Carmine Fusaro et al. v. Asif Malik et al. (2012)

MEMORANDUM OF DECISION ON DEFENDANTS' MOTION TO STRIKE DATED APRIL 20, 2011 (# 229.00)

The issue raised in this Motion to Strike is whether or not the three-year statute of limitations for a CUTPA violation can be tolled?

The Plaintiffs, Carmine Fusaro and Umberto Fusaro, filed a multi-count lawsuit against Asif A. Malik, Malik's Financial, LLC, and attorney David Rogers.   This Motion to Strike is addressed to two counts of the operative complaint, the Revised Complaint dated October 15, 2010 (# 181.00);  the Fourth Count alleging a CUTPA violation against Asif A. Maliik and the Thirteenth Count alleging a CUTPA violation against Malik's Financial, LLC. The Motion to Strike is also addressed to paragraph 6 of the Claims for Relief that states:  “Punitive and reasonable Attorneys fees damages pursuant to Connecticut General Statutes § 42–110(g)(a).”   Each party filed memoranda of law in support of their respective positions.   The plaintiffs' December 8, 2011 Opposition states:  “The Plaintiffs assert that the statute of limitations was tolled by the doctrine of continuing course of conduct and, therefore, the CUTPA claim is not barred by the statute of limitations.” (# 274.00, page 1.)

The central relationship between the two sets of parties was as client and mortgage broker.   The Fourth and Thirteenth Count allege that Asif A. Malik and Malik's Financial, LLC acted as a mortgage broker for the plaintiffs on a number of occasions involving three parcels of real property in Stamford, Connecticut.   The plaintiffs filed an application for a prejudgment remedy on August 20, 2008.   A PJR hearing was conducted by the undersigned over many days.   On September 9, 2009 the court rendered an oral decision from the bench granting a PJR in favor of the plaintiff, Carmine Fusaro, as against the defendant, Asif A. Malik, in the amount of $1,400,000.00.   The oral decision contained certain findings of fact.   No appeal has been taken from the granting of that PJR. The oral decision is in a thirty-page transcript.   The issue of the statute of limitations was not raised in the PJR hearing, either by pleadings, evidence, testimony or legal arguments.

On April 15, 2011 the defendant, Asif A. Malik, filed a Motion to Modify Prejudgment Remedy alleging that the statute of limitations had run and the PJR should be vacated.  “The Defendant, Asif Malik, hereby moves pursuant to C.G.S. § 52–278k to modify the prejudgment remedy issued by Tierney, J., on September 9, 2009, because the claims asserted against Asif Malik relied upon Court in issuing its prejudgment remedy, namely, breach of fiduciary duty and CUTPA, are barred by the relevant statutes of limitations.” (# 227.00, page 1.) After a hearing this court denied the Motion to Modify the Prejudgment Remedy in a written memorandum of decision on September 16, 2011 (# 265.00) [52 Conn. L. Rptr. 632].   The Memorandum of Decision contained certain findings of fact including that there was a continuing relationship between the parties as client and mortgage broker.

After the PJR was issued on September 9, 2009 both plaintiffs, Carmine Fusaro and Umberto Fusaro, commenced this instant lawsuit.   Service on the defendants Asif A. Malik, Malik's Financial, LLC and David Rogers was made on September 22, 2009 (# 109.10).   The parties acknowledge that an application for a prejudgment remedy, which contains an unsigned writ, and complaint does not commence an action in Connecticut and does not toll the statute of limitations.  Raynor v. Hitchcock Reality Corporation, 61 Conn.App. 234, 240 (2002).

A CUTPA remedy is created by statute, the Connecticut Unfair Trade Practice Act, Gen.Stat. § 42–110a et seq.   The statute that created the CUTPA cause of action established a three-year statute of limitation;  “Any action under this section may not be brought more then three years after the occurrence of a violation of this chapter.”  Gen.Stat. 42–110g(f).  The statute of limitations is an occurrence statute not a discovery statute.   An occurrence statute of limitation commences as of the date that the act or omission complained of occurs.  Labow v. Rubin, 95 Conn.App. 454, 468 (2006).   A discovery statute of limitations commences on the date of the discovery of the “actionable harm.”  Tarnowski v. Socci, 287 Conn. 455, 500 (2011);  Peerless Insurance Company v. Tucciaronne, 48 Conn.App. 160, 165 (1998)

Since this lawsuit commenced on September 22, 2009, the CUTPA violation must have occurred no earlier than September 22, 2006.   This court is not going to determine how to count the three years and determine whether one, both or none of the terminal days must be excluded in doing that counting.   For the purpose of this Memorandum of Decision the September 22, 2006 date will suffice.   The defendants are claiming that the statute has run since the last mortgage broker activity that occurred was February 1, 2006, when a $500,000 mortgage refinance of real property at West Main Street, Stamford, CT closed.

