LLC v. LP (2011)

MEMORANDUM OF DECISION ON MOTION FOR RECONSIDERATION

A court side trial was held in this matter beginning on August 18, 2010, through August 24, 2010.   Post-trial briefs were filed on September 10, 2010, October 12, 2010 and October 15, 2010.   A written Memorandum of Decision was entered on December 15, 2010, which entered judgment in defendants' favor on multiple grounds.   On January 3, 2011, the plaintiff filed a Motion for Reconsideration on eight separate grounds.   On January 4, 2011, the plaintiff filed a supplemental Motion for Reconsideration on one additional ground.   On February 11, 2011 the defendants filed a memorandum in opposition to the plaintiff's motion for reconsideration.   On March 14, 2011, oral argument was held on the motions.

The plaintiff's arguments in its first motion for reconsideration are based on eight grounds:  (1) the plaintiff requested that the court reconsider its method of assessing damages on the defendants' counterclaim.   The plaintiff claimed that the court failed to credit the unpaid balance of the construction contract against the costs of completion as found by the court;  (2) that the court reconsider its damage award as to the defendants' claim as to the issue of delay in the completion of work under the contract;  (3) that the court reconsider its reduction of the amount secured by the mechanic's lien;  (4) that the court reconsider its finding that the defendants made direct payments for cabinets and granite in the amount of $12,278.00;  (5) that the court reconsider its methodology for computing the amount secured by the mechanic's lien;  (6) that the court reconsider the amounts allowed for estimated cost of repair;  (7) that the remedial work proposed by the defendants' expert to relocate toilets, to remove and reinstall kitchen cabinets, replace tile in the kitchen removed by the defendants, to install a second foundation drainage systems each involve substantial disturbance of the structure and economic waste;  and (8) that the court reconsider its judgment on the counterclaim on the grounds the court found facts not averred in the counterclaim.   On January 4, 2011, the plaintiff filed an additional motion for reconsideration and asserted the argument that since the defendant failed to assert the defense of setoff, the court could not make any credits or adjustments to the mechanic's lien amounts that were due to the plaintiff.

I

DISCUSSION

“[T]he purpose of a reargument is ․ to demonstrate to the court that there is some decision or some principle of law which would have a controlling effect, and which has been overlooked, or that there has been a misapprehension of facts ․ It also may be used to address alleged inconsistencies in the trial court's memorandum of decision as well as claims of law that the [movant] claimed were not addressed by the court ․ [A] motion to reargue [however] is not to be used as an opportunity to have a second bite of the apple or to present additional cases or briefs which could have been presented at the time of the original argument.”  (Citations omitted;  internal quotation marks omitted.)  Opoku v. Grant, 63 Conn.App. 686, 692–93, 778 A.2d 981 (2001).   “Newly discovered evidence may warrant reconsideration of a court's decision.   However, [for evidence to be newly discovered, it must be of such a nature that [it] could not have been earlier discovered by the exercise of due diligence.”  (Internal quotation marks omitted.)  Durkin Village Plainville, LLC v. Cunningham, 97 Conn.App. 640, 656, 905 A.2d 1256 (2006).

The court will address each of the grounds cited by the plaintiff in its motion to reargue and for reconsideration.   The first ground raised by the plaintiff is that the court reconsider its method of assessing damages on the defendants' counterclaim.   The plaintiff contends that the court failed to credit the unpaid balance of the construction contract against the costs of completion as found by the court.   The flaw in the plaintiff's request is that its breach of construction contract claim and any monies due to it under the construction contract were withdrawn from this action and monies due were discharged in bankruptcy.   Since there was no balance due under the construction contract between the parties, there was no unpaid balance of the construction contract against which the court should credit the costs of completion.   In addition, the Hees v. Burke Construction, Inc., 290 Conn. 1, 961 A.2d 373 (2009) case relied upon by the plaintiff is a breach of contract case, not a mechanic's lien foreclosure case, and the methodology of damage calculation used in that case pertained to the claimed breach of contract.   As such it is inapposite to the issues before the court.   Based on the foregoing, the plaintiff's first request for reconsideration is denied.

