Opinion
No. CV-07-4008552
June 16, 2009
MEMORANDUM OF DECISION RE MOTION TO STRIKE (NO. 134)
Facts and Procedural History
The present action arises out of the plaintiffs, Jennifer Vitagliano's purchase of property located at 31 Pine Street in Waterford, Connecticut. The plaintiff filed a three-count complaint on October 12, 2007, against Jose Guzman, William Athan, Elizabeth Athan, Elizabeth Athan Real Estate, LLC, First Source Mortgage Solutions, Inc., and David C. Kinney. The plaintiff filed a revised complaint on January 6, 2009, and a second revised complaint on January 20, 2009. The second revised complaint added an additional count. Count one, against Jose Guzman, William Athan, Elizabeth Athan, Elizabeth Athan Real Estate, LLC, and First Source Mortgage Solutions, Inc., alleges violation of the Connecticut Unfair Trade Practices Act (CUTPA). Count two, against the defendant, David C. Kinney, an attorney, alleges that he represented the plaintiff in the closing and committed professional malpractice. Count three, also against the defendant Kinney, alleges, in the alternative, that the defendant did not represent the plaintiff in the closing, but that he nonetheless had a duty and failed to make certain disclosures to the plaintiff. Count four alleges that Kinney engaged in unfair and deceptive trade practices in violation of CUTPA.
Kinney filed a motion to strike count four of the plaintiff's second revised complaint, along with a memorandum in support, on February 20, 2009. The plaintiff filed its memorandum in opposition on February 27, 2009. The defendant filed its reply brief on March 27, 2009.
Discussion
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "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.) Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006). "If any facts provable under the express and implied allegations in the plaintiff's complaint support a cause of action . . . the complaint is not vulnerable to a motion to strike." Bouchard v. People's Bank, 219 Conn. 465, 471, 594 A.2d 1 (1991). Furthermore, the court must "construe the complaint in the manner most favorable to sustaining its legal sufficiency." (Internal quotation marks omitted.) Sullivan v. Lake Compounce Theme Park, Inc., 277 Conn. 113, 117, 889 A.2d 810 (2006).
The defendant argues that count four of the plaintiff's second revised complaint fails to state a legally cognizable claim for violation of CUTPA because the plaintiff was not his client and the allegations sound in professional malpractice and do not involve the entrepreneurial aspects of the defendant's practice of law. The defendant also seeks to strike the plaintiff's prayer for attorneys fees in connection with this claim. The plaintiff counters that whether she is the defendant's client is not dispositive of the court's determination of the sufficiency of her CUTPA claim. In addition, she disagrees with the defendant and contends that her CUTPA claim is based upon the entrepreneurial aspects of his practice of law.
The operative provision of CUTPA states: "No 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(a). "Our Supreme Court has explained that [i]t is well settled that in determining whether a practice violates CUTPA we 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 businesspersons] . . . 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 . . . Thus, a violation of CUTPA may be established by showing either an actual deceptive practice . . . or a practice amounting to a violation of public policy . . . In order to enforce this prohibition, CUTPA provides a private cause of action to [a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a [prohibited] method, act or practice." (Internal quotation marks omitted.) Kosiorek v. Smigelski, 112 Conn.App. 315, 321-22, 962 A.2d 880, cert, denied, 291 Conn. 903, 967 A.2d 113 (2009).
"A party seeking to recover damages under CUTPA must meet two threshold requirements. First, [the party] must establish that the conduct at issue constitutes an unfair or deceptive trade practice . . . Second, [the party] must [allege facts] providing the court with a basis for a reasonable estimate of the damages suffered . . . Once a violation of CUTPA has been established, evidence that the defendant has acted with reckless indifference to the rights of the plaintiff or has committed an intentional and wanton violation of those rights is a necessary prerequisite to the award of punitive damages." (Internal quotation marks omitted.) Richey v. Main Street Stafford, LLC, 110 Conn.App. 209, 221 954 A.2d 889 (2008).
