Opinion
No. CV-02-0080077S
October 8, 2004
RULING ON MOTION FOR SUMMARY JUDGMENT (#139)
In June 2002, the plaintiffs Michelle and William McKiernan (McKiernans) purchased property in Milford, Connecticut from the defendants Eric and Mari Green (Greens). After the closing, the McKiernans learned that the property had flooded in 1996. They commenced this action against the Greens and the defendant Re/Max Realty Associates of Milford (Re/Max) seeking a recission of the contract and damages based on various theories of liability. Re/Max had now moved for summary judgment on the fifth, sixth, seventh, eighth and ninth counts of the amended complaint.
"Practice Book . . . § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." (Brackets omitted; internal quotation marks omitted.) Miles v. Foley, 253 Conn. 381, 385, 752 A.2d 503 (2000). A "motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried." Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989). "A defendant's motion for summary judgment is properly granted if it raises at least one legally sufficient defense that would bar the plaintiff's claim and involves no triable issue of fact." Perille v. Raybestos-Manhattan-Europe, Inc., 196 Conn. 529, 543, 494 A.2d 555 (1985).
The following facts are undisputed: The Greens owned property known as 102 Dale Drive, Milford, Connecticut (the property). The property is located adjacent to the Wepawaug River. In 1996, the river flooded the property during a torrential rain storm. On May 1, 2002, the Greens listed the property with Re/Max, working with its salesperson Vera Clark (Clark). Re/Max is engaged in the business of serving as a broker for real estate in the Milford area and listed the sale of the property within the course of its business. On May 1, 2002, the Greens completed a Residential Property Condition Disclosure Report (report or disclosure report) that Clark had provided to them. Clark told the Greens to answer the questions truthfully and to the best of their ability. On the report, the Greens checked off "yes" to question 3 indicating that the property was "in a flood plain or an area containing wetlands" and checked off "no" to question 17 asking about their knowledge of water, seepage or damage in the basement, question 29 asking about rot and water damage and question 30 asking about water drainage problems. On or about May 3, 2002, the McKiernans, who were represented by their own realtor, entered into a purchase and sales agreement with the Greens to purchase the property for $295,000.00. The disclosure report was made a part of the purchase agreement and was incorporated into it. The McKiernans signed the disclosure report on May 4, 2002. The McKiernans did not have any discussions with Clark concerning flooding of the property and no representations about flooding were made to them in Clark's presence. The McKiernans were aware that the Greens had flood insurance for the property and Clark provided some information about flood insurance to the McKiernan's agent prior to the closing. On June 7, 2002, the McKiernans closed on the purchase of the property and took title. After they took title, the McKiernans learned about the 1996 flood.
In determining the undisputed facts the court has relied upon those allegations of the amended complaint that were admitted by Re/Max in its answer, the documentary evidence submitted by both sides, the following uncertified portions of deposition transcripts submitted by Re/Max: excerpts from the deposition of Michelle McKiernan taken on October 27, 2003, excerpts from the deposition of William McKiernan taken on October 27, 2003; the following uncertifed portions of transcripts submitted by the McKiernans: excerpts from the testimony of William McKiernan, Eric Green and Michelle McKiernan at the hearing on the prejudgment remedy on December 13, 2002 and excerpts from the Clark deposition taken on March 1, 2004.
I. Fifth Count — Common-Law Negligence
In the fifth count of the amended complaint, the McKiernans have alleged common-law negligence on the part of Re/Max claiming that it failed to disclose material information to them regarding the property's propensity to flood. In its motion for summary judgment, Re/Max maintains that as the seller's agent it did not have a duty to the McKiernans, the buyers of the property.