The second ground raised by the plaintiff is that the court reconsider its damage award of $10,000 as to the defendant's claim as to delay in the completion of work under the contract.   The court awarded $10,000 as result of the plaintiff's violation of General Statutes § 20–417c.   In support of its argument, the plaintiff raises many of the same arguments raised at trial and in its posttrial briefs, including the argument that the defendants contributed to the delays in construction.   Based on the evidence and testimony presented at trial which showed the plaintiff was at fault in the delay and the ascertainable losses by the defendants as a result of the delay in construction, this court disagrees with the plaintiff's position.   For purposes of clarification the court's award of $10,000 in damages as against the plaintiff for the violation of § 20–417c was based upon the ascertainable losses suffered by the defendants in connection with the delay of the construction of the house.   These damages included, but were not limited to, construction loan interest and fees incurred by the defendants after October 19, 2007, not reimbursed by the plaintiff, and the construction loan extension fee paid by the defendants that was not reimbursed by the plaintiff.   Based on the foregoing, the plaintiff's second request for reconsideration is denied.

The third ground for reconsideration raised by the plaintiff is that the court reconsider its reduction of the amount secured by the mechanic's lien.   The plaintiff argues that the court should follow its methodology for assessing payments by the defendants and credits to the defendants instead of the methodology used by the court.  (Pl.'s Mem. 6, January 3, 2011.)   The methodology suggested in its motion for reconsideration is the same methodology suggested in Plaintiff's September 10, 2010, posttrial brief, which the court rejected.  (Pl.'s Posttrial Mem. 24, September 10, 2010.)   The court has also reviewed the plaintiff's claim that the court duplicated its reduction of the amount of the lien by $10,771.75.   Based on its review of the records, the court rejects this argument.   Based on the foregoing, the plaintiff's motion for reconsideration on this ground is denied.

The fourth ground for reconsideration raised by the plaintiff is that the court reconsider its finding that the “Negrons made direct payments for cabinets and granite in the amount of $12,278 ․ and in fact a check was cut by Owner Builder Loan Services to the Negrons for this reimbursement.”  (Mem. of Decision 22.)   The plaintiff claims that there was no evidence in the record to support this adjustment or fact found by the court.   In fact, there was ample evidence for this finding of fact.  (Trial Exs. 19 & 40.)   The plaintiff itself on cross examination of the defendant Alberto Negron, put in front of him responses to Requests for Admission, in particular Request for Admission Number 24, which set forth in relevant part that “on September 4, 2007, Owner Builder Loan Service, d/b/a Home Builder Finance, disbursed the sum of $12,278 to Alberto Negron for reimbursement of expenses incurred for kitchen cabinetry and countertops.”  (Trial Ex. 19;  Trial Tr. 149, August 20, 2010.)   Plaintiff's counsel's inquiry into this subject matter was essentially limited to confirming that the defendant admitted this fact.  Id. The court also had ample evidence from the loan construction documents and checks to support this fact.  (See Trial Ex. 18 pp. 158, 166.)   Based on the foregoing, the plaintiff's motion for reconsideration on this ground is denied.

The fifth ground for reconsideration cited by the plaintiff is that the court reconsider its methodology for computing the amount secured by the mechanic's lien.   The legal arguments made by the plaintiff regarding the computation of this amount are similar to the arguments made at trial and in its post-trial briefs, which the court rejected.   The plaintiff further argues that the defendants have been unjustly enriched by the court's December 15, 2010, decision and received a windfall.

Even assuming the plaintiff's unjust enrichment or windfall argument has merit, of the $299,000 contract price the plaintiff alleges was due, the defendants made payments to the plaintiff of $221,777 and the balance due was discharged in bankruptcy.   Second, the record at trial was clear that the house built by the plaintiff was replete with defects and there was no evidence to support plaintiff's claim that the defendants received any benefit which they did not pay for.   The court made findings that the costs necessary to finish and repair the premises constructed by the plaintiff was $33,795.   The court also made findings as to the value of services rendered and materials furnished by the plaintiff based on the construction budget signed by the plaintiff's principal Ed Thomas.

Third, the court does not find that the plaintiff substantially performed and completed the construction of the house.¹  Thus, even if the balance due under the contract was not discharged in bankruptcy, the plaintiff would not have been entitled to the balance of the contract.   Moreover, after a review of the construction budget this court finds that the balance of the contract which the plaintiff contends the court should have considered is its profit on this construction and not the value of services rendered and material furnished.   The plaintiff is not entitled to this amount.   See Dreambuilders Construction, Inc. v. Diamond, 121 Conn.App. 554, 562, 997 A.2d 553 (2010) (affirming trial court's finding that the amount of the mechanic's lien was for the value of the services rendered and material furnished and not based on the builder's expectation of profit or other contractual measure of damages);  Intercity Development, LLC v. Andrade, 286 Conn. 177, 184–85, 942 A.2d 1028 (2008) (the mechanic's lien statute was not intended to provide a security interest for a builder's expectation of profit or other contract measure of damages).   See also Brin v. Mesite, 89 Conn. 107, 110, 93 A. 4 (1915).

