Opinion
No. NNH CV09 5029078 S
June 15, 2011
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT (#127)
FACTS
The plaintiff, East River Energy, Inc., initiated this action by service of process upon the defendant, Gaylord Hospital, Inc., on May 6, 2009. In the initial complaint, the plaintiff alleged that the defendant was liable for breach of contract, negligent misrepresentation, breach of the covenant of good faith and fair dealing, fraudulent and intentional misrepresentation, and violations of Connecticut Unfair Trade Practices Act (CUTPA) and contended that it is entitled to relief under the doctrine of promissory estoppel. The CUTPA count was stricken by the court on December 7, 2009, and the plaintiff filed a substituted complaint on January 22, 2010 containing the balance of the allegations.
Specifically, the plaintiff has made the following factual allegations in the operative complaint. The plaintiff is a full service energy company located in Guilford in the business of providing commercial and residential petroleum products. The defendant, located in Wallingford, is engaged in the business of long-term acute care hospital services. In or around July 2008, Mark Vere, who was employed as the director of facilities for the defendant, contacted the plaintiff to solicit the purchase of heating oil by the defendant for the 2008-09 heating season. During that month Vere had communications and meetings with Charles Guadagnino, director of business development for the plaintiff. As a result of those conversations the plaintiff learned the following: the defendant was looking to replace its current fuel provider, the defendant sought the plaintiff's advice on how to most effectively disburse or re-sell remaining fuel left from its former vendor, the defendant was seeking 160,000 gallons of fuel for the 2008-09 heating season, the defendant required a fixed monthly budget payment plan for a certain, fixed contract period and required the fuel be at a certain, fixed, minimum price per gallon, and the defendant promised to purchase fuel from the plaintiff when the plaintiff could meet the defendant's above noted requirements. During the course of the above mentioned conversations, Guadagnino conveyed to Vere that the plaintiff would attempt to procure fuel pursuant the defendant's terms and that because of the volatility of the fuel market, once fuel was found that could fulfill the defendant's terms, it would need to be purchased immediately.
On July 16, 2008, the plaintiff procured fuel fitting the defendant's alleged specifications, namely 160,000 gallons at a price of $4.170 per gallon for a heating contract period of October 1, 2008 to April 30, 2009. On that date, Guadagnino spoke with Vere by telephone, and conveyed that information to him. During that conversation, Vere accepted the specific terms and instructed the plaintiff to purchase the fuel. Vere also stated that he would sign a written confirmation of the agreement. The plaintiff then, on that same day, purchased the specified fuel from its supplier. The plaintiff then sent a document to the defendant via facsimile that set out the specific price of $4.170 for 160,000 gallons of heating oil for the contract period of October 1, 2008 through April 30, 2009. On July 17, 2008, the plaintiff received a voice message from Vere stating that the defendant would not perform in accordance with the agreement. On that date and thereafter the defendant refused to execute the written confirmation or pay for the fuel.
On February 22, 2010, the defendant filed an answer, special defenses and counterclaim. In its answer, the defendant admitted that its employee, Vere, sought an estimate from the plaintiff regarding the cost to provide 160,000 gallons of heating oil for the 2008-09 heating season. The defendant denied that its representative specified that they required a fixed monthly budget payment plan, fixed maximum price per gallon or that they promised to purchase fuel from the plaintiff when the plaintiff procured oil that met any particular specifications. The defendant admitted that Vere spoke with Guadagnino on July 16, 2008, but denied that, at that time, it was confirmed that the plaintiff had procured fuel meeting the alleged explicit, required terms or that Vere instructed Guadagnino to purchase the oil at that time or stated that he would sign an agreement to purchase oil from the plaintiff. The defendant admitted that it received a facsimile from the plaintiff delineating the price of $4.170 for 160,000 gallons of heating oil for October 1, 2008 through April 30, 2009. The defendant admitted that on July 17, 2008, Vere left a voice message for the defendant wherein he stated that the defendant had chosen a different vendor and would not be buying heating fuel from the plaintiff. The defendant denied that any agreement was ever formed, and therefore admitted that they never signed such an agreement. The defendant denied any and all allegations that an agreement ever existed or was breached.
The defendant also set forth special defenses and a counterclaim. The defendant has counterclaimed that the plaintiff breached the Connecticut Unfair Trade Practices Act (CUTPA). Specifically, the defendant alleges that on June 18, 2008, the defendant, through its employee, Vere, requested a price quote for the purchase of oil from the plaintiff. On June 23, 2008, the plaintiff provided the defendant with a written quote. On or about July 16, 2008, Vere contacted the plaintiff seeking an updated price quote. On or about that date, the plaintiff provided the defendant with a written offer to supply oil on certain terms. The offer was transmitted to the defendant via facsimile with a cover letter stating "please review attached. Thanks." The offer also contained the following language, "Please sign below where indicated as acceptance of this agreement, and return to my attention, along with Attachment A, via facsimile as soon as possible." On or about that date, Vere contacted the plaintiff to request the names of business references. The following day, Vere left a phone message for the plaintiff stating that the defendant was declining the offer and choosing a different vendor. The defendant did not sign or return the offer. Subsequently, the plaintiff contacted the defendant and stated that an oral contract was in place and demanded damages be paid to the plaintiff under threat of litigation. On July 28, 2008, the defendant authored a letter to the plaintiff disputing the claim that a contract was entered into and reiterated that they had not accepted the plaintiff's offer. By letter dated August 8, 2008, the plaintiff threatened litigation if the defendant did not agree to pay damages. To the extent that an agreement was entered into, the defendant claimed that it was done in bad faith and as a result of deceptive practices wherein the plaintiff sought to bind the defendant without a written contract.
