Opinion
WWMCV096000903S.
11-19-2012
George GIONIS et al. v. RUSSO'S MARINE MART, INC.
UNPUBLISHED OPINION
ROBERT F. VACCHELLI, Judge.
In this case, the plaintiffs, George Gionis and Richard J. Burke, seek money damages, punitive damages, attorneys fees and costs and/or rescission of their contract over their purchase of a 38-foot, 2006 model Rampage powerboat in 2007 that was represented to be a " new demo." At the time of sale, the defendant, dealer-seller, Russo's Marine Mart, Inc. of Medford, Massachusetts, did not disclose that the boat had been repaired after it was damaged in a grounding accident. The Amended Complaint is in ten counts encompassing claims for breach of contract (Counts One and Two), breach of warranty (Count Three), fraud and intentional misrepresentation (Counts Four and Five), violation of the Connecticut Unfair Trade Practices Act (CUTPA) (Counts Six and Seven), negligent misrepresentation (Counts Eight and Nine) and negligence (Count Ten). The defendant denies that it had a duty to disclose the grounding accident and repairs, denies any liability, and pleads four special defenses. For the following reasons, the court enters judgment in favor of the plaintiffs on the breach of warranty count only (Count Three), and awards them $15,000. Judgment enters for the defendant on all other counts.
I
The case was tried to the court on December 20 and 21, 2011, and on February 29, June 19, and August 9, 2012. Testimony was given by George Gionis and Richard Burke, the plaintiffs; Jesse Marden of Breakwater Marine Repair Co.; Robert Scanlan, expert witness, marine surveyor; Charles McCauley, expert witness, marine surveyor; Larry Russo, president of the defendant, Russo's Marine Mart; and Norman LeBlanc, expert witness, marine surveyor. The court also accepted numerous documents, reports, photographs and deposition transcripts into evidence. The parties also filed briefs and reply briefs in support of their respective positions.
The court finds the following facts: The plaintiffs are friends and business partners who also bought boats together for recreation. In 2006 they owned a boat called the " Egg Harbor" and desired to trade up. They saw a 38-foot 2006 model Rampage powerboat at a boat show in Massachusetts in the winter of 2006, and liked it. It appeared to fit their interest in using it on the ocean for fishing and overnight trips. The boat was owned by a dealership, Russo's Marine Mart, Inc. of Medford, Massachusetts (" Russo's"). The plaintiffs knew the boat was not new. It was a 2006 model, and it was described in the paperwork as a " new demo." The plaintiffs knew that Russo's had used the boat extensively in the summers of 2005 and 2006 to promote its business on a television sports show called " On the Hook." They knew it had been filmed participating in fishing tournaments and had over 450 hours of use on the twin engines. When they went to view it, the boat was stored outdoors for the winter. It was shrink wrapped and the bottom of the boat was obscured by the snow, so its exterior was not entirely visible. They were able to enter the interior through a doorway, and they inspected the interior.
On February 28, 2007, they negotiated to purchase the boat for the sales price of $400,000, which was a considerable savings off the $607,204 manufacturer's suggested retail price for the boat when it was new. They gave a $10,000 deposit. They also conveyed ownership of the Egg Harbor to Russo's, and Russo's gave them a trade-in allowance of $100,000 for that boat. The balance was financed with a loan from KeyBank, NA of Brooklyn, Ohio, arranged by Russo's. The sales agreement expressly stated that boat and motors were covered by " 5-year Caterpillar warranties and Rampage structural warranties." Despite the fact that they knew the boat had been used extensively, the plaintiffs did not inquire about its service history; they did not ask if it had been in any accidents or had been repaired; nor did they have it inspected by a marine surveyor. They could have made those inquiries and inspection, but did not do so. No one prevented them from doing any of those things. Mr. Gionis testified that he had purchased several used boats in the past, and most of time had them inspected by a marine surveyor in advance of purchase. The plaintiffs did not do so in this case, Gionis testified, because he thought it was not necessary because " it was a new boat" and because it was covered by warranties. Mr. Burke testified that the bank that financed the boat did not require a survey as part of their loan application, either, because, he said, " [I]ts a new boat ... It was on our application; new demo ."
The boat sailed into New London harbor on March 22, 2007, for delivery. The plaintiffs had an opportunity to view the boat again at that time. Being in the water, they could not inspect the bottom of the boat. Nevertheless, they accepted it at that time. They named it the " Dorado."
The plaintiffs enjoyed using the boat in 2007 for fishing and overnight trips on the ocean. They put another 20 or 30 hours of use on the motors, which was typical use for them. They winterized and dry docked the boat that winter. In 2008, they again enjoyed using the boat, putting another 20 or 30 hours of use on the engines. Once, in 2008, while they were out about 60 miles from shore on an overnight trip, they encountered rough seas. The experience permanently soured Burke on ocean boating. He decided he would not go out on the ocean again after that bad experience. Consequently, the plaintiffs put the boat up for sale in 2008. They winterized the boat and dry docked it again that winter.
