Decian, Inc. v. Accustandard, Inc. (2014)

MEMORANDUM OF DECISION RE MOTION TO STRIKE (# 103)

FACTS

The plaintiff, Decian, Inc., by writ, summons, and complaint commenced this action against the defendant, Accustandard, Inc., on May 7, 2013.   In a complaint filed on May 9, 2013, the plaintiff alleges the following facts.   The plaintiff and the defendant entered into a contract for computer-related services.   Although the plaintiff performed the services required under the contract and made a demand for payment, the defendant has refused to pay the amount due.   The plaintiff claims $28,366.99 in damages, plus interest pursuant to General Statutes § 37–3a,¹ costs, and attorneys fees.

On June 19, 2013, the defendant filed an answer denying liability under the contract and raising special defenses of unclean hands and fraudulent misrepresentation.   The defendant alleges that the plaintiff “represented itself as fully able and capable of providing the contracted-for services, including off-site storage for maximum protection and business continuity of [the defendant's] data,” that it was not capable of providing those services, and that the plaintiff is therefore guilty of unclean hands.   The defendant further claims that the plaintiff's false representations regarding the services and the defendant's reliance thereupon constitute fraudulent misrepresentation on the part of the plaintiff.   In the same filing, the defendant also brings a counterclaim for breach of contract in which it alleges that the plaintiff did not perform the services promised under the parties' contracts, causing the defendant to suffer damages.²

On August 14, 2013, the plaintiff filed a motion to strike the defendant's special defenses on the ground that the defendant does not allege sufficient facts to support its claims of unclean hands and fraudulent misrepresentation.   On September 12, 2013, the defendant filed an objection to the motion and an accompanying memorandum.   The court heard oral arguments on the motion and the objection thereto on December 9, 2013.   The plaintiff subsequently filed a supplemental memorandum in support of the motion on December 9, 2013.

DISCUSSION

“[A] party may challenge the legal sufficiency of an adverse party's claim by filing a motion to strike.”  Vertex, Inc. v. Waterbury, 278 Conn. 557, 564, 898 A.2d 178 (2006).  “In addition to challenging the legal sufficiency of a complaint or counterclaim, our rules of practice provide that a party may challenge by way of a motion to strike the legal sufficiency of an answer, ‘including any special defenses contained therein ․’ Practice Book § 10–39;  see also Practice Book § 10–6.”  GMAC Mortgage, LLC v. Ford, 144 Conn.App. 165, 179–80, 73 A.3d 742 (2013).

“The purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action.”  (Internal quotation marks omitted.)   Id., 181.  “In ․ ruling on [a] ․ motion to strike, the trial court [has an] obligation to take the facts to be those alleged in the special defenses and to construe the defenses in the manner most favorable to sustaining their legal sufficiency.”  Connecticut National Bank v. Douglas, 221 Conn. 530, 536, 606 A.2d 684 (1992).  “[P]leadings must be construed broadly and realistically, rather than narrowly and technically.”  (Internal quotation marks omitted.)   Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, 295 Conn. 240, 253, 990 A.2d 206 (2010).  “On the other hand, the total absence of any factual allegations specific to the dispute renders [the special defense] legally insufficient.”  (Internal quotation marks omitted.)   PHL Variable Ins. Co. v. Charter Oak Trust, Superior Court, judicial district of Hartford, Docket No. CV–10–6012621–S (March 27, 2013, Robaina, J.).

I

UNCLEAN HANDS

In the present case, the plaintiff moves to strike the defendant's first special defense, which alleges unclean hands on the part of the plaintiff, on the ground that it is legally insufficient.   The defendant counters that the defense of unclean hands need not be specially alleged, that it may be raised by the court when equity so requires, and that its allegation that the plaintiff willingly did not comport with the terms of the parties' contract is sufficient to state a claim for unclean hands.

“Our jurisprudence has recognized that those seeking equitable redress in our courts must come with clean hands.   The doctrine of unclean hands expresses the principle that where a plaintiff seeks equitable relief, he must show that his conduct has been fair, equitable and honest as to the particular controversy in issue ․ For a complainant to show that he is entitled to the benefit of equity he must establish that he comes into court with clean hands ․ The clean hands doctrine is applied not for the protection of the parties but for the protection of the court ․ It is applied ․ for the advancement of right and justice ․ The party seeking to invoke the clean hands doctrine to bar equitable relief must show that his opponent engaged in wilful misconduct with regard to the matter in litigation.”  (Internal quotation marks omitted.)   In re Iliana M., 134 Conn.App. 382, 389 n.6, 38 A.3d 130 (2012).  “Our Supreme Court defines ‘willful misconduct’ as ‘intentional conduct’ with ‘the design to injure either actually entertained or to be implied from the conduct and circumstances ․ Not only the action producing the injury but the resulting injury also must be intentional.’  “ Witczak v. Gerald, 69 Conn.App. 106, 116, 793 A.2d 1193 (2002), quoting Dubay v. Irish, 207 Conn. 518, 533, 542 A.2d 711 (1988).  “The trial court enjoys broad discretion in determining whether the promotion of public policy and the preservation of the courts' integrity dictate that the clean hands doctrine be invoked.”  (Internal quotation marks omitted.)  In re Iliana M., supra, 134 Conn.App. 389 n.6.

