LLC v. Martine Belamour (2011)

MEMORANDUM OF DECISION ON THIRD-PARTY DEFENDANT'S MOTION TO STRIKE

FACTUAL BACKGROUND

The present motion to strike follows a foreclosure action brought by LienFactors, LLC against the third-party plaintiff, Martine Belamour.   After the commencement of that action, Belamour filed a counterclaim against LienFactors.   Thereafter, pursuant to Practice Book § 9-22, Belamour successfully moved to cite in two third-party defendants, one of whom is Jessica Braus, former counsel for LienFactors.   On May 19, 2008, Belamour filed a revised third party complaint, and in the third-count, she alleges the following facts against Braus.

Braus is a licensed attorney who “represented LienFactors LLC in foreclosing judgment liens as well as attempting to collect debts on behalf of others.”   “At the time of entering her appearance” on behalf of LienFactors in its action against Belamour, Braus knew or should have known that (1) “the premises” ¹ were Belamour's primary residence and that (2) Belamour's “equity in the premises did not exceed $75,000 [which is] the amount of homestead equity exempted from judicial process” under General Statutes § 52-352b(t).  Belamour claims that “the foreclosure of exempt property is an unfair [debt collection] practice as defined in ․ 15 U.S.C. § 1692f(6)(c)” and that Braus, as a debt collector, is therefore subject to the penalties set out in the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq.

The fourth count of the revised third-party complaint, which also is directed against Braus, incorporates the facts alleged in the third count and further alleges that “an attempt to foreclose a judgment lien on exempt real property is an unfair trade practice” within the meaning of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq.   Belamour seeks damages, punitive damages, attorneys fees, statutory damages, costs and other relief deemed proper by the court.

On November 20, 2008, Braus filed a motion to strike the third and fourth counts.   She moves to strike the third count on the grounds that (1) representing a creditor in a lawsuit is not a “nonjudicial action” within the meaning of 15 U.S.C. § 1692f(6)(c) and (2) Belamour's property has not been proven to be exempt from “dispossession.”   She moves to strike the fourth count on the grounds that (1) CUTPA does not provide a cause of action against an attorney for her client's adversary and (2) Belamour's allegations do not pertain to the entrepreneurial or commercial aspects of the practice of law.   Braus filed a memorandum of law in support of her motion to strike.   In reply, Belamour filed a memorandum in opposition.

DISCUSSION

Practice Book § 10-39(a) provides in relevant part:  “Whenever any party wishes to contest ․ the legal sufficiency of the allegations of any complaint, counterclaim or cross claim, or of any one or more counts thereof, to state a claim upon which relief can be granted ․ that party may do so by filing a motion to strike the contested pleading or part thereof.”  “It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted.”  (Internal quotation marks omitted.)  Doe v. Yale University, 252 Conn. 641, 667, 748 A.2d 834 (2000).  “In ruling on a motion to strike, the court is limited to the facts alleged in the complaint ․ [and] must construe the facts in the complaint most favorably to the [pleader].”  (Internal quotation marks omitted.)  Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997).   Furthermore, “grounds other than those specified should not be considered by the trial court in passing upon a motion to strike ․” (Internal quotation marks omitted.)  Gazo v. Stamford, 255 Conn. 245, 259, 765 A.2d 505 (2001).

I COUNT THREE THE FDCPA

Braus argues that the third count should be stricken because Belamour does not sufficiently state a claim under 15 U.S.C. § 1692f(6)(c), which prohibits a debt collector's use of “nonjudicial action” to effect a dispossession of property exempt by law.   According to Braus, representing a creditor in a lawsuit is clearly a judicial action.   Therefore, she asserts that 15 U.S.C. § 1692f(6)(c) does not apply to the facts alleged.