In the spring of 2009, while preparing the boat for the next season of use, their maintenance serviceman, Jesse Marden, pointed out that there were cracks in the keel, and it appeared that it had been patched in spots. Marden advised that more patching work was needed, and that would cost approximately $1,500. The plaintiffs asked him to investigate the cause of the cracks. His inquiries revealed that the boat had been involved in a grounding accident in 2005, before the plaintiffs had purchased the boat. While it was on its way to a fishing tournament on the night of August 19, 2005, in connection with its use for the television sports show called " On the Hook, " it was pulled off course by the current in a channel off the coast of Woods Hole, Massachusetts. The bottom of the boat ran aground on a rock ledge outcropping while going 4 to 8 knots. The keel was scraped and parts of the propulsion system were damaged. The captain at the time, who was also the show's producer and host, was alone, but he was able to push the boat off the rocks with an extension pole. With the permission of Russo's, he drove the boat to a local repair yard, MacDougalls Cape Cod Marine Service, Inc. of Falmouth, Massachusetts. There, the keel and hull were patched and various parts of the propulsion system, i.e., shafts, struts propellers and rudders, were repaired or replaced for a total cost of approximately $15,000. It was paid for by insurance. After the repairs, the captain found " nothing wrong with it at all" and resumed using it for the show. However, Russo's never obtained Rampage authorization for the repairs, thus voiding the warranty for that work under the terms of the warranty. The fact that the damage occurred due to an accident and during commercial use also put the repair work outside the warranty under its terms. Russo's had never mentioned this history to the plaintiffs prior to the sale of the boat to them in 2007.
The plaintiffs contacted Russo's about their discovery. Russo's authorized the $1,500 repair proposed by plaintiffs' service man, but, by that time, plaintiffs became concerned about other cracks discovered on the hull. Russo's authorized no further assistance and eventually the parties stopped communicating with each other.
The plaintiffs did not use the boat at all in 2009. They took the boat off the market, and commenced this lawsuit, in November 2009. Mr. Gionis testified that if Russo's had told him about the grounding, he would not have bought the boat.
The plaintiffs had the boat thoroughly reviewed by a marine surveyor for this lawsuit. Their surveyor, Mr. Scanlan, testified at trial that when he inspected the boat on September 16, 2009, he found numerous problems with cracks, including delamination of the keel (the exposed edge running along the middle of the bottom of the boat). He testified that the keel was cored with balsam or foam that had become water logged. He also opined that the repair work done on the keel and propulsion system was of inferior quality. His survey was not complete. He advised that significant and costly disassembly of the boat would be necessary to investigate any other interior structural damage. Nevertheless, he estimated that it would cost about $85-90, 000 to properly repair the boat, and that with such repairs it would be valued at $245,000. He estimated that if it had not been in need of those repairs, it would have had a value of $289-305, 000. Nevertheless, there was no evidence that the vessel was not seaworthy in its present condition.
The plaintiffs declined to disassemble the boat at that time to investigate further. While the plaintiff, Burke, continues to avoid using the boat due to his reticence about using it on the ocean, the plaintiff, Gionis, resumed normal usage. He had some of the keel defects repaired for $475 and put the boat back in the water in 2010 and 2011. He used approximately 20-30 hours of engine time in each of those years. He received an estimate that it would cost $12,720 to perform further repairs to the fiberglass hull, and he looked into other work on the propulsion system, but he declined to pay for further repairs at that time and elected to wait to see the results of this litigation, instead.
The defendant attempted to demonstrate that the plaintiffs brought this suit seeking, inter alia, to rescind the contract and return the boat to the seller not for redress of damages, but to rid themselves of a boat they could no longer afford. That pretext was disproven. There was no persuasive evidence that the plaintiffs were having difficulty making boat payments or meeting expenses.
The defendant's first expert, Mr. McCauley, also a marine surveyor, testified that he inspected the boat damage for an insurance claim by the defendant on August 30, 2005. He testified that the boat had been in a grounding accident, minimal in nature, that the boat was sent for appropriate repairs to the keel, propellers, struts, shafts and rudders as needed at MacDougalls, and that he expected it would be restored to a condition similar to its condition prior to the accident. He compared the damage to a car accident where the car was scraped and a mirror broken off. He did not inspect the boat after the repairs were made. He valued the original damage at approximately $15,000.
The defendant's second expert, Mr. LeBlanc, was another marine surveyor. He inspected the boat for litigation on June 23, 2010. He testified that he found no structural damage to the boat. He further testified that the keel was not cored. He proved that the hull was solid fiberglass laminate from the keel to the waterline, in other words, all of the submerged parts at the bottom of the boat were solid fiberglass laminate, not cored. He also observed evidence of delamination, cracks and gouges in areas not involved in the accident. He observed some spots on the keel where the gel coating was cracked and weeping, and other cosmetic cracks in the coating. He identified poor maintenance, failure to remove bilge water during storage, and improper storage on keel blocks as a contributory or exacerbating cause of the existing damage to the keel. He had no criticism of the repairs to the propulsion system. He estimated that repairs would cost approximately $2,000.
Although their testimony was not free from inconsistencies or immune from effective challenge cross examination on some points, the court finds the defendant's experts who testified to be generally more accurate and credible than the plaintiffs' expert who testified. Defendant's experts essentially demonstrated that, after the grounding, the Rampage had been repaired and restored consistent with its status as a " new demo" when it was sold to the plaintiffs in 2007, that there was still some damage to the keel, but that poor maintenance and improper storage on keel blocks contributed to causing or exacerbated that damage, and that it could be easily repaired.
