Opinion
No. CV06 5001463
January 8, 2010
MEMORANDUM OF DECISION
This is a civil matter, tried to the court on December 1, 2009. Ronald Chorces, bankruptcy trustee for the estate of Frank Barnaba, alleges in count one of the amended complaint that the defendant breached a contract with Barnaba by failing to honor its promise to repay monies owed to the plaintiff. In count two of the complaint, the plaintiff alleges that the defendant, by entering into a loan agreement with Barnaba, owed Barnaba a fiduciary duty. The plaintiff further alleges that the defendant breached its fiduciary relationship with Barnaba by failing to perform its obligations under the loan agreement. On behalf of Barnaba's bankruptcy estate, the plaintiff is seeking repayment of the loan in the amount of $44,155.26.
In response to the plaintiff's amended complaint, the defendant filed on January 23, 2007, an answer along with three special defenses and a three-count counterclaim alleging, inter alia, that the defendant's board of directors never approved the loans or approved Barnaba's alleged inappropriate actions. Following pretrial motions, only the defendant's special defenses remain intact.
The plaintiff alleges that on various dates commencing from May 13, 2005 to January 2006, Mr. Barnaba, as president and director of Paul Lisa Program, Inc., loaned the defendant sums of money totaling $96,355.26. The plaintiff further alleges that on or about November 22, 2005, and December 14, 2005, the defendant paid the plaintiff $40,000 and $2,000, respectively, toward repayment of debt. The defendant in its answer on January 22, 2007, admitted that "[p]rior to January 2005, in order to further and effectuate the purpose of the defendant organization, the plaintiff has from time to time made loans to the defendant, which the defendant has agreed to pay back and has paid back to the plaintiff." The defendant also admitted that "on or about November 22, 2005, the defendant paid the plaintiff $40,000 and on December 14, 2005, the defendant paid the plaintiff $2,000 toward repayment of its debt toward repayment to the plaintiff." The defendant has also admitted that "on December 12, 2005, plaintiff donated the sum of $5,000 to the defendant by forgiving $5,000 on the principal balance of the loans." The defendant denies, however, that Mr. Barnaba loaned money to the defendant subsequent to January 2005. At trial, the defendant acknowledged that it received $44,155.26 of personal funds from Mr. and Mrs. Barnaba, but does not admit it was a loan.
At trial, Mr. Barnaba testified that he loaned the defendant $96,355.26 in 2005, that he was reimbursed $42,000 in two increments and that he forgave $10,200 of the debt. He conceded that there was no written evidence the board of directors authorized the loan, but insisted that the executive committee and the board knew about the loans. Mr. Barnaba acknowledged that no loan documents were signed by the defendant. Mr. Barnaba testified that there was no agreement as to the terms of the loan except that "the loan was to be repaid as funds became available."
The plaintiff then rested its case. The defendant made an oral motion for a directed verdict asserting that there was no term for the payback of the loan claimed, no loan documents, and no resolution of the board of directors authorizing the loan. The plaintiff responded that the defendant agreed to pay back the loan "when they had available funds," thus establishing the term of the loan, and that the executive committee was empowered to authorize the loan. The plaintiff asserted that discovery issues prevented it from determining when and if grant monies had been or would become available to the organization. The court inquired whether or not the plaintiff had in fact rested. The plaintiff confirmed it had. The court noted that, upon commencement of the trial, it addressed the plaintiff's motion for order under Practice Book § 13-14, the defendant's notice of the deposition and subpoena for deposition and duces tecum and the defendant's motion to quash. Although the court reserved its ruling, the court and the parties anticipated addressing outstanding discovery issues at the conclusion of the day's proceedings and before the trial was rescheduled. The plaintiff confirmed it had rested without offering any further proof.
Practice Book § 13-14(a) provides in relevant part: "If any party . . . has failed to appear and testify at a deposition duly noticed pursuant to this chapter, or has failed otherwise substantially to comply with any other discovery order made pursuant to Sections 13-6 through 13-11, the judicial authority may, on motion, make such order as the ends of justice require."
In challenging the plaintiff's proof at this stage of the case, the defendant has filed a motion for a directed verdict. Because this is a trial to the court, the motion should more properly be styled a motion for judgment of dismissal for failure to make out a prima facie case under Practice Book § 15-8.
Practice Book § 15-8 provides: "If, on the trial of any issue of fact in a civil matter tried to the court, the plaintiff has produced evidence and rested, the defendant may move for judgment of dismissal, and the judicial authority may grant such motion if the plaintiff has failed to make out a prima facie case. The defendant may offer evidence in the event the motion is not granted, without having reserved the right to do so and to the same extent as if the motion had not been made."
