LLC v. TD (2011)

MEMORANDUM OF DECISION RE DEFENDANT'S MOTION TO STRIKE (# 102)

Preliminary Statement

This action arises out of the alleged theft of the plaintiff's monies by an employee of the defendant bank and the bank's subsequent refusal to return the funds to the plaintiff.   The monies in question were left at the bank for counting, deposit and other distribution.   The plaintiff brings a five-count complaint alleging in count one—breach of contract;  in count two—negligence;  in count three—conversion;  in count four—breach of fiduciary duty;  and in count five—a violation of the Connecticut Unfair Trade Practices Act (CUTPA).   The defendant filed a motion to strike counts one, three, four and five on the grounds that the allegations do not support the causes of action stated therein.¹  For the reasons set forth below, the motion to strike is GRANTED in part and DENIED in part.

Standard of Review

It is well settled that the role of the trial court in ruling on a motion to strike is to test the legal sufficiency of a pleading.  RK Constructors, Inc v. Fusco Corp., 231 Conn. 381, 384 (1994).   The court must “examine the [complaint] construed in favor of the [plaintiff] to determine whether the [pleading party has] stated a legally sufficient cause of action.  (Internal quotation marks omitted.)  Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 378 (1997).  “[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied ․ Moreover, [w]hat is reasonably implied [in an allegation] need not be expressly alleged.”   (Citation omitted;  internal quotation marks omitted.)  Lombard v. Edward J. Peters, Jr., P.C., 252 Conn. 623, 626 (2000).   Similarly, a motion to strike may be used to challenge the relief sought if the relief sought could not be legally awarded.  Pamela B. v. Ment, 244 Conn. 296 (1998).

For purposes of the motion to strike, the moving party admits all facts well pleaded.  RK Constructors, Inc. supra, at 383 n.2. The same is not so of legal conclusions and a motion to strike may be granted if the complaint alleges “mere conclusions of law that are unsupported by the facts alleged.”   Novametrix Medical Systems, Inc. v. BOC Group, Inc. 224 Conn. 210, 215 (1992).

Discussion

A. Count One—Breach of Contract

The first count of the plaintiff's complaint purports to allege a breach of contract.   In Connecticut, a banking customer has a debtor-creditor relationship with the bank, created by the deposit of monies with the bank by the customer.  Alexiou v. Bridgeport–People's Savings Bank, 110 Conn. 397, 399 (1930).   These relationships are contractual in nature.  Ferrato v. Webster Bank, 67 Conn.App. 588, 593 (2002).  “[A] bank is indebted to its account holders for the amount of the funds that they have deposited.”  Id. citing Frigon v. Enfield Savings & Loan Ass'n., 195 Conn. 82, 87 (1985).

In addition, in the complaint the plaintiff alleges that “the defendant was obligated to safeguard all deposits made under the terms of the written agreement signed upon the opening of the plaintiff's accounts.”

The alleged breach of this agreement occurred when, after the employee stole the monies that had been left for deposit, the bank failed to return or reimburse the plaintiff for those lost funds.   The defendant claims that as pled, the count is legally insufficient.   It relies on the allegation that the funds were stolen and not deposited.   Thus, it concludes that on its face, the complaint fails to allege the only act that creates the contractual obligation—the deposit of funds.   In other words, since the funds were stolen before being deposited and were therefore never deposited, the funds were never the subject of any contractual obligation.

The plaintiff counters that the allegations adequately allege a contractual obligation that extends to the funds in question.   This court finds that whether the funds in question were subject to the bank's alleged contractual obligations to the plaintiff is not appropriately determined through a motion to strike.   The allegations clearly place that question in issue.

The complaint alleges a contractual obligation to safeguard deposits.   The complaint alleges that the plaintiff would “bring the coinage in bags to the Defendant's branch ․ where the coins would be counted and taken for deposit.”   Further, “Subsequent to each deposit, the Plaintiff was supposed to have been sent three deposit slips and one money order.”   Thereafter, the plaintiff learned that “amounts actually retained for deposit were significantly less than the amounts brought in for deposit.”  Thereafter, the plaintiff learned that the employee was “misappropriating substantial portions of the deposits and depositing less coinage than was presented for deposit” by the plaintiff.

In sum, the plaintiff's complaint alleges that the funds stolen were “deposits” and thus subject to the bank's contractual obligations.   The alleged breach, the failure to reimburse for the stolen deposits, is essentially a claim that the bank failed to honor a depositor's demand.   See, Lenox Realty Co. v. Hackett, 122 Conn. 143, 146–47 (1936) (A bank's obligation to its customers is limited to its requirement to pay on the depositor's demand);  Alexiou v. Bridgeport–People's Savings Bank, 110 Conn. 397, 399 (1930) (The obligation of the defendant savings bank was to pay the plaintiff the amount of her deposit upon proper demand).

