North American Technical Services, Inc. v. V.J. Technologies, Inc.

Filing 41

ORDER re the Motion to Dismiss (Doc. No. 15 ). Signed by Judge Alvin W. Thompson on 9/29/2011. (Gallagher, Robyn)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
------------------------------x
NORTH AMERICAN
:
TECHNICAL SERVICES, INC.,
:
:
Plaintiff,
:
:
v.
:
:
V.J. TECHNOLOGIES, INC.,
:
:
Defendant.
:
------------------------------x

Civil Action No.
10 CV 1384 (AWT)

ORDER RE MOTION TO DISMISS
The plaintiff, North American Technical Services, Inc., has
brought this action against V.J. Technologies, Inc., setting
forth claims for breach of contract (First Count), breach of the
covenant of good faith and fair dealing (Second Count), unjust
enrichment (Third Count), quantum meruit (Fourth Count),
promissory estoppel (Fifth Count), fraudulent misrepresentation
(Sixth Count), negligent misrepresentation (Seventh Count),
violation of the Connecticut Unfair Trade Practices Act, Conn.
Gen. Stat. § 42-110a et seq. (“CUTPA”) (Eighth Count), and unfair
competition (Ninth Count).

The defendant has moved to dismiss

the plaintiff’s Complaint pursuant to Fed. R. Civ. P. 12(b)(6)
and 9(b).

For the reasons set forth below, the motion is being

granted as to the Third and Fourth Counts, with leave to replead,
and denied as to the remaining counts.

1

I.

LEGAL STANDARD
When deciding a motion to dismiss under Rule 12(b)(6), the

court must accept as true all factual allegations in the
complaint and must draw inferences in a light most favorable to
the plaintiff.

Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).

Although a complaint “does not need detailed factual allegations,
a plaintiff’s obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.”

Bell Atlantic Corp. v. Twombly,

550 U.S. 550, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265,
286 (1986))(on a motion to dismiss, courts “are not bound to
accept as true a legal conclusion couched as a factual
allegation”).

“Nor does a complaint suffice if it tenders naked

assertions devoid of further factual enhancement.”

Ashcroft v.

Iqbal, 129 S.Ct. 1937, 1949 (2009)(quoting Twombly, 550 U.S. at
557).

“Factual allegations must be enough to raise a right to

relief above the speculative level, on the assumption that all
allegations in the complaint are true (even if doubtful in
fact).”

Id. (internal citations omitted).

However, the

plaintiff must plead “only enough facts to state a claim to
relief that is plausible on its face.”

Id. at 1974.

“The

function of a motion to dismiss is ‘merely to assess the legal
feasibility of the complaint, not to assay the weight of the

2

evidence which might be offered in support thereof.’”

Mytych v.

May Dept. Store Co., 34 F. Supp. 2d 130, 131 (D. Conn. 1999)
(quoting Ryder Energy Distribution v. Merrill Lynch Commodities,
Inc., 748 F.2d 774, 779 (2d Cir. 1984)).

“The issue on a motion

to dismiss is not whether the plaintiff will prevail, but whether
the plaintiff is entitled to offer evidence to support his
claims.”

United States v. Yale New Haven Hosp., 727 F. Supp.

784, 786 (D. Conn. 1990) (citing Scheuer, 416 U.S. at 232).
In its review of a motion to dismiss for failure to state a
claim, the court may consider “only the facts alleged in the
pleadings, documents attached as exhibits or incorporated by
reference in the pleadings and matters of which judicial notice
may be taken.”

Samuels v. Air Transp. Local 504, 992 F.2d 12, 15

(2d Cir. 1993).
When alleging fraud or mistake, a plaintiff bears the
additional burden of stating “with particularity the
circumstances constituting fraud or mistake.”
9(b).

Fed. R. Civ. P.

The plaintiff must “(1) detail the statements (or

omissions) that the plaintiff contends are fraudulent, (2)
identify the speaker, (3) state where and when the statements (or
omissions) were made, and (4) explain why the statements (or
omissions) are fraudulent.”
347 (2d Cir. 1996).

Harsco Corp. v. Segui, 91 F.3d 337,

“Malice, intent, knowledge, and other

conditions of a person’s mind may be alleged generally.”

3

Fed. R.

Civ. P. 9(b).
II. DISCUSSION
A. Choice-of-Law
The defendant argues that New York law should be applied to
the plaintiff’s contracts and torts claims.

