Opinion
No. CV 02 0818589 S
December 26, 2003
MEMORANDUM OF DECISION
This matter was tried to the court on October 21, 24, and 28, 2003. Thereafter, pursuant to a briefing schedule, the parties submitted memoranda of law, in lieu of oral argument the last being filed on November 26, 2003. After considering the evidence and the arguments of the parties, the court issues this memorandum of decision.
I. Background
In his amended complaint (#102), the plaintiff, Paul Corey, dba United Cabinetry (Corey), claims that the defendants Eric Hobert and Heidi Hobert breached their contract with him, under which they agreed to pay $43,285.00 for the installation of cabinets at their home on Feldspar Ridge in Glastonbury, Connecticut. He claims that, although he completed his work, an unpaid balance remains due from the Hoberts. In addition, pursuant to the contract, he seeks an award of attorneys fees. In the second count, he seeks damages from the Hoberts based on a claim of unjust enrichment.
For ease of reference, Eric Hobert will be referred to as "Hobert."
In their answer (#107), the Hoberts deny that they owe Corey. As special defenses, they allege that they have paid all sums which are due to Corey and that they paid the general contractor, third-party defendant Guimares Construction, Inc. (GCI), in full, for the cabinetwork performed at their house.
In his amended third-party complaint (#115) against GCI, Hobert alleges that he and GCI entered into a building contract for the construction of the home at Feldspar Ridge and that the cost of the cabinets and their installation was included therein. Hobert alleges that he paid GCI by check for the full amount of the construction work to be performed pursuant to that contract, including the installation of the cabinets, but that GCI has failed to pay "its subcontractor," (Corey) for said work. See third-party complaint, ¶ 4. Hobert seeks money damages and indemnification from GCI for any judgment rendered in favor of Corey.
The agreement between Hobert and GCI will be referred to as the "building contract" or the "building agreement." See Exhibit A.
While GCI asserts, in its reply brief, p. 2, that Hobert did not plead that he paid everything he owed under the building contract, GCI's contention ignores this part of the third-party complaint.
In its answer to the third-party complaint (#116), GCI denies Hobert's allegations and asserts two special defenses, payment and accord and satisfaction. GCI also filed a counterclaim against Hobert (#117), in four counts. In count one, GCI claims that Hobert breached the building contract with GCI by failing to pay an outstanding amount. In count two, count one's factual allegations are re-pleaded, and GCI asserts that Hobert has breached the covenant of good faith and fair dealing. Under count three, GCI also re-pleads the allegations from count one and contends that Hobert converted GCI's funds.
Count four of the counterclaim is premised on a claim of slander. GCI claims that Hobert falsely and maliciously reported to the Internal Revenue Service and other governmental agencies that GCI, through its president, Peter Guimares (Guimares) was cheating on income tax returns. In addition, GCI also pleads that it has a right of set off against Hobert, based on its allegations in the first and fourth counts. GCI seeks damages and, as to counts three and four, punitive damages.
In his answer to GCI's counterclaims (#119), Hobert denies GCI's allegations. In addition, by amendment dated October 21, 2003, Hobert filed a special defense, in which he alleged that, pursuant to 26 U.S.C. § 6103, all communications to the Internal Revenue Service are confidential and not subject to disclosure.
II. Discussion
As discussed below, several of the issues in this matter turn on assessments of credibility. As the trier of fact, the court must resolve a credibility contest. See State v. Nowell, 262 Conn. 686, 695, 817 A.2d 76 (2003); Lacic v. Tomas, 78 Conn. App. 406, 409-10, 829 A.2d 1, cert. denied, 266 Conn. 922 (2003). "The determination of a witness' credibility is the special function of the trial court." State v. Nowell, supra, 262 Conn. 695. "[I]t is the trier's exclusive province to weigh the conflicting evidence, determine the credibility of witnesses and determine whether to accept some, all or none of a witness' testimony." (Internal quotation marks omitted.) Hoffer v. Swan Lake Assn., Inc., 66 Conn. App. 858, 861, 786 A.2d 436 (2001).
A. Corey's Claims Against the Hoberts
Corey and the Hoberts entered into a written contract for the installation of cabinetry at the Hoberts' home. See Exhibit 1. The contract price was $43,285.00. In large letters, on the top of the first page, Exhibit 1 states that it is a "Contract." On the second page, Exhibit 1 states, in capital letters, "THIS IS A CONTRACT, NOT AN ESTIMATE."
Although signed only by Hobert and not by Heidi Hobert, Hobert testified that, with his wife's permission, he had entered into the contract with Corey on behalf of himself and Heidi Hobert, his wife, as owners of the property on which their house was built. Corey testified that he dealt extensively with both Hoberts. Also, Heidi Hobert signed Exhibit T, stating that Corey's work had been completed. Exhibit 4, a stipulation concerning payments made to Corey, was presented on her and Hobert's behalf. The Hoberts were represented by the same counsel at trial. Her counsel did not contend at trial or in their trial memorandum that she was not a party to the contract with Corey.
On the first page, it states, "Homeowner agrees to pay for all work as set forth below. If the homeowner defaults, homeowner agrees to pay all costs of collection, including reasonable attorneys fees, in addition to other damages incurred by contractor." See Exhibit 1.
