D & M Screw Machine v. Charles Lowe (2010)

MEMORANDUM OF DECISION RE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

PROCEDURAL HISTORY

In this action seeking injunctive relief, the plaintiff alleges it entered into a lease on December 30, 1998 with the defendant of certain machines and equipment [“equipment”].   One year later, the parties entered into a separate purchase agreement which provided that, at the termination of the equipment lease on December 31, 2009, the plaintiff had the right to purchase the equipment for $1.00.   The plaintiff gave notice of its intent to exercise that right on December 30, 2009.

The plaintiff alleges that the defendant refused to convey the equipment, claiming the plaintiff was in default of the lease agreement.¹  The plaintiff seeks to have the court “order the defendant to sign a Bill of Sale for the items in question.” ²

The defendant has filed a motion for summary judgment, stating there is no genuine issue of material fact and that he is entitled to judgment in his favor as a matter of law.   In furtherance of this claim, the defendant has filed an affidavit stating that the parties entered into a stipulation on October 24, 2003, which was “approved by the Court” which supersedes the 1999 purchase agreement.   In an accompanying affidavit, the defendant also alleges that, even if the 1999 purchase agreement survived the stipulation, the plaintiff is in default of the 1998 lease agreement and, therefore, precluded from exercising its right to purchase.

Argument was heard by the court on November 8, 2010.   At that time, counsel for the defendant presented argument that the plaintiff was in default of the lease agreement.   This was not raised in the motion or memorandum, but was asserted in the defendant's affidavit.   Counsel for the defendant requested time to brief the issue and the court granted the defendant until November 22, 2010 to so do.   The court granted the plaintiff until December 6, 2010 to file a response.   As of the date of this memorandum of decision, neither party has filed a supplemental brief.   It is presumed that they wish to stand on their prior submissions and argument.

LEGAL STANDARD:

Summary judgment “․ shall be rendered forthwith if the pleadings, affidavits, and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”  Practice Book § 17-49.   In deciding a motion for summary judgment a trial court must view the evidence in the light most favorable to the nonmoving party.  Hertz Corp. v. Federal Insurance Company, 245 Conn. 374, 381 (1998).  “The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under the applicable principles of substantive law, entitle him to a judgment as a matter of law ․ and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact ․ A material fact ․ [is] a fact that will make a difference in the result of the case ․” (Internal quotation marks omitted.)  Hurley v. Heart Physicians P.C., 278 Conn. 305, 314, 898 A.2 777 (2006).

“A motion for summary judgment is designed to eliminate the delay and expense of litigating an issue where there is no real issue to be tried.”  Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989).   In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any issues exist.  Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988).   Summary judgment “is appropriate only if a fair and reasonable person could conclude only one way.”  Miller v. United Technologies Corp., 233 Conn. 732, 751, 660 A.2d 810 (1995).  “[A] summary disposition ․ should be on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party.”  (Internal quotation marks omitted.)  Id., 752.  “[A] directed verdict may be rendered only where, on the evidence viewed in the light most favorable to the nonmovant, the trier of fact could not reasonably reach any other conclusion than that embodied in the verdict as directed.”  Id.

“A genuine issue has been variously described as a triable, substantial or real issue of fact ․ and has been defined as one which can be maintained by substantial evidence.”  (Citation omitted;  internal quotation marks omitted.)  United Oil Co. v. Urban Redevelopment Commission, 158 Conn. 364, 378, 260 A.2d 596 (1969).  “[T]he ‘genuine issue’ aspect of summary judgment procedure requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred.”  (Internal quotation marks omitted.)  Id., 378-79.  “Issue of fact encompasses not only evidentiary facts in issue but also questions as to how the trier would characterize such evidentiary facts and what inferences and conclusions it would draw from them.”  (Internal quotation marks omitted.)  Id.

ANALYSIS

The question presented here is if there is any genuine issue as to whether a 1999 purchase agreement survived a 2003 stipulation which was entered into by the parties and entered as an order of the court on October 24, 2003.   The plaintiff has submitted the affidavit of its principal, attaching various documents, including copies of the 1998 equipment lease and 1999 purchase agreement, to which the complaint refers.   The defendant has submitted his own affidavit, attaching a copy of the 2003 stipulation.   The court has reviewed all of the submissions to determine if there is any genuine issue of material fact that the purchase agreement was superseded by the stipulation.

