Opinion
No. 14 Civ. 5161 (NSR)
03-31-2017
CHRISTINE SVENNINGSEN, 33 PROSPECT HILL ROAD, LLC, 34 PROSPECT HILL ROAD, LLC, AUTO I, LLC, BELDENS ISLAND, LLC, CUT-IN-TWO EAST, LLC, CUT-IN-TWO WEST, LLC, EAST CRIB ISLAND, LLC, GUILFORD DOCKOMINTUM I, LLC, HOME PALACE, LLC, JEPSON ISLAND, LLC, LINDEN POINT, LLC, REEL ISLAND, LLC, ROGERS ISLAND, LLC, SNOW PALACE, LLC, THE OLD ADAMS HOUSE, LLC, WEST CRIB ISLAND, LLC, WHALER I, LLC, and WHEELER ISLAND, LLC, Plaintiffs, v. ULTIMATE PROFESSIONAL GROUNDS MANAGEMENT, INC., doing business as ULTIMATE SERVICES PROFESSIONAL GROUNDS MANAGEMENT, JOHN G. CHIARELLA, JR., DOMENIC A. CHIARELLA, and ULTIMATE SERVICES PROFESSIONAL GROUNDS MANAGEMENT, INC., Defendants.
OPINION & ORDER
Plaintiff Christine Svenningsen and her various real estate and property holding LLCs ("Property LLCs") brought this action against Ultimate Professional Grounds Management, Inc. ("Ultimate Professional") doing business as Ultimate Services Professional Grounds Management ("Ultimate Services") (collectively, "Ultimate") and its owners, John G. Chiarella, Jr. (Svenningsen's former husband) and Domenic A. Chiarella. Plaintiffs are alleging inter alia breach of contract, unjust enrichment, negligence, negligent misrepresentation, conversion, fraud, statutory theft, and unfair and deceptive business practices for Ultimate's alleged course of conduct in overcharging Svenningsen for the services it provided to her various estates and property, either by charging for work never performed and for taxes never paid, or by grossly inflating labor hours, labor rates, and material costs. Additionally Plaintiff Svenningsen alleges breach of contract surrounding a loan Svenningsen allegedly made to Ultimate.
By stipulation between the parties, Plaintiffs' claims against the Chiarellas in their individual capacities and against Ultimate Services, as predecessor to Ultimate Professional, have been voluntarily dismissed with prejudice as of May 3, 2016. (See May 3 Stipulation, ECF No. 141, at ¶ 2.)
Plaintiffs have moved for partial summary judgment with regard to the balance due on the loan and on the issue of whether an enforceable contract for grounds-keeping services existed between the parties in 2014. Defendants have moved for summary judgment on all of Plaintiffs' claims, arguing they are largely barred by the applicable statutes of limitations, judicial estoppel, or specific contractual releases such as the agreement entered into between Svenningsen and John Chiarella when the couple divorced.
By the same stipulation, Plaintiffs' conversion claim regarding the property allegedly withheld by Ultimate was also voluntarily dismissed with prejudice and that portion of their summary judgment motion was withdrawn. (See May 3 Stipulation at ¶ 2.) Plaintiffs' remaining claims are Counts I, III, V (partial), VII, IX, XI, XVII, and XIX as alleged in their amended complaint. (Id.; see also ECF No. 52.)
For the reasons that follow, Plaintiffs' motion is GRANTED in part and DENIED in part and Defendants' motion is GRANTED in part and DENIED in part.
BACKGROUND
The following undisputed facts are taken from the parties' Rule 56.1 statements, affidavits, and exhibits submitted in support of their motions. Disputed facts will be discussed as relevant along with the allegations made in the parties' operative pleadings.
The cross-motions were fully briefed as of July 18, 2016. (See Pls. Mot. Summ. J., ECF No. 143; Pls. Rule 56.1 Statement ("Pls. 56.1"), ECF No. 144; Pls. Mem. in Supp. Mot. ("Pls. Mem."), ECF No. 145; Defs. Response to Pls. 56.1 ("Defs. Resp. 56.1"), ECF No. 150; Decl. Sophia Ree in Opp'n to Pls. Mot. ("Ree Decl."), ECF No. 149; Defs. Mem. in Opp'n to Pls. Mot. ("Defs. Opp'n"), ECF No. 151; Pls. Mem. in Reply to Defs. Opp'n ("Pls. Reply"), ECF No. 147; Pls. Resp. Defs. Additional Facts ("Pls. Add'l Resp. 56.1"), ECF No. 148; see also Defs. Mot. Summ. J., ECF No. 154; Defs. Rule 56.1 Statement ("Defs. 56.1"), ECF No. 156; Decl. Daniel S. Moretti in Supp. Defs. Mot. ("Moretti Decl."), ECF No. 155; Defs. Mem. in Supp. Mot. ("Defs. Mem."), ECF No. 157; Pls. Counter to Defs. 56.1 ("Pls. Resp. 56.1"), ECF No. 161; Pls. Mem. in Opp'n to Mot. ("Pls. Opp'n"), ECF No. 160; Decl. Daniel S. Moretti in Further Supp. Mot. ("Moretti Suppl. Decl."), ECF No. 158; Defs. Mem. in Reply to Pls. Opp'n ("Defs. Reply"), ECF No. 159; Pls. Sur-Reply to Defs. Reply ("Pls. Sur-Reply"), ECF No. 164.)
Plaintiffs' amended complaint was filed December 22, 2014 and is the operative complaint in this action. (See ECF No. 52.) Defendants' amended answer was filed January 20, 2015 and contains the operative counter-claims. (See ECF No. 54.)
I. The Relationship between Svenningsen, the Property LLCs, John Chiarella, and Ultimate
Svenningsen, a resident of Katonah, New York, is a business-person with substantial real estate holdings. (Pls. Resp. 56.1 ¶¶ 7-10.) She currently owns, whether in her own name or through the Property LLC Plaintiffs, improved and unimproved realty in and around Katonah and Branford, Connecticut (including nine of the Thimble Islands). (Pls. 56.1 ¶¶ 1-2.) Svenningsen is the sole member and owner of the Property LLCs. (Defs. 56.1 ¶¶ 1, 6.) She generally has only lived at her Katonah property, which she owns personally, or vacationed at her Rogers Island property, but not at the other properties. (Pls. Resp. 56.1 ¶¶ 5, 16-26.)
For many years, Svenningsen was at the head of product development for her late husband's party supply company, which in 1996 had over 1000 employees and net sales of over $150 million. (Defs. 56.1 ¶ 9.) She was also a director of that company's holding company. (Defs. 56.1 ¶ 9.)
Starting in 1999, Svenningsen and the Property LLCs retained Ultimate to maintain Svenningsen's real estate holdings. (Pls. 56.1 ¶ 8; Pls. Resp. 56.1 ¶¶ 6, 27.) The scope and terms of the contracts between the parties, which were an amalgam of written and oral agreements, are disputed prior to 2010. (Pls. Resp. 56.1 ¶ 37.) Svenningsen asserts that Ultimate was to provide labor at "an agreed-upon rate," there was to be "no billing for travel time," and materials were to be provided "at cost." (Pls. 56.1 ¶ 28.) Defendants counter that the parties never agreed that there would be no billing for travel time or that materials would be provided at cost, rather projects were generally agreed-to at "negotiated" prices." (Defs. Resp. 56.1 ¶ 28.) Svenningsen paid for Ultimate's services out of her personal funds, not out of any funds controlled by the Property LLCs. (Pls. Resp. 56.1 ¶ 78.)
