Commissioner of Environmental Protection v. Chromium Process Co. et al. (2011)

MEMORANDUM OF DECISION

I

The instant enforcement action alleging some 500 violations of Connecticut's environmental statutes was commenced by Gina McCarthy, commissioner of the department of environmental protection (the DEP), in 2007 seeking penalties against the defendants, the Chromium Process Company (Chromium) and, its manager, Daniel T. Martin.   On April 24, 2008, the defendants moved this court to refer the matter to the Honorable George Levine, judge trial referee, for settlement purposes to avoid the expense of litigation, particularly because Chromium was already in a financially precarious position.   Although the DEP suggested that settlement talks were premature, the parties engaged in mediation with

“A stipulated judgment allows the parties to avoid litigation by entering into an agreement that will settle their differences once the court renders judgment on the basis of the agreement ․ A stipulated judgment, although obtained through mutual consent of the parties, is binding to the same degree as a judgment obtained through litigation ․ It necessarily follows that if the judgment conforms to the stipulation it cannot be altered or set aside without the consent of all the parties, unless it is shown that the stipulation was obtained by fraud, accident or mistake.”  (Internal quotation marks omitted.)   Housing Authority v. Goodwin, 108 Conn.App. 500, 506–07, 949 A.2d 494 (2008).  “General Statutes § 52–212a ¹ and Practice Book § 326 [now § 17–4] vest discretion in the trial court to determine whether a judgment should be opened for cause.”  Jenks v. Jenks, 232 Conn. 750, 753, 657 A.2d 1107 (1995).

III

Chromium argues that Judge Levine “aggressively pressured” Chromium to enter into the stipulated judgment after being advised by DEP that Chromium had failed to conduct any testing.   Chromium's president, Norman Tice maintains that he did not understand or misunderstood the terms as they were unclear and that he had no opportunity to study the document.²

In the DEP's objection, it emphasizes that a draft of the stipulation was first circulated on May 8, 2009 and then revised several times during the mediation.   On Monday, August 25, 2008, a final version was brought to court, which reflected the previous Friday's session.   DEP further notes that it took Chromium two years and four months to file this motion.³

“[T]he setting aside of a judgment on the basis of fraud will only be granted if the [movant] is not barred by any of the following restrictions:  (1) There must have been no laches or unreasonable delay by the injured party after the fraud was discovered.  (2) There must have been diligence ․ in trying to discover and expose the fraud.  (3) There must be clear proof of the perjury or fraud.  (4) There must be a substantial likelihood that the result of the new trial will be different.”  (Internal quotation marks omitted.)  Cromwell Commons Associates v. Koziura, 17 Conn.App. 13, 16, 549 A.2d 677 (1988).

At the hearing on April 6, 2011, Martin and Tice testified.   Aside from the two-year delay in bringing this motion, which is alone grounds for denial of the motion;  see id.;   the defendants have not produced any clear proof of fraud.   See Falls Church Group, Ltd. v. Tyler, Cooper & Alcorn, LLP, 281 Conn. 84, 110, 912 A.2d 1019 (2007) (“party alleging fraud bears the burden of proving it with clear, precise, and unequivocal evidence” [internal quotation marks omitted] ).   The defendants entered into a stipulated judgment that was negotiated over many months.   Even assuming the DEP improperly or mistakenly informed Judge Levine that Chromium had not conducted any testing, that is not, in and of itself, clear evidence of fraud.   More importantly, Judge Levine was not the trier of fact;  his role was that of a facilitator or mediator only—the ultimate decision to enter into the agreement was Chromium's.

Additionally, there was no evidence produced at the hearing on April 6, 2011 that in any way indicated that the stipulated judgment would have been different if Judge Levine had known Chromium's actual testing information.   Therefore, Chromium has failed to prove by clear and convincing evidence that the stipulated judgment was procured by fraud.

Chromium has also argued that the terms of the agreement were unclear, especially as to the penalty amounts.   This court rejected that argument in its prior decision and that issue was presented and similarly rejected in the appeal.  McCarthy v. Chromium Process Company, supra, 127 Conn.App. 333 (“[t]he challenged language of the stipulated judgment is clear and unambiguous”).   Additionally, the fact that Chromium may have interpreted the unambiguous penalty language of section III.D ⁴ to mean “up to” $25,000 rather than a penalty of $25,000, does not constitute a mutual mistake that warrants the opening of a stipulated judgment.   See BRJM, LLC v. Output Systems, Inc., 100 Conn.App. 143, 148, 917 A.2d 605, cert. denied, 282 Conn. 917, 925 A.2d 1099 (2007) (“[a] mutual mistake requires a mutual misunderstanding between the parties as to a material fact”).   Furthermore, the court is not persuaded by Chromium's argument that the judgment should be set aside based upon unilateral mistake.   Indeed, in Magowan v. Magowan, 73 Conn.App. 733, 741, 812 A.2d 30, cert. denied, 262 Conn. 934, 815 A.2d 134 (2003), the court held that “[t]he kind of mistake that would justify the opening of a stipulated judgment under § 52–212a must be mutual;  a unilateral mistake will not be sufficient to open the judgment.” ⁵

