H.J. Kelly Assoc. v. Meriden

Full title: H.J. KELLY ASSOCIATES v. THE CITY OF MERIDEN

Court: Connecticut Superior Court Judicial District of New Haven at Meriden

Date published: Jan 17, 2008

2008 Ct. Sup. 1692 (Conn. Super. Ct. 2008)

Opinion

No. CV 03 0285781

January 17, 2008

MEMORANDUM OF DECISION

MARK H. TAYLOR, JUDGE.

I. BACKGROUND

This case was tried before the court pursuant to an amended complaint in three counts, filed on August 8, 2005. The complaint alleges the following facts. The plaintiff, H.J. Kelly Associates, Inc. (H.J. Kelly), is a corporation organized under the laws of the State of Connecticut and was engaged in the excavation of sand and gravel from land located in Meriden and Wallingford. On or about November 28, 1988, the defendant, City of Meriden (Meriden), received a performance bond¹ from H.J. Kelly in the amount of thirty-five thousand five hundred and fifty ($35,550.00) dollars, in the form of a bank check,² with Meriden identified as the payee.

1 This bond has been referred to as a surety bond. It appears to be a performance or completion bond.

2 In testimony and in various pleadings, the funds provided for the satisfaction of the Commission's bond requirement have been referred to as a certified bank check or a certified check. The check was not in evidence, but it appears to have been either a teller's check or a cashier's check, as defined at General Statutes § 42a-3-104, otherwise known as Article III of the Uniform Commercial Code, which provides in relevant part: "(g) `Cashier's check' means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank. (h) `Teller's check' means a draft drawn by a bank (i) on another bank, or (ii) payable at or through a bank."

H.J. Kelly alleges in its complaint that this bond was required by Meriden to comply with the conditions of a permit for the operation of an earth removal site at Raven Lane in Meriden, and that the bond was ordered by the Meriden Planning and Zoning Commission on July 18, 1988, under the applicants' names of Edmond and Henry Godek (the Godeks), who were the owners of the land. H.J. Kelly further alleges that it performed the necessary work in accordance with the requirements of the bond and that Meriden has failed, refused or neglected to return H.J. Kelly's bond, as requested at diverse times after the completion of the bond requirements.³

3 The parties agree that facts resolving the issue of whether the conditions of the performance bond have been met are not before the court.

In the first count of the amended complaint, captioned "negligence," H.J. Kelley alleges that Meriden "has breached its agreement and failed to return the plaintiff's money." The second count of the amended complaint alleges that Meriden has "failed to return the plaintiff's funds held in bailment." In the third and final count, H.J. Kelly alleges that Meriden is unjustly enriched by keeping the bond.

Meriden generally denies that it took possession of the bank check intended as a bond and, at the same time, leaves H.J. Kelly to its proof of whether Meriden received the bond. By way of special defenses, Meriden claims that the statute of limitations bars recovery as to all three counts. In addition, Meriden also claims that the allegation of negligence in count one is barred by the doctrine of governmental immunity. Meriden finally claims that, as to count two, no employee or agent of Meriden was authorized to accept a bank check as a performance bond for this permit application and, therefore, it did not enter into a bailment contract with H.J. Kelly.

The court finds for H.J. Kelly on count two, as it apples to a bailment. The court further finds for Meriden on its special defense of the statute of limitations applicable to count one on negligence and as to count three on the merits of unjust enrichment.

II. FACTS

The court finds the following facts to be relevant to these proceedings. H.J. Kelly purchased the right to operate a sand and gravel pit on land owned by the Godeks located in Wallingford and Meriden. H.J. Kelly began the excavation of sand and gravel products on the Godeks' land in Wallingford, and was permitted to do so by the proper authorities in that municipality. As the excavation and earth removal operation moved toward the Meriden city line, the Godeks applied for an "earth removal permit" (permit) from the Meriden Planning Commission (Commission), which was approved on July 18, 1988, subject to two conditions: 1) "Receipt and compliance with revised plans, and 2) Receipt of [a] bond to be set by staff."

Hilton J. Kelly, president of the plaintiff, H.J. Kelly, Inc., testified that he was required by the Commission to provide a "certified bank check" to Meriden in the amount of $35,550.⁴ The bank check was intended to satisfy the bond requirement for the rehabilitation of the sand and gravel pit, in accordance with the Commission's requirements, after the excavation was concluded. Unfortunately, Mr. Kelly was unable to identify the name or specific position of the individual who advised him of the amount and form of this bond, and there is no written record of the calculation of this bond in the Commission's file, which would ordinarily be completed and recorded by the Commission's staff.

4 Testimony of Mr. Kelly. Transcript of proceedings dated August 28, 2007, at p. 12.

Mr. Kelly testified that he directed the bookkeeper for the corporation, his daughter Deborah Ann Kelly, to obtain the required, revised plan and a "certified bank check" from City Savings Bank of Meriden in the amount of $35,550, and to deliver them to the Meriden Engineering Department. Based upon credible evidence presented at trial, the court finds as a matter of fact that Deborah Ann Kelly delivered a bank check from City Savings Bank of Meriden, in the amount of $35,550 with the City of Meriden identified as payee, along with revised engineering plans to the Meriden Engineering Department on or about November 28, 1988. Ms. Kelly specifically recalled the procedure she used to obtain the bank check and provided evidence of the original receipts from this banking transaction to the court. These receipts show that $35,550 was removed from H.J. Kelly's account for the purpose of a bank check payable to Meriden and a $12 fee for the creation of that instrument. Ms. Kelly also specifically recalled the specific location of the Meriden Engineering Department and the secretary in that office who accepted delivery of the bank check and revised engineering plans. Unfortunately, Ms. Kelly neither remembers the secretary's name,⁵ nor does she have or recall receiving a receipt for the delivery of the $35,550 bank check, although a carbon copy of the bank check was in the corporate records until 2003.

5 The complaint need not be brought against a named municipal employee. See Spears v. Garcia, 263 Conn. 22, 31-32, 818 A.2d 37 (2003).

The court finds that the delivery of certified funds of $35,550 gives rise to the logical inference that Mr. Kelly was obligated to provide a bond in this amount. Based upon credible evidence presented at trial, the court finds as a matter of fact that this bond amount was set by a Commission official. The court finds Mr. Kelly to be a credible witness. It is highly unlikely that Mr. Kelly, who is a businessman, would unilaterally decide to deliver such a large and specific sum of money in the form of a "certified bank check" without believing that he was obligated to do so by someone acting on behalf of the Commission.⁶ The court notes that requiring a bank check as a performance bond would have been inconsistent with the Commission's policy and practices in 1988, and was required without municipal authority.

6 "It is an abiding principle of our jurisprudence that [t]he sifting and weighing of evidence is peculiarly the function of the trier [of fact]. [N]othing in our law is more elementary than that the trier [of fact] is the final judge of the credibility of witnesses and of the weight to be accorded to their testimony . . . The trier has the witnesses before it and is in the position to analyze all the evidence. The trier is free to accept or reject, in whole or in part, the testimony offered by either party . . . Smith v. Smith, 183 Conn. 121, 123, 438 A.2d 842 (1981). The determination of the credibility of the witnesses is a function of the trial court . . ." Welsch v. Groat, 95 Conn.App. 658, 664, 897 A.2d 710 (2006). "The [fact-finding] function is vested in the trial court with its unique opportunity to view the evidence presented in a totality of circumstances, i.e., including its observations of the demeanor and conduct of the witnesses and parties . . ." Id., 666. "[I]t is the right and the duty of the [trier of fact] to draw reasonable and logical inferences from the evidence . . . Russell v. Russell, 91 Conn.App. 619, 642, 882 A.2d 98, cert. denied, CT Page 1720 276 Conn. 924, 925, 888 A.2d 92 (2005). In considering the evidence introduced in a case, [triers of fact] are not required to leave common sense at the courtroom door . . . nor are they expected to lay aside matters of common knowledge or their own observations and experience of the affairs of life, but, on the contrary, to apply them to the facts in hand, to the end that their action may be intelligent and their conclusions correct. In re Kristy A., 83 Conn.App. 298, 316, 848 A.2d 1276, cert. denied, 271 Conn. 921, 859 A.2d 579 (2004)." Welsch v. Groat, supra, 95 Conn.App. 666-67. "The probative force of conflicting evidence is for the trier to determine . . ." (Internal quotation marks omitted.) Anderson v. Whitten, 100 Conn.App. 730, 740, 918 A.2d 1056 (2007).

