Opinion
FSTCV166027615S
04-25-2018
Maria HAMANN et al. v. Bernard CARL
UNPUBLISHED OPINION
OPINION
David R. Tobin, J.T.R.
The original plaintiffs in this case, Maria Hamann (Maria) and Thomas Hamann (Thomas) were a formerly married couple who, at all relevant times, resided together in Stamford. The defendant is Bernand Carl (Carl), a resident of Washington, D.C. The first count of the complaint dated February 1, 2016, alleges that on or about September 1, 2015, the plaintiffs, at Carl’s request, made a $150,000 interest-free loan to him for a period of one week which Carl has failed and refused to repay and that Carl has thereby been unjustly enriched. The second count alleges the same facts, but claims that the failure to repay the loan was a breach of contract. The third court alleges that Carl intentionally deprived the plaintiffs of the $150,000 and that his intentional conduct constitutes statutory theft and conversion pursuant to General Statutes § 52-564. The fourth count of the complaint alleges that Carl’s conduct violates the Connecticut Unfair Trade Practices Act (CUTPA).
After the conclusion of the trial Thomas withdrew as a plaintiff (# 169.00) leaving Maria as the only plaintiff.
Carl’s March 24, 2016 motion to dismiss that case on personal jurisdictional grounds (# 102.00) was denied by the court (Povodator, J.) on September 29, 2016. (# 102.01). On December 19, 2016, Carl filed an answer denying all essential allegations of the complaint. (# 123.00.) On April 4, 2017, Carl filed an amended answer (# 149.00) which differed from the original answer in two respects.
First, the allegations of paragraph 8 and 12 which stated: " On September 1, 2015, the plaintiff Maria Hamann wired $150,000 from her account into the defendant’s account with Ferrari Financial Services" and " [t]he defendant directly benefitted from plaintiffs’ payment to his account in the amount of $150,000.00" were no longer completely denied. The amended answer made the following responses to those allegations: " 8. Defendant admits that Maria Hamann wired $150,000 to Ferrari Financial Services on September 1, 2015, but otherwise denies this allegation ... 12. Defendant admits that Ferrari Motor Services credited his account with the $150,000 payment, but otherwise denies this allegation."
Second, the amended answer asserted three special defenses, unclean hands, statute of frauds, and equitable estoppel. The factual allegations of the special defenses involved transactions between Carl and Richard Edwards (Edwards). Edwards is described in the defendant’s answer as " a UK resident ... working as an independent fee-for-service broker" who had located several " vintage sports cars" which were purchased by Carl and were being " held in storage or on consignment for his account at Specialist Cars of Malton in the United Kingdom." The allegations also recite that when Specialist Cars of Malton refused Carl’s request to return the cars to his possession, Edwards reported to Carl that he had a potential buyer for one of his cars, an orange Lamborghini Miura. After Carl refused Edwards’ request to delay reclaiming his cars, Edwards is alleged to have offered Carl a $150,000 non-refundable deposit in return for a two-week opportunity to sell the Miura. Carl alleges that he instructed Edwards to wire the $150,000 deposit to his account at Ferrari Motor Services to cover an interest payment on his line of credit. Carl further alleges that when Edwards did not produce a buyer for the Miura he advised Edwards that he was keeping his deposit and renewing his demand for the return of all of his cars. Carl also alleges that Edwards claimed that Carl’s eight cars were stolen from the Malton dealership by " five burly men," but subsequently learned that at least three of the eight cars were not at the Malton dealership at the time of the alleged theft. In fact, Carl alleges that several of the cars were not purchased for him at all. Instead, the money for their purchase was kept by Edwards and his confederates. Carl testified that other cars he believed to be at Malton were sold by Edwards using false documentation.
The special defense of unclean hands alleges that in August 28, 2015, Thomas, acting on behalf of a client, was attempting to purchase, through Edwards, two Porsche automobiles owned by Carl which were located at the Malton dealership. In connection with that transaction Thomas’ attorney, George Kramer sent an e-mail to Edwards or his representative stating that he had received € 1,400,000 which he was holding for the purchase of the two Porsche automobiles. Carl alleges that Attorney Kramer was not holding any such amount and that " at best, ... had an uncashed personal check in his possession."
Attorney George Kramer also represents the plaintiffs in this litigation.
In further support of his claim of unclean hands, Carl alleges that Thomas threatened him with criminal prosecution if he did not repay the $150,000.00 which was sent to his account with Ferrari Motor Services. Carl claims that in making such a threat Thomas was acting as the agent for Maria and that, accordingly, Thomas’ misconduct bars her recovery.
The second special defense simply asserted that the plaintiffs’ breach of contract action is barred by General Statutes § 52-550 (the statute of frauds).
The third special defense asserted that the plaintiffs are equitably estopped from asserting their claims against Carl because Carl relied on Edwards’ misrepresentation that the $150,000 payment received from the plaintiffs was a non-refundable advance paid in connection with Edwards’ purported attempts to sell the Miura automobile. This reliance allegedly resulted in Carl’s delayed discovery of Edwards’ various misdeeds and allowed Edwards additional time to dispose of cars he had stolen from Carl.
On January 4, 2018, the plaintiffs filed a reply denying the allegations of all of Carl’s special defenses. (# 161.00.)
The case was tried before the court over three days from January 10 to 12, 2018. At the conclusion of evidence the court discussed the issues of the case with counsel. At that time the plaintiffs withdrew their second count, alleging breach of contract and the fourth count alleging violation of CUTPA, leaving only the claims for unjust enrichment and statutory theft under the first and third counts of their complaint. The plaintiffs further withdrew their claim for attorneys fees which might have been awarded under the third count. Carl withdrew his second (statute of frauds) and third (equitable estoppel) special defenses, leaving the first special defense (unclean hands) as the sole remaining special defense. The parties filed simultaneous initial briefs on February 5, 2018 (# 167.00 & # 168.00) and responsive briefs on February 26, 2018 (# 170.00 & # 171.00).
In his post-trial brief of February 5, 2018 Carl claims that the court has already entered judgment in his favor on the withdrawn counts. The claim is incorrect. The second and fourth counts of the complaint were withdrawn without objection from Carl.
Simultaneously with the filing of the plaintiffs’ final brief, Thomas withdrew his complaint leaving Maria Hamann as the sole remaining plaintiff. (# 169.00.) The operative pleadings now consist of the complaint, in which Maria asserts claims of unjust enrichment and statutory theft, the answer denying certain allegations of the complaint and asserting the special defense of unclean hands and the reply denying the allegations of the special defense.
THE EVIDENCE
The first witness called by the plaintiff at the trial was Carl, a resident of Washington, D.C. Carl testified that he is a graduate of Wesleyan (’69) and the University of Virginia School of Law (’72). Following law school he served as a clerk for the chief judge of the Court of Appeals for the D.C. Circuit and subsequently served as a clerk for Supreme Court Justice Thurgood Marshall. Following his clerkships, Carl was employed in the Department of Housing and Urban Development in Washington, eventually serving as assistant secretary of that department. Thereafter, he was with the litigation department of a prestigious Washington law firm before becoming involved in investment banking. His experience in that field included employment with Solomon Brothers and the Bass family of Texas. His career also including serving on two presidential transition teams.
He recently retired and is in a financial position to indulge his long-time passion for automobiles. Carl is particularly interested in classic European racing cars. He testified that collection includes approximately thirty-five vehicles. Some of those vehicles would, in his opinion be considered little more than used cars. However, others were very valuable classic cars of historical interest. Carl maintains homes in Washington, D.C., South Hampton, New York, in the Belgravia neighborhood of London and a chateau in the Loire Valley in France. He also owns the apartments in New York City and San Francisco occupied by his children.
