Opinion
136040725S
07-26-2016
The Neri Corporation v. McDermott Road, LLC
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Thomas J. Corradino, Judge
The facts of this case are somewhat confusing at least to the court. In any event in June 2012 McDermott Road, LLC was the owner of property at 81 McDermott Road in North Haven. On March 14, 2012 Neri Corporation entered into a contract with a company named G.L. Capasso to perform work on the premises.
The Neri company performed work on the property between April 3, 2012 and June 17, 2012. Saying it was not paid for its work under the contract, on August 16, 2012 Neri filed a mechanics lien on the property for the amount owed under the contract, attorneys fees and costs.
On February 28, 2013 G.L. Capasso Inc. complained to the American Arbitration Association. It stated it was the contractor and entered into a contract with Neri Corporation to perform work on the subject property for a proposed building on the site and that Neri violated the terms of the contract providing defective work and materials.
Common sense would seem to dictate G.L. Capasso Inc. was not some idle interloper seeking to benefit McDermott Road, LLC by having Neri perform work on the subject property and that all of this was done with McDermott Road, LLC having consented to the work.
In any event in preparation for mediation G.L. Capasso filed a thorough memorandum in which it claimed Neri defaulted under the contract and then asked for $26,400 in damages " to restore the property to the condition it should have been in after Capasso's first payment to Neri and before Neri abandoned its contractural duties." Capasso also claimed damages of $10,634 for replacement and analysis of wetland soil removed from the site . . . as well as $3,908.00 in storage damages for equipment left on the site" -no other damages were claimed. It seems evident that although McDermott, LLC was not a party to the arbitration Capasso was not, and of course could not, claim these sums for its own benefit but was doing so for and on behalf of the property owner McDermott Road, LLC to whom it was ultimately liable. The Capasso memorandum also noted Neri was claiming damages against Capasso for over $200,000. Neri itself claimed Capasso violated the terms of its contract with Capasso and demanded contract damages.
On October 3, 2013 after a hearing the Arbitrator in effect rejected the Capasso claims for breach of contract and damages and awarded Neri $31,744.41 holding the claimant Capasso breached the contract it had with Neri " by failing to pay Respondent (Neri) for all work completed. The " award is in full settlement of all claims and counterclaims submitted to this arbitration. All claims not expressly granted herein are hereby denied."
Capasso filed an application to vacate the arbitration award claiming it was the result of " partiality and/or corruption and is not in accord with the applicable law and facts." Neri filed an application to confirm the award. The applications were filed in Superior Court pursuant to Sections 52-417 and 52-418 of the General Statutes. The court per Judge Hadden granted Neri's application to confirm the award, denying Capasso's application to vacate it. The decision was rendered March 10, 2014 and was appealed to the Appellate Court and in a per curiam opinion that court affirmed the judgment of the trial court on March 10, 2015 at 155 Conn.App. 907, 108 A.3d 1200.
In the case now before the court suit was filed August 7, 2013 by the Neri Corporation against McDermott. The operative complaint is the Second Amended complaint, dated December 6, 2013. It asks for foreclosure of the mechanics lien, interest, attorneys fees, and the costs of the action claiming that as of the date of the complaint " the sum due to Neri for said labor and services remains unpaid, " paragraph 7. The answer filed August 27, 2014 " denies any sums are due the plaintiff" and denies paragraph 3 which claims the work Neri states it performed was done with the knowledge and consent of McDermott, LLC.
No claim or award for attorneys fees was made in the arbitration proceedings, Section 52-249 of the general statutes does, however, provide for attorneys fees for foreclosure of a lien in a Superior Court action and a claim under the statute is made in paragraph 6 of the Second Amended complaint.
