Opinion
CV135005797
01-08-2016
OCS Transport, Inc. v. J.D. Express, LLC et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
John D. Boland, S.J.
This case, which began over a simple vehicle leasing contract gone bad, has blown into a fully contested multi-party, multi-cause of action lawsuit. Following a court trial and post-trial briefing, judgment enters today for plaintiff against all defendants.
I. The Initial Contract
It is undisputed that this controversy began with plaintiff's lease to the named defendant of a 2004 Mack truck, on November 9, 2010, for a period of three years. The lease reported an initial payment of $196 followed by 155 weekly payments of $208.08 (principal and interest), amounting to a total of $31,500 principal over the course of three years. The lease contemplated that the named defendant could purchase the vehicle at the end of the term for the sum of $100, provided that it had fully complied with the lease's provisions. The lease defines default as including non-payment of the weekly sums due, and provides that plaintiff could repossess the vehicle in the event of default.
The court notes that the lease in question was executed in the state of Pennsylvania, and that it contains a choice of law provision reciting that it " shall be construed under and in accordance with the internal laws of the Commonwealth of Pennsylvania." (Lease, ¶ 15.08.) The court requested that the parties brief whether any salient differences between the laws of Connecticut and Pennsylvania might affect the outcome of the case. Both briefs indicated that laws of the two states have no discernible distinctions as to the legal concepts involved in this case.
II. The Parties and Their Claims
Plaintiff, OCS Transport, Inc. is a Pennsylvania corporation with an office in Orefield, PA. By its second amended complaint dated April 22, 2015, it asserts seven causes of action: 1) breach of contract; and 2) breach of the implied covenant of good faith and fair dealing, as to J.D. Express, L.L.C. (" JDE"); 3) conversion; and 4) civil statutory theft on the part of JDE, Davidson Transport, Inc. (" DT") and Steven Davidson; 5) a violation by DT of the terms of the Connecticut Unfair Trade Practices Act (" CUTPA"); 6) an attempt to pierce the corporate veil between DT and Davidson; and 7) an attempt to pierce the corporate veil between JDE and Davidson.
Defendant J.D. Express, L.L.C., is a Connecticut limited liability company with an office and principal place of business in the town of Killingly. At all times relevant to this case, its sole member and operating manager is the defendant Steven Davidson. JDE denies the material allegations of those counts addressed to it, and asserts three special defenses: 1) payment and breach of contract on plaintiff's part; 2) unclean hands; and 3) waiver. Additionally, JDE alleges by way of counterclaim that 1) plaintiff has breached its contract with JDE; 2) plaintiff has breached the contract's implied obligations to act in good faith and engage in fair dealing; 3) plaintiff has converted the vehicle; 4) plaintiff has committed civil statutory theft; 5) plaintiff has violated the terms of the Connecticut Unfair Trade Practices Act (" CUTPA"); and 6) plaintiff has unjustly enriched itself at JDE's expense. Plaintiff denies the material allegations of the special defenses and of each of the six counterclaims.
Defendant DT is also a Connecticut limited liability company with an office and principal place of business in the town of Killingly. Its sole member and manager is Steven Davidson. DT denies the material allegations of plaintiff's complaint, and alleges two special defenses: 1) that plaintiff has waived any rights it possessed under the lease; and 2) that plaintiff proceeded with unclean hands in its dealings with DT. In addition, this defendant asserts as counterclaims 1) breach of contract; and 2) a demand for recovery under a theory of quantum meruit for services it claims to have performed on plaintiff's behalf. Plaintiff denies the material allegations of both of the special defenses and of both of the counterclaims.
Defendant Steven Davidson is an individual residing in Sterling, Connecticut, and associated with the two business entities as described above. He denies the material allegations of plaintiff's complaint, and alleges 1) payment and breach of contract as a single, combined special defense; and 2) waiver; and 3) unclean hands as second and third special defenses. He has withdrawn a counterclaim filed along with his answer.
III. Facts
JDE took possession of the leased vehicle on or about the date of the lease, in November of 2010. Davidson signed the lease on behalf of JDE, but also individually and as guarantor of the company's obligations.
