Opinion
No. CV 98 0352037 S
January 20, 2005
MEMORANDUM OF DECISION ON DAMAGES
DISCUSSION
On September 7, 2004, this court issued its initial Memorandum of Decision finding the defendant, Thomas Fay doing business as Thomas E. Fay Insurance Adjusters liable to the plaintiff, Vanliner Insurance Company. In brief, the court found that the plaintiff retained the defendant to represent it and its insured, Mail Contractors of America, Inc., regarding a workers' compensation claim filed by the insured's employee, Robert Anastasio. Pursuant to this undertaking, the defendant agreed to take the necessary action to file a notice to transfer Anastasio's workers' compensation claim to the second injury fund, but failed to file the notice within the time limits required by applicable law. As a result of these findings, the court ruled in favor of the plaintiff and against the defendant on the plaintiff's contract and tort claims, and concluded that the defendant was liable to the plaintiff for damages.
See Vanliner Insurance Co. v. Fay, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 98 0352037 (September 7, 2004, Stevens, J.) ( 37 Conn. L. Rptr. 844).
This memorandum addresses the issue of damages and the defendant's special defense that the plaintiff failed to mitigate its damages. Based on a review of the evidence and the parties' memoranda, the court finds that the plaintiff has met its burden of proving damages in the amount of $737,568.
The plaintiff has the burden of proving damages by a preponderance of the evidence. To meet this burden, the plaintiff must provide sufficient evidence to enable the trier to make a fair and reasonable estimate of damages. "Although damages often are not susceptible of exact pecuniary computation and must be left largely to the sound judgment of the trier; Johnson v. Flammia, [ 169 Conn. 491, 500, 363 A.2d 1048 (1975)]; this situation does not invalidate a damage award as long as the evidence affords a basis for a reasonable estimate by the [trier] of that amount. Paiva v. Vanech Heights Construction Co., 159 Conn. 512, 517, 271 A.2d 69 (1970)." (Internal quotation marks omitted.) Leggett Street Limited Partnerhip v. Beacon Industries, 239 Conn. 284, 309, 685 A.2d 305 (1996).
In a negligence action, a plaintiff is entitled to recover all damages proximately caused by a defendant's negligence. Johnson v. Fammia, supra, 169 Conn. 499. In a contract action, a plaintiff "is entitled to compensation which will place him in the same position he would have been in had the contract been properly performed." Levesque v. DM Builders, Inc., 170 Conn 177, 180-81, 365 A.2d 1216 (1976). In the present case, the determination of damages will yield a similar result under either a tort or contract measure of damages.
The plaintiff was obligated to compensate Anastasio for medical and disability payments for the first 104 weeks of disability pursuant to General Statutes § 31-349, and after this time period, the second injury fund would have assumed these payments if the claim had been transferred to the fund. Because the defendant failed to file the notice of transfer within the applicable time period, the plaintiff remained liable for these payments. Consequently, after the 104-week period, the plaintiff made additional payments of $209,085 for temporary total disability compensation and $138,483 for medical expenses. To avoid further, continuing exposure to the claim, the plaintiff negotiated a lump sum settlement with Anastasio for $375,000. These payments total $722,568.
The plaintiff also retained legal counsel to represent it regarding Anastasio's claim in proceedings before the Workers' Compensation Commissioner, the Compensation Review Board and the Connecticut Appellate Court, expending approximately $45,900 for these services. The plaintiff concedes that most of these legal expenses relate solely to the investigation, evaluation and litigation of Anastasio's claim. However, the court agrees with the plaintiff that the evidence establishes that some of these litigation expenses are related to the plaintiff's efforts to have the claim transferred to the fund and that such expenses would have been avoided in the absence of the defendant's breach.
More specifically, because of the fund's refusal to accept the claim, the plaintiff pursued legal proceedings against the fund, culminating in the Appellate Court's decision in favor of the fund. See Anastasio v. Mail Contractors of America, Inc., 69 Conn.App. 385, 794 A.2d 1061, cert. denied, 261 Conn. 914-15, 806 A.2d 1053 (2002). This litigation addressed factual and legal issues that were intricate and novel involving the defendant's claim that the notice was timely filed in February 1994 and the effect of the 1995 statutory amendments retroactively changing the notice requirements; if the defendant had not breached his duty of care, these proceedings regarding the transfer of the claim would have been unnecessary or they would have resulted in a decision transferring the claim to the fund. Based on the evidence submitted by the plaintiff, particularly the testimony of its attorney, Jason Dodge, the court finds that the plaintiff has proven that approximately $15,000 of the litigation expenses were specifically related to these issues. See Falco v. James Peter Associates, Inc., 165 Conn. 442, 445, 335 A.2d 301 (1973) (damages need not be proven with "mathematical exactitude," and a plaintiff is only required to provide the trier with sufficient evidence to make a fair and reasonable estimate).
