LLC v. Giant Steps, Inc. et al. (2011)

MEMORANDUM OF DECISION RE MOTION TO STRIKE # 135

The issue before the court is whether to grant the defendants' motion to strike counts seventeen through twenty alleging violations of Connecticut's Unfair Trade Practices Act, and twenty-one through twenty-four alleging tortious interference with business relations on the ground that each count is legally insufficient because it fails to state a claim upon which relief may be granted.

I

FACTS

On May 13, 2011, the plaintiffs, Time Was Garage, LLC (Time Was Garage), CCM Holding, LLC (CCM Holding), Michael O'Brien, Christopher Kerr and Constance Fialkiewicz, filed a substituted revised second amended complaint against the defendants, Giants Steps, Inc. (Giant Steps), 425 P.M., LLC, Cathy Hinman and Howard Hinman, containing twenty counts ¹ and alleging five separate causes of action.²  On June 14, 2011, the defendants filed the present motion to strike counts seventeen through twenty, alleging violations of Connecticut's Unfair Trade Practices Act (CUTPA), and counts twenty-one through twenty-four, alleging tortious interference with business relations.   The defendants argue that each count is legally insufficient because it fails to state a claim upon which relief may be granted.   On July 21, 2011, the plaintiffs filed an objection to the defendants' motion to strike.

The matter was heard on the July 25, 2011 short calendar.   Additional facts will be presented as necessary.

II

DISCUSSIONAMotion to Strike Standard

“The purpose of a motion to strike is to contest ․ the legal sufficiency of the allegations of any complaint ․ to state a claim upon which relief can be granted.”  (Internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).  “[The court takes] the facts to be those alleged in the complaint that has been stricken and we construe the complaint in the manner most favorable to sustaining its legal sufficiency ․ Thus [i]f facts provable in the complaint 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 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 ․ Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically.”  (Internal quotation marks omitted.)   Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, 295 Conn. 240, 252–53, 990 A.2d 206 (2010).

B

Background

The plaintiffs and defendants operate neighboring businesses.   Plaintiff Time Was Garage is a used car dealership and automobile repair shop, specializing in the restoration of classic automobiles, that began operating a business at 417 Main Street in New Hartford, Connecticut in 2004.   Defendant Giant Steps owns and operates a day care facility at 425 Main Street in New Hartford, Connecticut.   The complaint alleges that as far back as 2003 until early 2009, the defendants engaged in conduct aimed at defaming the plaintiffs.   According to the plaintiffs, the defendants designed and carried out a campaign of harassment aimed at the plaintiffs which included making false accusations to neighbors and local, state and federal authorities of contamination of the air and ground as well as violations of local ordinances and state and federal laws.   The plaintiffs allege that the defendants' conduct was aimed at making the plaintiffs lose their property by making it difficult for the plaintiffs to maintain their business operations because of increasing costs, lost business and destroyed relationships with neighbors, police and governing officials.

CCM Holding is the owner of property at 417 Main Street in New Hartford, Connecticut.   CCM Holding leases the 417 Main Street property to Time Was Garage.   O'Brien and Kerr are members of Time Was Garage and CCM Holding.   Fialkiewicz is a member of CCM Holding.   Defendants Cathy and Howard Hinman are the majority shareholders of Giant Steps, which is owned by 425 P.M., LLC. Cathy and Howard Hinman are members of 425 P.M., LLC.

C

Analysis

The plaintiffs' substituted revised second amended complaint was filed in response to this court's ruling (# # 131.01, 133) on a motion to strike filed by the defendants on February 17, 2011, in which twelve counts of the plaintiffs' complaint were stricken, including counts seventeen through twenty, alleging violations of CUTPA, and counts twenty-one through twenty-four, alleging injurious falsehood.   The plaintiffs' substituted revised second amended complaint repleads counts seventeen through twenty, alleging violations of CUTPA, and pleads counts twenty-one through twenty-four as claims for tortious interference with business relations.

The defendants move to strike the CUTPA counts seventeen through twenty and counts twenty-one through twenty-four alleging tortious interference with business relations.   The plaintiffs do not object to the striking of counts twenty-one through twenty-four.   This will be treated as a withdrawal of those counts by the plaintiffs with prejudice.   Therefore, the court will focus its analysis only on the legal sufficiency of the CUTPA counts.