A discussion of all of the special defenses raised by the defendant is not required for the purposes of deciding this motion, but they are listed here for completeness. As to breach of contract, breach of good faith and fair dealing, promissory estoppel and fraudulent and intentional misrepresentations, the defendant states that the plaintiff is barred from recovery because the alleged contract does not satisfy the statute of frauds set forth in General Statutes § 42a-2-201; the doctrine of unclean hands; failure to mitigate damages; breach of the duty of good faith and fair dealing and failure to act in a commercially reasonable manner. As to the allegation of negligent misrepresentation, the defendant states that the plaintiff is barred from recovery because of its own contributory negligence.
On March 9, 2010, the plaintiff filed a reply to the defendant's special defenses and counterclaim. The plaintiff denied any and all allegations contained in the special defenses. As to the counterclaim, the plaintiff denied any violations of CUTPA or any other deceptive, unfair or unscrupulous behavior. The plaintiff admitted that Vere contacted the plaintiff seeking a price quote on June 18, 2008, that the plaintiff provided him with a quote on June 23, 2008, that Vere contacted the plaintiff seeking an updated quote on July 16, 2008, and at that time the plaintiff sent a document via facsimile that speaks for itself. The plaintiff denied that the defendant failed to accept an offer to provide heating fuel and that the plaintiff acted in any unscrupulous or deceptive manner. The plaintiff further denied the defendant sent it a letter stating that it had not accepted an offer, and denied that the plaintiff sent the defendant a letter threatening litigation if the defendant did not pay its damages.
On December 15, 2010, the defendant filed a motion for summary judgment as to all counts contained in the plaintiff's substituted complaint on the ground that there are no genuine issues of material fact and the defendant is entitled to judgment on all counts. The motion was accompanied by a memorandum of law. On February 1, 2011, the plaintiff filed an opposition to the motion for summary judgment in which they asserted that genuine issues of material fact remain and thus summary judgment must be denied. The plaintiff attached to its memorandum the affidavit of Charles Guadagnino, attached to which, as exhibits, are a hand written memorandum dated July 16, 2008, purportedly authored by Guadagnino noting that he spoke with Vere, got authorization to purchase 160,000 gallons of heating oil and was told that a contract would be signed; an invoice from Global Companies, LLC to the plaintiff verifying the oil purchased from the plaintiff's supplier; and a copy of the facsimile allegedly sent by the plaintiff to the defendant on July 16, 2008. The plaintiff also attached to its memorandum the affidavits of Ray Gincavage of Global Companies, LCC, and Jesse Herzog, an employee of the plaintiff. On February 18, 2011, the defendant filed a reply in support of its motion of summary judgment.
On March 21, 2011, the court heard oral arguments at short calendar. At that time, the court ordered the parties to submit supplemental memoranda on limited legal issues. On April 4, 2011, the plaintiff submitted its supplemental memorandum in opposition to the motion for summary judgment.
The parties were instructed to file supplemental briefs by April 4, 2011. The defendant's brief was filed after 5:00 p.m. on that date and thus is considered filed on April 5, 2011. The defendant submitted a motion for extension of time nunc pro tunc, because they were delayed in filing due to computer problems. The defendant submitted the affidavit of Christopher R. Drury, an attorney representing the defendant, in support of this motion. The plaintiff opposed this motion, stating that it filed its supplemental brief on the morning of April 4, 2011, and believes, based on the content of the defendant's brief, that the defendant used time on April 4, 2011 to respond to arguments made by the plaintiff in its brief, when the briefs were intended to be filed simultaneously. On April 27, 2011, this court denied the motion for extension of time nunc pro tunc. The defendant filed a. motion to reargue/reconsider on May 4, 2011. The plaintiff filed an opposition on May 5, 2011, and the court subsequently denied the motion to reargue/reconsider. Therefore, the court will not entertain the content contained in that submission.
DISCUSSION
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party . . . The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law." (Internal quotation marks omitted.) Horenian v. Washington, 128 Conn.App. 91, 96-97, 15 A.3d 1194 (2011).
I BREACH OF CONTRACT
In the first count of the complaint, the plaintiff alleges that the defendant breached a contract for the sale of heating fuel for the 2008-09 heating season. The defendant has moved for summary judgment on this count on ground that there are no genuine issues of material fact and it is entitled to judgment as a matter of law. The defendant argues that the alleged agreement to buy 160,000 gallons of heating oil at $4.17 per gallon is governed by Article 2 of the Uniform Commercial Code, governing sales, which states that such an agreement is not enforceable unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought. The defendant asserts that it is undisputed that there is no writing to satisfy the statute of frauds, and thus there was no enforceable contract that the defendant could breach. Based on the foregoing, the defendant argues that judgment should be granted in its favor as to the breach of contract count.
