LLC v. Gary Soracchi (2010)

MEMORANDUM OF DECISION

The plaintiff, Flannery Flickey, LLC, filed a two-count complaint against the defendant, Gary Soracchi.   In the first count, which sounds in breach of contract, the plaintiff alleges that on May 2, 2009, it leased a “bobcat” tractor to the defendant which was damaged by the defendant and that the defendant paid for the repairs and recovery of it.   The second count alleges the destruction of the tractor by the defendant.   A copy of the subject contract is attached to the complaint.   That contract, in addition to the substantive provisions, includes numerous boilerplate terms and conditions printed in fine print beginning at the bottom of the contract and continuing for a full page on the reverse side.   The plaintiff requests money damages, attorneys fees and costs, and such other relief as the court deems appropriate.

In his answer, the defendant admitted that he entered into an agreement with the plaintiff, but denies the remaining allegations.   He has also pled three special defenses:  that the tractor failed to operate properly, resulting in a failure of consideration;  that the contract was void ab initio because the plaintiff failed to deliver a tractor in operating condition;  and that several of the boilerplate terms and conditions of the contract are unconscionable because they are penal, unfair, printed in fine print and were never described to the defendant.   In his counterclaim, the defendant alleges that the provisions of the lease concerning default, noncancelability, risk of loss or damage and equipment repair violate the Connecticut Unfair Trade Practices Act (CUTPA), because they are unconscionable, they are written in fine print and were not described to him prior to entering into the lease, they are penal and unfair, and that such terms are immoral, unethical and unscrupulous.   He further alleges that, as a result of the plaintiff's wrongful actions, he suffered losses in the expense of attorneys fees and costs to defend this action.   He requests monetary damages, punitive damages, attorneys fees, costs and such other relief as the court deems appropriate.

The plaintiff filed a motion to strike the defendant's special defenses and counterclaim along with a memorandum of law in support of the motion.¹  The defendant filed a memorandum of law in opposition, and the court heard the matter at the short calendar on November 30, 2009.

“A motion to strike challenges the legal sufficiency of a pleading ․ and, consequently, requires no factual findings by the trial court.”  (Internal quotation marks omitted.)  Batte-Holmgren v. Commissioner of Public Health, 281 Conn. 277, 294, 914 A.2d 996 (2007).  “[A] plaintiff can [move to strike] a special defense or counterclaim.”  Nowak v. Nowak, 175 Conn. 112, 116, 394 A.2d 716 (1978).  “[F]or the purpose of a motion to strike, the moving party admits all facts well pleaded.”  RK Constructors, Inc. v. Fusco Corp., 231 Conn. 381, 383 n.2, 650 A.2d 153 (1994).   Accordingly, “[i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied.”  (Eternal quotation marks omitted.)  Batte-Holmgren v. Commissioner of Public Health, supra, 294.   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).  “Moreover ․ [w]hat is necessarily implied [in an allegation] need not be expressly alleged ․ 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 ․ Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically.”   (Internal quotation marks omitted.)  Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006).   Additionally, “[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).

The plaintiff argues that the court should sustain its motion for the following reasons.   First, the defendant failed to plead sufficient facts to sustain his special defenses.   Second, the facts alleged in the counterclaim are insufficient to satisfy the requirements of a CUTPA claim.   The defendant counters that the court should overrule the plaintiff's motion because, read in a light most favorable to him, he pled sufficient facts to support his special defenses.   Furthermore, he argues that the inclusion of unconscionable terms or unenforceable penalties in a contract are sufficient to sustain a CUTPA claim.

The court first addresses the defenses' special defenses.  “The purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action.”  (Internal quotation marks omitted.)  LaSalle National Bank v. Shook, 67 Conn.App. 93, 96, 787 A.2d 32 (2001).   Furthermore, a plaintiff is entitled to rely upon its complaint when seeking to strike a special defense because a valid special defense may only allege facts that are consistent with its complaint.   Eastern Account Systems, Inc. v. Southern New England Telephone Co., Superior Court, judicial district of Danbury, Docket No. CV 98 0332758 (May 7, 2001, Adams, J.) (29 Conn. L. Rptr. 717, 718).   Moreover, “[i]n ruling on a motion to strike, the court must accept as true the facts alleged in the special defenses and construe them in the manner most favorable to sustaining their legal sufficiency.”  Barasso v. Rear Still Hill Road, LLC, 64 Conn.App. 9, 13, 779 A.2d 198 (2001).

