Hartford Underwriters Ins. Co. v. LLC (2012)

MEMORANDUM OF DECISION RE MOTION TO STRIKE (# 116)

FACTS

The plaintiff, Hartford Underwriters Insurance Company, commenced this action on March 31, 2011, via summons and complaint, against the defendant, Plymouth Home Improvements, LLC, seeking the recovery of a premium allegedly owed for workers' compensation coverage.   On August 24, 2011, the plaintiff cited in the defendant, Lawrence Tomasetti, who is alleged to be the sole member of Plymouth Home Improvements, LLC. On October 25, 2011, the plaintiff filed a third amended complaint, the operative complaint, against both of the defendants.   Counts one through four are against Plymouth Home Improvements, LLC, while counts five through eight are against Lawrence Tomasetti.   Specifically, count one is a breach of contract claim for an insurance coverage contract entered into on January 24, 2007.   Count two is a claim for quantum meruit to the extent that the contract may be deemed unenforceable or invalid.   Count three is a breach of contract claim for a subsequent insurance coverage contract entered into on January 19, 2008.   Count four is an alternative quantum meruit claim for that contract.   Counts five through eight mirror counts one through four except that they are against the defendant, Lawrence Tomasetti, individually, as “the sole member of Plymouth Home Improvements, LLC.”

On November 18, 2011, the defendants filed their answer along with special defenses to the second, fourth, fifth, sixth, seventh and eighth counts.   Specifically, Plymouth Home Improvements' special defense to the second and fourth counts is that the plaintiff's claims for quantum meruit are barred by a three-year statute of limitations.   Similarly, with regard to the sixth and eighth counts, Lawrence Tomasetti's special defense is the same.   However, Lawrence Tomasetti sets forth an additional special defense for counts five through eight stating that “no assets of Plymouth Home Improvements, LLC have been distributed to Lawrence Tomasetti in liquidation,” and that, therefore, he “may not be held liable ․ pursuant to ․ General Statutes § 34–214.”

On November 23, 2011, the plaintiff moved to strike all of the defendants' special defenses and filed a memorandum in support.   On December 6, 2011, the defendants filed their objection thereto along with a memorandum in support.   On January 3, 2012, this matter was heard at short calendar.

DISCUSSION

“A party wanting to contest the legal sufficiency of a special defense may do so by filing a motion to strike.   The purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action ․ In ruling on a motion to strike, the court must accept as true the facts alleged in the special defenses and construe them in the manner most favorable to sustaining their legal sufficiency.”  (Citation omitted;  internal quotation marks omitted.)  Barasso v. Rear Still Hill Road, LLC, 64 Conn.App. 9, 13, 779 A.2d 198 (2001);  see also Practice Book § 10–39(a)(5).  “The burden of alleging recognizable special defenses rests on the defendant.”  Bridgeport v. C.R. Klewin Northeast, LLC, 51 Conn.Sup. 1, 4, 971 A.2d 864 (2007).  “If the allegations in the challenged pleading support any legally sufficient defense, the motion to strike must be denied.”  Krasnow v. Christensen, 40 Conn.Sup. 287, 288, 492 A.2d 850 (1985).

The plaintiff's first argument is that both of the defendants' special defenses to the second, fourth, sixth and eighth counts should be stricken because quantum meruit claims are subject to a six-year statute of limitations rather than a three-year statute of limitations.   In response, the defendants argue that quantum meruit is an equitable theory that only acquires a statute of limitations by analogy, and that in this case the plaintiff's claims for quantum meruit are more analogous to tort claims such as conversion and statutory theft, which have a three-year statute of limitations.

“Quantum meruit and unjust enrichment are common-law doctrines that provide restitution, or the payment of money, when justice so requires ․ Quantum meruit is usually a remedy based on implied contract and usually relates to the benefit of work, labor or services received by the party who was unjustly enriched, whereas unjust enrichment relates to a benefit of money or property ․ and applies when no remedy is available based on the contract ․ The lack of a remedy under a contract is a pre-condition to recovery based on unjust enrichment or quantum meruit.   It would be contrary to equity and fairness to allow a defendant to retain a benefit at the expense of the plaintiff.”  (Citation omitted;  internal quotation marks omitted.)  United Coastal Industries, Inc. v. Clearheart Const.   Co., Inc., 71 Conn.App. 506, 511–13, 802 A.2d 901 (2002).   Accordingly, quantum meruit is an equitable claim.  “[I]n an equitable proceeding, a court may provide a remedy even though the governing statute of limitations has expired, just as it has discretion to dismiss for laches an action initiated within the period of the statute ․ Although courts in equitable proceedings often look by analogy to the statute of limitations to determine whether, in the interests of justice, a particular action should be heard, they are by no means obliged to adhere to those time limitations.”  (Citations omitted.)  Dunham v. Dunham, 204 Conn. 303, 326–27, 528 A.2d 1123 (1987), overruled in part on other grounds by Santopietro v. New Haven, 239 Conn. 207, 213 n.8, 682 A.2d 106 (1996).   The appropriate statute of limitations to be examined by analogy is the one that applies to the underlying legal cause of action.   See Giordano v. Giordano, 39 Conn.App. 183, 215–16, 664 A.2d 1136 (1995).