As he built his collection, Carl would sometimes sell one or more cars in order to finance the purchase of more desirable cars of greater value. In 2013, Carl saw an opportunity to combine his ambition to expand and enhance his collection with a business opportunity. For some time, Carl had been regularly contacted by Richard Edwards, a resident of the United Kingdom offering him classic cars for sale. Edwards proposed that Carl establish a fund to purchase classic cars and resell that at a profit. Carl knew that Edwards had, at one time, owned a very valuable classic car. Carl also knew that he had declared bankruptcy under the laws of the United Kingdom several years before, but that he had yet to obtain a discharge from that bankruptcy. Carl did not entirely trust Edwards. He knew that Edwards had a " colorful reputation" in the world of classic car collectors and that he was known to be prone to " sharp practices" in business. Nevertheless, Edwards had a reputation for being able to obtain classic cars at reasonable prices.
In November 2013, Carl sent a document to Edwards proposing a relationship where Edwards would find classic cars and bring them to Carl’s attention. (Ex. 1.) If found acceptable by Carl, the cars would be purchased by Carl and delivered to him. Edwards would have an exclusive marketing period of sixty days following purchase of each such car to find a buyer for the car at a price acceptable to Carl. If such a sale took place, the profits (after deduction of any acquisition costs or repairs and a payment of interest to Carl for the use of his money) would be split evenly between Carl and Edwards. The agreement also provided that if Carl rejected an offer from a buyer which would have produced profits of at least twenty percent over costs, related expenses and interest (presumably because Carl had elected to keep the car) Carl would pay Edwards the same amount he would have been due had the car been sold to the buyer procured by Edwards.
The agreement between Carl and Edwards included the requirement that all sales of cars be made to buyers who were willing to pay a non-refundable deposit of twenty percent of the purchase price. If the buyer failed to make the balance of the payment in thirty days, the deposit would be forfeited and retained by Carl. The agreement placed several limitations on Edwards’ ability to act on Carl’s behalf: 1) he could only represent himself as a broker and not as " an owner or someone with authority to commit the car to a potential buyer" ; 2) Edwards had no authority to accept offers for resale on Carl’s behalf; and 3) " No agreement not executed by Carl shall be binding upon Carl."
The agreement also covered Edwards’ authority with respect to any holder of the cars covered by the agreement:
4. Any holder of the car must be approved in advance by Carl and must sign an agreement containing the following covenants. The holder of the car must acknowledge Carl’s sole and exclusive ownership of the car and promptly advise Carl of any proposal to resell the car. No agreement of sale shall be acknowledged by the holder or by Edwards without Carl’s prior written agreement. The car may not be released by the holder until Carl has given a written acknowledgement, confirmed by a telephone call from the holder to Carl, that Carl has received payment for the car or upon Carl’s specific written instructions, also confirmed by a telephone call from the holder to Carl.
Carl testified that he had prepared the agreement and structured it based on agreements he was familiar with involving the compensation of real estate brokers by sellers. Edwards agreed to the terms set forth in Exhibit 1 and they formed the basis of the dealings between Carl and Edwards from November 2013 through 2015. Exhibit 1 is neither dated nor signed.
Aside from Carl’s testimony, the only evidence authenticating Exhibit 1 was an e-mail from Carl to Edwards dated November 15, 2013, stating " [i]f I am going to buy any cars for resale, the attached is the only basis on which I will do so." The e-mail includes an attachment titled " Edwards deal.docx 130K." Carl testified that the attachment to that e-mail was Exhibit 1. (Ex. 28.)
Carl testified that before he sent Exhibit 1 to Edwards, he had the document reviewed by British counsel to determine if the agreement would present any problems with regard to the Edwards’ bankruptcy trustee. Apparently, the response was that Edwards alone was responsible for following the law with respect to his business dealing while he remained an undischarged bankrupt.
Thomas Hamann testified that he presently resides with his former wife, plaintiff Maria Hamann, in Stamford. Thomas was born and educated in Germany where he earned a MS degree in economics. He, like Carl, has a lifelong passion for classic automobiles. After graduation he worked at a dealership in Germany specializing in the marketing of classic automobiles to customers throughout the world. In the mid-1980s Thomas moved to the United States and accepted employment as salesman with a dealership in Miami. He was quickly promoted to the position of sales manager and then general manager. He resigned from the dealership when he learned that the owner was defrauding his bank by including consigned cars in the lending base of the dealership. After moving to California in the early 1990s, Thomas was able to obtain financing from a friend from Sweden which enabled them to open three dealerships including one in Munich, Germany. They became the largest dealer of European racing cars in the world. Unfortunately, the venture collapsed after his Swedish backer found himself overextended during a global recession and was forced to declare bankruptcy.
In 1998, Thomas founded Hamann Classic Cars. Under that company he acted as a broker in the purchase and sale of classic cars, with the majority of his volume being in European racing sports cars. His average volume of sales has been approximately $40,000,000 a year. He has served as a judge at several major Concours d’Elegance (events at which classic cars are displayed by their owners and at which classic cars are sometimes offered for sale by auction).
Both Thomas and Carl testified that the market for classic European racing cars is a worldwide one. In addition to sales by auction, transactions for the purchase and sale are also negotiated by brokers on behalf of undisclosed buyers. A broker will keep the name of his customer confidential to prevent the seller owner or his broker from circumventing the buyer’s broker and depriving him of his commission.
Thomas testified that he first met Carl at the Breakers Hotel in Palm Beach, Florida where they were both attending an event sponsored by Ferrari. Thomas’ initial contact with Edwards which he recalls occurred in 2013 when Edwards contacted him to offer him cars that he had for sale. In 2013, when both Edwards and Thomas were in London, Edwards invited Thomas to meet Carl, who Edwards described as his partner. Thomas accepted the invitation and went with Edwards to Carl’s home in Belgravia. They were greeted by a servant who, according to Thomas, seemed well acquainted with Edwards. Thomas also observed that Edwards was quite familiar with the layout of Carl’s home. Carl, Edwards and Thomas spent an hour to an hour and a half at Carl’s home discussing classic cars in general and, in particular, cars which Carl and Edwards had purchased together. The conversation continued after the three of them went to a restaurant for dinner. Carl did not expressly tell Thomas what his relationship with Edwards was, but it was clear that they were working together with respect to more than just one or two cars. Edwards later told Thomas, that his arrangement with Carl involved a 50/50 split of profits. Thomas knew from his long experience in the field of classic car sales, that the compensation to a broker is typically 5% of the sales price.
Edwards’ statement to Hamann regarding his compensation appears to accurately reflect the terms of the understanding between Carl and Edwards set forth in Exhibit 1. If so, it appears to be one of very few entirely truthful statements made by Edwards.
After meeting Carl and Edwards in London, Thomas heard from Edwards frequently in the form of e-mails offering various cars for sale. These communications continued up to and after the events which occurred in the fall of 2015.
Carl testified that from late 2013 through March 2015, Edwards located a number of cars which Carl purchased. Several of the cars were resold when Edwards, acting as a broker, found buyers for them. One car, a Porsche 959, was retained by Carl after Edwards presented a qualifying offer from a buyer which Carl rejected. Carl made a payment to Edwards in the amount required under Exhibit 1. In March 2015, Carl purchased the final car found by Edwards. Under the terms of Exhibit 1, Edwards’ exclusive right to resell that car as a broker expired in May 2015.