Because many of the

defendant’s arguments in support of its motion to dismiss rely on
New York law, the court addresses the choice-of-law analysis as
an initial matter.
In a diversity action, a federal court applies the choiceof-law rules of the forum state.

Greystone Comty. Reinvestment

Ass’n, Inc. v. Berean Capital, Inc., 638 F. Supp. 2d 278, 286 (D.
Conn. 2009).

“In Connecticut, the Court must select the local

law of the state having ‘the most significant relationship’ to
the occurrence and the parties to the dispute.”

Id.

Connecticut

follows the Restatement (Second) of Conflicts of Laws in making
this determination.

Reichhold Chemicals, Inc. v. Hartford

Accident And Indemn. Co., 243 Conn. 401, 413 (1997).

The

Restatement (Second) articulates “seven overarching
considerations in determining which state has the ‘most
significant relationship.”1

Id. at 409.

1

There are “five

The factors to be considered are:
(a) the needs of the interstate and international systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested states and the
relative interests of those states in the determination of the
particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular field of law,
(f) certainty, predictability and uniformity of result, and

4

contacts to be considered in applying the [factors] . . . to a
contract dispute.”2

Id.

There are four contacts to be

considered in applying the factors to a torts dispute, which “are
to be evaluated according to their relative importance with
respect to the particular issue.”3
Conn. 632, 652 (1986).

O’Connor v. O’Connor, 101

Application of these factors requires a

court to make a fact intensive inquiry regarding the
circumstances of the individual case.
Here, there are factual disputes with respect to issues
material to the choice of law analysis.

The defendant, for

example, argues that the letter acknowledging the parties’
agreement was signed in New York because the letterhead lists the
defendant’s New York address.

The plaintiff, however, alleges

that the letter was signed at the defendant’s office in

(g) ease in the determination and application of the law to be
applied.
Restatement (Second) of Conflicts of Laws § 6(2).
2

The five contacts to be considered in a contract dispute are:
(a) the place of contracting,
(b) the place of negotiation of the contract,
(c) the place of performance,
(d) the location of the subject matter of the contract, and
(e) the domicile, residence, nationality, place of incorporation and
place of business of the parties.
Restatement (Second) of Conflicts of Laws § 188(2)
3

The four contacts to be considered in a torts dispute are:
(a) the place where the injury occurred,
(b) the place where the conduct causing the injury occurred,
(c) the domicile, residence, nationality, place of incorporation and
place of business of the parties, and
(d) the place where the relationship, if any, between the parties is
centered.
Restatement (Second) of Conflicts of Laws § 145(2).

5

Connecticut.

Because of the “fact-intensive and context

specific” nature of the choice of law analysis and the complexity
of the instant case, it is premature to address choice of law at
the motion to dismiss stage.

Graboff v. The Collern Firm, No.

10-1710, 2010 WL 4456923 at *8 (E.D. Pa. Nov 8, 2010)
(“[C]onducting a . . . choice of law analysis is fact-intensive
and context specific.

Due to the complexity of this analysis

when confronted with a choice of law issue at the motion to
dismiss stage, courts . . . have concluded that it is more
appropriate to address the issue at a later stage in the
proceedings.”); see also Speedmark Transp., Inc. v. Mui, No. 11
Civ. 0722 (AJP), 2011 WL 1533042 at *4 (S.D.N.Y. Apr. 21, 2011)
(“[A] choice-of-law determination is premature on this motion to
dismiss, since the record lacks facts necessary to conduct the
context-specific . . . analysis required.”); Arroyo v. Milton
Acad., No. 5:10-cv-117, 2011 WL 65938 at *3 (D. Vt. Jan. 10,
2011) (finding that the Restatement (Second) of Conflicts,
employs “a fact intensive inquiry into the interests of the
various fora and their relationships with the parties involved,
as well as assessments of the policy implications of applying the
law of one jurisdiction over another” and therefore “it would be
premature to resolve these complex questions before the
completion of discovery.”).

6

B. First Count - Breach of Contract
The defendant argues that the plaintiff’s breach of contract
claim should be dismissed for three reasons: first, that the
parties had no contract; second, that even if there was a
contract, the New York Statute of Frauds applies and makes the
contract unenforceable; and third, that even if the parties had
an enforceable contract, there was no breach because the
defendant submitted its final bid to the plaintiff’s agent, Sung
Woo.

