Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—ConnCtApp: Connecticut Unfair Trade Practices Act Did Not Apply to Accountant, (May 15, 2013)

By Peter Reap, J.D., LL.M.

The Connecticut Unfair Trade Practices Act (CUTPA) was inapplicable to an accountant’s alleged improper actions in connection with the handling of Kenneth J. Stuart Sr.’s estate because the plaintiffs, William A. Stuart and Jonathon Stuart, sons of Kenneth J. Stuart Sr., offered no evidence indicating that the accountant’s alleged conduct implicated the entrepreneurial or commercial aspects of his accounting practice, a Connecticut appellate court has decided (Stuart v. Freiberg, May 21, 2013, Bishop, T.) Thus, a ruling of a Connecticut state trial court granting summary judgment to the accountant, Richard M. Freiberg, on the CUTPA brought against him by the Stuarts.

The Stuart’s complaint against Freiberg included four counts: fraud, negligent misrepresentation, accounting malpractice, and a violation of the CUTPA. Essentially, the Stuarts asserted that Freiberg knew that one of their brothers, Kenneth J. Stuart Jr., was mishandling the assets of their father’s estate and aided in that mismanagement with misleading and fraudulent conduct.

In the CUTPA count, the Stuarts alleged that Freiberg’s conduct as the accountant for Stuart, Sr.’s estate was ‘‘immoral, oppressive, unscrupulous and caused substantial injury and an ascertainable loss to the"" Stuarts.

The CUTPA provides that "[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." General Statutes § 42-110b (a). Although neither the Connecticut Supreme Court nor Appellate Courts had yet determined the parameters of CUTPA in the context of accounting malpractice, trial courts in Connecticut have found CUTPA inapplicable for accountants, except in cases relating to the commercial or entrepreneurial aspects of an accounting practice, the court observed.

Only the entrepreneurial or commercial aspects of medicine and law were covered by CUTPA. That reasoning was persuasive with respect to accountants, according to the appellate court.

The Stuarts failed to offer evidence sufficient to show a genuine issue of material fact that Freiberg’s alleged actions fell under CUTPA. The Stuarts only alleged negligence and poor judgment, the court noted.

The Stuart’s alleged that Freiberg’s "conduct, including without limitation his billing practices" fell within the CUTPA, but did not support their claim with further facts. The Stuarts relied on their allegations of fraud, negligent misrepresentation and accounting malpractice to support their CUTPA claim, but the evidence presented in these claims was not under the purview of CUTPA. Beyond their mention of his billing practices, none of the evidence presented in support of the Stuarts’ fraud, negligent misrepresentation or accounting malpractice claims alleged unfair and deceptive practices as related to entrepreneurial conduct.

The meaning of "entrepreneurial" was not so broad as to be any action performed by the defendant, the court explained. The Connecticut Supreme Court had defined entrepreneurial as "aspects of practice, such as the solicitation of business and billing practices, as opposed to claims directed at the competence of and strategy employed by the" defendant. "[P]rofessional negligence—that is, malpractice—did not fall under CUTPA."

Thus, to succeed, the Stuarts had to demonstrate that some element of the defendant’s business practices was deceptive or unfair. The Stuarts alleged fraudulent billing practices in name only, as their claim was supported with evidence of alleged poor decision making and withholding of information underlying their other legal claims. In sum, the Stuarts’ claims were not pointed, in the main, at Freiberg’s billing or other business related practices, as they must be in order to establish a CUTPA claim. The Stuarts did not, therefore, sufficiently allege a CUTPA violation.

The case is No. AC 33813.

Attorneys: Sandra J. Akoury for William A. Stuart. James A. Fulton (Whitman Breed Abbott & Morgan LLC) for Richard M. Freiberg.

Cases: StateUnfairTradePractices ConnecticutNews