The plaintiff counters that genuine issues of material fact exist, and the motion for summary judgment must be denied. The plaintiff argues that, while it is true that the UCC requires a writing and there is no such writing in this case, the court must go further to determine if a contract was formed. In support of its argument the plaintiff states that the UCC is to be liberally construed. The plaintiff points to § 42a-1-103, which states: "(a) This title shall be liberally construed and applied to promote its underlying purposes and policies, which are: (1) To simplify, clarify and modernize the law governing commercial transactions; (2) To permit the continued expansion of commercial practices through custom, usage and agreement of the parties; and (3) To make uniform the law among the various jurisdictions. (b) Unless displaced by the particular provisions of this title, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its provisions." The plaintiff argues that based on this language, when deciding whether a contract is formed, the court must consider claims of estoppel, fraud, negligence and custom and usage of trade. When considering these claims, the plaintiff argues, issues of fact remain that make this case inappropriate for summary judgment. The plaintiff further cites the common law statute of frauds, and its application in Connecticut, which allows for recovery in analogous situations.
In a reply brief the defendant challenges this assertion, stating that the remedies contained in § 42a-1-103(b) apply only to the extent that they are not displaced by the particular provisions of the UCC. The defendant argues that the statute of frauds is such a "particular provision" that prohibits use of the remedies discussed in § 42a-1-103(b). Specifically, in reference to the plaintiff's claim that the court should look at custom and usage of trade, the defendant argues that § 42a-1-303 prohibits the court from considering custom and usage when the statute of frauds is raised as a defense to enforcement. The defendant points to the UCC comments to that statute, which state, in relevant part, "[a] distinction is to be drawn between mandatory rules of law such as the Statute of Frauds provisions of Article 2 on Sales whose very office is to control and restrict the actions of the parties, and which cannot be abrogated by agreement or by usage of trade, and those rules of law . . . which fill in points which the parties have not considered and in fact agreed upon . . ." General Statutes Annotated § 42a-1-303, comment (3) (West 2011).
In a supplemental brief the plaintiff responds by stating that it is the practice of the courts to construe the statute with a view toward reconciling its parts in order to obtain sensible and rational overall interpretation. See Sweetman v. State Elections Enforcement Commission, 249 Conn. 296, 732 A.2d 144 (1999). The plaintiff argues that to prohibit this action would allow the defendant to use the statute to perpetrate an injustice upon them.
The first issue before the court is whether the UCC governs the alleged contract. Article 2 of the UCC, governing sales, as codified at General Statutes § 42a-2-201, states: "(1) Except as otherwise provided in this section a contract for the sale of goods for the price of five hundred dollars or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker."
In the present case, there is no dispute that the alleged agreement is for an amount greater than $500, and thus to determine whether that section applies the court must first address whether heating fuel is a "good," such that it is governed by Article 2 of the UCC. This question has not previously been addressed in Connecticut. "Goods" are defined at § 42a-2-105 as "all things, including specially manufactured goods, which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities covered by article 8 and things in action. 'Goods' also includes the unborn young of animals and growing crops and other identified things attached to realty as described in section 42a-2-107." Section 42a-2-107 refers to oil and gas in the context of mining, stating that, "[a] contract for the sale of minerals or the like, including oil and gas, or a structure or its materials to be removed from realty is a contract for the sale of goods within this article if they are to be severed by the seller but until severance a purported present sale thereof which is not effective as a transfer of an interest in land is effective only as a contract to sell." Therefore, once oil or gas has been extracted from the earth it is a moveable good, with its sale subject to the requirements of Article 2 of the UCC. Other jurisdictions have uniformly found oil and gas to be a "good" for these purposes. Thus, the alleged agreement in the present case is therefore subject to § 42a-2-201, as a contract for goods for greater than $500.
See Etheridge Oil Co. v. Panciera, 818 F.Sup. 480, 483 (D.R.I. 1993) (Applying the North Carolina version of the UCC, which in this section is identical to the Connecticut version: "A contract to supply fuel constitutes a contract for the sale of goods governed by the North Carolina version of the Uniform Commercial Code."); see also, Koch Hydrocarbon Co. v. MDU Resources Group, 988 F.2d 1529, 1534 (8th Cir. 1993) ("As natural gas is within the U.C.C. definition of 'goods' . . . the U.C.C. applies to the transactions at issue here." (Internal citation omitted)); Prenalta Corp. v. Colorado Interstate Gas Co., 944 F.2d 677, 687 (10th Cir. 1991) ("Gas purchases are contracts for the sale of goods and are governed by Article 2 of the Uniform Commercial Code"); Pennzoil Co. v. Federal Energy Regulatory Commission, 645 F.2d 360, 387 (5th Cir. 1981), cert. denied, 454 U.S. 1142, 102 S.Ct. 1000,71 L.Ed.2d 293 (1982), ("Since the Uniform Commercial Code applies to natural gas sales as the sale of goods, U.C.C. § 2-107(1), and all states except Louisiana have adopted the UCC, variations between state law and general principles are likely to be few").
As the alleged agreement is subject to the UCC, the court must next determine whether it satisfies the UCC statute of frauds. The parties agree that there is no writing that satisfies the statute of frauds, and thus the question involves the enforceability of an oral agreement. "Under § 42a-2-201, oral agreements for the sale of goods at a price of $500 or more are presumptively unenforceable." Kalas v. Cook, 70 Conn.App. 477, 483, 800 A.2d 553 (2002). There are, however, several exceptions to this rule contained within § 42a-2-201(3), which states: "A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable (a) if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or (b) if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or (c) with respect to goods for which payment has been made and accepted or which have been received and accepted as provided by section 42a-2-606." In the present case, there is no allegation that the goods were specially manufactured, that the defendant has admitted a contract for sale was made or that payment has been made and accepted. Therefore, the defendant has met its burden of demonstrating that there is no genuine issue of material fact and the alleged agreement does not conform to the UCC statute of frauds or its exceptions.