Finally, Chromium argues that the stipulated judgment should be opened because the agreement was procured through duress.   Specifically, Chromium asserts that, based on the DEP's misrepresentations that no testing had occurred, the tenor of the negotiations changed leading to a “now or never atmosphere.”   It maintains that Judge Levine “strongly recommend[ed] settling on the terms offered by plaintiff, terms he may not have recommended had he not believed [Chromium] to be guilty of such flagrant violations ․ This bleak characterization, based on misinformation, led [Chromium] to believe it had no choice other than to accept whatever settlement terms plaintiff proposed.”

“A stipulated judgment ․ is not voidable on the ground that it was accepted with reluctance, so long as its procurement was not the result of fraud, duress, or mistake ․ To conclude that a stipulated judgment resulted from duress, the finder of fact must determine that the misconduct of one party induced the party seeking to avoid the stipulated judgment to manifest assent thereto, not as an exercise of that party's free will but because that party had no reasonable alternative in light of the circumstances as that party perceived them to be ․ For a party to demonstrate duress, it must prove [1] a wrongful act or threat [2] that left the victim no reasonable alternative, and [3] to which the victim in fact acceded, and that [4] the resulting transaction was unfair to the victim ․ The wrongful conduct at issue could take virtually any form, but must induce a fearful state of mind in the other party, which makes it impossible for [the party] to exercise his own free will.”  (Citation omitted;  internal quotation marks omitted).  Cox v. Burdick, 98 Conn.App. 167, 177–78, 907 A.2d 1282, cert. denied, 280 Conn. 951, 912 A.2d 482 (2006).

This court notes that Chromium was represented by its current, highly experienced environmental counsel throughout the mediation process with Judge Levine.   The court canvassed Martin, Tice and Tice's daughter, Stephanie—both a director and the secretary of the corporation—concerning the stipulation.   On February 10, 2009, Tice stated that he was pressured into signing the agreement.   Specifically, he said, “I'm not claiming fraud, I'm just saying pressure, that's all I said.   And it happened so fast it stunned me.   That's all.”  (Transcript of hearing, February 10, 2009, p. 28.)   Of course, at that same hearing, Tice acknowledged participating in the mediation sessions from May to August and, evidently, although he had a copy of a stipulated judgment on Friday, August 22, 2008, he only read a few pages since he believed it was going to be changed.   He was unsure whether his lawyer had a copy of a draft stipulation as early as May 2008.   Finally, at the April 6, 2011 hearing, Tice changed his position maintaining that fraud was committed by the DEP and that this prompted Judge Levine to pressure Chromium.

Based upon the above, this court cannot find that a wrongful act has been committed that left Chromium with no reasonable alternative.   No direct testimony was given about what was allegedly said to Judge Levine, but, more importantly, no persuasive evidence suggests that Chromium had to enter into this stipulated judgment.   Perhaps Tice felt pressure, but this is not duress.   See Yankee Gas Services Co. v. The Chromium Process Company, Superior Court, judicial district of Ansonia–Milford, Docket No. CV 04 0085872, Connecticut Superior Court (December 8, 2004, Shluger, J.) (finding that evidence that defendant felt compelled to enter stipulation to avoid prejudgment remedy attachment does not constitute duress).⁶  Moreover, this was not the start of a trial;  it was mediation.   Chromium could have asked for the settlement conference to be continued to the next day or some other time or the defendants could have proceeded to trial.

Finally, “the person claiming duress must act promptly to repudiate the contract or release or he will be deemed to have waived his right to do so ․ If the releasing party does not promptly repudiate the contract or release, he will be deemed to have ratified it.   A party may ratify a contract or release entered into under duress by intentionally accepting benefits under the contract, by remaining silent or acquiescing in the contract for a period of time after he has the opportunity to avoid it, or by acting upon it, performing under it, or affirmatively acknowledging it.”  (Internal quotation marks omitted.)  Ace Equipment Sales, Inc. v. H.O. Penn Machinery Co., 88 Conn.App. 687, 697, 871 A.2d 402, cert. denied, 274 Conn. 909, 876 A.2d 1200 (2005).

