Garden Catering - Hamilton Avenue, LLC et al v. Wally's Chicken Coop, LLC et al

Filing 55

ORDER: Plaintiffs' Motion 23 to Dismiss Defendants' Counterclaim is GRANTED. Signed by Judge Janet Bond Arterton on 02/22/2013. (Flagg, K.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
Garden Catering-Hamilton Avenue, LLC and Frank
J. Carpenteri,
Plaintiffs,

Civil No. 3:11cv1892 (JBA)

v.
Wally’s Chicken Coop, LLC and Michael Natale,
Defendants.

February 22, 2013

RULING ON MOTION TO DISMISS
This case involves allegations that a former restaurant employee left his job to
start a rival eatery. Plaintiffs Garden Catering-Hamilton Avenue, LLC (“Garden
Catering”) and Frank J. Carpenteri sue Michael Natale and Wally’s Chicken Coop, LLC—
the former employee and the rival restaurant—for breach of fiduciary duty, unfair trade
practices, and unjust enrichment. Defendants have filed a counterclaim that alleges that
Plaintiffs’ suit is itself a violation of the Connecticut Unfair Trade Practices Act
(“CUTPA”). Plaintiffs move [Doc. # 23] to dismiss Defendants’ counterclaim. For the
reasons that follow, the Court will grant Plaintiffs’ motion.
I.

Factual Background
Plaintiffs bring a five-count complaint alleging (1) that Defendant Natale

breached his fiduciary duty to Garden Catering; (2) that Defendants’ actions constitute
unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125(a); (3) that
Defendants’ actions violate Connecticut common law prohibitions against unfair
competition; (4) that Defendants have violated the Connecticut Unfair Trade Practices
Act (“CUTPA”); and (5) that Defendants were unjustly enriched. (See Compl. [Doc. # 1]
¶¶ 64–89.)

Defendants’ Counterclaim addresses the purported legal insufficiency of Plaintiffs’
claims in the instant action (Counterclaim ¶ 1 (“None of Plaintiffs’ claims is supported by
facts or law sufficient to make out a cause of action.”); id. ¶¶ 2–11 (identifying putative
shortcomings in Plaintiffs’ pleadings)). Defendants further assert in their counterclaim
that they are being forced to incur substantial legal fees in connection with this action,
and that Mr. Natale, a “well-known Greenwich native,” is suffering harm to his good
name. (Id. ¶¶ 12–13.) Defendants conclude their allegations with a succinct summary of
their counterclaim: “[b]ecause [Plaintiffs’] claims are devoid of merit and are interposed
for the improper purpose of driving Defendants out of business, Plaintiffs have, in
commencing and prosecuting this action, ‘engage[d] in [an] unfair method[] of
competition and unfair or deceptive acts or practices in the conduct of [their] trade,’ a
trade practice prohibited under Connecticut law.” (Id. ¶ 15.)
II.

Discussion1
Plaintiffs argue that Defendants’ CUTPA counterclaim is, in essence, a vexatious-

litigation claim, and that Defendants are barred from asserting this cause of action
because a vexation-litigation claim cannot be maintained as a counterclaim in the same

1

The Federal Rules of Civil Procedure require any pleading stating a claim for
relief to contain “a short and plain statement of the claim showing that the pleader is
entitled to relief,” Fed. R. Civ. P. 8(a)(2), and a counterclaim-defendant may move to
dismiss a counterclaim that fails “to state a claim upon which relief can be granted.” Fed
R. Civ. P. 12(b)(6). “To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)); accord Kuck v. Danaher, 600 F.3d 159, 162–63 (2d Cir. 2010). A
counterclaim will not survive a motion to dismiss if it relies on “[t]hreadbare recitals of
the elements of a cause of action, supported by mere conclusory statements,” or if “the
well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct.” Iqbal, 556 U.S. at 679.
2

suit that is claimed to be vexatious. (See Pls.’ Mem. Supp. [Doc. # 24] at 6–8.) Under
Connecticut law, a plaintiff asserting a claim of vexatious litigation must establish that:
(1) the previous lawsuit or action was initiated or procured by the defendant
against the plaintiff; (2) the defendant acted with malice, primarily for a purpose
other than that of bringing an offender to justice; (3) the defendant acted without
probable cause; and (4) the proceeding terminated in the plaintiff’s favor.
Rioux v. Barry, 283 Conn. 338, 347 (2007). In light of the fourth prong, a vexatiouslitigation claim cannot be brought as a counterclaim to the suit that is purportedly
vexatious, because a counterclaim is brought in an ongoing proceeding, which, by
definition, has not terminated in the counterclaimant’s favor. See Kaltman-Glasel v.
Dooley, 156 F. Supp. 2d 225, 227 (D. Conn. 2001) (“As a necessary element of defendants’
counterclaim has not been and cannot be alleged unless and until the litigation terminates
in defendants’ favor, defendants’ vexatious litigation counterclaim fails . . . .”); Equality,
Inc. v. I-Link Commc’ns, 76 F. Supp. 2d 227 (1999) (“[I]t is impossible to use vexatious
litigation as a counterclaim in the very suit that the defendant claims is vexatious.”
(quotation marks and citation omitted)).
Defendants argue that because their counterclaim sounds under the CUTPA and
not as a vexatious–litigation tort, the above rulings are inapposite. The Court disagrees.
The same basic logic applies notwithstanding the difference in the legal elements between
a vexatious–litigation tort and a CUTPA claim alleging that purportedly frivolous
litigation is itself an unfair trade practice. A CUTPA violation “may be established by
showing either an actual deceptive practice . . . or a practice amounting to a violation of
public policy.” Daddona v. Liberty Mobile Home Sales, Inc., 209 Conn. 243, 254 (1988)
(citations omitted). As there is “nothing unfair or deceptive about bringing reasonably
grounded litigation,” Scinto v. Mariner Health Care, Inc., CV93 0302182S, 1993 WL
3

393834, at *2 (Conn. Super. Ct. Sept. 21, 1993), and because nonfrivilous litigation is not
contrary to public policy, a CUTPA claim founded on litigation must establish that the
litigation itself is vexatious or a sham.

The Court, however, cannot make this

determination where the litigation that forms the basis for the CUTPA claim is still
pending before the Court. As the Scinto court observed, “[p]lacing a CUTPA label on
what amounts to a vexatious suit claim does not avoid the problem that it is premature.”
Id. The Court concludes that a defendant may not bring a CUTPA counterclaim where
the purported CUTPA violation is the lawsuit in which the counterclaim is filed. See
Equal., Inc, 76 F. Supp. 2d at 232 (“As defendant’s counterclaim under CUTPA merely
repeats the allegations of the abuse of process counterclaim, that claim also fails. . . . It
would be a contrary rule that disallowed vexatious litigation counterclaims disguised as
abuse of process counterclaims, yet permitted such allegations under CUTPA.”).
Defendants’ counterclaim is therefore dismissed.
III.

Conclusion
For the reasons discussed above, Plaintiffs’ motion to dismiss Defendants’

counterclaim is GRANTED, and Defendants’ counterclaim is DISMISSED.

IT IS SO ORDERED.
/s/
Janet Bond Arterton, U.S.D.J.

Dated at New Haven, Connecticut this 22nd day of February, 2013.

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