Additional evidence was supplied by William Robbins of New England Marine Survey, LLC. He is also a marine surveyor. Although he did not testify at trial, his report was admitted into evidence. His report indicated that he viewed the boat on October 26, 2010. He also found delamination in parts of the boat not involved in the accident. At the keel, he observed evidence of previous repairs and existing unrepaired damage. He had no criticism of the repairs to the drive system. He estimated that it would cost $15,000 to completely repair the fiberglass hull, including the keel, and repaint the bottom of the boat.
Other factual findings critical for resolving the issues are made below as needed.
II
A
Counts One and Two of the Amended Complaint allege breach of contract. Plaintiffs alleged, as follows: on February 28, 2007, they entered into a contract with the defendant to purchase a 2006 Rampage power boat for $400,000. The boat was represented to be a new demo boat in excellent condition with a rebuilt starboard motor. They paid for it by trading in their used boat, and financed $308,755 with a loan from KeyBank, N.A., arranged by Russo Financial Services, Inc. at 6.38 per cent interest. That loan was secured by a mortgage on the Rampage. The defendant failed to disclose to the plaintiffs that the Rampage had run aground and sustained extensive mechanical, structural and other grounding damage. Prior to the sale, the defendant caused inadequate and cosmetic repairs to be made to the Rampage. At the time of the sale, the Rampage was defective. Because it had sustained extensive grounding damage, the Rampage had been stigmatized and its value greatly diminished. The defendant breached its sales contract with the plaintiffs by failing to disclose prior damage to the Rampage and by selling a defective boat to the plaintiffs. Thus, the plaintiffs rest their breach of contract claim on two grounds: (1) failure to disclose damage; and (2) sale of a defective boat. In Count One, plaintiffs seek compensatory damages consisting of, inter alia, costs to repair the Rampage and diminution in value due to the grounding, and loss of the benefit of the bargain; and consequential damages consisting of loss of use of the Rampage from the spring of 2009 and the costs of docking and storage from that time and into the future, and interest on the loan from KeyBank, N.A. In Count Two, plaintiffs seek rescission of the contract and consequential damages.
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. Rosato v. Mascardo, 82 Conn.App. 396, 411, 844 A.2d 893 (2004); T. Merritt, Connecticut Elements of an Action (2010-2011 Ed.) § 4:1. " An agreement is [t]he union of two or more minds in a thing done or to be done; a coming together of parties in opinion or determination ..." (Citation omitted; internal quotation marks omitted.) Viera v. Cohen, 283 Conn. 412, 429, 927 A.2d 843 (2007). " It is a fundamental principle of contract law that the existence and terms of a contract are to be determined from the intent of the parties ... The parties' intentions manifested by their acts and words are essential to the court's determination of whether a contract was entered into and what its terms were ... Whether the parties intended to be bound without signing a formal written document is an inference of fact for the trial court ..." (Citations omitted; internal quotation marks omitted.) MD Drilling & Blasting, Inc. v. MLS Construction, LLC, 93 Conn.App. 451, 454-55, 889 A.2d 850 (2006). " In order for an enforceable contract to exist, the court must find that the parties' minds had truly met ... If there has been a misunderstanding between the parties, or a misapprehension by one or both so that their minds have never met, no contract has been entered into by them and the court will not make for them a contract which they themselves did not make." Id., at 456. " Parties are bound to the terms of a contract even though it is not signed if their assent is otherwise indicated." (Citation omitted; internal quotation marks omitted.) Aquarion Water Co. of Connecticut v. Beck Law Products and Forms, LLC, 98 Conn.App. 234, 239, 907 A.2d 1274 (2006). The intention of the parties manifested by their words and acts is essential. " Although ordinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact ... [w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law ... When only one interpretation of a contract is possible, the court need not look outside the four corners of the contract." (Citations omitted; internal quotation marks omitted.) Rund v. Melillo, 63 Conn.App. 216, 220 772 A.2d 774 (2001). " A court will not torture words to import ambiguity when the ordinary meaning leaves no room for ambiguity, and words do not become ambiguous simply because lawyers or laymen contend for different meanings." (Internal quotation marks omitted.) Id.
Rescission of a contract is an appropriate remedy if there has been a material misrepresentation of fact upon which a party relied and which caused it to enter the contract. Kavarco v. T.J.E., Inc ., 2 Conn.App. 294, 298, 478 A.2d 257 (1984), overruled, in part, on other grounds, Kaczynski v. Kaczynski, 294 Conn. 121, 130, 981 A.2d 1068 (2009). The remedy of rescission is an alternative to damages in an action for breach of contract. Kavarco v. T.J.E., Inc., supra.
