McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc.

• Court: Connecticut Court of Appeals
• Writing for the Court: DRANGINIS, J.
• Citation: McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn.App. 486, 890 A.2d 140 (Conn. App. 2006)
• Decision Date: 31 January 2006
• Docket Number: No. 26347.,26347.
• Parties: McCANN REAL EQUITIES SERIES XXII, LLC, et al. v. DAVID McDERMOTT CHEVROLET, INC., et al.

890 A.2d 140

93 Conn.App. 486

McCANN REAL EQUITIES SERIES XXII, LLC, et al. v. DAVID McDERMOTT CHEVROLET, INC., et al.

No. 26347.

Appellate Court of Connecticut

Argued November 28, 2005

January 31, 2006

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Kenneth A. Votre, New Haven, with whom was Keith P. Sturges, for the appellants (plaintiffs).

David L. Weiss, East Haven, for the appellees (defendants).

SCHALLER, DRANGINIS and PETERS, Js.

DRANGINIS, J.

This appeal from the judgment rendered on a verdict directed by the trial court concerns the sale and purchase of real property. Subsequent to the closing of the transaction, the buyers learned that the soil contained more contamination than they had expected. The buyers sought to recoup from the sellers the cost of removing the contaminated soil and consequential damages generally on the basis of breach of contract and the sellers' misrepresentation as to a portion of the premises. The buyers cannot prevail, however, because the "as is" and merger provisions of the contract bar recovery; see footnote 12; and the buyers did not justifiably rely on the sellers' representations, nor were the representations the proximate cause of their injury. We therefore affirm the judgment of the trial court.

The underlying facts are not in dispute. On April 15, 1996, the plaintiffs, McCann Real Equities Series XXII, LLC (McCann), and Coral New Haven Associates, LLC (Coral New Haven),¹ entered into a written agreement with the defendants, David McDermott Chevrolet, Inc., David M. McDermott doing business as McDermott Realty and David McDermott, Inc.,² to purchase four acres of real property that had been used throughout the twentieth century for automobile sales and related services. In November, 1996, the plaintiffs received a report from their environmental experts informing them that there were 10,000 gallons of oil and water in the basement of one of the buildings on the property. Their further investigation revealed that the concrete forming the basement and the surrounding soil were contaminated by oil. The plaintiffs did not bring the results of their investigation to the defendants' attention at that time and purchased the premises on July 28, 1997. In March, 2000, the department of environmental protection (department) informed the plaintiffs that the soil surrounding the building was contaminated and ordered them to remediate the soil. In July, 2000, the plaintiffs commenced this action against the defendants for alleged breach of contract, misrepresentation and indemnification, among other claims, to recoup the cost of remediating the soil and for consequential damages.

The case was tried in September, 2004. At the conclusion of the plaintiffs' presentation of evidence, the defendants moved for a directed verdict. The court reserved judgment on the motion for a directed verdict, but the following day, it instructed the jury to return a verdict in favor of the defendants. The plaintiffs subsequently filed a motion to set aside the directed verdict, which the court denied in a thirty-two page memorandum of decision.

The plaintiffs have appealed from the judgment rendered by the court. In their statement of the issues, the plaintiffs have asserted twelve claims for us to consider.³ We are not persuaded by the plaintiffs' claims because we conclude that the court properly determined (1) that the plaintiffs did not rely on the misrepresentation by McDermott, (2) that no reasonable person could conclude that the plaintiffs' claimed reliance was justifiable or that the misrepresentation was the proximate cause of their loss and (3) that, regardless of the defendants' alleged wrongdoing, the plaintiffs had bargained away their rights in the agreement.

STANDARD OF REVIEW

"The standards for reviewing a challenge to a directed verdict are well known. Generally, litigants have a constitutional right to have factual issues resolved by the jury.... Directed verdicts [therefore] are historically not favored and can be upheld on appeal only when the jury could not have reasonably and legally reached any other conclusion.... We review a trial court's decision to direct a verdict for the defendant by considering all of the evidence, including reasonable inferences, in the light most favorable to the plaintiff." (Internal quotation marks omitted.) Young v. Rutkin, 79 Conn.App. 355, 363, 830 A.2d 340, cert. denied, 266 Conn. 920, 835 A.2d 60 (2003). "Although it is the jury's right to draw logical deductions and make reasonable inferences from the facts proven ... it may not resort to mere conjecture and speculation.... A directed verdict is justified if ... the evidence is so weak that it would be proper for the court to set aside a verdict rendered for the other party." (Emphasis added; internal quotation marks omitted.) Robinson v. Gailno, 275 Conn. 290, 297, 880 A.2d 127 (2005).

