March 12, 2004
MEMORANDUM OF DECISION
This is an action by a manufacturing company against the developer of a product designed to reduce the danger of fire spreading throughout buildings. The parties signed a contract as to their respective roles on June 12, 1999. (Plaintiff's Exhibit 1.) The manufacturing company (Super Stud) claims damages as a result of the developer's (Wesconn) failure to pay for items ordered and manufactured by Super Stud.
Wesconn generally denies the claim, while at the same time, indicating that the amount of the claim is overstated. Wesconn also counterclaims that Super Stud has violated the contract to his economic harm.
By way of prologue, the court notes that Super Stud is a large manufacturing operation based in New York which operates from as far south as Pennsylvania, as far west as Ohio, and all of the New England states. Wesconn is a much smaller operation operating only in Connecticut and was described as a "mom and pop" type business. Super Stud is admittedly the more knowledgeable party in terms of manufacturing and marketing. For reasons known and unknown, this business world "marriage" did not work out. The principals of Wesconn gave great deference to Super Stud, that deference was still evident during the trial. Although there was an existing contract between the two, it is clear to the court that Wesconn's principal felt trepidation to enforce it literally during the times in question. Regardless of the contract, both sides seem to have had loosey goosey personal dealings. They were hardly fastidious in billing, paying or following the contract.
The starting point of the legal conflict starts with a purchase order from Wesconn to Super Stud dated March 13, 2000. (Plaintiff's Exhibit 2.) The order was for 25,000 lineal feet of the product for the Stamford Courthouse. Oddly the order did not contain a purchase price or dollar amount. In response to that order Super Stud shipped 7,200 lineal feet of the product to Wesconn with an invoice for $11,520.00. (Plaintiff's Exhibit 3.) There was no breakdown of how that price was arrived at although the contract seems to require that that be done in Paragraph 4. This amount was not paid for some time. During this period Wesconn had discovered a huge employee embezzlement and they were inundated with police, bank and insurance investigators. Wesconn principal, Timothy Vellrath testified that he never admitted to Super Stud that he owed the amount he was claiming. His wife Patricia issued a check in the invoice amount, allegedly under pressure from Raymond Frobosilo, the president and founder of Super Stud. Vellrath testified with regard to that payment when asked if he admitted that he owes the $11,520.00, "Never. Never. In fact, to the contrary because I was upset with him talking my wife into paying him . . ." (Transcript p. 88.) Vellrath then testified
Well, I was talking to him. And I'm saying, Ray, we got to talk about this. But he wanted to get paid. So he goes to my wife and says, Look, you go to pay or I'm going — what ever he said to her, I don't know. But he intimidated her to such that she paid him in full for the things. And I talked to her and says, Look, he didn't do these things. But I also did the math and it comes out to be what his out-of pocket expenses should be. So I figure well —
What do you mean by that?
Well, I knew that he didn't have any — we didn't have any problems for him or for me. I knew there were no distribution costs because there were no distributors. There was no shipping to distributors because there weren't any. And there weren't any salesmen so there weren't any sales commissions. So there's a lot of things that he didn't do that are built into that $1.60.
(Transcript p. 89.)
Vellrath made a breakdown of the services later claimed by Super Stud to constitute the $11,520.00 invoice and compared them to the actual cost that should have been billed. (Defendant's Exhibit 4.)
The court finds Vellrath's testimony on this point to be credible and was largely unchallenged by Super Stud. The court therefore finds that the actual value of the product invoiced was $4,358.16 which means that at this point Wesconn overpaid $7,161.84.
The second claim by Super Stud is based upon the assertion that it has manufactured and boxed for shipment (but not shipped) another 9,200 lineal feet of the product pursuant to the original purchase order of Wesconn for 25,000 lineal feet. This seemingly undated invoice requests, again without a breakdown, the amount of $14,720.00. Upon review of Wesconn's breakdown of costs and services provided, contrasted with those of Super Stud's basis, there again is a discrepancy. That, based upon the credibility of Vellrath, and the lack of serious challenge by Super Stud, the court finds the dollar amount of this unshipped product to be $5,384.00 (Defendant's Exhibit 3.)
