Garden Catering-Hamilton Ave. LLC v. Wally's Chicken Coop LLC
A claim that the plaintiffs' suit is frivolous and constitutes an unfair or deceptive trade practice, in violation of the Connecticut Unfair Trade Practices Act, cannot be brought as a counterclaim in the same suit that purportedly is unfair or deceptive. The plaintiffs alleged that the defendant, Michael Natale, left his job with the plaintiffs to start a rival company, Wally's Chicken Coop. The plaintiffs sued, alleging breach of fiduciary duty, unfair trade practices, in violation of the Lanham Act, 15 United States Code §1125(a), unfair competition and unjust enrichment. The defendants filed a counterclaim, alleging that the plaintiffs failed to allege a cause of action, and that because the defendants were forced to hire an attorney to defend themselves from a suit that lacked merit and that was intended to prevent the defendants from working, the plaintiffs' suit constituted an unfair or deceptive trade practice, in violation of the Connecticut Unfair Trade Practices Act. The plaintiffs moved to dismiss the CUTPA counterclaim and argued that it constituted a premature claim for vexatious litigation, which cannot be litigated in the same suit as the plaintiff's original complaint. To prevail on a vexatious litigation count, a party must prove that the party prevailed in the underlying suit. A vexatious litigation claim cannot be brought as a counterclaim in the same suit that purportedly is vexatious, pursuant to the Connecticut District Court's 2001 decision, Kaltman-Glasel v. Dooley. The same logic applies here, even though the defendants' counterclaim alleges a violation of CUTPA, as opposed to vexatious litigation. "[A] CUTPA claim founded on litigation," wrote the District Court, "must establish that the litigation itself is vexatious or a sham." The District Court granted the plaintiffs' motion to dismiss the defendants' CUTPA counterclaim.