Opinion
No. CV04-4000390
September 22, 2005
MEMORANDUM OF DECISION RE MOTION FOR TEMPORARY INJUNCTION (#106)
In this action the Plaintiff, Michael M. Taylor, seeks a temporary injunction prohibiting and restraining the Defendant, Hoffman Ford, Inc., from transferring ownership and/or possession of the first 2005 Ford GT 40 allotted to and/or delivered to the Defendant; specific performance of a sales contract pursuant to General Statutes §§ 42a-2-610 and 42a-2-716; and damages. The Plaintiff now seeks a temporary injunction in accordance with his prayer for relief.
The court heard testimony from the Plaintiff, Peter Covello, the Plaintiff's expert, an automotive journalist; and Bradley Hoffman, President of the Defendant, Hoffman Ford, Inc.; and received exhibits concerning the Plaintiff's motion on April 4th and June 8th, 2004. The Plaintiff filed a posttrial brief in support of his motion on June 27th and the Defendant filed a reply brief opposing the motion on July 18th.
Based upon the evidence presented, and the stipulations of the parties, the court makes the following findings of fact. On February 5, 2004 the Plaintiff entered into a retail purchase order for a motor vehicle with the Defendant for a new 2005 Ford GT 40, the first unit allotted and/or delivered to Hoffman Ford. The sales price was listed as "MSRP + Dealer prep." Dealer preparation charges are charges associated with getting the car ready for delivery and usually run between $100 and $500. The dealer preparation charge is about the same for all new cars. On March 4, 2004 the Plaintiff paid, and the Defendant accepted, a $5,000 deposit on the purchase.
The Ford GT 40 is a limited edition car, a re-creation of a 1960s race car. The car is being first produced in 2005. There is an extra value associated with the first year of a limited edition automobile and a car that has not been registered in the name of an owner has additional value. Scarcity also affects market price. The Defendant dealership has been allotted one 2005 Ford GT 40 for delivery some time in September. The manufacturer's suggested retail price for the car is approximately $156,945. The price necessary to purchase a 2005 Ford GT 40 on the open market is substantially greater than the manufacturer's suggested retail price. Some cars have been available for sale through the internet but at prices starting at $250,000. The open market price of such a car is likely to be double its manufacturer's suggested retail price. However, the Ford GT 40 is not readily available on the open market and it is highly unlikely that the car can be purchased from another dealer.
In November 2004 the Plaintiff's counsel, referencing General Statutes § 42a-2-609, inquired of the Defendant's counsel whether the Defendant will duly perform the contract between them. The Defendant's counsel replied that Hoffman Ford stands ready, willing and able to perform under the contract and that the price of the car, including "dealer prep" is $300,000. Hoffman Ford normally does not charge a "dealer prep" but claims that in this case it was an "availability" surcharge. As a result of this response, this lawsuit was filed. The Defendant now has another offer from another buyer to purchase the car.
"`The principal purpose of a temporary injunction is to preserve the status quo until the rights of the parties can be finally determined after a hearing on the merits.' (Internal quotation marks omitted.) Clinton v. Middlesex Mutual Assurance Co., 37 Conn.App. 269, 270, 655 A.2d 814 (1995)." Rustici v. Malloy, 60 Conn.App. 47, 56, cert. denied 254 Conn. 952 (2000).
