Discovery Bank v. Tim Kollars (2010)

RULING ON PLAINTIFF'S MOTION TO STRIKE

I. INTRODUCTION

On October 29, 2009, the plaintiff, Discover Bank, commenced this collection action against the defendant, Tim T. Kollars.   In its complaint, the plaintiff alleges that the defendant became indebted to the plaintiff in the sum of $14,751.15 for charges and/or cash advances incurred on the defendant's credit account, that said balance remains wholly unpaid and that the defendant has failed and continues to fail to make payment.   The plaintiff seeks money damages, contractual interest, attorneys fees, court costs and postjudgment interest.

The defendant filed his amended answer, in which he denied the allegations put forth in the plaintiff's complaint, his special defenses and his counterclaims on January 25, 2010.   In his first special defense, the defendant alleges the following.   The defendant states that he was a user of a credit card with a credit limit issued by the plaintiff and that the plaintiff imposed various over-limit fees and charges, which increased the balance due above the credit limit, and then proceeded to charge over-limit fees.   The defendant alleges that the plaintiff imposed finance charges, past due fees, over-limit fees and other fees in violation of the cardholder agreement and federal law.   The defendant further alleges that the plaintiff's actions are in breach of its duty of good faith and fair dealing and that as a result of said breach the defendant has been damaged.   The defendant concludes that the breaches of the duty of good faith render the credit card charges void and unenforceable.

In his second special defense, the defendant incorporates the four paragraphs of the first special defense and alleges that the breach of the cardholder agreement and actions taken pursuant thereto by the plaintiff estop the plaintiff from enforcing the credit agreement against the defendant.

In his third special defense, the defendant incorporates the first five paragraphs of the first special defense and alleges that the plaintiff acted in an immoral, oppressive, unethical and unscrupulous manner and caused substantial injury to consumers, competitors and other businessmen, in violation of the Connecticut Unfair Trade Practices Act (“CUTPA”), General Statutes § 42-110a et seq.   The defendant alleges that the plaintiff's CUTPA violations render the credit card agreement unenforceable.

The defendant's counterclaims allege substantially similar facts as were alleged in his special defenses.   In the first count of the defendant's counterclaims, sounding in breach of contract, the defendant alleges the following.   On or after January 1, 2000, the defendant and plaintiff entered into a credit card agreement.   Under the terms of said agreement, the plaintiff was to charge the account up to a certain credit limit based on previous disclosures to the defendant.   The defendant alleges that the plaintiff charged the defendant's account with unauthorized over-limit fees and that this constitutes a breach by the plaintiff of the credit agreement through which the defendant has suffered damages.

In the second count of the defendant's counterclaims, the defendant incorporates the factual allegations of the first counterclaim and alleges that the plaintiff imposed finance charges, over-limit fees, past due fees and other fees in violation of the credit agreement and federal law.   The defendant further alleges that the actions of the plaintiff are in breach of its duty of good faith and fair dealing and that the defendant has been damaged as a consequence of those breaches.

In the third count of the defendant's counterclaims, the defendant incorporates the factual allegations of the first counterclaim and alleges that the plaintiff acted in an immoral, oppressive, unethical and unscrupulous manner and caused substantial injury to consumers, competitors and other businessmen, in violation of CUTPA.   The defendant claims that the CUTPA violations entitle the defendant to recover damages, attorneys fees and punitive damages.

On February 19, 2010, the plaintiff filed a request that the defendant revise his answer, special defenses and counterclaims.   More specifically, the plaintiff requested that all three special defenses be revised on the grounds that the defendant “failed to allege a special defense recognized under Connecticut law.”   The plaintiff further requested that all three counterclaims be revised because the defendant failed to allege facts to support claims of breach of contract, breach of the duty of good faith and fair dealing or a CUTPA violation.   On March 9, 2010, the defendant objected to the request to revise.   On March 22, 2010, the court sustained the defendant's objection as to all six requests to revise, stating that “[t]he issue of whether the special defenses and counterclaims adequately allege facts supporting special defenses or counterclaims should be raised in a motion to strike and not a request to revise.”

On May 27, 2010, the plaintiff filed its motion to strike the defendant's special defenses and counterclaims.   On June 8, 2010, the defendant filed a memorandum in opposition to the motion to strike.   The parties appeared for oral argument on August 16, 2010.

