Coppola Construction Co., Inc. v. Hofman Enterprises Limited Partnership et al. (2010)

MEMORANDUM ORDER RE DEFENDANTS' MOTION TO STRIKE COUNTS FOUR, FIVE AND SIX OF THIRD AMENDED COMPLAINT

INTRODUCTION

Upon considering all materials submitted by the parties in support of and in opposition to the Defendants' Motion to Strike Counts Four, Five and Six of the Third Amended Complaint, the Court hereby makes the following findings of fact and conclusions of law:

1. In this action, plaintiff Coppola Construction Co., Inc. has sued the defendants, Hoffman Enterprises Limited Partnership (“HELP”) and Jeffrey Hoffman, to recover money damages in connection with site work which the plaintiff agreed by contract to perform for HELP on several parcels of property owned by HELP known as Hoffman Auto Park, located on Route 44 in Simsbury, Connecticut.   A copy of the contract is attached to the plaintiff's Third Amended Complaint dated October 13, 2010 (“Complaint”).

2. The Complaint sets forth six separate claims, as follows:  in Count One, a claim of breach of contract against HELP;  in Count Two a claim for relief in quantum meruit against HELP;  in Count Three, a claim of unjust enrichment against HELP;  in Count Four, a claim of tortious interference against HELP;  in Count Five, a claim of unfair trade practices, in alleged violation of the General Statutes § 42-110 et seq., the Connecticut Unfair Trade Practices Act (“CUTPA”), against HELP;  and in Count Six, a claim of negligent misrepresentation against Jeffrey Hoffman.

3. On October 14, 2010, in accordance with the schedule for closing the pleadings which was agreed to at the parties' status conference with the Court on October 8, 2010, the defendants filed their Motion to Strike Counts Four, Five and Six.

ANALYSIS

4. “The purpose of a motion to strike is to challenge the legal sufficiency of the allegations of a complaint for failure to state a claim on which relief can be granted ․ The motion admits all facts that are well pleaded ․ but does not admit legal conclusion or the truth or accuracy of opinions ․ A motion to strike is properly granted if the complaint alleges mere conclusions of law that are not supported by the facts alleged.”  Bennett v. Connecticut Hospice, Inc., 56 Conn.App. 134, 136-37 (1999), cert. denied, 251 Conn. 938 (2000) (citation omitted).   However, “[i]f facts provable under the allegations would support a ․ cause of action, the motion to strike must fail.”   Ferryman v. Groton, 212 Conn. 138, 142 (1989).

5. In Count Four of the Complaint, the plaintiff alleges that, after entering into its contract with HELP and performing all work initially specified therein for an agreed-upon price of $400,000, it was asked on two occasions to perform extra work on the project by HELP's disclosed agent, Signature Construction Services International, LLC. Upon completing the first portion of such extra work, HELP paid the plaintiff an additional $380,000.   Thereafter, however, upon completing the second portion of such extra work, for which it claims to be entitled to receive an additional sum of $1.2 million under section 5 of the parties' contract, HELP not only failed to pay it for such work but attempted to induce some of its subcontractors to complete the work in exchange for direct payments to them, without going through the plaintiff, in order to “cut out the middle man” and deny the plaintiff any further payment for such additional work.   The plaintiff alleges that such contract with its subcontractors were made by defendant Jeffrey Hoffman, as an officer of HELP, either directly or through other agents of HELP, with knowledge that such conduct was in violation of HELP's contract with the plaintiff to have the plaintiff perform and be paid for the performance of such additional work on the project.

6. The defendants argue in their Motion to Strike that Count Four, so pleaded, fails to state a valid claim of tortious interference because it fails to plead one essential element of that cause of action, to wit:  that the conduct by which it interfered with the plaintiff's business relations was tortious.   Kakadelis v. DeFabritis, 191 Conn. 276, 279-80 (1983) (citation omitted;  internal quotation marks omitted). (“[l]n an action for intentional interference with business relations ․ the better reasoned approach requires the plaintiff to plead and prove at least some improper motive or improper means ․ A claim is made out only when interference resulting in injury to another is wrongful by some means beyond the fact of the interference itself”).   Here, claim the defendants, their alleged attempts to pay subcontractors for services they have rendered is not tortious conduct.

7. The plaintiff concedes that, to establish a valid claim of tortious interference, it must plead and prove that the defendant's interference was tortious, in the sense that “the defendant was guilty of fraud, misrepresentation, intimidation or molestation ․ or that the defendant acted maliciously ․ In other words, the [plaintiff] bears the burden of alleging and proving lack of jurisdiction on the part of the [defendant].”  Daley v. Aetna Life & Cas. Co., 249 Conn. 766, 805-06 (1999).   Here, however, it insists that the allegations of Count Four are undeniably sufficient to plead that HELP's conduct was tortious because they describe a knowing, intentional course of conduct designed to deprive the plaintiff of the benefit of its contractual bargain by dealing directly with the plaintiff's subcontractor to get the job done at a lower price without paying the plaintiff, as agreed.   The Court agrees that such conduct, as alleged, was tortious, in that it is claimed to have been engaged in, without any justification whatsoever, for the manifestly improper purpose of saving the defendant money at the plaintiff's expense.   Such conduct is, or amounts to, theft, which is surely tortious by any definition, and thus sufficient to support a claim of tortious interference.   For these reasons, the defendants' Motion to Strike must be denied with respect to Count Four.

