Opinion
HHDCV146051586
11-14-2016
Town of Manchester v. First Connecticut Capital, LLC
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Constance L. Epstein, J.
The issue is whether the court should grant the town of Manchester's application for prejudgment remedy in the amount of $770,000, on the ground that there is probable cause to believe that the town will prevail in a trial on the merits of its breach-of-contract claim and that judgment will enter for an amount greater than or equal to the amount sought.
FACTS
On March 5, 2015, the plaintiff, the town of Manchester (town), filed a two-count amended complaint against the defendant, First Connecticut Capital, LLC, arising out of the defendant's alleged failure to complete road and drainage improvements on an approved resubdivision in accordance with town regulations. Count two of the amended complaint alleges a cause of action for breach of contract. In support of that claim, the town alleges the following facts. On May 3, 2004, Distinctive Home Builders, LLC (Distinctive), entered into a contract with the town under which the town, acting through its Planning and Zoning Commission (commission), approved Distinctive's application for the resubdivision of real property located in Manchester, Connecticut (Holcombe Hills Subdivision). In exchange for the resubdivision approval, Distinctive agreed to construct the roadways and drainage systems in accordance with the town's regulations. On October 12, 2007, by warranty deed in lieu of foreclosure, Distinctive transferred title and all of its interest in the subdivision to the defendant. As a result, the defendant became a " subsequent developer" and " assumed the obligations of its predecessor [Distinctive], including the obligation to complete road and drainage improvements in accordance [with] town specifications." The defendant failed to complete the subdivision according to the town's specifications, thereby breaching its contract with the town and causing the town to sustain damages.
Count one alleges a claim for breach of a letter of credit.
The defendant filed an amended answer and special defenses on August 19, 2015. In its answer, the defendant admitted, inter alia, that on October 12, 2007, Distinctive transferred title and all of its interest in the subdivision to the defendant by deed in lieu of foreclosure. The defendant also raised special defenses to the town's breach-of-contract claim, namely, that the claim is barred by the statutes of limitations set forth in General Statutes § § 52-576 and 52-581.
The defendant also made admissions concerning the contents of an irrevocable letter of credit, which the defendant issued to the town on behalf of Distinctive, as well as other correspondence. As to the remaining allegations, the defendant either denied them or left the town to its proof.
General Statutes § 52-576(a) provides in relevant part that " [n]o action . . . on any simple or implied contract, or on any contract in writing, shall be brought but within six years after the right of action accrues . . ."
General Statutes § 52-581(a) provides in relevant part that " [n]o action founded upon any express contract or agreement which is not reduced to writing, or of which some note or memorandum is not made in writing and signed by the party to be charged therewith or his agent, shall be brought but within three years after the right of action accrues."
On July 15, 2015, the town filed an amended application for prejudgment remedy in the amount of $770,000, on the basis that there is probable cause to believe that judgment will enter in its favor on the merits of its breach-of-contract claim for an amount greater than or equal to the amount sought. The town seeks an order that authorizes the attachment of the defendant's property and prohibits the defendant from transferring or otherwise disposing of property during the pendency of litigation. The town supported its application with a sworn affidavit from Mark Czerepuszko, the town's chief construction inspector. This court held an evidentiary hearing on August 18, 2015, at which the court heard testimony from Mark Czerepuszko, the chief construction inspector for the town, and Lawrence Yurdin, on behalf of the defendant. At the court's request, the parties submitted opening briefs on October 9, 2015, and reply briefs on October 23, 2015.
At the hearing, the town withdrew its application for prejudgment remedy as to its cause of action for breach of the letter of credit, and indicated that it was proceeding solely on the basis of its breach of contract claim.
DISCUSSION
I
PREJUDGMENT REMEDY STANDARD
" A prejudgment remedy means any remedy or combination of remedies that enables a person by way of attachment, foreign attachment, garnishment or replevin to deprive the defendant in a civil action of, or affect the use, possession or enjoyment by such defendant of, his property prior to final judgment . . . A prejudgment remedy is available upon a finding by the court that there is probable cause that a judgment in the amount of the prejudgment remedy sought, or in an amount greater than the amount of the prejudgment remedy sought, taking into account any defenses, counterclaims or set-offs, will be rendered in the matter in favor of the plaintiff . . . Proof of probable cause as a condition of obtaining a prejudgment remedy is not as demanding as proof by a fair preponderance of the evidence . . . The legal idea of probable cause is a bona fide belief in the existence of the facts essential under the law for the action and such as would warrant a man of ordinary caution, prudence and judgment, under the circumstances, in entertaining it . . . Probable cause is a flexible common sense standard. It does not demand that a belief be correct or more likely true than false . . . Under this standard, the trial court's function is to determine whether there is probable cause to believe that a judgment will be rendered in favor of the plaintiff in a trial on the merits." (Citations omitted; internal quotation marks omitted.) TES Franchising, LLC v. Feldman, 286 Conn. 132, 136-37, 943 A.2d 406 (2008).
