Opinion
No. CV 07-5014293-S
August 24, 2010
MEMORANDUM OF DECISION
FACTS AND PROCEDURE:
This is a complaint for foreclosure of a mechanic's lien dated October 17, 2007 brought by the plaintiff (hereinafter also "Leone") against the defendant Lucy Frederick (hereinafter also "Frederick") in regard to work allegedly done by Leone on property owned by the defendant on 24-26 McKinley Street in Hartford for materials and services provided to the house upon said premises for reconstruction/remodeling of portions of the house as a result of a fire that took place at said house. The plaintiff claims that the mechanic's lien is based upon an agreement with the defendant dated June 15, 2006 by which the plaintiff was to remodel/reconstruct portions of the house and the defendant was to pay the plaintiff $311,213. The plaintiff further alleged that it began to do the construction work on or about July 31, 2006 and completed the same on April 3, 2007; that the defendant has paid the plaintiff approximately $218,804.50 on account of the contract and owes the plaintiff $92,408.50 due under said contract and, therefore, filed a certificate of mechanic's lien against said property. The plaintiff seeks a foreclosure of the lien, possession of the premises and damages in its prayer for relief. The "SERVICES CONTRACT" is plaintiff's Exhibit 1. The defendant claims as a special defense that all sums due the plaintiff if any have been paid and then filed on or about February 15, 2008 a counterclaim claiming that the aforementioned premises were damaged by a fire in 2006 and that the plaintiff prepared an agreement under which the plaintiff agreed to reconstruct the damaged areas of the plaintiff's house. The counterclaim claims that the agreement violates chapter 400 of the Connecticut General Statutes in the first count; in the second count the defendant claims that the work performed was not done in a workmanlike manner; in the third count that the plaintiff entered a shed on the defendant's property without her permission and without authorization removed building materials which the defendant had stored there and that such unauthorized use of defendant's materials is a conversion of same; and in the fourth count the defendant claims the plaintiff violated C.G.S. § 42-110a et seq. of the General Statutes which is a violation of the Connecticut Unfair Trade Practices Act (CUTPA). On the counterclaim the defendant claims money damages including a return of all monies paid to the plaintiff, punitive damages including double damages for conversion; attorneys fees and costs. Trial was held before this Court on March 17, 18, 19, 23 and April 6, 2010. Transcripts were ordered, and briefs and reply briefs were filed by the parties.
STANDARD OF REVIEW:
"The plaintiff in a civil case sustains its burden of proof as to any essential element in its cause of action if the evidence, considered fairly and impartially, induces in the mind of the trier, a reasonable belief that it is more probable than otherwise that the facts involved in that element are true." Busker v. United Illuminating Co., 156 Conn. 456, 458 (1968). This is also known as proof by a preponderance of the evidence.
In addition, this Court evaluates the credibility of the witnesses based upon their appearance and demeanor on the witness stand, the consistency or inconsistency of their testimony, their memory or lack thereof of certain events, whether they were candid and forthright or evasive and incomplete, their manner in responding to questions and their interest or lack of interest in the case.
Also, the Court evaluates general credibility on the basis of other testimony in this case as well as documents in evidence as to their consistency or inconsistency with other evidence.
The burden is on the plaintiff to prove its allegations by a preponderance of the evidence. The same is true for the defendant on her counterclaim.
General Statutes § 20-420(a) (part of the Home Improvement Act hereinafter also "HIA") provides: "No person shall hold himself or herself out to be a contractor or salesperson without first obtaining a certificate of registration from the commissioner as provided in this chapter, except that an individual or partner, or officer or director of a corporation registered as a contractor shall not be required to obtain a salesperson's certificate."
General Statutes § 20-427(b) provides in relevant part: "No person shall: . . . (5) offer to make or make any home improvement without having a current certificate of registration under this chapter . . ."
Section 20-429(a) provides: "No home improvement contract shall be valid or enforceable against an owner unless it: (1) Is in writing, (2) is signed by the owner and the contractor, (3) contains the entire agreement between the owner and the contractor, (4) contains the date of the transaction, (5) contains the name and address of the contractor and the contractor's registration number, (6) contains a notice of the owner's cancellation rights in accordance with the provisions of chapter 740, (7) contains a starting date and completion date, and (8) is entered into by a registered salesman or registered contractor." (Emphasis added.)
