Opinion
No. CV04 0287567-S
April 18, 2005
MEMORANDUM OF DECISION RE MOTION TO STRIKE #105 AND MOTION TO STRIKE #110
I PROCEDURAL HISTORY
On June 25, 2004, the plaintiffs, Stephanie Salzano and Carolyn Stanat, filed a ten-count amended complaint against the defendants, Mark and Elizabeth Goulet, the Law Offices of Alan B. Silver (Law Office), Attorney Alan B. Silver, the Cadre Group, LLC (Cadre) and Michael Massa in connection with the sale of real property located at 114 Poplar Drive in Cheshire, Connecticut. The plaintiffs allege the following facts. Prior to the events giving rise to this action, Mark and Elizabeth Goulet owned two adjacent parcels of property with continuous frontage on Poplar Drive in Cheshire, Connecticut. The parcels were comprised of approximately 12,500 square feet (Parcel 1) and 18,750 square feet (Parcel 2), respectively. The plaintiffs allege that the town of Cheshire zoning regulations provide for merger by operation of law where two or more lots are in single ownership, are undersized and have continuous frontage and that Parcels 1 and 2 are located in a residential zone which requires a minimum lot area of 20,000 square feet. On June 19, 2002, the plaintiffs entered into a contract with Mark and Elizabeth Goulet to purchase Parcel 2 located at 114 Poplar Drive in Cheshire, Connecticut. The contract provided that the parcel to be conveyed was in conformance with applicable zoning regulations. Alan B. Silver, an attorney with the Law Office, represented the plaintiffs in connection with the purchase of Parcel 2. Cendant Mortgage retained Michael Massa, the managing partner of Cadre, to appraise Parcel 2, as well as any improvements thereon, for the purpose of approving the plaintiffs to obtain financing m connection with the purchase of the subject property. On May 7, 2002, Massa issued a written appraisal on behalf of Cadre. In the appraisal, Massa stated that Parcel 2 was not in compliance with the applicable zoning regulations, but that said noncompliance was authorized as a "grandfathered use." Massa concluded that "[t]he site [was] legal, nonconforming due to size." On July 12, 2002, the Goulets transferred title to Parcel 2 to the plaintiffs by warranty deed. Subsequent to the sale, the plaintiffs learned that the town of Cheshire had determined that Parcel 1 and Parcel 2 had merged by the operation of law and that, as a result, the Goulets had created an illegal subdivision or redivision and that Parcel 2 was therefore not a marketable lot. The plaintiffs filed suit.
The plaintiffs claim in counts one and two respectively, breach of contract and fraud against the Goulets on the ground that the parcel conveyed was not m conformance with the applicable zoning regulations. In counts three and four, the plaintiffs allege legal malpractice and violation of CUTPA against the Law Office, with respect to its representation of the plaintiffs. Specifically, the plaintiffs allege that the Law Office failed to inquire as to the zoning status of Parcel 2 and/or if it made such inquiry, came to the wrong legal conclusion, allowed the plaintiffs to obtain a nonmarketable lot, and breached its duty of care and fiduciary duty owed to the plaintiffs. Similarly, in counts five and six, the plaintiffs allege legal malpractice under General Statutes § 34-133(b) and violation of CUTPA against Attorney Silver citing the same grounds. In counts seven and eight, the plaintiffs allege professional malpractice and violation of CUTPA against Cadre in connection with the appraisal it undertook on behalf of the plaintiffs. Specifically, the plaintiffs allege that Cadre owed a duty to the plaintiffs to inquire as to the zoning status of Parcel 2 and either failed to make such inquiry or made such inquiry and came to the wrong determination, thereby breaching its duty of care. The plaintiffs further allege that Cadre's conduct constituted an unfair or deceptive practice in violation of CUTPA. Counts nine and ten set forth similar claims of professional malpractice and violation of CUTPA against Massa in connection with the appraisal.
