T.D. Bank, N.A. v. LLC (2010)

MEMORANDUM OF DECISION Re Plaintiff's Motion for Summary Judgment, # 197

I

PROCEDURAL HISTORY

By complaint filed June 24, 2008, the plaintiff brought a foreclosure action against the defendants Nutmeg Investments, LLC (Nutmeg) and Teresa Bennett (Bennett).   The defendants responded by filing several special defenses and six counterclaims.   Subsequently, the plaintiff withdrew the complaint.   However, the six counterclaims remained to be addressed including:  (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) negligent misrepresentation, (4) fraud, (5) civil conspiracy and (6) the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq.   Subsequently, the plaintiff filed a “counter-counterclaim” (# 173) seeking the recovery of attorneys fees for defending the action.

The plaintiff has filed a motion for summary judgment (# 197) claiming that there is no genuine issue of material fact as to each of the defendants' six counterclaims.   In support of its motion it has submitted an affidavit, copies of various loan documents, correspondence, and Nutmeg's operating agreement.   Defendants have filed a memorandum of law in opposition to the motion (# 228) and have submitted affidavits of their counsel and Teresa Bennett.   The plaintiff has filed a reply memorandum (# 236).   Oral argument was held before the court on July 22, 2010.

II

FACTS

In 2005, Nutmeg, LLC sought to develop residential housing on property in Prospect, Connecticut.   There were two members of the limited liability company, Deborah Beausoleil and Teresa Bennett.   Each held a fifty percent interest in the company.   They had joined forces as Bennett had twenty-two years of experience as a licensed real estate broker and Beausoleil's husband, Lawrence Beausoleil, was a builder and general contractor.  (Bennett Affidavit, ¶¶ 2, 5.) It was agreed that Deborah Beausoleil would be responsible for developing the Project (i.e., clearing the land, building the houses, etc.) and Teresa Bennett would be responsible for the finances and selling the houses.   (Bennett Affidavit, ¶¶ 5, 6.) Pursuant to a commitment letter dated June 15, 2005 and a Revolving Construction Loan Agreement dated November 17, 2005, as well as other loan documents, Nutmeg executed two promissory notes to the plaintiff secured by a mortgage against the property that it wished to develop.   The first was a $700,000 loan to acquire the land and the second was a $600,000 line of credit to finance the construction of new homes.   (Plaintiff's Affidavit, ¶¶ 17-30;  Exhibits 4, 6 and 9.) Teresa Bennett personally guaranteed both loans by virtue of a Guaranty Agreement also dated November 17, 2005.  (Plaintiff's Affidavit, ¶¶ 31-32;  Exhibit 8;  Bennett Affidavit ¶ 3.)

Initially, Bennett handled the finances of the company until she became ill in 2006 which prevented her from actively participating in the business.   The illness lasted into 2007 and because of it, Deborah Beausoleil took over the handling of the company's finances.  (Bennett Affidavit ¶ 6.)   During Bennett's period of illness, all bank statements and other financial correspondence from the plaintiff were forwarded directly to Deborah Beausoleil's home.  (Bennett Affidavit ¶ 12.)   Also, Deborah Beausoleil made repeated requests for advances to Nutmeg from plaintiff during this time making representations to the plaintiff, through herself and her husband, as to the status of the property so as to justify the advances.  (Plaintiff's Affidavit ¶¶ 43, 47.)   However, a significant amount of the monies advanced to Nutmeg were not used for the physical construction costs for the development of the property as represented.  (Plaintiff's Affidavit ¶¶ 43, 45;  Bennett Affidavit ¶ 10.)   Despite her illness, Bennett would periodically call the plaintiff to inquire as to the status of the development of the property and was assured each time that the project was on schedule.  (Bennett Affidavit, ¶ 12.)   The information relayed to Bennett by the plaintiff was based on the representations of the Beausoleils.  (Plaintiff's Affidavit ¶¶ 45, 47.)   The plaintiff did not independently verify this information to ensure that the funds being released would not exceed the ongoing and anticipated cost of construction.  (Lenes Affidavit ¶ 4, Exhibit C.) The funds were released by the plaintiff as requested although the form of the request was not in compliance with the terms of the loan agreement between the parties.  (Plaintiff's Affidavit ¶¶ 38, 39, 40;  Bennett Affidavit, ¶¶ 8, 9.) Despite plaintiff's assurances, Deborah Beausoleil had in fact used many of the funds for other purposes thereby putting the construction well behind schedule.  (Lenes Affidavit ¶ 4, Exhibit C.)