Because the allegations in the Complaint are sufficient,

viewed in the light most favorable to the plaintiff, to support a
breach of contract claim, the motion to dismiss the First Count
is being denied.
The defendant argues that the alleged contract between the
parties fails for lack of definiteness because it does not
identify the parties’ respective obligations, omits essential
terms, such as compensation, and is so vague and indefinite that
its terms cannot be discerned.

In Connecticut,

[t]o be enforceable, an agreement must be definite and
certain as to its terms and requirements. Whether and on
what terms a contractual commitment has been undertaken
are ultimately questions of fact for the trier of facts.
A manifestation of mutual assent may be made even though
neither offer nor acceptance can be identified and even
though the moment of formation cannot be determined.
Presidential Capital Corp. v. Reale, 231 Conn. 500, 506-07 (1994)
(internal citations and quotation marks omitted).

“Moreover, the

defendant’s promise to pay a commission is not made unenforceable

7

merely because he did not include the amount of the commission.
We have long held that an agreement will not be rejected if the
missing terms can be ascertained, either from its express terms
or by fair implication.”

Id. at 507-08.

Here, the plaintiff has alleged that it had an oral
agreement with the defendant which was later confirmed in a
letter dated August 20, 2007.

The letter “appoints [the

plaintiff] as the lead team with exclusivity in the sales process
for the project,” and further states that the plaintiff “will
take the lead” on all sales and pricing issues.

Furthermore, the

Complaint alleges that the plaintiff and the defendant have had
prior agreements, which could establish a course of dealing
between the parties.

So long as a trier of fact can ascertain

missing terms, including the amount of the plaintiff’s
commission, the agreement will not be rejected for lack of
definiteness.
The defendant argues that the alleged contract between the
parties is unenforceable because it does not comply with the New
York Statute of Frauds.

New York Gen. Obl. Law § 5-701(10)

requires that commission agreements concerning the finding and
brokerage of business opportunities and inventory sales be in
writing.

In contrast, the Connecticut Statute of Frauds has no

such requirement.

As discussed above, it is premature to

determine whether New York law, as opposed to Connecticut law,

8

applies.4
The defendant argues that even if there was a contract,
there was no breach because it submitted its final bid to Sung
Woo, the plaintiff’s agent in South Korea.

The defendant relies

on agency principles to argue that Sung Woo had either actual or
apparent authority to waive the plaintiff’s right to
compensation.

“Actual authority exists when an agent’s action is

expressly authorized by resolution of the [principal][,] is
impliedly authorized by the [principal] or although not
authorized, is subsequently ratified by the [principal].”
Maharishi Sch. of Vedic Sci., Inc. v. Connecticut Constitution
Assoc. Ltd. P’ship, 260 Conn. 598, 606-07 (2002)(citation and
internal quotation marks omitted).

Nothing in the Complaint

describes the extent of Sung Woo’s actual authority.

Drawing all

reasonable inferences in the plaintiff’s favor, the allegations
in the Complaint support an inference that Sung Woo had no actual
authority to waive the plaintiff’s compensation.
“Apparent authority is that semblance of authority that a
principal, through its own acts or inadvertences, causes or
allows third persons to believe the principal’s agent possesses.”
Id. (emphasis added).

Drawing all reasonable inferences in the

4

The defendant also argues that the alleged contract falls within the
Connecticut Statute of Frauds pertaining to contracts that cannot be performed
within one year and cites a sentence in the letter. However, it is not clear
on the face of the document that the sentence at issue obligated the plaintiff
to perform duties extending beyond one year.

9

plaintiff’s favor, the allegations in the Complaint support an
inference that the defendant knew that Sung Woo did not have the
authority to waive all of the plaintiff’s compensation for the
project.

This knowledge, if shown, would be fatal to the

defendant’s apparent agency defense.
Because the allegations in the Complaint could support a
finding of a breach of contract, the motion to dismiss the First
Count is being denied.
C. Second Count - Breach of the Implied Covenant of Good
Faith and Fair Dealing
The defendant argues that the plaintiff’s claim for a breach
of the implied covenant of good faith and fair dealing should be
dismissed for three reasons: first, that the New York Statute of
Frauds makes the contract unenforceable; second, that the
plaintiff fails to allege a breach of the covenant of good faith
and fair dealing that is distinct from its express breach of
contract claim; and third, that the plaintiff fails to allege
that the defendant engaged in conduct that deprived it of the
“fruits” of the agreement.
With respect to the defendant’s argument that the contract
is unenforceable pursuant to the New York Statute of Frauds, for
the reasons discussed above, it is premature to apply the New
York Statute of Frauds to the agreement in this case.
The defendant argues that the claim for breach of the
implied covenant of good faith and fair dealing is redundant in
10