II. LEGAL STANDARD-MOTION TO STRIKE 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.)   Mortgage Electronic Registration Systems, Inc. v. Goduto, 110 Conn.App. 367, 369 n.2, 955 A.2d 544, cert. denied, 289 Conn. 956, 961 A.2d 420 (2008);  see Practice Book § 10-50.¹  “[A] plaintiff can [move to strike] a special defense ․” Nowak v. Nowak, 175 Conn. 112, 116, 394 A.2d 716 (1978);  see also Connecticut National Bank v. Voog, 233 Conn. 352, 354-55, 659 A.2d 172 (1995).  “In ․ ruling on the ․ motion to strike, the trial court recognize[s] its obligation to take the facts to be those alleged in the special defenses and to construe the defenses in the manner most favorable to sustaining their legal sufficiency.”  Connecticut National Bank v. Douglas, 221 Conn. 530, 536, 606 A.2d 684 (1992).  “A motion to strike admits all facts well pleaded;  it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings.”  (Emphasis in original;  internal quotation marks omitted.)  Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997).   None of the defendant's three special defenses are among those required to be specially alleged under Practice Book 10-50, however, that fact alone does not necessarily preclude a defendant from taking on the burden of proof and alleging such special defenses.

III. LEGAL ANALYSIS-SPECIAL DEFENSES

A

The defendant alleges in the first special defense that the plaintiff imposed finance charges, over-limit fees, past due fees and other fees in violation of the cardholder agreement and federal law, that these actions constitute a breach by the plaintiff of the duty of good faith and fair dealing and that these breaches render the credit card charges void and unenforceable.   More specifically, the defendant alleges that the plaintiff imposed various fees and charges that increased the balance owed by the defendant, pushing the defendant's balance over the credit limit, and then proceeded to impose over-limit charges upon the defendant's account for exceeding that credit limit.   The plaintiff moves to strike the first special defense on the grounds that the defendant has improperly pleaded a cause of action as a special defense, that the first special defense seeks to impose a result contrary to the parties' agreement, that the defendant has improperly pleaded a “setoff” as a special defense, that the special defense is insufficient because the defendant fails to plead “bad faith” and that the special defense fails to identify the federal law it claims the plaintiff violated.

“[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 ․ To constitute a breach of that covenant, 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 ․ Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive ․ Bad faith means more than mere negligence;  it involves a dishonest purpose.”  (Internal quotation marks omitted.)   Jones v. H.N.S. Management Co., 92 Conn.App. 223, 227, 883 A.2d 831 (2005).   A breach of the covenant of good faith and fair dealing may be a valid specific defense to a claim such as that made here.   Discover Bank v. Gallicchio, Superior Court, judicial district of New Britain, Docket No. CV 09 5012159 (May 5, 2010, Pittman, J.).

In Shiff v. Van Wyk, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 08 5008214 (July 6, 2009, Pavia, J.), the plaintiff buyers filed suit against the defendant sellers, alleging that the sellers were aware of various structural and mechanical problems in the real property being sold to the plaintiffs but that the sellers affirmatively represented that they had no knowledge of such problems.   The trial court granted the defendants' motion to strike the sixth count of the plaintiffs' complaint, which alleged that the defendants breached the implied covenant of good faith and fair dealing.   Although “the plaintiffs allege in count six that the defendant failed to disclose essential facts before the plaintiffs executed the contract relating to prior leaks, flooding and mechanical equipment failure at the home,” the court granted the defendant's motion to strike, reasoning that “the plaintiffs have failed ․ to sufficiently allege a breach of the implied covenant of good faith and fair dealing because the plaintiffs have not alleged that the defendant's conduct was dishonest, deliberate or purposeful.”

In contrast, in Pusztay v. Allstate Ins. Co., Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 06 5002425 (June 30, 2009, Pavia, J.), the plaintiff, having suffered injuries in an automobile collision and having already received the maximum payout under the at-fault third party driver's insurance policy, filed a claim with the defendant, with whom the plaintiff held an automobile insurance policy.   The plaintiff commenced suit against the defendant, alleging, inter alia, that the defendant breached the implied covenant of good faith and fair dealing, after the defendant refused to settle the plaintiff's claim.   The defendant moved to strike the plaintiff's good faith and fair dealing count, arguing that the plaintiff failed to allege any facts that could establish the required bad faith element for such a cause of action.   The trial court noted that the complaint “sets forth a litany of detailed allegations as to how the plaintiff contends that the defendant violated the implied covenant of good faith and fair dealing.   The plaintiff alleges that the defendant implied that it would inform [the plaintiff] of all substantive requirements and deadlines but failed to notify her of the contractual limitations period, failed to substantively and timely address the plaintiff's claim, encouraged the plaintiff to rely on its cooperation, failed to negotiate the plaintiff's claim in good faith, refused to make an offer of settlement despite its written and verbal commitment to do so, failed to pay on the claim without any substantive reasoning;  and failed to comply with the duty of good faith and fair dealing in attempting to resolve any issues relating to the plaintiff's claim.”   Accordingly, the court denied the defendant's motion to strike, further noting that the “complaint alleges that the defendant engaged in a pattern of conduct with the design of delaying settlement of this claim, including making verbal and written representations, over a sixteen-month period, with repeated instances of alleged malfeasances.”