In the instant case, the evidence showed that the plaintiffs intended to buy, and the defendant intended to sell, a 2006 boat that was a " new demo." The written contract of record and other evidence in the case showed that the plaintiffs knew they were buying a boat that had never been previously owned by a consumer, therefore it was new in that sense, but they also knew it was a 2006 model that had been extensively used by the dealer on a television fishing sport show to advertise its business. Indeed, they knew it had been used extensively for two seasons with over 450 hours of use on the engines. That the boat would have experienced significant wear and tear consistent with such use, including possible groundings, should have been anticipated. There is an inherent difference between a new product and a used product. Chamberlain v. Bob Matick Chevrolet, Inc., 4 Conn.Cir.Ct. 685, 692, 239 A.2d 42 (1967). A demonstrator is not new. Paul Bailey's, Inc. v. Commissioner of Motor Vehicles, 167 Conn. 493, 498, 356 A.2d 114 (1975). Any damage and repair work could have been easy observed, if the plaintiffs had looked. They chose not to look. Moreover, the court finds no evidence that the defendant told the plaintiffs, in writing or orally, that the boat was in " excellent" condition. The court finds that the boat was damaged in the grounding accident, but it was completely repaired professionally. Its condition at the time of sale was consistent with its characterization as a " new demo." The plaintiffs failed to demonstrate, in the facts or as a matter of contract law, that the defendant had or breached any duty to disclose the prior accident or repair. Thus, the court finds that the defendant did not breach its contract by failing to disclose prior damage, and did not deliver a boat that was defective in breach of the contract. The court further finds no misrepresentation that induced the plaintiffs to enter into this contract. " A plaintiff's bare assertion that it had relied on the defendant's representation was of no probative value in the face of other evidence to the contrary." McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, 93 Conn.App. 486, 510, 890 A.2d 140, cert. denied, 277 Conn. 928, 895 A.2d 798 (2006). The plaintiffs chose to purchase a heavily used boat without question, without getting a survey, and without thoroughly inspecting it themselves. They received what they bargained for: an older boat at one-third off the new price due to wear and tear from extensive use by the dealer as a promotional demonstrator. The dealer gave them what they bargained for. There was no contract law requirement to disclose damage under the circumstances, and the boat was not defective. There was no breach of contract. Accordingly the court renders judgment for the defendant on Count One and Count Two of the Amended Complaint.
B
In Count Three, plaintiffs allege breach of warranty. This claim is based on the ground that, under the sales contract, the plaintiffs had been promised, in writing, a 5-year structural warranty by Rampage. Plaintiffs argue that the defendant breached that promise based on the fact that when the plaintiffs attempted to file a claim under that warranty for the damage to the hull observed in the spring of 2009 by Jesse Marden, their claim was denied by Rampage. The evidence submitted showed that after the plaintiffs discovered the damage, they believed that it was caused by unsatisfactory and incomplete earlier repairs by MacDougalls, and they sought to have the damage repaired again. They sought to have the work paid for by Rampage pursuant the warranty. Rampage denied coverage under the terms of the warranty.
The governing law concerning liability for breach of express warranty is codified in the Uniform Commercial Code (UCC), as adopted in Connecticut. Web Press Services Corporation v. New London Motors, Inc., 203 Conn. 342, 351, 525 A.2d 57 (1987); Johnson v. Healy, 176 Conn. 97, 100, 525 A.2d 57 (1978). Under the UCC, " [a]ny affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise." General Statues § 42a-2-313(1)(a). In the instant case, the evidence showed that the Rampage was sold with a written, limited warranty covering defects in material and workmanship under normal use and service, subject to certain limitations and exclusions. Specifically the hull was covered from such manufacturer's defects for 5 years beginning from the date of delivery to the first consumer. Specifically, it did not cover damage sustained in accidents, improper operation, commercial use, damage caused by force or impact which exceeds design specifications, and it would not cover repairs performed by an unauthorized party. The plaintiffs in this case filed their claim within that time period, but the damage to the hull in this case was clearly not covered by the limited warranty because it was not a defect in material or workmanship. The damage was sustained in an accident while engaged in commercial use, and it was repaired without authorization, events specifically excluded by the limited warranty. Thus, the evidence showed that the defendant did not provide the warranty promised.
Defendant argues that it is not responsible for the breach of warranty because the warranty was a Rampage warranty, not a Russo's warranty. The court is not persuaded. Russo's promised a Rampage warranty that they knew or should have known was not available, at least with respect to the damage sustained in the grounding. It was their promise, and their breach. They did not sell the boat " as is" or with any disclaimer of warranty. Cf. Web Press Services Corp. v. New London Motors, Inc., supra, 203 Conn. at 353. The dealer is responsible for providing the manufacturer's warranties that it promised to give to the buyer in the contract between the parties absent a valid disclaimer. Cf. Koellmer v. Chrysler Motors Corporation, 6 Conn.Cir.Ct. 478, 481, 276 A.2d 807 (1970), cert. denied, 160 Conn. 590, 274 A.2d 884 (1971); Richards v. Goerg Boat and Motors, Inc., 279 Ind.App. 102, 118, 384 N.E.2d 1084 (1979), abrogated on other grounds, Hyundai Motor Am., Inc. v.. Goodin, 822 N.E.2d 947 (Ind.2005).
The court comes now to the question of damages. The pertinent section of the UCC is General Statutes § 42a-2-714. Acme Pump Co., Inc. v. National Cash Register Co., 32 Conn.Supp. 69, 75, 337 A.2d 627 (1974); LeBlanc v. Newman Comet-Lincoln-Mercury, Inc., 6 Conn.Cir.Ct. 365, 370, 273 A.2d 726 (1970). That section provides:
(1) Where the buyer has accepted goods and given notification as provided in subsection (3) of section 42a-2-607 he may recover as damages for any nonconformity of tender the loss resulting in the ordinary course of events from the seller's breach as determined in any manner which is reasonable.