Corey's work, including punchlist items, was completed, as acknowledged by the Hoberts. See Exhibit T. Corey finished his work on January 21, 2002, according to his testimony. The Hoberts acknowledge that Corey completed the cabinets on or about January 28, 2002. See Hoberts' trial memorandum, p. 5. The court assumes that the reference to January 28, not January 21, is a typographical error.
Corey received a total of $27,102.71 as payment for the cabinets provided by him to the Hoberts. Of this sum, the Hoberts paid $8,285.10. See Exhibit 4. Thus, an unpaid balance remained due, from the Hoberts to Corey, according to the contract, Exhibit 1, in the amount of $16,182.29.
Although Hobert acknowledged in his testimony that he signed Exhibit 1, the contract between himself (and his wife) and Corey, he also contended, on cross-examination, that Exhibit 1 is not a contract. The court does not credit this statement, and notes that this contention is not advanced in Hobert's trial memorandum. See Hoberts' trial memorandum, p. 2.
Likewise, the court does not credit Hobert's contention that it was Hobert's understanding that he was only obligated to pay the difference between the contract price stated in Exhibit 1 and the allowances set forth in the building contract with GCI. See Exhibit A. Exhibit 1, the Hobert-Corey contract, does not so provide.
The rules concerning contract interpretation and enforcement are well settled. "A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract . . . Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms." (Internal quotation marks omitted.) Niehaus v. Cowles Business Media, Inc., 263 Conn. 178, 188, 819 A.2d 765 (2003).
The Hoberts do not claim that their contract with Corey is ambiguous. Instead, they claim that they were led by Corey to believe that they were only responsible to pay to Corey the amount which exceeded the allowances afforded them in their building contract with GCI and that the rest would be paid to Corey by GCI. Thus, they rely on parol evidence.
"The parol evidence rule is a substantive rule of contract law that prohibits the use of extrinsic evidence to vary or contradict the terms of an integrated written contract." (Internal quotation marks omitted.) Sims v. Honda Motor Co., 225 Conn. 401, 416, 623 A.2d 995 (1993). "[O]ne purpose of the parol evidence rule is to secure business stability." (Internal quotation marks omitted.) Id., 416-17. The rule does not prevent consideration of parol evidence in limited circumstances. See id. "For instance, Connecticut allows extrinsic evidence of the parties' intent to show that a written contract is founded in mistake or fraud." Id., 416.
1. Mistake
In their trial memorandum, the Hoberts advance the doctrine of unilateral mistake in support of their opposition to Corey's claims. They seek reformation of their contract with Corey. See Hoberts' trial memorandum, pp. 8-11.
The Hoberts filed no counterclaim against Corey. Their special defenses to Corey's complaint do not raise either unilateral mistake or reformation. A litigant "may not allege one cause of action and recover upon another . . ." Treglia v. Zanesky, 67 Conn. App. 447, 458, 788 A.2d 1263 (2001), cert. denied, CT Page 14365 259 Conn. 926, 793 A.2d 252 (2002). A court may not render judgment on the basis of a legal theory that was never asserted in the pleadings. See Pergament v. Green, 32 Conn. App. 644, 654, 630 A.2d 615, cert. denied, 228 Conn. 903, 634 A.2d 296 (1993).
A cause of action for reformation rests on equitable grounds. See Traggis v. Shawmut Bank Connecticut, N.A., 72 Conn. App. 251, 258, 805 A.2d 105 (2002). "The allegations must make out a case for the equitable remedy asked, and if mistake is relied on, it must be precisely and distinctly charged; . . . this the present pleadings fail to do." (Citation omitted.) City Iron Works, Inc. v. Frank Badsteubner Post No. 2090, 22 Conn. Sup. 230, 231, 167 A.2d 462 (1960).
The request for reformation was raised for the first time, after trial, in the Hoberts' trial memorandum. Since Corey was not apprised in the pleadings of the Hoberts' claims of unilateral mistake and reformation, the court may not adjudicate them.
In addition, the court finds the argument for unilateral mistake to be unpersuasive. The concept that a contract will not be enforced due to mistake "rests on the equitable theory that the instrument sought to be reformed does not conform to the real contract agreed upon and does not express the intention of the parties and that it was executed as the result of mutual mistake, or mistake of one party coupled with actual or constructive fraud, or inequitable conduct on the part of the other." Lopinto v. Haines, 185 Conn. 527, 531, 441 A.2d 151 (1981).
To prevail on a claim of unilateral mistake, where fraud is absent, but the party claims that inequitable conduct led to his mistake, his burden of proof is that of presenting clear and convincing evidence. See Lopinto v. Haines, supra, 185 Conn. 534-35.
Here, the Hoberts do not claim fraud. Instead, they claim that Corey's conduct was inequitable. See Hoberts' trial memorandum, p. 10. Our Supreme Court, in Lopinto, cautioned that, in assessing whether a party has met the clear and convincing burden, relief is forbidden "whenever the evidence is loose, equivocal or contradictory." (Internal quotation marks omitted.) Lopinto v. Haines, supra, 185 Conn. 539. As set forth below, the court does not credit the Hoberts' contentions, let alone find that they rise to the level of clear and convincing proof.
