Opinion
FSTCV126016909S
02-28-2018
Weinshel, Wynnick & Associates, LLC v. Marie Bongiorno et al.
UNPUBLISHED OPINION
File Date: February 28, 2018
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Tierney, Kevin, J.T.R.
MEMORANDUM OF DECISION
Kevin Tierney Judge Trial Referee
This is a routine lawsuit seeking the collection of unpaid accounting services rendered to a liquor store, which accounting services became embroiled in the Bongiorno family disputes.
The operative complaint is the Fifth Amended Complaint dated November 17, 2017. (#218.00.) The only plaintiff is the accounting firm of Weinshel, Wynnick & Associates, LLC. The three defendants are Marie Bongiorno, individually, Marie Bongiorno, as Executrix of the decedent’s estate of George Bongiorno and Marie’s Liquors, LLC. The First Count is breach of contract against the Estate of George Bongiorno. The Second Count is successor liability as against the defendants, Marie Bongiorno, individually and Marie’s Liquors, LLC. The Third Count alleges a violation of the implied covenant of good faith and fair dealing directed against all three defendants. The Fourth Count alleges violations of the Connecticut Unfair Trade Practices Act directed against all three defendants. The Fifth Count sounds in quantum meruit as against all three defendants. The Sixth Count sounds in unjust enrichment as against all three defendants. In anticipation of the evidence being offered at trial, this court permitted the six Special Defenses dated November 13, 2017 (#213.00) to remain since they no doubt would conform the pleadings to the proof at trial. Antonofsky v. Goldberg, 144 Conn. 594, 596-97 (1957). The six Special Defenses are the statute of limitations Gen. Stat. § 52-576, the statute of limitations Gen. Stat. § 52-581, unclean hands, waiver, laches, and ratification. The court struck the defendants’ November 13, 2017 one-count Counterclaim (#213.00) by an order dated November 16, 2017 (#214.01). The pleadings were closed and a Certificate of Closed Pleadings was filed. (#217.00.) All parties were represented by counsel. The evidence was presented in a court trial over three days on November 14 through November 16, 2017. The parties timely filed simultaneous briefs on December 29, 2017. (#222.00, #223.00 and #224.00.) The parties waived oral argument and the filing of reply briefs. At the time of entering the briefing schedule, this court ordered that if the plaintiff was successful on either the CUTPA count or the breach of the implied covenant of good faith and fair dealing count then attorneys fees would be considered. An additional evidentiary hearing would be held on the subject of attorneys fees and the amount of the attorneys fees. P.B. § 11-21
The court finds the following facts and legal conclusions.
George Bongiorno was a successful businessman and real property investor. Along with his brother, John Bongiorno, George Bongiorno owned and operated Bongiorno’s Supermarket, an iconic business located just below I-95 in the western section of Stamford, Connecticut. During the expansion of the food business, George Bongiorno obtained a permit from the Liquor Control Commission of the Connecticut Department of Consumer Protection to sell retail liquor at the Stamford premises many years before 2010. The supermarket has long since gone out of business to be replaced by rental premises at the former supermarket location. The liquor store survived. The liquor store had been located at different locations within the Bongiorno business complex and is currently located at 284 West Avenue, Stamford, Connecticut. George Bongiorno was the original Permittee and Backer. The business was licensed under the name of " Bongiorno Maxi Discount Liquor." Ex. 20, page 4. George Bongiorno was the Backer on October 5, 2010. Ex. 20, page 4. Bongiorno Maxi Discount Liquor was a sole proprietorship ownd by George Bongiorno and was neither incorporated nor formally created. Ex. 20, page 4, Ex. 21, 22 and 23.
George Bongiorno around 1971 hired the accounting firm of Weinshel, Wynnick & Associate, LLC to be his personal and business accountant. A number of engagements letters were offered in evidence, all executed and signed by George Bongiorno d/b/a Bongiorno Maxi Discount Liquor; Exhibit 3, an engagement letter dated January 31, 2003; Exhibit 4, an engagement letter dated January 1, 2005 and Exhibit 2, an engagement letter dated January 1, 2010. Each of those agreements stated: " This agreement will remain in effect for future periods until changed by either party." Based upon these engagement letters, Weinshel, Wynnick & Associates, LLC acting generally by Michael Weinshel, the lead accountant, performed accounting services for George Bongiorno and Bongiorno Maxi Discount Liquor. No engagement letters later than January 1, 2010 were produced in evidence. No evidence of any change in or modification of the January 1, 2010 engagement letter was produced at trial.
The plaintiff billed the liquor store at sporadic intervals. The plaintiff could always expect payment of their accounting bills rendered to George Bongiorno, personally and by his various LLCs and corporations. Exhibit 5 contains six checks all issued on a checking account in the name of " Bongiorno Maxi Discount Liquor." Three checks were dated in 2003, one in May 2004, one in March 2010 and one in June 2010. The last two were each in the amount of $4,500.00 and they were signed by George Bongiorno. The plaintiff is claiming that three invoices sent at various times after those 2010 payments remain unpaid. Exhibit 6 is an invoice in the amount of $9,925.00; Exhibit 7 $9,925.00; and Exhibit 8 $16,380.00. The total of these unpaid invoices is $36,075.00 accordingly to these three Exhibits. Each invoice is billed to Bongiorno Maxi Discount Liquors. The plaintiff is claiming damages in the amount of $36,075.00 plus interest and seeks a judgment in that amount for the counts alleging breach of contract, successor liability, quantum meruit, and unjust enrichment.
