Opinion
No. CV07-5008683
July 24, 2007
MEMORANDUM OF DECISION RE ACTION IN DAMAGES
I. STATEMENT OF CASE
This is an action in damages arising from a dispute regarding professional accounting services. The complaint alleges breach of contract, value of services rendered, and unjust enrichment. The defendant denies certain allegations of the complaint. The case was tried on July 10, 2007.
II. FINDINGS OF FACT
The following facts were either admitted and/or proved at trial by a fair preponderance of the evidence.
"The admission of the truth of an allegation in a pleading is a judicial admission conclusive on the pleader." Rodearmel v. Rodearmel, 173 Conn. 273, 275, 377 A.2d 260, 262 (1977). "An admission in pleading dispenses with proof, and is equivalent to proof." (Internal quotation marks omitted.) Patchen v. Delohery Hat Co., 82 Conn. 592, 594, 74 A. 881 (1909).
"The [fact-finding] function is vested in the trial court with its unique opportunity to view the evidence presented in a totality of circumstances, i.e., including its observations of the demeanor and conduct of the witnesses and parties (Internal quotation marks omitted.) Cavolck v. DeSimone, 88 Conn.App. 638, 646, 870 A.2d 1147, cert. denied, 274 Conn. 906, 876 A.2d 1198 (2005).
"It is well established that in cases tried before courts, trial judges are the sole arbiters of the credibility of witnesses and it is they who determine the weight to be given specific testimony . . . It is the quintessential function of the fact finder to reject or accept certain evidence . . ." (Internal quotation marks omitted.) In re Antonio M., 56 Conn.App. 534, 540, 744 A.2d 915 (2000). "The sifting and weighing of evidence is peculiarly the function of the trier [of fact] . . . [N]othing in our law is more elementary than that the trier [of fact] is the final judge of the credibility of witnesses and of the weight to be accorded to their testimony . . . The trier is free to accept or reject, in whole or in part, the testimony offered by either party." (Citation omitted; internal quotation marks omitted.) Smith v. Smith, 183 Conn. 121, 123, 438 A.2d 842 (1981). "That determination of credibility is a function of the trial court." Heritage Square, LLC v. Eoanou, 61 Conn.App. 329, 333, 764 A.2d 199 (2001).
"[T]he trier is free to juxtapose conflicting versions of events and determine which is more credible . . . It is the trier's exclusive province to weigh the conflicting evidence and to determine the credibility of witnesses . . . The trier of fact may accept or reject the testimony of any witness . . . The trier can, as well, decide what — all, none, or some — of a witness' testimony to accept or reject." (Citations omitted; internal quotation marks omitted.) State v. Osborn, 41 Conn.App. 287, 291, 676 A.2d 399 (1996).
The trial court's function as the fact finder "is to draw whatever inferences from the evidence or facts established by the evidence it deems to be reasonable and logical." (Internal quotation marks omitted.) In re Christine F., 6 Conn.App. 360, 366, 505 A.2d 734, cert. denied, 199 Conn. 808, 508 A.2d 770 (1986).
"While a plaintiff is entitled to every favorable inference that may be legitimately drawn from the evidence, and has the same right to submit a weak case as a strong one, the plaintiff must still sustain the burden of proof on the contested issues in the complaint and the defendant need not present any evidence to contradict it . . . The general burden of proof in civil actions is on the plaintiff, who must prove all the essential allegations of the complaint." (Citation omitted; internal quotation marks omitted.) Gulycz v. Stop Shop Cos., 29 Conn.App. 519, 523, 615 A.2d 1087, cert. denied, 224 Conn. 923, 618 A.2d 527 (1992), citing Lukas v. New Haven, 184 Conn. 205, 211, 439 A.2d 949 (1981).
The standard of proof, a fair preponderance of the evidence, is "properly defined as the better evidence, the evidence having the greater weight, the more convincing force in your mind." (Internal quotation marks omitted.) Cross v. Huttenlocher, 185 Conn. 390, 394, 440 A.2d 952 (1981).
The plaintiff is a certified public accountant (CPA) with a principal place of business in Farmington, Connecticut. He has been a CPA for approximately twenty years serving individuals and small businesses. For the last five years, he has charged an hourly rate of $175.