Upon the abatement of her illness and her renewed involvement in the company, Bennett learned that Beausoleil had not used the construction funds for their intended purpose, and so she immediately moved to retake financial control of the company.   By this time, the two loans on the property were near maturity (due May 17, 2007) and so on July 25, 2007, the company entered into the Mortgage Modification Agreement, coupled with the Guaranty Agreement signed by Bennett, so as to extend the maturity date of the loans to September 17, 2007.  (Plaintiff's Affidavit, ¶¶ 22, 29;  Exhibits 5, 7, 8;  Bennett Affidavit ¶ 14.)   Despite the extension, Nutmeg was unable to bring its loan obligations current and the plaintiff filed the foreclosure action referenced above with the resultant counterclaims.

III

ASTANDARD OF LAW

“Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party ․ The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law ․” (Internal quotation marks omitted.)  Weiss v. Weiss, 297 Conn. 446, 998 A.2d 766 (2010).   The non-movant also “is given the benefit of all favorable inferences that can be drawn.”  (Internal quotation marks omitted.)  Catz v. Rubenstein, 201 Conn. 39, 49, 513 A.2d 98 (1986).

“Once the moving party has presented evidence in support of the motion for summary judgment, the opposing party must present evidence that demonstrates the existence of some disputed factual issue ․ It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue.   Mere assertions of fact ․ are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court ․” (Internal quotation marks omitted.)  Byrne v. Burke, 112 Conn.App. 262, 267-68, 962 A.2d 825, cert. denied, 290 Conn. 923, 966 A.2d 235 (2009).

Each party has submitted various documents in support of their position.   The plaintiff has submitted, copies of an affidavit of Fred Casale, vice-president of the plaintiff, as well as Exhibits 1-9 consisting of the operating agreement of Nutmeg, LLC, letters from the plaintiff to Lawrence Beausoleil, a letter from Deborah Beausoleil to the plaintiff, faxes from the plaintiff to Bennett, the Revolving Construction Loan Agreement dated November 17, 2005, Commercial Mortgage Promissory Note dated November 17, 2005 in the amount of $700,000, the July 25, 2007 allonge to that note;  the July 25, 2007 allonge to the $600,000 promissory note, the Guaranty Agreement dated November 17, 2005, the November 17, 2005 mortgage deed securing both notes with copies of the notes appended, and though not separately designated as an exhibit, the Modification Agreement of Note, Mortgage and Secured Instruments.¹  The defendants have submitted affidavits from Teresa Bennett and attorney James A. Lenes, along with copies of fax requests for advances, deposition transcripts of Christopher Rallo, the bank's loan officer and Lawrence Beausoleil, as well as a letter to, and e-mail from, Christopher Rallo, photos of the project, and a breakdown of expenses.   See defendants' Exhibits A-D.

B

WAIVER OF COUNTERCLAIM

In addressing the counterclaims of the defendants, the plaintiff argues that they cannot prevail for purposes of this motion as they have waived their right to bring any counterclaims.   Specifically, plaintiff points to their execution of the Mortgage Modification Agreement to Note, Mortgage and Secured Instruments dated July 25, 2007.   That document was executed by Bennett both as a duly authorized manager of Nutmeg and as an individual guarantor.   Paragraph 4 of the agreement states that “Borrower and Guarantor represent and warrant that there are no defenses, offsets or counterclaims against the Notes, Guaranty, or Secured Instruments and that there are no defaults under the Notes, Guaranty or the Secured Instruments, and no event has occurred which would be a default under the Notes, Guaranty or the Secured Instruments with the passage of time, giving of notice or both.”   Further, Paragraph 6 stated that “[e]xcept as herein specifically modified, all provisions of the original Notes, Guaranty or the Secured Instruments, shall remain in full force and effect including all the rights and remedies reserved to the holder in the event of any default.”   Moreover, the Guaranty Agreement signed by Bennett on November 17, 2005, clearly stated the “Guarantor hereby waives any right of indemnity, reimbursement, contribution, or subrogation arising as a result of payment by Guarantor hereunder, and will not prove any claim in competition with Bank in respect of any payment hereunder in bankruptcy or insolvency proceedings of any nature.   Guarantor will not claim any set-off or counterclaim against Borrower in respect of any liability of Guarantor to Borrower.   Guarantor waives any benefit of any right to participate in any collateral which may be held by Bank.”