On September 21, 2010, Articles of Organization for Marie’s Liquors, LLC were executed. Ex. 13. It was filed with the Connecticut Secretary of State on September 23, 2010 Ex. 13, Ex. 17, page 5. The manager was designated as George Bongiorno and George Bongiorno was its sole member. Ex. 13. The LLC was managed by a " manager/member." On October 14, 2010 an Assignment and Transfer of Membership Units in Marie’s Liquors, LLC was executed. Ex. 14. It states: " I, George Bongiorno, sole Member of Marie’s Liquors, LLC, do hereby convey, for good and valuable consideration, all right, title and interest of all of my membership units of Marie’s Liquors, LLC, owned by me, to: Name: Marie Bongiorno." Sometime later a Purchase and Sale Agreement dated July 31, 2012 was executed between George Bongiorno as Seller and Marie Bongiorno as Buyer for Marie’s Liquors, LLC. Ex. 15. The consideration was One Dollar. Shortly thereafter an Application for Transfer of Interest Within a Limited Liability Company for Marie Bongiorno, Permitee and Marie’s Liquors, LLC, Backer, was filed with the Division of Liquor Control, Department of Consumer Protection, State of Connecticut on October 12, 2012 for the trade name of the liquor store, " Bongiorno Maxi Discount Liquor." After the passage of a certain period of time, the Application was approved and the transfer was permitted on January 8, 2013 by the Division of Liquor Control. Ex. 17. An Amendment to the LLC’s Articles of Organization was filed on February 28, 2013 with the Connecticut Secretary of State naming Marie Bongiorno as the sole Member/Manager of the LLC. Ex. 19.
The Purchase and Sale Agreement of July 31, 2012 was silent as to the payment of indebtedness and bills that had accrued up to that period of time. Ex. 15. It provided that George Bongiorno shall resign as sole Member and Manager of Marie’s Liquors, LLC and Marie Bongiorno shall become the sole Member/Manager of the LLC.
The George Bongiorno liquor permit in the name of Bongiorno Maxi Discount Liquor was numbered LIP-12522. Ex. 20. That number remained the liquor permit number until Marie’s Liquors, LLC was formed. After the January 9, 2013 transfer, the liquor permit still was numbered LIP-12522. Ex. 17.
During the entire trial, no cross examination or direct examination occurred concerning the reasonableness of the accounting charges or the services rendered for which Exhibits 6, 7 and 8 were admitted. There was some questions as to the names of various entities that may have paid some of the previous liquor store accounting bills but other than that there was no contesting of the nature of the accounting services, the quality of the accounting services, the accuracy of the services, the accuracy of the accounting and tax documents prepared, nor whether or not the services were actually performed.
The First Count alleges breach of contract as against George Bongiorno: " 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." CCT Communications, Inc. v. Zone Telecom, Inc., 324 Conn. 654, 667-68 (2017). Court finds that the engagement letters establish a contract between George Bongiorno and Weinshel, Wynnick & Associates, LLC of a long duration. " This agreement will remain in effect for future periods until changed by either party." Ex. 2, dated January 1, 2010. There is no evidence that that this latest engagement letter was voided, changed, modified, or otherwise terminated by either party. The court finds that the accounting services that were rendered, were performed pursuant to those three engagement letters. The invoices, Exhibits 6, 7 and 8, all indicate the time period when the accounting services were performed. The court finds that the accounting services were performed consistent with the engagement letters. The above three invoices were sent to Bongiorno Maxi Discount Liquor for payment. No payment of those three invoices, Exhibits 6, 7 and 8, was made. The court finds that George Bongiorno breached the January 1, 2010 agreement and as a result the plaintiff has suffered damages in the amount of $36,075.00. The court finds that there was no contract between the plaintiff and the other two defendants, Marie Bongiorno individually and Marie’s Liquors, LLC.
George Bongiorno died on March 15, 2016. Although there is some litigation in the Stamford Probate Court, Marie Bongiorno is currently the duly appointed Executrix of the decedent’s Estate of George Bongiorno. There was no evidence that any formal claim has been brought against the decedent’s Estate of George Bongiorno by the plaintiff. Gen. Stat. § § 45a-359 and 45a-360; Keller v. Beckenstein, 305 Conn. 523, 533 (2012). Marie Bongiorno as Executrix of the Estate of George Bongiorno was not joined as a party defendant in this litigation within six months of March 13, 2016. Gen. Stat. § 52-599(b). May 15, 2017 was the date of the appointment of Marie Bongiorno as Executrix of the Estate of George Bongiorno. Marie Bongiorno as Executrix was not joined by the plaintiff as a party defendant in this litigation until August 29, 2017. (#206.01). Because of the circumstances of this case, the claim of successor liability and the uncertainty of the status of the Probate appeal against Marie Bongiorno as Executrix, Nizzardo v. Bongiorno, FST CV17-6032220 S, Superior Court, judicial district of Stamford/Norwalk at Stamford, and the possibility of the appointment of a new fiduciary for the Estate of George Bongiorno as a result of the Superior Court and Probate Court litigation, this court is reluctant to find liability in favor of the plaintiff as against the Estate of George Bongiorno on the First Count of breach of contract. The court does find as a fact that all the elements of a breach of contract have been met and that George Bongiorno, by failing to pay the $36,075.00, has breached the contract and damages in that amount have been sustained by the plaintiff.
Marie Bongiorno was appointed the Executrix of the Estate of George Bongiorno by the Stamford Probate Court on May 15, 2017. Nizzardo et al. v. Bongiorno, FST CV 17-60322202 S. (#100.31.) That Probate Court appointment and the admission of the underlying Last Will and Testament of George Bongiorno is the subject of an appeal commenced in the Stamford Superior Court on May 25, 2017. See Return of Service in that court file. The plaintiffs in that Probate appeal are Michele B. Nizzardo and Frank Bongiorno, two of the four children of George Bongiorno and Marie Bongiorno. The defendant in that Probate appeal is Marie Bongiorno, the Executrix under the contested will, and one of the three defendants in this liquor store litigation. This Probate appeal is pending on the civil jury docket in Stamford, FST CV 17-6032220 S. Jury selection is scheduled for July 10, 2018 with evidence to follow immediately. This court is unsure of the status of fiduciary orders issued by the Probate Court, District of Stamford. In the event this Probate appeal is successful, Marie Bongiorno may no longer be the Executrix of the Estate of George Bongiorno. A new fiduciary may then be appointed subject to appellate stays, if any. What a new fiduciary may do with this $36,075 claim is best left to speculation. Therefore in order to satisfy the requirements of judicial economy and to bring to an end this relatively simple $36,075 accounting services collection lawsuit, the court will exercise its discretion and find no liability or damages against the decedent’s Estate of George Bongiorno. (#219.01.)
