Amica Mutual Insurance Company v. LLC (2013)

MEMORANDUM OF DECISION

The plaintiff brings this action in subrogation to the rights of its insured, Michael Miller.   Miller entered into a written contract with the defendant for the purchase of real property at 9 Mansfield Place, Darien, Connecticut.   Paragraph 40 of the contract contained the following relevant provision:

40.  DEMOLITION OF EXISTING HOUSE ON PROPERTY.   By September 17, 2010 Seller shall obtain the permits from the Darien Building Department and applicable local regulatory authorities to remove the existing residence from the Premises.   Seller shall then remove the existing residence on the Premises per such permits at Seller's sole cost prior to closing.

Buyer shall not be obligated to close title until Seller has, at Seller's sole cost and expense:

5.  Remediated any environmental matters related to the demolition, including but not limited to asbestos, underground oil tank, soil clean-up, if necessary.

In accordance with the above provision the defendant hired City Carting and Recycling, Inc. to demolish the existing dwelling and remove the resulting demolition debris from the property.   During the demolition operation City Carting was required to remove earth from around the house foundation and in the process discovered metal tubing that was buried beneath the earth's surface to a depth of one to two feet.   The tubing was not connected to anything in the interior of the building and the portion which was exposed was lying loose in the earth.   Philip DeCresenzio who supervised the job for City Carting did not believe that the tubing was connected to an underground tank because the demolished house was served by an above ground tank which also was removed from the property.   For this reason, he did not bring his discovery to the defendant's attention.

Shortly after the demolition was complete, the debris removed and the earth rough graded, Miller began construction of a new home.   Because the foundation of the new home exceeded the footprint of the demolished house, Miller's builder was required to excavate an area larger than the demolition site.   In the process of excavating for the foundation, the builder discovered an abandoned oil storage tank.   Upon further investigation, he learned that the tank had leaked what he described as oil which he detected in the vicinity of the tank.   The builder also established that the tank had metal tubing attached to it.

As a result of the oil leak, Miller was required to remove and dispose of the tank and to remediate the contaminated soil.   The policy of insurance issued by the plaintiff covered the remediation but not the removal of the tank.   The plaintiff now seeks recovery of $13,749.35 as the cost of remediation and $645 on Miller's behalf for removal of the tank.

The plaintiff has a three-count complaint which alleges (1) innocent misrepresentation, (2) breach of contract and (3) breach of implied warranty of good faith and fair dealing.   In the court's view, because liability turns on the meaning and scope of the applicable contract provision, the issue is whether the tank removal and soil remediation required here was “related to the demolition” as that specification is used in paragraph 40.5 of the contract.

The principles which govern interpretation of contract language are well established.

“A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction ․ [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and ․ the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract ․ Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms.   A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity ․” (Internal quotation marks omitted.)  Alstom Power, Inc. v. Balcke–Durr, Inc., 269 Conn. 599, 610–11.”  (Alternate citations omitted.)  Allstate Life Ins. Co. v. BFA Ltd. Partnership, 287 Conn. 307, 313 (2008).

Not surprisingly, the contract does not define the term “related.”

The intention of the parties to a contract governs the determination of the parties' rights and obligations under the contract.  Mallad Construction Corp. v. County Federal Savings & Loan Ass'n, 32 N.Y.2d 285, 291, 925 (1973);  see Frye v. Brown, 189 App.Div.2d 1031, 1033 (1993);  American Express Bank Ltd. v. Uniroyal, Inc., 164 App.Div.2d 275, 277 (1990), appeal denied, 77 N.Y.2d 807 (1991);  accord Barnard v. Barnard, 214 Conn. 99, 109 (1990);  Hatcho Corp. v. Della Pietra, 195 Conn. 18, 20 (1985);  Sturman v. Socha, 191 Conn. 1, 10 (1983).   Analysis of the contract focuses on the intention of the parties as derived from the language employed.  Slatt v. Slatt, 64 N.Y.2d 966, 967 (1985);  Mallad Construction Corp. v. County Federal Savings & Loan Ass'n, supra, 291;  accord Levine v. Massey, 232 Conn. 272, 278 (1995);  Barnard v. Barnard, supra, 110;  Sturman v. Socha, supra, 10.

Where the intention of the parties is clearly and unambiguously set forth, effect must be given to that intent.  Slatt v. Slatt, supra, 64 N.Y.2d 967;  West Weir & Bartel, Inc. v. Mary Carter Paint Co., 25 N.Y.2d 535, 540 (1969), amended on other grounds, 26 N.Y.2d 969 (1970);  accord Lawson v. Whitey's Frame Shop, 241 Conn. 678, 686, 697 A.2d 1137 (1997);  Levine v. Massey, supra, 232 Conn. 278–79.   Contract language is unambiguous when it has a “definite and precise meaning concerning which there is no reasonable basis for a difference of opinion ․” (Citations omitted.)  Breed v. Ins. Co. of North America, 46 N.Y.2d 351, 355 (1978);  see Chimart Associates v. Paul, 66 N.Y.2d 570, 573 (1986) (proper inquiry in determining whether contract is ambiguous is whether agreement on its face is reasonably susceptible of more than one interpretation;  accord Levine v. Massey, supra, 279;  Zullo v. Smith, 179 Conn. 596, 601 (1980) (same) (“court will not torture words to impart ambiguity where ordinary meaning leaves no room for ambiguity”).   The rules of construction are applied only if the language of the contract is ambiguous, uncertain or susceptible of more than one construction.  Breed v. Ins. Co. of North America, supra, 355;  Gans v. Aetna Life Ins. Co. of Hartford, Connecticut, 214 N.Y. 326, 330 (1915);  accord Levine v. Massey, supra, 278;  Gino's Pizza of East Hartford, Inc. v. Kaplan, 193 Conn. 135, 138–39 (1984).   Moreover, if the intention of the parties is to be determined without reference to extrinsic evidence, interpretation of the contract is a question of law.  Mallad Construction Corp. v. County Federal Savings & Loan Ass'n, supra, 32 N.Y.2d 291;  American Express Bank Ltd. v. Uniroyal, Inc., supra, 164 App.Div.2d 277;  accord Morton Buildings, Inc. v. Bannon, 222 Conn. 49, 53–54 (1992).

