Sharp Electronics Corp. v. LLC (2013)

MEMORANDUM OF DECISION

I

PROCEDURAL BACKGROUND

The parties in this action are the plaintiff, Sharp Electronics Corporation (“Sharp”) and the defendants, Solaire Development, LLC (“Solaire”) and its principal, Stuart Longman (“Longman”).   On December 13, 2012, the plaintiff filed a four-count Revised Complaint alleging breach of contract and unjust enrichment.   On April 1, 2013, the defendants filed an answer, eleven special defenses and six counterclaims.   The plaintiff filed a Revised Answer to the counterclaims and special defenses on May 30, 2013 denying all claims.

On May 30, 2013 and July 25, 2013, a trial was held in this matter.   At the conclusion of the trial, the defendants withdrew their First, Second, Third, and Fourth Counterclaims relating to an alleged subsequent settlement agreement between the parties.   The defendants, however, asked the court to reach a decision on their Fifth and Sixth Counterclaims for rescission and a violation of the Connecticut Unfair Trade Practices Act.

On August 28, 2013, the parties filed their post-trial briefs and on September 9, 2013, the parties filed their respective replies to the post-trial briefs.   On October 24, 2013, the plaintiff requested an opportunity to respond to issues raised in defendants' reply brief that were not addressed in their post-trial brief.   That request was granted by the court and on November 8, 2013, the plaintiff filed a supplemental brief.

II

THE EVIDENCE

Based on the credible testimony and exhibits presented to the court, the following facts are found.

Between March and April 2009, Solaire ordered $1,534,377.60 or 2537 units of solar panels from the plaintiff.¹  On March 19, 2009, defendant Solaire submitted purchase order 39814 for 2300 solar modules priced at $1,391,040.   (Ex. 4.) On March 26, 2009, the defendant Solaire added 235 units to purchase order 39814.  (Ex. 25.)   On June 22, 2009, purchase order 39814 was modified to reflect a replacement module that no longer existed.  (Ex. 17.)

The defendant Longman, a principal of defendant Solaire, signed the purchase orders for such panels.  (Exs.4, 25.)   Before the plaintiff accepted these orders, it required the defendant Longman to submit a credit application and personally guarantee any amount that defendant Solaire owed to the plaintiff.   Defendant Longman admitted at trial that he submitted the credit application to the plaintiff and signed the unconditional personal guaranty.  (Exs. 1, 2;  Trial Tr. 81, July 25, 2013.)   After the execution of the credit application and guaranty by defendant Longman, 2537 units of solar panels were delivered to defendant Solaire.   An authorized representative of defendant Solaire received and accepted delivery of them at 60 Shelter Rock Road, Danbury, Connecticut.   (Trial Tr. 52, July 25, 2013.)   Following delivery of the solar panels, the plaintiff sent seven invoices totaling $1,534,377.60 to Solaire.²  (Exs.11–18.)   The invoices were sent to defendant Solaire at its business address of 424 West Mountain Road, Ridgefield, Connecticut.   At trial, the defendant Longman did not dispute that the panels were delivered or that defendant Solaire received invoices for such panels.   In September 2009, the defendant Solaire paid $200,000 to the plaintiff for the panels.   The defendants never paid the balance due of $1,334,377.60.   The defendant Longman testified that he was the guarantor on the obligation of defendant Solaire and that the reason that defendant Solaire failed to pay the outstanding amount due to the plaintiff was because it could not afford to do so.  (Trial Tr. 80–81, July 25, 2013.)   The court did not find defendant Longman's testimony to be credible with respect to his claim that the solar panel units delivered were defective.   The defendant Longman admitted that he did not complain about the panels delivered until a few months before trial, which was approximately four years after the panels were delivered.  (Trial Tr. 72, July 25, 2013.)

Pursuant to the terms of the unconditional guaranty that defendant Longman signed, he guaranteed full and prompt payment to the plaintiff when due:  “all indebtedness and liabilities of any kind (including all principal, interest, attorneys fees, late charges, and other charges becoming due with respect to such indebtedness) for which Customer [Solaire Development, LLC] is now or may hereafter become liable to Sharp.”  (Ex. 2, Unconditional Guaranty Agreement.)

III

DISCUSSIONA. Plaintiff's Breach of Contract Claim as Against Solaire

The plaintiff has moved for judgment with respect to its breach of contract claims as against defendants, Solaire and Longman.   In particular, the plaintiff has claimed that it entered into a contract for the sale with the defendant Solaire for solar panels for the sum of $1,534,377.60 and that defendants, Solaire and Longman, breached that agreement by not paying the sum due.