In any event an answer, special defenses, and a counterclaim were filed on August 27, 2014 by McDermott, LLC. By way of counterclaim three counts are asserted. The court will briefly describe the claims made in the counterclaims and will go into more detail when each count is addressed. The first count states GL Capasso was the contractor for the McDermott property and it contracted with the Neri Corporation " as a subcontractor to perform site work on the property." It then goes on to say in paragraph 10 that McDermott, LLC had authorized Capasso to enter in the just mentioned contract but:
11. Neri did not conform its conduct to, and perform its work as required by the terms of the contract.
12. As a result of Neri's failure to conform its conduct to, and perform its work as required by the terms of the Contract, McDermott's property was not improved and was damaged and McDermott was caused to suffer financial damage as a result.
The Second Count states in paragraph 12: " Notwithstanding Neri's failure to conform its conduct and work according to the terms of the Contract Neri, nevertheless, slandered McDermott's title to its property by filing its baseless, unnecessary, and fraudulent mechanics lien on the property delaying the project and financially damaging McDermott."
The Third Count lies under the Connecticut Unfair Trade Practices Act, § 42-110 et seq. saying:
12. Neri's failure to conform its conduct regarding the contract and its work on the property as required by the Contract, was intentional, deceitful and in bad faith.
In paragraph 13 it is claimed that Neri " made false and baseless claims against Capasso regarding Capasso's contract with Neri which were cost or potential costs for which McDermott would be responsible under its letter authorizing Capasso to contract with Neri." As a result of all this " McDermott has been financially damaged and has been caused to incur attorneys fees and costs.
Neri has now filed a motion for partial summary judgment against all three counts of the Motion for Summary Judgment.
Summary Judgment
Standard and Procedure
As said in Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 549-50, 791 A.2d 489 (2002).
Summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law . . . In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party . . . The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under the applicable principles of substantive law, entitle him to a judgment as a matter of law . . . and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact.
In considering a motion for summary judgment our Courts have said " Mere assertions of fact . . . are insufficient to establish the existence of a material fact and therefore cannot refute evidence properly presented to the court (in support of a motion for summary judgment), " Water & Way Properties v. Colt's Mfg. Co., 230 Conn. 660, 664-65, 646 A.2d 143 (1994), Marinos v. Poirot, 308 Conn. 706, 712, 66 A.3d 860 (2013). Practice Book § 17-46 provides that " Supporting and opposing affidavits shall be made on personal knowledge, shall set forth facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." The court in Romprey v. Safeco Ins. Co., 310 Conn. 304, 324, 77 A.3d 726 (2013) at footnote 12 noted that Practice Book § 17-45 " does not require affidavits when the relevant facts are available to the court and not challenged by the non-moving party, " citing Davis v . Family Dollar Store, 78 Conn.App. 235, 238, 826 A.2d 262, N.3 (2003).
Another matter which arises in this case is the concept of judicial admissions. As stated in Tait's Handbook of Connecticut Evidence, 5th ed. Tait and Prescott at § 8.16.2(c) page 527 " Judicial admissions are voluntary and knowing concessions of fact by a party or the party's attorney occurring during judicial proceedings Kanopka v. Kanopka, 113 Conn. 30, 38-39, 154 A. 144 . . . (1931). They excuse the other party from the necessity of presenting evidence on the fact admitted and are conclusive on the party making them James Destruction, Inc. v. Upjohn, 161 Conn. 191, 199, 286 A.2d 308 . . . (1971)."
Tait goes on to say that " The most common examples of judicial admissions are those contained in the operative pleadings citing Jones Destruction, Inc., supra and Days Inn of America v. 161 Hotel Group, Inc., 55 Conn.App. 118, 126-27, 739 A.2d 280 (1999).
A.
As indicated this is a motion for partial summary judgment against each count of the three count counterclaim.
1.
The first count of the defendant McDermott Road LLC counterclaim references in paragraphs 2 through 9 a contract between G.L. Capasso, contractor and Neri Corp., subcontractor to perform work on the McDermott property at 81 McDermott Road. Paragraph 8 of the counterclaim cites a paragraph of the Capasso-Neri contract that states the subcontractor Neri shall not assign the subcontract work nor subcontract its work without Capasso's consent. Paragraphs 10 through 12 read as follows:
10. The defendant (i.e. McDermott) authorized Capasso to enter into the contract with Neri in accordance with the contract terms.
