Opinion
No. CV-04-0104753
May 10, 2005
MEMORANDUM OF DECISION ON APPLICATION FOR PREJUDGMENT REMEDY
The plaintiff, Elizabeth Yavarone, seeks a prejudgment remedy against the defendant, James Moroni, claiming the breach of his obligation for contribution under an oral partnership agreement, breach of fiduciary duty, negligence, and an accounting in connection with the parties' purchase and sale of property located at 9 London Court, Old Saybrook, Connecticut (the "Property").
After a hearing the court finds the following facts. In December 1999 the parties entered into an oral agreement to purchase the Property, rehabilitate it and resell it. The parties contributed equally toward the down payment on the Property, which was held in the name of the plaintiff only due to the defendant's recent bankruptcy. The parties agreed to share the expenses incurred in the rehabilitation and the profits from the sale of the Property equally. On August 11, 2000 the Property was sold to Elaine Venanzi and the parties divided the net profit of $30,202.62 equally.
In 2001 Ms. Venanzi brought suit against the plaintiff for breach of contract and fraud arising out of the sale of the Property. The plaintiff and the defendant agreed to hire an attorney to defend that action and they hired Attorney Thomas Daly. Both parties contributed to Attorney Daly's fees until the summer of 2003. At that time Attorney Daly indicated that he could not handle the trial of the case and thereafter, the defendant refused to pay Attorney Daly's fees.
In the summer of 2003 the parties were engaged in litigation against each other relating to the operation of a heating business known as Jim Moroni's Oil Service, LLC. Attorney Sterling represented the plaintiff and her husband in that litigation in a position adverse to the defendant.
After Attorney Daly advised the parties that he could not handle the trial of the Venanzi case, the plaintiff retained the services of Attorney Sterling to represent her interest and that of Mr. Moroni in the Venanzi case. She did this without consulting with the defendant. Attorney Sterling clearly had a conflict of interest with respect to the representation of the plaintiff and the defendant in the same lawsuit. The defendant never advised the plaintiff that he objected to Attorney Sterling's representation, and never requested that she retain an attorney other than Attorney Sterling to represent them in the Venanzi case.
After the parties' adverse relationship arose, the plaintiff attempted to join Mr. Moroni as a defendant in the Venanzi case, but the court did not allow the joinder.
On April 8, 2004 this court, Spallone, J.T.R., rendered a judgment against the plaintiff in the amount of $8,560 and on August 11, 2004 the plaintiff made payment of $11,000 for damages, interest and costs to the attorney for Ms. Venanzi. The plaintiff seeks half of that amount as well as half of $982 and $9,774.15 paid by the plaintiff to Attorney Daly and Attorney Sterling, respectively.
Discussion of the Law and Ruling
The court may grant a prejudgment remedy where the plaintiff establishes probable cause to believe that a judgment will be rendered in his favor in a trial on the merits. Hoke, Inc. v. Circuits, Inc., 26 Conn.App. 804, 602 A.2d 1075 (1992).
Although the First Count of the Complaint is entitled, "Contribution," that count really states a cause of action for the breach of an oral partnership agreement. Although the oral partnership agreement pertained to real property, it was not within the statute of frauds because it did not pertain to the purchase or sale of the real property itself, but, rather, the sharing of expenses and profits associated with such property. Such agreements have been held to fall outside the Statute of Frauds, Connecticut General Statutes § 52-550. Maguire v. Kiesel, 86 Conn. 453, 85 A. 689 (1913); Jacobs v. Thomas, 26 Conn.App. 305, 309-10, 600 A.2d 1378 (1991). In Jacobs the Court stated:
"Although this enterprise was one which contemplated and involved the management of real estate and a division of funds derived from its rental and sale, it was, not the real estate, but the funds in which the plaintiff claims an interest by reason of the agreement" Faiola v. Faiola, 156 Conn. 12, 21, 238 A.2d 405 (1968). The primary purpose of the statute of frauds is "to provide reliable evidence of the existence and the terms of the contract . . ." Heyman v. CBS, Inc., 178 Conn. 215, 221, 423 A.2d 887 (1979). Our conclusion that the subject of the oral agreement was a fund representing profits from a joint enterprise in the nature of a partnership rather than an interest in real estate is consistent with this purpose. The particular terms of the agreement are irrelevant. The only relevant factor is that the plaintiff and the defendant were partners in a venture the sole purpose of which was financial gain.
The court finds that the plaintiff has established probable cause that she and the defendant entered into an agreement to share expenses and profits related to the Property and that the defendant breached that agreement by failing to pay half of the damages and counsel fees associated with that Property which arose from the Venanzi lawsuit. The court finds that those damages were $11,000 and that counsel fees for Attorney Daly and Attorney Sterling were $982.50 and $9,774.15, respectively. Therefore, there is probable cause that plaintiff will prevail on the First Count in the amount of $10,878.33, plus interest and costs.
The defendant argues that the claims of the First Count are barred by the doctrine of collateral estoppel and unclean hands. The estoppel argument appears to be based on the defendant's claim that he was unable to participate in the defense of the Venanzi litigation. However, there was no evidence that he ever sought to participate, or that Ms. Yavarone ever denied his request to participate in that defense.
As to the unclean hands defense, the hands of neither party were entirely clean. Ms. Yavarone retained Attorney Sterling even though she knew that he was representing her in an action against Mr. Moroni. However, Mr. Moroni never objected to this, but rather, seemed to use the litigation between himself and Ms. Yavarone as a convenient excuse to stop incurring legal fees and to stop all involvement in the Venanzi litigation, leaving Ms. Yavarone to fend for herself.
The defendant further argues that if he had been able to participate in the defense of the Venanzi action, the result would have been different. However, there was evidence that the defendant testified as a witness in that action. Moreover, the basis of the court's decision in Venanzi was, to a large degree, that there was no merger after the sale of the property because Yavarone had failed to obtain the necessary permits required to do the rehabilitation work. The court finds that the defendant and the plaintiff were aware of the necessity for obtaining permits, but in order to save money, agreed to do the work on the Property without permits. The defendant has admitted that he knew that permits should have been obtained by Ms. Yavarone, but chose to do the work without permits.
Since the court finds that both parties knew about the necessity of permits, the plaintiff has not established probable cause to support the Second Count for breach of fiduciary duty, or the Third Count, for negligence.
The plaintiff seeks to recover legal fees incurred in this action. However, there was no evidence that the parties made any agreement with respect to legal fees in the event one party breached the oral partnership agreement. Therefore, under the so-called "American Rule", each party must bear their own legal fees, Atlantic Mortgage Investment Corp. v. Stephenson, 86 Conn.App. 126, 132, 860 A.2d 751 (2004), and the plaintiff has not established probable cause that she will recover legal fees from the defendant in this action.
A prejudgment remedy may enter in favor of the plaintiff against the defendant in the amount of $15,000.
By the court,
Aurigemma, J.