Meriden presented evidence, which was admitted over H.J. Kelly's objection, of an electronic record of Meriden financial transactions showing the absence of a deposit of an amount approximating $35,550 within three months after the bank check was delivered. Although Meriden presented this evidence to prove that it never received the bank check, H.J. Kelly has, alternatively, failed to prove that Meriden cashed the check or otherwise materially benefited from the use of the money represented by the check. Based upon the evidence presented, the court finds that although the bank check was delivered to the Engineering Department, it was not cashed by Meriden and cannot be located. Based upon these findings of fact, the court concludes that the check was either lost, mislaid or stolen.

Mr. Kelly further testified that he was permitted to excavate sand and gravel from the pit and continued to do so from 1988 until some time in 1995 or 1996. Based upon credible evidence presented at trial, the court finds as a matter of fact that H.J. Kelly operated the pit openly and notoriously in Meriden for many years. Meriden city officials visited the pit on diverse occasions during the time it was in operation. No city official indicated that the pit was improperly permitted. Further, during this time, Meriden entered into substantial contracts with H.J. Kelly for sand products used for roads and construction. Moreover, the Commission received several maps, all of which were stamped "Received Planning Department for the City of Meriden August 5, 1993," and individually entitled "Closure Plan Godek Gravel Pit," "Existing Earth Excavation Permit Extension" and "Proposed Site Plan Erosion Control." Although the City Planner claims he was not specifically aware of the status of the permit for the operation of the pit, the logical inference of fact in this case is that H.J. Kelly was operating the pit with Meriden's tacit approval.⁷ At the very least, these facts led Mr. Kelly to the logical and reasonable conclusion that he was in compliance with the permit granted on July 18, 1988, having met his understanding of the conditions set by the Commission.

7 Dominick Caruso testified that he reacted to the filing of the maps in 1993 and brought an action against the operating engineers union. He did not testify as to the conclusion of that process. The court, however, notes that Mr. Kelly testified that he saw these engineers at the site for many years after 1993.

After H.J. Kelly ceased operation of the pit in approximately 1995, the Army Corps of Engineers and members of an operating engineers union continued to use the pit for training purposes. Engineers bulldozed the property, built roads, dug ditches, laid pipe and, therefore, rehabilitation of the pit by H.J. Kelly was not reasonably feasible. Mr. Kelly visited the area annually to inspect the status of the training operations until 2003, to determine whether rehabilitation was possible. By that time, the area had been completely altered, including the leveling of a hill next to the Meriden airport. At or about that time, Mr. Kelly believed that the property had been sold and reasonably concluded that rehabilitation was no longer possible or necessary. No evidence was presented at trial concerning the time by which the sand pit operation was required to cease operations or the time by which rehabilitation of the land was to occur.

In 2003, soon after Mr. Kelly determined that rehabilitation was no longer possible and that the pit was no longer in use, he demanded the return of H.J. Kelly's $35,550 bond. The parties stipulated that Meriden does not currently have a record of receiving the bank check for $35,550, nor is there an existing record of a deposit of these funds. For this reason, Meriden has refused H.J. Kelly's request for the return of its bond. Within several months of discovering the fact that Meriden had no record of the bond, H.J. Kelly initiated this lawsuit.

III. DISCUSSION

The plaintiff's complaint alleges negligence, bailment and unjust enrichment. The negligence and bailment counts of the complaint are interrelated, especially as they relate to the claim of negligence. Although a bailment relationship requires a contract, express or implied, the breach of a bailee's duty to return property in an undamaged condition may involve either specific allegations of negligence or a legal presumption of negligent conduct.

The first count of the complaint is entitled "negligence" and alleges a breach of an agreement to return H.J. Kelly's bond. The second count of the complaint is entitled "bailment" and further alleges that Meriden failed to return the bond pursuant to its obligation as a bailee. Failure to return a bond may give rise to a breach of bailment contract. In addition, failure to safely maintain a bond or to otherwise return bailed property in an undamaged condition may give rise to a presumption of negligence, if a bailment relationship is found to exist. The evidence presented at trial shows that Meriden neither has H.J. Kelly's bond, nor does it have a record of receiving the bond, and therefore has refused H.J. Kelly's demand to return the bond.

The hybrid nature of this cause of action has long been recognized in Connecticut. "In the care of property, the bailee's contractual obligation is to exercise due care for the safekeeping of the bailed property, and, so, essentially, when loss or damage occurs, liability is based on negligence, even though negligence constitutes a breach of contract. Once a bailment has been established and the bailee is unable to redeliver the subject of the bailment in an undamaged condition a presumption arises that the damage to or loss of the bailed property was the result of the bailee's negligence . . . Consequently . . . the issue of negligence is controlling but in a different context. Although such pleading is permissible, when a bailment contract is pleaded it will rarely serve any useful purpose to plead a separate count in negligence." (Citations omitted.) Barnett Motor Transp. Co. v. Cummins Diesel Engines of Conn., Inc., 162 Conn. 59, 63, 291 A.2d 234 (1971).

It is nonetheless the plaintiff's choice to proceed under a theory of contract or negligence. "Actions in tort or sounding in tort may also be appropriate when the bailee's violation of a duty or obligation imposed by the bailment is not only a breach of the bailment contract, but also a tort, and the bailor may elect to affirm the contract and, waiving the tort, bring an action ex contractu, or the bailor may abandon the contract and proceed against the bailee in an action ex delicto. Thus, in an action against a bailee for failure to return bailed property, the bailor may proceed on alternate theories of general negligence of the bailee, specific negligence of the bailee, or breach of the bailment contract." 8A Am.Jur.2d 657 Bailments § 206 (1997). See also CT Page 1697 National Broadcasting Co. v. Rose, 24 Conn.Sup. 459, 194 A.2d 448 (1963). Connecticut civil procedure allows the plaintiff to present alternate theories of his cause of action against the defendant. "Under our pleading practice, a plaintiff is permitted to advance alternative and even inconsistent theories of liability against one or more defendants in a single complaint." Dreier v. Upjohn Co., 196 Conn. 242, 245, 492 A.2d 164 (1985). In addition, the bifurcation of these causes of action may be analytically important to other issues, such as the applicable statute of limitations, discussed infra.

A. Bailment

The B.A. Ballou case sets forth the operative definition of a bailment relationship in our state. "A relationship of bailor-bailee arises when the owner, while retaining general title, delivers personal property to another for some particular purpose upon an express or implied contract to redeliver the goods when the purpose has been fulfilled, or to otherwise deal with the goods according to the bailor's directions. In a bailment, the owner or bailor has a general property [interest] in the goods bailed . . . The bailee, on the other hand, has mere possession of items left in its care pursuant to the bailment . . ." (Citations omitted; internal quotation marks omitted). B.A. Ballou Co., Inc. v. Citytrust, 218 Conn. 749, 753, 591 A.2d 126 (1991).

To establish a bailment relationship, a plaintiff must prove the delivery of personal property. Personal property is generally defined as all property other than real property.⁸ A question presented under the facts of this case is whether a bank check is personal property and therefore properly the subject of a bailment relationship. In a Supreme Court case decided after the trial of this matter, money owed as a debt was determined to give rise to a debtor-creditor relationship and was distinguished from a bailment relationship. After citing the B.A. Ballou case, the court reasoned that "[a] bailment therefore contemplates redelivery of goods entrusted to the bailee, whereas a debtor-creditor relationship contemplates the payment of an obligation defined by agreement between the parties." Mystic Color Lab, Inc. v. Auctions Worldwide, LLC, 284 Conn. 408, 420, 934 A.2d 227 (2007). "Furthermore, a bailment may not exist when the goods entrusted to a party properly are intermingled or commingled with goods belonging to others . . . If the purported bailee is not bound to return the same items that were delivered to him by the bailor, but may deliver any other item or items of equal value, there is no bailment." (Citations omitted.) Id.

8 See definition of personal property in Black's Law Dictionary.

Personal property can be tangible or intangible. In Mystic Color Lab, Inc., the court referred to "goods" and "items" subject to bailment, which appear to constitute tangible personal property, and may be more easily the subject of a bailment contract. Even tangible personal property, however, may not constitute a bailment when it is commingled with other tangible property, such as in the B.A. Ballou case, where scrap metal was commingled, processed and could not be returned. Money and checks representing money, intended to be cashed and become more readily commingled, appear to be more problematic in establishing a bailment relationship, when compared with a bailment involving tangible goods.

The Mystic Color Lab, Inc. case involved a debt owed under a contract for the auction of equipment. After the plaintiff's equipment was sold, proceeds of the sale were placed in the general account of the auction house and used for the general payment of its debts. After an accounting of the sale proceeds, fees and costs were calculated pursuant to the contract and a debt was determined to be owed to the plaintiff which remained unpaid.

