Opinion
No. DBD CV 04 4000373 S
January 28, 2005
MEMORANDUM OF DECISION DEFENDANT'S MOTION TO STRIKE #101
This action arises from an alleged verbal agreement for the sale of a parcel of land located in Bethel, Connecticut. The plaintiff, Mars Electric, LLC, in a five-count complaint filed on August 9, 2004, contends that the defendant, Wooster Par, LLC, failed to convey its 111 Wooster Street property as the parties agreed. In count one, Mars Electric alleges a breach of an oral agreement for the sale of real property, and seeks both a declaratory judgment vesting title to the premises and an injunction restraining Wooster Par from conveying, encumbering or disposing of the premises. Count two sounds in promissory estoppel, whereby Mars Electric alleges that it relied upon Wooster Par's oral representation that it would sell the property to Mars Electric and that such representation would be binding. Counts three and four include allegations of misrepresentation and inducement of reliance. Count five alleges violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110 et seq., for bad faith and deceptive business conduct.
On September 14, 2004, Wooster Par filed a motion to strike the entire complaint for failure to state a claim on which relief can be granted, contending that each count is predicated on an alleged verbal agreement between the parties for the sale of real property, in violation of General Statutes § 52-550, Connecticut's statute of frauds, which requires that such agreements be written. Pursuant to Practice Book § 10-42, Wooster Par filed a memorandum in support of its motion to strike, and on October 15, 2004, Mars Electric timely filed a memorandum of law in opposition.
"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, L.L.C. v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "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." (Internal quotation marks omitted.) Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 378, 698 A.2d 859 (1997). "For the purpose of ruling upon a motion to strike, the facts alleged in a complaint, though not the legal conclusions it may contain, are deemed to be admitted." (Internal quotation marks omitted.) Murillo v. Seymour Ambulance Assn., Inc., 264 Conn. 474, 476, 823 A.2d 1202 (2003). "If motion to strike is directed to the entire complaint, the motion must fail if any of the plaintiff's claims is legally sufficient." Kovacs v. Kasper, 41 Conn.Sup. 225, 226, 565 A.2d 18 (1989).
In its complaint, Mars Electric alleges that it met with Wooster Par on March 11, 2004, to discuss the purchase of Wooster Par's property, and on May 13, 2004, it submitted a signed offer to purchase to Wooster Par with a good faith deposit of $5,900. Thereafter, Wooster Par forwarded a contract for the purchase and sale of the premises, which Mars Electric signed on July 1, 2004; however, even though the parties met on the same date and verbally agreed to the terms and conditions of the sale, Wooster Par itself never signed the contract. Mars Electric further alleges that on July 12, 2004, Wooster Par informed Mars Electric that it accepted another offer to purchase the property. Mars Electric maintains that Wooster Par intentionally induced reliance by representing that the oral agreement would suffice and be binding, and caused Mars Electric to act to its detriment by persuading it not to proceed alternatively or obtain Wooster Par's representations in writing.
Wooster Par, in its memorandum of law in support of its motion to strike, argues that Mars Electric cannot maintain this action in the absence of a written contract signed by Wooster Par, without running afoul of the statute of frauds, and avers that Mars Electric failed to assert any facts in the complaint that would render applicable the part performance exception to the statute of frauds. Moreover, Wooster Par asserts that Mars Electric's CUTPA claim is without merit since Wooster Par did not sign a written contract, was not obligated to convey the property, and as such did not act improperly as a matter of law. Mars Electric, in response, argues that each count of the complaint is legally sufficient, and that the allegations imply conduct that would support a claim of part performance and a violation of CUTPA.
Section 52-550, Connecticut's statute of frauds, provides in relevant part: "(a) No civil action may be maintained in the following cases unless the agreement, or memorandum of the agreement, is made in writing and signed by the party, or the agent of the party, to be charged . . . (4) upon any agreement for the sale of real property or any interest in or concerning real property . . ." "Our statute of frauds, General Statutes § 52-550, requires that every agreement or memorandum of an agreement for the sale of real property or any interest in or concerning real property be in writing and signed by the party to be charged in order for a civil action to be maintained against that party." (Internal quotation marks omitted.) L.R. Realty v. Connecticut National Bank, 53 Conn.App. 524, 541, 732 A.2d 181, cert. denied, 250 Conn. 901, 734 A.2d 984 (1999).