" The hearing in probable cause for the issuance of a prejudgment remedy is not contemplated to be a full scale trial on the merits of the plaintiff's claim. The plaintiff does not have to establish that he will prevail, only that there is probable cause to sustain the validity of the claim . . . The court's role in such a hearing is to determine probable success by weighing probabilities . . . Moreover, this weighing process applies to both legal and factual issues." (Citation omitted; internal quotation marks omitted.) Bank of Boston Connecticut v. Schlesinger, 220 Conn. 152, 156, 595 A.2d 872 (1991).
" [T]o justify issuance of a prejudgment remedy, probable cause must be established both as to the merits of the cause of action and as to the amount of the requested attachment. That dual requirement ensures that a person is not deprived of the use of property without due process of law." (Emphasis in original; internal quotation marks omitted.) TES Franchising, LLC v. Feldman, supra, 286 Conn. 146.
II
MERITS OF THE PLAINTIFF'S BREACH-OF-CONTRACT CLAIM
The town argues that it has established probable cause to believe that it will obtain a judgment on the merits of its breach of contract claim. The town's argument appears to be that its conditional approval of Distinctive's resubdivision application created an implied contract under which Distinctive was required to complete the public improvements according to town specifications, and that this implied contract is enforceable against the defendant. In support of its theory that the defendant is bound by the requirements set forth in the original resubdivision approval, the town asserts, inter alia, (1) that subdivision approval obligations run with the land and became enforceable against the defendant when the defendant acquired title to the subdivision by deed in lieu of foreclosure; (2) the defendant held itself out as a developer after acquiring the subdivision and is therefore bound by the terms of the subdivision approval as the " successor in interest" or " successor developer" to Distinctive; and (3) the defendant is estopped from denying its obligations under the subdivision approval because it accepted the benefits of the subdivision approval by conveying lots to individual purchasers for a profit.
The town does not explicitly state, either in its amended complaint or in its briefs, whether its cause of action arises under an express or implied contract theory. The town represented at the August 18, 2015 evidentiary hearing that the basis for its breach-of-contract claim was the Connecticut Supreme Court's decision in Brookfield v. Greenridge, Inc., 177 Conn. 527, 418 A.2d 907 (1979), which recognized that a municipality may sue a developer for damages under a breach-of-contract theory where the developer fails to construct public improvements according to the requirements of a subdivision approval. See id., 536-37. In response to this court's question, the town indicated that it was uncertain as to whether Brookfield was decided on the basis of an express or implied contract theory, eventually stating, " I guess it is implied." Subsequently, the town, in its opening brief, apparently anticipating a statute of limitations defense, argued that under General Statutes § 52-576, " [t]he statute of limitation[s] for an implied contract claim is six years after the right of action accrued, " and that the present action was commenced within the limitation period because the right of action accrued on September 7, 2009, giving the town until September 7, 2015, to commence the action. The action was commenced on May 28, 2014, by service of process. The town has not briefed the issue of whether the evidence presented at the evidentiary hearing establishes probable cause that the parties entered into an implied contract. The defendant argued at the evidentiary hearing that the town's claim was barred by the statute of limitations--presumably the three-year statute of limitations for express oral contracts set forth in General Statutes § 52-581(a)--but does not argue a statute of limitations defense in its briefs. In its reply brief, the defendant states that it understands the town's argument to be that " if the [d]efendant was not acting as a 'subsequent developer, ' the [d]efendant, through its actions . . . impliedly entered into a contract to complete the [s]ubdivison." Accordingly, that the court considers the merits of the town's breach-of-contract claim under the theory of an implied contract.
Both parties devote considerable portions of their briefs to the issue of whether the defendant is a " developer" as that term is defined in the local subdivision and zoning regulations. The regulations provide that " developer" includes " the legal or beneficial owner or owners of land included in a development" as well as " agents, successors and assigns." See Manchester Subdivision Regs., § 3; Manchester Zoning Regs., art. I, § 2. Neither party explains, however, why this issue is significant or even relevant to the ultimate question of whether the defendant is subject to the obligations of the resubdivision approval. Because the defendant is bound by the subdivision approval for other reasons, the court does not need to address this issue.
In opposition, the defendant does not dispute the contention that Distinctive was obligated under a valid agreement with the town to construct the public improvements in accordance with town specifications. The defendant's argument, instead, is that it was not a party to that agreement and is therefore not bound by Distinctive's contractual obligations. In addition to asserting that it is not a " developer" under the local regulations, the defendant contends: (1) the burdens imposed on a developer pursuant to subdivision approval do not run with the land as a matter of both law and public policy; (2) it is not a " successor in interest" or successor developer" to Distinctive because its conduct after acquiring the subdivision was merely that of a lender, not a developer; (3) the parties did not enter into a valid implied contract as a matter of law because their dealings were governed by an express contract, namely, a letter of credit; and (4) the roadways and drainage systems were impliedly dedicated and accepted for public use, absolving the defendant of responsibility to complete or repair them.
A
Implied Contract
As explained in footnote 6 of this memorandum, the town appears to advance the theory that it entered into an implied contract with the defendant under which the defendant was required to repair the roadways and drainage systems that had been improperly constructed by Distinctive. The defendant contends that there can be no valid implied contract because its dealings with the town were governed by an express contract, namely, a letter of credit.
