LLC v. LLC (2011)

MEMORANDUM OF DECISION

The plaintiff, Rockwell Excavating, LLC (Rockwell), filed an application for prejudgment attachment of real estate against the defendants, PAS Realty, LLC (PAS), Alex Scavone (Scavone) and Pilar Scavone a/k/a Pilar Estrada–Scavone n/k/a Pilar Estrada (Estrada), on April 22, 2008.   Thereafter the court (Mintz, J.) granted the application and issued an order of attachment of the real property known as 24A Westville Avenue, Danbury in the amount of $46,100 standing in the names of Scavone and Estrada.   The attachment was served and this action commenced by summons and complaint on June 17, 2008.   The complaint was withdrawn as to Scavone on April 9, 2010, after he filed a bankruptcy petition and received a discharge.   The operative complaint, second amended complaint dated April 9, 2010, asserts counts in breach of contract as to PAS and Estrada (counts one and two respectively), quantum meruit as to PAS and Estrada (counts three and four respectively), unjust enrichment (counts five and six respectively) and fraudulent transfer as to Estrada.   The defendants assert a special defense of statute of limitations pursuant to General Statutes § 52–581.   This matter went to trial on April 12, 2011.

FACTS

The court makes the following findings of fact.   This action arises from an agreement to provide excavation and site work in connection with the building and development of a residential three-unit townhouse style building.   The subject premises known as 24A Westville Avenue, Danbury was originally part of a larger tract of land owned by an entity known as 24B Westville, LLC of which the defendants, Scavone and Estrada, among others were principals.   The tract was subdivided into two parcels and on January 23, 2004, the subject premises, 24A Westville Avenue, was conveyed to PAS, a limited liability company whose sole members at all relevant times herein were Scavone and Estrada.   Alex Scavone and Pilar Estrada were married at the time and the name “PAS” itself is an acronym for “Pilar Alex Scavone.”   Scavone and Estrada's former business partners retained the premises known as 24B Westville Avenue, the so-called front parcel, on which a large Victorian house was located.   The rear parcel, conveyed to PAS, has access to Westville Avenue via a one hundred forty-foot-long driveway which runs along the south side of the front parcel.   The parcel itself slopes from the rear to the front and is especially steeply sloped from the right rear of the lot.   To the rear of, and behind, the lot is a very steep hillside.

Scavone and Estrada commenced construction of the three-unit townhouse style building on the premises in early 2004.   The initial excavation and foundation work including footings, walls and slab, was completed by Scavone and Estrada's former business partner, Lee Seward.   Scavone had originally spoken to Kevin McSwiggan about doing the work and once the foundation was in, he contacted McSwiggan to take over the job and do the additional site work necessary to complete the project.   McSwiggan's company is Rockwell.   It is a corporation whose principal shareholder and officer is McSwiggan.   Scavone and McSwiggan had known each other for many years, had experience working together on other jobs and Scavone had previously retained McSwiggan to provide work on his home which he and Estrada owned jointly in Ridgefield.   When McSwiggan first inspected the premises he encountered a very difficult work site because of the extensive water problems caused by water draining off of the property to the rear and the conditions in which Seward had left the site.   In addition there were no blueprints or site plans for him to work from.   For these reasons he proposed to complete the remainder of the site work on a “time and materials basis,” i.e. he would bill equipment and labor on a scheduled time basis plus material.   Both Scavone and his wife, Estrada, were present at this initial meeting and both agreed to engage McSwiggan and his company Rockwell under the proposed terms.   Both Scavone and Estrada acknowledged their familiarity with McSwiggan's billing practices and rates because of their past experience with the work he had performed at their personal residence.   McSwiggan testified that he initially believed his agreement on behalf of Rockwell to provide the work was with Scavone and Estrada personally.   It was not until he was several months into the work that Scavone requested that McSwiggan bill the cost to PAS, the owner of the property.   McSwiggan agreed and the subsequent invoices from Rockwell were addressed to PAS.

