Coppola Constr. Co. v. Hoffman Enters. Ltd. P'ship, 18955.

• Decision Date: 16 July 2013
• Docket Number: No. 18955.,18955.
• Citation: 309 Conn. 342,71 A.3d 480
• Court: Connecticut Supreme Court
• Parties: COPPOLA CONSTRUCTION COMPANY, INC. v. HOFFMAN ENTERPRISES LIMITED PARTNERSHIP et al.

309 Conn. 342

71 A.3d 480

COPPOLA CONSTRUCTION COMPANY, INC.

v.HOFFMAN ENTERPRISES LIMITED PARTNERSHIP et al.

No. 18955.

Supreme Court of Connecticut.

Argued March 19, 2013.

Decided July 16, 2013.

Richard P. Weinstein, West Hartford, with whom was Nathan A. Schatz, for the appellant (defendant Jeffrey S. Hoffman).

George C. Springer, Jr., with whom was Lawrence G. Rosenthal, Hartford, for the appellee (plaintiff).

ROGERS, C.J., and NORCOTT, ZARELLA, EVELEIGH and McDONALD, Js. ^*

NORCOTT, J.

The sole issue in this certified appeal is whether a corporate principal or officer may be held personally liable for the tort of negligent misrepresentation in connection with statements made by that principal or officer that, under the apparent authority doctrine, also create binding contractual liabilities for the corporate entity. The defendant Jeffrey S. Hoffman ¹ appeals, upon our grant of his petition for certification, ² from the judgment of the Appellate Court reversing the judgment of the trial court granting his motion to strike the claim of negligent misrepresentation brought by the plaintiff, Coppola Construction Company, Inc. Coppola Construction Co. v. Hoffman Enterprises Ltd. Partnership, 134 Conn.App. 203, 38 A.3d 215 (2012). On appeal, Hoffman contends that the plaintiff could not, as a matter of law, satisfy the detrimental reliance element of the negligent misrepresentation tort because his apparent authority to bind the corporate entity contractually meant that the plaintiff could not have relied to its detriment on his statements. We disagree and, accordingly, affirm the judgment of the Appellate Court.

The Appellate Court's opinion aptly sets forth the following relevant facts, as pleaded in the operative complaint ³ (complaint), and procedural history. “This case was commenced on or about December 9, 2009, with an application for prejudgment remedy by the plaintiff against Hoffman and Hoffman Enterprises Limited Partnership (Hoffman Enterprises). The plaintiff sought to recover money damages in connection with site work that the plaintiff had agreed by contract to perform for Hoffman Enterprises on several parcels of property owned by Hoffman Enterprises known as Hoffman Auto Park located in Simsbury. The ... complaint alleged six separate claims: counts one through five against Hoffman Enterprises for breach of contract, quantum meruit, unjust enrichment, tortious interference and unfair trade practices, respectively, and count six against Hoffman for negligent misrepresentation. The defendants filed a motion to strike counts four, five and six, which the court denied with respect to counts four and five and granted with respect to count six.

“In count six, the plaintiff alleged, in part, that ‘Hoffman entered into agreements with Signature Construction Services,[LLC] (Signature) to perform construction on his new residence in Rhode Island. The agreements with Signature were based, in part, upon Signature being the construction manager and agent for ... Hoffman's business interests in the Hoffman Auto Park expansion.... Upon information and belief ... Hoffman received special pricing and below market rates for the construction of his residence in Rhode Island in exchange for inflating Signature's compensation through the Hoffman Auto Park facility [and other] valuable consideration.... Hoffman entered into the scheme to obtain lower bid estimates all in an attempt to have People's Bank [bank] fund the [Hoffman Auto Park construction] project initially and then to provide change orders after the fact to force the [b]ank into further financing .... [the plaintiff] was not aware of the scheme being perpetrated ... and was promised by ... Hoffman that he would pay for all change orders and “extras” that he ordered.... Hoffman is now alleging that Signature was not his “agent” for purposes of the construction of the Hoffman Auto Park and is, upon information and belief, stating that Signature did not have the authority to act on his or [Hoffman Enterprises'] behalf .... [the plaintiff] relied upon ... Hoffman's representations and those made by his agent, Signature, to its detriment when the costs of the change orders and extra work exceeded the [b]ank financing. [The plaintiff] relied upon the statements and actions of ... Hoffman that Signature was [Hoffman Enterprises'] agent for purposes of the construction, whether directly for [Hoffman Enterprises] or for ... Hoffman in his personal capacity.... The result of the scheme between Hoffman and Signature directly resulted in [the plaintiff] suffering damages in that Hoffman could not obtain the funding from [the] [b]ank to pay [the plaintiff] and thus forestall[ed] payments which have resulted in the severe economic harm to [the plaintiff].... In addition, to the extent that Hoffman now claims that [Hoffman Enterprises] did not provide the authority to Signature to act for [Hoffman Enterprises], such statements were made by Hoffman with knowledge that such statements were false. Hoffman's actions and statements were made to [the plaintiff] to induce it to perform the work at the [p]roject and [the plaintiff] relied upon the statements and actions of Hoffman to its detriment.’

