Court Opinion

ID: 7858109
Source: CourtListenerOpinion
Date Created: 2022-09-08 17:48:20.955349+00
Date Added: 2024-06-11T16:30:00.355021
License: Public Domain

LAVERY, J.,
dissenting. I concur with part II of the majority opinion affirming the trial court’s judgment on the named defendant’s cross appeal. Because the facts of this case reveal manifest injustice and represent the very essence of what the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., was intended to redress, I respectfully dissent from part I of the majority opinion.
The jury found that the plaintiffs proved each material element of their claim that the defendant’s actions violated CUTPA. Because the interrogatories submitted to the jury were general in nature, I will “presume that the jury found every issue in favor of the prevailing party.” Finley v. Aetna Life & Casualty Co., 202 Conn. 190, 202, 520 A.2d 208 (1987). That is, the jury found that not only did the defendant’s actions regarding the sale of the Branford car wash violate CUTPA, but also that his actions with respect to the stipulated judgment were in violation of CUTPA.
More specifically, the jury reasonably could have found that on December 5, 1989, the plaintiffs purchased a car wash business located in Branford from *216the defendant for $903,000.1 The plaintiffs were required to pay the defendant $453,000 prior to or at the closing and to sign a $450,000 promissory note payable to the defendant. The car wash was located on property owned by the defendant, and the plaintiffs were required to enter into a twenty-five year lease of the property. The defendant also had a security interest in the various assets and equipment of the car wash. The purchase agreement, promissory note, lease and security agreement all contained cross default provisions.
The defendant made numerous representations with respect to the car wash as to the number of cars serviced per year, the gross annual income from the business and its profitability. The defendant knew that the representations were false and that the immigrant plaintiffs had no prior experience in the car wash business. The plaintiffs asked to see books and records of the car wash, but the defendant told them there were no such records because the car wash was a “cash business.”
After three months of operation, the plaintiffs reported to the defendant that the volume of business was much smaller than he had represented and generated too little income to pay the rent and promissory note installments. The defendant told the plaintiffs not to worry about the mortgage payments, and blamed the low volume of business on the weather and business conditions in general. When the plaintiffs fell behind on the rent and note, they demanded their money back. Because the defendant threatened them with eviction, which would trigger all of the cross defaults, the plaintiffs refinanced their home for $30,000 to pay the arrearage. The car wash continued to lose money. The plaintiffs once more fell behind in their payments and told the defendant they could no longer subsidize the *217car wash losses. The defendant then commenced a summary process action against the plaintiffs to evict them from the premises and for judgment on the promissory note.
While the summary process action was pending, the defendant offered to settle the suit. The defendant dictated the terms of the settlement. The plaintiffs were to return the car wash and to permit a stipulated judgment on the promissory note to enter against them. In return, the defendant promised to forgive the plaintiffs’ debts on the car wash, pay the plaintiffs’ attorney’s fees and transfer to the plaintiffs a car wash business he owned in Hamden. The defendant made numerous representations to the plaintiffs with respect to the profitability of the Hamden car wash. The defendant, however, insisted that, for “tax purposes,” no mention of the transfer of the Hamden car wash could be made as part of the stipulated judgment. The attorney’s fees and forgiveness of debt were also not incorporated in the stipulated judgment.
Before the plaintiffs signed the settlement agreement, the defendant represented to them that he had signed the papers necessary to transfer the Hamden car wash and to release them from all liability and claims. The plaintiffs and the defendant agreed to transfer the car wash businesses simultaneously. The plaintiffs and the defendant agreed that the stipulated judgment would neither be filed nor take effect until the defendant transferred the Hamden car wash and signed the release.
The defendant not only failed to transfer the Hamden car wash to the plaintiffs, but also failed to release the plaintiffs and caused the stipulated judgment to enter on July 29, 1991. After the defendant locked the plaintiffs out of the Branford car wash, he operated it and the Hamden car wash until he filed a petition in bankruptcy with respect to the Hamden car wash on November 15, *2181991. He also did not pay the plaintiffs’ attorney’s fees as promised.