light of the plaintiff’s claim for express breach of contract.
See Simon v. Unum Grp., 07 Civ. 11426 (SAS), 2008 U.S. Dist.
LEXIS 47719, at *8 (S.D.N.Y. June 18, 2008) (“If the allegations
underlying the breach of the implied covenant of good faith claim
and the breach of contract claim are the same, then the good
faith claim is ‘redundant’ and cannot survive a motion to
dismiss.”) A breach of the implied covenant of good faith and
fair dealing occurs “only where one party’s conduct, though not
breaching the terms of the contract in a technical sense,
nonetheless deprived the other party of the benefit of its
bargain.” Pearce v. Manhattan Ensemble Theater, Inc., 528 F.
Supp. 2d 175, 180-81 (S.D.N.Y. 2007) (quoting Sauer v. Xerox
Corp., 95 F. Supp. 2d 125, 132 (W.D.N.Y. 2000)).
Here, the plaintiff has alleged that the defendant expressly
breached the terms of the contract by removing it from the sales
process despite language in the letter giving it exclusivity in
the sales process.

The defendant contends that, assuming there

is an enforceable contract, it did not breach that contract
because it submitted the final bid to the plaintiff’s agent.
Should the defendant prevail on that argument, the plaintiff
could seek to recover for a breach of the implied covenant of
good faith and fair dealing based on the allegation that the
final bid excluded any compensation for the plaintiff.

It is

permissible for the plaintiff to proceed in the alternative.

11

The defendant argues that there is no allegation that it
breached an implied promise that was “so interwoven into the
contract as to be necessary for effectuation of the purposes of
the contract.”

Thyroff v. Nationwide Mut. Ins. Co., 460 F.3d

400, 407-08 (2d Cir. 2006).

The plaintiff alleges that it

entered into a contract with the defendant that would allow it to
take the lead in developing a sales opportunity for the defendant
with the Korea Hydro Nuclear Power Corporation.

The plaintiff

further alleges that it invested significant resources in
ensuring that the defendant would get the business, and that the
defendant submitted its final bid without receiving the
plaintiff’s approval and failed to include compensation for the
plaintiff in the bid price.

Assuming there was no breach of an

express term of an agreement, the plaintiff has alleged facts
sufficient to support a conclusion that there was an implied
promise that the defendant would not deprive the plaintiff of any
and all compensation for the work it had done.
Because the allegations in the Complaint could support a
finding of a breach of the implied covenant of good faith and
fair dealing, the motion to dismiss the Second Count is being
denied.
D.

Third Count - Unjust Enrichment

The defendant argues that the plaintiff’s claim for unjust
enrichment should be dismissed for two reasons: first, that it is

12

barred by the New York Statute of Frauds; and second, that the
plaintiff has failed to allege the reasonable value of its
services.
As discussed above, it is premature to determine whether the
New York Statute of Frauds is applicable.
The defendant argues that to state a claim for unjust
enrichment the plaintiff must allege the reasonable value of its
services.

Under New York law, to state a claim for unjust

enrichment a plaintiff must identify the reasonable value of the
services rendered rather than relying on contract damages.

See

Fallon v. McKeon, 646 N.Y.S.2d 109, 110 (N.Y. App. Div. 1996).
Under Connecticut law, a plaintiff must show “that the defendant
[was] benefited, that the benefit was unjust in that it was not
paid for by the defendant[], and that the failure of payment
operated to the detriment of the plaintiff.”
11 Conn. App. 375, 383 (1987).

Burns v. Koellmer,

Here, the plaintiff fails to

identify the reasonable value of its services.

Therefore, it has

not stated a claim for unjust enrichment under New York law.
The defendant argues that Connecticut law also requires the
plaintiff to allege the reasonable value of its services and
cites J&N Elec., Inc. v. Notkins, No. 085020144, 2009 Conn.
Super. LEXIS 1382, at *4 (Conn. Super. Ct. May 20, 2009) and
Ravski v. Conn. State Med. Soc’y, IPA, Inc., No. 044000582S, 2005
Conn. Super. LEXIS 200, at *16-17 (Conn. Super. Ct. Jan. 26,

13

2005).