In the present case, the allegations in the defendant's first special defense fail to allege the elements that constitute a cause of action or defense sounding in breach of the covenant of good faith and fair dealing.   The defendant alleges that the plaintiff “imposed various overlimit fees and charges which increased the balance due above the credit limit,” that the plaintiff “imposed finance charges, overlimit fees, past due fees and other fees in violation of the cardholder agreement and federal law” and that these actions constitute a “breach of [the plaintiff's] duty of good faith and fair dealing.”   Nowhere in its first special defense, however, does the defendant make any factual allegations as to the plaintiffs acting in bad faith.   The defendant's allegation that the “actions of the Plaintiff are in breach of its duty of good faith and fair dealing” is merely a legal conclusion.   The defendant's first special defense does not make any factual allegations rising to the level of bad faith and is therefore legally insufficient and is stricken.

B

In his second special defense, the defendant incorporates the factual allegations of the first special defense and further alleges that the breach of the cardholder agreement by the plaintiff and the plaintiff's other actions estop the plaintiff from enforcing the credit card agreement against the defendant.   The plaintiff moves to strike the second special defense on the grounds that the defense is insufficient because it fails to allege facts concerning either of the two essential elements of an estoppel claim.

“Equitable estoppel is a doctrine that operates in many contexts to bar a party from asserting a right that it otherwise would have but for its own conduct ․ In its general application, we have recognized that [t]here are two essential elements to an estoppel-the party must do or say something that is intended or calculated to induce another to believe in the existence of certain facts and to act upon that belief, and the other party, influenced thereby, must actually change his position or do some act to his injury which he otherwise would not have done.”  (Internal quotation marks omitted.)  Harley v. Indian Spring Land Co., 123 Conn.App. 800, 827 (2010).

In SNET Information Services, Inc. v. A Premiere Limousine Service, Inc., Superior Court, judicial district of New Haven, Docket No. CV 07 5015163 (August 13, 2008, Cosgrove, J.), an action commenced by the plaintiff to recover for advertisements and listings it provided to the defendant, the defendant filed several special defenses, including an equitable estoppel special defense.   The estoppel special defense alleged only the following:  “The plaintiff's claims are barred in whole or in part by the doctrine of equitable estoppel.”   The court noted that “when a party files a special defense it must identify the material facts on which the pleader relies” and that the defendant's “special defenses are not based upon allegations of fact but merely are legal conclusions.”  (Internal quotation marks omitted.).   After noting that the defendant's estoppel “special defense does not allege facts that could be construed to support either of [the] two essential elements of the special defense of equitable estoppel” the court granted the plaintiff's motion to strike.

In Discover Bank v. Gallicchio, supra, Superior Court, Docket No. CV 09 5012159, which involved facts similar to the present matter, the court granted the plaintiff bank's motion to strike the defendant's second special defense of estoppel.   In Gallicchio, the plaintiff commenced an action to collect on a credit card debt allegedly incurred by the defendant.   In his estoppel special defense, the defendant alleged that the plaintiff initially issued the defendant a credit card with a limit of $5,000, later increased the credit limit to $10,000, and at some point thereafter, without the defendant's authority, the plaintiff decreased the credit limit to an amount below the outstanding balance of the defendant's account, creating a situation where the plaintiff began to impose over-limit fees, finance charges and other fees.²  The defendant's special defense alleged that the plaintiff's conduct should estop the plaintiff from enforcing the credit card agreement.   In granting the plaintiff's motion to strike the estoppel special defense, the court noted that the defendant's estoppel defense “contains no facts that would constitute an estoppel claim, either as a special defense or as a kind of free standing cause of action,” specifically stating that “the facts as alleged do not fit logically into the first element” of an estoppel claim or defense.   The court further noted that allegations speaking to the second element of a valid estoppel claim-that a party was influenced to change his position or do some act to his injury which he otherwise would not have done but for the wrongdoing party's inducement-were “missing altogether.”