The parties' briefs dispute the dates of the mortgage closings in which the plaintiffs were clients of the two defendants acting as mortgage brokers.   “Both the fourth and thirteenth counts of the Plaintiff's complaint allege that Asif Malik and Malik's Financial LLC acted as a mortgage broker on the following dates:  November 6, 2001;  November 5, 2002;  December 30, 2002;  October 26, 2004;  January 14, 2005;  December 5, 2005;  January 3, 2006 and February 1, 2006.”   Defendant's Memorandum of Law dated April 21, 2011 (# 230.00, page 2).  “As outlined in the Complaint, from November 6, 2001 through November 14, 2007, MALIK individually and/or as managing member of MALIK'S FINANCIAL, LLC induced the Plaintiffs to enter into a succession of refinancing transactions and loans.”   Plaintiffs' Objection to Defendant's Motion to Modify Prejudgment Remedy dated June 12, 2011 (# 245.00, page 8).   The resolution of the difference in the dates is best left to either trial or a Motion for Summary Judgment.   The court in deciding a Motion to Strike cannot resolve factual issues, even if as in this case, the court has heard substantial evidence on these factual issues and has made findings of facts in the PJR matter.  “In ruling on a Motion to Strike, the court is limited to the facts alleged in the complaint.   The court must construe the facts in the complaint most favorably to the plaintiff.”  Faulkner v. United Technologies, supra, 240 Conn. 580.

A motion to strike is authorized by P.B. § 10–39(a):  “Whenever any party wishes to contest 1) the legal sufficiency of the allegations of any complaint, counterclaim or cross claim, or any one or more of counts thereof, to state a claim upon which relief can be granted or 2) the legal sufficiency of any prayer for relief in any such complaint, counterclaim or cross complaint ․ that party may do so by filing a motion to strike the contested pleading or part thereof.”  “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 ․ In ruling on a motion to strike, the court is limited to the facts alleged in the complaint.   The court must construe the facts in the complaint most favorably to the plaintiff ․ If the facts provable in the complaint would support a cause of action, the motion to strike must be denied.”  Faulkner v. United Technologies, 240 Conn. 576, 580 (1997).   Thus, the court assumes the truth of both specific factual allegations and any facts fairly provable thereunder.   In doing so, moreover, the allegations must be read broadly, rather than narrowly.  Parsons v. United Technologies Corp., 243 Conn. 66, 83 (1997) “In ruling on a motion to strike, the trial court is limited to the facts alleged in the complaint.”  Rowe v. Godou, 12 Conn.App. 538, 544 (1987)

The narrow issue raised by this motion to strike is whether or not there is any tolling provision in the CUTPA statute of limitations, if so, does the continuing course of conduct doctrine toll the CUTPA statute of limitations?

When the wrong sued upon consists of a continuing course of conduct, the statute does not begin to run until that course of conduct is completed ․ In order to support a finding of continuing course of conduct that may toll the statute of limitations there must be evidence of the breach of a duty that remained in existence after commission of the original wrong related thereto.   That duty must not have terminated prior to commencement of the period allowed for bringing an action for such wrong ․ Where our Supreme Court has upheld a finding that a duty continued to exist after the cessation of the act or omission relied upon, there has been evidence of either a special relationship between the parties giving rise to such a continuing duty or some later wrongful conduct of a defendant related to the prior act ․ Thus, there must be a determination that a duty existed and then a subsequent determination of whether that duty is continuing.

Stuart v. Snyder, 125 Conn.App. 506, 510–11 (2010).

The complaint alleges that between 2001 and 2008 based on Asif A. Malik's representations the plaintiffs agreed to finance their real properties in Stamford, Connecticut.   The first mortgage loan brokered by Asif A. Malik closed on November 6, 2001.   Mortgage refinance closings took place brokered by Asif A. Malik on November 5, 2002, November 5, 2002, December 30, 2003, October 26, 2004, October 26, 2004, December 5, 2005, January 3, 2006 and February 1, 2006.   On November 14, 2007 the plaintiffs entered into a $50,000 mortgage transaction with Asif A. Malik.

