LLC v. LLC (2010)

MEMORANDUM OF DECISION

FACTS AND PROCEDURE:

The plaintiff, (hereinafter also “L & V”) purchased a 2002 GMC Savannah van (hereinafter also “vehicle”) in February 2003.   At said time the plaintiff purchased an extended warranty for the vehicle which allegedly covered the transmission.   In December 2007 the vehicle's transmission became inoperative.   The vehicle was taken to the defendant Drive Train's Aamco store in East Hartford, Connecticut.   Heritage Warranty Insurance Risk Retention Group which had issued the warranty mentioned authorized Drive Train to examine the vehicle's transmission to determine what was wrong with it.   The aforementioned warranty company, after the examination had been done, refused to pay for the transmission to be repaired.¹

The owners of Drive Train was Gary Gross (hereinafter also “Gross”) and Michael Corrigan (hereinafter also “Corrigan”) as an absentee owner.   There was no further communication between the parties, Leone and Gross, except for a letter from the defendants to the plaintiff dated January 21, 2008 explained hereafter, while Leone was negotiating until March 11, 2008 when Gross informed Leone that the vehicle was being auctioned.   Leone then authorized the defendants to repair the vehicle's transmission.   No money was requested by the defendants from the plaintiff in advance.   Leone was simply told that he would be contacted when the transmission was repaired.   Leone, in early June 2008, not having heard from the defendants, went to see Gross with a bank check for $2,000 as a retainer or deposit for the work to be done.   At that time Gross informed Leone that the vehicle had been sold.   This later turned out to be untrue;  the vehicle was never sold and to this day remains in the possession of the defendants.   This was confirmed by Gross in a letter dated October 4, 2008 to the plaintiff's attorney stating that “L & V Contractor's van has not been sold as the deal fell through and I have possession of the above.”   (Plaintiff's Exhibit Six.)

In addition, during July 2008 Gross drove the vehicle from East Hartford to his home in Woodbridge, Connecticut at least eight times and later claimed that this was, apparently after the transmission had been repaired, to loosen a knock in the engine.   Although Gross denied that he was using the vehicle for personal use, it was admitted in the Request For Admissions that he had used the vehicle for personal use.   He added 900 miles to the mileage of the vehicle.   The vehicle, as shown in pictures, introduced into evidence contained furniture and other materials which were clearly for personal use.

As a result of all of this, this suit was instituted by the plaintiff against the defendants aforementioned, claiming Statutory Theft, Conversion, Violation of the Connecticut Unfair Trade Practices Act (CUTPA), Fraudulent Misrepresentation and Negligent Misrepresentation.   The defendants then filed a counterclaim seeking the cost of breaking down the transmission for the inspection, the cost of repair of the transmission and storage charges.   A trial of this action was held before this Court on October 26, 2010.

STANDARD OF REVIEW:

“The plaintiff in a civil case (and a defendant in a counterclaim) sustain their burden of proof as to any essential element in their cause of action if the evidence, considered fairly and impartially, induces in the mind of the trier, a reasonable belief that it is more probably than otherwise that the facts involved in that element are true.”  Busker v. United Illuminating Co., 156 Conn. 456, 458 (1968).   This is also known as proof by a preponderance of the evidence.

In addition, this Court evaluates the credibility of the witnesses upon their appearance and demeanor on the witness stand, the consistency or inconsistency of their testimony, their memory or lack thereof of certain events, whether they were candid and forthright or evasive and incomplete, their manner in responding to questions and their interest or lack of interest in the case as well as the exhibits in the case.

Also, the Court evaluates general credibility on the basis of other testimony in this case as well as documents in evidence as to their consistency or inconsistency with other evidence.

The, burden is on the plaintiff, L & V Contractors, LLC to prove its allegations by a preponderance of the evidence, and the counterclaim plaintiffs, Drive Train and Aamco have the burden of proving their allegations in their counterclaim by a preponderance of the evidence.