“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.”  (Internal quotation marks omitted.)  Seligson v. Brower, 109 Conn.App. 749, 753, 952 A.2d 1274 (2008).   In this case, the defendant Longman signed purchase orders on February 23, 2009, on behalf of defendant Solaire, for the purchase of solar panels worth $1,534,377.60.   The plaintiff delivered the solar panel units to the defendant Solaire and the defendants received and accepted delivery of the panels.   The panels were installed, but the defendants only paid the plaintiff $200,000 for such panels.   As set forth above, the defendant Longman's testimony that the panels were defective or were not the panels defendant Solaire ordered was not credible.

The evidence at trial clearly established that the plaintiff performed its obligations under the parties' express contract by delivering $1,534,377.60 worth of solar panels within a week of defendant Solaire ordering them and in advance of receiving payment.   The defendants accepted the solar panels and used them without paying for such goods.   The plaintiff clearly established at trial that it was damaged by the defendants' nonpayment of the $1,334,377.60 balance due on such panels.

The defendants asserted eleven special defenses to the plaintiff's claim for breach of contract.   After the trial concluded, however, the defendants withdrew their Seventh, Eighth, Ninth, and Eleventh special defenses.   The defendants' First Special Defense, that the plaintiff “acted in a commercially unreasonable manner with regard to the [d]efendants' obligations ․ in that the [p]laintiff accelerated and otherwise improperly attempted to collect the alleged debt, failed to properly credit the [d]efendants' account, [and] failed to engage in good faith settlement discussions” has no merit as there was no evidence offered at trial to establish any of these allegations.   The defendants' Second Special Defense, that the plaintiff acted in bad faith and breached the implied covenant of good faith and fair dealing in its negotiations with the defendants and with respect to the defendants' obligations to the plaintiff under the alleged agreement and in the collection and/or settlement of the allegedly owed funds under the agreement, also has no merit.   There was virtually no evidence offered at trial to establish any of these allegations.

The defendants' Third Special Defense, that the allegations contained in all of the counts of the Amended Complaint fail to state a claim against the defendants, also has no merit.   In the three years this action was pending, the defendants did not move to strike such counts on the grounds that they were legally insufficient, and filed an answer responding to the allegations in the Amended Complaint.   A defendant who files an answer waives its right to have the court determine the legal sufficiency of the complaint.   See Burke v. Avitabile, 32 Conn.App. 765, 769, 630 A.2d 624, cert. denied, 228 Conn. 908, 634 A.2d 297 (1993) (“A challenge to the legal sufficiency of a complaint ․ must be pleaded and ruled on before the defendant files an answer to the plaintiff's complaint”).   By operation of the Practice Book § 10–7, “the filing of the answer to the amended complaint acts as a waiver of the right to file a motion to strike the amended complaint.”  Wilson v. Hryniewicz, 38 Conn.App. 715, 719, 663 A.2d 1073, cert. denied, 235 Conn. 918, 665 A.2d 610 (1995).   Even if the defendants could assert this claim, the court finds that the plaintiff had asserted a legally sufficient claim in its breach of contract claims asserted against the defendants.

The defendants' Fourth Special Defense, that the plaintiff's claims are barred by the doctrine of waiver in that the actions of the plaintiff with respect to the collection of the alleged debt of the defendants caused the plaintiff to waive any alleged debt, similarly has no merit.   No evidence was offered at trial as to this defense.   The defendants' Fifth Special Defense, that neither defendant authorized, approved or ratified the acts or omissions attributed to either defendant, is without merit as the evidence offered at trial abundantly demonstrated to the contrary that these transactions were authorized and ratified by the defendants.   The defendants' Sixth Special Defense, that if this court enters judgment in favor of the plaintiff as against both defendants for the same amount of damages this would violate the double jeopardy provision embodied in the Fifth and Fourteenth Amendments of the United States Constitution and Article First, § 8 of the State of Connecticut Constitution, is baseless.   The protections afforded by the double jeopardy clause “attaches only to proceedings which are essentially criminal.”  (Internal quotation marks omitted.)  State v. McDowell, 242 Conn. 648, 653, 699 A.2d 987 (1997), quoting in part Breed v. Jones, 421 U.S. 519, 528, 95 S.Ct. 1779, 44 L.Ed.2d 346 (1975).   Finally, the defendants' Tenth Special Defense, which alleges that the agreement was unconscionable on its face as it required the defendants to pay a price for goods that is vastly inflated above and beyond the fair market value of the goods, has no merit.   No evidence was offered at trial on this defense.