Plaintiff supports that claim by pleading allegations that state that during these refinance closings Asif A. Malik promised to become a tenant of the new commercial building that was being constructed on West Main Street, Stamford, Connecticut.   The new construction utilized those mortgage proceeds.   The parties continued to remain in contact with each other well after the February 2006 real estate closing.   The plaintiffs continued to receive on going promises from Asif A. Malik that he would occupy the building as a rent paying tenant once the building was completed.   The pleadings also allege that when the plaintiffs professed financial difficulties in meeting the mortgage payments on the January 2006 and February 2006 mortgages brokered by Asif A. Malik, Asif A. Malik proposed to loan the plaintiffs $50,000.00 secured by a mortgage on the Stamford real estate.   That mortgage was dated November 13, 2007.   In that $50,000 mortgage transaction Asif A. Malik was to pay the mortgage payments for the January 2006 and the February 2006 mortgages for the month of November and December 2006 and January 2007.   Thereafter the pleadings allege that the building would be completed and ready for the rent paying tenant occupancy including the rent payment occupancy of Asif A. Malik.   The plaintiffs argue that the pleadings allege a continuation of the party's special relationship, a fiduciary relation of client and mortgage broker, well after February 1, 2006 as well as later wrongful conduct since Asif A. Malik did not advance the entire $50,000 nor did he pay all the promised mortgage payments with the $50,000.   The plaintiffs' complaint alleges that these events actually occurred well after September 22, 2006, the commencement of the CUTPA three-year statute of limitations.

Assuming that the CUTPA statute of limitations can be tolled, the allegations of the complaint satisfy the pleading requirements of the doctrine of continuing course of conduct.   The pleadings allege that the mortgage broker relationship continued after the September 22, 2006 cutoff date.   The continuing promise to become a tenant continued after September 22, 2006, a continuing breach of the fiduciary duty owed by a mortgage broker to the client.   The mortgage broker relationship continued and was not terminated as of September 22, 2006.   The client mortgage broker relationship is a special relationship.   There was wrongful conduct alleged after September 22, 2006 including but not limited to the November 13, 2007 closing and the continued promises made thereafter.   On these grounds alone the Motion to Strike must be denied.   All of that assumes that the CUTPA statute of limitations can be tolled.

The defendants argue that the CUTPA three-year statute of limitation cannot be tolled citing Fichera v. Mine Hill Corporation, 207 Conn. 204, 210 (1988).   The defendants also cited another more recent case for the same proposition.   Flannery v. Singer Asset Finance Company, LLC et al.   128 Conn.App. 507, 514 (2011).  Flannery involved a CUTPA claim invoking the CUTPA statute of limitations, Gen.Stat. § 42–110g(f).  A further claim of breach of fiduciary duty was involved and its statute of limitations Gen.Stat. § 52–577 was invoked.   The trial court granted summary judgment on the basis of both statutes.   The Appellate Court agreed with the plaintiff that the continuing course of conduct doctrine can toll the statute of limitations in Gen.Stat. 52–577 but noted that the plaintiff had not evoked that doctrine either in his complaint or in pleading in avoidance.   Then Flannery discussed the very issue raised in this Motion to Strike.  “Furthermore, as to the plaintiff's CUTPA claim, our Supreme Court has stated that the continuing course of conduct doctrine does not toll the three years statute of limitations set forth in section 42–110g(f).  See Fichera v. Mine Hill Corp., 207 Conn. 204, 216–17 (1988).”  Flannery v. Singer Asset Finance Company, LLC., supra, 128 Conn.App. 514–15.

Although the defendants cited Flannery in their December 21, 2011 Reply Memorandum (# 276.00) they did not bring to the attention of this court the Supreme Court's view of Flannery v. Singer Asset Finance Company, LLC. On August 8, 2011 a petition for certification for appeal from the Appellate Court decision at 128 Conn.App. 507 was granted.   See Plaintiffs' Supplemental Memorandum dated December 8, 2011 (# 274.00, page 3) Certification was limited to two issues;  the first related to the breach of fiduciary duty and the second related to the continuing course of conduct doctrine tolling the CUTPA statute of limitations;  “2. Did the Appellate Court properly determine that the three year statute of limitations period for actions brought under the Connecticut Unfair Trade Practices Act, General Statutes § 42–110a et seq., cannot be tolled?”  Flannery v. Singer Asset Finance Company, LLC, 302 Conn. 902–03 (August 9, 2011).

Since the entire issue before the court is whether or not the continuing course of conduct doctrine tolls the running of the CUTPA's statute of limitations, the parties are in dispute concerning the meaning of various cases and the Connecticut Supreme Court has seen fit to definitively consider that issue, it would be imprudent for this court to opine on an issue that has been reserved by the Supreme Court.

Therefore, the Motion to Strike is denied without prejudice.  State v. Smith, 284 Conn. 126, 180 (2004).   The issue can be raised as soon as the Supreme Court renders a decision in Flannery v. Singer Asset Finance Company, LLC. The pleadings should be closed.   This court remains ready to grant any application by the defendants, Asif A. Malik and Malik's Financial, LLC, to file a late Motion to Strike or a late Motion for Summary Judgment addressed to the identical issues set forth in the instant Motion to Strike dated April 20, 2011 (# 229.00).

The defendants, Asif A. Malik and Malik's Financial, LLC, Motion to Strike dated April 20, 2011 (# 229.00) is denied without prejudice.

BY THE COURT

Hon. Kevin Tierney

Judge Trial Referee

Tierney, Kevin, J.T.R.