Joanna DiDomenico et al. v. Strawberry Woods Condominium Association, Inc. (2012)

MEMORANDUM OF DECISION ON DEFENDANT'S MOTION TO STRIKE DATED MARCH 7, 2012 (107.00)

Can a residential condominium association be sued for a CUPTA violation?   This issue has not been fully resolved by our appellate courts.

The two plaintiffs are the owners of a residential condominium unit in the Strawberry Woods Condominium in Norwalk, Connecticut.   The Strawberry Woods Condominium Association (SWCA) is the condominium association formed pursuant to the Connecticut Common Interest Ownership Act and as such is responsible for the maintenance and repair of the common elements of the condominium.   The plaintiffs allege that their residential unit suffered substantial water damage, which they attribute to a roof system that failed in January 2011.   In addition to the water damage there was water infiltration into their unit and resulting mold growth.   The plaintiffs allege that the fair market value of their residential unit has diminished.   The complaint further alleges that the plaintiffs made demands upon the Strawberry Woods Condominium Association for the repair of the roof and the resulting damage to their residential unit as well the remediation of the mold growth from January 2011 through August 2011.   The Association refused to take the necessary action authorizing the repair and failed to authorize pre-renovation tests for asbestos.   The plaintiffs are claiming monetary damages, punitive damages and attorneys fees.   The CUPTA allegations are contained in Count Three of the plaintiff's September 22, 2011 original complaint (Pleading 2), the operative complaint.   The plaintiffs' five-count complaint alleges breach of fiduciary duty, breach of the Association's statutory maintenance duties, CUTPA, negligence and breach of the maintenance and repair provisions Gen.Stat. §§ 47–249;  47–255(h)(1) and 47–84.

On March 7, 2012 the defendant moved to strike the Count Three of the plaintiff's complaint “because it fails to allege facts supporting that SWCA, a condominium association, was engaged in ‘trade’ or ‘commerce’ as is required to be subject to a claim under Connecticut's Unfair Trade Practices Act, General Statutes Sections 42–110b et seq.  (‘CUTPA’).” (# 107.00).   The defendant also moved to strike the corresponding prayer for punitive damages and attorney fees that are based on the CUTPA Count Three.   The defendant's supporting Memorandum of Law was part of the Motion to Strike. (# 107.00) The plaintiff filed an Objection dated April 26, 2012 (# 112.00) to which the defendant filed an April 27, 2012 Reply (# 113.00).   The parties appeared and argued the Motion to Strike before this court on April 30, 2012. (# 107.86).

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).

Fusaro v. Malik, Superior Court, judicial district of Stamford/Norwalk of Stamford, Docket Number FST CV 08–5008479 S (February 27, 2012, Tierney, J.)

CUTPA provides that “No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”  (Emphasis added.) § 42–110b(a).  “The purpose of CUTPA is to protect the public from unfair practices in the conduct of any trade or commerce ․” Sovereign Bank v. Licata, 116 Conn.App. 483, 493 (2009);  Cert. dismissed 303 Conn. 721 (2012).  “ ‘Trade’ and ‘commerce’ means the advertising, the sale or rent or lease, the offering of 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).

Our Supreme Court has previously addressed whether the management activities of condominium associations fall within a trade or commerce under CUTPA.   In Rafalowski v. Old County Road, Inc., 245 Conn. 504, 507 (1998), the Court reviewed the question as to whether the trial court properly concluded that the activities of the defendant in managing a condominium association do not constitute trade or commerce within the meaning of CUTPA.   The Supreme Court adopted the trial court's decision as a proper statement of the facts and the applicable law on those issues.  Id., 508.   The Supreme Court affirmed the trial court's determination that CUTPA was inapplicable since the allegations of mismanagement by a condominium association did not constitute trade or commerce activities within the statute's meaning.”  Id., 508.  Rafalowski v. Old County Road, Inc., 45 Conn.Sup. 341, 354–55 (1997)

