Ivey, Barnum & O'Mara v. Indian Harbor Properties, Inc.

• Citation: 461 A.2d 1369,190 Conn. 528
• Court: Connecticut Supreme Court
• Decision Date: 28 June 1983
• Parties: IVEY, BARNUM & O'MARA v. INDIAN HARBOR PROPERTIES, INC., et al.

Page 1369

461 A.2d 1369

190 Conn. 528

IVEY, BARNUM & O'MARA v. INDIAN HARBOR PROPERTIES, INC., et al.

Supreme Court of Connecticut.

Argued March 10, 1983.

Decided June 28, 1983.

L. Douglas Shrader, Bridgeport, with whom, on the brief, was Joseph C. Gasparrini, Bridgeport, for appellants (defendants).

Samuel J. Tedesco, Greenwich, with whom, on the brief, was Joseph R. Tedesco, Greenwich, for appellee (plaintiff).

Robert M. Langer and David E. Ormstedt, Asst. Attys. Gen., with whom, on the brief, was Joseph I. Lieberman, Atty. Gen., filed a brief as amici curiae.

Before PETERS, PARSKEY, SHEA, SPONZO and SPADA, JJ.

PETERS, Associate Justice.

The dispositive issue in this appeal is the extent to which Connecticut's Unfair Trade Practices Act; General Statutes §§ 42-110a through 42-110q (CUTPA, the act); provides a cause of action to clients of a law firm contesting a law firm's suit to collect legal fees. The plaintiff, Ivey, Barnum & O'Mara, a partnership organized for the practice of law, brought an action to recover the reasonable value of legal services rendered and disbursements made on behalf of its clients, the defendants Indian Harbor Properties, Inc., Showboat Inn, Inc., and Joseph B. Keating. The defendants counterclaimed that the plaintiff's attempt in its lawsuit to collect interest on the alleged unpaid balance constituted an unfair trade act or practice in violation of General Statutes § 42-110b. ¹ In addition, the defendant Keating counterclaimed and raised a special defense that the plaintiff had engaged in an unfair trade act or practice, which rendered the plaintiff's claim unenforceable, because the plaintiff was attempting to collect a debt which the plaintiff knew was not due and owing. The plaintiff moved to strike the counterclaims and special defense insofar as they stated claims under CUTPA, on the ground that CUTPA does not apply to the furnishing of legal services by an attorney. The trial court granted the plaintiff's motion to strike and the defendants have appealed from the judgment which was rendered pursuant to Practice Book § 157. See McInerney v. Cecio Bros., Inc., 189 Conn. 547, 549, 457 A.2d 303 (1983); Kilbride v. Dushkin Publishing Group, Inc., 186 Conn. 718, 724-25, 443 A.2d 922 (1982).

The facts that govern this appeal are not presently in dispute. ² The plaintiff performed legal services for the corporate defendants from July 1977 to October 1979 in connection with two legal actions in the Superior Court. On behalf of the defendant Keating, the plaintiff performed legal services from January 1979 to May 1979, representing him in the defense of an indictment in the state of Arizona.

It was not in the performance of these services that the claimed violations of CUTPA occurred, nor did the alleged violations occur in any attempt by the plaintiff, prior to the actual commencement of its lawsuit, to collect its fees. Rather, the claimed CUTPA violations occurred exclusively in the plaintiff's conduct of litigation to recover its claimed fees.

On March 11, 1980, the plaintiff instituted suits against the defendants seeking recovery for the reasonable value of legal services. In those actions the plaintiff sought recovery of interest computed at the rate of 1 percent per month on the amount claimed as due. At no prior time had the plaintiff and any defendant agreed that the defendants would be charged interest on any claimed unpaid balance resulting from legal services rendered by the plaintiff. The plaintiff's actions were withdrawn a week later when the defendants, through their counsel, had appeared and filed a motion to dismiss. On May 12, 1980, the plaintiff renewed its claims, which were dismissed by the trial court. ³ In the present action, commenced in August of 1980, the plaintiff originally claimed the 1 percent interest charge on the principal balance of $118,605.48, but deleted that claim by an amendment to its complaint on March 11, 1981.

With respect to the defendant Keating, the plaintiff had, subsequent to the performance of its legal services, rendered a statement of account in the amount of $5523.52. In the present action, the plaintiff seeks to recover $10,966.52 for the same services, which debt, according to Keating, "members of the plaintiff firm know is not due and owing."

In granting the plaintiff's motion to strike, the trial court determined that claims of attorney misconduct are not cognizable under CUTPA, the court having concluded that CUTPA regulations and procedures unconstitutionally interfere with the exclusive judicial power to discipline attorneys. Since the date of the trial court's decision, we have rejected the proposition that regulation of attorneys pursuant to CUTPA necessarily intrudes on the judicial power in an unconstitutional manner. Heslin v. Connecticut Law Clinic of Trantolo & Trantolo, 190 Conn. 510, 461 A.2d 938 (1983). We therefore do not adopt the reasoning of the trial court. We may, however, affirm its judgment if the result it reached can be supported for a different reason. W.J. Megin, Inc. v. State, 181 Conn. 47, 54, 434 A.2d 306 (1980); State v. Assuntino, 180 Conn. 345, 353, 429 A.2d 900 (1980); Favorite v. Miller, 176 Conn. 310, 317, 407 A.2d 974 (1978). Notwithstanding the constitutional permissibility of the defendants' claims, if the facts which the defendants allege are insufficient to frame their cause of action, they cannot prevail. Because we read the statute as not proscribing the acts alleged, we conclude that the defendants have not stated a cause of action under CUTPA and, therefore, that the trial court did not err in granting the plaintiff's motion to strike.

