LLC v. Gary Kraemer (2013)

MEMORANDUM OF DECISION

BACKGROUND

This case came to this court by writ, summons and complaint of M. Jolly & Son, LLC, (the plaintiff) dated October 28, 2011, alleging three separate counts against the defendant Gary Kraemer (the defendant).   The first count claims the return of $30,000 and unspecified “monetary damages” arising from the alleged terms of a contract.   The second count alleges that the alleged conduct of the defendant also caused “foreseeable and consequential damages.”   In the third count the plaintiff alleges that the conduct of the defendant constituted a violation of Connecticut Unfair Trade Practices Act (CUTPA).

The defendant's Answer admits some allegations, denies some and alleges two special defenses and Counterclaims and Setoffs in five separate counts.   The first special defense relates to a claim that the plaintiff failed to mitigate its losses.   The second special defense alleges that the parties' contract is a “contract of adhesion” limiting the plaintiff's remedy to that provided in the contract.

The defendant's Counterclaims and Set offs in the first count alleges that the plaintiff breached its contractual obligations relating to both express provisions of the contract and a claimed covenant of good faith and fair dealing.   In the second count the defendant claims damages relating to the alleged removal or damage to stone walls.   Count three alleges a claim for treble damages pursuant to CGS Sec. 52–564, relating to alleged civil theft.   In the fourth count the defendant claims damages for trespass.   The defendant has not briefed the claims relating to the third and fourth counts which are therefor considered abandoned.   In the fifth count the defendant seeks attorney fees as punitive damages for an alleged CUTPA violation.

The plaintiff has denied the material allegations of the various claims of the defendant.

The matter was tried to the court at New London on April 24, 2013 where the parties were well represented by counsel, presented evidence and exhibits.   The testimony of one of the witnesses, John Jameson, was presented in the form of a deposition submitted by agreement (Def's Exhibit J).  At the conclusion of the trial the court ordered a briefing schedule for simultaneous briefs on May 1, 2013.

Prior to and during the trial the plaintiff withdrew any claim being made for loss of profits resulting from the alleged breach of contract.

FINDING OF FACTS

From the evidence presented by the parties, including reasonable and logical inferences from the same, and taking into account the court's evaluation of the credibility of the witnesses, the following facts are found.   Additional facts may be found as set forth in the analysis and conclusions.

The plaintiff is a limited liability company with a place of business in Bozrah, Connecticut.   The company was in the business of buying stone from landowners and after sorting, grading and preparing the stone, reselling it to customers.   At all relevant times Michael Jolly (Jolly) was a duly authorized agent of the company.   The defendant is a natural person residing in Connecticut.   He was a landowner whose land included considerable stone.

It is not disputed that on July 10, 2011, the parties entered into a Stone Removal Contract whereby the defendant granted the plaintiff exclusive rights to remove stone from his property at 78 Salt Rock Road (63 acres) in Hanover, Connecticut (the site) in exchange for a lump sum payment of $30,000 (the contract) (Pl's Exh 1).   The contract was different than other Jolly contracts (Pl's Exh 11 & 12) in several respects indicating that many of the terms in the instant contract were specifically negotiated by the parties.   It is found that this was not a contract of adhesion.   The plaintiff paid the defendant the $30,000 payment in cash in advance.   The defendant wanted the payment in full in advance because he was not going to be able to monitor the stone removal since he had obtained employment out of state and would be leaving the area.   At the time of entering into the contract the plaintiff had other locations in the state where he obtained stone for delivery to customers, one of which was in Plainfield.

Prior to entering into the contract the defendant and Michael Jolly, a principal in the plaintiff company, walked the 63 acres taking notice of the stone available both as “surface” stone and stone walls.   The property contained considerable wetlands and a pond.   There were paths or woods roads through portions of the property by which it was understood the plaintiff would access and/or remove the stone.   During that time it is found that the defendant assured Jolly that all necessary permits were in place and that he could legally proceed with stone removal.

Around the time of the contract and thereafter the defendant was in the process of filling in some wetlands to improve a path or woods road for access to the remainder of the property.   The defendant had heavy equipment of his own on the property including an excavator, backhoe, dump truck and a bulldozer.

The process by which stone is removed includes breaking down stone walls and separating out various types of stones (i.e., flat, round, etc.) and making them ready in separate areas for later delivery to customers as orders are received.   Heavy equipment is used to move and deliver the stone, but the disassembly of the walls and the grading and sorting of the stone is done by hand.

The plaintiff moved equipment onto the defendant's property quickly.   A loader was moved in on July 14, 2011 and a backhoe was delivered on July 17, 2011.   Three men were used by the plaintiff in the stone operations.   They worked 14 hours disassembling a portion of stone wall in two days.   They were specifically removing round stone from the stone wall.   Those stones were moved into a pile (Pl's Exh 7).