1
Evidence Admitted at the Evidentiary Hearing
The following facts and evidence admitted at the evidentiary hearing are relevant to the town's implied contract claim. In a letter dated September 13, 2004, the town informed Distinctive that on September 8, 2004, the commission " approved with modifications" Distinctive's application for, inter alia, the resubdivision of the Holcombe Hills Subdivision. The letter stated that the modifications were set forth in detail in a staff memorandum dated September 3, 2004. That memorandum was not admitted into evidence. It is clear, however, that the modifications called for roadways, drainage systems, and other public improvements within the subdivision to be constructed in accordance with the town's specifications. The September 13, 2004 letter provided that " [a]ll public improvements required for this resubdivision" were required to be completed by September 8, 2009. Additionally, in an August 6, 2008 letter from the town to one of the defendant's contractors, in which the town identified several defects in the roadways and drainage systems, the town stated that all repairs " shall be in accordance with the [t]own of Manchester Public Improvement Standards . . ." These requirements are consistent with the Manchester Subdivision Regulations (regulations), which require, inter alia, roadways and drainage systems within an approved subdivision to be constructed in accordance with the town's Public Improvement Standards. Manchester Subdivision Regs., § § 4.09(a) and 4.11(a).
Exhibit 25.
Exhibit 8.
The commission enacted the regulations pursuant to its authority under General Statutes § § 8-25 and 8-26 to " adopt regulations covering the subdivision of land . . . Such regulations shall provide that the land to be subdivided shall be of such character that it can be used for building purposes without danger to health or the public safety, [and] that proper provision shall be made for water, sewerage and drainage . . . The commission may also prescribe the extent to which and the manner in which streets shall be graded and improved and public utilities and services provided and, in lieu of the completion of such work and installations previous to the final approval of a plan, the commission may accept a bond in an amount and with surety and conditions satisfactory to it securing to the municipality the actual construction, maintenance and installation of such improvements and utilities within a period specified in the bond." General Statutes § 8-25(a); see Manchester Subdivision Regs., § 3.
Subsequent to the town's approval of Distinctive's resubdivision application, the defendant, pursuant to General Statutes § 8-25 and § 8 of the Manchester Subdivision Regulations, provided the town with a performance bond in the form of an irrevocable letter of credit. The defendant issued the letter of credit on October 19, 2005, in the aggregate amount of $534,014.80. The letter of credit stated that sight drafts could be executed by the town upon an authorized statement that the conditions set forth in the town's modified approval of the resubdivision application had not been met. The letter of credit further provided that sight drafts must be executed " on or before October 19, 2007, " and that, absent written notification to the contrary, the expiration date would be extended for an additional period of one year, to October 19, 2008.
See Manchester Subdivision Regs., § 8 (" [t]he [t]own shall require a financial guarantee in accordance with [General Statutes § 8-25] to ensure installation of required soil erosion and sedimentation control measures and timely and adequate completion of any site improvements that will be conveyed to or controlled by the municipality").
The defendant also financed Distinctive's construction of the public improvements within the subdivision pursuant to a separate loan agreement. Lawrence Yurdin, the defendant's president and corporate executive officer, testified at the evidentiary hearing that the defendant issued a loan for approximately $725,000, which was used to finance the construction of the roadways and drainage systems. Mr. Yurdin further testified that during the construction of the public improvements, the defendant acted solely as a lender.
The terms of the loan were not admitted into evidence.
Before construction of the subdivision was complete, Distinctive began falling behind on its payments to the defendant under the loan. On October 12, 2007, Distinctive, by deed in lieu of foreclosure, conveyed all of its interest in the subdivision to the defendant. Mr. Yurdin testified that the defendant transferred its interest in the subdivision in exchange for the defendant's agreement to forgive the balance of the loan. Mr. Yurdin further testified that when the defendant acquired the subdivision, it knew there were problems with the roadways and drainage systems.
Exhibit 1.
After the defendant acquired the subdivision, it took action, in conjunction with the town, to identify and repair the defects in the roadways and drainage systems. Mr. Yurdin testified that, shortly after acquiring the subdivision, the defendant hired two contractors, West Central Enterprises, Inc. (West Central) and Anchor Engineering Services, Inc. (Anchor), for the purpose of working with the town to identify and correct fundamental problems with the roadways and drainage systems, as well as issues regarding sediment and erosion. Mr. Yurdin further testified that both West Central and Anchor were authorized to work directly with the town to correct these problems. In a letter to West Central dated August 6, 2008, a town official indicated that " the base course of pavement had failed at various locations" in the roadway and that extensive renovations were necessary to correct the problems. The letter further advised West Central to " set up a schedule for completing" the renovations, and that " [a]ll work shall be in accordance with the [town's] Public Improvement Standards . . ." Mr. Yurdin responded to the town directly, indicating in a letter that the defendant had contracted West Central to work with the town to repair the problems specified in the August 6, 2008 letter " to our mutual satisfaction." In a subsequent letter to West Central dated November 19, 2008, the town requested a determination as to the specific measures the defendant would take to correct the problems with the roadways, and indicated that " it might be in the best interest of the developer" to use any available method in order to " alleviate any activities that could be detrimental to their overall project." In response, Mr. Yurdin indicated in a December 1, 2008 letter to the town that the defendant had hired a consultant, Anchor, and that the issues raised in the town's previous letter would be resolved within thirty days. Mr. Yurdin further stated, both in the December 1, 2008 letter and in subsequent letters to the town, that its attorney was pursuing legal action against individual lot owners who had contributed to the erosion and sediment problems. The defendant also wrote directly to individual lot owners at various times in mid-2008, threatening legal action if they did not remediate the erosion problems on their lots. Yurdin testified multiple times at the evidentiary hearing that the reason the defendant undertook these actions was to " satisfy the town" so that it could convey individual lots within the subdivision and recover Distinctive's outstanding balance on the loan.