In July 2015, Edwards was the defendant in a criminal trial in the United Kingdom, in which he was accused of theft by retaining substantial deposits paid to him in connection with the sale of automobiles. Carl attended the trial and heard Edwards tell the jury that he was in debt to gangsters and had to use the deposits in order to prevent violence to himself and his family. Although the jury credited Edwards’ claims and acquitted him, Carl was certain that Edwards had lied and concluded that Edwards was, without question, a con artist and a thief. At about the same time, Carl learned from a friend that Edwards had " left a trail of wreckage and destruction" in his business dealings. After this conversation, Carl became intent on taking possession of all classic cars which he believed he had acquired with Edward’s assistance.
In mid-summer 2015, Carl believed that he owned an inventory of eight classic cars which he had acquired with Edward’s assistance. Carl identified those cars as:
1. A black Porsche 959 from the mid-1980s;
2. A 1973 white lightweight Porsche 2.7RS- made for track events;
3. A white Porsche 2.7RS Touring Model;
4. An orange Porsche 2.7RS Touring Model;
5. A Lamborghini Muira;
6. A 1969-73 Red Ferrari;
7. A Ferrari F40 from the mid-1980s; and
8. An Alfa Romeo Montreal from the 1970s.
Carl testified that he believed that those cars were stored at an automobile dealership known as " Specialist Cars of Malton" in Malton, a town in the north of England. That establishment was owned and operated by John Hawkins (Hawkins). Carl’s investment in the cars in Malton was financed by Ferrari Motor Services, which believed that it had a lien on all of the cars. On a monthly basis, Hawkins would correspond with Carl’s solicitor in London to confirm the presence and condition of Carl’s cars in his possession. Carl testified that Edwards had located and recommended Hawkins’ dealership as a suitable place to store his cars. Carl testified that he believed that Malton was located in the vicinity of Manchester, England and claimed to have vetted them prior to allowing his cars to be stored there. Carl never testified that he had, at any time, visited Malton or the Hawkins dealership.
There was no evidence that either Hawkins or Specialist Cars of Malton signed an agreement with Carl containing the terms mandated for a " holder" of Carl’s cars by paragraph 4 of Exhibit 1- the unsigned agreement between Carl and Edwards.
Carl identified an exchange of e-mails on July 30, 2015, between Carl and Jeffrey Parkinson, Chairman of Landmark Car Co. of London. (Ex. 2.) In the initial e-mail Parkinson states that " Richard" (presumably Edwards) told him that Carl was in need of £ 200,000 for a couple of weeks and would allow Parkinson to have a " speedster on sale or return for twelve weeks." Parkinson agreed to advance the money without interest, but also discusses a £ 200,000 deposit on " the 911 RS project that I understood was yours." Parkinson states " I could do with the £ 200 back, but what would you like me to do?"
In response, Carl informed Parkinson that Edwards had a " buyer who missed a deadline for a $750,000 payment for a Miura S I let him sell." Carl confessed that he needs " the cash right away to pay for an embarrassingly costly (seven-figure) wedding for my daughter." Carl went on to explain that in order to prevent the Miura from being sold to a local dealer, Edwards, who still hoped to sell the car offered to arrange for £ 200,000 to cover Carl’s immediate cash needs. Carl understands that Edwards solicited the loan from Parkinson and expresses his appreciation and offers to pay Parkinson back " with fair interest." Carl’s e-mail response to Parkinson also includes discussions of the several options for repaying the deposit including the sale of the " speedster" or the Miura through Parkinson. Carl testified that the " speedster" was a Porsche of 1950s vintage with right hand drive on consignment for sale with Parkinson.
Exhibit 3 is an e-mail dated June 18, 2015, from Edwards to Parkinson relating to the " speedster" which was being consigned to Parkinson for sale. In it Edwards requests a " loan advance of £ 200,000 [to] be made to [Carl] tomorrow for two weeks, in the event of the £ 200,000 not being paid in cleared funds by 3rd July 2015 then ownership of the Speedster will pass to you for the loan advance." Carl authenticated the e-mail addresses on Exhibit 3, but denied he had seen it previously.
On July 2, 2015, Carl sent an e-mail to Edwards stating that a debt of £ 250,000 is owed to him " in connection with the RS shell and motor." Carl further states that " getting £ 180,000 from Jeffrey leaves me with a considerable loss. The only good news would be that selling him the parts would reduce inventory and avoid my having to put out MORE cash to redeem the Speedster. If Jeffrey want to buy the parts for £ 180,000 and deduct it from the £ 200,000 loan he kindly advanced on the Speedster, then I would remit the balance of £ 20,000. However I need to know soon as I am holding £ 200,000 at Coutts to redeem the Speedster and would prefer to send some of it back to the U.S. if all of it is not needed for that purpose.
Carl identified " Coutts" as Coutts Private Bank, a private bank owned by the Royal Bank of Scotland where Carl maintained accounts.
During the month of August, Carl became concerned over the security of the cars which were being stored at the Hawkins dealership in Malton. Moreover, after Edwards’ exclusive right of sale had expired in May 2015, Carl had reached a decision to retrieve his cars from Malton and take personal possession of them. He contacted Hawkins to discuss the matter of retrieving the cars. On August 24, 2015, Hawkins sent Carl an evasive e-mail stating: " Hi Bernie, Sorry I couldn’t hear you and have very sporadic internet please call Richard as discussed as he is in charge of your cars whilst I’m away." Carl responded by sending an e-mail to Hawkins, with a copy to Edwards, stating: " I have repeatedly made clear that Richard is not in charge of my cars, so trying to pass off my request to retrieve them to Richard is baseless. Whatever else Richard may do, he certainly does not have standing to countermand my direct instructions to you as the owner of the cars. And you assured me I could pick up my cars while you were away and now seem to have reneged on that explicit promise. Unless you have some good reason to deny me access to my own property, what you are doing is illegal. I either need to retrieve my cars immediately or, as I have explained to Richard, I have to seek the intervention of the police. In any case, the current situation of being denied access to my own property, whether at your or Richard’s instance is intolerable." (Ex. 17.)
A similar e-mail was sent by Carl to Hawkins and Edwards on September 8, 2015, stating: " At the risk of being overly repetitive, I want to clearly remind everyone- once again- that no one has the authority to move, incur a lien on or contract to sell any of my cars without my clear and explicit prior written approval with regard to the specific car in question." (Ex. 21.) Hawkins offered Carl a number of reasons why he could not deliver the cars to him as requested and insisted on having sixty days prior notice.
Carl testified that after his repeated efforts to obtain possession of his cars from Hawkins and Edwards failed he obtained an order from a British court on October 14, 2015 directing Hawkins, Specialist Cars of Malton Limited and Edwards to deliver to Carl nine cars listed on the order. In addition to the eight cars identified by Carl in his testimony, the order also included a Porsche 936 " Jouet" child’s race car. (Ex. 32.)
Carl testified that Hawkins and Edwards appeared in the British court on the day the cars were to be turned over to him and testified that the cars had been taken from Hawkins’ dealership in Malton the previous day when a number of " burly men" arrived at the dealership and took the cars. Carl testified that he later learned that four of the eight cars were not even in Malton on the day of the alleged theft. He further testified as to what he learned from police authorities and private investigators he hired to track down his car.