Ordinarily, in the absence of fraudulent concealment, under the common law a seller's real estate agent does not owe an independent duty of disclosure to the buyer. Under certain circumstances, however, a duty may arise, such as where a broker voluntarily furnishes information, see Miller v. Ryan, Superior Court, judicial district of Hartford, docket no. 821438, 35 Conn. L. Rptr. 617 (Oct. 7, 2003, Booth, J.), or makes a partial disclosure. See "Residential Real Estate Condition Disclosure Legislation," 44 DePaul L. Rev. 381, 396 (1995). The question here is whether the circumstances surrounding the conduct of Clark, acting on behalf of Re/Max, create an exception to the ordinary rule. RK Constructors, Inc. v. Fusco Corp., 231 Conn. 381, 385, 650 A.2d 153 (1994) ("The nature of the duty, and the specific persons to whom it is owed, are determined by the circumstances surrounding the conduct of the individual.").
"The existence of a duty of care, an essential element of negligence, is a matter of law for the court to decide. A duty to act with reasonable care to prevent harm to a plaintiff which, if violated, may give rise to tort liability is based on a `special relationship' between the plaintiff and the defendant. A duty to use care may arise from a contract, from a statute, or from circumstances under which a reasonable person, knowing what he knew or should have known, would anticipate that harm of the general nature of that suffered was likely to result from his act or failure to act." (Internal quotation marks omitted; internal citations omitted.) Burns v. Board of Education, 228 Conn. 640, 647, 638 A.2d 1 (1994). Furthermore, a finding that harm might be foreseeable is an insufficient basis, by itself, to find a duty of care. In addition, the court must determine "on the basis of a public policy analysis, . . . whether the defendant's responsibility for its negligent conduct should extend to the particular consequences or particular plaintiff in the case." Mendillo v. Board of Education, 246 Conn. 456, 483-84, 717 A.2d 1177 (1998). The McKiernans claim that General Statutes § 20-320 and § 20-328-5a of the Regulations of Connecticut State Agencies imposed a duty upon Re/Max to disclose all material information related to the property and that the court should apply the Mendillo formula to impose a common-law duty on Re/Max to ascertain the completeness and accuracy of the information submitted by the Greens in the disclosure report.
General Statutes § 20-320 gives the Department of Consumer Protection the ability to suspend or revoke the license of any real estate broker or salesperson who, among other things, makes "any material misrepresentation" in the course of a real estate transaction. Similarly, § 20-328-5a(a), Regs. Conn. State Agencies, provides that a "licensee shall not misrepresent or conceal any material facts in any transaction." Section 20-328-5a(c), Regs. Conn. State Agencies, provides that a "real estate broker shall exercise diligence at all times in obtaining and presenting accurate information in the broker's advertising and representations to the public."
Section 20-320 has been viewed as codifying the general obligation of a real estate agent to the agent's principal. Licari v. Blackwell, 14 Conn.App. 46, 54, 539 A.2d 609, cert. denied, 208 Conn. 803, 545 A.2d 1100 (1988). Section 20-328-5a(a), Regs. Conn. State Agencies, appears to have the same purpose. Arguably, the statute and regulation may also be viewed as broadening an agent's limited common-law duty to a third party, sufficient to provide a remedy in negligence, by prohibiting the agent from making a material misrepresentation to that third party although under the common law any third party who relied on such a material misrepresentation would have a claim against the agent sounding in negligent misrepresentation even in the absence of the statute and regulation. See Giametti v. Inspections, Inc., 76 Conn.App. 352, 362, 824 A.2d 1 (2003). (Statutory scheme requiring vendor disclosure not intended to preclude preexisting common-law actions for negligent misrepresentation). Section 20-328-5a(c), Regs. Conn. State Agencies, on its face, states a different objective from § 20-320 and § 20-328-5a(a). It imposes a duty on a broker running to the general public to obtain and present accurate information, but only in the context of the information presented in advertising and other representations that the agent makes to the public. The common theme of the statute and regulations upon which the McKiernans rely is that when an agent does something active, such as making a representation, presenting information or advertising, the agent has a duty to so completely, accurately and honestly.
"This rule requiring a broker, or his subagent, to act with the utmost good faith towards his principal places him under a legal obligation to make a full, fair and prompt disclosure to his employer of all facts within his knowledge which are, or may be material to the matter in connection with which he is employed, which might affect his principal's rights and interests, or his action in relation to the subject matter of the employment, or which in any way pertains to the discharge of the agency which the broker has undertaken." Licari v. Blackwell, 14 Conn.App. 46, 54, 539 A.2d 609, cert. denied, 208 Conn. 803, 545 A.2d 1100 (1988).
