Opinion
CV146050901S
04-27-2017
Joann Vitkovsky v. Gerardo Nero
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Thomas J. Corradino, Judge Trial Referee.
In the plaintiff's complaint there are two requests for relief. The court will briefly describe the claims made in the complaint and give a brief factual background relevant to the claims being made. It will then try to discuss the legal principles it should apply to the facts and finally discuss the facts in more detail as they relate to the legal issues that the court must decide.
Paragraph 3 and 4 of the complaint state as follows:
3. From on or about May 9, 2007 to on or about July 8, 2008, the plaintiff loaned money to the defendant and paid bills and obligations on the defendant's behalf and at his request, totaling approximately Thirty Eight Thousand Eight Hundred Seventy-Five and 02/100 ($38,875.02) Dollars.
4. The defendant agreed to repay those sums within a reasonable period of time.
In 2006 the defendant and Richard Botega opened a restaurant called the Family Grill and it was registered under the name Hemingway Investments, LLC. Monies expended by the plaintiff involved paying off debts incurred by the restaurant.
The claim being made is based on the existence of the foregoing alleged oral contract; there is no claim that the agreement between the parties was reduced to writing. Pursuant to the oral agreement alleged by the plaintiff, the post-trial memorandum she submitted through counsel further states that " on or about May 8, 2007, the plaintiff (at the defendant's request) obtained a Credit Line from Citizen's Bank, in the amount of $58,600.00 . . . The evidence further shows that the plaintiff paid various credit card debt on behalf of the defendant, paid various other bills and debts of the defendant's business, and loaned him various sums of money totaling the $38,872.05 amount alleged in the complaint (Exhibit 1-11)."
The complaint goes on to allege that on or about May 7, 2012 the defendant made one payment on the debt but on various occasions communicated with the plaintiff acknowledging the debt and made " further promises of repayment of said debt, " par 5. As of the date of the complaint, however, it is claimed " the defendant is in default of the terms of his promise of repayment, " par 6.
In addition to these contract claims paragraph 7 alleges that " the defendant wrongfully removed an antique shotgun, belonging to the defendant's Father from the plaintiff's home."
The answer denies all the allegations made in the contract including denying that the plaintiff made claimed payments in the defendant's behalf and at his request. The defendant also denies the allegations regarding the antique gun.
In his post-trial brief the defendant argues that (1) the evidence fails to establish that the plaintiff and defendant entered into an oral contract (2) the plaintiff failed to prove the balance of the unpaid debt. Any damage award would necessarily rest on speculation. The credit card bills she paid were not shown to be the defendant's obligations. After Botega was removed from the LLC, the plaintiff and defendant were engaged in a joint venture thus any monies paid on behalf of the LLC were also the plaintiff's obligation. (3) The defendant cannot be held personally liable for loans and payments made to the LLC. No allegations regarding piercing the corporate veil were made and the evidence, in any event does not support such an argument. (4) The plaintiff's claims are barred by the statute of frauds (5) the shotgun was a gift to the defendant (6) plaintiff's claims are varied by Sections 52-581, 52-576 CGSA. (7) The plaintiff failed to mitigate her damages.
A court trial was held on October 27, 2016.
The court will attempt to discuss the legal concepts raised by this case and then apply that discussion to the facts of the case which it will address in more detail.
I
(a)
The defendant argues that assuming an oral contract existed, which is not conceded, it is not enforceable as a result of the statute of frauds, Section 52-550 of the General Statutes. In relevant part the statute reads as follows " (a) No civil action may be maintained in the following cases unless the agreement, or memorandum of the agreement is made in writing and signed by the party or agent of the party, to be charged: . . . (5) upon any agreement that is not to be performed within one year from the making there of . . ."
What is the purpose of the statute of frauds? Applying Connecticut law the court in Lee v. Yardley, 156 F.Supp. 858, 862 (1957), said of our statute: " The statute was enacted to prevent perjury and the enforcement of claims based upon memories made faulty by the lapse of time." In Lynch v. Davis, 181 Conn. 434, 440-41, 435 A.2d 977 (1980), the court said that " the function of the statute is evidentiary, to prevent the enforcement through fraud or perjury of contracts never in fact made." In Electrical Wholesalers Inc. et al. v. M.J.B. Corporation, 99 Conn.App. 294, 302, 912 A.2d 1117 (2007), cited an earlier case which said that " The primary purpose of the statute of frauds is to provide reliable evidence of the existence and the terms of the contract . . ."
On the other hand it is also true that as said in Willow Funding Company, L.P. v. Grencom Associates, 63 Conn.App. 832, 848-49, 779 A.2d 174 (2001), with citation to case law that " Our courts have been assiduous to prevent the statute of frauds from becoming an instrument of fraud." As said in Lynch v. Davis, supra, the record before it " sparse as it is, illustrates the wisdom of restricting spurious reliance on the statute of frauds." Id. at page 441. To put it simply as Judge Bordon said in Baum v. Sundstrom, 14 Conn.Supp. 426, 427 (1946), the statute of frauds is " . . . intended to relieve against fraud and not to be invoked as an instrument in aid of perpetrating wrong."
As noted subsection (a)(5) of Section 52-550 provides that the statute of frauds would bar an action upon an oral contract " that is not to be performed within one year of the making of the agreement. The leading Connecticut case on this matter is C.R. Klewin, Inc. v. Flagship Properties, Inc. et al., 220 Conn. 569, 600 A.2d 772 (1991), most recently cited in 111 Whitney Avenue, Inc. et al. v. Commissioner of Mental Retardation, 70 Conn.App. 692, 706, 802 A.2d 117 (2002). In C.R. Klewin the court addressed a question certified to our Supreme Court by the Second Circuit Court of Appeals. The court said that the issue upon certification:
. . . can be framed as follows: in the exclusion from the statute of frauds of all contracts except those " whose performance cannot possibly be completed within a year"; (emphasis omitted) Finley v. Aetna Life & Casualty Co., supra, 197; what meaning should be attributed to the word " possibly" ? One construction of " possibly" would encompass only contracts whose completion within a year would be inconsistent with the express terms of the contract. An alternate construction would include as well contracts such as the one involved in this case, in which, while no time period is expressly specified, it is (as the district court found) realistically impossible for performance to be completed within a year. We now hold that the former and not the latter is the correct interpretation. " The critical test . . . is whether 'by its terms' the agreement is not to be performed within a year, " so that the statute will not apply where " the alleged agreement contain[s] [no] provision which directly or indirectly regulated the time for performance." Freedman v. Chemical Construction Corporation, 43 N.Y.2d 260, 265, 372 N.E.2d 12, 401 N.Y.S.2d 176 (1977). " It is the law of this state, as it is elsewhere, that a contract is not within this clause of the statute unless its terms are so drawn that it cannot by any possibility be performed fully within one year." (Emphasis added.) Burkle v. Superflow Mfg. Co., supra 492. Id., p. 580.
The court gave its reasons for the position it took at pages 582-83 where it said:
Because the one-year provision " is an anachronism in modern life . . . we are not disposed to expand its destructive force." Farmer v. Arabian American Oil Co., 277 F.2d 46, 51 (2d Cir. 1960). When a contract contains no express terms about the time for performance, no sound reason of policy commends judicial pursuit of a collateral inquiry into whether, at the time of the making of the contract, it was realistically possible that performance of the contract would be completed within a year. Such a collateral inquiry would only expand the " destructive force" of the statute " by extending it to contracts not plainly within its terms, but would also inevitably waste judicial resources on the resolution of an issue that has nothing to do with the merits of the case or the attainment of a just outcome." See 2 A. Corbin, supra, § 275, p. 14 (the statute " has been in part the cause of an immense amount of litigation as to whether a promise is within the statute or can by any remote possibility be taken out of it. This latter fact is fully evidenced by the space necessary to be devoted to the subject in this volume and by the vast number of cases to be cited").
The court explicitly then ruled as follows: " We therefore hold that an oral contract that does not say in express terms, that performance is to have a specific duration beyond one year is, as a matter of law, the functional equivalent of a contract of indefinite duration for the purposes of the statute of frauds. Like a contract of indefinite duration such a contract is enforceable because it is outside the proscriptive force of the statute regardless of how long completion of performance will actually take." Id., pp 583-84.
The C.R. Klewin case cites Burkle v. Superflow Mfg. Co., 137 Conn. 488, 78 A.2d 698 (1951). In that case the court held that where there was an oral agreement pursuant to which the plaintiff co-partnership agreed to solicit orders for plumbing tools and supplies manufactured by the defendant for an indefinite and indeterminable time in the future. The oral agreement was within the statute of frauds as a contract not to be performed within a year.