In the present case, Chromium did not raise fraud, duress and mistake until the state sought enforcement of the judgment.   Indeed, Chromium ratified the stipulated judgment by paying one of its civil penalties under the agreement and then, when it could not timely make its next payment, it sought an extension of the schedule.   Additionally, as noted above, the defendants' motion to open was filed more than two years after the stipulated judgment was approved.

The evidence indicates that this is a case of a company seeking to void a stipulated judgment which was entered into reluctantly, but not fraudulently, under duress or by mistake.

Accordingly, the defendants' motion to reopen is denied.

Berger, J.

FOOTNOTES

FN1. Section 52–212a, in relevant part, provides:  “Unless otherwise provided by law and except in such cases in which the court has continuing jurisdiction, a civil judgment or decree rendered in the Superior Court may not be opened or set aside unless a motion to open or set aside is filed within four months following the date on which it was rendered or passed ․” A judgment may be opened, however, after the four-month limitation if the movant proves that the judgment was obtained by fraud or because of mutual mistake.   See Celanese Fiber v. Pic Yarns, Inc., 184 Conn. 461, 466, 440 A.2d 159 (1981)..  FN1. Section 52–212a, in relevant part, provides:  “Unless otherwise provided by law and except in such cases in which the court has continuing jurisdiction, a civil judgment or decree rendered in the Superior Court may not be opened or set aside unless a motion to open or set aside is filed within four months following the date on which it was rendered or passed ․” A judgment may be opened, however, after the four-month limitation if the movant proves that the judgment was obtained by fraud or because of mutual mistake.   See Celanese Fiber v. Pic Yarns, Inc., 184 Conn. 461, 466, 440 A.2d 159 (1981).

FN2. Tice also testified that the enforcement of the stipulated judgment and the penalty provisions therein would effectively end Chromium's eighty-three-year existence..  FN2. Tice also testified that the enforcement of the stipulated judgment and the penalty provisions therein would effectively end Chromium's eighty-three-year existence.

FN3. This court notes that Tice did raise some of these issues at the hearing on February 10, 2009, but without filing a motion..  FN3. This court notes that Tice did raise some of these issues at the hearing on February 10, 2009, but without filing a motion.

FN4. Section III.D provides that “any violation of paragraphs II.A. through II.L. of this judgment shall result in a stipulated interim civil penalty (‘Stipulated Penalty’) of Twenty–Five Thousand Dollars ($25,000) per day for each day of each violation.”.  FN4. Section III.D provides that “any violation of paragraphs II.A. through II.L. of this judgment shall result in a stipulated interim civil penalty (‘Stipulated Penalty’) of Twenty–Five Thousand Dollars ($25,000) per day for each day of each violation.”

FN5. There is authority for Chromium's argument that unilateral mistake may be grounds to open a judgment if there is also clear evidence of fraud or inequitable conduct.   See Greenwich Contracting Co. v. Bonwit Construction Co., 156 Conn. 123, 239 A.2d 519 (1968) (“[a] cause of action for reformation of a contract rests on the equitable theory that the instrument sought to be reformed does not conform to the real contract agreed upon and does not express the intention of the parties and that it was executed as the result of mutual mistake, or mistake of one party coupled with actual or constructive fraud, or inequitable conduct on the part of the other”).   Nevertheless, even if there was a unilateral mistake here, Chromium has not provided clear evidence of fraud or inequitable conduct..  FN5. There is authority for Chromium's argument that unilateral mistake may be grounds to open a judgment if there is also clear evidence of fraud or inequitable conduct.   See Greenwich Contracting Co. v. Bonwit Construction Co., 156 Conn. 123, 239 A.2d 519 (1968) (“[a] cause of action for reformation of a contract rests on the equitable theory that the instrument sought to be reformed does not conform to the real contract agreed upon and does not express the intention of the parties and that it was executed as the result of mutual mistake, or mistake of one party coupled with actual or constructive fraud, or inequitable conduct on the part of the other”).   Nevertheless, even if there was a unilateral mistake here, Chromium has not provided clear evidence of fraud or inequitable conduct.

FN6. There, as in the present case, negotiations had occurred over several months in which the amounts due were negotiated through competent counsel ultimately resulting in a settlement..  FN6. There, as in the present case, negotiations had occurred over several months in which the amounts due were negotiated through competent counsel ultimately resulting in a settlement.

Berger, Marshall K., J.