Svenningsen and John Chiarella—an owner of Ultimate—"developed a personal social relationship" sometime in 2007. (Defs. 56.1 ¶ 3; Pls. Resp. 56.1 ¶ 28.) Around that same time, Svenningsen loaned Ultimate $1.55 million, of which $250,000 was never repaid. (Pls. 56.1 ¶ 13; Defs. Resp. 56.1 ¶ 26; Pls. Add'l Resp. ¶ 90.)
The parties' contractual relationship changed in 2010, when Svenningsen and Ultimate entered into a flat-rate agreement for landscaping and property management services at $5.76 million for the year. (Defs. Resp. ¶ 29.) Also starting at least as of December 31, 2009, at the same time that Ultimate was providing services to the properties, Plaintiffs assert that John Chiarella also served as manager of the Property LLCs in a fiduciary capacity. (Pls. Resp. 56.1 ¶ 86; Am. Compl. ¶ 31 & Ex. A (agreement between Ultimate and the LLCs listing Chiarella's title both as "manager" for each LLC and as president of Ultimate).)
That year also marked a change for Svenningsen and Chiarella's personal relationship: the two were married on June 26, 2010. (Defs. Resp. ¶ 4.) The couple signed a brief Prenuptial Agreement two days prior to their wedding. (Pls. Resp. 56.1 ¶ 31; see Moretti Decl., Ex. O.) Intertwining their personal and business relationships further, Svenningsen officially became the Chief Administrative Officer for Ultimate starting in January 2011. (Pls. Resp. 56.1 ¶ 32.) The parties dispute the extent of her responsibilities in this role. Svenningsen contends she was Chiarella's "girl Friday," (Pls. Resp. 56.1 ¶ 33), but Ultimate argues she had "responsibility for all day-to-day functions at the company," (Defs. 56.1 ¶ 33), a description that Svenningsen agreed was at least semi-accurate. (Pls. Resp. 56.1 ¶ 33.) The parties also dispute when Svenningsen quit working as an officer of Ultimate. Whatever the exact date Svenningsen left, whether it was in 2012 or 2013, she agrees that she was paid for her work at Ultimate from 2011 to 2013. (See Defs. Resp. 56.1 ¶ 6; Pls. Resp. 56.1 ¶¶ 34-35; Moretti Decl., Ex. F (W-2s for 2011, 2012, and 2013).)
Defendants devote a great deal of time to the property gained and business activities explored by Svenningsen during her marriage to Chiarella, but that background is irrelevant to the issues decided herein.
Ostensibly, Svenningsen is referring to the 1940's romantic comedy "His Girl Friday," starring Cary Grant and Rosalind Russell, though Russell's character, Hildy, was viewed as a driven, hard-boiled ace reporter.
Ultimate continued to provide services to Svenningsen's properties during the couple's marriage and while Svenningsen was an officer of Ultimate. (Pls. Resp. 56.1 ¶ 36.) While services continued, the parties modified the scope of the work provided and the yearly fee by verbal agreement in 2011 to $2 million and again in 2012 to $1.4 million. (Defs. Resp. 56.1 ¶¶ 30-32.) The nature of the 2013 agreement is disputed, though the parties agree the price remained $1.4 million. (Id. ¶ 33; Pls. Resp. 56.1 ¶ 41.) The parties also dispute whether the 2010 agreement renewed each year with these scope and cost modifications or whether the parties orally agreed to entirely new agreements each year. (Compare Defs. 56.1 ¶ 30, with Pls. Resp. 56.1 ¶ 30.)
On May 22, 2013, Svenningsen filed for divorce in Connecticut state court. (Pls. Resp. 56.1 ¶ 43.) On June 11, 2013, she presented Chiarella with a Separation Agreement drafted by her attorney. (Id. ¶ 44.) Thereafter, beginning in September 2013, Svenningsen did not pay for three months of services performed by Ultimate because she claimed Ultimate "owed [her] money." (Pls. Resp. 56.1 ¶¶ 51-52.) In January 2014, Svenningsen and Chiarella executed sworn financial affidavits indicating that Svenningsen and her corporate asset CSC Landscape Holdings Inc. had no claims against Chiarella or his asset Ultimate, and vice-versa. (Pls. Resp 56.1 ¶¶ 55-62.) Svenningsen claims that the only debt she was aware of at this time was the $250,000 balance of the loan owed to her from Ultimate. (Pls. Resp. 56.1 ¶ 107.) Their divorce was final as of January 16, 2014. (Defs. Resp. ¶ 4.)
In light of Svenningsen's and Chiarella's divorce at the beginning of 2014, (Pls. Resp. 56.1 ¶ 61), it is perhaps unsurprising that the nature of the contract between the two for Ultimate's landscaping services that year is hotly contested. Svenningsen claims a new contract was required "prior" to Ultimate providing any services. (Pls. 56.1 ¶ 34.) Ultimate points to emails between Svenningsen and Ultimate employees where Svenningsen talks about "doing it differently this year," and the fact that she asked for services to be performed during the first few months of the year—all of which indicate the existing contract renewed for 2014 but that Svenningsen, as before, wanted to decrease the fixed rate. (Defs. Resp. ¶¶ 34, 37, 40 (referencing email where Svenningsen asked, "Are you saying that no annuals will be ordered or spring work done until my account is current?") (emphasis added), 41; Pls. Resp. 56.1 ¶¶ 67, 70.)
Ultimate does not dispute that it did not provide notice of the 2014 renewal prior to the end of the 2013 term, asserting instead that notice was not required. (Defs. Resp. 56.1 ¶ 42b.) The parties do agree however that Ultimate delivered services to Svenningsen's properties during the end of 2013 and at the beginning of 2014, until Svenningsen indicated she would no longer be using Ultimate for her properties. (Pls. Resp. 56.1 ¶ 54.)
Plaintiffs designated two paragraphs as "42" in their opening Rule 56.1 statement. The Court refers to those paragraphs as 42a and 42b.
Svenningsen claims that she discovered the billing issues complained of in this lawsuit in 2014, when the files containing the documentation for the work performed at her properties were returned to her from Ultimate. (Pls. 56.1 ¶ 10; Pls. Resp. 56.1 ¶¶ 59, 73, 84-85.) Ultimate claims that timeframe is implausible given that Svenningsen had already presented a claim for $2 million in overcharges to Ultimate in February 2014, a month after her divorce from Chiarella was final and at a time when she did not have the files in her physical possession—meaning she must have discovered the alleged overbilling prior to 2014. (Compare Pls. 56.1 ¶ 10, with Defs. Resp. 56.1 ¶ 10; see also Pls. Resp. 56.1 ¶ 63 (acknowledging the written demand).) In any event, the parties agree that she might have had access to the files while working at Ultimate, and that she had the files in her possession for some period of time after she stopped working for Ultimate. (Pls. Resp. 56.1 ¶ 83 ("[C]ould you have [accessed the records] if you wanted to do it? Possibly.").)
II. The Prenuptial and Divorce-related Agreements between Svenningsen and Chiarella
The Prenuptial Agreement between Svenningsen and Chiarella was brief, but the two agreed to abide by the terms of each other's wills regarding distribution of either's assets in the case of death, to waive alimony or support in the case of divorce, and to submit to arbitration any disputes regarding property "put in joint names after the marriage." (Moretti Decl., Ex. O.) The agreement was silent as to the distribution of property acquired during the marriage but not "put in joint names[.]" (Id.)
