Opinion
No. CV 05 5002481
October 6, 2006
MEMORANDUM OF DECISION RE MOTION TO STRIKE ( # 108)
In this twenty-count complaint against the defendants, Mark Giosa, Equis Corporation, Southern New England Telephone Company (SNET), and SBC Services, Inc., the plaintiff Helmar Wolf, alleges that he desired to purchase two parcels of land from the defendants and was engaged in a competitive bidding process to do so. The plaintiff alleges, however, that the bidding process was a sham in that the defendants misrepresented that the property was open for purchase because while the defendants were actively negotiating with the plaintiff they already had a buyer for the property and sold the property to that buyer at a price lower than what the plaintiff had offered.
In his complaint the plaintiff alleges that on January 6, 2003, Mark Giosa and Equis were instructed to work with the plaintiff's legal counsel to negotiate the purchase of the parcels. On March 10, 2003, the plaintiff bid $376,000 on the parcels. Two days later Giosa, drafted a letter to the plaintiff requesting a "last and best" offer. On March 17, 2003, the plaintiff submitted a bid of $380,000 or $396,000 if the defendants would agree to terms submitted with a previous bid. Three days later, Giosa informed the plaintiff that the parcels were to be sold to a third party. Notwithstanding this letter, on April 3, 2003, Donald McGregor, the chief financial officer for SNET, agreed to sell the property to the plaintiff provided that the plaintiff's bid was $1 more than the highest offer. The plaintiff orally accepted these terms. Nevertheless, the parcels were sold to a third party and on October 17, 2003, the Connecticut Department of Public Utility Control approved the sale of the parcels for $375,000 or $5,000 less than the plaintiff's bid.
The defendants move to strike the complaint in its entirety on the ground that the action is barred by the statute of frauds because there is no written agreement for the purchase of the parcels. The plaintiff concedes that there is no written agreement, but characterizes his action as one sounding in tort rather than contract law, specifically the torts of fraud, fraudulent misrepresentation, negligent misrepresentation, Connecticut Unfair Trade Practices Act (CUTPA) violations, and detrimental reliance against each of the defendants. The plaintiff does not seek enforcement of the contract, but rather damages for the allegedly tortious conduct.
"The defense of the statute of frauds may be raised by a motion to strike." (Internal quotation marks omitted.) Terracino v. Platano, Superior Court, judicial district of Danbury, Docket No. CV 01 0341944 (September 25, 2001, Holden, J.) ( 30 Conn. L. Rptr. 424). Mars Electric v. Wooster Par, Superior Court, judicial district of Danbury, Docket No. CV 04 4000373 (January 28, 2005, Bellis, J.) ( 38 Conn. L. Rptr. 545). "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 at Bridgeport, Docket No. CV 040410421 (August 25, 2004, Dewey, J.). "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 quotations omitted.) Commissioner of Labor v. C.J.M. Services, Inc., 268 Conn. 283, 292, 842 A.2d 1124 (2004).
The defendant's claim that the plaintiff cannot avoid the bar of the Statute of Frauds by labeling its causes of action torts. The defendants rely primarily on two Connecticut cases: Foster Road Associates v. NJM Realty Limited Partnership, Superior Court, judicial district of Hartford, Docket No. CV 940533485 (September 13, 1996, Aurigemma, J.) ( 17 Conn. L. Rptr. 616) and Mars Electric v. Wooster Par, supra, Superior Court, Docket No. CV 044000373.
Foster Road Associates also involved the sale of land through a competitive bidding process. In that case, the defendant agreed to sell property to whoever submitted the highest bid by 5:00 p.m. Instead, the defendant sold the property to a bidder whose submission, albeit the highest, was received after the deadline. The court treated the action as a breach of contract even though the defendant claimed that there was a misrepresentation. In so holding, the court reasoned that "the plaintiff cannot avoid the bar of the Statute of Frauds by labeling the cause of action as one to recover damages for fraud where, as here, proof of a contract, void under the Statute of Frauds, is essential to maintain the action." (Internal quotation marks omitted.) Id. The court, however, further provided that "[o]ne can envision a set of facts in which a plaintiff might state a valid cause of action for negligent misrepresentation where it took actions in reliance on a seller's representations." Id.