The Porsche 959 and the lightweight white Porsche 2.7RS were seized in Spain as stolen property. The white Porsche 2.7RS Touring was sold by Edwards to a buyer in Germany with forged documentation. The orange Porsche 2.7RS Touring was sent by Edwards to a " loan shark" as security for a loan made to Edwards’ wife. That car was seized by the police in the U.K. A Lamborghini Miura was seized by the police in Belgium, however, it is unclear as to whether Carl ever had good title to that car, or any Miura for that matter. The 1969-73 Red Ferrari was seized by police after Edwards sold it. The Ferrari F40 was to have been purchased from a Japanese seller; when the deal fell through, the seller kept the car and returned the deposit made with Carl’s funds to Edwards who retained it. Finally, the Alfa Romeo Montreal vanished without a trace. Carl claims that Edwards later told him that he had sold some of his cars for £ > 800,000 to pay his own personal debts.
Beginning in May or June 2015, Thomas was representing, as a broker, a very wealthy German car collector who was interested in purchasing two Porsche model 2.7R cars owned by Carl which were being offered for sale by Edwards. The asking price for the two cars was € 2,500,000. Thomas’ buyer was not interested at that price. Edwards subsequently dropped the price to € 1,800,000. This produced a counter offer of € 1,200,000 from Thomas’ buyer. Eventually a price of € 1,400,000 was agreed upon, provided that the cars passed inspection. On the day the inspection was to take place one of the two cars was not produced. Eventually both cars were inspected and the inspector reported to the buyer that one of the cars- the White Lightweight Porsche 2.7RS had " many non-conforming modification which would cost at least € 100,000 to remedy." Similarly, the second car- the Orange Porsche 2.7RS Touring was found to be " not a totally unmolested car as it was brought back to Touring specs after it was converted to RSR specs and that many parts are therefore not original anymore." In light of the above, on July 3, 2015, Thomas’ buyer lowered his offer for the two cars to € 1,250,000. In conveying his client’s position to Edwards, Thomas apologized for his buyer’s " bullying" negotiating tactics, but assured Edwards of his client’s financial ability to close the purchase immediately. " I can try to bring the German back up to his offer of € 1.4 Million, but he is a Bully which is why he has 40,000 employees in direct financial marketing and sales whom he is bullying around. It’s a different mentality than with other billionaires, but a billionaire he is (€ 2.5+Billion)." (Ex. 36.)
Negotiations between Thomas and Edwards regarding the two Porsches continued through August 2015. Thomas’ buyer apparently relented and agreed to the € 1,400,000 price, subject to re-inspection of the cars by the buyer’s " trusted inspector." (Ex. 36.) Unfortunately the inspections of the cars were delayed and Edwards pressed Thomas to have his buyer to proceed with the purchase or back out. On August 27, 2015, Thomas sent an e-mail to Edwards explaining why events had prevented the buyer and his " trusted inspector" from moving forward.
In an apparent attempt to satisfy Edwards’ stated concerns regarding the legitimacy of Thomas’ buyer, on August 28, 2015 attorney George Kramer, at Thomas’ request sent the following e-mail to Edwards: " To whom it may concern: The undersigned attorney hereby confirms that he had received EUR 1.4 million to be held for Thomas Hamann toward the purchase of a Porsche Carrera 2.7 Touring and a Porsche Carrera 2.7RS Lightweight subject to Buyer’s satisfactory inspection. Payment shall be made upon the conclusion of satisfactory inspection of said cars. The price is ex their current location in the U.K. George Kramer Attorney-at-Law." (Ex. 25.)
Thomas testified that he did not deposit any such amount with Kramer. Instead he had delivered a check for € 1,400,000 to Kramer, but both he and Kramer knew that Thomas did not have sufficient funds (or for that matter assets of any description) to honor the check. Carl testified that Edwards did not forward a copy of Kramer’s e-mail to him.
Despite the assurances from Kramer, on August 31, 2015, Edwards sent Thomas an e-mail regarding the proposed purchase of the two Porsche model 2.7R cars owned by Carl. The e-mail urges Thomas to take action to move the sale forward- " Please Thomas can you at least get the funds paid into your escrow account for you to hold- if not all, then at least 50% as a good deposit from your client who you assured me was a wealthy serious collector who would not mess around." The e-mail is signed: " Regards, Richard per Bernie Carl." (Ex. 18.) The transaction to purchase the two Porsches eventually fell through.
In September 1, 2015, Carl had an interest payment due on his line of credit with Ferrari Motor Services. On that day or the previous day, Edwards called Thomas and told him that Carl needed a favor. Carl was in a cash flow bind and needed to have $150,000 sent to Ferrari Motor Services to cover the interest payment. Could Thomas oblige by sending the funds to Ferrari, they would be repaid in one week. Thomas found Edwards’ request to be credible; the cost of Carl’s daughter’s wedding and Carl’s cash flow problems were common knowledge. Thomas testified that he would not have lent money to Edwards under any conditions, given the fact of his undischarged bankruptcy. However, he was willing to help out Carl in the interest of cultivating a business relationship with him. Thomas found that, while he did not have available funds, Maria did. Accordingly, at Thomas’ request, Maria had the funds sent to Ferrari Motor Services for credit to Carl’s account.
On September 4, 2015, Carl received confirmation of a payment of $150,000 had been made to his account. Carl testified that he had asked Edwards to obtain a deposit of $150,000 on the Lamborghini Miura which Edwards was trying to sell for $650,000. Carl subsequently learned that a payment had been made by wire transfer from Maria’s account. Carl took the position that the payment had been made by Edwards as a non-refundable deposit on the Miura which he believed that he owned and that he believed was stored at Hawkins’ dealership in Malton. In later correspondence in early 2016, Carl told Thomas that he regarded the funds sent by Maria to his account with Ferrari Motor Services constituted a loan made by Maria to Edwards and that they should look to Edwards, and Edwards alone, for repayment. (Ex. 11.)
The terms of the agreement between Carl and Edwards (Ex. 1) would have required a 20% non-refundable deposit. In the case of a $650,000 sale, the deposit would have been $130,000, not $150,000.
In his post-trial brief, Carl suggests that the court should discredit all or most of Hamann’s testimony for several reasons. First, he participated in procuring Kramer’s e-mail to Edwards which incorrectly stated that funds were being held in Kramer’s account. Second, Hamann, himself attempted to mislead the proposed buyer of the two Porsches by falsely stating that he had personally advanced a deposit of $200,000 on the cars. Third, Hamann testified that text messages between Hamann and Edwards were lost when he changed his cell phone. Carl took the position that the loss of the text messages was obviously an intentional destruction of evidence and that the court should draw the inference that the lost evidence would have been unfavorable to the Hamanns. The court found Hamann to be a credible witness. He freely, but with obvious discomfort or shame, admitted that in connection with his role as broker he would stretch the truth in order to facilitate a transaction which would result in his earning a commission. In this respect, the court observes that there appears to be little difference between the practices of certain used car dealers and buyers and sellers of high value classic cars. If anything, the business ethics of most used car dealers would compare quite favorably with Edwards’ conduct.
With respect to the missing text messages, the court declines to draw the adverse inferences as invited by Carl’s counsel. The loss of the messages when updating a phone appears to be a reasonable explanation for their loss. The cross examination of Thomas and Maria failed to show that the absence of the messages was part of a pattern of discovery abuse or spoliation of evidence. Moreover, the conduct in question with respect to the remaining counts of the complaint relate to Carl’s conduct, not Thomas.’ It is difficult to see how a message from Thomas which Carl did not receive could justify Carl’s retention of the $150,000, if he were not otherwise entitled to those funds.