This contract was not the sole relationship between the parties. Plaintiff is generally involved in the business of transportation of goods by truck, and frequently enters into contracts with individuals or corporations to haul materials in discharge of its obligations to its customers. At the time of the lease, it was affiliated with GreatWide, Inc., to fulfill those obligations. JDE, in turn, was an independent contractor hauling for GreatWide, and to satisfy the lease payments GreatWide would withhold sums each week from the amounts it owed JDE and pay them to plaintiff as a credit on the lease. Payments on the lease were made as required over the first several months of the lease, but began to lag after about six months as JDE cut back on its work for GreatWide. Plaintiff tried to work directly with JDE, in consideration of the mutually beneficial hauling work, but by the fall of 2011, after recurrent failures of payment by JDE, plaintiff determined " enough was enough, " and undertook the repossession of the vehicle.
On November 28, 2011, plaintiff made written demand upon Davidson that all outstanding payments had to be brought current, and simultaneously authorized " Speedy Repo" (formally known as C.C.I., Inc.) to serve as its agent in repossessing the vehicle. C.C.I. assigned this repossession mission to McLaughlin trucking company, a business which was then searching on plaintiff's behalf and pursuant to C.C.I.'s delegation for a different truck and trailer leased to an unrelated business. McLaughlin took possession of those items, and so notified plaintiff on or about December 30, 2011. Coincidentally, it delivered them to the business premises of DT, from which one of plaintiff's agents soon picked them up at that site.
Prior to December 30, JDE had brought its lease payments current. Accordingly, in a telephone conversation between McLaughlin and plaintiff's general manager on December 31, she advised him that the November 28 authorization to Speedy Repo was about to be rescinded and that he should take no further action with respect to the JDE truck. Plaintiff formally rescinded the C.C.I. authorization in writing on January 4, 2012.
According to Davidson, however, a separate dialogue had taken place between him and McLaughlin a few days prior to that New Year's Eve. His testimony on this point came in without objection, but that does not mean that the court is required to fully accept it as credible. This defendant contends that McLaughlin had attempted to repossess the Mack truck on or about December 26. Davidson, believing that repossession was unwarranted and would have a negative impact upon JDE, volunteered that DT would accept a sub-assignment to it to repossess the vehicle then in the hands of JDE. Having achieved McLaughlin's consent (of which no written memorandum was produced), Davidson thereupon, in his own words, " only moved the truck about 20 feet . . . I rolled it into the garage and closed the door." This, he said, only took about five minutes, but by this process he deemed the truck " repossessed." He claims that he notified plaintiff by telephone of this status on January 3, 2012. Plaintiff denies receiving such notice. This court finds that Davidson's testimony incredible as to having provided meaningful communication to plaintiff with respect to the vehicle, or his company's purported status as repossessing agent for plaintiff, until January of 2013, over a year later.
In the meantime, however, JDE resumed hauling for GreatWide. Once again, it made payments on the lease until about July of 2012. DT contends that the vehicle remained " repossessed" throughout that calendar year, although Davidson admits that JDE routinely used it for its activities. On October 19, 2012, three months after the payments had fallen into default for the second time, plaintiff again made written demand to JDE, via Davidson, for the immediate payment of $2,288.88 which was then outstanding. She followed up with several phone calls that went unanswered. Early in 2013, she received a letter from DT dated January 2 informing her that the company had repossessed the Mack truck pursuant to instructions from C.C.I. on January 3, 2012, and that plaintiff owed it storage fees of $60 per day, totaling $21,900 as of the date of the letter. Plaintiff filed this suit on July 3 of that year. Before that occurred, on April 13, DT sold the truck for scrap to a wholesaler for the price of $7,500 which it applied to its bill for storage.
IV. Discussion
A. Plaintiff's Contract Claims Against JDE--Count One
Given the plethora of conflicting claims and the odd circumstances that produced this suit, the court will first analyze the simple, first count of the complaint which alleges a breach of contract on the part of JDE. " The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages." Keller v. Beckenstein, 117 Conn.App. 550, 558, 979 A.2d 1055, cert. denied, 294 Conn. 913, 983 A.2d 274 (2009).