The court now turns to the Second Count sounding in successor liability. The legal principles governing a claim for successor liability in Connecticut were first set forth by the Appellate Court in Chamlink Corporation v. Merritt Extruder Corporation, 96 Conn.App. 183 (2006). " There are two theories used to determine whether the purchaser is merely a. continuation of the selling corporation. Under the common-law mere continuation theory, successor liability attaches when the plaintiff demonstrates the existence of a single corporation after the transfer of assets, with an identity of stock, stockholders, and directors between the successor and predecessor corporations ... Under the continuity of enterprise theory, a mere continuation exists if the successor maintains the same business, with the same employees doing the same jobs, under the same supervisors, working conditions, and production processes, and produces the same products for the same customers." Chamlink Corporation v. Merritt Extruder Corporation, supra, 96 Conn.App. 187-88. " A successor corporation may be held liable for the debts and liabilities of its predecessor when there is an express or implied assumption of liability, the transaction amounts to a consolidation or merger, the transaction is fraudulent, or the transferee corporation is a mere continuation or reincarnation of the old corporation." Robbins v. Physicians for Women’s Health, LLC, 311 Conn. 707, 714-15 (2014).
The court notes that the two above cited cases, Chamlink and Robbins, both involve the transfer of assets from one corporate entity to the another corporate entity. The court further understands that the citations mentioned in this Memorandum of Decision specifically refer the transfers by one corporation to another corporation. The defendants have filed a Memorandum of Law in opposition to the plaintiff’s successor liability claims arguing that under Connecticut law only inter-corporate transfers are the subject of successor liability claims. The defendant further argues that in this case the transfer was from an individual, George Bongiorno, to a limited liability company, Marie’s Liquors, LLC. The defendants therefore conclude that the claim of successor liability has no place in this litigation.
The court recognizes that the legal concept of successor liability was first rendered in Connecticut in 2006 in Chamlink Corporation v. Merritt Extruder Corporation . Following that 2006 decision this court notes that there was not a lot of activity in our trial and Appellate courts on the subject of successor liability. This court has found two cases that discuss the applicability of successor liability in situations other than a transfer from one corporation to another corporation. In 2008 the Appellate Court in Kendall v. Amster, 108 Conn.App. 319, 332 (2008) stated: " The mere transfer of the assets of one corporation to another corporation or individual generally does not make the latter liable for the debts or liabilities of the first corporation except where the purchaser expressly or impliedly agrees to assume the obligations, the purchaser is merely a continuation of the selling corporation ... or the transaction is entered into fraudulently to escape liability ... Under the continuity of enterprise theory, successor liability attaches where the successor maintains the same business, with the same employees doing the same jobs, under the same supervisors, working conditions, and production processes, and produces the same products for the same customers." Kendall v. Amster involved two corporations. The above citation was attributed to Chamlink Corporation v. Merritt Extruder Corporation, which also involved two corporations. The Appellate Court, both in Chamlink and in Kendall two years later, did not limit successor liability to merely a transfer from one corporation to another corporation, since both cases specifically mentioned " or individual" being involved in one of the transfers.
That same citation from the Chamlink Corporation v. Merritt Extruder Corporation was restated by a trial decision of more recent vintage. Lawnranger, LLC. v. Stabnick, Superior Court, judicial district of Hartford at Hartford, Docket Number CV11-6019457 S, (October 29, 2015 Wiese, J.) After citing the above general proposition from Chamlink including the phrase " or individual," the trial court discussed plaintiff’s allegation in this collection case for landscaping services incurred prior to 2006 filed as against David Stabnick and his corporation, Stabnick Landscaping and Design, Inc. In Lawnranger, the plaintiff contends that the corporate entity that was formed in 2006, assumed the pre-2006 debts owed to the plaintiff by David Stabnick individually. Prior to forming the corporation, David Stabnick was engaged in the same landscaping business as a sole proprietor.
The court found that David Stabnick individually owned the landscaping business in which he was a sole proprietor. The business was not an LLC or a corporation. It was located at 25 Custer Street, West Hartford, Connecticut. The evidence at trial indicated that some of the assets of the sole proprietorship business were transferred to Stabnick Landscaping and Design, Inc. when the corporation was created in 2006 and that the business continued to be operated at that same location at 25 Custer Street, West Hartford, Connecticut.
The court then proceeded to analyze both the common-law mere continuation theory as well as the continuity of enterprise theory set forth in Chamlink Corporation v. Merritt Extruder Corp., supra, 96 Conn.App. 187. The trial court found that the proof offered by the plaintiff failed to satisfy either of those two liability theories and found that: " the mere transfer of assets does not make the latter entity liable for the debts or liabilities of the first." The trial court specifically found that the plaintiff failed to satisfy the common-law mere continuation theory because it failed to demonstrate the existence of a single corporation after the transfer of asset with an identity of stock, stockholders and directors between the successor and predecessor. " The plaintiff has also failed to satisfy the continuity of enterprise theory because it did not show that the same employees are doing the same jobs, under the same supervisors, working conditions, and productions process, and producing the same products for the same customers."
Therefore Lawnranger stands for the proposition that a transfer of a business from a sole proprietorship to a later created corporation is subject to successor liability by either the common law of mere continuation theory or the continuity of enterprise theory.
This court rejects the limitation that the defendants state in their Memorandum of Law that the successor liability theory in Connecticut is applicable only where there are two corporations, one at each end of the transaction. This court finds that the successor liability theory in Connecticut, either the common-law mere continuation theory or the continuity of enterprise theory, are applicable to the transfer of a business owned by a sole proprietor in an noncorporate capacity to a later corporate type entity, which then continues to operate the same business. This finding is consistent with the Connecticut Department of Revenue Services requirement of successor liability for sales and use taxes involving a sole proprietor selling to an LLC. IP 2011 (16), paragraph 4, www.ct.gov/drs/cwp/view.asp?A=1510&Q=484796 .