During the course of the trial, Carl testified that in 2014 he had sent $5,000 to Thomas at Edwards’ request to pay Thomas’ expenses for a trip to Italy in order to evaluate a car on Carl’s behalf. He later learned that Thomas had purchased the car for his own account. Exhibit 16 is a copy of a wire transfer evidencing a payment from Carl to Thomas on May 6, 2014. Thomas testified that he was unaware that the $5,000 had come from Carl. Edwards had told him it was in partial repayment of a loan which Thomas had made to Edwards’ wife. Thomas paid his own way to Italy to look for cars for his own account and was unaware that Edwards had lied to Carl about the purpose of his trip. Thomas testified that had he known that he had received Carl’s money as the result of Edwards’ subterfuge he would have returned the money to Carl. It is noteworthy that Edwards employed essentially the same fraudulent technique in both May of 2014 and in September 2015 to induce first Carl, and then Thomas, to send funds to the other while misrepresenting to the recipient both the source and purpose of the funds.
During the course of cross examination, Thomas stated his belief that, in the United States at least, non-refundable deposits are not legal in connection with the sale of automobiles. The defense introduced into evidence a page from the website of the Connecticut Department of Consumer Protection stating: Connecticut law states that at the time a deposit is taken, the dealer must disclose in writing whether the deposit is refundable or non-refundable (pending loan acceptance). (Ex. 33.) There was no evidence produced as to law of any other jurisdiction concerning either dealer sales or the law concerning sales by parties other than dealers in any jurisdiction.
Plaintiff Maria testified that she married Thomas in 1992. The couple divorced in 2005 and reunited in 2009 without remarriage. In September 2015, she maintained an account with Citibank. At Thomas’ request, she sent $150,000 to Ferrari Motor Services to be credited to Carl’s account. Maria understood that the money was being advanced as loan to Carl to allow Thomas to help a wealthy business associate who had a short-term cash flow problem. She further understood that the loan would be without interest and would be repaid in seven days. The money in her Citibank account was from her personal savings and from an inheritance from her mother. None of the funds in Maria’s account came from Thomas or were connected in any way with him or his business as a classic car broker. Maria initially attempted to have Citibank make a direct transfer of the funds to Ferrari Motor Services, but eventually had to use a wire transfer to transmit the funds. (Exs. 29, 30, 31.)
Maria further testified that she had met Edwards on two occasions. Once in New York for dinner in 2014 and in 2015 when Edwards attended a memorial service for Maria and Thomas’ only child, a son, who had tragically died at a young age. She had no intention of making a loan to Edwards.
Both Maria and Thomas testified that although they expected Carl to repay the interest-free loan in one week, September 8, 2015, they did not actively pursue repayment of the loan during the balance of 2015 because they were both depressed and incapacitated by their joint grief over the recent loss of their only child, a twenty-three-year-old son.
In early 2016, Thomas initiated contact with Carl in an effort to obtain repayment of the loan. On January 14, 2016, he left " a detailed voice mail on [Carl’s] mobile phone" and followed up with an e-mail to Carl that evening. The e-mail referred to a telephone conversation which Thomas had with Carl " a few weeks ago" in which Carl allegedly acknowledged that he was indebted to the Hamanns for the $150,000 which had been deposited into Carl’s account with Ferrari Motor Services. Thomas also conveyed to Carl his shock upon finding that Carl, in an e-mail to Edwards had informed him that he intended to keep the $150,000 as a penalty. Thomas requested that Carl repay the $150,000 to avoid litigation. Two hours later, Carl responded to Thomas’ e-mail. In that response Carl insisted that the funds deposited to his account with Ferrari Motor Services were a loan to Edwards for which he had no responsibility. He denied having acknowledged his debt to the Hamanns, claiming that what he said was " if Richard had met his obligations to me, I would have agreed to have the $150,000 of the promised $650,000 proceeds of the sale of the Miura go to you. Sadly, Richard decided to steal that car rather than sell it." (Ex. 11.) Carl’s refusal to repay the $150,000 to Maria resulted in the present litigation.
DISCUSSION
UNJUST ENRICHMENT
" The lack of a remedy under a contract is a precondition to recovery based on unjust enrichment or quantum meruit." (Internal quotation marks omitted.) BHP Land Services, LLC v. Seymour, 137 Conn.App. 165, 169, cert. denied, 307 Conn. 927 (2012). " A right of recovery under the doctrine of unjust enrichment is essentially equitable, its basis being that in a given situation it is contrary to equity and good conscience for one to retain a benefit which has come to him at the expense of another ... With no other test than what, under a given set of circumstances, is just or unjust, equitable or inequitable, conscionable or unconscionable, it becomes necessary in any case where the benefit of the doctrine is claimed, to examine the circumstances and the conduct of the parties and apply this standard ... Unjust enrichment is, consistent with the principles of equity, a broad and flexible remedy ... Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefitted, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiffs’ detriment." (Citations omitted; internal quotation marks omitted.) Hartford Whalers Hockey Club v. Uniroyal Goodrich Tire, Co., 231 Conn. 276, 282-83 (1994).
After Carl denied that Edwards was his agent for any purposes whatsoever, and the plaintiffs were unable to produce credible evidence to the contrary, the plaintiffs withdrew their claim of breach of contract. After Thomas withdrew his claims against Carl, Maria was the only remaining plaintiff. Her claim of unjust enrichment is relatively simple. $150,000 of her funds were credited to Carl’s account at Ferrari Motor Services. She had advanced the funds after Thomas told her that Carl was experiencing cash flow problems as the result of the costs associated with his daughter’s wedding. Carl’s testimony confirmed the accuracy of that information. Neither Maria nor Thomas had any intention of loaning $150,000 to Edwards. The money was advanced for Carl’s benefit with the knowledge that he was a man of substantial means who would be able to repay the loan within a brief period. There is no doubt that Carl received a substantial benefit from the funds advanced by Maria. Carl’s monthly interest obligation to Ferrari Motor Services was satisfied from Maria’s funds.
It was also corroborated by other evidence, including the e-mails regarding the £ 200,000 debt which Carl owed to Jeffrey Parkinson, which Parkinson was willing to temporarily forebear. (Ex. 2.)
In his pleadings, testimony, oral argument and post-trial briefs Carl has offered at least three different narratives to justify his retention of the $150,000 he received from the plaintiffs. The first narrative is that Edwards had produced a buyer for the Miura and that the $150,000 presented a non-refundable deposit posted on behalf of the buyer. The second narrative is that Edwards personally offered Carl a $150,000 non-refundable payment in return for Carl’s agreement not to sell the Miura to a third party for two weeks. The third narrative links the $150,000 to a transaction which Thomas was negotiating with Edwards for the sale of two Porsche model 2.7RS cars on behalf of a German buyer.
In his initial post-trial brief (# 168.00), the defendant limited his claims to the second narrative claiming that he had an agreement with Edwards " to forfeit the [$150,000 non-refundable] deposit if the sale of the Miura did not close within two weeks." Carl reasons that since the $150,000 showed up in his account with Ferrari Motor Services " as promised," that amount must have been made on behalf of Edwards. Carl concedes that he learned several days after the $150,000 was credited to his account that plaintiff, Maria was the source of the funds. He further concedes that he later learned that Edwards could not have had a buyer for the Miura since that car was either 1) never owned by Carl, or 2) if Carl ever owned it, " Edwards has already put it beyond Carl’s reach."