(Alternate citations omitted.)  Levine v. Advent, Inc., 244 Conn. 732, 745–747 (1998).

The court concludes that the term “related” is not ambiguous and that its meaning may be gleaned by looking to the common understanding of the word and its dictionary definition.  Lombardo's Ravioli Kitchen, Inc. v. Ryan, 268 Conn. 222, 232 (2004).  G.S. § 1–1.

It is clear from the evidence that Miller was concerned that the house designated for demolition might be served by an underground oil storage tank.   As a result, he insisted upon inclusion of a contractual provision which would afford him protection against spillage from such a tank.   The seller, acting through Joseph Minichini, its president, on the other hand was unwilling to represent that there was no underground storage tank on the property because he had recently acquired the property at a foreclosure sale and had never occupied the premises for any purpose.   This is why he insisted upon the handwritten change in language to paragraphs 5 and 6 of the contract rider in order to limit the seller's representations to the presence of such tank and related contamination to the extent of “his knowledge.”   There is no evidence that the defendant had any knowledge or even reason to believe that such a tank was buried on the property.   Joseph Minichini made no representations and was under no duty to investigate underground conditions.  McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn.App. 486, 516 (2006).

The Supreme Court has shed light on the ordinary and common meaning of the word “related” in the context of statutory construction.¹  “Webster's International Dictionary (3d Ed.1986), in pertinent part, defines the word “related” as, “having relationship:  connected by reason of an established or discoverable relation.”   Black's Law Dictionary defines “related” as “[s]tanding in relation;  connected.”  Bolt Technology Corporation v. Commissioner of Revenue Services, 213 Conn. 220, 228 (1989).   Webster's New World Dictionary, 2d Coll. Ed. at 1198 defines the terms as “connected or associated.”

Philip DeCresenzio testified that the tubing which he uncovered was not connected in any way to the building foundation which he demolished nor was it connected to the above ground oil tank.   Also, he made it clear that he did not consider the tubing to be part of the demolition project and therefore did not remove it with the demolition debris.   The court concludes that the metal tubing and the underground storage tank were not related to the demolition but constituted separate and distinct disposable material which instead, were related to the new house excavation because that is when they were discovered.   This conclusion is bolstered by the terms of paragraph 26 of the contract which provides that “all representations by seller are made to the best of seller's knowledge and belief and without any duty of inquiry.”  (Emphasis added.)   Thus, the express language of the contract excuses the defendant from performing an investigation of any sort, whether above ground or below ground.   Such a provision is consistent with a seller who does not take occupancy of real property but merely “flips” it to a purchaser.

The remaining counts of the complaint merit only brief analysis and discussion.   The first count alleges the tort of innocent misrepresentation.   A claim of innocent misrepresentation requires a plaintiff to prove that (1) the defendant made a representation of a material fact;  and (2) the plaintiff reasonably relied upon that misrepresentation.   Such an act can override a disclaimer to the contrary if in fact a representation is made which turns out to be intentionally false.  McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn.App. at 511, supra.   In the present case there was no evidence of a misrepresentation.   The plaintiff has failed to meet its burden of proof.

The second count alleges a breach of the implied warranty of good faith and fair dealing.

“[I]t is axiomatic that the ․ duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship ․ In other words, every contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement ․ The covenant of good faith and fair dealing presupposes that the terms and purpose of the contract are agreed upon by the parties and that what is in dispute is a party's discretionary application or interpretation of a contract term ․

To constitute a breach of [the implied covenant of good faith and fair dealing], the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith ․ Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive ․ Bad faith means more than mere negligence;  it involves a dishonest purpose.”  (Citations omitted;  emphasis added;  internal quotation marks omitted.  DeLaConcha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn. 424, 432–33 (2004).”  (Alternate citations omitted.)   T.D. Bank, N.A. v. J & M Holdings, LLC, 143 Conn.App. 340, 347–48 (2013).

As in T.D. Bank, N.A. the plaintiff does not sufficiently allege a claim for breach of the covenant.   The sole allegation is found in paragraph 16 and reads as follows:

“16. The defendant's failure to fulfill its contractual duties, as enumerated in paragraphs 13 and 14, was prompted by defendant's financial interest in passing the cost of removing the underground oil tank and remediating the contaminated soil on to the plaintiff's insured.”   Paragraphs 13 and 14 do nothing more than set forth the defendant's contractual duties and ways in which it breached those duties.   There is no allegation that the defendant acted in bad faith nor do the sum total of the allegations form a factual basis for a claim of bad faith.   The evidence adduced at trial is consistent with this omission.

For all the foregoing reasons judgment may enter for the defendant.

BY THE COURT

A. WILLIAM MOTTOLESE, J.T.R.

FOOTNOTES

FN1. It is noted that our courts apply similar principles to construction of contractual language.   See United Illuminating Co. v. Wisvest–Connecticut, LLC., 259 Conn. 665, 670 (2002)..  FN1. It is noted that our courts apply similar principles to construction of contractual language.   See United Illuminating Co. v. Wisvest–Connecticut, LLC., 259 Conn. 665, 670 (2002).

Mottolese, A. William, J.T.R.