Miller v. Guimaraes

78 Conn. App. 760

829 A.2d 422

LAYNE R. MILLER ET AL. v. PETER GUIMARAES ET AL.

(AC 23032)

Appellate Court of Connecticut

Argued May 5, 2003.

Officially released August 19, 2003.

Dranginis, Bishop and West, Js. Jon L. Schoenhorn, with whom, on the brief, was Matthew D. Dyer, for the appellants-cross appellees (defendants).

Mark S. Rosenblit, for the appellees-cross appellants (plaintiffs).

Opinion

BISHOP, J.

The defendants, Peter Guimaraes and Guimaraes Construction, Inc., appeal from the judgment of the trial court rendered in favor of the plaintiffs, Layne R. Miller and Paula Miller, in connection with an agreement between the parties for the sale of a lot and the construction of a residential dwelling on it. The defendants claim that the court improperly determined (1) that they breached the contract with the plaintiffs and that Peter Guimaraes is personally liable for the breach, (2) that they violated the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., by failing to disclose that the building lot on which the house was to be constructed was in the name of a third party, (3) that they breached their implied duty of good faith and fair dealing, (4) that their refusal to return the plaintiffs' deposit constituted the tort of conversion, and (5) that the plaintiffs were entitled to an award of attorney's fees and costs.¹ In their cross appeal, the plaintiffs challenge the determination by the court that the defendants did not perpetrate a fraud by misrepresentation or nondisclosure. The judgment of the trial court is affirmed in part and reversed in part.

The following facts and procedural history are relevant to our discussion of the issues. On or about the second week of February, 1999, the plaintiffs, who are husband and wife, were driving by a subdivision that was being constructed and saw lot 31, an empty lot, located at 121 Boulder Drive in Rocky Hill. On the lot was a sign with the name Guimaraes Construction, Inc. Because the plaintiffs were interested in possibly purchasing the lot, they contacted Peter Guimaraes (contractor), the president of Guimaraes Construction, Inc., who met with them on that lot on the same day.

When the plaintiffs expressed interest in purchasing the lot, the contractor told them that he would sell it to them even though he had reserved it for himself. To reserve the lot, the plaintiffs issued a check on February 16, 1999, in the amount of $1000, payable to Guimaraes Construction, Inc., as a deposit. The check was deposited into the bank account of Guimaraes Development, Inc., another company owned by the contractor, because Guimaraes Construction, Inc., did not have a bank account.

On March 6, 1999, the plaintiffs, along with Paula Miller's mother, Evelyn Volpe, met with the contractor to view other houses built by the contractor in the subdivision. During that visit, the contractor told Volpe that he had reserved lot no. 31 for himself, but decided to sell it because business was so good. On April 2, 1999, the plaintiffs entered into a construction contract with Guimaraes Construction, Inc., to purchase lot 31 and for the construction of a house on it.

The total contract price was $338,145, apportioned as $95,000 for the lot and $243,145 for the construction of the dwelling. The contract required the plaintiffs to pay $40,000 at signing with the balance of the contract price to be paid as progress installments during construction as permitted by the buyers' lending institution. The contract also required that the contractor had to obtain all necessary permits on or before April 30, 1999, that the buyers had to obtain a mortgage loan commitment on market terms from a bank or other financial institutional lender on or before May 2, 1999, and that the closing was to take place on or before October 2, 1999.

In accordance with the terms of the construction contract, the plaintiffs had deposited a total of $41,000 by April 2, 1999, the date they signed the construction contract. During the first week of April, 1999, the plaintiffs applied for a mortgage loan with American Savings Bank (bank). When the plaintiffs submitted their financial records to the bank the following week, the bank requested blueprints of the residence in conjunction with the processing of the loan application. When the plaintiffs informed the contractor of the bank's request, he told them that the blueprints were not ready. Instead, he gave them blueprints of a house similar to the one they wanted to have built to facilitate approval of the loan. Upon its receipt of the blueprints, the bank informally approved the loan. Later, by letter dated May 25, 1999, the bank formally approved the plaintiffs' loan.

