Opinion
No. NNH CV 05 4008625
September 16, 2009
MEMORANDUM OF DECISION
This action arises from two surveys conducted by the defendant, H.O. Penn Machinery Co., Inc., upon a two-engine forty-foot Luhrs power boat known as "Extra Credit." The defendant is a franchisee and distributor of Caterpillar engines, which were used to power the subject boat. The plaintiffs, Cepro, LLC and Kenneth Ginsberg, allege that the defendant's 1998 and 2003 surveys of the boat gave rise to their claims of negligence, negligent misrepresentation and violations of CUTPA, resulting in damages totaling $34,251.33.
In essence, the plaintiffs claim that the defendant's 1998 and 2003 surveys of the boat resulted in a lost sale in 2003. In connection with this lost sale, the plaintiffs claim the loss of a sales tax credit that they would have earned from the trade in of Extra Credit, which they would have put towards their purchase of a new boat. In addition, the plaintiffs claim that they would have been entitled to the tax benefit provided by a free exchange, under section 1031 of the Internal Revenue Code. Furthermore, the plaintiffs claim that they paid for unnecessary repairs to Extra Credit as a result of the 2003 survey, including money spent to purchase and install new propellers. The plaintiffs also claim damages attributed to docking fees, insurance, registration, costs, and interest for a four-month period, from April 2003, when the prospective buyer backed out of the deal, to July 18, 2003, when the boat was eventually sold to another buyer for $2,500 less than the price agreed to by the prospective buyer.
The defendant counterclaims that it is entitled to judgment in the amount of $3,821.76 for unpaid work that it performed on the boat. The defendant also claims that it is entitled to prejudgment interest. A court side trial was held on March 10, 2009, April 28, 2009, and May 20, 2009.
I. Assignment of Claims
There is a threshold issue that the court must address before delving into the merits of this action. The defendant noted at trial that the owner of the boat from 1998 to 2003 was Cepro Investments, Inc., and not either of this action's named plaintiffs, Cepro, LLC and Kenneth Ginsberg. As a result, the defendant claims that Cepro Investments, Inc. should have been a party to this action. The plaintiffs argue that the claims of Cepro Investments, Inc. were assigned to Cepro, LLC and therefore, Cepro Investments, Inc. need not be a party to this action. The plaintiffs provided to the court a document titled "Assignment of Claims," which states: "Cepro Investments, Inc. hereby assigns to Cepro, LLC any and all right and interest it may have in the proceeds of any claims it may have or may ever have against H.O. Penn, Inc., said claims being more fully described in that civil action entitled Cepro, LLC v. H.O. Penn, Inc. bearing Docket Number CV 05 4008625." The document is signed by Ginsberg in his capacity as the vice president of Cepro Investments, Inc., but it is not dated.
In Stearns Wheeler, LLC v. Kowalsky Bros., Inc., 289 Conn. 1, 8, 955 A.2d 538 (2008), the Supreme Court addressed whether the assignment of a particular CUTPA claim violated public policy and in doing so, reviewed the general principles that guide our inquiry as to the issue of the assignability of legal actions. The court stated: "We previously have recognized that the assignment of contract claims is permissible . . . We have prohibited, however, the assignment of tort claims. See Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 382-84, 698 A.2d 859 (1997). In Dodd, we concluded that [t]he reasons underlying the rule [prohibiting the assignment of causes of action to recover for personal injuries] have been variously stated: unscrupulous interlopers and litigious persons were to be discouraged from purchasing claims for pain and suffering and prosecuting them in court as assignees; actions for injuries that in the absence of statute did not survive the death of the victim were deemed too personal in nature to be assignable; a tortfeasor was not to be held liable to a party unharmed by him; and excessive litigation was thought to be reduced." (Citation omitted; internal quotation marks omitted.) Id., 8-9.
Here, testimony at trial revealed that the named plaintiff, Ginsberg, is the manager of the named plaintiff, Cepro, LLC and additionally, is the vice president of Cepro Investments, Inc. The court has not been provided with any evidence indicating the relationship between Cepro, LLC and Cepro Investments, Inc., besides the fact that Ginsberg appears to be a principal in both entities. Furthermore, there is ample evidence that Ginsberg was directly involved in the surveys performed by the defendant in both 1998 and 2003. As a result, the court notes the guidance of the Supreme Court in its discussion of the assignability of tort and certain CUTPA claims and distinguishes it from the facts presented by this case.