Although the Mystic Color Lab, Inc. case was decided well after the trial of this case, and was therefore not considered by the parties in their briefs, the court finds it distinguishable. In the present case, there was no sale of goods intended by the parties. Meriden intended to require a bond for H.J. Kelly to perform the rehabilitation of certain property. According to Dominick Caruso of the Commission's planning staff, the policy and practice of the Commission was to require proof of an insurance policy or possession of a bank book to satisfy the bond requirement. No debtor-creditor relationship, in the traditional sense, was envisioned in this surety arrangement. Further, although the bank check was mistakenly delivered to the Engineering Department, it was never cashed and commingled with other Meriden funds. Instead, the bank check itself was determined by this court to have been lost, mislaid or stolen.

Ironically, if proper procedures were followed by the Engineering Department, the bank check may very well have been transmitted to the Treasurer's office, deposited and commingled with other municipal funds. It was not. If the prior Engineering Department practice⁹ of forwarding misfiled Commission paperwork had been followed, the check may have been rejected and returned to H.J. Kelly, thereby satisfying the duty of a bailee. It was not. These examples are merely intended to show that this transaction and the responsibilities of the parties in this case were substantially different than the transaction adjudicated in the Mystic Color Lab, Inc. case. Although the bank check represented money, it remained an identifiable item that could have been returned to H.J. Kelly.

9 Dominick Caruso testified that documents misfiled with the Engineering Department generally made their way to the Planning Commission office.

B. Constructive Bailment

No evidence was presented at trial to show that the Engineering Department secretary had express authority to bind Meriden to a performance bond or to a bailment contract. If a municipal employee has no authority to enter into an express contract, then no duty arising from an express contract exists to be breached. The court therefore finds that there was no express agreement between H.J. Kelly and Meriden to enter into a bailment contract with the Meriden Engineering Department, where the bond was delivered, instead of to the Commission which required and set the bond.

Logic and reason alone would suggest that the bond should have been delivered to the office that required it, and Meriden Zoning Ordinance 1983 § 800.9.1.4 specifically requires the bond to be posted with the Commission. Although the bond was specifically required to be delivered to the Commission, the Engineering Department secretary accepted possession of the bank check without reservation or conditions. And although no specific terms regarding the duration, delivery or the return of the bond were expressly agreed upon by H.J. Kelly and the Commission, the bond was intended by these parties to be held by Meriden for an indefinite period.

An express agreement is not necessary to establish an implied contract for a constructive bailment. "A contract is express if its terms are stated by the parties, either orally or in writing, and it is implied if its terms are not so stated. In other words, an implied contract is one in which some or all of the terms are inferred from the conduct of the parties and the circumstances of the case, though not expressed in words, while an express contract is one in which the parties arrive at their agreement and express it in words, either oral or written." 17A Am.Jur.2d 48-49 Contracts § 12 (2004). "An express contract is a contract the terms of which are stated by the parties; an implied contract is a contract the terms of which are not explicitly stated." 1 S. Williston, Contracts (4th Ed. 2007) § 1:5, p. 31-33.

Subject to principles of municipal liability, the basic elements of a constructive bailment have been met in this case and may be implied by the facts and circumstances of delivery and acceptance of the bank check by the Engineering Department secretary.¹⁰ "A constructive bailment arises when one person has lawfully acquired possession of another's personal property, other than by virtue of a bailment contract, and holds it under such circumstances that the law imposes on the recipient of the property the obligation to keep it safely and redeliver it to the owner. A constructive bailment may occur even in the absence of the voluntary delivery and acceptance of the property which is usually necessary to create a bailment relationship. For example, a constructive bailment arises when possession of personal property passes from one person to another by mistake or accident." 8A Am.Jur.2d 476 Bailments § 12 (1997). A constructive or implied bailment relationship would similarly be recognized if the personal property, which was delivered and accepted in this case, was instead lost or mislaid. See generally 8A Am.Jur.2d Bailments §§ 12, 39 and 48.

10 H.J. Kelly has claimed a bailment, generally, and has not argued for a specific finding of a constructive bailment. The court has found that a constructive bailment exists, based upon the facts, circumstances and legal findings of the court.

C. Municipal Liability

Meriden contends that if the bank check was delivered to the Engineering Department secretary, she neither had authority to accept a check in satisfaction of a Commission bond requirement nor authority for the purpose of entering into a bailment contract with H.J. Kelly. Since she had no authority to accept the bond, Meriden asserts that she had no ministerial duty to violate in connection with the bond and that it cannot be held liable for the violation of a duty, otherwise imposed by the law but not required by the Meriden's charter or regulations.

1. Municipal Liability for Implied Contracts

A constructive bailment is an implied contract. "It is generally considered that a municipal corporation may become liable on an implied contract within the scope of its corporate powers, where the contract is deduced by inference from corporate acts or is a contract implied in law. In order that an implied contract, however, be binding on, and the basis of a recovery against, a municipality, it must be within the scope of its corporate powers . . ." Windham Community Memorial Hospital v. Willimantic, 166 Conn. 113, 123, 348 A.2d 651 (1974). See also Vertex, Inc. v. Waterbury, 278 Conn. 557, 576-77, 898 A.2d 178 (2006).

The court finds that Meriden has the authority to enter into bailment contracts and performance bonds. The Commission, for example, had authority to require and hold a performance bond pursuant to zoning regulations. The question the court must address, however, is whether the Engineering Department secretary had sufficient municipal authority to bind Meriden to an implied bailment contract for the safekeeping and return of H.J. Kelly's bank check.

After finding "corporate power" to exist in a municipal liability case, the court must go further to find that "[t]he officer, body or board duly authorized [acted on] behalf of the municipality, otherwise a valid contract cannot be created. Generally the power to make contracts on behalf of the municipality rests in the council or governing body . . . Generally, no officer or board, other than the common council, has power to bind the municipal corporation by contract, unless duly empowered by statute, the charter, or authority conferred by the common council, where the latter may so delegate its powers . . . It follows that agents of a city, including its commissions, have no source of authority beyond the charter. [T]heir powers are measured and limited by the express language in which authority is given or by the implication necessary to enable them to perform some duty cast upon them by express language . . . [A]ll who contract with a municipal corporation are charged with notice of the extent of . . . the powers of municipal officers and agents with whom they contract, and hence it follows that if the . . . agent had in fact no power to bind the municipality, there is no liability on the express contract . . . Thus, every person who deals with [a municipal corporation] is bound to know the extent of its authority and the limitations of its powers." (Citations omitted; internal quotation marks omitted.) Fennell v. Hartford, 238 Conn. 809, 813-14, 681 A.2d 934 (1996).

No evidence was presented at trial showing the nature and scope of authority specifically granted to the Engineering Department by the Meriden charter or other regulations in existence in 1988. However, it has been shown that the Commission officially required H.J. Kelly to tender a bond of indefinite duration to operate the sand and gravel pit in Meriden. Therefore, H.J. Kelly's bank check was tendered to a Meriden employee for a lawful purpose.

Although the Engineering Department secretary had no authority to accept checks or money on behalf of the Commission or to bind Meriden to an express contract, the court abhors the supposition that a municipal employee has no duty toward money accepted in error, apart from the law of conversion or criminal larceny. In fact, Meriden has established a procedure for receiving funds on behalf of the city that was fully described in testimony at the trial. Meriden regulations specifically require that "[a]ll funds be transmitted immediately to the Treasurer's Office."¹¹

11 Defendant's Exhibit D, Finance department Procedures for Receipt of Cash.

Under this regulation, Meriden employees are required to immediately transfer all checks and cash to the Meriden Treasurer's Office, along with completed forms explaining the source and purpose of the funds submitted. (See Defendant's Exhibit E, entitled "Finance Department Procedures for Receipt of Cash.") This is only logical. If a municipal employee receives funds on behalf of Meriden, they are obligated by this procedure to immediately submit those funds to the proper municipal authority for processing and accounting purposes. The procedure is prescribed and provides for no discretion, except in allowing an explanation of the source of funds submitted.

The court concludes that the Engineering Department secretary had a ministerial duty to immediately transmit H.J. Kelly's bank check to the Treasurer. "The word `ministerial' refers to a duty which is to be performed in a prescribed manner without the exercise of judgment or discretion." (Internal quotation marks omitted.) Evon v. Andrews, 211 Conn. 501, 505, 559 A.2d 1131 (1989). Although this procedure is not specifically identified in the record as required by the City of Meriden Charter,¹² the procedure was fully described as municipally required by regulation in testimony by Mr. Robert Curry, Meriden's former finance director. Therefore, the regulation and procedure described by Mr. Curry provides the proper basis for determining the ministerial duties of Meriden employees. See New Haven v. Fresenius, 75 Conn. 145, 151, 52 A. 823, 825 (1902). ("[T]he duty of the defendant to deposit city funds in the designated depositary was clearly a ministerial, and not a discretionary [act] . . ."