"It is well settled in Connecticut that `a plaintiff is entitled to a preliminary or temporary injunction only if that plaintiff proves a reasonable likelihood of success on the merits and irreparable harm to him if the injunction is not issued.' Scatena v. Rowland, 47 Conn.Sup. 251, 253, 785 A.2d 1232 (2001). To demonstrate that she is likely to prevail on the merits, the plaintiff must present enough evidence to make her right clear, but need not put on a full trial on the merits. `[A] temporary injunction is an extraordinary remedy . . . It should not be granted where, among other things, the plaintiff's legal rights are not clear.' (Citation omitted.) Zoning Commission of Sachem's Head Ass'n. v. Leninski, 34 Conn.Sup. 66, 70, 376 A.2d 771 (1976). However, `a hearing on a preliminary injunction is not a forum for a full investigation into the merits of the plaintiffs' claims.' Norwalk CORE v. Norwalk Redevelopment Agency, 296 F.Sup. 456, 459 (D.Conn. 1968) . . .' A finding that a substantial probability of irreparable harm exists requires a two-part analysis: (1) whether there is a substantial probability that the alleged harm will result; and (2) whether the harm, if it occurs, will be irreparable.' International Assn. of Firefighters, Local 786 v. Serrani, 26 Conn.App. 610, 616, 602 A.2d 1067 (1992). Harm is irreparable when it `cannot be adequately compensated in damages or cannot be measured by any pecuniary standard . . .' (Internal quotation marks omitted.) Connecticut Ass'n. of Clinical Labs. v. Connecticut Blue Cross, Inc., 31 Conn.Sup. 110, 113-14, 324 A.2d 288 (1973)." Morytko v. Westfort, Superior Court, Judicial District of New Haven at Meriden, Docket No. CV04 400600S (Tanzer, J., May 31, 2005) ( 39 Conn. L. Rptr. 427).
"In the . . . situation of a temporary injunction to preserve the status quo until the rights of the parties can be determined after a full hearing on the merits, we have said that `the court is called upon to balance the results which may be caused to one party or the other, and if it appears that to deny or dissolve it may result in great harm to the plaintiff and little to the defendant, the court may well exercise its discretion in favor of granting or continuing it, unless indeed, it is very clear that the plaintiff is without legal right.' (Emphasis added.) Olcott v. Pendleton, 128 Conn. 292, 295, 22 A.2d 633 (1941). This criterion necessarily requires consideration of the probable outcome of the litigation. Decisions of our trial courts have frequently referred to the burden of an applicant to show a reasonable degree of probability of success before a temporary injunction to preserve the status quo may be granted. Connecticut State Medical Society v. Connecticut Medical Service, Inc., 29 Conn.Sup. 474, 477-78, 293 A.2d 794 (1971); Hopkins v. Hamden Board of Education, 29 Conn.Sup. 397, 417, 289 A.2d 914 (1971); Torrington Drive-In Corporation v. I.A.T.S.E.M.P.M.O. Local 402, A.F.L., 17 Conn.Sup. 416, 418 (1951). The need to show an irreparable loss unless the status quo is preserved has also been often mentioned. Covenant Radio Corporation v. Ten Eighty Corporation, 35 Conn.Sup. 1, 3, 390 A.2d 949 (1977); Colchester v. Reduction Associates, Inc., 34 Conn.Sup. 177, 185, 382 A.2d 1333 (1977)." Griffin Hospital v. Commission on Hospitals, 196 Conn. 451, 457-58 (1985).
The Plaintiff claims that he has established a probability of success on the merits in that there is a binding contract, the Defendant has repudiated the contract, and he is entitled to specific performance of the contract. The Plaintiff claims that Article 2 of the Uniform Commercial Code ("UCC"), General Statutes §§ 42a-2-101 et seq., applies. The Defendant claims that the UCC does not apply and that there was no meeting of the minds and therefore no contract. In addition, the Defendant claims that the alleged contract does not comply with the provisions of General Statutes § 14-62. The court agrees with the Plaintiff's contentions.
