Opinion
No. CV00 009 32 08
September 11, 2003
MEMORANDUM OF DECISION
This action originates from a two-count complaint filed on September 11, 2000, by the plaintiff, Alcoa Composites, Inc., against the defendants, Bonded Technology, Inc. (BTI), and Robert C. Miller (Miller), in his capacity as president of BTI In its complaint, the plaintiff alleges, as to each defendant, breach of contract and violation of the Connecticut transfer act (transfer act), General Statutes § 22a-134 et seq.
General Statutes § 22a-134 et seq. govern the transfer of property that generates more than one hundred kilograms of hazardous waste. This statutory framework delineates the filing procedure necessary to implement a change in ownership of such property.
FACTS
In July 1990, the plaintiff leased property located at 14 Alcap Ridge Road, Cromwell, Connecticut (site), from Miller, owner of the site. Prior to the lease, Miller used the site to operate BTI, a company that manufactured honeycomb composite structures. In addition to leasing the premises, the plaintiff purchased BTI's assets and formed the Bonded Technology Division of ACI, which conducted manufacturing operations similar to that previously performed by BTI. In 1993, however, the plaintiff transferred the assets back to the defendants. In accordance with this transfer, the parties signed a letter agreement (agreement), dated July 8, 1993, which addresses various matters pertaining to these transfers, including the allocation of responsibility for environmental issues and compliance with the transfer act.
The pertinent portions of the agreement are as follows:
1. ACI and Miller will share in the cost of removal of the existing etch line at the Alcap Ridge Road property (the "Property") and the cleanup of the chromium contamination of the soil at the Property identified to date in the various consultant reports, a list of which reports is attached hereto as Schedule A (the "Consultant's Reports"). Upon removal of the etch line and demolition and removal of the pit beneath the etch line, the scope of the cleanup to be undertaken will be determined based upon the nature of the contamination found in the underlying soil. Such cleanup will include at least removal of contaminated soil above .05 ppm total chromium directly beneath and in the immediate vicinity of the etch line pit. Thereafter, and as a part of the cleanup process, the Property shall be returned to the same condition that existed prior to the commencement of the cleanup process, provided, however, ACI shall have no obligation to seal or line the line pit nor to replace or reconnect the etch line components. The purchase price set forth in paragraph 10 reflects a $10,000 credit for the purpose of replacing and reconnecting the etch tanks all of which shall be accomplished by Miller. It is understood and acknowledged by Miller that ACI, from the time of completion of the etch line remediation as described herein, shall have no responsibility for nor involvement with the replacement and reconnection of the etch line. Miller shall pay 50% of the costs of such cleanup provided, however, that Miller's share of this remediation project shall in no event exceed $100,000.
2. Miller has agreed that, based on ACI's representation that is has not at any time used, stored, utilized, existed or released on the Property any of the volatile organic compounds ("VOC") which have been identified by the Consultant's Reports in the groundwater and/or soil of the Property or any VOC which normally breaks down into constituent VOCs of the type identified by the Consultant's Reports in the soil and/or groundwater of the Property, he will release ACI from any claim that he has or might have against ACI for the removal or remediation of such VOC contamination. At or before the closing on this agreement, ACI shall provide Miller with a list of all materials, particularly VOCs and copies of all material safety data sheets ("MSDSs") of materials, used, stored, existed, utilized or released by ACI on the Property. If at any time contamination beyond a regulatory action levels or requiring action by any environmental or health agency is found on the Property which may have resulted, either directly or indirectly, from the storage, use, existence or release by ACI of any materials whether set forth on said list, on any MSDS or otherwise, Miller reserves the right to seek contribution from ACI for any costs of removal or remediation or other damages resulting from the storage, use, existence or release of such materials by ACI. This agreement shall not limit or diminish ACI's right to seek contribution from Miller for any costs of removal or remediation or other damages resulting from the storage, use existence or release of hazardous materials prior to July 19, 1990 or after the date of the transfer of assets contemplated by the current transaction.
