Opinion
No. CV09 5004944-S
July 9, 2009
MEMORANDUM OF DECISION
BACKGROUND
This action arises out of dispute over a claim of unpaid repair work that the plaintiff, John Thornton (Thornton), performed on a building at 27-29 West Main Street, Meriden, Connecticut owned by the defendant, ABNIC Investments (ABNIC PARTNERSHIP) which is a general partnership, and at all relevant times, owned the said real property. The parties agree that ABNIC Investments, Inc., (ABNIC INC) is a Connecticut stock corporation and does not own the property at 27-29 West Main Street, Meriden. Janice N. Abutu, is a general partner of ABNIC PARTNERSHIP and is also a principal of ABNIC INC.
For the sake of clarity, the court will refer to Abnic Investments as "ABNIC PARTNERSHIP" to distinguish it from "ABNIC INVESTMENTS INC" which will be referred to as "ABNIC INC."
On or about the end of January 2005, a pipe burst, causing damage at the aforementioned property owned by ABNIC PARTNERSHIP, which, in turn, then contacted Thornton to make repairs to the building. Subsequently, a dispute arose over the amount to be paid for the work performed.
In February 2006, Thornton filed a mechanic's lien on the property in the amount of $61,233.90. After a hearing on August 23, 2006, the court, Taylor, J., found probable cause for Thornton's claims totaling $200,624.69. This figured was reduced by $122,500 previously paid by ABNIC PARTNERSHIP and then further reduced by $32,156.60, as the cost of work left unperformed by Thornton, and by $10,090, the amount by which Thornton's mold remediation claim was reduced. Therefore, the mechanic's lien was reduced by the court to $35,878.09 based on Thornton's verified total claim to that amount for uncompensated services and materials. See ABNIC Investments, et al. v. Thornton, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 06 5000464 (November 20, 2006, Taylor, J.).
Thornton did not commence any action to foreclose on the mechanic's lien which would have expired on February 23, 2007. On February 21, 2007, just prior to the one year statutory time period in which Thornton had to foreclose on the mechanic's lien, Thornton, submitted to the defendant a proposed mortgage of the property and a note in the amount of $25,000 to be executed in exchange for Thornton releasing the mechanic's lien.
Connecticut General Statutes § 49-39 requires that a mechanic's lien shall not continue in force for a more than one year after the lien has been perfected, unless the party claiming the lien commences an action to foreclose it.
The note, which was drawn up by Thornton's attorney, provides in pertinent part:
FOR VALUE RECEIVED, the undersigned promises to pay JOHN THORNTON, of 16 Hitchcock Drive, Meriden, Connecticut 06450, or order, the principal sum of TWENTY-FIVE THOUSAND AND 00/100 DOLLARS ($25,000.00) plus an additional Seven Percent (7%) Interest, per annum. A lump sum payment in the amount of SIX THOUSAND DOLLARS ($6,000.00) shall be made payable by April 15, 2007. The rest and remainder is due within two (2) years of the signing of this Note, or upon sale or refinance of said property, whichever occurs first.
***
IN WITNESS WHEREOF, WE, ABNIC INVESTMENTS, INC. have hereunto set our hand and seal this 22nd day of February 2007.
The note was signed by Janice N. Abutu, who, as noted, is a general partner of ABNIC PARTNERSHIP as well as a principal of ABNIC INC.
Subsequently, Thornton, through his attorney, received three separate payments totaling $6000 by checks which designate ABNIC PARTNERSHIP as the remitter, accompanied by letters referencing the note on ABNIC PARTNERSHIP letterhead. Additionally, the letter that accompanied the third and final payment reiterated the terms of the note and referenced the property in that "the remainder [of the note] is due within two years of the signing of the Note, or upon sale or refinance of the said property, whichever occurs first." (Emphasis added.) No further payments were made after May 1, 2007, and the note went into default status.
The first check was sent on March 15, 2007 in the amount of $3,000. The second check was sent on April 11, 2007 in the amount of $1,700. And, the third check was sent on May 1, 2007, in the amount of $1,300.