Similarly, in the present case, the defendant's estoppel special defense does not allege that the plaintiff did or said something intended or calculated to induce the defendant to believe in the existence of certain facts and to act upon that belief, and that the defendant, influenced thereby, actually changed his position or did some act to his injury which he otherwise would not have done.³  The second special defense does allege some facts-that the plaintiff imposed various fees and charges in violation of federal law and the cardholder agreement and that these charges increased the balance due above the credit limit-but this special defense does not allege either of the two essential elements of equitable estoppel.   Instead, the second special defense merely states a legal conclusion that the plaintiff's alleged breach of the credit agreement and subsequent actions, actions which are not specified, estop the plaintiff from enforcing the agreement against the defendant.   Because the second special defense has not alleged the requisite elements of equitable estoppel, this special defense is legally insufficient and is stricken.

C

In his third special defense, the defendant makes the same factual allegations as in the first two special defenses and further alleges that the plaintiff's actions were immoral, oppressive, unethical and unscrupulous, caused substantial injury to consumers, competitors and other businessmen and thereby violate CUTPA.   These CUTPA violations, the defendant continues, render the credit card agreement unenforceable.   The plaintiff counters that the third special defense is legally insufficient because CUTPA is a statutory cause of action and not a special defense.

In Gallicchio, a matter in which the plaintiff bank sought to collect on a credit card debt, the court granted the plaintiff's motion to strike the defendant's CUTPA special defense.  Discover Bank v. Gallicchio, supra, Superior Court, Docket No. CV 09 5012159.   The defendant's CUTPA special defense alleged that the conduct of the plaintiff constituted a violation of CUTPA and therefore rendered the credit card agreement unenforceable.   In granting the plaintiff's motion to strike the CUTPA special defense, the court stated that the CUTPA special defense “is simply not a special defense at all.   It is an affirmative cause of action which may be asserted as a means of recovery for having suffered actual harm.”

In Bank of America, N.A. v. Groton Estates, Superior Court, judicial district of New London, Docket No. CV 09 6001697 (July 13, 2010, Devine, J.), the court granted the plaintiff bank's motion to strike the defendant's fourth special defense, which asserted that the plaintiff's claims in a foreclosure action were barred for violation of CUTPA.   The court stated that “[t]here appears to be a split of authority amongst Superior Court decisions as to whether a violation of CUTPA provides a legally sufficient special defense to a foreclosure action.   This court, however, agrees with the line of Superior Court decisions holding that an alleged violation of CUTPA is properly brought as a counterclaim to foreclosure actions, rather than as a special defense.”

Another Superior Court case notes that “[s]ince CUTPA claims by their very nature constitute claims for damages, they are properly brought as counterclaims rather than special defenses ․ CUTPA is a sword rather than a shield.”  (Internal quotation marks omitted.)   U.S. Bank National Ass'n., Trustee v. Ascenzia, Superior Court, judicial district of New Haven, Docket No. CV 08 5022527 (July 30, 2009, Abrams, J.) (48 Conn.L.Rptr. 345, 346).   Similarly, in Windsor Federal Savings & Loan Ass'n., v. AQB Properties, LLC, Superior Court, judicial district of Hartford, Docket No. CV 065002705 (December 1, 2006, Freed, J.T.R.), in a foreclosure action in which the defendant pleaded CUTPA as a special defense, the court granted the plaintiff's motion to strike the special defense and stated that “[a]s a special defense there is a division of opinion among Superior Court judges as to whether a violation of CUTPA can be used as such a defense.   This court is of the opinion that the better view is that CUTPA provides a cause of action for its violation.”

In SNET Information, Inc. v. Prime One/Prime Direct, Inc., Superior Court, judicial district of New Haven, Docket No. CV 07 5008131, (August 7, 2009, Robinson, A., J.), in which the plaintiff commenced an action alleging that the defendant failed to pay for an advertising service that the plaintiff provided, the defendant filed thirty-two special defenses, one of which alleged that the plaintiff violated CUTPA.   The court granted the plaintiff's motion to strike the CUTPA special defense noting that “[t]he defendant's ninth special defense is CUTPA.   The plaintiff moves to strike this special defense on the grounds that CUTPA is not a permitted special defense and there are insufficient grounds to support a CUTPA claim.   The defendant provides no legal or factual basis for asserting a CUTPA claim.”

In accordance with the foregoing Superior Court decisions, the court finds that the third special defense is legally insufficient and is stricken.

