Bank of New York Mellon v. Fidelity National Title Insurance Company (2013)

MEMORANDUM OF DECISION RE MOTION TO STRIKE (# 111)

The issue before the court is whether the defendant's motion to strike counts two and eight, and the prayer for relief in connection with count eight, should be granted.   Specifically, as to the breach of contract claim contained in count two, the defendant argues that:  (1) the plaintiff does not allege sufficient facts to demonstrate the formation of an agreement between the plaintiff and the defendant;  (2) the plaintiff does not allege the requisite element of consideration;  and (3) the count is really a tort claim cloaked in contractual language.   As to the unjust enrichment count contained in count eight, the defendant argues that:  (1) the plaintiff fails to allege a direct connection between the defendant's benefit and the plaintiff's detriment;  and (2) the corresponding prayer for relief is improper.

I

FACTS

This action arises out of the closing of an insured mortgage loan.   On April 16, 2013, the plaintiff, Bank of New York Mellon, as successor indenture trustee under Novastar mortgage funding trust, series 2006–1, (Bank of New York) filed the operative, revised complaint against the defendant, Lyle Legal Services, LLC (Lyle).¹  In counts two and eight—the counts at issue in the present motion—the plaintiff attempts to allege breach of contract and unjust enrichment claims, respectively.   By way of background, the plaintiff states in its general statement of facts that Kevin Harrison, a non-party, executed a mortgage secured by property located in Berlin, and that the mortgage and note were subsequently assigned to the plaintiff.   The plaintiff then alleges, in count two, that the defendant breached the terms of the plaintiff's closing instructions because the mortgage was recorded in the second lien position instead of the first lien position as agreed upon.   Then, in count eight, the plaintiff alleges, in the alternative, that the defendant was unjustly enriched because the defendant was paid $568.00 for ensuring that the mortgage would be recorded in the first lien position but failed to do so.

On May 31, 2013, the defendant moved to strike counts two and eight, and the prayer for relief corresponding to count eight.   On July 8, 2013, the plaintiff filed its objection thereto along with a memorandum of law in support.   On August 16, 2013, the defendant filed a reply.   On August 19, 2013, the court heard oral argument in connection with the motion.

II

DISCUSSION OF LAW

“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).   The court takes “the facts to be those alleged in the [complaint] ․ and ․ construe[s] the [complaint] in the manner most favorable to sustaining its legal sufficiency.”  (Internal quotation marks omitted.)  New London County Mutual Ins. Co. v. Nantes, 303 Conn. 737, 747, 36 A.3d 224 (2012).   Thus, “[i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied.”  Waters v. Autuori, 236 Conn. 820, 826, 676 A.2d 357 (1996).  “[T]he complaint is required only to fairly put the defendant on notice of the claims against him ․ 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.”  (Citation omitted;  internal quotation marks omitted.)  Montanaro v. Gorelick, 73 Conn.App. 319, 323–24, 807 A.2d 1083 (2002).  “Moreover, we note that [w]hat is necessarily implied [in an allegation] need not be expressly alleged ․ 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 ․ Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically.”  (Citations omitted;  internal quotation marks omitted.)  Gazo v. Stamford, 255 Conn. 245, 260, 765 A.2d 505 (2001).

A

COUNT TWO

With regard to count two, the breach of contract claim, the defendant argues that:  (1) the plaintiff does not allege sufficient facts to demonstrate the formation of an agreement between the plaintiff and the defendant;  (2) the plaintiff does not allege the requisite element of consideration;  and (3) the count is really a tort claim cloaked in contractual language.

In response, the plaintiff argues that:  (1) it sufficiently alleges an agreement between the plaintiff and the defendant because a well-defined agreement need be pleaded;  (2) from whom the defendant received consideration is immaterial;  and (3) the count is not a tort claim because the plaintiff alleges that the parties contracted to obtain a specific result.

1) Formation of an Agreement

“If a complaint contains the necessary elements of a cause of action, it will survive a motion to strike.”  Malizia v. Anderson, 42 Conn.Sup. 114, 116, 602 A.2d 1076 (1991).  “The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages.”  (Internal quotation marks omitted.)  Hawley Avenue Associates, LLC v. Robert D. Russo, M.D. & Associates Radiology, P.C., 130 Conn.App. 823, 832, 25 A.3d 707 (2011).  “A bald assertion that the defendant[s] ha[ve] a contractual obligation, without more, is insufficient to survive a motion to strike ․ Nevertheless, our Supreme Court has determined that a breach of contract claim should not be stricken if a plaintiff has set forth a specific contractual obligation and alleged that it had not been met ․ Whether the terms of the contract support that allegation is a factual question to be determined by the fact finder and, therefore, is not at issue when the trial court considers a motion to strike.”  (Citations omitted;  internal quotation marks omitted.)   Szynkowicz v. Boniauto–O'Hara, Superior Court, judicial district of Waterbury, Docket No. CV 12 6016649 (July 26, 2013, Zemetis, J.), citing Commissioner of Labor v. C.J.M. Services, Inc., 268 Conn. 283, 293, 842 A.2d 1124 (2004).