Here, however, it was the Greens, not Re/Max, who allegedly made material misrepresentations to the McKiernans. Thus, the statute and regulations fail to squarely address the specific issue that this case raises: the scope of the duty that a seller's agent owes to a buyer, who is represented by a different agent when the seller makes inaccurate or false representations regarding the condition of the property in the statutorily required disclosure report that is transmitted by the seller's agent, but the seller's agent does not personally make the representations. The McKiernans maintain that under the statute and regulations, Re/Max had a duty to ascertain the completeness and accuracy of the information submitted by the Greens in the disclosure report. Such a broad duty, however, would make the seller's agent into a guarantor of the seller's representations and impose a greater duty on the agent than that imposed on the vendor, the agent's principal.
General Statutes § 20-327b requires that sellers of residential property "document the vendor's actual knowledge of the condition of the property" in the disclosure report. Giametti v. Inspections, Inc., supra, 76 Conn.App. 353 (emphasis supplied). General Statutes § 20-327e. If a seller makes a "knowing misrepresentation in the statutory report," about a known condition of the property the buyer has a cause of action against the seller. Id., 357. If the seller does not have actual knowledge about the information which is the subject of the disclosure report, the seller is not required to take any steps to ensure that the information the seller provides is complete and accurate. The legislature specifically determined that the disclosure required by § 20-327b does not create any new express or implied warranties nor "shall it be construed to require the seller of the property to secure inspections, tests or other methods of determining the physical condition of the property." General Statutes § 20-327d. The "function of a § 20-327b report is to diminish the risk of litigation by facilitating meaningful communications between a vendor and a prospective purchaser. It does not, however, require a vendor to assume the role of warrantor of conditions of which the vendor was in fact unaware." Giametti v. Inspections, Inc., supra, 76 Conn.App. 360.
The legislative history of § 20-327b makes it clear that "the report represents only the seller's actual knowledge of the property and does not form the basis for any claim of constructive knowledge on the seller's part." 38 H.R. Proc., Pt. 19, 1995 Sess., p. 6963, Remarks of Rep. Eberle. This language was included in § 20-327e which provides: "The representations made by seller pursuant to section 20-327b or 20-327c shall be construed only to extend to the seller's actual knowledge of the property and no constructive knowledge shall be imputed to the seller."
Yet if the McKiernans are correct that General Statutes § 20-320 and the cited regulations create a duty on the part of the seller's agent to ascertain the completeness and accuracy of the information that a seller provides in the disclosure report, the agent would be required to secure inspections, conduct tests or engage in other methods, such as researching the history of the property, to determine if the seller's representations are true. The McKiernans have not provided the court with any public policy analysis to support imposing such a strict duty upon the real estate agent. "Real estate brokers and agents are marketing agents, not structural engineers or contractors. They have no duty to verify independently representations made by a seller unless they are aware of facts that tend to indicate that such representations are false." (Internal quotation marks omitted; citation omitted). Provost v. Miller, 144 VT. 67, 69-70, 473 A.2d 1162, 1164 (1984).
In their memorandum in opposition to the summary judgment motion (pp. 11-12), the McKiernans suggest that Clark, the Re/Max agent, should have questioned the Greens about the river, helped them complete the disclosure report and reviewed the disclosure report. None of these steps, however, could have assured the completeness and accuracy of the Green's answers to the questions in the disclosure report if they chose to misrepresent the facts to Clark. In the amended complaint, the McKiernans allege that Re/Max should have known that the neighborhood and the property itself had been subjected to flooding in the past. Not only would this have required research and inquiry in the absence of actual knowledge of a prior flood, but it would effectively impose a constructive knowledge requirement on the seller's real estate agent that is not imposed on the seller. See note 3, infra.