General Statutes § 42a-2-102 provides that the UCC provisions regarding sales shall apply "to transactions in goods." General Statutes § 42a-2-105 defines "goods" as "all things, including specially manufactured goods, which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities covered by article 8 and things in action." It has thus been held that a motorcycle is a movable good within the meaning of this section. Michaud v. Zarillo, Superior Court, Judicial District of New Haven at New Haven, Docket No. CV96 0388490 (Zoarski, J.T.R., Oct. 28, 1996). However, the Appellate Session of the Superior Court held that an automobile is "personal property" within the meaning of General Statutes § 42a-1-206. "The Uniform Commercial Code, General Statutes § 42a-1-206 provides that `a contract for the sale of personal property is not enforceable by way of action or defense beyond five thousand dollars in amount or value of remedy unless there is some writing which indicates that a contract for sale has been made between the parties at a defined or stated price, reasonably identifies the subject matter . . .' `The term "personal property" embraces everything, not coming under the denomination of real estate, which is the subject of ownership and has an exchangeable value.' Austin v. Housing Authority, 143 Conn. 338, 345, 122 A.2d 399 (1956). Unquestionably, a Corvette is personal property which comes within the terms of the statute." Zahornacky v. Edward Chevrolet, Inc., 37 Conn.Sup. 751, 754-55 (1981). Pursuant to subsection (2) of General Statutes § 42a-1-206, its provisions do not apply to contracts for the sale of goods. Contracts for the sales of goods are governed by the provisions of General Statutes § 42a-2-201 et seq. General Statutes § 42a-2-201(1) provides that: "Except as otherwise provided in this section a contract for the sale of goods for the price of five hundred dollars or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing." General Statutes § 42a-2-204 further provides that: "(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. (2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined. (3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy." Here there is no dispute that the contract was in writing and signed by the parties or their representative.
Pursuant to General Statutes § 42a-2-305(1): "The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if (a) nothing is said as to price; or (b) the price is left to be agreed by the parties and they fail to agree; or (c) the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded. (2) A price to be fixed by the seller or by the buyer means a price for him to fix in good faith. (3) When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at his option treat the contract as cancelled or himself fix a reasonable price. (4) Where, however, the parties intend not to be bound unless the price is fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable to do so must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account."
The Defendant agrees that MSRP is a firm number determined by the manufacturer. The question remains as to the amount of "dealer prep" to be added to determine the total price under the contract. The Plaintiff claims that it is ascertainable as an industry standard or usage as demonstrated by the testimony of his expert, Michael Covello, who stated that dealer preparation charges are usually between $100 and $500. The court credited Covello's testimony that "dealer prep" is a nominal surcharge and is a charge for preparation by the dealer of a new car for delivery, as its label connotes. The court did not credit the testimony of the Defendant's witness that "dealer prep" is an availability surcharge, and in this case, well over one hundred thousand dollars. Even the statute cited by the Defendant refers to a dealer preparation charge. General Statutes § 14-62(b) provides that: "No dealer shall include in the selling price a dealer preparation charge for any item or service for which he is reimbursed by the manufacturer or any item or service not specifically ordered by the buyer and itemized on the invoice." (Emphasis added.) "Dealer preparation," although not defined, is also referred to in other statutes dealing with automobile sales and warranties. See, General Statutes § 14-62a and General Statutes § 42-179. Thus, although the term is not defined in the statutes, it has a meaning readily apparent in the automobile sales industry and, the court finds, as the Plaintiff's expert described, it is a charge by the dealer for getting the car ready for delivery, cleaning it, checking the car to determine that is working properly, checking the oil level, tire pressure, etc., and not an arbitrary and grossly excessive availability surcharge, as claimed by the Defendant.
Although the Defendant claims that there was no contract because the parties did not agree on the nature of "dealer prep" charges, the terms of the contract by setting forth a description of the item to be sold and its price is sufficient to satisfy the requirements of the UCC, whether the sale of the car was a sale of personal property or of goods. The price listed was a "defined price," within the meaning of General Statutes § 42a-1-206 or "a price . . . fixed in terms of some agreed market of other standard as set or recorded by a third person or agency" and it is so set.