As to unilateral mistake, coupled with inequitable conduct, Hobert's contentions revolve around the ideas that "all parties understood that funds paid for the cabinetry allowances ($36,000.00) under the building contract would be paid to Corey for installation of cabinetry," see Hoberts' trial memorandum, p. 9, and that "had Corey informed [Hobert] that he would be personally liable for the full amount of the cabinetry contract price, Dr. Hobert would not have entered into the cabinetry contract, especially after already contracting to pay Guimares allowances totaling $36,000.00 for cabinetry. Such non-disclosure or omission by Corey constitutes inequitable conduct on his part." See Hoberts' trial memorandum, p. 10.
The Hoberts also presented the testimony of their neighbor, Michael Esposito, who discussed his experience in having cabinets supplied by Corey for his home, which also was built by GCI, as his general contractor. His testimony had minimal probative value. While he testified that he entered into a contract with Corey and that he expected to be responsible only to pay the overage amount, above the allowance for cabinetry provided in his contract with GCI, he acknowledged that he was more concerned about the cabinets than the contract terms and that he had not read his agreement with Corey.
Based on the record, the court finds the Hoberts' unilateral mistake argument unpersuasive. Their contract reflects, clearly and unambiguously, the parties' agreement that the Hoberts were to pay Corey for the cabinet. Corey contracted with the Hoberts directly; he was not GCI's subcontractor. While the Corey-Hobert contract, Exhibit 1, does not provide how the contract amount was to be paid, the Hoberts undertook the obligation to pay Corey. The fact that partial payments were made to Corey by GCI does not change their obligation to pay Corey. The court credits Corey's testimony to the effect that he made it clear to them that the Hoberts were responsible to pay him. The court finds that there was no non-disclosure or omission by Corey concerning the Hoberts' obligation to fulfill their contract with him.
The court also finds the Hoberts' special defenses to be unpersuasive. The Hobert-GCI building contract was separate and independent from the Hobert-Corey agreement. As discussed below, Hobert is entitled to credits from GCI under the building contract. Payments to GCI by the Hoberts did not result in Corey being paid in full. The Hoberts are receiving credit for the amounts paid to Corey. The entry of judgment for Corey will not result in the Hoberts paying twice for the same cabinets.
Thus, on the first count of his complaint Corey has proved that, under the contract, the Hoberts are liable to him for the principal sum of $16,182.29, the balance due on his contract with them. In addition, on his second count, he has proved that the Hoberts have been unjustly enriched by that amount.
2. Attorneys Fees
Based on the contract's costs of collection provision, Corey seeks an award of attorneys fees, in the amount of $7,631.58. He presented itemized bills for the services rendered by his attorney. See Exhibits 2, 3, 7, and 10.
In response, the Hoberts acknowledge that the contract contains an attorneys fees provision. See Hoberts' trial memorandum, p. 12. They do not contend that the amount requested by Corey is unreasonable. Instead, they argue that the court should exercise its discretion to deny an attorneys fee award since Corey agreed to accept the sum of $17,677.39 in July 2002 if GCI delivered all necessary lien waivers to Hobert and since there is a bona fide dispute as to the Hoberts' obligation to Corey. See Hoberts' trial memorandum, pp. 12-13.
"Ordinarily, a successful litigant is not entitled to an award of attorneys fees . . . This rule is known as the `American rule.' . . . Connecticut adheres to the American rule . . . Connecticut recognizes, however, the exceptions to this rule. A successful litigant is entitled to an award of attorneys fees, if they are provided by contract[,] by statute[,] or as an aspect of punitive damages." (Citations omitted; internal quotation marks omitted.) Jones v. Ippoliti, 52 Conn. App. 199, 208-09, 727 A.2d 713 (1999).
"An award of attorneys fees is not a matter of right. Whether any award is to be made and the amount thereof lie within the discretion of the trial court, which is in the best position to evaluate the particular circumstances of a case." (Internal quotation marks omitted.) LaMontagne v. Musano, 61 Conn. App. 60, 63-64, 762 A.2d 508 (2000). "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.) Food Studio, Inc. v. Fabiola's, 56 Conn. App. 858, 865, 747 A.2d 7 (2000).
Here, the court concludes that it is right and equitable for the Hoberts to pay Corey for the attorneys fees he expended in prosecuting this action. The court credits Corey's testimony to the effect that, at the July 19, 2002 meeting with Hobert and Guimares, he was simply seeking payment for the work he had completed for the Hoberts months earlier. He testified that he had no recollection of the discussion concerning lien waivers. The Hoberts have not proved that Corey was a party to an agreement whereby he agreed to forego his contractual rights depending on whether Guimares provided lien waivers to Hobert which Hobert found to be acceptable.
Rather, from the evidence, it is clear to the court that Corey was a bystander caught up in the Hoberts' dispute with GCI. It would be unfair to allow the Hoberts, who contracted independently with Corey, to foist their dispute with GCI on Corey by avoiding their obligation, voluntarily undertaken, to, in the event of their default in paying Corey for the cabinetry, "pay all costs of collection, including reasonable attorneys fees." See Exhibit 1.
The court finds that Corey's attorneys fees request is reasonable. Corey is entitled to the attorneys fees which he requests.
3. Interest
Corey also seeks an award of prejudgment interest. General Statute § 37-3a provides in relevant part that "interest at the rate of ten per cent a year, and no more, may be recovered and allowed in civil actions . . . as damages for the detention of money after it becomes payable." "The allowance of prejudgment interest as an element of damages is an equitable determination and a matter lying within the discretion of the trial . . . The determination of whether or not interest is to be recognized as a proper element of damage, is one to be made in view of the demands of justice rather than through the application of an arbitrary rule." (Internal quotation marks omitted.) Rapin v. Nettleton, 50 Conn. App. 640, 651, 718 A.2d 509 (1998).