The plaintiff argues, however, that the court's analysis must go further. The plaintiff contends that genuine issues of material fact exist because allegations of estoppel, fraud, negligence and custom and trade usage, supplement the terms of the UCC and save the plaintiff's claim for breach of contract, despite the lack of a writing. The plaintiff points to Article 1 of the UCC, which allows for remedies sounding in estoppel, fraud and misrepresentation. This law, if applicable in the present case, would speak to the estoppel and tort claims, not the direct breach of contract claim. For these reasons the court concludes that no genuine issue of material fact remains, and, as a matter of law, no enforceable contract was formed between the parties. Accordingly, the defendant is entitled to summary judgment as to count one, which alleges breach of contract.
II BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING
The court will next address count three of the complaint, in which the plaintiff alleges breach of the covenant of good faith and fair dealing. The defendant argues that there is no genuine issue of material fact as to the lack of an enforceable contract and thus the covenant of good faith and fair dealing cannot be invoked, and the defendant is entitled to judgment as a matter of law on this count.
The plaintiff argues that a contract exists and that the defendant took bad faith actions that impeded the plaintiff's right to receive the benefits of the contract. The plaintiff concedes that if the court does not find that a contract exists, this claim cannot be sustained.
"Implicit in every contract is the common-law duty of good faith and fair dealing. [I]t is axiomatic that the . . . duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship . . . In other words, every contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement." (Internal quotation marks omitted.) Vance v. Tassmer, 128 Conn.App. 101, 111, 16 A.3d 782 (2011). As there is no contract in this case, the duty of good faith and fair dealing cannot be invoked. Therefore, there is no genuine issue of material fact on this count and thus, the defendant is entitled to judgment as a matter of law on count three, alleging a breach of the covenant of good faith and fair dealing.
III PROMISSORY ESTOPPEL
In count five, the plaintiff has raised the doctrine of promissory estoppel as a method of recovery. The defendant argues that this court should grant summary judgment on count five on the ground that promissory estoppel may not properly be asserted by the plaintiff. The defendant argues that when, as in the present case, an agreement is governed by Article 2 of the UCC, and does not satisfy the statute of frauds, promissory estoppel is not available to enforce the agreement. The defendant argues that allowing a promissory estoppel claim in such a case would defeat the purpose of the UCC statute of frauds. More specifically, the defendant points to outside jurisdictions that have held that allowing a plaintiff to apply the doctrine of promissory estoppel would abrogate the public policy principles of the UCC statute of frauds and make the UCC a nullity. The defendant argues that the exceptions to the statute of frauds contained in § 42a-2-201(3) are as far as our legislature was willing to go in allowing a party to circumvent the requirements of the statute of frauds. The defendant further argues that the plaintiff had an opportunity to confirm a deal in writing before purchasing the oil and yet chose not to do so. The defendant asserts that the court may not look to usage of trade customs in determining whether an agreement avoids the statute of frauds. For those reasons the defendant asks this court to enter judgment in its favor as to the promissory estoppel claim.
The plaintiff contends that they have alleged facts sufficient to create triable issues on this count and thus the court should deny the motion for summary judgment. The plaintiff reasserts its argument that § 42a-1-103(b) allows an aggrieved party to assert a claim for promissory estoppel. The plaintiff argues that § 42a-1-103 acts to supplement § 42a-2-201. Further, the plaintiff argues that Connecticut law allows the application of promissory estoppel when the common-law statute of frauds is invoked. The plaintiff argues that any other interpretation would allow the defendant the use the statute of frauds to perpetrate an injustice.
In a reply brief, the defendant points out that the plaintiff's arguments rely on the use of the common-law statute of frauds. The defendant argues that under the UCC statute of frauds, promissory estoppel is not allowed as a method of recovery. The defendant once again asserts its argument that it would be improper for the court to consider custom or usage of trade and promissory estoppel because the statute of frauds displaces all other remedies available under § 42a-1-103.
The common-law statute of frauds is codified at General Statutes § 52-550; see C.R. Klewin, Inc. v. Flagship Properties, Inc., 220 Conn. 569, 573-77, 600 A.2d 772 (1991) (gives a thorough historical development of the common-law statute of frauds, which is now codified as § 52-550); and states: "(a) No civil action may be maintained in the following cases unless the agreement, or a memorandum of the agreement, is made in writing and signed by the party, or the agent of the party, to be charged: (1) Upon any agreement to charge any executor or administrator, upon a special promise to answer damages out of his own property; (2) against any person upon any special promise to answer for the debt, default or miscarriage of another; (3) upon any agreement made upon consideration of marriage; (4) upon any agreement for the sale of real property or any interest in or concerning real property; (5) upon any agreement that is not to be performed within one year from the making thereof; or (6) upon any agreement for a loan in an amount which exceeds fifty thousand dollars. (b) This section shall not apply to parol agreements for hiring or leasing real property, or any interest therein, for one year or less, in pursuance of which the leased premises have been or are actually occupied by the lessee, or any person claiming under him, during any part of the term."
In a supplemental brief, the plaintiff attempts to distinguish case law presented by the defendant, noting that estoppel has been allowed in other jurisdictions because it is not specifically displaced by the provisions of the UCC statute of frauds and would not nullify the statute of frauds.