Belamour criticizes Braus' argument as standing for the proposition that “you can't send a letter threatening to foreclose a judgment lien on exempt property, but you can bring an action to foreclose that lien.”   Moreover, without addressing the applicability of 15 U.S.C. § 1692f(6)(c), Belamour responds that she has sufficiently stated a claim within the broader ambit of 15 U.S.C. § 1692f, which generally prohibits the use of “unfair or unconscionable means” by debt collectors to collect a debt.   Belamour, however, does not develop any analysis or submit pertinent legal authority to support this claim of legal sufficiency.²

As a threshold issue, the court must first determine whether to evaluate the legal sufficiency of Belamour's allegations on the basis of the general prohibition articulated in 15 U.S.C. § 1692f or on the basis of the specific violation expressed in 15 U.S.C. § 1692f(6)(c).³  In conformity with Practice Book § 10-3,⁴ Belamour pleaded 15 U.S.C. § 1692f(6)(c) as the statutory provision upon which her claim in the third count is grounded.   “Although our courts repeatedly have recognized that the rule embodied in Practice Book § 10-3 is directory and not mandatory ․ notice is the critical consideration ․” (Citations omitted.)  Michalski v. Hinz, 100 Conn.App. 389, 394, 918 A.2d 964 (2007).   Since Belamour provides express notice that 15 U.S.C. § 1692f(6)(c) is the statutory ground for her cause of action, it is proper for the court to determine the legal sufficiency of her allegations on the basis of the violation specified in that subsection.   The alternative approach would work an unfair surprise on Braus because the notice provided in the memorandum in opposition, namely, that Belamour seeks recovery under the general prohibition of 15 U.S.C. § 1692f, is not consistent with the notice provided in the operative complaint and was not given until after Braus filed the motion to strike.   See Foncello v. Amorossi, 284 Conn. 225, 233, 931 A.2d 924 (2007) (“[t]he purpose of a complaint or counterclaim is to limit the issues at trial, and such pleadings are calculated to prevent surprise ․ It is fundamental in our law that the right of a plaintiff to recover is limited to the allegations of his complaint”).

Under 15 U.S.C. § 1692f(6)(c), it is a violation for a debt collector to use “nonjudicial action” to effect “dispossession or disablement” of property exempt by law.   Belamour does not allege, however, that Braus took any nonjudicial action.   On the contrary, Belamour alleges that Braus appeared on behalf of LienFactors in its foreclosure action against her.  “In this state, every foreclosure must be prosecuted as a civil action in the [S]uperior [C]ourt for the judicial district in which the property is located.”   D. Caron, “The Foreclosure Process in Connecticut,” Foreclosures 101:  An Overview (2007), p. 2. Indeed, that foreclosure action is currently pending before the court.   Because Braus' alleged conduct involves judicial ⁵ action as opposed to nonjudicial action, Belamour fails to state sufficiently a claim under 15 U.S.C. § 1692f(6)(c).  See Glazer v. Chase Home Finance, LLC, United States District Court, Docket No. 1:09CV1262 (N.D.Ohio March 31, 2010) (holding 15 U.S.C. § 1692f(6) did not apply to judicial foreclosure because provision applied only to nonjudicial actions);  see also Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, United States District Court, Docket No. 05-3059 (C.D.Ill. May 18, 2006) (noting although “[t]he FDCPA states that taking possession of exempt assets through nonjudicial collection efforts is unfair or unconscionable as a matter of law ․ [it] does not state that using judicial proceedings is unfair or unconscionable”), aff'd, 480 F.3d 470 (7th Cir.2007).

Based on the foregoing, the motion to strike the third count of the revised third-party complaint will be granted.

COUNT FOUR CUTPA

Braus argues that the court should grant the motion to strike as to the fourth count because CUTPA does not provide a private cause of action to a party in litigation for the actions of his or her opponent's attorney.   Even if it so provides, argues Braus, Belamour still does not state a legally sufficient cause of action because, as to the practice of law, CUTPA applies only to its entrepreneurial or commercial aspects.

Belamour concedes that Braus “correctly states [that] CUTPA does not provide a cause of action against an attorney by his or her client's opponent.”   Contrary to this concession, however, Belamour argues that Braus violated CUTPA because Braus “knew, or should have known, [that] she was seeking to foreclose on exempt property.”   Although Belamour asserts this “is an unfair practice,” she does not provide any legal authority to support her position that allegations in the fourth count “easily come within the CUTPA purview.”

