Opinion
No. CV-05-4013814 S
May 22, 2006
MEMORANDUM OF DECISION ON ALTERNATIVE MOTION TO STRIKE OR FOR SUMMARY JUDGMENT
The defendants in this case have filed a "motion to strike the plaintiff's complaint or in the alternative, for summary judgment." The court will paraphrase the relevant portions of the complaint. The plaintiffs are Versat Group, LLC (Versat) and three individuals named Haversat all residing in Guilford. The defendants are WW Versat, LLC (WWV) and Access Point Openings (Access Point), Ohio a limited liability companies. (Paragraphs 1-4 of count one).
In paragraph 4 the complaint goes on to allege that on December 31, 2002 the parties entered into eight agreements which are listed and dated. Disputes between the parties developed between January 1, 2003 and November 4, 2004 concerning the "rights, responsibilities, and obligations" under these agreements (paragraph 6).
The following two paragraphs go on to represent that prior to and during November 2004 "authorized representatives of the parties" attempted to negotiate a settlement of the parties' various disputes under the previously mentioned agreements. Attorney David Goldston represented the defendants. Attorney Berman represented the plaintiffs.
Paragraph 8 alleges that in October 2004 lawyers' efforts "ultimately proved successful . . . the parties agreed to settle their differences and drafted a document reflecting the material terms of the settlement," "a comprehensive settlement document" was prepared in November 2004, and the plaintiffs were "ready, willing and able to execute the settlement agreement as agreed." Paragraphs 9, 10. Paragraph 11 goes on to say at all relevant times Attorney Goldston represented the settlement agreement was acceptable to the defendants and would be executed by them.
The settlement agreement was never signed by the parties but it is alleged that its terms and conditions have been materially performed from November 2004 to the date of the complaint, three material performances are alleged (paragraph 13) including monthly payments under paragraph 4(a) of the Settlement Agreement.
Paragraph 14 alleges that the plaintiffs relied on the reasonable expectation that the settlement agreement would be signed and took several actions all involving the deferment of legal actions under various pre-existing agreements between the parties.
The following paragraph states that on April 2005 the defendants ceased making payments to the plaintiffs "called for under paragraph 4 of the Settlement Agreement."
The plaintiffs seek specific performance of the agreement; they have learned that Access Point has undergone a change of control and they fear this may jeopardize their investment in WWV.
Count two repeats the factual allegations of the first count but then alleges that "as a result of defendant's refusal to execute and abide by the Settlement Agreement . . . and the recent change of control in Access Point they are threatened with loss of their equity investment in WWV and loss of their membership rights in WWV" which entitles them to compensatory damages.
As noted the defendants have now filed a motion to strike against both counts and alternatively a motion for summary judgment. The standards for acting on such motions by the court are well known and well stated by counsel. With a motion to strike every reasonably favorable inference must be given to the pleading under attack, here the complaint. As to a motion for summary judgment if there is a material issue of fact the court cannot decide it and grant such a motion because a party has a constitutional right to a trial. If there is no such material fact the court should grant such a motion when warranted to avoid imposing on parties the expense and stress of litigation.
The court will first discuss the motion to strike and the claims made by the defendants in support of it. CT Page 9306
(1)
The defendants assert that in order to move for specific performance of a contract the plaintiffs have the burden of establishing "that the contract at issue is enforceable." This of course is a truism that does not need to be established by citations to case law — the conclusion is a necessary result of the predicate statement.The defendants go on to argue that the plaintiffs cannot move for specific performance of a contract because the complaint makes clear that "the alleged settlement agreement — does not exist between the parties." The plaintiffs admit in the complaint that defendants never executed the settlement agreement . . . "Thus on its face, plaintiffs' complaint fails to establish an element necessary to support their claim for specific performance." That is, according to the argument the existence of a contract cannot be established, specific performance of which is requested.
This does not comport with the general law of contracts. In 17A Am.Jur.2d "Contracts" at § 173, page 186, it says that:
In the absence of a statute requiring a signature or an agreement that the contract will not be binding until it is signed, parties may become bound by the terms of a contract, even though they do not sign it, where their assent is otherwise indicated, such as by accepting and acting on the contract or by ratifying the contract, or by the acceptance by one of the performance of the other. Our court has of course accepted this principle. See Schwarzschild v. Martin, 191 Conn. 316, 321-22 (1983), quoting predecessor section to just cited Am.Jur. section. Also see, Hoye v. DeWolfe Co., 61 Conn.App. 558, 563-64 (2001). In that case the trial court's decision that a severance agreement was legally enforceable was affirmed by the Appellate Court even though the defendant had not signed it. Citing Martin the court said: "Parties are bound to the terms of a contract even though it is not signed if their assent is otherwise indicated."