The court concludes that under the circumstances of this case the seller's agent owed the McKiernans the same duty that General Statutes § 20-327b, as limited by §§ 20-327d and 20-327e, imposed on the Greens. Thus, if Clark had actual knowledge about a condition of the property Re/Max had a duty under General Statutes § 20-320 to assure that the Greens did not make a knowing misrepresentation about that condition in the disclosure report. The seller's agent must exercise the degree of care that a reasonable professional real estate agent would exercise to confirm the accuracy of the seller's representations in the disclosure report when the agent has actual knowledge of facts that indicate the representations are false.
Thus, in this case, whether Clark had actual knowledge of facts which might indicate that the Greens' answers to the disputed questions in the disclosure report were false is a material question of fact. The evidence presented in opposition to the motion for summary judgment, specifically the deposition testimony of Vera Clark and Eric Green's testimony during the hearing on the application for the prejudgment remedy, reveals that this question of fact is in dispute. Accordingly, the court must deny the motion for summary judgment as to the fifth count alleging common-law negligence.
Clark testified that although she knew the Greens had flood insurance for the property, she did not ask them about flooding or water damage or problems with the river. She also testified that she was not told, when she viewed the property during a home tour for realtors, that there was a history of flooding on the property and she had no knowledge of a history of flooding in the neighborhood. Eric Green testified that he believed the subject of the 1996 flood came up in conversation with Clark when the house was being appraised, although he did not mention flooding to her at the time he filled out the disclosure report. Green also testified that there was a conversation between his wife and William McKiernan regarding problems with the river and flooding. In ascertaining whether there is a genuine issue of material fact, the court must view the evidence in the light most favorable to the non-moving party and leave it to the fact-finder to assess credibility.
II. Sixth Count — Negligence Per Se
In the sixth count of the amended complaint, the McKiernans have alleged negligence per se or statutory negligence on the part of Re/Max claiming General Statutes § 20-320(1), (11) and (13) and § 20-328-5a(a), Regs., Conn. State Agencies, prohibited Re/Max from failing to disclose all material information it had about the property including its propensity to flood. Negligence per se provides a different theory of recovery from common-law negligence. Small v. South Norwalk Savings Bank, 205 Conn. 751, 760, 535 A.2d 1292 (1988); Wright v. Brown, 167 Conn. 464, 468-69, 356 A.2d 176 (1975). In a negligence per se case, the governing statute or regulation may impose affirmative duties upon the defendant beyond those imposed by common law and it is irrelevant whether the defendant's conduct was that of a reasonably prudent person. Gore v. Peoples Savings Bank, 235 Conn. 360, 375-76, 665 A.2d 1341 (1995); Wendland v. Ridgefield Construction Services, Inc., 184 Conn. 173, 178, 439 A.2d 954 (1981). Moreover, a valid excuse or justification for the violation of the law can provide a defense. Gore v. Peoples Savings Bank, supra, 235 Conn. at 376; 2 Restatement (Second), Torts § 288A (1965). Thus, a negligence per se count "transforms the character of the factfinder's inquiry," Wendland v. Ridgefield Construction Services, Inc., supra, 184 Conn. at 178, from that required under allegations of common-law negligence.
Negligence per se is actionable, however, only if two conditions are met: "(1) the plaintiff must be a member of the class protected by the statute; and (2) the injury must be of the type the statute was intended to prevent." Small v. South Norwalk Savings Bank, supra, 205 Conn. 760; Wright v. Brown, supra, 167 Conn. 468-69. Furthermore, the violation of the statute or regulation must be a proximate cause of the plaintiff's injury. Shritah v. Stop Shop Cos., 54 Conn.App. 273, 275, 734 A.2d 1035 (1999).