8. In Count Five of the Complaint, the plaintiff alleges:  (a) that HELP is engaged in the business of acquisition and development of property, including construction, development, management, ownership and leasing of said property as its trade or commerce;  (b) that HELP deliberately enticed the plaintiff to continue work on the Hoffman Auto Park project with promises of payment when it knew it would not pay the amount agreed upon and would use whatever sales techniques it normally employs to attempt to renegotiate the prices after the work was performed in a form of economic extortion;  (c) that it then deliberately and with wanton intent sought to end-run the plaintiff by approaching its subcontractors and providing them with funds to engage those subcontractors to return to the project and finish the work, in derogation of the plaintiff's contractual rights with the subcontractors;  (d) that HELP then abandoned these subcontractors and hired others to complete the work, all without making payments to the plaintiff, at all times aware of the debt it owed to the plaintiff and without ever complaining about the plaintiff's work;  and (e) that HELP engaged in such conduct to obtain work for free as part of a pattern and practice it has adopted of failing to pay amounts owed by it for development work and force vendors, through economic extortion of strong-arm tactics, to take less than they are contractually owned.   The plaintiff complains that, as a result of these deliberate, immoral and unscrupulous acts, which it claims to have been engaged in in violation of CUTPA, it has been severely damaged.

9. The defendants challenge the legal sufficiency of the plaintiff's above-described CUTPA claim on the ground that the conduct of which the plaintiff accuses HELP does not fall within the definition of acts occurring in the defendants' trade or commerce, for CUTPA assertedly does not make actionable business conduct that arises from the consumption of another's business services.   Under CUTPA, it argues, “trade” or “commerce” means “the advertising, the sale or rent or lease, the offering for sale or rent or lease, or the distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value in this state.”  General Statutes § 42-110a(4).   Here, however, all of the allegations of wrongdoing in Count Five assertedly pertain to claims that defendant HELP contracted to have the plaintiff provide construction services to it without paying for those services and otherwise frustrating the plaintiff's effort to make a profit on its contract to provide services to the defendants.   Thus, argue the defendants, “[T]he allegations at issue clearly suggest that the defendants' challenged actions occurred not while conducting their own trade or commerce activities-to wit, the advertising, sale or rent or lease, offering for sale or rent or lease, or distribution by them of their own services, property or other articles, commodities or things of value-but in the plaintiff's sale of its own professional services to them ․ A business' procurement of outside services to maintain or rehabilitate its own business property simply does not constitute the conduct of ‘trade or commerce’ within the meaning of § 42-110a(4).”   Defendants' Memorandum (10/14/10) (quoting Phillips Industrial Service Corp. v. Connecticut Light and Power Co., 1999 WL 436274 or *2 (Conn. Superior Court 6/18/99)) [24 Conn. L. Rptr. 641].   As this Court concluded in Phillips, the defendants here argue that, “[i]n this case, the plaintiff has clearly alleged that it had a commercial relationship with the defendants, in the sense that the defendants were consumers of services in the plaintiff's marketplace.   However, there is absolutely no allegation that the plaintiffs were ever involved-as consumers, competitors or other business persons-in the defendants' marketplace, much less that they were harmed by the defendants' unfair or deceptive acts or practices in that marketplace.   The defendants, to reiterate, are simply not claimed to have engaged in any unfair or deceptive act or practice in the advertising, sale or rent or lease, offering for sale or rent or lease, or distribution of any services, property or other items of any kind.”   Defendants' Memorandum, p. 6 (quoting Phillips, supra, 1999 WL 436274, * 3 (emphasis in original)).

10. As a further, related ground for claiming that the plaintiff's CUTPA claim is legally deficient, the defendants argue that a CUTPA defendant's offensive acts must have occurred in the defendant's primary trade or commerce;  Sovereign Bank v. Licata, 116 Conn.App. 483, 494 (2009);  McCann Real Equities Services XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn.App. 486, 521-23, cert. denied, 277 Conn. 928 (2006);  for conduct that is merely incidental to the defendant's primary trade or commerce is not actionable under the statute;  Sovereign Bank v. Licata, supra, 116 Conn.App. at 494;  McCann Real Equities Services XXII, LLC v. David McDermott Chevrolet, Inc., supra, 93 Conn.App. at 523.   Here, claim the defendants, the plaintiff's claim is deficient because, although it asserts that HELP “is engaged in the business of acquisition and development of property, including construction, development, management, ownership and leasing of said property as its trade or commerce;” Third Amended Complaint, Court Five, ¶ 17, it fails to allege that such business activity is its primary trade or commerce, or how the defendant's alleged conduct relates to whatever business activity is in fact its primary trade or commerce.