The question before the court, therefore, is whether the UCC statute of frauds precludes a claim of promissory estoppel. In Scruggs v. Caba, Superior Court, Docket No. CV 054003125 (June 9, 2006, Jones, J.), the court condoned the use of promissory estoppel as a special defense in a case governed by the UCC. In that case, the alleged contract was for the sale of a standard poodle for greater than $500, and thus it was governed by Article 2 of the UCC, yet there was no writing sufficient to satisfy the statute of frauds. The defendant was in possession of the animal and, in defense of the plaintiff's replevin action, asserted a promissory estoppel defense, stating that the parties agreed orally that she would take possession of the animal. In denying a motion to strike a promissory estoppel special defense, the court found that "the assertions are sufficient to constitute an allegation of an agreement." In a footnote, the court noted that, "[t]he authorities are not in agreement as to the availability of promissory estoppel as an avoidance of the particular statute of frauds contained in UCC § 2-201. A number of courts have adopted the view that promissory estoppel is so available, and this conclusion has been supported in several cases by approval of the rule of the Restatement of Contracts, Second § 139. Rejecting the contention that UCC § 2-201 was not intended to be avoided by the use of estoppel theories, some of these courts have relied on UCC § 1-103, which provides that estoppel principles are available to supplement the Code, and UCC § 1-203, which imposes a general obligation of good faith. Similarly, some courts have specifically rejected the theory that the doctrine of promissory estoppel is limited to use as a substitute for consideration in holding that promissory estoppel is an avoidance of the statute of frauds. It has been said that the availability of promissory estoppel as an avoidance of the statute of frauds essentially advances the policies underlying the statute of frauds by preventing the use of the statute as an instrument of fraud." (Citations omitted.) Id. This opinion was shared by the United States District Court for the District of Kansas, which has stated: "[W]here a breach of oral contract claim is barred by the Kansas UCC statute of frauds, K.S.A. § 84-2-201, the doctrine of promissory estoppel may nonetheless render that promise enforceable if application of the statute of frauds would otherwise work a fraud or a gross injustice upon the promisee . . . The rationale for this rule is that the statute of frauds was enacted to prevent fraud and injustice, not to foster or encourage it, and the court should not permit it to be used as a shield to protect fraud or to enable one to take advantage of his or her own wrong." (Citations omitted, internal quotation marks omitted.) School-Link Technologies, Inc. v. Applied Resources, Inc., 471 F.Sup.2d 1101, 1114 (D.Kan. 2007).
The defendant's argument is not, however, without support. In Lige Dickson Co. v. Union Oil, 96 Wn.2d 291, 635 P.2d 103 (1981), the Supreme Court of Washington was presented with the following certified question posed by the United States Court of Appeals for the Ninth Circuit: "Under the law of the State of Washington, may an oral promise otherwise within the statute of frauds, Wash. Rev. Code § 62A.2-201, nevertheless be enforceable on the basis of promissory estoppel?" Id., 292. The court responded by stating that, "promissory estoppel cannot be used to overcome the Statute of Frauds in a case that involves the sale of goods. The Uniform Commercial Code was adopted to regulate commercial dealings. Uniformity among different jurisdictions in decisions concerning commerce was a major motivation behind the development of the UCC . . . If we were to adopt § 217A [promissory estoppel] as applicable in the context of the sale of goods, we would allow parties to circumvent the UCC. For example, to prove justifiable reliance (an element of promissory estoppel), the promisee may offer evidence of course of dealing between the parties . . . The Official Comments to [the UCC as codified under Washington law], state that the Statute of Frauds 'restrict the action of the parties, and . . . cannot be abrogated by agreement or by usage of trade." Id., 299-300. The defendant has cited other cases that also reach this conclusion, including C.R. Fedrick, Inc. v. Borg Warner Corp., 552 F.2d 852 (9th Cir. 1977). That case involves the doctrine of equitable estoppel. In C.R. Fedrick, Inc., the federal court was tasked with determining the law of California on the question of whether estoppel could be asserted when the contract was governed by the UCC statute of frauds. In that case, the plaintiff argued that "its cause of action [was] not actually for breach of contract but rather in substance a cause for [the defendant's] unlawful revocation of its telephonic bid or offer after reliance thereon by [the plaintiff] to its detriment." Id., 856. The court concluded that if the California Supreme Court faced the issue, they would likely not allow such a claim, "rather than render [the California version of the UCC statute of frauds] a nulity by extending to vendor's oral bids for sale and delivery of specific goods the doctrine of estoppel." Id., 857.
Although promissory estoppel and equitable estoppel have different applications, both are equitable doctrines and are relevant in the present case. "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." Glazer v. Dress Barn, Inc., 274 Conn. 33, 60, 873 A.2d 929 (2005). Promissory estoppel refers specifically to enforcing a promise that a party has relied on to its detriment. See Abbott Terrace Health Center, Inc. v. Parawich, 120 Conn.App. 78, 86-87, 990 A.2d 1267 (2010).
However, as the plaintiff in this case points out, the C.R. Fedrick, Inc. decision was sharply criticized by the California Court of Appeals in Allied Grape Growers v. Bronco Wine Co., 203 Cal.App.3d 432, 249 Cal.Rptr. 872 (1988). " C.R. Fedrick, Inc. v. Borg-Warner Corp. . . . found that application of equitable estoppel to the statute of frauds would nullify the statute of frauds . . . The C.R. Fedrick court's conclusion is not supported by at least one California Authority . . . [T]he great weight of authority from sister state jurisdictions holds that estoppel can be applied to overcome the Uniform Commercial Code's statute of frauds provision as long as a court is not enforcing a mere oral promise. There must be some form of detrimental reliance . . . It does not nullify the statute of frauds because the elements of equitable estoppel must still be proven . . . In California, the doctrine of estoppel is proven where one party suffers an unconscionable injury if the statute of frauds is asserted to prevent enforcement of oral contracts . . . Unconscionable injury results from denying enforcement of a contract after one party is induced by another party to seriously change position relying upon the oral agreement. It also occurs in cases of unjust enrichment. Id. (citations omitted) 443-44 . . ."