The McKiernans rely on subsections (1), (11) and (13) of General Statutes § 20-320 which provide as follows:
The Department of Consumer Protection may, upon the request of the commission or upon the verified complaint in writing of any person, if such complaint, or such complaint together with evidence, documentary or otherwise, presented in connection with such complaint, shall make out a prima facie case, investigate the actions of any real estate broker or real estate salesperson or any person who assumes to act in any of such capacities within this state. The commission may temporarily suspend or permanently revoke any license issued under the provisions of this chapter and, in addition to or in lieu of such suspension or revocation, may, in its discretion, impose a fine of not more than two thousand dollars at any time when, after proceedings as provided in section 20-321, the commission finds that . . . the licensee is guilty of any of the following: (1) Making any material misrepresentation . . . (11) any act or conduct which constitutes dishonest, fraudulent or improper dealings . . . (13) a violation of any provision of this chapter or any regulation adopted under this chapter.
They also rely on § 20-328-5a(a), Regs., Conn. State Agencies, which provides that a "licensee shall not misrepresent or conceal any material facts in any transaction."
Section 20-320, originally enacted in 1953, is part of chapter 392 of title 20, which is a licensing scheme for real estate brokers and salesperson. "There is no question that the licensing provisions of chapter 392 are designed to allow supervision and regulation of the real estate business and make possible the elimination of the incompetent and unscrupulous agent." (Internal quotation marks omitted; internal citations omitted.) Colli v. Real Estate Commission, 169 Conn. 445, 451, 364 A.2d 167 (1975). See 5 S. Proc., Pt. 5, 1953 Sess., p. 1677-78, Remarks of Senator Elmer Watson. The purpose of the statutory scheme is to protect the public against incompetence and dishonesty. Dow Condon, Inc. v. Brookfield Development Corp., 266 Conn. 572, 590-91, 833 A.2d 908 (2003). As prospective purchasers of property, the McKiernans clearly were within the class of persons protected by the provisions of the statutory scheme and its associated regulations. Furthermore, the McKiernans claim a type of injury that the statute and regulations were intended to prevent — that they purchased a defective property because the real estate agent failed to provide information about which she was aware. See Gaetano v. Connecticut Real Estate Comm., Superior Court, judicial district of Hartford, docket no. 551484, 16 Conn. L. Rptr. 297 (March 8, 1996, Maloney, J.) (Statute and regulation impose a duty on a listing real estate agent to disclose known material facts to a buyer.)
In discussing the effect of the enactment of § 20-327b on real estate agents' preexisting statutory duties to prospective buyers, the legislature made it clear that the disclosure report "in no shape or manner does it relieve them of their current responsibilities. They still must provide any information that they are aware of to the prospective buyer. And if they are found not to, they can lose their license or be sued." S. Proc., 1995 Sess., p. 3134, Remarks of Senator DeLuca. See Id., p. 5892.
The question here, however, is whether Clark's conduct was in fact violative of the claimed statute or regulations. Generally, when statutory negligence is claimed, the question of whether the statute or regulation has been violated is one of fact for the fact-finder. As already discussed in part I of this opinion, the parties do not dispute that Clark did not make any misrepresentations directly to the McKiernans. Thus, liability could not be founded on § 20-320(1). However, there is a material factual dispute as to whether Clark was aware of facts that indicated the property had flooded in the past see n. 5, infra, which knowledge could provide a basis for liability under both § 20-320(11) and § 20-328-5a(a), Regs., Conn. State Agencies. Accordingly, the court must deny the motion for summary judgment on the sixth count.
III. Seventh Count — Breach of Fiduciary Duty
In the seventh count of the amended complaint, the McKiernans have alleged that, based on its statutory and regulatory obligations, Re/Max had a fiduciary duty to them which it breached. While a real estate agent is a fiduciary to his or her principal, Licari v. Blackwell, supra, 14 Conn.App. 54, that was not the relationship between Re/Max and the McKiernans. Nor are the McKiernans claiming an agency relationship between them and Re/Max. Rather, they seek to create a fiduciary duty out of the same statutory and regulatory obligations upon which they maintain Re/Max had a duty to them to refrain from negligent behavior. A breach of a duty of care, however, "does not automatically give rise to a claim for breach of fiduciary duty" because the latter duty is different — it is one of "loyalty and honesty." Beverly Hills Concepts, Inc. v. Schatz and Schatz, 247 Conn. 48, 56, 717 A.2d 724 (1998).
