Opinion
No. CV 06 5000447
November 30, 2009
MEMORANDUM OF DECISION RE MOTION FOR ATTORNEYS FEES BASED UPON CONTRACT (#141)
The defendant's claim for attorneys fees is before this court on remand from the Appellate Court. See Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, 114 Conn.App. 671, 970 A.2d 807 (2009).
The plaintiffs, Total Recycling Services of Connecticut, Inc. (Total Recycling) and Whitewing Environmental Corp. (Whitewing), commenced this action against the defendant, Connecticut Oil Recycling Services, LLC, (CORS) in a four-count complaint seeking damages for either breach of contract or unjust enrichment arising out of the plaintiffs' sale of its oil recycling business to CORS. Documents for the sale consist of three written contracts. CORS denied any liability and counterclaimed for, inter alia, breach of contract, and for breach of the implied covenant of good faith and fair dealing. In its Counterclaim CORS sought damages, interest, costs and attorneys fees.
The case was tried to the jury. In special interrogatories submitted to the jury, the court asked the jury to make specific findings regarding, inter alia, liability and damages. According to answers to the jury interrogatory the jury awarded to each plaintiff $63,130.70 plus ten percent interest as damages for their unjust enrichment claim. As to the CORS counterclaim, according to answers to the jury interrogatory the jury found that the plaintiffs breached the implied covenant for good faith and fair dealing.
See Special Verdict Interrogatories (#125.55), page 5.
The three contracts that formalized the sale are the Asset Purchase Agreement (Equipment); the Asset Purchase Agreement (Good Will); and the Non-Compete Agreement. Paragraph 14.2 of the Asset Purchase Agreement (Good Will) states as follows with respect to costs, damages and attorneys fees:
Seller agrees to indemnify and hold Buyer harmless from any costs, or damages, including reasonable attorney fees, resulting from any breach of any representation, warranty or covenant contained in this agreement.
Paragraph 1.2 of the Non-Compete Agreement provides as follows:
WW [Whitewing Environmental Group] agree to indemnify and hold CORS harmless for any costs or damages, including reasonable attorney fees, resulting from any breach of any representation, warranty or covenant contained in this Agreement.
The court, Aurigemma, J., denied the defendant's motion for attorneys fees reasoning that the damages awarded to the defendant for breach of the implied covenant of good faith clearly pertained to the Asset Purchase Agreement (Equipment), which did not contain any provision for the award of attorneys fees to the defendant in the event of a default. On appeal, on June 2, 2009, the Appellate Court affirmed the judgment entered on the jury verdict, but reversed the trial court's denial of the defendant's motion for attorneys fees.
The reasoning of the Appellate Court is contained in the quotation from its opinion set out below.
The defendant maintains that the facts of record, as documented in the jurys' responses to the jury interrogatories, establish that it was not reasonable for the trial court to have rejected, out of hand, its claim to an attorneys fee award. The plaintiffs have not challenged the jurys' findings that Total Recycling breached the agreement to transfer its customer list and that Whitewing breached the agreement not to compete. The attorneys fee clauses in these contracts did not require the defendant to prove more than breach. As our Supreme Court held in Storm Associates, Inc. v. Baumgold, 186 Conn. 237, 245, 440 A.2d 306 (1982), in the absence of an applicable statute, a litigant "derives its right to recover an attorneys fee . . . from its contract and not from a claim for damages." We hold, therefore, that the trial court improperly held that the jurys' verdict with respect to the equipment purchase agreement precluded the defendant's recovery of reasonable attorneys fees under the other two contracts between the parties.
Total Recycling Services of Connecticut, Inc. et al. v. Connecticut Oil Recycling Services, LLC, 114 Conn.App. 671, 680, 681, 970 A.2d 807 (2009).
The Motion for Attorneys Fees and Objection — Post-Appeal
On June 26, 2009, the defendant filed a motion for attorneys fees. On July 9, 2009, the plaintiffs submitted a memorandum in opposition. The court heard oral argument on August 10, 2009. On September 9, 2009, the plaintiffs filed a memorandum entitled "Supplemental Citation of Authority." The defendant replied on September 10, 2009, objecting on the grounds that the memorandum was improperly introduced and that the cases cited have no bearing on the present case. Neither party cites any authority as to whether the court may consider the supplemental memoranda.
The American Rule
In determining an award of attorneys fees, generally the American Rule prevails. The "`American rule' is that attorneys fees and ordinary expenses and burdens of litigation are not allowed to the successful party absent a contractual or statutory exception . . . Connecticut adheres to the American rule . . . There are few exceptions." (Internal quotation marks omitted.) Massad v. Greaves, 116 Conn.App. 672, 680, 977 A.2d 662 (2009). "Where a contract provides for the payment of attorneys fees by a defaulting party, those fees are recoverable solely as a contract right." (Internal quotation marks omitted.) N.E. Leasing, LLC v. Paoletta, 89 Conn.App. 766, 778, 877 A.2d 840, cert. denied, 275 Conn. 921, 883 A.2d 1245 (2005).
The standard for interpreting a contract provision is quite well established. Plikus v. Connecticut Light Power Co., 42 Conn.App. 299, 303, 679 A.2d 401 (1996). "When interpreting a contract, [a court] must look at the contract as a whole, consider all relevant portions together and, if possible, give operative effect to every provision in order to reach a reasonable overall result." O'Brien v. United States Fidelity Guaranty Co., 235 Conn. 837, 843 (1996).
Costs and Reasonable Attorneys fees
The court finds that the plain meaning of "hold harmless from (for) any costs or damages, including reasonable attorney fee(s) resulting from any breach" as used in paragraph 14.2 of the Asset Purchase Agreement (Good Will) and paragraph 1.2 of the Non-Compete Agreement is that the respective plaintiffs obligated themselves to compensate defendant CORS for any costs, plus reasonable attorneys fees which CORS suffered or incurred to establish the breach. The plain meaning also is that the plaintiffs obligated themselves to compensate CORS for any damages resultant from the breach.
Conclusion
Defendant CORS claims that it is entitled to all the attorneys fees it incurred in this litigation, including the costs of the appeal, which it asserts to be $72,050. The court finds that it is necessary for the defendant to identify which reasonable attorneys fees were incurred in prosecuting its breach of contract counterclaim with regard to the contracts that specifically provide for attorneys fees. See Appliances, Inc. v. Yost, 186 Conn. 673, 680 (1982). The defendant is invited to make that showing and to provide authority to the court for an award of the attorneys fees incurred in its appeal. The defendant may file the appropriate motion to address these matters at a further hearing.