Opinion
No. FST CV 05 4003286
November 29, 2005
MEMORANDUM OF DECISION
The plaintiff, Stones Trail, LLC, filed a revised five-count complaint, dated April 29, 2005, against Ridgefield Bank and its corporate successor, Fairfield County Bank Corp. (collectively referred to as the defendant), alleging breach of contract, breach of implied covenant of good faith and fair dealing, promissory estoppel and detrimental reliance, violations of General Statutes § 42-110a et seq., the Connecticut Unfair Trade Practices Act (CUTPA) and negligence. The allegations arise from one or more transactions involving the plaintiff as mortgagor and the defendant as mortgagee of property located at Ladder Hill Road in Weston, Connecticut.
The plaintiff alleges that on October 23, 1998, the plaintiff mortgaged the subject property to secure a note for the sum of $1,111,000. The subject property consists of six lots and a private road. Under paragraph forty of the mortgage the defendant agreed to release individual building lots from the mortgage and note upon the payment by the plaintiff of the sum of $222,200. Although, the plaintiff failed to make required payments on the mortgage, the defendant agreed to restructure the loan, entering into a written agreement on April 10, 2001, modifying the original note and mortgage deed. Paragraph forty of the original mortgage remained in effect.
The plaintiff further alleges that in September 2001, the defendant's vice president of commercial lending entered into an oral agreement with the plaintiff that allowed for the deferral of payments until the closing of a pending mortgage from another lender, at which time the plaintiff would pay any unpaid interest and quarterly principal payments and make a payment of $222,200 to secure the release of one of the six lots on the subject property. The plaintiff stopped making payments to the defendant in reliance upon this agreement. Subsequently, the defendant refused to release an individual lot, claiming that the Town of Weston did not consider the mortgaged property to be a valid six-lot subdivision and considered it to be only one lot. The plaintiff alleges that as a result of the defendant's refusal to release an individual lot, the plaintiff was unable to complete the closing on the mortgage from another lender, which caused the plaintiff to be unable to make the principal and interest payments on the mortgage to the defendant. The defendant commenced a foreclosure action on the mortgage on or about February 11, 2002.
Before this court is the defendant's May 17, 2005 motion #110 to strike each count of the plaintiff's revised complaint. "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.) Commissioner of Labor v. C.J.M. Services, Inc., 268 Conn. 283, 292, 842 A.2d 1124 (2004). "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . Thus, [the court] assume[s] the truth of both the specific factual allegations and any facts fairly provable thereunder. In doing so, moreover, [the court] read[s] the allegations broadly, rather than narrowly." (Internal quotation marks omitted.) Broadnax v. New Haven, 270 Conn. 133, 173, 851 A.2d 1113 (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).
First Count
The defendant moves to strike count one of the plaintiff's revised complaint on the grounds that to the extent the complaint alleges that the defendant breached an oral agreement the claim violates the statute of frauds and lacks consideration.
"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, Docket No. CV 04 0410421 (August 25, 2004).
General Statutes § 52-550(a) provides in relevant part: "No civil action may be maintained in the following cases unless the agreement, or a 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 . . ." The plaintiff argues that the agreement between the defendant and the plaintiff was "not an agreement for the sale of real property or an interest in real property" and that, therefore, the statute of frauds does not apply. The plaintiff further argues that "it was only an agreement allowing the plaintiff to defer making principal and interest payments on the mortgage note for a few months."
"[T]he characterization of [a] contract as either within or outside the statute of frauds must await the evidence which may be adduced at trial . . . Resolution of this issue requires evidence beyond the pleadings, however, no evidence is received by the court when passing on a motion to strike." (Citation omitted; internal quotation marks omitted.) ALI, Inc. v. Veronneau, Superior Court, judicial district of Waterbury, Docket No. 126431 (October 11, 1996) ( 17 Conn. L. Rptr. 677); see also Kenney v. McClatchie, Superior Court, judicial district of New Haven, Docket No. CV 01 0450368 (May 2, 2003).
