Jude D. Loiselle v. LLC (2011)

RULING RE DEFENDANTS' MOTION TO STRIKE

In this case, the plaintiff, Jude D. Loiselle, alleges that he accepted the seller's counteroffer on a house at 28 Indian Run in Thompson, CT on April 21, 2010, but that the seller's real estate agent “took steps to scuttle the deal” and steered it to a co-worker's client to benefit their agency in violation of the plaintiff's legal rights and causing him financial damage.   Currently, the defendants in the case are Browning & Browning Real Estate, LLC, and the two real estate agents:  Mary Beth Malin and Raymond Preece.   The Revised Third Amended Complaint is in four counts.   The defendants move to strike the First Count (Tortious Interference with Beneficial Economic Relations as to Preece) and the Third Count (Negligent Misrepresentation against Browning & Browning and Malin) on the grounds that the allegations are legally insufficient.   For the following reasons, the motion is granted as to the First Count.   It is denied as to the Third Count.

I

“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 ․ A motion to strike ․ consequently, requires no factual findings by the trial court ․ We take the facts to be those alleged in the complaint ․ and we construe the complaint in the manner most favorable to sustaining its legal sufficiency ․” (Citations omitted;  internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).  “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.)  Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006).

While “[a] motion to strike admits all facts well pleaded;  it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings.”  (Emphasis in original;  internal quotation marks omitted.)   Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997).  “Thus, [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied ․ A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged.”  (Citations omitted;  internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 498.

II

A. First Count—Tortious Interference with Beneficial Economic Relations as to Preece.

Reading the first count in the light most favorable to the plaintiffs, as the court must at this stage of the litigation, the complaint alleges as follows.   On or about December 8, 2009, the plaintiff was a prospective buyer for 28 Indian Run Drive, Thompson, CT. He was being represented by JoAnn Hall of Loomis Real Estate.   The listing agent was Mary Beth Malin, an agent of Browning & Browning Real Estate, LLC (“B & B”).  The seller was U.S. Bank. The property was listed for sale at $144,900.

Cabrera LLC was also a prospective buyer.   It was represented by Raymond Preece, also an agent of B & B. By virtue of his employment at B & B, Preece had access to confidential information not only on pricing strategies for the property, but the existence of, and specific nature of any offers made on the property, and B & B took no steps to ensure that Preece would not access inside information, and share it with Cabrera.   The asking price for the property was being regularly reduced, and Preece advised Cabrera of the reductions.

On or about April 21, 2010, the list price was reduced to $94,900.   Shortly before that, on or about April 15, 2010, Loiselle viewed the property.   Hall informed Malin of the viewing in order to obtain the lockbox code to get into the house.   Over the following weekend, the plaintiff and his father returned with an inspector.   The inspector reviewed the property and advised the plaintiff that it was sound.

On April 21, 2010 at 6:32 a.m., Loiselle made a written offer on the property for the full list price of $94,900.   Hall communicated his offer to Malin.   In the offer, Loiselle agreed to pay cash for the property, contingent on a well and septic system inspection.   He sent a $1,000 deposit with the offer, payable to B & B.

On April 21, 2010 at 11:56 a.m., Malin responded, by way of written electronic communication to Hall, stating that U.S. Bank “countered with that they want a 3K [deposit].   Everything else fine for them.”   Loiselle accepted the counteroffer and forwarded the additional $2,000 deposit to Hall, amended the purchase and sale agreement to reflect the additional deposit, and submitted the documents to Malin.

Plaintiff alleges that, “[n]otwithstanding her fiduciary duty to the seller, Malin took steps to scuttle the deal with Loiselle so that her partner, Preece, could close the deal (and relist the ‘flip’ with Browning and Browning).   Malin, for example, instructed Loiselle that she needed proof of funds, although U.S. Bank (or its agent) never requested same, and Malin had not requested the same of Cabrera;  once proof was received (in the form of a letter) Malin required plaintiff to provide a financial statement but did not require same of Cabrera;  finally Malin alerted U.S. Bank's agent (through a system known ‘Equator’) that Loiselle required inspections to close the deal, and the ‘Buyer is performing home inspections.   I am very concerned with the results with what we know ․ Very concerned with home inspections and repairs.’   In fact, he alleges, Malin knew that Loiselle only requested inspections of water quality, water yield and the sewage system.   Malin knew that these systems had never failed an inspection, but classified her concerns in an overly broad manner so as to make her partner's (Preece's) proposal, on behalf of Cabrera, more attractive.”

On April 21, 2010, at 9:13 p.m., Malin communicated to Hall that U.S. Bank had accepted another offer.   That offer was made by Cabrera.

On April 22, 2010, at 9:01 a.m., Malin communicated to Hall that Cabrera's offer was accepted because it was, supposedly, a “stronger” cash offer”;  Cabrera was “ready to close ASAP”;  and Cabrera did not require any inspections.   Plaintiff also argues, without explanation, that Cabrera and Preece had access to an inspection report performed on February 15, 2010, by Bernier Associates, LLC, but were waiting for the price to continue its decline.