12 Although not introduced as evidence by the parties, the court notes that the Meriden City Charter § C8-11(c) provides as follows: "The Director of Finance shall prescribe the time at which and the manner in which persons receiving money on account of the city shall pay the same to the city." In addition, § C11-9 of the Meriden City Charter provides an effective date of the first Monday of December 1979. Therefore, it is clear to the court that the Finance Department procedures, adopted pursuant to the charter, were in effect in 1988. See Connecticut Code of Evidence § 2-2.

If the test for entering contracts with municipal employees is the test of "authority," it seems reasonable that a ministerial duty would exceed that test. Where authority allows discretion, duty commands action. Returning to the Fennell case, the court recited language that further suggests municipal authority and municipal duty are intertwined. The Fennell court indicated that the powers of municipal employees "are measured and limited by the express language in which authority is given or by the implication necessary to enable them to perform some duty cast upon them by express language." (Emphasis added; citation omitted; quotations marks omitted.) Fennell v. City of Hartford, 238 Conn., supra, 814.

The court concludes that the imposition of ministerial duty is a sufficient basis for finding municipal authority to enter an implied contract. Moreover, the Engineering Department secretary's duty to transmit the bank check to the Treasurer for accounting purposes is consistent with a constructive bailee's duty to safely preserve and return bailed property, otherwise imposed by law. See Barnett Motor Transp. Co. v. Cummins Diesel Engines of Conn., Inc., supra, 162 Conn. 63; see also 8A Am.Jur.2d Bailments § 39 (1997). Therefore, the court finds that the Engineering Department secretary had sufficient municipal authority to enter into an implied contract on behalf of Meriden for a constructive bailment and, on this basis, Meriden may be held liable for its failure to return H.J. Kelly's bank check. The court further deduces by inference from corporate acts inducing the tender of the check, and the facts and circumstances of the delivery and acceptance of the bank check, that the implied contract of bailment was for an indefinite duration. See Windham Community Memorial Hospital v. Willimantic, supra, 166 Conn. 123.

2. Municipal Liability for Negligence

The hybrid nature of bailment law has previously been discussed and must be considered in the analysis of whether municipal liability for negligence exists in this case. See Barnett Motor Transp. Co. v. Cummins Diesel Engines of Conn., Inc., supra, 162 Conn. 63. If a bailee's breach of duty involves the loss of or damage to bailed property, the nature of the action for that loss or damage may be based upon negligence, even where an express contract exists between the parties. Id. In this case, the court has determined that there are sufficient facts to support a constructive bailment. In the case of a constructive bailment, without the benefit of an express contract defining the specific duties of the bailee, those duties, if any, may be imposed by law.¹³

13 Our Supreme Court has noted that "[a]n action in contract is for the breach of a duty arising out of a contract; an action in tort is for a breach of duty imposed by law." Gaza v. Stamford, 255 Conn. 245, 263, 765 A.2d 505 (2001). The bailor-bailee relationship, however, may be contractual on the one hand, and yet a bailee's duties are imposed by law. Nonetheless, our courts have recognized that an action for the breach of a bailee's duty, and thus the cause of action, may be based upon contract or upon negligence. Where the duties of a constructive bailee are derived from circumstances and imposed by law, the true nature of the claim is somewhat unclear. As an implied contract, the court will apply principles of contract law to the plaintiff's contract claims and principles of tort law separately to the plaintiff's claims of negligence. The essence of the contract claim is that the bank check was not returned upon demand and the essence of the negligence claim is that it was lost, mislaid or stolen. Many cases involving negligence on the part of a bailee, however, involve the failure to return personal property in an undamaged condition, where the presumption of negligence is most applicable.

The duty of a bailee has been characterized by the nature of bailment relationship. Some bailment relationships are characterized as for the benefit of the bailor or the bailee exclusively; others are characterized as being for the mutual benefit of both parties. Here, the bond appears to have been intended for the mutual benefit of both parties.¹⁴ In some jurisdictions, such differing characterizations give rise to varying degrees of duty toward the bailed property. Whether a bailment is constructive or implied by law or whether it is characterized as gratuitous or for hire, a duty of care attaches to a bailee. "In Connecticut, there are no degrees of care . . . and the more modern cases hold that in every case good faith requires a bailee without reward to exercise reasonable care." D. Wright, J. Fitzgerald W. Ankerman, Connecticut Law of Torts (3d.Ed. 1991) § 84, p. 243. Here there is certainly no promise to the bailee of reward, express or implied and, therefore, the standard of reasonable care would ordinarily apply.

14 Although originally intended as a bailment for the mutual benefit of the parties, once the bond was delivered to the wrong location and in the wrong form, the now constructive or implied bailment might be considered to be a bailment exclusively for the benefit of the H.J. Kelly. The Engineering Department was not responsible for the inspection or restoration of the sand pit operation. However, it does not appear that this would diminish the standard of care required under Connecticut law.

Once a bailment has been established and the bailee is unable to redeliver the subject of the bailment in an undamaged condition, a presumption arises that the damage to or loss of the bailed property was the result of the bailee's negligence. The presumption of negligence by the bailee, which arises when bailed property is not returned to a bailor, is one that continues in favor of the bailor until the bailee not only produces substantial contravening evidence but proves the actual circumstances involved in the loss of the property. See National Broadcasting Co. v. Rose, 153 Conn. 219, 225, 215 A.2d 123 (1965). The presumption of negligence in this case leads the court to conclude that the bank check was lost, mislaid or stolen. Meriden's proof that it did not deposit or otherwise account for the H.J. Kelly bank check does not, however, sufficiently rebut the presumption of negligence in this case. It is, instead, critical to the court's finding that the bank check was lost, mislaid or stolen.

Ordinarily, the duty of a constructive bailee is one of safekeeping and the return of personal property. See Barnett Motor Transp. Co. v. Cummins Diesel Engines of Conn., Inc., supra, 162 Conn. 63; see also 8A Am.Jur.2d Bailments § 39 (1997). Where the breach of a duty implied at law is at the hands of a municipal employee, however, that duty and the standard of care is subject to further analysis under the law of municipal liability. For a municipality to be held liable in a case involving a constructive bailment, the duty imposed on a municipal employee must be consistent with a ministerial duty. Therefore, the question presented is what duty is imposed upon a municipal employee who accepts a bank check, intended as the satisfaction of a bond requirement of another municipal department, and therefore has been delivered in error.

Meriden claims in its special defense to this count that it is immune from municipal liability because the acts of negligence alleged in this case involve a governmental function requiring the exercise of judgment or discretion. By way of background, "General Statutes § 52-557n abandons the common-law principle of municipal sovereign immunity and establishes the circumstances in which a municipality may be liable for damages . . . One such circumstance is a negligent act or omission of a municipal officer acting within the scope of his or her employment or official duties. General Statutes § 52-557n(a)(1)(A). General Statutes § 52-557n(a)(2)(B), however, explicitly shields a municipality from liability for damages to person or property caused by the `negligent acts or omissions which require the exercise of judgment or discretion as an official function of the authority expressly or impliedly granted by law.'

"Municipal officials are immune from liability for negligence arising out of their discretionary acts in part because of the danger that a more expansive exposure to liability would cramp the exercise of official discretion beyond the limits desirable in our society . . . Discretionary act immunity reflects a value judgment that — despite injury to a member of the public — the broader interest in having government officers and employees free to exercise judgment and discretion in their official functions, unhampered by fear of second-guessing and retaliatory lawsuits, outweighs the benefits to be had from imposing liability for that injury . . . In contrast, municipal officers are not immune from liability for negligence arising out of their ministerial acts, defined as acts to be performed in a prescribed manner without the exercise of judgment or discretion . . . This is because society has no analogous interest in permitting municipal officers to exercise judgment in the performance of ministerial acts." (Citations omitted; internal quotation marks omitted.) Doe v. Petersen, 279 Conn. 607, 614-15, 903 A.2d 191 (2006). See also Durrant v. Board of Education, 284 Conn. 91, 105-07, 931 A.2d 859 (2007).¹⁵

15 General Statutes § 52-557n provides in relevant part: "(a)(1) Except as otherwise provided by law, a political subdivision of the state shall be liable for damages to person or property caused by: (A) The negligent acts or omissions of such political subdivision or any employee, officer or agent thereof acting within the scope of his employment or official duties . . . (2) Except as otherwise provided by law, a political subdivision of testate shall not be liable for damages to person or property caused by (B) negligent acts or omissions which require the exercise of judgment or discretion as an official function of the authority expressly or impliedly granted by law."

