Opinion
No. X08 CV 08 4018089
September 22, 2011
MEMORANDUM OF DECISION MOTION FOR PARTIAL SUMMARY JUDGMENT AS TO THE BOZZUTO CROSS-CLAIM # 311
INTRODUCTION
On September 9, 2009, the defendant, Bozzuto's, Inc. ("Bozzuto's") filed an Answer, Special Defenses, Counterclaim and Cross-Claim to the Amended Verified Complaint dated August 18, 2008. The Cross-Claim as to the defendant CT INDY NH TT, LLC set forth Five Counts. By motion dated June 3, 2011, the defendant CT INDY NH TT, LLC ("CT INDY") contends that summary judgment should be granted as to Counts One, Four, and Five of Bozzuto's cross-claim. On June 17, 2011 Bozzuto's submitted a memorandum with supporting documentation in opposition to the motion for summary judgment. Bozzuto's contends that there are genuine issues of fact that preclude the issuance of summary judgment on any of the three counts subject to the motion and memorandum. The defendant contends that there is insufficient testimony or evidence in support of Count One, alleging a fraudulent misrepresentation, Count Four, alleging a cause of action for Breach of Covenants of Good Faith and Fair Dealing or Count Five, alleging a cause of action for violation of the Connecticut Unfair Trade Practices Act. The court heard argument from counsel on August 2, 2011.
FACTUAL BACKGROUND
Bozzuto's is a wholesale distribution company for food and household products. It serves over 800 grocery retailers in New England and the mid Atlantic. In 2008, Bozzuto's negotiated a contract with the Big Y supermarkets to distribute for a number of their stores. In order to service this account, Bozzuto's needed refrigerated warehouse space in Connecticut. It became aware of the property at 300 Montowese Avenue and began negotiations for the rental of the space in June 2008. The property at this site consists of three separate buildings identified as the Grocery Building, the Produce Building, and the Transportation Building.
A proposal to lease both the Produce Building and the Grocery Building was exchanged between CT INDY and Bozzuto's on June 5, 2008. Thereafter, on July 15, 2008, CT INDY and Bozzuto's entered into a lease for both buildings for a period of five years. On the same date, Bozzuo's executed a Notice of Lease and made payments for the first month's rent and security.
Prior to entering into a lease agreement, Bozzuto's, through its' attorney, had conducted a title search to determine if any other party had recorded a Notice of Lease for the buildings. No leases or interests were discovered on the land records. The defendant CT INDY did not indicate that there were any parties with an interest in the buildings.
Beginning on July 16, 2008, Bozzuto's began work on the property, including the refrigeration and the parking lot work to allow its' use as a distribution center.
On July 17, 2008, Bozzuto's received a letter from New Breed indicating to them that New Breed had a July 7, 2006 lease agreement with the CT INDY's predecessor, PREI, which granted the right of first offer on any space in the Produce Building. Bozzuto's inquired of CT INDY about the information conveyed to them and the implications. At first, the defendant denied that there was any right of first offer. Thereafter, CT INDY informed Bozzuto's that in fact the right of first offer was limited only to the Transportation Building.
This letter does not include the Transportation Building but the discussions thereafter include and then lease the Transportation Building to New Breed.
The July 17, 2008 letter from New Breed referred to Paragraph 37 of the Lease Agreement as establishing a right of first offer. Bozzuto's representative requested a copy of the agreement and/or Paragraph 37 between CT INDY and New Breed. Neither the lease nor paragraph 37 were provided to Bozzuto's during this time. Instead CT INDY contended there was a confidentiality provision which precluded it from providing a copy of the lease to Bozzuto's. However, CT INDY inititated discussions about an amended lease with Bozzuto's because of the New Breed disclosure. Bozzuto's and CT INDY entered into a second lease agreement on July 30, 2008 for the Produce Building with an additional provision of indemnity for Bozzuto's. On August 8, 2008, shortly after entering into this lease, New Breed filed a legal action alleging that it entered into a lease with the predecessor of CT INDY, PREI, and that it contained an agreement for a right of first offer to lease the Produce Building as well as the Transportation Building and that the defendants had deprived it of this right.
On September 10, 2009, the defendant, Bozzuto's, filed an answer, special defenses and cross-claim against the defendant CT INDY. The defendant CT INDY has filed this motion for summary judgment as to the cross-claims of Bozzuto's.
