Westmere Group, Inc. v. Town of Darien (2013)

MEMORANDUM OF DECISION—DEFENDANT'S MOTION FOR PREJUDGMENT INTEREST (# 222.00)

Nature of the Proceeding

This is a lawsuit brought by plaintiff developer against the town of Darien.   In connection with developing a subdivision for which septic systems would not be adequate, plaintiff entered into an agreement with the town whereby plaintiff would construct a sewer line servicing the properties in the subdivision (to be connected to the town's existing system), with the potential if not expectation that there would be additional connections to the new sewer line, both directly and via one or two extensions (“developer's agreement”).   Plaintiff acquired the property as well as the plans for development from a prior developer, with the town's approval of the plan for dealing with sewage as an explicit condition of the closing.

Although the plans were approved and the closing on the sale of the property occurred in or around December 1999, the construction of the sewer line servicing the subdivision (including its connection to the town's existing sewer system—hereafter, Westmere sewer line) did not conclude until approximately 2005.   Further, despite the expectation that there would be seven houses in the subdivision, plaintiff constructed or caused to be constructed only three, with the other four lots remaining vacant through the time of trial.   Also in or around 2006, the town constructed a sewer line servicing Brushy Hill Lane (hereafter, Brushy Hill extension), which sewer line was connected to the Westmere sewer line as a means of connecting into the town's sanitary sewer system.

In 2006, plaintiff started this action.   Although plaintiff's complaint went through a number of iterations in which plaintiff attempted to assert a number of theories, the case was tried on the basis of a complaint asserting two theories—breach of contract and unjust enrichment.   In addition to the two theories seeking monetary compensation, both sides sought temporary and permanent injunctive relief relating to the connection of the Brushy Hill extension to the Westmere sewer line constructed and owned by plaintiff.

Evidence on the monetary claims in both counts started on May 14, 2013.   The jury returned a verdict ¹ for plaintiff, on the unjust enrichment count only, on May 24.   Both sides have filed post-verdict motions, plaintiff claiming that the jury erred in not finding for plaintiff on the breach of contract claim, and defendant claiming that the jury erred in finding for the plaintiff on the unjust enrichment claim.   Both sides have challenged the amount of the unjust enrichment award.   On August 13, 2013, the court filed memoranda of decision as to each of the three post-verdict motions filed by the parties, denying all of them.

Plaintiff has now filed a motion seeking prejudgment interest with respect to the jury award of $118,987.74 for unjust enrichment.

Legal Standards

An award of such interest is an equitable determination lying within the trier's sound discretion.   The determination is one to be made in view of the demands of justice rather than through the application of an arbitrary rule.

“A trial court must make two determinations when awarding compensatory interest under § 37–3a:  (1) whether the party against whom interest is sought has wrongfully detained money due the other party;  and (2) the date upon which the wrongful detention began in order to determine the time from which interest should be calculated.”  Maloney v. PCRE, LLC, 68 Conn.App. 727, 755 (2002) (citations and internal quotation marks, omitted).

If a court determines that interest is appropriate, the rate of interest is also a matter entrusted to the discretion of the court, subject to the statutory cap of 10%.  Sears, Roebuck & Co. v. West Hartford, 241 Conn. 749 (1997).

Discussion

Although plaintiff correctly cites Maloney, supra, with respect to the issues applicable to a determination of whether to provide prejudgment interest, plaintiff fails to match up those requirements with the situation at hand.   Plaintiff cites no authority, and offers no explanation, supporting the implicit contention that a claim for unjust enrichment comes within the scope of an award of interest for wrongful detention of money.   Wrongful detention usually and perhaps almost always involves a liquidated sum of money, as is implicit in the discussion in Maloney, 68 Conn.App. 755.  (Sometimes presented as a corollary or an alternate perspective, the existence of a bona fide dispute as to the amount owed often is deemed a justification for a denial of prejudgment interest.)

If the court were to conclude that money had been wrongfully detained/withheld, the obvious question is:  how much?   How much “should” defendant have tendered to plaintiff in order to avoid a claim of wrongful detention?   Was defendant supposed to make a series of escalating tenders/offers, in the hope that some figure would have been acceptable to plaintiff?

Plaintiff, in attempting to justify the claim for interest, continues to bring up claims that were foreclosed by the jury verdict and interrogatories, as well as the court's prior rulings.   Plaintiff claims that the jury found that the $38,000 tender for the Brushy Hill Road extension was improper.   That contention is erroneous on a number of levels.   First of all, as discussed in the court's earlier memoranda, the Brushy Hill Road extension was addressed in jury interrogatory # 4, not jury interrogatory # 2.   Additionally, the jury did not find that the town had breached any contractual obligation.   Still further, as also discussed in the court's memoranda, even if the assessment had been incorrectly calculated by the town, that was related to the issue of construction and recovery of construction costs for the sewer line, whereas the jury verdict was solely for unjust enrichment in connection with the operation and maintenance of the sewer line.   In other words, the issue of $38,000 versus $60,000 as being the proper assessment has no bearing whatsoever on whether money was wrongfully detained relating to operational costs.²

Plaintiff also fails to address the second point identified in Maloney:   “the date upon which the wrongful detention began in order to determine the time from which interest should be calculated.”   Plaintiff is asking that interest be awarded back to January 2006, thereby implicitly claiming that the wrongful detention began in or around January 2006.   The problem, of course, is that most of the expenses were not incurred until long after January 2006 as the expenses being claimed were accrued over a period of time.   Pl.Ex. 102—the summary of claimed charges—and the supporting backup exhibits reflect expenses incurred over the years since 2006, up to and including 2013.   The most glaring example is that plaintiff is seeking interest back to 2006 for insurance expenses that were only incurred in 2012 (Pl.Ex. 98).   Similarly, the claim based on Mr. Pritchard's time extends to April of 2013.