“The doctrine of consideration is fundamental in the law of contracts, the general rule being that in the absence of consideration an executory promise is unenforceable.”  (Internal quotation marks omitted.)  Russell v. Russell, 91 Conn.App. 619, 640, 882 A.2d 98, cert. denied, 276 Conn. 924, 888 A.2d 92 (2005).   Furthermore, “[f]ailure of consideration is a legally sufficient special defense to an action for breach of contract.”   Midlantic National Bank v. Clack-Blye, Superior Court, judicial district of Danbury, Docket No. 315210 (April 3, 1995, Leheny, J.).   Still, “[i]n the context of valid consideration for an equipment lease agreement, no clear law is available on whether an equipment lease agreement is invalid for lack of consideration if the product leased is ultimately defective.”   Colony Diner Restaurant, LLC v. Capital Innovations, Inc., Superior Court, judicial district of New Haven, Docket No. CV 06 5003796 (February 13, 2007, Thompson, J.) [42 Conn. L. Rptr. 909].   On the other hand, “[t]his court knows of no authority to the effect that if a lessor delivers a useless product to a lessee the lessor will generally be absolved of the defense of failure of consideration.”   Pitney Bowes Credit Corp. v. Barry, Superior Court, judicial district of Tolland, Docket No. CV 97 63624 (December 8, 1997, Sullivan, J.).

The plaintiff argues that the defendant's defense of failure of consideration is both legally and factually insufficient.   Specifically, the plaintiff contends that it delivered a fully operable tractor to the defendant, that the defendant did not make a timely rejection of the tractor and that the tractor was damaged and failed to perform only after being in the defendant's possession.   Consequently, the plaintiff further argues, it performed its obligations under the rental agreement, and, as a result, the court should strike the defendant's first special defense.   The defendant counters that, read in a light most favorable to him, he has sufficiently pled a defense of failure of consideration because he specifically alleged that the tractor did not operate properly or perform in the manner for which it was intended.   Furthermore, he argues that an equipment lease agreement is invalid for lack of consideration if the product leased is defective.

In its breach of contract count, the plaintiff alleges that it leased the tractor to the defendant and that he damaged the machine either intentionally, recklessly or negligently.   In contrast, the defendant alleges in his first special defense that the “leased equipment ․ did not operate properly or perform in the manner for which it was intended, therefore resulting in failure of consideration.”   This pleading is more than a mere conclusion of law because it specifically alleges the tractor failed to operate properly, which, construed in a manner most favorable to the defendant, implies that the plaintiff delivered a useless product to Soracchi.   Furthermore, it is consistent with the allegations in the complaint because it does not deny the existence of the lease.   Cf. Chesire Service, LLC v. Arbor Glen Ass'n., Superior Court, judicial district of New Haven, Docket No. CV 05 5004501 (April 18, 2007, Corradino, J.) (special defense pleaded facts inconsistent with complaint's contract allegations because it denied existence of viable contract).   Therefore, the defendant has sufficiently alleged facts that, if proven, would support a defense of failure of consideration.

The plaintiff points to the terms of the lease, which specify that the “[r]enter has examined the [e]quipment ․ and [r]enter declares that he has received all such [e]quipment in a secure and operative condition,” and notes that the defendant accepted delivery of the tractor with no objection.   The defendant alleges, however, that the tractor failed to operate properly or perform in the manner for which it was intended.   Construed broadly in a manner most favorable to him, these allegations imply that a latent defect may have caused the tractor to fail, which would render this contract provision unenforceable.   Cf. Torrance v. Dorisol, Inc., 20 Conn.Sup. 62, 66, 122 A.2d 589 (1956) (contract stipulation specifying that plaintiff must notify defendant of defect within ten days not binding if defect is latent and not readily discoverable on inspection but only upon use).   Furthermore, the thrust of the plaintiff's argument, that it fully performed its obligations under the lease and that the defendant failed to timely reject the tractor, relies on disputed facts that are best resolved by a trier of fact rather than by a motion to strike.   Midlantic National Bank v. Clack-Blye, Superior Court, judicial district of Danbury, Docket No. 315210, (April 3, 1995, Leheny, J.) (focus of motion to strike is on legal sufficiency, not on whether defendant will prevail at trial on his special defense).