These cases stand for the proposition that a plaintiff

cannot incorporate allegations of breach of an express contract
into its unjust enrichment claim because lack of an express
contract is a “precondition to recovery based on unjust
enrichment.” Ravski, 2005 Conn. Super. LEXIS 200, at *18
(dismissing unjust enrichment claim because the count alleging
unjust enrichment incorporated paragraphs which alleged breach of
an express contract); see also J&N Elec., Inc., 2009 Conn. Super.
LEXIS 1382 at *4 (dismissing unjust enrichment claim because
“plaintiff clearly alleges the existence and breach of an express
contract in the count seeking unjust enrichment, contrary to the
rule that alternative causes of action must be pleaded in
separate counts.”).

These cases do not require that a plaintiff

identify the reasonable value of services rendered within the
complaint.

They do require, however, that a plaintiff not make

allegations inconsistent with the legal claim being pursued.
In the Third Count, which alleges unjust enrichment, the
plaintiff incorporates paragraphs 1 through 56 of the Complaint.
In paragraph 23 of the Complaint plaintiff states that “[o]n
August 20, 2007, [the plaintiff] and [the defendant] entered into
a formal, written contract (the “Letter Agreement”).”

In

paragraph 49 of the Complaint, the plaintiff alleges that “[i]n
breach of the terms of the Letter Agreement, [the defendant] did
not seek or obtain approval from [the plaintiff] before

14

submitting the final offer to Sung Woo.”

Because lack of an

express contract is a precondition to recovery based on unjust
enrichment, allegations to the contrary incorporated into the
count require dismissal.
Because the choice of law issue remains unsettled and the
plaintiff’s unjust enrichment claim would be dismissed under
either New York law or Connecticut law, the motion to dismiss is
being granted as to the Third Count, but with leave to replead.
E.

Fourth Count - Quantum Meruit

The defendant argues that the plaintiff’s claim for quantum
meruit should be dismissed for two reasons: first, that it is
barred by the New York Statute of Frauds; and second, that the
plaintiff has failed to allege the reasonable value of its
services.
As discussed above, it is premature to determine whether the
New York Statute of Frauds is applicable.
In order to recover in quantum meruit under New York
law, a claimant must establish “(1) the performance of
services in good faith, (2) the acceptance of the
services by the person to whom they are rendered, (3) an
expectation of compensation therefor, and (4) the
reasonable value of the services.”
Mid-Hudson Catskill Rural Migrant Ministry, Inc. v. Fine Host
Corp., 418 F.3d 168, 175 (2d Cir. 2005) (quoting Revson v. Cinque
& Cinque, P.C., 221 F.3d 59, 69 (2d Cir. 2000)).

Also, a claim

will be dismissed where the complaint is “entirely devoid of any
indication of what [a plaintiff] spent or, in fact, of the
15

reasonable value of any services which it may have performed.”
Martin H. Bauman Assoc. v. H&M Intl. Transp., 171 A.D.2d 479, 484
(N.Y. App. Div. 1991).
The plaintiff failed to allege the reasonable value of its
services.

Therefore, it has failed to state a claim for quantum

meruit under New York law.
Under Connecticut law, “[w]hen there is an express contract
entered into by the parties, the plaintiff cannot recover under
the theory of quantum meruit.”

Schreiber v. Connecticut Surgical

Grp., P.C., 96 Conn. App. 731, 739-40 (2006).

As discussed

above, such a claim has not been stated where the plaintiff has
alleged facts within the count that are inconsistent with the
legal claim being pursued.
As with the unjust enrichment claim, the plaintiff
incorporated paragraphs 1 through 56 of the Complaint into the
Fourth Count, the claim for quantum meruit.
paragraphs allege an express contract.

Some of those

Thus, under Connecticut

law, the quantum meruit claim must be dismissed.
Because the plaintiff’s quantum meruit claim would be
dismissed under either New York law or Connecticut law, the
motion to dismiss is being granted as to the Third Count with
leave to replead.
F.