On July 12, 2004 the defendants, Cadre and Massa, filed a motion to strike (#105) the professional malpractice and CUTPA claims set forth in counts eight, nine and ten of the amended complaint. The plaintiffs filed a memorandum of law in opposition to motion #105 on July 23, 2004. Subsequently, on September 29, 2004 the plaintiffs filed a second amended complaint alleging two additional counts against the Law Office and Attorney Silver for breach of fiduciary duty. Shortly thereafter, the defendants, the Law Office and Silver, filed a motion to strike (#110) counts four, five, seven and eight of the plaintiffs' second amended complaint, which allege breach of fiduciary duty and CUTPA claims against them. On November 4, 2004 the plaintiffs filed a memorandum in opposition to motion #110. The Law Office and Silver submitted a reply memorandum on December 17, 2004. At short calendar on December 20, 2004 the court heard oral argument on motion #110. At this time, the parties agreed to have motion #105 heard on the basis of the briefs submitted to the court.
The second amended complaint adds two counts alleging breach of fiduciary duty against the Law Office and Silver. For purposes of eliminating confusion with respect to the new numbering of counts, the counts set forth in the second amended complaint are as follows: (1) breach of contract against Mark and Elizabeth Goulet, (2) fraud against Mark and Elizabeth Goulet, (3) legal malpractice against the Law Offices of Alan B. Silver, (4) breach of fiduciary duty against the Law Offices of Alan B. Silver, (5) violation of CUTPA against the Law Offices of Alan B. Silver, (6) legal malpractice under General Statutes § 34-133(b) against Alan B. Silver, (7) breach of fiduciary duty against Alan B. Silver, (8) violation of CUTPA against Alan B. Silver, (9) professional malpractice against Cadre Group, LLC, (10) violation of CUTPA against Cadre Group, LLC, (11) professional malpractice under § 34-133(b) against Michael Massa, (12) violation of CUTPA against Michael Massa.
II DISCUSSION
"In ruling on a motion to strike, the court is limited to the facts alleged in the complaint." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). "The court must construe the facts in the complaint most favorably to the plaintiff." (Internal quotation marks omitted.) Id. "Moreover [w]hat is necessarily implied [in an allegation] need not be expressly alleged." (Internal quotation marks omitted.) Commissioner of Labor v. C.J.M. Services, Inc., 268 Conn. 283, 292, 842 A.2d 1124 (2004). "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). If, however, "facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Connecticut Carpenters Benefit Funds v. Burkhard Hotel Partners II, LLC, 83 Conn.App. 352, 361, 849 A.2d 922 (2004).
Motion to Strike #105
In their motion to strike, Cadre and Massa argue that counts eight and ten of the amended complaint are based on allegations amounting to professional malpractice, and that, as such, they do not set forth a sufficient cause of action under CUTPA. In addition, they argue that the plaintiffs have failed to state a claim under CUTPA because the conduct alleged by the plaintiffs does not amount to an unfair or deceptive practice under the "cigarette rule" adopted by the Connecticut Supreme Court. In response, the plaintiffs contend that the CUTPA exclusion for professional negligence does not extend to professions other than law and medicine and further argue that the defendants' conduct satisfies the "cigarette rule" and therefore states a valid claim under CUTPA.
The provisions of the Connecticut Unfair Trade Practices Act (CUTPA) are set forth in General Statutes § 42-110a et seq.