"The defense of the statute of frauds may be raised by a motion to strike." (Internal quotation marks omitted.) Terracino v. Platano, Superior Court, judicial district of Danbury, Docket No. CV 01 0341944 (September 25, 2001, Holden, J.) ( 30 Conn. L. Rptr. 424). "Courts [will] permit the [s]tatute of [f]rauds to be raised by a motion to strike only when the alleged agreement falls squarely within those categories of agreements required to be in writing . . . Thus, in order for the plaintiff to survive a motion to strike a count that would otherwise be barred by the statute of frauds, it is incumbent on the plaintiff to plead sufficient facts to take the claim out of the statute of frauds." (Citations omitted; internal quotation marks omitted.) Keiser v. Hanrahan, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 04 0410421 (August 25, 2004, Dewey, J.). Mars Electric's cause of action rests upon an alleged agreement for the sale of real property, and thus falls squarely within the statute of frauds. As such, Wooster Par's motion to strike is appropriate in the present case.
"The primary purpose of the statute of frauds is to provide reliable evidence of the existence and the terms of the contract . . ." (Internal quotation marks omitted.) Killion v. Davis, 69 Conn.App. 366, 372, 793 A.2d 1237, cert. denied, 260 Conn. 931, 799 A.2d 295 (2002). There is a limited exception to the statute of frauds, however, for agreements for the sale or conveyance of real property. The Connecticut Supreme Court has "repeatedly recognized that a contract is enforceable, despite the statute, when, subsequent to the making of the contract, there has been conduct that amounts to part performance." Heyman v. CBS, Inc., 178 Conn. 215, 222, 423 A.2d 887 (1979). "[W]here one party in reliance upon the contract, has partly performed it to such an extent that a repudiation of the contract by the other party would amount to the perpetration of a fraud, equity looks upon the contract as removed from the operation of the statute of frauds and will enforce it by specific performance or give other relief as the case may be." (Internal quotation marks omitted.) FDIC v. Altholtz, 4 F.Sup.2d 80, 86 (D.Conn. 1998), quoting Santoro v. Mack, 108 Conn. 683, 690, 145 A. 273 (1929). "[T]he acts of part performance generally must be such as are done by the party seeking to enforce the contract, in pursuance of the contract, and with the design of carrying the same into execution, and must also be done with the assent, express or implied, or knowledge of the other party, and be such acts as alter the relations of the parties . . . The acts must also be of such a character that they can be naturally and reasonably accounted for in no other way than the existence of some contract in relation to the subject matter in dispute . . ." (Citation omitted; internal quotation marks omitted.) Ubysz v. DiPietro, 185 Conn. 47, 54, 440 A.2d 830 (1981). Whether a party's actions constitute part performance to take a contract out of the statute of frauds is a factual determination to be made by the trial court. Milazzo v. Schwartz, 44 Conn.App. 402, 407, 690 A.2d 401, cert. denied, 240 Conn. 926, 692 A.2d 1282 (1997).
After signing an offer to purchase the subject premises, Mars Electric alleges that it paid Wooster Par's agent the sum of $5,900 as a good faith deposit in anticipation of a completed transaction. This does not, in and of itself, constitutes part performance such as would take a case out of the statute of frauds. "[A]cts of a purely preliminary or collateral character, done . . . only in anticipation of the actual performance of a contract by both parties, are not considered to be acts of part performance because they do not compel the inference that there was some contract by which these acts were required and therefore explainable upon no other theory . . . Acts prior or preliminary to the acquisition of title, such as partial payment of the purchase price . . . are not acts of part performance; they are instead considered to be preliminary in nature." (Citation omitted; emphasis added; internal quotation marks omitted.) FDIC v. Altholtz, supra, 4 F.Sup.2d 86. "It is generally held that partial or even full payment of the purchase price for the sale of land under an oral contract does not take the case out of the statute of frauds . . . The reason usually given for this rule is that the purchaser normally may have restitution of the consideration paid so that his predicament does not warrant the application of an equitable doctrine designed to prevent the statute of frauds itself from becoming an engine of fraud." (Citations omitted; internal quotation marks omitted.) Breen v. Phelps, 186 Conn. 86, 94-95, 439 A.2d 1066 (1982). Therefore, as Mars Electric's initial payment does not constitute part performance, and Mars Electric does not aver that it performed any other acts — such as construction or improvements on the subject property — that would constitute part performance, the alleged contract remains within the statute of frauds. As such, Wooster Par's motion to strike count one is granted.