As a threshold issue, the Supreme Court, in declining to extend CUTPA liability to the attorney for the plaintiff's opponent, stated: "Imposing liability under CUTPA on attorneys for their representation of a party opponent in litigation would not comport with a lawyer's duty of undivided loyalty to his or her client." Jackson v. R.G. Whipple, Inc., 225 Conn. 705, 729, 627 A.2d 374 (1993). In another decision, the Supreme Court noted: "[I]n general, CUTPA applies to the conduct of attorneys . . . The statute's regulation of the conduct of any trade or commerce does not totally exclude all conduct of the profession of law . . . Nevertheless, we have declined to hold that every provision of CUTPA permits regulation of every aspect of the practice of law . . . We have stated, instead, that, only the entrepreneurial aspects of the practice of law are covered by CUTPA . . . Accordingly . . . we conclude that professional negligence — that is, malpractice — does not fall under CUTPA. Our CUTPA cases illustrate that the 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." (Citations omitted; internal quotation marks omitted.) Suffield Development Associates, Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 781, 802 A.2d 44 (2002).
"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. See Haynes v. Yale-New Haven Hospital, 243 Conn. 17, 34-38, 699 A.2d 964 (1997) (reasoning that practice of law and medicine may give rise to CUTPA claims only for entrepreneurial aspects, such as solicitation of business and billing, and not for claims involving issues of competence and strategy). 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." Id., 782. Furthermore, the court rejected the argument that when an attorney intends to profit from intentional misconduct, the misconduct then becomes entrepreneurial. Id. 782-83. "Many decisions made by attorneys eventually involve personal profit as a factor, but are not considered part of the entrepreneurial aspect of practicing law . . . Using an attorneys 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." Id., 783.
Finally the Supreme Court stated, "our justification for exempting negligent malpractice from CUTPA claims — that liability would have a chilling effect on lawyers' duty of robust representation — applies equally to intentional misconduct." Id. 783-84. "Providing a private cause of action under CUTPA to a supposedly aggrieved party for the actions of his or her opponent's attorney would stand the attorney-client relationship on its head and would compromise an attorney's duty of undivided loyalty to his or her client and thwart the exercise of the attorney's independent professional judgment on his or her client's behalf . . . By shielding attorneys from CUTPA liability for professional conduct, we do not intend to protect intentional malpractice, just as we never have intended to protect negligent malpractice. Rather, protecting professional conduct from CUTPA liability ensures that no attorney is discouraged from intentional and aggressive actions, believed to be in the interest of a client, by fear of being held liable under CUTPA in the event that the action is later deemed to have been an intentional deviation from the standards of professional conduct. [W]e must . . . take care not to adopt rules which will have a chilling and inhibitory effect on would-be litigants of justiciable issues . . . [We seek] to avoid any rule that would interfere with the attorney's primary duty of robust representation of the interests of his or her client." (Citation omitted; internal quotation marks omitted.) Id., 783-84.
"Thus, the dispositive issue for this court to consider is whether the allegations of the complaint implicate the entrepreneurial or representational aspects of the defendant's legal practice." Tracey v. Still, Superior Court, judicial district of Ansonia-Milford at Derby, Docket No. CV 05 4001883 (March 23, 2006 Stevens, J.) (41 Conn. L. Rptr. 101, 103). The court in Tracey v. Still, supra, 103, noted, "where the complaint concerns issues involving the heart of representation such as competence, strategy or duty, the conduct is not within the scope of CUTPA." In Beverly Hills Concepts, Inc. v. Schatz Schatz, Ribicoff Kotkin, 247 Conn. 48, 51-54, 79, 717 A.2d 724 (1998), the Supreme Court found that the attorney's conduct was not within the scope of CUTPA when it involved a failure to act in the course of providing legal services, which included the failure to file necessary papers for a commercial client to legally operate its business in Connecticut.