Fifth Count - Promissory Estoppel

The defendant argues that the plaintiff’s claim for
16

promissory estoppel should be dismissed for three reasons: first,
that it is barred by the New York Statute of Frauds; second, that
the promises between the parties are not definite enough to
support promissory estoppel; and third, that it was unreasonable
to rely on vague and indefinite promises.
As discussed above, it is premature to determine whether the
New York Statute of Frauds is applicable.
The defendant argues that its promise to appoint the
plaintiff to the lead team and its promise of exclusivity is
vague, indefinite, and leaves out numerous terms that one would
typically expect to be included.
To prevail on a cause of action for promissory estoppel a
plaintiff must establish “1) a clear and unambiguous promise; 2)
reasonable and foreseeable reliance on that promise; and 3)
injury to the relying party as a result of the reliance.”

Kaye

v. Grossman, 202 F.3d 611, 615 (2d Cir. 2000); see also D’UlisseCupo v. Bd. of Dirs. of Notre Dame High Sch., 202 Conn. 206, 213
(1987) (“A fundamental element of promissory estoppel . . . is
the existence of a clear and definite promise which a promisor
could reasonably have expected to induce reliance.”).
The plaintiff alleges that it informed the defendant of the
potential opportunity to sell its products in South Korea.

It

further alleges that it required the defendant to confirm, in
writing, that the plaintiff would serve as the exclusive

17

representative with respect to the potential sale before it would
move forward.

The letter that was signed on August 20, 2007

explicitly states that it is confirming previous verbal
agreements.

The plaintiff further alleges that the plaintiff and

the defendant had other exclusivity agreements pursuant to which
the plaintiff distributed the defendant’s products.

The

allegations, taken together with the conversations between the
parties and their prior course of dealing, support a reasonable
inference that the letter agreement created a clear and
unambiguous promise.
The defendant argues that it was unreasonable for the
plaintiff to rely on vague and indefinite promises.

However, the

Complaint alleges that the parties continued to work closely
together towards culmination of a deal.

Thus the plaintiff was

not simply relying on vague and indefinite promises but on
promises made in the context of a continuing joint effort.
Therefore, the motion to dismiss the Fifth Count is being
denied.
G.

Sixth Count - Fraudulent Misrepresentation

The defendant argues that the plaintiff’s fraudulent
misrepresentation claim should be dismissed for three reasons:
first, that the plaintiff failed to plead with particularity a
misrepresentation of fact by the defendant; second, that the
plaintiff cannot show that the defendant never intended to

18

fulfill its promise to make the plaintiff the exclusive
representative on the project; and third, that the allegations do
not give rise to a strong inference that the defendant never
intended to perform under the purported agreement.
The defendant argues that the plaintiff failed to allege the
speaker or the time or place of the misrepresentations.

To the

contrary, the plaintiff clearly identifies the letter, signed by
Steve Halliwell - Manager of Government Business on August 20,
2007, as at least one source of misrepresentations by the
defendant.

The letter states that the plaintiff will be

appointed the “lead team with exclusivity in the sales process
for the project.”
The defendant argues that, because the purported
misrepresentations are identical to the terms of the alleged
contract, they cannot support a claim for fraudulent
misrepresentation.

Under New York law, intentionally false

statements indicating an intent to perform under a contract are
not sufficient to support a claim for fraud.
Bridgestone/Firestone, Inc. v. Recovery Credit Services, Inc., 98
F.3d 13, 19 (2d Cir. 1996).

Under Connecticut law, however,

“whether [the defendant] fraudulently induced the plaintiff to
agree to a proposal, and whether the defendant breached the
contract, are independent and distinct claims.”

Greenwich

Interiors, LLC v. DCM Sys., LLC, No. FSTCV085009200S, 2009 WL

19

765529 at *4 (Conn. Super. Feb. 25, 2009).

This is because ”the

economic loss doctrine does not apply to causes of action based
upon negligent or intentional torts considered independent of the
contractual breach even though a breach of contract action
exists.” Id. at *3.
The defendant argues that the plaintiff cannot show it never
intended to fulfill its promise to make the plaintiff the
exclusive representative on the project.

As noted above, under

New York law “general allegations that defendant entered into a
contract while lacking the intent to perform are insufficient to
support a fraud claim.”

Miller v. Holtzbrinck Publishers, LLC,

No. 09-0919, 2010 U.S. App. LEXIS 9893, at *5 (2d Cir. May 14,
2010).

The defendant cites Midsun Grp. v. Jem Dev., LLC, No.

044000356, 2009 Conn. Super. LEXIS 1259, at *11-13 (Conn. Super.
Ct. May 5, 2009) for the proposition that Connecticut law is the
same as New York law on this point.

