Alarmax Distributors, Inc. v. New Canaan Alarm Co., Inc. (2011)

MEMORANDUM OF DECISION RE PLAINTIFF'S AND DEFENDANT'S MOTIONS FOR SUMMARY JUDGMENT (160.00, 162.00)

I. Background

Before the court are two well-briefed and well-argued motions for summary judgment arising out of the plaintiff Alarmax Distributors Inc.'s (Alarmax) lawsuit seeking payment for the sale of certain alarm and security equipment to the defendant New Canaan Alarm Company, Inc. (NCA).  In a six-count complaint Alarmax sues for over $100,000.00 in principal plus “contract charges” and interest which are claimed to amount to at least another $150,000.00.   After withdrawal of two counts during the briefing process, Alarmax seeks summary judgment on claims of breach of contract, account stated and unjust enrichment.   For its part, NCA seeks summary judgment dismissing all the remaining counts, including Alarmax's claim under the Connecticut Unfair Trade Practices Act, General Statutes §§ 42-110a et seq.  (CUTPA).

The main line of defense for NCA is its argument that the Alarmax suit is barred by the statute of limitations.   Alarmax contends that the applicable limitations period had not expired before it commenced this action, and in any event, any limitations period has been tolled or is otherwise not applicable.

II. Scope of Review

Practice Book § 17-49 provides that 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.  “In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.”  Appleton v. Board of Education, 254 Conn. 205, 209 (2000).   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 (1985).  “The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to judgment as a matter of law.”  Appleton v. Board of Education, supra, 254 Conn. 209.  “A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case.”  (Internal quotation marks omitted.)   United Oil Co. v. Urban Development Commission, 158 Conn. 364, 379 (1969).   The trial court, in the context of summary judgment motion, may not decide issues of material fact, but only determine whether such genuine issues exist.  Nolan v. Borkowski, 206 Conn. 495, 500 (1988).

“Although the party seeking summary judgment has the burden of showing the nonexistence of any material fact [question] ․ a party opposing summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact together with the evidence disclosing the existence of such an issue.   It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue.”  Maffucci v. Royal Park Ltd. Partnership, 243 Conn. 552, 554 (1998).  “[T]he party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact.”  Appleton v. Board of Education, supra, 254 Conn. 209.

III. Facts

The following appear to be undisputed facts.   NCA ordered goods from Alarmax which were delivered and received beginning as early as 2000.   NCA made application for credit from Alarmax in 1999.   There is no signed credit application in the record;  however, there appears to be no dispute that the payment terms were stated as follows:

In consideration of your supplying product on open account credit terms, it is understood this account is to be paid in full on terms of net 30 days FOB shipping point.

In the latter part of 2005, NCA's bookkeeper was charged with embezzling over $615,000.00 and later imprisoned.   The loss of this money had an adverse effect on NCA's ability to meet payroll and pay suppliers.   According to Alarmax's aging accounts receivable report, which is attached to the amended complaint and both sets of moving papers, the last sale of equipment and parts by Alarmax to NCA took place on May 9, 2005, and the amount shown as due and owing, including some finance charges, is $109,994.55.   The report also shows that NCA made payments to Alarmax through 2006 with the last payment on February 14, 2006.   Alarmax commenced this lawsuit on September 15, 2009.

IV. Discussion

A. Breach of Contract.   The applicable statute of limitations for breach of contract for the sale of goods is found in General Statutes § 42a-2-724 which states “(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued ․ (2) A cause of action accrues when the breach occurs.   Regardless of the aggrieved party's lack of knowledge of the breach.”   NCA contends that the last goods sold by Alarmax to NCA took place on May 9, 2005 with payment due thirty days thereafter, more than four years before this action was commenced.

Alarmax terms the statute of limitations defense “frivolous,” and argues that there are several reasons why the breach of contract claim is not barred.   First, Alarmax says the NCA account was an “open account as opposed to an invoice by invoice account,” and the course of dealings between Alarmax and NCA was a series of lump sum payments.   Since these payments did not stop until February 14, 2006, the breach did not occur until then, less than four years before suit was commenced.   While the record shows that NCA did not pay invoice by invoice, but rather made periodic payments in round numbers (e.g.$5,000.00, $10,000.00) the language of the purported credit agreement and invoices stated that payment was due in thirty days.   This court determines that it is at least a mixed question of law and unresolved facts as to when the alleged breach of contract occurred.   The credit agreement language is evidence that the breach occurred after payment was not forthcoming within thirty days after delivery.   The conduct of the parties may be evidence that a breach did not occur until later.