3. ACI shall be responsible for any and all liability resulting from the noncompliance with or violation of any environmental, health or safety law or regulation, resulting from its operations including without limitation those mattes identified in Schedule B attached hereto and such matters pertaining to its operations at the Property since July 19, 1990 as are more particularly described in the Consultant's Reports. ACI shall utilize its best efforts to remediate, settle or otherwise resolve any existing violation or non-complying conditions prior to the transfer of assets to Miller. Notwithstanding any such transfer, ACI shall remain responsible for and shall indemnify Miller from all liabilities, claims, suits, damages, expenses and costs, including reasonable attorneys fees, that may be incurred by Miller in connection with the responsibility assumed by ACI pursuant to this paragraph 3.
4. In connection with the transfer of assets described in paragraph 9 below, Miller will file a Form III under the Connecticut Transfer Act. Such notice will identify Miller as the party responsible for remediating the Property, with exception of the foregoing. ACI agrees to be responsible for all filing fees incurred in connection with the filing of the Form III.
5. In connection with the transfer of the assets of Bonded Technology Inc. ("BTI") occurring in July 1990, Miller, acting in his capacity as president of BTT, will file a Form III under the Connecticut Transfer Act. Such notice will identify BTI as the party responsible for remediating the Property. ACI and BTI will jointly file a certification in response to a certain Department of Environmental Protection Notice of Violation regarding such 1990 transfer, and ACI agrees to be responsible for all filing fees incurred in connection with the filing of such form III.
Approximately five years later, in June 1998, the commissioner of environmental protection (commissioner) issued orders to the plaintiff and defendants, as well as to a number of other companies that had conducted manufacturing operations on the site, requiring them to investigate and remediate pollution at the site. The plaintiff and defendants appealed the commissioner's order and an administrative hearing was conducted in March and April 2001. The hearing officer upheld the commissioner's findings and determined that the plaintiff and defendants (along with another company) were jointly and severally liable for pollution at the site. The plaintiff appealed this decision to the Superior Court. In Alcoa Composites, Inc. v. Connecticut Dept. of Environmental Protection, Superior Court, judicial district of New Britain, Docket No. CV 01 0511202 (April 29, 2002, Schuman, J.), the court affirmed the agency's decision and dismissed the plaintiff's appeal.
Meanwhile, on September 11, 2000, the plaintiff filed a two-count complaint against the defendants, alleging, as to each defendant, breach of contract and violation of the transfer act. In its prayer for relief, the plaintiff requests the following: (1) an order requiring the defendants to perform the contractual obligations contained in the agreement; (2) a declaration that the defendants are liable for all costs associated with site contamination; (3) an order requiring the defendants to undertake any action required to comply with the transfer act; (4) all costs involved in bringing this action, including attorneys fees; and (5) any other relief as this court deems just and reasonable.
After granting the plaintiff's motions for judgment for failure to appear and for failure to plead, as to BTI and Miller, respectively, the court commenced a hearing in damages, at which the defendants' newly retained counsel sought to introduce four special defenses. The court allowed the defendants' second special defense (i.e., that the plaintiff could not raise a claim of contribution because the Connecticut department of environmental protection (DEP), in a separate proceeding, determined that the parties were jointly and severally liable for contamination on the premises). The plaintiff subsequently filed a motion to strike the special defense, which the court granted.
At the continued July 15, 2002 hearing in damages, the court asked the parties to submit briefs concerning the interplay between the transfer act and the parties' contractual agreement. Following receipt of the parties' briefs, the court issued a decision concerning the scope of damages based on the plaintiff's allegations and prayer for relief. The hearing in damages was concluded on March 25, 2003, after which the parties submitted trial briefs.
DISCUSSION
Arguing that the defendants are obligated through the terms of the agreement and/or by the authority of the transfer act to "assume all environmental investigation and remediation" at the site, the plaintiff asks the court to order the defendants to perform their obligations under the agreement and/or the transfer act, to declare the plaintiff's rights under the agreement, and to award the plaintiff attorneys fees.
In support of its argument, the plaintiff offers the testimony of Michael Scott (Scott), a senior general attorney with the plaintiff's legal department in 1993; in which he states that Miller's signing the form III "was a public acknowledgment of his acceptance of the responsibility for characterization and remediation of the property." (Transcript, March 25, 2003, p. 29.) Although the plaintiff offered Scott as a witness to testify as to the parties' intentions at the time of signing the agreement, Scott did not participate in the negotiations. (Transcript, March 25, 2003, p. 35.) Moreover, his understanding of the agreement, as well as the plaintiff's position, generally, is inconsistent with the clear language of the agreement. Accordingly, the court finds that Scott lacks credibility on this issue.