The defendant also argues that the aforementioned oral agreement lacked consideration and, therefore, moves to strike the plaintiff's breach of contract claim on this basis. "In pleading an action for breach of [contract], plaintiff must plead: 1) the existence of a contract or agreement; 2) the defendant's breach of the contract or agreement; and 3) damages resulting from the breach." Chem-Tek, Inc. v. General Motors Corp., 816 F.Sup. 123, 131 (D.Conn. 1993). The court does not reach the legal or factual merits of the plaintiff's claim, however, based on a reading most favorable to the plaintiff as nonmoving party, as the plaintiff has sufficiently alleged the elements of a breach of contract claim.
The defendant also moves to strike count one on the grounds that to the extent that the plaintiff claims that the defendant breached the mortgage agreement, the agreement is unenforceable because the plaintiff was in material breach of the loan documents. As discussed, supra, this count is not amenable to disposition by a motion to strike. The plaintiff alleges in its complaint that it was not in breach of the loan documents at the time the parties entered into an oral agreement for the deferral of payments. The defendant's motion to strike count one of the plaintiff's revised complaint is therefore denied.
Count Two
The defendant moves to strike count two on the grounds that it is redundant of the breach of contract claim, does not allege that the defendant acted in bad faith and seeks to alter the express terms of the parties' written agreements.
"Every contract carries an implied covenant of good faith and fair dealing requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement." (Internal quotation marks omitted.) Gupta v. New Britain General Hospital, 239 Conn. 574, 598, 687 A.2d 111 (1996). "Bad faith means more than mere negligence; it involves a dishonest purpose . . . Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive." (Citation omitted; internal quotation marks omitted.) Cadle Co. v. Ginsberg, 70 Conn.App. 748, 768, 802 A.2d 137, cert. denied, 262 Conn. 905, 810 A.2d 271 (2002). "Absent allegations and evidence of a dishonest purpose or sinister motive, a claim for breach of the implied covenant of good faith and fair dealing is legally insufficient." Alexandru v. Strong, 81 Conn.App. 68, 81, 837 A.2d 875, cert. denied, 268 Conn. 906, 845 A.2d 406 (2004).
In the present case, the plaintiff has not alleged that the defendant's conduct was motivated by bad faith. In count two, the plaintiff alleges that the defendant refused to release one lot and commenced foreclosure of the mortgage "based upon statements attributed to the Town of Weston that the subject property does not consist of six lots . . ." The plaintiff fails to allege facts sufficient to support a claim that the defendant's actions were the result of a dishonest purpose or sinister motive. The plaintiff's claim is legally insufficient and the defendant's motion to strike count two is granted.
Third Count
The defendant moves to strike count three, the plaintiff's promissory estoppel claim, on the grounds that the plaintiff's actions were not of such a character that they can be naturally and reasonably accounted for in no other way than by the existence of the alleged oral agreement. The defendant also argues that the alleged oral promise was not one upon which the plaintiff could reasonably rely.
The court reads the defendant's first ground as an implication that the alleged agreement violates the statute of frauds, and that in order to avoid the statute the plaintiff "must demonstrate acts that constitute part performance of the contract." See Glazer v. Dress Barn, Inc., 274 Conn. 33, 60, 873 A.2d 929 (2005) ("when estoppel is applied to bar a party from asserting the statute of frauds . . . the party seeking to avoid the statute must demonstrate acts that constitute part performance of the contract"). In such instances, "[t]he acts . . . must be of such a character that they can be naturally and reasonably accounted for in no other way than by the existence of some contract in relation to the subject matter in dispute." (Internal quotation marks omitted.) Id., 61. As mentioned above, however, "[t]he characterization of [a] contract as either within or outside the statute of frauds must await the evidence which may be adduced at trial." (Internal quotation marks omitted.) ALI, Inc., v. Veronneau, supra, 17 Conn. L. Rptr. 677. Accordingly, the defendant's motion to strike on this ground is denied.