The court recognizes that neither the Chamlink nor Robbins case refers to the successor-liability theory as being applicable to a limited liability company. When the limited liability company form of ownership was created by our state legislature not all of the corporate rules, regulations and statutes were made applicable to LLCs. Since then case law has generally applied corporate statutes and corporate case law to that of limited liability companies. Sturm v. Harb Development, LLC, 298 Conn. 124, 131, fn.7 (2010); Ward v. Gamble, Superior Court, judicial district of Hartford, Docket Number CV08-5017829 S (July 23, 2009, Prescott, J.) ; Savino v. Sullivan, judicial district of Hartford, Docket Number CV10-6013378 S (February 14, 2011, Wagner, J.T.R.). The court therefore finds that his court can treat the defendant, Marie’s Liquors, LLC, as a successor corporate type entity in applying successor liability law. Crown Milford, LLC v. Jackson Law Group, LLC, Superior Court, judicial district of Ansonia/Milford at Milford, Docket Number AAN CV15-6017933 S (November 2, 2017, Brown, J. ).
There were two possible dates of transfer presented before this court at trial. All parties agreed that Bongiorno Maxi Discount Liquor was a sole proprietorship owned solely by George Bongiorno at the commencement of its business and remained solely owned by George Bongiorno until the creation of Marie’s Liquors, LLC. Marie’s Liquors, LLC was created by Articles of Organization dated September 21, 2010 executed and filed with the Connecticut Secretary of State. Ex. 13. In that new LLC, George Bongiorno was named as the sole manager and George Bongiorno was designated as the LLC’s sole member. The LLC was designated as a manager/member LLC. Therefore, the first transfer occurred from George Bongiorno as sole proprietor to Marie’s Liquors, LLC on September 21, 2010. Thus the court must discuss what occurred on September 21, 2010 and thereafter by Marie’s Liquors, LLC in regard to owning, operating and managing the Bongiorno Maxi Discount Liquor business.
The court finds that the plaintiff has sustained its burden to show that after September 21, 2010 Marie’s Liquors, LLC operated with its sole manager George Bongiorno and with its sole member George Bongiorno. It maintained the same business, with the same employees, doing the same jobs, under the same supervisors, working conditions, production process, and produced the same products for the same customers as the former sole proprietorship, Bongiorno Max Discount Liquor. The business was still known as Bongiorno Maxi Discount Liquor after September 21, 2010. The identity of the owner of the business as a sole proprietorship was identical to George Bongiorno individually since after September 21, 2010 George Bongiorno was the sole member and manager of Marie’s Liquors, LLC. The court therefore finds that on or after September 21, 2010, the two successor liability theories of common-law mere continuation theory and the continuity of enterprise theory have been proven by the plaintiff. The court finds that Marie’s Liquors, LLC was and is responsible for the debts prior to September 21, 2010 incurred by George Bongiorno as sole proprietor doing business as Bongiorno Maxi Discount Liquor.
The next transfer that occurred was an infra-LLC type transfer that commenced on October 14, 2010 and was completed on January 9, 2013. Ex. 14, Ex. 17. On October 14, 2010 an Assignment and Transfer of Membership Units in Marie’s Liquors, LLC was executed. Ex. 14. That document stated: " I, George Bongiorno, sole Member of Marie’s Liquors, LLC, do hereby convey, for good and valuable consideration, all right, title and interest of all of my membership units of Marie’s Liquors, LLC, owned by me, to: Name: Marie Bongiorno." Confirming that intra-LLC transfer a July 31, 2012 Purchase and Sale Agreement was executed between George Bongiorno and Marie Bongiorno in regards to Marie’s Liquors, LLC. Ex. 15. Thereafter various documents were filed with the Division of Liquor Control, Department of Consumer Protection, State of Connecticut for Bongiorno Maxi Discount Liquor and liquor permit LIP-12522. That transfer Application was approved and the intra-LLC transfer was permitted by the Division of Liquor Control on January 9, 2013. Ex. 17. Thus the second transfer commenced on October 14, 2010 and formally ended with the formal transfer of the liquor permit on January 9, 2013. During that entire period of time the business and liquor permit was owned by Marie’s Liquors, LLC. The transfer related to the infra-LLC ownership and asset transfer from George Bongiorno as its sole member to Marie Bongiorno as its sole member and George Bongiorno as manager to Marie Bongiorno as manager of Marie’s Liquors, LLC.
Applying the same two theories, the common-law mere continuation theory and the continuity of enterprise theory for successor liability, this court finds during that entire two and half-year period of time from October 14, 2010 to January 9, 2013, the successor maintained the same business, with the same employees, doing the same jobs, under the same supervisors, working conditions, and production processees, and produced the same products for the same costumers. In addition the same name of the business, Bongiorno Maxi Discount Liquors, was retained. A sign on the outside of the liquor store reads: " Bongiorno Maxi Discount Liquor" and that sign was consistently displayed during the sole proprietorship up to this trial. The same liquor permit LIP-12522 was retained. The liquor store at all times operated under that same permit number issued by the Department of Liquor Control of the State of Connecticut.
On the first day of trial the parties entered into the following stipulation: " The parties stipulate that all bills of Bongiorno’s Maxi Discount Liquors that were incurred prior to the takeover of the liquor store by Marie Bongiorno in August of 2012 with the exception of the bills of the plaintiff were paid out of the income of Bongiorno’s Maxi Discount Liquors after the takeover." Ex. 1.