The defendant is a Connecticut corporation with a principal place of business in West Hartford, Connecticut. The founder and president of the company is Barry Lazowski (Lazowski). The company has been in the parking control business for the last twenty years.
Lazowski has been friendly with the plaintiff's family for years and has known the plaintiff since he was a child. The plaintiff's father was a CPA and did work for the defendant in the 1990s. During this period, the plaintiff worked with his father. At some point after the plaintiff's father passed away, the plaintiff discontinued doing work for the defendant. The defendant had to hire another accounting firm.
In August 2003, the plaintiff ran into Lazowski at a local event. After exchanging pleasantries, the plaintiff indicated that he was looking for some extra work. They agreed to meet to discuss the possibility of working together.
They met at the defendant's office in late August 2003. Jay Blutt (Blutt), the chief operating officer, also attended the meeting. The company was facing the loss of its controller. The plan was to promote the current accountant assistant, Sara Kroscen, to accountant manager. The defendant envisioned the plaintiff stepping in to fill the role of controller.
The parties discussed what was necessary to make the arrangement work. The defendant needed the plaintiff to complete four high-level, analytical projects: timely financial reporting, job costing, budgeting, and inventory control. He would also be responsible for training Kroscen as the accountant manager. The plaintiff wanted to continue his outside accounting business. The parties discussed how the arrangement could work. For most of the year, the plaintiff would work on-site a few days per week. During the plaintiff's busy season, from January through April, he would focus on his own accounting practice and be in the office less frequently.
After much discussion, the parties reached an oral agreement. The plaintiff was going to act as de facto controller for the company. His primary tasks were to implement the four high-level projects: timely financial reporting, job costing, budgeting, and inventory control. He was also responsible for training Kroscen. The agreement was not reduced to writing by either party.
Conflicting evidence was presented on the issue of compensation. The plaintiff testified that the parties agreed to an hourly rate of $75. The total annual cost of his services was expected to be approximately $30,000. On the other hand, Lazowski and Blutt testified that the plaintiff did not specify the exact compensation but instead told them that they would be very happy with his fee. The preponderance of the evidence demonstrated that the parties agreed on the total annual compensation of approximately $30,000 per year but did not actually agree to an hourly rate of $75 per hour.
In September 2003, the plaintiff began providing accounting services to the defendant. The plaintiff testified that ninety percent of the work for the corporation was done on-site with the balance done at his office. The plaintiff's work week varied depending on the time of year. He kept track of his work hours on a legal pad. At the end of the month, he would total up his hours and send an invoice to the defendant. The notes were not saved. The invoices averaged approximately $3,100 per month. The plaintiff adjusted the first three invoices to reflect a courtesy discount of fifty percent. The discount was provided to keep within the $30,000 yearly estimate and to reflect the plaintiff's learning curve in trying to understand the company's accounting and business practices. The parties never discussed the courtesy discount.
According to the plaintiff, the company's accounting practices were poor. Many of the financial documents were inaccurate or incomplete. The plaintiff had to spend an inordinate amount of time making sure the basic accounting was being done correctly, rather than doing the high-level, analytical work. A high staff turnover made it difficult to implement many procedures. The plaintiff believed he would have been able to get to the other jobs if the accounting department had worked better. The defendant was aware that the plaintiff was having problems with the mundane things which made it difficult to get to the high-level tasks. The plaintiff believed his most important task was to generate monthly financial information. He did not readily recall having any meetings with Lazowski or Blutt regarding his performance.
During 2005, the plaintiff claimed he provided a variety of accounting services to the defendant, including adjusting trial balances, adjusting journal entries, bank reconciliations, analysis and adjustments regarding accounts receivable on detailed historical aging report, preparation of prepaid insurance and insurance payable schedule, analysis of credit card accounts and payments, analysis of line of credit and loan activity, sales tax returns, calculation of accrued payroll expenses, schedule of rent paid, schedule of payroll by department, schedule of payroll taxes paid, schedule of health insurance paid, and schedule of dental and life insurance paid. The plaintiff believed that the defendant had authorized payment for his 2005 invoices because they were entered into the company's record system. Lazowski contested this point.