On July 19, 2011, the plaintiff brought in his tri-axle dump truck for the purpose of picking up the round stone assembled for delivery to a customer.   On that day, before the plaintiff's workers could load the truck, a town wetlands enforcement officer arrived with a Notice of Violation and cease and desist order which prohibited the removal of stone among other things.  (Pl's Exh 23.)   A show cause hearing was scheduled for July 25, 2011.   On July 19, 2011, the plaintiff stopped working on the site and has not returned since.   On July 25, 2011, the plaintiff requested the return of his $30,000.   The plaintiff's equipment was removed with the last item removed on July 27, 2011.   No stone was removed from the property by the plaintiff's workers before the stoppage, although some walls had been disassembled for sorting and grading.   Testimony to the contrary at the trial was not credited by the court.

In furtherance of the claim that the plaintiff had removed some stone before the stoppage, the defendant did present the testimony of a credible expert, John Sciremammano, who examined the site in 2013, long after the activities of the plaintiff.   He was of the opinion that seven to ten loads of stone had been removed from what appeared to him as the original situation.   However, it was clear to the court and it is found that he had no way of knowing who had removed any stone or when it may have been removed.   Nor was he familiar with the amount of stone on the site and available for removal before the plaintiff and defendant entered their contract.   Moreover, the defendant himself acknowledged that he had sold some stone to others before contracting with the plaintiff.

The plaintiff incurred $400 in costs to have the equipment brought to the property and $400 to have the equipment removed on July 27, 2011.

When told about the cease and desist order the defendant told Jolly he would “take care of it.”   From prior dealings with the town it is found that the defendant was fully familiar with the town's wetlands procedures and knew that there were wetland restrictions relating to the property.

Shortly thereafter the defendant erected a chain across the entrance to the property.  (Pl's Exh 31.)   The defendant did not appear at the time for the hearing before the wetland's commission, but a quorum not being present, the meeting was continued.   Thereafter the defendant engaged a professional to represent his interests before the commission.

Later in November and December 2011 the town wetlands agency granted the defendant permission to work on his road improvement and gave permission, subject to several new “stipulations” and conditions, to remove stones from the 63–acre site.   The plaintiff had not been subjected to stipulations or conditions in the contract with the defendant.   The defendant invited the plaintiff to return to the property thereafter to remove the stone under the new conditions but the plaintiff did not do so.   Compliance with the stipulations and conditions, including limiting working in areas protected by wetland regulations, would have adversely effected the ability of the plaintiff to have removed stone if he went back to the site.

The contract contained the following provision dealing with stoppage:  “․ If work is stopped due to the land owner, town, state or due to neighbor complaints, a refund toward the percentage of stone not yet removed from the property will be returned to M. Jolly & Son, LLC.”

The plaintiff, through Jolly, requested the refund of the $30,000 due to the stoppage before stone could be removed but was told by the defendant that he had spent the money and did not have money to pay him.   The defendant testified he spent the $30,000 between July 10, 2011 and July 25, 2011.   When Jolly told the defendant that he would be in financial difficulties without either the money or the stone to sell, the defendant told him “welcome to my world.”   No funds have ever been returned to the plaintiff by the defendant.

This litigation followed.

During the pendency of the litigation the defendant telephoned the plaintiff directly and left a recorded message on his answering machine in which, among other things, the defendant admitted “I know I gotta pay you back ․” but no specific amount was mentioned at the time.

The defendant incurred attorneys fees of $15,687.50 up to April 23, 2013.

THE LAW

The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages.  Keller v. Beckenstein, 117 Conn.App. 550, 558, 979 A.2d 1055, cert. denied, 294 Conn. 913, 983 A.2d 274 (2009).   To form a valid and binding contract there must be a mutual understanding of the terms that are definite and certain between the parties.  Duplissie v. Devino, 96 Conn.App. 673, 688, 902 A.2d 30, cert. denied, 280 916, 908 A.2d 536 (2006).

“It is well settled that in determining whether a practice violates CUTPA [the Connecticut Supreme Court has] adopted the criteria set out in the ‘cigarette rule’ by the federal trade commission for determining when a practice is unfair:  (1)[W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise—in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness;  (2) whether it is immoral, unethical, oppressive, or unscrupulous;  (3) whether it causes substantial injury to consumers, [competitors or other business persons] ․ All three criteria do not need to be satisfied to support a finding of unfairness.   A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.”  (Citations omitted;  internal quotation marks omitted.)  Cheshire Mortgage Services, Inc. v Montes, 223 Conn. 80, 105–06 (1992).  “[A] violation of CUTPA may be established by showing either an actual deceptive practice ․ or a practice amounting to a violation of public policy ․” (Citations omitted;  internal quotation marks omitted.)  Normand Josef Enterprises, Inc. v. Connecticut National Bank, 230 Conn. 486, 522–23 (1994).   The entire act is remedial in character;  General Statutes § 42–110b(d);  Hinchliffe v. American Motors Corp., 184 Conn. 607, 615 n.4 (1981);  and must be liberally construed in favor of those whom the legislature intended to benefit ․ Concept Associates, Ltd. v. Board of Tax Review, 229 Conn. 618, 623 (1994).  (Internal quotation marks omitted.)  Larsen Chelsey Realty Co. v. Larsen, 232 Conn. 480, 492 (1995).