In the present case, it is alleged that the plaintiff is entitled to quantum meruit for the value of the insurance product provided to the defendant.   The defendants' special defense that the plaintiff's claim is better characterized as sounding in conversion or statutory theft, so that the three-year statute of limitations for torts applies, is without merit.  “Conversion is an unauthorized assumption and exercise of the right of ownership over goods belonging to another, to the exclusion of the owner's rights ․ The essence of the wrong is that the property rights of the plaintiff have been dealt with in a manner adverse to him, inconsistent with his right of dominion and to his harm.”  (Internal quotation marks omitted.)  Marut v. Indymac Bank, FSB, 132 Conn.App. 763, 768–69 A.3d (2012).   Under our case law money can be subject to conversion.   See Devitt v. Manulik, 176 Conn. 657, 661–63, 410 A.2d 465 (1979) (recovery of money wrongfully taken from joint survivorship bank account).   However, “[a] mere obligation to pay money may not be enforced by a conversion action ․ and an action in tort is inappropriate where the basis of the suit is a contract, either express or implied ․ Consistent with this rule, in our case law sustaining a cause of action wherein money was the subject of the conversion or theft, the plaintiff's in those cases at one time had possession of, or legal title to, the money.”  (Citation omitted;  internal quotation marks omitted.)  Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745, 772, 905 A.2d 623 (2006).   In Deming, the plaintiffs' claims of conversion and theft were found to fail as a matter of law because they had not alleged that they ever possessed or owned legal title to these funds.   See id., at 773.  (Concluding that, “[a]t best, the defendants merely are obligated to pay the money.”)  Id. In the present case, the plaintiff's claims arise out of the alleged breach of express contracts.   The plaintiff has not alleged legal ownership or prior possession of the money at issue.   Therefore, conversion is not a better description of the plaintiff's allegations.   Furthermore, as to statutory theft, the court notes that liability for conversion is a pre-condition for finding liability for statutory theft.   See News America Marketing In–Store, Inc. v. Marquis, 86 Conn.App. 527, 544–46, 862 A.2d 837 (2004).   Consequently, since conversion cannot be found in the instant case, the claim for statutory theft must also fail.

In conclusion, the court finds that the plaintiff's claims sounding in quantum meruit are more analogous to contract actions so that the six year statute of limitations, General Statutes § 52–576, applies.¹  As a result, the defendants' special defense, that the three-year statute of limitations applies to the plaintiff's claims seeking quantum meruit, shall be stricken for being legally insufficient.

Next, the plaintiff argues that the special defense by the defendant, Lawrence Tomasetti, to the fifth, sixth, seventh and eighth counts of the plaintiff's complaint, should be stricken because it is nothing more than a general denial and inappropriate as a special defense.   Specifically, the plaintiff argues that it is pursuing a claim against the defendant solely pursuant to the authority of § 34–214, which allows claims against members of a dissolved LLC only to the extent that assets have been distributed to that member in liquidation.²  Therefore, the defendant's claim that no assets have been distributed to him is inconsistent with and in direct contradiction to the authorizing language of § 34–214.   In short, the plaintiff argues that the defendant's special defense is nothing more than a denial of the plaintiff's allegations and should be stricken.   In response, the defendant argues that, although he has pleaded facts in his special defense that may be inconsistent with a cause of action under § 34–214, his pleadings are, in fact, consistent with the allegations of the complaint as actually written.   Consequently, the defendant maintains that he has alleged facts consistent with the complaint that show, notwithstanding, that the plaintiff has no cause of action—the very purpose of a special defense.