The defendant's argument, that funds left by the customer to be deposited are not deposits until they actually make it into an account, may ultimately succeed, but not on a motion to strike as the allegations are to the contrary.   Further, the defendant's reliance on Rheaume v. FleetBoston Financial Corp., Superior Court, judicial district of New London, Dkt. No. CV 03 0564496, (November 16, 2005, Leuba, J.T.R.), is unavailing.   There, the plaintiff brought a breach of contract claim against the bank under the theory of respondeat superior, for the theft of monies that had unquestionably been deposited.   After trial, the plaintiff did not even brief or argue the nature and extent of the alleged contract.   Nor did the court find any evidence of the terms of any such contract.   Notwithstanding, the court ruled that the theft by the employee could not be imputed to the bank under the doctrine of respondeat superior insofar as the employee's conduct was in no way “done to further [the bank's] business.”  Id.

Here, the alleged breach of the contract is not the theft of the monies by the employee.   The alleged breach occurred when the defendant failed to reimburse or return the funds stolen.   Again, whether a contractual obligation is found to exist and whether it was breached is not to be decided in a motion to strike.   As alleged, the complaint sets forth the necessary elements of a breach of contract claim.   The motion to strike count one is denied.

B. Count Four—Breach of Fiduciary Duty

Count four alleges that the bank breached its fiduciary duty to the plaintiff.   The complaint avers that the Defendant held a position of trust with respect to all deposits made by the Plaintiff.   It further avers that the plaintiff had a unique degree of trust and confidence in the defendant and relied on its superior knowledge skills and expertise.   Thereafter, the plaintiff alleges a fiduciary duty to:  process the plaintiff's deposits accurately;  account for them;  oversee the employees charged with taking the deposits;  account for all losses caused by the employees and reimburse for same.   Finally, the plaintiff claims a breach of this fiduciary duty in various ways, to include failing to supervise the employee and failing to reimburse the plaintiff for the stolen funds.

A fiduciary relationship is characterized by a unique degree of trust and confidence between the parties, one of whom has superior knowledge, skill or expertise and is under a duty to represent the interests of the other.   Dunham v. Dunham, 204 Conn. 303, 322 (1987);  Worobey v. Sibieth, 136 Conn. 352, 359 (1949).   While negligence implicates a duty of care, fiduciary duty implicates a duty of loyalty and honesty.  Beverly Hills Concepts, Inc. v. Schatz & Schatz, Ribicoff & Kotkin, 247 Conn. 48, 56–57 (1998).   The superior position of the fiduciary affords him the opportunity to abuse the trust placed in him.  Dunham v. Dunham, supra., citing, D. Dobbs, Remedies (1973) 10.4, p. 682.

Rather than defining a fiduciary relationship with precision and in such a manner to exclude new situations, the Supreme Court has left open the possibility of a fiduciary relationship being established in a variety of situations in which there is a justifiable trust confided on one side and a resulting influence on the other.  Elm City Cheese Co. v. Federico, 251 Conn. 59, 99 (1999).   See also, Alaimo v. Royer, 188 Conn. 36, 41 (1982).

However, as a general matter, a bank does not act in a fiduciary capacity on behalf of its customers.  “The fact that a bank is indebted to its account holders ․ imposes no special duty of care for the safe keeping of the funds on deposit.”  Frigon v. Enfield Savings & Loan Ass'n, 195 Conn. 82, 87 (1985).   The mere fact that a customer has deposited funds into a bank does not create a fiduciary relationship between the bank and the customer.   See, Greenwords Scholarship Foundation, Inc. v. Northwest Community Bank, Superior Court, judicial district of Hartford, Docket No. CV 96 0558956 (June 4, 1999, Teller, J.).   Indeed, the debtor-creditor relationship between a bank and its customer rarely gives rise to a fiduciary duty.   M.P.H. Recovery v. Bank of America, N.A., Superior Court, Judicial District of Fairfield, Docket No. CV 05 4010772 (January 30, 2007, Arnold, J.);   Lukaskik v. Banknorth, N.A., Superior Court, judicial district of New Britain, Docket No. CV 04 4001336 (April 26, 2005, Burke, J.);   Citicorp Vendor Finance, Inc. v. Sonnelite, Superior Court, judicial district of Danbury, Docket No. CV 03 0350572 (January 28, 2005, Frankel, J.).