In the present case, the plaintiff alleges in count two that, pursuant to the terms of the plaintiff's closing instructions, the defendant agreed in writing and was paid to close the mortgage and ensure that it was recorded in the first lien position;  that the defendant failed to do so;  and that this failure caused the plaintiff to incur damages.  (Revised Complaint, Count Two, ¶¶ 7–12.)   It bears emphasizing that the plaintiff specifically alleges in count two that the defendant breached “the [p]laintiff's closing instructions.”   (Emphasis added.)  (Id., ¶ 11.)   This directly contradicts the defendant's argument that the plaintiff merely alleges that the defendant “acknowledged closing instructions issued by some unnamed entity and unilaterally agreed to do something,” which “does not demonstrate any contractual agreement between [the defendant] and the plaintiff.”  (Emphasis added.)  (Def.'s Memo., 5/31/13, p. 7.)

In light of the above, the plaintiff alleges sufficient facts to demonstrate the formation of an agreement between the plaintiff and the defendant.

2) Consideration

Next, the defendant argues that the plaintiff never alleges from whom the defendant received the requisite element of consideration, thus rendering count two insufficient.   Specifically, the defendant argues, “[t]here is no allegation that [the defendant] as the promisee received [the] consideration from the plaintiff as the [promisor] in exchange for his promise to close the lien in the first lien position.”  (Def.'s Memo., 5/31/13, p. 7.) In response, the plaintiff contends that this argument is immaterial to the determination of whether the plaintiff has sufficiently pled a cause of action for breach of contract.   The court agrees with the plaintiff.

Generally, if consideration is sufficient for a contract in other respects, it does not matter from whom or to whom it moves.   2 Restatement (Second), Contracts § 71(4), comment (e) (1981);  see also 17A Am.Jur.2d, Contracts § 125, p. 139 (1991) (same);  and Republic Ins. Co. v. Pat DiNardo Auto Sales, Inc., 44 Conn.Sup. 207, 219–20, 678 A.2d 516 (1995), aff'd, 41 Conn.App. 686, 677 A.2d 21, cert. denied, 239 Conn. 906, 682 A.2d 1005 (1996), citing 2 Restatement (Second), supra, § 71(4), comment (e).

3) Tort Claim Cloaked as Contract

Finally, the defendant argues that count two is really a tort claim cloaked in contractual language and thus should be stricken.  “Although ordinarily—indeed, in most cases—in reviewing a motion to strike, the court must take the plaintiff's allegations at face value, that rule is not absolute.   We have, on occasion, looked beyond the specific language of a pleading to discern its real underlying basis.   See, e.g., Allard v. Liberty Oil Equipment Co., 253 Conn. 787, 800, 756 A.2d 237 (2000) (‘[the defendant] cannot ․ convert its apportionment claim against [the third party defendant] into something other than a product liability claim simply by alleging only negligent misconduct’).”  Gazo v. Stamford, supra, 255 Conn. 262–63.   In Gazo, our Supreme Court reasoned that “[t]he law should not permit [a party] to recast what is essentially a tort claim as a contract claim solely to gain the potential advantage of a longer statute of limitations”;  id., 266;  and that this made it “an appropriate case in which to pierce the pleading veil.”   Id., 263.

Similarly, in Pelletier v. Galske, 105 Conn.App. 77, 936 A.2d 689 (2007), cert. denied, 285 Conn. 921, 943 A.2d 1100 (2008), the Appellate Court found that “the sole count in the complaint [was] not governed by the six year statute for contract actions ․ but, rather, was time barred by the three year statute of limitations for tort claims ․”;  id., 83;  because a tort claim cannot be converted into a contract claim “merely by talismanically invoking contract language ․” (Internal quotation marks omitted.)  Id., 81.

In the present case, unlike Gazo and Pelletier, no statute of limitations issue has yet been raised.  “[O]rdinarily, [a] claim that an action is barred by the lapse of the statute of limitations must be pleaded as a special defense, not raised by a motion to strike.”  (Internal quotation marks omitted.)  Greco v. United Technologies Corp., 277 Conn. 337, 344 n.12, 890 A.2d 1269 (2006).   Consequently, the court chooses not to “pierce the pleading veil,” but makes this ruling without prejudice reconsideration of the issue should the defendant plead as a special defense that the action is time barred.

B

COUNT EIGHT

With regard to count eight, the unjust enrichment claim, the defendant argues that:  (1) the plaintiff fails to allege a direct connection between the defendant's benefit and the plaintiff's detriment;  and (2) the plaintiff's prayer for relief is improper because monetary damages are inconsistent with a claim in equity.

In response, the plaintiff argues that:  (1) it sufficiently states a cause of action for unjust enrichment because there is a direct connection between the benefit conferred upon the defendant—the $568.00—and the detriment to the plaintiff—being deprived of the first lien position.   Additionally, although the plaintiff concedes that the proper measure of damages for a claim of unjust enrichment is restitution, it nevertheless argues that:  (2) the defendant's motion to strike to prayer for relief is procedurally improper.