The following procedural facts are also relevant. Paragraph forty-one of the fourth count of the complaint alleges that the “ [defendants’2 conduct described above constituted unfair and deceptive acts and practices in the conduct of trade or commerce in violation of [CUTPA], the use and employment of which resulted in ascertainable loss of money to the [plaintiffs].” The amended complaint prays for the following relief: “compensatory damages; punitive damages; multiple damages; rescission; estoppel; constructive trust; disgorgement; accounting, costs, expenses, including attorney’s fees, and prejudgment interest; and such other and further relief as the court deems just and proper.”
The parties agreed that liability with respect to the first (fraud), fourth (CUTPA) and eighth (theft) counts would be decided by the jury, and that the court would decide liability with respect to the third (rescission) and fifth (unjust enrichment) counts, and the remedy with respect to any counts for which the defendant was found liable by the jury. Interrogatories were submitted to the jury, which found in favor of the plaintiffs on the CUTPA count,3 without interest, and for the defendant on the fraud and theft counts. The court directed a verdict with respect to the second, sixth, seventh, ninth, tenth, eleventh and twelfth counts of the amended complaint. The trial court rendered judgment in favor of the defendant on the rescission and unjust enrichment counts.4
*219By memorandum of decision dated February 16,1996, the trial court awarded the plaintiffs restitution in the amount of $483,000 and attorney’s fees of $80,000 as their remedy for the defendant’s CUTPA violation. The trial court declined, however, to rescind the stipulated judgment because the plaintiffs failed to move to open it within four months.
In summary, although he must return some of the funds paid to him by the plaintiffs and pay their attorney’s fees, the defendant, who was found by the jury to have violated, CUTPA, still owns both the Branford and Hamden car wash businesses, has the $453,000 deposit and is the plaintiffs’ judgment creditor in the amount of $448,598.18 plus interest at 10 percent per annum since July 29, 1991, because the trial court refused to rescind the stipulated judgment.
The issue before this court is whether the trial court had the power to rescind the stipulated judgment on the basis of the jury’s finding that the procurement of the stipulated judgment by the defendant was in violation of CUTPA. Because I would find that the restitution awarded by the trial court is not equitable and results in an injustice, I respectfully dissent.
“In an equitable proceeding, the trial court may examine all relevant factors, to ensure that complete justice is done. Reynolds v. Ramos, 188 Conn. 316, 320, 449 A.2d 182 (1982). The determination of what equity requires in a particular case, the balancing of the equities, is a matter for the discretion of the trial court. Kakalik v. Bernardo, 184 Conn. 386, 395, 439 A.2d 1016 (1981). Harbour Landing Development Corporation v. Herman, 27 Conn. App. 98, 101-102, 603 A.2d 779 (1992). Our review is quite limited, and is usually confined to a determination of whether the trial court’s decision to *220award the particular equitable relief was reasonable. Reynolds v. Ramos, supra, 321. ... On appellate review, the ultimate issue is whether, according to recognized principles of equity, abuse of discretion is manifest or an injustice appears to have been done. Thomas v. Thomas, 159 Conn. 477, 480, 271 A.2d 62 (1970).” (Citation omitted; internal quotation marks omitted.) Banthin v. Shoreline Plumbing & Heating Supply Corp., 30 Conn. App. 637, 640, 621 A.2d 769 (1993). Where the proceedings are equitable and the statute is remedial in nature, a trial court’s refusal to open a judgment must “be consistent with the authority conferred upon that court ‘to modify the terms of the judgment in order to achieve an outcome fairer to the parties than provided by the original judgment in light of conditions as they appear when the motion to open is decided. . . . [Ejither a forfeiture or a windfall should be avoided if possible.’ Farmers & Mechanics Savings Bank v. Sullivan, 216 Conn. 341, 352-54, 579 A.2d 1054 (1990) . . . .” (Citations omitted.) Society for Savings v. Stramaglia, 225 Conn. 105, 110, 621 A.2d 1317 (1993).