IV. LEGAL STANDARD-MOTION TO STRIKE COUNTERCLAIMS

“[A] plaintiff can [move to strike] a ․ counterclaim.”  Nowak v. Nowak, supra, 175 Conn. 116.  “[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.”  (Internal quotation marks omitted.)   JP Morgan Chase Bank, Trustee v. Rodrigues, 109 Conn.App. 125, 131, 952 A.2d 56 (2008).  “[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);  see also Ferryman v. Groton, 212 Conn. 138, 142, 561 A.2d 432 (1989).  “[I]f facts provable in the [counterclaim] would support a cause of action, the motion to strike must be denied ․ Moreover ․ [w]hat is necessarily implied [in an allegation] need not be expressly alleged ․ It is fundamental that in determining the sufficiency of a [pleading] challenged by a [moving party'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).  “It is well established that a motion to strike must be considered within the confines of the pleadings and not external documents ․ We are limited ․ to a consideration of the facts alleged in the [pleading].”  (Internal quotation marks omitted.)  Zirinsky v. Zirinsky, 87 Conn.App. 257, 268-69 n.9, 865 A.2d 488, cert. denied, 273 Conn. 916, 871 A.2d 372 (2005);  see also Rowe v. Godou, 209 Conn. 273, 278, 550 A.2d 1073 (1988).

V. LEGAL ANALYSIS-COUNTERCLAIMS

A

In the defendant's first counterclaim he claims that the plaintiff breached the credit agreement.   Specifically, the defendant alleges that under the terms of the credit card agreement he entered into with the plaintiff, he was “to charge the account up to a certain credit limit based on previous disclosures to the defendant,” however, the plaintiff charged the defendant's account with unauthorized over-limit fees, which constituted a breach by the plaintiff of the credit card agreement, causing the defendant to suffer damages.   The plaintiff moves to strike this counterclaim on the grounds that it is legally insufficient because the defendant does not allege that the credit card agreement prohibited or even contained a provision related to over-limit fees.

“The 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.)  Keller v. Beckenstein, 117 Conn.App. 550, 558, 979 A.2d 1055, cert. denied, 294 Conn. 913, 983 A.2d 274 (2009).   The defendant alleges in his first counterclaim that he entered into a credit card agreement with the plaintiff, that the plaintiff breached the agreement by charging certain over-limit fees and that the defendant has suffered damages.   The defendant has pleaded facts sufficient to constitute a breach of contract action against the plaintiff.   In taking the facts to be those alleged in the first counterclaim and construing the counterclaim in a manner most favorable to sustaining its legal sufficiency, the court finds that the first counterclaim is sufficient.

B

In the defendant's second counterclaim, which is similar to his first special defense, the defendant incorporates the factual allegations of the first counterclaim and further alleges that the plaintiff imposed certain fees upon the defendant's credit account in violation of the cardholder agreement and federal law, that these actions are a breach of the duty of good faith and fair dealing and that the defendant has been damaged as a result of these breaches.   The plaintiff moves to strike the second counterclaim on the grounds that it is legally insufficient for one or more of the following reasons:  The counterclaim seeks to impose a result contrary to the parties' agreement;  the counterclaim is legally insufficient because the defendant failed to plead bad faith, which is a necessary element of good faith and fair dealing claims;  and the counterclaim fails to identify the federal law that the plaintiff has allegedly violated.

Nowhere in the second counterclaim does the defendant make factual allegations as to bad faith on the part of the plaintiff.   The allegation that the “actions of the Plaintiff are in breach of its duty of good faith and fair dealing” is a mere legal conclusion and does not allege any improper motive or bad faith on the plaintiff's behalf.   In accordance with the discussion of the plaintiff's motion to strike the defendant's first special defense, because the defendant fails to make any factual allegations concerning bad faith, the second counterclaim is legally insufficient and is stricken.

C

In the defendant's third counterclaim he incorporates the factual allegations from the first five paragraphs of the first counterclaim and further alleges that the plaintiff “acted in an immoral, oppressive, unethical and unscrupulous manner and caused substantial injury to consumers, competitors and other businessmen, thereby violating” CUTPA and entitling the defendant to recover compensatory damages, attorney fees and punitive damages.   The plaintiff moves to strike the third counterclaim on the grounds that it is improper and legally insufficient for one or more of the following reasons:  The defendant failed to allege that he suffered an ascertainable loss or actual damages, which are necessary elements of a CUTPA claim;  the defendant only alleges a single incident and not an actual practice;  the defendant fails to allege an unfair method of competition;  and a simple breach of contract does not offend public policy so as to invoke CUTPA.