Midsun, however, merely

stands for the principle that a plaintiff must prove both that a
defendant stated it would adhere to the terms of the agreement
and that it “had no intention of doing so at the time the
contracts were consummated and the promises were made.”
Conn. Super. LEXIS 1259, at *11-12.

2009

Midsun discusses the

heightened evidentiary standard a plaintiff needs to meet to
prove a claim for fraud.

However, Midsun was decided after

trial, i.e. after the plaintiff had the opportunity to conduct

20

discovery and present its evidence.

The plaintiff here should be

provided the same opportunity with respect to this point.
The defendant argues that the plaintiff’s allegations do not
support a strong inference that it did not intend to fulfill its
contractual obligations, and in fact, suggest the opposite.

For

instance, the plaintiff alleges that the defendant continued to
work with it during the bidding process and submitted an initial
bid that included compensation.

At this stage in the litigation,

however, “[m]alice, intent, knowledge, and other conditions of a
person’s mind may be alleged generally.”

Fed. R. Civ. P. 9(b).

Because the allegations in the Complaint could support a
finding of fraudulent misrepresentation, the motion to dismiss
the Sixth Count is being denied.
H.

Seventh Count - Negligent Misrepresentation

The defendant argues that the negligent misrepresentation
claim should be dismissed for three reasons: first, that New York
law requires a special relationship between the parties as an
element of a claim for negligent misrepresentation; second, that
the claim is indistinguishable from the breach of contract claim;
and third, that it fails to satisfy the heightened pleading
standards of Fed. R. Civ. P. 9(b).
While New York law does require a special relationship
between the parties, see B&M Linen, Corp. v. Kannegiesser, USA,
Corp., 679 F. Supp. 2d 474, 483 (S.D.N.Y. 2010), Connecticut law

21

does not.
2010).

See Sturm v. Harm Dev., LLC, 2 A.3d 859, 872-73 (Conn.

As a result, this claim survives unless it is determined

that New York law applies.
The defendant argues that the negligent misrepresentation
claim is, in substance, the breach of contract claim restated.
Under Connecticut law, “[a] negligent misrepresentation action
does not seek to enforce the underlying contract; rather, it
seeks damages for reliance on misrepresentations that may have
been made in relation to that contract.

This critical

distinction sets the tort action apart from a contract action and
makes the claim worthy of independent review.”

East River

Energy, Inc. v. Gaylord Hosp., Inc., No. NNHCV095029078S, 2011 WL
3198251 at *11 (emphasis in original).

Because the negligent

misrepresentation claim is distinct under Connecticut law, it
survives the motion to dismiss.
The defendant argues that the negligent misrepresentation
claim fails to satisfy the heightened pleading standards of Fed.
R. Civ. P. 9(b) for the same reasons it gave with respect to the
fraudulent misrepresentation claim. The defendant’s argument is
not persuasive for the reasons discussed above.
Because the allegations in the Complaint could support a
finding of negligent misrepresentation, the motion to dismiss the
Seventh Count is being denied.
I.

Eighth Count - CUTPA

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The defendant argues that the CUTPA claim should be
dismissed for three reasons: first, because New York law applies;
second, because the defendant’s actions were incidental to its
true trade or business and were not intimately associated with
Connecticut; and third, because the conduct alleged does not rise
to the level of a deceptive practice or conduct that would
violate CUTPA.
As discussed above, the choice-of-law determination must be
made at a later stage of this case.
The defendant argues that its actions were incidental to its
true trade or business.

“A claim under CUTPA requires that [the]

plaintiff allege that [the] defendant engaged in ‘unfair methods
of competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce’” where trade or commerce is
defined as “‘the advertising, the sale or rent or lease, the
offering for sale or rent or lease, or the distribution of any
services and any property . . .”

PTI Assocs., LLC v. Carolina

Int’l Sales Co., 3:09-cv-849, 2010 U.S. Dist. LEXIS 5922, at *14
(D. Conn. Jan. 26, 2010) (quoting Conn. Gen. Stat. § 42-110b).
“There is no viable claim under CUTPA when the practice
complained of is incidental to the true trade or business
conducted.”

Brandewiede v. Emery Worldwide, 890 F. Supp. 79, 81

(D. Conn. 1994).
Brandewiede is inapposite to the current case.

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In

Brandewiede the court held that leasing commercial aircraft was
incidental to an air freight and cargo business.

This case

involves a contract for the sale and distribution of specialized
x-ray equipment.