1

Counts Seventeen Through Twenty:  CUTPA

The defendants move to strike counts seventeen through twenty alleging violations of CUTPA ³ on the ground that the counts are legally insufficient because they fail to allege any consumer, trade or other business relationship between the parties.   According to the defendants, the plaintiffs, in an attempt to establish the requisite relationship between the parties, revised their complaint to add the conclusory allegation that 425 P.M., the corporation owning the daycare center property, is in the business of real estate and is, therefore, a competitor of CCM Holding, the corporation owning the autobody shop property.   Moreover, to tie the remaining defendants into the alleged relationship between 425 P.M. and CCM Holding, the plaintiffs claim that Giant Steps conspired with 425 P.M. and that Cathy and Howard Hinman dominated Giant Steps and 425 P.M. to the extent that these corporations had no separate identities.

The defendants argue that these allegations are legally insufficient because (1) 425 P.M. is not in the business of real estate;  (2) even if 425 P.M. was in the business of real estate, the claimed relationship between 425 P.M. and CCM Holding does not pertain to the relevant marketplace;  (3) the law of the case doctrine dictates that the plaintiffs' allegations are insufficient;  and (4) no relationship between the defendants and plaintiffs Time Was Garage, Michael O'Brien, Constance Fialkiewicz and Christopher Kerr has been alleged.   Moreover, with respect to defendants Cathy and Howard Hinman, the defendants argue that the complaint is unclear whether the claims against the Hiumans allege personal liability or liability as shareholders of Giant Steps.   In either case, however, the defendants contend that the motion to strike should be granted because the Hinmans were not engaged in a trade or commerce at the time of the alleged actionable conduct.

The plaintiffs object arguing that the new allegations adequately allege a business relationship in the real estate marketplace, the law of the case doctrine is not relevant because the substituted revised second amended complaint contains new allegations, and the substituted revised second amended complaint properly alleges a business relationship between the defendants and all the plaintiffs.   According to the plaintiffs, the substituted revised second amended complaint alleges that CCM Holding and 425 P.M. both operate in the same marketplace of real estate, that 425 P.M. directed its tortious conduct toward the plaintiffs in an effort to obtain the 417 Main Street property owned by CCM Holding, and that CCM Holding and 425 P.M. are competing for the same piece of real estate in the same marketplace.   As such, the plaintiffs argue that these allegations adequately allege the trade or commerce element of CUTPA and are sufficient to withstand a motion to strike.

The plaintiffs also contend that there are sufficient allegations of a business relationship between the defendants and plaintiffs Time Was Garage, Michael O'Brien, Constance Fialkiewicz and Christopher Kerr. According to the plaintiffs, the close relationship of all the plaintiffs is such that harm to CCM Holding in the real estate marketplace results in harm to all the plaintiffs—”all the plaintiffs have that type of commercial relationship to the alleged wrongdoers which is such that the latters unfair and deceptive acts might deleteriously affect fair competition in a particular marketplace.” ⁴  Finally, the plaintiffs argue that counts nineteen and twenty sufficiently allege facts to support piercing the corporate veil and holding Cathy and Howard Hinman personally liable for the CUTPA violations by 425 P.M. and Giant Steps.

CUTPA, General Statutes § 42–110b(a), states that “[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.”   Trade or commerce is defined as “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).  “Although our Supreme Court repeatedly has stated that CUTPA does not impose the requirement of a consumer relationship ․ the court also has indicated that a plaintiff must have at least some business relationship with the defendant in order to state a cause of action under CUTPA.”  (Citation omitted;  emphasis in original.)  Pinette v. McLaughlin, 96 Conn.App. 769, 778, 901 A.2d 1269, cert. denied, 280 Conn. 929, 909 A.2d 958 (2006).

CUTPA “was designed to protect two classes or deal with two sets of problems.   First, there is the protection of consumers from unfair or deceptive acts or practices.   Then there is a concern with ensuring fair competition and in order to accomplish that end, competitors and other business people can bring a CUTPA action.   But at the very least, other business people, who are not direct competitors, must have some type of commercial relationship with the alleged wrongdoer—commercial relationship not being so much a business relationship but some kind of relationship in the marketplace so that the particular acts of wrongdoing alleged will interfere with fair and open competition in that particular marketplace.”  (Emphasis in original.)   Marr v. WMX Technologies, Inc., Superior Court, judicial district of Litchfield, Docket No. CV 96 0071542 (November 6, 1998, Sheldon, J.) (23 Conn. L. Rptr. 220, 224), aff'd on other grounds, 244 Conn. 676, 711 A.2d 700 (1998).