In contrast, furnishing labor and material toward the renovation and repair of the premises, or construction of substantial improvements on the land by the purchaser, have been construed as sufficient part performance to remove the case from the operation of the statute of frauds. See Breen v. Phelps, supra, 186 Conn. 96; see also Ubysz v. DiPietro, supra, 185 Conn. 47 (1981) (part performance found where tenants seeking to enforce oral agreement added improvements to the property, continually occupied the property and performed routine jobs for the owner.). See also McMahon v. Plumb, 88 Conn. 547, 553, 92 A.113 (1914).
In counts two, three and four Mars Electric alleges promissory estoppel, inducement of reliance and misrepresentation. These counts, like count one, are founded on the allegation that Wooster Par breached an oral agreement for the sale of real property, an unenforceable contract. A party "cannot avoid the bar of the Statute of Frauds by labeling the cause of action as one to recover damages for fraud where . . . proof of a contract, void under the Statute of Frauds, is essential to maintain the action." (Internal quotation marks omitted.) Foster Road Associates v. NJM Realty Limited Partnership, Superior Court, judicial district of Hartford, Docket No. CV 94 533485 (September 13, 1996, Aurigernma, J.) ( 17 Conn. L. Rptr. 616, 618). Moreover, "[Section] 52-550 is not limited to actions for `breach of contract,' but rather provides that `no civil action' shall be maintained upon an oral agreement to sell real estate." Id. Therefore, counts two, three and four are also stricken.
See also Weakly v. East, 900 S.W.2d 755, 759 (Tex.App. 1995), cited in Foster Road Associates v. NJM Realty Limited Partnership, supra, 17 Conn. L. Rptr. 618 (stating that claims of fraud, negligent misrepresentation and other claims were unenforceable because each "has as its nucleus [an] unenforceable oral contract to buy . . . property.").
In count five, Mars Electric alleges a violation of the Connecticut Unfair Trade Practices Act (CUTPA), § 42-110 et seq. "The purpose of CUTPA is to protect the public from unfair practices in the conduct of any trade or commerce . . ." Krawiec v. Blake Manor Development Corp., 26 Conn.App. 601, 607, 602 A.2d 1062 (1992). In determining whether certain acts constitute a violation of CUTPA, the Connecticut Supreme Court has adopted the criteria set out in the Federal Trade Commission's "cigarette rule": "(1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers [competitors or other businessmen]. . . ." (Internal quotation marks omitted.) Journal Publishing Co. v. Hartford Courant Co., 261 Conn. 673, 695, 804 A.2d 823 (2002). Although CUTPA may apply to the sale of real estate, there is no viable claim under CUTPA when the practice complained of is incidental to the true trade or business conducted. Cornerstone Realty, Inc. v. Dresser Rand Co., 993 F.Sup. 107 (D.Conn. 1998).
Section 42-110b(a) provides: "No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce."
Section 42-110a(4) defines "trade" or "commerce" as "the advertising, the sale or rent or lease, the offering for sale or rent or lease, or the distribution of any services and any property . . . and other article, commodity, or thing of value in this state."
In the present case, the subject transaction is the purported sale of Wooster Par's property to Mars Electric. Mars Electric has not alleged that Wooster Par is or was in the business of selling real estate. For that reason, there can be no claim under CUTPA. Moreover, Mars Electric's CUTPA claim is, as are the previous counts of the complaint, based on an oral agreement in violation of the statute of frauds. Mars Electric contends that Wooster Par's actions, representation and conduct in connection with the alleged transaction were "immoral, unethical, unscrupulous and made in bad faith with mal intent," and constitute unfair and deceptive acts and practices in violation of the statute. Without more than conclusory statements concerning Wooster Par's misconduct, Mars Electric lacks a sufficient basis for a CUTPA claim and count five must be stricken.
For the foregoing reasons, Wooster Par has effectively challenged the legal sufficiency of all the allegations of Mars Electric's complaint on the basis of noncompliance with the statute of frauds. The motion to strike is granted as to all five counts.
Bellis, J.