Exhibit 9.
At the same time it was coordinating with the town to identify and repair defects in the subdivision, the defendant was conveying lots. Certified copies of the deeds were admitted as exhibits at the evidentiary hearing. The defendant sold the last of its six lots on June 16, 2009, at which point it ceased to have an ownership interest in the subdivision.
The lots were sold on (1) November 8, 2007; (2) March 31, 2008; (3) September 30, 2008; (4) March 17, 2009; (5) April 28, 2009; and (6) June 16, 2009. See exhibits 2 through 7.
In a letter to West Central dated December 11, 2008, the town advised that under the general statutes, the resubdivision approval would expire on September 8, 2009, and that " [i]f the public improvements and the required plan, conveyances, and easements are not completed by the expiration date, the [commission] can act to declare the subdivision expired." See General Statutes § 8-26c(c). Mr. Yurdin, despite the fact that the defendant no longer owned any of the lots within the subdivision, wrote a letter to the town on July 14, 2009, formally requesting an extension of the subdivision for an additional two-year period. Shortly thereafter, Mr. Yurdin, accompanied by his attorney and employees from West Central and Anchor, met in person with town officials to discuss the defendant's application for an extension of the subdivision approval. Mr. Yurdin testified that he could not explain why the defendant applied for an extension of the subdivision approval after it sold the last remaining lot, but denied that it did so because of a belief that it was obligated under the original resubdivision approval to complete the public improvements.
Exhibit 17.
Exhibit 20.
In September 2009, Anchor issued a comprehensive " Roadway Investigation Report" (Anchor report), detailing its investigation and conclusions regarding " the likely causes of the rapid deterioration" of the roadways within the Holcombe Hills Subdivision. The Anchor report identified several fundamental defects in the roadways and drainage systems, and concluded that the extensive damage resulting from improper water drainage required a complete " system based" repair--in other words, that the " roadway section needs to be reconstructed comprehensively as opposed to individual localized repairs." At Mr. Yurdin's request, Anchor issued copies of the Anchor report to the town on September 11, 2009.
Exhibit 24.
Exhibit 23.
In a letter dated December 21, 2009, counsel for the defendant informed the town that the letter of credit, which had an expiration date of October 19, 2007, and had been extended for a period of one year to October 19, 2008, " has expired of its own terms, and [the defendant] is discharged from any and all obligations thereunder." The letter further stated that the one-year statute of limitations applicable to suits under letters of credit expired on October 19, 2009.
Exhibit B.
2
Analysis
" [T]he elements of a breach of contract action are the formation of the agreement, performance by one party, breach of the agreement by the other party and damages." (Internal quotation marks omitted.) Hawley Avenue Associates, LLC v. Robert D. Russo, M.D. & Associates Radiology, P.C., 130 Conn.App. 823, 832, 25 A.3d 707 (2011). " An implied in fact contract is the same as an express contract, except that assent is not expressed in words, but is implied from the conduct of the parties." Vertex, Inc. v. Waterbury, 278 Conn. 557, 573-74, 898 A.2d 178 (2006). " [A] contract implied in fact depends on an actual agreement that there be an obligation created by law that imposes a duty to perform, and it may be inferred from words, actions or conduct . . . It is not fatal to a finding of an implied contract that there were no express manifestations of mutual assent if the parties, by their conduct, recognized the existence of contractual obligations . . . Whether and on what terms a contractual commitment has been undertaken are ultimately questions of fact . . ." (Internal quotation marks omitted.) Connecticut Light & Power Co. v. Proctor, 158 Conn.App. 248, 253, 118 A.3d 702, cert. granted on other grounds, 319 Conn. 905, 122 A.3d 639 (2015). Thus, " [w]hether [a] contract is styled express or implied involves no difference in legal effect, but lies merely in the mode of manifesting assent . . . A true implied [in fact] contract can only exist [however] where there is no express one. It is one [that] is inferred from the conduct of the parties though not expressed in words." (Internal quotation marks omitted.) Id., 254.