Accordingly, the court sustains the defendant's objection and denies the motion to strike the first special defense.

Turning to the defendant's claim that the contract is void ab initio, failure of consideration renders a contract void ab initio.   Ford Motor Credit Co. v. Pelletier, Superior Court, judicial district of Hartford, Docket No. CV 95 0548599 (April 14, 1997, Mulcahy, J.).   The plaintiff, however, argues that the contract it entered into with the defendant cannot be rendered void ab initio because the defendant failed to plead any facts that the tractor was inoperable.   Furthermore, he pleaded no allegations of mistake, duress or fraud that would negate the contract formation.   Therefore, the plaintiff contends that the court should strike the defendant's second special defense.   The defendant counters that he sufficiently pled that the contract was void ab initio because he alleged that the plaintiff did not deliver the tractor in operable condition.   He further argues that, although similar to the allegations in his first special defense, void ab initio is a separate and distinct special defense and therefore the court should sustain his objection and refuse to strike his second special defense.

In Pitney Bowes Credit Corp. v. Barry, supra, Docket No. CV 97 63624 (December 8, 1997, Sullivan, J.), the plaintiff sued the defendant because the defendant defaulted on an equipment lease agreement.   The defendant responded by way of special defenses that alleged, inter alia, that the equipment failed to operate properly, resulting in a failure of consideration, and that the contract was void ab initio because the plaintiff failed to deliver the equipment in operable condition.   In overruling the plaintiff's motion, the court observed that “[t]he (defendant's] special defense claims that the lease is void ab initio because the plaintiff failed to deliver the leased equipment in operating condition.   Such defense is allied to the first special defense, failure of consideration, and may in some aspects be redundant.   However, redundancy would not be a proper ground for a motion to strike.”  Id.

Here, the defendant alleges in his second special defense that “[t]he lease is void ab initio because the [plaintiff] failed to deliver the leased equipment in operating condition.”   As in Pitney, Soracchi's second special defense, void ab initio, is closely allied to his first special defense, failure of consideration, because both essentially allege that the tractor failed to operate properly.   Therefore, the defendant's objection is sustained.   The defendant has sufficiently alleged facts that, if proven, would support a defense of void ab initio.

The court now addressed the defendant's claim that the conditions of the contract are unconscionable.  “The purpose of the doctrine of unconscionability is to prevent oppression and unfair surprise ․ Unconscionability is a question of law to be determined by the court in light of all the facts and circumstances of the case ․ The Uniform Commercial Code, as adapted by Connecticut courts, contains a basic test for examining a claim of unconscionability.   That test is whether, in light of the general commercial background and the commercial needs of the particular trade ․ the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract.”  (Citations omitted;  internal quotation marks omitted.)  Edart Truck Rental Corp. v. B. Swirsky & Co., 23 Conn.App. 137, 142, 579 A.2d 133 (1990).   Furthermore, “[t]he party unconscionability bears the burden of proof ․ [and] the defendant's mere assertion of unconscionability ․ is insufficient to establish the special defense.   The fact that a party to a contract comes to regret one of its provisions does not render the contract unconscionable.”  (Citation omitted;  internal quotation marks omitted.)  New England Retail Properties, Inc. v. Maturo, 102 Conn.App. 476, 490, 925 A.2d 1151, cert. denied, 284 Conn. 912, 931 A.2d 932 (2007).

To sufficiently plead the special defense of unconscionability, the defendant must allege that the objectionable terms were both procedurally and substantively unconscionable.   Our Supreme Court has stated that “[t]he doctrine of unconscionability, as a defense to contract enforcement, generally requires a showing that the contract was both procedurally and substantively unconscionable when made [such as] some showing of an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party ․” (Internal quotation marks omitted.)  Bender v. Bender, 292 Conn. 696, 732, 975 A.2d 636 (2009).   Moreover, “[s]ubstantive unconscionability focuses on the content of the contract, as distinguished from procedural unconscionability, which focuses on the process by which the allegedly offensive terms found their way into the agreement.”  (Internal quotation marks omitted.)  Cheshire Mortgage Service, Inc. v. Montes, 223 Conn. 80, 87 n.14, 612 A.2d 1130 (1992).   Furthermore, “[i]f the substantive provisions of a contract are hidden in a maze of fine print, if no effort is made to alert the other party directly to the existence of the provisions, and if the parties had unequal bargaining power, a claim of unconscionability might be viable.”  (Emphasis added.)  Edart Truck Rental Corp. v. B. Swirsky & Co., supra, 143.