"A motion for judgment of dismissal has replaced the former motion for nonsuit for failure to make out a prima facie case . . . When such a motion has been granted, the question is whether sufficient facts were proved to make a prima facie case . . . The right of the court to grant such a motion is to be sparingly exercised . . . where the granting of a nonsuit must depend in any appreciable degree upon the court's passing upon the credibility of witnesses, the nonsuit should not be granted . . . where a case is close, the preferable course is to deny a motion for a nonsuit . . . A prima facie case, in the sense in which that term is relevant to this case, is one sufficient to raise an issue to go to the trier of fact . . . In order to establish a prima facie case, the proponent must submit evidence which, if credited, is sufficient to establish the fact or facts which it is adduced to prove . . . In evaluating a motion to dismiss, [t]he evidence offered by the plaintiff is to be taken as true and interpreted in the light most favorable to [the plaintiff], and every reasonable inference is to be drawn in [the plaintiff's] favor . . . A party has the same right to submit a weak case as he has to submit a strong one." (Citations omitted; internal quotation marks omitted.) Thomas v. West Haven, 249 Conn. 385, 391-92, 734 A.2d 535 (1999), cert. denied, 528 U.S. 1187, 120 S.Ct. 1239, 146 L.Ed.2d 99 (2000).
The plaintiff's action, on both counts, is essentially a contract claim with the attendant burden of proof. "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.) Chiulli v. Zola, 97 Conn.App. 699, 706-07, 905 A.2d 1236 (2006). Taken in the light most favorable to the plaintiff, Mr. Barnaba loaned the defendant $96,355.26 over the course of various dates from May 13, 2005 to January 2006. The defendant paid Mr. Barbnaba $42,000 toward repayment of these loans and Mr. Barnaba forgave $10,200, leaving a balance due of $44,155.26. The loan from Frank Barnaba to the defendant provided in its terms for reimbursement as funds became available. The issue remains whether this conditional term was sufficient to establish the existence of the agreement. Even if, arguendo, the conditional phrase defeats a valid contract, the plaintiff rested its case without establishing the remaining elements. Specifically, the plaintiff failed to provide any evidence that the defendant had funds available to repay the loan. See Booth v. Booth Bayliss Commercial School, Inc., 120 Conn. 221, 229, 180 A. 278 (1935) (payment not due until creditor proves debtor's ability to pay) and T.H.P. Associates Ltd. Partnership v. Norwich Museum Trust, Inc., Superior Court, judicial district of Middlesex, Docket No. CV 97 0080952, (October 10, 1997, Hodgson, J.) (agreement to pay "as soon as funds are available" did not condition obligation to pay, but that time to pay was conditioned upon promisor's developing ability to do so). Thus, the plaintiff has not carried its burden of proving a prima facie case.
No Connecticut court has specifically addressed the issue of whether a promise to repay a loan "as funds become available" is sufficiently definite to form a valid contract. Some jurisdictions hold that such terms are too indefinite and uncertain to form a valid contract. See Irwin Rogers Insurance Agency Inc. v. Murphy, 122 Idaho 270, 275, 833 P.2d 128 (1992); Soar v. National Football League Players Ass'n., 438 F.Sup. 337, 343-44 (D. R.I. 1975), aff'd, 550 F.2d 1287 (1st Cir. 1977). Other jurisdictions hold that such terms create a condition precedent. See Fertilizer Co. v. Eason, 194 N.C. 244, 248, 139 S.E. 376 (1927); North Market Ass'n. v. Case, 99 Ohio App. 187, 188, 132 N.E.2d 122 (1955); but see O'Brien Gere Engineers, Inc. v. Taleghani, 540 F.Sup. 1114, 1116 (E.D. Pa. 1982), aff'd, 707 F.2d 1394 (3d Cir. 1983) (agreement to pay "within fifteen days of availability of funds" unconditional promise).
Connecticut courts have, however, construed similar terms as promises to "pay when able." See Griffin v. Smith, 101 Conn. 219, 224, 125 A. 465 (1924) (plaintiff's promise to pay when he "could spare the money" construed as unconditional promise to pay within reasonable time). It is worth noting, however, that while some cases hold that pay when able promises are strictly unconditional promises to pay within a reasonable time, other cases hold that, while the promisor's obligation to pay is unconditional, the time to pay is indefinite and premised on the promisor's ability to do so. Compare Griffin v. Smith, supra, 224 and Mucha v. Brown, Superior Court, judicial district of Tolland, Docket No. CV 91 48796 (July 10, 1997, Hammer, J.T.R.) ( 20 Conn. L. Rptr. 2) (pay when able promise unconditional and to be performed within reasonable time) with Booth v. Booth Bayliss Commercial School, Inc., CT Page 2619 120 Conn. 221, 229, 180 A. 278 (1935) (payment not due until creditor proves debtor's ability to pay) and T.H.P. Associates Ltd. Partnership v. Norwich Museum Trust, Inc., Superior Court, judicial district of Middlesex, Docket No. CV 97 0080952, (October 10, 1997, Hodgson, J.) (agreement to pay "as soon as funds are available" did not condition obligation to pay, but that time to pay was conditioned upon promisor's developing ability to do so); cf. Baileck v. Hartford, 135 Conn. 551, 555-56, 66 A.2d 610 (1949) (city's promise to pay teachers cost of living adjustment "from the date that funds become available" is conditional offer not ripened into contract).
Accordingly, the defendant's oral motion of dismissal for failure to make out a prima facie case pursuant to § 15-8 is granted.