Here, the defendant alleges that the plaintiff comes to the court with unclean hands because it represented itself as fully able and capable of providing computer-related services for the defendant, it was not able or capable of providing said services, and it repeatedly failed to perform to the terms of the parties' contracts.   Nowhere in the first special defense, however, does the defendant allege that the plaintiff's actions constitute wilful or intentional misconduct with the design to injure the defendant.   At most, the defendant alleges a breach of contract on the part of the plaintiff, which several judges of the Superior Court have noted does not support the application of the unclean hands defense.   See, e.g., People's United Bank v. E2A, LLC, Superior Court, judicial district of New London, Docket No. CV–13–6016368–S (December 12, 2013, Cosgrove, J.);   U.S. National Bank Assn. v. Lewis, Superior Court, judicial district of New London, Docket No. CV–09–5011097–S (November 12, 2009, Martin, J.).   Although a claim of wilful misconduct may be implied from the conduct and circumstances alleged, the defendant does not plead any facts to support the inference that the plaintiff's failure to perform in accordance with the terms of the contracts was done wilfully or intentionally.

It is well settled that “[a]pplication of the doctrine of unclean hands rests within the sound discretion of the trial court.”  (Internal quotation marks omitted.)  Thompson v. Orcutt, 257 Conn. 301, 308, 777 A.2d 670 (2001).   Absent allegations establishing the element of intentional or wilful misconduct on the part of the plaintiff, the first special defense is legally insufficient.   Accordingly, the motion to strike the first special defense is granted.

II

FRAUDULENT MISREPRESENTATION

The plaintiff next moves to strike the defendant's second special defense of fraudulent misrepresentation on the ground that the defendant does not plead any of the elements required for the claim.   The defendant counters that its allegations that the plaintiff represented itself as capable of providing the services in the parties' contract, that the plaintiff entered into the contract, and that it repeatedly failed to provide said services are sufficient to constitute a claim of fraudulent misrepresentation.

“The essential elements of an action in common law fraud ․ are that:  (1) a false representation was made as a statement of fact;  (2) it was untrue and known to be untrue by the party making it;  (3) it was made to induce the other party to act upon it;  and (4) the other party did so act upon that false representation to his injury ․ Under a fraud claim of this type, the party to whom the false representation was made claims to have relied on that representation and to have suffered harm as a result of the reliance ․ In contrast to a negligent representation, [a] fraudulent representation ․ is one that is knowingly untrue, or made without belief in its truth, or recklessly made and for the purpose of inducing action upon it ․ This is so because fraudulent misrepresentation is an intentional tort.”  (Citations omitted;  internal quotation marks omitted.)  Sturm v. Harb Development, LLC, 298 Conn. 124, 142, 2 A.3d 859 (2010).  “Furthermore, when a claim for damages is based upon fraud, the mere allegation that a fraud has been perpetrated is insufficient;  the specific acts relied upon must be set forth in the complaint.”  (Internal quotation marks omitted.)  Nazami v. Patrons Mut. Ins. Co., 280 Conn. 619, 628, 910 A.2d 209 (2006).

In the present case, the defendant has pled the first and part of the fourth element of a claim for fraudulent misrepresentation.   Specifically, the defendant alleges that the plaintiff “represented itself as fully able and capable of providing the contracted-for services,” that the defendant entered into contracts with the plaintiff in reliance on that representation, and that the plaintiff was subsequently not able or capable of performing to the terms of the contracts.   The defendant does not allege, however, that the plaintiff knew the alleged representations to be untrue, or that the plaintiff intended to induce the defendant's reliance on them.   Moreover, although the defendant makes a claim for damages in its counterclaim for breach of contract, it does not specify anywhere in the second special defense that it suffered damages or injury as a result of the plaintiff's allegedly false representations, which is required as part of the fourth element of a fraudulent misrepresentation claim.   Because knowledge of falsity, intent to induce reliance, and damages are three essential elements of a claim for fraudulent misrepresentation, which the defendant has failed to allege, the second special defense is legally insufficient.   Accordingly, the plaintiff's motion to strike is granted as to the second special defense.

CONCLUSION

Based on the foregoing, the plaintiff's motion to strike is granted in its entirety.

Wilson, J.

FOOTNOTES

FN1. General Statutes § 37–3a provides in relevant part:  “[I]nterest at the rate of ten per cent a year, and no more, may be recovered and allowed in civil actions ․ including actions to recover money loaned at a greater rate, as damages for the detention of money after it becomes payable ․”.  FN1. General Statutes § 37–3a provides in relevant part:  “[I]nterest at the rate of ten per cent a year, and no more, may be recovered and allowed in civil actions ․ including actions to recover money loaned at a greater rate, as damages for the detention of money after it becomes payable ․”

FN2. In its counterclaim, the defendant states that it entered into two separate contracts with the plaintiff for computer-related services and submits copies of those contracts in support of its breach of contract claim.   In its answer, the defendant denies that the contract submitted by the plaintiff is a true and correct copy of the contract between the parties.   Because the defendant does not incorporate either of these allegations into its special defenses and the counterclaim is not subject to the present motion to strike, the issue of which contract or combination of contracts controlled the agreement between the parties is irrelevant to the court's resolution of the present motion..  FN2. In its counterclaim, the defendant states that it entered into two separate contracts with the plaintiff for computer-related services and submits copies of those contracts in support of its breach of contract claim.   In its answer, the defendant denies that the contract submitted by the plaintiff is a true and correct copy of the contract between the parties.   Because the defendant does not incorporate either of these allegations into its special defenses and the counterclaim is not subject to the present motion to strike, the issue of which contract or combination of contracts controlled the agreement between the parties is irrelevant to the court's resolution of the present motion.

Wilson, Robin L., J.