Opinion
No. CV 03-0474926 S
September 15, 2003
MEMORANDUM OF DECISION RE MOTION TO STRIKE #106 AND 107
The defendants in two separate motions have moved to strike certain counts of the plaintiff's revised complaint. Counts one and two of that complaint allege that the plaintiff purchased a garbage hauling and disposal company from the defendants Keith Devit and Lori Devit. The plaintiffs also allege that those defendants misrepresented the quarterly billings of the company and that the plaintiff relied on those representations in purchasing the business. Count one alleges negligent misrepresentation and count two alleges intentional misrepresentation.
The defendants Keith and Lori Devit have moved to strike those counts claiming that the contract contains what is known as an integration or merger clause which prevents the plaintiff from now claiming any such misrepresentations. However, the parole evidence rule "has no application where there has been fraud in the inducement of the contract, and parole evidence is ordinarily admissible to prove fraudulent misrepresentations." Paiva v. Vanech Heights Construction, Co., 159 Conn. 512, 521 (1970).
The plaintiff is not seeking to add to, subtract from or alter the terms of the contract but is claiming that it was induced to enter into the contract by a misrepresentation of a material fact. See Presta v. Monnier, 145 Conn. 694 (1958). The same reasoning should apply to a negligent or reckless misrepresentation. See Foley v. Huntington, Co., 42 Conn. App. 712, 721-22 (1996).
Additionally, plaintiff has in count one alleged facts sufficient to state a cause of action in negligent misrepresentation. See Giametti v. Inspections, Inc., 76 Conn. App. 352, 363 (2003).
The motion to strike counts one and two of the plaintiff's revised complaint is denied.
In a separate motion, the defendant Vincent McManus moves to strike CT Page 10878-ja counts five, six and seven of the revised complaint. Those counts allege that the defendant McManus pursuant to the contact between the parties, was designated as an escrow agent to hold $20,000 from the purchase price to be paid to the plaintiff in the event of certain loss of customers within 90 days of the closing. The plaintiff claims that McManus distributed the $20,000 to the Devits in contravention of his obligations under the contract.
Count five alleges negligence, count six alleges a breach of a fiduciary duty and count seven alleges a violation of the Connecticut Unfair Trade Practices Act, (CUTPA). Despite the defendant's argument to the contrary, count five, construed in favor of the pleader does allege that McManus, pursuant to the agreement owed a duty of care which was breached when he distributed the funds in question to the Devits.
As to the sixth count, the defendant claims that under the facts alleged, he cannot be a fiduciary. However, a number of Superior Courts have held that an escrow agent can be a fiduciary. "Where an escrow agreement exists, the escrow agent is required to act in accordance with the terms of the escrow agreement, even though he may have a special relationship to one of the parties to the escrow as an attorney, fiduciary or otherwise." Oge v. People's Bank, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 94 310 165 (June 2, 1994) (Fuller, J.). See also, Kallas v. Harmen, Superior Court, judicial district of Danbury, Docket No. 303611 (May 10, 1996) (Stodolink, J.).
Whether a fiduciary relationship exists is generally a question of fact and therefore not properly determined on a motion to strike. Siling v. New York Life Insurance Co., Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 97 342973 (January 12, 2001, Skolnick, J.).
The cases cited by the defendant for the proposition that an attorney cannot be an escrow agent have been legislatively overruled by C.G.S. § 51-81h (b) which provides in relevant part: "No escrow agreement shall be ineffective, invalid or unenforceable because the escrow holder is the attorney-at-law, law firm or agent for one of the parties to the escrow agreement, whether in connection with the matter to which the escrow agreement is related or otherwise."
No Connecticut cases expressly authorize or discuss the viability of a cause of action for breach of fiduciary duty against an escrow holder/agent; however, other jurisdictions recognize such a cause of action. See, e.g., Armbruster v. Alvin, 437 So.2d 725, 726 (Fla.App. 1983), cert. denied, 450 So.2d 485 (Fla. 1984) ("It is well settled that CT Page 10878-jb an escrow agent may be liable in damages for breach of the fiduciary duties owed to the parties to the escrow"); Smith v. First National Bank Trust, 440 N.W.2d 915 (Mich.App. 1989) ("[A]n escrow agent may be liable in tort for the negligent performance of its duties as escrow agent or breach of fiduciary responsibilities owed to its principal"); Southern Cross Lumber Millwork Co. v. Becker, 761 S.W.2d 269, 272 (Mo.App. 1988) ("An escrow agent's failure to strictly follow the terms of the escrow agreement is a breach of his fiduciary duty. The breach of such duty constitutes a tort").
As to count seven, the defendant's claim that a CUTPA claim cannot be based upon his conduct as an attorney must fail because he is being sued not in his capacity as an attorney, but as an escrow agent.
The motion to strike counts five, six, and seven of the revised complaint is denied.
Thompson, J CT Page 10878-jc