The defendant did not always pay the plaintiff on time. Several months passed before the plaintiff received his first payment. Eventually, the plaintiff was paid for his services rendered in 2003 and 2004. The plaintiff billed the defendant for services performed in 2005, but he was never paid in full. He continued to provide services through the end of September 2005, even though he was not getting paid.
The defendant viewed the situation much differently than the plaintiff. Lazowski testified that the plaintiff's primary responsibilities were the four high-level projects: timely financial reporting, job costing, budgeting, and inventory control. While the plaintiff was working for the company, he never completed any of these projects. He made little, if any, progress toward these goals. He failed to generate timely monthly reports on a regular basis. In terms of budgeting, the best he could do was to produce a partial budget, which was never completed. The plaintiff never implemented job costing or inventory control. He also never trained Kroscen.
On numerous occasions, Lazowski and Blutt apprised the plaintiff of their concerns regarding his performance, especially the untimely monthly reporting. The plaintiff was constantly told that he was hired to do the high-level projects, not the routine accounting work. They told the plaintiff to pick a date to complete any of the projects. Instead, the plaintiff did what he wanted to do, the low-level accounting work. Lazowski claimed that at some point the plaintiff came in and apologized for not completing the projects. The plaintiff never told Lazowski that he was bogged down with low-level work. If the plaintiff had done so, the defendant would have hired accountant temps, which would have been a lot less expensive than having the plaintiff do the basic accounting.
The defendant still had to retain an outside accounting firm to review the company's financial statements. An accounting firm was hired based on the plaintiff's recommendation. The plaintiff shared office space with the firm. The defendant expected that the firm's fees would be less because of the work the plaintiff was supposed to be doing. However, the outside accounting firm's charges were higher than expected.
Despite his frustrations, Lazowski was not good at confrontation. He had known the plaintiff since he was a child. Lazowski decided to stop paying the plaintiff in the hope that the plaintiff would get the message his services were no longer needed and leave.
In the summer, 2005, with the situation still unresolved, the parties met at the office to discuss the plaintiff's work for the company. Lazowski expressed concerns regarding the plaintiff's performance. He was critical of the plaintiff for not being on-site enough. The plaintiff was requested to be in the office on specific days and be available for meetings. The plaintiff had previously been in the office on a more regular basis, on Tuesdays and Thursdays. Lazowski also wanted more detailed invoices from the plaintiff documenting his work days. After the meeting, the invoices dated September 7, 2005, and October 1, 2005, documented, for the first time, the days worked as well as an hourly rate of $75.
By the end of September 2005, the situation had not improved, and the plaintiff stopped providing services to the defendant. The plaintiff testified that Lazowski said later he felt bad so much money was owed and promised to try to pay by the end of the month. The defendant made a final payment to the plaintiff in February 2006. According to the defendant, the plaintiff's services were not missed. After the plaintiff left, Kroscen was able to perform almost all of the tasks the plaintiff was hired for, including generating timely monthly financial statements and implementing job costing and inventory control.
During the period in question, the defendant paid the plaintiff $49,313.75 for services rendered. The plaintiff claims an unpaid balance for services rendered of $27,660. The plaintiff has made demand for full payment without success.
Additional facts will be provided, as necessary, which are found by a fair preponderance of the evidence.
III. DISCUSSION
"Whoever asks the court to give judgment as to any legal right or liability has the burden of proving the existence of the facts essential to his or her claim of defense." (Citations omitted.) C. Tait J. LaPlante, Connecticut Evidence (3rd Ed. 2001) § 3.3.1, p. 136.
A. Breach of Contract
The essential elements for a cause of action based on breach of contract are (1) agreement formation, (2) performance by one party, (3) breach of the agreement by the other party, (4) direct and proximate cause, and (5) damages. McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn.App. 486, 503-04, 890 A.2d 140, cert. denied, 277 Conn. 928, 895 A.2d 7 (2006). "[A] breach of contract claim . . . requires proof by a preponderance of the evidence." Foley v. Huntington Co., 42 Conn.App. 712, 732 n. 7, 682 A.2d 1026, cert. denied, 239 Conn. 931, 683 A.2d 397 (1996).