"The fact that this dispute is `hotly contested' does not impact on the trial court's determination that the defendant wrongfully detained the [plaintiff's] money." Solomon v. Hall-Brooke Foundation, Inc., 30 Conn. App. 136, 147, 619 A.2d 866 (1993). "[P]rejudgment interest is awarded in the discretion of the trial court to compensate the prevailing party for a delay in obtaining money that rightfully belongs to him." (Internal quotation marks omitted.) Northrop v. Allstate Insurance Co., 247 Conn. 242, 254-55, 720 A.2d 879 (1998).
As discussed above, Corey was entitled to be paid by the Hoberts long ago. He claims $3,664.37 as interest, through November 12, 2003, and $4.43 per day thereafter. The Hoberts did not dispute this calculation. Pursuant to General Statute § 37-3a, and in its discretion, the court awards to Corey the interest he has requested, as a result of the Hoberts' wrongful delay in paying him.
B. Hobert's and GCI's Claims Against Each Other Arising from the Building Contract
As noted, in his third-party complaint, Hobert alleges that he paid GCI in full for all of the work to be provided in the building contract including the cabinetry, but that GCI failed to pay Corey, its subcontractor, for that work.
Under Connecticut law, "a party is entitled to indemnification, in the absence of a contract to indemnify, only upon proving that the party against whom indemnification is sought either dishonored a contractual provision or engaged in some tortious conduct." Burkert v. Petrol Plus of Naupatuck, Inc., 216 Conn. 65, 74, 579 A.2d 26 (1990); see Smith v. New Haven, 258 Conn. 56, 65-66, 779 A.2d 104 (2001). Here, in his third-party complaint, Hobert claims indemnification and damages from GCI, based on a claim of breach of contract.
Hobert has not proved his allegation, in his third-party complaint, that Corey was GCI's subcontractor. Based on Exhibit 1, the contract between the Hoberts and Corey, it is evident that Corey contracted with the Hoberts, not with GCI. Corey was not GCI's subcontractor.
Nevertheless, the fact that Corey was not Hobert's subcontractor is not dispositive of Hobert's claim, since the third-party complaint fairly put GCI on notice of Hobert's claim that GCI had breached its contract with him by not providing the full allowances set forth therein. See amended third-party complaint paragraph 3 (alleging that the cost of the cabinets were included in the building contract between Hobert and GCI) and paragraph 4 (alleging that Hobert paid GCI in full, including for the installation of the cabinets), and Hobert's claim for monetary damages. "As long as the pleadings provide sufficient notice of the facts claimed and the issues to be tried and do not surprise or prejudice the opposing party, we will not conclude that the complaint is insufficient to allow recovery." (Internal quotation marks omitted.) Dornfried v. October Twenty-four, Inc., 230 Conn. 622, 629, 646 A.2d 772 (1994).
As noted above, GCI's counterclaim, first and second counts, seeks monetary damages from Hobert for his alleged breach of the building contract and the duty of good faith and fair dealing. GCI also claims conversion in its third count, and claims a set off against Hobert's claim against it. Accordingly, the court considers these parties' claims against one another which arise from their contractual relationship.
Hobert's testimony was inconsistent. On the one hand, he stated that GCI was paid in full for all of the work it performed. On the other hand, he acknowledged that he owed more to GCI, but not the amount claimed by GCI. Under the building contract between GCI and Hobert, the parties agreed to an allowance to Hobert for cabinets of $30,000.00. See Exhibit A, Building Contract Specifications, Interior House, Item No. 22. Hobert also contends that he is entitled to an additional $6,000.00 allowance for cabinets, based on an addendum to the contract. See Exhibit A, letter of February 27, 2001 (signed by Hobert on March 20, 2001), Item No. 9.
Guimares acknowledged that the Hoberts were entitled to these allowances. He stated that the $6,000.00 allowance was for "cherry surrounds" to an entertainment center, which was not constructed. He could not recall providing the $6,000.00 credit to the Hoberts.
As reflected in Exhibit A, the original contract price was $558,758.00. Hobert acknowledged in his testimony that extra items were subsequently added by agreement, for an additional approximate amount of $32,000.00, resulting in a total contract price of $590,758.00. Hobert also agreed to pay $140,000.00 for the real property to Stone Construction, LLC, an entity related to GCI, for an overall total of $730,758.00. See Exhibit A, the building contract, to which the bond for deed is annexed. Hobert acknowledged that 3.1% of the contract price, without the extras, was not paid. Hobert testified that he had paid the sum of about $706,000.00 through his construction loan, and that he owed more, but asserted that the full amount is not due, since he claims that GCI did not complete the project and work was done and not paid to others by GCI.
1. Credits
Hobert testified that although as of March 2002, about 3% of the project remained to be completed, representing about the $18,156.53 balance shown as of March 21, 2002, on GCI's Customer Balance Detail, Exhibit G, he never paid that money to GCI since he completed other items himself and paid others to do so.
Hobert vaguely refers to alleged delay by GCI in completing the house. See Hobert's trial brief, p. 18. The court does not credit Hobert's assertion that GCI declined to do so in a timely manner.