“CUTPA was first enacted in 1973. It was originally intended to be the state’s counterpart to the Federal Trade Commission Act. R. Langer & D. Ormstedt, ‘The Connecticut Unfair Trade Practices Act,’ 54 Conn. B. J. 388, 389 (1980). The purpose of the statute was to provide a meaningful avenue of redress for consumers who had been victims of unfair or deceptive trade practices by providing for private as well as public enforcement.” Gill v. Petrazzuoli Bros., Inc., 10 Conn. App. 22, 31-32, 521 A.2d 212 (1987).
Section 42-110b (d) provides: “It is the intention of the legislature that this chapter be remedial and be so construed.” “Remedial statutes are to be liberally construed in favor of those whom the legislature intended to benefit. Hartford Fire Ins. Co. v. Brown, 164 Conn. 497, 503, 325 A.2d 228 (1973).” Hinchliffe v. *221American Motors Corp., 184 Conn. 607, 615 n.4, 440 A.2d 810 (1981). “The importance of equitable remedies to the CUTPA scheme is underscored by the fact that equitable relief is expressly provided for in two separate parts of the statute. General Statutes § 42-1 lOg (a) and (d).” Hinchliffe v. American Motors Corp., supra, 618.
Section 42-1 lOg provides in relevant part: “(a) Any 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, may bring an action .... The court may, in its discretion . . . provide such equitable relief as it deems necessary or proper. ... (d) ... In any action brought under this section, the court may, in its discretion, order, in addition to damages or in lieu of damages, injunctive or other equitable relief. . . (Emphasis added.)
Our Supreme Court addressed the nature of the equitable remedies applicable to CUTPA cases at some length in Associated Investment Co. Ltd. Partnership v. Williams Associates IV, 230 Conn. 148, 645 A.2d 505 (1994). “Our conclusion that CUTPA does not give rise to a legal cause of action grounded in the common law comports with the essentially equitable character of the statutory scheme. Equity may be described as a system of positive jurisprudence founded upon established principles which can be adapted to new circumstances where a court of law is powerless to give relief. Harper v. Adametz, 142 Conn. 218, 223, 113 A.2d 136 (1955). A hallmark of equity is its capacity of expansion [beyond the common law], so as to keep abreast of each succeeding generation and age. 1J. Pomeroy, Equity Jurisprudence (5th Ed. 1941) § 67, p. 89. CUTPA, like equity, reaches beyond traditional common law precepts in establishing a fairness standard designed to grow and broaden and mold [itself] to meet circumstances as they arise . . . . M. Handler, The Jurisdiction of the Federal *222Trade Commission Over False Advertising, 31 Colum. L. Rev. 527, 535 (1931). The resolution of claims requiring the application of broadly defined and deeply rooted public values such as the statute’s elusive, but [legislatively] mandated standard of fairness; Federal Trade Commission v. Sperry & Hutchinson Co., [405 U.S. 233, 244, 92 S. Ct. 898, 31 L. Ed. 2d 170 (1972)]; has historically been the function of a court of equity. 1 J. Pomeroy, supra, §§ 59, 67.” (Internal quotation marks omitted.) Associated Investment Co. Ltd. Partnership v. Williams Associates IV, supra, 159.
“The significance of the broad equitable remedies authorized under CUTPA is underscored by the express language of § 42-1 lOg (d), which in affording the court discretion to order injunctive and other equitable relief in lieu of damages, ‘contemplates plaintiffs’ judgments which do not include an award of money damages.’ [Hinchliffe v. American Motors Corp., supra, 184 Conn. 618].” (Emphasis in original.) Associated Investment Co. Ltd. Partnership v. Williams Associates IV, supra, 230 Conn. 160. In short, the expansive scheme of CUTPA provides “ ‘an action more flexible and a remedy more complete than did the common law’; Hinchliffe v. American Motors Corp., [supra, 617] . . . .” Associated Investment Co. Ltd. Partnership v. Williams Associates IV, supra, 156.