In defending against the plaintiff's claims in this case, Meriden asserts that it did not receive the bank check. Since the court has found that the bank check was accepted by the Engineering Department secretary, Meriden had also asserted, in the alternative, that any act or omission on the part of their employee occurred without ministerial capacity. In the absence of a ministerial requirement, Meriden claims that it may not be held liable for any act or omission of an employee, except for a discretionary act within an exception to the general rule of immunity.¹⁶

16 "The immunity from liability for the performance of discretionary acts by a municipal employee is subject to three exceptions or circumstances under which liability may attach even though the act was discretionary: first, where the circumstances make it apparent to the public officer that his or her failure to act would be likely to subject an identifiable person to imminent harm . . . second, where a statute specifically provides for a cause of action against a municipality or municipal official for failure to enforce certain laws . . . and third, where the alleged acts involve malice, wantonness or intent to injure, rather than negligence." (Citations omitted.) Evon v. Andrews, 211 Conn. 501, 505, 559 A.2d 1131 (1989).

H.J. Kelly asserts that the bond requirement itself was a ministerial act, since it was imposed pursuant to a Commission regulation. The court agrees, but this alone is insufficient to hold Meriden liable under a theory of municipal negligence. H.J. Kelly further asserts that there was a misperformance of a ministerial act in accepting the bank check and losing or misplacing it. The court will begin its analysis with the first part of H.J. Kelly's argument, that accepting the bank check involved the misperformance of a ministerial act.

As previously indicated by the court, there was no evidence presented to the court showing that this secretary had authority to accept a check on behalf of the Commission. Accepting a check is not, as a general matter, a negligent act to which municipal liability would attach. Although accepting a check in the misperformance of a ministerial duty may form the basis for municipal liability, there was no evidence presented at trial showing it was a municipal duty for this secretary to accept funds on behalf of the Engineering Department, even though it would be reasonable and logical to assume that she did have such ministerial authority.¹⁷ It would, however, be speculative for the court to make such a finding.

17 Although not introduced as evidence in this case, Ch. 22, Art. II, of the Code of the City of Meriden, § 180-15 requires the deposit of bonds, including certified checks, with the Director of Engineering and Public Utilities, as follows: "A. No permit to make any excavation shall be granted unless or until there has been deposited with the Director of Engineering and Public Utilities a bond in the form of a performance bond, certified check, cash, or in such other form as may be approved by the Corporation Counsel . . ." Although this city code provision is clear and unequivocal, the court cannot assume that the Director of Engineering and Public Utilities is the Director of the Engineering Department, although it is a logical assumption. Further, the court cannot conclude from the language cited that the Engineering Department secretary had the authority to accept funds on behalf of the Director of Engineering and Public Utilities. Although Connecticut Code of Evidence § 2-2 permits the court to provide notice and a hearing on judicially noticed evidence subject to contradictory interpretations, the court need not do so in this case given further findings of the court concerning the ministerial duties of the Engineering Department secretary to immediately transfer funds received to the Treasurer's Office.

Losing or misplacing the bank check, however, is a negligent act and the question is whether this act or omission involved the misperformance of a ministerial duty. By a preponderance of the evidence, the court has determined that the bank check accepted by the Engineering Department secretary in error was not submitted to the Treasurer as required by municipal regulation. Therefore, the court finds that this omission constituted the misperformance of a ministerial duty for which Meriden may be held liable. Further, the court finds that the breach of the ministerial duty to immediately transmit the bank check to the Treasurer in this case is the proximate cause of H.J. Kelly's injury.

In finding that there was a misperformance of a ministerial duty, the fact that the bank check was delivered to the wrong office by H.J. Kelly is problematic. Although this employee had no specific authority to accept a Commission check, she nonetheless had the specific duty to transmit that check to the Treasurer's Office where it would have been processed and properly accepted or rejected and returned. Through this process, the money would have been safeguarded for H.J. Kelly until the error, if any, was discovered and corrected.

If the proper handling of wrongfully delivered money is, instead, considered a discretionary act for which no liability attaches, an ordinary citizen walking into the labyrinth of City Hall for a lawful purpose may be unjustly penalized for the delivery money to the wrong office. In this case, the money was not abandoned or lost by H.J. Kelly in City Hall. It was, instead, induced by an official act of the Commission, delivered to a municipal employee and accepted. Although the Engineering Department secretary may not have had a ministerial duty to accept the check, she nonetheless breached her duty to transmit the funds she received to the Treasurer's Office. Since the sine qua non of liability in a bailment action based on negligence is the breach of a bailee's duty to safeguard bailed property, the court finds that the misperformance of this ministerial duty is sufficient for finding a breach of a bailee's duty within the limitations of municipal liability.

Compounding this misperformance of a ministerial duty, the court further concludes that requiring a "certified bank check" as a performance bond constituted the misperformance of a ministerial duty. The court concluded that the Commission's regulations require a bond for the proper issuance of a permit. The court has also concluded that a Commission official required the bond in the form of a "certified bank check" in the amount of $35,550. According to Dominick Caruso, Meriden's Director of Planning and Development, the policy of the Commission in 1988 was to accept only a bank book or insurance policy as a performance bond and not certified funds of any kind. Therefore, the court finds that it was a ministerial duty to require a bank book or insurance policy for a performance bond in 1988 and to have required a "certified bank check" as a performance bond constituted the misperformance of a ministerial duty. It is the form of this bond, required in error, which has resulted in injury to H.J. Kelly. The Commission wisely does not accept bonds in the form of certified funds as a matter of policy. Requiring a bank book would have preserved the $35,550 in H.J. Kelly's bank account, and although an insurance policy may have had a cost associated with its purchase, its loss would not have exposed H.J. Kelly to the loss of $35,550.

H.J. Kelly also asserts that there was a history and practice of transmitting documents to the Commission when they had been mistakenly filed with the Engineering Department. Although the court has found this to be the case, the record provides no evidence that this practice was required by a ministerial duty. To the extent that misfiled documents historically found their way to Commission, the court finds that it was the result of discretionary acts and did not result from the performance of a ministerial duty to which municipal liability may apply.

D. Unjust Enrichment

Next, the court must consider whether receipt of a check that is subsequently lost, mislaid or stolen is sufficient for a finding of unjust enrichment. "Unjust enrichment is a legal doctrine to be applied when no remedy is available pursuant to a contract . . . Recovery is proper if the defendant was benefited, the defendant did not pay for the benefit and the failure of payment operated to the detriment of the plaintiff." (Internal quotation marks omitted.) Russell v. Russell, 91 Conn.App. 619, 637, 882 A.2d 98, cert. denied, 276 Conn. 924, 888 A.2d 92 (2005). See generally 26 S. Williston, Contracts (4th Ed. 2003) § 68:5, p. 58. "[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." (Emphasis added; internal quotation marks omitted.) Gagne v. Vaccaro, 255 Conn. 390, 408, 766 A.2d 41 (2001).

In view of the court's finding that Meriden has not cashed, deposited or otherwise retained possession of the bank check, it cannot be unjustly enriched. Although Meriden received the benefit of possessing the bank check when it was delivered, its right to the money remains inchoate. In as much as the check represented a performance bond, Meriden may never have had the right to keep the money until a breach to perform the rehabilitation had been established. Since H.J. Kelly has failed to prove that Meriden has retained the benefit of the check or the money, the court finds for Meriden on Count Three.

CT Page 1708

E. Special Defenses and Statute of Limitations

The court has previously addressed Meriden's special defense of governmental immunity, as applied to the claim of negligence in count one, as well as the absence of authority to enter into a contract, as applied to the allegation of a bailment in count two. The court has determined that they are not legal defenses in this case. Meriden, however, also claims the statute of limitations for negligence as a special defense to all three counts of the complaint. The court has found for Meriden on count three, brought under the theory of unjust enrichment, and it is therefore unnecessary to address the special defense that the claim is time-barred.

"Public policy generally supports the limitation of a cause of action in order to grant some degree of certainty to litigants . . . The purpose of [a] statute of limitation . . . is . . . to (1) prevent the unexpected enforcement of stale and fraudulent claims by allowing persons after the lapse of a reasonable time, to plan their affairs with a reasonable degree of certainty, free from the disruptive burden of protracted and unknown potential liability, and (2) to aid in the search for truth that may be impaired by the loss of evidence, whether by death or disappearance of witnesses, fading memories, disappearance of documents or otherwise . . . Therefore, when a statute includes no express statute of limitations, we should not simply assume that there is no limitation period. Instead, we borrow the most suitable statute of limitations on the basis of the nature of the cause of action or of the right sued upon . . ." (Citations omitted; internal quotation marks omitted.) Bellemare v. Wachovia Mortgage Corp., 284 Conn. 193, 199, 931 A.2d 916, (2007).