(1) Agreement Formation
"The existence of a contract is a question of fact to be determined by the trier on the basis of all the evidence." (Internal quotation marks omitted.) John M. Glover Agency v. RDB Building, LLC, 60 Conn.App. 640, 643, 760 A.2d 980 (2000).
"The doctrine of consideration is of course fundamental in the law of contracts, the general rule being that in the absence of consideration an executory promise is unenforceable. In defining the elements of the rule, we have stated that consideration consists of a benefit to the party promising, or a loss or detriment to the party to whom the promise is made . . . An exchange of promises is sufficient consideration to support a contract." (Internal quotation marks omitted.) Keefe v. Norwalk Cove Marina, Inc., 57 Conn.App. 601, 606, 749 A.2d 1219, cert. denied, 254 Conn. 903, 755 A.2d 881 (2000), quoting Osborne v. Locke Steel Chain Co., 153 Conn. 527, 530-31, 218 A.2d 526 (1966). "In order for an enforceable contract to exist, the court must find that the parties' minds had truly met . . . If there has been a misunderstanding between the parties, or a misapprehension by one or both so that their minds have never met, no contract has been entered into by them and the court will not make for them a contract which they themselves did not make . . . [A]n agreement must be definite and certain as to its terms and requirements. (Citations omitted; internal quotation marks omitted.) Electrical Wholesalers, Inc. v. M.J.B. Corp., 99 Conn.App. 294, 302, 912 A.2d 1117 (2007). In other words, "[o]ur case law requires definite agreement on the essential terms of an enforceable agreement." (Internal quotation marks omitted.) 111 Whitney Avenue, Inc. v. Commissioner of Mental Retardation, 70 Conn.App. 692, 699, 802 A.2d 117 (2002). "The parties' intentions manifested by their acts and words are essential to the court's determination of whether a contract was entered into and what its terms were." (Internal quotation marks omitted.) Aquarion Water Co. of Connecticut v. Beck Law Products Forms, LLC, 98 Conn.App. 234, 239, 907 A.2d 1274 (2006). The "[p]arties are bound to the terms of a contract even though it is not signed if their assent is otherwise indicated." (Internal quotation marks omitted.) Id.
"[W]here evidence as to terms of an oral contract is conflicting, it is for the trier of fact to pass upon the facts and determine the terms of the contract." (Internal quotation marks omitted.) A M Towing Recovery, Inc. v. Guay, Superior Court, judicial district of Hartford, Docket No. CVH 7221 (May 15, 2006, Bentivegna, J.), citing 11 R. Lord, A Treatise on the Law of Contracts (1999) § 30:8, p. 95. "It is a fundamental principle of contract law that the existence and terms of a contract are to be determined from the intent of the parties . . . The parties' intentions manifested by their acts and words are essential to the court's determination of whether a contract was entered into and what its terms were . . . Whether the parties intended to be bound without signing a formal written document is an inference of fact for the trial court . . ." (Internal quotation marks omitted.) MD Drilling and Blasting, Inc. v. MLS Construction, LLC, 93 Conn.App. 451, 454-55, 889 A.2d 850 (2006).
(2) Performance by One Party
To prevail in an action for breach of contract to recover unpaid fees for professional services, a lawyer or other professional service provider must prove by a fair preponderance of the evidence that he actually rendered the services he contracted to perform, the rate of compensation agreed to for such services, and the time required to perform them. Day v. Len-Metal-Fab, Inc., 3 Conn. Cir.Ct. 249, 212 A.2d 426 (1965).
(3) Breach of the Agreement by the Other Party
In the present matter, the plaintiff alleges that the defendant breached the agreement by not paying for services rendered.
"Under an at-will employment relationship, an employer can alter the terms of compensation provided [the employer] has given notice of the alteration to the employee and the employee thereafter continues [his or her] employment." 27 Am.Jur.2d Employment Relationship § 53, p. 594 (2004). "Where, however an employee is an at-will employee, a notice by the employer that for the future he will pay less compensation to the employee creates a new contract based upon a sufficient consideration, if the employee continues service thereafter." 69 A.L.R.4th 1147 (1989). "However, even if there is an at-will employment relationship, the employer cannot unilaterally alter the amount of the compensation for work that has already been rendered by the employee." 27 Am.Jur.2d Employment Relationship § 53, p. 594 (2004).
