Connecticut Bar Journal
84 CBJ 49.
COMMERCIAL LITIGATION: 2009
Connecticut Bar JournalVolume 84, No. 1, Pg. 49MARCH 2010COMMERCIAL LITIGATION: 2009By Thomas J. Sansone And Lee Friend Lizotte(fn*)Whether it is a symptom of the continuing struggles of our economy or merely another indicator of the litigious nature of our society, the number of reported commercial cases at all levels of our state courts during 2009 suggests that there is no shortage of business disputes in Connecticut. And, while few of the decisions reported can truly be classified as groundbreaking, the judges and justices of our courts have been hard at work reinforcing established trends, especially in the areas of contracts, business organizations, foreclosures and the application of uniform commercial laws. A sampling of their more notable opinions is presented here, along with a "potpourri" of other interesting commercial litigation decisions that fall outside of these broader classifications.
Our Supreme Court decided several cases that dealt with the black-letter law issues that dominate every first-year law student's core curriculum, three of which are discussed here. In SS-II, LLC v. Bridge Street Associates,(fn1) the court tackled a difficult statute of frauds(fn2) issue in affirming the trial court's entry of summary judgment for the defendant. The plaintiff had leased a parcel of real property from the defendant, and sought to purchase the property under an option clause in the parties' lease agreement. When the defendant balked, the plaintiff brought an action for specific performance. The trial court granted summary judgment for the defendant, finding that the option provision was too uncertain as to the purchase price of the property. Because the contract involved an interest in land, it fell within the parameters of the statute of frauds. And, because an essential term of the transaction, namely the purchase price, was not specified, the statute acts to bar enforcement of the contract.
The plaintiff attempted to remove the bar of the statute, contending that the parties' partial performance would take the contract outside the statute's application. The high court likewise found this unavailing, holding instead that the option clause did not guaranty the plaintiff's rights to purchase the property, and there was no true meeting of the minds with regard to the purchase price. Under those circumstances, the parties' past actions did not clearly evince an intention to proceed with a purchase and sale transaction.
Before moving on to the next Supreme Court case, it is quite worthwhile to spend a moment examining Judge Alfred Jennings's decision in Tardy v. Willis,(fn3) coming out of the Stamford Superior Court. In another statute of frauds case, the court held that a contract of indefinite duration is not barred by the statute's bar of enforceability of unwritten contracts that require more than one year from the date of formation to be performed. In so holding, the court observed that the more recent view embraced by courts is to uphold such contracts unless there is absolutely no possibility of the contract being performed within a year of its formation.
On that score, an excellent primer on contract formation, particularly the tenet of offer and acceptance, is presented in Auto Glass Express v. Hanover Ins. Co.(fn4) The plaintiff, an auto glass repair company, contended that the defendant insurer had breached their agreement to reimburse the plaintiff for windshield repairs and replacements performed for the defendant's policyholders. The court was unconvinced, however, finding instead that no contract between the parties had ever been formed. The letters sent by the insurance company were merely offers, which required a clear manifestation of assent by the repair shop to result in acceptance of those offers. The plaintiff's mere performance of the repair work, absent formal acceptance of the written offer from the insurance company, was insufficient to create a contract between them.
The last of this trio of Supreme Court contract cases is Wasniewski v. Quick and Reilly, Inc.(fn5) The defendant brokerage company had lost at both the trial and appellate court levels, but ultimately secured a reversal following the grant of further review by the Supreme Court. The facts giving rise to this dispute evoke images of bad reality TV shows.
Long after the plaintiff had attained his majority, his father established a brokerage account in the plaintiff's name, using the plaintiff's Social Security number, but never told the plaintiff of the account's existence. During the decade plus that the account was maintained, the plaintiff's father took great pains to conceal its existence from the plaintiff, and eventually closed the account, disbursing the funds to himself and his other son, the plaintiff's brother (the plaintiff was, by this time, long estranged from both his father and his brother). The plaintiff contended that the account constituted a gift, thereby vesting him with legal ownership. The trial court agreed, notwithstanding the absence of an unequivocal act of delivery of the gift by the plaintiff's father to the plaintiff.
Under Connecticut law, a valid gift requires both donative intent and delivery, either actual or constructive, of the property constituting the gift. Instead, the trial court found that the defendant had willfully obstructed delivery of the gift, thereby excusing the plaintiff from having to prove this element. The trial court also found that the plaintiff was a third-party beneficiary of the contract between the plaintiff's father and the defendant, thereby endowing the plaintiff with enforcement rights.
The Appellate Court agreed, despite a vigorous dissent by Judge (now Justice) McLachlan. Upon further review by the Supreme Court, the Appellate and trial court decisions were reversed. The court found that there was no proof of delivery, given that the plaintiff's father never divested himself of control of the account as evidenced most convincingly by the fact that the plaintiff's father ultimately closed the brokerage account and distributed the contents to himself and his other son, never disclosing the account's existence to the plaintiff. Moreover, absent any evidence that the plaintiff's father and the defendant intended to create a contract for the benefit of the plaintiff, the plaintiff could not claim the status of a third-party beneficiary.
Meanwhile, the Appellate Court was equally active in handling its share of contract cases. In Froom Development Corp. v. Developers Realty, Inc.,(fn6) the plaintiff brought claims for breach of contract, breach of fiduciary duty, unfair trade practices, breach of the implied covenant of good faith and fair dealing and tortious interference with contractual relations, stemming from its business relationship with the defendant, a shopping center developer. At trial, the jury found the defendant liable solely on the implied covenant of good faith and fair dealing claim, but declined to award any damages. The Appellate Court affirmed, finding that the jury did not act inconsistently by finding a violation of the implied covenant but awarding no damages, given its finding that the plaintiff had not proved its damages with reasonable certainty. The plaintiff's petition for further review by the Supreme Court was denied.
The Appellate Court applied the same principle, albeit with a different result, in Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC.(fn7) The plaintiff claimed that the defendant had failed to pay all sums owed for its purchase of the plaintiff's business. As in Froom, the jury found that there had been a breach of contract, but nevertheless declined to award damages. Unlike Froom, however, the jury also found for the plaintiff on the alternative unjust enrichment claim, and did award damages for that. Furthermore, the jury awarded attorneys' fees to the plaintiff, as provided under the parties' contract. In affirming the judgment, the Appellate Court held that, insofar as liability for breach of contract had been established (notwithstanding the jury's refusal to award damages for such breach), attorneys' fees could be properly awarded because the contract contained an attorneys' fees provision.
Speaking of attorneys' fees, one should take a look at the Appellate Court's opinion in Gardner Heights Health Care Center, Inc. v. Korolyshun.(fn8) There, the court upheld the denial of an award of attorneys' fees under General Statutes Section 42-150bb, which permits recovery to a consumer defendant who successfully defends a contract action brought by a commercial party. In this instance, the plaintiff had claimed a breach of fiduciary duty, i.e., a tort claim, not a breach of contract, and therefore, the statute had no application.
The Superior Court was busy with contract cases as well, with several notable decisions throughout most of the judicial districts in the state. Judge Barbara Bellis (Bridgeport Superior Court) authored one such opinion, Zeldis v. Marini,(fn9) where she provides a very thorough discussion of what constitutes "materiality" in performance of a contract. In this case, the plaintiff contracted with the defendant to purchase two large tracts of improved land in Redding. As the closing approached, a new survey revealed that the property boundaries varied slightly from...