Valencis v. Nyberg

160 Conn.App. 777

125 A.3d 1026

Stanley VALENCIS et al.

v.David NYBERG et al.

No. 36320.

Appellate Court of Connecticut.

Argued April 7, 2015.

Decided Oct. 27, 2015.

Christopher M. Licari, New Haven, for the appellants (defendants).

Jill Hartley, Hartford, for the appellees (plaintiffs).

ALVORD, MULLINS and SCHALLER, Js.

SCHALLER, J.

The defendants David Nyberg and CSM North, LLC (CSM),¹ appeal from the judgment of the trial court awarding a prejudgment remedy in favor of the plaintiffs, Stanley Valencis, ACSYS, Inc. (ACSYS), and MIG Ventures, LLC (MIG), in the amount of $1,517,389.40.² On appeal, the defendants claim that (1) the court improperly granted the application for a prejudgment remedy without taking into account the defenses raised by the defendants, (2) there was insufficient evidence to grant the application for a prejudgment remedy, and (3) the court improperly failed to make a specific finding of damages for each count for which it found probable cause. We disagree with these claims, and, accordingly, affirm the judgment of the trial court.

The following facts and procedural history are relevant to our resolution of this appeal, which stems from what the court described as a "construction contract gone awry." In the plaintiffs' unsigned complaint attached to their application for a prejudgment remedy, they alleged, inter alia, the following causes of action: breach of express contract, breach of implied contract, and breach of the covenant of good faith and fair dealing (contract claims); promissory estoppel, unjust enrichment, breach of fiduciary duty, fraud, negligent misrepresentation, conversion, statutory theft, and violation of General Statutes § 42–110a et seq., the Connecticut Unfair Trade Practices Act (CUTPA).³ All of the counts were directed at the defendants, with the exception of the breach of fiduciary duty, fraud and negligent misrepresentation counts, which applied only to Nyberg individually. The parties presented evidence, made oral argument, and filed briefs. The court found probable cause on all but the breach of fiduciary duty count and granted a prejudgment remedy in the amount of $1,517,389.40.

In granting the prejudgment remedy, the court found the following facts as stated in its memorandum of decision. In 2011, Nyberg negotiated the purchase of a property located at 1577 New Britain Avenue in Farmington (property) in the name of CSM.⁴ The plaintiffs acquired the property from CSM. Valencis, the president of ACSYS, entered into an oral agreement with Nyberg, who described himself as a " ‘handshake kind of business person,’ " regarding the renovation of the property, which would act as the new headquarters of ACSYS.

Under the contract, Nyberg was to act as general contractor of the project to "gut and totally renovate the building," with Gerald Ginsberg, an independent contractor hired by CSM, acting as the project manager. Early on in the project, the budget was approximately $2 million, consisting of a $1.5 million purchase price and $647,000 for the anticipated design and "build out." The project initially was projected to be completed in December, 2011, or January, 2012.

The project was not completed until August, 2012, at a total cost of between $3.7 and $3.8 million. In 2011 and early 2012, the plaintiffs made a number of payments to CSM in advance on the basis of Nyberg's representation that he could save 30 to 40 percent by paying for labor and materials up front. This included payments to CSM for construction work before any was performed and for materials before they were delivered. Amid questioning by the plaintiffs regarding when the work would be performed and when the materials they had paid for would be delivered, Ginsberg resigned as project manager and was replaced by Frank Cotrona, another independent contractor, in late January or early February, 2012. Cotrona began investigating the status of payments made by the plaintiffs and the overall progress of the project. With his help, the plaintiffs eventually concluded that a number of subcontractors had not been paid and a variety of materials had not been purchased, despite the payments made by the plaintiffs to the defendants. The plaintiffs also discovered that the defendants never obtained a general building permit.

The court determined that the plaintiffs had met their burden of establishing probable cause with respect to, inter alia, their contract claims and the claims for promissory estoppel, unjust enrichment, fraud, negligent misrepresentation, conversion, statutory theft and violation of CUTPA. The court found treble damages of $1,205,115.12 pursuant to the statutory theft count; see General Statutes § 52–564 ; and $312,374.28 for the remaining damages, for a total of $1,517,389.40. The court declined to award punitive damages pursuant to the CUTPA claim because Nyberg invoked his fifth amendment privilege against self-incrimination.⁵ This appeal followed.