The parties here reached a comprehensive written agreement which is an exhibit in the case. The plaintiff delivered the Mack truck which is the object of the contract and the truck has not been returned to it. Having promised weekly payments over three years totaling $31,500, plus interest, the defendant JDE has failed to make those payments. By now, all payments due under that agreement ought to have been made, and absent any special defense or offset, damages are due in the amount of $14,357.45, principal, plus interest as of September 15, 2015 (the trial date) of $1,732.85, and interest between September 15 and the date of judgment (January 8, 2016) of $226.18 ($1.967 per diem times 115 days); these three sums total $16,376.47. (Interest continues to accrue thereafter at the contract rate of five (5%) per annum.)
Because the truck was not returned to plaintiff at the end of the lease term as required, the court deems defendants' sale of the vehicle to be tantamount to exercise of the option to purchase at the price of $100, and accordingly will add $100 to the foregoing sums due on the lease. The total damages for breach of contract are $16,476.47.
B. The Special Defenses
Although variously captioned, the essence of the several special defenses is that plaintiff dealt with defendants and is now dealing with this court with unclean hands, and that it has waived any contractual remedies available to it under the lease.
The defense of waiver appears to be premised on three facts: first, that in 2011, plaintiff waited for several months after payments ceased before issuing its repossession order, and second, that it subsequently, following the 2012 default, let almost a year pass by before instituting suit. Each of those delays was allowable under the contract, which includes language specifying that waiver is only present upon written consent of the lessor, and that forbearance in the face of lessee's nonperformance shall not be considered a waiver (Lease, ¶ 15.03). See, S.H.V.C., Inc. v. Roy, 188 Conn. 503, 450 A.2d 351 (1982).
The third fact defendants rely upon is plaintiff's decision not to accept DT's express offer to return the Mack truck to it in January of 2013. Under the circumstances, that decision was not a waiver of rights but a refusal to be a victim of extortion. Having seen Davidson testify, this court finds him credible neither on the details of his conversation with McLaughlin nor upon his claim to have reported that arrangement to plaintiff at any time throughout 2012. He testified that as a " repo man" (i.e., wearing his DT hat), he was acting on behalf of a company in the business of repossession and had no duty to investigate the bona fides of any authorization coming to him, and that DT might as well get the business as any other outfit providing that service. At the same time (wearing his JDE hat), he believed that repossession was out of order and professed that he was in a unique position to see that the rights of the lessee were protected. He seems unfazed by any possibility of a conflict of interest between the opportunity this situation afforded to DT and the obligation as an agent (even if unknown and unintended) to relay to plaintiff as his principal the information in his possession material to the terms of the agency. Even assuming that one in Davidson's position in early January of 2012 could pay scrupulous attention to that possibility and fulfill his implicit duties to plaintiff while holding its truck, the court finds that his failure to communicate to plaintiff that he was in fact doing so is a fundamental breach of that duty. At the same time, the court notes that DT's ostensible charge for " storing" the truck, $60 per day, is more than double the $208 per week lease price which was arrived at in contemplation of JDE's use of the vehicle; as such, it is commercially absurd. To allow storage charges to arise over a year to a point higher than the outstanding balance due on the lease makes clear that the unclean hands in this case do not belong to plaintiff.
The court finds that defendants have proven none of their special defenses.
C. The Counterclaims
Defendants JDE and DT have between them pled a total of eight counterclaims. All rely upon the premise that plaintiff, having authorized C.C.I. to repossess the Mack truck in November of 2011, was chargeable with all that happened to the truck thereafter. Thus, in JDE's six counts, an essential allegation is that plaintiff allowed its " agent, " DT, to repossess the truck even after the first default was cured in December of 2011. This repossession, JDE complains, deprived it of its bargain and constitutes not only a breach of the contract but a tort and an unfair trade practice. For its part, DT relies upon the same purported act of plaintiff's agent (DT), and sues for its storage fees, on alternative theories of breach of contract and quantum meruit.
The most direct answer to these claims is that all depend upon Davidson's version of fact, which, as indicated above, this court finds not credible. Weighing and commenting upon the many details recited in the eight counts would serve no purpose.
The court finds that there is no factual basis for any of the counterclaims, and orders that judgment upon all shall enter for plaintiff.