The commonly cited example of an implied-in-fact contract involves a situation " where a plaintiff, without being requested to do so, renders services under circumstances indicating that he expects to be paid therefor, and the defendant, knowing such circumstances, avails himself of the benefit of those services. In such a case, the law implies from the circumstances, a promise by the defendant to pay the plaintiff what those services are reasonably worth." (Internal quotation marks omitted.) Id., 254. Our appellate courts have held, however, that a defendant may be liable under an implied contract to provide the plaintiff with services . See, e.g., Bolmer v. Kocet, 6 Conn.App. 595, 611, 507 A.2d 129 (1986) (holding that defendants were obligated under implied contract theory to cooperate with plaintiffs in process of obtaining subdivision approval).
The Connecticut Supreme Court addressed breach-of-contract claims in the context of subdivision approval in Brookfield v. Greenridge, Inc., 177 Conn. 527, 418 A.2d 907 (1979). In Brookfield, the municipality approved the defendant developer's application for the subdivision of two plats of land, subject to the requirement that the developer construct the plats in accordance with the municipality's subdivision and road regulations. Id., 529. Despite the lack of any " formal contract or written agreement between [the parties] relating to the construction of the roads other than the obligations of the parties implicit in the subdivision approval"; id.; the court concluded that the developer was liable for its improper construction of the roadways--specifically its failure to install sufficient underdrain--because " the roads were not constructed in accordance with its implied obligation [pursuant to the subdivision approval] to conform with good road building practice . . ." Id., 533. In addition, the court held that the municipality was not limited to recovering the amount secured by the performance bond because " [t]he contract for bonding did not supersede the agreement by [the developer], in return for subdivision approval, to complete [the plats of land] in accordance with the requirements of the town subdivision regulations and road regulations, and for breach of this agreement the [developer] may be held liable independent of the contract of suretyship." Id., 536-37 .
In the present case, it must be noted initially that the evidence set forth above clearly shows, and the defendant does not dispute, that the town's conditional approval of Distinctive's resubdivision application created a valid contract between the town and Distinctive under which Distinctive was required to construct the public improvements--including the roadways and drainage systems--in accordance with town specifications. More specifically, Distinctive, in exchange for its agreement to complete the public improvements, obtained the right to convey the subdivision lots to individual purchasers before construction of the public improvements were complete. See General Statutes § 8-25(a), prohibiting subdivision of land without approval from commission and providing that " [a]ny person, firm or corporation making any subdivision of land without the approval of the commission shall be fined not more than five hundred dollars for each lot sold or offered for sale or so subdivided."
This same contractual exchange may be inferred from the conduct of the town and the defendant. That is, the defendant, after it acquired the subdivision from Distinctive by deed in lieu of foreclosure, exercised rights under the subdivision approval by selling the lots before the public improvements were completed, and with the knowledge that the roadways were built improperly and were deteriorating. The correspondence between the town and defendant, in which the town identifies defects in the roadways and recommends remedial measures, evidences the town's belief that the defendant had taken up Distinctive's obligation to complete the public improvements. In response to this correspondence, the defendant, rather than disclaiming its intention to repair the subdivision, made representations suggesting that it would take the necessary measures to correct the defects. In addition, the defendant hired contractors for the purpose of working with the town to identify and repair the subdivision and threatened legal action against individual lot owners whose lots were contributing to sediment and erosion problems. It may reasonably be inferred from these actions that the defendant understood and accepted its obligation to complete the public improvements. Indeed, Mr. Yurdin's testimony that the defendant took these actions in order to " satisfy the town" so that the defendant could continue selling lots demonstrates an understanding that the defendant's right to sell the lots was dependent on its agreement to complete the public improvements.
For example, in the town's August 6, 2008 letter to West Central, the town advised West Central to " set up a schedule for completing" the renovations and that " [a]ll work shall be in accordance with the [town's] Public Improvement Standards . . ." Exhibit 8. Similarly, in a November 19, 2008 letter to West Central, the town requested a determination as to the methods that would be used to fix the roadways. Exhibit 14. In addition, when the subdivision approval was set to expire on September 8, 2009, the town contacted the defendant despite the fact that the defendant had conveyed its interest in the subdivision. Exhibit 17.
That the defendant applied for an extension of the resubdivision approval after the town indicated that the approval was set to expire on September 8, 2009, is particularly telling. Notably, by this time, the defendant had conveyed all of its interest in the subdivision. General Statutes § 8-26c(b) provides in relevant part that " [t]he subdivider or his successor in interest may apply for and the commission may grant one or more extensions of the time to complete all or part of the work in connection with such subdivision ." (Emphasis added.) Thus, the defendant's application--the purpose for which, as provided in § 8-26c(b), was necessarily to obtain more time to complete the required work--is strong, if not overwhelming, evidence of the defendant's awareness and assent to its obligation to complete the public improvements as required by the original subdivision approval. The defendant could offer no explanation at the evidentiary hearing for why the defendant applied for the extension. It cannot be contended, however, that the application was the result of mere clerical error, given the fact that, shortly after submitting it, Mr. Yurdin, accompanied by his attorney and both of the defendant's contractors, met in person with town officials to discuss the application.
On the basis of these facts, the town has established probable cause to believe that the parties' conduct created a contract implied in fact, under which the defendant is obligated to complete the roadways and drainage systems in accordance with town regulations, in exchange for rights to develop the land and to sell the lots.
