LLC v. Suntech of Fairfield County, Inc. (2011)

Memorandum of Decision on Application for Prejudgment Remedy (No. 100.31)

Procedural/Factual Background

This is an application for prejudgment remedy (PJR) pursuant to Conn. Gen.Stat. § 52–278c, et seq. seeking to secure the sum of $45,000 in a pending civil action.   The plaintiff, Jumar Marketing, LLC seeks to collect the sum of $37,551.45, plus interest and costs, from its former customer the defendant Suntech of Fairfield County, Inc. for failure to make full payment of sums billed for goods, services and costs incurred pursuant to a certain contract for marketing services and products, known as “Marketing Proposal” of March 18, 2011 signed by both parties on March 30, 2010.  (Pl Ex. 1.) (the “Marketing Contract”).   The defendant maintains that it has paid in full under the terms of the contract for all goods and services rendered under the Marketing Contract.

The complaint sounds in Breach of Contract (Count One);  Goods Sold and Delivered (Count Two);  Quantum Meruit (Count Three);  Account Stated (Count Four);  and Unjust Enrichment (Count Five).   The PJR application came up on the Miscellaneous and Special Proceedings calendar of April 4, 2011.   The court conducted an evidentiary hearing on that date at which the principals of both parties testified and presented documentary exhibits.

Standard of Decision

Under Conn. Gen.Stat. § 52–278d(a) the hearing on a PJR application is limited to whether there is:  (a) probable cause that judgment will be rendered for the plaintiff in the amount equal to or greater than the amount of the prejudgment remedy application, taking into account all defenses, counterclaims or set-offs;  (b) whether defendant has adequate insurance to pay any judgment that may be rendered;  (c) whether the property is exempt from execution;  and whether to require bond.   The court may grant a pre-judgment remedy in an amount less than that requested, in which case it need only determine that there is probable cause that a judgment in that lesser amount will be rendered.  Connecticut Light & Power Co. v. Gilmore, 89 Conn.App. 164, 174–76, cert. denied, 275 Conn. 906 (2005).   Probable cause has been defined as a bona fide belief in facts essential under the law for the action and such as would lead a reasonable, prudent person to entertain such belief.  Dufraineu v. CHRO, 236 Conn. 250, 261 (1996).   Probable cause must exist as to both the merits and damages.   It is not necessary to prove the case by a preponderance of the evidence at the probable cause hearing.

In this case there was no evidence of any insurance which would cover the plaintiff's claim, nor is there any claim of exempt property.

Discussion and Ruling

After reviewing the evidence the court finds probable cause that the defendant will recover a judgment in the reduced amount of $42,000.

Plaintiff's president Judi Virgulack testified that the defendant was billed monthly commencing April 1, 2010 for sums due under the Marketing Agreement and a certain “spreadsheet for advertising budget” (Def. Ex A), presented to and approved by the defendant on May 10, 2010.   The Marketing Agreement called for the plaintiff to provide certain advertising/marketing services/products to the defendant over the twelve-month period commencing April 1, 2010 consisting of online marketing strategy to include the creation of a customized search engine optimization and search engine marketing strategy;  creation of print and media strategy, creation of advertising materials;  and creation of tangible marketing and sales materials to introduce and promote Suntech, including a “brochure.”   For these services the contract calls for plaintiff to devote a certain declining number of total hours per month for which defendant agreed to pay a fixed monthly “retainer” (calculated at about $150 per hour) consisting of:  $4,500 per month in April, May and June 2010 for 30 hours per month;  $3,000 per month in July, August, and September 2010 for 20 hours per month;  and $1,900 per month in October 2010 through March 2011 for 12.5 hours per month.  (Pl. Ex 1.) The agreement also has the following provisions relevant to the issues here presented:

Retainer and Monthly Fees:  First month is due upon contract acceptance in order to begin work.   Subsequent months will be invoiced in advance and are due later no later than the fifth of the month.

Jumar marketing reserves the right to discontinue services at such time as the client becomes 60 days past due.

Finance Charges:  Past due balances will incur a 2% per month finance charge.

Terms & Conditions

Termination of this agreement, by either party, must be received in writing with 60 days advance notice.