On April 22, 2010, at 10:58 a.m., Hall presented to Malin a new offer on Loiselle's behalf in which Loiselle offered to pay $97,000 ($2,100 above the asking price) for the property, and waived all requests for inspections.

On April 22, 2010, less than five minutes after Loiselle's proposal was conveyed, Malin replied to Hall that she was “not able to present [the offer to the seller] as the seller accepted another offer.”   Thus, Loiselle's second offer was never presented to U.S. Bank. The listing agreement, however, required the agent to present all offers, up until the closing.   As such, plaintiff alleges, “Malin was not legally barred from presenting the offer;  she chose to withhold it.”

On May 3, 2010, Cabrera took out a mortgage for $111,100 on the property.   On May 4, 2010, Cabrera purchased the property for $90,000.   This purchase price was $4,900 less than Loiselle's original offer, and $7,000 less than his second offer.

On May 13, 2010, Cabrera listed the property through Preece and/or B & B in the amount of $179,900.   It eventually sold for approximately $159,000 with very minor renovations.

Plaintiff presents this factual circumstance as grounds for his claim of tortious interference with beneficial economic relations as to the defendant Preece.   That tort is often called tortuous interference with business expectancies.  “It is well established that the elements of a claim for tortuous interference with business expectancies are:  (1) a business relationship between a plaintiff and another party;  (2) the defendant's intentional interference with the business relationship while knowing of the relationship;  and (3) as a result of the interference, the plaintiff suffers actual loss.”  (Citation omitted;  internal quotation marks omitted.)   American Diamond Exchange, Inc. v. Alpert, 302 Conn. 494, 510, 28 A.3d 926 (2011);  Lawton v. Weiner, 91 Conn.App. 698, 706, 882 A.2d 151 (2005).   It is “clear that not every act that disturbs a contract or business expectancy is actionable ․ [F]or a plaintiff successfully to prosecute such an action it must prove that the defendant's conduct was in fact tortious.   This element may be satisfied by proof that the defendant was guilty of fraud, misrepresentation, intimidation or molestation ․ or that the defendant acted maliciously.”  (Citations omitted;  internal quotation marks omitted.)   Blake v. Levy, 191 Conn. 257, 260–61, 464 A.2d 52 (1983).  “In the terminology of the Restatement [ (Second) of Torts], the test is whether the actor's behavior is improper.”  (Internal quotation marks omitted.)  Id., 261.  “The plaintiff in a tortious interference claim must demonstrate malice on the part of the defendant, not in the sense of ill will, but intentional interference without justification.”  Daley v. Aetna Life & Casualty Co., 249 Conn. 766, 805, 734 A.2d 112 (1999) (quoting 4 Restatement (Second), Torts § 766, comment (s) (1979)).

Defendants argue that the plaintiff has failed to allege facts showing Preece had any improper motive nor that he utilized any improper means in his business activities in this count.   Reading the allegations in this count with all inferences favoring the plaintiff, the court, nevertheless, agrees with the defendants that plaintiff has not yet pled a viable claim against Preece on this point.   Nearly all of the factual allegations concern the actions of the defendant Malin persuading or manipulating U.S. Bank to accept Cabrera over Loiselle.   There are few allegations concerning the actions of Preece.   The only factual claim against Preece is that, as an employee of B & B, he had access to “confidential” information on file at B & B. It does not allege that he actually obtained and used such confidential information.   Also, there are no factual allegations showing that Preece intentionally interfered, such as that he, in fact, knew of Loiselle's contract negotiations, and that he used confidential information about that to outbid Loiselle, or that he engaged in any illegally or improper acts to interfere in any way.   The factual allegations as to Preece in effect merely show that Cabrera's offer was accepted, that Preece represented Cabrera, and that Preece worked in the same office as Malin.   It fails to show that Preece had any improper motive or utilized any improper means in his business activities in this case.

In his responsive brief, the plaintiff argues that the factual allegation that Preece had access to confidential information at the office infers that he utilized it and other subterfuge to cause the plaintiff to lose the deal.   That is a leap in logic without justification.   If plaintiff believes that he has justification for alleging that Preece obtained and misused confidential information regarding Loiselle's offer, or engaged in other fraud or misrepresentation or other improper behavior to interfere with Loiselle's deal, then the facts in support of those claims should be set forth.   The fact that he worked as a real estate agent in the same office as Malin and that his client's offer was consummated instead of Loiselle's does not suffice.   His conclusion that Preece utilized confidential information and subterfuge is not supported by the facts.   The bare legal conclusion does not suffice.  “A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged.”  (Citation omitted;  internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 498;  see, e.g. Baer v. New England Home Delivery Services, LLC, Superior Court, judicial district of New Haven, Doc. No CV 06–4021976 (October 18, 2007, Lopez, J.) (“The plaintiffs' characterization of the defendant's conduct as improper does not make it so ․ The allegation that the defendant usurped their business is a legal conclusion, rather than a factual statement”).   The First Count of the Third Revised Amended Complaint alleges only conclusions with respect to the defendant Preece.   Accordingly, the motion to strike this count is granted on this point.