D. Plaintiff's Additional Claims--Counts Two through Seven
1. Count Two--Breach of Implied Covenants by JDE
In this count, plaintiff focuses upon the fact that the sale of the truck in April of 2013 preceded by six months the expiration of the lease in November of that year, thus breaching the covenants of good faith and fair dealing implicit within the contract. These are principles well regarded in our case law, supplying a " rule of construction designed to fulfill the reasonable expectations of the contracting parties as they presumably intended; " PSE Consulting, Inc. v. Frank Mercede & Sons, Inc., 267 Conn. 279, 302, 838 A.2d 135 (2004). It is axiomatic, however, that the plaintiff cannot recover more than once for the same loss, even if it prevails on two or more causes of action. Since it prevails here on its first contract count, that result will fulfill its reasonable expectations under the contract and this second count need not be examined in detail.
2. Count Three--Conversion
Plaintiff brings this third count against all three defendants.
" Conversions may be grouped into two general classes: (1) those where the possession is originally wrongful; and (2) those where it is rightful and subsequently becomes wrongful. Under the first class, wrongful use and the unauthorized dominion constitute the conversion; therefore no demand for the return of the personal property is required. Under the second class, since the possession is rightful and there is no act of conversion, there can be no conversion until the possessor refuses to deliver up the property upon demand; " Label Systems Corp. v. Aghamohammadi, 270 Conn. 291, n.30, 852 A.2d 703 (2004). Obviously, the facts of this case eliminate a conversion of the first class as to JDE, but not as to DT and Davidson. Potentially, the second class is one in which any of the three defendants might be found.
The tort of conversion occurs when one, without authorization, assumes and exercises ownership over property belonging to another, to the exclusion of the owner's rights." Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 43, 761 A.2d 1268, (2000). When DT sold plaintiff's truck in 2013, it had no authority to do so. It was assuming and exercising control over the property to the exclusion of plaintiff's rights. As to DT, the event and manner of sale fits the definition of conversion.
It may be argued that JDE was a passive spectator to the events of late December 2011, although since it shared with DT a single general manager, it must be assumed that it had actual knowledge of DT's tortious behavior. After the initial taking of the truck, moreover, JDE did nothing to check the ongoing tort by its affiliate, and breach of its own contract with plaintiff, and in fact continued to use the truck for its own business purposes. It cannot now deny acquiescence in that tort, and the court therefore finds for plaintiff against JDE as well on this count.
Plaintiff cites Steven Davidson in this count as " the principal" of both business entities and seeks to hold him accountable on that basis. Under Section D(5), below, this memorandum assesses plaintiff's overall efforts to pierce the veils of those companies. Consistent with the results of the analysis there, judgment should enter on this count against Davidson also.
The court believes that their measure of damages should be the loss of the contract opportunity occasioned to plaintiff by the undertaking of this ruse, a sum equal to $14,457.45 as outlined in the discussion of count one. Another measure is the value of the purloined vehicle. Davidson testified that upon taking it, it was worth about $15,000. These two measures are close in value. The court will adopt the lower one, and add to it the interest (again, at 5% per annum) due to plaintiff for loss of its bargain and its property since December of 2011. The total damages for conversion, therefore, is $16,476.47.
3. Count Four--Statutory Theft
The fourth count alleges statutory theft on the part of all three defendants. Our Supreme Court has held that " [s]tatutory theft under [General Statutes] § 52-564 is synonymous with larceny [as provided in] General Statutes § 53a-119." Hi-Ho Tower, supra, at 44. That provision of the penal code, at subsection (10), indicates that larceny as to a leased vehicle occurs when " after renting or leasing a motor vehicle under an agreement in writing which provides for the return of such vehicle to a particular place at a particular time, [a person] fails to return the vehicle to such place within the time specified, and who thereafter fails to return such vehicle to the agreed place or to any other place of business of the lessor within one hundred twenty hours after the lessor shall have sent a written demand to him for the return of the vehicle by registered mail addressed to him at his address as shown in the written agreement . . ." (emphasis added).