At about the same time, the plaintiffs requested blueprints of the home, they also asked the contractor to produce the necessary building permits. They made that request because they had become concerned after being told by a Rocky Hill town official that the contractor had not obtained or even applied for the necessary permits, despite numerous assurances to the plaintiffs that he had done so. Unhappy with those circumstances, the plaintiffs asked the contractor for a refund of their deposit. When, however, the contractor refused to return the plaintiffs' deposit and told them that if they brought legal action for its return, their legal expenses would eclipse the amount of the deposit, the plaintiffs decided to go forward with the project.

The plaintiffs placed conditions on their agreement to go forward with the construction. Those conditions were that the contractor would obtain all the necessary building permits and produce the construction blueprints on or before the anticipated closing date of June 7, 1999. Notwithstanding his promises, the contractor failed to provide any evidence of having obtained the building permits by June 7, 1999. At about the time that the plaintiffs confronted the contractor in regard to the building permits, they learned that there were wetlands on the lot and that for the contractor to receive building permits, he first had to obtain wetlands permits.

Subsequently, the plaintiffs' attorney learned, through a title search, that the contractor did not own lot 31. Rather, the lot was titled in Trinity Ridge Associates Limited Partnership (Trinity Ridge), a party unfamiliar to the plaintiffs. The plaintiffs learned that Trinity Ridge had entered into an agreement dated February 20, 1998, with Guimaraes Development, Inc., an entity with which the plaintiffs had no legal relationship, for the conveyance of lot 31 to the development company with an anticipated closing date of June 20, 1998. That closing did not take place. Additionally, there was no evidence in the agreement between Trinity Ridge and Guimaraes Development, Inc., that either of them had assigned any rights to the property to the contractor.

The parties' relationship further deteriorated over a dispute regarding the amount of funds the contractor demanded that the plaintiffs bring to the closing. Because the contractor did not presently own lot 31, he required adequate funds to purchase the property from Trinity Ridge to be able to convey it to the plaintiffs. As a consequence, he demanded that the plaintiffs bring funds to the closing in an amount greater than the plaintiffs thought necessary. From the plaintiffs' perspective, the $41,000 deposit they already had paid the contractor was to be allocated, in its entirety, to the closing on the lot. To the contrary, the contractor took the position that the deposit paid at the time the parties contracted was to be applied to the construction of the dwelling. Because the bank did not advance to the plaintiffs the entire additional funds the contractor required of them at the closing, compliance with his demands would have required the plaintiffs to produce additional funds from their own resources greater than they believed reasonable or contemplated in their agreement with the contractor. The parties surmounted that disagreement and determined to proceed, setting a new closing for June 17, 1999, a date by which the contractor had to produce all required building permits and final house blueprints. When by June 17, 1999, the contractor had produced no building permits and had furnished no blueprints, the plaintiffs made demand for a return of their $41,000 deposit.

As a result of the contractor's refusal to return the plaintiffs' deposit, the plaintiffs commenced this action against the defendants, alleging fraudulent misrepresentation (count one), violations of CUTPA (count two), common-law conversion (count three), breach of contract (count four), and breach of the implied duty of good faith and fair dealing (count five). In turn, the defendants filed an answer together with a claim of setoff and a counterclaim, alleging breach of contract (count one) and breach of the duty of good faith and fair dealing (count two). The court found for the plaintiffs on all counts of the complaint except count one, which alleged fraudulent misrepresentation, and rendered judgment in favor of the plaintiffs on the defendants' counterclaims. Last, the court determined that the defendants' claim of setoff for damages stemming from the plaintiffs' alleged breach of contract was not factually supported. This appeal followed. Additional facts will be set forth as necessary.

I

The defendants' first claim is that the court improperly determined that they breached the contract with the plaintiffs and that the contractor was liable personally for that breach. We disagree.

Before addressing the merits of the defendants' claim, we set forth our standard of review. "With regard to the trial court's factual findings, the clearly erroneous standard of review is appropriate. . . . A factual finding is clearly erroneous when it is not supported by any evidence in the record or when there is evidence to support it, but the reviewing cou...