Specific Performance
The plaintiff asks the court to order the defendants to perform their obligations under the agreement and/or the transfer act. When a plaintiff seeks legal relief, "[a] judgment of default normally requires a two step process. The first step is the entry of a judicial ruling of default, which constitutes a technical admission by the defendant of the truth of the facts alleged in the complaint . . . The second step of the process is the hearing in damages, in which the plaintiff must still prove how much of the judgment prayed for in his complaint he is entitled to receive . . . It is normally only after these two steps are completed that a judgment on default may be tendered." (Citations omitted.) Ratner v. Willametz, 9 Conn. App. 565, 574-75, 520 A.2d 621 (1987). A claim for specific performance is not, however, a claim for legal relief. The doctrine of specific performance "originated in the old equity courts and continues today to be thought of as an equitable remedy, with the usual attributes of such remedies." (Internal quotation marks omitted.) Gager v. Gager Peterson, LLP, 76 Conn. App. 552, 560, 820 A.2d 1063 (2003).
Accordingly, a somewhat different standard applies to default judgments on claims for specific performance. "An action brought by a plaintiff which requests equitable instead of legal relief poses a situation in which a determination of monetary damages in a hearing in damages is not appropriate. The plaintiff, however, is still required to establish his right to receive equitable relief after the entry of default . . . This necessarily entails a hearing in which the plaintiff must prove the matters he has alleged in his complaint . . . Thus, in contrast to a default entered in a legal action, the facts alleged in the plaintiff's complaint are not treated as confessed when a default is entered in an equitable action . . . In equitable as well as legal actions, however, the entry of a default bars a defendant from asserting a defense . . . Thus, the distinction between defaults entered in equitable and legal actions lies merely in what must be proven by the plaintiff in the subsequent hearing on the relief to be granted. In legal actions, the plaintiff must establish that the amount of damages he claimed is appropriate, whereas in equitable actions the principles of equity require that the plaintiff prove the allegations contained in his complaint so that equitable relief may be granted. Thus, in both equitable and legal actions, the plaintiff must establish his right to relief to the court's satisfaction, even though some issues may have been laid at rest by the default." (Citations omitted; internal quotation marks omitted.) Ratner v. Willametz, supra, 9 Conn. App. 575-76.
As to the remedy of specific performance, it "is a form of injunctive decree in which the court orders the defendant to perform the contract . . . The availability of specific performance is not a matter of right, but depends rather upon an evaluation of equitable considerations . . . The determination of what equity requires in a particular case, the balancing of the equities, is a matter for the discretion of the trial court . . . In balancing the equities, the court is not bound by a formula but is free to fashion relief molded to the needs of justice." (Citations omitted; internal quotation marks omitted.) Gager v. Gager Peterson, LLP supra, 76 Conn. App. 560-61. Thus, for example, "[t]he granting of specific performance of a contract to sell land is a remedy which rests in the broad discretion of the trial court depending on all of the facts and circumstances when viewed in light of the settled principles of equity." (Internal quotation marks omitted.) National Harmony, Inc. v. Normand, 211 Conn. 145, 149, 558 A.2d 231, (1989). "Equity depends essentially on the particular circumstances of each individual case. That being so, there can be no established rules and fixed principles laid down for its application, without destroying its very existence and reducing it to positive law." (Emphasis in original; internal quotation marks omitted.) Id., 150. "It is settled law, however, that in an action for specific performance the plaintiff has the burden of proving all of the essential elements of his cause of action and the burden is primarily on him to show his right in equity and good conscience to the relief sought." Cutter Development Corp. v. Peluso, 212 Conn. 107, 114-15, 561 A.2d 926 (1989).