With respect to the named plaintiffs,' Cepro, LLC's and Ginsberg's, claims of negligence and negligent misrepresentation, the court finds that the reasons underlying the rule prohibiting the assignment of causes of action to recover for personal injuries are inapplicable. This is not a case of two separate entities without any relation to one another assigning personal injury claims. Although not clearly developed at trial, there is clearly a relationship between Cepro Investments, Inc. and Cepro, LLC, which is, at the very minimum, that Ginsberg serves as a principal of each. Further, in regard to the named plaintiffs' CUTPA claim, it is completely distinguishable from the factual scenario described in Stearns Wheeler, LLC v. Kowalsky Bros., Inc., supra, 2.
The court notes that the plaintiffs have failed to present any evidence in support of their CUTPA claim. As more fully discussed later in this opinion, the court ultimately finds for the defendant on this ground, thus making any discussion as to the assignability of the plaintiffs' CUTPA claim irrelevant.
As a result, the court finds that the assignment of claims is valid and will proceed to analyze the merits of this action. The court notes that this issue would have been more appropriately raised in a pre-trial motion, so that the court would have had a full understanding of the relationship of these three entities prior to this late stage of litigation.
II. The 1998 Survey
The plaintiffs sought to purchase the Luhrs power boat at the center of this action in March of 1998. Testimony presented at trial shows that, prior to purchasing a power boat, a prudent prospective buyer would have a survey conducted on the boat in order to determine the condition of the boat, including the condition of the boat's engines. The defendant, as the exclusive distributor of Caterpillar engines in the northeast, was hired by the plaintiffs to survey the Luhrs in 1998, as the boat contained two Caterpillar marine engines.
The evidence disclosed that a survey is conducted in the following manner. First, the assigned surveyor conducts a visual inspection of the boat and especially, the engine. In this visual inspection, the surveyor looks for leaks and any other visual abnormalities in the engine, which would impair the boat's functioning. Next, the surveyor installs test equipment, which provides data to the surveyor as to whether the engines are performing up to spec and also whether there are any problems with the different systems, such as the cooling and lubrication systems. Once the test equipment is installed, the surveyor conducts a dock trial. The boat is put in neutral and its throttles are pushed forward. The dock trial is used to determine the maximum rpm that the engines reach. This measurement is known as high idle rpm. After completion of the dock trial, the boat is taken on a sea trial. During a sea trial, the boat is under load and the propellers are in gear. The surveyor determines how fast the boat can go through the water and in doing so, measures the rpms responsible for turning the engine. A sea trial tests full load rpm. It should be noted that a surveyor is not provided with any information regarding the condition of the boat because it is deemed irrelevant. A surveyor is to make his or her own unbiased findings regarding the condition of the boat and make recommendations for its improvement to a prospective buyer who ordered the survey.
The surveyor of the Luhrs in March 1998 was Richard Porter, an employee of the defendant for more than forty years, from 1967 to 2007. He was certified by Caterpillar to work with marine engines and had surveyed engines since the late 1980s. Porter testified that the dock trial of the boat revealed that the high idle rpm, on the starboard engine, was low. Evidence disclosed that Porter made statements to Ginsberg in which Porter indicated that adjustments to the throttle linkage and the high idle screw were not necessary to remedy this problem, given that Ginsberg would not need to operate the boat at full throttle. Bob Mattson, a field supervisor for the defendant, wrote a letter to Ginsberg dated March 18, 1998. Attached to this letter was Porter's report on the survey. The plaintiffs purchased the boat soon after receiving the results of the survey and used it for the next five years.
The 2003 Survey
In 2003, the plaintiffs decided to upgrade to a larger boat and sought to sell Extra Credit to Charles Johnson for $136,000. The sale of the boat was, however, contingent on its survey. This time, Johnson hired the defendant to conduct the survey, as he, and not the plaintiffs, was the prospective buyer. The 2003 survey was conducted by Joseph Raulukaitis. Raulukaitis has been employed by the defendant since 1985 as a field service technician qualified to work on marine engines. Raulukaitis testified that the sea trial of the boat revealed that the full load rpm in the starboard engine was out of spec. As a result of this sea trial, Raulukaitis detailed the full load rpm problem in his report to Johnson, which was attached to a letter, signed by Bob Mattson and dated April 1, 2003. Johnson withdrew his offer to purchase Extra Credit via fax, which was dated April 2, 2003.