Citing C.R. Klewin the court in Jacobs v. Harold Thomas, 26 Conn.App. 305, 600 A.2d 1378 (1991), also ascribed to the position set forth in Section 130 of 1 Restatement (2d) contracts where the restatement said: " under the prevailing interpretation, the enforceability of a contract under the one-year provision does not turn on the actual course of subsequent events, nor on the expectations of the parties as to the probabilities. Contracts of indefinite duration are simply excluded; the provision covers only those contracts whose performance cannot possibly be completed within a year." (Emphasis added by Jacobs court.)
Another concept that should be discussed in the context of this case is the doctrine of equitable estoppel. The question becomes how does it affect the right of a party to rely on the statute of frauds to defeat a claim on an oral contract which would be otherwise barred by application of the statute? Justice Katz thoroughly discussed this issue under our law citing numerous cases. In Glazer v. Dress Barn Inc., 274 Conn. 33, 60-65, 873 A.2d 929 (2005), the court said:
Equitable estoppel is a doctrine that operates in many contexts to bar a party from asserting a right that it otherwise would have but for its own conduct. In its general application, we have recognized that " [t]here are two essential elements to an estoppel--the party must do or say something that is intended or calculated to induce another to believe in the existence of certain facts and to act upon that belief, and the other party, influenced thereby, must actually change his position or do some act to his injury which he otherwise would not have done." . . . This court previously has applied the doctrine of equitable estoppel to bar a party from asserting the statute of frauds as a defense so as to prevent the use of the statute itself from accomplishing a fraud.
When estoppel is applied to bar a party from asserting the statute of frauds, however, we also require that the party seeking to avoid the statute must demonstrate acts that constitute " part performance" of the contract . . . Specifically, " the acts of part performance . . . must be such as are done by the party seeking to enforce the contract, in pursuance of the contract, and with the design of carrying the same into execution, and must also be done with the assent, express or implied, or knowledge of the other party, and be such acts as alter the relations of the parties . . . The acts also must be of such a character that they can be naturally and reasonably accounted for in no other way than by the existence of some contract in relation to the subject matter in dispute." In the context of the statute of frauds; therefore, we sometimes have referred to the application of estoppel as the doctrine of part performance . . .
Thus, in sum, the elements required for part performance are: (1) statements, acts or omissions that lead a party to act to his detriment in reliance on the contract; (2) knowledge or assent to the party's actions in reliance on the contract; and (3) acts that unmistakably point to the contract . . . Under this test, two separate but related criteria are met that warrant precluding a party from asserting the statute of frauds . . . First, part performance satisfies the evidentiary function of the statue of frauds by providing proof of the contract itself . . . Second, the inducement of reliance on the oral agreement implicates the equitable principle underlying estoppel because " repudiation of the contract by the other party would amount to the perpetration of a fraud." . . .
Therefore, although this court on occasion has used the terms interchangeably, we never have intended that the doctrine of equitable estoppel and the doctrine of part performance operate as independent exceptions to the statute of frauds. . . .
In a concise summary of the law on this subject Am.Jur.2d at Section 291 pages 11-12 of the article on the statute of frauds says that: " The basis of the doctrine of part performance is that it would be a fraud upon the plaintiff if the defendant were permitted to escape performance of its part of the oral agreement after permitting the plaintiff to perform in, in reliance upon the agreement. Thus the doctrine of part performance was established for the same purpose for which the statute of frauds itself was enacted, namely, for the prevention of fraud, and it arose out of the necessity of preventing the statute from becoming an agent of fraud. Given the legislative policy evidenced by the statute of frauds, partial performance should take an oral contract out from its reach only when necessary to avoid a fraud and to accomplish justice." Among the several cases cited by the article for this proposition are the Connecticut cases of Gabriele v. Brino, 85 Conn.App. 503, 858 A.2d 273 (2004), and Rutt v. Roache, 138 Conn. 605, 87 A.2d 805 (1952).
As noted besides the statute of fraud question other legal issues are presented by this case which the court will try to discuss.
(b)
A predicate to the preceding discussion about the applicability of the statute of frauds is the question of whether there was a contract between the parties. As said in Presidential Capital Corp. v. Reale, 231 Conn. 500, 506, 652 A.2d 489 (1994) " under established principles of contract law, an agreement must be definite and certain as to its terms and requirements." Section 33 of the Restatement (2d) of contracts in subsection (1) and (2) states " (1) Even though a manifestation of intention is intended to be understood as an offer it cannot be understood as an offer so as to form a contract unless the terms of the contract are reasonably certain (2) The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy. " In comment (b) it says the rule stated in the just quoted subsection (2) " reflects the fundamental policy that contracts should be made by the parties, not by the courts and hence that remedies for breach of contract must have a basis in the agreement of the parties. " All of this is not to say in these situations a finding of the non-existence of a contract is mandated. As said in subsection (a) . . ." the actions of the parties may show conclusively that they have intended to conclude a binding contract, even though one or more terms are missing . . . In such cases courts endeavor, if possible, to attach a sufficiently definite meaning to the bargain." However, as the subsection goes on to say " if the essential terms are so uncertain that there is no basis for deciding whether the agreement has been kept or broken, there is no contract." But again there is a qualification to this in section 34 where subsection (2) states " (2) Part performance under an agreement may remove uncertainty and establish that a contract enforceable as a bargain has been formed."
It should also be noted regarding contract formation between non-marital partners our court as courts in other states has held the courts should enforce express contracts between such parties except where the contract is founded " on the consideration of meretricious sexual services, " Boland v. Catalano, 202 Conn. 333, 340-41, 521 A.2d 142 (1987). The court went on to say: " In the absence of an express contract, the courts should inquire into the conduct of the parties to determine whether the conduct demonstrates an implied contract, agreement of partnership or joint venture or some other tacit understanding between the parties, " id., see footnote 13 at page 272 in Allstate Ins. Co. v. Palumbo, 296 Conn. 253, 994 A.2d 174 (2010), also see Chiulli v. Zola et al., 97 Conn.App. 699, 706-07, 905 A.2d 1236 (2006).
(c)
It is the law in our state that " the burden of proving damages in on the party claiming them . . . When damages are claimed they are an essential element of the plaintiff's proof and must be proved with reasonable certainty . . . Frillici v. Westport, 264 Conn. 266, 283, 823 A.2d 1172 (2003)." FCM Group, Inc. v. Miller, 300 Conn. 774, 804, 17 A.3d 40 (2011). Thus " damages are recoverable only to the extent that the evidence affords a sufficient basis for estimating their amounts in money with reasonable certainty, " Carrano v. Yale-New Haven Hospital, 279 Conn. 622, 646, 904 A.2d 149 (2006).
But as said in Hess v. Burke Const., Inc., 290 Conn. 1, 961 A.2d 373 (2009) which quoted an earlier case: " 'It is axiomatic that the sum of damages awarded as compensation in a breach of contract action should place the injured party in the same position as he would have been in had the contract been performed . . . The injured party, however, is entitled to retain nothing in excess of that sum which compensates him for the loss of his bargain, " id., page 7-8. In other words " damages are recoverable only to the extent that the evidence affords a sufficient basis for estimating their amount in money with reasonable certainty, " quote from earlier case in Rossman v. Morasco et al., 115 Conn.App. 234, 249, 974 A.2d 1 (2009), also see RBC Nice Bearings, Inc. v. SKF, 146 Conn.App. 288, 313, 78 A.3d 195 (2013).
Quoting from a series of cases on this subject the court in 24 Leggett Street Limited Partnership v. Beacon Industries, Inc., 239 Conn. 284, 685 A.2d 305 (1996), said: " Although damages often are not susceptible of exact pecuniary computation and must be left to sound judgment of the trier . . . this situation does not invalidate a damage award as long as the evidence afforded a basis for a reasonable estimate by the trier of that amount . . . Mathematical exactitude in the proof of damages is often impossible, but the plaintiff must nevertheless provide a sufficient basis for the trier to make a fair and reasonable estimate, " id., page 309, see also 22 Am.Jur.2d, " Damages, " Section 719, pp. 661-62.
