Edwards v. McMillen Capital, LLC

Paul Edwards v. McMillen Capital, LLC

No. CV155008533S

Superior Court of Connecticut, Judicial District of Middlesex, Middletown

November 4, 2016

UNPUBLISHED OPINION

MEMORANDUM OF DECISION ON MOTION TO STRIKE

Julia L. Aurigemma, J.

The defendant, McMillen Capital, LLC, has moved to strike all counts of the plaintiff's Revised Amended Complaint dated January 8, 2015 (" Complaint") on the grounds that they either do not exist under Connecticut law, fail to state a claim, or are barred by the applicable statute of limitations.

Allegations of the Complaint

The plaintiff alleges that he is the owner of a piece of real property known as 7 New Lane, Cromwell, Connecticut (" Property"). He further alleges that the defendant knew that the plaintiff intended to use the property as his primary residence. The parties executed a promissory note and mortgage for the property. The plaintiff has attached the Note and Mortgage as exhibits to the Complaint. The Note entitled " One Year Term Interest Only Balloon Mortgage Note" states that plaintiff's address is 9-11 Colony Street, Meriden, CT 06450 and further states that it is secured by a mortgage on the Property. The defendant has not sought to foreclose on the Property, but the plaintiff has pled that the defendant has made demands for payment.

The plaintiff's main complaint appears to be that the Note was a Mortgage Note on residential property and, therefore should not have contained a Prejudgment Remedy Waiver and a Jury Waiver. There are no allegations that the defendant has commenced any foreclosure proceedings against the Property or that the defendant attempted to enforce either waiver. The Note itself is clearly not a residential mortgage note, as it is for a term of one year only and on its face is secured by a property other than the one in which the plaintiff resides. The court will state additional facts as relevant to each particular count.

Discussion of the Law and Ruling

In American Progressive Life & Health Ins. Co. v. Better Benefits, LLC, 292 Conn. 111, 120, 971 A.2d 17 (2009) the court outlined the standard for a motion to strike:

[A] motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court . . . We take the facts to be those alleged in the complaint . . . and we construe the complaint in the manner most favorable to sustaining its legal sufficiency . [I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . Thus, we assume the truth of both the specific factual allegations and any facts fairly provable thereunder. In doing so, moreover, we read the allegations broadly, rather then narrowly.

The defendant argues that the First Count, Residential Mortgage Fraud, is not legally sufficient, because there is no cause of action known as Residential Mortgage Fraud in Connecticut. The plaintiff pleads violations of both Connecticut Abusive Home Loan Lending Practices Act (" CAHLLPA") and Truth-in-Lending Act in this claim. CAHLLPA is codified in Connecticut General Statutes § 36a-746 et seq. These statutes describe activities that are regulated by the Bank Commissioner under the Banking Law of Connecticut. Under CAHLLPA, the Bank Commissioner may seek civil penalties and remedies available at law for violations therein. Connecticut General Statutes § 36a-50. Three separate Superior Court cases affirm that there is no private right of action under CAHLLPA. Pantanella v. Rowe, 2009 WL 3740686, Judicial District of Middlesex (October 14, 2009, Bear, J.); U.S. Bank National v. Suvemay, 2010 WL 4352496, Judicial District of Fairfield (October 4, 2010, Hartmere, J.); Citimortgage, Inc. v. Tsoukalas, 2012 WL 3104592, Judicial District of Fairfield (June 29, 2012, Hartmere, J.) [54 Conn.L.Rptr. 264, ].

Pantanella states:

Given the focus on regulatory enforcement set forth above and the absence of any statutory indication that the legislature intended any private right of action, there are no genuine issues of material fact and the defendants . . . are entitled to summary judgment as a matter of law . . .

Pantanella, supra, Id. at *14.

Based on the foregoing the First Count for Residential Mortgage Fraud is hereby stricken.

The defendant argues that the Second Count, Fraudulent Misrepresentation, fails to state a legal claim, because the plaintiff has not pled the necessary elements of a fraudulent misrepresentation claim.