Johnson offered $135,000 for the boat and the plaintiffs counter-offered with $136,000, to which he agreed.
III. Count One: Negligence
The plaintiffs base their negligence claim on both the March 1998 and the March 2003 survey of the Luhrs. Evidence disclosed at trial demonstrates that the defendant's procedure in surveying boats mandates that a surveyor not be provided with any prior information on the condition of the boat. Given this procedure, and that the court was not presented with any evidence demonstrating the defendant's departure from this procedure, the court concludes that in 2003, Raulukaitis conducted his survey without any knowledge of the results of the survey conducted by Porter in 1998. As a result, the 1998 and 2003 surveys will be analyzed separately in determining the merits of the plaintiffs' negligence claim.
"The essential elements of a cause of action in negligence are well established: duty; breach of that duty; causation; and actual injury." RK Constructors, Inc. v. Fusco Corp., 231 Conn. 381, 384, 650 A.2d 153 (1994). A plaintiff must prove each of these elements by a preponderance of the evidence. Furthermore, § 52-584 states, in relevant part: "No action to recover damages for injury to the person, or to real or personal property, caused by negligence, or by reckless or wanton misconduct . . . shall be brought but within two years from the date when the injury is first sustained or discovered or in the exercise of reasonable care should have been discovered, and except that no such action may be brought more than three years from the date of the act or omission complained of, except that a counterclaim may be interposed in any such action any time before the pleadings in such action are finally closed."
The court finds that any negligence claim of the plaintiffs as to the 1998 survey would be barred by the statute of limitations pursuant to § 52-584. From the evidence presented at trial, the court concludes that the 1998 survey was in no way related to the 2003 survey, the latter of which, according to the plaintiffs, resulted in the Johnson's rescission of the sale and its resulting damages. The surveyor in 2003, Raulukaitis, was not presented with the results of the 1998 survey prior to conducting his dock and sea trial of the Luhrs and therefore, could not rely on it in making his findings. Furthermore, the court finds that, despite what may have been negligence on the part of the defendant during the 1998 survey, in making statements to Ginsberg indicating that adjustments to the throttle linkage and the high idle screw were not necessary and then not performing these adjustments to remedy the high idle problem, the plaintiffs used and enjoyed the boat for more than five years without any apparent problem interfering with his operation or enjoyment of the boat, other than the normal need for maintenance.
As to the 2003 survey, the court finds that the plaintiffs have not met their burden of proof. First, the court notes that Johnson and not the plaintiffs hired and paid the defendant to perform the 2003 survey. Therefore, the defendant owed no direct duty to the plaintiffs. The Appellate Court, however, recently noted that: "Duty is a legal conclusion about relationships between individuals, made after the fact, and imperative to a negligence cause of action. The nature of the duty, and the specific persons to whom it is owed, are determined by the circumstances surrounding the conduct of the individual . . . Although it has been said that no universal test for [duty] ever has been formulated . . . our threshold inquiry has always been whether the specific harm alleged by the plaintiff was foreseeable to the defendant. The ultimate test of the existence of the duty to use care is found in the foreseeability that harm may result if it is not exercised . . . A simple conclusion that the harm to the plaintiff was foreseeable, however, cannot by itself mandate a determination that a legal duty exists. Many harms are quite literally foreseeable, yet for pragmatic reasons, no recovery is allowed . . . A further inquiry must be made, for we recognize that duty is not sacrosanct in itself, but is only an expression of the sum total of those considerations of policy which lead the law to say that the plaintiff is entitled to protection . . . While it may seem that there should be a remedy for every wrong, this is an ideal limited perforce by the realities of this world." (Internal quotation marks omitted.) Pike v. Bugbee, 115 Conn.App. 820, 824-25, 974 A.2d 743 (2009).