The operative provision of CUTPA, General Statutes § 42-110b(a), provides that no person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce. In certain circumstances, courts have held that professional malpractice claims are outside the scope of CUTPA. In Haynes v. Yale-New Haven Hospital, 243 Conn. 17, 34-38, 699 A.2d 964 (1997), the Supreme Court discussed the scope of CUTPA with respect to professional malpractice claims against a hospital and physician. There, the court explained that "the touchstone for a legally sufficient CUTPA claim against a health care provider is an allegation that an entrepreneurial or business aspect of the provision of services is implicated, aside from medical competence or aside from medical malpractice based on the adequacy of staffing, training, equipment or support personnel. Medical malpractice claims recast as CUTPA claims cannot form the basis for a CUTPA violation. To hold otherwise would transform every claim for medical malpractice into a CUTPA claim." Id., 38. On this basis, the court concluded that "professional negligence — that is, malpractice — does not fall under CUTPA. Although physicians and other health care providers are subject to CUTPA, only the entrepreneurial or commercial aspects of the profession are covered, just as only the entrepreneurial aspects of the practice of law are covered by CUTPA." Id., 34. Later, in Beverly Hills Concepts, Inc. v. Schatz Schatz, Ribicoff Kotkin, 247 Conn. 48, 79, 717 A.2d 724 (1998), the Supreme Court reaffirmed this principle as it applies to the practice of law. In that case, the court again concluded "that professional negligence — that is, malpractice — does not fall under CUTPA." (Internal quotation marks omitted.) Id.; see also Suffield Development Associates, Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 781, 802 A.2d 44 (2002). This principle was extended by the Appellate Court to a licensed clinical psychologist in Rumbin v. Baez, 52 Conn.App. 487, 490-91, 727 A.2d 744 (1999).
The defendants urge the court to extend the reasoning of Haynes and Beverly Hills Concepts to professional real estate appraisers and argue that the CUTPA claims against Cadre and Massa should be stricken because they allege simple malpractice and do not fall within the "entrepreneurial exception" to immunity from CUTPA. The plaintiffs, however, relying on Advanced Financial Services v. Associated Appraisal Services, Inc., 79 Conn.App. 22, 830 A.2d 240 (2003), argue that CUTPA applies to claims of professional malpractice against real estate appraisers.
The Appellate Court's decision in Advanced Financial Services v. Associated Appraisal Services, Inc., supra, 79 Conn.App. 22, provides limited guidance in the present case since the court addressed only the limited question of whether the trial court properly awarded the plaintiff punitive damages under CUTPA. The trial court decision, however, provides useful guidance on the issue of whether and to what extent CUTPA applies to real estate appraisers. See Advanced Financial Services v. Associated Appraisal Services, Inc., Superior Court, judicial district of Hartford, Docket No. CV 98 0580372 (July 23, 2001, Freed, J.).
In Advanced Financial Services v. Associated Appraisal Services, Inc., supra, Superior Court, Docket No. CV 98 0580372, the plaintiff, a mortgage lender, alleged that the defendants, a real estate appraisal company and its president, violated CUTPA when they certified to the plaintiff in connection with a mortgage that construction had been completed on a home even though they knew that construction had not in fact been completed. The plaintiff alleged that the defendant appraisers knew the "completion of construction" certificate was false, knew that the plaintiff would rely on certificate in making the loan, and submitted a false and misleading report with a reckless disregard for the truth of the certificate or the rights of the plaintiff. In its analysis, the trial court recognized that "[p]rofessional malpractice cases are normally outside of the scope of CUTPA," but nevertheless found CUTPA applicable, reasoning that courts do not exclude professional malpractice cases from CUTPA where the alleged misconduct is comprised of "deceptive acts such as forgery, deliberate falsification and nondisclosure." Id. The trial court found that the defendant appraisers submitted a certificate of completion of construction when they knew that the construction work had not, in fact, been completed, and further, failed to disclose their knowledge that vandalism had occurred on the property. On this basis, the court found that the defendants' conduct violated CUTPA.
Unlike Advanced Financial Services v. Associated Appraisal Services, Inc., supra, Superior Court, Docket No. CV 98 0580372, which involved deliberate acts of deception on the part of the appraiser, the present case involves allegations of simple professional malpractice. See also Pollock v. Panjabi, 47 Conn.Sup. 179, 194-96 (2000) (where the plaintiffs' complaint contained allegations that went beyond claims of mere incompetence and included destroying data, bad faith and borderline extortionate conduct). The plaintiffs do not allege that Cadre and Massa deliberately misrepresented or lied to the plaintiffs regarding the zoning status of Parcel 2. In fact, they state in their complaint that Cadre and Massa informed them that Parcel 2 was "not in compliance with the applicable zoning regulations, but that said noncompliance was authorized by a `grandfathered use,'" which rendered the site "legal," but "nonconforming due to size." In short, the plaintiffs allege that Cadre and Massa made errors in judgment with respect to the zoning status and the consequences arising from that status. These are clearly allegations of professional malpractice.