"It is well settled that a fiduciary or confidential relationship is characterized by a unique degree of trust and confidence between the parties, one of whom has superior knowledge, skill or expertise and is under a duty to represent the interests of the other." (Citations omitted; internal quotation marks omitted.) Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 640, 804 A.2d 180 (2002). When, as here, the parties are not in a relationship in which a fiduciary duty is automatic, such as trusteeship, the law will only imply a fiduciary duty when one party is "in a dominant position, thereby creating a relationship of dependency," Hi-Ho Tower Inc. v. Com-Tronics, Inc., 255 Conn. 20, 38, 761 A.2d 1268 (2000), that is, "where there is evidence of a unique degree of trust and confidence between the parties such that the defendant undertook to act primarily for the benefit of the plaintiff." (Citation omitted; internal quotation marks omitted.) Forte v. Citicorp Mortgage, Inc., 66 Conn.App. 475, 489, 784 A.2d 1024 (2001).
There is simply no evidence here that Clark or Re/Max undertook any obligation to act primarily for the benefit of the McKiernans. Indeed, if they had done so they would have violated their fiduciary duty to the Greens. The law is clear that "not all business relationships implicate the duty of a fiduciary." Macomber v. Travelers Property Casualty Corp., supra, 261 Conn. 640; Hi-Ho Tower, Inc. v. Com-Tronics, Inc., supra, 255 Conn. 38. In the purchase and sale transaction between the Greens and the McKiernans, Re/Max was dealing at arm's length with the McKiernans, who were represented by their own agent who had a fiduciary duty to protect the McKiernans' interests in the transaction. When plaintiffs are in a position to protect their own interests, for example by performing an independent inspection, see e.g., Forte v. Citicorp Mortgage, Inc., supra, 66 Conn.App. 489, and are dealing at arm's length with a defendant, the relationship lacks the characteristics of dominance and dependence required to impose a fiduciary duty on the defendant. Accordingly, the motion for summary judgment as to the seventh count is granted.
In this case, the Greens disclosed that the property was located in a flood plain but the evidence presented on the motion for summary judgment does not indicate if the McKiernans undertook any independent steps, other than inquiring of the Greens, to ascertain whether there was any history of flooding of the property.
IV. Eighth Count — Fraudulent Nondisclosure
In the eighth count of the amended complaint, the McKiernans have alleged that Re/Max "knew or should have known that the Greens provided false and misleading information to the McKiernans in the Disclosure Report, but Re/Max failed to disclose the information it possessed about the property and failed to disclose material to the McKiernans that the Greens had made false statements in the Disclosure Report." (¶ 47). Re/Max maintains that if there was a failure to disclose in this case, which it denies, it does not rise to the level of fraudulent nondisclosure.
The McKiernans have not addressed the eighth count in their Memorandum in Opposition to the Motion for Summary Judgment.
"Fraud involves deception practiced in order to induce another to act to her detriment, and which causes that detrimental action. The four essential elements of fraud are (1) that a false representation of fact was made; (2) that the party making the representation knew it to be false; (3) that the representation was made to induce action by the other party; and (4) that the other party did so act to her detriment. Fraud by nondisclosure, which expands on the first three of these four elements, involves the failure to make a full and fair disclosure of known facts connected with a matter about which a party has assumed to speak, under circumstances in which there is a duty to speak. A lack of full and fair disclosure of such facts must be accompanied by an intent or expectation that the other party will make or will continue in a mistake, in order to induce that other party to act to her detriment." (Internal citations omitted). Gelinas v. Gelinas, 10 Conn.App. 167, 173, 522 A.2d 295, cert. denied, 204 Conn. 802, 525 A.2d 965 (1987). In order to prevail on a claim of fraudulent nondisclosure, the first three elements must be proven by "clear, precise and unequivocal" evidence. Giulietti v. Giulietti, 65 Conn.App. 813, 836, 784 A.2d 905, cert. denied, 258 Conn. 946, 947, 788 A.2d 95, 96, 97 (2001).