On March 31, 2009, Thornton made the instant application for a prejudgment remedy and as well as a claim upon the original contract to perform work and/or remediation upon the property arising from the January 2005 pipe bursting incident.
In the memorandum of law in opposition to application for prejudgment remedy, ABNIC PARTNERSHIP has raised two defenses; 1) novation, claiming ABNIC INC was substituted as the debtor on the note, and 2) of accord and satisfaction, claiming the execution of the note discharged any of ABNIC PARTNERSHIP's duties under the previous contractual dispute. In the memorandum of law is support of the application for prejudgment remedy, Thornton claims that he never intended to substitute ABNIC INC for the ABNIC PARTNERSHIP on the note, and since ABNIC PARTNERSHIP breached their accord, he is free to seek enforcement of the original duty. A hearing was held on May 19, 2009, at which both parties were heard.
The plaintiff testified that he would only release the mechanic's lien in exchange for a note from the defendant, ABNIC PARTNERSHIP. He further asserted that the reference in the note to ABNIC INC is a scrivener's error. The plaintiff further claims that ABNIC INC was not mentioned at any time during the pendency of this dispute, he never intended to substitute ABNIC INC as a debtor for ABNIC PARTNERSHIP, and that he believed he was making a deal with the owner of the property.
Janice Abutu testified that ABNIC PARTNERSHIP refused to submit the property to any encumbrance, but as a compromise, ABNIC INC, a third-party corporation would, and did, execute the note, promising to pay $25,000 over a period of time.
DISCUSSION
"If the court, upon consideration of the facts before it and taking into account any defenses . . . finds that the plaintiff has shown probable cause that such a judgment will be rendered in the matter in the plaintiff's favor in the amount of the prejudgment remedy sought and finds that a prejudgment remedy securing the judgment should be granted, the prejudgment remedy applied for shall be granted as requested or modified by the court." C.G.S. § 52-278d(a) "The purpose of the statute is to allow a plaintiff who can show probable cause that he will eventually succeed on the merits to encumber property of the defendant to protect himself from obtaining a judgment which cannot be satisfied. At the same time the statute seeks to protect the defendant from unreasonable encumbrances." Gagne v. Vaccaro, 80 Conn.App. 436, 452 (2003). "In acting on a prejudgment remedy motion, the trial court `must evaluate the arguments and evidence produced by both parties' to determine whether there is probable cause to sustain the validity of the plaintiff's claim." Haxhi v. Moss, 25 Conn.App. 16, 18 (1991).
NOVATION
ABNIC PARTNERSHIP claims the note constitutes a novation. "A novation is a term used to refer to the introduction of a new party into a new contract." Riverside Cole Co. v. American Coal Co., 107 Conn. 40, 44 (1927). "To succeed on its claim of novation, the defendant [is] required to prove that `the one in the position of creditor, in this case the [plaintiff], had accepted a new debtor . . . in the place of the defendant to which [he] would look for fulfillment of the . . . obligation owing to [him].'" Ruwet-Sibley Equipment Corp. v. Stebbins, 15 Conn.App. 21, 26 (1988) (quoting Norwalk Tire Rubber v. Manufacturers Casualty Ins. Co., 109 Conn. 609, 615 (1929)). In addition, it requires proof that the plaintiff had agreed to a discharge of the defendants' obligation to him. See Windsor Cement Co. v. Thompson, 86 Conn. 511, 513 (1913).
The salient issue at hand is the parties' intent when they executed the note. The defendant claims that Thornton opted to abandon his claim under the mechanic's lien in favor of accepting a new debtor, ABNIC INC, thereby releasing ABNIC PARTNERSHIP from its original obligation. The plaintiff, however, claims that the note referencing ABNIC INC is a scrivener's error, and he never intended to substitute ABNIC INC in lieu of ABNIC PARTNERSHIP as a debtor.