1) Relationship Between Defendant's Benefit and Plaintiff's Detriment

“Unjust enrichment applies wherever justice requires compensation to be given for property or services rendered under a contract, and no remedy is available by an action on the contract ․ Unjust enrichment is, consistent with the principles of equity, a broad and flexible remedy ․ Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefitted, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiffs' detriment.”  (Internal quotation marks omitted.)  Culver v. Culver, 127 Conn.App. 236, 249, 17 A.3d 1048, cert. denied, 301 Conn. 929, 23 A.3d 724 (2011).

“The elements of a cause of action for unjust enrichment ․ do not include a contractual, ‘privity’ requirement.”   Coastal, Inc. Plumbing–Heating v. TP Builders, Inc., Superior Court, judicial district of Ansonia–Milford, Docket No. CV 04 0084236 (April 11, 2005, Stevens, J.) (39 Conn. L. Rptr. 103, 104).  “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).   For example, in the context of construction projects, “appellate courts in [Connecticut] have held that where a property owner hires a general contractor ․ and thereafter receives the benefit of labor or materials supplied by a subcontractor hired by that general contractor, any enrichment of the property owner from the work of the subcontractor is not unjust absent fraud and provided that the property owner pays the general contractor in full for the subcontractor's services.”  Nation Electrical Contracting, LLC v. St. Dimitrie Romanian Orthodox Church, 144 Conn.App. 808, 817 (2013), citing Providence Electrical Co. v. Sutton Place, Inc., 161 Conn. 242, 246–47, 287 A.2d 379 (1971);  see also Siegel, Reilly & Conlon, LLC v. Cvecich, Superior Court, judicial district of Fairfield, Docket No. CV 13 6033078 (July 9, 2013, Sommer, J.) [56 Conn. L. Rptr. 438] (“The fact that the plaintiff and defendant did not have a direct contractual relationship is inapposite.  [Providence Electrical Co. v. Sutton Place, Inc., supra, 161 Conn. 242], and [New Hartford v. Connecticut Resources Recovery Authority, supra, 291 Conn. 433], together stand for the proposition that unjust enrichment does not require that the defendant receive a benefit directly from the plaintiff”).

In the present case, the plaintiff alleges in count eight that the defendant was paid $568.00 to ensure that the mortgage would be recorded in the first lien position.  (Revised Complaint, Count Eight, ¶ 8.)   Furthermore, the plaintiff alleges that the defendant “was unjustly benefitted as the money it received ․ was to ensure clear title ․ which [the defendant] failed to accomplish ․” (Id., ¶ 9.)   The defendant argues that because the plaintiff fails to allege that it was the plaintiff that paid the defendant, the plaintiff thus fails to establish any direct connection between the plaintiff's detriment and the defendant's unjust enrichment.   However, research reveals that no privity of contract is required to properly plead a claim of unjust enrichment.

C

PRAYER FOR RELIEF

The plaintiff concedes that the proper measure of damages for a claim of unjust enrichment is restitution;  nevertheless it argues that striking the prayer for relief is procedurally improper.   Instead, the plaintiff maintains that the defendant should file a request to revise.

Pursuant to Practice Book § 10–39, a party may move to strike a prayer for relief.   However, a prayer for relief may “be stricken only if the relief sought could not be legally awarded.”  Pamela B. v. Ment, 244 Conn. 296, 325, 709 A.2d 1089 (1998).²  Additionally, in striking a prayer for relief, judges of the Superior Court have at times limited their striking to the relevant portions thereof.   See, e.g. Pereira v. North Carolina Granite Corp., Superior Court, judicial district of New Haven, Docket No. CV 09 5031427 (August 5, 2011, Wilson, J.) (52 Conn. L. Rptr. 417, 422) (“the court grants the motions to strike counts one, two, five, six, nine and ten and the portions of the prayer for relief seeking attorneys fees and punitive damages”).

III

CONCLUSION

For all of the aforementioned reasons, the defendant's motion to strike is denied as to counts two and eight, but the motion is granted as to those portions of the plaintiff's prayer for relief that seek monetary damages in connection with count eight.

James W. Abrams, Judge

FOOTNOTES

FN1. Fidelity National Title Insurance Company (FNTIC) and Fidelity National Title Group (FNTG) are also named defendants in this action.   However, for convenience, all references to the defendant are to Lyle because it is the only moving party at issue..  FN1. Fidelity National Title Insurance Company (FNTIC) and Fidelity National Title Group (FNTG) are also named defendants in this action.   However, for convenience, all references to the defendant are to Lyle because it is the only moving party at issue.

FN2. Abrogation on other grounds is recognized by Markley v. Dept. of Public Utility Control, 301 Conn. 56, 66 n.11, 23 A.3d 668 (2011)..  FN2. Abrogation on other grounds is recognized by Markley v. Dept. of Public Utility Control, 301 Conn. 56, 66 n.11, 23 A.3d 668 (2011).

Abrams, James W., J.