(4) Direct and Proximate Cause
"One who violates his contract with another is liable for all the direct and proximate damages which result for the violation . . . Causation is an essential element of damages in a breach of contract action; and as in tort, a plaintiff must prove that a defendant's breach directly and proximately caused his or her damages . . . Damages for breach of contract must be such only as actually follow or may follow from the breach of contract . . . Moreover, damages may be so remote as not to be directly traceable to the breach, or they may be the result of other intervening causes, and then they cannot be allowed." (Citations omitted; internal quotation marks omitted.) National Market Share, Inc. v. Sterling National Bank, 392 F.3d 520, 525-26 (2d Cir. 2004).
"It is hornbook law that to be entitled to damages in contract a plaintiff must establish a causal relation between the breach and the damages flowing from that breach. Such causal relation must be more than surmise or conjecture, inasmuch as a trier is concerned not with possibilities but with probabilities. Where . . . the damages claimed are remote from the breach complained of and the causal connection is wholly conjectural, there can be no recovery." Calig v. Schrank, 179 Conn. 283, 286, 426 A.2d 276 (1979).
(5) Damages
"As a general rule, contract damages are awarded to place the injured party in the same position as he would have been in had the contract been fully performed. Fuessenich v. DiNardo, 195 Conn. 144, 153, 487 A.2d 514 (1985). General contract damages are allowable whenever they arise directly from and as a natural consequence of the breach." (Internal quotation marks omitted.) Barry v. Posi-Seal International, Inc., 36 Conn.App. 1, 27 (1994), cert. denied, 237 Conn. 918, 676 A.2d 1373 (1996). "Damages are recoverable only to the extent that the evidence affords a sufficient basis for estimating their amount in money with reasonable certainty." (Internal quotation marks omitted.) Dent v. Lovejoy, 85 Conn.App. 455, 470-71, 857 A.2d 952 (2004), cert. denied, 272 Conn. 912, 866 A.2d 1283 (2005), quoting Lawson v. Whitey's Frame Shop, 241 Conn. 678, 689, 697 A.2d 1137 (1997). See also Expressway Associates II v. Friendly Ice Cream Corp. of Connecticut, 218 Conn. 474, 477, 590 A.2d 431 (1991). "Courts have traditionally held that a party may recover `general' contract damages for any loss that may fairly and reasonably be considered [as] arising naturally, i.e., according to the usual course of things, from such breach of contract itself." (Internal quotation marks omitted.) Jacob v. Thomas, 26 Conn.App. 305, 314, 600 A.2d 1378 (1991), cert. denied, 221 Conn. 914 (1992). Moreover, "[i]t is axiomatic that the burden of proving damages is on the party claiming them." (Internal quotation marks omitted.) 24 Leggett Street Ltd. Partnership v. Beacon Industries, Inc., 239 Conn. 284, 308, 685 A.2d 305 (1996).
"[D]amages resulting from a breach of contract may be divided into those which flow naturally and usually from the breach itself, or general damages, and those which do not naturally and usually flow from such a breach, but did in this case, or special or consequential damages. As to the former, the parties need not actually have considered the possibility of their occurrence, as long as they may fairly be supposed to have considered them, while, as to the latter, to be recoverable, they must meet the requirements of causation, certainty, and foreseeability, that is, be such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract. Stated another way, when a defendant has reason to know, before entering into the contract in question, of facts indicating that particular, though unusual, damages will follow or may follow the defendant's failure to perform its agreement, the defendant is liable for such damages." Milford v. Coppola Construction Co., 93 Conn.App. 704, 714-15, 891 A.2d 31 (2006), citing 24 S. Williston, Contracts (4th Ed. Lord 2002) § 64:12, pp. 130-31.