ISSUES AND FINDINGS:

1. Credibility:

The Court finds that Mr. Leone was credible in his testimony and in the way he conducted himself with the defendants.   In sharp contrast the Court finds that Mr. Gross was not credible for reasons which include the following:

1. He told Leone that he had sold the vehicle when in fact he had not.

2. He testified that if he had a mechanics lien it was the same thing as title to the vehicle.   He neither obtained a mechanics lien nor title to the vehicle and was never in a position to sell the vehicle.

3. He denied using the vehicle for personal use, but later admitted it.

4. He knew that he did not have authority to sell the vehicle, but threatened or warned the plaintiff that the vehicle would be sold at auction, and then lied by telling him that it had already been sold.

5. At the time that Leone offered the $2,000 deposit, Gross not only refused it but lied by saying the vehicle had been sold and then subsequently told Leone that he would waive storage charges if the transmission was repaired and Leone paid for the repairs;  yet, in his counterclaim Gross is seeking storage charges.²

6. Gross testified that not only was there no difference between being an owner and a lien holder of a vehicle but stated that if he had possession of the vehicle he could do whatever he wanted to do with it.

7. As for Mr. Corrigan, he testified his knowledge was very limited because he was a self-described “absentee owner.”   However, he also testified that ownership and the lien are one and the same thing.   It should be noted that there was an affidavit from the Department of Motor Vehicles which Gross or Corrigan was to sign in order to perfect a mechanics lien, but never did so.

8. Corrigan testified that Drive Train was not a franchisee of Aamco;  that it simply paid 7% of revenue to Aamco for use of its name and for advertising, whereas Gross testified that it was in fact a franchisee.³

9. The defendant Drive Train gave different figures as to the cost of disassembling the transmission and also gave different estimates as to the cost of repair of the transmission.

2. Is AAMCO Liable for the Actions of Drive Train?

The short answer is Yes.

There was contradictory evidence as to whether Drive Train operates as an Aamco franchise.   Accordingly, the Court does not find that Drive Train was a franchisee of Aamco.

The Court does accept plaintiff's argument that the defendant, Aamco, is vicariously liable for defendant Drive Train.  “The underlying rationale of modern doctrine of respondeat superior ․ is that every man who prefers to manage his affairs through others, remains bound to so manage them that third persons are not injured by any breach of legal duty on the part of such others while they are engaged upon his business and within the scope of their authority.”  Mitchell v. Resto, 157 Conn. 258, 262 (2000).   The Court finds as a matter of fact that Drive Train's torts occurred within the scope of Aamco's employment of Drive Train and was done to further Aamco's business.

The Court further finds that Drive Train was an agent of Aamco with the actual and apparent authority to act upon Aamco's behalf.   As to actual authority, Drive Train's agreement with Aamco was to pay 7% of revenue for advertising and other expenses and was authorized to use Aamco's name.   As a matter of fact, many of the Exhibits from Drive Train have at the heading of the document the letterhead of Aamco.   As for apparent authority, by permitting the use of Aamco's name, Aamco held Drive Train out as possessing sufficient authority to embrace the act of repairing transmissions, and, therefore, had apparent authority.   The plaintiff dealing with Drive Train must have and did have in good faith a reasonable belief that Drive Train had the necessary authority to bind Aamco to Drive Train's actions.   This conclusion is based upon the Court's evaluation of the conduct of the parties in light of all the surrounding circumstances.   It should be noted that plaintiff's Exhibits 1 through 4 are letters from Drive Train written on Aamco letterhead without identifying Drive Train anywhere on the document.   Accordingly, to the plaintiff these were letters from Aamco.

As a matter of common sense when Aamco advertises that it has a distributor in East Hartford, Connecticut that carries the Aamco name, Aamco is holding itself out to the public that if members of the public, consumers, patronize the Drive Train store with the Aamco name, the members of the public, including the plaintiff will be able to rely on the fact that this is an Aamco distributorship and carries with it the high standards that Aamco advertises.   It could also be argued that because of the 7% being paid for the use of the name and advertising, this could be a partnership between Aamco and Drive Train.