Among Superior Courts, there is a split of authority on this issue. A number of courts have held that the CUTPA exclusion extends beyond the medical and legal fields to exempt other types of professional malpractice. See Krassner v. CPM Ins. Services, Superior Court, judicial district of New Haven, Docket No. CV 01 0456362 (August 8, 2002, Booth, J.) ( 35 Conn. L. Rptr. 701) (insurance); Worldwide Preservation Services, LLC v. IVth Shea, LLC, Superior Court, complex litigation docket at Stamford, Docket No. X05 CV 98 0167154 (February 1, 2001, Tierney, J.) ( 29 Conn. L. Rptr. 7) (excluding claims for professional malpractice against engineers from CUTPA after noting broad language of Haynes and Beverly Hills Concepts and failing to divine "any reason from [ Haynes and Beverly Hills Concepts] and the statutory definition [of CUTPA] why professional malpractice should be limited just to health care providers and attorneys, merely by the fact that the Supreme Court has only had the opportunity to address those two professions."); Amity Regional School District #5 v. Atlas Construction Co., Superior Court, complex litigation docket at Waterbury, Docket No. X06 CV 99 153388 (July 26, 2000, McWeeny, J.) ( 27 Conn. L. Rptr. 605) (architecture); Day v. Yale University School of Drama, Superior Court, judicial district of New Haven, Docket No. CV 97 400876 (March 7, 2000, Licari, J.) ( 26 Conn. L. Rptr. 624) (education); Ann Fields of South Windsor, Inc. v. Prestileo, Superior Court, judicial district of Hartford, Docket No. CV 97 569685 (August 25, 1999, Bishop, J.) (insurance agents); Shareamerica, Inc. v. Ernst Young, Superior Court, judicial district of Waterbury, Docket No. CV 93 150132 (July 2, 1999, Sheldon, J.) (accounting); Anderson v. Yale University, Superior Court, judicial district of New Haven, Docket No. CV 97 399373 (July 1, 1998, Hartmere, J.) ( 22 Conn. L. Rptr. 341) (journalism).
Other Superior Courts have reasoned that a CUTPA count based on negligence in professions other than law or medicine should survive a motion to strike because the appellate courts have not expressly extended the professional negligence exception. See Vuoso Enterprises, Inc. v. Dept. of Consumer Protection, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 99 267844 (March 13, 2001, Robinson-Thomas, J.) (automechanic); Pollock v. Panjabi, supra, 47 Conn.Sup. 194-96 (expert witness); Hopper v. Hemphill, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. 99 171709 (May 10, 2000, Hickey, J.) ( 27 Conn. L. Rptr. 181) (architecture); Darien Asphalt Paving, Inc. v. Newtown, Superior Court, judicial district of New Britain, Docket No. CV 98 488078 (December 7, 1998, Nadeau, J.) ( 23 Conn. L. Rptr. 495) (architecture).
In both Haynes and Beverly Hills Concepts, the Supreme Court stated that "professional negligence — that is, malpractice — does not fall under CUTPA." Beverly Hills Concepts, Inc. v. Schatz Schatz, Ribicoff Kotkin, supra, 247 Conn. 79; Haynes v. Yale-New Haven Hospital, supra, 243 Conn. 34. Moreover, "[t]he purpose of CUTPA is to protect the public from unfair trade practices in the conduct of any trade or commerce . . . The purpose of CUTPA is not to provide an alternate, statutory basis for bringing a malpractice action." (Citation omitted; internal quotation marks omitted.) Hendriks Associates v. Old Lyme Marina, Inc., Superior Court, judicial district of New London, Docket No. CV 01 546496 (April 26, 2001, Robina, J.) ( 30 Conn. L. Rptr. 26). Accordingly, this court concludes that the Supreme Court's distinction between the entrepreneurial and other aspects of professional practice should apply with equal force to the profession of real estate appraisal. See also Worldwide Preservation Services, LLC v. IVth Shea, LLC, supra, Superior Court, Docket No. CV 98 0167154 ("A better rule would be a bright line; all those accused to professional malpractice can claim the benefit of the entrepreneurial rule in CUTPA, all professions.") Thus, while the entrepreneurial aspects of the real estate appraisal profession are subject to CUTPA, claims against appraisers alleging simple professional negligence — that is, malpractice — are exempt from CUTPA.