11. Neri did not conform its conduct to, and perform its work as required by the terms of the contract.
12. As a result of Neri's failure to conform its conduct to, and perform its work as required by the terms of the contract, McDermott's property was not improved and was damaged and McDermott was caused to suffer financial damages as a result.
Interestingly the above referenced counterclaim language contradicts the answer made by McDermott to the complaint. McDermott denied paragraph 2 of the complaint which states between two dates Neri performed work on the subject property pursuant to a contract between it and G.L. Capasso. More to the point paragraph 3, which McDermott denied goes on to allege that the work was performed with the knowledge and consent of McDermott and Capasso as McDermott and Capasso are owned by the same individual and the contract was prepared by McDermott architect, Robert Mangino.
Paragraphs 11 and 12 set forth the legal theory on which the first count is based.
In response to the quoted paragraphs of the counterclaim Neri first argues that the First Count . . ." sounds in breach of contract . . . McDermott was not a party to the contract between Capasso and Neri and therefore does not have standing to enforce its terms." McDermott's response to this argument is to say that " Neri's motion (for partial summary judgment) is based on a misstatement of (McDermott's) claims. The First Count of the counterclaim " does not claim, as Neri states, a claim for 'breach of contract' . . . because there was no contract between Neri and McDermott, the First Count is for damage to the property by an unauthorized third party trespasser Hammonasett Construction, LLC, which Neri brought on the property as well as for damage by whom whcih (sic) was not a subject of the arbitration proceedings or included in the (arbitration) award."
In fact the general law in this construction industry is set forth in Section 32 of 13 Am.Jur.2d at Section 32, " Building and Construction Contracts, " page 40 where it says that: " In the absence of an otherwise binding agreement, express or implied, there is no privity of contract between a subcontractor and the property owner who negotiated the original agreement with general contractor such that the subcontractor can be held liable for a breach of an implied duty to perform in a workmanlike manner." In other words to pass muster any claim here must lie in trespass.
Section 158 of Restatement (2d) Torts does define trespass as follows:
One is subject to liability to another for trespass, irrespective of whether he (she) thereby causes harm to any legally protected interest of the other, if he (she) intentionally:
(a) enters land in the possession of the other, or causes a thing or a third person to do so. (Emphasis by court) or
(b) remains on the land
(c) fails to remove from the land a thing which he is under a duty to remove.
Courts in other states refer to Section 158 and its language of causing a third person to enter the land of another as one of the elements of civil trespass, e.g. Medeika v. Watts, 2008 ME 163, 957 A.2d 980, 982 (ME, 2008). Purkey v. Roberts, 2012 UT App 241, 285 P.3d 1242, 1247 (UT, 2012). Also see Section 55 of 75 Am.Jur.2d, " Trespass" which states " A person may be liable for causing someone else to commit a trespass, " i.e. causing someone else to trespass is a trespass, Martin v . Brown, 650 A.2d 937 (ME, 1994).
The court could find no Connecticut Appellate case reciting that causing another person to enter the land of another would allow a claim of civil trespass but our case law does refer to Restatement sections on Trespass, see City of Bristol v. Tilcon Minerals, 284 Conn. 55, 931 A.2d 237 (2007), Boyne v. Town of Glastonbury, 110 Conn.App. 591, 955 A.2d 645 (2008) and the Tilcon case specifically refers to Section 158 for support of the notion that allowing foreign matter on another's property would meet the requirements of subsection (a) of Section 158 of the Restatement. Common sense would seem to dictate that just as allowing a foreign substance or " thing" on another's land would meet the criteria for the first subsection of Section 158 of the Restatement so too allowing another person on such land, without the owner's consent would meet the requirements of subsection (a) of Section 158 of the Restatement.