DISCUSSION
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Provencher v. Enfield, 284 Conn. 772, 790-91, 936 A.2d 625 (2007). "[S]ummary judgment is appropriate only if a fair and reasonable person could conclude only one way . . . [A] summary disposition . . . should be on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party." (Citations omitted; internal quotation marks omitted.) Dugan v. Mobile Medical Testing Services, Inc., 265 Conn. 791, 815, 830 A.2d 752 (2003). The burden is on the moving party to demonstrate an absence of any triable issue of material fact and "[t]o satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17-45]." (Internal quotation marks omitted.) Zielinski v. Kotsoris, 279 Conn. 312, 318-19, 901 A.2d 1207 (2006).
The defendant, CT INDY contends that it is entitled to judgment as a matter of law because there is no evidence to sustain the cross claim as to the three counts noted above. The defendant has submitted a memorandum and affidavits from J. Michael O'Brien, Vice president of CT INDY, and Christopher R. Perry, counsel for CT INDY, attaching deposition testimony in support of its motion.
Bozzuto's submitted a memorandum of law and affidavits of Rafael Santiago and Benjamin Wattenmaker and exhibits in opposition to the motion for summary judgment, contending that there is ample evidence to support the claims of bad faith conduct, fraudulent misrepresentation and CUTPA violations in CT INDY's business dealings with Bozzuto's. The plaintiff, Bozzuto's, in the cross claim also contends that the court has previously ruled on this matter and made findings of fact which are contrary to the representations of CT INDY in the instant motion.
LEGAL STANDARD COUNT ONE — FRAUDULENT MISPREPRESENTATION
The defendant Bozzuto's included within its first count of the cross claim that the defendant CT INDY engaged in actions and made statements that were untrue and known to be untrue as to the availability of the Produce Building. In particular, Bozzuto's contends that CT INDY made statements and gave assurances to induce them to sign the lease for the Produce Building when they had knowledge of the conflict with the lease for New Breed. Bozzuto's contends that as a result of causing them to enter the lease agreement, it has incurred substantial bills and costs related to the litigation and is in jeopardy of losing the leased property. The Defendant CT INDY NH TT, LLC contends that Bozzuto's cannot support this allegation and that CT INDY did not make false representations. The defendant contends that the Bozzuto's plaintiff has failed to provide specific acts to support the claim as required by law.
A claim for fraudulent misrepresentation requires proof of four elements: (1) a false representation was made as a statement of fact; (2) it was untrue and known to be untrue by the party making it; (3) it was made to induce the other party to act upon it, and (4) the other party did so act upon that false representation to his injury. Centimark Corp. v. Village Manor Associates Ltd. Partnership, 113 Conn.App. 509, 522, 967 A.2d 550, cert. denied, 292 Conn. 907, 973 A.2d 103 (2009), HL Chevrolet v. Berkeley Ins., Co. 110 Conn.App. 428, 440, 955 A.2d 565 (2008). "Where a claim for damages is based upon fraud, the mere allegation that a fraud has been perpetrated is insufficient; the specific acts relied upon must be set forth in the complaint." Maruca v. Phillips, 139 Conn. 79, 81, 90 A.2d 159 (1952).
Bozzuto's has submitted an affidavit of Attorney Santiago that creates a genuine issue of fact as to the nature of the negotiations and the promises and representations made. The affidavit of Attorney Santiago describes a period of negotiation before the signing of the first lease on July 15, 2008. During this time frame no information was provided by CT INDY to address the right of first offer that was part of the New Breed lease. It was not until after a substantial commitment by Bozzuto's including physically beginning work to occupy the space that it received notice, not from CT INDY but from New Breed as to its' rights under a lease that was never recorded. The letter indicating a right of first offer was sent by New Breed to Bozzuto's on or about July 17, 2008. It is undisputed that this was the first notice to Bozzuto's of the claimed right of first offer. Thereafter, Bozzuto's counsel, Attorney Santiago contends he made attempts to determine what rights New Breed had in the property. On July 17, 2008, CT INDY revised the lease agreement to eliminate the Transportation Building but there was no mention of the status of the Produce Building. On July 19, 2008 counsel specifically requested to be sent "a copy of the relevant provisions of the New Breed lease, including Paragraph 37 cited in New Breed's letter, which appears to contradict the representations you and your client have made to us since this issue surfaced late on Thursday afternoon." (Santiago affidavit, Exh. 13.) Thereafter, according to Attorney Santiago's affidavit, counsel for CT INDY refused to provide the lease as a whole or only paragraph 37 but continued to assure them there was no right of first offer for the Produce Building. Counsel for Bozzuto's contends that the refusal to send the lease provisions was based upon the rationale that there was a confidentiality provision but no such provision exists. These series of representations by CT INDY, according to the affidavit of Attorney Santiago, were not truthful and were made to convince Bozzuto's to enter into the final lease for the property which they did. CT INDY submitted exhibits of deposition testimony by members of Bozzuto's in an effort to demonstrate their knowledge of the claims by New Breed. These depositions simply confirm the fact that Bozzuto's knew there was some claim being made, however, the real issue is whether the defendant CT INDY took steps to misrepresent and convince Bozzuto's that the property was not the subject of another lease agreement. The affidavits and deposition testimony create conflicting views and thus create a genuine issue of fact as to this claim. Therefore, the motion for summary judgment as to Count One is denied.