Here, the plaintiff argues that the contract is not unconscionable because the defendant failed to plead facts that show that the contract was both procedurally and substantively unconscionable.   Specifically, the plaintiff argues that the defendant failed to allege that he had no meaningful choice in renting the tractor from the defendant, that there was any fraud or overreaching by the plaintiff, that there was disproportionate bargaining power between the parties, or that the defendant was not experienced or sophisticated in the handling of his business affairs.   The defendant counters that he pleaded sufficient allegations to support his defense of unconscionability.   Specifically, he argues that the provisions of the lease regarding default, noncancelability, risk of loss or damage and equipment repair are penal and unfair.   Furthermore, he argues that the objectionable provisions are printed in fine print and were never described to him.

The defendant's third special defense states that “[t]he provisions of the lease concerning default, noncancelability, risk of loss or damage, equipment repair, are penal, unfair and unconscionable and are enumerated in print so small as to be nearly unreadable, and never described to the [d]efendant in any particularity.”   Construed in a manner most favorable to the defendant, these facts sufficiently allege that the objectionable terms are substantively unconscionable because the plaintiff failed to direct the defendant's attention to substantive terms written in unreadable fine print.   These facts do not sufficiently allege, however, that the contract formation was procedurally unconscionable because the defendant failed to allege that the parties had unequal bargaining power.   Accordingly, the motion to strike the defendant's third special defense is granted.

The court next addresses the defendant's counterclaim.  “[A] counterclaim is a cause of action existing in favor of the defendant against the plaintiff and on which the defendant might have secured affirmative relief had he sued the plaintiff in a separate action ․ A motion to strike tests the legal sufficiency of a cause of action and may properly be used to challenge the sufficiency of a counterclaim.”  (Citations omitted;  internal quotation marks omitted.)  Fairfield Lease Corp. v. Romano's Auto Service, 4 Conn.App. 495, 496, 495 A.2d 286 (1985).

General Statutes § 42-110b(a) provides:  “Unfair trade practices prohibited ․ No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”   The so-called “cigarette rule” defines what an unfair practice is:  “It 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-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 ․ 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 ․ Furthermore, a party need not prove an intent to deceive to prevail under CUTPA.”  (Internal quotation marks omitted.)  Keller v. Beckenstein, 117 Conn.App. 550, 565-66, 979 A.2d 1055, cert. denied, 294 Conn. 913, 979 A.2d 1055 (2009).

In addition, “[l]eases come within the provisions of the CUTPA ․ It is clear that an unconscionable rental would constitute an unfair trade practice if the lessee had unequal bargaining power.”  Murphy v. McNamara, 36 Conn.Sup. 183, 193 n.8, 416 A.2d 170 (1979).  “By unequal bargaining power, the court means that at the time the contract was made there was such an inequality of bargaining power ․ that the merchant could insist on the inclusion of unconscionable terms in the contract which were not justifiable on the grounds of commercial necessity.”  Id., 193-94.

The plaintiff argues that the facts alleged in the counterclaim are insufficient to satisfy the requirements of a CUTPA claim because they fail to satisfy the elements of the so-called “cigarette test.”   Specifically, it contends that the defendant's allegations fail to show that the plaintiff's conduct offends public policy, common law or statute.   Furthermore, it argues that the defendant failed to allege that his injury is substantial and that it is not outweighed by any countervailing benefits to the public.   The plaintiff also contends that none of its alleged actions have been prohibited as unfair.   The defendant counters that the court should overrule the plaintiff's motion because the inclusion of unconscionable terms or unenforceable penalties in a contract are sufficient to sustain a CUTPA claim.

The defendant alleges in his counterclaim that the “[t]he provisions of the lease concerning default, noncancelability, risk of loss or damage, equipment repair, are penal, unfair, and unconscionable ․ [and that] [t]he actions of [the][p]laintiff are immoral, unethical and unscrupulous and violate the provisions of [CUTPA].”   Even when construed broadly in a manner favorable to the defendant, these allegations are legally insufficient to sustain a CUTPA action for the following reasons.   First, his allegation that the objectionable provisions violate CUTPA because they are penal, unfair, unconscionable, immoral, unethical and unscrupulous is merely a conclusion of law unsupported by facts.   Second, his allegation that the contract provisions are unconscionable is legally insufficient because he failed to allege that the parties had unequal bargaining power.