With respect to waiver, “[a] contract provision seeking to limit a party's liability must be narrowly construed and will not exculpate intentional or bad faith conduct.”   New London County Mutual Insurance v. Nissan North America, Inc., Superior Court, judicial district of Waterbury, Docket No. CV 02 4003594 (April 23, 2007, Eveleigh, J.).  “While a determination about a party's intent to waive his rights ordinarily poses a question of fact, clear and definitive contract language can establish waiver as a matter of law.”  Connecticut National Bank v. Douglas, 221 Conn. 530, 545, 606 A.2d 684 (1992).  “It is not illegal for a party to have a contract to limit his liability in damages for non-performance of his promises, although such a provision is not effective in case he acts fraudulently or in bad faith.”   A. Corbin, Contracts, Section 85.18 (2003).   With respect to tort claims, The Second Restatement of Contracts provides:  “A term exempting a party from tort liability for harm caused intentionally or recklessly is unenforceable on grounds of public policy ․ One cannot exempt himself from such liability for harm that is caused either intentionally or recklessly.   Restatement (Second) Contracts, Section 195(1) & cmt. a (1979).  “[E]xculpatory contracts receive careful judicial scrutiny ․ unless the contract clearly, unequivocally, specifically, and unmistakably express[es] the parties' intention to exculpate the [defendant] from liability resulting from its own negligence, the [contract] is insufficient for that purpose ․ An obligation to indemnify a party against its own negligence will not be given effect in the absence of language which itself compels such a result.”  (Citations omitted;  internal quotation marks omitted.)  Malin v. Whitewater Mountain Resorts of Connecticut, Inc., Superior Court, judicial district of New Haven, Docket No. CV 99 0432774 (March 16, 2001, Blue, J.) (29 Conn. L. Rptr. 374).   Nonetheless, “[b]oth the common law and the Uniform Commercial Code recognize that a guarantor may expressly waive his rights with respect to collateral that secures the debt he has guaranteed.”  Connecticut National Bank v. Douglas, supra, 221 Conn. 545.

The plaintiff also contends, in the alternative, that under the terms of the loan documents it is immune from suit by the defendants.   For this proposition, the plaintiff points to paragraph 10 of the Revolving Construction Loan Agreement dated November 17, 2005, which states that “Lender's commitment to make advances hereunder shall at no time be subject or liable to attachment or levy or the suit of any creditor of Borrower or any agent, contractor, subcontractor or supplier of Borrower.”   Plaintiff's contention in this regard is misplaced.   The document executed by the defendants contemplates claims against the plaintiff brought by third parties seeking to attach or levy the monies constituting advances to Nutmeg.   The instant action is not one for the “attachment or levy or suit of any creditor of Borrower or any agent ” thereof.   The defendant Bennett's execution of the original loan documents as well as the related Guaranty Agreement, makes her neither a creditor nor an agent of Nutmeg in this action.   Her execution of those documents, as well as the subsequent modification agreement of July 25, 2007, was not as an agent of Nutmeg, but rather as duly authorized member.   The counterclaim is brought by her in the same capacity.   Also, her individual signature as a guarantor on the Guaranty Agreement did not make her a creditor of Nutmeg, but rather an independent indemnifier of the lender.   The defendants' counterclaims as alleged, including the enforcement and execution of the terms of the loan documents, do not constitute claims by a creditor or agent of Nutmeg.   Accordingly, the defendants do not fall within the parameters of the immunity provision.

After a full review of the relevant pleadings and supporting materials, the court addresses each count of the counterclaims in light of the plaintiff's claim of waiver, as follows.

1

Breach of Contract

The defendants allege in the first count of the counterclaim that the plaintiff had a contract with the defendants via the commitment letter, loan agreement and related documents.   Generally, “[t]he elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages.”  (Internal quotation marks omitted.)  Chiulli v. Zola, 97 Conn.App. 699, 706-07, 905 A.2d 1236 (2006).   The plaintiff points to the waiver provision within the Mortgage Modification Agreement and the specific provision within the Guaranty Agreement as constituting the waiver of any such claim by the defendants.

