C.R. Klewin, Inc. v. Flagship Properties, Inc.

• Decision Date: 10 December 1991
• Docket Number: No. 14322,14322
• Citation: 600 A.2d 772,220 Conn. 569
• Court: Connecticut Supreme Court
• Parties: C.R. KLEWIN, INC. v. FLAGSHIP PROPERTIES, INC., et al.

Page 772

600 A.2d 772

220 Conn. 569

C.R. KLEWIN, INC. v. FLAGSHIP PROPERTIES, INC., et al.

No. 14322.

Supreme Court of Connecticut.

Argued Oct. 1, 1991.

Decided Dec. 10, 1991.

Daniel S. Blinn, with whom, on the brief, was Louis R. Pepe, Hartford, for appellant (plaintiff).

A. Susan Peck, with whom was Hope C. Seeley, Hartford, for appellees (defendants).

Before PETERS, C.J., and SHEA, GLASS, COVELLO and BERDON, JJ.

PETERS, Chief Justice.

The sole question before us in this certified appeal is whether the provision of the statute of frauds, General Statutes § 52-550(a)(5), ¹ requiring a writing for an "agreement that is not to be performed within one year from the making thereof," renders unenforceable an oral contract that fails to specify explicitly the time for performance when performance of that contract within one year of its making is exceedingly unlikely. This case comes to this court upon our grant of an application for certification from the United States Court of Appeals for the Second Circuit pursuant to General Statutes § 51-199a. ² C.R. Klewin, Inc. v. Flagship Properties, Inc., 936 F.2d 684 (2d Cir.1991).

The Second Circuit has provided us with the following facts. See id., 685-86. The plaintiff, C.R. Klewin, Inc. (Klewin), is a Connecticut based corporation that provides general construction contracting and construction management services. The defendants, Flagship Properties and DKM Properties (collectively Flagship), are engaged in the business of real estate development; although located outside Connecticut, they do business together in Connecticut under the trade name Conn-Tech.

Flagship became the developer of a major project (ConnTech Project) in Mansfield, near the University of Connecticut's main campus. The master plan for the project included the construction of twenty industrial buildings, a 280 room hotel and convention center, and housing for 592 graduate students and professors. The estimated total cost of the project was $120 million.

In March, 1986, Flagship representatives held a dinner meeting with Klewin representatives. Flagship was considering whether to engage Klewin to serve as construction manager on the ConnTech Project. During the discussions, Klewin advised that its fee would be 4 percent of the cost of construction plus 4 percent for its overhead and profit. This fee structure was, however, subject to change depending on when different phases of the project were to be constructed. The meeting ended with Flagship's representative shaking hands with Klewin's agent and saying, "You've got the job. We've got a deal." No other specific terms or conditions were conclusively established at trial. The parties publicized the fact that an agreement had been reached and held a press conference, which was videotaped. Additionally, they ceremoniously signed, without filling in any of the blanks, an American Institute of Architects Standard Form of Agreement between Owner and Construction Manager.

Construction began May 4, 1987, on the first phase of the ConnTech Project, called Celeron Square. The parties entered into a written agreement regarding the construction of this one part of the project. Construction was fully completed by the middle of October, 1987. By that time, because Flagship had become dissatisfied with Klewin's work, it began negotiating with other contractors for the job as construction manager on the next stage of the ConnTech Project. In March, 1988, Flagship contracted with another contractor to perform the sitework for Celeron Square II, the next phase of the project.

After having been replaced as construction manager, Klewin filed suit in the United States District Court for the District of Connecticut, claiming (1) breach of an oral contract to perform as construction manager on all phases of the project; (2) quantum meruit recovery for services performed in anticipation of future stages of the project; and (3) detrimental reliance on Flagship's promise to pay for preconstruction services. Flagship moved for summary judgment, claiming, inter alia, that enforcement of the alleged oral contract was barred by the statute of frauds. The district court granted summary judgment, reasoning that (1) "the contract was not of an indefinite duration or open-ended" because full performance would take place when all phases of the ConnTech Project were completed, and (2) the contract "as a matter of law" could not possibly have been performed within one year. In drawing this second conclusion, the court focused on the sheer scope of the project and Klewin's own admission that the entire project was intended to be constructed in three to ten years.