B. Value of Services Rendered
"Quantum meruit is the remedy available to a party when the trier of fact determines that an implied contract for services existed between the parties, and that, therefore, the plaintiff is entitled to the reasonable value of services rendered . . . The pleadings must allege facts to support the theory that the defendant, by knowingly accepting the services of the plaintiff and representing to her that she would be compensated in the future, impliedly promised to pay her for the services she rendered." (Internal quotation marks omitted.) Schreiber v. Connecticut Surgical Group, P.C., 96 Conn.App. 731, 737-38, 901 A.2d 1277 (2006), quoting Total Aircraft, LLC v. Nascimento, 93 Conn.App. 576, 582 n. 5, 889 A.2d 950, cert. denied, 277 Conn. 928, 695 A.2d 800 (2006). A contractor is permitted to recover the reasonable value of services rendered when the other party has wrongfully prevented him from completing the contract. Valente v. Weinberg, 80 Conn. 134, 138, 67 A. 369 (1907); Dadio v. Dadio, 123 Conn. 88, 92, 192 A. 657 (1937). The Supreme Court ruled that a discharged attorney is entitled to receive "reasonable compensation" for the work he has done up to the point of discharge. Cole v. Myers, 126 Conn. 223, 21 A.2d 396 (1941). In Shapero v. Mercede, 77 Conn.App. 497, 507, 827 A.2d 11 (2003), the court stated that: "quantum meruit is a doctrine that provides restitution for amounts not previously paid . . . In other words, by alleging a cause of action in quantum meruit, the plaintiff asked the court to award him a reasonable sum for services rendered and for which payment had not been made previously. In fact, in the quantum meruit count of his complaint, he expressly sought to recover the reasonable value of the services he "performed . . . to (his] financial detriment."
C. Unjust Enrichment
"Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefited, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiffs' detriment." (Internal quotation marks omitted.) Vertex v. Waterbury, 278 Conn. 557, 573, 898 A.2d 178 (2006). "Unjust" is defined as "contrary to justice; not just." Black's Law Dictionary (8th ed. 2004).
D. Analysis
Based on the evidence presented, the plaintiff's strongest claim is based on value of services rendered.
The parties entered into an oral agreement under which the plaintiff would provide accounting services to the company. The plaintiff was to act as the de facto controller. He was responsible for completing four high-level, analytical projects and training Kroscen. His compensation was to be approximately $30,000 per year.
During the period in question, the plaintiff never completed any of the four high-level projects he was hired to perform. He did not provide timely monthly reporting on a regular basis. He never implemented job costing, budgeting or inventory control. There was no evidence that he made any effort to train Kroscen.
Nevertheless, the plaintiff did provide valuable accounting services to the company, including adjusting trial balances, adjusting journal entries, bank reconciliations, analysis and adjustments regarding accounts receivable on detailed historical aging report, preparation of prepaid insurance and insurance payable schedule, analysis of credit card accounts and payments, analysis of line of credit and loan activity, sales tax returns, calculation of accrued payroll expenses, schedule of rent paid, schedule of payroll by department, schedule of payroll taxes paid, schedule of health insurance paid, and schedule of dental and life insurance paid.
These are services that a certified public accountant may provide as well as high-level analysis. In addition, the defendant never terminated its relationship with the plaintiff before these services were performed. Lazowski's aversion to confrontation is not a sufficient basis to bar the plaintiff's recovery of the reasonable value of the services rendered. The defendant, by knowingly accepting services of the plaintiff and representing that he would be paid in the future, impliedly promised to pay him for the services. The plaintiff is entitled to recover a reasonable sum for services he performed.
The breach of contract claim fails, in large part, because the plaintiff did not prove performance on his part. The evidence failed to show that the plaintiff rendered all the services he contracted to perform. He never completed the high-level tasks he was hired for, namely, timely financial reporting, job costing, budgeting, and inventory control. The plaintiff made limited, if any, progress towards achieving these goals. He also never trained Kroscen. There was a lack of evidence regarding the number of hours and days the plaintiff worked for the defendant. The time required to perform the services was unclear.
As to unjust enrichment, while the defendant's actions reflected poor business practices and a somewhat dysfunctional relationship with the plaintiff, they did not rise to the level necessary to sustain this claim. The plaintiff was also guilty of poor business practices, including failing to keep better records of his work for the defendant.
IV. CONCLUSION AND ORDER
The plaintiff has proved, by a fair preponderance of the evidence, the value of services rendered claim. The preponderance of the evidence does not support either the breach of contract or unjust enrichment claim. Accordingly, judgment is entered for the plaintiff for the value of services rendered in the amount of $13,830.00.