Joseph General Contractors, Inc. v. John Couto et al. (2011)

MEMORANDUM OF DECISION

This decision is intended to supplement the partial decision rendered from the bench at the conclusion of argument, and it is the intention of the court that all times for appeal commence with the filing of this memorandum of decision, but the court recognizes that it is hardly the final word on that point.   Because each party is both a plaintiff and a defendant the court will refer to the parties by name, i.e. Couto, Silvestri, Landel and Joseph General, to make this decision more understandable.   As a final preliminary matter, there was some amendment to the pleadings to correct the corporate name of Joseph General, as of record will appear, but the foregoing designations are intended by the court to refer to the parties by their correct names.

In 2006, the Coutos were interested in obtaining a different house from the one in which they were living (in North Stonington), and they came upon an upscale five-lot subdivision called Admiral's Cove in Stonington.   While at first interested in the “model” house which had been fully built, the Coutos wished a separate dwelling for their special needs daughter on the same lot where the Coutos were to have their house located.   This was the situation that they had been able to arrange in North Stonington with cooperation and appropriate rulings from that town's land use authorities, and they had no reason to think that the situation in Stonington would be any different.   Mr. Silvestri and the Coutos came to an agreement in July of 2006, culminating in an agreement signed in July 2006 (p's ex. 21), in which the Coutos and Joseph General agreed to purchase and build, respectively, a home and “carriage house” on lot 5 in the Admiral's Cove subdivision for a total price of $1,980,000.   At this time, the Coutos were assured by Mr. Silvestri that if they didn't like the finished product they didn't have to buy it.   The specifications were vague, to be sure, but the overarching crux of the agreement (testified to by all parties in a rare moment of factual agreement) was that the new construction was to be of like kind and quality with the same materials as existed in the “model home” previously constructed by Silvestri and his companies, Joseph General and Landel.   At this time also Mr. Silvestri was well aware that the Coutos wanted and needed a separate dwelling for their special needs daughter, and assured the Coutos that this requirement would be met.

The first problem arose when Mr. Silvestri was unable to obtain financing for the project from Chelsea Groton Savings Bank, because the bank felt that they had already loaned Mr. Silvestri as much as they thought prudent from the standpoint of the bank's exposure.   Upon learning of this development, Mr. Silvestri told the Coutos that the financing was unavailable because the Coutos had “reserved” the money by obtaining a loan commitment to purchase the property when it was built.   Mr. Silvestri indicated that it was the Coutos' fault that he couldn't get financing and that they were likely to forfeit their deposits under the July 2006 contract.   Under this pressure, the Coutos acceded to Mr. Sylvestri's demands and agreed to purchase the lot from Landel, one of Mr. Silvestri's companies which held title to lot 5, and to have Silvestri and Joseph General, another of Mr. Silvestri's companies, construct the two houses on lot 5. This agreement, although drafted for signature by Joseph General and the Coutos, was never signed by anyone.   So, the Coutos paid $880,000.00 for lot 5 (for which Mr. Silvestri, through Landel, had paid $185,000.00) and obtained a construction loan from Chelsea.   Mr. Silvestri, Joseph General and Landel (which paid a considerable amount of the bills incurred for the construction on lot 5) proceeded to construct the two dwellings on lot 5, now owned by the Coutos.   Obviously, Mr. Silvestri's promise that if the Coutos didn't like the finished product they didn't have to purchase it was rendered unenforceable by Mr. Silvestri's pressuring the Coutos to obtain the construction financing themselves when Mr. Silvestri was unable to perform his part of the bargain contained in the only signed contract ever entered into by any of the parties.

Although the Coutos and Mr. Silvestri all seem to be upstanding people, and although Mr. Couto is a successful businessman who in the course of owning numerous Dunkin' Donut franchises has constructed numerous structures (those, the court finds were of the “cookie cutter” variety, the details of which construction were appropriately delegated) both Mr. and Mrs. Couto were extremely inexperienced and unsophisticated in the area of home construction, while Mr. Silvestri was an experienced home builder and land developer.   In all probability, Mr. Silvestri thought that zoning requirements restricting lots in Admiral's Cove could be circumvented by not installing a stove in the smaller dwelling until after certificates of occupancy were obtained (an optimistic conclusion drawn from a settled piece of litigation involving the Town of Stonington which had been resolved by removing a stove from a garage apartment).   Unfortunately, the Zoning Enforcement Officer of the town had not concurred in that settlement (by the town ZBA) and enforced the plain meaning of the one dwelling limitation.   In spite of Mr. Silvestri's claims that the Coutos knew of the single dwelling restriction on lot 5, the court finds that, if indeed it was mentioned at all by Mr. Silvestri, it was mentioned in the context that it would not be a problem as long as a stove was not connected.

Mr. Silvestri and the Coutos had also agreed that the houses were to be designed by the same architect who designed the model house.   As the project began design phase, Mr. Silvestri advised the Coutos that that architect was busy and substituted a designer (Mr. Silvestri claimed that this designer had a “higher” certification than an architect).   The first design seemed a good start, but Mr. Silvestri discovered that the design produced was larger than the 4000 square ft, +/- in the unsigned contract and so the designer was instructed to reduce the size.   Subsequent designs were indeed smaller, but as construction progressed, it became painfully obvious that many rooms were not going to be functional, i.e., toilets placed so as to be unusable, kitchen dimensions which rendered sinks unusable, and so on.   Whether caused by the “shrinking” of the size of the original design or by flaws in the original design, the court does not opine, but the court does find that the house was not designed in a manner similar to the model house upon which the agreements of the parties was based.