(2) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.
(3) In a proper case any incidental and consequential damages under the next section may also be recovered.General Statutes § 42a-2-714.
Thus, the difference between the value of the goods delivered and that which they would have had if they had complied with the warranty is not the exclusive measure of damages in breach of warranty cases. Where that is not the appropriate measure, the measure of damages can be the loss, directly and naturally resulting, in the ordinary course of events, from the breach of warranty. K.B. Noble Co. v. Popielarczyk, 125 Conn. 699, 703, 8 A.2d 33 (1939). " The general rule for measurement of damages upon breach of warranty is to award the prevailing party such compensation as will place him in the same position as he would have enjoyed had the property been as warranted." (Citation omitted.) Johnson v. Healy, 176 Conn. 97, 105, 405 A.2d 54 (1978); Acme Pump Co., Inc. v. National Cash Register Co., supra, 32 Conn.Supp. at 76. The costs of repair can be the basis for an award of damages for breach of warranty. See, e.g., Web Press Services Corp. v. New London Motors, Inc., 205 Conn. 479, 482 n. 3, 533 A.2d 1211 (1987). This is the appropriate measure, provided the cost of repair does not exceed the diminution of value of the property. " Although cost of repair may more precisely place the injured party in the same physical position as full performance, policy dictates limitation to diminution of value to avoid unreasonable economic waste." Johnson v. Healy, supra, 176 Conn. at 105.
Considering all of the above, the court calculates the damages resulting from the absence of the structural warranty coverage promised at $15,000. This is consistent with the cost of repair found by the expert witness Robbins, which the court accepts. The court finds that amount to be the most appropriate and accurate measure of damages in this case. It does not exceed the overall diminution in value of the boat, considering the credible valuation estimates of record. No other awards or remedies are found to be appropriate for this case considering all the facts.
Plaintiffs also claim that Russo's breached the promised 5-year warranty on the motors by Caterpillar. They argue that this was breached when they tried to put a claim in on a motor that was giving them trouble. They made the claim within 5 years of purchase. Mr. Gionis testified that when he called Caterpillar, he was told that he was too late because the warranty began to run from the date that Russo's " purchased" the boat, not when he purchased it, and it had expired. When he complained to Russo's about that, Russo's told him that the information he received from Caterpillar was in error. Gionis did not pursue the point. Due to the lack of final resolution, the court cannot conclude that the warranty was breached. Web Press Services Corporation v. New London Motors, Inc., supra, 203 Conn. at 350.
Therefore, the court renders judgment for the plaintiffs on the breach of warranty count and awards them damages in the amount of $15,000.
C
Counts Four and Five allege fraud and intentional misrepresentation. The plaintiffs' allegations on point are as follows:
18. The Defendant knowingly and intentionally failed to disclose to the Plaintiffs prior to sale of the Rampage, that the Rampage had been run aground and sustained extensive grounding damage.
19. The Defendant's failure to disclose the grounding and extensive damage sustained by the Rampage was to induce the Plaintiffs to purchase the Rampage.
20. The Defendant intentionally concealed the fact that the Rampage had sustained significant grounding damage by making inadequate cosmetic repairs and failing to report the grounding to soldboat.com, boathistoryreport.com, or the National Crime Bureau/Boat History, although it could and should have done so.
21. The Plaintiffs purchased the Rampage as aforesaid in reliance on the representations of the Defendant, that the Rampage was a new demo boat represented to be in excellent condition.Amended Complaint, Counts Four and Five, paras. 18-21.
Essentially, plaintiffs allege that they were fraudulently induced into buying the Rampage. They further alleged that the defendant represented to them that the Rampage was in excellent condition. In Court Four, they seek compensatory damages, consequential damages and punitive damages. In Count Five, they seek, in the alternative, rescission of the contract and propose to tender back the boat for return of their purchase price plus consequential damages.
In Connecticut, intentional misrepresentation is also called fraudulent misrepresentation and fraudulent misrepresentation is commonly called fraudulent inducement. " Courts repeatedly use the necessary elements of common-law fraud when assessing both claims sounding in fraudulent misrepresentation and fraudulent inducement." (Citations omitted.) Biro v. Matz, Superior Court, judicial district of Danbury, Doc. No. CV 08-60009365 (June 9, 2010, Ozalis, J.), aff'd, 132 Conn.App. 272, 33 A.3d 742 (2011).
In an action for intentional misrepresentation or fraudulent inducement, the Supreme Court has " repeatedly held that a plaintiff must prove that: (1) a false representation was made as a statement of fact; (2) it was untrue and known to be untrue by the party making it; (3) it was made to induce the other party to act upon it; and (4) the other party did so act upon that false representation to his injury." (Internal quotation marks omitted.) Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 777, 802 A.2d 44 (2002); citing Barbara Weisman, Trustee v. Kaspar, 233 Conn. 531, 539, 661 A.2d 530 (1995). " A fraudulent representation ... is one that is knowingly untrue, or made without belief in its truth, or recklessly made and for the purpose of inducing action upon it ... This is so because fraudulent misrepresentation is an intentional tort." (Citations omitted; internal quotation marks omitted.) Sturm v. Harb Development, LLC, 298 Conn. 124, 142, 2 A.3d 859 (2010).