In light of the foregoing, the defendants' motion to strike must be granted if the facts alleged in counts eight and ten state claims for simple professional negligence, rather than an unfair practice in the entrepreneurial aspects of the defendants' business. The defendants argue that the allegations in these counts do not implicate CUTPA because they constitute nonentrepreneurial aspects of the practice of real estate appraisal and are, in essence, negligence claims recast as CUTPA claims.
The "entrepreneurial" exception is "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 . . . conduct to CUTPA liability." (Citation omitted.) Suffield Development Associates, Ltd. Partnership v. National Loan Investors, L.P., supra, 260 Conn. 782. Entrepreneurial activity includes activities such as solicitation of business and billing and does not extend to claims involving issues of competence and strategy. See Haynes v. Yale-New Haven Hospital, supra, 243 Conn. 34-38.
The plaintiffs' allegations in count eight do not fall within the scope of the entrepreneurial exception. In count eight, the plaintiffs allege that Cadre "either failed to inquire into the zoning status of Parcel 2, or made such inquiry and came to the wrong determination." The plaintiffs allege that Cadre violated CUTPA in that it engaged in unfair or deceptive practices by representing to the plaintiffs that it had accurately researched the title and zoning status for Parcel 2, which representations the plaintiffs reasonably relied upon and were material to their acquisition of a nonmarketable lot. The plaintiffs further claim that Cadre informed them that Parcel 2 was "not in compliance with the applicable zoning regulations, but that said noncompliance was authorized by a `grandfathered use,'" which rendered the site, "nonconforming due to size." At most, these allegations amount to professional malpractice, incompetence and errors in judgment with respect to the zoning status of Parcel 2 and the consequences arising from that status. The plaintiffs have failed to allege sufficient facts to support a CUTPA claim against Cadre in count eight. The court therefore, grants the defendants' motion to strike this count.
In count ten, the plaintiffs make similar allegations against Massa, claiming that he violated CUTPA when he "either failed to inquire into the zoning status of Parcel 2, or made an inquiry and came to the wrong determination." The plaintiffs also allege, however, that Massa violated General Statutes § 20-501 because he did not possess a valid license or certification at the time he issued the appraisal and that, as a result, his conduct was unfair, immoral, unethical and/or unscrupulous and in violation of CUTPA. General Statutes § 20-501 prohibits a person from engaging in the business of real estate appraisal without a license or appropriate certification. Thus, unlike in count eight, the plaintiffs' claim of violation of CUTPA in count ten is grounded in more than simple professional negligence. Moreover, because the plaintiffs allege that Massa was not a licensed or certified real estate appraiser, the "entrepreneurial exception" pertaining to professional malpractice claims is not directly applicable. The court must therefore analyze the plaintiffs' claim under the "cigarette rule."
General Statutes § 20-502 provides in relevant part: "a) No person shall act as a real estate appraiser or provisional appraiser or engage in the real estate appraisal business without the appropriate certification, license, limited license or provisional license issued by the commission, unless exempted by the provisions of sections 20-500 to 20-528, inclusive."
"It is well settled that in determining whether a practice violates CUTPA, [courts] have adopted the criteria set out in the cigarette rule by the [F]ederal [T]rade [C]ommission for determining when a practice is unfair: (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] . . . 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 . . ." (Citations omitted; internal quotation marks omitted.) Fink v. Golenbock, 238 Conn. 183, 215, 680 A.2d 1243 (1996).
