Opinion
No. CV06 500 58 06 S
August 21, 2007
MEMORANDUM OF DECISION RE MOTION TO STRIKE (#104)
On December 8, 2006, the plaintiff, Steven Papazahariou, filed a twenty-count complaint against the defendants, Ayeshah Malik, Attorney David Rogers, Michael Troderman and Allied Financial Services, LLC (Allied). The complaint alleges the following facts. Prior to November 9, 2005, Malik was the owner of a one-family residential home at 25 Moss Road in Monroe (property). Malik worked as a mortgage broker for and was the operator of Allied, a mortgage company. On November 5, 2005, Malik and the plaintiff entered into a verbal agreement in which the plaintiff would purchase the property for $980,000, even though he told Malik that he did not have the financial qualifications to purchase a mortgage in that amount. Malik represented to the plaintiff that, as a mortgage officer and an agent of Allied, she would submit a mortgage application to Allied that would allow the plaintiff to purchase the property without any down payment. Malik then told the plaintiff that the property had an appraisal value of $1,250,000 and the plaintiff agreed to purchase the property, planning to sell it immediately at or near the appraised value. Malik then submitted a mortgage application on behalf of the plaintiff to Opteum Financial Services, LLC (Opteum), without the plaintiff's knowledge, and informed the plaintiff that a mortgage had been approved in the amount of $980,000. The plaintiff agreed to the transaction and a closing date was scheduled for November 9, 2005. Since the plaintiff did not know an attorney in the Monroe area, he was assured by Malik that she would hire an attorney to represent him at the closing.
At the closing on November 9, 2005, the plaintiff first met Rogers at Allied's office, where he learned that Rogers was going to represent Opteum, Malik and the plaintiff in the transaction. Rogers directed the plaintiff to sign the closing documents, but never explained to him what the documents were and failed to answer his questions about those documents. Instead, Rogers promised that he would send the plaintiff copies of the documents by mail. Subsequently, the plaintiff checked his credit report and discovered that there was an open equity line of credit in the amount of $225,000 with a third company, National City Mortgage (National), even though the plaintiff had not been told that Malik and Rogers were going to pursue secondary financing on the plaintiff's behalf in the transaction. The plaintiff later learned that National transferred $225,000 to an account at Rogers' law office on November 8, 2005, prior to the closing.
The plaintiff then sought the counsel of another attorney and repeatedly requested copies of all of the documents that he had executed at the closing. Some of the documents were eventually delivered to the plaintiff's attorney on February 7, 2006. Among those documents were: a purchase and sale agreement dated September 16, 2005 for the property in the amount of $1,225,000; a closing statement for the dispersal of funds in the amount of $215,000 dated November 8, 2005; a residential loan application in the amount of $980,000; a document dated September 16, 2005, that represents that the plaintiff provided authority for Rogers to represent the parties in the transaction; and a letter dated October 25, 2005 from Troderman, a certified public accountant, that falsely stated that Troderman had prepared taxes for the plaintiff and that the plaintiff operated a business known as Dynamic Investment, LLC. While many of these documents contained the plaintiff's signature or initials, the plaintiff did not sign or initial any of them himself.
Subsequent to the closing, Malik continued to reside on the property pursuant to an occupancy agreement prepared by Rogers, despite the fact that the plaintiff did not authorize Malik to remain on the premises. Rogers claimed that, pursuant to the occupancy agreement, Malik would pay the plaintiff $15,000 to remain on the property for four months after the closing date, even though this was less than the carrying cost of the property for four months. Malik continued to deny the plaintiff access to the property and never paid him the $15,000. The property has since been foreclosed upon because all of the mortgage funds were transferred to Malik at the closing.
Counts eleven through sixteen of the complaint are against Rogers, and allege claims for legal malpractice, breach of contract, fraud, negligent misrepresentation, intentional misrepresentation and violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq. (CUTPA), respectively. On February 26, 2007, Rogers filed a motion to strike counts twelve, thirteen, fifteen and sixteen of the complaint, as well as the plaintiff's corresponding prayer for attorneys fees and punitive damages.
"A motion to strike challenges the legal sufficiency of a pleading . . . and, consequently, requires no factual findings by the trial court." Batte-Holmgren v. Commissioner of Public Health, 281 Conn. 277, 294, 914 A.2d 996 (2007). "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.) Asylum Hill Problem Solving Revitalization Assn. v. King, 277 Conn. 238, 246, 890 A.2d 522 (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, 262 Conn. 480, 498, 815 A.2d 1188 (2003).