The court in Allied Grape Growers cited numerous jurisdictions that allow the principles of estoppel to overcome the UCC statute of frauds. They are listed here with updated case law where applicable. See, e.g., Metropolitan Alloys Corp. v. Considar Metal Marketing, Docket No. 06-12667 (E.D.Mich. 4-30-2009) ("[T]he UCC's statute of frauds would bar Plaintiff's breach of contract claim here, absent some legally valid and factually supported basis for relaxing the usual statutory requirement of a writing signed by Defendant . . . Yet . . . principles of estoppel provide one potential avenue for Plaintiff to overcome a statute of frauds defense"); Citizens State Bank v. Peoples Bank, 475 N.E.2d 324, 327 (Ind.App. 1985) ("This court has ruled the doctrine [of promissory estoppel] is applicable to commercial transactions . . . The use of promissory estoppel is also consistent with the Uniform Commercial Code's (UCC) obligation of good faith, found in Title 26 of the IND. CODE." (Citation omitted)); Northwest Potato Sales, Inc. v. Beck, 208 Mont. 310, 315-16, 678 P.2d 1138 (1984) ("The UCC expressly mentions estoppel as one of the general principles of law that supplement the UCC (Section 30-1-103, MCA), unless other parts of the UCC expressly displace that principle. Here no provision of the UCC states that estoppel cannot be applied to defeat a statute of frauds defense"); Ralston Purina Co. v. McCollum, 271 Ark. 840, 840-41, 611 S.W.2d 201 (1981) ("The Uniform Commercial Code states that the principles of law and equity, including estoppel, supplement the U.C.C. unless displaced by a particular provision, thus, the doctrine of promissory estoppel is applicable to transactions covered by the U.C.C."); Meylor v. Brown, 281 N.W.2d 632, 635 (Iowa 1979) ("We again conclude that . . . promissory estoppel applies with equal force to sections 622.32 and 554.2201 [of the Iowa version of the Uniform Commercial Code]"); see also May Trucking Co. v. Northwest Volvo Trucks, Inc., 238 Ore.App. 21, 37, 241 P.3d 729 (2010); Varnell v. Henry M. Milgrom, Inc., 78 N.C.App. 451, 455, 337 S.E.2d 616, (1985); Atlantic Wholesale Co. v. Solondz, 283 S.C. 36, 40-41, 320 S.E.2d 720 (1984), Porter v. Wertz, 68 App.Div.2d 141, 147-48, 416 N.Y.S.2d 254 (1979), aff'd 53 N.Y.2d 696, 700, 439 N.Y.S.2d 105, 421 N.E.2d 500 (1981); Maryland Supreme Corp. v. Blake Co., 279 Md. 531, 548-50, 369 A.2d 1017 (1977); Decatur Cooperative Assn. v. Urban, 219 Kan. 171, 176-80, 547 P.2d 323 (1976); Farmers Cooperative Assn. of Churches Ferry v. Cole, 239 N.W.2d 808, 812 (N.D. 1976); Farmers Elevator Co. of Elk Point v. Lyle, 90 S.D. 86, 91, 238 N.W.2d 290 (1976), Sacred Heart Farms Cooperative Elevator v. Johnson, 305 Minn. 324, 326-27, 232 N.W.2d 921 (1975); Fairway Machinery Sales Co. v. Continental Motors Corp., 40 Mich.App. 270, 272, 198 N.W.2d 757 (1972).
Similarly, our neighboring jurisdiction of New York also allows claims of promissory estoppel in UCC statute of fraud cases with a showing of unconscionable injury. See Robins v. Zwirner, 713 F.Sup.2d 367, 376-77 (S.D.N.Y. 2010). The New York application of the rule, like the California rule, is designed to mirror their application of the common-law rule on promissory estoppel. In New York, whether the claim is based on the UCC or on the common-law statute of frauds, a plaintiff must demonstrate unconscionable injury. See Stillman v. Townsend, United States District Court, Docket No. 05 Civ. 6612 (WHP) (S.D.N.Y. July 26, 2006) ("The doctrine of promissory estoppel as a bar to assertion of a Statute of Frauds defense has been strictly construed to apply only in those rare cases where the circumstances [are] such as to render it unconscionable to deny the oral promise upon which the promisee has relied." (Internal quotation marks omitted)).
Based on the foregoing, the most persuasive approach to this issue is to apply promissory estoppel to the UCC as enunciated in Allied Grape Growers and numerous others jurisdictions. Section 42a-1-103 preserves such a right and the approaches taken by the Federal District Court for the Southern District of New York and the California Court of Appeals are well reasoned and persuasive. Furthermore, in Connecticut, "[w]hen the Statute of Frauds is claimed, the doctrine of estoppel may be applied to prevent the use of that statute to accomplish a fraud." DeLuca v. C.W. Blakeslee Sons Inc., 174 Conn. 535, 544, 391 A.2d 170 (1978). For these reasons this court concludes that as a matter of law, a plaintiff may recover via promissory estoppel in an action governed by the UCC statute of frauds. The defendant's argument that this ruling will make the UCC statute of frauds a nullity is without merit. As noted by the court in Allied Grape Growers, supra, 203 Cal.App.3d 432, the statute is not nullified because the elements of estoppel still must be proven. Parties will still have an incentive to reduce agreements to writing because enforcing a written contract on a theory of breach of contract will likely be much easier than enforcing an oral promise on a theory of promissory estoppel.