In his trial memorandum, he states that "[t]he Customer Balance Detail with the backup commentary and information showed that there was a balance due to Guimares as of July 2002 of $15,935.79." See Hobert's trial memorandum, p. 14. However, in evidence are several versions of GCI's Customer Balance Detail. See, for example, Exhibits C and G. Hobert's brief does not make clear to which version he refers or how the claimed $15,935.79 is calculated.
GCI asserts, in its reply brief, p. 2, that this sum is apparently derived from Exhibit AA's handwritten entries. The court agrees that these handwritten entries are unclear and the court does not ascribe any weight to them.
Hobert then goes on to contend that, from the figure of $15,935.79, other items ought to be credited to Hobert. See Hobert's trial memorandum, pp. 14-15. The court is unpersuaded that Hobert is entitled to the additional credits he claims, except for the $6,000.00 credit for cherry surrounds. The court addresses below Hobert's requests for these additional credits.
Hobert seeks a $1,000.00 credit for an "overpayment" he made to Corey. As discussed above, Hobert undertook separate contractual obligations with Corey, which were independent of his building contract with GCI. No credit for the "overpayment" is warranted.
Hobert also seeks credits for the purchases and installation of mantles and columns, in the total of $4,211.63 ($967.72 plus $943.91 plus $1,500.00 plus $800.00). See Hobert's trial memorandum, pp. 14-15. Exhibits C and R reflect that GCI credited Hobert the sum of $2,150.00 for these items (and shadow boxing). Hobert did not present witnesses from those who supplied the materials and did the work to support the claimed differentials in amounts. The court is persuaded by Guimares' testimony concerning the credits reflected on Exhibits C and R. The court is unpersuaded by Hobert's presentation of a Home Depot statement, showing a previous balance of $943.91, which does not attribute the amount to a particular item purchased at that location. See Exhibit EE.
Hobert seeks a credit of $3,360.00 for paying RJ Paving the sum of $3,360.00. Exhibits C and R reflect that GCI provided a credit to Hobert in that amount.
He also seeks a credit of $2,204.34 for "[t]rim material and repair of baseboard McEwen Construction." See Hobert's trial memorandum, p. 15. See Exhibit II. According to Hobert, this work was necessary to correct GCI's work. No contract with McEwen was presented and no one from McEwen testified. The court is unpersuaded by Hobert's conclusory testimony that repair work was needed. Also, the court credits Guimares' testimony that part of the work for which Hobert claims this credit was not encompassed in the building contract and, therefore, was not GCI's responsibility.
Hobert also claims a credit for $3,200.00 for a bluestone walk. The court credits Guimares' testimony, in which he stated that he never agreed not to charge for this item and that it represented a contractual upgrade.
Another requested credit item concerns a $500.00 payment to Olsen Tree Experts, dated May 16, 2003. See Exhibit JJ. No one from Olsen testified. No photographic evidence of damaged trees was presented. The court declines to credit Hobert's conclusory testimony claiming this sum from GCI.
Hobert seeks $10.00 for paying the Town of Glastonbury for a certificate of occupancy. The court is unpersuaded that this expenditure was made necessary by actions undertaken by GCI.
Hobert also claims $75.00 for millwork and $60.00 for paint supplies, without attributing these claims to any documentary evidence. He also seeks $450.00 for personally undertaken work on his deck. The court is unpersuaded by the conclusory presentation concerning these items.
In his testimony, Guimares contended that Hobert owes a balance of $17,928.15 on the building contract as amended. See Exhibit C, Customer Balance Detail through November 8, 2002. However, this sum does not account for either the full $30,000 allowance to Hobert for cabinetry or the $6,000.00 allowance for the cherry surrounds, both of which the Hoberts were entitled to under the building contract.
GCI contends that it received $16,762.74 for cabinetry. See GCI's reply brief, p. 3. Hobert did not provide any documentation to dispute this assertion, such as a record of advances by his construction lender. GCI's contention is corroborated by Exhibit D, a Webster Bank Construction Inspection Report, which allocates 3% of the construction loan to "Cabinets and countertops." Three per cent of the original building contract price of $558,758.00 (before extras) amounts to $16,762.74. Guimares testified that if additional payment had been received from Hobert, GCI would have signed that sum over to Corey.
Also, GCI's recognition of its obligation to provide the full $30,000.00 cabinet allowance is evidenced by the fact that GCI twice issued checks to Corey, in January 2002 for $20,000.00, and in May 2002, for $20,985.00. While GCI stopped payment on these checks, their issuance is probative of the fact that GCI had not yet fully afforded the cabinet allowance to Hobert.
GCI argues, without providing decisional authority, that Hobert forfeited his right to the allowances when he breached the contract by withholding the final contractual payment. See GCI's reply brief, pp. 4-5; GCI's briet p. 4-5, 6. It relies on paragraph 12 of the building contract to assert that "the contract specifically states that funds are not to be escrowed." (Italics in original.) See GCI's brief, p. 6. To the contrary, the provision in the building agreement states that the contractor will not escrow funds: "Contractor will agree, in writing, to complete or correct items listed by Owners which are Contractor's responsibilities but will not escrow for any uncompleted items." See Exhibit A, building contract, ¶ 12.