I
The court first considers Rogers' motion to strike count twelve, which alleges a breach of contract. Rogers argues that the claim for breach of contract simply restates the allegations of the claim for legal malpractice and, because it adds no new factual allegations, therefore, it amounts only to a claim for negligence. Rogers explains that the plaintiff has not alleged the existence of a contract, either oral or written, between them or that he promised a specific result under such a contract.
"[A]lthough one may bring against an attorney an action sounding in both negligence and contract . . . one [cannot] bring an action in both negligence and contract merely by couching a claim that one has breached a standard of care in the language of contract." (Internal quotation marks omitted.) Alexandru v. Strong, 81 Conn.App. 68, 79, 837 A.2d 875, cert. denied, 268 Conn. 906, 845 A.2d 406 (2004). As the Appellate Court explained, "[n]otwithstanding that embedded in the language of the plaintiff's claim are the contractual rudiments of promise and breach, [w]here the plaintiff alleges that the defendant negligently performed legal services and failed to use due diligence the complaint sounds in negligence, even though he also alleges that he retained . . . or engaged [the attorney's] services." (Internal quotation marks omitted.) Id., 79-80. "[A] claim that a defendant promised to work diligently or in accordance with professional standards is not made a contract claim simply because it is couched in the contract language of promise and breach." Caffery v. Stillman, 79 Conn.App. 192, 197, 829 A.2d 881 (2003). Such a claim "is distinguishable from a true contract claim in which a plaintiff asserts that a defendant who is a professional breached an agreement to obtain a specific result." Id.
"Whether the plaintiff's cause of action is one for malpractice depends upon the definition of that word and the allegations of the complaint . . . Malpractice is commonly defined as the failure of one rendering professional services to exercise that degree of skill and learning commonly applied under all the circumstances in the community by the average prudent reputable member of the profession with the result of injury, loss, or damages to the recipient of those services . . . The elements of a breach of contract action are the formation of an agreement, performance by the party, breach of the agreement by the other party and damages." (Citation omitted; internal quotation marks omitted.) Rosato v. Mascardo, 82 Conn.App. 396, 410-11, 844 A.2d 893 (2004).
In the present case, in count eleven, the plaintiff alleges legal malpractice against Rogers. Specifically, he alleges that Rogers "failed to represent the [p]laintiff with diligence and care, which resulted in a denial of [the plaintiff's] proper legal representation." The plaintiff lists many ways in which that Rogers was negligent, all of which involve Rogers' rendering of professional services. He does not allege, however, that the plaintiff and Rogers reached an agreement for a specific result, nor that such an agreement was breached as a result of Rogers' actions and inactions. Count twelve consists of only one sentence that incorporates the allegations from count eleven. The plaintiff has made no attempt to even use contract terminology to raise his claim for breach of contract. It is solely a restatement of the plaintiff's legal malpractice claim. Accordingly, the motion to strike count twelve is granted.
II
Next, the court addresses the motion to strike as to count thirteen which alleges fraud. Rogers argues that the plaintiff failed to allege with sufficient specificity that he was damaged by Rogers' conduct. Rogers asserts that there must be a direct causal relationship between the fraud and the injuries alleged and that the plaintiff's claim fails to sufficiently allege this. "Fraud involves deception practiced in order to induce another to act to her detriment, and which caused the 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 . . . Because specific acts must be pleaded, the mere allegation that a fraud has been perpetrated is insufficient." (Internal quotation marks omitted.) Whitaker v. Taylor, 99 Conn.App. 719, 729-30, 916 A.2d 834 (2007).
In the present case, the plaintiff alleges that Rogers "deliberately and intentionally made false representations and assurances to the [p]laintiff to induce the [p]laintiff to sign and execute all the documents at the closing, when in fact he was representing the interest of the seller, Malik, to convey the property for a price more than the [p]laintiff had agreed to pay" and that Rogers "caused [p]laintiff to affix his signature to a number of mortgage documents at the closing by intentionally concealing their true meanings and consequences by requesting [p]laintiff to sign documents which violated the terms of the mortgage upon execution and the [p]laintiff relied upon his attorney, [d]efendant Rogers, when he signed all of the documents at the closing." The plaintiff alleges further that, "[a]s a result of [Rogers'] intentional fraud, [p]laintiff has sustained monetary loss, loss of profit, loss of property, foreclosure, and loss of financial credit and continuing obligation to the mortgage loans." These allegations are representative of the factual claims made by the plaintiff in the thirteen paragraphs in count thirteen in addition to the underlying factual basis previously detailed in earlier counts. All four elements of fraud are present or are necessarily implied by the allegations in count thirteen. Accordingly, the motion to strike that count is denied.