“The court reviewed the parties' arguments. Hoffman argued that count six was really ‘a claim of breach of contract based upon the promises and representation of [Hoffman]’ and that ‘when a party misrepresents another person to be his agent, that does not state a claim for misrepresentation but merely affords a factual basis for inferring that the putative agent had apparent authority to bind the principal who made the representation.’ The court noted that the plaintiff asserted that its claim that ‘Hoffman's misrepresentation as to Signature's authority to act for him and [Hoffman Enterprises], in relation to the Hoffman Auto Park construction project, was in fact a misrepresentation of fact, then known to be false, which it reasonably relied on to its detriment.’ The court found: ‘At no point, however, does [the plaintiff] specify how it ever relied upon that misrepresentation to its detriment except by agreeing to perform extra work on the project with Signature’[s] approval—in their words, as the defendants have asserted, by entering into and performing work under contracts which the defendants are bound to honor based upon Signature's approval....' The court concluded that the count did not state a valid claim for negligent misrepresentation and granted Hoffman's motion to strike that count. Pursuant to Practice Book § 10–44, Hoffman moved for judgment. The court granted Hoffman's motion for judgment and denied the plaintiff's motion to amend its complaint.” Id., at 204–207, 38 A.3d 215.

The plaintiff appealed from the judgment of the trial court to the Appellate Court, claiming that the trial court had improperly granted Hoffman's motion to strike the sixth count of the complaint. Id., at 204, 38 A.3d 215. In a unanimous opinion, the Appellate Court agreed with the plaintiff because, “[c]onstruing the complaint in the manner most favorable to sustaining its legal sufficiency, as we are required to do, a comparison between the elements of negligent misrepresentation and the allegations in count six reveals that the plaintiff has provided allegations that would support, if proven to be true, a cause of action for negligent misrepresentation.” Id., at 210, 38 A.3d 215. In particular, the Appellate Court rejected Hoffman's claims that “where the alleged misrepresentation is based on a statement by a principal, or one who speaks for a principal, that another person is an agent of the principal, that allegation necessarily fails to state an actionable claim for misrepresentation. Rather, it merely provides a basis to bind the purported contracting party on a theory of apparent authority.” (Internal quotation marks omitted.) Id., at 210 n. 4, 38 A.3d 215. On that point, the Appellate Court concluded that Hoffman's arguments were inconsistent with “the plaintiff's right to plead alternative causes of action based on the same facts,” observing, inter alia, that “tort remedies may be different from contract remedies, and damages may be sought from different parties,” consistent with the prohibition on multiple recoveries for the same wrong. Id., at 210–11 n. 4, 38 A.3d 215. Accordingly, the Appellate Court reversed the judgment of the trial court and remanded the case to that court “with direction to deny the motion to strike as to count six and for further proceedings according to law.” ⁴Id., at 211, 38 A.3d 215. This certified appeal followed. See footnote 2 of this opinion.

On appeal, Hoffman argues that the Appellate Court improperly concluded that the plaintiff had sufficiently pleaded a claim of negligent misrepresentation because the plaintiff's allegations cannot satisfy the detrimental reliance element of that tort. Specifically, Hoffman posits that, even if his statement that Signature was the agent of Hoffman Enterprises for purposes of the construction contract was actually false, “because the statement here claimed to be false has the legal effectof being true [under the apparent authority doctrine, as explained in Tomlinson v. Board of Education, 226 Conn. 704, 734–35, 629 A.2d 333 (1993) ], the individual making that statement cannot be liable for a negligent misrepresentation.” (Emphasis in original.) Hoffman further contends that the elements of apparent authority and negligent misrepresentation overlap analytically to render the negligent misrepresentation claim insufficient as a matter of law, because if he had “no actual or apparent authority ... when making the representations regarding Signature's authority to act on behalf of [Hoffman Enterprises] ... then the plaintiff's claim of negligent misrepresentation will necessarilyfail for the separate reason that [the] plaintiff will not be able to show that it reasonably relied on Hoffman's alleged...