Several Connecticut courts have upheld exclusionary contracts prohibiting counterclaims or limiting liability under a contract.   For instance, in NY Urban Real Estate Investments, Inc. v. Hillside Acquisition, LLC, Superior Court, judicial district of Windham, Docket No. CV 08 5002430 (October 29, 2008, Booth, J.), the defendant alleged two counterclaims despite a contract with the plaintiff that included a provision stating:  “Waiver of Counterclaim.   Mortgagor hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against them by Lender arising out of or in any way connected with this Security Instrument, the Note, any of the Other Security Documents, or the Obligations.”   The court held the defendant unconditionally waived any counterclaims and granted the plaintiff's motion for summary judgment as to both counterclaims.

In New London County Mutual Insurance v. Nissan North America, Inc., Superior Court, judicial district of Waterbury, Docket No. CV 02 4003594 (April 23, 2007, Eveleigh, J.), the plaintiff and defendant had an insurance contract that included a clause limiting liability.   In addressing a subrogation claim brought by the insurer, the court noted that it “ ․ views the Limitation of Liability Clause, relating to damages, in the same light as it would an exculpatory clause.”   It then held “that the Limitation of Liability clause in the contract is valid only as to any claims for breach of contract or simple negligence.”

Based on the language of both the Mortgage Modification Agreement and the Guaranty Agreement, the defendants in this case unequivocally waived their right to a counterclaim for breach of contract.   This was a commercial transaction entered into by sophisticated parties who freely bargained the terms of their agreement.  “Judicial scrutiny is relaxed in a purely commercial setting.   Business executives can bargain over which party is to bear the risk of damage and set the price accordingly, thus achieving a more rational distribution of the risk than the law would otherwise allow ․ Connecticut allows this leeway to parties dealing in a business context.”  (Citations omitted;  internal quotation marks omitted.).  Malin v. White Water Mountain Resorts of Connecticut, Inc., supra, 29 Conn. L. Rptr. 374.   At the time of the execution of the Mortgage Modification Agreement, as well as the Guaranty Agreement, the defendants were fully aware of the events and circumstances which had previously transpired between themselves and the plaintiff.   Their cause of action for breach of contract does not implicate or allege any intentional or bad faith conduct on part of the plaintiff which might otherwise except the defendants from the effect of a waiver.   Therefore, summary judgment is granted as to count one as a matter of law.

2

Breach of the Implied Covenant of Good Faith and Fair Dealing

It is axiomatic that “[e]very 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.”   Habetz v. Condon, 224 Conn. 231, 238, 618 A.2d 501 (1992).   A party must not engage in conduct designed to mislead or to deceive, or neglect or refuse to fulfill some duty or contractual obligation not prompted by an honest mistake as to its rights or duties.  Elm Street Builders, Inc. v. Enterprise Park Condominium Ass'n., Inc., 63 Conn.App. 657, 667-68, 778 A.2d 237 (2001).  “Bad faith means more than mere negligence;  it involves a dishonest purpose.”   (Internal quotation marks omitted.)  De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn. 424, 433, 849 A.2d 382 (2004).   However, bad faith does not require a showing that the improper motive or dishonest purpose rise to the level of fraud.  PSE Consulting, Inc. v. Frank Mercede & Sons, Inc., 267 Conn. 279, 305, 838 A.2d 135 (2004).

In this count, the defendants allege that, based on the parties' contractual relationship, the plaintiff breached its implied covenant of good faith and fair dealing.  “As our Supreme Court [has] stated ․ a claim brought pursuant to a contract, alleging a breach of the implied covenant of good faith and fair dealing, sounds in contract because [e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement ․ To constitute a breach of [that duty], the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith.”   (Internal quotation marks omitted.)  Bellemare v. Wachovia Mortgage Corp., 94 Conn.App. 593, 610, 894 A.2d 335 (2006).