But the foregoing discussion only stands for the proposition that McDermott could have explicitly made a trespass claim. However, the quoted language of the counterclaim in paragraphs 11 and 12 clearly sounds in contract and the fact that paragraph 8 refers to a contract provision explicitly stating no other business entities would be allowed on the property to do contract work without Capasso's permission does not dictate that what is really being advanced in the first count of the counterclaim is an allegation of trespass. The point of paragraph 12 is that Neri is sought to be held responsible for failure " conform its conduct to, and perform its work as the contract required-thus McDermott's property" was not improved and was damaged" as paragraph 12 of the counterclaim's first count states. Thus, according to the complaint, the damages being claimed result from damages to the property and failure to improve it as required by the contract agreement.
All of this is underlined in the language of a complaint in a separate case McDermott has brought against Hammonasset Construction, CV 13-6035719. Paragraph 5 of that complaint states " Hammonasset's site work on the property was defective and was done in a negligent and unworkmanlike manner and without regard to applicable plans and specifications available to it such " plans and specification could only have been engendered as a result of the contract G.L. Capasso had with Neri . . ." Seven claims are then listed specifically addressed to failure to meet requirements imposed on Neri through the contract it had with Capasso. Neri would be responsible for the failure to meet these requirements whether Neri so failed or the entity it brought on the property resulted in the alleged failures to perform under the contract.
As said in McCann Real Equities v . McDermott Chevrolet, 93 Conn.App. 486, 490, 890 A.2d 140 (2006): " It is fundamental in our law that the right of a plaintiff (here counterclaim plaintiff) to recover is limited to the allegation of his complaint" and " the purpose of the complaint is to limit the issues to be decided at the trial of a case and is calculated to prevent surprise." Id. page 491. The first count, as said previously, sounds in contract and McDermott cannot prevail on such a claim because McDermott was not a party to a contract with Neri; on this reasoning the first count should be dismissed.
But even if the court is incorrect in the foregoing conclusion that a breach of contract claim is being made there is perhaps an even more fundamental reason the first count must fail even if it should be appropriately characterized as a claim in trespass. In the first count of the counterclaim paragraphs 2 through 9 reference the contract made between G.L. Capasso and the Neri Corporation introducing what now McDermott wishes to characterize as a trespass claim. As stated in paragraph 1, McDermott Road, LLC is the owner of the subject property on which construction was to proceed. In addition in an affidavit submitted by Giuseppe Capasso in opposition to the Neri motion for summary judgment, Mr. Capasso states he was the former president of G.L. Capasso and goes on to say by a letter dated March 14, 2012 McDermott Road, LLC allowed G.L. Capasso to contract with Neri to do site improvement work " in accordance with the contract terms. " In a document attached to its motion by Neri, one Carmine Capasso defines himself as a member of McDermott, LLC and says " after a meeting with all family members, McDermott, LLC agreed to allow G.L. Capasso Inc. to contract with The Neri Corporation for the site improvements at 81 McDermott Road, North Haven, Connecticut in accordance with the contract terms."
Clearly G.L. Capasso is an agent of McDermott. McDermott clearly consented that G.L. Capasso, as a general contractor, act on McDermott's behalf, see Section 101 Restatement (2d) Agency. In its counterclaim McDermott relies on the contract G.L. Capasso made with Neri for the site improvement of the McDermott property to claim damages which it says it suffered as a result of Neri's alleged failure to comply with the contract Neri had with G.L. Capasso.
The contract in question here and entered on March 14, 2012 between G.L. Capasso and the Neri Corporation provided that any claim arising out of the subcontract between the parties " shall be subject to arbitration." Also " the party filing a notice of demand for arbitration must assert in the demand all claims then known to that party on which arbitration is permitted to be demanded." Here G.L. Capasso demanded arbitration. (Emphasis by court.)
What McDermott cannot do is cherry pick portions of the contract and ignore certain contract provisions such as arbitration which may be of relevance to the viability of any counterclaim. The arbitration provisions of the contract is a portion of the contract its agent entered into with McDermott's authorization and approval.
