Fernwood Realty, LLC v. Aerocision, LLC
| Decision Date | 21 June 2016 |
| Docket Number | AC 37627 |
| Court | Connecticut Court of Appeals |
| Parties | FERNWOOD REALTY, LLC v. AEROCISION, LLC |
(Appeal from Superior Court, judicial district of Middlesex, Aurigemma, J.)
Jeffrey J. White, with whom were Kathleen E. Dion and, on the brief, Sorell E. Negro, for the appellant (defendant).
Hugh D. Hughes, with whom was Stephen R. Sheehan, for the appellee (plaintiff).
The defendant, AeroCision, LLC, appeals from the judgment, rendered after a court trial, in favor of the plaintiff, Fernwood Realty, LLC. On appeal, the defendant claims that the court (1) erroneously concluded that it had committed statutory theft of components from an electrical distribution system because the defendant was the rightful owner of those components, and that there was no evidence to support the defendant's good faith belief that it owned those components, (2) erred in its interpretation of a commercial lease, and (3) misapplied the legal standard with respect to the defendant's constructive eviction counterclaim. We affirm the judgment of the trial court.
The following procedural history is relevant to this appeal. The plaintiff's operative amended complaint, filed on January 11, 2010, alleged, inter alia, that the defendant committed statutory theft in violation of General Statutes § 52-564 and breached its contract by defaulting on a commercial lease.1 The defendant filed an answer, special defenses, and a counterclaim. Relevant to this appeal are counts one and two of the counterclaim, which sought to recover damages for the plaintiff's alleged breach of the terms of a commercial lease, and count six, which alleged that the plaintiff constructively evicted the defendant.
A bench trial was conducted over six nonconsecutive days, beginning on June 19, 2014, and ending on July 31, 2014. After the court, Aurigemma, J., reviewed the parties' proposed statements of fact, posttrial briefs, and replies to the posttrial briefs, it issued its memorandum of decision on December 18, 2014. The court rendered judgment in favor of the plaintiff on its statutory theft and breach of contract counts, and it rendered judgment in favor of the plaintiff on all counts of the defendant's counterclaim.2
The following facts, as found by the court, are relevant to this appeal. Donald F. Woods (Donald) acquired 167 Elm Street (property), a commercial manufacturing building in Old Saybrook, in 1984.3 The bus ducts,4 branch feeders,5 and transformer (electrical components) that formed the basis for the plaintiff's statutory theft claim were installed in 1990. On November 30, 2001, Donald, Jeffrey D. Woods (Jeffrey), his son, and Barbara A. Woods (Barbara), his daughter, quitclaimed their interest in the property6 to a three member limited liability company, the plaintiff, of which they were each a member. After the plaintiff acquired ownership of the property, it leased the property to an entity that the Woods family members owned, Pye & Hogan Machine Company, Inc. (Pye & Hogan), for $17,000 per month.
Starting in 2004, Jeffrey and Donald began negotiations to sell Pye & Hogan to Patrick G. Bromley, a Texas businessman who had "engaged in extensive businessinvestments on behalf of a large employer and . . . on his own behalf." On May 5, 2005, the sale was finalized, and Pye & Hogan sold many of its assets, including its personal property, to Pye & Hogan, LLC, through an asset purchase agreement (agreement). On the following day, the plaintiff and Pye & Hogan, LLC, entered into a lease agreement (lease) in which Pye & Hogan, LLC, would rent the property for sixty months, ending on May 6, 2010, for the amount of $17,000 per month. Shortly after signing the lease, Pye & Hogan, LLC, changed its name to AeroCision, LLC, the defendant in this matter.
