc., 322 Conn. 385, 398, 142 A.3d 227 (2016).
Analysis
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." The purpose of CUTPA is to protect the public, including consumers and businesses, from unfair practices in the conduct of any trade or commerce. See, e.g., Eder Bros., Inc. v. Wine Merchants of Connecticut, Inc., 275 Conn. 363, 379, 880 A.2d 138 (2005). While attorney conduct is within the purview of CUTPA's application; Heslin v. Connecticut Law Clinic of Trantolo & Trantolo, 190 Conn. 510, 520, 461 A.2d 938 (1983); only the entrepreneurial or commercial aspects of the profession are covered to the specific exclusion of professional negligence, i.e. malpractice. Haynes v. Yale-New Haven Hospital, 243 Conn. 17, 34-35, 699 A.2d 964 (1997); Beverly Hills Concepts, Inc., v. Schatz & Schatz, Ribicoff & Kotkin, 247 Conn. 48, 49, 717 A.2d 724 (1998). The entrepreneurial or commercial aspects of lawyering have been chiefly identified as advertising, the solicitation of business, billing, and bill collection. See, e.g., Stuart v. Freiberg, 142 Conn.App. 684, 709, 69 A.3d 320, 335 (2013), rev'd in part on other grounds, 316 Conn. 809, 116 A.3d 1195 (2015); Janusauskas v. Fichman, 264 Conn. 796, 809, 826 A.2d 1066 (2003); Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P.; 260 Conn. 766, 782, 802 A.2d 44 (2002).
" [I]t is important to note that, although all lawyers are subject to CUTPA, most of the practice of law is not." Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., supra, 260 Conn. 782. The specific exemption for the entrepreneurial aspect of the profession is " not a catch-all provision intended to subject any arguably improper attorney conduct to CUTPA liability . . . [T]he mere fact that the actions of the attorney and the law firm might have deviated from the standards of their profession does not necessarily make the actions entrepreneurial in nature." Id. " Many decisions made by attorneys eventually involve personal profit as a factor, but are not considered part of the entrepreneurial aspect of practicing law . . . Using an attorney's financial considerations as a screening mechanism for separating professional actions from entrepreneurial ones would dissolve the distinction between the two, subjecting attorneys to CUTPA claims for any decision in which profit conceivably could have been a factor." Id., 783.
In the present case, the plaintiff asserts that certain misconduct arising out of the professional relationship, namely, fraudulent concealment and intentional nondisclosure of impropriety, that is motivated by the desire to retain a client or clients for future business prospects subjects the attorney and accompanying firm to liability under CUTPA. This argument highlights the occasional difficulty in differentiating between the entrepreneurial or commercial aspect of law and the actual practice of law, given that the retention and development of clientele is dependent upon the satisfactory completion of the object of representation. Adherence to the plaintiff's argument would lead to the conclusion that the failure to report any wrongful act or omission by the attorney, motivated in part by his or her desire to retain, or avoid losing, the client, does not involve the practice of law. If this were so the exception would swallow the rule. Thus, this court is not persuaded that the alleged facts of the revised complaint state a legally sufficient claim for a violation of CUTPA.
When determining whether the plaintiff's allegations fit within the " entrepreneurial exception, " a court " must review the plaintiff's allegations of CUTPA violations and look to the underlying nature of the claim to determine whether it is really a [legal] malpractice claim recast as a CUTPA claim." Haynes v. Yale-New Haven Hospital, supra, 243 Conn. at 38. In the present case, neither party, nor the court's research, has identified a Connecticut case that examined how the manner in which a lawyer retains a client may relate to the entrepreneurial aspect of the legal practice as opposed to the actual practice of law. The plaintiff relies on Hurowitz v. Garbinski, Superior Court, judicial district of New Haven, Docket No. CV-14-6048288-S (2015 WL 6405913) (October 1, 2015, Nazzaro, J.) (61 Conn. L. Rptr. 56, ), for the proposition that " [t]he entrepreneurial aspects of legal practice are those related to: how the price of legal services is determined, billed and collected and the way a law firm obtains, retains, and dismisses clients." (Emphasis added.) Id.,, [WL] *3. This expression of the contours of the " entrepreneurial aspects" of legal practice was in turn drawn from the decision in Kegeles v. Bergman, Horowitz & Reynolds, P.C., Superior Court, judicial district of New Haven, Docket No. CV-96-0391439-S (199 WL 1125419) (November 24, 1999, Levin, J.) (26 Conn. L. Rptr. 22, ). In Kegeles, the " entrepreneurial aspects" characterization was provided in a parenthetical to a citation to the Washington Supreme Court's decision in Eriks v. Denver, 118 Wash.2d 451, 464, 824 P.2d 1207 (1992), which was favorably cited by our Supreme Court in Haynes v. Yale-New Haven Hospital, supra, 243 Conn. 36. Neither decision had occasion to elaborate on how the retention of a client might constitute an unfair trade practice. The Eriks decision also did not have before it a factual pattern related to an act motivated by the retention of a client, nor did it postulate how such might occur.
The only case which addressed an attorney's motivation to retain a client as forming the basis for a statutory fraud violation involved the assumption that an attorney's concealment or misrepresentation of his failure to secure his client's interest in a debt by not timely recording a mortgage. Kessler v. Loftus, 994 F.Supp. 240 (D. Vt. 1997). The court ultimately declined to find a violation of the Vermont Consumer Fraud Act, Vt.Stat.Ann. tit. 9, ch. 63 (1993 and Supp. 1997) without resolving the issue of whether the situation implicated the entrepreneurial aspects of the practice of law. Id., 244.
The gravamen of the CUTPA counts in the present case is the failure to disclose, and the subsequent concealment of, the transfer, and any attendant conflict of interest. The transfer was inextricably intertwined with and arose out of the defendants' legal representation of the plaintiff. This malfeasance forms the predicate for the nonfeasance, namely, the failure to communicate the act of the transfer to the plaintiff or the resulting conflict of interest, in addition to the malfeasance attributed to the fraudulent concealment of the transfer at issue. All necessarily are founded on the breach of duty imposed by the attorney client relationship. Absent a duty to disclose, the failure to disclose is neither deceptive nor actionable. See, e.g., Macomber v. Travelers Property & Casualty Corp., 277 Conn. 617, 622, 894 A.2d 240 (2006) (failure to disclose deceptive only if there is a duty to disclose). Clearly, the duty to disclose in the present case arose out of the fiduciary relationship between the plaintiff and defendant that imposed the obligation of loyalty and honesty. Beverly Hills Concepts, Inc. v. Schatz & Schatz, Ribicoff & Kotkin, supra, 247 Conn. 56-57. " [W]here the complaint concerns issues involving the heart of representation such as competence, strategy or duty, the conduct is not within the scope of CUTPA." (Emphasis added.) Tracey v. Still, Superior Court, judicial district of Ansonia-Milford, Docket No. CV-05-4001883-S (2006 WL 1000078, at *3) (March 23, 2006, Stevens, J.) [21 Conn. L. Rptr. 101, ]. Because the improper conduct alleged in the complaint was part of the defendants' professional representation of the plaintiff, and thus did not involve the entrepreneurial or commercial aspects of the practice of law, the CUTPA counts fail.
Conclusion
Counts nine and ten of the revised complaint implicate only the representational, rather than entrepreneurial, aspects of the practice of law and therefore the claim of a violation of CUTPA is legally insufficient. The motion to strike these counts, as well as paragraphs three, four and five of the prayers for relief, is granted.
See footnote 2.