The Separation Agreement between the couple, dated June 11, 2013, indicated that "to effect an amicable settlement of all financial and property matters between them so as to conclude all present and future rights which either of them now or hereafter may have with respect to any property or estate of the other," both Svenningsen and Chiarella would "retain any and all assets in his or her individual name, free of any claim by the other." (Moretti Decl., Ex. S. ("Separation Agreement") at 2.) Moreover, "[e]ach party waive[d] any and all financial rights and claims of any kind arising by virtue of their marriage or otherwise, under any present or future law, including, but not limited to[,] all rights[] in or to[] property owned or acquired by the other party prior to and during their marriage[.]" (Id. § 3.2.) This included a general release between the parties of "claims of any and all kinds, whether in tort or otherwise, and demands whatsoever, in law or in equity, which against him or her, she or he ever had [or] now has[.]" (Id. § 5.1.) The agreement was incorporated into the parties' divorce judgment along with the financial affidavits listing Svenningsen's asset as CSC Landscape Holdings Inc. and Chiarella's asset as Ultimate, though neither listed the Plaintiff LLCs. (Moretti Decl., Exs. W, U, V.)
III. Procedural History
Plaintiffs' commenced this action in New York state court on June 16, 2014. (ECF No. 1.) Defendants' removed the action to this Court on July 10, 2014. (Id.) On August 14, 2014, they answered Plaintiffs' complaint and lodged counter-claims against Svenningsen and the Property LLCs. (See ECF Nos. 23, 25.) Plaintiffs answered Defendants' counter-claims on September 3, 2014. (ECF No. 29.) Plaintiffs' amended their complaint on December 22, 2014 (ECF No. 52), and Defendants' answered, and amended that answer, in January 2015 (see ECF Nos. 53 (filed Jan. 9, 2015), 54 (filed Jan. 20, 2015)). John Chiarella waived the affirmative defense of lack of jurisdiction on March 16, 2015. (ECF No. 67.)
Prior to filing their respective motions for summary judgment, the claims were narrowed and the individual defendants dismissed from the action based on a stipulation between the parties, which was ordered by the Court on May 3, 2016. (ECF No. 141 (also agreeing that Connecticut law governed the parties' disputes and that neither party would be entitled to attorney's fees or costs with respect to the claims dismissed).) The motions for summary judgment were fully briefed as of July 18, 2016. (See ECF Nos. 143, 154.)
STANDARD ON A MOTION FOR SUMMARY JUDGMENT
A "court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The moving party bears the initial burden of pointing to evidence in the record, "including depositions, documents [and] affidavits or declarations," id. at 56(c)(1)(A), "which it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party may also support an assertion that there is no genuine dispute by "showing . . . that [the] adverse party cannot produce admissible evidence [in] support" of such a contention. Fed. R. Civ. P. 56(c)(1)(B). If the moving party fulfills its preliminary burden, the onus shifts to the non-moving party to identify "specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (internal citation and quotation marks omitted).
A genuine dispute of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248; accord Benn v. Kissane, 510 F. App'x 34, 36 (2d Cir. 2013) (summ. order). Courts must "constru[e] the evidence in the light most favorable to the non-moving party and draw[] all reasonable inferences in its favor." Fincher v. Depository Trust & Clearing Corp., 604 F.3d 712, 720 (2d Cir. 2010) (internal quotation marks omitted). The party asserting that a fact is genuinely disputed must support their assertion by "citing to particular parts of materials in the record" or "showing that the materials cited do not establish the absence . . . of a genuine dispute." Fed. R. Civ. P. 56(c)(1). "Statements that are devoid of any specifics, but replete with conclusions, are insufficient to defeat a properly supported motion for summary judgment." Bickerstaff v. Vassar Coll., 196 F.3d 435, 452 (2d Cir. 1999).
The nonmoving party "may not rely on conclusory allegations or unsubstantiated speculation." FDIC v. Great Am. Ins. Co., 607 F.3d 288, 292 (2d Cir. 2010) (internal citation and quotation marks omitted). Similarly, "a party cannot create an issue of fact by submitting an affidavit in opposition to summary judgment that contradicts prior deposition testimony." Gorzynski v. JetBlue Airways Corp., 596 F.3d 93, 104 (2d Cir. 2010) (citing Perma Research and Dev. Co. v. Singer Co., 410 F.2d 572, 578 (2d Cir. 1969) (such affidavits "greatly diminish the utility of summary judgment as a procedure for screening out sham issues of fact")). But the mere fact that a non-movant's factual allegations in opposition are "self-serving" does not automatically render them insufficient to defeat summary judgment. Danzer v. Norden Sys., Inc., 151 F.3d 50, 57 (2d Cir. 1998). Instead, summary judgment should be granted when a party "fails to make a showing sufficient to establish the existence of an element essential to that party's case," where "that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322.
In reviewing the record, "the judge's function is not himself to weigh the evidence and determine the truth of the matter," nor is it to determine a witness's credibility. Anderson, 477 U.S. at 249. Rather, "[t]he inquiry performed is the threshold inquiry of determining whether there is the need for a trial." Id. at 250.
DISCUSSION
Plaintiff Svenningsen's and the Property LLC Plaintiffs' remaining claims against Ultimate Professional concern the alleged inflated billing practices that Ultimate has engaged in since at least 2006 through the end of Plaintiffs' professional relationship with Ultimate. (See Stip., ECF No. 141 (agreeing to dismiss all claims against the Chiarellas in their individual capacities and against Ultimate Services, the predecessor to Ultimate Professional).) The claims against the now sole-Defendant Ultimate Professional, as alleged in Plaintiffs' amended complaint, include fraud (Count I), negligent misrepresentation (Count III), conversion of funds through false invoices (Count V), Connecticut Statutory Theft, Conn. Gen. Stat. § 52-564 (Count VII), Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. §§ 42-110a - 42-110q (Count IX), unjust enrichment (Count XI), negligence (Count XVII), and breach of contract (Count XIX). (Id.; see Am. Compl.) The parties have agreed that Connecticut law governs this diversity jurisdiction action. (Stip, ECF No. 141.)
"Under New York choice-of-law rules, 'where the parties agree that [a certain jurisdiction's] law controls, this is sufficient to establish choice of law." Alphonse Hotel Corp. v. Tran, 828 F.3d 146, 152 (2d Cir. 2016) (modification in original and citation omitted); In re Lois/USA, Inc., 264 B.R. 69, 96 (Bankr. S.D.N.Y. 2001) ("this Court is comfortable in believing that New York would hardly be offended by the parties' [] choice of the law of another state, especially where a real, even if not predominant, nexus with the other state is present"); Fiserv Sols., Inc. v. XL Specialty Ins. Co., 94 A.D.3d 456, 464 (1st Dep't 2012) (court utilized Connecticut law where "[t]he parties agree[d] that Connecticut law govern[ed] their dispute").
The Court will address Ultimate's motion for summary judgment first given that resolution of Ultimate's claimed defenses will determine which claims remain, and thus which claims are potentially available for summary judgment in Plaintiffs' favor.
I. Ultimate's Motion for Summary Judgment
Two of the grounds on which Defendants move for summary judgment—statute of limitations and waiver—address a significant portion of Plaintiffs' claims in this action. Defendants' remaining arguments do not impact the remaining viable claims.
a. Statutes of Limitations
Ultimate asserts that all of Plaintiffs' claims are stale (Defs. Mem. at 16), pointing to Svenningsen's knowledge of or suspicions regarding certain of her claims during the period of time when Ultimate was providing services to her properties and she had access to the files that would have either confirmed or denied those suspicions. Svenningsen contends that she did not learn of the inflated billing until she took possession of the backup documentation for the service invoices in 2014. (Pls. Resp. 56.1 ¶¶ 84-85; Am. Compl. ¶ 37.)