Even if damages can be established with sufficient certainty it is also true that in a breach of contract case a non-breaching party has a duty to minimize damages as a result of the breach, Keefe v. Norwalk Cove Marina, 57 Conn.App. 601, 610, 749 A.2d 1219 (2000). The court in Sam Howard's Apricots Restaurant, Inc. v. Citro, 237 Conn. 209, 229, 676 A.2d 844 (1996), said, quoting prior case law, " we have often said in the contracts and tort contexts that the party receiving a damage award has a duty to make reasonable efforts to mitigate damages . . . What constitutes a reasonable effort under the circumstances of a particular case is a question of fact for the trier . . . Furthermore, we have concluded that the breaching party bears the burden of proving that the non-breaching party has failed to mitigate damages, " also see Moore v. Sergi, 38 Conn.App. 829, 843, 664 A.2d 795 (1995), Preston v. Keith, 217 Conn. 12, fn9, 584 A.2d 439 (1991); Richard v. A. Waldman & Sons, Inc., 155 Conn. 343, 349, 232 A.2d 307 (1967).
All of this is reflected in Section 350, Restatement (2d) Contracts which states:
(1) Except as otherwise stated in subsection (2), damages are not recoverable for loss that the injured party could have avoided without undue risk, burden, or humiliation.
(2) The injured party is not precluded from recovery by the rule stated on Subsection (1) to the extent that he has made reasonable but unsuccessful efforts to avoid loss.
(d.)
The court will try to make some general remarks on the nature of joint ventures.
In Doe v. Yale University, 252 Conn. 641, 672-74, 748 A.2d 834 (2000), the court engaged in an extensive discussion of joint ventures and partnerships, citing previous cases. The court said:
" Our case law has long recognized that a joint venture, also referred to as a joint adventure or joint enterprise, exists when two or more parties combine their property, money, efforts, skill or knowledge in some common undertaking . . . The relationship between contracting parties cannot amount to a joint venture unless the parties so intend . . . Generally joint ventures relate to a single transaction whereas partnerships exist for a general business . . ."
We noted in Lesser v. Smith, 115 Conn. 86, 89, 160 A. 302, that " the relations and obligations of [a joint venture] in general are those which govern a partnership. This concept of a joint adventure as distinguished from a partnership, is of comparatively modern origin and is a creation of the American courts. At common law and still in England, such an enterprise is treated as an informal partnership." Similarly, in Dolan v. Dolan, 107 Conn. 342, 349, 140 A. 745, we stated that a joint venture " was what at common law was looked upon as a sort of informal partnership. It would probably still be so considered in the British Dominion, but in this country it is commonly defined as a joint enterprise or adventure." Although regarded as an informal partnership, joint ventures are generally governed by the same principles that govern common-law partnerships As in a partnership, the members of a joint venture " undertake fiduciary duties to each other concerning matters within the scope of the joint adventure." Finally it should be noted that in the Dolan case the court said: " In a joint adventure it is not necessary that there be an express agreement, for the conduct of the parties and other circumstances will often justify the inference that such an agreement existed; and the contract is not avoided for indefiniteness because the minor details are not fully established, " 107 Conn. at page 349.
There are differences between a joint venture and a partnership beyond that noted in Doe v. Yale University . As Dolan says: " There is not the relation of principal and agent in joint adventure which we find in a partnership, " id., 107 Conn. page 349, Keyes v. Nims is cited 43 Cal.App. 1, 184 P. 695 (Cal., 1919), which states " In a joint adventure, no one of the parties thereto can bind the joint adventure, " id. page 698.
What must be proven to establish the existence of a joint venture? In 46 Am.Jur.2d " Joint Ventures" at Section 8 five elements are set forth (1) " two or more persons must enter into a specific agreement to carry on an enterprise for profit (2) their agreement must evidence their intent to be joint venturers (3) each must make a contribution of property financing, skill, knowledge, or effort (4) each must have some degree of joint control over the venture (5) there must be a provision for the sharing of both profits and losses."
The " control" factor is not explicitly mentioned in the Connecticut cases the court examined. And Section 13 of the Am.Jur. article is particularly ambivalent in its discussion of the formation of such an entity. Citing several cases the section says: " To form a joint venture, there must not only be a joint interest in the objects and purposes of the undertaking but also either an express or implied right of each member of the joint venture to direct and control the other with respect to all aspects of the alleged enterprise. The mere sharing of an economic interest is not sufficient to form a joint venture, since there must be some evidence that the parties participate and have control over the enterprise." But then it goes on to say " However, there is authority to the effect that a joint venture may exist although the parties have unequal control of operations." Rhodes v. Sunshine Mine Co., 113 Idaho 162, 742 P.2d 417, 422 (Idaho, 1987) is referred to where the court quoted with approval the observation of the trial court to the effect that " It would be absurd, especially in the context of a mining operation to require that all joint venturers actively participate in all decisions of operation, " (emphasis by Rhodes court), Primary Care Investors, Seven v. PHP Health Care Corp, 986 F.2d 1208 (CA8, 1993), dealt with an entity as a joint venture in a situation where the plaintiffs were to finance the joint venture and Primary Care Corporation was to develop and operate medical centers, id., page 1209.
Although, as noted, the " control" factor is not explicitly mentioned in our case law as one of the prerequisites to finding a joint venture Connecticut cases in fact have found joint ventures in situations where one party contributes the finances to set up the enterprise which constitutes the joint venture and the other party manages or runs that enterprise or business operation, see Lesser v. Smith, 115 Conn. 86, 89, 160 A. 302 (1932), Dolan v. Dolan, 107 Conn. 342, 349, 140 A. 745 (1928), also see Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545 (1928), an opinion by Judge Cardozo and cited in Doe v. Yale University, supra, when talking of the fiduciary duties of joint venturers. In Meinhard where the plaintiff and defendant were found to have established a joint venture; the enterprise involved converting a hotel into shops and offices. Meinhard was to put up the money and Salman was to be involved in reconstructing, altering, managing and operating the property, id., p. 462.
Requirement 5 in the Am.Jur. section concerns an agreement to share losses as a prerequisite for funding a joint venture. Section 14 of the Am.Jur. article explicitly states that " The existence of an agreement between the alleged joint venturers to share in the profits and losses of the venture constitutes an essential element of a joint venture." The section notes however that in some jurisdictions " the intention to share losses may be implied from an agreement to share in the profits." Lesser v. Smith, 115 Conn. 86, 90, 160 A. 302 (1932), seems to go agree with this in saying " In the absence of an agreement to the contrary it will be presumed that the losses are to be shared in the same proportion as the profits, " also see Rhodes v. Sunshine Mining Co., supra, where the court said an agreement to share losses is important it is not essential, 742 P.2d at page 421.
The Am.Jur. section at page 42 makes the interesting observation that " a joint venture may exist even though the agreement does not explicitly provide for the sharing of losses, where the agreement requires the expenditure of time, effort, and expense by the parties such that the parties would share in the loss caused by unsuccessful efforts under the agreement." See In Re Carpenter, 205 F.3d 1249, 1252 (CA10, 2000), where the court said as to ventures: " Numerous courts have held that the 'loss' requirement is satisfied where an agreement calls for one party to expend time and out of pocket expense on the venture such that a failure to obtain a profit would render that party's effort for naught."
(e.)
Another issue raised by the defendant is that since any monies advanced by the plaintiff went for the benefit of the LLC, the defendant cannot be held personally liable.
As said in Weber v. U.S. Sterling Securities, Inc., 282 Conn. 722, 730, 924 A.2d 816 (2007): " Much like the liability protection offered to shareholders in a corporation, members of a limited liability have been traditionally exempt from liability based on their membership in a limited liability company while they remain personally liable for their individual conduct."
However, in the corporate context it has been held that a stockholder is liable if he or she makes a contract as an individual, CF. Long Atlantic PBS Inc., 681 A.2d 249, 256 (RI, 1996). Also in LeBoeuf, Lamb, Greene & MacRae v. Worsham, 185 F.3d 61, 66 (USCA2, 1999), the court applied New York law and noted that although officers and directors are generally not liable for corporate debts, " an individual may affirmatively assume personal liability for corporate debts." If Calcasieu-Marine Nat. Bank of Lake Charles v. Darling, 399 So.2d 1245, 1249 (La, 1981). Whether a shareholder has guaranteed the credit of a corporation so as to become personally liable on the corporation's obligations is a question of fact Byrd v. Brand, 140 Ga.App. 135, 230 S.E.2d 113, 114 (Ga., 1976). Aetis Brands II, LLC v. Alexander, 435 S.W.3d 432 (Tex) (held that guarantee must be conclusively established).
The article entitled " Limited Liability Companies" in 51 Am.Jur.2d Selection 16 cites several cases in other jurisdictions and the Connecticut case of Weber v. Sterling Securities Inc., supra for the proposition that " For liability purposes, a limited liability company (LLC) should be subject to the same treatment as a corporation . . . However, limited liability does not preclude individual liability for members of an LLC if that liability is not based simply on the member's affiliation with the LLC." . . . pp. 845-46.