Resolution of this issue "is guided by general principles governing the construction of contracts. A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction . . . The intent of the parties is to be ascertained by a fair and reasonable construction of the written words." Issler v. Issler, 250 Conn. 226, 235 (quoting Lawson v. Whitey's Frame Shop, 241 Conn. 678, 686 (1997)). "When only one interpretation of a contract is possible, the court need not look outside the four corners of the contract . . . Extrinsic evidence is always admissible, however, to explain an ambiguity appearing in the instrument." (Citations omitted; internal quotation marks omitted.) Poole v. Waterbury, 266 Conn. 68, 89 (2003). "A contract is ambiguous if the intent of the parties is not clear and certain from the language of the contract itself." (Citation omitted.) Jo-Ann Stores, Inc. v. Property Operating Co., LLC, 91 Conn.App. 179, 190 (2005).
"Each part of a written contract must be interpreted so as to give effect to the general purpose of the agreement . . . Where two seemingly conflicting contract provisions reasonably can be reconciled, a court is required to do so." (Citations omitted; internal quotation marks omitted.) Montoya v. Montoya, 91 Conn.App. 407, 415-16 (2005). "In many cases, words used by the parties in their writing are not particularly suitable to express their meaning, but they are nevertheless capable of being interpreted." Shawmut Bank Connecticut, N.A. v. Connecticut Limousine Service, Inc., 40 Conn.App. 268, 274 (1996) (quoting D. Dobbs, Law of Remedies (2d Ed. 1993) § 11.6(3)). Additionally, "[i]f the word in question appears to be an error, the trial court may, by looking at the contract as a whole, interpret the word so it is more logically suited to the agreement." Shawmut Bank Connecticut, N.A. v. Connecticut Limousine Service, Inc., supra (citing Roth v. Petroleum Co., 739 S.W.2d 598, 600 (Mo.App. 1987)). "[I]n construing contracts, we give effect to all the language included therein, as the law of contract interpretation . . . militates against interpreting a contract that renders a provision superfluous." O'Connor v. Waterbury, 286 Conn. 732, 743 (2008).
The court finds that the note in question contains ambiguities; it lists ABNIC INC as the debtor, but also references "said property." As noted, it is unquestioned that ABNIC PARTNERSHIP is the owner of record for 27-29 West Main Street, not ABNIC INC. The court holds that the term "said property" is not rendered superfluous if the reference to ABNIC INC is a scriveners' error, and should have referred to ABNIC PARTNERSHIP. Moreover, because of this ambiguity in the contract, the court can look to the situation of the parties and the circumstances connected with the transaction to reconcile the ambiguity and to determine whether the parties intended to create a novation.
Here, Thornton had established a verified claim to $35,878.09 from ABNIC PARTNERSHIP through a mechanic's lien. Instead of instituting foreclosure proceedings, Thornton agreed to waive his rights under the mechanic's lien in favor of executing a note for $25,000. During the repairs, as well as the discussions and execution of the note, Thornton did not deal with any new individuals, and dealt with Janice Abutu almost exclusively. There is nothing in the note itself which indicates that Janice Abutu signed the note in her corporate capacity as an officer of ABNIC INC. There is nothing in the note which indicates the note is intended to release ABNIC PARTNERSHIP from its obligation to Thornton. Most tellingly, once the note had been executed, Thornton received three separate checks totaling $6,000 from ABNIC PARTNERSHIP, all of which were accompanied by letters referencing the note on ABNIC PARTNERSHIP letterhead. Finally, when the note became past due, Thornton contacted Janice Abutu in a letter directed to ABNIC PARTNERSHIP to demand the entire balance due.
In reviewing the contract as a whole, it is clear that the parties did not intend to substitute ABNIC INC in place of ABNIC PARTNERSHIP as the debtor. Additionally, as the initial payments were provided by ABNIC PARTNERSHIP, not ABNIC INC, this evinces partial performance under the note, and cannot now be gainsaid. See Fleet Bank, N.A. v. Galluzzo, et al., 33 Conn.App. 662, 666 (1994) (discussing partial performance of such a character that it can be naturally and reasonably accounted for in no other way than by the existence of a contract in relation to the subject matter in dispute). If the purpose of the note was to transfer the obligation to ABNIC INC it is incongruent that ABNIC PARTNERSHIP would have begun performance by making the first three payments.