Under Connecticut law, the statute of limitations for contract claims is six years. See Nunn v. Massachusetts Cas. Ins. Co., 758 F.3d 109, 117 (2d Cir. 2014) (citing Conn. Gen. Stat. § 52-576(a)); Corbett v. Petrillo, No. CV065005440S (DWS), 2008 WL 726373, at *4 (Conn. Super. Ct. Feb. 29, 2008) (unjust enrichment is a quasi-contract remedy). For Plaintiffs' tort and statutory claims, the limitations period is three years. See Breiner v. Stone, 122 F.3d 1055, *1 (2d Cir. 1997) (negligence and CUTPA claims) (citing Conn. Gen. Stat. § 52-577 ("No action founded upon a tort shall be brought but within three years from the date of the act or omission complained of.") and § 42-110g(f)); Certain Underwriters at Lloyd's, London v. Cooperman, 957 A.2d 836, 850 (Conn. 2008) (equitable unjust enrichment claims based on the same allegations as legal conversion and statutory theft claims subject to the same three-year statute of limitations); Kidder v. Read, 93 A.3d 599, 603 (Conn. App. Ct. 2014) (fraud).
Generally, "[i]n an action for breach of contract . . . the cause of action is complete at the time the breach of contract occurs, that is, when the injury has been inflicted." Tolbert v. Connecticut Gen. Life Ins. Co., 778 A.2d 1, 5 (Conn. 2001) (quoting Kennedy v. Johns-Manville Sales Corp., 62 A.2d 771, 773 (Conn. 1948)). "[I]gnorance of the fact that damage has been done does not prevent the running of the statute, except where there is something tantamount to a fraudulent concealment of a cause of action." Id. (quoting Kennedy, 62 A.2d at 772). The tort and statutory limitations periods are also "occurrence based," which "mean[s] that the time period within which a plaintiff must commence an action begins to run at the moment the act or omission complained of occurs." In re Trilegiant Corp., Inc., 11 F. Supp. 3d 82, 121 (D. Conn. 2014) (quoting Breiner, 122 F.3d at 1055).
Plaintiffs commenced this action on June 16, 2014. Without a basis for tolling the claims, any tort claims that occurred before June 16, 2011 are time-barred. Similarly, any contract claims that occurred prior to June 16, 2008 would be barred. But Svenningsen has testified that she did not learn of her claims until much later in 2014, or—as will be discussed—in 2013 when she took physical possession of the files for a short period of time and concluded she had been overcharged by at least $2 million. (See Pls. Resp. 56.1 ¶¶ 63, 74.)
To address the gap between the occurrence of the causes of action and Svenningsen's alleged timeframe for discovering the overcharging, Plaintiffs claim the doctrines of fraudulent concealment and of continuing course of conduct toll their claims. (Pls. Opp'n at 17-21.) Ultimate contends, however, that the doctrines are inapplicable given Svenningsen's prior awareness of specific portions of her allegations. (Defs. Reply at 9-13.) The Court assumes without deciding that these tolling provisions could theoretically toll all of the claims Plaintiffs' assert. Before considering the two doctrines, it is necessary to discuss Plaintiff Svenningsen's awareness of the issues based on the evidence submitted, and the inferences drawn therefrom.
There is some disagreement as to whether CUTPA claims can be tolled under the continuous course of conduct doctrine. Compare Flannery v. Singer Asset Fin. Co., LLC, 17 A.3d 509, 514 (Conn. App. Ct. 2011) ("the continuing course of conduct doctrine does not toll the three year statute of limitations"), aff'd, 94 A.3d 553 (Conn. 2014) (declining to consider "applicability of tolling to save an untimely CUTPA action" since "the plaintiff's tolling claim [was] entirely nonviable"), with McClancy v. Rotunno Const., Inc., No. FSTCV116010029S (DRT), 2014 WL 6805318, at *6 (Conn. Super. Ct. Oct. 28, 2014) (concluding that "[t]he dissenting justices [in Flannery] relied on case law that had 'aptly read 42-110g(f) as subject to toll by the continuing course of conduct doctrine" and applying the doctrine to toll a CUTPA claim).
i. Svenningsen's Knowledge or Notice of the Alleged Wrongdoing
Based on the evidence presented, the Court finds that Svenningsen had either knowledge of or sufficient notice of her injuries in January 2011 based on the undisputed facts that a) she expressed her suspicion regarding being billed for questionable pesticide treatments prior to 2010, and b) she made a demand for $2 million of overcharges relating to the period of time when Domenic Chiarella was in charge prior to gaining direct physical access to the files in March 2014. Svenningsen admits that she had suspicions sometime between 2008 and 2009 that she was being billed for pesticide that was not actually being used. (Svenningsen Tr. at 219-221 ("John's cousin's husband told me that they sprayed water instead of pesticides"); Am. Compl. ¶¶ 33(f) (false pesticide billing), 44(f) (same).) She also harbored the suspicion that she was being "so overcharged" when Chiarella's brother was in charge of Ultimate (prior to 2010) (see Moretti Decl., Ex. J; Pls. Resp. 56 ¶ 81). She expressed those suspicious to John Chiarella at the time, though she contends he smoothed over the issue by agreeing to take care of it. (Svenningsen Tr. at 220-21.)
Then, after Svenningsen's divorce from Chiarella was final in early 2014, she presented a demand to Ultimate for, amongst other things, $2 million of overcharges. (See Moretti Supp. Decl., Ex. CC (Svenningsen's list of amounts owed to her from Ultimate); Svenningsen Tr. at 324-25.; Fields Tr. at 23 (Svenningsen presented the list of demands including for the $2 million overcharges to an Ultimate employee at a late February 2014 meeting); Moretti Supp. Decl., Ex. FF (Chiarella had reviewed and commented on the list by February 27, 2014).) This figure is substantially larger than the $250,000 outstanding on the loan between her and Ultimate, which she testified was the only thing she was aware of between herself and Chiarella (and presumably Ultimate) when the divorce judgment was entered. (See Ex. CC; see also Am. Compl. ¶¶ 61-62; Pls. Resp. 56.1 ¶ 107.) There is no way to distinguish these overcharges from the overcharges claimed in this action albeit attributed to Ultimate Services as opposed to Ultimate Professional. (See Am. Compl. ¶ 35 ("All told, Ultimate Services deliberately overcharged Plaintiffs by at least $3,000,000.00, and that figure is most likely much higher").)
Although the Court does not rely on the expert report submitted by Defendants in connection with these motions, the report's analysis of the claimed damages comports with the Court's analysis of the origin of the $2 million claim asserted by Svenningsen in February 2014. (See Moretti Decl., Ex. BB (expert for Defendants asserts "96% of [the] total claimed damages" of approximately $5.5 million starting from June 1, 2008 to December 31, 2013 "relate to alleged overcharges that occurred prior to January 1, 2010").)
Svenningsen claims the $2 million was for "other unrelated billing issues" without persuasive clarification (Pls. Resp. ¶ 74), but the deposition testimony and exhibits submitted by Defendant support the position that the overbilling related to the pattern and practice of which she now complains. (See Ex. CC ("[o]vercharging of invoices by Domenic [Chiarella]. $2,000,000+"); Svenningsen Tr. at 219-22, 344-45.) Based on the evidence in the record, even considering her conflicting explanations, a reasonable jury could not conclude that the overcharges were materially distinct from the overcharges claimed in this lawsuit. Therefore, the Court concludes that there is no genuine dispute of fact that, by February 2014, Svenningsen had knowledge of the overcharging.