“[A] damage award ․ may include amounts to compensate for consequential damages.   These are damages which are or were reasonably foreseeable ․ or which should have been reasonably foreseeable ․ if [it was] acting appropriately, to be the natural and probable results of a misrepresentation.”

“We have often said in the contracts and torts contexts that the party receiving a damage award has a duty to make reasonable efforts to mitigate damages ․ What constitutes a reasonable effort under the circumstances of a particular case is a question of fact for the trier ․ Furthermore, we have concluded that the breaching party bears the burden of proving that the nonbreaching party has failed to mitigate damages.”  Pan Handle Realty, LLC v. Olins, 140 Conn.App. 556 (2013).

“[T]he most salient feature [of a contract of adhesion] is that they are not subject to the normal bargaining processes of ordinary contracts.”  “[Adhesion contracts] tend to involve standard form contract[s] prepared by one party, to be signed by the party in a weaker position, [usually] a consumer, who has little choice about the terms ․” (Internal quotation marks omitted.)   Brown v. Soh, 280 Conn. 494, 504, 909 A.2d 43 (2006);  Gianetti v. Reither, No. CV 02–0398555 (August 24, 2011).   See also Rumbin v. Utica Mutual, 254 Conn. 259, 264, n.6 (2000).

Connecticut courts have held that “[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.”   (Internal quotation marks omitted.)  Warner v. Konover, 210 Conn. 150, 154 (1989).   See also Collins v. Anthem Health Plans, Inc., 275 Conn. 309, 333 (2005).   In Magnan v. Anaconda Industries, Inc., the court interpreted this duty to be a rule of construction designed to fulfill the reasonable expectations of the contracting parties as they presumably intended.  Magnan v. Anaconda Industries, Inc., 193 Conn. 558, 567 (1984).

ANALYSIS AND CONCLUSION

Applying the law to the facts found by the court, it is found that the plaintiff has satisfied its burden of proof as to the allegations of the first and second counts of the complaint in that there was a contract between the parties the implied terms of which were breached by the defendant to the plaintiff's detriment.   It was intended by the parties at the time of the contract that the plaintiff would have access to and the legal right to remove the specified stone during the period of time provided.   The defendant represented that all necessary permits were in place.   The plaintiff was in fact stopped from removing stone by the municipal authorities which stoppage remained in effect for a long period of time.   In addition to a violation of those implied terms, the defendant also breached the implied promise of fair dealing by misrepresenting the permitting situation thus inducing the plaintiff to advance the entire payment of $30,000.   The contract also specifically provided for the return of that payment in the event of such stoppage.   The plaintiff was required to incur the expense of bringing his equipment both to and from the site without the benefits anticipated by the contract.   These expenses were foreseeable and reasonable under the circumstances and are appropriate consequential damages.

Judgment is entered for the plaintiff on the first count and second count of the complaint against the defendant in the amount of thirty thousand eight hundred dollars.   In the third count of the complaint the plaintiff alleges a violation of CUTPA by the defendant.   Having reviewed the facts and applied the law as above the court finds that the plaintiff has not sustained the burden of proof as to the requirement of showing that the defendant was engaged in a trade or business when contracting for removal of stone from his property and for that reason the plaintiff cannot prevail on the third count.

The defendant's counterclaim alleges in count one a breach of contract by the plaintiff.   The court finds that the defendant has not sustained his burden of proof on that claim.   No breach of contract is found to have been proven as related to the plaintiff.   In the Second Count of the counterclaim the defendant seeks damages for the removal of stone from his property but the court finds no evidence of that as above.   The third and fourth counts are found to have been abandoned, but even if pursued the defendant has not established evidence sufficient to prove either of those claims.   In the fifth count of the counterclaim the defendant claims the plaintiff violated CUTPA in connection with its actions relating to this contract.   The court finds that the defendant has not sustained his burden of proof with respect to this claim.   Specifically the court does not find proven the facts alleged by the defendant to have established that violation.   For these reasons judgment may enter for the plaintiff on the defendant's counterclaim.

Accordingly, Judgment may enter for the plaintiff, M. Jolly & Son, LLC, against the defendant, Gary Kraemer to recover the sum of $30,800.00, plus costs.

Robert C. Leuba, JTR

Leuba, Robert C., J.T.R.