In light of the evidence presented in this action, the court finds that, despite the absence of a direct duty to the plaintiffs, the defendants did indeed owe a duty of care to them in conducting the survey of the boat that they were attempting to sell to Johnson. It is reasonably foreseeable that the plaintiffs would be harmed if the defendant were negligent in its survey of Extra Credit, given that the sale to the prospective buyer was contingent on the boat's performance in the survey. The plaintiffs have failed, however, to prove that the defendant breached this duty.
The defendant's duty to the plaintiffs was simply to conduct a survey of Extra Credit that was consistent with H.O. Penn protocol and report its unbiased results of the survey to the customer, Johnson. The court finds that the defendant accomplished this. There has been no evidence presented which demonstrates that Raulukaitis or any other employee of the defendant acted negligently in conducting the 2003 survey. The 2003 survey was conducted pursuant to the defendant's customary procedure, which included a visual inspection, a dock trial and a sea trial. Additionally, Raulukaitis conducted this survey without any prior knowledge of the boat's condition, including the 1998 survey conducted by Porter.
More significantly, the court finds ample evidence in the record to arrive at the conclusion that the adjustment that Ginsberg thought the defendant should have made during the 1998 survey would not have, in and of itself, remedied the full load rpm problem that Raulukaitis encountered during the 2003 survey. Both Porter, a certified field technician in Caterpillar marine engines for more than forty years, and Raulukaitis, a field technician for more than twenty years, gave the opinion that it was highly unlikely that an adjustment to the throttle linkage and the high idle screw would have by itself remedied the full load rpm problem in 2003. Instead, testimony demonstrated that an adjustment to the fuel setting screw on the fuel injector was, at least, a contributing factor to the engine reaching spec after the Johnson sale fell through. Other factors were the various repairs made to the boat, including a new turbo charger and new propellers.
In sum, the court finds that the defendant, while owing a duty of care to the plaintiffs to provide a survey consistent with H.O. Penn protocol, did not breach its duty. As such, the court finds for the defendant on the plaintiffs' negligence claim in regard to the 2003 survey.
Count Two: Negligent Misrepresentation CT Page 15514
The Supreme Court "has long recognized liability for negligent misrepresentation. [It has] held that even an innocent misrepresentation of fact may be actionable if the declarant has the means of knowing, ought to know, or has the duty of knowing the truth . . . The governing principles [of negligent misrepresentation] are set forth in similar terms in § 552 of the Restatement (Second) of Torts (1977): One who, in the course of his business, profession or employment . . . supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information." (Internal quotation marks omitted.) Kramer v. Petisi, 285 Conn. 674, 681, 940 A.2d 800 (2008). "Accordingly, an action for negligent misrepresentation requires a plaintiff to prove that (1) the defendant made a misrepresentation and (2) the plaintiff reasonably relied upon that misrepresentation . . . Whether evidence supports a claim of . . . negligent misrepresentation is a question of fact." (Internal quotation marks omitted.) Savings Bank of Manchester v. Ralion Financial Services, Inc., 91 Conn.App. 386, 390, 881 A.2d 1035 (2005). "[T]he plaintiff need not prove that the representations made by the [defendant] were promissory. It is sufficient . . . that the representations contained false information." (Internal quotation marks omitted.) Citino v. Redevelopment Agency, 51 Conn.App. 262, 274, 721 A.2d 1197 (1998).
As discussed above, the plaintiffs' claim of negligent misrepresentation as to the 1998 survey of the Luhrs is barred by the statute of limitations contained in § 52-584. The court concedes that the defendant, in making statements to Ginsberg which indicated that adjustments to the throttle linkage and the high idle screw were not necessary to remedy the high idle rpm problem because the boat would attain adequate speeds without such adjustment and he would not need to operate the boat at full throttle. This apparently proved to be true, as plaintiffs offered the boat for sale with the high idle rpm problem existing. The fact remains, however, that the plaintiffs purchased the boat in 1998, using it for more than five years until its sale in 2003.