It should be noted that while the Deluca case involved application of § 52-550, the common-law statute of frauds, and not the UCC statute of frauds per § 42a-2-201(1) this court finds the court's analysis of the application of the doctrine of estoppel to the statute of frauds persuasive.
Having determined that the doctrine of promissory estoppel applies, the court must now determine if genuine issues of material fact remain as to the plaintiff's claim of promissory estoppel. "Under the law of contract, a promise is generally not enforceable unless it is supported by consideration. This court has recognized, however, the development of liability in contract for action induced by reliance upon a promise, despite the absence of common-law consideration normally required to bind a promisor . . . Section 90 of the Restatement Second states that under the doctrine of promissory estoppel a promise which the promisor should reasonably expect to induce action or forebearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. A fundamental element of promissory estoppel, therefore, is the existence of a clear and definite promise which a promisor could reasonably have expected to induce reliance. Thus, a promisor is not liable to a promisee who has relied on a promise if, judged by an objective standard, he had no reason to expect any reliance at all." (Citations omitted; internal quotation marks omitted.) D'Ullisse-Cupo v. Board of Directors of N.D.H.S., 202 Conn. 206, 213, 520 A.2d 217 (1987).
"[A] claim [for promissory estoppel] requires proof of two essential elements: the party against whom estoppel is claimed must do or say something calculated or intended to induce another party to believe that certain facts exist and to act on that belief; and the other party must change its position in reliance on those facts, thereby incurring some injury." (Internal quotation marks omitted.) Abbott Terrace Health Center, Inc. v. Parawich, 120 Conn.App. 78, 86-87, 990 A.2d 1267 (2010).
While Connecticut courts do not use the concept of "unconscionable injury," it is defined by the courts in New York as injury "beyond that which flows naturally (expectation damages) from the non-performance of the unenforceable agreement." (Internal quotation marks omitted.) United Magazine v. Curtis Circulation, 279 Fed.Appx. 14, 18 (2d Cir. 2008). In this case, the court could find genuine issues of material fact as to whether a loss of over $600,000 could be deemed unconscionable.
The allegations of the complaint, the answer, and plaintiff's affidavits submitted in opposition to the motion, particularly the affidavit of Charles Guadagnino, who works in New Business Development for the plaintiff, demonstrate genuine issues of material fact as to whether a promise was made by Mark Vere, the defendant, Gaylord's Director of Facilities, to the plaintiff, and, whether the defendant did or said something to induce the plaintiff to act in reliance on that promise, and that the plaintiff did then act in reliance to its detriment. Guadagnino states in his affidavit that in or around July 2008, Vere contacted the plaintiff, through him, regarding using the plaintiff to provide heating oil to the defendant. He states that he and Vere had various communications in which Vere outlined the defendant's heating oil needs and requirements. Guadagnino avers that during these conversations he explained to Vere the volatility of the market, and that once the price was found, the oil would need to be purchased immediately. Guadagnino further states that based on the nature of the conversations, he physically went to the defendant's location to investigate how the oil would be delivered and spoke to an employee who reported to Vere. Guadagnino then states that once the plaintiff obtained the price requirements set forth by the defendant, he spoke on the telephone with Vere. He states that Vere accepted the terms of the deal and instructed him to purchase the oil. Attached to the affidavit is a hand written note, which Guadagnino authored after the phone call, which indicates that Vere instructed him to purchase the oil. Guadagnino then purchased the oil from a supplier on July 16, 2008. An invoice attached to the affidavit demonstrates that the oil cost $4.17 for 160,000, or $667,200. He then confirmed the terms of the agreement by sending a facsimile to the defendant. The following day he received a voice message from Vere stating that the defendant would not perform. He concludes the affidavit by noting that since that date the defendant has not performed. This evidence therefore establishes that genuine issues of material fact remain and for that reason, the court therefore denies the motion for summary judgment as to count five in which the plaintiff alleges promissory estoppel.
IV NEGLIGENT MISREPRESENTATION AND FRAUDULENT/INTENTIONAL MISREPRESENTATION
In counts two and six of the complaint the plaintiff alleges negligent misrepresentation and fraudulent/intentional misrepresentation, respectively. These claims, sounding in tort, will be discussed together. The defendant has moved for summary judgment on the ground that there is no genuine issue of material fact that the alleged agreement is barred by the UCC statute of frauds, and these tort claims are duplicative of the breach of contract and promissory estoppel claims and merely a way to circumvent the requirements of the UCC statute of frauds.
The plaintiff first argues, as to negligent misrepresentation, that negligence is not typically susceptible to summary judgment. The plaintiff next argues that case law supports its claim that misrepresentation survives a motion for summary judgment even when the statute of frauds is raised. The plaintiff argues that, because these actions sound in tort, and not contract, the statute of frauds does not bar the claim.
In its reply, the defendant argues that, as with its promissory estoppel argument, the case law presented by the plaintiff speaks to the common-law statute of frauds, not the UCC statute of frauds. The defendant reasserts its argument that the only exceptions to the UCC statute of frauds are contained at § 42a-2-201(3).