The court cannot credit Carl’s claim that he was entitled to retain the $150,000 in funds deposited to his account at Ferrari Motor Services as a non-refundable deposit made by Edwards on a purported sale of the Lamborghini Miura for $650,000. There is no record of any agreement (written or otherwise) which characterized the $150,000 as a non-refundable deposit; only Carl’s after-the-fact assertions to that effect. Exhibit 1 makes it clear that the defendant would not sell any cars to or through Edwards without a contract providing for a non-refundable deposit equal to 20% of the selling price. Exhibit 1 requires that any such contract must: 1) be submitted to Carl; 2) be unconditional; and 3) accompanied by a non-refundable deposit. It is clear that Exhibit 1 contemplated that such contracts would be in writing and contain all of the required terms. Carl never offered any explanation as to the difference between the $150,000 credited to his account with Ferrari Motor Service and the $130,000 which would have represented twenty percent of the $650,000 price then being discussed between Carl and Edwards.
Carl did not offer any proof of the existence of a contract, written or oral, either with an independent buyer or with Edwards which provided for a non-refundable deposit. Moreover, Carl testified that he subsequently discovered that he either; 1) never owned the Miura, or that 2) by September 2015, the car was no longer at Hawkins’ dealership in Malton having been sold by Edwards who retained the proceeds of sale. It is difficult to understand Carl’s claim that, under those circumstances, he would have been entitled to retain a down payment made on property which he either never actually owned or which he could never deliver to any potential or purported buyer. Moreover, there was no evidence presented as to whether the laws of the United Kingdom, which presumably would apply to the sale of an automobile located at Malton within that country, would require that a contract providing for a non-refundable deposit be in writing.
In his February 5, 2018 post-trial brief, Carl concedes by September 1, 2015, Edwards had put the Lamborghini Miura beyond Carl’s reach.
Carl’s claim that he rightfully retained the $150,000 as a forfeited non-refundable deposit are ultimately doomed by his actions after the funds were credited to his account with Ferrari Motor Credit. On September 4, 2015, long before the end of the two-week period at which time Carl claimed the balance of the purchase price on the Miura was to be paid, Carl wrote to Edwards, Hawkins and two persons who Edwards had identified to him as potential buyers of the Miura cancelling any purported sale of the Miura. In that e-mail Carl stated, in relevant part:
I have really lost my patience with all of you. I was promised the already overdue $425,000 first payment from the buyers would be in any respective bank accounts ONE WEEK ago today. A payment of $150,000 was made to one of those accounts Wednesday by a lender to Richard. But none of the purchase money has shown up. Neither SUNTRUST nor COUTTS have received the monies promised. And, getting money to COUTTS should take no more than a day. Thus the purchaser money has not shown up as promised- for the fourth time. Now, another week has gone by. That will not happen again.
My patience has ended, I am once again left with no choice but to cancel this deal and seek other alternatives . I will not and cannot continue to be stalled in this way. (Emphasis added.)
Unless someone can show that the failure of the money to appear in my accounts was the fault of my banks, as far as I am concerned there is not agreement with regard to the Miura and I once again am in a position to resell the car to whomever I want . (Emphasis added.) (Ex. 19.)
Figures in the e-mail do not correspond with Carl’s testimony. If the deposit was $150,000 and the balance was $425,000, the total purchase price would have been $575,000, not the $650,00 as Carl testified. The e-mail does not characterize the supposed deposit as a non-refundable subject to forfeiture.
On September 15, 2015, Carl wrote an e-mail to Edwards stating: " I am willing to wait ONE more day, provided you agree that, if the money is not in my account by noon as promised, the $150,000 from Harmann (sic) is also due me as a penalty. I am not going- once again- to take all the risks and aggravation of having another delay, only to have nothing happen and be left with all the consequences." (Ex. 9.) This exhibit demonstrates that although Carl had cancelled the sale of the Miura eleven days previously and knew that the funds credited to his account had not come from Edwards, but rather from the Hamanns, he felt that he needed Edwards’ agreement in order to retain the $150,00 payment as " a penalty." Carl never saw the need to inform either of the plaintiffs of his attempt to revive the deal he had already cancelled in an attempt to justify his retention of the $150,000 payment. There was no evidence offered that, Edwards ever responded to Exhibit 9 and agreed to the proposal regarding the treatment of the $150,000 as a penalty. Carl’s claim that the $150,000 was a loan from the Hamanns to Edwards is further contradicted by the e-mail exchange he had with Edwards on September 1, 2015. That exchange makes it clear that Edwards had told Carl that the source of the funds to make the $150,000 payment to Ferrari Motor Services would not be either Edwards’ own funds or funds that he would borrow. Instead the money was to come from the actual buyers of the Miura. (Ex. 10.)
Ex. 19 demonstrated that on September 4, 2015, Carl was characterizing the $150,000 sent to his account with Ferrari Motor Services as a deposit on the Miura " made by a lender to [Edwards]" who was not identified. Eleven days later Carl was aware that the funds had originated with Maria or Thomas who he misidentified " Harmann."
Also on September 1, 2015, Carl sent an e-mail to Hawkins stating: " I have agreed to wait yet another day for payment but the Miura money has to be in my Coutts account before noon your time tomorrow, so Coutts has time to transfer it out tomorrow. Otherwise, the sale cannot go forward. If I have to cancel the sale again and incur costs because of the delay, I will be looking for you to pay those costs. I will sell the F40 for net to me of U.S. $1,000,000 which is less than the price gotten for any F40 this year, but only if it gets paid this week and is part of a multi-car sale that includes at least two of the three RS coupes." (Ex. 24.) Edwards was not copied on that e-mail.
The court concludes that rather than providing a justifiable reason for his retention of the $150,000, Carl’s claims amount to non-viable excuse for his indefensible actions.
The court finds that Maria has proven her claim that Carl was unjustly enriched to the extent of the $150,000 of her funds which were credited to Carl’s account with Ferrari Motor Service. The court will next consider Carl’s special defense of unclean hands.
SPECIAL DEFENSE- UNCLEAN HANDS
Carl claims that Maria’s inequitable conduct bars her from prevailing on her equitable claim of unjust enrichment. The first twenty paragraphs of the defendant’s special defense focuses on the conduct of Edwards and his co-conspirators in cheating and defrauding the defendant. The allegations regarding the plaintiffs’ role with regard to these events may be summarized as follows: Thomas had Carl’s contact information. On August 28, 2015, Thomas’ attorney, George Kramer falsely reported to Edwards that he had € 1.4 million he was holding in connection with a proposed purchase of two Porsches owned by Carl. Carl claims that Thomas Hamann was at fault for failing to deal directly with him rather than with Edwards and that had he done so, Carl would have learned of Edwards’ deceit in time to prevent the theft of at least two of his Porsches.
Carl further claims that because Attorney Kramer’s e-mail regarding the € 1.4 million he was supposedly holding occurred in the same week as the $150,000 was sent by Maria Hamann to Ferrari Motors Services, " it was almost certainly part of the same discussion." Carl reasons that Kramer sent the e-mail acting as Thomas’ agent and on her behalf and that Thomas was acting as an agent for Maria. There was no evidence that Maria had any interest or involvement in the transaction involving the purchase of the two Porsches or that Thomas was acting as her agent.
Carl faults the Hamanns for having sent the $150,000 to Ferrari without contacting him " to confirm any of Mr. Edwards’ representations, despite knowing that the source was an independent broker with a poor reputation for probity." However, in his February 5, 2018 post-trial brief, Carl concedes that the negotiations between Thomas Hamann and Edwards regarding the sale of the two Porsches was " [u]nbeknownst to Carl." There was no evidence that Carl was ever informed about Attorney Kramer’s e-mail until long after negotiation for the purchase of the two Porsches had terminated. Moreover, there was no evidence that Carl relied upon any misrepresentations in the Kramer e-mail or that he suffered harm of any sort as a result of it. Finally, there was no evidence linking the sale of the Porsches to the $150,000 Maria sent to Carl’s account at Ferrari Motor Services.
