Mi–Roof, Inc. v. Michael T. Shutler et al. (2013)

MEMORANDUM OF DECISION ON PLAINTIFF'S APPLICATION FOR A PRE–JUDGMENT REMEDY

FACTS

The plaintiff, hereinafter also called “Mi–Roof,” is a software developer which licenses certain web-based computer software applications used in the roofing industry (hereinafter also “the software”).   The defendant, Michael T. Shutler (hereinafter also “Shutler”) was, in 2005, an employee of Silktown Roofing, Inc. (“Silktown”), approached the plaintiff to provide said software to his company, Silktown, and in 2009, Mi–Roof entered into a contract with Silktown giving it allegedly exclusive rights to distribute and use the software in the states of Connecticut, New York, Rhode Island and Massachusetts.   See plaintiff's Exhibits 3 and 5. Shutler was allegedly involved on behalf of Silktown with developing this exclusive agreement between Silktown and the plaintiff and was, therefore, familiar with the fact that Silktown had this territory exclusively.   In 2010, Shutler became employed by the defendant, Tecta America New England, LLC, a wholly-owned subsidiary of the defendant, Tecta America Corporation (collectively known as “Tecta”).   Tecta is a commercial roofing contractor which conducts business throughout the United States including Connecticut.

Well aware that Silktown had the exclusive rights to use the plaintiff's software in the territory above-mentioned including the State of Connecticut, Shutler and Tecta gained access to the codes for the plaintiff's software and utilized the plaintiff's software in the State of Connecticut for among other things, to take customers away from Silktown and by doing same would be taking business away from the plaintiff.   The plaintiff alleges that Shutler misled the plaintiff into believing that Tecta's use of the plaintiff's software would be confined to the State of Maine.   A contract was entered into between the plaintiff and Tecta America—Maine office (hereinafter also “Maine Office”) as is alleged by the plaintiff for use of the plaintiff's software only in the State of Maine.   The plaintiff brought suit by complaint dated April 22, 2013, against Shutler, Tecta America Corporation and Tecta America New England, LLC. The defendants then successfully moved to consolidate this case with CV 13–6041507 Silktown Roofing v. Michael Shutler;  Tecta America Corporation;  Tecta America New England and CV11–6026676, Silktown Roofing, Inc. v. Mi–Roof, Inc., Ryan Shultz;  (who is the president of the plaintiff) and Jeff Shultz.   Attorney George Royster, representing Mi–Roof, Inc., has become involved in all of these cases.   The first count of this complaint is for tortious interference with contract and/or business relations, the second count violation of the Connecticut Unfair Trade Practices Act, the third count breach of contract against Tecta, the fourth count breach of the covenant of good faith and fair dealing against all defendants, count five negligence misrepresentations and negligent interference with business and/or contractual relationships against all defendants, count six innocent misrepresentations and in the plaintiff's prayer for relief, it seeks attorneys fees and costs under CGS Sec. 42–110g(a).   A hearing was held before this Court, with counsel for all parties except Silktown on July 30, 2013.

Briefs were filed by the parties.

STANDARD OF REVIEW

In defining probable cause, which is what the Court must find, in order to grant the prejudgment remedy, TES Franchising, LLC v. Feldman, 285 Conn. 132, 137 (2008), states as follows:  “Proof of probable cause as a condition of obtaining a prejudgment remedy is not as demanding as proof by a fair preponderance of the evidence ․ probable cause is a flexible common sense standard.   It does not demand that a belief be correct or more likely true than false ․ The trial court's function is to determine whether there is probable cause to believe that a judgment will be rendered in favor of the plaintiff in a trial on the merits ․ In its determining of probable cause, the trial court is vested with broad discretion which is not to be overruled in the absence of clear error.”

ISSUES AND FINDINGS

1. The defendants claim that the contract between the plaintiff and Tecta America–Maine office dated April 5, 2011, does not indicate that there is exclusivity provision limiting Tecta America–Maine office to the State of Maine.   It is true that such specific language does not appear in said contract which is plaintiff's Exhibit 2. However, Shutler who is employed by the Maine office knew of the exclusivity agreement with Silktown, and there is nothing in the contract that allows the Maine office to utilize the plaintiff's software outside of the State of Maine.   It seems to this Court that if Tecta America wanted to have use of the software not limited, the contract would be with Tecta America, Corporation and not Tecta America–Maine office.   Moreover, there is an agreement signed by the Maine-office and the contract is in the name of the Maine-office all of which indicates that the contract was limited to Maine.   It does not make sense for the plaintiff to enter into a contract that allows utilization of its software in the State of Connecticut, Massachusetts, New York and Rhode Island when it was well aware of its exclusive arrangement with Silktown.

2. The Parole Evidence Rule cannot amend a contract, but when it is ambiguous, parole evidence may be used to make the ambiguity clear.   See Jay Realty, Inc. v. Ahearn Development Corporation, 189 Conn. 52, 55–6 (1983).

The Court finds that the contract between the plaintiff and Tecta America–Maine office is not ambiguous and by its terms nothing gives Tecta America–Maine office the right to utilize the software outside the State of Maine.   If, however, one were to interpret it as being ambiguous, parole evidence can come from the affidavit of Ryan Schulz who is president of the plaintiff and one of the developers of the Mi–Roof software, the affidavit being dated May 3, 2013;  also, see affidavit of John McConville, president of Silktown, dated July 9, 2013, in which he states that Shutler knew when he went to Tecta that Silktown had an exclusive right to the software in the states mentioned above.   In his affidavit, he stated that Shutler was instrumental in helping put the contract with Silktown together which set forth the exclusive rights to use the software in the states of Connecticut, New York, Rhode Island and Massachusetts.   He further states that Shutler explained to him that the software would be used only in Maine, and the contract would, therefore, be with the Maine office of Tecta.   Schultz stated that he was served with a lawsuit from Silktown claiming that Mi–Roof had breached the exclusive contract by allowing Shutler access to the New Haven, Connecticut schools' program.   Also Schulz confirmed the allegations of the complaint which alleges tortious interference, misrepresentation, etc., as above stated.   Shutler is an employee of Tecta America New England–Maine office, Tecta America New England, LLC and Tecta American Corporation, which owns Tecta America New England, LLC and Tecta America–Maine office.

3. Attorney George Royster of Halloran & Sage, LLP, representing Mi–Roof, Inc., has submitted an affidavit for $132,763.88 for attorneys fees and costs incurred, or to be incurred, in all of the matters that have been consolidated.   It is the defendants that moved to consolidate, and Attorney Royster had to represent the plaintiff in at least one of the other matters which were consolidated.   Accordingly, this Court finds that attorneys fees, of $132,763.88, which would be based at least on violation of the Connecticut Unfair Trade Practices Act are fair, just and reasonable.

CONCLUSION

The Court finds that the plaintiff has established probable cause for a judgment to be rendered in its favor in at least the amount of $132,763.88 and the prejudgment remedy is granted in that amount against all defendants.

Rittenband, JTR

Rittenband, Richard M., J.T.R.