Here, the plaintiffs' allegation that Massa issued the appraisal without a license or appropriate certification pursuant to § 20-502 satisfies the first criteria. In addition, the plaintiff's allege that engaging in the profession of real estate appraisal without a license or appropriate certification is unethical and unscrupulous. Finally, the plaintiffs' allege that they have been substantially injured as a result of the appraisal in that they are left with a nonmarketable piece of property. As such, the facts alleged in count ten of the amended complaint support a claim for violation of CUTPA. In light of the foregoing, the court denies the defendants' motion to strike count ten of the amended complaint.
In support of their claim that count nine, also directed toward Massa, should be stricken, the defendants argue that as the managing partner of Cadre, a limited liability company, Massa cannot be held personally liable for the conduct alleged in the amended complaint absent allegations sufficient to permit the court to pierce the corporate veil. The plaintiffs counter that Massa may be held liable under General Statutes § 34-133.
Notably, the plaintiffs cite no case law supporting this position.
The Connecticut Limited Liability Company Act, General Statutes § 34-130 et seq., creates the ability to "bring together in a single business organization the best features of all other business forms — properly structured, its owners obtain both a corporate-styled liability shield and the pass-though tax benefits of a partnership." (Internal quotation marks omitted.) PB Real Estate, Inc. v. DEM II Properties, 50 Conn.App. 741, 742, 719 A.2d 73 (1998). General Statutes § 34-133(a) provides: "Except as provided in subsection (b) of this section, a person who is a member or manager of a limited liability company is not liable, solely by reason of being a member or manager, under a judgment, decree or order of a court, or in any other manner, for a debt, obligation or liability of the limited liability company, whether arising in contract, tort or otherwise or for the acts or omissions of any other member, manager, agent or employee of the limited liability company."
Section 34-133(b) limits a member's personal liability to his or her own negligent or wrongful acts, providing in relevant part: "Nothing contained in sections 34-100 to 34-242, inclusive, shall be interpreted to abolish, repeal, modify, restrict or limit the law . . . in this state applicable to the professional relationship and liabilities between the person furnishing the professional services and the person receiving such professional service and to the standards for professional conduct; provided any member, manager, agent or employee of a limited liability company rendering professional services formed under sections 34-100 to 34-242, inclusive, shall be personally liable and accountable only for negligent or wrongful acts or misconduct committed by him, or by any person under his direct supervision and control, while rendering professional services on behalf of the limited liability company to the person for whom such professional services were being rendered . . ." Section 34-133(b) parallels the common law in which it has been clearly established that "an officer of a corporation who commits a tort is personally liable to the victim regardless of whether the corporation itself is liable." Kilduff v. Adams, Inc., 219 Conn. 314, 331-32, 593 A.2d 478 (1991). "[A]n officer of a corporation does not incur personal liability for its torts merely because of his official position. Where, however, an agent or officer commits or participates in the commission of a tort, whether or not he acts on behalf of his principal or corporation, he is liable to third persons injured thereby." Scribner v. O'Brien, Inc., 169 Conn. 389, 404, 363 A.2d 160 (1975). "In view of the corporate-styled liability shield afforded by the limited liability company structure, . . . these principles are equally applicable to the manager of a limited liability company." (Citation omitted; internal quotation marks omitted.) Malone v. DR, LLC, Superior Court, judicial district of Hartford, Docket No. CV 040834225 (November 10, 2004, Shapiro, J.).