The foregoing, however does not take account of the doctrine of piercing the corporate veil which allows an action against a member or members of an LLC under certain circumstances. The defendant first argues that the plaintiff cannot take advantage of this doctrine since it was not plead. The court will discuss the substantive nature of the doctrine as it applies to limited liability companies . . ." The general view is that it is possible to 'pierce the veil' of the limited liability company. To pierce the veil of the limited liability company (LLC) so that liability can attach to a member, a plaintiff must show that the LLC form was used to violate or evade a duty and that the LLC form must be disregarded to prevent loss to an innocent party." Section 20, page 853.
Connecticut adopts this view, see extensive discussion by Judge Cosgrove in Tzovolos v. Wiseman, 51 Conn.Supp. 532, 557-60, 16 A.3d 819 (2007), judgment aff'd, 300 Conn. 247, 12 A.3d 563 (2011), also see CL& P v. Westview Carlton Group, LLC, 108 Conn.App. 633, 639-41, 950 A.2d 522 (2008); KLM Industries v. Tylutki, 75 Conn.App. 27, 31, 815 A.2d 688 (2003); Ventres v. Goodspeed Airport, 275 Conn. 105, 140-46, 881 A.2d 937 (2005), also see section 34-134 of the general statutes.
As said at page 853, or the 51 Am.Jur.2d article, which describes piercing the corporate veil as an equitable doctrine: " When the statutory privilege of doing business in the limited liability company form is employed as a cloak for the evasion of obligations, as a mask behind which to do injustice, or invoked to subvert equity the separate personality of the liability company will be disregarded, " citing Litchfield Asset Management Corporation v. Howell, 70 Conn.App. 133, 152-58, 799 A.2d 298 (2002). As the court said on page 152 the so-called instrumentality test to determine whether the veil should be pierced requires proof of three elements.
(1) Control, that is complete domination of finances and policy and business practice in respect to the transactions attacked.
(2) Such control must have been used to commit fraud or wrong, to perpetrate or dishonest or unjust act legal rights and
(3) That the control and breach of duty must be the proximate cause of the injury or loss complained of by the plaintiff.
It should also be noted that as said in an LLC case supporting the imposition of personal liability, personal liability can be imposed for those who knowingly enter into contracts on behalf of corporations prior to their legal formation. Mastroianni v. Fairfield County Paving, LLC, 106 Conn.App. 330, 338-39, 942 A.2d 418 (2008).
II.
The court will now try to apply some of these general principle to the facts of this case.
(a.)
As noted previously the complaint alleges an oral contract stating that from on or about May 9, 2007 to on or about July 8, 2008 the plaintiff loaned the defendant money and paid bills and obligations on the defendant's behalf totaling $38,875.02 which the defendant Nero promised to repay. At trial the claim appeared to become more specific at least at one point. The following testimony occurred at page 9 under direct examination:
Q. . . . Did there come a time when you became aware that some of the bills at the restaurant weren't being paid?
A. Yes I did.
Q. And did Mr. Nero approach you about getting your assistance in paying those bills?
A. Yes he did.
Q. And can you tell me what he asked you to do?
A. It was over a period of time, maybe a couple of weeks, he asked if I would take a credit line against my home to help pay for the restaurant. And also I paid off my credit card bills.
A credit line was in this case a second mortgage on a home the plaintiff owned. The amount of the credit line according to the plaintiff's testimony was $58,000.00 of which she immediately paid some of her credit card bills in the amount of $18,000.00.
At page 23 the plaintiff agreed with her counsel's statement that when the credit line was first taken out some of the money was going to be for the restaurant's benefit. The following then occurred.
Q. How the credit line was to be repaid for the money you were taking out
A. Yes, he would pay me for what part of the credit line he used.
The court: For the restaurant?
Q. Was it with--with regard to the restaurant only or for any bills that you paid on his behalf.
A. No, it was for any bills that I used from the credit line for her Nero, he would pay me back.
Mr. Nero on direct denied asking the plaintiff to take out the home equity loan on his behalf--" it was before the restaurant and had nothing to do with the restaurant." But he did admit that " at some point some money from the credit line went into the restaurant account, " because we were having a rough time and bills needed to be paid." After the restaurant failed he denied signing a contract with the plaintiff regarding repaying any of the money that " was allegedly" loaned to him at his request. After the failure of the restaurant he denied also that he ever discussed specific repayment terms with regards to the money that the plaintiff allegedly loaned to (him)."
The genesis of contract formation is a request by one party to another party to deliver services or monies to accomplish some purpose or interest of the party making the request. The court finds it more credible to believe that the credit line was taken out with one of its main purposes to financially assist the new business Nero had begun as an LLC. As noted Nero admitted at some point credit line money was used to pay off restaurant bills because it was not doing well. The Family Grill was opened in October 2006 and the plaintiff's monetary claims covered outlays of monies for the reinstallment after May 7, 2007.
The court accepts the defendant's testimony that he gave the plaintiff $400.00 per week for her use in paying household bills and other expenses. Even when she was unemployed she received $300.00 per week in unemployment benefits and about $1,200.00 a month for child support. Why would the plaintiff have taken out a credit line of $58,000.00 with $40,000.00 left over after she paid some of her own financial obligations unless it was to support the restaurant when Nero requested her financial assistance. To take three examples of requests for funds followed by compliance the requests plaintiff's records show a July 8, 2008 check for $4,500.00 made out to United Illuminating--hardly an expense the plaintiff would have incurred in running her household. A notation at the bottom of the check says " Loan to Rest. for UI bill." A March 26, 2008 check for $3,5000.00 in which she procured cash from the credit line--where else--has a notation " Loan to Jerry Nero (Rest.)." An August 1, 2007 check for $5,000.00 has the same notation on it.
There is no doubt money was advanced at Nero's request to support his restaurant business, Vitkovsky having taken out a credit line or second mortgage on her own. This alone would not establish a contract. Under the circumstances of a case such as this, a contract couldn't only said to be formed between these two co-habitating individuals if there was an agreement on Nero's part to repay Vitkovsky for the monies given him. Leaving aside the joint venture argument for the moment, and concentrating on the issue of contract formation (although the two are related) was there an implied contract between the parties that Nero would repay Vitkovsky for monies advanced to him to operate the restaurant or was she simply making a gift to Nero based on their relationship and/or perhaps in recognition of Nero's consideration for her represented in such actions as leaving over $400 in cash per week for her use?
The latter cannot be the case. On each of the checks mentioned the plaintiff, as noted characterized the outlays of money as " loans." On the sheet where the August 1, 2007 check appears (Ex. 10) there is a note to the effect as follows: " 9/1/07 verbal agreement w/Jerry will pay back $6,000 in 2 weeks to include purchases for rest. No pd back!" Were all of these notes on the checks just referenced and made out in 2007 in anticipation of litigation that was not to commence until October 2014, to ask the question provides the answer.
Mr. Nero's position at trial was that the monies procured for the credit line were not a loan and he never signed anything obliging him to reimburse the plaintiff for monies paid on his behalf. He agreed with his counsel's assertion that after the restaurant failed he never discussed " specific payment terms" regarding the money the plaintiff alleges she loaned to him. His defense melded into the joint venture argument and any discussions he had with the plaintiff regarding these monies merely reflected the fact that any monies paid out " would be like making an investment in the stock market, if it goes good we win, if it goes bad we lose." He testified that he was not aware until November 2012, after he left the relationship that Vitkovsky claimed he owed her $35,000.00.
What is particularly harmful to the no contract theory are text messages to the plaintiff and Mr. Nero's responses which were introduced into evidence without objection.
On November 22, 2012:
Jerry I need my money for the credit line before Monday! It was due on the 14!!! I think I've waited long enough!! You will have it.
On November 17, 2012:
Jerry I really need the money for the credit line!!! U didn't have to see me at all. Just leave it when I'm at work.
I know Joann just had to finish this job. I will bring it to you.
On November 14, 2012:
Jerry I didn't get the money for the credit line.
I know I'll bring it just been crazy with work.
On November 23, 2012:
I know your mad at me but are U still going to give me the money for the credit line Jerry I really need it!!!
Yes.
On January 29, 2013:
When you asked me to take a credit line on my condo for you I did it . . . Now that we are no longer together you still owe your share of the money.
Ok.