Both parties cited Rafalowski and furnished trial court decisions supporting their respective positions.   The defendant is claiming that the allegations of the Count Three are no more than the failure of the defendant condominium association to properly manage its maintenance and repair obligations and since under Rafalowski, CUTPA is inapplicable when only mismanagement is alleged against a condominium association, Count Three must fail.   The plaintiffs counter by alleging that the water infiltration did both direct and indirect damage.   They allege that the water damage not only continued but was exacerbated by the resulting mold condition.   They claim that the delays, inactions and failure to repair and maintain the common roof system shows bad faith by the condominium association.   Plaintiffs allege that this is more than ordinary mismanagement.   The plaintiffs point to the following allegations in Count Three:

“14. As described above, the Association has affirmatively, and in bad faith, shirked its obligations under the Common Interest Ownership Act.” “15.   The Owners have made the Association aware that pursuant to the National Emission Standard for Hazardous Air Pollutants (‘NESHAP’) found in Title 40 CFR Part 61, promulgated under Section 112 of the Clean Air Act, the Unit must undergo a pre-renovation survey by a licensed asbestos inspector (the ‘Inspection’).” “16.   The Association has refused to acknowledge the requirements for the Inspection and has failed to undertake, initiate and/or authorize such Inspection, even though work on the Unit cannot begin unless and until the Inspection is complete.”   The remaining paragraphs of Count Three allege the standard CUTPA allegations that the defendant was an entity doing business, that its actions were immoral, unethical, oppressive, unscrupulous and offended public policy, that the owners have been directly harmed, that the owners have suffered an ascertainable loss and that the Association's actions constitute an unfair trade practice in violation of Gen.Stat. § 42–110b et seq.

Since the Rafalowski decision in 1998 neither appellate court issued a further opinion on whether a condominium association can be subject to CUTPA.   Numerous trial court decisions issued both before and after Rafalowski have discussed these issues.  Rafalowski alleged the application of condominium fees in an inconsistent fashion by the condominium association between finished commercial units and unfinished commercial units.   In addition failure to hold various meetings, give notice of meetings or adopt a budget were alleged.   After trial, the court held that these failings were management activities of the condominium association and as such were excluded from CUTPA relief.   Rafalowski, however, does not categorically exclude all condominium association's omissions or commissions from CUTPA responsibility.   Rafalowski relied on trial court decisions.   Although most trial court decisions have found that management duties of a condominium association do not constitute trade or commerce and therefore a condominium association is not subject to CUTPA, some trial court decisions hold otherwise.   An examination of those trial court decisions is useful since the Rafalowski trial court and Supreme Court relied on trial court decisions for their holding.

Some trial court decisions stand for the proposition that certain specific allegations can bring a condominium association within the definition of trade or commerce.   Depot Square Business Center Condominium Association, Inc. v. Charbonneau, Superior Court, judicial district of Waterbury at Waterbury, Docket No. CV 04–0184471 (April 12, 2005, Agati, J.);   Bosco v. Caswell Cove Condominium Association, Inc., Superior Court, judicial district of New Britain at New Britain Docket No. CV 08–5010253 (July 15, 2009, Pittman, J.).

“In enacting CUTPA, the legislature intended to create an expansive act which would provide relief to persons suffering ‘any ascertainable loss' as a result of an unfair or deceptive trade practice.  General Statutes § 42–110g(a).”   Web Press Services Corporation v. New London Motors, Inc., 203 Conn. 342, 354 (1987).  “The public policy underlying CUTPA is to encourage litigants to act as private attorneys general and to engage in bringing actions that have as their basis unfair or deceptive trade practices.”  Thames River Recycling, Inc. v. Gallo, 50 Conn.App. 767, 794–95 (1998).

The mere allegation of medical malpractice or legal malpractice is insufficient to rise to the level of a CUTPA violation but if those bad acts by the medical provider or the attorney relate to the entrepreneurial aspects of their profession then a CUTPA claim may stand.  Haynes v. Yale–New Haven Hospital, 243 Conn. 17, 34 (1997);  Beverly Hills Concepts, Inc. v. Schatz & Schatz, Ribicoff & Kotkin, 247 Conn. 48, 79 (1998).  “This public policy consideration requires us to hold that CUTPA covers only the entrepreneurial or commercial aspects of the profession of law.   The noncommercial aspects of lawyering—that is, the representation of the client in a legal capacity—should be excluded for public policy reasons.”  Jackson v. R.G. Whipple, Inc., 225 Conn. 705, 730–31 (1993);  Haynes v. Yale–New Haven Hospital, supra, 243 Conn. 35.