A review of the allegations in the amended complaint reveals that count nine does not allege liability with respect to Massa based solely upon his status as managing partner of a limited liability company. The plaintiffs allege that Massa "either failed to inquire as to the zoning status of Parcel 2, or made an inquiry and came to the wrong determination" and thereby breached the duty of care he owed to the plaintiffs. In addition, the plaintiffs claim that Massa, on behalf of Cadre, informed the plaintiffs that Parcel 2, although not in compliance with the applicable zoning regulations, was authorized as a "grandfathered use" and therefore, was a legal nonconforming parcel. In short, the plaintiffs claim that while rendering professional appraisal services on behalf of Cadre, Massa was negligent. The court finds that the allegations set forth in count nine of the amended complaint fall within the scope of § 34-133(b). Massa may therefore be held personally liable pursuant to the statute. As a result, the court denies the defendants' motion to strike count nine of the amended complaint.
Motion to Strike #110
The court now turns to the second motion to strike (#110), which is directed toward claims set forth in the plaintiffs' second amended complaint. The Law Office and Attorney Silver move to strike counts four and seven, which allege breach of fiduciary duty against each defendant respectively, and counts five and eight, which allege CUTPA claims against each defendant.
With respect to the breach of fiduciary duty claims, the Law Office and Silver argue that counts four and seven cannot support a claim for breach of fiduciary duty because the plaintiffs failed to allege any facts implicating dishonesty, disloyalty or immorality on the part of the defendants. In opposition, the plaintiffs argue that there are two "transactions" at issue and assert that the "zoning and subdivision" issues are the subject of the legal malpractice claims, while that "the real estate closing itself" gave rise to the breach of fiduciary duty claims. The plaintiffs contend that the defendants departed from the appropriate standard of care when they released the plaintiffs' funds to themselves and others without reasonable and accurate assurances as to the legality of the transaction and that this departure constitutes a breach of fiduciary duty.
Generally, "[p]rofessional negligence alone . . . does not give rise automatically to a claim for breach of fiduciary duty. Although an attorney-client relationship imposes a fiduciary duty on the attorney . . . not every instance of professional negligence results in a breach of that fiduciary duty. A fiduciary 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 . . . Professional negligence implicates the duty of care while breach of fiduciary duty implicates a duty of loyalty and honesty." (Citations omitted; internal quotation marks omitted.) Beverly Hills Concepts, Inc. v. Schatz Schatz, Ribicoff Kotkin, supra, 247 Conn. 57.
In order to allege a claim for breach of fiduciary duty, courts have found that a plaintiff must allege not only the existence of a fiduciary relationship, but also conduct by the defendant that implicates his or her honesty, loyalty or morality. See Nosik v. Bowman, Superior Court, judicial district of Fairfield, Docket No. CV 00 0379089 (July 12, 2002, Doherty, J.) (finding that "to survive a motion to strike framed as a breach of fiduciary duty, a pleader must allege facts which implicate the morality of counsel's conduct"); Gurski v. Rosenblum Filan, LLC, Superior Court, judicial district of Stamford, Docket No. CV 00 0179063 (February 23, 2001, D'Andrea, J.) ( 28 Conn. L. Rptr. 717) (granting motion to strike claim for breach of fiduciary duty where plaintiff alleged that defendant attorneys made no attempt for three weeks to inform the plaintiff of a default, judgment, or to attempt to reopen the default judgment, but included no allegations of fraud, self-dealing, or conflict of interest). "Although [the Supreme Court has] not expressly limited the application of these traditional principles of fiduciary duty to cases involving only fraud, self-dealing or conflict of interest, the cases in which [it has] invoked them have involved such deviations." (Emphasis in original.) Murphy v. Wakelee, 247 Conn. 396, 400, 721 A.2d 1181 (1998).
The plaintiffs allege that the defendants "had a fiduciary duty to the Plaintiffs to tender [their] funds in exchange for a Warranty Deed only upon reasonable and accurate assurances that the transfer of Parcel 2 was a legal subdivision or re-division" and that the release of the plaintiffs' funds at the closing "was a breach of this fiduciary duty in that it is a departure from the appropriate standard of care." The court is unpersuaded by the plaintiff's attempts to draw a distinction between the "zoning and subdivision issues" and "the real estate closing itself" as a foundation for their breach of fiduciary duty claims. All of the conduct complained of stems from the defendants' alleged failure to inquire into the zoning status of Parcel 2 or the conclusions they drew from any such inquiry. Read broadly in the light most favorable to the plaintiffs, counts four and seven allege simple professional negligence. They contain no allegations of fraud, self-dealing or conflict of interest; see Murphy v. Wakelee, supra, 247 Conn. 400; or any act that implicates the defendants' morality. As such, the plaintiffs have failed to allege sufficient facts to support a claim for breach of fiduciary duty. The court therefore grants the defendants' motion to strike counts four and seven of the second amended complaint.
