Red Buff Rita, Inc. v. Moutinho

151 Conn.App. 549

96 A.3d 581

RED BUFF RITA, INC., et al.

v.Manuel MOUTINHO et al.

No. 35705.

Appellate Court of Connecticut.

Argued April 23, 2014.

Decided July 15, 2014.

Jonathan J. Klein, with whom, on the brief, were John R. Bryk, Bridgeport, and William J. Varese, Trumbull, for the appellants (plaintiffs).

James R. Winkel, with whom, on the brief, was James M. Nugent, Milford, for the appellees (defendants).

DiPENTIMA, C.J., and ALVORD and KELLER, Js.

DiPENTIMA, C.J.

The dispositive issue in this case is whether the trial court properly determined that the complaint did not allege sufficient facts to overcome the application of the statute of frauds. After reviewing the complaint, we conclude that the court improperly struck the counts of breach of contract and fraud and misrepresentation.

The plaintiffs, Red Buff Rita, Inc., and Gus Curcio, appeal from the judgment of the trial court granting the motion to strike their three count complaint filed against the defendant, Manuel Moutinho.¹ On appeal, the plaintiffs generally argue that the court did not construe the operative complaint in the manner most favorable to sustaining its sufficiency.² Specifically, the plaintiffs contend that the court failed to construe the complaint in the manner most favorable to the pleader with respect to their factual allegation of part performance of an oral forbearance agreement to make inapplicable the statute of frauds, General Statutes § 52–550. We agree with the plaintiffs and reverse in part the judgment of the trial court.

Because of the procedural posture of this case, we accept as true the facts alleged in the plaintiffs' operative complaint. See Craig v. Driscoll, 64 Conn.App. 699, 702, 781 A.2d 440 (2001), aff'd, 262 Conn. 312, 813 A.2d 1003 (2003). The defendant, individually and as trustee for the Mark IV Construction Company, Inc., 401(K) Savings Plan, claimed to be the owner and holder of fourteen notes and related mortgages owed by various entities. The defendant possessed the authority to negotiate the terms of these notes and mortgages, to decide which loans would be made and the terms of each loan, to determine the source of funds that would be used for each loan, to collect all the payments made toward the notes and mortgages and determine the allocation of payments, negotiate modifications of these notes and mortgages, and to decide whether to initiate collections actions or foreclosure proceedings.

On various dates prior to December 30, 2008, Curcio had guaranteed some or all of the fourteen notes and mortgages. Prior to December 30, 2008, the parties entered into an oral agreement whereby the defendant agreed to modify and extend the terms and payment dates of these notes and mortgages (forbearance agreement). The plaintiffs executed a promissory note in favor of the defendant, secured by a mortgage, dated December 30, 2008, on property known as 10 Fifth Avenue in Stratford. Curcio signed a guarantee for this note on the same date. The defendant failed to fulfill his obligations under the forbearance agreement and commenced foreclosure actions against some of the fourteen properties. The plaintiffs then instituted this action with a three count complaint against the defendant for breach of contract, fraud and misrepresentation, and a violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42–110a et seq.

Pursuant to Practice Book § 10–39, the defendant filed a motion to strike the entirety of the plaintiffs' complaint. Specifically, he claimed that counts one and two violated the statute of frauds and count three failed to state a valid cause of action for a CUTPA violation because no facts were pleaded to support the legal conclusion contained therein. The plaintiffs filed an objection, stating, inter alia, that counts one and two were not barred by the statute of frauds because of the doctrine of part performance.

On November 8, 2012, the court issued a written order granting the defendant's motion to strike. The court concluded that the first two counts of the plaintiffs' operative complaint were barred by the statute of frauds. The court stated: “The allegations of the plaintiffs' complaint clearly concern real property or an interest in it. Each of the mortgages and notes referenced ... exceeded a value of [$50,000]. In Saunders v. Stigers, [62 Conn.App. 138, 143, 773 A.2d 971 (2001) ] the Appellate Court approvingly noted the language used by the trial court wherein it referenced that the statute of frauds requires any modification to the note and mortgage to be in writing. Here, the forbearance agreement referred to in the plaintiffs' complaint was the modification of the note[s] and mortgage[s]. As such, and given that the loan was in excess of [$50,000], the statute of frauds was applicable.” (Internal quotation marks omitted.) The court also struck the CUTPA count. ³ On February 7, 2013, the defendant moved for judgment pursuant to Practice Book § 10–44, and noted that the plaintiffs had not filed a substitute pleading. On April 30, 2013, the court granted this motion. This appeal followed.