The affidavit of Attorney Santiago indicates that he "conducted substantial due diligence to ascertain whether any other party had any interest in any of the Buildings on the Property." He specifically "ordered a Title Search to ascertain whether any other party had recorded a Notice of Lease for any of the Buildings at 300 Montowese Avenue, North Haven."
At this point counsel for CT INDY had already admitted the mistake with the Transportation Building and had revised the lease to eliminate this property from the lease agreement.
COUNT FOUR — BREACH OF IMPLIED WARRANTY OF GOOD FAITH AND FAIR DEALING
An action for breach of the covenant of good faith and fair dealing requires proof of three essential elements: "(1) that the plaintiff and the defendant were parties to a contract under which the plaintiff reasonably expected to receive certain benefits; (2) that the defendant engaged in conduct that injured the plaintiff's right to receive benefits it reasonably expected to receive under the contract; and (3) that when committing the acts by which it injured the plaintiff's right to receive under the contract, the defendant was acting in bad faith." Le v. Saporoso, Superior Court, judicial district of Hartford, Docket No. CV 095028391 (October 19, 2009, Domnarski, J.) ( 2009 Ct. Sup. 17328).
Good faith and fair dealing mean an attitude or state of mind denoting honesty of purpose, freedom from intention to defraud and being faithful to one's duty or obligation. Buckman v. People Express, Inc. 205 Conn. 166, CT Page 20364 530 A.2d 596 (1987). "The definition [of good faith] requires not only honesty in fact but also observance of reasonable expectations of the contracting parties as they presumably intended." Verrastro v. Middlesex Ins. Co., 207 Conn. 179, 190, 540 A.2d 693 (1988).
On July 30, 2008 CT INDY and Bozzuto's entered into a second lease that was different than the July 15, 2008 lease. Bozzuto's was aware that the Transportation Center was not part of the July 30 lease but received assurances as late as July 28, 2008 that there were no concerns about the Produce Building. With the filing of the instant action, Bozzuto's contends that it may be precluded from occupying the Produce Building and thus lose business. Additionally, as a result of the instant action, it has expended considerable amounts for counsel fees. The issue confronting the court is whether there is a genuine issue of fact that would preclude summary judgment on this Count. The defendant utilizes portions of the deposition questions to Mr. Daly concerning the claim of good faith and fair dealing in support of the motion for summary judgment. The responses in this deposition by Mr. Daly are related to the defendant's questioning and comparing the claim to the fraud allegations. However, Mr. Daly also indicates that the claim is related to "the provision in the lease that deals with the implied duty of good faith so the fact that we're in litigation over that lease would perhaps lead you to the conclusion that there was bad faith that got us to this point." The affidavit of Rafael Santiago submitted in opposition to the summary judgment sets forth a series of actions and inactions by CT INDY that were part of the negotiations for the lease that resulted in the entering into the July 30 lease that is the subject of this action. In particular, the Santiago deposition describes the on-going negotiations for a substantial period before the July 15, 2008 lease during which time no mention was made of the lease with New Breed. He further discusses the great lengths that Bozzuto's took before the July 15, 2008 lease, including a title search of the Land Records, making payments for the lease, providing security payments, naming CT INDY as an additional insured on their commercial liability insurance policy, and informing them in writing that time was of the essence because of a commitment to distribute for Big Y Supermarkets. Thereafter, the July 17, 2008 letter from New Breed forced CT INDY to acknowledge that New Breed had some lease rights but CT INDY refused to give Bozzuto's the opportunity to decide for itself if there truly was a right of first offer. CT INDY continued to adamantly state that New Breed was incorrect. (Santiago Affidavit Exh. 14.) When Bozzuto's requested the provision through counsel they were informed that there was a confidentiality provision. No such provision is contained in the lease agreement. With the representations of CT INDY and bolstered by an indemnification agreement, Bozzuto's was convinced to sign a lease on July 30, 2008. These actions and assurances are memorialized in a series of e-mails and letters that create a genuine issue of fact as to whether CT INDY acted in good faith and fair dealing in the negotiations to enter into a lease. CT INDY contends that Bozzuto's was aware of the claim before the second lease but Bozzuto's claim is not that they were aware of it but that CT INDY assured them that the claim was incorrect and that there was no right of first offer. CT INDY made these assurances and then did not give Bozzuto's an opportunity to analyze the provision because they falsely conveyed to Bozzuto's that there was a confidentiality provision. Thus the only assurance Bozzuto's had was the very word of CT INDY. There is a genuine issue of fact as to whether the actions of CT INDY were in good faith and constituted fair dealing, Summary judgment is denied as to Count Four.