The Coutos were unable to find fixtures within the allowances set forth in the unsigned contracts, sometimes because of price increases, sometimes because Mr. Silvestri was unable to find the products he had promised, and sometimes because Mrs. Couto, who carried the laboring oar in this phase of the project had more expensive tastes than the allowances provided for, but, on balance, the court finds that the selection process for fixtures, finishes and the like, while not setting any speed records, was proceeding apace.   At this time Mr. Silvestri attempted to get another large progress payment, but the Coutos were reluctant to pay more money until the allowances had been resolved, a not unreasonable position, particularly in view of the fact that Mr. Silvestri and his companies Joseph General and Landel had been completely paid to date for work performed.   When the demanded payment was not forthcoming, Mr. Silvestri walked off the job, leaving the Coutos, who by now had sold their North Stonington home and were living in a hotel, in dire straits.

Mr. Silvestri subsequently caused a mechanic's lien to be placed on lot 5, and willfully prevented the Coutos from accessing the sewer line, requiring the Coutos to obtain relief by suing to prevent Mr. Silvestri from continuing to block their access to the sewer line to which they were so clearly entitled.   As the Coutos were completing the construction of the dwellings, it was discovered that considerable quantities of construction debris had been dumped and buried where the smaller house was to have been built.

As decided from the bench in a partial decision rendered before the court ran out of time, the court finds that Joseph General has failed to prove the allegations of its five-count complaint and judgment will enter on Joseph General's claims of Breach of Contract, Unjust Enrichment, Promissory Estoppel, and Breach of the Covenant of Good Faith and Fair Dealing in favor of the Coutos.   The fifth count is directed against Travelers on the statutory bond posted by the Coutos to release the mechanic's lien placed on the Couto's property by Mr. Silvestri (lot 5) so that the Coutos could continue to try to build a home for their family.   That bond is ordered discharged.

The claims by the Coutos are brought in a First Amended Counterclaim (six counts) in the case where Joseph General is the plaintiff and in which case the court has ruled in the above paragraph, and in the Second Amended Complaint of Feb 4, 2010 (nine counts) in the case where the Coutos are the plaintiffs.   Since many of the counts track each other, the court will rule on the counts as they are designated in the respective pleading.

On the first count of both of the Couto pleadings, the court finds in favor of Mr. Silvestri, Landel and Joseph General.   The claimed violation of C.I.O.A. in not providing a public offering statement fails because the court finds that the statutory exception for common interest communities containing no more than 12 units, not utilizing a master association, and not subject to development rights (C.G.S.sec.47–262(b)(7)) applies.   The Coutos have failed to prove that development rights were retained.

On the breach of contract counts, the court finds that while the initial contract may well have been between the Coutos and Joseph General, subsequent developments without any signed agreements make it clear that because of the individual failure to obtain financing on the part of Mr. Silvestri, the individual importuning by Mr. Silvestri, and the individual tortious conduct of Mr. Silvestri to be discussed later, the actions of the parties can only be construed as joint action by Mr. Silvestri, Joseph General and Landel, and therefore the court finds against those three parties on these counts.

On the fraud counts, the court finds that while Mr. Silvestri's conduct was improper in many respects, the Coutos have failed to prove fraud against any party by clear and convincing evidence, and so judgment will enter on those counts in favor of Mr. Silvestri, Joseph General and Landel.

On the breach of implied warranty counts, as with the breach of contract counts discussed above, judgment enters against Mr. Silvestri, Joseph General, and Landel.

Again, while the actions which constitute the trespass counts were clearly those of Mr. Silvestri, the court finds that both Landel and Joseph General are liable as tortfeasors, and so judgment will enter on those counts against all three of those parties.

On the CUTPA counts the court finds that many of the actions taken by Mr. Silvestri and his companies were indeed unscrupulous, oppressive, unfair and deceptive, among them blaming the Coutos for his inability to obtain the financing necessary to fulfill his contractual obligations, pressuring the Coutos into a changed arrangement for the house construction, the blatant attempt to force money that was not owed by welding the access cover to the unconnected sewer closed and dumping debris on the Coutos' property.   The court find that the Coutos have proved their CUTPA claim against Mr. Silvestri, Landel and Joseph General.

As indicated from the bench, judgment will enter for Mr. Silvestri on the Count of Intentional Infliction of Emotional Distress.

As to the eighth count of the Coutos' second amended complaint, seeking declarations as to the effects of various aspects of the entire common interest community, any such ruling by the court would impact the rights of other lot owners, and so that count is dismissed, sua sponte, for failure to join all necessary parties, the other lot owners.

The count for declaratory relief as to the escrow funds has been proven, and the escrow funds are ordered disbursed to the Coutos.

The court awards damages as follows, but declines to order injunctive relief.   The court finds that much, but not all of the costs incurred by the Coutos are attributable to the breaches by Mr. Silvestri and his companies.   The court finds that $100,000.00 of the Coutos' claimed damages are really for items and work that Mr. Silvestri was not obligated to provide.   Damages are awarded on the breach counts in the amount of $553,222.55, which sum includes $12,254.48 for the Coutos' attempts to acquire their promised C.O. for the second dwelling on lot 5 and $14,570.00 for the bond premiums.   On the trespass count, damages are awarded in the amount of $20,436.30, consisting of $10,436.00 for the cost of removing the wrongfully placed debris from lot 5 and $10,050.30 as the fair and reasonable costs of obtaining access to the sewer line blocked by the wrongful conduct of Mr. Silvestri and his companies.

As to damages under CUTPA, actual damages are already awarded in other counts and counsel fees will be determined at a hearing presently scheduled for Wed. Nov 30, in New London at ten a.m. This schedule is created without input from counsel, and since the court will be away for much of November, requests for changes to that date should be made before October 31.

Judgment shall enter accordingly.

Koletsky, JTR

Koletsky, Joseph Q., J.T.R.