TDS Painting & Restoration, Inc. v. Copper Beech Farm, Inc.

• Decision Date: 12 November 2002
• Docket Number: (AC 22086)
• Citation: 808 A.2d 726,73 Conn. App. 492
• Parties: TDS PAINTING AND RESTORATION, INC. v. COPPER BEECH FARM, INC.
• Court: Connecticut Court of Appeals

73 Conn. App. 492

808 A.2d 726

TDS PAINTING AND RESTORATION, INC. v. COPPER BEECH FARM, INC.

(AC 22086)

Appellate Court of Connecticut

Argued June 4, 2002

Officially released November 12, 2002

Schaller, Flynn and West, Js. Andrew J. McDonald, with whom, on the brief, was Peter S. Olson, for the appellant-appellee (plaintiff).

Scott R. Lucas, with whom was Mary Alice S. Canaday, for the appellee-appellant (defendant).

Opinion

SCHALLER, J.

The plaintiff, TDS Painting and Restoration, Inc. (TDS Painting), appeals and the defendant, Copper Beech Farm, Inc. (Copper Beech), cross appeals from the trial court's supplemental judgment rendered after remand from this court, from the trial court's ruling on TDS Painting's motion to open the judgment and from the trial court's judgment of foreclosure. TDS Painting claims on appeal that the court (1) misinterpreted the remand from this court, thereby failing to render judgment in accordance with the attorney trial referee's (referee) report, (2) improperly determined that TDS Painting was not entitled to postjudgment interest from the date of the original judgment, and (3) misinterpreted our remand and refused to order the referee to consider postjudgment attorney's fees and costs of collection. On cross appeal, Copper Beech claims that the court improperly (1) remanded the matter to the referee and increased TDS Painting's damages award, (2) adopted the recommendation of the referee as to the increased damages award and (3) rendered judgment on TDS Painting's lien. We reverse, in part, the judgment of the trial court on TDS Painting's appeal and affirm the judgment on Copper Beech's cross appeal.

The referee found the following facts on the basis of evidence presented at the original hearing before the referee. The Copper Beech property consists of fifty acres of real property with a number of buildings on Long Island Sound at Mead Point in Greenwich, and includes Goose Island and White Rock Island.¹ Copper Beech, which acquired the property in 1982 for $7.55 million, is a corporation owned entirely by John M. Rudey (Rudey) and his wife, Laurie Rudey. Rudey is the president of Copper Beech, and his wife is the secretary. In December, 1982, Rudey individually entered into a ten year lease with Copper Beech, under which the main residence on the property was leased to be used "as a living place for [Rudey] and [f]amily." The lease was not an arm's length or market transaction. The goal of the lease payments was to reimburse the corporation for costs associated with Rudey's use.² The lease was not intended to make a profit. The Rudeys, whose permanent residence is in New York City, used the Copper Beech property as a summer home and occasional retreat.

In early 1991, Rudey wanted to have the main house on the Copper Beech property painted and restored. Rudey called Donald Freitag, president and owner of TDS Painting, to discuss the proposed project. Freitag and Rudey discussed the scope of the job, the price and certain precautions that TDS Painting would take. Before any contract was signed, TDS Painting began work on the project at Rudey's request.

On February 22, 1991, Freitag and Rudey executed a written contract. The contract is in the form of a proposal submitted to "Mr. John Rudy [sic] Copper Beech Farm Inc." The contract specifies that work areas "will be covered thoroughly and cleaned up daily." There is no maximum price for the work to be performed under the agreement; rather, the contract provides an estimate that the labor will range from 250 to 500 "man hours" per week, which would be billed bimonthly. On the back of the second page of the contract, printed terms provided for the payment of attorney's fees and costs of collection in the event of default. Rudey was aware of those terms when he signed the contract. TDS Painting performed the work under the agreement for several weeks and submitted invoices to Copper Beech. Copper Beech paid the invoices with certain adjustments. Several disputes arose during the course of the job, including complaints by Joseph Blank, a horticulturist, who resided on the property and managed it for Copper Beech. Blank complained that TDS Painting's employees were littering the property and taking long, unjustified breaks. Rudey and Freitag discussed those issues.

By April, 1991, the job had advanced considerably but was not yet complete. The total cost to that point exceeded $25,000. Rudey and Freitag executed a supplemental agreement, designed to expand the scope of TDS Painting's work and to address the additional costs to be incurred on the project in early May, 1991. The supplemental contract also was on a time and materials basis, and stated that "all [of certain] costs are estimates only and will be billed for the actual labor hours and materials used."

