A & G Contracting, Inc. v. LLC (2011)

MEMORANDUM OF DECISION RE MOTION TO STRIKE REGARDING THE DESIGN/BUILD COLLABORATIVE, LLC'S COUNTERCLAIM (No. 137)

The motion to strike now before the court arises out of a three-cornered dispute between a homeowner, a general contractor, and a builder over the collapse of a contract for the expansion and renovation of a home.   In the subset of the dispute involved here, the general contractor, The Design/Build Collaborative, LLC (“DBC”), has filed a counterclaim against the builder, A & G Contracting, Inc. (“A & G”).  The counterclaim consists of four counts, three of which are in dispute here.   The First Count claims tortious interference with contract, the Second Count claims tortious interference with business relationship, and the Fourth Count claims a violation of the Connecticut Unfair Trade Practices Act, Conn. Gen.Stat. § 42–110a et seq.  (“CUTPA”).  The gist of the counterclaim is that, while working on the project, A & G falsely informed the homeowner that DBC had failed to pay A & G for work that A & G had performed at the premises.   This communication allegedly caused the homeowner to lose “confidence and trust in DBC,” and the homeowner consequently terminated his contract with DBC.

On December 29, 2010, A & G filed the motion to strike now before the court.   The motion seeks to strike the First, Second, and Fourth Counts of the counterclaim.   It asserts five grounds:  (1) the First and Second Counts “are barred by the economic loss doctrine,” (2) the First and Second Counts “contain no allegation of improper motive or means,” (3) the First and Second Counts “must be stricken because A & G cannot be interfere with [sic] the contract of its alleged principal,” (4) the Second Count “must be stricken because it is nothing more than a Tortious Interference with Contractual Relationship claim re-alleged as a Tortious Interference with Business Relations Claim,” and (5) the Fourth Count is “legally insufficient ․ for failing to allege injury to anyone else than DBC.”

The motion was argued on February 22, 2011.   Supplemental briefs were filed on February 25, 2011.

The grounds of the motion will be considered in order.

(1) The Economic Loss Rule

Our Supreme Court has recognized what it terms “the economic loss rule.”   American Progressive Life & Health Insurance Co. v. Better Benefits, LLC, 292 Conn. 111, 116, 971 A.2d 17 (2009).   The rule holds that, when “sophisticated” parties enter into a contract, they are free to allocate the risks of their enterprise as they please, and recovery under tort law should not be allowed for purely commercial losses.   Id., n. 4. The key term in this somewhat terse summary is “sophisticated.”   When two corporations, each with a squadron of lawyers, negotiate a contract, they are appropriately left to their own contractual language.   Other cases, involving less sophisticated parties, may require a different judicial approach.  American Progressive suggests that this is a fact-based determination rather than a categorical rule applicable to all cases of asserted contract.   The relevant facts in this case cannot be determined on a motion to strike.   A & G' s “economic loss” argument is better left to a motion for summary judgment.

(2) “Improper motive or means”

Although A & G contends that the First and Second Counts allege no “improper motive or means,” a cursory look at those counts indicates the contrary.   Paragraph 10 of each count expressly alleges malice.

3. DBC's “principal” status.

A & G argues that the First and Second Counts must be stricken because A & G could not “interfere with the contract of its alleged principal.”   The decision on which A & G relies, Wellington Systems, Inc. v. Redding Group, Inc., 49 Conn.App. 152, 714 A.2d 21, cert. denied, 247 Conn. 905, 720 A.2d 516 (1998), does not support its argument in the context of this case.   Wellington Systems holds that an agent cannot be held liable for inducing a principal to break his contract with a third party “because to hold him liable would be, in effect, to hold the corporation liable in tort for breaching its own contract.”  Id., at 168.  (Internal quotation marks and citations omitted.)   DBC does not, however, allege that A & G caused DBC to breach its own contract.   Rather, it alleges that A & G caused the homeowner to breach the homeowner's contract with DBC. Wellington Systems does not prohibit this allegation.

4. Duplicative Counts

A & G's fourth argument essentially attacks the First and Second Counts as duplicative.   When read carefully, both counts assert the existence of a contract, so the conceptual difference between them is not clear.   The tort asserted in each of these counts does not, in any event, depend on the formal existence of a contract.   It is often called “tortious interference with business expectancies.”  Harris v. Bradley Memorial Hospital & Health Center, Inc., 296 Conn. 315, 346, 994 A.2d 153 (2010).   A & G agreed with these observations at argument and further agreed to amend its pleading accordingly.

5. CUTPA

Although A & G's motion seeks to strike the Fourth Count on the ground that it is legally insufficient for failing to allege injury to someone other than DBC, A & G subsequently retreated from this asserted ground in its supplemental memorandum of law.   That memorandum acknowledges that, under Connecticut law, “a single act of misconduct is sufficient to constitute a violation of CUTPA.”   Supplemental Memorandum, at 1. The supplemental memorandum instead attacks the Fourth Count for concluding “in a cursory manner that A & G's conduct was deceptive as opposed to the entity being simply mistaken.”  Id., at 2.

The short answer to this contention is that the Fourth Count does not allege deception.   It instead incorporates the factual allegations discussed supra and alleges that A & G's actions were “immoral, unethical, oppressive, unscrupulous, offend public policy ․ and were done with reckless indifference.”   Viewing the counterclaim broadly, in the light most favorable to the party opposing the motion, the court cannot conclude at this stage that the Fourth Count fails to plead a cause of action under CUTPA.

For the reasons stated above, the motion to strike is granted insofar as it seeks to strike the Second Count as duplicative.   The motion is otherwise denied.

Blue, Jon C.

Blue, Jon C., J.