Klewin appealed to the United States Court of Appeals for the Second Circuit. The Court of Appeals held that "the issues presented involve substantial legal questions for which there is no clear precedent under the decisions of the Connecticut Supreme Court"; id., 686; and certified to this court the following questions: ³

"A. Whether under the Connecticut Statute of Frauds, Conn.Gen.Stat. § 52-550(a)(5), an oral contract that fails to specify explicitly the time for performance is a contract of 'indefinite duration,' as that term has been used in the applicable Connecticut precedent, and therefore outside of the Statute's proscriptions?

"B. Whether an oral contract is unenforceable when the method of performance called for by the contract contemplates performance to be completed over a period of time that exceeds one year, yet the contract itself does not explicitly negate the possibility of performance within one year?" ⁴ Id., at 685. We answer "yes" to the first question, and "no" to the second.

I

The Connecticut statute of frauds has its origins in a 1677 English statute entitled "An Act for the prevention of Fraud and Perjuries." See 6 W. Holdsworth, A History of English Law (1927) pp. 379-84. The statute appears to have been enacted in response to developments in the common law arising out of the advent of the writ of assumpsit, which changed the general rule precluding enforcement of oral promises in the King's courts. Thereafter, perjury and the subornation of perjury became a widespread and serious problem. Furthermore, because juries at that time decided cases on their own personal knowledge of the facts, rather than on the evidence introduced at trial, a requirement, in specified transactions, of "some memorandum or note ... in writing, and signed by the party to be charged" placed a limitation on the uncontrolled discretion of the jury. See 2 A. Corbin, Contracts (1950) § 275, pp. 2-3; 6 W. Holdsworth, supra, pp. 387-89; An Act for Prevention of Fraud and Perjuries, 29 Car. 2, c. 3, § 4 (1677), quoted in J. Perillo, "The Statute of Frauds in the Light of the Functions and Dysfunctions of Form," 43 Fordham L.Rev. 39, 39 n. 2 (1974). Although the British Parliament repealed most provisions of the statute, including the one-year provision, in 1954; see The Law Reform (Enforcement of Contracts) Act, 2 & 3 Eliz. 2, c. 34 (1954); the statute nonetheless remains the law virtually everywhere in the United States. ⁵

Modern scholarly commentary has found much to criticize about the continued viability of the statute of frauds. The statute has been found wanting because it serves none of its purported functions very well; see J. Perillo, supra; and because it permits or compels economically wasteful behavior; see M. Braunstein, "Remedy, Reason, and the Statute of Frauds: A Critical Economic Analysis," 1989 Utah L.Rev. 383. It is, however, the one-year provision that is at issue in this case that has caused the greatest puzzlement among commentators. As Professor Farnsworth observes, "of all the provisions of the statute, it is the most difficult to rationalize.

"If the one-year provision is based on the tendency of memory to fail and of evidence to go stale with the passage of time, it is ill-contrived because the one-year period does not run from the making of the contract to the proof of the making, but from the making of the contract to the completion of performance. If an oral contract that cannot be performed within a year is broken the day after its making, the provision applies though the terms of the contract are fresh in the minds of the parties. But if an oral contract that can be performed within a year is broken and suit is not brought until nearly six years (the usual statute of limitations for contract actions) after the breach, the provision does not apply, even though the terms of the contract are no longer fresh in the minds of the parties.

"If the one-year provision is an attempt to separate significant contracts of long duration, for which writings should be required, from less significant contracts of short duration, for which writings are unnecessary, it is equally ill-contrived because the one-year period does not run from the commencement of performance to the completion of performance, but from the making of the contract to the completion of performance. If an oral contract to work for one day, 13 months from now, is broken, the provision applies, even though the duration of performance is only one day. But if an oral contract to work for a year beginning today is broken, the provision does not apply, even though the duration of performance is a full year." 2 E. Farnsworth, Contracts (2d Ed.1990) § 6.4, pp. 110-11 (footnotes omitted); see also Goldstick v. ICM Realty, 788 F.2d 456, 464 (7th Cir.1986); D & N Boening, Inc. v. Kirsch Beverages, Inc., 63 N.Y.2d 449, 454, 472 N.E.2d 992, 483 N.Y.S.2d 164 (1984); 1 Restatement (Second), Contracts (1979) § 130, comment a; J. Calamari & J. Perillo, Contracts (3d Ed.1987) § 19-18, p. 807. ⁶

Historians have had difficulty accounting for the original inclusion of the one-year provision. ⁷ Some years after its enactment, one English judge stated that "the design of the statute was, not to trust to the memory of witnesses for a...