We begin by setting forth the relevant legal principles applicable to this appeal. “The standard of review in an appeal challenging a trial court's granting of a motion to strike is well established. A motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court. As a result, our review of the court's ruling is plenary. ... We take the facts to be those alleged in the [pleading] that has been stricken and we construe the [pleading] in the manner most favorable to sustaining its legal sufficiency.” (Internal quotation marks omitted.) Bernhard–Thomas Building Systems, LLC v. Dunican, 286 Conn. 548, 552–53, 944 A.2d 329 (2008); see also Giacalone v. Housing Authority, 122 Conn.App. 120, 123, 998 A.2d 222 (2010), aff'd, 306 Conn. 399, 51 A.3d 352 (2012); Tallman v. Gawel, 11 Conn.App. 801, 802, 526 A.2d 535 (1987) (trial court properly granted motion to strike on basis that documents in question did not satisfy statute of frauds); Kasper v. Anderson, 5 Conn.App. 358, 362, 498 A.2d 132 (same), cert. denied, 197 Conn. 818, 501 A.2d 388 (1985).

Under the doctrine of the statute of frauds, certain contracts are not enforceable. Section 52–550(a) provides: “No civil action may be maintained in the following cases unless the agreement, or a memorandum of the agreement, is made in writing and signed by the party, or the agent of the party, to be charged: (1) Upon any agreement to charge any executor or administrator, upon a special promise to answer damages out of his own property; (2) against any person upon any special promise to answer for the debt, default or miscarriage of another; (3) upon any agreement made upon consideration of marriage; (4) upon any agreement for the sale of real property or any interest in or concerning real property; (5) upon any agreement that is not to be performed within one year from the making thereof; or (6) upon any agreement for a loan in an amount which exceeds fifty thousand dollars.” The purpose of this statute is to provide reliable evidence of the existence and the terms of the contract. Reid & Riege, P.C. v. Bulakites, 132 Conn.App. 209, 217, 31 A.3d 406 (2011), cert. denied, 303 Conn. 926, 35 A.3d 1076 (2012).

The doctrine of part performance, however, is an exception to the statute of frauds. Milazzo v. Schwartz, 44 Conn.App. 402, 406, 690 A.2d 401, cert. denied, 240 Conn. 926, 692 A.2d 1282 (1997). This doctrine originated to prevent the statute of frauds from “becoming an engine of fraud.” (Internal quotation marks omitted.) Ubysz v. DiPietro, 185 Conn. 47, 54, 440 A.2d 830 (1981). In Glazer v. Dress Barn, Inc., 274 Conn. 33, 59–63, 873 A.2d 929 (2005), our Supreme Court clarified and explained the circumstances in which a contract may be enforced despite its noncompliance with the statute of frauds. It also concluded that part performance and equitable estoppel are not separate and independent exceptions to the statute of frauds, but, rather, that part performance is an essential element of the estoppel exception to the statute of frauds. Id. at 60–63, 873 A.2d 929; see also SS–II, LLC v. Bridge Street Associates, 293 Conn. 287, 294–95, 977 A.2d 189 (2009). “[T]he elements required for part performance are: (1) statements, acts or omissions that lead a party to act to his detriment in reliance on the contract; (2) knowledge or assent to the party's actions in reliance on the contract; and (3) acts that unmistakably point to the contract.... Under this test, two separate but related criteria are met that warrant precluding a party from asserting the statute of frauds.... First, part performance satisfies the evidentiary function of the statute of frauds by providing proof of the contract itself.... Second, the inducement of reliance on the oral agreement implicates the equitable principle underlying estoppel because repudiation of the contract by the other party would amount to the perpetration of a fraud.” (Citations omitted; internal quotation marks omitted.) Glazer v. Dress Barn, Inc., supra, at 62–63, 873 A.2d 929; Blackwell v. Mahmood, 120 Conn.App. 690, 696–97, 992 A.2d 1219 (2010); see also H. Pearce Real Estate Co. v. Kaiser, 176 Conn. 442, 443, 408 A.2d 230 (1979).

In the present case, the plaintiffs alleged that they fulfilled all of their obligations under the forbearance agreement. Specifically, they assert that Red Buff Rita, Inc., executed and delivered the note and mortgage on 10 Fifth Avenue in Stratford, and that Curcio executed a guarantee for that note and mortgage. These allegations support application of the doctrine of part performance, which would remove the forbearance agreement from the statute of frauds. See Glazer v. Dress Barn, Inc., supra, 274 Conn. at 65–72, 873 A.2d 929; Blackwell v. Mahmood, supra, 120 Conn.App. at...