As to the elements of a claim for specific performance, "[w]hen the specific performance of a contract is sought to be enforced, courts of equity will look to the substance of the transaction, to the purpose of the agreement and the real understanding of the parties, whether expressed in the written contract or not, and will never decree the specific performance of a contract when its enforcement will defeat the primary object of the agreement and the real understanding of the parties." Clowes v. Miller, 74 Conn. 287, 295, 50 A. 728 (1901). The intention of the parties in making a contract "is to be determined from the language used, the circumstances, the motives of the parties and the purposes which they sought to accomplish." (Internal quotation marks omitted.) Peter-Michael, Inc. v. Sea Shell Associates, 244 Conn. 269, 276, 709 A.2d 558 (1998). In addition, "[t]o be specifically enforceable, a contract must be fair, equitable, certain and mutual, consistent with policy and made on good consideration." (Internal quotation marks omitted.) Burns v. Gould, 172 Conn. 210, 214, 374 A.2d 193 (1977). The agreement must also be "free from fraud, surprise or mistake." (Internal quotation marks omitted.) Sidor v. Kravec, 135 Conn. 571, 574, 66 A.2d 812 (1949).
Once the court determines that the contract at issue is enforceable, it must consider whether the equities involved will permit the remedy of specific performance. Generally, "[t]he equities on both sides must be taken into account . . . An equity court wisely considers the relative positions of the parties and makes a decree that does substantial justice to all. It is the duty of a court of equity to strike a proper balance between the needs of the plaintiff and the consequences of giving the desired relief . . . [C]ourts should not intervene unless the need for equitable relief is clear, not remote or speculative. Thus, a court of equity should not grant an award which would be disproportionate in its harm to the defendant and its assistance to the plaintiff." (Internal quotation marks omitted.) Gager v. Gager Peterson, LLP, supra, 76 Conn. App. 560 n. 9.
"The relative burden imposed upon the defendant as compared with the benefit the plaintiff will derive from the performance of a contract may be a ground for a court's refusal to direct specific performance. Thus, in determining whether to grant a decree of specific performance, a court may weigh the cost and expense that specific enforcement of the contract in question would impose on the defendant as compared with the benefit the plaintiff would receive from the performance, and the enforcement may be refused if the burden would be much in excess of the benefit. The fact that specific enforcement of a contract would be of little benefit to the plaintiff, but a burden upon the defendant, is also sufficient ground for the court, in its discretion, to refuse to decree its performance. If the specific enforcement of an agreement would result in great injury to the defendant with comparatively little good to the plaintiff, so that the result would be more spiteful than just, equity will not decree specific performance. The discretion of the court will be exercised by refusing specific performance if, in view of changed conditions or other circumstances, a decree would be very unjust to one party, as compared to the material benefit to the other." (Internal quotation marks omitted.) Id., 561 n. 10.
Finally, in entering a decree of specific performance, the court must be mindful that "the primary purpose of a decree of specific performance, which is always an equitable remedy, is to place an injured [party] in a position that replicates, as nearly as possible, that which it would have enjoyed but for the [other party's] unexcused breach." State v. Lex Associates, 248 Conn. 612, 631, 730 A.2d 38 (1999). Thus, "[i]n framing an order of specific performance . . . the trial court can mold it to do justice as fully as is practicable . . . If the exact performance promised is very difficult to enforce or has become impossible, unreasonably burdensome, or unlawful, the court may order a performance not identical with what was promised." (Internal quotation marks omitted.) Sink v. Meadow Wood Country Estates, Inc., 18 Conn. App. 569, 578, 559 A.2d 725, cert. denied, 212 Conn. 809, 564 A.2d 1072 (1989). "If, under the circumstances, specific performance would be inequitable, the relief to be accorded rests in the trial court's sound discretion, to be exercised in light of the equities of the case and using reason and sound judgment." Webster Trust v. Roly, 261 Conn. 278, 284, 802 A.2d 795 (2002).
In this case, the plaintiff has failed to prove that the defendants, by failing to investigate and remediate all pollution on the site, breached the agreement. The plaintiff's position, i.e., that by signing the form III, the defendants are solely responsible for investigating and remediating pollution at the site, is untenable in light of the unambiguous contract language limiting the defendants' responsibility.
The form III provides that the certifying party agrees to take responsibility for pollution of environmental property found on the property being transferred.
