Custom Midget Club, Inc. v. Rick Fuller et al. (2013)

MEMORANDUM OF DECISION

The defendants move to strike counts one and three of the second, revised complaint on the ground that the plaintiff has failed to make the requisite allegations to establish an agency relationship between the defendants.

On October 12, 2012, the plaintiff filed a revised complaint against the defendants United States Auto Club, Rick Fuller, John Mikitarian, Stephen Lombardo, Richard Morrocco, Anthony Franco, Gary Labreck, William Faford, Jason Levesque, Michael Arieta, and Donald R. Hoenig, alleging, inter alia, fraud and intentional tortious interference with its business relationship.   The defendant United States Auto Club will hereinafter be referred to as “USAC.” The defendants Rick Fuller, John Mikitarian, Stephen Lombardo, Richard Morrocco, Anthony Franco, Gary Labreck, William Faford, Jason Levesque, and Michael Arieta will collectively be referred to as “the individual defendants.”   On February 15, 2013, the plaintiff withdrew all of his claims against Donald Hoenig.   On October 22, 2012, USAC moved to strike the fraud count of the revised complaint on the ground that the plaintiff failed to allege the underlying essential facts to establish the elements of agency under Hollister v. Thomas, 110 Conn.App. 692, 706, cert. denied, 289 Conn. 956 (2008).   USAC also moved to strike the tortious interference count on the ground that the plaintiff failed to allege specific tortious conduct on the part of USAC. On December 10, 2012, the court granted USAC's motion with respect to the fraud count but denied the motion with respect to the tortious interference count.

On January 3, 2013, the plaintiff filed a second, revised complaint against the same defendants.   In count one of the complaint, the plaintiff alleges facts in support of its claim for fraud or misrepresentation against USAC. In count three, the plaintiff alleges the same facts in support of its claim for fraud or misrepresentation against the individual defendants.   In particular, the plaintiff alleges the following facts.   The plaintiff is a nonprofit corporation involved in the development of sportsmanship in youth racing under the auspices of the national Quarter Midgets of America, Inc. (QMA).  On or before December 17, 2010, Dale Gross was the president of the plaintiff corporation.   The individual defendants were officers of a group that subsequently claimed to represent the plaintiff as USAC. The individual defendants “consented by understanding to and with USAC and subject to USAC's control as manifested” to replace the leadership of the plaintiff corporation with USAC compliant individuals to the detriment of the plaintiff and its members by fraud and false representation.

On December 17, 2010, Donald R. Hoenig, the owner of the speedway where the plaintiff held races, “with the consent and control as manifested by USAC,” returned the plaintiff's check for $5,000 for the season lease of the speedway and canceled the plaintiff's annual meeting in order to prevent a vote that would deny USAC control.   On January 13, 2011, Hoenig sent an e-mail to the plaintiff's members stating that the plaintiff would now be operating under USAC. On January 14, 2011, the plaintiff's members voted to remove Gross and the individual defendants from the board and filed the change with the secretary of state.

The plaintiff alleges that the individual defendants, “with the understanding and agreement between them that they will act in the manifest interest of and under the control of USAC,” attempted to defraud the plaintiff of its assets and misrepresent themselves as the plaintiff to induce them to act by:  (1) retaining the plaintiff's assets by false representation in claiming to be the plaintiff's corporate officers;  (2) attempting to cancel the plaintiff's annual meeting in order to prevent a vote concerning affiliation with USAC;  (3) conspiring to turn over the plaintiff's assets to Hoenig and USAC by false representation;  (4) refusing the plaintiff's demands for the return of corporate property;  (5) contracting on behalf of the plaintiff when they had full knowledge that they did not represent the plaintiff;  (6) filing a false statement with the secretary of state claiming to be the plaintiff's officers;  (7) misusing the plaintiff's property;  (8) attempting to appropriate the plaintiff's name and website in order to steal assets;  (9) conspiring to turn the plaintiff's assets over to USAC for purposes of inducing the plaintiff to believe it was at the behest of Hoenig and USAC;  (10) continuing to use, sell and conceal the plaintiff's property knowing that they had no legal title to it;  (11) conspiring to replace QMA as the sanctioning body with USAC;  (12) misrepresenting the value of the property they seized;  (13) purporting to remove the corporate agent of service to induce members and the public that they were in control of the corporation;  and (14) using the plaintiff's assets to promote a USAC sponsored race for profit.

On March 6, 2013, USAC moved to strike count one of the second, revised complaint on the ground that the plaintiff failed to state a claim of agency relationship between USAC and the individual defendants.   On March 7, 2013, the individual defendants moved to strike count three of the second, revised complaint on the same ground.   Both USAC and the individual defendants have submitted memoranda of law in support of their motions to strike.   On March 13 and 14, 2013, the plaintiff submitted memoranda in opposition to the motions to strike.   This matter was heard on the short calendar on April 1, 2013.

“Whenever any party wishes to contest the legal sufficiency of the allegations of any complaint, counterclaim or cross claim, or of any one or more counts thereof, to state a claim upon which relief can be granted ․ that party may do so by filing a motion to strike the contested pleading or part thereof.”   Practice Book § 10–39(a)(1).  “The proper method to challenge the legal sufficiency of a complaint is to make a motion to strike prior to trial.”   Gulack v. Gulack, 30 Conn.App. 305, 309 (1993).  “The role of the trial court [is] to examine the [complaint], construed in favor of the plaintiffs, to determine whether the [pleading party has] stated a legally sufficient cause of action.”  (Internal quotation marks omitted.)  Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 378 (1997).

