Opinion
No. CV04 0286297-S
December 20, 2005
MEMORANDUM OF DECISION
This case was initiated by a writ, summons and complaint dated December 2, 2003, and made returnable January 13, 2004. The parties appeared for trial, with counsel on November 29, 2005, and the case was tried to the court (Shluger, J.).
The plaintiff, a dry cleaning and uniform rental company claimed that it entered into a contract with the defendant, an equipment company. Pursuant to the contract dated February 21, 2002, and duly signed by each party, the plaintiff agreed to prepare and supply uniforms for the defendant's employees for a three-year term. Pursuant to said agreement, the plaintiff further agreed, for a fee, to embroider the first name of each employee and affix an emblem onto each uniform depicting the defendant's logo. The first uniform delivery was scheduled for March 18, 2002 and on March 15, 2002, the defendant contacted the plaintiff and indicated its intention to breach the contract and accept no deliveries pursuant to the contract. Thus, no deliveries were made and no billing was sent.
As a result of the breach, the defendant offered to pay to the plaintiff a reasonable fee for the actual losses which the plaintiff incurred for the emblem and embroidering. The parties agreed that $500 would be sufficient. The plaintiff issued an invoice dated April 11, 2002, in the amount of $500 which was paid by the defendant.
The contract contains a liquidated damage clause at paragraph eight which states as follows: "If the customer breaches this agreement, customer shall pay supplier, in addition to the payments required by paragraph three and four, (50%) of the average weekly billing from the date of the breach to date of termination, together with reasonable attorneys fees, costs and expenses incurred by supplier in the collection of any amount due." There was no evidence presented as to costs, attorneys fees or payments pursuant to paragraphs three and four.
The question presented is whether this liquidated damage clause is enforceable.
It is well held that liquidated damage clauses are enforceable if three conditions exist:
1. The damages which were to be expected as a result of a breach of contract were uncertain in amount or difficult to prove;
2. There was an intent on the part of the parties to liquidate damages in advance; and
3. The amount stipulated was reasonable.
Norwalk Door Closer Co. v. Eagle Lock Screw Co., 153 Conn. 681, 686 (1966).
While the parties disagree as to whether or not these three conditions exist, the court need not reach that conclusion as the defendant has raised an objection to the court considering the liquidated damages clause whatsoever. The defendant argues that based on the holding in Sanitary Serv. Corp. v. Greenfield Village Assn., 36 Conn.App. 395 (1994), the liquidated damage clause is impossible to apply. In that case, the court found that the defendant had breached the contract before there was any revenue or performance on the part of the plaintiff. The court held "when the calculation of a liquidated damages clause is based on revenue, and the contract is breached before there is any revenue, the liquidated damages clause is impossible to apply and does not control the award of damages. Id. at p. 400. The case at bar is remarkably similar. In both cases, the breach occurred before there was any revenue generated or bill sent. The plaintiff argues that the cases are distinguishable because in Sanitary Serv. Corp. v. Greenfield Village Assn., supra, the breach occurred before there was any performance whatsoever, and in the instant case, the breach occurred after the plaintiff had performed the embroidery and emblem work. This distinction is minimal at best in that the contract was for the rental and supply of uniforms and not for embroidery work. Moreover, the language of the Sanitary Serv. Corp. v. Greenfield Village Assn., case refers to there being revenue generated pursuant to the contract and no revenue was in fact, generated. See, Granato v. Benettiere, 5 Conn. Cir.Ct. 150 (1968).
Having concluded that the plaintiff cannot be awarded liquidated damages, the court must consider whether the plaintiff is entitled to seek actual damages. The plaintiff neither plead nor proved any actual damages. Moreover, there was uncontroverted evidence that the parties discussed the actual damages incurred for the embroidery and emblem work and reached an accord and satisfaction, in the amount of $500. As a result, any claim for actual damages would be moot.
There is no doubt that the defendant breached the contract but the court finds that, as a matter of law, no damages are to be awarded. Judgment shall enter in favor of the plaintiff for zero damages.