This is not unlike three attorneys, Smith, Jones and Brown putting out a shingle and using stationery in that name even though they are not a partnership but merely an association dividing expenses but not income.   However, to the public Smith, Jones and Brown holds itself out as a partnership, and, the public is, therefore, entitled to rely upon the expertise of all three attorneys just as the public is entitled to rely upon the expertise of Aamco when a member of the public does business with Drive Train with the Aamco insignia.   If one of the attorneys commits malpractice, it may well be that the other two attorneys are held liable as part of the partnership, or some noncriminal act is done by one of the attorneys that results in damages to a client, the client has a right to rely on the expertise and reputation of the three lawyers as a partnership, and the three lawyers can each be held liable as a partnership member to a client who has been represented by one of the three lawyers.   The same is true of Aamco and Drive Train.   The public, including the plaintiff, had a right to rely on the expertise and high reputation of Aamco in deciding whether or not to have the transmission repaired at Drive Train.   Accordingly, this Court holds that Aamco is as much liable for any damages for which Drive Train is liable to the plaintiff.

The Court will now address the plaintiff's revised complaint of November 30, 2009.   Count One was against Heritage Warranty Insurance Risk Retention Group which has been withdrawn.   Counts Two and Three have been “Removed.”   The Court will now address the remaining counts in order of their appearance.

3. Are the Defendants, Liable to the Plaintiff on a Claim of Statutory Theft Pursuant to C.G.S. § 52-564?

The short answer is Yes.

Connecticut General Statutes § 52-564 states in pertinent part “any person who steals any property of another, or knowingly receives and conceals stolen property, shall pay the owner.”

Statutory Theft is the same as the criminal statute for larceny under C.G.S. § 53a-119 which states in pertinent part:  “․ a person commits larceny when, with intent to deprive another of property or to appropriate the same to himself or a third person, he wrongfully takes, obtains or withholds such property from an owner ․” The first question is whether the defendants, acting through Gross, withheld the vehicle from the rightful owner, the plaintiff.   The vehicle was towed to the defendant originally to be disassembled for an examination for the warranty company.   However, the defendants withheld the vehicle from the plaintiff, the owner.   As noted above, when the plaintiff, acting through Leone, offered a bank check of $2,000 for a deposit for the repair of the transmission, Gross told him that the vehicle had been sold.   The defendants did not have a perfected mechanics lien on the vehicle nor title to the vehicle.   As a matter of fact, based upon the testimony of the defendants through Gross, the vehicle is still in the defendants' possession.   According to the evidence, the vehicle was not actually sold, but Gross admitted that he attempted to sell it, and he put the plaintiff off by telling him, untruthfully, that it had been sold.   This and other evidence mentioned above clearly shows that there was an intent to deprive the plaintiff of the vehicle.   He was deprived of the vehicle, and the Court concludes from the totality of the evidence that Gross's conduct was a scheme on the part of the defendants to sell the vehicle for a profit, and, therefore, intended to deprive the plaintiff of the vehicle it owned.   He has withheld the property from the owner, has not offered to return it and attempted to permanently deprive the owner of the vehicle.   The defendants are, therefore, liable for treble damages.⁴

4. Are the Defendants Liable to the Plaintiff for Conversion?

The short answer is Yes.