In May 2013 Vitkovsky mentioned the $35,000.00 figure. Nero responded " Want my money. You sure it's not $50,000.00. Might be $75,000." These later remarks do not negate the significance of the just quoted earlier ones which, in a general sense evince an obligation to repay per an agreement. But could they raise an issue against contract formation in the sense there was no formal or specific agreement as to method or dates of payment amount owed or even general time period in which money owed (whatever figure that may be) had to be repaid?
The absence of these just mentioned factors may affect whether a damage claim can be articulated or in some cases when and under what circumstances a breach of contract can be said to have occurred. But in the court's opinion they do not negate the finding that an implied contract existed between these parties. The just discussed evidence establishes for the court that an agreement between the parties was formed providing that monies would be advanced to the defendant from the plaintiff's credit line at least to satisfy obligations incurred by the restaurant. There was also an understanding that the plaintiff would be reimbursed for these outlays--see notations on several checks and the text messages. As the court's previous discussion of the Restatement (2d) of contracts indicates at Section 33 subsection (1), the terms of a contract must be reasonably certain but as subsection (2) indicates " the terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy."
Payment of restaurant bills in substantial amounts covered several months and as said in section 34 of the Restatement " (2) part performance under an agreement may remove uncertainty and establish that a contract enforceable as a bargain has been formed."
Also the agreement between these parties regarding the advancement of funds occurred while they were cohabitating, some five years before Mr. Nero left the relationship. As discussed earlier courts have recognized contracts between cohabitating parties but one cannot expect in these situations detailed agreements as to time of payments, specific amounts thereof etc.--such agreements often arise in situations of mutual trust and affection. But as said Allstate Insurance v. Palumbo, supra, and preciously quoted, " In the absence of an express contract, the courts should inquire into the conduct of the parties to determine whether the conduct demonstrates an implied contract . . . or some other tacit understanding between the parties." 296 Conn. at fn 13 page 272.
Here monies were paid out through the credit line with notations by Vitkovsky that the checks represented loans were being made and the text messages with Vitkovsky's pleas and Nero's responses establish an underlying agreement.
When all is said and done how is the situation presented here and the implied contract claim different from the agreement by cohabitation partners in Chiulli v. Zola et al. 97 Conn.App. 699, 905 A.2d 1236 (2006), where the court said at pages 706-07:
" The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement, breach of agreement by the other party and damages." (Internal quotation marks omitted.) Bross v. Hillside Acres, Inc., 92 Conn.App. 773, 780-81, 887 A.2d 420 (2005). Here, the plaintiff alleged that the defendant offered to share her home with him and that they agreed to share the household expenses. The plaintiff further alleged that the agreement also included an extensive renovation plan that would increase the value of the house, achieved by the plaintiff's contributing his skills as a contractor and the defendant's paying for the supplies. In addition, the plaintiff alleged that the defendant promised " that the property was to be their common home and if it was sold, then the profit realized thereon would be divided equally between the parties." Relying on this agreement, the plaintiff completed performance over a three-year period. The plaintiff claims that he has been injured by the defendant's breach of oral contract in that (1) the defendant intends to sell the property and not to share the profits with him, (2) the defendant owes him approximately $300,000 for services rendered and moneys he expended to improve the property, and (3) the defendant intends to deny him the use of, and any profits from, the property. Thus, the plaintiff has pleaded facts sufficient to establish that he has been injured and, therefore, has standing as an individual to sue the defendant for breach of contract.
For the foregoing reasons the court concludes there was an implied oral contract between these two parties regarding credit line withdrawals by the plaintiff to pay bills associated with the restaurant.
The court's finding of an implied contract only applies to credit line payments for the Family Grille Restaurant and not to other bills she paid through the credit line on the defendant's behalf. On direct examination at page 9 the plaintiff testified she became aware some restaurant bills were not being paid and over a period of weeks Nero " asked if I would take a credit line against my home to help pay for the restaurant." At page 23 she added Mr. Nero would pay her back " for any bills from the credit line for Mr. Nero." If one examines the checks introduced into evidence, several of them have words to the effect that they represented a loan to Nero for the restaurant. Other checks do not refer to the restaurant or any loan but just have written on them Jerry Nero's bill. Also the text messages are interesting on this score. The court referred to Nero's responses to Vitkovsky's demands to be paid back for credit line payments as evidence of an agreement between the parties. However, a November 2, 2012 message from Vitkovsky to Nero, the first sent, says the following: " Jerry I need $150.00 to pay the credit line this mo. I can't afford to pay it. Now that I don't have health ins. I have to pay full price for my meds and Dr., I took that out to help u with the restaurant!!! I would never have do (sic) that otherwise. Just because u left me and have a girlfriend does not mean u don't have to pay this is your debt too; when u left u promised to pay me it's been over 6 mos . . . and u have given me nothing . . ." (emphasis by court).
For other reasons it is difficult for the court to conclude that Nero would have agreed to pay for non-restaurant credit card bills of Nero paid through the credit line by the plaintiff. The plaintiff testified she had no idea as to what Nero's credit card bills were for and which she paid out of the credit line. At one point she agreed that Nero could have run up the credit card charges for her benefit--" I'm sure when we went out together he might have purchased dinner or, you know, bought me something! I'm sure he did." As to Exhibits 1, 2, 3 and 4 the plaintiff's response was the same; she had no idea what the bills incurred were for. As to Exhibit 1--a bill for $527.29 when asked whether $500 could have been for a dinner she shared with the defendant she said " I doubt it, but, yes." From another perspective Nero testified, for example, he left his full paycheck of over $400 per week for Vitkovsky to cover expenses. In 2007 and 2008 she was only getting $850 a month for child support, no unemployment, since she was working at the restaurant Family Grille, and was earning only tips except for a few $200 a week wage payments but she could not cash the checks. The year 2007 and 2008 are the years the pay outs from the credit line are claimed. Under the foregoing circumstances how does it make sense that Nero would have agreed to reimburse Vitkovsky for non-restaurant related expenses even though they might have been to pay off his personal debts when he was apparently helping to pay all the plaintiff's household expenses? The court concludes that there was only a contract between the parties regarding the plaintiff's right to reimbursement for payment of restaurant obligations by means of the credit line.
(b)
The court will now discuss the statute of frauds issue insofar as it applies to the contract in this case. The statute of frauds (§ 52-550 CGSA) would bar an action " upon any agreement that is not to be performed within one year from the making thereof . . ." that is not based on a written agreement. The contract here to support the operations of an ongoing business enterprise is clearly a contract of indefinite duration. Outlays from the credit line by evidence of checks submitted by the plaintiff ran from May 2007 through August 2008. At the time of contract formation in May 2007 there was no indication or possible estimation of how long the contractual duties had to be performed, under the reasoning of C.R. Klewin Inc. v. Flagship Properties, supra , Jacobs v. Harold Thomas and especially Burkle v. Super Flow-Mfg. Co., supra especially (company agreed to solicit orders for tools and supplies for indefinite time). The agreement here falls under the application of the Statute of Frauds.
But the foregoing just states the problem and in this case does not provide the solution. The court concludes the doctrine of equitable estoppel as set forth in Glazer v. Dress Barn, Inc., supra, would bar the defendant's reliance on the statute of frauds. To use the vernacular this agreement was not a one-shot deal--several checks were written out by Vitkovsky over a fifteen-month period to pay restaurant bills. In other words there was ongoing part performance of the obligation Vitkovsky assumed by taking out a credit line to enable her to write these checks. As Glazer said " First part performance satisfied the evidentiary function of the statute of frauds by providing proof of the contract itself . . . Second, the inducement of reliance on the oral agreement implicates the equitable principle underlying estoppel."
The notations Vitkovsky made on the checks, as discussed, long before the relationship collapsed and when there was no prospect of litigation, and the text messages with Nero's replies indicate there was an agreement to repay--to allow the operation of the statute to negate this agreement would defeat the purposes of the statute itself, which is to prevent wrongs or unfair results.
(c)
In his thorough post-trial brief the defendant argues that after Botega, who had formed the LLC with Mr. Nero, the defendant and plaintiff operated the restaurant as a joint venture and that " therefore, any alleged sums paid to or on behalf of Hemingway Investments, LLC are also obligations of Vitkovsky." The court has previously discussed the concept of joint ventures or joint adventures as they are sometimes called but the specific point raised by the defendant requires further discussion.