As pleaded, the law upon which the plaintiff seeks to hold the defendant individually liable in counts five through eight is unclear.   The plaintiff cites § 34–214 in its memorandum of law supporting its motion to strike the defendant's special defense, as well as in its motion to cite in Lawrence Tomasetti.   However, § 34–214 is glaringly absent from the complaint, which only states that the defendant, “was the sole member of Plymouth Home Improvements, LLC.” The complaint then goes on to incorporate by reference the prior counts sounding in breach of contract and quantum meruit.  Practice Book § 10–3(a) states, “[w]hen any claim made in a complaint, cross complaint, special defense, or other pleading is grounded on a statute, the statute shall be specifically identified by its number.”   Again, no such statute was identified in the complaint.   Additionally, because there is no prima facie case made out by the complaint as written, the court cannot even address whether the defendant's special defense is or is not consistent with the plaintiff's allegations.  “If ․ a party seeks the admission of evidence which is consistent with a prima facie case, but nevertheless would tend to destroy the cause of action, the ‘new matter’ must be affirmatively pleaded as a special defense.”  Pawlinski v. Allstate Ins. Co., 165 Conn. 1, 6, 327 A.2d 583 (1973).³  Here, the plaintiff's only allegation in the complaint is that “Lawrence Tomasetti, was the sole member of Plymouth Home Improvements, LLC ․” In response, the defendant's special defense is that “no assets of Plymouth Home Improvements, LLC have been distributed to Lawrence Tomasetti in liquidation,” and that, therefore, he “may not be held liable ․ pursuant to ․ General Statutes § 34–214.”   The court is aware that the defendant's special defense must be in response to the plaintiff's previous motion to cite in Lawrence Tomasetti.   In that motion, the plaintiff relied on § 34–214 because of an alleged dissolution of the underlying LLC. However, subsequently, the plaintiff failed to include that information in the operative complaint.   Accordingly, nothing in the defendant's special defense contradicts the allegations of the actual complaint.  “It is well established that a motion to strike must be considered within the confines of the pleadings and not external documents ․ [The court is] limited ․ to a consideration of the facts alleged in the complaint.”  (Internal quotation marks omitted.)  Zirinsky v. Zirinsky, 87 Conn.App. 257, 268 n.9, 865 A.2d 488, cert. denied, 273 Conn. 916, 871 A.2d 372 (2005).   Consequently, the plaintiff's motion to strike the special defense of the individual defendant, Lawrence Tomasetti, is denied.

In summary, for all of the aforementioned reasons, the plaintiff's motion to strike the defendants' first set of special defenses, asserting that the applicable statute of limitations is three years, is hereby granted, but the plaintiff's motion to strike the second set of special defenses by Lawrence Tomasetti is hereby denied.

WOODS, J.

FOOTNOTES

FN1. General Statutes § 52–576(a) states in relevant part, “No action for an account, or on any simple or implied contract, or on any contract in writing, shall be brought but within six years after the right of action accrues ․”.  FN1. General Statutes § 52–576(a) states in relevant part, “No action for an account, or on any simple or implied contract, or on any contract in writing, shall be brought but within six years after the right of action accrues ․”

FN2. General Statutes § 34–214 states, “Any claim not barred pursuant to sections 34–212 and 34–213 may be enforced by a claimant, legal representative or assignee against:  (1) The dissolved limited liability company to the extent of its undistributed assets, or (2) if the assets of a dissolved limited liability company have been distributed in liquidation, against one or more members of the dissolved limited liability company to the extent of their pro rata shares of the claim or the assets of the limited liability company distributed to them in liquidation, whichever is less, but no member's total liability for all claims under this section shall exceed the total amount of assets distributed to that member.”.  FN2. General Statutes § 34–214 states, “Any claim not barred pursuant to sections 34–212 and 34–213 may be enforced by a claimant, legal representative or assignee against:  (1) The dissolved limited liability company to the extent of its undistributed assets, or (2) if the assets of a dissolved limited liability company have been distributed in liquidation, against one or more members of the dissolved limited liability company to the extent of their pro rata shares of the claim or the assets of the limited liability company distributed to them in liquidation, whichever is less, but no member's total liability for all claims under this section shall exceed the total amount of assets distributed to that member.”

FN3. “Historically, the special defense plea is an outgrowth of the common-law plea of ‘confession and avoidance.’   1 Stephenson, op. cit., p. 521, § 127(c), explains the plea with an apt illustration:  D is liable to P if a, b, and c are true unless d is also true.   If d contradicts a, b, or c, then evidence of d may be admitted under a denial.   If, however, the existence of d does ․ independently destroy[ ] liability, then evidence of d may be admitted only under a special defense.   The distinction is significant since pleading is more than a mere procedural formality.   Generally, it allocates the burden of proof on a particular issue.”   Pawlinski v. Allstate Ins. Co., supra, 165 Conn. 6–7..  FN3. “Historically, the special defense plea is an outgrowth of the common-law plea of ‘confession and avoidance.’   1 Stephenson, op. cit., p. 521, § 127(c), explains the plea with an apt illustration:  D is liable to P if a, b, and c are true unless d is also true.   If d contradicts a, b, or c, then evidence of d may be admitted under a denial.   If, however, the existence of d does ․ independently destroy[ ] liability, then evidence of d may be admitted only under a special defense.   The distinction is significant since pleading is more than a mere procedural formality.   Generally, it allocates the burden of proof on a particular issue.”   Pawlinski v. Allstate Ins. Co., supra, 165 Conn. 6–7.

Woods, Glenn A., J.