Opinion
No. CV 08-5003492 S
March 23, 2010
MEMORANDUM OF DECISION
This matter is before the court on a complaint, dated April 8, 2008, brought by the plaintiff, Kirtida Zatakia. The defendant, Ecoair Corp., filed an answer and special defenses, and the matter was tried before the court on March 5, 2010, and both parties were thereafter given the opportunity to file briefs.
This is an action on a promissory note. The court heard testimony only from Peter Knudsen, the Chief Executive Officer of the defendant. From the evidence and testimony adduced at trial, and the reasonable inferences drawn therefrom, the court makes the following findings of facts and conclusions of law.
During the 1990s until present, the defendant, Ecoair Corp. (hereinafter "Ecoair"), was a Delaware corporation doing business in Connecticut and engaged in the production of air conditioner components. During 1992, the defendant entered into agreements with Globe Scott Motors Private Limited, (hereinafter "Globe"), a corporation existing and operating in Bombay India. Globe performed engineering services from 1992 to 1995 for Ecoair. On March 2, 1995, Ecoair, acting through its executive vice president and secretary, William Lavelle, executed a promissory note in the amount of $125,000.00 in consideration for past due services. The note was renegotiated on November 15, 1996. The basic terms of that note call for an amount of $125,000.00, payable on October 2, 1997, with monthly interest payments due at a rate of 10% per annum. No evidence was presented at trial indicating that any principle or monthly payments ever being paid, except a $2,000 payment apparently made in 1997.
During the 1990s, Rajan Zatakia was a director of Globe and the apparently the principal manager of its operations. His wife, the plaintiff, Kirtida Zatakia was also a director. Shortly after Ecoair executed its promissory note with Globe in November 1996, Rajan Zatakia died. Thereafter, on April 26, 2001, the plaintiff purchased the Ecoair/Globe promissory note from Globe for 25,000 Rupees, which apparently was a substantial discount from the original $125,000.00 amount. The agreement executed by the plaintiff with Globe, whereby she was assigned the note, indicated that there were "certain disputes and differences and recently there has been no response whatsoever from Ecoair" to Globe.
Thereafter, the plaintiff, by letter dated August 28, 2001, made demand on the defendant for payment on the note. No subsequent payment was ever tendered by the defendant. However, the defendant, by letter executed by Peter Knudsen dated September 26, 2001, clearly acknowledged the debt and the assignment of the note to the plaintiff. That correspondence also indicated "we have not had the ability to make any payments on your note even though I would like very much to reach a financial settlement with you." Such qualification in an acknowledgment has long been held to be insufficient to avoid any indebtedness, see Foster v. Smith, 52 Conn. 449, 451-52 (1885).
The plaintiff initiated this action on April 8, 2008. The defendant has raised the statute of limitations as a special defense, citing both C.G.S. §§ 42a-3-118 and 52-576, which both call for a six year limitation period. Clearly, if the court looks solely at the September 26, 2001, letter by the defendant and the date of the plaintiff filing suit, both statutes have run.
However, the plaintiff has produced a letter signed by Peter Knudsen on the defendant's letterhead, dated October 3, 2005, which was sent to her by T.M. Byxbee Company, P.C., who were auditors of the defendant's books. The letter states in relevant part as follows: "Our auditors, T.M. Byxbee Company, P.C., are conducting an audit of our financial statements. Please confirm directly to them the following information relating to our note payable to you at September 30, 2005: date of note: March 2, 1995; Original amount of note $125,000.00; Unpaid principle balance $125,000.00; Maturity date: October 2, 1997; Interest rate 10%; Date to which interest has been paid: April 28, 1996 . . . Please indicate in the space provided below whether the above is in agreement with your records. If it is not, please furnish our auditors any information you may have that will help them reconcile the difference."
No evidence was presented indicating that the plaintiff either agreed with, or disputed the information.
At issue is whether the October 3, 2005, letter constitutes a reaffirmation sufficient to remove the bar of the statute of limitations. "The Statute of Limitations creates a defense to an action. It does not erase the debt. Hence, the defense can be lost by an unequivocal acknowledgment of the debt, such as a new promise, an unqualified recognition of the debt, or a payment on account." Cadle Co. v. Errato, 71 Conn.App. 447, 461 (2002). "A general acknowledgment of an indebtedness may be sufficient to remove the bar of the statute. The governing principle is this: The determination of whether a sufficient acknowledgment has been made depends upon proof that the defendant has by an express or implied recognition of the debt voluntarily renounced the protection of the statute . . . But an implication of a promise to pay cannot arise if it appears that although the debt was directly acknowledged, this acknowledgment was accompanied by expressions which showed that the defendant did not intend to pay it, and did not intend to deprive himself of the right to rely on the Statute of Limitations." (Citations omitted; emphasis added; internal quotation marks omitted.) Gianetti v. United Healthcare, 99 Conn.App. 136, 144 (2007).
The October 3, 2005 letter, while prepared by the defendant's auditors, was written on the defendant's letterhead and signed by the defendant's CEO. It clearly delineates the terms of the note and refers to it as "our note payable to you." The court finds the correspondence as a clear acknowledgment of the indebtedness. Further, nothing in the correspondence indicates that the defendant did not intend to pay the debt, or that it intended to rely on any statute of limitations. As such, the court finds that statute of limitations is not a bar to the indebtedness, and the defendant is liable for the note and existing debt.
As for damages, the plaintiff offered no testimony as to any calculation of the debt. Instead, the plaintiff offered an affidavit, signed by the plaintiff, which was submitted with the post-trial brief. The defendant objects to the untimely filing of the affidavit. Since the defendant would be deprived of any cross-examination of the plaintiff, the court sustains the defendant's objection and will not consider the affidavit of debt, nor does it consider any affidavits or exhibits not properly presented at trial.
Nonetheless, in order to assess damages, the court has before it several exhibits, specifically the note and subsequent signed agreement dated November 15, 1996, as well as the testimony of Peter Knudsen, the CEO of the defendant.
The original note, dated March 2, 1995, called for payment of $125,000.00 on March 2, 1996, with a rate of interest of 10% per annum. The due date of the note was extended by written agreement to October 2, 1997, which called for monthly interest payments in the interim. From the testimony and exhibits considered, the court finds that no interest payments were ever made, with the exception of a $2,000 payment in 1997. The note does not call for compounding of interest; however a monthly late charge of $104.17 was agreed to on any late interest payments until the note was paid in full.
The court calculates damages as follows:
Note $125,000.00 Simple Interest @10% (3-2-95 to 3-22-10) 175,821.92 Late charges (12-96 to 3-10, 159 months x $104.17) 16,563.03 Less: $2,000 payment in 1997 (2,000.00)The court finds the issues and renders judgment in favor of the plaintiff and awards total monetary damages in the amount of $315,384.95.