As the court found in its previous decision, the defendants paid for a brand new house and instead received a house replete with numerous serious defects which was a travesty.   The video of the house built by the plaintiff admitted at trial speaks volumes as to the current serious defects present at the house.  (Trial Ex. CC.) There is no factual basis for the court to find that the defendants were unjustly enriched by its decision in defendants' favor and the court rejects the plaintiff's contention that its decision put the defendants in a windfall position.   The plaintiff's motion for reconsideration on these grounds is denied.

With respect to plaintiff's argument that the court should reconsider plumbing expenditures outside the time period of the lien, this argument is once again rejected.   The plaintiff with the assistance of counsel prepared and filed its mechanic's lien and set the time parameters for which it was claiming monies for services rendered and materials furnished were due.   Plaintiff claims its commencement date for its mechanic's lien of July 1, 2007 is an erroneous commencement date.   The plaintiff's argument is not credible based on the evidence and testimony presented at trial and it is rejected.   Plaintiff's motion for reconsideration on this ground is denied.

The plaintiff's remaining claims on the fifth ground regarding the analysis done by the court to determine the value of services and materials owed are also unavailing.   The court did an extensive analysis of the amounts due to the plaintiff under its mechanic's lien and the plaintiff has raised no persuasive argument that the methodology used by the court was erroneous.   Based on the foregoing, the plaintiff's motion for reconsideration is denied.

The sixth ground raised by the plaintiff for reconsideration is that the court reconsider the amounts allowed for estimated cost of repair.   Once again, the arguments raised by the plaintiff are no different than the arguments raised in its posttrial briefs and as such are rejected.   As to the specific claims of erroneous and duplicative allocation of damages, the court rejects the argument that the drainage system proposed to be installed will result in an enhanced drainage system above and beyond that which was contracted for and already in existence.   The fundamental flaw with the plaintiff's argument is that the evidence and testimony presented at trial clearly showed that the plaintiff did not properly install a drainage system and left the property in such ruin and disrepair that the drainage work proposed was necessary.   Thus, the plaintiff's arguments that the court reconsider its calculation of damages with respect to the drainage system is denied.

Moreover, there was additional evidence presented at trial that provided a sufficient basis for each of the costs of repair allocated by the court and the plaintiff's motion for reconsideration is denied as to each of those expenses, with the exception of the $1,900 expense relating to fill, grass seed and water.   With respect to the plaintiff's argument that $1,900 of expenses relating to fill, grass seed and water were duplicated and credited twice to the defendant, the court agrees.   The court finds there is a good and compelling reason for the modification of this $1,900 amount from the $25,234.73 in credits and adjustments to the mechanic's lien amount and to the $25,234.73 judgment entered by the court in defendant's favor for plaintiff's violation of § 20–417c(6).   Accordingly, the court orders that the $25,234.73 damages judgment entered in defendants' favor on December 15, 2010, be opened and reduced by $1,900 to $23,234.73 and the $25,234.73 credits and adjustments amount found by the court to the mechanic's lien be modified as well by $1,900 to $23,234.73.

The seventh ground raised by the plaintiff for reconsideration is that the remedial work proposed by the expert to relocate toilets, to remove and reinstall kitchen cabinets, replace tile in the kitchen removed by the defendant, to install a second foundation drainage system each involve substantial disturbance of the structure and economic waste.   The arguments raised by the plaintiff in its motion for reconsideration were all raised by the plaintiff at trial and rejected by the court.   At trial the court found the defendant's expert, with forty years of experience in the construction industry, to be credible, and accepted his testimony with respect to the work that needed to be done to address the many issues in the house and the costs to do that work.   The court did not accept, nor find as credible, the plaintiff's expert testimony, a real estate appraiser, or any other evidence offered by the plaintiff on this subject matter.   Notwithstanding this fact, in this motion for reconsideration the plaintiff once again argues the court should accept his expert's opinion and other evidence offered at trial.   The plaintiff's argument that the work proposed to be done will result in substantial economic waste is completely devoid of merit and in direct conflict with the body of evidence presented at trial.   There is simply no credible evidentiary basis to support the plaintiff's argument that work proposed by the defendant's expert will involve substantial economic waste.   Based on the foregoing, the plaintiff's motion for reconsideration on this ground is denied.