Carl also supports his claim of unclean hands by claiming that on January 14, 2016, Thomas Hamann, in an attempt to extort $150,000 from him threatened him with criminal prosecution in violation of General Statute § 53a-119(5).
" A person obtains property by extortion when he compels or induces another person to deliver such property to himself or a third party by means of instilling in him a fear that, if the property is not so delivered, the actor will ... (D) accuse some person of a crime or cause criminal charges to be instituted against him ..."
In Thompson v. Orcutt, 257 Conn. 301 (2001), the Supreme Court reviewed the elements and applicability of the special defense of unclean hands. The court summarized the defense as follows:
It is a fundamental principal of equity that for a complainant to show that he is entitled to the benefit of equity he must establish that he comes into court with clean hands ... The clean hands doctrine is applied not for the protection of the parties but for the protection of the court ... It is applied not by way of punishment but on considerations that make for the advancement of right and justice ... The doctrine of unclean hands expresses the principle that where a plaintiff seeks equitable relief, he must show that his conduct has been fair, equitable and honest as to the particular controversy in issue ... Unless the plaintiff’s conduct is of such a character as to be condemned and pronounced wrongful by honest and fair-minded people, the doctrine of unclean hands does not apply.(Citations omitted; Interior quotation marks omitted.) Supra at 310.
The court in Thompson further discussed the application of the doctrine:
Because the doctrine of unclean hands exists to safeguard the integrity of the court, where a plaintiff’s claim grows out of or depends upon or is inseparably connected with his own prior fraud, a court of equity will, in general deny him any relief, and leave him to whatever remedies and defenses at law he may have. The doctrine generally applies only to the particular transaction under consideration, for the court will not go outside the case for the purpose of examining the conduct of the complainant in other matters or questioning his general character for fair dealing. The wrong must be in regard to the matter in litigation ... Though an obligation be indirectly connected with an illegal transaction, it will not thereby be barred from enforcement, if the plaintiff does not require the aid of the illegal transaction to make out his case.(Citations omitted; Interior quotation marks omitted.) Supra at 310-11.
In this case, the court finds any misconduct attributable to Thomas or Attorney Kramer in connection with the attempt to purchase the two Porsches owned by Carl are in no way connected to the $150,000 which Maria advanced for Carl’s benefit as a loan. With respect to Thomas’ communication to Carl in attempt to obtain repayment of the funds Maria advanced, the language used by Thomas was: " Our attorney considers this matter to be criminal in nature and wire fraud. As such he has suggested that me or my wife shall proceed legally against you and sue you for triple damages." In the court’s view, such language does not amount to an extortionate threat to pursue criminal charges, but rather a warning that continuing to unjustly retain Maria’s funds could result in a civil claim of statutory theft.
The court finds the issues raised by Carl’s special defense in favor of Maria.
STATUTORY THEFT
General Statutes § 52-564 provides: " Any person who steals any property of another, or knowingly receives and conceals stolen property, shall pay the owner treble his damages." " Statutory Theft under § 52-564 is synonymous with larceny under General Statutes § 53a-119 [a] person commits larceny when, with intent to deprive another of property or to appropriate the same to himself or a third party, he wrongfully takes, obtains or [withholds] such property from an owner ..." (Citations omitted, internal quotation marks omitted.) Howard v. MacDonald, 270 Conn. 111, 129 n.8 (2004).
General Statutes § 53a-119 provides that: " Larceny includes, but is not limited to: ..." followed by eighteen separate ways in which larceny might be committed. Included in that enumeration is: " (4) Acquiring property lost, mislaid or delivered by mistake. A person who comes into control of the property of another that he knows to have been lost, mislaid, or delivered under a mistake as to the nature or amount of the property or the identity of the recipient is guilty of larceny if, with purpose to deprive the owner thereof he fails to take reasonable measures to restore the property to a person entitled to it."
Our Supreme Court has recently clarified that the standard of proof to be applied to statutory theft claims is the preponderance of the evidence. Stuart v. Stuart, 297 Conn. 26 (2010).
Rana v. Terdjanian, 136 Conn.App. 99 (2012), involved a situation closely analogous to that of Maria, the remaining plaintiff, and the defendant, Carl. In Rana, a bank mistakenly paid funds owed to the buyer of a business to the former owner. The former owner did nothing to cause the funds to be mistakenly credited to his account, however, after being made aware of the mistake, he refused to turn over the funds to the buyer. The Appellate Court sustained the decision of the trial court finding that the evidence was sufficient to establish that the former owner exhibited an intent to deprive the buyer of the funds and that such conduct constituted civil theft under General Statutes § § 52-564 and 53a-119(4).
In this case, the funds wired by Maria to Carl’s credit at Ferrari Motor Services were delivered by her in the mistaken belief that she was making a short-term interest-free loan to Carl. Unfortunately, neither Maria nor Thomas notified Carl of their expectation that he would repay the funds advanced for his benefit for several months. By the time Thomas initiated contact with Carl, Carl had learned that, acting in concert Edwards and Hawkins had defrauded him out of classic cars having a value of several million dollars. Under those circumstances, Carl was, to say the least, unreceptive to the thought of having to write a check for an additional $150,000. He had long since come to believe that he was entitled to retain the $150,000 as a non-refundable deposit on the Miura. It is understandable that Carl was in no mood to see the losses resulted from the association with Edwards increase. Nevertheless, by January 14, 2016, Carl was well aware of the fact that neither Thomas nor Maria had ever intended to make a loan to Edwards and that the Hamanns forwarded the money to his credit in an effort to alleviate the cash flow shortage Carl was experiencing as a result of his daughter’s wedding.
In his answer, Carl included a claim of equitable estoppel asserting that the Hamann’s delay in contacting him and disabusing him of his understanding that he was entitled to retain the $150,000 as a non-refundable deposit caused him substantial damages which he sustained in reliance on his understanding that he was entitled to retain the funds. This claim was not supported by the evidence and was abandoned by Carl after the trial. Carl never asserted a claim of laches in defense of Maria’s claim of unjust enrichment. The court finds that on January 14, 2016, having been fully informed of the facts establishing that he had no legal or equitable right to retain the $150,000, Carl refused to return them to Maria. The court finds that Carl’s actions constituted statutory theft under § 52-564, entitling Maria to treble damages.
CHOICE OF LAW
After the close of evidence, counsel for the defendant, in oral argument, suggested that the law of some jurisdiction, other than Connecticut, might apply to the plaintiffs’ claims of unjust enrichment and statutory theft claim. In his post-trial brief the defendant claims that the laws of the State of New York rather than Connecticut’s should apply to both the plaintiffs’ unjust enrichment claim and the claim of statutory theft. Carl claims that the evidence establishes that when the $150,000 was wired to his account at Ferrari Motor Services in September 2015 and when he refused to return the funds to the plaintiffs in late 2015 and early 2016, he was physically present at his Southampton, New York property and that, accordingly, the laws of New York must control. The defendant points to the absence of any evidence of his presence in Connecticut or that he had any negotiations or communications of any nature with either of the plaintiffs prior to or contemporaneously with the deposit of funds which were credited to his account with Ferrari Motor Services.
The parties did not order transcripts of the testimony given in this trial. The court’s notes indicate that Carl testified that he was in Southampton in September 2015. The court’s notes and recollection did not indicate any testimony as to Carl’s whereabouts in January 2016 when he refused to return the funds to Maria.
