National Loan Acquisitions Co. v. Olympia Properties, LLC

NATIONAL LOAN ACQUISITIONS CO. v. OLYMPIA PROPERTIES, LLC

No. CV186085015S

Superior Court of Connecticut, Judicial District of New Haven, New Haven

September 23, 2019

UNPUBLISHED OPINION

Wilson, J.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On September 26, 2018, the plaintiff, National Loan Acquisitions Company, filed a one-count complaint in this debt collection action against the defendants, Olympia Properties, LLC Dennis P. Nicotra, and Christopher S. Nicotra. On the same day, the plaintiff filed with the court certain line of credit agreements (Docket Entry #101.00), which the complaint incorporated by reference. These agreements, however contained personal identifying information of the defendants, Dennis P. Nicotra and Christopher S. Nicotra. On October 2, 2018, the plaintiff filed a motion to seal the pleading (Docket Entry #102.00), which was granted the same day (Docket Entry #102.10).^[1] On October 3, 2018, the plaintiff redacted the agreements and re-filed the same (Docket Entry #103); however, the redacted versions of the agreements still contained some personal identifying information. As a result, on October 5, 2018, the plaintiff, once again, brought a motion to seal the pleading (Docket Entry #104.00), which was granted the same day (Docket Entry #104.10).

On November 13, 2018, the defendants filed a joint answer, special defenses, and counterclaim, which asserts special defenses and a counterclaim based on the plaintiff’s disclosure of Dennis P. Nicotra’s and Christopher S. Nicotra’s personal identifying information. Specifically, the defendants’ counterclaim alleges that the plaintiff’s conduct "constitutes unfair and deceptive trade practices, improper collection procedures and [has] violated the privacy of the defendants." Def.s’ Counterclaim, ¶5.^[2] The defendants further allege that as a result of the plaintiff’s conduct, they have been "damaged and are subject to potential further and future damages." Def.s’ Counterclaim, ¶6.

On March 19, 2019, the plaintiff filed a motion to dismiss and a memorandum of law in support, asserting that the court lacks subject matter jurisdiction over the counterclaim because the defendants do not have standing. On May 3, 2019, the defendants filed a memorandum of law in opposition to the plaintiff’s motion on the ground that they have standing to bring the counterclaim, as they do not need to prove special damages for the cause of action sounding in invasion of privacy, and can prove an ascertainable loss for the cause of action alleging a violation of the Connecticut Unfair Trade Practices Act (CUTPA); General Statutes § 42-110a et seq. On May 3, 2019, the plaintiff filed a reply memorandum. On May 23, 2019, the defendants filed a surreply. This matter was heard at short calendar on May 28, 2019.

II. DISCUSSION

"[A] motion to dismiss ... properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court." (Internal quotation marks omitted.) Santorso v. Bristol Hospital, 308 Conn. 338, 350, 63 A.3d 940 (2013). "A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) MacDermid, Inc. v. Leonetti, 310 Conn. 616, 626, 79 A.3d 60 (2013). "A court deciding a motion to dismiss must determine not the merits of the claim or even its legal sufficiency, but rather, whether the claim is one that the court has jurisdiction to hear and decide." (Internal quotation marks omitted.) Hinde v. Specialized Education of Connecticut, Inc., 147 Conn.App. 730, 740-41, 84 A.3d 895 (2014).

"Pursuant to the rules of practice, a motion to dismiss is the appropriate motion for raising a lack of subject matter jurisdiction." St. George v. Gordon, 264 Conn. 538, 545, 825 A.2d 90 (2003). "[T]he plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430 n.12, 829 A.2d 801 (2003).

"[B]ecause the issue of standing implicates subject matter jurisdiction, it may be a proper basis for granting a motion to dismiss." (Internal quotation marks omitted.) Electrical Contractors, Inc. v. Dept. of Education, 303 Conn. 402, 413, 35 A.3d 188 (2012). "If ... the plaintiff’s standing does not adequately appear from all materials of record, the complaint must be dismissed." (Footnote omitted; internal quotation marks omitted.) Burton v. Dominion Nuclear Connecticut, Inc., 300 Conn. 542, 550, 23 A.3d 1176 (2011).