Mr. Nero testified that the LLC was set up with financial help from his brother. When it opened on October 2006 a Mr. Botega was also a member of the LLC. Ms. Vitkovsky worked at the restaurant daily but Nero went on to testify that she and Botega did not get along and he left six to eight months after the restaurant opened. Nero worked during the day at his regular job so after Botega left she basically managed the restaurant. In addition, she took out a credit line of approximately $50,000 according to Nero in part to help pay restaurant bills. As discussed earlier there was no express agreement that a joint venture would be formed after Botega left but this is not a prerequisite for finding such an agreement if the other elements of the venture are met. Given the amount of time and effort Ms. Vitkovsky put into the enterprise and her managerial involvement it seems clear to the court at least that a joint venture came to be as is further evidenced by the financial assistance she gave to the restaurant from May 2007 through July 2008. It is difficult to see how the business could have continued to operate after Botega left without Ms. Vitkovsky's presence. Nor is it viable to say mere acceptance of a salary and tips nullifies any notion that there was an agreement to share profits especially in light of the large sum represented by a good percentage of the credit line taken out just to help the restaurant continue to operate.
But to get to the issue at hand does the existence of a joint venture dictate that Vitkovsky, under the facts of this case cannot be reimbursed for expenditures from the credit line which the defendant notes in its briefs.
First it should be noted that a finding of a joint venture is not precluded if all the five requirements for finding a joint venture as the court noted in its reference to 46 Am.Jur.2d, § 8 are not met. As discussed sharing of losses is said to be a prerequisite for finding of a joint venture but as noted in Lesser v. Smith, 115 Conn. 86, 90, 160 A. 302 (1932). " In the absence of an agreement to the contrary it will be presumed that the losses are to be shared in the same proportion as the profits, also see Rhodes v. Sunshine Mine Co., supra, where court said agreement to share losses is important but not essential--ergo if there is an agreement not to share all or some of the losses a finding of a joint venture can still be made. Likewise, the Am.Jur. article cites McDermott v. Strauss, 283 Ark. 444, 678 S.W.2d 334 (Ark., 1984), for the proposition that: " The general rule is a party to a joint venture may, if in accord with the agreement, obtain reimbursement from the other parties for expenses incurred in the ordinary course of the enterprise, " id., page 339, 46 Am.Jur.2d, Section 18 at page 46. That is, in such a case a joint venture can still be found.
Here monies from the credit line were procured by Ms. Vitkovsky to pay specific restaurant bills. She noted in her check records such monies were loans for the restaurant before the breakup of the relationship or litigation was even thought of. Why would she do that unless she was of the opinion that she would be reimbursed for these outlays. In the text message between Nero and Vitkovsky, Nero appeared to recognize a credit line repayment obligation.
Perhaps more to the point--here we have an LLC which according to Mr. Nero experienced a profit for a couple of months of its operation, which, given Ms. Vitkovsky's day to day involvement, she must have been well aware of under these circumstances it would not have made any sense for this woman to take out a sizeable credit line, which served as a second mortgage in the house where she lived without being assured of the fact that her expenditures would at some point be reimbursed by Nero if the restaurant failed. She was not a woman of independent wealth and even when she was employed in other jobs besides the Family Grille, there is no evidence that they generated large amounts of income--Nero still contributed his paycheck throughout periods of her employment and unemployment.
In any event the court concludes even if a joint venture is found to exist that would not absolve Nero, under the facts of this case from liability for payments of the joint ventures expenses through the credit line.
(d)
Much of the same reasoning, resting as it does in the factual context of this case, does not permit Mr. Nero to avoid paying Vitkovsky for monies taken from the credit line to pay restaurant debts based on the position that monies advanced by Vitkovsky were made to the LLC so that Nero has no personal responsibility to reimburse her. As discussed in earlier introductory remarks on this topic, it has been held that a stockholder in a corporation can be held liable for corporate debts, if he makes a contract as an individual--that is the stockholder " may affirmatively assume personal liability for corporate debts."
The court cannot accept the argument that Ms. Vitkovsky did not enter into a personal agreement with Mr. Nero that he would reimburse her for monies she paid from the credit line for restaurant bills. On an August 1, 2007 check for $5,000 she noted on the bottom of the check " (Loan to Jerry Nero for Rest.)" On a March 26, 2008 check for $3,500 she noted on the check " Loan to Jerry Nero (Rest.)." On the $4,500 check to pay the U.I. bill she wrote " Loan to Restaurant for UI bill." On an October 10, 2007 check for $12,000, $10,000 of which went to the restaurant Vitkovsky wrote on the check " Loan to Jerry Nero." The use of the word " loan" repeatedly belies any claim that these monies were paid without expectation of reimbursement from Nero personally. Further evidence of this lies in the fact that, as Nero testified, the restaurant only made profits for a couple of months. As previously noted due to her hands on involvement why would an intelligent person, both litigants struck me as such, make payments to a restaurant entity on some illusory hope she would be paid back if things turned around. More to the point the November 12, 2012 conversations took place almost three years after the restaurant folded. Mr. Nero certainly indicated he had questions about the size of the debt owed but he recognized he had an obligation that could only have resulted from the existence of an agreement (the relationship collapsed several months before) to reimburse Vitkovsky for monies laid out from the credit line.
The court will not delve into the intricacies of the doctrine of piercing the corporate veil, given the foregoing since there is no veil to pierce. In any event the court concludes the defendant cannot avoid liability on the basis of this argument. (e)
The defendant also claims that the plaintiff's claims are barred by Section 52-581 and Section 52-576 of the General Statutes.
§ 52-576. Actions for account or on simple or implied contracts
(a) No action for an account, or 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, except as provided in subsection (b) of this section.
(b) Any person legally incapable of bringing any such action at the accruing of the right of action may sue at any time within three years after becoming legally capable of bringing the action.
(c) The provisions of this section shall not apply to actions upon judgments of any court of the United States or of any court of any state within the United State, or to any cause of action governed by article 2 of title 42a.
§ 52-581. Action on oral contract to be brought within three years
(a) No 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. (b) This section shall not apply to causes of action governed by article 2 of title 42a.
Discussing these two statutes the court in Bagoly v. Riccio, 102 Conn.App. 792, 799, 927 A.2d 950 (2007), said the following:
This court has addressed the distinction between § § 52-581 and 52-576. " These two statutes, each establishing a different period of limitation, can both be interpreted to apply to actions on oral contracts. Our Supreme Court has distinguished the statutes, however, by construing § 52-581, the three year statute of limitations, as applying only to executory contracts . . . A contract is executory when neither party has fully performed its contractual obligations and is executed when one party has fully performed its contractual obligations . . . It is well established, therefore, that the issue of whether a contract is oral is not dispositive of which statute applies. Thus, the . . . argument that § 52-581 automatically applies to the oral contract between the parties is incorrect. The determinative question is whether the contract was executed." (Citations omitted: emphasis in original; internal quotation marks omitted.) John H. Kolb & Sons, Inc. v. G& L Excavating, 76 Conn.App. 599, 610 821 A.2d 774, cert. denied, 264 Conn. 919, 828 A.2d 617 (2003).
The defendant was served with the complaint on October 15, 2014. The defendant first argues, relying on Bagoly that Section 52-581 applies since per that case an executory contract was involved. Vitkovsky testified she had an oral contract with Nero. He would pay her back monies he borrowed from the credit line. In answer to her interrogatories she said the contract started May 2007 " approximately a week before credit line was done." The defendant argues, referring to the claimed oral contract that it was executory because: " At its creation Vitkovsky had not yet obtained the money nor had she loaned any money to or on behalf of Nero, nor had he agreed to pay her." This last statement cannot be garnered from Vitkovsky's testimony where at page 48 of the transcript she was asked by her attorney what where the terms of the contract. She responded the terms of the contract were that " he would pay me back what he borrowed from the credit line." She was then asked " when was that determined." Vitkovsky's response was " Before we took the credit line out, during the time we took the credit line out, and after we took the credit line out." This response was also consistent with her responses to question 22 of the Interrogatories. Query could there be any contract formation before the credit line was actually taken out. Section 20 of 17A Am.Jur.2d at page 51 states the general law: " It has been held that there must be mutuality of obligation to form a contract or to render it enforceable, and mutuality of obligation is sometimes listed as an element required for the formation of a contract." Given the agreement to repay how could there be contract formation before the credit line was taken out which represented the pool of funds to be used to pay restaurant bills. But the point really is that the contract here was " executed" since Ms. Vitkovsky paid various restaurant bills accruing prior to the restaurant's closing in January 2009.
But the defendant also argues that even if Section 52-576 applies with its 6-year statute of limitations the plaintiff's action is still barred. The last obligation paid by Vitkovsky on behalf of the restaurant was on July 8, 2008--more than six years before the service of the complaint on Mr. Nero.