The standard of proof in such cases is that of clear and convincing proof, a standard greater than proof by a fair preponderance of the evidence but less than proof beyond a reasonable doubt. Cf. Stuart v. Stuart, 297 Conn. 26, 40, 996 A.2d 259 (2012); Kavarco v. T.J.F., Inc., supra, 2 Conn.App. at 296; see, also, Kilduff v. Adams, 219 Conn. 314, 326-27, 593 A.2d 478 (1991) (burden of proving each element of fraud, except damages, is by clear and satisfactory; or clear, precise and unequivocal evidence). Damages for fraud may be proven by a preponderance of the evidence. Kilduff v. Adams, supra, 219 Conn. at 330.
In this case, the court finds no evidence the defendant told the plaintiffs that the boat was in excellent condition. Thus, the plaintiffs' case must rest not on what the defendant said, but on what it did not say. Nevertheless, an action sounding in fraud can rest on evidence of either a false statement or a non-disclosure. The test is as follows:
It is, of course, true that, under certain circumstances, there may be as much fraud in a person's silence as in a false statement. Kronfeld v. Missal, 87 Conn. 491, 493, 89 A. 95. Mere nondisclosure, however, does not ordinarily amount to fraud. Watertown Savings Bank v. Mattoon, 78 Conn. 388, 393, 62 A. 622. It will arise from such a source only under exceptional circumstances. Boardman v. Burlingame, 123 Conn. 646, 656, 197 A. 761; Slabotsky v. State Department of Health, 108 Conn. 88, 92, 142 A. 477. To constitute fraud on that ground, there must be a failure to disclose known facts and, in addition thereto, a request or an occasion or a circumstance which imposes a duty to speak. Ceferatti v. Boisvert, 137 Conn. 280, 283, 77 A.2d 82; Behrmann v. Behrmann, 110 Conn. 443, 446, 148 A. 363. To be actionable for fraud, the nondisclosure must be by a person intending or expecting thereby to cause a mistake by another to exist or to continue, in order to induce the latter to enter into or refrain from entering into a transaction. Haddad v. Clark, 132 Conn. 229, 233, 43 A.2d 221. " A vendor of property may not do anything to conceal from the vendee a material fact affecting it ... or deliberately hide defects, for, in so doing, he is not merely remaining silent but is taking active steps to mislead. So the surrounding circumstances may be such that the effect of his silence is actually to produce a false impression in the mind of the vendee, and the making of an agreement or doing of some other act may in itself lead the vendee to believe that a certain fact exists and so amount to an affirmation of it. So the vendor may stand in such a relationship of trust and confidence to the vendee that it is his duty to make a full disclosure. But, these instances aside, the general rule is that the silence of a vendor with reference to facts affecting the value or desirability of property sold cannot give rise to an action by the vendee [for fraud]. Certainly this is true as to all facts which are open to discovery upon reasonable inquiry by the vendee. Gayne v. Smith, 104 Conn. 650 652, 134 A. 62.
The decisive question on this appeal is whether, in view of the foregoing legal principles, the circumstances in the case at bar were of such a nature that the defendant's silence produced a false impression in the plaintiffs' minds as to the structural condition of the house which they proposed to buy.Egan v. Hudson Nutt Products, Inc., 142 Conn. 344, 347-48, 114 A.2d 214 (1955).
Similarly, in the instant case, the critical question is whether the circumstances in this case were of such a nature that the defendant's silence produced a false impression in the plaintiffs' minds as to the condition of the boat which they intended to buy. The answer must be in the negative.
For the same reasons, the court found no breach of contract, the court finds no persuasive evidence of fraud or intentional misrepresentation in the instant case. There was no evidence that the defendant's representatives made any false statements either by commission or omission. It is true that they did not tell the plaintiffs that the boat had been involved in a grounding accident and had been repaired. But there was no law that required them to do so under the circumstances. They did not report the events to the websites or organizations cited in the plaintiffs' Amended Complaint. But, again, there was no law that required them to do so. The damage was minor, and it was repaired completely. Considering that the plaintiffs knew the boat was a 2006 model, had been used in a boating show, and had over 450 hours of use on the motors, they knew they were buying a boat that had seen much hard use and had been exposed to much wear and tear. A minor grounding and such other bumps and banging would not have been unusual. They bought the boat at a steep discount off the new price because of that age and use. The condition of the boat would have been evident upon inspection, but the plaintiffs did not choose to do so. The fact that they did not discover the evidence of the grounding for two years proves the minor nature of the damage and the effective nature of the repair. The failure to disclose or publicly report the specifics, under these circumstances, was not fraud or intentional misrepresentation. " For a nondisclosure to amount to fraud, there must be a failure to disclose known facts and, in addition thereto, a request or an occasion or a circumstance which imposes a duty to speak." (Citation omitted; internal quotation marks omitted.) Kenney v. Healey Ford-Lincoln Mercury, Inc., 53 Conn.App. 327, 333, 730 A.2d 115 (1999). Considering all the circumstances, the court finds no fraud or intentional misrepresentation in this case. The court renders judgment for the defendant on Counts Four and Five.
D
In Count Six, plaintiffs allege violations of CUTPA under which they seek compensatory damages, attorneys fees and costs and punitive damages available under that statutory remedy. In Count Seven, they repeat the CUTPA claim and, in the alternative, seek rescission, consequential damages, attorneys fees and costs and punitive damages also available under that statutory remedy.