" The essential elements of an action in common law fraud, as we have repeatedly held, 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." (Citation omitted; internal quotation marks omitted.) Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 777-78, 802 A.2d 44 (2002). " 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." (Internal quotation marks omitted.) Kramer v. Petisi, 285 Conn. 674, 684 n. 9, 940 A.2d 800 (2008). " This is so because fraudulent misrepresentation is an intentional tort." Id., at 684, 940 A.2d 800.

Sturm v. Harb Development, LLC, 298 Conn. 124, 141, 2 A.3d 859 (2010).

The Second Count never alleges that the defendant made any untrue statements. The plaintiff states that by " inserting commercial clauses in a contract where the agreed-upon term and the interceded purpose were for a loan for personal, family, or household use is alleged fraud in the note and mortgage." Plaintiff basically repeats the above-quoted allegation throughout the First Count, which is incorporated by reference in the Second Count.

The plaintiff never alleges that the defendant made any misrepresentation of any statement of fact, or that said misrepresentations were made to induce the plaintiff to enter into the mortgage and/or promissory note. For the foregoing reasons, the Second Count, Fraudulent Misrepresentation, must be stricken.

The defendant argues that the plaintiff has not pled the necessary elements of a breach of contract claim and, therefore, the Third Count, Breach of Contract, must be stricken.

The necessary elements of a breach of contract action are: (1) the formation of an agreement; (2) performance by one party; (3) breach of the agreement by the other party; and (4) damages. Presidential Capital Corp. v. Reale, 231 Conn. 500, 506-07, 652 A.2d 489 (1994); Dunham v. Dunham, 204 Conn. 303, 313, 528 A.2d 1123 (1987); 1 A. Corbin, Contracts (Rev.Ed. 1996) § 4.1, p. 525.

The plaintiff has alleged that the defendant performed its obligations under the Note in that it advanced him money. Count One ¶ 47. The plaintiff has not alleged any facts that he has performed under the Note. In fact, he has in effect alleged that he has not performed. The plaintiff has made the defendant's demand letter to him an exhibit to the Complaint. This demand letter states that the plaintiff owes the entire principal balance of the Note plus interest. Thus the plaintiff has not and cannot honestly plead that he has performed on the Note, and, therefore, he cannot allege a breach of contract.

The plaintiff further pleads in the Third Count a breach of the implied covenant of good faith and fair dealing. Our Supreme Court has stated that to constitute a breach of the implied covenant of good faith and fair dealing, the acts of the defendant must impede the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract and must have been taken in bad faith. Capstone Building Corp. v. American Motorists Ins. Co., 308 Conn. 760, 794-95, 67 A.3d 961 (2013).

Capstone states:

Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive . . . Bad faith means more than mere negligence; it involves a dishonest purpose. Id.

The plaintiff has not pled any dishonest purpose or any actions that defendant tried to block the plaintiff's ability to receive any benefits under the Note. Plaintiff has not pled that he did not receive any benefits under the note. In short, the plaintiff has failed to plead any facts that show that the defendant acted with a sinister motive.

Based on the foregoing, the Third Count, Breach of Contract, is hereby stricken.

The defendant argues that the Fourth Count, Violation of Truth in Lending Act, is barred by the applicable statute of limitations. The federal Truth in Lending Act, as amended in particular by the Truth-in-Lending Simplification Reform Act of 1980, was enacted as part of the Consumer Credit Protection Act of 1968, and is codified at 15 U.S.C. § 1601 et seq. Cheshire Mortgage Service, Inc. v. Montes, 223 Conn. 80, 96-97, 612 A.2d 1130 (1992).

Our legislature has enacted the Connecticut's own truth in lending act, which is codified at Connecticut General Statutes § 36a-675 et seq. Connecticut General Statutes § 36a-683(e) provides that any action under Connecticut TILA shall be brought within one year from the date of the occurrence of the violation, except in an action to collect the debt which was...