In the plaintiff's supplemental brief, it notes that § 42a-2-721 provides that "[r]emedies for material misrepresentation or fraud include all remedies available under this article for nonfraudulent breach. Neither rescission or a claim for rescission of the contract for sale nor rejection or return of the goods shall bar or be deemed inconsistent with a claim for damages or other remedy."
In Sovereign Bank v. Licata, 116 Conn.App. 483, 977 A.2d 228, cert. granted in part, 293 Conn. 935, 981 A.2d 1080 (2009), the court found that tort claims could be presented in spite of the statute of frauds because "[the tort claim] rests not on an oral agreement but, rather, on a claim that [the counterclaim defendant] made misrepresentations to the defendant during the period of forbearance on which she relied to her detriment." Id., 497. The court went on to state: "[Comment (c) to § 530 of the Restatement (Second) of Torts (1977] notes that the person misled by the representation has a cause of action in tort as an alternative to a contract action and that a misrepresentation of one's intention is actionable even when the agreement is oral and made unenforceable by the statute of frauds . . . Additionally, Professor Samuel Williston sets forth in his learned treatise that [u]nder most formulations of the Statute of Frauds, it has frequently been held that only the enforceability, not the validity, of a bargain depends upon the satisfaction of the Statute . . . We find soundness in the reasoning of those Superior Court decisions that have allowed an action based on misrepresentation even where the alleged tortious conduct relates, in some measure, to an unenforceable oral contract, and we ally ourselves with Professor Williston and the applicable section of the Restatement of Torts in this regard. Guided by the foregoing, we conclude that the policies of the statute of frauds will not be subverted by affording plaintiffs who can prove a claim of negligent misrepresentation the opportunity to do so. A negligent misrepresentation action does not seek to enforce the underlying contract; rather, it seeks damages for reliance on misrepresentations that may have been made in relation to that contract. This critical distinction sets the tort action apart from a contract action and makes the claim worthy of independent review. We conclude, therefore, that because the defendant's claim for negligent misrepresentation sounds in tort and not in contract, the statute of frauds does not bar such a claim. To find otherwise would unjustly extend the reach of the statute of frauds." (Citations omitted; emphasis in original; internal quotation marks omitted.) Id., 501-02.
Our Supreme Court has granted certification as to "[w]hether the Appellate Court properly concluded that the statute of frauds as adopted in General Statutes § 52-550 does not bar an action brought in tort which relies in whole or in part upon terms of an agreement that is barred specifically by § 52-550(a)(4)?" Sovereign Bank v. Licata, 293 Conn. 935, 981 A.2d 1080 (2009). The case remains pending before the Supreme Court.
While no Connecticut court has ruled on the specific issue of whether misrepresentation claims may be brought when the UCC statute of frauds is invoked, the same rationale applied in Sovereign Bank applies in this case. Because the allegations deal with misrepresentations before the creation of a contract, they are sufficiently separate as to warrant independent review from the breach of contract claim.
In analyzing whether the allegations and evidence viewed in the light most favorable to the plaintiff create an issue of fact in the present case, it is noted that, "[our Supreme Court] has long recognized liability for negligent misrepresentation . . . 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.) Sturm v. Harb Development, LLC, 298 Conn. 124, 143-44, 2 A.3d 859 (2010). It is also noted that "[a] cause of action for intentional misrepresentation is essentially a claim of fraud. Fraud consists [of] deception practiced in order to induce another to part with property or surrender some legal right, and which accomplishes the end designed . . . The elements of a fraud action are: (1) a false representation was made as a statement of fact; (2) the statement was untrue and known to be so by its maker; (3) the statement was made with the intent of inducing reliance thereon; and (4) the other party relied on the statement to his detriment Additionally, [t]he party asserting such a cause of action must prove the existence of the first three of [the] elements by a standard higher than the usual fair preponderance of the evidence, which higher standard we have described as clear and satisfactory or clear, precise and unequivocal . . . The determination of what acts constitute fraud is a question of fact . . ." (Citations omitted; internal quotation marks omitted.) Reid v. Landsberger, 123 Conn.App. 260, 281, 1 A.3d 1149, cert. denied, 298 Conn. 933, 10 A.3d 517 (2010).
In the present case, viewed in the light most favorable to the nonmovant, the plaintiff's allegations and affidavits in support thereof demonstrate that this action is based on representations leading up to the formation of the alleged oral agreement and does not seek to enforce the agreement itself. In Guadagnino's affidavit, he states that in the time leading up to the purchase of the oil he was led to believe that once the price was found, the oil could be purchased immediately. Guadagnino also states that one day after receiving confirmation from the defendant that he should purchase the oil, he received a voice message stating that the defendant would not perform in accordance with the alleged agreement. If proven, these allegations could demonstrate that the defendant knew or should have known that these representations were false and were intended to induce reliance. The affidavit also demonstrates that, based on the representations, the plaintiff acted and was injured in that it purchased fuel in the amount of $667,200 in reliance on the defendant's statements. For the foregoing reasons, the motion for summary judgment is denied as to count two, which alleges negligent misrepresentation, and as to count six, which alleges fraudulent/intentional misrepresentation.
CONCLUSION
Accordingly, for the foregoing reasons, the motion for summary judgment as to counts one and three, which allege breach of contract and breach of the covenant of good faith and fair dealing is granted, respectively. The motion for summary judgment as to counts two, five and six, which allege negligent misrepresentation, promissory estoppel and fraudulent/intentional misrepresentation is denied.