“CUTPA provides a private cause of action to [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 [prohibited] method, act or practice ․” (Internal quotation marks omitted.)  Fink v. Golenbock, 238 Conn. 183, 212, 680 A.2d 1243 (1996).   CUTPA's operative provision, General Statutes § 42-110b(a), provides:  “No person ⁶ shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” ⁷  “[B]y its own terms, [the act] applies to a broad spectrum of commercial activity ․ The entire act is remedial in character ․ and must be liberally construed in favor of those whom the legislature intended to benefit.”  (Citations omitted;  internal quotation marks omitted.)  Larsen Chelsey Realty Co. v. Larsen, 232 Conn. 480, 492, 656 A.2d 1009 (1995).⁸

“[Our Supreme Court] has stated that, in general, ‘CUTPA applies to the conduct of attorneys.’  Heslin v. Connecticut Law Clinic of Trantolo & Trantolo, 190 Conn. 510, 521, 461 A.2d 938 (1983).   The statute's ‘regulation of the conduct of any trade or commerce does not totally exclude all conduct of the profession of law.’  (Internal quotation marks omitted.)  Id.” Beverly Hills Concepts, Inc. v. Schatz & Schatz, Ribicoff & Kotkin, 247 Conn. 48, 79, 717 A.2d 724 (1998).   Nevertheless, “[a]lthough an attorney is not exempt from CUTPA ․ [w]e have held that it is important not to interfere with the attorney's primary duty of robust representation of the interests of his or her client.”  (Citation omitted;  internal quotation marks omitted.)   Haynes v. Yale-New Haven Hospital, 243 Conn. 17, 34-35, 699 A.2d 964 (1997).

Accordingly, our Supreme Court significantly delimited CUTPA's coverage as to attorneys when it “conclude[d] that in a situation where a party to a lawsuit sues the adversary's lawyer, CUTPA does not provide a private cause of action.”  Jackson v. R.G. Whipple, Inc., 225 Conn. 705, 726 n.15, 627 A.2d 374 (1993).   That case arose from the actions taken by an owner of a trailer park and its attorney to remove the plaintiff's mobile home from the trailer park.   The court in R.G. Whipple, Inc. rejected the plaintiff's argument that the attorney was liable under CUTPA for the damage he caused to her mobile home during his representation of the owner in various aspects of the owner's eviction and collection actions against the plaintiff.  Id., 722.   The court reasoned:  “Notwithstanding the 1979 amendment to CUTPA's standing provision [intended to make privity less of an obstacle to recovery], important policy considerations inform the potential liability of an attorney to an adversary.   Those considerations transcend CUTPA and its remedial intent ․ Providing a private cause of action under CUTPA to a supposedly aggrieved party for the actions of his or her opponent's attorney would stand the attorney-client relationship on its head and would compromise an attorney's duty of undivided loyalty to his or her client and thwart the exercise of the attorney's independent professional judgment on his or her client's behalf ․ Imposing liability under CUTPA on attorneys for their representation of a party opponent in litigation would not comport with a lawyer's duty of undivided loyalty to his or her client.”(Emphasis added.)  Id., 727-29.

In view of our Supreme Court's holding in R.G. Whipple, Inc. and in recognition of the paramount importance of the attorney-client relationship to the legal profession, Belamour's allegations are legally insufficient to state a claim under CUTPA.   Those allegations are essentially that Braus represented LienFactors in litigation that Belamour claims is unfair and illegal.   Braus' actions, however, are precisely those which have been held to be exempt from CUTPA liability.   Therefore, the court will grant the motion to strike as to the fourth count of the revised third-party complaint.

CONCLUSION

Based on the foregoing, the court grants the motion to strike counts three and four of the revised third-party complaint.

Hartmere, J.

FOOTNOTES

FN1. Although basic facts as to “the premises” are neither alleged nor incorporated in the third count, Belamour alleges in the first count that the premises are property that she owns and are encumbered by the judgment lien that LienFactors seeks to foreclose.   Belamour further alleges that LienFactors was assigned the lien and that the original lien holder was Coldwell Banker Residential Brokerage, who had obtained a $14,590.40 judgment against her..  FN1. Although basic facts as to “the premises” are neither alleged nor incorporated in the third count, Belamour alleges in the first count that the premises are property that she owns and are encumbered by the judgment lien that LienFactors seeks to foreclose.   Belamour further alleges that LienFactors was assigned the lien and that the original lien holder was Coldwell Banker Residential Brokerage, who had obtained a $14,590.40 judgment against her.