The court further notes that the latest engagement letter of January 1, 2010 is addressed to three separate entities; M&F Car Wash, LLC, Bongiorno Gas Island, LLC, and " Mr. George Bongiorno D/B/A Bongiorno’s Maxi Discount Liquor." Ex. 2. The language of the engagement letter indicates that the plaintiff would prepare the Schedule C for Bongiorno’s Maxi Discount Liquor for the federal individual income tax return of its owner and would prepare the federal and Connecticut partnership tax returns for Bongiorno Gas Island, LLC and M&F Car Wash, LLC. The plaintiff also agreed to prepare Connecticut sales and use tax returns for all three. Maurice Nizzardo as a member of Bongiorno Gas Island, LLC and M&F Car Wash, LLC executed the January 1, 2010 engagement letter on behalf of those two LLCs. George Bongiorno by his own signature individually signed the January 1, 2010 engagement letter. His acknowledgment states: " George Bongiorno D/B/A Bongiorno’s Maxi Discount Liquor." George Bongiorno signed on the line under which was printed " Proprietor." This court finds that the liquor store, since its inception to the current time, has always been known as Bongiorno Maxi Discount Liquor. The court notes that all the evidence of payments of the accounting services to Weinshel, Wynnick & Associates, LLC on file before this court were drawn on checks from a People’s Bank account and its successor bank, People’s United Bank. Each of those checks was preprinted as a checking account belonging to " Bongiorno Maxi Discount Liquor." Ex. 5.
The court notes that the three invoices marked in evidence before this court formed the basis of the plaintiff’s monetary claim. Each invoice was billed to " Bongiorno Maxi Discount Liquor." Ex. 6, 7 and 8. Gen. Stat. § 52-123. No sole proprietorship documents were furnished to this court to indicate the exact proper name of the sole proprietorship. No certificate of trade name was offered in evidence. It appears to this court that the parties treated " Bongiorno Maxi Discount Liquor" interchangeably with " Bongiorno Maxi Discount Liquors," " Bongiorno’s Maxi Discount Liquor" and " Bongiorno’s Maxi Discount Liquors." The court can find no difference or legal significance between the use of " liquor," singular or " liquors," plural.
In analyzing the three invoices, it is noted that each one-page invoice is supported by a multiple-page: " Detail Worksheet." Only the invoice was sent to the client, not the Detail Worksheet. Each of the Detail Worksheets contains more than two hundred entries and verifies the billing in the attached one-page invoice. Each one-page invoice on Exhibits 6, 7 and 8 refer to the nature of the accounting services, the approximate date of the services and contains a monetary total. Two of the Detail Worksheets, Exhibit 6 and 7, contains credits for payments titled " Less Progress Billing" and " Less Previously Billing." Exhibit 7 contains $9,000.00 of credits, which is supported by the two $4,500.00 payments on March 17, 2010 and June 2, 2010. Ex. 5. At the time those credits were furnished, they were applied to the Exhibit 7 invoice for the periods of 2007 to 2009 and yet as of that time an unpaid sum of $9,925.00 remained as shown in invoice 33907. Ex. 6. No explanation was furnished as to why this $9,000 was credited to an interim billing instead of the earlier billing of Exhibit 6, which had a balance due of $9,925.00. This court believes that the two $4,500 payments should be credited toward the earliest billing due or else the defendants would be held responsible for interest charges unnecessarily. Therefore this court finds that the two payments set forth in Exhibits 6 and 7 ($5,600 + $9,000) should be applied to the invoice 33907, Exhibit 6, reducing that invoice to the balance due of $25.00.
Exhibit 6 has its earliest billed date, July 21, 2004. The latest billed services in the Exhibit 6 invoice was dated December 21, 2006 for $114.00 (Exhibit 6, page 3 middle), December 22, 2006 $14.00 (Exhibit 6, page 5 top) and December 21, 2006 $38.00 (Exhibit 6, page 6 top). All of these three billings were within six years from the November 27, 2012 date of service as set forth by the Return of Service in the court file, and therefore would not be subject to the first special defense of the six-year statute of limitations. This court has found already this claim is based upon a written agreement, Exhibit 2 dated January 1, 2010, and the six-year statute of limitations, General Statutes § 52-576, is applicable. This lawsuit is commenced on November 27, 2012. All accounting services contained in Exhibits 6, 7 and 8 that are dated on or after November 27, 2006 are within that six-year period of time and not subject to the statute of limitations. Only $25.00 of Exhibit 6 would be subject to the statute of limitations and this court has already found that more than $25.00 of services that remained outstanding were incurred in late December 2006. The court has examined in detail Exhibits 7 and 8. The court finds that there are no invoices or billings made by the plaintiff in either Exhibits 7 or 8 and contain a date prior to November 27, 2006. The court finds therefore that the unpaid billings of the invoices marked as Exhibits 7 and 8 are outside six-year statute of limitations. It is only the last $25.00 due on the Exhibit 6 invoice that could possibly be subject to the six-year statute of limitation. The court finds that the total of those three invoices is $36,075.00. Ex. 6, 7 and 8.
The court finds that no billings were in the Exhibit 6 or Exhibit 7 invoices from January 1, 2010 thereafter. The court further finds that there were no billings in any of the invoices including those for Exhibit 8, that were billed after January 9, 2013, the date that the Division of Liquor Control permitted the transfer of the manager and membership in Marie’s Liquors, LLC from George Bongiorno to Marie Bongiorno. Ex. 17. This court has not conducted an analysis of the billings and Exhibit 8 between the dates of September 21, 2010 when the Articles of Organization of Marie’s Liquors, LLC were executed and filed with the Connecticut Secretary of State, Exhibit 13, and from October 14, 2010 when the Assignment and Transfer of Membership Units in Marie’s Liquors, LLC was executed, Exhibit 14, and from January 11, 2012 when the Purchase and Sale Agreement between George Bongiorno and Marie Bongiorno was executed, Exhibit 15, nor for the period of time to October 12, 2012 when the Application for Transfer of Interest of the limited liability company was filed with the Division of Liquor Control, Department of Consumer Protection, State of Connecticut on behalf of Marie’s Liquors, LLC, Exhibit 16.