Conversion is an exercise or assumption of the right of ownership over property belonging to another to the exclusion of the owner's rights.   See Miller v. Guimaraes, 78 Conn.App. 760, 778 (2003).   Conversion in this case arose after an initial right of possession.   The vehicle was towed to the defendants' building for an examination of the transmission so the defendants had initial right of possession.   However, the vehicle was owned by the plaintiff, and as stated above Drive Train deprived the plaintiff of the vehicle for an indefinite period of time and converted it to its own use by selling it or attempting to sell it to deprive the plaintiff of the vehicle permanently.   The defendants' conduct was not authorized by the plaintiff nor did the defendants have a perfected mechanics lien or title.   Further, the conversion mirrors the elements of Statutory Theft which have been proven;  additionally to show conversion the plaintiff was required to prove that it was harmed by Drive Train's conduct.   This is obvious because the vehicle which the plaintiff still owned which was estimated at a value of $15,000 was never returned to the plaintiff and has still has not been returned to the plaintiff and is in the possession of the defendants.   The plaintiff has been harmed in the amount of the value of the vehicle.   Not only was the conduct of the defendants unauthorized by the plaintiff, it is obvious that the plaintiff never gave permission to the defendants to sell the vehicle or use it for personal use as described above.   Not only has the plaintiff been deprived of the value of the van but it has also been deprived of the use of the vehicle.

5. Are the Defendants Liable for Fraudulent Misrepresentation to the Plaintiff?

The short answer is Yes.

It is well settled law that the elements of Fraudulent Misrepresentation are as follows:

1. A false representation was made as a statement of fact.   In this case the statement to the plaintiff that the vehicle had been sold when it had not was false, and as described above there were other statements made to the plaintiff that were false.

2. The statements were untrue and known to Gross who made the statements that they were untrue;  it is obvious that the statement that the vehicle had been sold was untrue and was known to be untrue by Gross.

3. The representation was made to induce the other party to act upon it.   In this case Gross wanted Leone and the plaintiff to believe that the vehicle was no longer available to the plaintiff because it had been sold to a third party and to walk away from seeking the return of the vehicle.

4. The other party, the plaintiff, did act upon the false representation to his injury.   In this case the plaintiff did not turn over the $2,000 bank check and walked away believing that the vehicle was no longer available to him, and his injury was the loss of the vehicle estimated at a value of $15,000.   It is clear that the defendants acting through Gross committed fraudulent misrepresentation and are liable to the plaintiff for same.

6. Are the Defendants Liable to the Plaintiff for Negligent Misrepresentation?

The short answer is Yes.

The case of Barton v. City of Bristol, 291 Conn. 84, 102-03 (2009), sets forth the elements of proof for the defendants to be liable for Negligent Misrepresentation;  namely, that the defendants supplied false information which in this case as stated above did falsely say to the plaintiff that the vehicle had been sold.   Also, it was for the guidance of others in their business transactions.   As stated above on the issue of Fraudulent Misrepresentation it was to induce the plaintiff to leave and consider that he could not, short of a lawsuit, get his vehicle returned.   Basically, if someone is liable for Fraudulent Misrepresentation, then they are clearly liable for Negligent Misrepresentation.   In this case the defendants are liable to the plaintiff for Negligent Misrepresentation.

7. Did the Defendants Violate the Connecticut Unfair Trade Practices Act (“CUTPA”)?

The short answer is yes.

It is well settled law that under the CUTPA statutes the elements of proof are that (1) In the conduct of any trade or commerce entities such as the defendants use unfair or deceptive acts thereby causing the other party to suffer an ascertainable loss.  (2) It is also well settled law that a practice is unfair under CUTPA if it offends public policy as it has been established by statutes, common law or otherwise or is immoral, unethical, oppressive or unscrupulous and causes substantial injury to consumers.

Having found the defendants liable for statutory theft and fraudulent misrepresentation it is clear that both the theft which is defined by statute and the fraudulent misrepresentation which is defined by common law clearly offend public policy.   There is a public policy as evidenced by statute not to commit theft, and it is public policy as established by common law that an entity is not to make fraudulent misrepresentations.

Further, to commit Statutory Theft and to lie as Gross did to Leone saying that the vehicle had been sold when in fact it had not thereby attempting to and eventually depriving the plaintiff of its vehicle is not only unethical and oppressive but unscrupulous.   Finally, it caused substantial injury to the plaintiff in the loss of use of its vehicle and loss of the value of the vehicle.   It is a practice that applies to that consumer as well as others and the loss of the vehicle estimated at a $15,000 value is an ascertainable loss.   In sum, by clear and convincing evidence, the Court finds that the defendant violated CUTPA.