Combining these two facts (her suspicions and her eventual February 2014 knowledge) with the also indisputable fact that while working at Ultimate she had physical access to the files containing the underlying invoices for work performed at her properties, means that she could have discovered the injuries of which she claims to have been unaware—in fact, she did just that when she quit working at Ultimate. The February 2014 timing of her claim for overcharges at a meeting with an Ultimate employee is critical. Drawing all inferences from the testimony in Svenningsen's favor, she took possession of the files without permission at the latest sometime in 2013 when she left Ultimate. (Pls. Resp. 56.1 ¶ 83; Svenningsen Tr. at 166.) But she returned the files to Ultimate in 2013 "for an audit" and thus only had them in her possession "for a limited period" of time. (Id.) Despite not having access to the files again until March 2014 (Am. Compl. ¶ 37), at some point between 2013 and February 2014, she came to the conclusion that she was owed over $2 million. The only logical conclusion to be drawn from this information is that she came to conclusion sometime in 2013 when she possessed the files. (But see Svenningsen Tr. at 171 (when asked if she looked for overcharges when she possessed the files, Svenningsen testified she did not; when asked why, she answered, "Cause I didn't").)
While there is no reasonable view of the evidence that would explain how Svenningsen did not look for overcharges when she possessed the files and yet was able to present a claim for overcharges prior to getting access to the files in 2014, the Court notes that this conclusion is not the determinative factor in this case.
But even more importantly, if she took possession of the files at that time, and "potentially" could have accessed them at any time since she began working for her ex-husband's company in 2011 (Pls. Resp. 56.1 ¶ 83; Svenningsen Tr. at 169, 202-203), then she had the ability to investigate these claims starting in 2011. The most favorable inference the Court can draw based on the facts presented is that prior to January 2011 she did not have access to the files she needed, but thereafter she knew or should have known through due diligence of her causes of action: by then, she had the materials necessary to confirm or deny her suspicions.
Therefore, there is no genuine dispute as to whether Svenningsen had potential access to that information and was on inquiry notice—if not actual notice—of her claims by January 2011. (Svenningsen Tr. at 219-21 (learning Ultimate "sprayed water instead of pesticides" between 2008 and 2009).) Similarly, her knowledge as sole member of the Property LLCs who signed the 2010 contract with Ultimate is necessarily imputed to the holding companies, providing them with knowledge of their claims as of January 2011 as well. See Conn. Gen. Stat. § 34-132 (a limited liability company is charged with "notice to or knowledge of" any member or manager).
ii. Tolling
"Under the doctrine of fraudulent concealment, a cause of action is deemed to accrue against a defendant when a plaintiff first discovers its existence." Izzarelli v. R.J. Reynolds Tobacco Co., 117 F. Supp. 2d 167, 177 (D. Conn. 2000) (citing Conn. Gen. Stat. § 52-595 ("If any person, liable to an action by another, fraudulently conceals from him the existence of the cause of such action, such cause of action shall be deemed to accrue against such person so liable therefor at the time when the person entitled to sue thereon first discovers its existence.")). Tolling under the doctrine requires "evidence that a defendant:"
(1) had actual awareness, rather than imputed knowledge, of the facts necessary to establish the [plaintiff's] cause of action; (2) intentionally concealed these facts from the [plaintiff]; and (3) concealed the facts for the purpose of obtaining delay on the [plaintiff's] part in filing a complaint on their cause of action.Iacurci v. Sax, 99 A.3d 1145, 1154 (Conn. 2014) (quoting Falls Church Group, Ltd. v. Tyler, Cooper & Alcorn, LLP, 912 A.2d 1019, 1032-33 (Conn. 2007).
"[F]raudulent concealment of a cause of action under § 52-595 must, like other frauds, be proved by [a] more exacting standard[.]" Fichera v. Mine Hill Corp., 541 A.2d 472, 477 (Conn. 1988) (Connecticut requires "clear, precise, and unequivocal" evidence); see also Breiner, 122 F.3d at *1 (in federal court, "[a]llegations of fraudulent concealment, like allegations of fraud, must satisfy the pleading requirements of Rule 9(b)."). And, "the concealment must have taken place within three years of the filing of the action." Izzarelli, 117 F. Supp. 2d at 177 (citing Willow Springs Condo. Ass'n v. Seventh BRT Dev. Corp., 717 A.2d 77, 101 (Conn. 1998)). But, "[t]here can be no concealment which will prevent the running of the statute of limitations where the cause of action is known to the plaintiff or there is a presumption of such knowledge." See Discover Bank v. Hill, 94 A.3d 1287, 1292 (Conn. Super. Ct. 2012), aff'd, 93 A.3d 159 (Conn. App. Ct. 2014) (emphasis added).
The Court, therefore, agrees with Defendant's position that, at minimum, based on her suspicions that she was being billed for pesticide that was not actually being used (Svenningsen Tr. at 219-221; Am. Compl. ¶¶ 33(f), 44(f)) and that she was being "so overcharged" when Chiarella's brother was in charge of Ultimate (prior to 2010) (see Moretti Decl., Ex. J; Pls. Resp. 56 ¶ 81), she at least had notice of her claim based on those suspicions, and could have exercised due diligence to explore them. Hodges v. Glenholme Sch., No. 15 Civ. 1161 (SRU), 2016 WL 4792184, at *7 (D. Conn. Sept. 13, 2016) ("A plaintiff need not have an understanding of the full extent of her harm, nor its legal import, in order to have sufficient knowledge to bring a claim.") (citing Maslak v. Maslak, 2013 WL 5663798, at *4 (Conn. Super. Ct. Sept. 27, 2013) ("equitable tolling [principles] only permit[] a plaintiff to avoid the bar of the statute of limitations if despite all due diligence, he is unable to obtain vital information bearing on the existence of his claim") (emphasis added).
In contrast, there is "no specific duty upon a plaintiff to investigate a potential claim of [medical] malpractice" based on § 52-584's discovery accrual clause: "the date when the injury is first sustained or discovered or in the exercise of reasonable care should have been discovered[.]" Lagassey v. State, 846 A.2d 831, 846 (Conn. 2004).
She therefore had to either investigate her suspicions stemming from pre-2010 or run the risk that her claims would be time-barred. Weiner v. Clinton, No. HHDCV044006045, 2006 WL 3200353, at *5 (Conn. Super. Ct. Oct. 19, 2006), aff'd, 942 A.2d 469 (Conn. App. Ct. 2008) ("When a plaintiff learns of information that would lead to discovery of a cause of action through due diligence, the statute of limitations runs even if there has been fraudulent concealment."); Moran v. Hirsch, No. FBTCV085019081, 2009 WL 5322427, at *4 (Conn. Super. Ct. Dec. 14, 2009) ("If 'the means of knowledge existed and the circumstances were such as to put a plaintiff of ordinary prudence on inquiry . . . and the plaintiff learned of information that would lead to the discovery of a cause of action through due diligence . . . the plaintiff cannot successfully establish fraudulent concealment of a cause of action."). Her voluntary affiliation with Chiarella does not void that responsibility. (See Svenningsen Tr. at 329-30 (discussing her choice not to act or sue because Chiarella was her boyfriend, then fiancé, and then husband).)
Svenningsen has not established that Ultimate "concealed the facts [regarding overcharging] for the purpose of obtaining delay on [her] part in filing a complaint[.]" See Iacurci, 99 A.3d at 1154. And Svenningsen has failed to rebut Ultimate's showing that there is no genuine dispute as to her notice of the alleged overcharging and access to her files. Rather, she has established that despite having access to the bulk files she chose not to attempt to access them. Assuming based on the evidence presented that Svenningsen chose to wait until she filed for divorce and quit working at Ultimate to investigate her claims, that decision does not justify extending the limitations period. See Perry v. City of Stamford, 996 F. Supp. 2d 74, 84 (D. Conn. 2014) ("[a] plaintiff must be ignorant of the facts that [a] defendant has sought to conceal for the statute of limitations to toll under § 52-595"); World Wrestling Entm't, Inc. v. THQ, Inc., No. X05CV065002512S, 2008 WL 4307568, at *12 (Conn. Super. Ct. Aug. 29, 2008) ("there is appellate authority and persuasive trial court support for the proposition that the tolling benefits of Section 52-595 may only be utilized if a plaintiff has exercised due diligence after being placed on inquiry notice of the existence of a cause of action").