In the present case, the complaint alleges that plaintiff CCM Holdings and defendant 425 P.M., LLC are limited liability companies which own the property leased to plaintiff Time Was Garage and defendant Giant Steps, respectively.   The complaint further alleges that both CCM Holdings and 425 P.M. are in the business of purchasing real estate and leasing it to commercial or business tenants.   Moreover, the complaint alleges that CCM Holdings and 425 P.M. operate in the same marketplace, i.e., real estate, and that 425 P.M. was and is desirous of obtaining some or all of the 417 Main Street property owned by CCM Holdings and is therefore directly competing against CCM Holdings in the same marketplace and for the same piece of real estate.   The complaint goes on to allege that Giant Steps conspired with 425 P.M. to obtain the 417 Main Street property.⁵

With regard to the Hinmans, they allege that Cathy and Howard Hinman had complete domination of the finances, policy and business practices with respect to Giant Steps and 425 P.M. such that the entities had no separate mind, will or existence of their own.   The complaint further alleges that the Hinmans used their control over Giant Steps and 425 P.M. to commit the alleged conduct against the plaintiffs.⁶

Although the allegations are thin and subject to proof, the plaintiffs have, nonetheless, pleaded the minimum necessary to state a cause of action for CUTPA and overcome the defendants' motion to strike.   Therefore, the motion to strike counts seventeen through twenty is denied.   By agreement, counts twenty-one through twenty-four are stricken and not to be renewed.

BY THE COURT

Roche, J.

FOOTNOTES

FN1. Counts nine through twelve of the plaintiffs' revised second amended complaint were previously stricken and not repleaded in the substituted revised second amended complaint.   The plaintiffs did not, however, renumber the counts and, as such, the substituted revised second amended complaint contains counts numbered through twenty-four.   Counts nine through twelve are listed as “stricken.”.  FN1. Counts nine through twelve of the plaintiffs' revised second amended complaint were previously stricken and not repleaded in the substituted revised second amended complaint.   The plaintiffs did not, however, renumber the counts and, as such, the substituted revised second amended complaint contains counts numbered through twenty-four.   Counts nine through twelve are listed as “stricken.”

FN2. Rista Malance, zoning enforcement officer, is also a named defendant but is not a party to the present motion to strike..  FN2. Rista Malance, zoning enforcement officer, is also a named defendant but is not a party to the present motion to strike.

FN3. Count seventeen is directed at Giant Steps, count eighteen is directed at 425 P.M. and counts nineteen and twenty are directed at Cathy and Howard Hinman..  FN3. Count seventeen is directed at Giant Steps, count eighteen is directed at 425 P.M. and counts nineteen and twenty are directed at Cathy and Howard Hinman.

FN4. The plaintiffs quoted Raymond Road Associates, LLC v. Taubman Centers, Inc., Superior Court, complex litigation docket at Waterbury, Docket Nos. X02 CV 07 5007877, X02 CV 07 5007876 (March 5, 2009, Eveleigh, J.) (47 Conn. L. Rptr. 313)..  FN4. The plaintiffs quoted Raymond Road Associates, LLC v. Taubman Centers, Inc., Superior Court, complex litigation docket at Waterbury, Docket Nos. X02 CV 07 5007877, X02 CV 07 5007876 (March 5, 2009, Eveleigh, J.) (47 Conn. L. Rptr. 313).

FN5. Counts seventeen and eighteen incorporate the allegations contained in paragraphs one through twenty and paragraph twenty-two of count one..  FN5. Counts seventeen and eighteen incorporate the allegations contained in paragraphs one through twenty and paragraph twenty-two of count one.

FN6. Counts nineteen and twenty incorporate all allegations contained in counts seventeen and eighteen, respectively..  FN6. Counts nineteen and twenty incorporate all allegations contained in counts seventeen and eighteen, respectively.

Roche, Vincent E., J.