Trial courts have outlined factors in determining whether successor liability should be imposed. " In determining whether or not successor liability should be imposed, it is the duty of the court to examine the substance of the transaction to ascertain its purpose and true intent. Factors relevant to the mere continuation exception include continuity of management; continuity of personnel; continuity of physical location, assets and general business operations; and cessation of the prior business shortly after the new entity is formed. Also relevant is the extent to which the successor intended to incorporate the predecessor into its system with as much the same structure and operation as possible. Thus, the court should determine whether the purchaser holds itself out to the world as the effective continuation of the seller. However, the proponent of successor liability need not necessitate establish all of these factors." Southern Connecticut Gas Co. v. Waterview of Bridgeport Association, Inc., Superior Court, Judicial District of Fairfield at Bridgeport, Docket Number FBT CV 05-4005335 S (June 1, 2006 Owens, J.T.R.).
Marie’s Liquors, LLC is the current Backer. The former Backer was Bongiorno Maxi Discount Liquor. There is currently a sign on the side of the liquor store that is currently being operated by Marie’s Liquors, LLC. It publically, proudly and with a purpose calls itself Bongiorno Maxi Discount Liquor. The same store manager, the same store employees, the same business location, the same landlord, the same shelving, and the former liquor supply were all continued without cessation. Most importantly the same liquor permit and liquor permit number was transferred. There was no need to go through a full liquor permit process, which would have required showing the source of purchase funds, source of business capital, background information, letters of recommendation, and the like since this was a continuation of the Bongiorno liquor business from one family member to another.
The most important asset of the liquor business is its liquor permit issued by the state. The Liquor Control Division, Department of Consumer Protection had issued license LIP-12522 to the Bongiorno family liquor store when it was first owned and operated by George Bongiorno and then doing business as Bongiorno Maxi Discount Liquor. George Bongiorno was both the Permitee and Backer. Later Marie Bongiorno became the Permittee under license LIP-12522, the same license and license number. Marie’s Liquors, LLC became Backer for the same license, LIP-12522. The same business name was being held out to the public, Bongiorno Maxi Discount Liquors. The court finds that the plaintiff has offered persuasive evidence of successor liability under the continuity of enterprise theory and the theory that Marie’s Liquors, LLC is a mere continuation or reincarnation of the old business. The court finds that all the elements of the mere continuation though as well as the continuity of enterprise theory of the business successor liability have been met. The court finds the issues on the Second Count in favor of the plaintiff as against Marie’s Liquors, LLC.
Counts Five and Six claim the equitable relief of unjust enrichment and quantum meruit. These equitable remedies are applicable only when there is no remedy available based upon contract. Gagne v. Vaccaro, 255 Conn. 390, 401 (2001); United Coastal Industries, Inc. v. Clearheart Construction Company, Inc., 71 Conn.App. 506, 512 (2002). Since the court has found a breach of contract and the resulting successor liability in the Second Count as to the defendant, Marie’s Liquors, LLC, the court has already entered relief in the form of a contract recovery. The issues on the Fifth Count and Sixth Count are found for all three defendants.
As an alternative form of relief, in the event this court’s decision on the Second Count finding successor liability as against the defendant, Marie’s Liquors, LLC is overruled, reversed or not sustained for any reason, this court finds that it is appropriate to reconsider this court’s decision on the Sixth Count of unjust enrichment as against Marie’s Liquors, LLC only. " Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefitted, (2) that the defendants unjustly did not pay the plaintiff for the benefits, and (3) that the failure of payment was to the plaintiff’s detriment." Vertex, Inc. v. City of Waterbury, 278 Conn. 557, 573 (2006). This court has already found that all three of the above elements have been proven as against the defendant, Marie’s Liquors, LLC. Having taken over the liquor store business and operating the same business in the same location and fashion and not disputing the accuracy or completeness of the accounting services and having paid all of the prior George Bongiorno’s bills except for the accounting bills, liability under unjust enrichment, in the alternative, only as against defendant, Marie’s Liquors, LLC is warranted.
The Third Count is breach of implied covenant of good faith and fair dealing. " To constitute a breach of the implied covenant of good faith and fair dealing, the acts by which a defendant allegedly impedes the plaintiff’s right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith ... Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one’s rights or duties, but by some interested or sinister motive ... Bad faith means more than mere negligence; it involves a dishonest purpose." De La Concha of Hartford, Inc. v. AETNA Life Insurance Company, 269 Conn. 424, 433 (2004). The only evidence offered by the plaintiff of such a " sinister motive" was the fact that upon the takeover by Marie Bongiorno as Permittee and Marie’s Liquors, LLC as Backer, all previous bills incurred by Bongiorno Maxi Discount Liquor were paid except for the accounting fees at issue in this litigation. The court notes that in the past invoices were not sent out timely by the plaintiff. The invoices in the past were not sent out routinely, such as every month or every quarter. In the past a number of individual Bongiorno family members or other Bongiorno entities paid the accounting fees attributable to the liquor store. This could have caused a delay in the payments thereafter. It is the plaintiff’s obligation to show such a sinister motive. The evidence falls short of that target. The issues on the Third Count of breach of the implied covenant of good faith and fair dealing are found for the three defendants.
The Fourth Count alleges violations of the Connecticut Unfair Trade Practices Act. For such a liability to incur the defendants, both Marie Bongiorno and Marie’s Liquors, LLC, had have to been engaged in the " trade or commerce" for which such a violation occurred. The LLC’s sole business is the purchase and sale of retail liquor. It was not in the business of engaging multiple accountants for the operation of a simple local retail liquor store. McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn.App. 486, 523 (2006). The plaintiff has failed to meet the " trade or commerce" element of a violation of the Connecticut Unfair Trade Practices Act. Gen. Stat. § 42-110a(4); Muniz v. Kravis, 59 Conn.App. 704, 711 (2000); " A CUTPA violation may not arise out of conduct that is merely incidental to the performance of one’s trade or commerce." " A CUTPA violation may not be alleged for activities that are incidental to an entity’s primary trade or commerce." Sovereign Bank v. Licata, 116 Conn.App. 483, 494 (2009).
In addition this is a simple breach of contract lawsuit. There is inadequate proof of any egregious conduct that would warrant a violation of the Connecticut Unfair Trade Practices Act. A simple breach of contract cannot form the basis of a CUTPA violation. Naples v. Keystone Building and Development Corporation, 295 Conn. 214, 227 (2010); Greene v. Orsini, 50 Conn.Supp. 312, 315 (2007) (" A simple breach of contract does not offend traditional notions of fairness and, standing alone, does not offend public policy so as to invoke CUTPA." Id., 315). The issues on the Fourth Count are found for the three defendants.