The court also has difficulties with the defendant's position as to both statutes based on the concept of tolling. The case of Cadle v. Errato, 71 Conn.App. 447, 461-62, 802 A.2d 887 (2002), is instructive. There the court said:
" The Statute of Limitations creates a defense to an action. It does not erase the debt. Hence, the defense can be lost by an unequivocal acknowledgment of the debt, such as a new promise, an unqualified recognition of the debt, or a payment on account . . . Whether partial payment constitutes unequivocal acknowledgment of the whole debt from which an unconditional promise to pay can be implied thereby tolling the statute of limitations is a question for the trier of fact . . . As with other questions of fact, unless the determination by the trial court is clearly erroneous, it must stand . . ."
" A general acknowledgment of an indebtedness may be sufficient to remove the bar of the statute. The governing principle is this: The determination of whether a sufficient acknowledgment has been made depends upon proof that the defendant has by an express or implied recognition of the debt voluntarily renounced the protection of the statute . . . But an implication of a promise to pay cannot arise if it appears that although the debt was directly acknowledged, this acknowledgment was accompanied by expressions which showed that the defendant did not intend to pay it, and did not intend to deprive himself of the right to rely on the Statute of Limitations . . . [A] general acknowledgment may be inferred from acquiescence as well as from silence, as where the existence of the debt has been asserted in the debtor's presence and he did not contradict the assertion." (Citations omitted; internal quotation marks omitted.) Id., at 461-62, 802 A.2d 887.
Mr. Nero left the relationship on May 9, 2012. Ms. Vitkovsky testified that on May 6, 2012 she asked him what am I to do about the credit line bill, she couldn't pay it by herself. She then said what do you want me to do give you money every week, every month and she then said yes. The next morning she found three one hundred dollar bills on the counter. Nero testified that he recalled giving Vitkovsky the $300 because she needed to pay bills--" I recall that." He denied the money was towards the home equity line. But Vitkovsky's position in this regard is consistent with her claim that Nero owed her money on the credit line--see her November 2012 text messages. Nero announced he was leaving May 6, 2012, Vitkovsky is adamant she mentioned the credit line debt at that time--why would he leave $300 on her counter the next day. Why would she not mention the large credit line debt she took out at Nero's request for the restaurant he started? He would no longer be living there so he would not be sharing household expenses, why leave $300 after her May 6th demand but leave nothing after that. It makes more sense to the court that he left the $300 in response to her plea regarding the credit line but then thought it over and stopped paying because of new obligations. Also his November 2012 response to Vitkovsky's text messages are consistent with his acknowledgment that he owed money on a debt incurred in his behalf and at his request.
Query--the court finds it difficult to believe Mr. Nero was completely oblivious to the nature of the household and other obligations Vitkovsky had despite the fact that for periods of time Vitkovsky had no income. She was using some of the money Nero left her to pay interest on the credit line up to the time he left the relationship. Would that not be the date the action occurred thereby avoiding the statute of limitations arguments?
III
The court will now turn to the damage claim in this matter based on its conclusion that there was a viable oral contract between the parties.
As the court has discussed, the only damage claim that can be considered to have arisen out of a breach of the oral agreement between the parties concern payments made for the restaurant.
Exhibit 1 is a check Vitkovsky wrote in the amount of $527.29 to pay off one of his (Nero's) credit card bills. No description of why the bills were incurred is given. The date of the check is June 2, 2007 and the monies came from the credit line. All the foregoing is true of Exhibit 2 which is dated May 18, 2007 and is a check for $2,513.53 and Exhibit 3, a May 19, 2007 check for $1,433.19. When asked about these checks for credit card payoffs Vitovsky agreed these credit card charges could very well have been used for her benefit, dinner or gifts for example. Each one of these three checks has " Jerry Nero's Bill . . ." on the bottom right hand as does Exhibit 4 made out to District Merchants for the sum of $2,072.89. As with the other exhibits, Exhibit 4, made out May 18, 2007, gives no indication as to what Nero used his credit card for to account for this sum and Ms. Vitkovsky provided no information. June 2, 2007 check for $477.40 which was written to pay off a Nero Credit card debt with the same lack of description as to what the credit card was used for and for whom the charges were incurred. Ms. Vitkovsky at one point in her testimony explicitly said that she had no knowledge as to what Nero used the credit cards for. Also, as will be discussed, Ms. Vitkovsky knew quite well how to indicate on checks she wrote for the restaurant's benefit on the checks written for that purpose and she did so on several of them but she did not do so on any of the just discussed checks.
In any event regarding the just discussed checks which simply had a notation that they were to pay Nero's credit card obligations without reference to the restaurant even if Vitkovsky had a contract claim against Nero for monies advanced from the credit line to cover his personal obligations there would be no right to recovery. Any award for damages would be entirely speculative and require the court to engage in a guessing game since the plaintiff honestly conceded some of the charges involved could very well have included sums Nero spent on dinners, gifts to her etc. Also the equities of the result are not so unacceptable given the fact that he was leaving her $300 to $400 a week from his paycheck for various expenses resulting in a benefit to her and which was not categorically denied. Under these circumstances how could Nero have paid his own bills and met his personal obligations? At one point Vitkovsky said Nero's wages were garnished but when and how long were not set forth. It is also true that for periods of time in their relationship Vitkovsky was unemployed and receiving only $300 per week in unemployment and child support which the court assumes was used for that purpose and could not have completely covered household expenses.
However, there are several exhibits, Exhibits 5 through 10 as to which Vitkovsky testified were checks for the sums stated that drew on the credit line and were for the benefit of and used for paying off restaurant bills. Exhibit 7 is dated July 8, 2008 and is made out for $4,500 to cover a UI restaurant bill. Ms. Vitkovsky said the company was about to shut off the electricity and that's why the bill was paid. And on cross examination (p. 124) Nero appeared to agree the UI bill was paid out of the credit line but took the position that by paying the bill Vitkovsky received a lot of benefit--" She ran the restaurant." A payment of $10,000 was made for the use of the restaurant (see Ex. 5, check dated 10/10/07) but Nero on cross examination testified the monies went to the restaurant but said he was not obligated to pay Vitkovsky back " the restaurant is obligated to pay it." --confirming the money went to the restaurant. Exhibit 9 is a March 26, 2008 check for $3,500 Ms. Vitkovsky said she put into the restaurant's account and a Citizen's Bank Deposit slip for that amount appears below the check. An August 1, 2007 check (Ex. 10) for $5,000 indicates like Exhibit 9 that it is for the restaurant and a Citizens Bank Deposit slip attached to Exhibit 10 reflects the deposit. Exhibit 6 is a July 8, 2008 check for $350.90 made out to Amex which Vitkovsky claims went to the restaurant which she personally made out from monies her mother gave her and it was not from the credit line. Mr. Nero testified and at Page 114 of the transcript admitted that monies came into the restaurant from the credit line and never personally was asked to deny and did not deny the foregoing exhibits were in fact restaurant bills that had been paid. There is one August 6, 2008 check for $610.59 (Ex. 8) which Vitkovsky said were for the restaurant's benefit. She says that garden supplies she bought at Lowe's, the store to which the check was made were used to plant flowers in front of the restaurant. But the notation at the bottom of the check reads " for rest sup/garden home." The court accepts this characterization as accurate as opposed to Ms. Vitkovsky's testimony given eight years after the fact.
The total provable monies from the credit line used to pay expenses and bills of the Family Grille Restaurant are as follows:
Exhibit 7
$4,500.00
Exhibit 5
$10,000.00
Exhibit 9
$3,500.00
Exhibit 10
$5,000.00
Exhibit 6
$350.90
Total
$23,350.90
However, one further matter must be discussed if the issue of damages is to be addressed. The defendant claims the plaintiff failed to mitigate her damages. His testimony was that he gave Vitkovsky from $440 to $500 a week. The sum of $440 was his approximate basic salary but he was also compensated for side jobs. Nero's testimony was that he continued to do this from the time the credit line was taken out to the end of their relationship in May 2012. The argument is that Nero never knew that monies he gave the plaintiff were not being applied to the principal but only to pay interest. Also Vitkovsky failed to offer any accounting of the credit line, including the credit line application and application of Nero's contributions. But the burden is clearly on the defendant to establish the defense of mitigation of damages, there is no dispute a credit line was taken out, and Nero agreed that one of the main reasons for doing so was to help the restaurant he opened continue to operate. The critical years that are involved in addressing this issue run from 2007 through the first half of 2012. Monies given before that date can hardly be involved in the mitigation of damage claim--the damage claim did not accrue until May 2007 when payments started to be made out of the credit line for the restaurant.