There is some difficulty in determining the appropriate statute of limitations to apply to a cause of action involving a constructive bailment. It is an implied contract, to which General Statute § 52-576 applies on its face. As a bailment, however, the violation of a bailee's duty to safeguard and return property in an undamaged condition may be an action in negligence as well, to which another statute of limitations, General Statutes § 52-584, may apply and the right of action accrues in a different manner. The court will begin with the applicability of § 52-584.¹⁸

18 The parties have fully briefed the applicability of General Statutes § 52-584. H.J. Kelly argues, however, that bailment is a contract and the statute of limitations should run from the breach of that contract, but have not cited a statute of limitations applicable to contracts. Meriden argues that the breach, if any, is the result of negligence to which the statute of limitations for torts should apply.

I. Statutes of Limitations for Negligence

Meriden contends that General Statute § 52-584 is the applicable statute of limitations in this case, which provides in relevant part as follows: "No action to recover damages for injury to the person, or to real or personal property, caused by negligence . . . shall be brought but within two years from the date when the injury is first sustained or discovered or in the exercise of reasonable care should have been discovered, and except that no such action may be brought more than three years from the date of the act or omission complained of . . ."

Courts in Connecticut have applied the statute of limitations for negligence, General Statutes § 52-584, to the breach of a bailee's duty to return bailed property. See Davis v. McDermott Chevrolet, Inc., Superior Court, judicial district of New Haven at Meriden, Docket No. CV 02 0281269 (January 14, 2005, Tanzer, J.). In Brian's Floor Covering Supplies, LLC v. Spring Meadow Elderly Apartments, Superior Court, judicial district of Fairfield, Docket No. CV 00 0375810 (March 22, 2006, Richards, J.), the court applied the statute of limitations for negligence, but considered the accrual of the limitations period to be "two years from the time Brian's Floor first notified [the plaintiff] to retrieve the floor materials . . ." Therefore, the accrual of the statute of limitations was determined to begin upon notice.

Determining the accrual of the statute of limitations is of critical importance. Meriden's liability has been established in this case upon a theory of negligence, yet H.J. Kelly had no reason to know of Meriden's negligent act or omission until it demanded the return of its bond. Moreover, H.J. Kelly's delay in demanding the return of its bond was induced by the Commission's requirement of a bond for an indefinite period of time.

The court cannot overlook the length of time between posting the bond in 1988 and the demand for its return fifteen years later in 2003. Although this cause of action was initiated several months later, the principles underlying the statute of limitations are tested by the length of time between the initiation of this action and the original act or omission found in this case. H.J. Kelly asserts that the loss of the bank check is ongoing, and since the presumption of negligence requires Meriden to prove the circumstances of the loss, and has not done so, the loss or misplacement of the check may be considered, arguendo, by the court to have occurred immediately before the demand. The court has found, however, that the negligent act or omission, based upon principles of municipal liability, occurred when the Engineering Department secretary failed to immediately transmit H.J. Kelly's bank check to the Meriden Treasurer's Office, which occurred in 1988.

General Statutes § 52-584 has been described as both a statute of limitations and a statute of repose.¹⁹ The statute of limitations is the two-year limitation on bringing an action, and the statute of repose is the three-year bar, notwithstanding a plaintiff's reasonable discovery of an injury. "[S]tatutes of repose differ in some respects from statutes of limitation. While statutes of limitation are sometimes called `statutes of repose,' the former bars a right of action unless it is filed within a specified period of time after injury occurs, while `statute[s] of repose' [terminate] any right of action after a specific time has elapsed, regardless of whether there has as yet been an injury." (Internal quotation marks omitted.) Baxter v. Sturm, Ruger and Co., 230 Conn. 335, 341, 644 A.2d 1297 (1994).

19 "[L]egislatures enact statutes of repose in furtherance of the public policy of allowing people, after the lapse of a reasonable time, to plan their affairs with a degree of certainty, free from the disruptive burden of protracted and unknown potential liability . . . It is clear, however, that this rationale applies to statutes of limitation as well. Whether seen as a sanction imposed on plaintiffs who sleep on their rights or as a benefit conferred upon defendants to reduce the risk and uncertainty of liability, statutes of limitation and statutes of repose serve the same public policy of avoiding the litigation of stale claims." (Internal quotation marks omitted.) Baxter v. Sturm, Ruger and Co., 230 Conn. 335, 344, 644 A.2d 1297 (1994).

A statute of limitations or repose may be tolled for a variety of reasons. In actions for negligence, for example, the continuing course of conduct of a tortfeasor may provide the basis for tolling the statute of repose provision of General Statutes § 52-584. See Sherwood v. Danbury Hospital, 252 Conn. 193, 203, 746 A.2d 730 (2000). "We previously have recognized . . . that the repose section of the statute of limitations found in § 52-584 may be tolled under the continuing course of conduct doctrine, thereby allowing a plaintiff to commence his or her lawsuit at a later date . . . In its modern formulation, we have held that in order [t]o support a finding of a continuing course of conduct that may toll the statute of limitations there must be evidence of the breach of a duty that remained in existence after commission of the original wrong related thereto. That duty must not have terminated prior to commencement of the period allowed for bringing an action for such a wrong . . . Where we have upheld a finding that a duty continued to exist after the cessation of the act or omission relied upon, there has been evidence of either a special relationship between the parties giving rise to such a continuing duty or some later wrongful conduct of a defendant related to the prior act . . . The continuing course of conduct doctrine reflects the policy that, during an ongoing relationship, lawsuits are premature because specific tortious acts or omissions may be difficult to identify and may yet be remedied." (Citation omitted; emphasis added; internal quotation marks omitted.) Neuhaus v. Decholnoky, 280 Conn. 190, 201-02, 905 A.2d 1135 (2006). Therefore, the statute of repose provision contained in General Statutes § 52-584 is not absolute, and may be tolled under limited circumstances.²⁰

20 When applying § 52-584 to determine whether an action . . . commenced in a timely manner, the Appellate Court has held that "an injury occurs when a party suffers some form of actionable harm . . . Actionable harm occurs when the plaintiff discovers . . . that he or she has been injured and that the defendant's conduct caused such injury . . . The statute begins to run when the plaintiff discovers some form of actionable harm, not the fullest manifestation thereof . . . The focus is on the plaintiff's knowledge of facts, rather than on discovery of applicable legal theories . . . Most importantly, the continuing course of conduct doctrine has no application after the plaintiff has discovered the harm." (Citations omitted; internal quotation marks omitted.) Rosato v. Mascardo, 82 Conn.App. 396, 404-05, 844 A.2d 893 (2004).

Under H.J. Kelly's theory of the case, Meriden's duty to immediately deposit the bank check should continue until the check is discovered. This may be true, but it is not sufficient to graft the continuing course of conduct theory to this case, although some elements of the theory militate in favor of its application. For example, the breach of Meriden's duty to immediately transmit the check to the Treasurer, if discovered, remains in existence and has not terminated. Further, there has been evidence of an ongoing relationship between the parties, including inspections by Meriden officials and municipal contracts for sand. In addition, although not a party to this case, the operating engineers working at the pit were the subject of an action brought by Meriden sometime after the closure plan was filed with the Commission by H.J. Kelly in 1993. Apparently, the engineers continued to practice at the pit for many more years, preventing H.J. Kelly from demanding the return of the bond. However, Meriden and H.J. Kelly are not involved in a "special relationship," such as exists between a doctor and a patient, and Meriden's conduct does not amount to "later wrongful conduct," related to prior acts, as contemplated for the continuing course of conduct theory and required for tolling the statute of limitations. Although the Commission failed to determine the permit status of the pit operation up to and including the filing of closure plans in 1993, and although this omission is clearly established by the evidence, it does not constitute conduct that the court views as "wrongful." Even if the court were to make this finding, the most egregious of Meriden's omissions occurred when it failed to determine the status of the permit in 1993 when closure and permit extension plans were filed while the pit operation continued. This occurred approximately five years after the bank check was delivered and, therefore, it occurred two years after the three-year statute of repose barred the action.