Plaintiff's only explanation of why it believes it is entitled to 10% interest, notwithstanding Sears, is a reference to the claimed culpability of defendant.   Interest is awarded to provide compensatory damages to the party whose money was wrongfully withheld, not to punish the party withholding the money.   Plaintiff's suggestion that the level of wrongfulness of defendant warrants an award at the maximum rate allowable finds no support in the statute, and plaintiff has cited no authority suggesting such an outcome.³  For a more appropriate analysis, see Judge Adams' decision dated June 19, 2013 in Alarmax Distributors, Inc. v. New Canaan Alarm Co., Inc., FST CV–09–5012255S [56 Conn. L. Rptr. 260], in which he discusses the appropriate rate of interest in the economic climate existing over the last few years, concluding that a 4% interest rate is appropriate for the current financial environment.  (If interest were to be awarded, the court would adopt this analysis.)

The court does not believe that prejudgment interest is appropriate in this case.   The jury declined to find any breach of contract, and awarded a recovery only under the unjust enrichment claim.   That is an unliquidated claim.   The expenses incurred by plaintiff, forming the basis for the jury award, were incurred over an extended period of time, with expenses accruing virtually to the date of trial, such that it is impossible to determine a date on which the wrongful detention began.   The court already has opined that it believes the award to have been on the high side, approaching excessive.  (The court cannot rule out the possibility that, in determining the award for unjust enrichment, the jury took into account timing-type issues.)   There was a bona fide dispute as to whether any amount at all was due to plaintiff, associated with the ongoing operation and maintenance of the sewer line, a position finding support in the language of the contract between the parties (Developer's Agreement).⁴  Conversely, plaintiff has cited no authority for an award of prejudgment interest on an unjust enrichment claim such as this.  (Plaintiff's contentions concerning its ongoing maintenance obligation, while arguably a valid concern, has nothing to do with whether interest should be allowed based on the jury's unjust enrichment award based on past expenses.)   Each of these considerations, alone, probably would be sufficient to justify a denial of prejudgment interest;  taken together, they all but compel such a conclusion.

Accordingly, plaintiff's motion for prejudgment interest is denied.

POVODATOR, J.

FOOTNOTES

FN1. The jury also responded to a series of interrogatories that had been submitted along with the verdict forms.   Plaintiff has attached the jury's responses to the interrogatories to its motion (Exhibit B)..  FN1. The jury also responded to a series of interrogatories that had been submitted along with the verdict forms.   Plaintiff has attached the jury's responses to the interrogatories to its motion (Exhibit B).

FN2. Even more remote to the claim at hand is plaintiff's reference to the town's decision not to utilize a second possible connection to plaintiff's sewer line (plaintiff's discussion of MH–2 on page 4 of its motion).   An additional connection would have allowed an additional assessment but that would only address construction cost recovery, and the jury awarded no damages in that regard—nothing for breach of contract and nothing for unjust enrichment relating to construction..  FN2. Even more remote to the claim at hand is plaintiff's reference to the town's decision not to utilize a second possible connection to plaintiff's sewer line (plaintiff's discussion of MH–2 on page 4 of its motion).   An additional connection would have allowed an additional assessment but that would only address construction cost recovery, and the jury awarded no damages in that regard—nothing for breach of contract and nothing for unjust enrichment relating to construction.

FN3. Plaintiff cites Aubin v. Miller, 64 Conn.App. 781 (2001), but in that case, the reference to punishment was an observation that defendant's intent to punish plaintiff constituted the wrongfulness allowing interest to be awarded.   There is no suggestion in the case that the award of interest was intended to punish defendant nor that the interest rate somehow should reflect the culpability of the defendant..  FN3. Plaintiff cites Aubin v. Miller, 64 Conn.App. 781 (2001), but in that case, the reference to punishment was an observation that defendant's intent to punish plaintiff constituted the wrongfulness allowing interest to be awarded.   There is no suggestion in the case that the award of interest was intended to punish defendant nor that the interest rate somehow should reflect the culpability of the defendant.

FN4. The agreement, as repeatedly discussed in earlier memoranda, required plaintiff to maintain and operate the sewer line until one year after the final lateral connection to plaintiff's subdivision was made, and it is/was undisputed that that final connection has yet to be made.   Indeed, it plausibly could be said that defendant's “theory of the case” was that that condition had never been satisfied such that operational costs were and should not be in issue..  FN4. The agreement, as repeatedly discussed in earlier memoranda, required plaintiff to maintain and operate the sewer line until one year after the final lateral connection to plaintiff's subdivision was made, and it is/was undisputed that that final connection has yet to be made.   Indeed, it plausibly could be said that defendant's “theory of the case” was that that condition had never been satisfied such that operational costs were and should not be in issue.

Povodator, Kenneth B., J.