A review of the case law finds support for the position that the waiver provisions in this case would not be applicable to this cause of action.   In Rhode Island Hospital Trust v. Martin Trust, Superior Court, judicial district of Hartford, Docket No. 700674 (February 18, 1992, Burns J.) (6 Conn. L. Rptr. 75), the court was also faced with a motion for summary judgment as to several counts of the complaint, including a breach of the implied covenant of good faith.   The parties had a promissory note and guaranty agreement which included a waiver provision.   There, the court stated “[t]he implied covenant of good faith and fair dealing cannot be waived ․ General Statutes § 42a-1-102(3) clearly states that under the Uniform Commercial Code the duty of good faith cannot be waived.”

Similarly, in New Hartford v. Connecticut Resources Recovery Authority, Superior Court, judicial district of Waterbury, Docket No. CV 04 0185580 (September 11, 2006, Eveleigh, J.) (42 Conn. L. Rptr. 101), the court was faced with a motion for summary judgment as to several counts that involved allegations of illegal activity, ultra vires activity, breach of fiduciary duty, and violation of good faith and fair dealing.   In determining the motion the court stated that “[w]ere the court to grant the summary judgment with respect to these three counts, it would countenance the very violations of public policy which both the commentators and the case law have criticized.   Indeed, intentional torts, bad faith, and illegal activity, are areas in which the cases suggest that a party cannot exculpate himself or herself, since, to do so, would be a violation of public policy.   Thus, this court will neither interpret the contract beyond its clear meaning, nor will it interpret same so to violate public policy.”

In the present case, the court is faced with a prohibition on counterclaims in both the Guaranty Agreement and the Mortgage Modification Agreement.   Despite the agreements, both stating there are no counterclaims under the note, the plaintiff cannot waive the duty of good faith and fair dealing as it was created as a matter of policy to protect the public.   Although our courts have noted such a claim sounds in contract, the second count s a distinct cause of action which has some measure of bad faith as a necessary element.   Hence, public policy dictates that such a claim not be subject to the contractual waiver.

This however, does not end the analysis.   The defendants must still establish that there remains a genuine issue of material fact.   On the issue of whether the plaintiff neglected or refused to fulfill some duty or contractual obligation not prompted by an honest mistake as to its rights or duties, the defendants point to the affidavit of Teresa Bennett (# 229) wherein she recounts that she “became aware of an improper relationship” between the bank's officer and the defendants' contractor who was the husband of Deborah Beausoleil.   She claims, in essence, that they maintained a social relationship that was so close that it interfered with the business relationship between the plaintiff and the defendants.   This affidavit, however, is in many respects conclusory and it is unclear as to whether all of the information regarding the relationship was gained through the direct personal knowledge of the affiant.   In other words, it appears that some parts may be based on hearsay.   Determining the intent of the parties in a transaction, and making any inferences of fact surrounding that transaction, is something that is best left to a trier of fact.  Gaudio v. Griffin Health Services Corp., 249 Conn. 523, 533, 733 A.2d. 197 (1999).   It is not something well suited for a summary judgment motion.   Given that the non-movant “is given the benefit of all favorable inferences that can be drawn” the court believes that the issue in the second count is a factual one best resolved by the trier of fact.  Catz v. Rubenstein, supra, 201 Conn. 49;  Rhode Island Hospital Trust v. Martin Trust, supra, 6 Conn. L. Rptr. 75.

Accordingly, the motion for summary judgment as to the second count is denied.

3

Negligent Misrepresentation

In the third count, the defendants allege that the plaintiff's verbal assurances as to the status of the construction and its compliance with the loan documents constituted negligent misrepresentations.   To establish a claim for negligent misrepresentation, the plaintiff's must prove that the lender:  (1) made a misrepresentation;  and (2) that the defendants relied on that misrepresentation.  Savings Bank of Manchester v. Ralion Financial Services, Inc., 91 Conn.App. 386, 390, 881 A.2d 1035 (2005).  “Whether evidence supports a claim of ․ negligent misrepresentation is a question of fact.”  Id. Unlike a claim of fraudulent misrepresentation, the standard of proof for a negligent misrepresentation claim is that of a preponderance of the evidence.   Rego v. Connecticut Insurance Placement Facility, 22 Conn.App. 428, 430, 577 A.2d 1105 (1990), rev'd on other grounds, 219 Conn. 339, 593 A.2d 491 (1991).   A recent pronouncement on the issue of liability for negligent misrepresentation was made as follows:  “[The Supreme Court] has long recognized liability for negligent misrepresentation ․ The governing principles [of negligent misrepresentation] are set forth in similar terms in § 552 of the Restatement (Second) of Torts (1977):  One who, in the course of his business, profession or employment ․ supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information ․ As a result, [w]e have held that even an innocent misrepresentation of fact may be actionable if the declarant has the means of knowing, ought to know, or has the duty of knowing the truth.”   (Citations omitted;  internal quotation marks omitted.)  Sturm v. Harb Development, LLC, 298 Conn. 124 (2010).