In the present case, the plaintiff moves to dismiss the defendants’ counterclaim on the ground that the defendants lack standing, and therefore, the court is without jurisdiction. More specifically, the plaintiff asserts that the defendants lack standing because they "have yet to sustain any actual damages." Pl.’s Mem. Law Support Mot. to Dismiss, p. 5. Moreover, the plaintiff argues that for the defendants to sustain any actual damages "someone would have needed to have stumbled across [Dennis P. Nicotra’s and Christopher S. Nicotra’s] information on the Connecticut judicial website for the very brief period of time it was available, and then took the information and used it to [their] detriment." Pl.’s Mem. Law Support Mot. To Dismiss, p. 5.

In support, the plaintiff cites federal cases that hold, in the identity theft context, that a plaintiff either lacked standing or could not prove the damages element of their claim when only facing an alleged risk of future injury from a wrongful disclosure of confidential information, but has not suffered an actual, present injury. See Pl.’s Mem. Law Support Mot. To Dismiss, pp. 5-6. For example, the plaintiff cites Hammond v. Bank of New York Mellon Corp., United States District Court, Docket No. 08 Civ. 6060 (RMB) (S.D.N.Y. June 25, 2010), in which the District Court held that the plaintiffs lacked standing to assert negligence, negligence per se, breach of implied contract, breach of fiduciary duty, as well as certain statutory claims against the defendant. The plaintiffs in Hammond alleged that their sensitive personal information was stolen, accessed, and/or compromised by third parties while entrusted to the defendant. Specifically, the plaintiffs alleged, among other things, that their sensitive personal information was lost from a truck operated by a transport company hired by the defendant. The court granted the motion for summary judgment, concluding that the plaintiffs lacked standing because their claims were future oriented, hypothetical, and conjectural. See also Key v. DSW, Inc., 454 F.Supp.2d 684 (S.D. Ohio 2006) (customer’s claimed injury, that she was subjected to substantially increased risk of identity theft and other related financial crimes due to store’s conduct, was insufficient to show actual or imminent injury for purposes of establishing standing).

Additionally, the plaintiff cites a Connecticut Superior Court case, wherein the court (Berger, J.) granted summary judgment finding that there was no coverage under an insurance policy for certain costs incurred in remedying a data loss, the facts were such that certain tapes containing personal information fell off of a van and were subsequently stolen by a thief. See Recall Total Info. Mgmt. v. Fed. Ins. Co., Superior Court, judicial district of Hartford, Docket No. CV-09-5031734-S (January 17, 2012, Berger, J.) . The court noted that the circumstances did not constitute a "publication" of stolen information, and therefore, it was not enough that the property was in the hands of a thief, especially because there was no indication that the thief, or anyone else, had accessed the stolen information. Id. The court also stated, relying on Hammond, that "any plaintiff seeking damages for invasion of privacy could not speculate and would be required to prove that personal information was accessed." (Footnote omitted.) Id.

The defendants counter that they have standing to bring their counterclaim because they do not need to prove special damages for their invasion of privacy cause of action, as they may recover for emotional distress or personal humiliation, and can prove an ascertainable loss for purposes of CUTPA in the form of attorneys fees. Furthermore, the defendants assert that their counterclaim does not bring a cause of action for identity theft, but rather, a cause of action for invasion of privacy, which does not require the same proof of harm or damages as does identity theft, and which allows for damages simply due to the harm to an individual’s interest in privacy itself. Moreover, the defendants argue that they "can prove stress from the disclosure of their personal identifying and private information"; see Def.s’ Mem. Opp’n to Mot. To Dismiss, p. 5; that the cases cited by the plaintiff are not invasion of privacy cases, but rather, identity theft cases in which the claimants did not plead damages with the requisite certainty, and that the focus in Recall was on publication, not damages; and therefore, the plaintiff’s reliance on Recall is misplaced.

In its reply, the plaintiff asserts that whether the defendants’ invasion of privacy claim is based on an increased risk of identity theft or stress, it nonetheless presents a non-actionable injury. For purposes of the CUTPA claim, the plaintiff argues that its conduct is neither the proximate cause nor the cause-in-fact for the attorneys fees that the defendants claim to have incurred as a result of bringing their counterclaim; and if it did, that would mean a party could bring a claim based on a non-actionable injury, but, by incurring attorneys fees in doing so, make the injury...