"It is fundamental in our law that the right of a plaintiff to recover is limited to the allegations of his complaint." (Internal quotation marks omitted.) Wright v. Hutt, 50 Conn.App. 439, 449, 718 A.2d 969, cert. denied, 247 Conn. 939, 723 A.2d 320 (1998). "A material fact is a fact that will make a difference in the result of the case.... The facts at issue are those alleged in the pleadings.... The purpose of the complaint is to limit the issues to be decided at the trial of a case and is calculated to prevent surprise." (Citation omitted; emphasis in original; internal quotation marks omitted.) Vaillancourt v. Latifi, 81 Conn.App. 541, 545, 840 A.2d 1209 (2004). "[F]acts must be pleaded as a special defense when they are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action. Practice Book § 10-50 .... The fundamental purpose of a special defense, like other pleadings, is to apprise the court and opposing counsel of the issues to be tried, so that basic issues are not concealed until the trial is underway." (Citation omitted; internal quotation marks omitted.) Almada v. Wausau Business Ins. Co., 274 Conn. 449, 456, 876 A.2d 535 (2005).

"[T]he interpretation of pleadings is always a question of law for the court .... Our review of the trial court's interpretation of the pleadings therefore is plenary.... Furthermore, [t]he complaint must be read in its entirety in such a way as to give effect to the pleading with reference to the general theory upon which it proceeded, and do substantial justice between the parties." (Citations omitted; internal quotation marks omitted.) Bross v. Hillside Acres, Inc., 92 Conn.App. 773, 778-79, 887 A.2d 420 (2006).

THE PLEADINGS

In their amended complaint filed August 17, 2000, the plaintiffs alleged, inter alia, that they entered into a written agreement, dated April 15, 1996, with the defendants to purchase approximately four acres of improved real property situated on Whalley Avenue in New Haven. The plaintiffs further alleged that the agreement contained representations and warranties with regard to the sale of the premises, i.e., that the defendants had agreed to " 'comply with all laws, ordinances, regulations, orders or notices of violations of or issued by any Governmental Authority' prior to closing which representation contractually obligated the defendants as sellers to abide by all state, federal and local laws and ordinances relating to the property and to fully comply with all notices of violation issued in regards to the real property." The plaintiffs also alleged that the defendants represented and warranted that "there are no actions, suits or proceedings pending or, to the best knowledge of [the defendants], threatened against [the defendants], at law or in equity, by or Before any Federal, State, Municipal or other governmental court, department, commission, board, bureau, agency or instrumentality which in the event of a decision adverse to [the defendants] would prevent the consummation of the transactions contemplated by this Agreement."

The plaintiffs alleged that the defendants breached their contractual obligations in violation of the affirmative representations they made in the agreement. Specifically the plaintiffs alleged that the defendants "(a) ... failed to comply with certain notices of violation issued by the [department]; (b) ... failed to comply with local, State and federal environmental laws affecting the ... property prior to closing; (c) ... failed to disclose the existence of notices of violation during that period of time after execution of the ...agreement and in particular, following the environmental contingency period contained in the ... agreement; (d) ... failed to timely and truthfully disclose facts known to them concerning the environmental condition of the ... property and the existence of current violations; [and] (e) ... knowingly concealed from the Plaintiffs facts relevant to the Purchase of the ... property including, inter alia, the existence of a current environmental investigation relating to the ... property, issuance of notices of violations and the existence of past violations which were unresolved prior to closing." The plaintiffs alleged that as a consequence of the defendants' failure to comply with the law and to disclose certain correspondence from the department, the plaintiffs sustained significantly increased environmental cleanup costs to comply with the department's order to rid the property of environmental contamination.

The plaintiffs also pleaded counts that sounded in negligent misrepresentation, reckless or indifferent misrepresentation, intentional and fraudulent misrepresentation, and that the defendants had violated the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq. The plaintiffs sought common-law and statutory indemnification pursuant to General Statutes § 22a-452 in counts six and seven, respectively. Counts eight and nine of the amended...