The defendant asserts that the plaintiff waived its right to purchase the equipment at the conclusion of the equipment lease when it entered into the 2003 stipulation.   In support of this assertion is the defendant's affidavit.   In ¶ 13 of the affidavit, the defendant claims the plaintiff made a concession in the 2003 stipulation that it would return the equipment to him or pay its assessed value, referring to ¶ 5 of the stipulation.   The full language of that paragraph is edifying.   It states,

FOR VALUE RECEIVED, the Lessee promises to return to Lessor all equipment identified in Schedule A, at its sole cost, to a location that Lessor may instruct, upon any of the occurrences set for below, or in default of such delivery, promises to immediately pay to the Lessor the assessed value of the property at the time the obligation to return such equipment arises, and all the damages that may accrue by reason of the taking and detention thereof.

[Capitalization in original, emphasis added.]

Under a Schedule B in the same stipulation, the parties set forth the three occurrences referred to above:

1.  The conclusion of any period during which the Lessee is entitled to use and possession of such equipment, as set forth in an agreement between the parties concerning the use of said equipment, or as provided by law.

2. The occurrence of a default under an agreement between the parties concerning the use of said equipment.

3. The filing by or against the Lessee of any petition, arrangement, reorganization, or the like under any insolvency or bankruptcy law, or the adjudication of the Lessee as a bankrupt (and if such filing is involuntary, the failure to have same dismissed within sixty (60) days from the date of the filing), or the making of an assignment for the benefit of creditors, or the appointment of a receiver for any part of the Lessee's properties or the admission in writing by the Lessee of the inability to pay debts as they become due.

The 1999 purchase agreement submitted by the plaintiff specifically states, “This agreement shall not be included in the equipment lease dated December 30, 1998 and the amendment thereto dated December 1, 1999.”   It cannot be reasonably inferred, as the plaintiff claims, that the purchase agreement was made part of the equipment lease, which is the agreement to which Schedule B, ¶ 1 of the 2003 stipulation refers.

The unambiguous language of the 2003 stipulation states that, upon the occurrence of the termination of the equipment lease, the plaintiff is to return the equipment or pay the defendant its value.   This stipulation was entered into subsequent to the purchase agreement of 1999 and supersedes the 1999 agreement.   If it did not, there would be no purpose for the language of Schedule B, ¶ 1.

In his affidavit submitted with the memorandum in opposition, the plaintiff's principal states, “At that [court] hearing [on the stipulation,] the defendant-lessor, Charles Lowe, told the judge that the lease would remain in effect without change.”   The lease did remain in effect, but the purchase agreement specifically states it is not included in the lease agreement.   The plaintiff seems to believe the purchase agreement was incorporated into the lease agreement, but it specifically states it is not.

The plaintiff has provided no evidence that the purchase agreement survived the stipulation or that the parties mutually agreed that it would.   Rather, the only agreement that survived was the equipment lease agreement.   That the plaintiff would have to return or pay for the equipment is explicitly stated in the language of Schedule B, ¶ 1.

It may be that the plaintiff made a mistake in entering into the stipulation.   He is not alleging that it was a mutual mistake.  “ ‘A mutual mistake is one that is common to both parties and effects a result that neither intended ․ In that sense, a mutual mistake requires a mutual misunderstanding between the parties as to a material fact.”  (Citation omitted;  internal quotation marks omitted.)  BRJM, LLC v. Output Systems, Inc., 100 Conn.App. 143, 148, 917 A.2d 605, cert. denied, 282 Conn. 917, 925 A.2d 1099 (2007);  see also 1 Restatement (Second), Contracts, Mistake § 151, p. 385 (1981).   The existence of a mutual mistake is a question of fact.  Inland Wetlands & Watercourses Agency v. Landmark Investment Group, Inc., 218 Conn. 703, 708, 590 A.2d 968 (1991).”  Hogan v. Lagosz, 124 Conn.App. 602, 618-19 (2010).

Even proof that the plaintiff, had it been aware of the extinguishment of the purchase agreement, would not have signed the stipulation, is insufficient to prove that a mutual mistake had a material effect on the agreed upon stipulation.   See 1 Restatement (Second), Contracts, Mistake § 152, pp. 387-88 (1981);  McBurney v. Cirillo, 276 Conn. 782, 817, 889 A.2d 759 (2006).   In the absence of evidence, or even a claim, of mutual mistake, there is no genuine factual dispute.

The Connecticut Supreme Court has recently revisited the law on unilateral mistake:

“ ‘[T]he mistake of [only one] of the parties inducing him to sign a contract which, but for the mistake, he would not have entered into, may be a ground in some cases for canceling the contract ․ Snelling v. Merritt, 85 Conn. 83, 101, 81[A.] 1039 [1911] ․ Relief is granted in such cases only when the mistake is induced by the conduct of the other party, or when he seeks unconscionably to take advantage of it.”(Citation omitted;  emphasis added;  internal quotation marks omitted.)  Lieberum v. Nussenbaum, 94 Conn. 276, 279, 108 A. 662 (1920);  accord Milford Yacht Realty Co. v. Milford Yacht Club, Inc., 136 Conn. 544, 549, 72 A.2d 482 (1950).   The Restatement (Second) of Contracts rule ․ which the Appellate Court more recently has applied, provides:  “Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in § 154, and (a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or (b) the other party had reason to know of the mistake or his fault caused the mistake.”  (Emphasis added.)   1 Restatement (Second), Contracts § 153, p. 394 (1981);  see Shoreline Communications, Inc. v. Norwich Taxi, LLC, 70 Conn.App. 60, 65, 797 A.2d 1165 (2002) (applying Restatement [Second] rule);  Gebbie v. Cadle Co., 49 Conn.App. 265, 276, 714 A.2d 678 (1998) (same).   The comment to the Restatement (Second) indicates that, although the law of unconscionability “is not itself applicable to such cases since the unconscionability does not appear at the time the contract is made, the standards of unconscionability in such cases are similar ․” 1 Restatement (Second), supra, comment (c), p. 395.

“The classic definition of an unconscionable contract is one ‘which no man in his senses, not under delusion, would make, on the one hand, and which no fair and honest man would accept, on the other.’  “ Smith v. Mitsubishi Motors Credit of America, Inc., 247 Conn. 342, 349, 721 A.2d 1187 (1998).   The doctrine of unconscionability, as a defense to contract enforcement, “generally requires a showing that the contract was both procedurally and substantively unconscionable when made-i.e., some showing of an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other ․” [fn26] (Internal quotation marks omitted.)  Hottle v. BDO Seidman, LLP, 268 Conn. 694, 719, 846 A.2d 862 (2004).

Bender v. Bender, 292 Conn. 696, 730-32, 975 A.2d 636 (2009).

The plaintiff makes no claim that it was induced by the conduct of the defendant to enter into the stipulation, nor does it allege that the contract is unconscionable.   The language of the stipulation is not complex.   The terms are clear.   The plaintiff was represented by counsel at the time and the plaintiff's counsel signed the stipulation as a witness.

If the plaintiff had offered some evidence that the purchase agreement survived the stipulation, other than its principal's mere assertion that it does, there might be a genuine issue of fact.   The evidence presented, however, is to the contrary and the court cannot find that there is any question of fact as to that evidence.   The plaintiff's complaint cannot succeed and the defendant is entitled to summary judgment in his favor.³

CONCLUSION AND ORDER:

The defendant's motion for summary judgment is granted.

Robert E. Young, J.

FOOTNOTES

FN1. ¶ 7 of the complaint states, “The defendant's attorney told the plaintiff's attorney, that they were not going to convey to the plaintiff the equipment in question because the plaintiff was in default of a certain equipment lease above referred to.”.  FN1. ¶ 7 of the complaint states, “The defendant's attorney told the plaintiff's attorney, that they were not going to convey to the plaintiff the equipment in question because the plaintiff was in default of a certain equipment lease above referred to.”

FN2. Although the plaintiff claims it wishes “a mandatory injunction,” the plaintiff appears to be requesting the court to order the defendant to convey the equipment.   The plaintiff further has added an “Amount in Demand” page to its complaint, seeking in excess of $15,000.00.   At this stage of the litigation, the court considers this to be a complaint seeking specific performance of a contract..  FN2. Although the plaintiff claims it wishes “a mandatory injunction,” the plaintiff appears to be requesting the court to order the defendant to convey the equipment.   The plaintiff further has added an “Amount in Demand” page to its complaint, seeking in excess of $15,000.00.   At this stage of the litigation, the court considers this to be a complaint seeking specific performance of a contract.

FN3. Although not asserted in his motion for summary judgment or memorandum, the defendant also asserts in his affidavit that the occurrence in Schedule B, ¶ 2 has also come to pass.   He appears to argue that, as the plaintiff has neither returned the equipment nor paid its assessed value, it is in default of the agreement.   Counsel for the defendant made this argument at oral argument but has provided no support for his contention that failure to return or pay for the equipment was a “default” under the agreement.   The agreement would have expired by lapse of time prior to the plaintiff's obligation to return or pay for the equipment.   As to this ground, to the extent that the defendant may be asserting it, the motion is denied..  FN3. Although not asserted in his motion for summary judgment or memorandum, the defendant also asserts in his affidavit that the occurrence in Schedule B, ¶ 2 has also come to pass.   He appears to argue that, as the plaintiff has neither returned the equipment nor paid its assessed value, it is in default of the agreement.   Counsel for the defendant made this argument at oral argument but has provided no support for his contention that failure to return or pay for the equipment was a “default” under the agreement.   The agreement would have expired by lapse of time prior to the plaintiff's obligation to return or pay for the equipment.   As to this ground, to the extent that the defendant may be asserting it, the motion is denied.

Young, Robert E., J.