In regard to the 2003 survey, the court finds that the plaintiffs have not met their burden of proof in regard to this claim. The plaintiffs allege that they made unnecessary repairs to the boat after the 2003 survey in reliance on the defendant's misrepresentations that the engine required serious work. As discussed more fully above, the more credible evidence was that it is highly unlikely that a simple adjustment, such as the throttle linkage adjustment, high idle screw adjustment or even the fuel setting adjustment, alone would have remedied the full load rpm problem. It is more likely that the repairs to the turbo charger and propellers, combined with the fuel setting adjustment, ultimately remedied the problem. As such, the court cannot find that the defendant misrepresented the problem to the plaintiffs.
In sum, the court finds for the defendant on the plaintiffs' negligent misrepresentation claim.
Count Three: CUTPA
Finally, the court addresses the plaintiffs' CUTPA claim. The plaintiffs appear to allege that the defendant engaged in prohibited debt collection practices outlined in § 36a-645 et seq. in violation of CUTPA. The court finds for the defendant on this claim, as the plaintiffs have failed to produce any evidence supporting this allegation.
Section 36a-645 states: "As used in sections 36a-645 to 36a-647, inclusive, unless the context otherwise requires: (1) `Consumer debtor' means any natural person residing in this state who owes a debt to a creditor. (2) `Creditor' means (A) any person to whom a debt is owed by a consumer debtor and such debt results from a transaction occurring in the ordinary course of such person's business, or (B) any person to whom such debt is assigned. `Creditor' shall not include a consumer collection agency, as defined in section 36a-800, or any department or agency of the United States, this state, any other state, or any political subdivision thereof. (3) `Debt' means an obligation or alleged obligation arising out of a transaction in which the money, property, goods or services which are the subject of the transaction are for personal, family or household purposes, whether or not such obligation has been reduced to judgment."
Section 36a-646 states: "No creditor shall use any abusive, harassing, fraudulent, deceptive or misleading representation, device or practice to collect or attempt to collect any debt."
IV. The Defendant's Counterclaim
The court finds that the defendant is entitled to judgment in the amount of $3,821.76 for unpaid work that it performed on Extra Credit. Both parties produced evidence demonstrating that this amount is owed to the defendant.
The court also finds, however, that the defendant is not entitled to interest on this amount. "Prejudgment interest pursuant to § 37-3a has been applied to breach of contract claims for liquidated damages, namely, where a party claims that a specified sum under the terms of a contract, or a sum to be determined by the terms of the contract, owed to that party has been detained by another party . . . [T]he determination of whether interest pursuant to § 37-3a should be awarded is a question for the trier of fact . . . It is clear that Connecticut case law establishes that prejudgment interest is to be awarded if, in the discretion of the trier of fact, equitable considerations deem that it is warranted . . . Prejudgment interest in accordance with § 37-3a normally is awarded for money wrongfully withheld, and provides for interest on money that is detained after it becomes due and payable." (Citations omitted; internal quotation marks omitted.) Ceci Bros., Inc. v. Five Twenty-One Corp., 81 Conn.App. 419, 427, 840 A.2d 578, cert. denied, 268 Conn. 922, 846 A.2d 881 (2004). "Prejudgment interest pursuant to § 37-3a is not warranted in cases for breach of contract in which the damages are similar to damages in a personal injury claim in negligence where a party is seeking to be made whole for the loss caused by another . . . To award § 37-3a interest, two components must be present. First, the claim to which the prejudgment interest attaches must be a claim for a liquidated sum of money wrongfully withheld and, second, the trier of fact must find, in its discretion, that equitable considerations warrant the payment of interest." (Citations omitted; internal quotation marks omitted.) Id., 427-28.
Section 37-3a(a), states, in pertinent part: "Except as provided in sections 37-3b, 37-3e and 52-192a, interest at the rate of ten per cent a year, and no more, may be recovered and allowed in civil actions . . . as damages for the detention of money after it becomes payable."
The court finds that the plaintiff's payment of the $3,821.76 bill was withheld, yet in exercising its discretion, finds that the defendant is not entitled to the payment of interest on this amount. There were factual issues surrounding the necessity of the repairs to the boat in 2003, which have only been resolved by a trial on the merits. The court is satisfied that the defendant will be made whole by the plaintiffs' payment of $3,821.76.
V. Conclusion
Accordingly, the court finds for the defendant on the plaintiffs' claims, and enters judgment in favor of the defendant, on its counterclaim, in the amount of $3,821.76.
SO ORDERED