Plaintiffs also hope to extend the limitations period by invoking the continuing course of conduct doctrine. "When the wrong sued upon consists of a continuing course of conduct, the statute [of limitations] does not begin to run until that course of conduct is completed." Giglio v. Connecticut Light & Power Co., 429 A.2d 486, 491 (Conn. 1980). To invoke the doctrine,
there must be evidence of the breach of a duty that remained in existence after commission of the original wrong related thereto. That duty must not have terminated prior to commencement of the period allowed for bringing an action for such a wrong . . . . [The Connecticut Supreme Court] ha[s] upheld finding[s] that a duty continued to exist after the cessation of the act or omission relied upon, [upon] evidence of either a special relationship between the parties giving rise to [] a continuing duty or some later wrongful conduct of a defendant related to the prior act.Saint Bernard Sch. of Montville, Inc. v. Bank of Am., 95 A.3d 1063, 1077 (Conn. 2014) (citations omitted); see Izzarelli, 117 F. Supp. 2d at 177. "[A] mere contractual relationship does not create a fiduciary or confidential relationship" of the kind envisioned by the doctrine. Id. at 1078 (citing Fichera, 541 A.2d at 475). The doctrine also does not apply to causes of action of which the plaintiff was "already aware." See Beckenstein v. Potter & Carrier, Inc., 464 A.2d 18, 24-25 (Conn. 1983) (discussing the plaintiffs' awareness of symptoms of a faulty roof, even if they alleged they were unaware of the "main problem"); see also Connell v. Colwell, 571 A.2d 116, 123 (Conn. 1990) (tolling applied, if at all, only until plaintiff became aware of the injury).
The Court need not address the issue of an existing ongoing duty or special relationship given Plaintiffs' awareness of allegedly false billing. See Johnson v. Walden Univ., Inc., 839 F. Supp. 2d 518, 528 (D. Conn. 2011) ("The [Connecticut Supreme Court] seems to say that it is fair to have the 'continuous course of conduct rule' operate where there is a fiduciary relationship or relationship between the parties so that one of the parties has an ongoing responsibility to right any wrongs he or she may have done or bring them to the injured party's attention—the latter party relying on the relationship of trust might very well not be as attentive to protecting his or her interests") (citation omitted).
In any event, while there are allegations in the operative complaint suggesting John Chiarella acted in a fiduciary capacity as manager to the Property LLCs (Am. Compl. ¶ 31), and conclusory evidence elicited in that regard (Pls. Resp. 56.1 ¶ 86 (Chiarella Tr. 1114, 1516 ("Did you [Chiarella] understand, as manager of the real estate holding LLCs, you owed a fiduciary duty to those LLCs? Yes.")), determining whether someone is a fiduciary is a question of law. See Iacurci, 99 A.3d 1145, 115152 (Conn. 2014). "Whether a member of a limited liability company (LLC) owes a fiduciary duty towards other members is not clearly established under Connecticut jurisprudence at this time." French ReedPutnam, LLC v. SpinReed Putnam, LLC, No. FSTCV146023208, 2015 WL 9598370, at *1011 (Conn. Super. Ct. Nov. 30, 2015).
LLCs are creatures of contract existing by virtue of state statutory schemes. See Styslinger v. Brewster Park, LLC, 138 A.3d 257, 26162 (Conn. 2016) (discussing Connecticut's Limited Liability Company Act). Amendments to Connecticut's LLC Act will soon become effective, codifying the ability to remove particular duties members owe to one another. See Uniform Limited Liability Company Act, 2016 Conn. Legis. Serv. P.A. 1697 (H.B. 5259) (West) (effective July 2017). Here, the operating agreements for each of the Property LLCs have not been submitted to the Court in conjunction with any attempt to determine that Chiarella is a fiduciary to the LLCs, and the individual claims against Chiarella have been dismissed. Moreover, it is unclear why a groundskeeper "manager" would hold a fiduciary role with respect to armslength business dealings with a property owner "member" who sets the scope of work and the fixed cost for services provided by allegedly orally renegotiating on a yearly basis multimillion dollar contracts. Therefore, in light of the uncertainty of whether a manager or member automatically has a fiduciary duty and the absence of a fully developed record on the issue, the Court declines to decide whether Chiarella owed such a duty to the LLCs in this case.
Here, assuming there was a scheme, each false invoice represents a discrete, actionable injury. See Saint Bernard, 95 A.3d at 1079 ("In between the case in which a single event gives rise to continuing injuries and the case in which a continuous series of events gives rise to a cumulative injury is the case in which repeated events give rise to discrete injuries . . . . [In such a case] the damages from each discrete act . . . would be readily calculable without waiting for the entire series of acts to end. There would be no excuse for the delay. And so the violation would not be deemed continuing.") The alleged fraud was not in progress and finalized by some ultimate or relatable final action occurring within the limitations period. Cf. Giulietti v. Giulietti, 784 A.2d 905, 926 (Conn. App. Ct. 2001) (defendant attorney, who was also plaintiffs' son, engaged in an "ongoing failure" to effectuate his father's wishes regarding property distribution, such that defendant's final omissions "related directly back to [his] earlier wrongs").
Hypothetically, if each inflated invoice were to charge a set fee from a predefined reserve amount that was to be reconciled with actual expenses at the end the year, but the final invoice indicated no reconciliation was necessary because all invoiced funds were necessarily expended, then the final invoice could conceivably relate back to the prior ones. In this case, nothing presented shows the invoices interrelate in that fashion.
There are no genuine disputes surrounding the timeframes when Plaintiffs' first became aware of potential issues, for some of which they are now suing Ultimate, and when Plaintiff Svenningsen gained potential access to the necessary information to prove or disprove any suspicious she harbored. See Flannery v. Singer Asset Fin. Co., LLC, 94 A.3d 553, 570 (Conn. 2014) (considering the application of the doctrine at the summary judgment stage). Here, each invoice was a discrete repetitive act furthering the harm but inflicting the same injury—and Plaintiffs were on investigatory notice of that harm in 2011. See Rosato v. Mascardo, 844 A.2d 893, 899 (Conn. App. Ct. 2004) ("The statute begins to run when the plaintiff discovers some form of actionable harm, not the fullest manifestation thereof . . . . The focus is on the plaintiff's knowledge of facts, [and] . . . [m]ost importantly, the continuing course of conduct doctrine has no application after the plaintiff has discovered the harm."). The Supreme Court of Connecticut has favorably cited an example provided by Judge Posner of the Seventh Circuit that highlights the distinction: if a "plaintiff were seeking backpay for repeated acts of wage discrimination (suppose that every pay day for five years he had received $100 less than he was entitled to), he would not be permitted to reach back to the first by suing within the limitations period for the last." Watts v. Chittenden, 22 A.3d 1214, 1222 (Conn. 2011). Only the breaches occurring within the limitations period are actionable. See Fradianni v. Protective Life Ins. Co., 73 A.3d 896, 903 (Conn. App. Ct. 2013) (where plaintiff alleged a yearly overcharge in breach of its contract with the defendant, each alleged overcharge, "if found to be true, would constitute separate breaches by the defendant").
Notably, even recent congressional amendments to Title VII of the Civil Rights Act via the Lilly Ledbetter Fair Pay Act of 2009 do not allow a plaintiff to reach back, for damages calculations, to the first act of wage discrimination. See 42 U.S.C. § 2000e-5(e) (amended to permit "recovery of back pay for up to two years preceding" the filing of a discrimination complaint alleging a long-term course of discriminatory conduct).