In an affidavit submitted by Guiseppi Capasso on February 18, 2016 in opposition to the Neri motion for summary judgment on the McDermott counterclaims, Mr. Capasso says G.L. Capasso never consented to Neri assigning its work and did not learn until the arbitration hearings that Neri subcontracted some of its site work on the McDermott property to Hammonasset, LLC. The arbitration hearing was held in July 2013. But on January 4, 2013 McDermott filed a suit against Hammonasset for damage on the site setting forth damages in paragraph 5 of the complaint, see CV 13-6035719. In its September 4, 2013 submission to the arbitrator, in its arbitration claim against Neri, G.L. Capasso listed some of the same damages listed in paragraph 5 of the suit against Hammonasset. Thus paragraph 5 of CV13-6035719 lists some of the specific damages also mentioned in the Capasso arbitration claim against Neri; other damages not so listed such as the wrong location of catch basins appear to be observable to any party doing a reasonable inspection. At arbitration, per the contract, all demands known to a party had to be asserted. But more to the point they were alleged in a January 2013 complaint against Hammonasset which was several months before the arbitration hearing and were the result of site work which was Neri's responsibility and its sole responsibility per McDermott.
In any event G.L. Capasso's claims or demands for damages which were caused by failure to perform or failure to perform in a workmanlike manner on the site pursuant to the contract would be Neri's fault whether the failures were because of Neri's actions or failures to act or that of a subcontractor, Hammonasset, it brought on the site to fulfill its (i.e. Neri's) contractual obligations.
The arbitrator rejected the Capasso damage claims and awarded Neri over $30,000 in damages.
Under the guise of making a trespass claim McDermott cannot by indirection nullify the result of an arbitration process whose result was upheld on appeal which its agent, G.L. Capasso, agreed to in a contract for McDermott's benefit which McDermott was well aware of and approved and authorized.
The first count of the McDermott counterclaim is dismissed.
Second Count
The second count of the counterclaim is based on slander of title. Paragraph 12 states as follows:
12. Notwithstanding Neri's failure to conform its conduct and work to the terms of the contract Neri, nevertheless, slandered McDermott's title to its property by filing its baseless, unnecessary and fraudulent mechanics lien on the property delaying the project and financially damaging McDermott.
Quoting from an earlier case the court in CHFA v. Elazazy, 157 Conn.App. 1, 18, 116 A.3d 814 (2015) said: " A cause of action for slander of title consists of the uttering or publication of a false statement derogatory to the plaintiff's title, with malice, causing special damages as a result of diminished value of the plaintiff's property in the eyes of third parties. The publication must be false, and the plaintiff must have an estate or interest in the property slandered. Pecuniary damages must be shown in order to prevail on such a claim. " As the court went on to discuss that actual malice is required--knowledge of falsity or a reckless disregard of the truth is required, id. p. 19.
Filing of a mechanic's lien like that of any other lien can be the basis of a slander of title action as long as all of the elements of the tort are met, Bordieri v. Nelson, 2006 WL 2948081 (Keller, J., 2006), Wright, Connecticut Law of Torts, 3d.ed., § 167 p. 447.
In this case the lien was filed August 8, 2012 for services that is claimed began on April 3, 2012 and finished on June 17, 2012. The lien was based on a claim of $27,655.50 plus interest. It obviously was not paid since the matter went into arbitration with claims by G.L. Capasso against Neri and a claim by the latter against Capasso. It is unclear when the arbitration claims were filed but a hearing was held and post hearing briefs were filed by G.L. Capasso on September 4, 2013 and Neri on March 7, 2013. More to the point the arbitrator denied Capasso's claims and ruled in favor of Neri on October 3, 2013 in the amount of $27,644.00 ($15.50 less than the amount claimed in the mechanics lien plus $4001.41 in interest for a total of $31,744.41).
