LLC v. Sandro Cvecich (2013)

MEMORANDUM OF DECISION RE DEFENDANT'S MOTION TO STRIKE (Motion No. 101.00)

Introduction

On February 6, 2013, the plaintiff, Siegel, Reilly & Conlon, LLC, a law firm practicing in Connecticut, filed a three-count complaint in which it alleges the following facts.   The defendant, Sandro Cvecich, is the former husband of the plaintiff's former client, Angela Cvecich.   The plaintiff provided legal services to Ms. Cvecich related to her divorce from the defendant.   During the course of the plaintiff's representation of Ms. Cvecich, she incurred substantial legal fees that she ultimately failed to pay.   On November 26, 2012, the United States District Court for the District of Connecticut, Eginton, J., affirmed an arbitration award against Ms. Cvecich in favor of the plaintiff for the non-payment of legal fees in the amount of $150,894.78.¹  Prior to( the entry of that judgment, Ms. Cvecich transferred a condominium she owned in New York, New York (the property) to the defendant for little or no consideration.²  The deed through which the transfer occurred indicates that the defendant paid the sum of $10 for the property.   The plaintiff alleges further that the defendant knew or should have known that Ms. Cvecich owed the plaintiff substantial legal fees by virtue of financial affidavits submitted as part of the divorce proceedings, and that the transfer of the property was made for the purpose of avoiding payment of the judgment and/or defrauding the plaintiff.

Count one alleges a cause of action for fraudulent transfer.   Count two alleges a cause of action for constructive fraudulent transfer.   Count three, the subject of the present motion to strike, states a cause of action for unjust enrichment.   Paragraphs twenty-three and twenty-four of count three, which constitute the nexus of the present dispute, specifically allege:  “23.   As a direct and proximate result of his acts, conduct and/or omissions the defendant has been unjustly enriched to the detriment of the plaintiff in that the defendant has obtained, for little and/or no consideration, the property. 24.   As a direct and proximate result of the defendant's unjust enrichment, the plaintiff has been caused to suffer money damages.”   The plaintiff's prayer for relief requests, inter alia, money damages and/or avoidance of the fraudulent transfer.

On March 22, 2013, the defendant filed a motion to strike count three of the complaint on the ground that the plaintiff has failed to allege that the defendant benefitted from legal services that were rendered to Ms. Cvecich and/or that the defendant unjustly failed to pay for such services.   On April 18, 2013, the plaintiff filed a memorandum in opposition to which defendant replied.   The court heard argument at the short calendar on April 22, 2013.

Legal Standard

“Whenever any party wishes to contest ․ the legal sufficiency of the allegations of any complaint ․ 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.  “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.”  (Internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).  “[I]t 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.)  Coe v. Board of Education, 301 Conn. 112, 116–17, 19 A.3d 640 (2011).   A motion to strike “does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings.”  (Internal quotation marks omitted.)  Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997).  “A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged.”  (Internal quotation marks omitted.)  Bridgeport Harbour Place I, LLC v. Ganim, 303 Conn. 205, 213, 32 A.3d 296 (2011).

The defendant argues that the cause of action for unjust enrichment is an alternative to a claim for breach of contract and, therefore, requires a plaintiff to plead that (1) the defendant was benefitted, (2) the defendant unjustly did not pay the plaintiff for the benefit and (3) the failure of payment was to the plaintiff's detriment.   The defendant argues that the plaintiff does not plead in the complaint that the defendant in any way benefitted from legal services that were rendered by the plaintiff to Ms. Cvecich during the course of her divorce from the plaintiff, nor does the plaintiff plead facts showing that the defendant's failure to pay for such services was unjust.

In response, the plaintiff argues that the defendant's characterization of the cause of action for unjust enrichment exclusively as an alternative to an action on a contract is overly narrow.   The plaintiff argues that unjust enrichment is, at the outset, an equitable cause of action. which is meant to be flexible in order to include any circumstances under which the defendant received a benefit to the detriment of the plaintiff and unjustly failed to pay for that benefit.   Accordingly, plaintiff argues, a direct relationship between the plaintiff and the defendant, such as a contractual relationship, while sufficient to form the basis of an unjust enrichment claim, is not a prerequisite to the cause of action.   Here, the plaintiff contends, the defendant knew or should have known that Ms. Cvecich owed substantial legal fees to the plaintiff and that a judgment against her was likely.   Thus, the plaintiff claims, equity and good conscience require that the defendant pay the plaintiff for the benefit of the property he received for little or no consideration via a transfer he knew was designed to allow Ms. Cvecich to avoid her creditors.

In the alternative, plaintiff argues that a constructive trust was created on its behalf when the defendant accepted the transfer of the property from Ms. Cvecich.   Specifically, plaintiff argues that where related parties transfer assets among one another to the detriment of creditors, a constructive trust is imposed to prevent the unjust enrichment of the receiving party.