Similarly, in DePrimo v. Chiarelli, Superior Court, judicial district of New Haven, Docket No. CV 01 0454691 (February 9, 2004, Zoarski, J.T.R.), the attorney's conduct fell within the scope of the representational aspects of the practice of law when his conduct and the conduct of his firm included: fraudulently inducing their client to sign an appearance form: filing an appearance form against his express wishes and explicit instructions; refusing to represent him in a custody case without an additional fee; terminating their representation of him without his permission or consent; and filing two unethical, oppressive or unscrupulous lawsuits against him. In Salzano v. Goulet, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 04 0287567 (April 18, 2005, Wiese, J.) (39 Conn. L. Rptr. 166, 167-70), an attorney and his law office's alleged conduct were not within the scope of the entrepreneurial aspect of the practice of law when their alleged conduct stemmed from either their failure to inquire into the zoning status of a parcel of land or any conclusions drawn by them after any such inquiry.
Furthermore, "[a] failure to disclose can be deceptive, for purposes of establishing a CUTPA violation, only if, in light of all the surrounding circumstances, there is a duty to disclose. Kenney v. Healey Ford-Lincoln-Mercury, Inc., 53 Conn.App. 327, [330], 730 A.2d 115 (1999). The threshold question raised by the allegations . . . is therefore where, if at all, does such a duty arise? If . . . it arises from the parties' existing or impending attorney-client relationship and the fiduciary duties associated therewith, then the plaintiff's claimed breach of that duty, even if duly proven, would be a classic instance of legal malpractice, which cannot, as aforesaid, be relied upon as the basis for a CUTPA claim." David M. Somers Associates, P.C. v. Busch, Superior Court, judicial district of Hartford, Docket No. CV 03 0822125 (April 10, 2006, Sheldon, J.) (41 Conn. L. Rptr. 332, 347). Further, "it is generally true that a party to a business transaction cannot be found to have violated any legal duty in connection with that transaction simply because he does not volunteer information to another party to the transaction." Id.
Finally, in Papazahariou v. Malik, Superior Court, judicial district of Fairfield, Docket No. CV 06 5005806 (August 21, 2007, Gilardi, J.), the complaint alleged in part that the attorney made certain representations to the plaintiff in order to induce him to execute closing documents, that the attorney fraudulently executed those documents and that the attorney failed to provide him with adequate legal representation. The court found that these allegations did not in any way involve the entrepreneurial aspect of practicing law and are focused entirely on the attorney's alleged negligent and fraudulent acts and omissions regarding his competence and legal strategies. See id.
On the other hand, cases involving the solicitation of clients, the hiring of the attorney and the billing and collection of the attorneys fees were found to pertain to the entrepreneurial aspects of the practice of law. See Tracey v. Still, supra, 41 Conn. L. Rptr. 103-04 (finding attorney's deceptive solicitation of the client's business does not involve professional competence, legal strategy or ethical behavior in the actual representation of the plaintiffs); See also Anderson v. Schoenhorn, 89 Conn.App. 666, 674, 874 A.2d 798 (2005) (challenge to the content of a fee agreement and a firm's billing practices arguably fall within the ambit of CUTPA); Stevenson v. McMillan, Superior Court, judicial district of Fairfield, Docket No. CV 04 0409731 (February 24, 2005, Skolnick, J.) (38 Conn. L. Rptr. 788, 789) (attorney's misrepresentations to client about the size of his firm and his areas of expertise supported a CUTPA cause of action); Nosik v. Bowman, Superior Court, judicial district of Fairfield, Docket No. CV 00 0379089 (July 12, 2002 Doherty, J.) (same); Roemmele v. Law Offices of John Haymond, Superior Court, judicial district of New London, Docket No. CV 98 0547182 (May 4, 1999, Harley, J.) (24 Conn. L. Rptr. 441, 442) (attorney's alleged conduct in agreeing to file suit on behalf of its client and then reneging on that promise pertained to the entrepreneurial aspects of the practice of law).