Copper Beech paid the invoices submitted to it through June 16, 1991. At some point between mid-June and August, Rudey moved to the Copper Beech property for the summer. While living there, Rudey expressed concerns regarding TDS Painting's performance.³ TDS Painting continued its work until the first week of August, 1991. Despite having expressed his concerns, Rudey asked TDS Painting to perform "extra work" outside the scope of the original contract. The extra work consisted of painting the interior portions of the home during the months of June and July.⁴ At some time between mid-June and August, Rudey informed TDS Painting that he believed that the April 25, 1991 supplemental contract had a fixed ceiling and that the ceiling had been exceeded. Rudey refused to make any further payments. Rudey then informed TDS Painting that he believed that TDS Painting was responsible for extensive damage to the Copper Beech property and, therefore, was entitled to no additional sums. Payments were made by Rudey through June 26, 1991, totaling $92,899.36. TDS Painting submitted invoices for the balance of its work totaling $62,894.71. On July 26, 1991, Rudey made a partial payment of $5000, leaving a balance of $57,894.71. Rudey refused to make any further payments despite an outstanding balance of $57,894.71. At about that same time, Copper Beech determined that the soil surrounding the main residence at the property was contaminated with lead due to the paint removal process. Negotiations between the parties were not fruitful and litigation ensued.

The following exhaustive recitation of the procedural history of the action is necessary to analyze fully TDS Painting's claims on appeal and Copper Beech's claims on cross appeal. On December 9, 1991, TDS Painting commenced an action to foreclose a mechanic's lien. That first action consisted of a three count complaint. Count one concerned the foreclosure of the lien, count two claimed damages under a theory of quantum meruit, and count three claimed damages under a theory of unjust enrichment. Copper Beech filed a counterclaim, alleging breach of contract, negligence, trespass and violations under the Home Improvement Act (HIA), General Statutes § 20-418 et seq.,⁵ and a resulting per se violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq. Finally, Rudey, in a companion action, also alleged the three theories of recovery raised by Copper Beech in Copper Beech's counterclaim. The two cases were consolidated and tried before the referee.

The referee filed a report on February 8, 1995, recommending judgment in favor of TDS Painting on its complaint, and against Copper Beech and Rudey on the counterclaim and the companion case, respectively. The referee found, among other things, that (1) the provisions of the HIA were inapplicable because Copper Beech's property was commercial in nature and that the agreement of the parties fell within the "commercial exception" to the HIA, and (2) TDS Painting was entitled to recover for the balance due on its written agreements with Copper Beech, and for extras, in the total amount of $57,894.71. The parties stipulated to reserve the issue of attorney's fees for a separate hearing.

On April 10, 1995, Copper Beech filed a motion to correct the referee's report concerning findings of fact and conclusions of law, and on April 17, 1995, the parties presented their evidence relevant to attorney's fees. The referee ruled on Copper Beech's motion to correct the report as to findings of fact and conclusions of law, and issued his ruling concerning attorney's fees. On October 13, 1995, the referee ruled that TDS Painting's remedy on its foreclosure count, count one, should be restricted to contract damages and should not include damages for extra services performed outside the scope of the contract.⁶ On October 30, 1995, the referee issued a ruling regarding attorney's fees, concluding that TDS Painting was entitled to recover $83,910 for legal services through February, 1995. In the ruling, the referee also asked for further briefing on "costs" available to TDS Painting. Subsequently, on November 15, 1995, Copper Beech and Rudey filed exceptions and objections to the referee's report pursuant to Practice Book §§ 439 and 440, now § 19-14.

On March 4, 1996, the court, after reviewing the referee's record and report, issued its memorandum of decision. The court (1) accepted the referee's conclusion that Copper Beech, not Rudey, was the contracting party and hence a proper defendant, (2) accepted the referee's conclusion that Copper Beech did not exhibit bad faith as required to excuse or to negate a violation of the HIA, (3) rejected the referee's finding that the Copper Beech property was commercial in nature and, hence, the referee's conclusion that TDS Painting was exempt from the provisions of the HIA, and (4) accepted the referee's conclusion that Copper Beech and Rudey failed to prove that TDS Painting had acted negligently in rendering painting and restoration services. Accordingly, the court rendered judgment in favor of Copper Beech with...