Subtracting the later amount from the overpayment on the first claim, Wesconn is owed $1,777.84 thus far.
Super Stud next claims damages in the amount of $6,778.00 for the manufacturing of a special dye for the product. This invoice, seemingly addressed to no one, was prepared one week before this lawsuit was filed. This claim is based solely upon the parties' contract. The contract does indeed provide for such payment. However, the contract specifically provides that it will be paid "from first future profit." Because of factors contributed to by both parties, as will be seen, there was never any "profit" and therefore this claim is denied.
Super Stud's final claim is for materials it has in hand for the completion of the original purchase order of 25,000 lineal feet. This invoice, seemingly addressed to no one, was also prepared one week before this lawsuit was filed. This invoice is for $6,343.20. (It includes a claim for cartons for the product, among other things. Wesconn convincingly showed that the Super Stud bill for the cartons was triple the market value and likely obtained from Super Stud's principal's brother-in-law.) The invoice claims a debt of $6,343.20. The court finds that the more credible and reasonable amount is $4,693.29. There was no serious challenge to this amount. Giving Wesconn credit for its previous surplusage against the latter amount, it is indebted to Super Stud in the amount of $2,915.45.
Now to Wesconn's counterclaims. This contract never worked. The court cannot find either side blameless in this regard. As examples, Super Stud was perhaps dilatory in its marketing efforts. Wesconn was dilatory in not following the contract's provision to put such complaints in writing. "[O]ne cannot recover upon a contract unless he has fully performed his own obligation under it, has tendered performance or has some legal excuse for not performing." DiBella v. Widlitz, 207 Conn. 194, 199, 541 A.2d 91 (1998) (emphasis added); see also Automobile Ins. Co. v. Model Family Laundries, Inc., 133 Conn. 433, 436 (1947). There is also another serious factor here that caused this business divorce. And that is when Wesconn was not allowed to do the Stamford Courthouse which was the reason it ordered the 25,000 lineal feet of product in the first place.
The court also notes that the contract provided that "any disagreements between the parties concerning the terms of this agreement OR ANY OTHER MATTER between the parties such argument shall be settled by arbitration between the parties . . ." The court is not aware that either party followed this contract provision.
The First Count of Wesconn's counterclaim is based upon the alleged breach of contract. As mentioned, both sides ignored this contract and failed to follow its terms. (And, in the case of these counterclaims the first time they were advanced was AFTER the lawsuit!) The specific claims for damages made by Wesconn in its First Count are:
a) Approximately $18,000.00 paid to Underwriters Laboratory.
Even if the contract were viable, the Court notes that these expenses were not clearly covered by the terms of the contract. Further, $16,786.80 of these expenses were incurred before the parties entered the contract.
b) Approximately $4000.00 paid out to obtain the patent for said product.
Again, even if this contract were viable, it does not clearly obligate Super Stud to be responsible for patent costs. Paragraph 15 of the contract merely recites that Wesconn has, prior to the contract, filed for a patent and that if Wesconn obtains such patent it would be obligated to allow Super Stud to use it exclusively and not assign it to anyone else without complying with other requirements of the contract. There is no direct mention of Super Stud's financial responsibility for patent costs incurred by Wesconn. Wesconn owns the patent and can do what it will with it.
c) Approximately $2,500.00 for drawings of said product.
There is absolutely nothing in this contract that obligates Super Stud to pay any such claims.
The court denies the First Count and finds for Super Stud.
With regard to the Second Count of the counterclaim, the court considers it moot in view of its prior findings regarding the payment of $11,520.00 made to Super Stud by Wesconn under duress. This counterclaim is also denied and the court finds for Super Stud.
This was a business gamble that could and should have won. The parties have only themselves to blame for the loss.
Judgment shall enter for Super Stud in the amount of $2,915.95.
By The Court,