LLC v. Statham Woodwork, Inc. dba Statham Woodwork (2011)

MEMORANDUM OF DECISION

The plaintiff and the defendant entered into a written letter form of agreement on December 8, 2006 under which the defendant agreed to design, fabricate and install certain cabinetry in an apartment owned by a client of the plaintiff.   The plaintiff, successor to Nancy O'Rouke Interiors, is in the business of interior design.   The contract was for the total sum of $33,480 and called for a deposit of $16,740.   The plaintiff in fact paid the defendant a deposit of $20,000.   The contract further provided for “delivery three weeks from contract and approval of drawings.”   Sometime in February 2007 the plaintiff notified the defendant that because the client was considering acquiring the adjacent apartment the project would be put on “hold.”   The project remained on “hold” status until October 29, 2008 when the plaintiff wrote to the defendant and advised it that its “work was no longer needed” because the scope of the job had changed.   In that letter the plaintiff demanded refund of the $20,000.   By letter dated November 4, 2008 the defendant refused, citing the time expended for shop drawings and “reserved manufacturing time to produce and deliver the cabinets within three weeks.”   By this action the plaintiff seeks to recover her $20,000 deposit with interest.

The plaintiff has filed a five-count complaint.   The court finds that the only count that has been proved is the fourth count which alleges unjust enrichment.

“Unjust enrichment is a legal doctrine to be applied when no remedy is available pursuant to a contract.   See 5 S. Williston, supra, § 1479.   Recovery is proper if the defendant was benefitted, the defendant did not pay for the benefit and the failure of payment operated to the detriment of the plaintiff.   See Gardner v. Pilato, supra, 68 Conn.App. 453;  Polverari v. Peatt, 29 Conn.App. 191, 200–01, cert. denied, 224 Conn. 913 (1992).  “In the absence of a benefit to the defendant, there can be no liability in restitution;  nor can the measure of liability in restitution exceed the measure of the defendant's enrichment.”   Restatement (Third), Contracts, Restitution and Unjust Enrichment, § 2(d) (Discussion Draft March 31, 2000).   These requirements for recovery of restitution are purely factual.  Dow & Condon, Inc. v. Muros North Ltd. Partnership, 69 Conn.App. 220, 228 (2002).   Because recovery is fact bound, our review is limited to the clearly erroneous standard.  Gardner v. Pilato, supra, 454–55, supra, 255 Conn. 401.   The lack of a remedy under a contract is a precondition to recovery based on unjust enrichment or quantum meruit.   It would be contrary to equity and fairness to allow a defendant to retain a benefit at the expense of the plaintiff.  Id.

Partial performance under a contract is sufficient to trigger, and, in some cases, to allow a claim for restitution by a breaching party, when there has been a nonwilful breach of a contract, equal to the benefits conferred on the nonbreaching party.  Vines v. Orchard Hills, Inc., 181 Conn. 501, 506 (1980).   A claim for restitution is equitable in nature, and permits a trial court to balance the equities and to take into account competing principles to determine if the defendant was unjustly enriched.  Id., 507.

Although restitution for unjust enrichment often applies to situations in which there is no written contract, it can also apply to situations in which there is a written contract and the party seeking restitution has breached the contract.  Id., 505–07.   The case law and other authorities do not support the defendant's claim that the plaintiff cannot recover by way of restitution damages arising from unjust enrichment or quantum meruit because the plaintiff had not substantially performed the contract.”  (Alternate citations omitted.)  United Coastal Industries, Inc. v. Clearheart Construction Co., 71 Conn.App. 506, 512–13 (2002).

The equitable remedy of unjust enrichment rather than breach of contract (First Count) is appropriate in the present case simply because the defendant has done nothing to violate the terms of the December 8, 2006 agreement.   This is so because the agreement is silent on the refundability of the deposit.   The obligation of the plaintiff to perform was frustrated by the unforseen circumstance created by the client's reversal of its decision.

This circumstance calls into question the applicability of the doctrine of supervening impracticability.