There is nothing magical about a written contract whether it is signed or not which is a prerequisite to the court's power to order specific performance of a contract. The court used the search mechanism in Loislaw for all jurisdictions with a "specific performance near 10 oral contract" command which came up with 1096 cases from many jurisdictions. The court scanned several dozen of the more recent cases and many of them involved real estate transactions where a plaintiff was requesting specific performance of a sale of real estate. In Landry v. Landry, 641 A.2d 182, 183-84 (1994, Maine) for example, the court ordered specific performance of an oral agreement to sell land where a part performance exception to the statute of frauds was found. The point is that it appears to be universally accepted that under appropriate circumstances specific performance of even a purely oral contract can be ordered — the more so, it would seem, where a contract had been written up but not signed and the party seeking specific performance rests his contract claim on words and deeds in light of the existence of such a contract though unsigned.
The point is that the plaintiffs' claim is legally sufficient and its ultimate viability cannot be tested by a motion to strike since the very nature of the plaintiffs' claim requires the establishment of evidential facts which have been appropriately alleged and can only be tested by means of summary judgment or trial.
Insofar as the defendants have advanced a motion to strike as defined in the argument portion of their brief (section B), it is denied.
(2)
The defendants have also moved for summary judgment. They argue that there is an "admitted" absence of any signed settlement agreement. For the reasons previously stated this might be of some evidentiary value in further litigation but standing alone does not entitle the defendant to summary judgment.
The primary argument advanced by the defendants refers to the fact that the plaintiffs have filed a so-called Verified Complaint in Ohio. The defendants go on to argue that
The Ohio action is not based upon plain allegations but sworn statements submitted by plaintiffs themselves. Further, these verified allegations, on their face, disprove the existence of the very settlement agreement alleged by plaintiffs to exist in this action. Plaintiffs have alleged under oath that defendants have breached the very same agreements which they claim were compromised by settlement in this action (and consequently would be superseded and unenforceable), without any reference to the existence of the settlement agreement.
The defendants go on to argue that . . . "as sworn to by plaintiffs (and agreed to by defendants), the controlling agreements between the parties are the underlying operating and employment agreements and not any supposed settlement agreement." In their earlier brief the defendants categorize the position taken in the Ohio action as a judicial admission "which presumes the existence and continuing validity of such agreements, while omitting any reference to the settlement agreement."
Interestingly the defendants also state that the plaintiffs' opposition brief to the summary judgment motion is "devoted" to arguing that "the first to file rule" or the election of remedies doctrine does not apply to this case. But argue the defendants: "Neither of these issues . . . were raised by the defendants, nor, as discussed above, form the basis for their entitlement to the dismissal of (their) action."
The court cannot accept the defendants' position. It is no doubt true that the plaintiffs' claim in the Ohio action is inconsistent with that in this action. In the Ohio action, under oath, the plaintiffs rely on agreements which in our court they say were compromised by the settlement agreement. In fact as the defendants note there is no reference to the existence of the settlement agreement. Or to look at it from another perspective the very existence of the sworn statements in the Ohio action "demonstrate that a settlement agreement does not, in fact, exist between the parties." If it did how could they bring the Ohio action?
To the court at least this is not acceptable position, if the purpose of litigation is to resolve disputes on the merits rather than by the application of rigid common-law procedural rules. The defendants have spent considerable time and effort trying to establish that the settlement agreement is not enforceable because it was not signed. Whether or not that position is accepted must be based on an analysis of neutral principles of contract law not on the merits of the underlying dispute. If the defendants' argument were to be in fact accepted why could not the plaintiffs rely on the underlying agreements, their settlement agreement claim having been rejected?
In other words, there is no magic imported into the analysis by the fact that an action was brought in Ohio. Let's assume an action exactly similar to this one in its basic claims were brought in Connecticut and both of the claims — the one now brought in Ohio and the one brought here — were combined in one complaint, what would be improper with this?
The point is that a plaintiff can plead in the alternative even if the claims presented are contradictory. As noted in Horton and Knox, Connecticut Superior Court Civil Rules, "inconsistent factual claims may be pleaded," citing Burns v. Koellmer, 11 Conn.App. 375, 386 (1987) commenting on Practice Book § 10-1 and also "alternative and inconsistent pleadings are permitted," commenting on Practice Book § 10-25 citing Drier v. Upjohn Co., 196 Conn. 242, 246 (1985). In any Connecticut pleading combining both claims the magic word "alternatively" may have to be used to pass muster but failure to use it in the present separate litigations should not preclude fully addressing the merits of the dispute based on all claims alternatively considered.
The question does arise as to the possible risks or difficulties presented by not granting the summary judgment action as to this action while the Ohio action proceeds into litigation. Could there be a danger of double recovery? Avoidance of such a result can appropriately be dealt with by application of conflict of law doctrine and further down the line, if need be, by the dictates of the federal full faith and credit clause. Furthermore, a motion to stay can be filed in either the Ohio or Connecticut courts to avoid dire or unfair results because of the advancement of alternative claims in two separate jurisdictions. Cf. Parker v. Avis Rent-A-Car, 33 Conn. L. Rptr. 103 (2002).