This court discussed the equitable remedy of rescission in the context of a misrepresentation in a land transaction in the case of Kavarco v. T.J.E., Inc., 2 Conn. App. 294, 478 A.2d 257 (1984).5 “Rescission of a contract is an appropriate remedy if there has been a material misrepresentation of fact upon which a party relied and which caused it to enter the contract. State *223v. Hartford Accident & Indemnity Co., 136 Conn. 157, 167, 70 A.2d 109 (1949). The material misrepresentation, when made in connection with the sale of land, may be an innocent misrepresentation. Slocum v. Leffler, 272 Or. 700, 701, 538 P.2d 906 (1975); see Albany Motor Inn & Restaurant, Inc. v. Watkins, 85 App. Div. 2d 797, 798, 445 N.Y.S.2d 616 (1981). At the option of the defrauded party, where there has been fraud in the inducement of the contract, the contract is voidable or subjects the defrauding party to a suit for damages. A. Sangivanni & Sons v. F.M. Floryan & Co., 158 Conn. 467, 472, 262 A.2d 159 (1969). The party defrauded has the option of electing either to rescind the contract or to claim damages for the breach of the contract. Pacelli Bros. Transportation, Inc. v. Pacelli, 189 Conn. 401, 409-10, 456 A.2d 325 (1983). To seek rescission is to waive any claim for damages arising from a breach of the contract. Duksa v. Middletown, 192 Conn. 191, 197, 472 A.2d 1 (1984). The remedy of rescission and restitution is an alternative to damages in an action for breach of contract. 12 Williston, Contracts (3d Ed. Jaeger) § 1455, p. 14. Rescission, simply stated, is the unmaking of a contract. It is a renouncement of the contract and any property obtained pursuant to the contract, and places the parties, as nearly as possible, in the same situation as existed just prior to the execution of the contract. A condition precedent to rescission is the offer to restore the other party to its former condition as nearly as possible. Duksa v. Middletown, supra [197]; Keyes v. Brown, 155 Conn. 469, 476, 232 A. 2d 486 (1967).” Kavarco v. T.J.E., Inc., supra, 298-99.6
Kavarco is particularly instructive with respect to the facts and the equities of the case now before this court. In Kavarco, the plaintiffs’ claim for relief was basically rescission. “Their complaint alleges that their *224purchase was induced by the representation of the defendants to them that the defendants would develop or allow to be developed the surrounding lots in the subdivision as single family residences. It is undisputed that at the time of the conveyance to the plaintiffs all of the lots, including the one conveyed to them, were actually located in a multiple family zone under existing zoning laws, and that the warranty deed conveying title to them stated that the premises were conveyed subject to the ‘limitations of use imposed by governmental authority.’ The offer to purchase signed by the parties stated that the buyers did not rely on any representations not contained in the document.” Id., 297. “After the conveyance to the plaintiffs, the defendants, in fact, constructed a multi-family dwelling within the subdivision and obtained permits to construct multi-family dwellings on other lots within the subdivision.” Id., 300.
“ ‘Fraud vitiates all contracts, written or verbal and sealed or unsealed.’ Feltz v. Walker, 49 Conn. 93, 98 (1881). This principle is certainly applicable to the stipulated judgment . . . relied upon by the defendant in this case.” Pacelli Bros. Transportation, Inc. v.Pacelli, supra, 189 Conn. 409. “The distinction between fraud in the form of an express misrepresentation and in the form of nondisclosure becomes significant where a damage award rather than avoidance of the contract is the remedy sought. Although a cause of action sounding in fraud was cognizable both at law and in equity, courts exercising equitable jurisdiction broadened the legal conception of fraud as an affirmative misrepresentation to include more subtle guises, such as nondisclosure. 37 Am. Jur. 2d, Fraud and Deceit § 326. That there may be a fraud in the view of a court of equity, which is not so at law, has long since been declared. Broome v. Beers, 6 Conn. 198, 211 (1826). Fraud, indeed, as known to equity jurisprudence, properly includes all acts, omissions and concealments, by which an undue *225and unconscientious advantage is taken of another. . . . Story v. Norwich & Worcester R. Co., 24 Conn. 94, 113-14 (1855).” (Internal quotation marks omitted.) Pacelli Bros. Transportation, Inc. v. Pacelli, supra, 410.