The eighth ground that the plaintiff raises for reconsideration is that the court reconsider its judgment on the counterclaim as the court found facts not averred in the counterclaim.   In ruling on the defendant's sole counterclaim the court had before it facts that were pleaded that it found relevant to and supportive of its findings that the defendant engaged in unfair or deceptive business practices.   These included claims that:  (1) the plaintiff “mislead the defendants by indicating he was an experienced new home builder who would complete his contract in a workmanlike manner;  (2) built the new home in a negligent and unskillful manner;  (3) failed to timely complete construction of the home and (4) failed to remedy violations of the building code.”   All of these allegations pertained to the defendants' claim that the plaintiff violated General Statutes § 20–417c.

“To set aside a judgment on the basis of a variance between the pleadings and the proof, the variance must be material in a way which is essential to the cause of action claimed ․ Under our practice, an immaterial variance is disregarded ․ A variance is material if the plaintiff was prejudiced in countering a special defense, surprised by the defendant's proof or mislead by the allegations in the special defense.”  Boccanfuso v. Connor, 89 Conn.App. 260, 287, 873 A.2d 208, cert. denied, 275 Conn. 905, 882 A.2d 668 (2005).

The court took all of the allegations in the sole counterclaim into consideration in determining whether the plaintiff engaged in unfair and deceptive trade practices under General Statutes § 20–417c(6).²  The plaintiff does not argue in its motion for reconsideration that it was surprised or mislead by the foregoing allegations in the defendants' counterclaim and in fact at trial the plaintiff defended against these very allegations.   Since facts were alleged in the counterclaim from which the court could make the findings of fact that supported its ultimate conclusion, the plaintiff's motion for reconsideration on this ground is denied.

The ninth ground on which the plaintiff moves for reconsideration is that it alleges the defendant did not plead the special defense of setoff, therefore it was error for the court to make any credits or adjustments to the mechanic's lien amounts that were due to the plaintiff.   The motion for reconsideration on this ground is denied for the following reasons.

First, while the general rule is that in order to have the benefit of a right of setoff, a defendant must affirmatively raise his claim in the pleadings, the Appellate Court has upheld the trial court's decision of setting off the amount in an equitable unjust enrichment claim where setoff was not specifically pleaded.  Waterview Site Services, Inc. v. Pay Day, Inc., 125 Conn.App. 561, 511 A.2d 692 (2010) (defendant failed to plead setoff and appellate court found it was within the province of the trial court, in balancing equities, on an equitable claim to subtract the fair rental value of the property from the total amount to establish a net award).  “Equitable remedies are not bound by formula, but are molded to the needs of justice ․” Waterview Site Services, Inc. v. Pay Day, Inc., supra, 125 Conn.App. 569.  “Because foreclosure is peculiarly an equitable action ․ the court may entertain such questions as are necessary to be determined in order that complete justice may be done.”  (Internal quotation marks omitted.)  New Milford Savings Bank v. Jajer, 244 Conn. 251, 256, 708 A.2d 1378 (1998).  “In an equitable proceeding, the trial court may examine all relevant factors to ensure that complete justice is done ․ The determination of what equity requires in a particular case, the balancing of equities, is a matter for the discretion of the trial court.”  (Internal quotation marks omitted.)  Citicorp Mortgage, Inc. v. Burgos, 227 Conn. 116, 120, 629 A.2d 410 (1993).   Applying these principles to the case at hand, the court finds that it was within its discretion, even if the defendants did not plead setoff, to subtract from the mechanic's lien amount due the defendants' costs of repair and completion.

Second, the court examined whether the plaintiff was claiming surprise, prejudice or being mislead by the alleged omission of this special defense.   Upon review of the plaintiff's motion for reconsideration the court finds the plaintiff did not raise any of these claims.   The court notes that the first time the plaintiff raised the issue that setoff was not pleaded was on January 4, 2011, in its second motion for reconsideration.   The record reflects that the trial was replete with evidence offered by the plaintiff itself as to the issue of what amounts should setoff the mechanic's liens amount claimed and the plaintiff itself argued in its two post-trial briefs that “credits and adjustments for allowances and incomplete work” should be subtracted from the mechanic's lien total amount claimed by plaintiff.  (Pl.'s Posttrial Mem. 17, October 15, 2010;  Pl.'s Posttrial Mem. 22–26, September 10, 2010.)   In the Joint Trial Management Memorandum filed by the parties, the plaintiff set forth that “the plaintiff claims that the amount due, before credit due for payments made by the defendants to third parties and allowances and certain omissions by plaintiff is $78,130.00.”  (Joint Trial Mem. 2, August 12, 2010.)   It is clear to the court that shortly before trial, at trial and thereafter the plaintiff was aware of and not surprised by the setoff claims of the defendants as to the mechanic's lien amount and the plaintiff has not directed this court to anything in the trial record which demonstrates any prejudice it suffered due to the alleged omission of the word setoff in the pleadings.

