Cadco, Ltd. v. Doctor's Associates, Inc.

Cadco, Ltd. v. Doctor's Associates, Inc

No. LLICV146010928S

Superior Court of Connecticut, Judicial District of Litchfield, Litchfield

November 13, 2015

UNPUBLISHED OPINION

RULING RE THE DEFENDANT'S MOTION TO STRIKE (#106)

Honorable John D. Moore, J.

The plaintiff, Cadco, Ltd., has brought a five-count complaint against the defendant Doctor's Associates, Inc., alleging in counts one through four violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., and unjust enrichment in count five. The defendant has moved to strike (#106) each of the five counts of the plaintiff's revised complaint for the following reasons:

(1) Counts one through four, based on a claim that CUTPA only applies to the defendant's primary business, and the allegations of the revised complaint posit claims pertaining to an enterprise incidental to the defendant's primary business, which is selling Subway franchises;

(2) Counts one through two, because the plaintiff has not alleged facts that constitute a violation of the cigarette rule, the test for unfair acts or practices under CUTPA;

(3) Counts three through four, because the plaintiff has not alleged sufficient facts to prove deceptive acts or practices under CUTPA;

(4) The punitive damage claims set forth in the second and fourth counts, because the plaintiff has not sufficiently alleged facts to support a claim for punitive damages; and

(5) The fifth count, because the revised complaint does not allege facts sufficient to show that the defendant was unjustly enriched.

For the reasons set forth below, the court disagrees and denies the defendant's motion to strike.

LEGAL STANDARD FOR MOTION TO STRIKE

The motion to strike is used " 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). In determining whether or not a pleading's allegations are sufficient, all well-pleaded facts and those facts necessarily implied from the allegations " are taken as admitted." (Internal quotation marks omitted.) Gazo v. Stamford, 255 Conn. 245, 260, 765 A.2d 505 (2001). Stated a different way, the court should view the facts " in a broad fashion, not strictly limited to the allegations, but also including the facts necessarily implied by and fairly provable under them." (Internal quotation marks omitted.) Dennison v. Klotz, 12 Conn.App. 570 577, 532 A.2d 1311 (1987), cert. denied, 206 Conn. 803, 535 A.2d 1317 (1988). However, a " motion to strike does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Emphasis omitted internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997). As a result, " [a] motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotations marks omitted). Fort Trumbull Conservancy, LLC v. Alves, supra, 498. However, the court must " construe the complaint in the manner most favorable to sustaining its legal sufficiency . . . [and] [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Sullivan v. Lake Compounce Theme Park, Inc., 277 Conn. 113, 117-18, 889 A.2d 810 (2006). In other words, the court must " construe the complaint in the manner most favorable to sustaining its legal sufficiency." (Citations omitted; internal quotation marks omitted.) Mahoney v. Lensink, 213 Conn. 548, 567, 569 A.2d 518 (1990).

THE PLAINTIFF HAS ALLEGED THAT THE DEFENDANT WAS ENGAGING IN A PRIMARY BUSINESS ACTIVITY

As a threshold matter, the defendant argues that CUTPA applies only to a party's primary business activity and not to activities incidental thereto. While this statement is true as a general proposition, McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn.App. 486, 523, 890 A.2d 140 (" [A] CUTPA violation may not be alleged for activities that are incidental to an entity's primary trade or commerce"), cert. denied 277 Conn. 928, 895 A.2d 798 (2006), the court finds that the plaintiff's allegations reflect a primary business activity.

The defendant argues that its only primary business activity was the sale and distribution of Subway franchises. For purposes of considering a motion to strike, however, the court must review, as discussed supra, all well-pleaded facts and those facts necessarily implied from the allegations of the pleading attacked. Gazo v. Stamford, supra, 255 Conn. at 260, as opposed to the movant's characterization of the allegations. In other words, the court should view the facts in a broad fashion, not strictly limited to the allegations, but also including the facts necessarily implied by and fairly provable under them. Dennison v. Klotz, supra, 12 Conn.App. at 577.