In Mars Electric, the plaintiff signed a contract, prepared by the defendant, for the purchase of the defendant's land. The defendant, although verbally agreeing to the purchase, failed to sign the contract and instead sold the property to a third party. The Mars Electric court relied, in part, on Foster Road Associates in granting the defendant's motion to strike the plaintiff's promissory estoppel, inducement of reliance and misrepresentation counts. The court found that the tort counts were "founded on the allegation that [the defendant] breached an oral agreement for the sale of real property." Id. The Mars Electric court was persuaded by the argument that the text of the statute of frauds precludes tort recovery because "§ 52-550 is not limited to actions for `breach of contract,' but rather provides that `no civil action' shall be maintained upon an oral agreement to sell real estate." Id. The defendants herein likewise argue that the "no civil action" portion of the statute means that all claims against the defendants should be stricken.
General Statutes § 52-550 provides that "[n]o civil action may be maintained . . . unless the agreement . . . is made in writing and signed by the party . . . upon any agreement for the sale of real property or any interest in or concerning real property . . ." (Emphasis added).
The plaintiffs rely on Terracino v. Platano, Superior Court, judicial district of Danbury, Docket No. CV01 0341944 (September 25, 2001, Holden, J.) which addressed the issue of whether a plaintiff may recover tort remedies for fraud when the statute of frauds denies the plaintiff a remedy under contract law. The court acknowledged that the parties' agreement was one "for the sale of real property that falls squarely within category (a)(4) of General Statutes § 52-550." Id. The court, however, reasoned that "[s]trict adherence to the language of § 52-550(a)(4), which provides that no civil action may be maintained upon an agreement for the sale of property in the absence of a writing, would foreclose any remedy to Terracino, even if the defendants perpetrated a fraud. It is a fundamental tenet of jurisprudence in Connecticut, however, that the statute of frauds cannot itself be allowed to serve as an engine of fraud . . . [S]everal authorities illuminate the issue. First is Reed v. Copeland, 50 Conn. 472, 47 A. 663 (1883), in which the court stated that `[i]t is the accepted construction of [the statute of frauds] in courts of equity that, inasmuch as its design was to furnish protection against fraud, a party cannot take shelter behind its provisions, and thereby perpetrate a fraud on the other party, either actual or constructive.' Id., 491. Another is Wittstein v. Keenan, 17 Conn.Sup. 163 (1951), in which the court held that the statute of frauds was not a bar to an action to recover the plaintiff's deposit, where the defendant fraudulently misrepresented an unwritten, but material, element of their agreement. Id., 165. Indeed, the authors of Connecticut Law of Torts cite Wittstein for the following proposition: `Occasions may arise where the contract remedy will not be enforceable due to the Statute of Frauds whereas the tort remedy of fraud and deceit might be applicable. D. Wright, J. Fitzgerald W. Ankerman, Connecticut Law of Torts (3d Ed. 1991) 8134, p. 389.' (Citations omitted.)" Terracino v. Platano, supra, Superior Court, Docket No. CV 01 0341944.
This court agrees with Terracino and Foster Road Associates that there may by occasions where the Statute of Frauds does not foreclose a plaintiff from seeking remedy for tortious conduct such as fraud and misrepresentation; this, however, is not such an occasion. This case is akin to Foster Road Associates, which did not survive a motion to strike, and it is distinguishable from Terracino, which did survive a motion to strike. Here, the alleged misrepresentations and the alleged injury and loss claimed by the plaintiff arise from and relate to the bidding process, to a promise to convey the property to the bidder making the best offer and/or to a promise to convey the property for $1.00 more than the highest bidder — similar to representation in Foster Road Associates. Whereas in Terracino, the alleged promises relate to a business transaction by which defendant had an independent duty to inform the plaintiff that he himself had purchased the property at issue and which he subsequently conveyed to a third party.
The plaintiff variously claims an "ascertainable loss of money" and "damages in that he had to forego other business opportunities and he expended considerable sums of money preparing to purchase the property."
As set forth in the court's decision, plaintiff Terracino alleged that he had a contract to purchase real property with the defendant Platano, and that Platano and the co-defendant, United Property Holdings, LLC, fraudulently deprived Terracino of the property. Terracino was a co-guarantor on a note, secured by a mortgage on the property. Robert Rossman was Terracino's co-guarantor. Terracino and Rossman engaged Platano to represent them in purchasing the property and to provide them with the funds to purchase the property. Platano was to purchase the property, and convey it to Terracino and Rossman in exchange for their payment of fees for Platano's services. Platano purchased the property for $83,000, and a few months later Platano sold the property for $83,000 to United Property Holdings, LLC, a limited liability corporation controlled by Robert Rossman's wife and another individual. Platano did not inform Terracino either that he purchased the property, or that he conveyed it to United Property Holdings, LLC. Terracino v. Platano, supra, Superior Court, Docket No. CV 01 0341944.
The motion to strike on the ground that the complaint is barred by the Statute of Frauds is granted.