The court now turns to the six Special Defenses dated November 13, 2017. (#213.00.) It is the defendants’ burden to prove at least one of the Special Defenses. Zabaneh v. Dan Beard Associates, Inc., 105 Conn.App. 134, 140 (2008).
The First Special Defense alleges statute of limitations in violation of Gen. Stat. § 52-576. " No action for an account, or on any simple or implied contract, or on any contract in writing, shall be brought but within six years after the right of action accrues, except as provided in subsection (b) of this section." § 52-576(a). This lawsuit was returned to the Superior Court on December 18, 2012. It was commenced on November 27, 2012. See Return of Service in court file. All three of the initial named defendants, Marie Bongiorno, individually, George Bongiorno individually and Marie’s Liquors, LLC, were served on November 27, 2012. The six-year statute of limitations would affect all billings prior to November 27, 2006. The court notes that after the accounting services were rendered from 2005 to 2006 and George Bongiorno was billed, he made two payments each in the amount of $4,500.00 on account; the first on March 17, 2010 and the second on June 2, 2010. Ex. 5. Payment of those bills acknowledged the viability of the accounting services and acknowledged George Bongiorno’s obligation to pay for those accounting services whether it was in the year 2005, 2006 or thereafter. JSA Financial Corporation v. Quality Kitchen Corporation of Delaware, 113 Conn.App. 52, 55 (2009). The court finds those two payments of $4,500.00 each tolled the statute of limitations. Zapolsky v. Sacks, 191 Conn. 194, 198 (1983). The court finds the issues on the First Special Defense of the six-year statute of limitations for the plaintiff.
The Second Special Defense alleges statute of limitations in violation of Gen. Stat. § 52-581 " No action founded upon any express contract or agreement which is not reduced to writing, or of which some note or memorandum is not made in writing and signed by the party to be charged therewith or his agent, shall be brought but within three years after the right of action accrues." Gen. Stat. § 52-581(a). This court has already found that the accounting services were supported by written contracts, the signed engagement letters. The three engagement letters including the last one of Exhibit 2 cover all of the periods in question. Each of the engagement letters continues on until the next engagement letter. Each of the services rendered was pursuant to a written signed engagement letter executed by George Bongiorno and Weinshel, Wynnick & Associates, LLC. There is no breach of contract claim in this litigation as against Marie Bongiorno, individually or Marie’s Liquors, LLC. The liability of Marie Bongiorno, individually and Marie’s Liquors, LLC is based upon the continued contractual liability of George Bongiorno under the successor liability provisions of Connecticut law. The court finds that the six-year statute of limitations under Gen. Stat. § 52-576 is applicable, not the three-year statute of limitations. The court therefore finds the issues on the Second Special Defense for the plaintiff.
The Third Special Defense of unclean hands is usually not a defense to a breach of contract or of successor liability based upon that contract. Thompson v. Orcutt, 257 Conn. 301, 310 (2001). Unclean hands is an equitable defense. The only two equitable actions in this litigation are quantum meriut and unjust enrichment in Counts Five and Six. Since Counts Five and Six have been found for the defendants, the court finds that the Third Special Defense of unclean hands is not applicable to the plaintiff’s actions at law. Weiss v. Smulders, 313 Conn. 227, 265, fn.19 (2014). " The doctrine of unclean hands expresses the principle that where a plaintiff seeks equitable relief, he must show that his conduct has been fair, equitable and honest as to the particular controversy in issue ... Unless the plaintiff’s conduct is of such a character as to be condemned and pronounced wrongful by honest and fair-minded people, the doctrine of unclean hands does not apply." (Citation omitted.) Bauer v. Waste Management of Connecticut, Inc., 239 Conn. 515, 525 (1996).
The defendants have the burden of proving that the plaintiff engaged in " willful misconduct" for the equitable defense of unclean hands to be invoked. DeCecco v. Beach, 174 Conn. 29, 34-35 (1977). Lateness in sending bills is not " willful misconduct." None of the elements of unclean hands of the plaintiff were proven.
The issues on the Third Special Defense of unclean hands are found for the plaintiff.
The Fourth Special Defense is waiver. The allegations of this Special Defense state: " Plaintiff waived any and all claims to any fees owed for services." " Waiver is the intentional relinquishment or abandonment of a known right or privilege." C.R. Klewin Northeast, LLC v. Bridgeport, 282 Conn. 54, 87 (2007). This is a Special Defense filed by all three defendants. The defendants offered no proof whatsoever on the elements of waiver. No documents, evidence or testimony to that effect was produced at trial. The sending of late bills does not satisfy the Special Defense of waiver. The issues on the Fourth Special Defense of waiver are found for the plaintiff.
The Fifth Special Defense is laches.
The defense of laches, if proven, bars a plaintiff from seeking equitable relief ... First, there must have been a delay that was inexcusable, and, second, that delay must have prejudiced the defendant. (Internal quotation marks omitted.) Id. " The burden is on the party alleging laches to establish that defense." Cummings v. Tripp, 204 Conn. 67, 88, 527 A.2d 230 (1987). " The mere lapse of time does not constitute laches ... unless it results in prejudice to the [opposing party] ... as where, for example, the [opposing party] is led to change his position with respect to the matter in question. (Internal quotation marks omitted.) Fromm v. Fromm, 108 Conn.App. 376, 385-86, 948 A.2d 328 (2008).Caminis v. Troy, 112 Conn.App. 546, 552 (2009).
The delay in sending the bills until June 2012 is not an inexcusable delay. No evidence of prejudice suffered by Marie’s Liquors, LLC has been offered in evidence. The court finds that the defendants have failed to prove both elements of laches by a fair preponderance of the evidence.
The court has already found the two equitable actions, the Fifth arid Sixth Count, in favor of the defendants. The issues on the doctrine of laches in the Fifth Special Defense are found for the plaintiff.