"The general rule in breach of contract cases is that the award of damages is designed to place the injured party, so far as can be done by money, in the same position as that which he would have been in had the contract been performed." (Internal quotation marks omitted.) West Haven Sound Development Corp. v. West Haven, 201 Conn. 305, 319, 514 A.2d 734 (1986). However, any amount due is subject to being set off by credits to which a contracting party is rightfully entitled. See Loveland v. Aymett's Auto Arcade, Inc., 121 Conn. 231, 237, 184 A. 376 (1936); Wark v. Beach Hotel Corp., 113 Conn. 119, 154 A. 252 (1931).
Thus, reconciling the conflicting claims shows that Hobert is entitled to additional credits in the amount of $17,182.39 ($36,000.00 less the $18,817.61 which was paid by GCI to Corey). See Exhibit 4. Applying the uncredited amounts to the amount shown on Exhibit C to be due from Hobert results in a balance in favor of GCI of $745.76 ($17,928.15 minus $17,182.39).
In addition, in his trial brief, Hobert seeks an award of attorneys fees, in the amount of $10,000.00. See Hobert's trial brief, p. 15. Attorneys fees were not sought in the third-party complaint. In addition, Hobert cites no contractual provision or statute entitling him to such an award. Also, he neither claimed nor is he entitled to an award of punitive damages. See Jones v. Ippoliti, supra, 52 Conn. App. 208-09. Hobert is not entitled to an award of attorneys fees.
2. July 19, 2002 Meeting
On July 19, 2002, Corey, Hobert, and Guimares met to resolve their differences. Hobert admitted that he agreed to pay an additional sum to Corey. In his trial brief, he states that "the parties came to an agreement as to payment on both contracts." See Hobert's trial brief, p. 12. The amount agreed upon was $17,677.39. An undated check was prepared, on Hobert's checking account, in the amount of $17,677.39, made payable to "Guimares Construction," for "final disbursement," and endorsed to Corey by Guimares, on behalf of GCI. See Exhibit V. In his testimony, Guimares agreed that this was to represent the final payment to GCI. GCI's brief, p. 5, concurs also that this was to be the final payment.
Hobert testified that he agreed to pay additional money to Corey in this fashion only under duress. "For a party to demonstrate duress, it must prove [1] a wrongful act or threat [2] that left the victim no reasonable alternative, and [3] to which the victim in fact acceded, and that [4] the resulting transaction was unfair to the victim . . . The wrongful conduct at issue could take virtually any form, but must induce a fearful state of mind in the other party, which makes it impossible for [the party] to exercise his own free will . . . Where a party insists on a contractual provision or a payment that he honestly believes he is entitled to receive, unless that belief is without any reasonable basis, his conduct is not wrongful and does not constitute duress or coercion under Connecticut law . . . and the fact that consent was given, or payment was made under protest does not establish duress." (Internal quotation marks and citations omitted.) Noble v. White, 66 Conn. App. 54, 59, 783 A.2d 1145 (2001).
Duress was not pleaded as a special defense by Hobert, either in response to Corey's claim or in response to GCI's counterclaim, although Practice Book § 10-50 requires it to be specially pleaded. Also, based on the record, the claim is not proved. The court does not credit Hobert's contention that he agreed to pay under threat. Rather, he and GCI reached an agreement to settle their differences.
Hobert testified that he did not release the check to Corey because he was concerned that other contractors would lien his property. He noted that it was agreed on July 19, 2002, by Guimares and GCI, that lien waivers from subcontractors would be provided by GCI. He claims that he did not receive acceptable lien waivers from GCI and, therefore, did not release the check to Corey. He testified that he received from Guimares four purported lien waivers on behalf of GCI's subcontractors, which allegedly were forgeries. The receipt of these "forged" lien waivers precipitated the breakdown between the Hoberts and GCI, after which Hobert declined to deal with GCI any more. He also stated that he went to the Town of Southington Police to complain about the lien waivers.
Guimares testified that he signed lien waivers on behalf of the subcontractors, with their authority, and that no subcontractor complained. No subcontractor testified that Guimares lacked the authority to provide such lien waivers. There is no evidence before the court that any criminal charges resulted from the claimed forgeries. In addition, in his trial memorandum, Hobert does not argue that the lien waivers which were provided were forgeries. See Hobert's trial memorandum, pp. 6-7. Hobert has not shown that GCI breached the parties' agreement by failing to provide lien waivers.
The lien waivers were not presented to the court as exhibits.
3. Conversion
As noted, in the third count of its counterclaim, GCI seeks treble damages and punitive damages, based on a claim of conversion. "The tort of [c]onversion occurs when one, without authorization, assumes and exercises ownership over property belonging to another, to the exclusion of the owner's rights." (Emphasis in original, internal quotation marks omitted.) Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 43, 761 A.2d 1268 (2000). "The intent required for a conversion is merely an intent to exercise dominion or control over an item even if one reasonably believed that the item is one's own." Plikus v. Plikus, 26 Conn. App. 174, 180, 599 A.2d 392 (1991). General Statute § 52-564 authorizes a court to award treble damages for theft.
Section 52-564 provides, "Any person who steals any property of another, or knowingly receives and conceals stolen property, shall pay the owner treble his damages."
