Santa Buckley Energy v. Blue Sky Holdings, Inc. d/b/a Manchester Athletic Club (2010)

MEMORANDUM OF DECISION

The plaintiff, Santa Buckley Energy, instituted the present action against the defendant, Blue Sky Holdings, Inc., d/b/a Manchester Athletic Club, to recover monetary damages for natural gas furnished to the defendant for which the defendant has not paid.   In March of 2007, the defendant executed an agreement with the Celeren Corporation (hereinafter “Celeren”) to “negotiate and execute on (defendant's) behalf ․ purchase agreements for the delivery of” natural gas to the defendant's facility in Atwater, MA. The agreement also provided that the defendant “hereby agrees that, as of the Effective Date;  Celeren shall be and otherwise act as ․ the sole energy procurement consultant, agent, aggregator, broker supplier and/or energy marketer ․ on behalf of the” defendant (emphasis supplied).   Celeren also agreed to provide “utility bill payment services” wherein Celeren agreed to make all payments due to the third-party suppliers.   On its failure to do so, the defendant was entitled to make direct payments to such suppliers and reduce Celeren's fees accordingly.   In return for the services provided by Celeren, Celeren received monthly payments of $17,101.00 from the defendant.

In July of 2007, Celeren entered an agreement with the plaintiff to provide natural gas to the defendant's facility in Manchester, MA. Under the agreement Celeren was listed as the “buyer.”   The agreement, however, was signed by Celeren as “agent for Blue Sky Holdings, Inc.”

Effective April 30, 2008, the defendant terminated its agreement with Celeren and notified the plaintiff that the defendant would be responsible for payments from May 1, 2008 onward.   The defendant has paid all sums due to Celeren as well as payments due to the plaintiff for fuel delivered after May 1, 2008.

There is a balance due to the plaintiff in the amount of $29,377.29 for natural gas provided by the plaintiff to the defendant prior to May 1, 2008.   The plaintiff claims that the defendant is responsible for that sum, together with interest and attorneys fees, as provided in the agreement between Celeren (on behalf of the defendant) and the plaintiff, on the ground that Celeren was an agent, both actual and apparent, of the defendant.   The defendant claims that up until the time that the agreement with Celeren was terminated it had never received an invoice from the plaintiff and did not even know of the plaintiff's existence.   The defendant also asserts that it has already paid Celeren for the natural gas and claims it will have to pay for the same fuel twice.

“The existence of an agency relationship is a question of fact.   In, ․ we set forth the elements to show the existence of any agency relationship (1) a manifestation by the principal that the agent will act for him;  (2) acceptance by the agent of the undertaking;  and (3) an understanding between the parties that the principal will be in control of the undertaking.”  (Citations omitted;  internal quotation marks omitted.)  National Publishing Co. v. Hartford Fire Ins. Co., 287 Conn. 664, 677-78 (2008).

“[A]gency is defined as the fiduciary relationship which results from manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act ․ Thus, the three elements required to show the existence of an agency relationship include;  (1) a manifestation by the principal that the agent will act for him;  (2) acceptance by the agent of the undertaking;  and (3) an understanding between the parties that the principal will be in control of the undertaking.

“Moreover, it is a general rule of agency law that the principal in an agency relationship is bound by, and liable for, the acts in which his agent engages with authority from the principal, and within the scope of the [agency relationship].”   An agent's authority may be actual or apparent.  (Citations omitted;  internal quotation marks omitted.)  Gordon v. Tobias, 262 Conn. 844, 849 (2003).

“Apparent authority is that semblance of authority which a principal, through his own acts or inadvertences, causes or allows third persons to believe his agent possesses ․ Consequently, apparent authority is to be determined, not by the agent's own acts, but by the acts of the agent's principal ․ The issue of apparent authority is one of fact to be determined based on two criteria․  First, it must appear from the principal's conduct that the principal held the agent out as possessing sufficient authority to embrace the act in question, or knowingly permitted [the agent] to act as having such authority ․ Second, the party dealing with the agent must have, acting in good faith, reasonably believed, under all the circumstances, that the agent had the necessary authority to bind the principal to the agent's action.”   (Citations omitted;  internal quotation marks omitted.)  Machado v. Statewide Grievance Committee, 93 Conn.App. 832 fn8 (2006).

The agreement between the defendant and Celeren specifically describes Celeren as a “agent” who is authorized to “negotiate and execute on (defendant's) behalf” delivery of natural gas.   There are no limitations expressed in the agreement on the authority of the agent.   The agreement also provides that Celeren “will provide utility bill payment services” for the natural gas supplied to the defendant's facility.   The agreement also provides that if Celeren fails to make payments for such purchases the defendant may make those payments directly and reduce the monthly payment to Celeren.   The natural gas sales agreement between Celeren and the plaintiff does describe Celeren as the “buyer” of natural gas provided to the facility of the Manchester Athletic Club. However the agreement signed between the plaintiff and Celeren specifically states that Celeren is signing the agreement as “agent for Blue Sky Holdings Inc.” Prior to supplying the natural gas, the plaintiff performed a credit check not as to Celeren but only as to the credit standing of the defendant.

The court finds that Celeren was the actual agent of the defendant, and also had apparent authority to act on behalf of the defendant, and accordingly the defendant is responsible to the plaintiff for the sums due for natural gas supplied by the plaintiff to the defendant's facility.   The defendant is also responsible for interest in accordance with the agreement executed by Celeren with the plaintiff as well as “reasonable attorneys fees.”

The judgment in this case will not be effective however until a hearing is held with respect to the attorneys fees and interest to which the plaintiff is entitled.   Accordingly, the court therefore schedules a hearing, which may be evidentiary, with respect to the issue of attorneys fees and the calculation of interest.   That hearing is scheduled for Monday, August 23, 2010 in Courtroom 6D at 10:00 a.m.

RUSH, J.T.R.

Rush, William B., J.T.R.