The criteria for a CUTPA action are well settled. It is " remedial in character ... and must be liberally construed in favor of those whom the legislature intended to benefit." (Citations omitted; internal quotation marks omitted.) Eder Bros ., Inc. v. Wine Merchants of Connecticut, Inc., 275 Conn. 363, 379, 880 A.2d 138 (2005). " CUTPA, by its own terms, applies to a broad spectrum of commercial activity. The operative provisions of the Act, General Statutes § 42-110b(a), states merely 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." Trade or commerce, in turn, is broadly defined as " the advertising, the sale or rent or lease, the offering for sale or rent or lease, or the distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value in this state." General Statues § 42-110a(4); Larsen Chelsey Realty Co. v. Larsen, 232 Conn. 480, 492, 656 A.2d 1009 (1995). The purpose of CUTPA is to protect the public from unfair practices in the conduct of any trade or commerce, and " whether a practice is unfair depends upon the finding of a violation of an identifiable public policy." Daddona v. Liberty Mobile Home Sales, Inc., 209 Conn. 243, 257, 550 A.2d 1061 (1988). A CUTPA claim may be brought in the Superior Court by " [a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a method, act or practice prohibited by section 42-110b ..." General Statutes § 42-110g(a). " It is well settled that in determining whether a practice violates CUTPA we have adopted the criteria set out in the cigarette rule by the federal trade commission for determining when a practice is unfair: (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— in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers ... All 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." (Citation omitted; internal quotation marks omitted.) Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 19, 938 A.2d 576 (2008). " This language has been the foundation of the analysis defining the meaning of ‘ unfair acts or practices' under CUTPA and has been cited repeatedly by the Connecticut Supreme Court." R. Langer, J. Morgan and D. Belt, Unfair Trade Practices (12 Conn. Practice Series, 2011-12 Ed.) § 2.2. Under CUTPA, a plaintiff can recover actual damages for any ascertainable loss of money or property. General Statutes § 42-110g(a). Costs, attorneys fees and punitive damages may also be awarded in appropriate situations. General Statutes § 42-110g(a) and (d).
In testing whether a particular practice is unfair or deceptive, it is not necessary for the plaintiffs to prove that the defendant knew or should have known that it was misstating the condition of the boat. Knowledge of falsity, either constructive or actual need not be proven to establish a violation of CUTPA. Web Press Services Corporation v. New London Motors, Inc., supra, 203 Conn. at 363. Nor are the plaintiffs required to prove that the defendant made a false statement. The failure to disclose pertinent information may be as deceptive an act as affirmative misrepresentation. Bailey Employment Systems, Inc. v. Hahn, 545 F.Supp. 62, 67 (D.Conn.1982), aff'd, 723 F.2d 895 (2nd Cir.1983). But, where a plaintiff alleges that the defendant's passive conduct violated CUTPA, there is no violation for failing to disclose information when the defendant was under no legal obligation to disclose that information; the failure to disclose what one is not required to disclose does not violate public policy or CUTPA. Downes-Patterson Corp. v. First National Supermarkets, Inc., 64 Conn.App. 417, 427-28, 780 A.2d 967, cert. granted, 258 Conn. 917, 782 A.2d 1242 (2001) (appeal dismissed June 25, 2002); see also, Glazer v. Dress Barn, 274 Conn. 33, 84-85, 873 A.2d 929 (2005).
In the instant case, the plaintiffs claimed that the defendant's failure to disclose the damage sustained by the Rampage was a deceptive act or practice. Amended Complaint, Counts Six and Seven, para. 22. They have failed to prove a CUTPA violation. While the defendant did not voluntarily disclose that the Rampage had been repaired after a grounding accident, it was under no legal duty to do so. Kenney v. Healey Ford-Lincoln Mercury, Inc., supra, 53 Conn.App. at 331. The boat had been repaired to its status as a " new demo" when it was sold to the plaintiffs, and, thus, the conduct of the defendant was not unfair or deceptive as contemplated under criteria one and two for a CUTPA claim.
Moreover, the court finds that, under the facts, the alleged defects are mostly cosmetic, the cost to repair is relatively minor in relation to the total value of the boat, and the plaintiffs contributed to causing or exacerbated the damage to the keel by their poor maintenance. Thus, the court finds no substantial injury under the third criteria for a CUTPA claim. Accord, Web Press Services Corporation v. New London Motors, Inc., supra, 205 Conn. at 484. Therefore, the court renders judgment for the defendant on Counts Six and Seven.
E
In Counts Eight and Nine, the plaintiffs allege that the defendant negligently represented to the plaintiffs that the Rampage was a new demo, that it had the means of knowing, ought to have known and had a duty to know that it was not a new demo because of the grounding. They allege that they relied on the defendant's misrepresentations when they purchased the boat, and that the defendant knew that they would rely on it. They allege that as a result, they suffered compensatory damages and consequential damages and seek a monetary award or rescission, return of the purchase price, and consequential damages.
" Traditionally, an action for negligent misrepresentation requires the plaintiff to establish (1) that the defendant made a misrepresentation of fact (2) that the defendant knew or should have known was false, and (3) that the plaintiff reasonably relied on the misrepresentation, and (4) suffered pecuniary harm as a result." (Citation omitted.) Nazami v. Patrons Mutual Ins. Co., 280 Conn. 619, 626, 910 A.2d 209 (2006); M. Taylor and D. Krisch, Encyclopedia of Connecticut Causes of Action (2009), p. 46-47.
