Sung Gaynor et al. v. Richard Stein dba Hi–Tech Homes (2012)

MEMORANDUM OF DECISION

This matter was heard on the hearing in damages calendar on September 20, 2012 following a default entered against the defendant for his failure to plead on May 17, 2011.   The plaintiffs' complaint, dated November 11, 2009, sets forth three counts against the defendant, Richard Stein, d/b/a Hi–Tech Homes.¹  The first count alleges breach of a contract between the plaintiffs and the defendant to construct a residence on property owned by the plaintiffs.   The second count alleges unjust enrichment.   The third count claims violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42–110b.

FIRST COUNT—BREACH OF CONTRACT

From the allegations of the complaint ² and the evidence produced at the hearing in damages, the following facts were established.   The plaintiffs in this matter were formally owners of property located at 106 Green Farms Road in Westport.   They spent $485,000 to acquire the property in 2004 with the intention of tearing down the existing residence located on the property and constructing a new residence in its place.   The plaintiffs planned to sell the property at a profit after completion of the new residence.   On October 19, 2005, the plaintiffs entered into an agreement with the defendant to construct a new residence on the plaintiffs' Westport property.   The agreement contemplated that the new residence would be erected in two phases.   In the first phase the defendant agreed to erect a pre-fabricated home on the property in return for payments totaling $290,400.   The agreement was specific as to the obligations of the defendant with respect to the delivery and installation of the pre-fabricated home.

The second phase contemplated under the agreement involved completion of the residence by subcontractors employed by the plaintiffs.   The defendant's obligations under the second phase was “to supervise all phases of work necessary to complete the pre-fabricated home.   Estimates will be obtained by [the defendant] and/or [the plaintiffs] and approved by [the plaintiffs].  [The defendant shall receive ten percent compensation for supervision of [the plaintiffs'] subcontractors final bill of the completion of the above captioned house.”

On December 19, 2005, the plaintiffs took out a new mortgage in the amount of $933,800.  (Ex. 4.) Approximately $435,000 of the proceeds of the mortgage were applied to pay off two existing mortgages.   The plaintiffs planned to use the balance of the proceeds to erect the new residence on the property.   In early 2006, the prefabricated home was delivered to the plaintiffs' property and installed in accordance with the October 19, 2005 agreement, and the defendant was paid $290,400 as provided under the terms of the agreement.

At the hearing in damages one of the plaintiffs, Sung Gaynor, testified that the defendant had fulfilled his obligations under the first phase of the agreement.   However, she stated that the defendant breached the contract by failing to supervise the subcontractors adequately and by failing to complete the residence in a timely fashion.   Specifically, the plaintiffs claim that:  (1) some of the work assigned to the subcontractors operating under the defendant's supervision was not performed or not completed, despite the fact that the plaintiffs advanced funds to the defendant to pay the subcontractors in full;  (2) the plaintiffs lost the residence due to foreclosure;  and (3) as a consequence of the defendant's breaches and the resulting delays, the plaintiffs were unable to place the residence on the market for sale.

With respect to the plaintiffs' first claim, Sung Gaynor testified that during the second phase of construction, the parties envisioned that the defendant would supervise “subcontractors” approved and employed by the plaintiffs and would receive payments equal to ten percent of each subcontractor's final bill.   Despite the provisions of the agreement, the parties, in practice, adopted a different approach.   The subcontractors submitted their estimates and bills to the defendant, and the defendant would thereafter prepare invoices which were submitted to the plaintiffs for payment.

The plaintiffs introduced into evidence copies of eight invoices presented to them by the defendant for work performed by subcontractors under the second phase of the agreement which were paid by the plaintiffs in full.  (Exs. 11 through 18.)   The first invoice was dated May 19, 2005 and the last was dated September 18, 2007.   Plaintiff Sung Gaynor testified that the defendant performed all the work specified under four of the invoices, but that, to a greater or lesser extent, work had not completed with respect to the remaining four invoices.   She testified that the work which was not completed included the following:

Ex. 15—Railings on stairs $ 1,276.00

Ex. 16—Waterproof basement $ 950.00

—Interior finish $ 3,281.00

—Wood floors $14,200.00

Ex. 17—Process $ 5,750.00

—Gutters & Leaders $ 3,100.00

Ex. 18—Rake and seed lawn $ 3,000.00

—Plumbing $ 7,000.00

—Ceramic floors and granite $13,404.00

—Interior stair rails $ 2,837.00

—City water connection $ 2,500.00

—Garage door openers $ 320.00

Total $57,618.00

The court finds that the plaintiffs have sustained damages in the above amount due to the defendant's breach of his obligation to supervise the “subcontractors” as alleged in the first count of the plaintiffs' complaint.   The evidence clearly demonstrated that the defendant had failed to ensure that the subcontractors had completed the work assigned to them prior to presenting his invoices covering that work to the plaintiffs.