Although the defendants state that their position is not based on application of the election of remedies doctrine their position does raise some of the specters that doctrine purports to allay.
With the development of more modern procedural rules and alternative pleading that common-law doctrine has been generally criticized. Thus our court in Abbadessa v. Puglisi, 101 Conn. 1 (1924) at page 7 said:
"In view of the general relaxation of the common law requirement of consistency in pleading, the Supreme Court of the United States has wisely observed that 'at best this doctrine of election of remedies is a harsh, and now largely obsolete rule, the scope of which should not be extended, as it must be in order to reach the case at bar.' Friederichsen v. Renard, 247 U.S. 207, 213, 38 Sup.Ct. 450."
The comments of a Pennsylvania judge in Smith v. Brink, 561 A.2d 1253, 358 Pa.Super 597 (1989) offer some interesting insights. There the court said the appeal before it presented "an opportunity to explain the doctrine of election of remedies as it applies to a plaintiff's choice of pursuing a contract action for breach of a settlement agreement or litigating the underlying claim." Id., p. 598. The court said the following:
While an action for breach of a settlement agreement can not survive a verdict on the underlying claim and a suit on the underlying claim cannot survive a verdict in favor of the plaintiff on a settlement breach action, logic dictates that an action for breach of a settlement agreement may be litigated to a defense verdict prior to a suit on the underlying claim without sacrificing a trial on the merits of the underlying claim.
Perhaps even more to the point our liberal pleading rules would seem to support a comment in 25 Am.Jur.2d "Election of Remedies," § 13, pp. 673-74 where it says:
Under some authority, a plaintiff may plead and prove his or her entitlement to either or both of two or more alternative remedies but the plaintiff may not recover both. Thus, it has been held that a plaintiff need not make a pretrial election between alternative theories but is entitled to have the case submitted to the jury on both theories."
(See for example Huffman v. Saul Holdings Ltd. Partnership. 194 F.3d 1072 (10th Cir. 1999).
Merely, for the defendants, to say that we do not raise the election of remedies doctrine does not suffice to allow the logic behind its lack of applicability to this case to be ignored as a basis for decision merely because the doctrine is not explicitly mentioned.
For the foregoing reasons, the court, therefore, does not accept the argument that the advancement of inconsistent or even mutually exclusive theories of liability require granting of the defendants' motion for summary judgment.
Finally, the defendants also maintain that the representations under oath in the Ohio action are somehow to be considered judicial admissions requiring dismissal of the Connecticut action. In rejoinder the plaintiffs make two points which the court agrees with:
(1) The fact that the settlement agreement was not alleged in the Ohio action has no bearing on its existence, but rather demonstrates only that it was not relevant to the alleged Ohio action which is addressed to the bona fides of the underlying agreements.
(2) . . . the continued existence and validity of the Underlying Agreements is not antithetical to the existence and enforceability of the Settlement Agreement. The plaintiffs have the option of enforcing either of these agreements.
In light of the foregoing there can be no "judicial admission," as commonly understood, based on the Ohio action.
In any event, the general rule appears to be that . . . "ordinarily, pleadings in one case do not' amount to judicial admissions in another case. An admission contained in a pleading in one action may, however, be received in evidence against the pleader on the trial of another action." 32 CJS "Evidence," § 402, p. 136, cf. McCormick On Evidence, Vol. II, 5th ed., § 257, pp. 142-43. See Tait, Handbook of Connecticut Evidence, § 8.16.3, p. 587: "Judicial admissions are conclusive only in the judicial proceeding in which made . . . In subsequent proceedings such prior judicial admissions are merely evidential admissions, to be used as evidence to prove a matter in dispute in the subsequent trial." See ancient case of Perry v. Simpson Manufacturing Co., 40 Conn. 313, 317 (1873), cf. Bradley v. Newman, 137 Conn. 81, 83 (1950). Logic would seem to dictate the same rule where two pending but separate litigations are involved.
There is no judicial admission in the Ohio action which would preclude this action.
For the foregoing reasons, the court denies the motion insofar as it requests summary judgment just as it has denied relief by way of a motion to strike.
(a)
In a footnote added to the conclusion of the defendant's second brief they say "In addition, plaintiff's opposition papers fail to establish a genuine issue of material fact regarding the existence of a binding agreement." However, the defendant's citation to exhibits is selective and does not negate the allegations of a partial performance enumerated in paragraph 15 of the Robert Haversat, Sr. affidavit (Ex. 1 of plaintiffs.' exhibits). At least two of these sets of allegations post-date the referenced difficulties of securing lenders which is now being advanced as a reason why a binding agreement cannot be found.
(b)
The plaintiffs in their brief raise several arguments as to why certain hypothetical arguments against their claims have no merit. But the defendants never raised these arguments — in their second brief the defendants state that the plaintiffs' opposition brief solely focuses on rebutting arguments not even raised by defendants. The court therefore, will not give an advisory opinion on these issues.