The plaintiff also seeks to recover $2,269.15 paid to an investigator retained to conduct surveillance of Anastasio and other litigation expenses. The plaintiff has failed to prove that these expenses were incurred specifically in relation to the transfer of the claim to the fund, as compared to the general expenses incurred as part of its investigation and adjudication of Anastasio's claim.
The defendant opposes the recovery of these litigation expenses on the ground that under the American rule parties are required to bear their own litigation costs in the absence of a contract or a statute shifting this burden. See generally, M. DeMatteo Construction Co. v. New London, 236 Conn. 710, 715, 674 A.2d 845 (1996) ("It is a settled principle of our common law that parties are required to bear their own litigation expenses, except as otherwise provided by statute"); News America Marketing In-Store, Inc. v. Marquis, 86 Conn.App. 527 (2004) (expenses incurred for investigation and preparation of the litigation in chief are not recoverable as damages). The defendant's argument is obviously misplaced because the plaintiff is not seeking damages for the litigation costs incurred in the prosecution of the present case, but for those costs incurred as a result of the defendant's wrongful actions. The law is well established that legal expenses, including attorney fees, may be recovered as damages when they are incurred as a result of a party's wrongful conduct. See Celantano v. Oaks Condominium Assn., 265 Conn. 579, 616-18, 830 A.2d 164 (2003) (attorney fees awarded against a party for its breach of the covenant of good faith and fair dealing); Atlantic Mortgage Investment Corp. v. Stephenson, 86 Conn.App. 126, 144-45, 860 A.2d 751 (2004) (same).
The defendant's primary defense to the damages sought by the plaintiff is the defendant's contention that the plaintiff failed to mitigate its damages. In both negligence and breach of contract actions, a party has the duty to take reasonable measures to minimize the damages resulting from a breach. See Preston v. Keith, 217 Conn. 12, 15-16, 584 A.2d 439 (1991); Lynch v. Granby Holdings, Inc., 37 Conn. App. 846, 850 (1995), cert. dismissed, 235 Conn. 941, 669 A.2d 578 (1996). The defendant bears the burden of proof on its failure to mitigate claim, and in order to prevail he "must show that the injured party failed to take reasonable action to lessen the damages; that the damages were in fact enhanced by such failure; and that the damages could have been avoided and can be measured with reasonable certainty. Keans v. Bocciarelli, 35 Conn.App. 239, 243, 645 A.2d 1029, cert. denied, 231 Conn. 934, 650 A.2d 172 (1994).
The defendant's specific argument is that the plaintiff had numerous opportunities to settle Anastasio's claim for amounts much lower than its present damages, but instead, the plaintiff rejected these opportunities and chose to pursue the litigation against the fund. According to the defendant, the plaintiff's failure to settle Anastasio's claim earlier for these lower amounts was unreasonable particularly because of the admittedly low likelihood of prevailing in the case against the fund.
The error in the defendant's reasoning is that without fully prosecuting the action against the fund, the full extent of the defendant's responsibility would have been undetermined. The crux of the proceedings against the fund concerning the transfer of the claim involved the propriety and the consequences of the defendant's actions. This case is, therefore, dissimilar to one in which the injury is clear or established and the injured party fails to take reasonable action to ameliorate the harm. See, e.g . . . Keans v. Bocciarelli, supra, 35 Conn.App. 239. In the present case, the injury was not clear or established until a final determination was made about whether the fund was legally required to accept transfer of the claim, and even after this determination was made by the Appellate Court, the defendant still maintained that he had done nothing wrong.
If the plaintiff's action against the fund had been successful, the entire liability would have been transferred to the fund, resulting in the ultimate mitigation in favor of both the plaintiff and the defendant. On the other hand, if the plaintiff had settled Anastasio's claim before a final judgment in this action, the plaintiff would have been exposed to a claim from the defendant that the plaintiff had abandoned the possibility of having the entire claim transferred to the fund or that the plaintiff had waived its claims against the defendant.