While this tort resembles conversion, the two can be distinguished. " First, statutory theft requires an intent to deprive another of his property; second, conversion requires the owner to be harmed by a defendant's conduct. Therefore, statutory theft requires a plaintiff to prove the additional element of intent over and above what he or she must demonstrate to prove conversion." Howard v. MacDonald, 270 Conn. 111, n.8, 851 A.2d 1142 (2004) (internal quotation marks omitted). Liability for conversion is a precondition to finding of liability for treble damages under section § 52-564; News America Marketing In-Store, Inc. v. Marquis, 86 Conn.App. 527, 547, 862 A.2d 837 (2004), affirmed, 276 Conn. 310, 885 A.2d 758 (2005); but liability for conversion does not automatically trigger that remedy.
Here, plaintiff twice wrote to JDE with regards to the payment defaults, first on November 28, 2011, and later on October 19, 2012. In neither correspondence did plaintiff demand return of the Mack truck within one hundred and twenty hours, as 53a-119(10) requires. Since the terms of the penal statute define the statutory cause of action, the court finds for the defendants on this count.
4. Count Five--CUTPA
Count five accuses DT of breaching the Unfair Trade Practices Act through its sham repossession of the Mack truck and subsequent allowing JDE to use the vehicle instead of restoring the vehicle to plaintiff as its rightful owner. The Act, at Conn. Gen. Stat. § 42-110g, authorizes a civil action for damages to be brought by " [a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a method, act or practice prohibited by section 42-110b." A successful claimant may be awarded punitive damages by the court, as well as such further equitable relief as the court deems necessary or proper.
§ 42-110b(a) directs that " [n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce, " and largely defers to federal and state courts and trade regulators to define what behavior violates that commandment. Recently, in Landmark Investment Group, LLC v. CALCO Constr. & Dev. Co., 318 Conn. 847, 124 A.3d 847 (2015), our Supreme Court restated the oft-cited observation that behavior violates that statute if it meets at least one of the three following criteria: 1) it offends public policy as it has been established by statutes, the common law or other established concept of unfairness; or 2) it is immoral, unethical, oppressive or unscrupulous; or 3) it causes substantial injury to consumers, competitors or other business persons. Citing Sportsmen 's Boating Corp. v. Hensley, 192 Conn. 747, 474 A.2d 780 (1984), the Court noted that while conduct that might be actionable under CUTPA may not rise to a level sufficient to invoke tort liability, the reverse of that proposition is seldom true.
This court has concluded that DT's actions do constitute the tort of conversion. In assessing whether its actions separately violate CUTPA, this court considers material the fact that this company not only inserted itself into the repossession process when it obviously had interests conflicting with those of its unknowing principal, but thereafter kept the whereabouts of the Mack truck hidden from plaintiff in derogation of its duty, as a self-proclaimed agent, to restore possession of the vehicle to plaintiff. Then, instead of making amends when plaintiff addressed JDE's second default, this purported agent conjured up new and exorbitant storage charges as a deliberate and unfair obstacle to plaintiff's pursuit of its contractual rights. Throughout 2012, after it deemed the truck " repossessed, " it nevertheless permitted JDE, its sister company, to use the truck on numerous occasions. Finally, despite Davidson's testimony that the value of the truck when in DT's possession was around $15,000, it sold the truck as scrap for $7,500. Viewing all these facts in the aggregate, the court finds that DT engaged in conduct that was tortious, unfair to plaintiff, and unscrupulous, and that such behavior has caused plaintiff substantial loss. Accordingly, the court concludes that plaintiff has proven a violation of CUTPA by DT.
On this count, the court awards actual damages of $16,476.47. Further, it will award attorneys fees as described below.
5. Counts Six and Seven--Piercing The Corporate Veils
a) As to DT
Count six demands that the court declare that Steven Davidson is individually liable for any judgment against DT, as that company is a mere instrumentality used by him to commit the wrongs complained of. This count incorporates the material allegations of all prior counts, and thus exposes Davidson to any liability of the company on counts three or five.
Two recent decisions of our Supreme Court provide substantial guidance to a court weighing whether a business principal can be held personally liable for the wrongs inflicted by his company. These are Naples v. Keystone Building & Development Corp., 295 Conn. 214, 990 A.2d 326 (2010), and Joseph Gen. Contr., Inc. v. Couto, 317 Conn. 565, 119 A.3d 570 (2015).
