First Merchants Group Limited Partnership v. Harriet Fordham (2013)

MEMORANDUM OF DECISION RE PLAINTIFF'S' MOTION TO STRIKE

I. NATURE OF THE PROCEEDINGS

The facts giving rise to this declaratory judgment action have been recited in a pair of Appellate Court decisions, and need not be repeated here.   See First Merchants Group Ltd. v. Fordham, 121 Conn.App. 135 (2010);  First Merchants Group Ltd. v. Fordham, 138 Conn.App. 220, cert. denied, 307 Conn. 937 (2012).

The plaintiff now moves to strike the Second and Third Counts of the Defendant's January 14, 2011 Counterclaim.   The Second Count alleges that the plaintiff breached the parties' agreement to arbitrate by asserting its claim that the February 2007 arbitration decision was a final decision.   The Third Count alleges that this declaratory judgment action was brought without probable cause, in violation of C.G.S. § 52–568.

II. STANDARD OF REVIEW

“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.”  (Citations omitted;  internal quotation marks omitted).  Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).   “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.”   (Citations omitted;  internal quotation marks omitted).  Asylum Hill Problem Solving Revitalization Ass'n v. King, 277 Conn. 238, 246, 890 A.2d 522 (2006).

“[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied.”  (Citation omitted;  internal quotation marks omitted.)  Id., 252.   Nevertheless, “[a] motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged.”  (Citation omitted;  internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 498.

III. DISCUSSION

A. Counterclaim Second Count—Breach of Agreement to Arbitrate

As to the Second Count, the plaintiff argues “pursuant to the parties' own agreement, the Court has no jurisdiction to decide whether the plaintiff may have breached the agreement to arbitrate by the parties and whether the Defendant could be awarded fees and damages based on the alleged breach.   This is a matter solely left to an arbitrator's discretion.”  (Plaintiff's June 20, 2013 Memorandum of Law in Support of Motion to Strike at p. 5.) The defendant objects to this ground for the motion to strike, arguing that it requires reference to facts outside the pleadings (i.e., the parties' operating agreement) and is therefore a speaking motion.  “It is well established that a motion to strike must be considered within the confines of the pleadings and not external documents, such as the agreement between the parties.   We are limited ․ to a consideration of the facts alleged in the complaint.”   (Internal quotation marks omitted.)  Zirinsky v. Zirinsky, 87 Conn.App. 257, 268–69 n.9, 865 A.2d 488, cert. denied, 273 Conn. 916, 871 A.2d 372 (2005).

The operating agreement is an external document;  the plaintiff did not attach it to the operative complaint as an exhibit, and the defendant did not attach it to the counterclaim.   See Practice Book § 10–29.   Accordingly, the court may not consider the purported provisions within the contract in deciding the plaintiff's motion, and the court is limited to the facts alleged in the pleadings.

The plaintiff insists that the terms of the agreement governing arbitration of the dispute are fully alleged in the pleadings.   Paragraph 4 of the December 29, 2008 Complaint (also incorporated by reference as Paragraph 4 of the Counterclaim) states (emphasis added):

4.  Pursuant to Paragraph 8.14 of the Operating Agreement between the parties dated January 25, 2002 (and the Third Amended and Restated Merchant Founders II, LLC Operating Agreement dated as of July 15, 2005), any dispute arising out of the agreements was to be settled by arbitration.

However, the plaintiff also describes this paragraph in the pleadings as alleging that “the parties' operating agreement requires any dispute relating to company business to be settled by arbitration.”  (Plaintiff's June 20, 2013 Memorandum of Law in Support of Motion to Strike at p. 4, emphasis added.)   Given the existence of different characterizations of the scope and intent of the arbitration clause in the parties' agreement, the court cannot rely on the parties' allegations in the pleadings as to the terms of the agreement and must, instead, resort to the language of the agreement itself.

On the face of the pleadings, the court cannot resolve the question of legal sufficiency set forth in the plaintiff's motion to strike.  “Where the legal grounds for ․ a motion [to strike] are dependent upon underlying facts not alleged in the plaintiff's pleadings, the defendant must await the evidence which may be adduced at trial, and the motion should be denied.”  (Internal quotation marks omitted.)  Commissioner of Labor v. C.J.M. Services, Inc., 268 Conn. 283, 293, 842 A.2d 1124 (2004).

Accordingly, the Motion to Strike the Second Count of the Counterclaim is denied.

B. Counterclaim Third Count—Statutory Vexatious Litigation

The plaintiff moves to strike the Third Count as legally insufficient “because it lacks an essential element:  the Plaintiff's action has not been terminated in the Defendant's favor.”  (Plaintiff's June 20, 2013 Memorandum of Law in Support of Motion to Strike at p. 4.) Also, the plaintiff argues that “[t]he Defendant cannot bring a successful claim of vexatious litigation per Conn. Gen.Stat. § 52–568 in the same action that she claims was brought without probable cause.   Her claim is premature, as there has been no litigation that terminated in her favor.”  (Plaintiff's June 20, 2013 Memorandum of Law in Support of Motion to Strike at p. 4.)

The court agrees with the plaintiff.   The essential elements of such a statutory vexatious litigation action are:  (1) the defendant procured or initiated a prior lawsuit against the plaintiff;  (2) the defendant did so without probable cause;  and (3) the prior proceeding terminated in the plaintiff's favor.  Charlotte Hungerford Hospital v. Creed, 144 Conn.App. 100, 108 (2013).  “A condition precedent to the institution of an action for vexatious litigation is that the original action has terminated unsuccessfully.”  Somers v. Chan, 110 Conn.App. 511, 542, 955 A.2d 667 (2008).   That condition has not been satisfied here.   Moreover, “under Connecticut law, a counterclaim alleging vexatious litigation may not be brought in the same action as that which the defendant claims is vexatious.”   Somers v. Chan, id.

“Several judges of the Superior Court have held that when an underlying action is pending, a vexatious litigation claim stemming from that action would be premature.   See Marubeni Specialty Chemicals, Inc. v. Goldschneider, Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No. CV 11 6010045 (September 28, 2011, Adams, J.T.R.) (granting motion to dismiss a vexatious litigation charge because the underlying action in Florida had not terminated);  Branford v. Doyle, Superior Court, judicial district of New Haven, Docket No. CV 08 5022420 (May 6, 2011, Lager, J.) (granting motion to dismiss the defendant's vexatious litigation counterclaim partially on the ground that the counterclaim could not be brought into the underlying action itself, since it had not terminated);  Bedoukian v. Nolen, Superior Court, judicial district of Waterbury, Docket No. CV 07 4015371 (December 24, 2008, Scholl, J.) (noting that “a claim for vexatious litigation is not ripe until the underlying action, claimed to be vexatious, has been resolved”).”   Scalise v. East Greyrock, LLC, Superior Court, judicial district of Hartford, Docket No. CV 11 6027246 (January 4, 2013, Peck, J.) [55 Conn. L. Rptr. 291] (granting motion to dismiss for lack of subject matter jurisdiction because underlying lawsuit pending).

For all these reasons, the plaintiff's motion to strike the Third Count is granted.

IV. CONCLUSION

For the foregoing reasons, the motion to strike is DENIED as to the Second Count of the Counterclaim and GRANTED as to the Third Count of the Counterclaim.

BY THE COURT,

Sheridan, J.

Sheridan, David M., J.