As with the other counts, before addressing whether a genuine issue of material fact exists, it is first necessary to determine whether the terms of the waiver are applicable as matter of law.   As noted above, an exculpatory contract provision will not be effective where one acts fraudulently or in bad faith.   A. Corbin, Contracts, § 85.15 (2003).   Moreover, “[b]ad faith means more than mere negligence;  it involves a dishonest purpose.”  De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., supra, 269 Conn. 433.   Because the elements of a claim for negligent misrepresentation do not involve conduct that is intentional, fraudulent or done in bad faith, there is no bar to the applicability of the waiver that was freely negotiated between sophisticated parties.²

Because the contractual terms of the agreements effectively waive any counterclaim as to this cause of action, summary judgment is granted as to count three as a matter of law.

4

Fraud

In their fourth count, the defendants allege fraud on the part of the plaintiff.   Fraud must be established by clear and convincing evidence.   Kavaraco v. T.J.E. Inc., 2 Conn.App. 294, 296, 478 A.2d 257 (1984).  “The essential elements of an action in fraud, as we have repeatedly held, are:  (1) that a false representation was made as a statement of fact;  (2) that it was untrue and known to be untrue by the party making it;  (3) that it was made to induce the other party to act on it;  and (4) that the latter did so act on it to his injury.”  (Internal quotation marks omitted.)  Updike, Kelly & Spellacy, P.C. v. Beckett, 269 Conn. 613, 643, 850 A.2d 145 (2004).  “[I]n private disputes, a court must enforce the contract as drafted by the parties and may not relieve a contracting party from anticipated or actual difficulties undertaken pursuant to the contract, unless the contract is voidable on grounds such as mistake, fraud or unconscionability.”  (Internal quotation marks omitted.)  Gibson v. Capano, 241 Conn. 725, 730-31, 699 A.2d 68 (1997).

As more fully discussed above, causes of action that entail an element of intentional actions or ones done in bad faith cannot be waived through an exculpatory clause as a matter of law.   Because a cause of action sounding in fraud includes the element of an intentional act to deceive, the waiver is inapplicable to this count.

This again, however, does not end the inquiry.   It must be determined whether there is a genuine issue of material fact.   While a review of the affidavits and supporting documentation reveals little to set forth a claim of fraudulent conduct, the court is required to view the evidence in the light most favorable to the non-moving party.  Weiss v. Weiss, supra, 297 Conn. 446.   The non-movant “is given the benefit of all favorable inferences that can be drawn.”   Catz v. Rubenstein, supra, 201 Conn. 49.   The court is mindful of the plaintiff's arguments regarding the potential unreliability of the affidavit of Bennett, and the minimal evidence presented on the issue of fraudulent conduct.   As noted above, the affidavit is in many respects conclusory and unclear as to the extent of the direct personal knowledge of the affiant.   Some parts of the affidavit may be based on hearsay.   However, giving the defendants the benefit of favorable inferences, this issue is one best resolved by the trier of fact after a full hearing.   Accordingly, the motion for summary judgment as to the fourth count is denied.

5

Civil Conspiracy

In their fifth count the defendants allege that the plaintiff engaged in a conspiracy with Deborah Beausoleil and Lawrence Beausoleil for the purpose of defrauding Nutmeg and Bennett.  “The [elements] of a civil action for conspiracy are:  (1) a combination between two or more persons, (2) to do a criminal or an unlawful act or a lawful act by criminal or unlawful means, (3) an act done by one or more of the conspirators pursuant to the scheme and in furtherance of the object, (4) which act results in damage to the plaintiff.”   (Internal quotation marks omitted.)  Macomber v. Travelers Property & Casualty Corp., 277 Conn. 617, 635-36, 894 A.2d 240 (2006).