“General Statutes § 42-110g(a) ․ allows [a]ny person who suffers any ascertainable loss of money or property ․ as a result of the use or employment of a method, act or practice prohibited by Section 42-110b, [to] bring an action ․ to recover actual damages ․ [T]he words ‘any ascertainable loss' as used in this section do not require a plaintiff to prove a specific amount of actual damages to make out a prima facie case.”  (Internal quotation marks omitted.)  Hinchliffe v. American Motors Corp., 184 Conn. 607, 612-13, 440 A.2d 810 (1981).  “An ‘ascertainable loss' is a loss that is capable of being discovered, observed or established ․ The term ‘loss' necessarily encompasses a broader meaning than the term ‘damage’ and has been held synonymous with deprivation, detriment and injury ․ To establish an ascertainable loss, a plaintiff is not required to prove actual damages of a specific dollar amount ․ [A] loss is ascertainable if it is measurable even though the precise amount of the loss is not known ․” (Citations omitted;  internal quotation marks omitted.)  Artie's Auto Body, Inc. v. Hartford Fire Ins. Co., 287 Conn. 208, 217-18, 947 A.2d 320 (2008).

Despite the plaintiff's arguments, in the present case the defendant has made sufficient allegations in his CUTPA counterclaim concerning the threshold issue of ascertainable loss.   The counterclaim alleged that in spite of the credit card agreement between the parties, “[t]he Plaintiff charged the Defendant's account with unauthorized overlimit fees.”   The counterclaim further alleged that in charging the defendant's account with these unauthorized charges, “the Plaintiff acted in an immoral, oppressive, unethical and unscrupulous manner and caused substantial injury to consumers, competitors and other businessmen, thereby violating the [CUTPA]” and that “[t]he Plaintiff's violation of CUTPA entitles the Defendant to recover damages, attorney fees and punitive damages.”   Construing the pleading in a light most favorable to the defendant, the defendant has sufficiently alleged that he has suffered an ascertainable loss.

The plaintiff contends that the CUTPA counterclaim is insufficient because the defendant has alleged only a single incident of misconduct and not a practice.   The appellate court addressed the issue of whether CUTPA applies to a single act of misconduct in Johnson Electric Co. v. Salce Contracting Associates, Inc., 72 Conn.App. 342, 349, 805 A.2d 735, cert. denied, 262 Conn. 922, 812 A.2d 864 (2002).   In Johnson, trial court held that because the plaintiff did not prove that the defendant had engaged in a repeated course of misconduct, the plaintiff did not establish that the defendant violated CUTPA.  Id. 349.   The plaintiff subcontractor filed a complaint against the defendant general contractor, in which the plaintiff alleged that the defendant had violated CUTPA by failing to award the plaintiff a subcontract to do the electrical work on a construction contract after listing the plaintiff as the electrical subcontractor in its successful bid proposal.  Id. 344.   The trial court concluded that CUTPA was inapplicable because the dispute between the parties involved only a single isolated instance and judgment was entered in favor of the defendant as a matter of law.  Id. 348, 59.

The appellate court disagreed, reversed the decision of the lower court and held “that the trial court improperly declined relief to the plaintiff on the ground that it had alleged and proven only a single act of misconduct.”  Id. 353.   Noting that the Supreme Court had not addressed the issue directly, the court undertook a statutory interpretation of CUTPA to determine whether CUTPA applies to a single act of misconduct.   The court stated that “[t]extually, § 42-110g(a) describes those who are eligible to bring a CUTPA action as ‘[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 method, act or practice prohibited by Section 42-110b ․’ (Emphasis added.).   The use of ‘practice’ as well as ‘act’ is indicative of an intent to make the statute applicable to a single act of misconduct.   This interpretation is consistent with § 42-110b(d), which expresses the intent of the legislature that, as a remedial statute, CUTPA is to be interpreted broadly.”  Id. 350.

The court does note that, “it is true, as the defendant notes, that § 42-110g(a) refers to § 42-110b, which speaks, in the plural, of deceptive ‘acts' or ‘practices.’   We are persuaded that our interpretation of § 42-110g(a) can be reconciled with § 42-110b.   In describing the kinds of conduct that CUTPA forbids, the legislature naturally described such conduct in the plural.   When it came to defining the terms of the conduct that was actionable, the legislature naturally was more precise.   It not only used the word ‘act’ in the singular but also provided relief for a ‘practice.’   We do not disregard any part of the statute.   Every word and phrase is presumed to have meaning, and we do not construe statutes so as to render certain words and phrases surplusage.”  (Internal quotation marks omitted.)  Id. 351.

Finally, the court noted that its “interpretation of § 42a-110g is supported by case law in which, albeit without discussion of the issue, CUTPA has been held to apply to a single act of misconduct.   Our Supreme Court so held in Daddona v. Liberty Mobile Home Sales, Inc., 209 Conn. 243, 259, 550 A.2d 1061 (1988), in which that court found that the single act of dismantling a mobile home violated CUTPA.   This court, again without statutory analysis, came to a similar conclusion in Lester v. Resort Camplands International, Inc., 27 Conn.App. 59, 71, 605 A.2d 550 (1992) (single controversy about space in a campground).   We know of no appellate case to the contrary and the defendant has cited none.”  Id. 351-52.