The defendant also argues that the alleged oral promise was not one upon which the plaintiff could reasonably rely. "The essential elements of a claim for promissory estoppel are: 1) a clear and definite promise; 2) a change in position in reliance on the promise: and 3) resulting injury . . . The promise must be sufficiently clear and definite such that the promisor could reasonably expect to induce reliance." (Citations omitted.) Chem-Tek, Inc. v. General Motors Corp., supra, 816 F.Sup. 131. Here, the plaintiff alleges reliance upon the agreement and representations of the defendant's officer that the payments could be deferred and that the plaintiff did not make the mortgage payments based upon the agreement. Construing the complaint in the manner most favorable to sustaining its legal sufficiency, the plaintiff has sufficiently stated a cause of action for promissory estoppel. See Helm v. California Federal Bank, 78 Conn.App. 351, 359, 828 A.2d 129, cert. denied, 266 Conn. 911, 832 A.2d 70 (2003) (the court "must construe the complaint in the manner most favorable to sustaining its legal sufficiency"). The defendant's motion to strike count three is denied.
Fourth Count
The defendant moves to strike count four on the grounds that the plaintiff alleges only a cause of action for breach of contract and has not alleged any substantial aggravating circumstances so as to adequately claim a violation of CUTPA. In the fourth count, the plaintiff repeats and realleges the conduct of the defendant in refusing to release one of the lots from the mortgage and in foreclosing its mortgage. The defendant describes these activities as violating CUTPA in that they were "unfair, unethical, oppressive and unscrupulous and caused substantial injury to the plaintiff."
"It is well settled that in determining whether a practice violates CUTPA [Connecticut courts] have adopted the criteria set out in the cigarette rule by the federal trade commission 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 — 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 business persons] . . . 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.) Updike, Kelly Spellacy, P.C. v. Beckett, 269 Conn. 613, 655-56, 850 A.2d 145 (2004).
CUTPA states in relevant part that "[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." General Statutes § 42-110b. "`Trade' or `commerce' means 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, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value in this state." General Statutes § 42-110a(4).
The plaintiff has not pleaded facts sufficient to ascribe its loss to "the conduct of any trade or commerce" on the part of the defendant. "[T]he plain language of § 42-110g(a) provides one limitation by requiring that the plaintiff suffer an ascertainable loss that was caused by the alleged unfair trade practice." (Internal quotation marks omitted; emphasis added.) Calandro v. Allstate Ins. Co., 63 Conn.App. 602, 812, 778 A.2d 212 (2001). "Thus, in order to prevail in a CUTPA action, a plaintiff must establish both that the defendant has engaged in a prohibited act and that `as a result of' this act, the plaintiff suffered an injury. The language requires a showing that the prohibited act was the proximate cause of a harm to the plaintiff.
With regard to the requisite causal element, it is axiomatic that proximate cause is [a]n actual cause that is a substantial factor in the resulting harm . . . Proximate cause does not exist merely because there is cause in fact." (Citations omitted; emphasis in original; internal quotation marks omitted.) Abrahams v. Young Rubicam, Inc., 240 Conn. 300, 306, 692 A.2d 709 (1997).
The plaintiff has not alleged a sale, rent or lease but has set forth a claim for breach of contract. "[T]he same facts that establish a breach of contract claim may be sufficient to establish a CUTPA violation . . ." Lester v. Resort Camplands International Inc., 27 Conn.App. 59,71.605 A.2d 550(1992). However, there must be substantial aggravating circumstances to support recovery under CUTPA. Designs on Stone, Inc. v. Brennan Construction Co., Inc., Superior Court, judicial district of Ansonia-Milford at Milford, Docket No. CV 97 059997 (April 9, 1998) ( 21 Conn. L. Rptr. 659) (reasoning that where unfairness or deception at the time of contract formation or in the circumstances of the breach is not alleged, a violation of CUTPA has not been alleged).
Here, the plaintiff alleges that there was a breach of an agreement to release a lot upon a payment of a certain sum and then a failure to do so because of a controversy involving the validity of an alleged subdivision. The plaintiff, then, has not alleged aggravating circumstances at both the time the contract was formed and at the time of the breach. A cause of action in CUTPA was not adequately pleaded. Accordingly, the motion to strike the fourth count of the complaint is granted.