In paragraph four of the agreement, the parties assign Miller responsibility to file the form III with regard to the 1993 transfer, "which will identify Miller as the party responsible for remediating the Property, with exception of the foregoing." (Emphasis added.) For purposes of apportioning responsibility for remediating pollution at the site, the critical words in paragraph four are "with the exception of the foregoing," given that the "foregoing" includes three paragraphs in which the parties articulate their respective obligations with regard to redressing environmental contamination at the site. In fact, in paragraph three of the agreement, the parties agreed that the plaintiff would be responsible for "any and all liability resulting from the noncompliance with or violation of any environmental, health or safety law or regulation, resulting from its operations including without limitation those matters identified in Schedule B attached hereto and such matters pertaining to its operations at the Property since July 1990 as are more particularly described in the Consultant's Reports." Additionally, paragraphs one and two articulate duties and obligations specific to the plaintiff. Thus, according to the agreement, the defendants are not solely responsible for investigating and remediating pollution at the site. Even though the defendants filed the form III, the parties agreed that the plaintiff would be responsible for remediating any contamination resulting from its operations.
At the July 15, 2002 hearing, the court noted the incongruity between the words "with exception of the foregoing" and the plaintiff's position. The plaintiff addressed this issue only in its reply brief, wherein the plaintiff emphasized the words " the party responsible," though never discussed the significance of "with exception of the foregoing." Moreover, the plaintiff completely omitted "with exception of the foregoing" when it referred to paragraph four of the agreement in its trial brief. (Plaintiff's Post-Hearing Brief, p. 3.)
The court notes that the consultant's reports were never provided for review, although five were referenced as schedule A, which was attached to plaintiff's exhibit 1. Schedule B references, inter alia, numerous instances in which the DEP named the plaintiff's Bonded Technology Division as a defendant for violating the DEP's waste management regulations, as well as for violating its wastewater permit.
Consistent with the division of responsibilities described in the prior paragraphs, the 1990 form III would apply to remediation of contamination that occurred prior to the 1990 transfer, which would be the defendants' responsibility.
The court agrees, however, that, absent the contractual language, the defendants would be required under the transfer act to remediate the property, because, having signed the form III, Miller was the "certifying" party. See General Statutes § 22a-134. The pertinent question, therefore, is whether the parties can enter into a contract to alter this responsibility. In Dixon Venture v. Joseph Dixon Crucible, 122 N.J. 228, CT Page 10755 584 A.2d 797 (1991), the New Jersey Supreme Court answered this question in the affirmative, with regard to a similar statute. In that case, the court examined the relationship between the parties' contractual agreements and the Environmental Cleanup Responsibilities Act (ECRA). Noting that "[t]he ECRA statute does not preempt the law of contracts"; id., 324; the court determined that, where parties enter into a contract with the knowledge that ECRA applies, and the contract does not shift ECRA responsibilities to the buyer, the statute imposes strict liability for the cleanup on the seller. Id., 232. Here, by way of the agreement, the parties contractually shifted responsibilities under the transfer act. The defendants were responsible for remediating the property, "with exception of the foregoing," i.e., the numerous responsibilities to be undertaken by the plaintiff.
The Connecticut legislature examined the ECRA prior to passing the transfer act in 1985. Connecticut passed a less "drastic" version of the New Jersey Act. See Comments of Senator O'Leary, Wednesday, May 1, 1985, Senate Proceedings, pp. 1803-04.
The court has considered the substance of the transaction, the purpose of the agreement and the intention of the parties in executing the agreement, and finds that the plaintiff has failed to prove by a preponderance of the evidence that the defendants' failure to perform all investigation and remediation of pollution at the site constitutes a breach of the agreement. The agreement specifically apportions responsibility for remediation between the parties. Because the plaintiff has failed to prove all of the elements of its cause of action, the court will not order specific performance. This determination is in accord with equitable considerations. The DEP found, and the Superior Court affirmed, that the parties are jointly and severally liable for remediating the site. The Commissioner of Environmental Protection has expressed concern that an order by this court could contravene the authority and directives already issued by the DEP. Apart from an enviromnental investigation performed on behalf of the plaintiff, there is little evidence before this court of any actions undertaken by the plaintiff to remediate pollution at the site. Rather, despite the DEP's finding that the plaintiff is partly responsible for contamination at the site, the plaintiff seeks to place the entire burden of cleanup on the defendants, even though the defendants have already conducted an investigation of the site and expended approximately $150,000 towards remediation. (Transcript, March 25, 2003, pp. 131-33.)