Finally, the defendant alleges that “[t]he provisions of the lease ․ are enumerated in print so small as to be nearly unreadable, and were never described prior to entering [into] the lease.”   The Appellate Court's decision in Edart Truck Rental Corp. v. B. Swirsky & Co., supra, provides guidance on this issue.   In Edart, the defendant rented a truck from the plaintiff.   The defendant's driver signed, but failed to read, the plaintiff's rental agreement, which contained a provision allocating the risk of loss to the defendant printed in fine print on the reverse side.   After a judgment by the trial court entered in favor of the plaintiff, the defendant appealed, arguing, inter alia, that the trial court should have found that the small print format of the contract was a violation of CUTPA.   Although the Appellate Court observed that “[t]he plaintiff's rental agreement is very hard to read, and not designed to enlighten an unwary consumer,” id., 141, it nevertheless affirmed the trial court's decision, holding that the plaintiff's use of fine print did not amount to an unfair trade practice.  Id., 145.   As in Edart, the defendant alleges that the plaintiff failed to point out substantive provision of the lease printed in fine print on the reverse side of the contract.   This allegation is legally insufficient to sustain a CUTPA claim because the use of fine print in a contract is not an unfair trade practice.

Therefore, the motion to strike the defendant's CUTPA counterclaim is granted.

Accordingly, the plaintiff's motion to strike the defendant's third special defense and counterclaim is granted.   The plaintiff's motion to strike the defendant's first and second special defense is denied.

BURGDORF, J.

FOOTNOTES

FN1. It is noted that the plaintiff's motion to strike fails to comply with Practice Book § 10-41 because it does not specify the grounds for the claimed legal insufficiencies.  “Motions to strike that do not specify the grounds of insufficiency are fatally defective and, absent a waiver by the party opposing the motion, should not be granted ․ Our Supreme Court has stated that a motion to strike that does not specify the grounds of insufficiency is fatally defective ․ and that Practice Book § [10-42], which requires a motion to strike to be accompanied by an appropriate memorandum of law citing the legal authorities upon which the motion relies, does not dispense with the requirement of [Practice Book § 10-41] that the reasons for the claimed pleading deficiency be specified in the motion itself.”  (Internal quotation marks omitted.)  Stuart v. Freiberg, 102 Conn.App. 857, 861, 972 A.2d 343 (2007).   Nevertheless, the defendant failed to oppose the form of the plaintiff's motion to strike and, therefore, he waived the motion's noncompliance with § 10-41.   Id., 861-62.   See also Bouchard v. People's Bank, 219 Conn. 465, 468 n.4, 594 A.2d 1 (1991) (court will consider motion to strike that does not comply with § 10-41 if opposing party does not object to its form)..  FN1. It is noted that the plaintiff's motion to strike fails to comply with Practice Book § 10-41 because it does not specify the grounds for the claimed legal insufficiencies.  “Motions to strike that do not specify the grounds of insufficiency are fatally defective and, absent a waiver by the party opposing the motion, should not be granted ․ Our Supreme Court has stated that a motion to strike that does not specify the grounds of insufficiency is fatally defective ․ and that Practice Book § [10-42], which requires a motion to strike to be accompanied by an appropriate memorandum of law citing the legal authorities upon which the motion relies, does not dispense with the requirement of [Practice Book § 10-41] that the reasons for the claimed pleading deficiency be specified in the motion itself.”  (Internal quotation marks omitted.)  Stuart v. Freiberg, 102 Conn.App. 857, 861, 972 A.2d 343 (2007).   Nevertheless, the defendant failed to oppose the form of the plaintiff's motion to strike and, therefore, he waived the motion's noncompliance with § 10-41.   Id., 861-62.   See also Bouchard v. People's Bank, 219 Conn. 465, 468 n.4, 594 A.2d 1 (1991) (court will consider motion to strike that does not comply with § 10-41 if opposing party does not object to its form).

Burgdorff, Mary-Margaret D., J.