McSwiggan, acting through his company, Rockwell, commenced work on the property in late 2004.   His first task was to remove large quantities of silt from around the foundation and in the drains and catch basins which had already been installed that had washed down from the property behind and to the rear.   He installed curtain and footing drains around three sides of the foundation and piped the drains into a catch basin.   He installed a radon trap and backfilled the foundation.   He relocated the driveway and installed utility and water hookups to the street.   At the completion of this phase of work he submitted an invoice to PAS dated January 22, 2005, for the total amount of $37,120.   The invoice acknowledged the receipt of $12,000 paid but gave no indication of the dates on which such payments were received.   During 2005 he installed a series of leader drains to captured additional storm water from the neighboring property to the rear.   Because the storm water drains connecting to the city storm water system had been improperly designed and installed by the prior contractor/excavator it became necessary to remove an existing catch basin and redesign and install a new catch basin in the city's street right of way.   Additional work included installing a sidewalk, rough grading the driveway, installing stone and final grading around the building and property.   At the conclusion of the work in December 2005, McSwiggan submitted a final invoice to PAS dated December 18, 2005, on behalf of Rockwell for the additional work in the amount of $34,100.   The final invoice acknowledged a balance remaining from the first bill of $12,000.   The total due and owning to Rockwell was $46,100.   By December 15, 2005, a certificate of occupancy had been issued for the premises.   McSwiggan testified that his last day on the job was the day before the certificate of occupancy was issued.

By the time he had completed the work McSwiggan began to realize that money had become an issue for Scavone, Estrada and their company PAS. There was more work to be done, a retaining wall on the northwest corner of the property but no money to do it.   It had been communicated to him that Scavone and Estrada were planning to refinance the property to obtain the extra capital.   McSwiggan dropped off his final invoice at the home of Scavone and Estrada and left for Florida for the winter months.   By the time he returned in early March 2006, he discovered that Scavone and Estrada were now embroiled in an acrimonious divorce.   He communicated with both of them and each requested duplicate copies of his bills which he provided, each assuring him that he would be paid in due course but that because of the pending divorce their funds were “tied up.”   Neither at the time McSwiggan presented the two invoices on behalf of Rockwell, nor at any time subsequent have either Scavone or Estrada inquired about how the bills were calculated or disputed the charges.   McSwiggan and Rockwell never received any further payment on the debt.

During the time that he worked on the project, over one year in length, McSwiggan had extensive contact with both Scavone and Estrada.   Scavone was the experienced developer and he oversaw all phases of the development.   Estrada was eager to be involved and learn the business of development and she devoted as much time as she could to being at the site, along with her other tasks of raising two young children, running the business end of Scavone's painting business and tending to her pet sitting business.   There were never any questions about the quality of work or services delivered by McSwiggan Rockwell.   He was able to negotiate solutions with the city building officials for the difficult site problems.   He was complimented by both Scavone and Estrada upon completion of the project.   When he left the project in December 2005, all of his work had been signed off by city building officials.   McSwiggan testified that he has never been contacted by either Scavone or Estrada, or anyone else for that matter, about the quality of his work or the drainage systems he has installed.   As of the date he completed work on the site the drainage systems functioned as they were designed to do.   Francis Lollie, assistant construction manager for the building department of the City of Danbury, testified that he inspected all of the work as the project progressed, all work was completed to code and design specifications and that the building department has never received a complaint about the premises or its storm water drainage systems in the intervening years since the completion of the project.

On January 20, 2006, scarcely one month before the institution of divorce proceedings between Scavone and Estrada and after McSwiggan had delivered Rockwell's final bill to Scavone and Estrada, PAS conveyed title of the property to Scavone and Estrada personally.   The stated consideration on the warranty deed was “one dollar and other consideration.”   The deed was signed by Estrada as a member of PAS. Scavone disclaims any knowledge that he knew the property was transferred.   Estrada claims the conveyance was done as a prelude to a planned refinance.   In any event Estrada stipulated at the time of trial that the property was the only asset of PAS at the time of conveyance and that the conveyance left PAS with no assets.   On cross examination Estrada admitted that no consideration was paid to PAS for the transfer and that PAS had no ability to pay the debt to Rockwell after the transfer because “it had no money.”   Estrada testified that at the time of the transfer there was approximately between $100,000 and $200,000 in equity in the property.