In any event the important point is the clear law that the burden is on the defendant to prove a mitigation claim. The court has examined the plaintiff's responses to interrogatories and particularly the response to paragraph 10 which asked Ms. Vitkovsky to list her expenses. The monthly expenses listed ranged from $2,518.50 to $2,873.50. In the years 2007, and 2008 Vitkovsky was working at the restaurant and apparently not collecting unemployment but only relying on tips from a failing business, and child support in the amount of $850 per month. The court must assume much of that money could only be applied to support the child, whence its name.
After that, assuming she was on unemployment, she only got $300 a week from that source. The plaintiff gave no evidence or made any pretrial inquiry to contest the monthly support figures, or to establish whether and when she worked after 2009 to the date of the breakup. On direct examination Mr. Nero said after the restaurant closed Vitkovsky " eventually" got a new job but " not for a while" " maybe a year." Also on cross examination Nero admitted Vitkovsky paid some of his credit card debts. But he also seemed to say the plaintiff paid all the credit card bills implying his and her bills. That would make sense since he testified he gave all the money he earned each week to her up until the breakup--he said he did not even keep a dime clearly he had to run up credit card charges under all of these circumstances. As noted the defendant also argues that he was not aware that the plaintiff was only paying interest charges on the credit line debt--but the foregoing evidence indicates she had no funds to go beyond that and the defendant did not prove otherwise. The court credits Vitkovsky's testimony that they both knew only interest payments were being made--his response to the situation being: " don't worry about it, eventually it'll get paid." That is certainly an understandable response from Nero who on the joint venture theory said it was like an investment in the stock market collapsed but given the evidence it is hard to justify a viable failure to mitigate argument, or better put that such an argument has been established. Not an iota of evidence was presented to indicate that due to Nero's contributions or what monies she was receiving over the relevant time period she was using any of the monies left over after paying household bills interest on the credit line and Mr. Nero's bills for other than these purposes. Difficulty in proving failure to mitigate is not surprising since in these cohabitation contractual situations while the partners remain romantically involved it would be unrealistic for either one of the partners to keep detailed records on financial expenditures on the expectation that there would be a split at some point in the future. Under these circumstances a heavy burden is placed on a defendant to prove a mitigation theory otherwise the doctrine, instead of being a shield would be turned into a method of unfairly avoiding justifiable claims.
For the foregoing reasons the court awards the damages as indicated on this aspect of the claim.
IV
There is another claim made by the plaintiff unrelated to the credit line repayment claim. In paragraph 7 of the complaint it is alleged that " the defendant wrongfully removed an antique shotgun, belonging to the plaintiff's father, from the plaintiff's home."
The defendant argues that the gun was a gift inter vivos from the plaintiff's father to him. The case of Kukanskis v. Jasut, 169 Conn. 29, 34, 362 A.2d 898 (1975) which held that " to constitute a valid inter vivos of personal property, there must be not only a delivery of possession but also an intent on the part of the donor that title shall pass immediately." The defendant also quotes other language from the case which says: " A gift may be valid even though the original owner's intent is to postpone the enjoyment of the property to a future date, " id. In this case the gun would have been given to the defendant while he was living with the daughter of the donor in the daughter's house. The defendant took the gun when he ended the relationship in May 2012 and left the daughter's home. At the time the defendant says the gift of the gun was made to him the donor father was not living with the defendant and his daughter in the latter's home. The article on " gifts" in 38 Am.Jur.2d page 755 et seq. cert. Section 18, page 775 quotes cases to the effect that: " Words alone normally are not sufficient to constitute gift since they constitute a mere promise or executory agreement to make a gift of property which is unenforceable unless accompanied by delivery of the property, " two cases cited are Krickerberg v. Hoff, 201 Ark. 63, 143 S.W.2d 560 564 (Ark, 1940), and Farah v. Stout, 112 Md.App. 106, 684 A.2d 471, 478 (Md.App. 1990).
Connecticut law on the subject of inter vivos gifts is set forth in Wasniewski v. Quick and Reilly, Inc., 292 Conn. 98, 103-05, 971 A.2d 8 (2009). There the court said: quoting from and relying on other cases: " 'A gift is the transfer of property without consideration . . . To make a valid gift inter vivos, the donor must part with control of the property which is the subject of the gift with an intent that title shall pass immediately, and irrevocably to the donee . . .'In other words, a valid inter vivos gift of personal property requires both delivery of possession of the property intent on the part of the donor that title shall pass immediately to the donee' . . .'The burden of proving intent and delivery rests upon the party claiming the gift . . . 'Delivery of possession is the foundation of a transfer; without delivery there can be no transfer . . . 'In order to constitute a delivery, not only must the donor part with possession of the property, but he must also relinquish control of it . . . Delivery may be actual or constructive, but does not require that the donor effect delivery in any particular form or mode."
The question of whether Ms. Vitkovsky's father gifted this particular antique shot gun to Mr. Nero is a difficult one. The court does not believe either party was lying about this matter or for that matter about the credit line issue. The events in question occurred years before the trial, there was an emotional breakup all of which has an effect on memory and the importance attached to particular events and conversations.
The defendant has the burden of proving the donor's intent to gift the gun to him and delivery of the weapon to him. The delivery part of the equation is the easier one to resolve. If there is a donative intent established whether the gun was handed over to Nero or Nero and Vitkovsky or even Vitkovsky alone the father must be held to be aware that Nero lived in the same house as the daughter so that delivery would entail the gun arriving at the house Nero shared with Vitkovsky no matter who took it there or how it arrived. The real issue in the case is the donative intent.
Mr. Nero testified that he had a very close relationship with Vitkovsky's father visiting him on an almost daily basis; he described the relationship as " great." He even testified that he would go over to the father's house to clean it. At one point in his testimony he became somewhat irritated and emotional. Ms. Vitkovsky did not attempt to contradict Nero's statements in this regard regarding the closeness of their relationship. Ms. Vitkovsky did say the gun " was supposed to go to my son; which is his (her father's) namesake, but, Mr. Nero took it." She did not elaborate on why she believed the gun was supposed to go to her son, whether it was based on her conjecture as to her rights as the daughter or deduced from something her father told her--that is most likely perhaps but query whether any such deduction occurred before Nero developed a close relationship with the father?
Ms. Vitkovsky said she took the shotgun along with four hand guns and another shotgun from her father's house at police direction because on the horrible day in question her mother was lying dead on the floor, she had killed herself, and the father had made threats about shooting an ice cream truck that went by his house because it made too much noise. Nero's testimony is a little confusing on the circumstances of when the shotgun in question was taken. He suggested it was before the other guns were taken saying the father was not in his right mind " either." It is difficult to ascertain whether " either" was used in reference to an earlier time before the guns were taken due to the tragedy of his wife or was just an additional comment as to the father's state of mind when all of the guns including the shotgun were taken because of the tragedy. On redirect Nero said that what he meant by saying the father was not in his right mind was that he just lost his wife to suicide and the guns were taken because " we wanted to keep him safe." But there is no suggestion that Vitkovsky was advancing some theory that her father was not in his right mind so that he could not have the necessary donative intent.
At one point Nero on direct said he used to go shooting with his nephew and the father, apparently knowing this said " . . . you know her, you should take it, you know, you should use it. I said all right Joe." On cross something was made of this language suggesting it did not show a donative intent--Nero was just to use it, it was not given to him absolutely. On cross examination this language was brought to Nero's attention and he said the father said " A, you should use it and I could have it."
This has been difficult to decide. In the credit line aspect of the case Mr. Nero was, in the court's opinion, relying on legal conjectures which he could not validly make in context of the facts of this case. Neither party struck the court as people who intentionally lie about factual claims. The court believes the father gifted the gun to Nero and does not believe that Nero would intentionally lie about this. Ms. Vitkovsky does not directly contradict Nero on this subject; she could not because she was not present for discussions between Nero and her father about the gun. There is no indication that the shotgun, despite being an antique, was of priceless value and the court does not believe Nero would have returned to the Vitkovsky house with the intent to take something that was not given to him. The court concludes the gun in question was gifted to the defendant Nero.
Conclusion
The court further concludes that damages in the amount of $23,350.90 should be awarded to the plaintiff for the restaurant bills paid through the credit line (see list of bills at page 29 supra ). The court also decides that the gun in dispute was a valid gift to the defendant delivered to him with the proper donative intent.
The court would note that on page 2 of the plaintiff's post-trial brief there is a list of monies paid out of the credit line for the benefit of the defendant, these five charges amounting to more than $19,000.00 were not introduced into evidence, the court cannot determine what these credit line pay outs were for or whom they might have benefitted. It will not make any award as to these claims.