FN2. For example, although Belamour argues that the foreclosure action instituted by LienFactors “was never otherwise legal,” she provides no reasoning or authority for this assertion nor does she relate this claim to the statute that was allegedly violated..  FN2. For example, although Belamour argues that the foreclosure action instituted by LienFactors “was never otherwise legal,” she provides no reasoning or authority for this assertion nor does she relate this claim to the statute that was allegedly violated.

FN3. 15 U.S.C. § 1692f provides in relevant part:  “A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt.   Without limiting the general application of the foregoing, the following conduct is a violation of this Section ․”15 U.S.C. § 1692f(6)(C) then lists a specific violation of the section:  “Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if ․ the property is exempt by law from such dispossession or disablement.”.  FN3. 15 U.S.C. § 1692f provides in relevant part:  “A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt.   Without limiting the general application of the foregoing, the following conduct is a violation of this Section ․”15 U.S.C. § 1692f(6)(C) then lists a specific violation of the section:  “Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if ․ the property is exempt by law from such dispossession or disablement.”

FN4. Practice Book § 10-3(a) provides:  “When any claim made in a complaint, cross complaint, special defense, or other pleading is grounded on a statute, the statute shall be specifically identified by its number.”Practice Book § 10-3(b) provides:  “A party to an action who intends to raise an issue concerning the law of any jurisdiction or governmental unit thereof outside this state shall give notice in his or her pleadings or other reasonable written notice.”.  FN4. Practice Book § 10-3(a) provides:  “When any claim made in a complaint, cross complaint, special defense, or other pleading is grounded on a statute, the statute shall be specifically identified by its number.”Practice Book § 10-3(b) provides:  “A party to an action who intends to raise an issue concerning the law of any jurisdiction or governmental unit thereof outside this state shall give notice in his or her pleadings or other reasonable written notice.”

FN5. “Judicial” means “[o]f, relating to, or by the court or a judge ․” Black's Law Dictionary (9th Ed.2009)..  FN5. “Judicial” means “[o]f, relating to, or by the court or a judge ․” Black's Law Dictionary (9th Ed.2009).

FN6. “ ‘Person’ means a natural person, corporation, limited liability company, trust, partnership, incorporated or unincorporated association, and any other legal entity ․” General Statutes § 42-110a(3)..  FN6. “ ‘Person’ means a natural person, corporation, limited liability company, trust, partnership, incorporated or unincorporated association, and any other legal entity ․” General Statutes § 42-110a(3).

FN7. “ ‘Trade’ and ‘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)..  FN7. “ ‘Trade’ and ‘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).

FN8. “It is well settled that in determining whether a practice violates CUTPA [our Supreme Court] [has] adopted the criteria set out in the cigarette rule by the federal trade commission for determining when a practice is unfair:  (1)[W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise-whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness;  (2) whether it is immoral, unethical, oppressive, or unscrupulous;  (3) whether it causes substantial injury to consumers [competitors or other businessmen] ․ All three criteria do not need to be satisfied to support a finding of unfairness.   A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.”  (Internal quotation marks omitted.)  Journal Publishing Co. v. Hartford Courant Co., 261 Conn. 673, 695-96, 804 A.2d 823 (2002)..  FN8. “It is well settled that in determining whether a practice violates CUTPA [our Supreme Court] [has] adopted the criteria set out in the cigarette rule by the federal trade commission for determining when a practice is unfair:  (1)[W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise-whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness;  (2) whether it is immoral, unethical, oppressive, or unscrupulous;  (3) whether it causes substantial injury to consumers [competitors or other businessmen] ․ All three criteria do not need to be satisfied to support a finding of unfairness.   A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.”  (Internal quotation marks omitted.)  Journal Publishing Co. v. Hartford Courant Co., 261 Conn. 673, 695-96, 804 A.2d 823 (2002).

Hartmere, Michael, J.