Scavone moved in to the middle apartment of the townhouse style building in February 2006, and continued to reside there for the next two years.   At some point each of the two end units were rented.   Scavone acknowledged the existence of a crack in the foundation wall of the middle unit which sometimes leaked water after a heavy storm or accumulation of melting snow.   McSwiggan and Rockwell did not build the foundation and there is no evidence that any work provided by Rockwell caused or exacerbated the condition.   In February 2008, Scavone vacated the premises and Estrada moved in.   Estrada had been awarded the property in the dissolution proceeding and a deed dated November 17, 2008, conveying title from Scavone to Estrada was subsequently recorded.   Along with the title to the property the court (Leheny, J.) ordered Estrada to pay the outstanding obligation to Rockwell.   Indeed, at the trial under cross examination, Estrada acknowledged that “I'm responsible for the debt of Westville Avenue.”   Several times during her testimony she acknowledged responsibility for the debt.   However she disputes the amount of the debt and to that end she introduced copies of three cancelled checks into evidence as follows:  a check in the amount of $2,000 dated July 16, 2004, written on the account of PAS, a check in the amount of $10,000 dated January 10, 2005, written on the account of PAS and a check in the amount of $15,000 dated April 24, 2005, written on the account of Lawrence R. Scavone, Joann Scavone and Alex Scavone.   Estrada attempts to persuade the court that these three checks prove that the balance due Rockwell is only $34,100.   The court notes that Rockwell's total billing was $71,220 and that Rockwell acknowledges receipt of $25,000 in payments.   The total checks introduced by Estrada total $27,000 but the first check in the amount of $2,000 on July 16, 2004, predates Rockwell's commencement of any work on the property by several months.   There was testimony that Scavone and Rockwell had other business dealing prior to Rockwell's involvement with the property and that Scavone had been making payments to Rockwell in satisfaction of those prior obligations.

Aside from the balance of the debt Estrada also disputes the quality of McSwiggan and Rockwell's work.   She claims to be generally dissatisfied with the quality of Rockwell's final grading of the backyard, claiming that there are “watermelon size rocks” on the lawn.   Rockwell provided final grading but did not provide, and was not engaged to provide, any landscape work including the installation of a lawn.   Estrada also complains that the property does not drain properly, that the back yard is a “swamp,” and that the basement leaks because of the crack in the foundation wall.   Estrada submitted photos depicting puddles in the yard obviously taken after a storm but offered no evidence of the cause of any unusual or chronic flooding condition or that such condition is causally connected to any of the work provided by Rockwell.   Estrada testified that the water problems have become increasingly worse since she moved in February 2008 and that by February 2009, the basement began leaking on a regular basis.   In May 2009, Estrada listed the premises for sale.   In connection with the listing she acknowledged under cross examination that she provided information for, and signed as “true and accurate” both a residential property condition disclosure report and a mold and mold-forming condition disclosure.   In the residential property condition disclosure report she certified that the basement has no water seepage problems and that she has no knowledge of water drainage problems.   In the mold and mold-forming condition disclosure she certified that she has no knowledge of the presence of conditions that could lead to the growth of mold.

Further factual findings are set forth below when necessary to resolve the parties' specific claims.

DISCUSSION

I

Rockwell asserts individual claims in separate counts against PAS and Estrada in contract, quantum meruit and unjust enrichment.   To create a contract, there must be an unequivocal acceptance of an offer.   The acceptance of an offer need not be express, but may be shown by any words or acts which indicate the offeree's assent to the proposed bargain.  Maltby, Inc. v. Associated Realty Co., 114 Conn. 283, 288, 158 A. 548 (1932).   The acceptance of the offer must be explicit, full and unconditional.  Woodbridge Ice Co. v. Semon Ice Cream Corp., 81 Conn. 479, 487, 71 A. 577 (1908).   The burden rests on the plaintiff to prove a meeting of the minds to establish its version of the claimed contract.  Lucier v. Norfolk, 99 Conn. 686, 699, 122 A. 711 (1923).   The contract must also be supported by bargained for consideration.  Fisher v. Jackson, 142 Conn. 734, 737, 118 A.2d 316 (1955).   The court finds sufficient credible evidence to support a finding that a valid contract existed between Rockwell and PAS. During the trial the court heard testimony from Scavone that he and Estrada were the general contractors acting on behalf of PAS. The court heard testimony from Estrada that PAS itself was the general contractor.   McSwiggan testified that as far as he was concerned he was just doing business with his friends, Scavone and Estrada, and that PAS was “just this invisible thing hanging out there.”   He fully understood and agreed to bill PAS because “PAS was the owner.”   The court finds the conduct of the parties and their expressions of assent sufficient to support a finding that Scavone and Estrada acting as members of PAS accepted McSwiggan's offer as an officer and representative of Rockwell to complete the site work on a time and materials basis.   It is clear that both McSwiggan and Estrada understood that they were doing business with each other through their respective legal entities.   The evidence does not support recovery against Estrada personally under contract, quantum meruit or unjust enrichment.