“The impracticability doctrine represents an exception to the accepted maxim of pacta sunt servanda, in recognition of the fact that certain conditions cannot be met because of unforeseen occurrences.   Cf. Aetna Casualty & Surety Co. v. Murphy, 206 Conn. 409, 413, 538 A.2d 219 (1988).   A party claiming that a supervening event or contingency has prevented, and thus excused, a promised performance must demonstrate that:  (1) the event made the performance impracticable;  (2) the nonoccurrence of the event was a basic assumption on which the contract was made;  (3) the impracticability resulted without the fault of the party seeking to be excused;  and (4) the party has not assumed a greater obligation than the law imposes.   2 Restatement (Second), Contracts § 261;  E. Farnsworth, Contracts (1982) § 9.6, p. 678;  Dills v. Enfield, 210 Conn. 705.

Furthermore, the event upon which the obligor relies to excuse his performance cannot be an event that the parties foresaw at the time of the contract.   We have previously held that “[t]he regular enforcement of conditions is ․ subject to the competing but equally well established principle that the occurrence of a condition may be excused in the event of impracticability ‘if the occurrence of the condition is not a material part of the agreed exchange and forfeiture would otherwise result.’   2 Restatement (Second), Contracts § 271;  6 Corbin, Contracts (1962) § 1362;  5 Williston, Contracts (3d Ed.1961) § 793.”  (Emphasis added.)  Grenier v. Compratt Construction Co., 189 Conn. 144, 148–49, 454 A.2d 1289 (1983);  see also West Haven Sound Development Corporation v. West Haven, 201 Conn. 305, 313, 514 A.2d 734 (1986).   Thus, the “central inquiry” is whether the nonoccurrence of the alleged impracticable condition “was a basic assumption on which the contract was made.”  General Statutes § 42a–2–615(a) 2 Restatement (Second), Contracts § 261;  E. Farnsworth, supra, § 9.6, pp. 679–84.  Id. at 718–19.

Applying this four-pronged test to the facts in the present case there was no evidence that the plaintiff should have foreseen the change in circumstance and therefore the non-occurrence of this event “was a basic assumption on which the contract was made.”   The other prongs have also been satisfied.

In its First Special Defense the defendant has claimed recoupment for “the costs, expenses and losses incurred in preparing for and performing under its contract.”

“Recoupment ․ refers to the defendant's right, in the same action, to cut down the plaintiff's demand, either because the plaintiff has not complied with some cross obligation of the contract on which he or she sues or because the plaintiff has violated some legal duty in the making or performance of that contract ․ The practice serves to avoid needless delay and unnecessary litigation.”   20 Am. Jr.2d 231, Counterclaim, Recoupment and Setoff § 5 (1995);  see also Genovese v. J.N. Clapp Co., 4 Conn.App. 443, 445–46 (1985).  Premier Capital, Inc. v. Grossman, 68 Conn.App. 51, 58 (2002).

The defendant seeks compensation in the form of a deduction from the deposit for the time which he and his company staff devoted to the project.   Gary Statham, the plaintiff's principal, testified that because of the three-week delivery and installation requirement he was forced to begin work several days prior to execution of the contract.   Moreover, he stated that he reserved his production floor for the project for two weeks during which time “the shop was idle.”   The work performed consisted of taking measurements, producing stained wood samples and developing preliminary drawings.

For a party to recover in restitution, work performed by the other party must have benefitted the other party.   The defendant here was clearly benefitted in that it has retained the deposit.   The plaintiff, in turn, benefitted because while the job never went forward, the drawings which were prepared and measurements upon which they were based benefitted the plaintiff in that they assisted her in advancing her business relationship with the client.   Therefore, the plaintiff has been unjustly enriched to the extent of the value of that benefit and that supports the defendant's recoupment claim.

The court has weighed the evidence and finds most persuasive Mr. Statham's testimony that the work which he performed comprises approximately thirty percent of the entire project.   Accordingly, the court awards the defendant $10,044 of the $20,000 and orders a refund of the remainder to the plaintiff.   The court finds unpersuasive that portion of the defendant's claim in which it seeks compensation for shop down time.   The court believes that proper management practice could have prevented this.

As stated above, the plaintiff has failed to prove any count except for Count Four. The court declines to award interest as the defendant harbored a bona fide belief that it was entitled to retain the entire deposit.   Therefore, the retention was not wrongful.  Smithfield Associates, LLC v. Tolland Bank, 86 Conn.App. 14, 26 (2004).   Judgment may enter for the plaintiff in the amount of $9,956.

BY THE COURT

A. WILLIAM MOTTOLESE, J.T.R.

Mottolese, A. William, J.T.R.