Alarmax also asserts that NCA's failure to respond to a demand letter sent on November 16, 2005 and that the payments made by NCA as late as February 14, 2006 toll the running of the applicable limitations period until that date.   In Gianetti v. United Healthcare, 99 Conn.App. 136, 144 (2007), the Appellate Court highlighted the following language from Cadle v. Errato, 71 Conn.App. 447, cert. denied, 262 Conn. 918 (2002):

Whether partial payment constitutes unequivocal acknowledgment of the whole debt from which an unconditional promise to pay can be implied thereby tolling the statute of limitations is a question for the trier of fact ․

That is the law in Connecticut, and it precludes granting summary judgment on the basis of NCA's payments in late 2005 and early 2006.   See Zapolsky v. Sacks, 191 Conn. 194, 198 (1983).   The failure to respond at all to Alarmax's demand letter of November 15 is not, as a matter of law, a general acknowledgment of the alleged debt, and the holding of the authority cited by Alarmax, Potter v. Prudential Insurance Co., 108 Conn. 271, 281 (1928), does not say otherwise.

Alarmax also contends that the deposition testimony of Paul Chludzinski, the principal officer of NCA given in 2010 was an unequivocal acknowledgment of the debt owed to Alarmax.   The relevant deposition testimony of Mr. Chludzinski was as follows:

BY MR. GOSTYLA:  [plaintiff's attorney]

Q. Is it your claim, sir, that New Canaan Alarm Company does, in fact, owe this $112,000 debt on a stated account to Alarmax, but that the statute of limitations has expired?

MR. SPIRER [defendant's attorney]:  Objection to the form of the question.   You can answer it, if you understand the question.

THE WITNESS [Mr. Chlundinski]:  I don't understand the question.

MR. GOSTYLA:

Q. Does-is it your testimony that New Canaan Alarm Company owes a $112,00 debt to Alarmax?

A. Yes.

Q. They do owe it?

A. Yes.”

Chludzinski Deposition, 11-12.   This testimony does not arise to a general acknowledgment of indebtedness sufficient to render the statute of limitations inapplicable.

“A general acknowledgment of an indebtedness may be sufficient to remove the bar of the statute.   The governing principle is this:  the determination of whether a sufficient acknowledgment has been made depends upon proof that the defendant has by a express or implied recognition of the debt voluntarily renounced the protection of the statute ․ But an implication of a promise to pay cannot arise if it appears that although the debt was directly acknowledged, this acknowledgment was accompanied by expressions which showed that the defendant did not intend to pay it, and did not intend to deprive himself of the right to rely on the Statute of Limitations.

JSA Financial Corp. v. Quality Kitchen Corp., 113 Conn.App. 52, 56 (2009).   In this case the initial question posed to Mr. Chludzinski asked, in part, whether NCA was relying on the statute of limitations.   That question was never answered.   The later question did not make reference to the statute of limitations, and when answered affirmatively has to be viewed in light of the known fact that NCA had already availed itself of its right to invoke the statute by raising the issue in a special defense.

Alarmax also contends that a request by Chludinski to his major contact at Alarmax, Doug Kinney, for Alarmax to give him some breathing room while NCA recovered from the effect of the embezzlement was sufficient to toll the statute of limitations.   The plaintiff cites Cadle v. Errato, 71 Conn.App. 447 (2002), as authority for the proposition that a request for forbearance tolls the statute of limitations as a matter of law.  Errato does not provide that authority.   At best from Alarmax's point of view, the case stands for the proposition that a request for forbearance may be a general acknowledgment of the debt and whether it is, is a question of fact.  Id. 461-62.

For the reasons stated above, unresolved fact questions preclude the granting of either party's motion for summary judgment on the breach of contract claim.