The requirements for notices of cancellation rights are specified by General Statutes § 42-135a, which provides in relevant part: "No agreement of the buyer in a home solicitation sale shall be effective if it is not signed and dated by the buyer or if the seller shall: (1) Fail to furnish the buyer with a fully completed receipt or copy of all contracts and documents pertaining to such sale at the time of its execution, which contract shall be in the same language as that principally used in the oral sales presentation and which shall show the date of the transaction and shall contain the name and address of the seller, and in immediate proximity to the space reserved in the contract for the signature of the buyer, or on the front page of the receipt if a contract is not used, and in boldface type of a minimum size of ten points, a statement in substantially the following form:
YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THIS TRANSACTION. SEE THE ATTACHED NOTICE OF CANCELLATION FORM FOR AN EXPLANATION OF THIS RIGHT. (2) Fail to furnish each buyer, at the time he signs the home solicitation sales contract or otherwise agrees to buy consumer goods or services from the seller, a completed form in duplicate, captioned `NOTICE OF CANCELLATION,' which shall be attached to the contract or receipt and easily detachable.
"As a minimum, the import of § 20-429 is that [a defendant is] privileged, in the absence of an allegation of bad faith, to repudiate an agreement in violation of the statute." Barrett Builders v. Miller, 215 Conn. 316, 328, 576 A.2d 455 (1990). "Absent proof of bad faith on the part of the homeowner, General Statutes § 20-429 permits no recovery by a home improvement contractor under theories of quantum meruit or unjust enrichment if the home improvement contractor under theories of quantum meruit or unjust enrichment fails to comply with the statutory requirements of the act . . . [I]n the absence of bad faith, a homeowner is privileged to repudiate a home improvement contract that violates the act . . . [P]roof of a homeowner's bad faith will preclude that homeowner from repudiating with impunity a home improvement contract that violates the act." (Citations omitted.) Dinnis v. Roberts, 35 Conn.App. 253, 257, 644 A.2d 971, cert. denied, 231 Conn. 924, 648 A.2d 162 (1994).
ISSUES AND FINDINGS: 1. Was the contract between the parties in violation of the Home Improvement Act?
The short answer is Yes.
The contract, plaintiff's Exhibit 1, is invalid and unenforceable for the following reasons:
1. At the time of the signing of the agreement/contract, the plaintiff did not have "a valid certificate of registration from the commissioner (Consumer Protection Commissioner) as provided in this chapter . . ." Further C.G.S. § 20-427(b) provides in relevant part "no person shall . . . (5) offer to make or make any home improvement without having a current certificate of registration under this chapter . . ." Also, as noted above in this case there is a violation of C.G.S. § 20-429(a) which provides: "no home improvement contract shall be valid or enforceable against an owner (the owner is in this case the defendant) unless . . . (6) contains a notice of the owner's cancellation rights in accordance with the provisions of chapter 740 . . . and (8) is entered into by a registered salesman or registered contractor."
2. The requirements for notices of cancellation rights are specified by C.G.S. § 42-135(a) which provides in relevant part: "no agreement of the buyer in a home solicitation sale shall be effective . . . if the seller shall: Fail to furnish the buyer . . . in immediate proximity to the space reserved in the contract for the signature of the buyer . . . and in boldface type of a minimum size of ten points, a statement in substantially the following form:
YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THIS TRANSACTION. See the attached notice of cancellation form for an explanation of this right . . . fail to furnish each buyer, at the time he signs the home solicitation sales contract . . . a completed form in duplicate, captioned `NOTICE OF CANCELLATION,' WHICH SHALL BE ATTACHED TO THE CONTRACT OR RECEIPT AND EASILY DETACHABLE . . . The only words in regard to this provision on the contract (plaintiff's Exhibit 1) are as follows: "This agreement may be withdrawn by us within 3 business days." That is hardly what is specified in C.G.S. § 42-135(a).
"Absent proof of bad faith on the part of the homeowner, General Statutes § 20-429 permits no recovery by a home improvement contractor under theories of quantum meruit or unjust enrichment if the home improvement contractor fails to comply with the statutory requirements of the act . . . [I]n the absence of bad faith, a homeowner is privileged to repudiate a home improvement contract that violates the act. [P]roof of a homeowner's bad faith will preclude the homeowner from repudiating with impunity a home improvement contract that violates the act." (Citations omitted.) Dinnis v. Roberts, 35 Conn.App. 252, 257, 644 A.2d 971, cert denied, 231 Conn. 924, 648 A.2d 162 (1994).
From the totality of the evidence, this Court has found no bad faith on the part of the defendant.
Accordingly, this Court holds that the contract entered into by the parties, plaintiff's Exhibit 1, is invalid and unenforceable against Frederick.