Our decision in Heslin, while it recognizes the potential liability of attorneys for violation of CUTPA, does not mean that every claimant who alleges attorney misconduct states a cause of action under the act, nor that every dispute over the value of goods and services supports a claim for statutory recovery. A private recovery can only be predicated upon a violation of General Statutes § 42-110b(a), ⁴ which provides: "No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce."

For guidance in determining what may constitute unfair or deceptive acts or practices CUTPA directs us to the "interpretations given by the Federal Trade Commission and the federal courts to Section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. § 45(a)(1)), ⁵ [FTC Act] as from time to time amended." General Statutes § 42-110b (b). In measuring the sufficiency of a private CUTPA claim, recourse to precedent under the FTC Act is concededly somewhat problematic, since the federal act creates no express private cause of action and the federal courts have refused to recognize an implied one. Naylor v. Case & McGrath, Inc., 585 F.2d 557, 561 (2d Cir.1978); Beckenstein v. Hartford Electric Light Co., 479 F.Supp. 417, 423 (D.Conn.1979). For the Federal Trade Commission to proceed against unfair or deceptive practices, furthermore, it must first determine that the challenged activity is contrary to a specific and substantial public interest. Federal Trade Commission v. Raladam Co., 283 U.S. 643, 648-49, 51 S.Ct. 587, 590-91, 75 L.Ed. 1324 (1931); Spiegel, Inc. v. Federal Trade Commission, 494 F.2d 59, 62 (7th Cir.), cert. denied, 419 U.S. 896, 95 S.Ct. 175, 42 L.Ed.2d 140 (1974); see 15 U.S.C. § 45(b). While the Federal Trade Commission possesses broad discretion in determining whether a proceeding brought by it is in the public interest; Porter & Dietsch, Inc. v. Federal Trade Commission, 605 F.2d 294, 308 (7th Cir.1979), cert. denied, 445 U.S. 950, 100 S.Ct. 1597, 63 L.Ed.2d 784 (1980); Guziak v. Federal Trade Commission, 361 F.2d 700, 704 (8th Cir.1966), cert. denied, 385 U.S. 1007, 87 S.Ct. 712, 17 L.Ed.2d 545 (1967); it is not the commission's function to intervene in private disputes; Federal Trade Commission v. Klesner, 280 U.S. 19, 27-28, 50 S.Ct. 1, 3-4, 74 L.Ed. 138 (1929); Exposition Press, Inc. v. Federal Trade Commission, 295 F.2d 869, 873 (2d Cir.1961), cert. denied, 370 U.S. 917, 82 S.Ct. 1554, 8 L.Ed.2d 497 (1962); nor to vindicate merely private rights. Porter & Dietsch, Inc. v. Federal Trade Commission, supra; Montgomery Ward & Co. v. Federal Trade Commission, 379 F.2d 666, 672 (7th Cir.1967); Henry Broch & Co. v. Federal Trade Commission, 261 F.2d 725, 728 (7th Cir.1958), modified on other grounds, 285 F.2d 764 (7th Cir.), rev'd. on other grounds, 363 U.S. 166, 80 S.Ct. 1158, 4 L.Ed.2d 1124, reh. denied, 364 U.S. 854, 81 S.Ct. 30, 5 L.Ed.2d 77 (1960).

In creating a private cause of action under CUTPA, the legislature has thus departed significantly from the enforcement scheme of the federal act. Recognizing that exclusively administrative enforcement might prove insufficient to serve the remedial purpose of the act; ⁶ General Statutes § 42-110b; Hinchliffe v. American Motors Corporation, 184 Conn. ---, pp. ---, --- (43 CLJ 3, pp. 14, 16) 440 A.2d 810 (1981); the legislature has created incentives for private vindication of the public interest. CUTPA encourages the conduct of private litigation by permitting recoveries which include punitive damages ⁷ and attorney's fees. ⁸ See Hinchliffe v. American Motors Corporation, supra, ---, 440 A.2d 810. CUTPA's substantive provisions provide a further incentive for private litigation because under the guideline provision of the FTC Act; 15 U.S.C. § 45(a)(1); they make cognizable unfair or deceptive practices broader than those which were illegal at common law or by criminal statute. Federal Trade Commission v. Sperry & Hutchinson Co., 405 U.S. 233, 241-44, 92 S.Ct. 898, 903-905, 31 L.Ed.2d 170 (1972); Federal Trade Commission v. Motion Picture Advertising Service Co., 344 U.S. 392, 394, 73 S.Ct. 361, 363, 97 L.Ed. 426 (1953); Spiegel, Inc. v. Federal Trade Commission, 540 F.2d 287, 292 (7th Cir.1976); ...