Based on the foregoing, the court finds in the plaintiff's favor as against defendant Solaire on the breach of contract claim in the First Count of its Revised Complaint and awards the plaintiff $1,334,377.60 in damages.   The court has reviewed the purchase order and invoices for the solar panels in question and there is no provision for attorneys fees or costs.   Accordingly, the plaintiff's request for attorneys fees and costs on its breach of contract claim is denied.

B. Plaintiff's Breach of Contract Claim as Against Longman

The plaintiff also seeks judgment on the Second Count of its Revised Complaint for breach of contract asserted as against defendant Longman.   At trial, evidence was offered that defendant Longman signed an unconditional personal guaranty guaranteeing payment of defendant Solaire's debts.  (Ex. 2;  Trial Tr. 44–45, May 30, 2013;  Trial Tr. 81, July 25, 2013.)   Defendant Longman admitted at trial that he signed the guaranty and that defendant Solaire had not paid the balance of $1,334,377.60 due and owing to the plaintiff due to financial reasons.  (Trial Tr. 80–81, July 25, 2013.)   The defendant Longman contends in his post-trial brief that there was no consideration for his execution of the guaranty.   The plaintiff's consideration, however, was clearly the agreement to advance credit to defendant Solaire, of which defendant Longman was a principal, for the purchase of solar units.   As the defendant Longman guaranteed the debts and liabilities of defendant Solaire to the plaintiff, he is liable for the $1,334,377.60 due to the plaintiff.

Based on the foregoing, the court finds in favor of the plaintiff on the Second Count of its Revised Complaint which asserts a breach of contract claim as against defendant Longman, and enters judgment in its favor as against defendant Longman in the amount of $1,334,377.60.

C. Plaintiff's Claims of Unjust Enrichment as against Solaire and Longman

The plaintiff has also moved for judgment as to its Third and Fourth Counts of the Revised Complaint as against defendants, Solaire and Longman, which assert claims for unjust enrichment.  “The equitable remedy of unjust enrichment may be invoked when justice requires that a party be compensated for property or services rendered under a contract, and no [legal] remedy is available by an action on the contract ․ As an equitable right, unjust enrichment is based on the principle that in a given situation, it is contrary to equity and good conscience for the defendant to retain a benefit [that] has come to him at the expense of the plaintiff ․ All the facts of each case must be examined to determine whether the circumstances render it just or unjust, equitable or inequitable, conscionable or unconscionable to apply the doctrine.”  (Internal quotation marks omitted.)  Nation Electrical Contracting, LLC v. St. Dimitrie Romanian Orthodox Church, 144 Conn.App. 808, 815, 74 A.3d 474 (2013).

As the court has already found in plaintiff's favor on its breach of an express contract claims, the court need not enter any judgment with respect to the Third and Fourth Counts of the Revised Complaint as these counts were pled in the alternative to the First and Second Counts.

D. Defendants' Counterclaims of Rescission and CUTPA

In their answer filed on April 1, 2013, the defendants asserted six counterclaims against the plaintiff.   After the trial concluded, the defendants withdrew their First through Fourth Counterclaims.   The defendants have moved for judgment on their Fifth Counterclaim, a rescission claim, and their Sixth Counterclaim which asserts a violation of the Connecticut Unfair Trade Practices Act (CUTPA).

In their Fifth Counterclaim, which incorporates by reference the First through Fourth counterclaims that the defendants withdrew after trial ended, the defendants claim that as a result of the breach of an alleged settlement agreement reached between the parties, there exists an equitable basis for the rescinding of the purchase order contracts between the parties.  “The remedy of rescission and restitution is an alternative to damages in an action for breach of contract ․ Rescission, simply stated, is the unmaking of a contract.   It is a renouncement of the contract and any property obtained pursuant to the contract, and places the parties, as nearly as possible, in the same situation as existed just prior to the execution of the contract.”  Little Mountains Enterprises, Inc. v. Groom, 141 Conn.App. 804, 812, 64 A.3d 781 (2013).   The basis of the defendants' rescission claim is that the plaintiff breached and/or misrepresented an alleged settlement agreement with the defendants.   As the defendants offered no evidence as to the alleged settlement agreement at trial, there is no factual basis for entering judgment in defendants' favor on this Fifth Counterclaim and judgment shall enter in plaintiff's favor on this claim.