Plaintiff's claim of waiver is inapplicable to this count.  “[A]n attempted exemption from liability for a future intentional tort or crime or for a future willful or grossly negligent act is generally held void.”  Hanks v. Powder Ridge Restaurant Corp., 276 Conn. 314, 337, 885 A.2d 734 (2005).  “It is against public policy to enforce clauses of this nature.”   New Hartford v. Connecticut Resources Recovery Authority, Superior Court, judicial district of Waterbury, Docket No. CV 04 0185580 (September 11, 2006, Eveleigh, J.) (42 Conn. L. Rptr. 101).  “To establish the liability of a party for civil conspiracy, it is necessary to prove that the party was actuated by the same wrongful intent and had the same knowledge of the wrongful means and purposes as the other participants in the conspiracy ․ Thus, the tort of civil conspiracy is an intentional tort pursuant to the Connecticut body of case law.”  (Citation omitted;  internal quotation marks omitted.)   Palmieri v. Beacon Falls, Superior Court, judicial district of Waterbury, Docket No. CV 07 4018840 (June 23, 2009, Eveleigh, J.).   Because plaintiff cannot exculpate itself for liability for intentional torts, the waiver as to the counterclaim for civil conspiracy is inapplicable.

However, the question of whether a genuine issue of material fact exists between the parties still remains.   A review of the materials submitted by the parties produces no evidence, either direct or circumstantial, that the lender acted in concert with another in some criminal or unlawful way pursuant to a scheme to injure the defendants.   At oral argument, the defendants' counsel conceded that the defendants could not show that a criminal or unlawful act had been committed, or that the plaintiff had in some way conspired to injure the defendants.   The plaintiff has put forth sufficient evidence, which has not been rebutted by the defendants, to establish that there is no genuine issue of material fact as to the fifth count and therefore summary judgment may enter in favor of the plaintiff.

6

CUTPA

CUTPA provides 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(a).   Pursuant to General Statutes § 42-110b(d), CUTPA is intended to be a remedial statute.  “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-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.”  (Internal quotation marks omitted.)   Updike, Kelly & Spellacy, P.C. v. Beckett, 269 Conn. 613, 655-56, 850 A.2d 145 (2004).

Generally, rights granted by a statute can be waived unless the statute is intended to protect the general rights of the public rather than private rights.  Panaroni v. Johnson, 158 Conn. 92, 103, 256 A.2d 246 (1969).   The court in Rhode Island Hospital Trust v. Martin Trust, supra, 6 Conn. L. Rptr. 75, in construing the waiver of counterclaims stated that “a CUTPA claim cannot be waived by contract, given that the intent of the statute is remedial.   See General Statutes § 42-110b(d);  Web Press Services Corp. v. New London Motors, Inc., 203 Conn. 342, 354, 525 A.2d 57 (1987) (CUTPA must be construed liberally in an effort to effectuate its public policy goals);  Hernandez v. Monterey Village Associates Limited Partnership, 17 Conn.App. 421, 425, 553 A.2d 617 (1989) (policy behind CUTPA is to encourage litigants to act as private attorneys general and to bring actions for unfair or deceptive trade practices).”  (Internal quotation marks omitted.)   CUTPA was created to protect the public from bad business policies and unfair or deceptive acts in the practice of a trade or commerce.   In the present case, because the statute was created to benefit the public and is remedial in nature, the CUTPA claim cannot be waived.   Therefore, the waiver is inapplicable to defendants' claim in the sixth count.

However, again, it must be determined whether there exists a genuine issue of material fact as to this count.   In their sixth count, the defendants incorporate paragraphs 1-7 of the fifth count.   That count, like all the others before it, incorporated those paragraphs of the previous count before it which go all the way back to the first count.   Effectively then, the sixth count has incorporated all of the allegations of the first seven paragraphs of the first count which alleged a breach of contract.   Hence, the sixth count, read liberally, alleges that the plaintiff's breached the terms of the loan documents and that the plaintiff's actions in so doing were broad enough to constitute a violation of the CUTPA.