The defendant is in the business of

manufacturing and selling x-ray equipment.

Therefore, the

contract is directly related to its business.
The defendant also argues that its actions are not
intimately associated with Connecticut.
There are two approaches that courts have employed to
evaluate whether a violation of CUTPA occurred in
Connecticut. First, this Court has previously held that
CUTPA is violated where the violation “is tied to a form
of trade or commerce intimately associated with
Connecticut . . .”
Alternatively, where Connecticut
choice of law principles are applicable, those principles
dictate the application of Connecticut law, which
provides that a tort is deemed to have occurred where the
‘economic impact’ of the injury is felt.
PTI Assocs., LLC, 2010 U.S. Dist. LEXIS 5922, at *15 (quoting
Victor G. Reiling Assocs. v. Fisher-Price, Inc., 406 F. Supp. 2d
175, 200 (D. Conn. 2005)) (citations omitted).

There is no

dispute that the economic impact of the injury was felt by the
plaintiff in Connecticut.

Because the court has not decided the

choice-of-law question, the defendant’s argument regarding
whether the trade or commerce is intimately associated with
Connecticut must be addressed at a later stage in this case.
The defendant argues that its conduct does not rise to the
level of deceptive practice covered by the statute because, at
most, the claim is one for breach of contract.
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The Complaint

alleges far more than a simple breach of contract.

The plaintiff

alleges that the defendant took advantage of the plaintiff’s
experience and contacts with South Korea and Canberra throughout
the course of the negotiations, all the while intending to cut
the plaintiff out of the deal.

The plaintiff alleges that the

defendant, acting in bad faith, circumvented it at the last
minute to submit a bid that provided for zero compensation for
the plaintiff.

The plaintiff’s allegations are sufficient to

support a claim for a deceptive practice.
Because the allegations in the Complaint could support a
claim under the CUTPA, the motion to dismiss the Eighth Count is
being denied.
J.

Ninth Count - Unfair Competition

The defendant argues that the unfair competition claim must
be dismissed because the plaintiff and the defendant lacked the
competitive relationship essential to an unfair competition claim
under New York law.

“Although Connecticut has not addressed the

issue, New York does not require direct competition between a
plaintiff and a defendant in order to sustain a cause of action
for common-law unfair competition.”

QSP, Inc. v. Aetna Cas. and

Sur. Co., 256 Conn. 343, 370-71 (2001) (citing Berni v.
International Gourmet Rests. of America, 838 F.2d 642, 648 (2d
Cir. 1988)).

“[I]t is apparent that, at a minimum, standing to

bring a [New York unfair competition] claim requires the

25

potential for a commercial or competitive injury.”
F.2d at 648.

Berni, 838

The plaintiff alleges that there was an agreement

under which it would distribute the defendant’s products in South
Korea.

The plaintiff further alleges that the defendant took

over that distributorship role by submitting a bid directly to
the plaintiff’s agent, Sung Woo.

In doing so, the defendant

caused a commercial injury, i.e. it assumed the plaintiff’s
position in the negotiations with the Korea Hydro Nuclear Power
Corporation, depriving the plaintiff of all compensation related
to the agreement.
The defendant argues that the plaintiff never alleges that
the defendant misappropriated the fruits of its labor.

The

plaintiff alleges that it had a special relationship with the
client in South Korea and with Canberra, a business partner in
the deal.

It alleges that it used its influence to enable the

defendant to place a bid, arranging meetings with Canberra and
even petitioning the South Korean government to place the
defendant on an approved vendor list.

In return for its efforts,

the plaintiff anticipated being able to negotiate a sales price
that would provide it with some form of commission.

The

defendant misappropriated the fruits of the plaintiff’s labor by
taking advantage of the connections established by the plaintiff
while simultaneously removing the plaintiff from the deal in
violation of the letter agreement.

26

Because the allegations in the Complaint could support a
finding of unfair competition, the motion to dismiss the Ninth
Count is being denied.
III. CONCLUSION
For the reasons set forth above, Defendants’ Motion to
Dismiss is hereby GRANTED with respect to the plaintiff’s claims
for unjust enrichment (Third Count) and quantum meruit (Fourth
Count) and DENIED as to all other counts.

The plaintiff is

granted leave to amend its complaint within 30 days.
It is so ordered.
Signed this 29th day of September, 2011 at Hartford,
Connecticut.

/s/AWT
Alvin W. Thompson
United States District Judge

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