Defendants rely upon the Naples case. The trial court there had held that the named defendant (and a successor limited liability company) were liable for breach of contract in the construction and sale of a new home with substantial defects, but rejected claims that these entities and their controlling officer, Leonard Bourbeau, had violated CUTPA. The Supreme Court affirmed this mixed result, noting that " mere incompetence does not by itself mandate a trial court to find a CUTPA violation." 295 Conn. 214, 229, 990 A.2d 326.
The Court also affirmed the trial court's decision that on the contract counts, Bourbeau was entitled to the shield against personal liability which the two business entities provided. It employed the two classic tests designed for determining whether to pierce the shield of immunity afforded by the corporate structure in a situation in which the corporate entity has been so controlled and dominated that justice requires liability to be imposed on the real actor. One of these is the " instrumentality rule, " which requires " in any case but an express agency, proof of three elements: (1) Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) that such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of [the] plaintiff's legal rights; and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of." Zaist v. Olson, 154 Conn. 563, 578, 227 A.2d 552 (1967). The other, the " identity rule, " permits piercing the veil " [if] plaintiff can show that there was such a unity of interest and ownership that the independence of the corporations had in effect ceased or had never begun, " such that " an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise." Angelo Tomasso, Inc. v. Armor Construction & Paving, Inc., 187 Conn. 544, 552-54, 447 A.2d 406 (1982).
The Naples decision, pointing out that resolution of the instant question is highly fact-dependent, usefully enumerates some of the factors which a trial court ought to consider in gauging whether either rule indicates that a veil should be pierced. " Those include: (1) the absence of corporate formalities; (2) inadequate capitalization; (3) whether funds are put in and taken out of the corporation for personal rather than corporate purposes; (4) overlapping ownership, officers, directors, personnel; (5) common office space, address, phones; (6) the amount of business discretion by the allegedly dominated corporation; (7) whether the corporations dealt with each other at arm's length; (8) whether the corporations are treated as independent profit centers; (9) payment or guarantee of debts of the dominated corporation; and (10) whether the corporation in question had property that was used by other of the corporations as if it were its own." 295 Conn. 214, 232-33, 990 A.2d 326, citing Litchfield Asset Management Corp. v. Howell, 70 Conn.App. 133, 152-53, 799 A.2d 298, cert. denied, 261 Conn. 911, 806 A.2d 49 (2002).
Applying the Litchfield Asset factors to this case, this court finds:
(1) an absence of corporate formalities on the part of both JDE and DT. After receiving a subpoena duces tecum demanding that he bring to trial records regarding bank accounts in the name of either limited liability company, and the tax returns of each, Davidson showed up at trial with a few bank records and no tax returns. He testified that each is a cash business, and that neither has ever filed a tax return. He has no records of inventory or of vehicles repossessed. Neither business is computerized, and " whenever needed" he keeps records by hand; he described these as " cheat sheets." Whatever paper records might once have existed, he said, were mostly destroyed by " the mentally-ill daughter of his former girlfriend";
(2) inadequate capitalization. Neither business owns any real property. JDE's bank account had $6.24 at the beginning of 2011, until service charges reduced that to zero; on August 27, 2012, $709.21 was deposited, and $600 of that withdrawn two days later; the only activity revealed thereafter were further service charge deductions. As to DT, Davidson made no showing of any bank account, and claimed that " this lawsuit is the only thing keeping it alive";
(3) funds are put in and taken out of the businesses for personal rather than corporate purposes. While there is no direct evidence proving that Davidson pocketed money coming into either business, his admission (rather proudly, it must be noted) that all transactions were in cash, the absence of proof of any meaningful separate account for either entity, and his overall evasiveness as to accounting for the income of those businesses, are together sufficient circumstantial evidence to sustain the inference that he was the routine and immediate recipient of business receipts;
(4) overlapping ownership, officers, directors, personnel. At all times relevant to this dispute, Davidson has been the sole member, officer, and manager of both limited liability companies;
(5) common office space and addresses. Historically, he testified, the businesses have been headquartered at his residence at 155 Willimantic Road, Chaplin (prior to 2010); then at his residence at 10 Wauregan Road, Brooklyn (2010-2014); and now at his residence at 892 Gibson Hill Road, Sterling. He did not explain why the lease he signed states that 46 Fairview Drive in Danielson is the address of JDE, nor why mail sent to him there by plaintiff was delivered there, but he also indicated that he was able to quickly perform the " repossession" at that location by merely moving the truck from the " JDE part" of his property to the " DT part" thereof, indicating that where Davidson is, there both businesses may be found;
(6) neither business possesses any discretion independent of Davidson. He provided no evidence that either entity has any direction from any source other than himself;
(7) the businesses have not dealt with each other at arm's length. This conclusion is reached with respect to the transactions relevant to this lawsuit. By allowing JDE to use the " repossessed" truck after December 26, 2011, DT extinguished any pretense that it was conducting its business with neutrality as far as JDE was concerned;
(8) the businesses are not treated as independent profit centers. Without serious banking records, or any tax filings, the independence of the two as " profit centers" is impossible to discern;
(9) Davidson guaranteed payment of the lease obligation JDE entered into with plaintiff; and
(10) whatever property either business possessed was used by the other as if it were its own. See findings (5) and (7).
