Appellate Court Notes

by Pullman & Comley, LLC

Welcome to our Supreme and Appellate Court summaries page.  Here, I provide abbreviated summaries of decisions from the Connecticut appellate courts which highlight important issues and developments in Connecticut law, and provide practical practice pointers to litigants.  I have been summarizing these court decisions internally for our firm for more than 10 years, and providing relevant highlights to my municipal and insurance practice clients for almost as long.  It was suggested that a wider audience might appreciate brief summaries of recent rulings that condense often long and confusing decisions down to their basic elements.  These summaries are limited to the civil litigation decisions.  I may from time to time add commentary, and may even criticize a decision’s reasoning. Such commentary is solely my own personal opinion.. I hope the reader finds these summaries helpful. – Edward P. McCreery

Appellate Court Advance Release Opinions

  • AC36912 - Whitney v. J.M. Scott Associates, Inc.

Plaintiff entered into an employment and stock purchase agreement with the owner of the company, that provided if he were terminated without cause before the end of five years, his purchased stock would have to be sold back to the defendant at an agreed-upon value, and he would be paid a liquidated amount for his termination from employment. If he continued his employment through five years, he, in turn, would buy out the defendant (company owner) from the rest of the company stock.  Despite prior favorable employment reviews, the defendant informed the plaintiff in the 4th year that he would not honor the obligation to sell company stock to the plaintiff, and then proceeded to give him bad reviews and fired him, claiming it was “for cause”. The plaintiff sued.

The Trial Court found that the plaintiff was terminated from his employment without adequate cause, and that the defendant had engaged in common law fraud by deliberately failing to disclose that the company owed deferred compensation to the defendant that would be due and owing if the plaintiff had been able to buy the company. The Court awarded breach of contract damages, liquidated damages, punitive damages and pre-judgment interest in favor of the plaintiff, but the Trial Court denied the request for CUTPA damages.

On appeal, the defendant first argued that the Trial Court miscalculated the damages for the breach of the stock option, arguing that the only way to measure it was the difference between the historic purchase price of the stock and the value of the stock. The Appellate Court disagreed, and upheld the Trial Court’s calculation of damages utilizing the “Benefit of the Bargain” theory, whereby damages were calculated based upon the plaintiff’s testimony that he planned to own the corporation for ten years after buying out the defendant, and thus would have received a total compensation over that timeframe of $1.7 million, from which was deducted the $400,000 the plaintiff did earn at alternate employment after being fired. This was just, in part, because the Stock Option Purchase provided no mechanism for calculating any measure to calculate damages in the event of a breach of the obligation to sell stock (as opposed to the provision covering the price of re-purchase). Next, the defendant claimed that the Trial Court erroneously failed to require the plaintiff to return his shares of stock if he was terminated, as provided for in the employment agreement. The Appellate Court agreed. That clause did provide a fixed price for the repurchase of the stock. A defrauded party has the option to seek rescission of a contract or enforcement of a contract. Here, the plaintiff chose to enforce the contract. Therefore, all its terms must be enforced, including the plaintiff’s obligation to sell stock back to the defendant at the fixed price called for in the agreement.

Next, the defendant challenged an award of $250,000 in punitive damages. In order to recover for common law punitive damages, the pleadings must allege – and the evidence must show – a wanton or willful, malicious conduct, and the language contained in the pleadings must be explicit to inform the Court and opposing counsel that such damages are being sought. The damages are measured by the plaintiff’s expenses of litigation, less taxable costs, generally arrived at by multiplying the attorney hours against a reasonable rate, and then adjusting this lodestar calculation by other factors as outlined in the Johnson v. Georgia Highway Express (Fifth Circuit) decision. Here, the Trial Court awarded punitive damages without hearing evidence on the attorney’s fees, without providing the defendant an opportunity to rebut, and provided no numerical analysis of how the number was reached.  The Trial Court simply extrapolated from a mid-trial legal bill estimate. This does not comport with the proper way of doing a lodestar analysis. The matter was remanded for a further hearing.

Finally, the defendant claimed that the Trial Court abused its discretion by awarding pre-judgment interest where the damages were not liquidated. The Appellate Court agreed, noting that pre-judgment interest is only appropriate when the damage amount being claimed is liquidated under C.G.S. § 373-(a). Pre-judgment interest, however, was appropriate for the liquidated damage provision for termination of the employment agreement.

  • AC36931 - Prenderville v. Sinclair

Plaintiffs commenced a medical malpractice action after the death of their son, with a complaint dated April 1, with a return date of May 7, but the process did not get returned to Court until September 9th.  The defendants filed a motion to dismiss for lack of jurisdiction for failure to comply with the return of process time limits in C.G.S. § 52-46 and C.G.S. § 52-46(a). Here, process was served one hundred and fourteen days after the return date, and was filed with the Court one hundred and twenty-five days after the return date. In the meantime, the statute of limitations had expired. The plaintiffs objected, and moved to amend the return date.

The Trial Court denied the motion to amend and granted the motion to dismiss, and held that C.G.S. § 52-123 that says no pleading will be abated because of a circumstantial error was not the proper way for the plaintiffs to address the issue.

The Appellate Court agreed, holding that C.G.S. § 52-123 is available to cure defects in the writ itself, but not irregularities in service of process. The Appellate Court said that C.G.S. § 52-72 was of no relief to the plaintiffs, either, despite its broad language to permit amendment of a return date because the return date as amended must still comply with C.G.S. § 52-48(b) which requires process to be returnable no later than two months after the date of the summons. Once it was determined that the return date could not have been amended to comply with the statute, any issue of prejudice to the defendant was irrelevant. The defect in process, in turn, was an issue of personal jurisdiction and dismissal was the appropriate remedy.