“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.”   (Internal quotation marks omitted.)   Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, 295 Conn. 240, 252–53 (2010).  “[T]he modern trend ․ is to construe pleadings broadly and realistically, rather than narrowly and technically ․ As long as the pleadings provide sufficient notice of the facts claimed and the issues to be tried and do not surprise or prejudice the opposing party, we will not conclude that the complaint is insufficient to allow recovery.”  (Citations omitted;  internal quotation marks omitted.)  Normand Josef Enterprises, Inc. v. Connecticut National Bank, 230 Conn. 486, 496 (1994).

In the present case, all of the defendants argue that the plaintiff has failed to allege facts to prove the existence of an agency relationship between USAC and the individual defendants.   Specifically, the defendants argue that, despite this court's ruling on the previous motion to strike, the plaintiff has still failed to allege the underlying essential facts which establish the elements of agency under the Appellate Court's holding in Hollister v. Thomas, supra, 110 Conn.App. 692.   As a result, the defendants argue that counts one and three should be stricken from the second, revised complaint on the ground that the plaintiff has failed to state a claim.   The plaintiff argues that they have made the requisite allegations of agency relationship in their second, revised complaint and, thus, both counts are legally sufficient to sustain claims of agency and fraud.

“[T]he three elements required to show the existence of an agency relationship include:  (1) a manifestation by the principal that the agent will act for him;  (2) acceptance by the agent of the undertaking;  and (3) an understanding between the parties that the principal will be in control of the undertaking ․ The existence of an agency relationship is a question of fact ․ Some of the factors ․ in assessing whether such a relationship exists include:  whether the alleged principal has the right to direct and control the work of the agent ․ In addition, [a]n essential ingredient of agency is that the agent is doing something at the behest and for the benefit of the principal ․ Finally, the labels used by the parties in referring to their relationship are not determinative;  rather a court must look to the operative terms of their agreement or understanding.”  (Internal quotation marks omitted.)  Hollister v. Thomas, supra, 110 Conn.App. 706.

“To survive a motion to strike, a complaint must allege more than a conclusory allegation of agency;  it must allege facts supporting that legal conclusion of agency.”   Michel v. Bridgeport Hospital, Superior Court, judicial district of Fairfield, Docket No. CV 11 6015195 (March 7, 2011, Levin, J.).   In Hollister, for example, the Appellate Court upheld the trial court's decision to grant the defendant's motion to strike several counts of the plaintiff's complaint because the plaintiff (1) did not allege that the defendant had the right to control the work of the agent and (2) did not elaborate on the relationship between the defendant and the agent other than the use of the words “agent” and “subcontractor.”  Hollister v. Thomas, supra, 110 Conn.App. 706–07.

“While there are some superior [court] cases which have required the pleader to spell out the elements of an agency relationship, other decisions have deemed it sufficient to allege the relationship.”   West v. Royal Bank of Canada, Superior Court, judicial district of Hartford, Docket No. CV 06 4023999 (August 29, 2007, Wagner, J.) (44 Conn. L. Rptr. 135, 135).  “There are no decisions of the Supreme Court or the Appellate Court addressing the defendants' claim that an allegation that they are liable for the alleged malpractice of named and unnamed ‘servants, agents, apparent agents and/or employees' without a statement of facts evidencing the alleged agency relationship is insufficient to state a cause of action.”   Trimm v. Kasir, Superior Court, judicial district of New Britain, Docket No. CV 11 6009059 (November 30, 2011, Shortall, J.T.R.) (53 Conn. L. Rptr. 35, 37).   Trial courts “recognize the difficult, if not impossible burden on a plaintiff at the commencement of the lawsuit of knowing the facts giving rise to the alleged agency relationship when they allow the plaintiff simply to plead the three elements of the agency relationship.”  (Emphasis in original.)  Id.

Additionally, some trial courts have narrowly construed the Hollister decision to apply only to situations where a plaintiff is suing individuals, not corporate entities.   See Gagnon v. Bristol Hospital, Inc., Superior Court, judicial district of New Britain, Docket No. CV 11 6012982 (February 19, 2013, Swienton, J.) [55 Conn. L. Rptr. 576] (“It is not necessary to allege in a complaint that an act performed by a corporate defendant was performed by an agent, nor is it necessary to allege in the complaint that the agent had the authority to act”);  see also Newburry v. Bristol Hospital, Inc., Superior Court, judicial district of New Britain, Docket No. CV 11 6010996 (April 5, 2012, Swienton, J.) (53 Conn. L. Rptr. 690, 691–92) (“[C]orporations always act through agents.   They are excepted from the rule requiring that the fact that a contract was made through an agent be stated ․ Therefore, when the defendant is a corporation ․ it is not even necessary to allege that the act charged to have been performed by the defendant was in fact performed by an agent acting for it ․”).  Id.

In the present case, the plaintiff made reference to the elements of agency relationship throughout the contested counts of the second revised complaint.   In paragraph fourteen of counts one and three, for example, the plaintiff alleges that the individual defendants, “acting as agents or servants of Donald R. Hoenig and USAC, and with the understanding and agreement between [the] defendants that they will act in the manifest interest of and under the control of USAC, ․ have attempted to defraud the [plaintiff] of its assets and misrepresent themselves to individuals and the public as the [plaintiff] ․” (Emphasis added.).   Although the plaintiff does not elaborate on the manifestation of USAC or the understanding between the defendants, the plaintiff sets forth the basic elements of an agency relationship in the second, revised complaint.   Construing the sufficiency of the counts broadly and recognizing the difficult burden on the plaintiff to identify specific facts giving rise to the relationship between the individual defendants and USAC, the plaintiff has made the requisite allegations for an agency relationship under Hollister.

For the foregoing reasons, the court denies the defendants' motions to strike counts one and three of the second, revised complaint.

Sferrazza, S.J.

Sferrazza, Samuel J., S.J.