The defendant's arguments to the contrary are unpersuasive. In its reply brief, the defendant contends that it took action to identify and repair the subdivision improvements, and to obtain an extension of the resubdivision approval, not because it understood or believed that it was contractually obligated to complete the public improvements, but because it was liable to the town under the letter of credit. This, the defendant contends, is evidenced by the fact that it stopped coordinating with the town to repair the subdivision after its exposure under the letter of credit ceased on October 19, 2009. It must be noted that, with respect to the defendant's application to extend the subdivision approval, if it allowed the subdivision to expire on September 8, 2009, it would have been liable to the town under the letter of credit to the extent necessary to complete the defective and incomplete roadways and drainage systems. See General Statutes § 8-26c(c) (" [i]f lots have been conveyed during such five-year period . . . the municipality shall call the bond or other surety on said subdivision to the extent necessary to complete the bonded improvements and utilities required to serve those lots" [emphasis added]); Southington v. Commercial Union Ins. Co., 254 Conn. 348, 361, 757 A.2d 549 (2000) (" if lots have been conveyed prior to the lapse of the specified time period from the date of the subdivision approval, a municipality is obligated to call the bond to the extent necessary to serve those lots"). That the defendant makes this argument is particularly troubling under the facts of this case because, as explained above, the defendant held itself out as the party responsible for repairing the subdivision. The defendant now contends that it never actually intended to repair the defective public improvements, but simply sought to avoid liability under the letter of credit. It follows, therefore, that all of the actions the defendant took to correct the problems with the subdivision, including its application to extend the subdivision approval, were merely a ruse to induce the town into refraining from executing a sight draft on the letter of credit until after the statute of limitations expired. If this court accepted this argument as a basis for defeating the town's implied contract claim, it would, in effect, be sanctioning bad faith. Accordingly, argument is rejected.
Finally, the defendant contends that the existence of the letter of credit precludes a finding that the parties entered into an implied in fact contract. Although " [a] true implied [in fact] contract can only exist . . . where there is no express one"; (internal quotation marks omitted) Connecticut Light & Power Co. v. Proctor, supra, 158 Conn.App. 254; the letter of credit merely established a contractual obligation on the part of the defendant, as a surety to the original resubdivision approval, to guarantee that Distinctive constructed the public improvements. It does not apply to the obligations acquired by the defendant, as principal, as a result of its acquisition of the subdivision and implied contract with the town. The Supreme Court has recognized that a contract of suretyship is separate and distinct from a principal's obligation under a subdivision approval to complete public improvements according to local regulations. See Brookfield v. Greenridge, Inc., supra, 177 Conn. 536-37 (" [t]he contract for bonding did not supersede the agreement by [the developer], in return for subdivision approval, to complete [the plats of land] in accordance with the requirements of the town subdivision regulations and road regulations, and for breach of this agreement the [developer] may be held liable independent of the contract of suretyship"). Accordingly, that the letter of credit is inapposite.
B
Estoppel
The town also contends that the defendant is estopped from denying its obligations under the subdivision approval because it accepted the benefits of the subdivision approval by conveying lots to individual purchasers for a profit.
On the issue of estoppel, the Appellate Court's decision in Middletown Commercial Associates Ltd. Partnership v. Middletown, 42 Conn.App. 426, 680 A.2d 1350, cert. denied, 239 Conn. 939, 684 A.2d 711 (1996), is instructive. In that case, the plaintiff, who was the owner of a shopping mall, brought suit to enforce a parking agreement that was entered into years earlier by the original developer of the mall and the city of Middletown (city). Id., 428. The parking agreement required the city to construct a parking lot for not less than 600 cars and to provide the original developer with parking privileges in exchange for an annual fee. Id., 429-30. The plaintiff subsequently acquired title to the shopping mall and, when the city demolished part of the parking garage to make room for a new courthouse, the plaintiff brought suit against the city on the ground that the city breached its contractual rights under the parking agreement. Id., 430. The trial court found that the plaintiff had no right to enforce the parking agreement because it was not in privity of contract with the city and it was ever assigned the agreement. Id., 431. The Appellate Court reversed, holding, inter alia, that the parking agreement was enforceable against the city under the principle of estoppel. The court wrote: " The plaintiffs are not strangers to the contract. The city accepted monthly payments totaling $9,000 per year from the plaintiffs without objection. The Connecticut Supreme Court has said: 'One enjoying rights is estopped from repudiating dependent obligations which he has assumed; parties cannot accept benefits under a contract fairly made and at the same time question its validity.' Schwarzschild v. Martin, 191 Conn. 316, 321, 464 A.2d 774 (1983); see also Sawmill Brook Racing Assn., Inc. v. Boston Realty Advisors, Inc., 39 Conn.App. 444, 451, 664 A.2d 819 (1995)." Middletown Commercial Associates Ltd. Partnership v. Middletown, supra, 42 Conn.App. 433-34. Accordingly, the court could " discern no reason why the estoppel principle . . . should not apply to the city's claim that it may accept the plaintiffs' payments, yet incur no obligations pursuant to the parking agreement." Id., 434.