This court finds that the note, in referencing ABNIC INC as the debtor, is a scrivener's error, and both parties intended for the defendant, ABNIC PARTNERSHIP to fulfill the obligations under the note. Accordingly, the listing of ABNIC INC does not constitute a novation, and does not relieve the defendant of its obligation to pay.
ACCORD AND SATISFACTION
The defendant also claims that Thornton cannot pursue an action under the original contractual dispute based on the theory of accord and satisfaction. "An accord is a contract under which an obligee promises to accept a stated performance in satisfaction of the obligor's existing duty. Performance of the accord discharges the original duty." Audubon Parking Associates v. Barclay and Stubbs, Inc. et al., 225 Conn. 804, 809 (1993). "Satisfaction of a claim may be found in either the promise to settle or the full performance of that promise." Air-Care N.O. Nelson Co. v. Patchet, 5 Conn.App. 203, 205 (1985) (citing Halloran v. Fischer, 126 Conn. 44, 46 (1939)). "Whether the new agreement was per se accord and satisfaction of the original debt, depends on the intention of the parties . . . It is strongly presumed, however, that a plaintiff . . . would not accept a mere promise to pay a much smaller sum in discharge of a claim for a larger amount . . . It is generally more reasonable to suppose that [the plaintiff] bound himself to surrender his old rights only when the new contract of accord was performed." (Citations omitted; emphasis added.) Air-Care N.O. Nelson Co. v. Patchet, supra.
"[T]he creditor's receipt of the promised payment discharges the underlying debt and bars any further claim relating thereto." County Fire Door Corporation v. C.F. Wooding Company, 202 Conn. 277, 281 (1987). However, in "the event the parties intended that performance of the new agreement was to be the satisfaction of the claim, `there can be no doubt that the creditor may, on default in performance of the accord by the debtor, sue either on the original cause of action, or . . . on the contract of accord.'" Air-Care N.O. Nelson Co. v. Patchet, supra (quoting 15 Williston, Contracts (3d Ed. Jaeger) § 1848).
In this case, it is apparent from the language of the note that Thornton surrendered his rights under the mechanic's lien based on his expectation of receiving performance on the note, not in receiving the promise of performance. Indeed, the note speaks of a two-year period during which specific payments must be made, interest will accrue, and an acceleration of the remainder of the debt owed if the property is sold before the two-year period. The clear intent of this language is that full performance is expected. In contrast there is no language in the note to the effect that the mere signing of the note would relieve ABNIC PARTNERSHIP of its obligation. While it may be true, as the defendant claims, that Thornton's acceptance of the promissory note was indeed a compromise, memorializing a compromise figure, there is no language that states that anything less than ABNIC PARTNERSHIP's full performance of that compromise, pursuant to the note, would discharge the underlying debt.
Here, ABNIC PARTNERSHIP breached the accord when it defaulted on the note after paying only $6,000. In light of that breach, Thornton has the right to sue either under the original breach of contract action or on the breach of the note. This option does not provide Thornton with the possibility of receiving double redress for a single wrong as the defendant argues. Thornton claims over $35,000 in unpaid work. To this date, he has only received $6,000, leaving a claim of over $29,000 owed by the defendant. He may now choose his remedy.
CONCLUSION
As noted above, the court holds that the reference to ABNIC INC in the note is a scrivener's error on the note and does not constitute a novation. Additionally, since the parties intended performance of the note to constitute accord and satisfaction, and thus discharge the underlying debt, ABNIC PARTNERSHIP's default on the note breached the accord. This leaves Thornton with the option to pursue a claim on the underlying breach of contract.
Upon consideration of the facts before it and taking into account the failure of the defendant's proposed defenses of novation and accord and satisfaction, this court finds that the plaintiff has shown probable cause that a judgment will be rendered in the matter in the plaintiff's favor in the amount of the prejudgment remedy sought. Accordingly, a prejudgment remedy securing the judgment is granted in the amount of $29,878.09.