The court has previously determined that there was no authority for the Engineering Department secretary to contractually bind the Commission to an express performance bond or bailment contract. H.J. Kelly was nonetheless induced by the Commission to present its $35,550 bank check in satisfaction of a bond, required as a condition of its permit. Statutes of limitations in cases of negligence may be tolled, based upon equitable principles of estoppel, which, upon close analysis, are inapplicable to this case.

Generally, there are two equitable theories employed to toll the accrual of a statute of limitations, equitable estoppel and equitable tolling. "Courts, applying equitable principles, have laid down the doctrine of equitable estoppel by which a defendant may be estopped by his conduct from asserting defenses such as the statute of limitations . . . Estoppel rests on the misleading conduct of one party to the prejudice of the other . . . There are two essential elements to an estoppel — the party must do or say something that is intended or calculated to induce another to believe in the existence of certain facts and to act upon that belief; and the other party, influenced thereby, must actually change his position or do some act to his injury which he otherwise would not have done." (Citations omitted; internal quotation marks deleted.) Morris v. Costa, 174 Conn. 592, 599, CT Page 1712 392 A.2d 468 (1978).

"In addition, estoppel against a public agency is limited and may be invoked: (1) only with great caution; (2) only when the action in question has been induced by an agent having authority in such matters; and (3) only when special circumstances make it highly inequitable or oppressive not to estop the agency . . . As noted, this exception applies where the party claiming estoppel would be subjected to substantial loss if the public agency were permitted to negate the acts of its agents." Fadner v. Commissioner of Revenue Services, 281 Conn. 719, 726, 917 A.2d 540 (2007). Further, "[a] party seeking to justify the application of the estoppel doctrine by establishing that a public agency has induced his actions carries a significant burden of proof." Id., 727.

In the context of tolling statutes of limitations, federal courts have applied equitable estoppel "in cases where the defendant misrepresented the length of the limitations period or in some way lulled the plaintiff into believing that it was not necessary for him to commence litigation." Cerbone v. International Ladies' Garment Workers Union, 768 F.2d 45, 50 (2d Cir. 1985). Connecticut courts have generally applied "the doctrine of equitable estoppel to bar a party from asserting the statute of frauds as a defense so as to prevent the use of the statute itself from accomplishing a fraud." Glazer v. Dress Barn, Inc., 274 Conn. 33, 60, 873 A.2d 929 (2005). In the present case, there has been no fraud alleged or proven to exist. Further, any misrepresentations made to H.J. Kelly about the nature of the bond required by the Commission or by the improper acceptance of the check by the Engineering Department secretary were not intended to "lull" H.J. Kelly into delaying the assertion of its rights. Therefore, the theory of equitable estoppel is inapplicable.

In federal courts "[e]quitable tolling, by contrast, has not been universally held to require proof of fraudulent or misleading conduct as the basis for invoking it." Connecticut Insurance Guarantee Association v. Yocum, Superior Court, Docket No. CV 94 05396915 (June 6, 1996, Sheldon, J.) [ 17 Conn. L. Rptr. 343]. Connecticut courts have noted that "[e]quitable tolling permits a plaintiff to avoid the bar of the statute of limitations if despite all due diligence he is unable to obtain vital information bearing on the existence of his claim . . . This doctrine embraces . . . what is sometimes called the `discovery rule,' which holds that the statute begins to run only after discovery of the facts constituting the violation . . ." (Citations omitted; emphasis added; internal quotation marks omitted.) Gallop v. Commercial Painting Co., 42 Conn.Sup. 187, 192, 612 A.2d 826 (1992, Blue, J.) [ 6 Conn. L. Rptr. 9]. See also Falls Church Group, Ltd. v. Tyler, Cooper Alcorn, LLP, Superior Court, judicial district of Hartford at Hartford, Docket No. CV 01 0804488 (November 26, 2003, Berger, J.) ( 36 Conn. L. Rptr. 111), aff'd, 281 Conn. 84, 912 A.2d 1019 (2007).

The essential distinction between equitable tolling and equitable estoppel is the plaintiff's knowledge of the factual basis for a cause of action. "Unlike equitable tolling, which is invoked in cases where the plaintiff is ignorant of his cause of action . . . equitable estoppel is invoked in cases where the plaintiff knew of the existence of his cause of action but the defendant's conduct caused him to delay in bringing his lawsuit." Cerbone v. International Ladies' Garment Workers' Union, supra, 768 F.2d 49-50. Moreover, for equitable estoppel to apply, the defendant must be found to have engaged in fraud or misrepresentation, causing the plaintiff to delay the initiation of an action.

A misrepresentation was initially made to H.J. Kelly, leading it to believe it had properly performed the conditions of its permit, by posting a bank check as a performance bond. This misrepresentation, however, was not intended to delay a known cause of action, and H.J. Kelly was ignorant of its cause of action until late in the summer of 2003. Of these two theories, therefore, equitable tolling is more applicable to the facts of this case. The additional factual question to be addressed is whether, despite "all due diligence," H.J. Kelly was unable to obtain vital information bearing on the existence of the claim.

The parties vehemently dispute the diligence of Mr. Kelly in pursuing his claim. Meriden characterizes Mr. Kelly's attitude toward the posting of the bond as "cavalier." Apart from his failure to post the bond with the Commission and failure to confirm the final issuance of a permit, closure and permit extension plans were filed with the Commission in 1993 and H.J. Kelly waited ten years to demand the return of the bond. After he ceased operations at the pit in 1995, he then waited eight years for the return of his bond.

Mr. Kelly testified that he waited to claim the bond because the operating engineers union and Army Corps of Engineers continued to use the pit for their training exercises, preventing him from rehabilitating the pit. Although it was reasonable and honorable for H.J. Kelly to wait for the training operations to come to conclusion to claim the return of his money, the standard for applying the theory of equitable tolling is whether H.J. Kelly exercised "all due diligence" to discover vital information bearing on the existence of its claim. This appears to be an affirmative duty to seek information bearing on the claim. A party may not simply wait eight, ten or fifteen years, albeit with reason, to pursue vital information bearing on the claim.

Mr. Kelly returned to the pit annually to determine whether the engineering operations at the pit had ceased, but he sought no other information from Meriden regarding the status of his bond. For example, upon ceasing H.J. Kelly's operations at the pit in 1995, Mr. Kelly acknowledged at trial that he could have asked for the return of the bond, but assumed he was ineligible to receive it at that time, due to the ongoing operations at the pit by the operating engineers union and others. Although this was reasonable, there is no evidence in the record that Mr. Kelly followed up on the permit extension and closure plans filed in 1993, to determine if they were approved, and, if so, whether he would be eligible for the return of the bond if the closure plan was completed as proposed.²¹ In this context, H.J. Kelly fails the factual test of all due diligence, required for the equitable tolling of the statute of limitations applicable to a cause of action based upon negligence.

21 There was no testimony concerning the filing of the closure plans, other than they were located in the Commission's "Godek Gravel Pit" file and stamped as received on August 5, 1993. The plans were drawn by Conklin Soroka, Inc., the same surveyors who produced the original revised plans required by the Commission as a condition for the issuance of the permit, and misfiled with the Engineering department secretary. The court draws the inference that these plans were produced with the knowledge of H.J. Kelly, as they coincide with Mr. Kelly's testimony that he planned to close the pit operation some time after 1993 and did so sometime in 1995 or 1996.

Further, some cases analyzing the theory of equitable tolling of statutes of limitations have concluded that it is inapplicable to the tolling of a statute of repose as a matter of law. See Connecticut Insurance Guarantee Association v. Yocum, supra, Superior Court, Docket No. CV 94 0539691S (June 6, 1996, Sheldon, J.). ("[T]he doctrine of equitable tolling cannot be invoked to avoid the applicability of the time bar here at issue, which is a statute of repose, not a statute of limitations.") As discussed previously, General Statutes § 52-584 combines elements of a statute of limitations for two years and a three-year statute of repose.

2. Statutes of Limitations for Implied Contracts

H.J. Kelly claims that a bailment is a contract and that the breach of the bailment relationship occurred when Meriden discovered that the bank check was missing and refused a demand to return the bond. In summary, the court has found that a bond was required by the Commission for an indefinite period and that this requirement was an official act for which there was municipal authority. The form of the bond required, namely a "certified bank check," resulted from the misperformance of a ministerial duty and, further, although it was delivered and accepted, it was never accepted by an official with authority to enter into an express performance bond or bailment contract.