In the present case, Distinctive entered into an agreement with the town under which Distinctive, in exchange for subdivision approval, agreed to complete the public improvements according to town specifications. One of the benefits of subdivision approval is that it permits the developer to convey lots prior to completion of the public improvements. General Statutes § 8-25(a) (" No subdivision of land shall be made until a plan for such subdivision has been approved by the commission. Any person, firm or corporation making any subdivision of land without the approval of the commission shall be fined not more than five hundred dollars for each lot sold or offered for sale or so subdivided"). The defendant conveyed the lots to individual purchasers despite its knowledge of the deteriorating roadways and drainage systems, and, thus, accepted the benefits of the agreement between the town and Distinctive. Estoppel prohibits the defendant from taking advantage of this benefit while avoiding its dependent obligation to complete the public improvements. Thus, the requirements set forth in the resubdivision approval are enforceable against the defendant on the basis of estoppel.
C
Subdivision Approvals Run with the Land
The town argues that Distinctive's obligations under the resubdivision approval run with the land and became enforceable against the defendant by virtue of the defendant's acquisition of the subdivision by deed in lieu of foreclosure. In response, the defendant contends that subdivision obligations do not run with the land because they burden, rather than benefit, the subsequent owner. In addition, the defendant maintains as a matter of public policy that if subdivision obligations ran with the land, it would lead to a " parade of horribles" and " would potentially stifle commercial lending in this context . . ." This is so, the defendant argues, because commercial lenders would be reluctant to issue loans to developers out of fear that their security on the loan--typically the subdivision itself--would be rendered valueless if the foreclosing lender were required to undertake the often substantial and costly obligation to complete construction of the roadways and other public improvements.
Because the defendant is obligated to complete the public improvements on the basis of a contract implied in fact and estoppel, the court does not need to address these issues.
D
Dedication of the Roadway and Drainage Systems for Public Use
The defendant argues that it is not responsible for the repair of the roadways because the roadways have been dedicated for public use. The defendant appears to argue that although the public improvements have not been formally dedicated pursuant to the provisions set forth in the location regulations, there has nonetheless been a valid dedication under the common law.
One method of creating highways " is the common-law doctrine known as dedication and acceptance. From early times, under the common law, highways have been established in this state by dedication and acceptance by the public . . . Dedication is an appropriation of land to some public use, made by the owner of the fee, and accepted for such use by and in behalf of the public . . . Both the owner's intention to dedicate the way to public use and acceptance by the public must exist, but the intention to dedicate the way to public use may be implied from the acts and conduct of the owner, and public acceptance may be shown by proof of the actual use of the way by the public . . . Thus, two elements are essential to a valid dedication: (1) a manifested intent by the owner to dedicate the land involved for the use of the public; and (2) an acceptance by the proper authorities or by the general public." (Internal quotation marks omitted.) Montanaro v. Aspetuck Land Trust, Inc., 137 Conn.App. 1, 10-11, 48 A.3d 107, cert. denied, 307 Conn. 932, 56 A.3d 715 (2012).
The Connecticut Supreme Court has held, however, that common-law dedication is not a defense to a claim for damages brought by a municipality against a developer for the developer's improper construction of public improvements. In Brookfield v. Greenridge, Inc., supra, 177 Conn. 527, the court rejected the defendants' argument that the municipality's maintenance of the defective subdivision roads " amounted to a 'common law acceptance' of the roads by their dedication to public use"; id., 534; on the ground that " [a]lthough a municipality that repairs, maintains, or improves a road may be estopped to deny its responsibility to one who sues to recover damages for personal injuries caused by a defect in the road . . . it is not in the same manner estopped from seeking damages from the builder for improper construction. We have held under similar circumstances that, when a developer has failed to improve highways in a manner acceptable to municipality authorities, [i]t is not permissible to circumvent the mandate of the statutes by a claim of common-law dedication." (Citation omitted; internal quotation marks omitted.) Id.; see also R. Fuller, 9B Connecticut Practice Series: Land Use Law and Practice (4th Ed. 2015) § 50.2, p. 173 (" [w]hether or not the town has accepted the subdivision roads as public highways, it can bring an action for damages against the subdivider and against the surety on the bond").
Here, the town has brought a cause of action against the defendant for damages arising out of its failure to properly construct and repair the roadways and drainage systems. Accordingly, the doctrine of common-law dedication is not a defense to the town's breach-of-contract claim.
III
AMOUNT OF THE PREJUDGMENT REMEDY
Having determined that there is probable cause that the town will prevail in a trial on the merits of its breach-of-contract claim, the remaining question concerns the damages that will likely be awarded. Neither party has briefed the issue of damages.