The mere fact that during the closing, the defendants paid themselves for the services they provided the plaintiffs does not rise to the level of self-dealing in these circumstances.
In addition, the Law Office and Silver seek to strike counts five and eight, which allege violations of CUTPA, arguing that those counts are based on allegations amounting to simple professional malpractice and do not involve the entrepreneurial or commercial aspects of practice and therefore do not rise to level of a claim under CUTPA. Moreover, the defendants argue that the second amended complaint does not set forth in what respect the defendants' alleged activities are either immoral, unethical, unscrupulous or offensive to public policy as required to state a claim under CUTPA. In response, the plaintiffs argue first that the defendants "chose" not to inquire into the zoning status of Parcel 2 for financial reasons and that their claim thus pertains to the entrepreneurial aspect of the practice of law, subjecting the defendants to liability under CUTPA. In addition, the plaintiffs contend that the actions of the defendants involved more than "just plain legal representation" of the type typically excluded from CUTPA for public policy reasons and that, therefore, the defendants' are subject to CUTPA. Finally, the plaintiffs maintain that they have alleged sufficient facts that demonstrate that the defendants' conduct was unfair and deceptive.
As discussed previously, "only the entrepreneurial aspects of the practice of law are covered by CUTPA . . . Accordingly, . . . professional negligence — that is, malpractice — does not fall under CUTPA." (Citation omitted; internal quotation marks omitted.) Suffield Development Associates, Ltd. Partnership v. National Loan Investors, L.P., supra, 260 Conn. 781. "[T]he most significant question in considering a CUTPA claim against an attorney is 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." Id. The "entrepreneurial" exception is "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.
In addition, "[m]any decisions made by attorneys eventually involve personal profit as a factor, but are not considered part of the entrepreneurial aspect of practicing law . . . The attorney's financial considerations do not place all of these actions [referring to profiting from intentional misconduct] into the category of entrepreneurial aspects 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 . . . [courts] reject such an interpretation." Id., 783.
In the present case, the conduct complained of stems from the defendants' alleged failure to inquire into the zoning status of Parcel 2 or the conclusions they drew from any such inquiry. The plaintiffs' allegations attack the defendants' competence, judgment and professional ability as a law firm and lawyer. They do not fall within the scope of the entrepreneurial exception, but rather bear upon the representational aspects of the practice of law. As such, the plaintiffs have failed to allege sufficient facts to support a CUTPA claim against the Law Office in count five and Silver in count eight of the second amended complaint. Therefore, the court grants the defendants' motion to strike counts five and eight.
In support of their CUTPA claim in count five of the second amended complaint, the plaintiffs allege that after the closing, the Law Office billed the plaintiffs in connection with researching the title and applicable zoning regulations. Presentation of a bill for services rendered, even if to correct a prior mistake, does not constitute a violation of CUTPA. This argument therefore is without merit. See Kegeles v. Bergman, Horowitz Reynolds, P.C., Superior Court, judicial district of New Haven, Docket No. CV 3913397 (November 24, 1999, Levin, J.) ( 26 Conn. L. Rptr. 22).
III CONCLUSION
With respect to motion to strike #105, the court grants the defendants' motion as to count eight of the plaintiffs' amended complaint and denies the defendants' motion as to counts nine and ten of the amended complaint.
With respect to motion to strike #110, the court grants the defendants' motion as to counts four, five, seven and eight of the plaintiffs' second amended complaint.
So Ordered.
BY THE COURT
Wiese, Judge