Additionally, in Grazioli v. Nichols, Superior Court, judicial district of New Haven, Docket No. CV 06 5001604 (June 19, 2007, Cosgrove, J.), the plaintiffs alleged that the attorney misused his position as their attorney to entice their participation in a real estate business venture in which the attorney would personally participate. The attorney's contributions to the capitalization of the business venture included his provision of legal services to the business entity. See id. While the court noted that the complaint contained allegations of legal malpractice, it found that the transactions alleged involved a complicated transaction in which the attorney provided legal services and also participated in an entrepreneurial or commercial transaction. See id. Therefore, the court found that the complaint stated sufficient facts to sustain a cause of action under CUTPA. See id.
First, this court addresses the defendant's argument that the plaintiff has failed to state a legally cognizable claim for violation of CUTPA because the plaintiff was not his client. The plaintiff's complaint states: "The closing was conducted by defendant Kinney, to whom the plaintiff paid $900.00 in lawyer's fees at the time of closing. Kinney had a duty and obligation to explain the transaction to the plaintiff and to protect her interests. If defendant Kinney was not representing the plaintiff at the closing, this fact was not disclosed to her." Plaintiff's Second Revised Complaint, #130, ¶ 19. The complaint later states, however, that: "At the closing described above, Kinney functioned as the attorney for an entity other than the plaintiff." Id., Count Four, ¶ 23. There is ambiguity as to whether the plaintiff is alleging that she was the defendant's client at the closing. Therefore, viewed in a light most favorable to the plaintiff, count four of the complaint is not vulnerable to a motion to strike on this issue.
The plaintiff's complaint also states: "In the course of the transactions alleged above, Kinney engaged in numerous unfair and deceptive practices, including, but not necessarily limited to, one or more of the following: he failed to disclose to the plaintiff that he was not acting as her attorney under circumstances where she could reasonably believe that he functioned in that capacity; he allowed or permitted Guzman to act as the conduit for information to the plaintiff, when he knew or should have known that Guzman did not have the professional qualifications to do so; he allowed or permitted Guzman to act as the conduit for information to the plaintiff, when he knew or should have known that Guzman, as a matter of business practice, was engaged in a pattern and practice of misleading consumers such as the plaintiff; he overcharged the plaintiff for title insurance; he paid Guzman both a real estate commission and a broker's fee when he knew or should have known that Guzman was not entitled to such fees." Plaintiff's Second Revised Complaint, #130, ¶ 24.
The plaintiff's allegations against Guzman are, in essence, that he prepared a credit application to allow for her purchase of the property located at 31 Pine Street in Waterford, Connecticut, which contained false information about her income. See Plaintiff's Second Revised Complaint, #130, ¶ 16.
These allegations implicate the representational aspects of the defendant's legal practice. The allegations of the plaintiff's complaint are, in essence, that the defendant engaged in misrepresentation and also, failed to disclose certain information to her at the closing. While, this conduct raises questions regarding the defendant's professional competence, legal strategy or ethical behavior, it is not within the scope of the entrepreneurial aspect of the defendant's practice of law. There are no allegations that the defendant deceptively solicited the plaintiff as a client or even that the plaintiff hired the defendant to represent her at the closing following the defendant's intentional misrepresentations that he was competent to do so. Furthermore, the fact that the defendant profited from his participation in the closing does not make his conduct entrepreneurial. The plaintiff does not base her CUTPA claim on allegations that the defendant's fee was improperly determined, billed or collected. Finally, this action is distinguishable from Grazioli v. Nichols, supra, where the attorney provided legal services and also participated in an entrepreneurial or commercial transaction.
Conclusion
The motion to strike the fourth count of the plaintiff's second revised complaint, alleging violation of CUTPA, is hereby granted. Because the plaintiff's CUTPA claim fails, the plaintiff's prayer for attorneys fees pursuant to § 42-110g(d) is also stricken.