" A prejudgment remedy is available upon a finding by the court that there is probable cause that a judgment in the amount of the prejudgment remedy sought, or in an amount greater than the amount of the prejudgment remedy sought, taking into account any defenses, counterclaims or set-offs, will be rendered in the matter in favor of the plaintiff . . ." (Internal quotation marks omitted.) TES Franchising, LLC v. Feldman, supra, 286 Conn. 137. " [T]he party seeking the prejudgment remedy must present evidence that is sufficient to enable the court to determine the probable amount of the damages involved . . . Although the likely amount of damages need not be determined with mathematical precision . . . the plaintiff bears the burden of presenting evidence [that] affords a reasonable basis for measuring her loss." (Citation omitted; internal quotation marks omitted.) Id., 146 . Accordingly, " a court may grant a prejudgment remedy order that authorizes an attachment for an amount less than that sought in the application for prejudgment remedy as long as there is probable cause that a judgment in that lesser amount, taking into account any defenses, counterclaims or setoffs, will be rendered in the plaintiff's favor." Connecticut Light & Power Co. v. Gilmore, 89 Conn.App. 164, 176, 875 A.2d 546, cert. denied, 275 Conn. 906, 882 A.2d 681 (2005).
" The general rule in breach of contract cases is that the award of damages is designed to place the injured party, so far as can be done by money, in the same position as that which he would have been in had the contract been performed." (Internal quotation marks omitted.) Ambrogio v. Beaver Road Associates, 267 Conn. 148, 155, 836 A.2d 1183 (2003). " For a breach of a construction contract involving defective or unfinished construction, damages are measured by computing either [(1)] the reasonable cost of construction and completion in accordance with the contract, if this is possible and does not involve unreasonable economic waste; or [(2)] the difference between the value that the product contracted for would have had and the value of the performance that has been received by the plaintiff, if construction and completion in accordance with the contract would involve unreasonable economic waste." Levesque v. D& M Builders, Inc., 170 Conn. 177, 181, 365 A.2d 1216 (1976). Consistent with these principles, a municipality is entitled to damages from a developer for the defective construction of subdivision improvements " in an amount that would leave the [municipality] in the same position as it would have enjoyed had [the developer] fully performed [its obligation under the subdivision approval] . . ." Brookfield v. Greenridge, Inc., supra, 177 Conn. 537. " [T]he cost of completion or correction by a third party is . . . the proper measure of such damages." Id. " Damages in this circumstance must be determined as of the time of the breach . . ." Id., 538.
In the present case, the town seeks a prejudgment remedy in the amount of $770,000. In support of its application, the town submitted the sworn affidavit of Mark Czerepuszko, the town's chief construction inspector. Mr. Czerepuszko stated that he is familiar with the Holcombe Hills Subdivision as well as the improvements required by the town's subdivision regulations. Czerepuszko further averred that the estimated cost of the total work needed to complete the subdivision according to town specifications amounted to $694,050.
The Anchor report, which details the investigation and findings made by Anchor related to the " likely causes of the rapid deterioration" of the roadways, provides, inter alia, that (1) " the underdrain system is not functioning due to the existing installation conditions, " resulting in the retention of water; (2) the " rapid deterioration of the roadway pavement" is caused by insufficient bituminous concrete and granular subbase material that contains a high percentage of fines; and (3) the granite curbing has been rendered structurally unsound by the lack of adequate drainage. The Anchor report concluded that the extensive damage caused by the improper water drainage required a complete " system based" repair--in other words, that the " roadway section needs to be reconstructed comprehensively as opposed to individual localized repairs." Regarding the long-term stability of the roadways, the Anchor report opined that " nothing seems to indicate that the deterioration will not continue further." Mr. Czerepuszko testified that the remedial measures recommended by the Anchor report amount to a complete reconstruction of the roadways and drainage systems.
Mr. Czerepuszko also testified that his responsibilities as chief construction inspector include providing estimates of the costs of development projects in order to set performance bonds at the proper amount. He further testified that he prepared a spreadsheet, detailing his estimate of the total costs to implement the corrective measures recommended by the Anchor report and he also testified that the lists of expenses were drawn from two other development projects that involved similar elements. As recorded in the spreadsheet, the estimate is that it will cost $638,630 to complete the corrective actions recommended in the Anchor report, and an additional $55,420 to complete the remainder of the subdivision improvements, resulting in a total cost of $694,050 to complete the subdivision according to the requirements set forth in the town's original resubdivision approval.
Exhibit 29.
Mr. Czerepuszko admitted on cross examination that, in support of the town's original application for prejudgment remedy, he submitted a sworn affidavit stating that the repairs would cost a total of approximately $330,000, but further testified that his prior estimate was based on " spot repairs, " that is, repairs of specific areas of the roadways that were visibly deteriorating, whereas his current estimate is based on a full, systematic repair of the roadways. According to Mr. Czerepuszko, more extensive repairs were determined to be necessary after a closer consideration of the report.
The defendant has suggested that the town bears some responsibility for the improper construction of the roadways. During the construction of the roadways, town officials conducted inspections in order to ensure that the improvements were being constructed in compliance with the town's regulations, and it was concluded that Distinctive had failed to install sufficient subbase. As a result of this observation, a memorandum instructing Distinctive to cease working on the roadways pending the results of a compaction test was issued, but Distinctive was permitted to building despite the improper construction. According to Mr. Czerepuszko, however, the defects identified in the Anchor report were unrelated to problems with compaction.
CONCLUSION
The court finds that the facts and the law favor granting the town's application and the court awards a prejudgment remedy in the amount of $694,050.