At the outset, we identify the relevant legal principles and our standard of review. "We begin with the law governing prejudgment remedies and our limited role on review. A prejudgment remedy means any remedy or combination of remedies that enables a person by way of attachment, foreign attachment, garnishment or replevin to deprive the defendant in a civil action of, or affect the use, possession or enjoyment by such defendant of, his property prior to final judgment.... General Statutes § 52–278a (d). A prejudgment remedy is available upon a finding by the court that there is probable cause that a judgment in the amount of the prejudgment remedy sought, or in an amount greater than the amount of the prejudgment remedy sought, taking into account any defenses, counterclaims or setoffs, will be rendered in the matter in favor of the plaintiff.... General Statutes § 52–278d (a)(1).... Proof of probable cause as a condition of obtaining a prejudgment remedy is not as demanding as proof by a fair preponderance of the evidence.... The legal idea of probable cause is a bona fide belief in the existence of the facts essential under the law for the action and such as would warrant a man of ordinary caution, prudence and judgment, under the circumstances, in entertaining it.... Probable cause is a flexible common sense standard. It does not demand that a belief be correct or more likely true than false.... Under this standard, the trial court's function is to determine whether there is probable cause to believe that a judgment will be rendered in favor of the plaintiff in a trial on the merits....

"As for our standard of review, [our Supreme Court has] stated: [An appellate court's] role on review of the granting of a prejudgment remedy is very circumscribed.... In its determination of probable cause, the trial court is vested with broad discretion which is not to be overruled in the absence of clear error.... [W]e have consistently enunciated our standard of review in these matters. In the absence of clear error, this court should not overrule the thoughtful decision of the trial court, which has had an opportunity to assess the legal issues which may be raised and to weigh the credibility of at least some of the witnesses.... [On appeal], therefore, we need only decide whether the trial court's conclusions were reasonable under the clear error standard." (Citations omitted; internal quotation marks omitted.) TES Franchising, LLC v. Feldman, 286 Conn. 132, 136–38, 943 A.2d 406 (2008) ; see also Landmark Investment Group, LLC v. Calco Construction & Development Co., 141 Conn.App. 40, 49–50, 60 A.3d 983 (2013). Under the clear error standard, we review the record with "a heightened standard of deference that exceeds the level of deference afforded under the abuse of discretion standard" and will overrule the granting of a prejudgment remedy "only if we are left with the definite and firm conviction that a mistake has been committed." (Internal quotation marks omitted.) TES Franchising, LLC v. Feldman, supra, at 138 n. 6, 943 A.2d 406 ; Travelers Casualty & Surety Co. of America v. Caridi, 144 Conn.App. 793, 797, 73 A.3d 863 (2013).

I

The defendants claim that the court improperly granted the prejudgment remedy without taking into account their defenses and, furthermore, that the evidence was insufficient in light of those defenses. Specifically, they argue that the court failed to give adequate consideration to the following defenses, or, if considered, that these defenses resulted in insufficient evidence to grant a prejudgment remedy: (1) the defense to the contract claims that Nyberg was not liable personally under the contract, (2) the defense to the plaintiffs' claims for promissory estoppel, fraud, and negligent misrepresentation that any statements made by the defendants were not the cause of payments made by the plaintiffs, (3) the defense to the plaintiffs' claims for conversion and statutory theft that the plaintiffs never made a demand for return of funds and (4) the defense to the plaintiffs' claim for statutory theft that the defendants did not intend to deprive the plaintiffs of funds.

A

The claim that the trial court failed to consider the defendants' defenses is premised on the requirement in the prejudgment remedy statute, § 52–278d (a), that in determining probable cause for a prejudgment remedy the court should take "into account any defenses, counterclaims or set-offs...."⁶

The defendants place great weight on the analysis of § 52–278d (a) in TES Franchising, LLC v. Feldman, supra, 286 Conn. at 141–42, 943 A.2d 406, claiming that that case requires a trial court to address specifically any defenses raised by the defendant.⁷ We agree that TES Franchising, LLC, is highly relevant to the present case, but reject the defendants' interpretation. In TES Franchising, LLC, the defendant claimed that, in granting a prejudgment remedy, the trial court had failed to consider his defenses sufficiently. Id., at 134, 943 A.2d 406. Our Supreme Court clearly...