The defendants' Sixth Counterclaim alleges a claim for the violation of the Connecticut Unfair Trade Practices Act. CUTPA, General Statutes § 42–110b(a), provides in pertinent part, that “[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”   The Connecticut Supreme Court has “adopted the criteria set out in the cigarette rule by the Federal Trade Commission ․ (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 ․ (2) whether it is immoral, unethical, oppressive, or unscrupulous;  (3) whether it causes substantial injury to consumers [competitors or businessmen].”  Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 591, 657 A.2d 212 (1995).  “[A]ll 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.”  Associated Investment Co., Ltd. Partnership v. Williams Associates IV, 230 Conn. 148, 156, 645 A.2d 505 (1994).  “Thus, a violation of CUTPA may be established by showing either an actual deceptive practice ․ or a practice amounting to a violation of public policy ․ Furthermore, a party need not prove an intent to deceive to prevail under CUTPA.”  (Citations omitted;  internal quotation marks omitted.)   Cheshire Mortgage Service, Inc. v. Montes, 223 Conn. 80, 106, 612 A.2d 1130 (1992).

In the Associated Investment Co. case, the Connecticut Supreme Court found that “our General Assembly in adopting the sweeping language of § 5(a)(1) of the FTCA, deliberately chose not to define the scope of unfair or deceptive acts proscribed by CUTPA so that courts might develop a body of law responsive to the marketplace practices that actually generate such complaints.”   (Internal quotation marks omitted.)  Associated Investment Co., Ltd. Partnership v. Williams Associates IV, supra, 230 Conn. 157.  “Predictably, [therefore] CUTPA has come to embrace a much broader range of business conduct than does the common law tort action.”  (Internal quotation marks omitted.)   Id., 157–58.  “In addition to establishing a standard of conduct more flexible than traditional common law claims, the expansive language of CUTPA prohibits unfair or deceptive trade practices without requiring proof of intent to deceive, to defraud or to mislead.”  Id., 158, citing Web Press Services Corp. v. New London Motors, Inc., 203 Conn. 342, 362–63, 525 A.2d 57 (1987);  see also Sportsmen's Boating Corp. v. Hensley, 192 Conn. 747, 755, 474 A.2d 780 (1984) (unlike a tort claim for interference with business expectancies, which requires proof of malicious or deliberate interference with competitor's business expectations, CUTPA liability may be based solely on proof of unfair or deceptive acts).

The bases of the defendants' Sixth Counterclaim for violation of CUTPA is allegations contained in the First through Fourth Counterclaims which relate to an alleged settlement agreement between the parties.   These Counterclaims were withdrawn after trial concluded.   At trial, the defendants offered no evidence that the plaintiff violated CUTPA because of representations it had made during the course of settlement negotiations and/or in the course of entering into an alleged settlement agreement.   As there was no evidence offered at trial to support the defendants' Sixth Counterclaim, such claim must be rejected and judgment shall enter in plaintiff's favor on this claim.

IV

CONCLUSION

After having considered the evidence and testimony presented, the court enters judgment in favor of the plaintiff Sharp on its First and Second Counts of the Revised Complaint which assert breach of contract claims as against defendants Solaire and Longman.   Judgment shall enter against defendants in the amount of $1,334,377.60.   As the court rendered judgment in favor of the plaintiff on its breach of contract claims, the court need not enter any judgment with respect to the Third and Fourth Counts of the Revised Complaint as these counts were pled in the alternative to the First and Second Counts.   The court also enters judgment in favor of the plaintiff on the defendants' Fifth and Sixth Counterclaims.   In the discretion of the court, and in balancing the equities, postjudgment interest in the amount of five percent (5%) is awarded.

BY THE COURT

Ozalis, J.

FOOTNOTES

FN1. Defendants' belated argument in their reply brief that the plaintiff only delivered 911 packages, or less than the 2537 units ordered, was never argued at trial and no evidence was offered on this issue at trial..  FN1. Defendants' belated argument in their reply brief that the plaintiff only delivered 911 packages, or less than the 2537 units ordered, was never argued at trial and no evidence was offered on this issue at trial.

FN2. The court's total of the seven invoices is $1,534,377.60 and paragraph 40 of the First Count alleges a claim for this amount.   Plaintiff's post-trial brief claims that amount is $1,534,337.60 which the court ascribes to a scrivener's error..  FN2. The court's total of the seven invoices is $1,534,377.60 and paragraph 40 of the First Count alleges a claim for this amount.   Plaintiff's post-trial brief claims that amount is $1,534,337.60 which the court ascribes to a scrivener's error.

Ozalis, Sheila A., J.