In December, 2009, the defendant notified the plaintiff that it was vacating the property. It alleged that it had been constructively evicted because of "water intrusion" and a nonfunctioning toilet. Additionally, the defendant alleged that Donald threatened its employees with violence, which left it "no choice but to vacate the property to protect its employees."7 (Internal quotation marks omitted.) The plaintiff responded in a letter stating that the defendant was not to remove various items from the property, including the electrical components. Afterward, the plaintiff filed its original complaint on December 14, 2009. In conjunction with its original complaint, the plaintiff sought an ex parte temporary injunction ordering the defendant not to remove items that belonged to the plaintiff, namely, "fire alarm and fire suppression systems, electric [bus] ducts and electrical raceway, electrical panels, electrical conduit, mounted and attached fixtures and light fixtures, electrical boxes." The plaintiff's ex parte temporary injunction was denied that same day.8
During the process of removing items from the property, the defendant changed the locks to the property. As a result, the plaintiff could not "[oversee] in any manner the removal of items from the property." Subsequently, the defendant relocated the bus ducts to its new location.9 In January, 2010, the defendant provided the plaintiff with keys to the new locks. The plaintiff then hired John M. Lamb10 to inspect the electrical distribution system. Lamb discovered that the electrical components were missing. He opined that it would cost $181,300 to replace the missing electrical components.11 Additionally, the property was left in disrepair, and the plaintiff spent $34,614.30 to repair it.
The court found that the defendant had violated § 52-56412 and awarded the plaintiff $543,900.13 As to the plaintiff's breach of contract claim, it awarded the plaintiff $219,251.46.14 This appeal followed. Additional facts will be set forth as required.
The first issue raised by the defendant on appeal consists of two interrelated claims. It first claims that the court improperly concluded that it had committedstatutory theft because either the court "ignored centuries of legal precedent making the distinction between 'fixtures' and 'trade fixtures,'" or the court's conclusion was "contrary to Supreme Court precedent." In the alternative, the defendant claims that it could not have committed statutory theft because it had a good faith belief that it owned the electrical components. We address each claim in turn.
The following additional facts are necessary to provide context to the defendant's first claim. Section 2.1 (a) (ii) of the agreement stated, in relevant part, that Pye & Hogan would "sell, assign, transfer, convey and deliver . . . to [the defendant], and the [defendant would] purchase and accept . . . all of the assets, properties . . . including all right, title and interest of [Pye & Hogan] in . . . the personal property described in Schedule 2.1 (a) (ii), together with the fixtures, furnishings, furniture, equipment . . . [and] property owned or leased by [Pye & Hogan], wherever located, or acquired by [Pye & Hogan] in connection with conduct of the [b]usiness . . . or used by [Pye & Hogan] in connection with the conduct of the [b]usiness . . . ." (Emphasis in original.) Schedule 2.1 (a) (ii) listed the individual machinery (e.g., CNC Toyota FH45 NM6424), the furniture and fixtures (e.g., telephone system and equipment), the data processing equipment (e.g., printers and computers), and the vehicles. Section 2.2 of the agreement set forth that certain assets were excluded from the sale. Schedule 2.2 (d) of the agreement listed the excluded assets. The electrical components were not listed in either schedule.
In the agreement, Pye & Hogan made two important representations. First, it represented that it did not own the real property but, rather, leased it. The relevant portion of that provision of the agreement stated that to Pye & Hogan's (Emphasis altered.) Second, Pye & Hogan represented that the purchased assets "constitute[d] all of the assets used in connection with the [b]usiness . . . ."
Jeffrey was questioned at length during trial with respect to the electrical components. He testified that, after a fire in 1989 destroyed the building that Pye & Hogan had used for its business, Donald—with his own money—bought the necessary machinery and the electrical components for Pye & Hogan to continue with the business.15 The machinery and the electrical compo-nents were installed in a temporary location. When the construction of the new building was completed in 1990, the machinery and the electrical components were installed in the property.16 Jeffrey was directly asked who, at the time of the purchase, owned the bus ducts. He testified that Donald owned them until Donald transferred part of his ownership interest in the property to Jeffrey and Barbara; see footnote 6 of this opinion; who, along with Donald, then transferred ownership to the plaintiff.
Jeffrey was also questioned extensively by the defendant's counsel on the language of the agreement. Jeffrey asserted that the agreement did not include the sale of the bus ducts. In an attempt to impeach this testimony, the defendant's counsel had Jeffrey read the relevant portions of the agreement discussing the assets to be sold and the assets to be excluded. The defendant's counsel then took the position that because schedule 2.1 (a) (ii) was not an exhaustive list and the bus ducts were not listed as excluded assets, the bus ducts were part of the...
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