An evaluation of whether to settle or prosecute a case often involves such subtle and judgmental considerations, and the court cannot say that under the circumstances here, especially considering the novel issues presented in the fund litigation, that the failure to settle the case constitutes a failure to mitigate damages. In order to satisfy its duty to mitigate damages, the plaintiff is not required to take action that would undermine or compromise its legal right or ability to assert its claim for damages. The law only requires an injured party to take such actions that are reasonable in order to mitigate damages, and under the facts presented, prosecution of the case against the fund was not an unreasonable course of action. See Ann Howard's Apricots Restaurant, Inc. v. Commission on Human Rights Opportunities. 237 Conn. 209, 229, 676 A.2d 844 (1996) ("We have often said in the contracts and torts contexts that the party receiving a damage award has a duty to make reasonable efforts to mitigate damages. What constitutes a reasonable effort under the circumstances of a particular case is a question of fact for the trier.")
As Judge Hastie wrote in In re Kellett Aircraft Corp., 186 F.2d 197, 198-99 (3d Cir. 1950): "Where a choice has been required between two reasonable courses, the person whose wrong forced the choice cannot complain that one rather than the other was chosen. [Citing McCormick on Damages, page 530 § 35 (1935).] The rule of mitigation of damages may not be invoked by a contract breaker as a basis for the hypercritical examination of the conduct of the injured party, or merely for the purpose of showing that the injured person might have taken steps which seemed wiser or would have been more advantageous to the defaulter. One is not obligated to exalt the interest of the defaulter to his own probable detriment."
The defendant's last argument concerns the plaintiff's failure to pay the $2,000 notification fee. As discussed in this court's earlier Memorandum of Decision, the requirements for filing the notice of transfer retroactively changed as a result of the 1995 statutory amendments. The amended statute required a $2,000 fee which was not paid by the plaintiff. The defendant claims that the plaintiff breached its duty to mitigate its damages by deciding to pursue the litigation against the fund, rather than paying this fee to effectuate the transfer of the claim to the fund. These contentions have numerous problems.
First, the defendant, as part of his agreement with the plaintiff, was charged with the responsibility to file the notice of transfer. The defendant essentially concedes that the plaintiff relied on his expertise to determine the appropriate manner to file the notice of transfer; see defendant's memorandum of law in support of motion for reconsideration of court ruling re: liability, p. 3; and the court has rejected as meritless the defendant's allegation that he had no continuing responsibility regarding Anastasio's claim after 1994. Vanliner Insurance Co. v. Fay, supra, Superior Court, 37 Conn. L. Rptr. 847, 849-50. The defendant did not pay the $2,000 fee on behalf of the plaintiff or advise the plaintiff about any need to pay the fee in light of his 1994 filing of the notice of transfer. See generally, Loyal Christian Benefit Ass'n v. Bender, 342 Pa.Super. 614, 620, 493 A.2d 760 (1985) ("The injured party is not obligated to mitigate damages where both he and the liable party have an equal opportunity to reduce damages").
Furthermore, the court has found that the plaintiff would have paid the fee in 1995 if it had appreciated the need to pay it at that time, but it did not. Vanliner Insurance Co. v. Fay, supra, Superior Court, 37 Conn. L. Rptr. 847. In 1995, the plaintiff was unaware that any damages existed that needed to be mitigated.
The parties concede that in 1997 the plaintiff became aware of the problem concerning the timeliness of the notice of transfer, and the plaintiff did not pay the fee in 1997 either. In support of its mitigation claim, however, the defendant has failed to show that the fund would have accepted the fee at that time or was legally obligated to accept the fee then. Indeed, this court has found that any tender of the fee two years after the statutory amendments would have been too long a delay. Vanliner Insurance Co. v. Fay, supra, Superior Court, 37 Conn. L. Rptr. 847.
In summary, the court finds that the defendant has failed to meet its burden of proving its defense that the plaintiff failed to mitigate its damages.
CONCLUSION
Therefore, the court finds in favor of the plaintiff, Vanliner Insurance Company, and against the defendant, Thomas Fay, doing business as Thomas E. Fay Insurance Adjusters, and awards damages in favor of the plaintiff and against the defendant in the amount of $737,568, plus costs.
So ordered this 20th day of January 2005.
STEVENS, J.