The Sixth Special Defense is ratification. The defendant’s allegations of ratification are: " The plaintiff had actual knowledge that funds being paid in the form of monthly payments in the amount of One Thousand Two Hundred and 00/100 Dollars ($1,200.00) from Bongiorno Supermarket, Inc. were rendered in satisfaction of services provided to the operation of the liquor store. The plaintiff accepted said payments with said knowledge of the factual circumstances and legal consequences associated therewith. The plaintiff accepted said payments with the intent to ratify and/or endorse the factual and legal consequences associated therewith." Not one item of evidence was offered by the defendants in support of ratification as a Special Defense. Virtually no mention of Bongiorno Supermarket, Inc. was before this court other than that is where the liquor store first started. There was no mention of any $1,200.00 payment. No checks, invoices or records of any payments were offered before this court. The issues on the Sixth Special Defense are found for the plaintiff.
The issues on all six Special Defenses, for the reasons stated, are found for the plaintiff.
In the event the alternate form of relief of unjust enrichment as against the defendant, Marie’s Liquors, LLC, in the Sixth Count is invoked, this court now reviews the above cited six Special Defenses that may be applicable under those circumstances. The claim of successor liability is based on the underlying breach of contract. Breach of contract is an action of law. Wolfe v. Wallingford Bank and Trust Company, 122 Conn. 507, 509 (1937).
The First Special Defense is the six-year statute of limitations. There is no statute of limitation as to equitable action of unjust enrichment. Rossman v. Morasco, 115 Conn.App. 234, 256 (2009). In the alternative, the time constraints of the equitable defense of laches may apply to an equitable action of unjust enrichment. Dunham v. Dunham, 204 Conn. 303, 326-27 (1987). The court finds the issues on the First Special Defense for the plaintiff, if that First Special Defense is being applied to the Sixth Count of unjust enrichment.
The Second Special Defense of the three years statute of limitation is rejected for the reasons already stated in this Memorandum of Decision.
The Third Special Defense has already been found for the plaintiff since the defendants failed to prove " willful misconduct."
The Fourth Special Defense has already been found for the plaintiff since the defendants have failed to prove the elements of waiver.
The Fifth Special Defense has already been found for the plaintiff since the defendants have failed to prove either element of laches.
The Sixth Special Defense has not been proven factually by the defendants.
Although Marie Bongiorno is the Permittee of Marie’s Liquors, LLC, no legal authority has been furnished to this court that would impose individual liability on her. " A permittee and backer shall be held strictly liable for any violation of the statutes, regulations, policies and stipulations of the liquor control commission when such violation concerns their permit premises or their applications regarding the proposed permit premises." Debigare v. Department of Liquor Contract, Superior Court, judicial district of Hartford-New Britain at Hartford, Docket Number 35-69-88 (May 15, 1990, Smith, J.). Thus, this rule established the plaintiff’s probable cause in suing the Permittee individually for expenses incurred in the operation of the licensed retail liquor store. Contreras v. 455 Pacific Street, LLC, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket Number FST CV 08-5006917 S (June 30, 2009, Pavia, J.)
Marie Bongiorno is the sole Member and Manager of Marie’s Liquor, LLC. As such she is entitled to be shielded from liability of or from debts of the LLC. Falcone v. Night Watchman, Inc., 11 Conn.App. 218, 220 (1987); Weber v. U.S. Sterling Securities, Inc., 282 Conn. 722, 729-30 (2007). Neither the instrumentality rule nor the identity rule was briefed by the plaintiff. Angelo Tomasso, Inc. v. Armor Construction & Paving, Inc., 187 Conn. 544, 552-54 (1982). There was no separate count of piercing the corporate veil. The court finds insufficient evidence has been offered to this court of piercing the LLC veil. Labbe v. Carusone, 115 Conn.App. 832, 838-39 (2009).
The issues in this trial are found for the defendant, Marie Bongiorno, individually.
The court finds damages in favor of the plaintiff in the amount of $36,075.00 as supported by Exhibits 6, 7 and 8. The court finds that the monies were due from the liquor store business and should have been paid by George Bongiorno. Once Marie’s Liquors, LLC took over as Backer, the LLC should have paid those bills for accounting services in the amount of $36,075.00. The failure to make payment was " wrongful" since the accounting bills were due and their nonpayment has caused additional damages to the plaintiff. Sosin v. Sosin, 300 Conn. 205, 229-30 (2011); DiLieto v. County Obstetrics and Gynecology Group, P.C., 310 Conn. 38, 50-51, fn.12 (2013). The court in its discretion awards the maximum interest permitted by General Statutes § 37-3a at the rate of ten percent per annum. Sears Roebuck Company v. Board of Tax Review of the Town of West Hartford, 241 Conn. 749, 766 (1997).
Although the services rendered as set forth in Exhibits 6, 7 and 8 preceded its billing date of June 21, 2012, it is the plaintiff that was responsible for not sending out timely bills. Therefore the court awards interest at the ten percent rate on $36,075.00 commencing June 22, 2012 to the date of payment. Gen. Stat. § 37-3a(a). Interest from June 22, 2012 to the date of this Memorandum of Decision is $20,562.54, rounded to $20,563. Per diem interest is to accrue thereafter at the rate of $10.02 per diem. This per diem interest is based on a 360-day calendar year. Gen. Stat. § 37-1(a).
The total judgment as of the date of this Memorandum of Decision is $56,638. ($36,075 + $20,563 = $56,638). The court enters judgment in favor of the plaintiff, Weinshel, Wynnick & Associates, LLC, as against Marie’s Liquors, LLC, in the amount of $56,638.
Postjudgment interest on the principal sum of $36,075 shall accrue at the rate of 8.0% percent per anum. Gen. Stat. § 37-1; Sikorsky Financial Credit Union, Inc. v. Butts, 315 Conn. 433, 438-45 (2015). Payments shall be first applied to postjudgment interest, then prejudgment interest and thereafter to the unpaid sum of $36,075.00.
The Superior Court Clerk will tax costs.