11. The plaintiff responds to this portion of the defendants' Motion to Strike by contending, initially, that real estate development is a “trade” or “commerce” for the purposes of CUTPA;  Plaintiff's Opposition Memorandum, p. 6 (citing Tremblay v. Patenaud, 1992 WL 201911, *3 (August 6, 1992, Conn.Super.) [7 Conn. L. Rptr. 201];  and Soloman v. WMN Assoc., Inc., 1994 WL 597390, *7 (October 20, 1994, Conn.Super.));   further, that it has expressly alleged that HELP is engaged in the business of real estate development, “including construction, development, management, ownership and leasing of said property as its trade or commerce, as those terms are used C.G.S. § 42-110 et seq.;” Plaintiff's Opposition Brief, p. 6;  and finally, that the conduct here complained of took place while HELP was engaged in such trade or commerce, more particularly the acquisition and development of property.  Id., p. 7. Such allegations, claim the plaintiff, distinguish this cases from Phillips, where there were no allegations whatsoever tending to establish that the defendant's offensive conduct in dealing with persons performing services for it to rehabilitate its own commercial property took place in the conduct of its own trade or commerce.

12. As for the defendants' claim that their alleged CUTPA relations are not claimed to have been committed in the course of their primary trade or commerce, the plaintiff first asserts that there is no such pleading requirement in the statute or in our case law.   In effect, it argues that the word “primary” is simply meant to distinguish between activities engaged in in the conduct of any part of one's own trade or commerce, which are actionable under CUTPA, and other incidental activities, which are not.

13. The Court agrees with the plaintiff that it has more than adequately pleaded a violation of CUTPA in this case.   The plaintiff has duly alleged that the defendant HELP was engaged in the trade or commerce of real estate development as part of its regular business.   Its hiring of plaintiff to assist it with such development was an activity engaged in the regular course of such business instead of, as in Phillps, in a one-time transaction incidental to that business, involving the one-time purchase of outside services to maintain or rehabilitate its own commercial property.   If, then, the plaintiff proves its allegation that the development of properties such as Hoffman Auto Park, for sale or lease, was part and parcel of its regular business, then it will sufficiently prove that the hiring of plaintiff to do site work on that development project was not merely incidental to its primary trade or commerce.   For these reasons, the Court must deny the defendants' Motion to Strike with respect to Count Five.

14. In Count Six of the Complaint, the plaintiff alleges that defendant Jeffrey Hoffman is liable to it for negligent misrepresentation on the theory that he misinformed the plaintiff that Signature Construction Services, LLC was HELP's and his agent for purposes of the construction project at Hoffman Auto Park. The plaintiff claims that it relied on Mr. Hoffman's representation and those made by his putative agent, Signature, when the cost of the change orders on which it performed work exceeded the amount of bank financing and new financing for such extra work could not be obtained.   The plaintiff claims that it relied upon Mr. Hoffman's misrepresentations with respect to Signature's authority to act for him to its detriment, for it performed extra work ostensibly authorized by Signature when Signature is now claimed to have had no authority to approve or promise payment for such work.

15. The defendants challenge the legal sufficiency of the plaintiff's allegations of negligent misrepresentation on the ground that when a party misrepresents another person to be his agent, that does not state a claim for misrepresentation, but merely affords a factual basis for inferring that the putative agent had apparent authority to bind the principal who made the misrepresentation.   See Tomlinson v. Board of Education, 226 Conn. 704, 734-35 (1993) (apparent authority exists when “the principal held the agent out as possessing sufficient authority to embrace the act in question, or knowingly permitted [the agent] to act as having such authority,” and where, as a consequence, “the party dealing with the agent ․ acting in good faith, reasonably believed, under all the circumstances, that the agent had the necessary authority to bind the principal to the agent's action”) (internal quotations marks omitted).   Here, then, conclude the defendants, the Sixth Count alleges nothing more than a claim of breach of contract based upon the promises and representation of the defendants, based upon the conduct of Signature, their agent.

16. The plaintiff responds to this argument by arguing that Jeffrey Hoffman's misrepresentation as to Signature's authority to act for him and HELP, in relation to the Hoffman Auto Park construction project, was in fact a misrepresentation of fact, then known to be false, which it reasonably relied on to its detriment.   At no point, however, does it specify how it ever relied upon that misrepresentation to its detriment except by agreeing to perform extra work on the project with Signature's approval-in their words, as the defendants have asserted, by entering into and performing work under contracts which the defendants are bound to honor based upon Signature's approval continues to bind them.   The Court agrees with the defendants that these allegations do not state a valid and sufficient claim for negligent misrepresentation, and thus concludes that the Motion to Strike must be granted with respect to Count Six.

CONCLUSION

17. For the foregoing reasons, the defendants' Motion to Strike Counts Four, Five and Six of the Third Amended Complaint is hereby GRANTED with respect to Count Six but DENIED with respect to Count Four and Count Five.

IT IS SO ORDERED this 2nd day of November 2010.

Michael R. Sheldon, J.

Sheldon, Michael R., J.