Although the determination of what amounts to fraud is ordinarily a question of fact, Miller v. Guirmares, 78 Conn.App. 760, 781, 829 A.2d 422 (2003), a party opposing a motion for summary judgment has the obligation of providing a substantial evidential basis outside the pleadings to establish that there is genuine issue of material fact. Appleton v. Board of Education, 254 Conn. 205, 209, 757 A.2d 1059 (2000); Maffucci v. Royal Park Ltd. Partnership, 243 Conn. 552, 554-55, 707 A.2d 15 (1998). It is undisputed here that the McKiernans did not have any discussions with Clark concerning flooding of the property and no representations about flooding were made to them in Clark's presence. There is no evidence that Clark made any voluntary disclosures to the McKiernans which would have imposed on her the obligation to make a full and fair disclosure. See Duksa v. Middletown, 173 Conn. 124, 127, 376 A.2d 1099 (1977). Furthermore, the McKiernans have failed to provide an evidential basis to support a claim that any alleged nondisclosure by Clark was done intentionally and for the purpose of inducing them to act to their detriment. Accordingly, the court grants the motion for summary judgment as to the eighth count.
V. Ninth Count — CUTPA
In the ninth count of the amended complaint, the McKiernans have incorporated the allegations of the fifth, sixth, seventh and eighth counts and claimed that the conduct of Re/Max constituted a violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq. (CUTPA). Re/Max maintains it is entitled to summary judgment because its conduct was not "immoral, unethical, oppressive or unscrupulous" and also because the McKiernans cannot establish "that they have suffered significant harm," see Motion for Summary Judgment (#139), or "substantial injury." See Memorandum of Law in Support of Motion for Summary Judgment (#140).
The "cigarette rule" is used to determine whether conduct violates CUTPA. Updike, Kelly Spellacy v. Beckett, 269 Conn. 613, 655-56, 850 A.2d 145 (2004). It contains three criteria: "(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 — 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 . . . All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three." (Internal quotation marks omitted.) Hartford Electric Supply Co. v. Allen-Bradley Co., 250 Conn. 334, 367-68, 736 A.2d 824 (1999). Thus, a "showing [of] either an actual deceptive practice . . . or a practice amounting to a violation of public policy," can lead to CUTPA liability. Jacobs v. Healey Ford-Subaru, Inc., 231 Conn. 707, 725-26, 652 A.2d 496 (1995). Whether a practice is unfair within the meaning of CUTPA is a question of fact. Willow Springs Condo. Ass'n v. Seventh BRT Dev. Corp., 245 Conn. 1, 43, 717 A.2d 77 (1998).
The court has previously concluded that there is a genuine issue of material fact as to whether Clark's conduct violated the provisions of General Statutes § 20-320(11) and § 20-328-5a(a), Regs., Conn. State Agencies, which set forth the public policy of this state to protect consumers in real estate transactions from incompetent and dishonest real estate agents and sales persons. If a violation of the statute or regulation can be established by a fair preponderance of the evidence, it could provide a predicate for imposing CUTPA liability under the first criterion of the cigarette rule. Furthermore, under certain circumstances a failure to disclose information when there is a duty to disclose may permit the imposition of CUTPA liability. See Willow Springs Condo. Ass'n v. Seventh BRT Dev. Corp., supra, 245 Conn. 43-44; Normand Josef Enterprises, Inc. v. Connecticut National Bank, 230 Conn. 486, 523, 646 A.2d 1289 (1994). Of course, the McKiernans also have to establish that Re/Max's conduct was a proximate cause of any ascertainable loss claimed. Abrahams v. Young Rubicam, 240 Conn. 300, 306, 692 A.2d 709 (1997) Since there is at least one legally sufficient CUTPA claim alleged in the ninth count and there is a genuine issue of material fact related to its proof, the motion for summary judgment is denied as to the ninth count.
VI. Conclusion
For the reasons stated above, the defendant Re/Max's motion for summary judgment is denied as to fifth, sixth and ninth counts and granted as to the seventh and eighth counts.
LINDA K. LAGER, JUDGE