Those findings warrant strong skepticism as to Davidson's argument that he has maintained JDE and DT as separate entities, under either the instrumentality or the identity rule. What the Litchfield Asset decision did not add in the balance was the commitment by the subject business of a tort or a violation of CUTPA, both of which exist here on the part of DT, and which in Joseph General led the Supreme Court to move the question of individual liability for a corporate CUTPA violation past the point that it reached in Naples .
Published on September 25, 2015, less than two weeks before the parties submitted their post-trial briefs here, it is not surprising that neither party alluded to its holding. Once again, the Joseph General plaintiffs were real estate purchasers who sued the corporate builders of their new home and their sole shareholder and president, Anthony Silvestri, on a variety of theories including breach of contract and CUTPA violations. They prevailed on both theories at trial, a decision affirmed by the appellate court at 144 Conn.App. 241, 72 A.3d 413 (2013). The Supreme Court reversed the decision holding Silvestri personally liable for the contract breach, but nevertheless upheld the extension of CUTPA liability to him. It noted, first, a practice in federal case law of extending CUTPA liability to an individual who engages in unfair or unscrupulous conduct on behalf of a business entity. That result commonly involved a showing that an entity violated the federal act, that the charged individual either participated directly in the entity's deceptive or unfair acts or practices, or that he or she had the authority to control them, and that the accused individual had knowledge of the wrongdoing at issue. The Court favorably cited case law holding that an individual's status as controlling shareholder or officer in a closely held corporation creates a presumption of the ability to control, and that the knowledge requirement may be established with evidence showing that the individual " had actual knowledge of [the entity's] material misrepresentations, reckless indifference to the truth or falsity of such misrepresentations, or an awareness of a high probability of fraud along with an intentional avoidance of the truth . . . An individual's degree of participation in business affairs is probative of knowledge . . . [T]he [plaintiff] is not required to show that a defendant intended to defraud consumers in order to hold that individual personally liable"; 317 Conn. 565, 589-90, 119 A.3d 570. (Internal quotation marks omitted.)
Just as in that case, there is no question in the present case that Davidson controlled the companies involved and was actively engaged in the business relationship with plaintiff. He is the managing member and sole owner of both limited liability companies. He was aware of all the details of JDE's lease obligations, and indeed directly responsible for DT's involvement in plaintiff's efforts to recover its truck. There is no aspect of this situation as to which he can deny knowledge. As the Supreme Court concluded with respect to Silvestri, there is no question that Davidson directly participated in the wrongful conduct of DT and had the ability to control it. Given the character of the actions at issue, he necessarily knew or should have known of their wrongfulness. Consistent with the remedial nature of the statute and the ultimate protection of the consumer--ends which the Court endorsed without reservation--this court holds that Davidson must be deemed liable for the CUTPA violations of DT, whether or not the conclusions set forth above applying the instrumentality or identity tests pass scrutiny.
b. As to JDE
Count seven sets forth a parallel claim against him stemming from the derelictions of JDE. The factors found in support of establishing his liability for the actions of DT are equally compelling when viewing the actions of JDE.