" This court has long recognized liability for negligent misrepresentation ... The governing principles [of negligent misrepresentation] are set forth in similar terms in § 552 of the Restatement (Second) of Torts (1977): One who, in the course of his business, profession or employment ... supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information ... As a result, [w]e have held that even an innocent misrepresentation of fact may be actionable if the declarant has the means of knowing, ought to know, or has the duty of knowing the truth." (Citations omitted; internal quotation marks omitted.) Sturm v. Harb Development, LLC, 298 Conn. 124, 143-44, 2 A.3d 859 (2010). " An actionable misrepresentation, whether made knowingly, recklessly, negligently or innocently, must be made for the purpose of inducing action upon it." (Citations omitted.) J. Frederick Scholes Agency v. Mitchell, 191 Conn. 353, 359, 464 A.2d 795 (1983). It must be established that there was a false representation in order for a plaintiff to prevail on a negligent misrepresentation claim. Daley v. Aetna Life & Casualty Co., 249 Conn. 766, 792-93, 734 A.2d 112 (1999). A plaintiff also is required to show that he reasonably relied on the misrepresentation. Visconti v. Pepper Partners Ltd. Partnership, 77 Conn.App. 675, 682, 825 A.2d 210 (2003).
The court finds that the defendant made no false representations in this case. It represented the boat to be a " new demo" and the boat was a " new demo." The plaintiffs were not misled, and they received what they bargained for. The court renders judgment for the defendant on Counts Eight and Nine.
F
Finally, in Count Ten, the plaintiffs allege that the defendant and/or its agents were negligent in repairing the Rampage in that (a) it failed to inspect and diagnose the damage; (b) it failed to properly repair the keel and hull; (c) it failed to properly remove the shafts and struts; or properly repair the area where the shaft and struts were reinstalled; (d) it failed to properly remove the rudder, or repair the area where the rudder was reinstalled; (e) it failed to properly repair and coat the keel; and (f) it failed to properly repair and coat the hull. In this count, plaintiffs seek damages and consequential damages.
" The essential elements of a cause of action in negligence are well established: duty; breach of that duty; causation; and actual damages." (Citation omitted; internal quotation marks omitted.) Archambault v. Soneco/Northeastern, Inc., 287 Conn. 20, 32, 946 A.2d 839 (2008).
Defendant argues that the plaintiffs cannot prevail on this count because plaintiffs allege that Russo's repaired the boat, when, in fact, it was repaired by MacDougalls Marine. That argument is factually inaccurate. The plaintiffs alleged negligence in repair by Russo's " and/or its agents." Amended Complaint, Count Ten, para. 10.
On the merits of this claim, the parties engaged in a proverbial battle of the experts to persuade the court of their respective claims. As noted above, the court found the defendant's experts who testified to be generally more credible than the plaintiffs' expert who testified. The court finds that the Rampage was repaired appropriately and correctly. It was restored to its status as a " new demo" at the time of the sale to the plaintiffs. The plaintiffs did demonstrate that some cracks developed in the gel coating on the keel and hull after the sale, and that there were some other cosmetic defects, but they failed to show that this was the result of a substandard repair. To the contrary, the court finds that the present condition is a result of the fact that plaintiffs later compromised the repair work and condition of the vessel by failing to have the boat properly supported on blocks when in dry dock, failing to remove sea water from the bilge during storage, and by neglecting other normal maintenance during their ownership. Moreover, the flaws identified by the plaintiffs did not amount to structural or significant defects that would compromise the safety and seaworthiness of the vessel or alter its character as a " new demo." To the contrary, they were cosmetic and consistent with the status of the boat as a " new demo." Therefore, the court renders judgment for the defendant on Count Ten.
G
In its Amended Answer with Revised Special Defenses, the defendant raises four special defenses: First Special Defense— failure to mitigate damages by failing to use the available 5-year manufacturer's warranty; Second Special Defense— the damage was caused by someone for whose conduct the defendant was not and is not legally responsible, i.e., the boat was prepared for sale by a qualified marine yard and fault, if any lies with that marine yard; Third Special Defense— plaintiffs' claims are barred by the doctrine of unclean hands because plaintiffs brought suit to rid themselves of a boat they could no longer afford; Fourth Special Defense— as to Counts Eight, Nine and Ten, contributory negligence.
Inasmuch as the court has rendered judgment for the defendant on Counts One, Two, Four, Five, Six, Seven, Eight, Nine and Ten, it is unnecessary to address the special defenses with respect to those claims.
As to Count Three— breach of express warranty— the court rendered judgment for the plaintiffs. The defendant has failed to explain how the pertinent special defenses are applicable to this count, which facts support their defenses, and what law makes those defenses available with respect to Count Three. Therefore, the court finds that the pertinent special defenses as to the Count Three were unexplained and unproven, and renders judgment for the plaintiffs on the special defenses as to Count Three.
III
For all of the foregoing reasons, the court enters judgment in favor of the plaintiffs on the breach of warranty count only (Count Three), and awards them $15,000. Judgment enters for the defendant on all other counts.