Our Appellate Court recently explained the distinction between conversion and statutory theft. "Statutory theft under § 52-564 is synonymous with larceny under General Statutes § 53a-119 . . . Pursuant to § 53a-119, [a] person commits larceny when, with intent to deprive another of property or to appropriate the same to himself or a third person, he wrongfully takes, obtains or withholds such property from an owner. By comparison, [c]onversion is an unauthorized assumption and exercise of the right of ownership over goods belonging to another, to the exclusion of the owner's rights . . . In addition, conversion requires that the owner be harmed as a result of the unauthorized act . . . Conversion can be distinguished from statutory theft as established by § 53a-119 in two ways. First, statutory theft requires an intent to deprive another of his property; second, conversion requires the owner to be harmed by a defendant's conduct. Therefore, statutory theft requires a plaintiff to prove the additional element of intent over and above what he or she must demonstrate to prove conversion." (Internal quotation marks and citations omitted.) Suarez-Negrete v. Trotta, 47 Conn. App. 517, 520-21, 705 A.2d 215 (1998).
To be entitled to an award of treble damages under § 52-564, a plaintiff must satisfy the burden of presenting clear and convincing evidence. See Suarez-Negrete v. Trotta, supra, 47 Conn. App. 520.
Based on the record, the parties to the building contract had a good faith dispute about the amount which was due. GCI has not proved that Hobert intended to deprive GCI of its property. Accordingly, treble damages are not warranted.
The court, in its discretion, declines to award punitive damages. An award of punitive damages is discretionary. See Arnone v. Enfield, 79 Conn. App. 501, 522, 821 A.2d 283, cert. denied, 266 Conn. 932 (2003). "To furnish a basis for recovery of such damages, the pleadings must allege and the evidence must show wanton or wilful malicious misconduct and the language contained in the pleadings must be sufficiently explicit to inform the court and opposing counsel that such damages are being sought." Markey v. Santangelo, 195 Conn. 76, 77, 485 A.2d 1305 (1985). Our Appellate Court recently reiterated the applicable considerations under the common law, stating, "[w]e have previously held that in order to award punitive damages, evidence must reveal a reckless indifference to the rights of others or an intentional and wanton violation of those rights . . ." (Internal quotation marks omitted.) Arnone v. Enfield, supra, 79 Conn. App. 521. "In fact, the flavor of the basic requirement to justify an award of punitive damages is described in terms of wanton and malicious injury, evil motive and violence." Gargano v. Heyman, 203 Conn. 616, 622, 525 A.2d 1343 (1987). In Connecticut, common-law punitive damages are limited to the plaintiffs' litigation expenses plus taxable costs. See Berry v. Loiseau, 223 Conn. 786, 825-27, 614 A.2d 414 (1992).
In view of the good faith dispute concerning the amounts owed, an award of punitive damages to GCI is not warranted here.
Accordingly, judgment may enter in favor of GCI and against Hobert on his third-party complaint and in favor of GCI and against Hobert on counts one, two, and three of GCI's counterclaim, in the amount of $745.76.
C. New Home Construction Act
In their trial brief, pp. 15-17, the Hoberts argue that GCI Violated the "New Home Construction Act," which is codified in General Statutes § 20-417a, et seq. This claim was not pleaded. As noted above, a litigant may not allege one cause of action and recover on another and a court may not render judgment on a legal theory that was never asserted in the pleadings. See Treplia v. Zanesky, supra, 67 Conn. App. 457-58; Pergament v. Green, supra, 32 Conn. App. 654. The court declines to consider this belatedly asserted theory of liability.
D. Defamation
In count four of its counterclaim, GCI seeks damages, and punitive damages, based on a claim of slander. GCI alleges that Hobert claimed to the Internal Revenue Service (IRS) that GCI, through its president, Guimares, was engaged in income tax evasion, in that he "was cheating on his income tax returns." See GCI's counterclaim, count four, ¶ 9. In his trial testimony, Hobert stated that, "I did report him to this criminal investigation unit." See Trial Transcript, October 24, 2003. The substance of Hobert's communication to the IRS was not elicited.
"Defamation is comprised of the torts of libel and slander. Defamation is that which tends to injure reputation in the popular sense; to diminish the esteem, respect, goodwill or confidence in which the plaintiff is held, or to excite adverse, derogatory, or unpleasant feelings or opinions against him. W. Prosser W. Keeton, Torts (5th Ed. 1984), p. 773. Slander is oral defamation." (Internal quotation marks omitted.) DeVito v. Schwartz, 66 Conn. App. 228, 234, 784 A.2d 376 (2001).
"[I]t is settled that the credit property or business reputation of a corporation can be injured by a false publication of defamatory matter, written or oral, which tends to prejudice it in the conduct of its trade or business, or to deter third persons from dealing with it. Since a corporation has no reputation in the sense that an individual has, it is only with respect to its credit, property or business that a corporation can be injured by a false publication." (Internal quotation marks omitted.) Lega Siciliana Social Club, Inc. v. St. Germaine, 77 Conn. App. 846, 854 n. 3, 825 A.2d 827 (2003).
"A prima facie case of defamation is made when the plaintiff demonstrates that: 1. [a] defamatory statement was made by the defendant; 2. [t]he defamatory statement identifies the plaintiff to a reasonable [hearer]; 3. [t]he defamatory statement is published to a third person; and; 4. [t]he plaintiff's reputation suffers injury . . ." (Citation omitted.) Silva v. New York Life Insurance Co., Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV97-0342973 (January 12, 2001, Skolnick J.).