However, the claim of a breach of contract alone does not create a viable CUTPA claim.  Paulus v. Lasala, 56 Conn.App. 139, 154, 742 A.2d 379 (1999), cert. denied, 252 Conn. 928, 746 A.2d 789 (2000).   There must be something more.   Viewing the evidence in the light most favorable to the non-moving party and giving the benefit of all favorable inferences that can be drawn as discussed above, the court believes that the issue of whether the elements of a claim under CUTPA have been met are best left to the trier of fact.  “[I]n order to prevail in a CUTPA action, [the defendants] must establish both that the [plaintiff] has engaged in a prohibited act and that, as a result of this act, the [defendants] suffered an injury.   The language ․ requires a showing that the prohibited act was the proximate cause of a harm to the [defendants].”  (Emphasis in original;  internal quotation marks omitted.)   Scrivani v. Vallombroso, 99 Conn.App. 645, 651, 916 A.2d 827, cert. denied, 282 Conn. 904, 920 A.2d 309 (2007).   Whether the defendants can establish this at trial remains to be seen.   Accordingly, the motion for summary judgment as to the sixth count of the defendants' counterclaim is denied.

IV

CONCLUSION

For all the above reasons, viewing the matter in the light most favorable to the defendants, there still remains a genuine issue of material fact to be decided as to counts two, four and six of the defendants' counterclaim.   The plaintiff's motion for summary judgment is denied with respect to those counts.   The motion is granted as to counts one, three and five as the waiver provision contained within the loan documents is applicable to those counts.

So ordered.

Shaban, J.

FOOTNOTES

FN1. Normally, “only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment.”  (Internal quotation marks omitted.)  New Haven v. Pantani, 89 Conn.App. 675, 678-79, 874 A.2d 849 (2005).   Our Supreme Court has stated that parties may “knowingly waive compliance with the procedural provisions of the Practice Book relating to motions for summary judgment.”  Krevis v. Bridgeport, 262 Conn. 813, 824, 817 A.2d 628 (2003).   It has also stated that “[w]e previously have afforded trial courts discretion to overlook violations of the rules of practice and to review claims brought in violation of those rules as long as the opposing party has not raised a timely objection to the procedural deficiency.”  Schilberg Integrated Metals Corp. v. Continental Casualty Co., 263 Conn. 245, 273, 819 A.2d 773 (2003).“Here, where each party has asked the court to consider uncertified documents, and no objection was raised on that basis to their consideration, the court, in the exercise of its discretion, has reviewed the exhibits submitted by each side.”   Fabrizio v. Bristol Housing Authority, Superior Court, judicial district of New Britain, Docket No. CV 05 5000208 (October 21, 2005, Shapiro, J.).   In this instance, the court has done likewise for the same reason..  FN1. Normally, “only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment.”  (Internal quotation marks omitted.)  New Haven v. Pantani, 89 Conn.App. 675, 678-79, 874 A.2d 849 (2005).   Our Supreme Court has stated that parties may “knowingly waive compliance with the procedural provisions of the Practice Book relating to motions for summary judgment.”  Krevis v. Bridgeport, 262 Conn. 813, 824, 817 A.2d 628 (2003).   It has also stated that “[w]e previously have afforded trial courts discretion to overlook violations of the rules of practice and to review claims brought in violation of those rules as long as the opposing party has not raised a timely objection to the procedural deficiency.”  Schilberg Integrated Metals Corp. v. Continental Casualty Co., 263 Conn. 245, 273, 819 A.2d 773 (2003).“Here, where each party has asked the court to consider uncertified documents, and no objection was raised on that basis to their consideration, the court, in the exercise of its discretion, has reviewed the exhibits submitted by each side.”   Fabrizio v. Bristol Housing Authority, Superior Court, judicial district of New Britain, Docket No. CV 05 5000208 (October 21, 2005, Shapiro, J.).   In this instance, the court has done likewise for the same reason.

FN2. For another case on the issue of negligent misrepresentation and the applicability of an exculpatory clause, see Dalton v. Dampf, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 04 0199611 (April 12, 2005, Nadeau, J.) (39 Conn. L. Rptr. 81)..  FN2. For another case on the issue of negligent misrepresentation and the applicability of an exculpatory clause, see Dalton v. Dampf, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 04 0199611 (April 12, 2005, Nadeau, J.) (39 Conn. L. Rptr. 81).

Shaban, Dan, J.