8. Plaintiff's Damages.

It is also well settled law that the plaintiff through Mr. Leone is qualified to testify as to the fair market value of its vehicle.   Leone estimated that the vehicle's fair market value at the time it was turned over to the defendant was $15,000, a drop of $10,000 from its original purchase price of $25,000 a little less that four years earlier.   The Court finds by the totality of the evidence that the defendants are liable as follows under the claims of the plaintiff:

1. Statutory Theft.   Under this statute the defendants are liable for treble damages.   The original damage is the loss of the $15,000 vehicle, which tripled is $45,000 for which the defendants are liable to the plaintiff, and judgment may enter in that amount against both defendants.

2. Conversion. The defendants are liable to the plaintiff for the loss of the vehicle in the amount of $15,000, and judgment is entered against both defendants for that amount.

3. Fraudulent Misrepresentation.   The defendants are liable to the plaintiff in the amount of $15,000 for the value of the vehicle plus attorneys fees and punitive damages for fraudulent misrepresentation.   The punitive damages are $10,000.   The attorneys fees will be mentioned shortly.   Judgment is entered against both defendants for $25,000 plus attorneys fees.

4. Negligent Misrepresentation.   The defendants are liable for negligent misrepresentation and damages of $15,000 for the loss of the vehicle and judgment is entered for the plaintiff against both defendants in that amount.

5. CUTPA. The defendants are liable to the plaintiff in the amount of $15,000 for the value of the vehicle plus punitive damages of $10,000 and attorneys fees to be assessed hereafter, and judgment is entered against both defendants for $25,000 plus attorneys fees.

Accordingly, judgment is entered as follows against the defendants in favor of the plaintiff:

Count Four, Statutory Theft-$45,000.

Count Five, Conversion-$15,000.

Count Six, CUTPA-$15,000 plus $10,000 in punitive damages for a total of $25,000 plus attorneys fees.

Count Seven, Fraudulent Misrepresentation-$15,000 plus punitive damages of $10,000 plus attorneys fees.

Count Eight, Negligent Misrepresentation-$15,000.

The total judgment against both defendants is $45,000 plus punitive damages of $10,000 for a total of $55,000, plus attorneys fees.

Interest for wrongfully withholding what was due the plaintiff under C.G.S. § 37-3a is at 10% per annum on $15,000 from June 2008 to December 1, 2010 in the amount of $4,625.

Accordingly, judgment is entered against the defendants and in favor of the plaintiff as set forth above for $55,000 plus $4,625 for a total of $59,625, plus attorneys fees.

Attorneys fees will be assessed upon a motion for attorneys fees filed by the plaintiff setting forth an affidavit of same within 30 days of this judgment and a hearing to be held thereon unless the defendant waives said hearing.

Counterclaim:

The Court finds for the defendants (counterclaim plaintiffs) on the counterclaim as follows:

1. Plaintiff received a credit of $2,500 in settlement with the warranty company for which it cannot take advantage of twice.

2. The cost of repair of the transmission in the amount of $2,634.20 because the $15,000 evaluation by the plaintiff would presumably have been with a working transmission.

3. Three hundred fifty dollars for dissembling the transmission for inspection by the warranty company.

4. The counterclaim plaintiffs are not entitled to storage charges for the reasons specified above and for the fact that even Mr. Corrigan testified that the storage charges should not be commenced until after a vehicle has been abandoned, and the Court finds that there was no abandonment of the vehicle.   It should also be noted that when an affidavit of compliance was to be sent to the Motor Vehicle Department the defendants checked off Artificer's Lien on the form as to what they allegedly have and did not fill in the one that says Abandoned Motor Vehicle.   See transcript page 36, lines 6-18.

Accordingly, judgment may enter for said defendants on the counterclaim in the total amount of $5,484.23.