This count, too, incorporates the allegations of all prior counts, and those counts do not allege identical wrongdoing on the part of both limited liability companies. Since the court has found for JDE on counts two and four, and JDE is not named as a defendant in count five, the only practical consequence of finding for plaintiff on count seven would be to impose liability upon Davidson with respect to JDE's contractual liability under count one, and as to the company's tort liability under count three.
As to count one, the court notes that apart from any veil piercing Davidson's guaranty and signature as an individual party to the lease contract renders him liable in each of those capacities for the breach of that lease. As to count three, the court will grant plaintiff's demand for a declaration that Davidson is liable for the torts of JDE, for the reasons set forth as to DT, above.
E. Attorneys Fees
Plaintiff is entitled to an award of attorneys fees, whether under the lease (¶ 15.01 provides that the lessee is liable for the lessor's reasonable attorneys fees incurred in enforcing that contract), under statute (§ 42-110g(d) provides that in a successful CUTPA action, " the court may award, to the plaintiff, in addition to the relief provided in this section, costs and reasonable attorneys fees based on the work reasonably performed by an attorney and not on the amount of recovery), or under the common law (as punitive damages awardable upon a finding of a tort violation, and limited to the costs of litigation).
Plaintiff submitted copies of its invoices for all attorneys fees incurred from the time it hired counsel for this case until the last day of the month preceding trial; thus these copies do not include any time for trial, briefing, or post-judgment proceedings. The court has examined this fee request in light of the factors articulated in Riggio v. Orkin Exterminating Co., 58 Conn.App. 309, 318 n.3, 753 A.2d 423, cert. denied, 254 Conn. 917, 759 A.2d 507 (2000). Further, though plaintiff did not prevail one hundred per cent on its complaint, its success is substantially complete; the core facts within its seven counts are intertwined and could not have been pursued separately with any greater economy; see, Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, 308 Conn. 312, 63 A.3d 896 (2013). The three defendants all signed on to a defensive strategy that was a high risk, and none was successful in its pursuit.
The court has scrutinized these invoices carefully, and notes that counsel spent a little over 200 hours on all aspects of the case, at hourly rates ranging from $170 to $350, but most at the level of $230 per hour. Neither the hourly rates nor the time expended is excessive. The invoices document total fees of $45,431, which this court approves. Plaintiff's representative testified to having paid an amount slightly higher. The court has deducted from this fee award charges shown on the invoices for filing fees, marshal's service, and similar taxable costs which plaintiff may pursue by filing a bill of costs.
V. Conclusion
1. Judgment is entered against J.D. Express, L.L.C., and Steven Davidson, individually, for breach of contract, in the amount of $16,476.47 damages, plus attorneys fees of $45,431.
2. Judgment is entered against J.D. Express, L.L.C., Davidson Transport, L.L.C., and Steven Davidson, individually, for conversion, in the amount of $16,476.47 damages, plus attorneys fees of $45,431.
3. Judgment is entered against Davidson Transport, L.L.C. and Steven Davidson, individually, for breach of the Connecticut Unfair Trade Practices Act in the amount of $16,476.47 damages, plus attorneys fees of $45,431.
4. Postjudgment interest shall accrue at the rate of five per cent (5%) per annum.
5. The court does not intend that the awards listed under paragraphs 1 through 3 are cumulative. A single payment of $61,907.47 by any single defendant, or sums totaling that amount paid by any combination of the three defendants, will satisfy the judgment as to all. Any partial payments will reduce each award equally. The court thanks both attorneys for the professionalism shown at trial and the quality of their briefing.
The court understands that defendants have filed a postjudgment motion (#153) challenging plaintiff's exhibit 9, its request for admissions. That motion has not yet been formally adjudicated, but its precise content was argued to the court when defendants unsuccessfully objected to the exhibit at trial. That motion is both moot and unpersuasive, and is therefore denied. However, having become aware of the post-trial motion prior to preparing this memorandum, and out of an exercise of caution, the court set aside the disputed exhibit and made all findings expressed herein on the basis of other evidence duly admitted. To the extent that any detail found in this memorandum should also be present in the request for admissions, that circumstance is purely coincidental.