Such is the case now before this court where the defendant induced the plaintiffs to enter into the stipulated judgment, in part, with a promise to transfer ownership of the Hamden car wash to the plaintiffs, pay their attorney’s fees and forgive all debts related to the Branford car wash. The defendant never transferred ownership of the Hamden car wash to the plaintiffs but took it into bankruptcy. The defendant also never forgave the plaintiffs’ debts or paid their attorney. “A representation about a promise to do something in the future, when linked with a present intention not to do it, is a false representation. Paiva v. Vanech Heights Construction Co., 159 Conn. 512, 515, 271 A.2d 69 (1970).” Kavarco v. T.J.E., Inc., supra, 2 Conn. App. 300.
On the facts before it here, the trial court, sitting as a court of equity pursuant to CUTPA, had the authority to rescind the original contract for the sale of the Bran-ford car wash and the contract for the stipulated judgment in light of the jury’s finding that the defendant’s behavior was in violation of CUTPA. Instead, the trial court held that it would not rescind the stipulated judgment because the plaintiffs had failed to move to open the judgment within four months of the judgment’s having been entered. This holding permits the defendant further to exploit the plaintiffs to whom he said that he would transfer the Hamden car wash, only to put the business in bankruptcy two weeks before the end of the four month period in which to open the stipulated judgment.7
*226“The recent weight of authority is that the right to rescind a contract for the sale of land, or a contract for the sale of a business, or a lease, is not necessarily destroyed because the buyer failed to make an independent investigation which would have revealed that the representation upon which he relied was false. See Pacelli Bros. Transportation, Inc. v. Pacelli, supra, [189 Conn.] 409; Besett v. Basnett, 389 So. 2d 995, 998 (Fla. 1980); National Conversion Corporation v. Cedar Building Corporation, 23 N.Y.2d 621, 627-28, 246 N.E.2d 351, 298 N.Y.S.2d 499 (1969); Slocum v. Leffler, supra, [272 Or. 704]; Wilson v. Zimmerman, 261 Or. 528, 532-33, 495 P.2d 713 (1972).
“To shield a seller with a buyer’s negligence in not finding out whether the representation was true or false would be to give a seller the fruit of his falsehood. The defendants’ argument raises the issue of whether the law should choose either to allow the person who fraudulently misrepresented a basic fact to use the armament of caveat emptor to escape liability, or not to require the person to whom the misrepresentation was made to conduct an independent investigation as to the truth of an ascertainable fact. The Restatement chooses the latter. 2 Restatement (Second), Torts § 540. This court does also.” Kavarco v. T.J.E., Inc., supra, 2 Conn. App. 301-302.
In this case, I would not permit the defendant, who did not disclose the records of the Branford car wash to the plaintiffs because it was a “cash business” and who, for “tax reasons,” did not want to include the transfer of the Hamden car wash in the stipulated judgment, to take advantage of the plaintiffs’ having neglected to open the stipulated judgment within four months. The trial court, acting within its equitable powers, could easily have granted the plaintiffs’ motion to *227consolidate its motion to open the stipulated judgment8 with the trial of this case and rescinded the stipulated judgment as partial remedy for the defendant’s CUTPA violation. Its failure to do so has granted the defendant a windfall.