Practice Book § 10-3(b) mandates that: " A party to an action who intends to raise an issue concerning the law of any jurisdiction or governmental unit thereof outside of this state shall give notice in his or her pleadings or other reasonable written notice." In this case, Carl did not give any notice of such an intent, written or otherwise, prior to the trial. The Joint Trial Management Order, dated January 4, 2018 (# 163.00), signed by counsel for all parties, makes no mention of any claims or defenses based on the law of any state other than Connecticut.
On January 20, 2017, Carl filed a ten-page Memorandum of Law in Support of Defendant’s Request for a Continuance and other Pre-Trial Motions. (# 134.00.) The memorandum referred to both of the plaintiffs’ statutory claims (Civil theft under General Statutes § 52-564 and a CUTPA claim). The defendant claimed that the allegations of the complaint did not establish either civil theft or a CUTPA claim. However, Carl did not assert any claims that Connecticut law did not apply to the plaintiffs’ claims against him or that those claims were controlled by the law of another jurisdiction.
The reason for the requirements of § 10-3(b) are obvious. Issues concerning choice of law issues are primarily fact driven. If a party claims that the laws of another jurisdiction applies to either claims or defenses, justice requires that the matter be raised prior to trial, not after the conclusion of evidence. In Suresky v. Sweedler, Superior Court, judicial district of Fairfield, Docket No. CV 06 5003255-S (April 9, 2010, Gilardi, J.T.R.), the court considering a motion for summary judgment rejected the defendant’s attempt to claim that Delaware law rather than Connecticut law applied to the business transaction which was the subject of the litigation. The court noted that the defendants had failed to give notice in their pleadings regarding the claim that Delaware law applied; " [t]herefore, the issue whether Delaware law should apply is moot, as Connecticut law has been applied during the entirety of the present case." See also Pont v. Barker, Superior Court, judicial district of New London, Docket No. 4002020 (May 30, 2006, Hurley, J.T.R.) , in which the court, in considering a motion to strike a special defense, rejected a claim in the defendants’ opposition brief that Rhode Island law, rather than Connecticut should apply, when the defendants had failed to comply with the requirements of Practice Book § 10-3(b).
The court also notes that the laws of Delaware and Connecticut were apparently in accord.
In Suresky, supra and Pont, supra the claims of foreign law were asserted for the first time on a motion for summary judgment and a motion to strike a special defense respectively. In this case, Carl did not make any sure claim until after the completion of the trial and did not make a written disclosure of the particulars of his claim until he filed his post-trial brief on February 5, 2018, over three weeks after the completion of the trial. Prior to that disclosure, plaintiffs’ counsel withdrew a claim for attorneys fees, in the apparent belief, that the availability of treble damages under § 52-564 would be sufficient compensation to his clients for Carl’s actions. Because of Carl’s failure to comply with the requirements of Practice Book § 10-3(b) the court rejects his claims as to the applicability of New York law to either of Maria’s two remaining counts.
Moreover, with respect to Maria’s unjust enrichment claim, Carl’s post-trial briefs do not persuade the court that the application of New York law to that claim would result in a different result. Finally, Connecticut law governing choice of law issues would mandate that Connecticut law be applied. " Under Connecticut choice of law rules, for the plaintiff’s claims sound in tort, namely, civil conspiracy, unjust enrichment and CUTPA, we apply the law of the state in which the plaintiff was injured, unless to do so would produce an arbitrary or irrational result." Macomber v. Travelers Property & Casualty Corp., 277 Conn. 617, 640 (2006).
The evidence shows that Carl was unjustly enriched in September 2015, when Maria wired $150,000 to his credit at Ferrari Motor Services. However, because of the absence of communications between the Hamanns and Carl, it is not clear that the statutory theft took place prior to January 14, 2016, when Carl, in full possession of the facts concerning the circumstances under which he had received the $150,000 refused to return the funds to Maria. By that time Carl was aware that Maria resided in Connecticut and would sustain damages as the result of his failure to return the funds to which he had no legal right. The court has found that Carl waived his right to claim that the laws of some other jurisdiction might be applicable to his wrongful assertion of ownership over Maria’s funds by failing to comply with the mandates of Practice Book § 10-3(b). The court finds that the application of General Statutes § 52-564 to Carl’s action is appropriate.
INTEREST
General Statutes § 37-3a provides, in relevant part, " interest at the rate of ten percent a year, and no more, may be recovered and allowed in civil actions ... including actions to recover money loaned at a greater rate, as damages for the detention of money after it becomes payable." The evidence establishes that when Maria sent the $150,000 to Carl’s account with Ferrari Motor Services on September 1, 2015, she intended to make an interest-free loan to Carl for a period of one week. The court finds that Maria is entitled to interest on the $150,000 she advanced, commencing September 8, 2015, and continuing until January 14, 2016, the date on which the court has found Carl’s intentional retention of Maria’s funds became civil theft. The court further finds that Maria is entitled to interest on the $450,000 in damages to which she is entitled to on her civil theft count commencing January 14, 2016. The court has the discretion to award interest at a rate less than 10% a year. Bruno v. Bruno, 177 Conn.App. 599 (2017) see also Sikorsky Financial Credit Union, Inc. v. Butts, 315 Conn. 433 (2015).
The court finds that interest should be awarded to Maria at the rate of 6% per year from the dates indicated above to the date of judgment and further finds that she is entitled to postjudgment interest at the rate of 6% per year.
CONCLUSION
The court finds the issues for plaintiff, Maria Hamann, on both remaining counts of the complaint (unjust enrichment and civil theft). Damages in the amount of $150,000 are awarded on the unjust enrichment count. Pursuant to § 52-564 the court awards damages in the amount of $450,000 on the civil theft count. Damages on the unjust enrichment count are included in the $450,000 awarded on the civil theft count. See: Rogan v. Rungee, 165 Conn.App. 209, 222-25 (2016). Total damages, exclusive of interest, are $450,000. Pre-judgment Interest is awarded in accordance with the foregoing section of this memorandum of decision. Attorneys fees are not awarded to the plaintiff, that claim having been withdrawn following the conclusion of evidence.
CONDUCT OF ATTORNEY GEORGE KRAMER
The evidence, including exhibit 25 and the testimony of Thomas Hamann, establishes that on August 28, 2015, Attorney George Kramer sent an e-mail to Richard Edwards asserting he had " received EUR 1.4 Million to he held for Thomas Hamann toward the purchase of a Porsche Carrera 2.7 Touring and a Porsche Carrera 2.7RS Lightweight subject to Buyer’s satisfactory inspection." The evidence further establishes Attorney Kramer did not, in fact, hold any such funds in any account. Instead Attorney Kramer held a check in the amount of € 1.4 million signed by Thomas which both Thomas and Kramer knew was not drawn on good funds and which Kramer never deposited in any account.
Rule 4.1 of the Rules of Professional Conduct states: " In the course of representing a client a lawyer shall not knowingly: (1) Make a false statement of material fact or law to a third person ..." Rule 2.15(b) of the Code of Judicial Conduct requires: " A judge having knowledge that a lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question regarding the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects shall take appropriate action including informing the appropriate authority."
In light of this obligation, the court deems it appropriate to afford Attorney Kramer to be heard prior to the court determining the action to be taken with respect to the evidence of his apparent violation of Rule 4.1. If Attorney Kramer wishes to be heard he is directed to inform the clerk of this court of his desire to be heard no later than twenty days after the date of this memorandum of decision.