In his reply memorandum, the defendant reiterates his earlier argument and argues that plaintiff's reliance upon constructive trust confuses the cause of action for unjust enrichment with the remedy of constructive trust.   Finally, he asserts that the complaint does not plead constructive trust, nor allege the existence of a confidential relationship between the defendant and Ms. Cvecich, a necessary element of constructive trust.

“A right of recovery under the doctrine of unjust enrichment is essentially equitable, its basis being that in a given situation it is contrary to equity and good conscience for one to retain a benefit which has come to him at the expense of another ․ With no other test than what, under a given set of circumstances, is just or unjust, equitable or inequitable, conscionable or unconscionable, it becomes necessary in any case where the benefit of the doctrine is claimed to examine the circumstances and conduct of the parties and apply this standard.”  (Citation omitted;  internal quotation marks omitted.)   Providence Electric Co. v. Sutton Place, Inc., 161 Conn. 242, 246, 287 A.2d 379 (1971).  “Although unjust enrichment typically arises from a plaintiff's direct transfer of benefits to a defendant, it also may be indirect, involving, for example, a transfer of a benefit from a third party to a defendant when the plaintiff has a superior equitable entitlement to that benefit.”  New Hartford v. Connecticut Resources Recovery Authority, 291 Conn. 433, 468, 970 A.2d 592 (2009).

In Providence Electric Co. v. Sutton Place, Inc., supra, 161 Conn. 242, the court addressed a claim of indirect unjust enrichment.   There, the defendant contracted with a contractor to construct an apartment complex.   The contractor purchased appliances for the apartments but failed to pay the total amount owed for their purchase.   The plaintiff subsequently brought suit against the defendant alleging unjust enrichment because the defendant retained the benefit of the appliances that had been installed in the complex to the detriment of the plaintiff.

The court stated:  “It is clear that in order to recover on the basis of unjust enrichment, it is necessary for a plaintiff to demonstrate two aspects of the transaction.   First, it must be shown that the defendant was benefitted;  that is, he has received something of value.   And second, it must be shown that the benefit was unjust;  that it was not paid for by the defendant, to the detriment of the plaintiff ․ In this case, the plaintiff has clearly demonstrated that [the defendant] has derived a benefit ․ If, however, [the defendant] has paid its contractor ․ for those appliances, then the enrichment, in the absence of fraud, has not been unjust.”  Id., 246–47.   The court found that the plaintiff could not establish unjust enrichment because the record established that there was no fraud involved and the plaintiff paid the contractor for the appliances.

The court finds the facts alleged by the plaintiff in the present case rely upon a theory of unjust enrichment that is substantially similar to that which the court accepted as valid in Providence Electric Co. Unlike Providence Electric Co., however, in the present case, the facts alleged by the plaintiff are sufficient to state a cause of action for unjust enrichment.   Plaintiff alleges that the defendant participated in the fraudulent transfer of real property in order to assist Ms. Cvecich with avoiding her creditors, which includes the plaintiff.   The plaintiff further alleges that the defendant either knew or should have known of the amount of outstanding legal fees and that the purpose of the transfer was fraudulent in light of the fact that the defendant only paid $10 for the property.   The fact that the plaintiff and defendant did not have a direct contractual relationship is inapposite.   Providence Electric Co. and New Hartford together stand for the proposition that unjust enrichment does not require that the defendant receive a benefit directly from the plaintiff.   Instead, the cause of action for unjust enrichment, while often occurring in the context of a direct contractual relationship, is not so inflexible so as to require, as a prerequisite, the existence of such a relationship between the parties.   The cause of action includes circumstances, such as here, where a defendant receives a benefit from a third party and the plaintiff is harmed by the benefit the defendant receives.   Accordingly, the defendant's focus upon the fact that the plaintiff provided legal services to Ms. Cvecich during the course of the divorce from the defendant, and that the defendant did not benefit from those services, is misplaced.   Under the facts alleged, when read in the light most favorable to the nonmoving party, it is sufficient that the defendant derived a benefit in the form of the property, that the benefit came at the detriment of the plaintiff and that equity and good conscience would require that the defendant pay the plaintiff for that benefit.

Because the court agrees with the plaintiff's argument that unjust enrichment provides enough flexibility to include circumstances such as those presented, it does not reach the parties' arguments pertaining to the relationship between unjust enrichment and constructive trust.

CONCLUSION

For the foregoing reasons, the motion to strike is denied.

SOMMER, J.

FOOTNOTES

FN1. A copy of the judgment is attached to the complaint as Exhibit A..  FN1. A copy of the judgment is attached to the complaint as Exhibit A.

FN2. A copy of the deed by which the transfer of the property occurred is attached to the complaint as Exhibit B..  FN2. A copy of the deed by which the transfer of the property occurred is attached to the complaint as Exhibit B.

Sommer, Mary E., J.