Ambrogio v. Beaver Road Associates

• Decision Date: 30 December 2003
• Docket Number: (SC 16853).
• Citation: 267 Conn. 148,836 A.2d 1183
• Court: Connecticut Supreme Court
• Parties: RICCARDO I. AMBROGIO v. BEAVER ROAD ASSOCIATES ET AL.

267 Conn. 148

836 A.2d 1183

RICCARDO I. AMBROGIO v. BEAVER ROAD ASSOCIATES ET AL.

(SC 16853).

Supreme Court of Connecticut.

Argued September 9, 2003.

Officially released December 30, 2003.

Borden, Norcott, Palmer, Vertefeuille and Zarella, Js. Thomas P. Chapman, for the appellant (defendant Paul DiMascio Construction Company, Inc.).

Barbara A. Frederick, with whom, on the brief, were Richard S. Order and Laura F. Baldini, for the appellee (plaintiff).

Opinion

VERTEFEUILLE, J.

In this certified appeal, the defendant,¹ Paul DiMascio Construction Company, Inc., appeals from the judgment of the Appellate Court reversing the trial court's summary judgment rendered in favor of the plaintiff, Riccardo I. Ambrogio, as to liability, but awarding no damages. Ambrogio v. Beaver Road Associates, 71 Conn. App. 576, 803 A.2d 338 (2002). We conclude that the Appellate Court properly determined that the plaintiff was not precluded, as a matter of law, from recovering lost profits for the defendant's breach of a construction contract with the plaintiff. Accordingly, we affirm the judgment of the Appellate Court. The Appellate Court set forth the following relevant facts and procedural history of this case. "The plaintiff, an oral surgeon, leased office space at 20-30 Beaver Road in Wethersfield. The lease, which was for a period of ten years with two options to renew for additional terms of five years, stated that the premises were to be used for a dental/oral and maxillofacial surgery practice in accordance with the normal work program of [the plaintiff] and/or associates and for no other purposes.

"Shortly after signing the lease, the plaintiff entered into an agreement with the defendant, a general contractor, for the construction of his office. As part of the contract, the defendant agreed to secure and provide. . . all the materials necessary and perform or cause to be performed all the work necessary for the completion of improvements to the Premises . . . in accordance with the General Specifications and that [a]ll work shall be done in a good and workmanlike manner, using experienced labor and first-quality materials as per the specifications.

"The defendant thereafter contracted with Z-Florz, Inc., to install the flooring in the plaintiff's two surgical rooms. The floors, Forbo Forshaga AB smaragd sheet vinyl flooring with Forbo's heat welding system, were to be installed in accordance with the manufacturer's instructions to ensure coverage under the manufacturer's five year warranty. Z-Florz, Inc., installed the surgical flooring, and the plaintiff opened his practice on November 16, 1992.

"Several months after opening his practice, the plaintiff noticed moisture seepage, slippery conditions, offensive odors and bubbling in the flooring in the surgical areas of the office. As a result, unsafe and unhealthy conditions caused the plaintiff to close one of the surgical rooms. "The plaintiff subsequently discovered that improper ventilation of the concrete slab under the flooring had caused the seepage problem. Attempts by the plaintiff to rectify the condition of the surgical room floors were to no avail and the plaintiff brought this action. He claimed that the defendant had breached its contractual duty by failing to properly supervise the installation of the flooring in his office.

"After filing this action, the plaintiff notified the defendant that he intended to call two expert witnesses to testify during the trial, Michael C. Matzkin, a dentist, and Conrad A. Kappel, a certified public accountant. Matzkin and Kappel were to testify as to the projected growth of the plaintiff's practice and the profits that were lost as a result of the defective installation of the flooring in the surgical rooms. Prior to the date the trial was to begin, the defendant filed a motion in limine seeking to preclude the plaintiff from introducing any evidence which [purports] to show that the plaintiff lost patients, lost patient referrals or lost business growth opportunities as elements of his damages." (Internal quotation marks omitted.) Ambrogio v. Beaver Road Associates, supra, 71 Conn. App. 577-79.

At oral argument on the motion in limine before the trial court, Wollenberg, J., the defendant contended that "[l]ost business and loss of business opportunities are not included in the measure of damages for the breach of a construction contract." (Internal quotation marks omitted.) Id., 579. The plaintiff disagreed, arguing that lost profits were an appropriate measure of damages for breach of a construction contract. Neither party offered evidence or testimony at the hearing. Following the hearing, the trial court granted the defendant's motion in limine, concluding, first, that lost profits can be an appropriate measure of damages for breach of a construction contract when such damages were within the contemplation of the parties at the time they made the contract. The trial court further determined that lost profits were not recoverable in this case, however, because the defendant reasonably could not have contemplated such damages at the time the parties entered into the contract.