There was no disagreement that the defendant paid the monthly retainers for the months of April through October 2010.   The dispute between the parties centers on plaintiff's claims for services relating to creation and placement of print media (magazine) and internet advertising as detailed in the “spreadsheet for advertising budget” (Def.Ex. A) which was prepared by plaintiff and submitted to defendant.   Vincent Burkun, a director of defendant Suntech, admitted that his father had signed Ex. A. on May 10, 2010 on behalf of Suntech.   There was conflicting and confusing testimony as to the exact nature and meaning of Ex. A which presents a $65,891 “total budget” for placement of advertisements created by Jumar in various magazines and on the internet in the second half of 2010.   The “Print Subtotal” is $51,452.   The “Online Subtotal” is $3,939.   Additionally, there is a line item for “Print Production Budget” of $8,000 and a line item for “Online Production Budget” of $2,500.   Mr. Burkun testified that he thought those production costs (last two items) were covered by the “creation of print and media strategy” component of the Marketing Contract and should have been covered by the monthly retainer payments.   Ms. Virgulack pointed out the provision in the Marketing Contract which states “ADVERTISING COSTS FOR INSERTIONS ARE NOT INCLUDED IN THIS PROPOSAL” (capital letters in original) and testified that the monthly retainer only included the creation of “rough drafts” of advertising copy, but the “finalization” of the ads and the “placement” in magazines and on the internet were in addition to the retainer services and were billed separately as line items on Ex. A. She could not say, however, the number of hours spent in finalization and placement in addition to the hours covered by the retainer, or how the $8,000 and $2,500 items were determined.   She testified that Jumar refused as a matter of policy to provide to customers evidence of its advertising costs.   She further testified that Ex. A is an “agreement,” not a “budget” and there was an understanding that the 50% of the $65,891 “total budget” was to be paid in advance and 50% halfway through the advertising cycle.   She confirmed that the first half of that amount, or $32,945.50 was paid by defendant on June 2, 2010 (See Pl.Ex., June 2 Invoice).   Mr. Burkun testified that he thought Ex. A was a “budget” or an “estimate,” a “not to exceed” figure, and that he thought the defendant would be shown the actual costs and would “pay like a pass through.”   But when he questioned the billing for the second half of the $65,891 total and asked to see the actual costs from the magazines and the internet providers and plaintiff's records, plaintiff refused to show him those costs.   He also testified that he asked to see copies of the actual magazine advertisements, but none were provided.   When shown a copy of plaintiffs' Ex 3., which is Jumar's summary billing statement showing the $37,551.45 balance claimed due, he testified that Suntech made payments as billed “until we didn't understand the big bill and got frustrated about lack of progress.   We were not getting critical ‘deliverables.’   They didn't do search engine marketing, ․ We weren't getting hits on our website.” ¹  He complained about not having the brochure or catalog and sent an email to Marie Jablonski at Jumar on August 30, 2010 (Def. Ex C) stating “․ we need this [the catalog] desparately!   We've been waiting a long time for this, and I am extremely frustrated awaiting its emergence.   Please, let's not waste another week.”   No catalogue was produced.   Jumar stopped all activity for Suntech as of November 5, 2011 because the account was more than 3 months past due.   (Pl.Ex. 7.)

The evidence raises several issues which the plaintiff has not proved in its favor by a preponderance of the evidence, especially since there are ambiguities in the Marketing Contract and the spreadsheet for advertising budget (Ex A) whether or not Ex. A was a binding agreement to pay that amount, or whether it was simply a budget (the word actually used four times in the document) or estimate;  and the extent to which advertisement production costs are or are not covered by the monthly retainers.   Since the plaintiff prepared both the contract and the spreadsheet, the ambiguities would have to be construed against the interest of the plaintiff.   There is also an issue as to whether or not the plaintiff itself was in compliance with the contract, especially with regard to production of the brochure or catalog.   But, for purposes of this hearing, the plaintiff is not required to prove its case by a preponderance of the evidence.   The court holds that the plaintiff has met the lower standard of proving probable cause that it will prevail.   Two items of evidence primarily support this conclusion:  first, that the defendant paid the first half of the $65,891 “total budget” claimed on Ex. A exactly as billed without protest or comment (Pl.Ex. 5);  and second, after receiving the invoice of November 4, 2010 (Pl.Ex. 2. 11/4/10 invoice) showing a claimed balance due of $37,555.45 which included the $32,945.50 second half of the $65,891 “total budget” from Ex. A, Mr. Berkun of Suntech emailed Ms. Virgulak of Jumar on November 30, 2010, stating, in part:  “Judi, we know we owe you the money ․” (Pl. Ex 4).   The plaintiff is therefore entitled to a prejudgment remedy.   The court has deducted from the $37,555.45 claimed balance due, the sum of $3,800 representing the retainers billed for November and December 2010 after the plaintiff has ceased to perform under the contract, bringing that total down to $33,755.45.   That total includes invoiced finance charges of $1,505.95 though the end of October 2010.   The court will allow another year of finance charges at 2% per month (24% per year) or $8,101.31 and $143.24 for costs of suit, bringing the total allowed prejudgment remedy to $42,000.

NOW, THEREFORE, it is hereby ORDERED that a duly authorized Marshal attach the value of up to Forty–Two Thousand ($42,000.00) Dollars, as follows:

A.  To attach sufficient property of the defendant SUNTECH OF FAIRFIELD COUNTY, INC. (the “Defendant”), as disclosed pursuant to applicant's disclosure of assets;  and/or

B. To garnish sufficient debts owed to the Defendant, as disclosed pursuant to the

Applicant's Motion for Disclosure of Assets;  and/or

C. To attach any other amounts currently held by Defendant SUTECH OF FAIRFIELD COUNTY, INC. at Quinnipiac Bank & Trust Co., Hamden, Connecticut 06514 (Account No. 1001030616) or any other such account at said bank.

BE IT FURTHER ORDERED that the foregoing order of attachment is issued without the requirement of a bond to posted by plaintiff, but without prejudice to defendant hereafter requesting pursuant to Conn. Gen.Stat. § 52–278d(a)(4), (d) and (e) the posting of a bond with surety.

BE IT FURTHER ORDERED that this Order is without prejudice to either of the parties requesting pursuant to Conn. Gen.Stat. § 52–278k an increase or decrease of the amount of the attachment.

BE IT FURTHER ORDERED that the Defendant is hereby enjoined, without further notice, from transferring, hypothecating, allowing or placing any further encumbrance upon the real or personal property held by the Defendant except in the ordinary course of Defendant's business.

Alfred J. Jennings, Jr.

Judge Trial Referee

FOOTNOTES

FN1. No transcript of the hearing has been prepared.   Quotations are from my handwritten notes and may not be literally accurate, but they convey the substance of what was testified to..  FN1. No transcript of the hearing has been prepared.   Quotations are from my handwritten notes and may not be literally accurate, but they convey the substance of what was testified to.

Jennings, Alfred J., J.T.R.