Because there are no compelling justifications for tolling Plaintiffs' claims, the Court must grant summary judgment on Plaintiffs' stale, pre-June 16, 2008, contract claims and their stale, pre-June 16, 2011, tort and statutory claims in favor of Ultimate. Rosato, 844 A.2d at 899 ("Allowing th[e] [accrual] point [for a cause of action] to be pushed forward as long as it is claimed that the [] conduct continued would eviscerate the policies underlying the statute of limitations[:] The plaintiff would be allowed to acquiesce in the defendant's conduct as long as it was convenient to the plaintiff."); cf. Fenn v. Yale Univ., 283 F. Supp. 2d 615, 637-38 (D. Conn. 2003) (statute of limitations tolled by doctrines of fraudulent concealment and continuing course of conduct where fiduciary failed to disclose information until complaining party "learned of [the] wrongdoing").
b. Waiver and Release
Defendant additionally asserts that the Separation Agreement between Svenningsen and Chiarella bars her personal claims against Ultimate, or at minimum provides a justification for applying judicial estoppel to those claims. (Defs. Mem. at 8-14.) In contrast, Svenningsen understandably wishes to separate her literal divorce from Chiarella from her figurative break-up with Ultimate. (See Pls. Opp'n at 16-17.) Unfortunately, Svenningsen—a sophisticated business woman with a vast array of LLCs—chose to intertwine her personal and business relationship with Chiarella, ignoring the "oft-repeated but seldom heeded aphorism: Never do business with your family." Winger v. Winger, 82 F.3d 140, 141 (7th Cir. 1996). Not only is it widely acknowledged that "family business disputes tend to be ugly, protracted, and destructive," Benjamin Means, Family Business Disputes, Bus. L. Today, at 1 (Feb. 2015), but by comingling the two relationships, Svenningsen's decisions during her marriage and subsequent divorce from Chiarella have consequences that reach outside of the marital sphere.
The Separation Agreement between Svenningsen and Chiarella is interpreted like a contract pursuant to Connecticut law. Remillard v. Remillard, 999 A.2d 713, 719 (Conn. 2010). "If [the agreement] is unambiguous within its four corners, 'the determination of what the parties intended by their contractual commitments is a question of law.'" Id. (citation omitted). "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." Id.
When Svenningsen decided to "waive[] any and all financial rights and claims of any kind arising by virtue of the[] [parties'] marriage or otherwise, under any present or future law, including, but not limited to[,] all rights[] in or to[] property owned or acquired by the other party," she did so knowing that Ultimate Professional was "property owned" by John Chiarella and that she was waiving any claim of any kind arising in any way against that property. (See Separation Agreement § 3.2.) Moreover, the release extended to past and present claims "of any and all kinds, whether in tort or otherwise[.]" (See id. § 5.1 (emphasis added).) The agreement was incorporated into the court's divorce judgment, where Svenningsen and Chiarella listed their respective assets on their sworn financial affidavits. (Pls. Resp. 56.1 ¶¶ 55-62.) Simply put, the parties to the agreement released each other from any claims the other might have been contemplating, including any claims either party might want to lodge against the other's personally held property: for Svenningsen that is her Katonah property and her company CSC Landscape Holdings Inc.; for Chiarella it is his personal property and his company Ultimate.
The perhaps regrettable outcome, given Svenningsen's position now, is that all of her personal claims against Ultimate were waived when she signed the Separation Agreement—coinciding with the timeframe when she stopped being an employee at Ultimate herself and finally took possession of her bulk files. Of course, the agreement also bars Chiarella from any personal claims he might have entertained, i.e. for any interest in CSC Landscape Holdings such as the property acquired during the couple's brief marriage. Therefore, Svenningsen's remaining claims cannot proceed, and summary judgment on those claims is entered in favor of Ultimate. This includes her claims for the balance of the loan and her claims with regard to her personally held property.
The portion of Plaintiffs' motion for summary judgment seeking judgment in favor of Svenningsen on the breach of contract for the outstanding loan must therefore be denied.
Nevertheless, the remaining claims brought by the Property LLCs are not waived in the same fashion. Padawer v. Yur, 66 A.3d 931, 936 (Conn. App. Ct. 2013) (citing Conn. Gen. Stat. § 34-167(a)) ("Although the plaintiff is the sole member of [the] LLC, that does not impute ownership of the limited liability company's assets to the plaintiff.") While a third-party beneficiary can reap a benefit of a contract, they cannot be obligated by provisions of a contract to which they are not a party. Gateway Co. v. DiNoia, 654 A.2d 342, 346 (Conn. 1995) (a third-party beneficiary to a contract can enforce its obligations if the contract was intended to create a direct obligation from one party to that third-party); Cf. In re M/V Rickmers Genoa Litig., 622 F. Supp. 2d 56, 72 (S.D.N.Y. 2009) (citing Stein Hall & Co. v. S. S. Concordia Viking, 494 F.2d 287, 291 (2d Cir. 1974)) ("qualifying as an intended beneficiary in no way creates contractual obligations on the part of the intended beneficiary"). The same is true for Ultimate. Indeed, Defendants do not further articulate any viable defenses to claims brought by the LLCs.
c. Other Defenses
Defendants' remaining arguments are either unnecessary, because Svenningsen's personal claims have been dismissed, or unpersuasive. Specifically, Plaintiffs' claims are not impermissibly duplicative. Although a "breach of contract standing alone" will not suffice to underpin a CUTPA claim, Boulevard Assocs. v. Sovereign Hotels, Inc., 72 F.3d 1029, 1038-39 (2d Cir. 1995), "[a] misrepresentation can constitute an aggravating circumstance that would allow a simple breach of contract claim to be treated as a CUTPA violation; it would, in effect, be a deceptive act." Greene v. Orsini, 926 A.2d 708, 711 (Conn. Super. Ct. 2007) ("[m]ultiple breaches of contract may also raise a breach of contract claim to the level of a CUTPA violation") (citation omitted). Similarly, Connecticut courts allow claims of statutory theft to overlap with other tort claims. See, e.g., Chiulli v. Chiulli, 127 A.3d 1146, 1155 (Conn. App. Ct. 2015) (adopting reasoning of the trial court, which post-trial entered judgment in favor of defendant on plaintiff's claims of breach of contract, conversion, and statutory theft where plaintiff failed to adduce sufficient evidence of an enforceable contract and similarly of ownership over the funds promised to him via the unenforceable contract).
This leaves the Property LLCs' claims related to Ultimate's provision of grounds-keeping services to the property held by the LLCs.
II. Svenningsen's and the Property LLCs' Motion for Summary Judgment
Only Plaintiffs' request for summary judgment on the enforceability of any alleged contract between Plaintiffs and Ultimate for 2014 remains, given the waiver discussed above.
a. The Contract between Ultimate and the LLCs in 2014
The Court is left with a narrow set of claims focused on whether, through fraud, negligence, or otherwise, Ultimate breached its contractual obligations to the Property LLCs, which Chiarella managed, when it provided services that allegedly fell short of the oral contract modifications made between Svenningsen and Chiarella, and whether Svenningsen owes Ultimate money for the services rendered at the end of 2013 and the beginning of 2014. The latter question is currently before the Court in the form of Plaintiffs' motion for summary judgment on the issue of whether there was an enforceable contract between Plaintiffs' and Ultimate in 2014. As previously explained, Plaintiffs argue there was no enforceable contract in place that year. (Pls. Mem. at 6.) Defendant's position is that the base contract from 2010 was in place, automatically renewed each year absent cancellation by Plaintiffs, and renewed for 2014—along with whatever oral modifications were made to the scope and cost for that year. (Defs. Opp'n at 15.)