Subsequently, the plaintiff moved for summary judgment against the defendant as to liability for breach of the construction contract. The trial court, Shapiro, J., granted the motion for summary judgment and rendered judgment thereon but awarded no damages to the plaintiff due to the preclusive effect of the prior ruling granting the motion in limine.²

The plaintiff appealed from the trial court's judgment to the Appellate Court, claiming that, in granting the motion in limine, the trial court improperly had resolved a factual issue not before it, i.e., whether the parties reasonably contemplated lost profits as damages when they entered into the contract. The Appellate Court reversed in part the judgment of the trial court, concluding that, as a matter of law, lost profits can be awarded for breach of a construction contract, but further concluding that the trial court exceeded its authority by deciding that, as a factual matter, the plaintiff in the present case could not recover lost profits because they were not within the contemplation of the parties. Id., 584. The Appellate Court therefore remanded the case for a hearing in damages.³ Id.

We thereafter granted the defendant's petition for certification to appeal limited to the following issue: "Did the Appellate Court properly conclude that the plaintiff was not precluded, as a matter of law, from recovering lost profits for breach of his construction contract with the defendant?" Ambrogio v. Beaver Road Associates, 261 Conn. 943, 944, 808 A.2d 1136 (2002). This appeal followed.

On appeal to this court, the defendant claims that the Appellate Court improperly reversed the trial court's judgment, and challenges both aspects of the Appellate Court's ruling. First, the defendant argues that the Appellate Court misstated the law of damages relating to recovery of lost profits. Specifically, the defendant claims that the Appellate Court failed to recognize an established exception to the general rule of compensatory damages that precludes recovery of lost profits in a breach of contract action stemming from a construction contract. Second, the defendant contends that the Appellate Court incorrectly determined that, as a matter of law, the trial court exceeded its authority by precluding evidence of lost profits in the present case on the ground that lost profits were not within the reasonable contemplation of the parties.⁴ We are not persuaded by either of the defendant's claims.

We begin by setting forth the applicable standard of review. Both claims raised by the defendant present questions of law. Accordingly, our review is plenary. DeLeo v. Nusbaum, 263 Conn. 588, 593, 821 A.2d 744 (2003). As the defendant acknowledges, our case law unequivocally supports awarding lost profits as an element of compensatory damages for general breach of contract claims. "The general rule in breach of contract cases is that the award of damages is designed to place the injured party, so far as can be done by money, in the same position as that which he would have been in had the contract been performed." (Internal quotation marks omitted.) West Haven Sound Development Corp. v. West Haven, 201 Conn. 305, 319, 514 A.2d 734 (1986). The Restatement (Second) of Contracts divides a defendant's recovery into two components: (1) direct damages, composed of "the loss in value to him of the other party's performance caused by its failure or deficiency"; 3 Restatement (Second), Contracts § 347(a) (1981); plus, (2) "any other loss, including incidental or consequential loss, caused by the breach . . . ." Id., § 347(b). Traditionally, consequential damages include "any loss that `may fairly and reasonably be considered [as] arising naturally, i.e., according to the usual course of things, from such breach of contract itself.'" West Haven Sound Development Corp. v. West Haven, supra, 201 Conn. 319, quoting Hadley v. Baxendale, 9 Ex. 341, 354, 156 Eng. Rep. 145 (1854). Although there is no unyielding formula by which damages are calculated, "it is our rule that `[u]nless they are too speculative and remote, prospective profits are allowable as an element of damage whenever their loss arises directly from and as a natural consequence of the breach.'" West Haven Sound Development Corp. v. West Haven, supra, 320, quoting Kay Petroleum Corp. v. Piergrossi, 137 Conn. 620, 624, 79 A.2d 829 (1951).

Although the defendant acknowledges Connecticut's practice of allowing recovery of lost profits in most breach of contract cases, it nonetheless maintains that the Appellate Court overlooked a salient exception pertaining to construction contracts. Specifically, the defendant relies on two cases, M. J. Daly & Sons, Inc. v. New Haven Hotel Co., 91 Conn. 280, 287, 99 A. 853 (1917), and Levesque v. D & M Builders,...