Defendants also argue that plaintiff must not merely allege facts showing conduct which the defendant knew or should have known to carry with it a special risk of the harm of the same type that it is claimed to have caused, but, rather a specific intent to interfere with a particular business relationship.   Plaintiff disputes any requirement to plead specific intent.   The court agrees with the plaintiff to the extent that “specific intent” is a term of art more common to criminal law than tort.   However, it has been repeatedly acknowledged that “[t]ortious interference requires proof that a defendant intentionally interfered with a known business relationship.   It is insufficient to allege and prove that the defendant knew or ought to have known that its practices had a tendency or potential, however strong, to interfere with a competitor's business generally.   The defendant must intentionally and knowingly target a specific business relationship or relationships.”  (Citation omitted;  internal quotation marks omitted;  emphasis in original.)  Baer v. New England Home Delivery Services, LLC, supra.   This is consistent with the recognition that this is an intentional tort, not negligence.  “The intent required for this [tort] is that defined in [1 Restatement (Second), Torts] § 8A ․ [ (1979) ].   The interference with the other's prospective contractual relation is intentional if the actor desires to bring it about or if he knows that the interference is certain or substantially certain to occur as a result of his action.”   4 Restatement (Second), Torts § 766B, comment (d) (1979).   In this respect, the court agrees with the defendants that sufficient specificity has not been alleged by the plaintiff in this count.

B. Third Count—Negligent Misrepresentation by B & B and Malin.

The third count incorporates the same factual allegations in the first count, plus it alleges that Malin negligently represented to Loiselle that U.S. Bank had agreed to sell the property to him under the terms negotiated on April 21, 2010.   He further alleges that he reasonably relied on that misrepresentation to his detriment and was harmed.   He also alleges that B & B is equally liable on this claim, under the doctrine of respondeat superior, because Malin was acting within the course and scope of her employment with B & B at all times.   On this basis, plaintiff seeks damages against B & B and Malin for negligent misrepresentation.

“Traditionally, an action for negligent misrepresentation requires the plaintiff to establish (1) that the defendant made a misrepresentation of fact (2) that the defendant knew or should have known was false, and (3) that the plaintiff reasonably relied on the misrepresentation, and (4) suffered pecuniary harm as a result.”  (Citation omitted.)  Nazami v. Patrons Mutual Ins. Co., 280 Conn. 619, 626, 910 A.2d 209 (2006);  M. Taylor and D. Krisch, Encyclopedia of Connecticut Causes of Action (2009), p. 46–47.

“This court has long recognized liability for negligent misrepresentation ․ The governing principles [of negligent misrepresentation] are set forth in similar terms in § 552 of the Restatement (Second) of Torts (1977):  One who, in the course of his business, profession or employment ․ supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information ․ As a result, [w]e have held that even an innocent misrepresentation of fact may be actionable if the declarant has the means of knowing, ought to know, or has the duty of knowing the truth.”  (Citations omitted;  internal quotation marks omitted.)   Sturm v. Harb Development, LLC, 298 Conn. 124, 143–44, 2 A.2d 859 (2010).

Defendants argue that the plaintiff has failed to allege a cause of action.   They argue that although plaintiff alleges that the defendants negligently represented that U.S. Bank had agreed to sell the property to Loiselle in the Third Count, para. 20, plaintiff does not allege that the statement was false.   Plaintiff counters that the falsehood lies in the factual allegation that Malin told him, after he made his offer, that U.S. Bank “countered with that they want a 3K [deposit].   Everything else is fine for them.”   First Count, para. 10;  Third Count, para. 1–19.   He argues that it was not true that everything was fine because Malin simultaneously was advising the seller that she was “very concerned about the inspections.”   First Count, para. 11.   Whether that makes her statement false is a matter for the trier of fact.   At this stage of the litigation, the court finds that the plaintiff has made sufficient factual allegations of falsity to support a cause of action for the tort of negligent misrepresentation.

Defendants also argue that this count fails to show facts demonstrating that the alleged misrepresentation was made for the purpose of inducing the plaintiff to act on it.   That, also, is an essential element of the cause of action.  “An actionable misrepresentation, whether made knowingly, recklessly, negligently or innocently, must be made for the purpose of inducing action upon it.”  J. Frederick Scholes Agency v. Mitchell, 191 Conn. 353, 359, 464 A.2d 795 (1983).   The allegations on this point also suffice.   Plaintiff alleges in his Revised Third Amended Complaint that in response to the defendants' representations, he continued to pursue the deal, changed the deposit required, and continued to make offers to prevent the deal from slipping away.   First Count, paras. 10, 14;  Third Count, para. 1–19.

III

For all of the foregoing reasons, the defendants' motion to strike is granted as to the First Count.   It is denied as to the Third Count.

THE COURT

Robert F. Vacchelli

Judge, Superior Court

Vacchelli, Robert F., J.