B. Account Stated.   Alarmax contends that it is entitled to summary judgment on the second count of its complaint-account stated.   It correctly points out that Connecticut law recognizes such a cause of action.  General Petroleum, Inc. v. Merchants Trust Co., 115 Conn. 50, 56 (1932);  Citibank (South Dakota) v. Manger, 105 Conn.App. 764 (2008);  Credit One, LLC v. Head, 117 Conn.App. 92 (2009).   Generally, however, cases upholding the validity of an account stated claim involve the regular rendition of statements by the plaintiff.   See e.g. Credit One, LLC v. Head, supra, 117 Conn.App. 95 (six monthly billing statements);  Citibank (South Dakota) v. Manger, supra, 105 Conn.App. 765 (monthly statements).   In this case, the record reflects only one statement sent to NCA, with the November 16, 2005 demand letter, and therefore a fact question remains unresolved as to whether Alarmax can prove an account stated claim.¹

Alarmax argues that the statute of limitations for account stated is six years pursuant to General Statutes § 52-576(a).   NCA argues that the appropriate limitation period, four years, is established by General Statutes § 42a-2-725 because Section 52-576(c) makes Section 576 inapplicable to actions brought under Article 2 of Title 42a.   The court finds that NCA has the better of this argument, but it is not determinative of any part of the pending motions because of the unresolved fact questions as to whether the claim is an account stated and when the breach occurred.

C. Unjust Enrichment.   Alarmax contends it has met its burden of proving an unjust enrichment claim.   The elements of such a claim are well recognized:  (1) the defendant was benefitted;  (2) the defendant unjustly did not pay for the benefit;  and (3) the failure of payment was to the plaintiff's detriment.  Rossman v. Morasco, 115 Conn.App. 234, 248 (2009).   Assuming for the moment that the required elements have been established Alarmax asserts that it is entitled to a remedy even though the statute of limitations has expired, citing Dunham v. Dunham, 204 Conn. 303, 326 (1987), overruled in part on other grounds by Santopietro v. New Haven, 239 Conn. 207, 212 n.8 (1996).   In Dunham the Connecticut Supreme Court stated:

․ in an equitable proceeding a court may provide a remedy even though the governing statute of limitations has expired ․ Although courts in equitable proceedings often look by analogy to the statute of limitations to determine whether, in the interests of justice, a particular action should be heard, they are by no means obliged to adhere to these time limitations.

Id., 326-27 (citations omitted).   However, in Gager v. Sanger, 95 Conn.App. 632 (2006), the Appellate Court made clear there is no rule that a court cannot apply an analogous statute of limitations to an equitable claim and went on to say where both a legal claim and equitable claim arise from the same basic facts, the limitations period applicable to the legal claim also applied to bar the equitable claim.”  Id. 641-42, In this case the court determines that the four-year limitations should apply and therefore the same fact questions described above remain unresolved.

In further support of this determination, as NCA points out, courts are reluctant to allow any party in a purchase and sale of goods transaction to employ different causes of action to avoid the effect of the four-year statute of limitations set out in the Uniform Commercial Code. See F.F. Hitchcock Co., Inc. v. Herrmidifier Co., Inc., Superior Court, judicial district of New Haven, CV 04 0427250(sic) (June 18, 2001, Licari, J.);  Wuhu v. Capstone, 39 A.D.3d 314, 834 N.Y.S.2d 129 (1st Dept.2007).

D. Connecticut Unfair Trade Practice Act. The statute of limitations for a claim brought under CUTPA is three years.  General Statutes § 42-110g(f).  NCA has moved for summary judgment dismissing Alarmax's CUTPA claim on the grounds that (1) the provisions of CUTPA do not apply to a “simple” breach of contract, and (2) the claim is barred by the statute limitations.   While Alarmax has not explicitly withdrawn its CUTPA claim, its December 2, 2010 memorandum of law opposing the NCA motion for summary judgment does not address NCA's arguments directed at Count VI (CUTPA).   Because of the lack of opposition, and it appearing that the three-year limitation period bars the CUTPA claim, Count VI is dismissed.

V. Conclusion

NCA's motion for summary judgment is granted, and Alarmax's CUTPA count is dismissed.

In all other respects, the parties' summary judgment motions are denied.

TAGGART D. ADAMS

SUPERIOR COURT JUDGE

FOOTNOTES

FN1. In its memorandum Alarmax states that it sent monthly statements to NCA after December 2005, but these are not before the court..  FN1. In its memorandum Alarmax states that it sent monthly statements to NCA after December 2005, but these are not before the court.

Adams, Taggart D., J.