As noted previously arbitration was a part of the contract G.L. Capasso signed and McDermott authorized Capasso to enter into and was necessarily aware of the arbitration provision in the contract. The arbitration award was upheld on appeal to the trial court and that court decision was upheld in a per curiam decision of the Appellate Court at 155 Conn. 907, 235 A.2d 848 issued March 10, 2015--some 2 1/2 years after the lien was filed and 11/2 years after the arbitrator's decision. For all of the reasons previously discussed it is difficult to understand how McDermott could argue that a lien could not be filed against the McDermott property where Neri's work was done at Capasso's request under a contract sanctioned by McDermott, LLC and dispute the results of the arbitration favoring Neri which supported the basis Neri held for filing the mechanic's lien in the first place--an arbitration procedure McDermott itself sanctioned and necessarily approved when it authorized the contract Capasso had with Neri. It is also self-evident, that even leaving aside the arbitration award issue, it cannot be said that the mere fact that parties dispute whether there is any amount owing under a construction contract dictates that the party who determines a mechanics lien or lis pendens must be filed is acting with malice--the existence of such a dispute is the reason for the mechanics lien in the first place and its mere filing, in and of itself, creates no presumption the filer must overcome. The claim is also made that filing the lien was " unnecessary" because G.L. Capasso according to Giuseppi Capasso's affidavit submitted in opposition to the summary judgment motion, " Neri knew G.L. had ample funds to pay and was the sole party responsible for payment to Neri of any sums claimed to be due." McDermott claims the mechanics lien was an attempt to extort money by the Neri Corporation. The Neri idle equipment claim of over $200,000 was not awarded and Capasso appealed the award actually made in a process that went on for another 15 months before the award was final, per the Appellate Court's decision. It should also be noted that the amount claimed on the lien was $27,655.50 and did not include the much larger idle equipment claim by Neri during the arbitration process which would nullify any claim the mechanic's lien, was part of in an attempt to " extort" monies from McDermott.
The lack of necessity argument is not accepted by the court. The consequences of accepting such a position would cripple the fair operation of the construction industry--is a subcontractor who perhaps may have limited financial resources required to do a thorough financial check upon the general contractor or the property owner before a lien can be placed and be faulted for doing so although the amount claimed in the lien is later held to be due and owing as a result of arbitration? Here the time from the filing of the lien to final resolution by the Appellate Court consumed over 2 1/2 years. Should a subcontractor have to gamble that the healthy financial situation of a general contractor or property owner will be good for months or years? As said in a case cited by Neri " Our mechanics lien statute is to be liberally construed so as to reasonably and fairly to carry out its remedial intent, that is to provide a contractor with security for (its) labor and services, " Anthony Julian RR Construction Co. v. MaryEllen Drive Assocs., 39 Conn.App. 544, 548-49, 664 A.2d 1177 (1995).
It should also be noted that nothing submitted by McDermott establishes the latter suffered any damages or loss of property value. Mere assertions do not establish facts for purposes of summary judgment.
Faced with the foregoing difficulties McDermott now changes what is exactly pled in its complaint. Mr. Capasso in his affidavit states after the arbitration award became a final judgment G.L. Capasso paid the full amount of the award including costs and interest--the award became final in March 2015. Thus, the argument goes, continuing with this action to foreclose the mechanic's lien and not releasing it after Capasso satisfied the final judgment of the arbitration award was a slander of title. Attached to the affidavit is a check from G.L. Capasso to the Neri Corporation in the amount of $25,773 but confusingly it is dated April 24, 2012. Perhaps that is an oversight of some kind and Capasso's affidavit, which is dated February 18, 2016 stating the full amount of the arbitration award was paid at some unspecified time after it became a final judgment can be accepted. But the affidavit of Carl Neri state the sums due if have not been paid, the affidavit is dated January 29, 2016. However, the pleadings themselves present a problem. Paragraph 12 of the counterclaim reads as noted previously " 12. Notwithstanding Neri's failure to conform its conduct and work to the terms of the contract, Neri, nevertheless, slandered McDermott's title to its property by filing its baseless unnecessary and fraudulent mechanics lien on the property delaying the project and financially damaging McDermott." (Emphasis by court). The complaint alleges only that the filing of the mechanic's lien was inappropriate--it makes no reference to failure to remove it after it was filed. Parties are entitled to know what the claims are against them, see previously cited case of McCann Real Equities v. David McDermott Chevrolet, Inc., supra .