Because the court finds the existence of a valid contract it is not necessary to consider Rockwell's other theories of recovery.   The court notes however that had it not found the requisite elements for the existence of a contract between Rockwell and PAS, Rockwell could have recovered against PAS under a theory of unjust enrichment.  “The right of recovery for unjust enrichment is equitable, its basis being that in a given situation it is contrary to equity and good conscience for the defendant to retain a benefit which has come to him at the expense the plaintiff ․ Unjust enrichment is, consistent with the principles of equity, a broad and flexible remedy ․ Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefitted, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiffs' detriment.”  (Citations omitted;  internal quotation marks omitted.)   Polverari v. Peatt, 29 Conn.App. 191, 200–01, 614 A.2d 484, cert. denied, 224 Conn. 913, 617 A.2d 166 (1992).

As to damages, McSwiggan testified that the balance due and owing is $46,100.   Estrada contends that the balance due is at most $34,100 and that this sum should be further reduced by some indeterminate sum because of her dissatisfactions with the grading of the back yard and her drainage problems.   With regard to the alleged deficiencies with McSwiggan's work Estrada has put her credibility at stake.   The court is entitled to observe the demeanor of a witness, to draw inferences therefrom, and to consider such evidence in assessing the credit to be given to the witnesses' testimony.  Dadio v. Dadio, 123 Conn. 88, 92–93, 192 A. 557 (1937).   Estrada's credibility has been severely impaired by her contrary testimony at trial and statements she made and certified as “true and accurate” on residential real estate disclosure and mold forming disclosure reports she signed in connection with the attempted sale of the property.   The court also found her testimony to be inconsistent and at times even contradictory.   The court finds the testimony of McSwiggan as to the debt to be more credible and that the balance due and owing from PAS to Rockwell is the sum of $46,100.

II

Rockwell's seventh count asserts a claim under common-law fraudulent transfer against Estrada.  “Under Connecticut law, a plaintiff may maintain an action for fraudulent conveyance under either the common law or the Uniform Fraudulent Transfer Act. Whether a claim is brought under the common law or the applicable statute, General Statutes § 52–552e, the elements are the same.”   Hamrah v. Emerson, Superior Court, judicial district of Fairfield, Docket No. CV 05 4012872 (August 29, 2009, Maiocco, J.T.R.).  “A party alleging a fraudulent transfer or conveyance under the common law bears the burden of proving either:  (1) that the conveyance was made without substantial consideration and rendered the transferor unable to meet his obligations or (2) that the conveyance was made with a fraudulent intent in which the grantee participated ․ These are also elements of an action brought pursuant to General Statutes §§ 52–552e(a) ․ Indeed, although the statute provides a broader range of remedies than the common law ․ the Uniform Fraudulent Transfer Act is largely an adoption and clarification of the standards of the common law of [fraudulent conveyances] ․” (Citations omitted;  internal quotation marks omitted.)  Certain Underwriters at Lloyd's, London v. Cooperman, 289 Conn. 383, 394–95, 957 A.2d 836 (2008).   The elements of fraudulent conveyance, including whether the defendants acted with fraudulent intent, must be proven by “clear, precise and unequivocal evidence.”  (Internal quotation marks omitted.)  Tyers v. Coma, 214 Conn. 8, 11, 570 A.2d 186 (1990).

At the start of the trial the parties provided a written stipulation to the court.   The defendants stipulated that “PAS's only asset was the Westville property” and that “[a]fter ownership of the Westville property transferred from PAS to Alex and Pilar, PAS had no assets.”   PAS conveyed title to Scavone and Estrada on January 20, 2006, scarcely more than thirty days after McSwiggan delivered Rockwell's final invoice to them.   Estrada admitted under oath that no consideration was paid to PAS for the transfer and that PAS had no ability to pay the debt to Rockwell after the transfer.   At the time of the transfer there was approximately between $100,000 and $200,000 in equity in the property.   The court finds Rockwell's seventh count sounding in fraudulent transfer against Estrada proven.

III

The defendants have asserted a special defense claiming that the action is barred by the applicable statute of limitations, General Statutes § 52–581 which provides in pertinent part that “No action founded upon any express contract or agreement which is not reduced to writing, or of which some note or memorandum is not made in writing and signed by the party to be charged therewith or his agent, shall be brought but within three years after the right of action accrues.”   Rockwell completed its performance under the terms of the contract on December 14, 2005.   The present action was commenced by summons and complaint on June 17, 2008.   There is no merit to the defendants' claimed defense.

CONCLUSION

For the foregoing reasons, the court enters judgment in favor of the plaintiff, Rockwell Engineering, Inc. against the defendant, PAS Realty, LLC on the first count and against the defendant, Pilar Scavone a/k/a Pilar Estrada–Scavone a/k/a Pilar Estrada, on the seventh count, in the amount of $46,100.

Michael G. Maronich, Judge

Maronich, Michael G., J.