COUNT FIVE — CONNECTICUT UNFAIR TRADE PRACTICES ACT
The defendant contends that summary judgment should be entered as to Count Five of the Cross Claim because there are no genuine issues of fact. Count Five is a claim pursuant to the Connecticut Unfair Trade Practices Act ("CUTPA"). The Act, General Statutes § 42-110b(a) provides that "[n]o person shall be engaged in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce . . . To enforce this prohibition, CUTPA provides a private cause of action to [a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a [p]rohibited method, act or practice . . ." Neither of the parties have addressed the issue of general business practice in addressing the instant motion. For purposes of the motion, this court finds that the defendant is involved in the general business of commercial transactions.
The purpose of CUTPA is to protect the public from unfair practices in the conduct of any trade or commerce . . . In determining whether certain acts constitute a violation of CUTPA, our Supreme Court has adopted the criteria set out in the Federal Trade Commission's cigarette rule: (1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, otherwise — whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers[competitors or other businessman] . . . Ventres v. Goodspeed Airport, LLC, 275 Conn. 105, 155, 881 A.2d 937 (2005). All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because, to a lesser extent it meets all three. Thus, a violation of CUTPA may be established by showing either an actual deceptive practice or a practice amounting to a violation of public policy. Notably, not every contractual breach rises to the level of a CUTPA violation. In the absence of aggravating unscrupulous conduct, mere incompetence does not by itself mandate a trial court to find a CUTPA violation. Landmark Investment Group, LLC v. Chung Family Partnership, LLC, 125 Conn.App. 678, 10 A.3d 61 (2010). The instant cross claim contains more than a breach of contract claim. The claim of CUTPA in Count Five incorporates the allegations in Count One concerning fraudulent misrepresentation. Bozzuto's contends that there is substantial evidence to demonstrate that CT INDY engaged in immoral, unethical or unscrupulous activity to support the cause of action. Bozzuto's then again refers to the claim that CT INDY, through its representatives, lied about the contractual rights of New Breed. An attorney's actions during negotiations are imputed to his client for the purposes of establishing a CUTPA violation, even though the attorney is not personally liable. Lankmark Investment Group, LLC v. Chung Family Partnership, LLC, supra. Count Five adds to the allegations of Count One that CT INDY is engaged in trade and commerce within the meaning of C.G.S. § 42-110a and that the actions constitute unfair and/or deceptive acts or practices which violate C.G.S. § 42-110a. Bozzuto's also alleges that as a direct and proximate cause of CT INDY's actions it has suffered damages.
Although Bozzuto's has included a claim of breach of contract, the cause of action pursuant to CUTPA refers specifically to Count One for fraudulent misrepresentation. The claims in Count One include the actions that question the truthfulness of the disclosure of the lease with New Breed as well as the actions to prevent Bozzuto's from acquiring the lease provisions to determine their status. Instead of being forthright about the position of New Breed, CT INDY continued to negotiate with Bozzuto's, who were in a precarious position because of their commitment to the site. They had notified CT INDY that time was of the essence because of the Big Y contract. Thus, CT INDY provided a second lease on July 30, 2008 without giving Bozzuto's all of the relevant background information. Meanwhile it is uncontradicted that CT INDY assured Bozzuto that there was no right of first refusal for New Breed and the lease for the Produce Building would give them the space needed for their business. CT INDY even entered into an indemnification provision as part of the July 30 lease to induce Bozzuto to continue with the plan to lease the Produce Building.
The decision of Judge Robinson in New Breed Logistics v. CT INDY NH TT, Superior Court, judicial district of New Haven at New Haven, Docket No. CV 084032668 (December 9, 2009, Robinson, J.) ( 2010 Ct.Sup. 857) found that CT INDY had assured Bozzuto that New Breed did not have a right of first offer before completion of the July 30, 2008 lease.
These actions provide a genuine issue of fact as to whether these actions are the immoral, unethical, oppressive or unscrupulous acts which support the CUTPA cause of action. The conflicting affidavits as to the intent and knowledge of the parties and the counsel during the negotiation period and shortly thereafter are enough to establish a genuine issue of fact. The motion for summary judgment is denied as to Count Five.