In addition to the existence of case law which refutes the plaintiff's argument that a single count of misconduct cannot constitute a CUTPA violation, in the present case, taking the pleading in a light most favorable to the non-moving defendant, the defendant has alleged more than a single instance of the plaintiff's unauthorized charging of over-limit fees.   The CUTPA counterclaim alleges that the plaintiff made “unauthorized charges ” on the defendant's account, not a single unauthorized charge.   When construed in the defendant's favor, the allegation may in fact refer to several acts of misconduct on the part of the plaintiff and not a single act.

While a single incident may be the basis for a sufficient CUTPA claim, “not every contractual breach rises to the level of a CUTPA violation.”  Hudson United Bank v. Cinnamon Ridge Corp., 81 Conn.App. 557, 571, 845 A.2d 417 (2004).  “A simple breach of contract does not offend traditional notions of fairness and, standing alone, does not offend public policy so as to invoke CUTPA.   A CUTPA claim lies where the facts alleged support a claim for more than a mere breach of contract.   Depending upon the nature of the assertions, however, the same facts that establish a breach of contract claim may be sufficient to establish a CUTPA violation.”  Greene v. Orsini, 50 Conn.Sup. 312, 315, 926 A.2d 708 (2007).

In the present case, the defendant's third counterclaim does nothing more than incorporate the first five paragraphs of his breach of contract counterclaim and then makes conclusory allegations concerning the violation of CUTPA by the plaintiff.⁴  The defendant merely alleges that the parties entered into a credit card agreement, that the plaintiff breached that agreement by charging the defendant with certain fees and that in doing so the plaintiff acted in an immoral, oppressive, unethical and unscrupulous manner, causing substantial injury to consumers, competitors and other businessmen, entitling the defendant to recover under CUTPA.   In the present case, the defendant makes no factual allegations as to how the alleged breach of contract by the plaintiff, which came in the form charging the defendant with fees unauthorized under the credit agreement, constitutes a violation of CUTPA.   The defendant fails to identify or allege any aggravating circumstances that would justify a legally sufficient CUTPA claim rather than a mere breach of contract claim.   There is no factual allegation that the plaintiff undertook an action prohibited by CUTPA, only that the plaintiff breached the credit card agreement.   Accordingly, the third counterclaim is legally insufficient and is stricken.

VI. CONCLUSION

For the foregoing reasons the plaintiff's motion to strike all three special defenses and the second and third counterclaims is GRANTED, but the motion to strike the first counterclaim is DENIED.

Bright, J.

FOOTNOTES

FN1. Practice Book § 10-50 provides:  “No facts may be proved under either a general or special denial except such as show that the plaintiff's statements of fact are untrue.   Facts which are consistent with such statements but show, notwithstanding, that the plaintiff has no cause of action, must be specially alleged.   Thus, accord and satisfaction, arbitration and award, coverture, duress, fraud, illegality not apparent on the face of the pleadings, infancy, that the defendant was non compos mentis, payment (even though nonpayment is alleged by the plaintiff), release, the statute of limitations and res judicata must be specially pleaded, while advantage may be taken, under a simple denial, of such matters as the statute of frauds, or title in a third person to what the plaintiff sues upon or alleges to be the plaintiff's own.”.  FN1. Practice Book § 10-50 provides:  “No facts may be proved under either a general or special denial except such as show that the plaintiff's statements of fact are untrue.   Facts which are consistent with such statements but show, notwithstanding, that the plaintiff has no cause of action, must be specially alleged.   Thus, accord and satisfaction, arbitration and award, coverture, duress, fraud, illegality not apparent on the face of the pleadings, infancy, that the defendant was non compos mentis, payment (even though nonpayment is alleged by the plaintiff), release, the statute of limitations and res judicata must be specially pleaded, while advantage may be taken, under a simple denial, of such matters as the statute of frauds, or title in a third person to what the plaintiff sues upon or alleges to be the plaintiff's own.”