Moreover, a third party has commenced remediation efforts on the site. (Transcript, November 29, 2001, p. 39.) Under these circumstances, there is insufficient evidence to allow this court to determine to what degree specific performance would be duplicative of the efforts already undertaken, or to tailor an order for specific performance. The plaintiff argues that the defendant has the right to seek indemnification from Alcoa, under the agreement, for money spent remedying Alcoa's contamination. This would entail additional litigation, and under the circumstances would be unfair to the defendant.
Declaratory Judgment
The plaintiff next asks the court to declare the plaintiff's rights under the agreement, i.e. a declaration that the defendant is liable for all costs of the site contamination. Generally, a declaratory action is appropriate to secure adjudication of rights where there is substantial uncertainty of legal relations between the parties or a substantial question in dispute. Mannweiler v. LaFlamme, 232 Conn. 27, 33, 653 A.2d 168 (1995). "In a declaratory judgment action, the prayer is not that the court declare that the plaintiff has certain rights and immunities but rather that the court determine the question whether he does have such rights and immunities." United National Indemnity Co. v. Zullo, 143 Conn. 124, 131, 120 A.2d 73 (1956). Because the agreement specifically states that the plaintiff will bear some responsibility for remediating pollution at the site, the court finds that the defendants are not liable for all costs associated with site remediation. Thus, the court finds in favor of the defendants as to the plaintiff's request for declaratory relief.
Attorneys Fees
The plaintiff also asks the court to award the plaintiff all costs involved in bringing this action, including attorneys fees. "[A]bsent contractual or statutory authorization, there can be no recovery, either as costs or damages, for the expenses of litigation or the expenditures for counsel fees by a party from his opponent . . . Where a contract expressly provides for the recovery of reasonable attorneys fees, an award under such a clause requires an evidentiary showing of reasonableness . . . A trial court may rely on its own general knowledge of the trial itself to supply evidence in support of an award of attorneys fees . . . The amount of attorneys fees to be awarded rests in the sound discretion of the trial court and will not be disturbed on appeal unless the trial court has abused its discretion." (Citations omitted; internal quotation marks omitted.) Buccino v. Cable Technolopy, Inc., 25 Conn. App. 676, 679, 595 A.2d 376 (1991). "Sound discretion, by definition, means a discretion that is not exercised arbitrarily or wilfully, but with regard to what is right and equitable under the circumstances and the law . . ." (Internal quotation marks omitted.) Krasowski v. Fantarella, 51 Conn. App. 186, 199-200, 720 A.2d 1123 (1998), cert. denied, 247 Conn. 961, 723 A.2d 815 (1999).
As the parties' agreement does not provide for the recovery of attorneys fees by the plaintiff, the plaintiff must establish that it is entitled to attorneys fees under § 22a-134b, which states that "[f]ailure of the transferor to comply with any of the provisions of Sections 22a-134 to 22a-134e, inclusive, entitles the transferee to recover damages from the transferor, and renders the transferor of the establishment strictly liable, without regard to fault, for all remediation costs and for all direct and indirect damages." This section provides a private cause of action based on violation of the transfer act, and holds the transferor strictly liable for the cost of remediation as well as for all direct and indirect damages.
The plaintiff argues that the language of § 22a-134b should be construed as meaning that the "certifying" party, rather than the transferor, can be held strictly liable. (Transcript, March 25, 2003, p. 6.) This interpretation, however, contradicts the express language of the statute; see Marsala v. Bridgeport, 15 Conn. App. 323, 326, 544 A.2d 191 (1988) ("there is no room for statutory construction where the legislative intent is clear"); which provides a private cause of action by the transferee as against the transferor. Accordingly, because the plaintiff has not prevailed on its underlying claim, and the defendants were not the transferors in the 1993 transaction, the plaintiff is not entitled to recover attorneys fees or costs in this case.
CONCLUSION
For the reasons stated above, the plaintiff has failed to establish by a preponderance of the evidence that it is entitled to damages by way of an order for specific performance, declaratory relief or attorneys fees. Judgment may enter on the plaintiff's behalf for $1.
It is so ordered.
WOLVEN, J.