In the present case, the plaintiff's allegations include not only that the defendant advertised for sale, offered for sale, and sold and distributed Subway restaurant franchises, revised complaint December 18, 2014, para. 4. (1), but also that the defendant engaged in the trade or commerce of providing services associated with such restaurant franchises, id., and offered to purchase; purchased; offered for sale, rent, or lease; and sold, rented, or leased equipment used in Subway restaurants by its franchisees. Id., para. 4. (2). Moreover, as further detailed in the allegations, the defendant: (1) considered adding a new flatbread product, called the " Flatizza, " to the line of products sold in its franchisees' restaurants, id. , para. 6; (2) decided to proceed with a national rollout of the Flatizza through its franchisees' restaurants, id., para. 33; (3) had numerous discussions with the plaintiff pertaining to technical and other requirements of a heat plate needed to cook the Flatizza, id., para.7, 17 and 19; (4) conducted tests of the plaintiff's product in the defendant's own test kitchen, in local Connecticut Subway restaurants and in other test markets, id., para. 12; (5) worked cooperatively with the plaintiff to refine and improve the plaintiff's product for use by all three models of ovens used in Subway restaurants, id., para. 16(2), 18, 19, 20, 21, 22, and 24; and (6) inquired about whether the plaintiff's heat plate comported with international safety standards, what materials were included in the base material of the product and what the plaintiff's production capabilities for this product were, id., para. 30. Necessary implications that flow from these factual allegations include that the defendant: (1) makes decisions on a national level about the introduction of new products at its franchisees' facilities; (2) becomes intimately involved in the design, production, operation, and cleaning of food preparation devices that will cook these new products; (3) attempts to insure that the new food products sold at Subways comply with applicable standards; (4) attempts to insure, even to the extent of maintaining its own test kitchen, and being willing to test new products at its franchisees' restaurants, that its food will cook properly and will be palatable to consumers; and (5) limits the kinds of ovens used by its franchisees to three.

From all of the facts alleged by the plaintiff, as well as facts necessarily implied and fairly provable under them, the court concludes that the defendant's primary business was not limited to handing out franchises, but included, as well, hands-on, detailed involvement with all aspects of the preparation of safe, palatable, and profitable food products, including devices used in the production thereof.^[1] In short, the defendant does not simply pass out franchises and then abandon the franchisees to their own devices; rather, the defendant stays actively involved, in the ways alleged and set forth above, in the food business.

These allegations sharply distinguish this case from the line of cases cited in the defendant's brief concerning primary business. In Dinardo Seaside Tower, Ltd. v. Sikorsky Aircraft Corp., 153 Conn.App. 10, 26-27, 100 A.3d 413, cert. denied, 314 Conn. 947, 103 A.3d 976 (2014), for example, the defendant Sikorsky Aircraft Corporation was being sued for alleged malfeasance as a tenant, such as destroying pipes, dismantling security systems, and vandalizing the leased premises. Under those circumstances, which arose in the context of a directed verdict ruling after trial, it was obvious that the defendant's primary business was manufacturing helicopters, and that renting space large enough in which to do so was only incidental to that primary business. Similarly, in Arawana Mills Co. v. United Technologies Corp., 795 F.Supp. 1238, 1252-53 (D.Conn. 1992), the court held that the act of leasing property from the plaintiff was incidental to the defendant's true business, namely the repair and servicing of aircraft engines and parts. See also McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., supra, 93 Conn.App. 523 (sale of real property incidental to primary business of selling and servicing automobiles), Longo v. Longo, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-10-6003946-S (May 15, 2012, Genuario, J.) (granting of personal loan not the primary trade of commerce of defendant company engaged in the excavation, paving, and landscaping business).

Unlike all of these cases, in the present case, as alleged by the plaintiff, the defendant's primary business involves staying involved in the food production business after the initial sale of franchises. As a...