Third, the court reviewed the pleadings filed by the defendants in this action.   On February 3, 2009, the defendants filed an amended disclosure of defense that “no amounts are due to the plaintiff by reason of plaintiff's egregious breaches of contracts between the plaintiff and such defendants.”   On July 6, 2010, the defendants filed restated special defenses in which they pleaded in relevant part:  (1) the plaintiff was negligent in its construction of the home;  (2) the plaintiff caused substantial delay in the construction of the home which increased the cost to complete the project;  (3) the plaintiff did not substantially complete the construction of the home.   While the defendants did not use the word “setoff” in their July 6, 2010, special defenses, the defendants raise three separate defenses to the claims asserted by the plaintiff for payment of monies due and owing for services rendered and materials furnished on its mechanic's lien claim.³  A reasonable construction of the defenses is that they are defenses disputing the mechanic's lien amount.   While the defenses are inartful, they do give notice to the plaintiff that the defendants were disputing the amount owed on the mechanic's lien because of the plaintiff's negligent construction and delay.

“To set aside a judgment on the basis of a variance between the pleadings and the proof, the variance must be material in a way which is essential to the cause of action claimed ․ Under our practice, an immaterial variance is disregarded ․ A variance is material if the plaintiff was prejudiced in countering a special defense, surprised by the defendant's proof or mislead by the allegations in the special defense.”  Boccanfuso v. Connor, supra, 89 Conn.App. 287.   Plaintiff does not claim any of these things with respect to the omission of the setoff language.

The court finds that the defendants gave sufficient notice in their pleadings of their intention to assert the defense of setoff to the plaintiff's mechanic's lien amount and the plaintiff was not prejudiced, surprised or mislead by the allegations made.

Based on all of the foregoing grounds, the plaintiff's motion for reconsideration on the ninth ground is denied.

II.

CONCLUSION

For the reasons stated above, the plaintiff's Motion for Reconsideration is granted.   Upon consideration, the judgment of $25,234.73 entered on December 15, 2010, shall be reopened and reduced by $1,900.00 and judgment shall enter in favor of the plaintiffs in the amount of $23,334.73.   For the reasons stated above, this court denies the plaintiffs request to reopen judgment and enter judgment in its favor and/or to further modify this court's December 15, 2010, memorandum of decision.

BY THE COURT

Ozalis, J.

FOOTNOTES

FN1. “Substantial performance contemplates the performance of all items of a building contract except for minor expenditures ․ Whether a building contractor has met this standard is ordinarily a question of fact for the trier.”  (Citation omitted.)  Argentinis v. Gould, 23 Conn.App. 9, 14, 579, A.2d 1078 (1990), rev'd in part on other grounds, 219 Conn. 151, 592 A.2d 378 (1991)..  FN1. “Substantial performance contemplates the performance of all items of a building contract except for minor expenditures ․ Whether a building contractor has met this standard is ordinarily a question of fact for the trier.”  (Citation omitted.)  Argentinis v. Gould, 23 Conn.App. 9, 14, 579, A.2d 1078 (1990), rev'd in part on other grounds, 219 Conn. 151, 592 A.2d 378 (1991).

FN2. For clarification purposes, the court states that its finding of fact made with respect to the failure of the plaintiff to provide an accounting to the defendants is not a basis for this court's finding that the plaintiff violated General Statutes § 20–417c(6)..  FN2. For clarification purposes, the court states that its finding of fact made with respect to the failure of the plaintiff to provide an accounting to the defendants is not a basis for this court's finding that the plaintiff violated General Statutes § 20–417c(6).

FN3. The plaintiff's breach of contract claim was discharged in bankruptcy on October 28, 2009, well before the July 6, 2010 special defenses were filed..  FN3. The plaintiff's breach of contract claim was discharged in bankruptcy on October 28, 2009, well before the July 6, 2010 special defenses were filed.

Ozalis, Sheila A., J.