The plaintiffs' second claim is that they were unable to make the payments due under their mortgage and consequently lost the property in foreclosure proceedings.   Although the plaintiffs' complaint alleges that they lost the residence through foreclosure, the complaint does not allege any connection between the defendant's breach of contract and the foreclosure.   Consequently, any losses suffered by the plaintiffs in connection with the foreclosure are not recoverable as damages.

The plaintiff's third claim of damages is based on the failure of the defendant to complete the project in a timely manner which allegedly resulted in the plaintiff's inability to sell the property.   The agreement does not provide for any time period for completion of the second phase of construction.   It appears that the parties contemplated that the plaintiffs' choices for the finishing of the interior of the residence, the selection of subcontractors and the availability of funds to complete the project would be left open.³  However, the plaintiff presented no credible evidence of damages resulting from any delay in their ability to market the property.   The court can not engage in speculation to determine whether and to what extent the plaintiffs may have incurred damages due to any delays in the performance of the work required to place the new residence in a condition which would have permitted it to be placed on the market.  American Diamond Exchange, Inc. v. Alpert, 302 Conn. 494, 513 (2011).

SECOND COUNT—UNJUST ENRICHMENT

Generally, a recovery based on a claim of unjust enrichment is available only when there is no remedy available by an action under a contract.  Hartford Whalers Hockey Club v. Uniroyal Goodrich Tire Co., 231 Conn. 276, 282–83 (1994).   Here, the evidence and the allegations of the first count of the plaintiffs' complaint establish the existence of a valid contract between the parties covering all aspects of the relationship between the parties.   Aside from collecting funds from the plaintiffs for work that was not completed, which is properly the subject of a breach of contract claim as alleged in the first count, the evidence does not show that the defendant was in any way enriched by the plaintiffs' inability to market the residence prior to foreclosure.   The court finds no basis for an award of additional damages to the plaintiffs under the claim of unjust enrichment alleged in their second count.

THIRD COUNT—CUTPA VIOLATION

Pursuant to the allegations of the third count of the plaintiffs' complaint, which are deemed admitted because of the defendant's default, the defendant's actions constitute a violation of the Connecticut Unfair Trade Practices Act. Therefore the court may award the plaintiff's attorneys fees pursuant to General Statutes § 42–110g(d).  The court has reviewed the affidavit of the plaintiff's attorney (Ex. 10) and awards fees in the amount of $14,404.19.   The court finds that double or triple damages, although available under the Connecticut Unfair Trade Practice Act, are not appropriate under the circumstances of this case.

For the reasons stated above, the court awards damages to the plaintiffs in the amount of $57,618.00 together with attorneys fees in the amount of $14,404.19.

David R. Tobin, J.T.R.

FOOTNOTES

FN1. Although the action was brought against both Richard Stein and “Hi–Tech Homes,” it is clear that, at all relevant times, Hi–Tech Homes was a trade name and not a legal entity..  FN1. Although the action was brought against both Richard Stein and “Hi–Tech Homes,” it is clear that, at all relevant times, Hi–Tech Homes was a trade name and not a legal entity.

FN2. Deemed admitted, as to liability, pursuant to Practice Book § 17–34 as a consequence of the default entered against the defendant..  FN2. Deemed admitted, as to liability, pursuant to Practice Book § 17–34 as a consequence of the default entered against the defendant.

FN3. The plaintiffs' complaint does not contain a count alleging that they entered into the agreement with the defendant as the result of any intentional or negligent misrepresentations made by the defendant as to either the cost to complete the project or the time which it might take to finish the residence to the satisfaction of the plaintiffs..  FN3. The plaintiffs' complaint does not contain a count alleging that they entered into the agreement with the defendant as the result of any intentional or negligent misrepresentations made by the defendant as to either the cost to complete the project or the time which it might take to finish the residence to the satisfaction of the plaintiffs.

Tobin, David R., J.T.R.