Here, although the complaint contains the talismanic and conclusory language required to establish a fiduciary relationship, the factual allegations do not, as a matter of law, rise to the level contemplated by our Supreme Court in establishing such a relationship.   The circumstances alleged do not transform the role of the bank from creditor to fiduciary or trustee.

The motion to strike count four is granted.

C. Count Five—CUTPA (42–110b)

In count five, the plaintiff incorporates the allegations of count one,—the breach of contract claim.   The complaint further avers that following the theft of funds by the defendant's employee, the bank failed to return the stolen deposits, reimburse the plaintiff or even communicate with the plaintiff.   These failures are bases upon which the plaintiff alleges that the defendant engaged in conduct that was “unfair, unethical, immoral, oppressive, unscrupulous and violative of public policy and is of the kind that causes substantial injuries to consumers.”

Under CGS § 42–110b(a), “[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.”

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 ․ Thus a violation of CUTPA may be established by showing either an actual deceptive practice ․ or a practice amounting to a violation of public policy ․ In order to enforce this prohibition, 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 ․” (Citations omitted;  internal quotation marks omitted.)  Ramirez v. Health Net of the Northeast, Inc., supra, 285 Conn. 18–19.

Harris v. Bradley Memorial Hospital & Health Center, 296 Conn. 315, 350–51 (2010).

Here, the plaintiff incorporates the allegations of the breach of contract (failure to return the deposits) and further asserts that following the employee defalcation, the bank failed and refused to communicate with the plaintiff.²  This conduct, in the aggregate, is alleged to meet the so-called cigarette rule standard for unfair practices.   The allegations, read broadly and favorably to the plaintiff, do not set forth a CUTPA claim.   The alleged breach of contract, even coupled with an alleged refusal to communicate does not implicate public policy nor substantial injury to consumers.   See, e.g.;   Ranger v. Gianmarco, Superior Court, judicial district of Middlesex, Docket No. CV 08 5004260 (October 7, 2008, Holzberg, J.) (A contract breach is not sufficient to establish a violation of CUTPA unless it is set forth how or in what respect the defendant's activities are either, immoral, unethical, unscrupulous, or offensive to public policy).   There is no explanation or allegation, beyond the conclusory, that the conduct at issue is violative of any identifiable public policy;  oppressive, unscrupulous or otherwise unfair or deceptive.   The allegations are generally that the bank breached a contract and thereafter refused to acknowledge that breach or further discuss the issue, thereby taking a contrary legal position from the plaintiff.

The motion to strike count five is granted.

K. DOOLEY, J

FOOTNOTES

FN1. At oral argument, plaintiff's counsel conceded that the third count alleging conversion should be stricken..  FN1. At oral argument, plaintiff's counsel conceded that the third count alleging conversion should be stricken.

FN2. The plaintiff does not incorporate the allegations of negligence.   However, even if those allegations were included, the CUTPA count would fail.   See, e.g. A–G Foods, Inc. v. Pepperidge Farm, Inc., 216 Conn. 200, 213–17 (1990) (CUTPA claim failed where allegations involved negligent supervision of an employee) Assurance Co. of America v. Yakemore, 50 Conn.Sup. 28, 39 777 (2006) (“Allegations of negligence alone are insufficient to support a CUTPA claim.”);   McCarthy v. Jensens, Inc., Superior Court, judicial district of New London, Docket No. CV 535951 (Mar. 12, 1997, Booth, J.) (19 Conn. L. Rptr. 286, 287) (If a CUTPA claim is based on negligence alone, it must satisfy all three criteria for unfairness adopted in the ‘cigarette rule’ used by the federal trade commission”)..  FN2. The plaintiff does not incorporate the allegations of negligence.   However, even if those allegations were included, the CUTPA count would fail.   See, e.g. A–G Foods, Inc. v. Pepperidge Farm, Inc., 216 Conn. 200, 213–17 (1990) (CUTPA claim failed where allegations involved negligent supervision of an employee) Assurance Co. of America v. Yakemore, 50 Conn.Sup. 28, 39 777 (2006) (“Allegations of negligence alone are insufficient to support a CUTPA claim.”);   McCarthy v. Jensens, Inc., Superior Court, judicial district of New London, Docket No. CV 535951 (Mar. 12, 1997, Booth, J.) (19 Conn. L. Rptr. 286, 287) (If a CUTPA claim is based on negligence alone, it must satisfy all three criteria for unfairness adopted in the ‘cigarette rule’ used by the federal trade commission”).

Dooley, Kari A., J.