III
The court next addresses the motion to strike count fifteen, which alleges intentional or fraudulent misrepresentation. Rogers argues that the plaintiff failed to allege both that he relied on a fraudulent statement made by Rogers and any such reliance caused him harm. Rogers further argues that the plaintiff has not alleged any specific acts on which he relied which he must do because there is a heightened pleading requirement for this cause of action. "The essential elements of a cause of action in [fraudulent misrepresentation] are: (1) a false representation was made as a statement of fact; (2) it was untrue and known to be untrue by the party making it; (3) it was made to induce the other party to act upon it; and (4) the other party did so act upon the false representation to his injury." (Internal quotation marks omitted.) Phillips v. Phillips, 101 Conn.App. 65, 71, 922 A.2d 1100 (2007).
In the present case, the complaint incorporates the same fact pattern from all of the other counts. It alleges further that Rogers intentionally misrepresented to the plaintiff that he was going to represent the plaintiff's interests in the transaction, that he intentionally caused the plaintiff to execute various fraudulent closing documents and that he used the plaintiff as a straw man to benefit Malik. Count fifteen does not explicitly allege that the plaintiff relied on Rogers' alleged misrepresentations nor does it allege that the plaintiff acted upon those misrepresentations to his detriment. Accordingly, the motion to strike as to count fifteen is granted.
IV
Next, the court will consider the motion to strike count sixteen, which alleges a violation of CUTPA. Rogers argues that this count is not a valid claim against an attorney for conduct allegedly carried out in the representation of a client. In making a determination as to whether the activities of a professional give rise to a CUTPA claim, the court must determine "whether the allegedly improper conduct is part of the attorney's professional representation of a client or is part of the entrepreneurial aspect of practicing law." Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 781, 802 A.2d 44 (2002). "[A]lthough all lawyers are subject to CUTPA, most of the practice of law is not. The `entrepreneurial' exception is just that, a specific exception from CUTPA immunity for a well-defined set of activities — advertising and bill collection, for example . . . It is not a catch-all provision intended to subject any arguably improper attorney conduct to CUTPA liability. Therefore, the 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." (Citation omitted.) Id., 782; see also Haynes v. Yale-New Haven Hospital, 243 Conn. 17, 34-38, 699 A.2d 964 (1997) (finding that practice of law and medicine may give rise to CUTPA claims only for entrepreneurial aspects of such practice, such as solicitation of business and billing, and not for claims involving issues of professional competence and strategy).
In the present case, count sixteen of the complaint alleges in part that Rogers made certain representations to the plaintiff in order to induce him to execute closing documents; that Rogers fraudulently executed those documents and that Rogers failed to provide him with adequate legal representation. These allegations do not in any way involve the entrepreneurial aspect of practicing law and are focused entirely on Rogers' alleged negligent and fraudulent acts and omissions regarding his competence and legal strategies. Accordingly, count sixteen is legally insufficient and is stricken.
V
Finally, the court considers the motion to strike the prayer for attorneys fees and punitive damages. Rogers argues that the plaintiff has failed to plead a statutory or contractual basis for an award of attorneys fees and also that, should the court strike the previously discussed claims against Rogers, the counts that would remain would not permit the imposition of punitive damages.
In the present case, as previously discussed, the court has stricken counts twelve, fifteen and sixteen of the complaint. This leaves counts eleven, thirteen and fourteen remaining against Rogers, which allege legal malpractice, fraud and negligent misrepresentation, respectively. Regarding count thirteen, "[i]n an action for fraud, the plaintiffs are entitled to punitive damages, in addition to general and special damages . . . The [purpose] of awarding punitive damages is not to punish the defendant for his offense, but to compensate the plaintiff for his injuries . . . The rule in this state as to torts is that punitive damages are awarded when the evidence shows a reckless indifference to the rights of others or an intentional and wanton violation of those rights . . . An award of punitive damages is discretionary, and the exercise of such discretion will not ordinarily be interfered with on appeal unless the abuse is manifest or injustice appears to have been done." (Citation omitted, internal quotation marks omitted.) Whitaker v. Taylor, supra, 99 Conn.App. 730. Additionally, in an action for fraud, attorneys fees may be awarded by way of punitive damages. See Brower v. Perkins, 135 Conn. 675, 680-81, 68 A.2d 146 (1949).
In the present case, as the court has found the plaintiff's allegations of fraud to be legally sufficient, the prayer for relief requesting damages that may properly be awarded for a successful fraud claim is sufficient as well. Therefore, the motion to strike the plaintiff's prayer for relief in the form of punitive damages and attorneys fees is denied.
For the aforementioned reasons, this court grants Rogers' motion to strike counts twelve, fifteen and sixteen and denies the motion to strike count thirteen as well as to the corresponding prayer for relief seeking recovery of punitive damages and attorneys fees.