Costs are assessed in favor of the plaintiff only against the defendants in the total amount of $302.79.

Rittenband, JTR

FOOTNOTES

FN1. Suit was originally brought against Heritage Warranty Insurance Risk Retention Group in this suit as well as against the other defendants mentioned, but during the course of this action, the plaintiff settled its claim against Heritage Warranty Insurance Risk Retention Group for $25,000, and the plaintiff withdrew its claim against said defendant.   The plaintiff's manager, Alejandro Leone (hereinafter also “Leone”), advised Drive Train that he wanted to continue negotiating with the warranty company because he believed that he had coverage for the repair of the transmission..  FN1. Suit was originally brought against Heritage Warranty Insurance Risk Retention Group in this suit as well as against the other defendants mentioned, but during the course of this action, the plaintiff settled its claim against Heritage Warranty Insurance Risk Retention Group for $25,000, and the plaintiff withdrew its claim against said defendant.   The plaintiff's manager, Alejandro Leone (hereinafter also “Leone”), advised Drive Train that he wanted to continue negotiating with the warranty company because he believed that he had coverage for the repair of the transmission.

FN2. There was a letter dated January 21, 2008, plaintiff's Exhibit 1, advising the plaintiff that a storage charge of $25 a day would be assessed if Drive Train did not hear from the plaintiff within 10 days.   However, Leone explained that he was still negotiating with the warranty company to have the warranty company pay for the repairs, which it turned out was successful, and subsequently Gross agreed to waive the storage charges if the plaintiff would proceed with having the repairs done.Through no fault of the plaintiff, Leone did not pay for the repairs because even though he offered a $2,000 down payment, Gross first told him that he would let him know what the cost was when the defendants had completed the repairs, and then at the time of the proffering of the $2,000 bank check, Gross told Leone that the car had already been sold.   Accordingly, Gross made a conditional promise of waiving the storage charges on a condition that Leone was to pay for the repairs but the paying of the repairs was impossible since Gross told him that the car had been sold which, of course, was also untrue..  FN2. There was a letter dated January 21, 2008, plaintiff's Exhibit 1, advising the plaintiff that a storage charge of $25 a day would be assessed if Drive Train did not hear from the plaintiff within 10 days.   However, Leone explained that he was still negotiating with the warranty company to have the warranty company pay for the repairs, which it turned out was successful, and subsequently Gross agreed to waive the storage charges if the plaintiff would proceed with having the repairs done.Through no fault of the plaintiff, Leone did not pay for the repairs because even though he offered a $2,000 down payment, Gross first told him that he would let him know what the cost was when the defendants had completed the repairs, and then at the time of the proffering of the $2,000 bank check, Gross told Leone that the car had already been sold.   Accordingly, Gross made a conditional promise of waiving the storage charges on a condition that Leone was to pay for the repairs but the paying of the repairs was impossible since Gross told him that the car had been sold which, of course, was also untrue.

FN3. There are several other instances where on capable cross examination by Attorney Jonathon Cantor questions were asked and answers solicited from witnesses for the defendants which were then revealed as contrary to the answers the witnesses gave in depositions..  FN3. There are several other instances where on capable cross examination by Attorney Jonathon Cantor questions were asked and answers solicited from witnesses for the defendants which were then revealed as contrary to the answers the witnesses gave in depositions.

FN4. Plaintiff's Exhibit Six is a letter from the defendants to the plaintiff stating that “L & V Contractor's van (thereby admitting it was still owned by the plaintiff) has not been sold as the deal fell through ․” Further, as noted above, Gross admitted that he never had title to or a perfected mechanics lien to the vehicle..  FN4. Plaintiff's Exhibit Six is a letter from the defendants to the plaintiff stating that “L & V Contractor's van (thereby admitting it was still owned by the plaintiff) has not been sold as the deal fell through ․” Further, as noted above, Gross admitted that he never had title to or a perfected mechanics lien to the vehicle.

Rittenband, Richard M., J.T.R.