Although the breach of a bailee's duty may involve a cause of action arising in negligence, the bailment relationship initially arises in contract, as previously discussed. "A relationship of bailor-bailee arises when the owner, while retaining general title, delivers personal property to another for some particular purpose upon an express or implied contract to redeliver the goods when the purpose has been fulfilled . . ." (Internal quotation marks omitted.) B.A. Ballou Co. v. Citytrust, supra, 218 Conn. 753. Although the Engineering Department secretary had no municipal authority to bind Meriden to an express contract by accepting the bank check as satisfaction of the Commission's bond requirement, she was nonetheless municipally required to transmit the check to the Treasurer for accounting purposes. Upon this basis, the court has found an implied contract with Meriden for a bailment of H.J. Kelly's bank check.

General Statutes § 52-576(a) provides in relevant part that "[n]o action for an . . . implied contract . . . shall be brought but within six years after the right of action accrues . . ." The Supreme Court has set forth the rule for the accrual of this statute of limitations. "[I]n an action for breach of contract . . . the cause of action is complete at the time the breach of contract occurs, that is, when the injury has been inflicted . . . Although the application of this rule may result in occasional hardship, [i]t is well established that ignorance of the fact that damage has been done does not prevent the running of the statute, except where there is something tantamount to a fraudulent concealment of a cause of action." (Citations omitted; emphasis in original; internal quotation marks omitted.) Tolbert v. Connecticut General Life Ins. Co., 257 Conn. 118, 124-25, 778 A.2d 1 (2001).

In this case, the bond was demanded and refused. The reason the demand was refused was there was no record of receipt or deposit of the bank check. Since the court has found that the bank check was delivered, it is presumed by operation of law that the bank check was lost, mislaid or stolen. Under these facts and conclusions, the court must decide whether the injury inflicted is Meriden's refusal to return the bank check pursuant to the implied contract of constructive bailment, established in this case under count two, or exclusively based upon the presumed act of negligence established under count number one.

"[P]utting a contract tag on a tort claim will not change its essential character. An action in contract is for the breach of a duty arising out of a contract; an action in tort is for a breach of duty imposed by law. [W]hen the claim is one for personal injury, the decision usually has been that the gravamen of the action is the misconduct and the damage, and that it is essentially one of tort, which the plaintiff cannot alter by his pleading . . . It is true, of course, that out of a contractual relationship a tort liability, as in negligence, may arise." (Citation omitted; internal quotation marks omitted.) Gazo v. Stamford, 255 Conn. 245, 263-64, 765 A.2d 505 (2001).

Under Connecticut law, actions for bailment may be pled in contract and in negligence, and H.J. Kelly has done so in this case. The failure to return property by a constructive bailee constitutes the breach of an implied contract. Although a bailee's duty is imposed by law, the gravamen of H.J. Kelly's action under count two is the return of its bond pursuant to the implied contract of bailment. The court therefore concludes that General Statutes § 52-576(a), applicable to implied contracts, should apply to count two sounding in a contract of bailment.

The presumption of negligence in bailment cases appears most applicable to plaintiffs required to establish liability where damage occurs to bailed property in the possession and control of the bailee. Without the presumption of negligence, such plaintiffs would be hard-pressed to prove negligence, despite clear evidence of damage. In this case, H.J. Kelly claims that the bailed property has not been returned and the presumption of negligence is not essential to this claim.

Meriden's answer is that it never received the bond, but, if it did, the form of the performance bond was improper and invalid. It further claims that it does not have the bond. It is Meriden's answer that gives rise to the presumption of negligence, and that answer should not negate the plaintiff's contract claim. If the court were to hold otherwise, a bailment for an indefinite period would be unenforceable in many cases, where facts giving rise to the loss of bailed property are unknown to the bailor. Further, it was Meriden that required H.J. Kelly to tender a performance bond as a condition of the permit in 1988. The bond was clearly intended to be for an indefinite period of time. When H.J. Kelly filed a permit extension and closure plan five years later in 1993, Meriden failed to reasonably discover the status of the original permit application and the absence of a bond. Had they done so, H.J. Kelly would have had notice within the applicable statute of limitations.

"While the statute of limitations normally begins to run immediately upon the accrual of the cause of action, some difficulty may arise in determining when the cause or right of action is considered as having accrued. The true test is to establish the time when the plaintiff first could have successfully maintained an action. That is, an action cannot be maintained until a right of action is complete and, hence, the statute of limitations cannot run before that time . . . The settled rule that the statute of limitations begins to run upon the accrual of a cause of action applies in actions on implied and quasi contracts . . ." (Citations omitted; internal quotation marks omitted.) Gaylord Hospital v. Massaro, 5 Conn.App. 465, 467, 499 A.2d 1162 (1985).

"In a bailment for an indefinite term, since the bailee is not in default until refusing to return the bailment property in response to the bailor's demand, the statute of limitations does not begin to run against the bailor's action to recover the property until there has been such a demand for, and refusal to return, the property, or until the bailee has repudiated the bailment by converting the property." 8A Am.Jur.2d 667 Bailments § 216 (1997). Although this rule does not appear to have been adopted in our jurisdiction, it is logical, reasonable and the longstanding rule in other jurisdictions. See Lowney v. Knott, 83 R.I. 505, 509, 120 A.2d 552 (1956).

The court has found that H.J. Kelly's bank check was a constructive bailment for an indefinite period. Under facts and circumstances found in this case, H.J. Kelly had no reasonable notice of facts concerning Meriden's loss or repudiation of the bond until 2003. Having taken possession of H.J. Kelly's bank check in 1988 for an indefinite period, the statute of limitations began when Meriden refused H.J. Kelly's demand for the return of its property in 2003.

F. Prejudgment Interest

In its prayer for relief, H.J. Kelly seeks an award of interest pursuant to General Statutes § 37-3a.²² H.J. Kelly did not demand the return of his money until sometime in the late summer or fall of 2003 and, in its reply brief dated November 26, 2007, H.J. Kelly limits its claim to the date of the loss at that time, which the court construes to be the time of Meriden's refusal and repudiation of the bailment.

22 The prayer for relief mistakenly cites General Statutes § 37-3, which has been repealed.

The court "may award prejudgment interest, as an element of damages, for the detention of money after it becomes payable if equitable considerations deem that such interest is warranted . . . An award of such interest is an equitable determination lying within the trier's sound discretion . . . The determination is one to be made in view of the demands of justice rather than through the application of an arbitrary rule . . .

"A trial court must make two determinations when awarding compensatory interest under § 37-3a: (1) whether the party against whom interest is sought has wrongfully detained money due the other party; and (2) the date upon which the wrongful detention began in order to determine the time from which interest should be calculated." (Citations omitted; internal quotation marks omitted.) Maloney v. PCRE, LLC, 68 Conn.App. 727, 754-55, 793 A.2d 1118 (2002).

"The fact that an award of such interest is discretionary and subject to equitable considerations, rather than automatic, reflects the reality that not all improper detentions of money are wrongful." Id., 756. "The resolution of the issue is dependent on the circumstances in each case and is, consequently, inherently fact bound . . . Prior courts have properly awarded prejudgment interest despite the fact that the issues at trial were `hotly contested' . . . and courts have found that such interest was warranted because a party had detained money to punish the party who rightly should have possessed it . . . Other courts have upheld a trial court's refusal to award such damages where the trial court found that the party who had detained moneys had made good faith arguments in defense of its actions . . . or where the trial court found that the defendant improperly withheld moneys under a good faith belief bolstered by the advice of counsel, that an agreement was enforceable." (Citations omitted; internal quotation marks omitted.) Id.

There is no evidence of bad faith or willfulness on the part of Meriden or evidence of a desire to punish H.J. Kelly by detaining the claimed property. Although Meriden was wrongful in the sense that it misperformed certain ministerial duties, leading to its failure to record receipt of the bank check, H.J. Kelly has also failed to produce a receipt or other clear and undisputable proof of delivery. As a proper steward of the public purse, Meriden refused payment and it is now the court's determination of the facts, found by a preponderance of the evidence, that payment is due.

General Statutes § 37-3a provides in relevant part that "interest at the rate of ten per cent a year, and no more, may be recovered and allowed in civil actions . . . as damages for the detention of money after it becomes payable." The sum of $35,550 is therefore due and payable by Meriden to H.J. Kelly as of the date of judgment. The court will therefore exercise its discretion and grant postjudgment interest in this case. See TDS Painting Restoration, Inc. v. Copper Beech Farm, Inc., 73 Conn.App. 492, 511, 808 A.2d 726, cert. denied, 262 Conn. 925, 814 A.2d 379 (2002).

IV. CONCLUSION

The court finds for H.J. Kelly on count two, as it apples to a contract of bailment, with interest pursuant to General Statutes § 37-3a beginning on this date of judgment. The court further finds for Meriden on its special defense as to count one on negligence and as to count three on the merits of unjust enrichment.