The court finds persuasive this professional versus the entrepreneurial dichotomy.   In this court's opinion that dichotomy will be adopted by our appellate courts in the same fashion that it has been adopted in legal and medical malpractice CUTPA cases.   Managerial duties of a condominium association will be excluded from CUTPA but a condominium association's entrepreneurial activities will be subject to CUTPA.   Two trial court decisions have furnished an example of entrepreneurial activities subjecting a condominium association to a CUTPA claim.

Walker v. Warner Village Condominium Association, Superior Court, judicial district of New Haven at New Haven, Docket No. CV 03–0477670 (June 28, 2006, Devlin, J.).   In Walker the trial court declined to strike a CUTPA claim brought by a condominium unit owner against the condominium association since the allegations went beyond mismanagement.   The plaintiff alleged that the poor maintenance was used as a tactic by the condominium association to effectuate a strategy to purchase condominium units that they did not already own.   The Walker court found that this activity on behalf of the condominium association was “entrepreneurial and within the ambit of CUTPA.”

Bergin v. Holmes, Superior Court, judicial district of Waterbury at Waterbury, Docket No. CV 09–5012683 S (October 14, 2011, Taylor, J.).   In Bergin, the motion to strike the CUTPA count against a condominium association was denied on the basis that “sufficient facts have been alleged to satisfactorily assert a claim pursuant to CUTPA.”  “In evaluating the claims of the parties in this case, it is important to look to the nature of the activity allegedly engaged in by HVMA in order to determine whether its actions were managerial or entrepreneurial in nature.”   HVMA is also known as the Heritage Village Master Association.  “HVMA has clearly managed the Upgrade Contract program on behalf of the association.   However, the allegations further assert that HVMA engaged in the trade and commerce of advertising renovated condominium units to members of the public for a pecuniary benefit.”  “The court in Walker concluded that the plaintiffs' allegations went beyond mismanagement to claim that poor maintenance was used as a tactic by the defendant to effectuate a strategy to purchase condominium units that they did not already own.   The court found that this activity was entrepreneurial and within the scope of CUTPA.”  Id., Bergin v. Holmes.

Plaintiff cites one trial court decision for the proposition that CUTPA is applicable to condominium association mismanagement.   Ferraro v. Tamarc Ridge Condominium Association, Inc., Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 08–5015500 S (June 3, 2009, Bellis, J.) [47 Conn. L. Rptr. 670].   The defendants in Ferraro were the condominium association, the management company and the president of the condominium association.   The CUTPA claim at issue involved a claim against the management company not the condominium association.   The underlying facts were that the management company consistently told the plaintiff, the condominium unit owner, that the unit would be repaired when the management company knew that the condominium association would not make the repairs.   The Ferraro court denied the motion to strike thus allowing the CUTPA claim.   The court does not find Ferraro applicable since the motion to strike was not directed to the mismanagement of the condominium association but mismanagement by the management company alone.

“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, supra, 240 Conn. 580.   Applying the managerial/entrepreneurial test to the allegations of CUTPA Count Three, the court finds that insufficient entrepreneurial facts have been alleged by the plaintiff.  “In fact, the plaintiff has not alleged that the defendant's conduct was in the pursuit of anything other than its usual management responsibilities.”   Pasquariello v. Castle Rock Owners Association, Inc., Superior Court, judicial district of New Haven at New Haven, Docket Number CV 09–6006082 S (August 5, 2010, Zoarski, J.T.R.).

Since the CUTPA Count Three is not sufficient, the resulting Claim for Relief for punitive damages and attorney fees under CUTPA must also fail.

The defendant's Motion to Strike dated March 7, 2012 (# 107.00) is granted.

BY THE COURT

Hon. Kevin Tierney

Judge Trial Referee

Tierney, Kevin, J.T.R.