Certain "specific categories of speech [are] deemed actionable per se where the defamatory meaning of [the speech] is apparent on the face of the statement." DeVito v. Schwartz, supra. "When the defamatory words are actionable per se, the law conclusively presumes the existence of injury to the plaintiff's reputation. He is required neither to plead nor to prove it." (Internal quotation marks omitted.) Olivas v. DeVivo Industries, Inc., Superior Court, judicial district of Danbury, Docket No. CV99-0335908 (February 26, 2001, Hiller J.). "We have recognized slander to be actionable per se where the utterance falsely charges a crime involving moral turpitude or to which an infamous penalty is attached." Moriarty v. Lippe, 162 Conn. 371, 383, 294 A.2d 326 (1972). "The modern view of this requirement is that the crime be a chargeable offense which is punishable by imprisonment . . . The allegation that a person committed a crime need not be as specific as in an indictment, but it must bear some reasonable relation to the legislative definition of a crime." (Citations omitted.) Olivas v. DeVivo Industries, Inc. supra.
Income tax evasion is a federal crime punishable by imprisonment. See 26 U.S.C. § 7201. "In order for a person to be convicted of attempted income tax evasion, the government must prove three elements: (1) willfulness; (2) the existence of a tax deficiency; and (3) an affirmative act constituting the evasion or attempted evasion of the tax." (Internal quotation marks omitted.) United States v. Klausner, 80 F.3d 55, 61 (2d Cir. 1996). Thus, GCI is claiming slander per se.
Liability for defamation requires proof that the defendant published a false statement about the plaintiff. See Kelley v. Bonney, 221 Conn. 549, 563, 606 A.2d 693 (1992). GCI has not proved this element of its slander claim. As reflected above, the substance of what Hobert said to the IRS was not presented in evidence at the trial. While Hobert admitted that he reported to the IRS a claim of income tax evasion by Guimares, GCI has not proved what was communicated and that the communication was false.
Here, GCI seeks to prove the falsity of Hobert's report to the IRS by inference. Whether or not an inference should be drawn is properly a question for the finder of fact. See Capozzi v. Liberty Mutual Fire Insurance Co., 229 Conn. 448, 453, 642 A.2d 1 (1994). "A permissible inference rests upon premises of fact; conjecture does not." Malvicini v. Stratfield Motor Hotel, Inc., 206 Conn. 439, 446, 538 A.2d 690 (1988).
While Guimares testified that the IRS "filed" for income tax evasion and that its investigation was "basically closed," since there was no substance to the allegations, the court declines to infer from that testimony that whatever was communicated by Hobert to the IRS was not true. The inference is negated, for example, by other evidence presented by GCI, which shows that Guimares' dealings with the IRS pre-dated Hobert's report. As damages for the claimed slander, GCI seeks to recover $11,232.00 in attorneys fees for the defense of "baseless and malicious charges" made by Hobert to the IRS. See GCI's brief, p. 8. In support of the claim for the attorneys fees allegedly expended in defense of Hobert's report to the IRS, GCI submitted bills from Richard G. Convicer, LLC. See Exhibit E. Attorney Convicer did not testify at the trial.
Exhibit E reflects that Convicer was dealing with the IRS on Guimares' behalf in May, June, July, and August 2002, well before the dates (August 12 and 14, 2002) when, according to Hobert's testimony, he contacted the IRS. See Trial Transcript, October 24, 2003. GCI presented no evidence to dispute Hobert's assertion that he did not contact the IRS until August 12, 2002.
That assertion is consistent with the fact that the breakdown in the parties' contractual relations occurred after their July 19, 2002 meeting, discussed above.
For example, an entry for May 2, 2002 states that Convicer spoke with his client about a tax lien on that date; an entry for May 6, 2002 concerns a telephone conference with the IRS. See Exhibit E. The entry for June 14, 2002 is for "[r]eview file re: IRS response." Two weeks later, on June 28, 2002, Convicer contacted the IRS. Similarly, on July 31, 2002, Convicer attended a conference with the IRS. On August 1, 2002, his time entry states, "Telephone conference with IRS and file amended Offer." Statements reflecting services provided on dates subsequent to those on which Hobert contacted the IRS do not reflect that Convicer was then dealing with charges made by Hobert. See Exhibit E.
In the absence of the substance of Hobert's communication and in the absence of any evidence about GCI's tax filings, and dealings with the IRS, other than Convicer's bills, described above, and Guimares' conclusory testimony on the subject, the court declines to infer that whatever information Hobert provided to the IRS was false. Such an inference would have to be based on speculation, which would be impermissible. See Lipshie v. George M. Taylor Son, Inc., 265 Conn. 173, 183, 828 A.2d 110 (2003).
Accordingly, judgment may enter for Hobert and against GCI on count four of GCI's counterclaim.
CONCLUSION
Judgment may enter in favor of Paul Corey DBA United Cabinetry and against Eric and Heidi Hobert on Corey's amended complaint, in the principal amount of $16,182.29, plus interest in the amount of $3,859.29, plus attorneys fees in the amount of $7,631.58, for a total of $27,673.16.
Judgment may enter in favor of Guimares Construction, Inc. and against Eric Hobert on his amended third-party complaint. Judgment may enter in favor of Guimares Construction, Inc. and against Eric Hobert on the first, second, and third counts of its counterclaim, in the amount of $745.76. Judgment may enter in favor of Eric Hobert and against Guimares Construction, Inc. on count four of its counterclaim. It is so ordered.
BY THE COURT, ROBERT B. SHAPIRO, JUDGE OF THE SUPERIOR COURT.