Unfair Trade Practices Claim Against CCRC That Sold Charitable Annuity to Resident May Continue

February 11, 2016

A Connecticut trial court refuses to dismiss an unfair trade practices claim against a continuing care retirement community (CCRC) that sold a charitable annuity to one of its residents. Roscoe v. Elim Park Baptist Home, Inc. (Conn. Super. Ct., No. NNHCV146049541S, Dec. 22, 2015).

John Roscoe paid an entrance fee to move into a CCRC. Mr. Roscoe subsequently married and needed more liquid assets. The CCRC’s director of planned giving convinced Mr. Roscoe to transfer money from his entrance fee account to purchase a charitable annuity. During the sales process, the CCRC allegedly represented that the annuity was a more valuable product than it actually was and the sales representative did not take into account Mr. Roscoe’s financial circumstances or possible need for Medicaid planning.

After Mr. Roscoe died, his estate and widow filed several claims against the CCRC, including claims for violating fair trade practices, misrepresentation, and civil theft. The CCRC filed a motion to dismiss, arguing that Mr. Roscoe’s estate did not allege substantially aggravating circumstances to support a fair trade practices claim.

The Connecticut Superior Court denies the motion to dismiss with regard to the unfair trade practices claim, the misrepresentation claim, and the civil theft claim. According to the court, there was evidence that the CCRC “misrepresented the nature of the agreement with [Mr. Roscoe] based on factual predicates that the [CCRC] knew or should have known were untrue.” The court rules that while a standard breach of contract claim can’t support a fair trade violation claim, the allegations of misrepresentation and civil theft were substantial aggravating circumstances.

For a summary of the ethics opinion and brief commentary by Penn State Dickinson Law professor Katherine C. Pearson, click here.

For the full text of this decision, click here.