Next, the plaintiffs argued their ought to be an exception when a defendant is taking steps to evade service of process by closing their office location, dissolving their company, leaving no forwarding information, etc. The Appellate Court’s reply was that the plaintiff simply failed to take advantage of all the various options for service of process upon an LLC. The statutory agent listed before dissolution with the Secretary of State’s records could have still been served at his business address, of which the plaintiffs were aware. However, even if they were not aware of his new business address, he could have been served as statutory agent at his abode. 

  • AC37123 - State v. Brantley
  • AC37530 - Wells Fargo Bank, N.A. v. Ruggiri

The Appellate Court refused to consider challenges to an earlier underlying motion for summary judgment in favor of the plaintiff lender and an earlier judgment of strict foreclosure, when the defendant only appealed a later denial of his motion to reopen the judgment.

  • AC37770 - Martin Franchises, Inc. v. Cooper U.S., Inc.

Injured party contracted Mesothelioma and sued several defendants. One of those defendants turned around as a third party plaintiff and impleaded a third party defendant saying it may be liable for some or all of the claims of the original plaintiff because the original plaintiff asserted they may have contracted the disease as a result of her husband once working at a dry cleaning establishment decades before with machinery containing asbestos. The third-party plaintiff asserted that it had bought dry cleaning equipment assets from the third-party defendant who, in turn, contractually agreed to defend and indemnify it from any claims arising out of the purchase.                 

Third party plaintiff then filed a motion for partial summary judgment, stating that there was no issue of material fact as to the third party defendant’s obligation to indemnify it pursuant to the language of the contract. The Motion attached an affidavit of an employee claiming she had been delegated the duty to review their company’s contracts, franchise agreements and legal files. The affidavit went on to say she concluded that the third party defendant had manufactured the equipment in question, had placed it at the site where the spouse worked, and that it contained asbestos, even though such events took place more than forty years before her employment. The affidavit attached no documentary proof. The third party  defendant objected to summary judgment asserting the affidavit was not based upon personal knowledge. The Trial Court accepted the allegations of the affiant that the defendant had manufactured equipment where the injured party’s spouse had worked, and might have exposed them to the asbestos, and granted summary judgment to the third party plaintiff.

The Appellate Court noted that the affidavit in support of summary judgment was a crucial piece of evidence because in the absence of it, there would be no evidence whether the dry cleaning equipment to which the injured claimant had been exposed was one manufactured by the third party defendant.  That affidavit, in turn, made numerous statements about the use of a corporate trade names, corporate marketing, and corporate succession of the third party defendant, as well as purported manufacture of equipment that contained asbestos, but failed to show any personal knowledge of the affiant about those allegations. Even though the affiant was a corporate officer of the third party plaintiff, she failed to establish that she had any personal knowledge of the manufacturing, equipment sales, and marketing of the third party defendant. The affiant’s general references to being delegated the obligation to review contracts and legal files of the company was insufficient to establish personal knowledge, especially when the affiant only started working for the third party plaintiff forty-four years after the claimant would have been exposed to the dry cleaning equipment in question. Accordingly, the affidavit did not comply with Practice Book § 17-46, showing that the witness was competent to testify to those issues, and summary judgment should not have been granted in favor of the third party plaintiff.

  • AC37497 - J.D.C. Enterprises, Inc. v. Sarjac Partners, LLC

Property owner hired an engineering firm to ascertain why its property kept flooding. An inquiry into the town whether it had any drain pipes in the area resulted in a denial. Shortly thereafter, however, a sinkhole opened up on the property, and it was discovered that there was a live municipal storm line that had a missing section. The property owner had the engineering firm repair the pipes to the tune of $150,000, but did not pay the engineering firm for the work.

When the engineering firm sued the property owner to be paid, the property owner issued a third party complaint against the municipality asserting claims for negligence, indemnity, and declaratory judgment. The complaint asserted it was being filed pursuant to Connecticut General Statutes § 7-148(c)(6). The municipality moved to strike the complaint on the basis of governmental immunity against common law negligence claims, which was granted by the Trial Court, which held that the decisions to repair or not repair, install or not install, piping were discretionary acts, and that the Identifiable Person Imminent Harm Exception to Immunity did not apply.

First, the Appellate Court held that it agreed with the Trial Court that despite the nature of the pleadings, all of the counts of the complaint sounded in common law negligence. The Appellate Court noted that the plaintiff was not attempting to rely upon any particular statute which abrogated governmental immunity, such as the Defective Road and Bridges Statute, nor the exceptions found in Connecticut General Statutes § 52-557(n) that include Creation of a Nuisance and Ministerial Acts and Failure to Repair Known Hazards.

Further, the plaintiff failed to take advantage of Practice Book § 10-44 to plead over its complaint to assert any of the statutory provisions abrogating immunity. Connecticut General Statutes § 7-148 cited in the complaint pertains to the power of a municipality to carry out certain activities, but says nothing about abrogating immunity. Neither does a town ordinance plaintiff relied upon, as it merely designated what town department was obligated to carry out maintenance of the drainage systems. It did not provide for abrogation of immunity, either.

The facts and holdings of any case may be redacted, paraphrased or condensed for ease of reading.  No summary can be an exact rendering of any decision, however, so interested readers are referred to the full decisions.  The docket number of each case is a hyperlink to the Connecticut Judicial Department online slip opinion.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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