Fifth Count
The defendant moves to strike count five on the grounds that the plaintiff has failed to allege sufficient facts to support the existence of a legal duty that was breached by the defendant. In the fifth count, the plaintiff alleges that the defendant was negligent in declaring the mortgage in default and commencing a foreclosure of the mortgage based upon a claim that the subject property does not consist of six lots when it knew or should have known that such claim was wrong. The defendant "erroneously argue[s] that the plaintiff must allege and provide facts indicating that a fiduciary relationship existed" between the plaintiff and the bank. See Miller v. Ryan, Superior Court, judicial district of Hartford, Docket No. CV 02 0821438 (October 7, 2003) ( 35 Conn. L. Rptr. 617). The plaintiff's ordinary negligence claim is not dependent upon the finding of a fiduciary relationship between the plaintiff and the defendant bank.
"The essential elements of a cause of action in negligence are well established: duty; breach of that duty; causation; and actual injury . . . The existence of a duty is a question of law and only if such a duty is found to exist does the trier of fact then determine whether the defendant violated that duty in the particular situation at hand . . . Because duty is an essential element in a negligence action, the plaintiff cannot have an action in negligence unless he shows that the defendant owed a duty to the plaintiff." (Citations omitted; internal quotation marks omitted.) Silano v. Cumberland Farms, Inc., 85 Conn.App. 450, 453, 857 A.2d 439 (2004). "The requisite duty to use care may stem from a contract, from a statute, or from circumstances under which a reasonable person would anticipate that harm of the general nature of that suffered was likely to result . . . Negligence cannot be predicated upon the failure to perform an act which the actor was under no duty or obligation to perform." (Citation omitted.) Sheiman v. Lafayette Bank Trust Co., 4 Conn.App. 39, 45, 492 A.2d 219 (1985).
"[T]he test for the existence of a legal duty of care entails (1) a determination of whether an ordinary person in the defendant's position, knowing what the defendant knew or should have known, would anticipate that harm of the general nature of that suffered was likely to result, and (2) a determination, on the basis of a public policy analysis, of whether the defendant's responsibility for its negligent conduct should extend to the particular consequences or particular plaintiff in the case." (Internal quotation marks omitted.) Ryan Transportation, Inc. v. MG Associates, 266 Conn. 520, 525-26, 832 A.2d 1180 (2003).
The court agrees with the plaintiff's argument that although "the word `duty' is not used in the complaint, [it] adequately states that the [defendant] failed to make a proper investigation into the status of the property and that such an investigation would disclose that the property contains six lots." The allegations support a determination that the defendant knew or should have known that the property consisted of six lots, if, as alleged, "the property consisted of six lots, the defendant [accepted] a mortgage based on six lots, received title insurance that the property consisted of six lots, the maps and deeds in the land records describe the property as six lots, and the map in the land records showing six lots contains a certification by the proper and authorized town officials that the lots on it are not a subdivision and do not require subdivision approval." The plaintiff further alleges that the defendant knew or reasonably should have known of the plaintiff's intention to build and sell a house on the lot to be released from the mortgage at a profit. The defendant, therefore, knew or should have anticipated that refusal to release one lot would likely result in harm of the general nature experienced by the plaintiff.
Having satisfied the first prong of the two-pronged test, the court must now determine "whether the defendant's responsibility for its negligent conduct should extend to the particular consequences or particular plaintiff in [this] case." (Internal quotation marks omitted.) Ryan Transportation, Inc. v. MG Associates, supra, 266 Conn. 525-26. Because the defendant accepted a mortgage based on six lots, containing a specific provision allowing for the release of individual lots, that question is answered in the affirmative and the defendant's motion to strike count five of the plaintiff's revised complaint is denied.
In summary, the defendant's motion to strike counts two and four is granted and the defendant's motion as to counts one, three, and five is denied.
So Ordered.