None of the parties have submitted sufficient evidence to determine whether judgment can be granted on these claims as a matter of law. The Court notes, however, that both the breach of contract claims and the unjust enrichment claims can continue at this time. See Fabri v. United Techs. Int'l, Inc., 387 F.3d 109, 128 (2d Cir. 2004) ("Unjust enrichment applies even where the parties have an express contract if: (1) the plaintiff cannot recover under the contract because the plaintiff is guilty of breach of contract, and (2) the defendant would nevertheless be unjustly enriched by keeping the plaintiff's services or money without some payment.") (citing Vines v. Orchard Hills, Inc., 435 A.2d 1022, 1028 (Conn. 1980) ("The purchaser must show more than that the contract has come to an end and that the seller retains moneys paid pursuant to the contract. To prove unjust enrichment, in the ordinary case, the purchaser, because he is the party in breach, must prove that the damages suffered by his seller are less than the moneys received from the purchaser.").
The party moving for summary judgment bears the burden of either pointing to evidence that demonstrates there is no genuine dispute of fact on a particular issue or pointing to the dearth of evidence supporting the non-moving party's position where that party will bear the burden of proof at trial. Celotex, 477 U.S. at 322. On Ultimate's counter-claims for the services provided at the end of 2013 and the beginning of 2014, it will bear the burden of proving the existence of the contract and that it renewed automatically such that a contract was in place for 2014. And Ultimate has presented a copy of the written agreement between Plaintiffs and Ultimate that suggests that proposition may be correct. (See Moretti Decl., Ex. I (written contract with yearly renewal provision).) Svenningsen has now, however, asserted that the contract never renewed because the automatic renewal clause was voided by Connecticut law (see Pls. Mem. at 11-13 (citing Conn. Gen. Stat. § 42-126b(c)(3)), and thus whatever oral contract existed between the parties expired at the end of 2013 (see Pls. Mem. at 7).
The elements of a breach of contract claim in Connecticut are textbook. See Tatum v. Oberg, 650 F. Supp. 2d 185, 192 (D. Conn. 2009) ("Under Connecticut law, the elements of a breach of contract are 'the formation of an agreement, performance by one party, breach of the agreement by the other party and damages.'") (citing Rosato, 844 A.2d at 902).
Even oral contracts that should be unenforceable pursuant to Connecticut's statute of frauds may be enforced on the basis of equitable estoppel when coupled with evidence that the party seeking to avoid the statute engaged in acts of "part performance." See Glazer v. Dress Barn, Inc., 873 A.2d 929, 947 (Conn. 2005). However, any oral modifications to a contract require valid consideration to be effective. See Deutsche Bank Trust Co. Americas v. DeGennaro, 89 A.3d 969, 973 (Conn. App. Ct. 2014).
Section 42-126b(c)(1) sets forth the notice requirement:
Any person, firm, partnership, association or corporation that sells or offers to sell any products or services used primarily for personal, family or household purposes for a specified period of time of more than one hundred eighty days pursuant to a written contract that contains a provision for automatic renewal of the contract for a period of time of more than thirty-one days at the end of the period of time specified in the contract shall provide the recipient of such products or services with a clear and conspicuous written notice that the recipient may cancel such contract.Conn. Gen. Stat. § 42-126b(c)(1). "If such notice is not provided . . . in accordance with subdivision (1) of this subsection . . ., any such products or services furnished to the recipient after the expiration of the period of time specified in the contract shall be deemed an unconditional gift under subsection (a) of this section." Id. § 42-126b(c)(3) (emphasis added).
...
[N]otice shall be given at least fifteen days but not more than sixty days prior to: (A) [the renewal date], or (B) the [end of the cancellation period], whichever time period is earlier.
Plaintiffs' persuasively argue that the renewal provision became void when Ultimate failed to provide the statutorily required notice, despite continuing to provide services to Svenningsen's personal property and the Property LLCs. (Defs. Resp. 56.1 ¶ 42b.) Uncited by either party, Am. Alarm Ltd,. Inc. v. Febles is a Connecticut case that addresses this provision. There, an alarm monitoring company failed to send renewal notices that complied with the statute for its service contract, which was for a five-year term and automatically renewed without notice to the contrary for another such term. Am. Alarm, No. FSTCV126014875S, 2015 WL 2344686, at *4 (Conn. Super. Ct. Apr. 16, 2015). Failure to provide proper notice to the consumer led the court to void the renewal of the contract. Id.
Defendant's attempts to compare § 42-126b to other statutes, or to argue over the disputed facts concerning whether Plaintiffs' usage of the properties at issue is for personal or investment purposes, are unavailing. (See Defs. Opp'n at 17-19.) The statute does not distinguish between oblivious consumers and limited-liability holding companies whose sole member and owner has also worked at the company providing the services. In the absence of Connecticut cases interpreting and narrowing the scope of § 42-126b(3), the Court is bound to apply it according to its plain language. Conn. Gen. Stat. § 42-126b(c)(3) ("If such notice is not provided . . . products or services furnished to the recipient after the expiration of the period of time specified in the contract shall be deemed an unconditional gift"); Vincent v. City of New Haven, 941 A.2d 932, 941 (Conn. 2008) (the absence of limiting language should be "resolved in a manner that furthers, rather than thwarts, the act's remedial purposes"). "Courts may not by construction supply omissions . . . or add exceptions merely because it appears that good reasons exist for adding them." Id. at 942. Since it is undisputed that Ultimate did not provide a notice, thinking it was not required to do so, Ultimate provided its 2014 services gratis.
Although Svenningsen testified that she never received the rider to the base agreement that indicated it would automatically renew (Svenningsen Tr. at 23), it strains credulity that someone who worked at Ultimate, and was thus fairly familiar with the company's business practices, was unaware of the potential that her particular agreement might renew. In any event, the dispute as to whether Svenningsen received the rider is irrelevant to the outcome on this issue.
Despite the lack of a formal agreement, however, Plaintiffs have conceded that equitable remedies are available for the services rendered by Ultimate in 2014. (See Pls. Mem. at 13 n.2 ("Plaintiffs have always agreed that [they] would provide Ultimate Professional with a credit for the fair and reasonable costs related to that work").) --------
Finding the renewal provision to be void, the Court must agree with Plaintiffs that there was no contract, oral or otherwise, in place for 2014. Defendant's position has unwaveringly been that a contract was in place because the oral amendments of 2011, 2012, and 2013 were merely modifications of the evergreen written 2010 agreement. (See Defs. 56.1 ¶ 39; Defs. Resp. ¶¶ 30-42b, 64-67.) That position is no longer tenable as a matter of law. Therefore, the Court grants Plaintiffs' summary judgment motion in that regard, granting judgment in favor of Plaintiffs on Defendant's counter-claims related to contractual services from 2014 (part of Count I and all of Count III).
CONCLUSION
For the foregoing reasons, Defendants' motion seeking summary judgment in its favor is GRANTED in part and DENIED in part. Judgment in favor of Defendants is granted on all of Plaintiff Svenningsen's personal claims. Summary judgment in favor of Defendants is also granted on the remaining Plaintiffs claims based on alleged contractual breaches occurring prior to June 16, 2008 and claims based on alleged violations of tort or statutory law occurring prior to June 16, 2011, which are time-barred.
Plaintiffs' motion seeking summary judgment in its favor is also GRANTED in part and DENIED in part. Judgment in favor of Plaintiffs is granted on Defendant's breach of contract counter-claims related to services provided in 2014 (Count I (partial) and Count III).
The Clerk of the Court is respectfully directed to terminate the motions at ECF Nos. 143 & 154. The parties are directed to appear for a pre-trial conference on May 3, 2017 at 11:00 a.m. Dated: March 31, 2017
White Plains, New York
SO ORDERED:
/s/_________
NELSON S. ROMÁN
United States District Judge