The case in which the stipulated judgment entered was a summary process action. Our Supreme Court has held that equity applies in summary process actions. See Fellows v. Martin, 217 Conn. 57, 584 A.2d 458 (1991). “[E]quity abhors ... a forfeiture. Menzies v. Fisher, 165 Conn. 338, 357, 334 A.2d 452 (1973) [House, C. J., dissenting], quoting Pierce v. Staub, 78 Conn. 459, 466, 62 A. 760 (1906); Sheets v Selden, 74 U.S. (7 Wall.) 416, 421, 19 L. Ed. 166 (1868). It is well settled that equity will relieve against the forfeiture of a lease for nonpayment of rent. Kann v. King, 204 U.S. 43, 27 S. Ct. 213, 51 L. Ed. 360 (1907); Sheets v. Seldon, supra, 421; 1 Restatement (Second), Property, Landlord and Tenant § 12.1, comment (n); J. Eaton, Handbook of Equity Jurisprudence (2d Ed.) § 27; II. McClintock, Handbook of Equity § 31; 2 J. Pomeroy, Equity Jurisprudence as Administered in the United States of America (5th Ed.) § 453; 3 J. Story, Equity Jurisprudence (14th Ed.) § 1727; see Nicoli v. Frouge Corporation, 171 Conn. 245, 246, 368 A.2d 74 (1976); Thompson v. Coe, 96 Conn. 644, 115 A. 219 (1921). This ancient principle allows relief because [i]n reason, in conscience, in natural equity, there is no ground to say because a man has stipulated for a penalty in case of his omission to do a particular-act (the real object of the parties being the performance of the act), that if he omits to do the act he shall suffer an enormous loss wholly disproportionate to the injury to the other party. 3 J. Story, supra, § 1728. The penalty is the forfeiture of the leasehold, imposed for omission to do a particular act, that is, to pay rent; if the payment *228may be secured without a forfeiture, equity will not permit a forfeiture. J. Eaton, supra, § 34; 2 M. Friedman, Leases (2d Ed. 1983) § 16.2; H. McClintock, supra, § 31; J. Story, supra [§ 1728]; 2 J. Taylor, American Law of Landlord and Tenant (9th Ed.) § 495; 2 H. Tiffany, Law of Landlord and Tenant § 194 (3).” (Internal quotation marks omitted.) Fellows v. Martin, supra, 65-66.
In this case, the defendant’s position is much improved over that he was in before he sold the Bran-ford car wash to the plaintiffs. He has the $453,000 down payment. The Branford car wash was returned to him, as well as the personal property in which he had a security interest, and he is free to lease or operate the business. The defendant has a stipulated judgment of $448,598.18 with postjudgment interest. The amount due under the stipulated judgment exceeds the amount of the CUTPA award to the plaintiffs. The plaintiffs, however, are in a worse position than they were in before the sale. They have forfeited their deposit, they owe more on the stipulated judgment than was awarded them for the defendant’s CUTPA violation and they have no car wash business.
Therefore, I would find that under CUTPA the trial court had the authority to rescind the entire transaction, including the stipulated judgment, and to order restitution to make the plaintiffs whole. See Associated Investment Co. Ltd. Partnership v. Williams Associates IV, supra, 230 Conn. 148; Hinchliffe v. American Motors Corp., supra, 184 Conn. 607. I would reverse the judgment and remand this case to the trial court to give the plaintiffs a new hearing in damages consistent with this opinion.
Accordingly, I dissent.

 The Branford car wash business was actually purchased from Raindance, Inc., a corporation owned and controlled by the defendant.

 The plaintiffs sued two additional parties but withdrew the complaint as to those individuals prior to trial.

 The interrogatories were general in nature and did not indicate which of the alleged actions by the defendant, if not all, the jury considered to be in violation of CUTPA.

 The plaintiffs did not ask the trial court to articulate its factual and legal basis for rendering judgment in favor of the defendant on the rescission *219and unjust enrichment counts. Therefore, we do not review the judgment on those counts.

 This court found that the trial court improperly failed to mention in its memorandum of decision the burden of proof it applied to the allegation of fraud and remanded the case for a new trial. Kavarco v. T.J.E., Inc., supra, 2 Conn. App. 296, 302.

 The plaintiffs in the present case actually returned the subject business and properly to the defendant prior to commencing suit.

 The stipulated judgment was entered July 29, 1991; the petition in bankruptcy was filed November 15, 1991. There is no evidence as to when the plaintiffs learned of the filing. I do note that the plaintiffs were not listed as creditors on the bankruptcy petition.

 The plaintiffs filed a motion to open the stipulated judgment on September 27, 1993.