2. CREDIBILITY:
The Court finds that based upon the testimony in accordance with the standard set forth under STANDARD OF REVIEW, that the defendant, Frederick, was more credible than Mr. Leone. The Court believes that Mr. Leone believed that what he thought was the proper way to do the reconstruction was paramount and that he could override the wishes of the defendant. For example, the defendant insisted that she did not want certain walls taken down. Mr. Leone, on the other hand, believed that a wide open space would be more attractive and more in keeping with the style of the day, and as a result, he took down the walls over the objection of the defendant and refused to put them back up. The ultimate decision should have been that of the defendant, and it was not. Further, Mr. Leone carried a somewhat arrogant attitude when he testified as opposed to Frederick who testified with some restraint and in an inoffensive manner. Also, some of Leone's testimony was contradictory; and he was lacking in necessary documents.
3. IS THE DEFENDANT BARRED FROM RECOVERY ON HER COUNTERCLAIM BECAUSE SHE HAS WITHHELD FUNDS IN EXCESS OF HER LOSS?
The short answer is Yes.
The Court accepts the appraisal of the plaintiff's expert witness that $31,223.70 is the cost of compliance with the punch list. The unpaid balance remaining on the contract is $92,408.50, therefore, greater than the cost of the labor and materials due to the defendant of $31,223.70. The leading case on this issue is Hees v. Burke Construction, Inc., 290 Conn. 1, 13, 961 A.2d 373 (2009). That court found that "in an action brought by a homeowner against the home improvement contractor for a breach of contract (in this case a counterclaim) § 20-429(a) does not preclude the damage award from being reduced by an amount equal to the unpaid balance remaining on the contract ( Id. 17). . . "[b]ecause application of this conclusion means that the plaintiffs' (in this case the defendant) damages are completely offset by the amount they owed the defendant (plaintiff in this case) under the contract, judgment should have been rendered in favor of the defendant." Accordingly, judgment should and is granted in favor of the plaintiff on the defendant's counterclaim because the damages of $31,223.70 are completely offset by the unpaid balance. Retaining the balance of the $92,408.50 or $61,184.80 seem to be a windfall to the defendant in this case. However, to pay it to the plaintiff in view of the violation of the Home Improvement Act would result in a windfall to the plaintiff. Accordingly, the Court finds that the defendant may retain the $92,408.50 which includes the $31,223.70 as claimed by the defendant which the Court has so found as damages. There may be other damages unspecified by the defendant which the Court, therefore, cannot calculate, but the $92,408.50 minus the $31,223.70 should not go to the plaintiff.
Defendant claims she should not be limited to the punch list; but she hired Mr. Ursaki who created the punch list and is bound by his failure to add to it and/or failure to qualify it as not being all of the faulty and non-work. Further, she is not unsophisticated in construction having been a member of the carpenters' union and having worked as a carpenter.
Under Hees v. Burke Construction Inc., supra, the Court did state that "[a]lthough C.G.S. § 20-429(a) may result in a windfall to the homeowner in certain prescribed circumstances, such as its preclusion of affirmative enforcement by the contractor of otherwise valid claims under the contract, . . ." Id. 16.
4. Should Frederick be reimbursed for payments made under
CT Page 16748
a contract in violation of C.G.S. § 20-429?
The short answer is No.Hees v. Burke, supra does not allow the homeowner (Frederick) to recover monies already paid to the plaintiff. To reimburse the defendant for payments previously made under the contract would supercede established principles of contract damages and result in the sort of windfall our Supreme Court rejected in Hees v. Burke, supra. Accordingly, the defendant may not be reimbursed for payments previously made to the plaintiff.
5. Did the plaintiff's actions constitute a CUTPA violation which is recoverable by the defendant?
The short answer is No.
C.G.S. § 20-427(c) provides: "a violation of any of the provisions of this chapter shall be deemed an unfair or deceptive trade practice under subsection (a) of § 42-110b." ". . . A CUTPA claimant must demonstrate a statutory violation coupled with some ascertainable loss. Once the violation of the act has been established . . . our cases make clear that the homeowners still must prove that they have suffered an injury or actual loss in order to recover damages under CUTPA." (Citations omitted; internal quotations marks omitted.) Campagone v. Clark, 216 Conn.App. at 633. The Court in Campagone held that a homeowner did not have an ascertainable loss for the purposes of a CUTPA claim when the amount withheld was greater than the contract damages. Id. 633-34. The defendant, therefore, has no ascertainable loss and cannot recover under CUTPA.
CONCLUSION:
1. Judgment is entered for the defendant on the plaintiff's complaint, and judgment is entered for the plaintiff on the defendant's counterclaim. The defendant may keep the money she has withheld, $92,408.50.
2. The plaintiff is ordered to release immediately any mechanic's leans it/he may have on the defendant's property.
Note: CPB § 4-6 limits briefs to 35 pages. Also, in addition to bench copies, briefs must be e-filed.