A motion for summary judgment cannot be used to amend a complaint whether filed for the plaintiff or by way of a counterclaim. The second count of the counterclaim is dismissed.
Third Count
The Third Count of the counterclaim is based on alleged violation of the Connecticut Unfair Trade Practices Act, Section 42-110a of the General Statutes. In paragraphs 12 and 13 of the Third Count sets forth the basis on which the CUTPA claim is based:
12. Neri's failure to conform its conduct regarding the Contract and its work on the property as required by the terms of the Contract was intentional, deceitful, and in bad faith.
13. (Neri) Made false and baseless claims against Capasso regarding Capasso's contract with Neri which were cost or potential costs for which McDermott would be responsible under its letter authorizing Capasso to contract with Neri.
In the McDermott brief responding to Neri's brief asking for summary judgment on McDermott's CUTPA claim only adds the following " Certainly perjure in legal proceeding involving the conduct of ones business is a violation of CUTPA" and a final statement to the effect that " The allegations of the counterclaim clearly involve Neri's being engaged in commerce, his business practices with competitors, his intentional breach of contract and his false statements under oath state the factual basis for violations of Connecticut's Unfair Trade Practices Act, Connecticut General Statutes Section 42-110a et seq.
There is no indication of or reference to any factual basis for any of these assertions.
The court will first set forth the general rule set forth in Jacobs v. Healey Ford-Subaru, Inc., 231 Conn. 707, 652 A.2d 496 (1995) used to determine whether there has been a CUTPA violation. Our courts according to Jacobs " have adopted the criteria set out in the cigarette rule by the federal trade commission for determining when [an act or] practice is unfair: (1) [Whether the practice, without necessarily having been previously considered unlawful, offends a public policy established by statutes, the common law, or otherwise--whether, in other words, it is within at least the penumbra of some common law, statutory, or otherwise established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3)) whether it causes substantial injury to consumers [competitors or other businessmen]." (Internal quotation marks omitted.) Id. page 725.
Returning to the allegations of this case under CUTPA, it is difficult to understand the applicability of the just quoted paragraphs 12 and 13 of the Third Count of the Counterclaim since it is a list of generalizations. Suffice it to say pursuant to the arbitration process of the Capasso-Neri contract which McDermott approved of and authorized, an arbitrator upheld Neri's claim for work performed and rejected Capasso damage claim which was based on the Capasso-Neri contract and which would have encompassed the same claims McDermott would be entitled to make. Nowhere is it established, except by assertion, that any damage claim McDermott is making has an extracontractual basis. As noted the arbitration award was upheld on appeal to the Superior Court per Judge Hadden and later upheld in a per curiam decision by the Appellate Court.
The only false statement under oath the court can guess at which McDermott makes refers to the Affidavit submitted on January 26, 2016 by Carl Neri. In paragraph 6 Neri in effect states his corporation supplied labor and material " in accordance with the terms of the contract" he had with Capasso. In paragraph 9 Neri states the sums due his corporation under the terms of the contract for labor and services remains unpaid. These are statements alleging contract violations were decided in arbitration and the court already has discussed the difficulties presented by McDermott's claim it paid the monies owing Neri.
As this court noted in Design On Stone, Inc. v. John Brennan Construction Co., 1998 WL 182406 (1998) " a simple breach of contract does not offend traditional notions of fairness and thus no violation of CUTPA can be found" with citations to several Superior Court cases. The burdens and risks attendant on contract formation would be significantly increased by a contrary rule and simple breach of contract claims would turn into an opportunity for windfalls in every case. There is no alleged misrepresentation at the time of contract formation. Even assuming that somehow Neri did not deliver on a contract promise every simple breach of contract claim would constitute a CUTPA claim where a party has not delivered on a promise and this cannot be a rational application of CUTPA since in every breach of contract claim it is alleged that a party has not performed on a prior representation. As said by Judge Haynsworth in United Roasters, Inc. et al. v. Colgate Palmolive Co., 649 F.2d 985, 992 (CA 4, 1981) " In a sense, unfairness inheres in every breach of contract when one of the contracting parties is denied the advantage for which he contracted, but this is why remedial damages are awarded on contract claims."