FN2. The court in Gallicchio found these facts sufficient to defeat the plaintiff's motion to strike the plaintiff's first special defense based on the covenant of good faith and fair dealing.   The allegations in that case are different than here in that the defendant in Gallicchio specifically alleged that the plaintiff lowered the defendant's credit limit without his authority to an amount below his balance, allowing the plaintiff to impose fees on the defendant.   In this case, the defendant has merely alleged that the plaintiff violated the agreement and federal law by imposing fees on him.   There is nothing in the allegations to suggest that the plaintiff's conduct was undertaken in bad faith..  FN2. The court in Gallicchio found these facts sufficient to defeat the plaintiff's motion to strike the plaintiff's first special defense based on the covenant of good faith and fair dealing.   The allegations in that case are different than here in that the defendant in Gallicchio specifically alleged that the plaintiff lowered the defendant's credit limit without his authority to an amount below his balance, allowing the plaintiff to impose fees on the defendant.   In this case, the defendant has merely alleged that the plaintiff violated the agreement and federal law by imposing fees on him.   There is nothing in the allegations to suggest that the plaintiff's conduct was undertaken in bad faith.

FN3. The defendant's estoppel special defense incorporated the first four paragraphs of the first special defense which stated that “1. On or after January 1, 2000 the Defendant was a user of a credit card issued by Discover Card with a credit limit. 2. Subsequently, the Plaintiff imposed various overlimit fees and charges which increased the balance due above the credit limit, and then proceeded to charge overlimit fees. 3. The Plaintiff imposed finance charges, overlimit fees, past due fees and other fees in violation of the cardholder agreement and federal law. 4. The actions of the Plaintiff are in breach of its duty of good faith and fair dealing as required at common law.”   The fifth and final paragraph of the estoppel special defense provided:  “The breach of the cardholder agreement and actions taken pursuant thereto by the Plaintiff estop the Plaintiff from enforcing the agreement against the Defendant.”.  FN3. The defendant's estoppel special defense incorporated the first four paragraphs of the first special defense which stated that “1. On or after January 1, 2000 the Defendant was a user of a credit card issued by Discover Card with a credit limit. 2. Subsequently, the Plaintiff imposed various overlimit fees and charges which increased the balance due above the credit limit, and then proceeded to charge overlimit fees. 3. The Plaintiff imposed finance charges, overlimit fees, past due fees and other fees in violation of the cardholder agreement and federal law. 4. The actions of the Plaintiff are in breach of its duty of good faith and fair dealing as required at common law.”   The fifth and final paragraph of the estoppel special defense provided:  “The breach of the cardholder agreement and actions taken pursuant thereto by the Plaintiff estop the Plaintiff from enforcing the agreement against the Defendant.”

FN4. The third counterclaim incorporates the first five paragraphs of the first counterclaim, which state:  “1. The Defendant, Tim T. Kollars, at all times material herein is a resident of the State of Connecticut. 2. The Plaintiff Discover Bank, at all times material herein is a foreign corporation. 3. On or after January 1, 2000 the Defendant and the Plaintiff entered into a card member agreement. 4. Under the terms of said agreement, the Defendant was to charge the account up to a certain credit limit based on previous disclosures to the Defendant. 5. The Plaintiff charged the Defendant's account with unauthorized overlimit fees.”The remaining paragraphs of the third counterclaim alleged the following:  “6. In regard to the aforesaid, the Plaintiff acted in an immoral, oppressive, unethical and unscrupulous manner and caused substantial injury to consumers, competitors and other businessmen, thereby violating the Connecticut [Unfair] Trade Practices Act (“CUTPA”), C.G.S. § 42-110a et seq. as made and provided. 7. The Plaintiff's violation of CUTPA entitles the Defendant to recover damages, attorney fees and punitive damages pursuant to Conn. Gen.Stat. Sec. 42-110g(a) and 42-110g(d).”.  FN4. The third counterclaim incorporates the first five paragraphs of the first counterclaim, which state:  “1. The Defendant, Tim T. Kollars, at all times material herein is a resident of the State of Connecticut. 2. The Plaintiff Discover Bank, at all times material herein is a foreign corporation. 3. On or after January 1, 2000 the Defendant and the Plaintiff entered into a card member agreement. 4. Under the terms of said agreement, the Defendant was to charge the account up to a certain credit limit based on previous disclosures to the Defendant. 5. The Plaintiff charged the Defendant's account with unauthorized overlimit fees.”The remaining paragraphs of the third counterclaim alleged the following:  “6. In regard to the aforesaid, the Plaintiff acted in an immoral, oppressive, unethical and unscrupulous manner and caused substantial injury to consumers, competitors and other businessmen, thereby violating the Connecticut [Unfair] Trade Practices Act (“CUTPA”), C.G.S. § 42-110a et seq. as made and provided. 7. The Plaintiff's violation of CUTPA entitles the Defendant to recover damages, attorney fees and punitive damages pursuant to Conn. Gen.Stat. Sec. 42-110g(a) and 42-110g(d).”

Bright, William H., J.