The Defendant claims that General Statutes § 14-62, rather than the UCC governs the validity of the contract here. That statute, part of the motor vehicle dealers' licensing statutes, states that: "(a) Each sale shall be evidenced by an order properly signed by both the buyer and seller, a copy of which shall be furnished to the buyer when executed, and an invoice upon delivery of the motor vehicle, both of which shall contain the following information: (1) Make of vehicle; (2) year of model, whether sold as new or used, and on invoice the identification number; . . . (4) cash selling price . . ." However, the failure to comply with this statute does not effect the validity of the agreement between the parties but may be the basis for revocation or suspension of a dealer's license or the imposition of a civil penalty on the dealer pursuant to General Statutes § 14-64(7).
It was apparent to the court that there was a meeting of the minds when the deal was made, but because of the increased demand and decrease in supply of the subject automobile, the Defendant is attempting to renegotiate the terms of the original contract which are now unfavorable to it. Therefore the court finds that there is reason to believe that the Plaintiff will succeed on his claim that there is a valid contract for his purchase of the Ford GT 40 from the Defendant.
The Plaintiff claims that the Defendant has now repudiated the contract. The court agrees that the Plaintiff is likely to succeed on such a claim. General Statutes § 42a-2-609 provides that: "(1) A contract for sale imposes an obligation on each party that the other's expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return . . . (4) After receipt of a justified demand failure to provide within a reasonable time not exceeding thirty days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract." In November 2004 the Plaintiff's counsel inquired of the Defendant's counsel whether the Defendant will duly perform the contract between them. The Defendant's counsel replied that Hoffman Ford stands ready, willing and able to perform under the contract and that the price of the car, including "dealer prep" is $300,000. Thus the Defendant demanded a "dealer prep" fee of more than one hundred thousand dollars, this is clearly beyond the price in the contract. Thus the Defendant did not provide due assurance that it would perform the contract pursuant to its terms.
The Plaintiff claims that the Defendant's anticipatory repudiation of the contract and the scarcity of the Ford GT 40 entitles the Plaintiff to specific performance of the contract. "Upon the repudiation of the agreement by [the seller]; see General Statutes 42a-2-609(4); [the buyer] was entitled to `resort to any remedy for breach as provided by . . . section 42a-2-711 [of the General Statutes] . . .' General Statutes 42a-2-610." Universal Builders Corp. v. United Methodist Homes, 7 Conn.App. 318, 323 (1986). General Statutes § 42a-2-711 provides that where the seller has repudiated "the buyer may also . . . in a proper case obtain specific performance . . . as provided in section 42a-2-716." General Statutes § 42a-2-716 provides that: "[s]pecific performance may be decreed where the goods are unique or in other proper circumstances." In a similar case, where a car sought to be purchased by the Plaintiffs was a limited edition, and of short supply, and could not be purchased on the open market without "considerable expense, trouble, loss, great delay and inconvenience," the court held specific performance was an appropriate remedy for breach of the sale contract by the Defendant. Sedmak v. Charlie's Chevrolet, Inc., 622 S.W.2d 694, 699-700 (Missouri Court of Appeals, 1981).
The Defendant claims that the Plaintiff will not be irreparably harmed if the temporary injunction is not issued, and that if he is required to purchase the car from another source he can sue for money damages related to any increase in cost to him. Although this may be an available remedy, the statutes provide for a remedy in the form of specific performance in a situation such as this and which may be lost if a temporary injunction is not issued restraining the Defendant's ability to transfer ownership of the car pending a final determination of this matter on the merits. In addition, it is speculative at best whether the Plaintiff would be able to purchase a similar car in a similar condition. Lastly, the Defendant will not suffer significant harm in delaying sale of the vehicle since, from the evidence presented, it appears that the prospects that the Defendant may be able to sell the vehicle to another buyer at an even higher price if the Defendant ultimately prevails in this matter is great.
Based on the evidence presented, the standards for issuance of a temporary injunction, and in order to preserve the ability of the court to order specific performance of the contract if the Plaintiff prevails after trial, the motion for temporary injunction is granted.
It is hereby ordered that the Defendant is enjoined from transferring ownership and/or possession of the first 2005 Ford GT 40 allotted and/or delivered to the Defendant pending further order of this court.
Jane S. Scholl, J.