It is true that Neri contracted with Capasso that it would not assign the subcontract work nor subcontract subcontract work without Capasso's consent. This is the contract language McDermott should be taken to have approved and consented to when it approved and authorized the entire Neri contract. It is not clear from the pleadings or the McDermott brief that this is one of the basis of the CUTPA claim but the court will discuss it since paragraph 8 of the Third Count does allege the just mentioned contract language.
In Centimark Corp. v. Vill. Manor Assocs. Ltd. P'ship, 113 Conn.App. 509, 523-24, 967 A.2d 550 (2009) the court upheld the trial court's finding of a CUTPA violation where Centimark on numerous occasions represented to Village Manor that a company named Dzen would be doing the work on a shingled portion of a roof but failed to tell Village Associates that in fact Dzen, one of the top 2% roofers in the country, would not be doing the work. The work was farmed out to a less qualified subcontractor. Damage resulted and the court found the misrepresentation was such as to warrant a finding that CUTPA was violated.
In Tessmann v. Tiger Lee Construction Company, 228 Conn. 42, 54-55, 634 A.2d 870 (1993) a jury found that a violation of CUTPA was proven. The issue before the trial court was whether punitive damages were warranted under the act. The court upheld the trial court's finding of punitive damages saying that the record showed a reckless disregard of the plaintiff's rights. The court noted that a Tiger Lee representative told the plaintiff that Tiger Lee would be doing all the work on the plaintiff's home with its own employees. But Tiger Lee relied " completely" on subcontractors. The court went on to note that the plaintiff told Tiger Lee that the driveway needed to be reconstructed so as to give her easy access to the kitchen door because of her medical condition. The driveway was so steep that water leaked into the basement. Also a skylight leaked constantly but Tiger Lee refused to correct the condition. Tiger Lee inspected a leak but would not correct it saying it was just condensation. Another leak was inspected but Tiger Lee denied seeing it or the bucket the plaintiff placed under the leak. At the time of trial water continued to leak into the basement. Also a promised dumpster was not delivered to the site and noxious materials were placed in wetlands located near her well.
But in Tessman there apparently was no challenge to the CUTPA finding by the jury so it cannot be determined on what evidence that finding was based. Thus the mere fact Tiger Lee did not due any of the work cannot be read as a dictate that whenever a subcontractor uses any other subs even in violation of a clause, ipso facto, a CUTPA violation can be found.
Although broad statements are made here that the arbitration process did not take account of damage claims resulting from Hammonasset entrance on the property there is nothing to indicate Hammonasset was not a qualified company or less qualified than Neri, in fact. Also the damage claim in the suit in Hammonasset are simple contract violation claims. In any event there is no evidence of the obvious deceptive practices regarding contract defects and complaints thereof as noted in Tessman.
For the foregoing reasons the Third Count is dismissed.
Looking at the arguments made here it is the court's opinion that the counterclaims here are nothing more than an attempt to explain away the results arrived at as a result of the arbitration procedure. If the rule were to be that the principal is not bound by the arbitration procedure agreed to by its general contractor in the contract of the latter with a subcontractor especially in a case where the principal approved the general contractor--subcontractor contract, it would seriously reduce or even render nugatory the usefulness of arbitration agreements in the construction industry--This is a favored procedure to avoid lengthy delays in completing projects which thereby might not be completed at all because of the otherwise only alternative--trial court with full blown formal evidentiary hearings, to Appellate Court, then possibly to the Supreme Court.
As said in Remax Right Choice v. Aryeh, 100 Conn.App. 373, 381, 918 A.2d 976 (2007) . . ." in our juris prudence . . . arbitration is a favored method of settling disputes and operates as an efficient and economical system of alternative dispute resolution."