Meyers v. Cornwell Quality Tools, Inc.

• Decision Date: 09 April 1996
• Docket Number: 14089,Nos. 13783,s. 13783
• Citation: 674 A.2d 444,41 Conn.App. 19
• Court: Connecticut Court of Appeals
• Parties: William D. MEYERS et al. v. CORNWELL QUALITY TOOLS, INC., et al.

Page 444

674 A.2d 444

41 Conn.App. 19

William D. MEYERS et al. v. CORNWELL QUALITY TOOLS, INC., et al.

Nos. 13783, 14089.

Appellate Court of Connecticut.

Argued Nov. 29, 1995.

Decided April 9, 1996.

Chester J. Bukowski, Jr., Hartford, with whom, was Christopher L. Slack, for appellants-appellees (defendants).

Kathleen Eldergill, Manchester, for appellees-appellants (plaintiffs).

Before FOTI, LAVERY and SCHALLER, JJ.

SCHALLER, Judge.

The defendants and the plaintiffs filed separate appeals ¹ in a fraud and Connecticut Unfair Trade Practices Act (CUTPA) ² action. The defendants ³ appeal from the judgment of the trial court, rendered after a jury trial, in favor of the plaintiffs on both counts. ⁴ The defendants claim that the trial court improperly (1) submitted the CUTPA claim to the jury, (2) denied their motion to set aside the verdict on the fraud count, which they based on the plaintiffs' claimed failure to make out a prima facie case and on the claim that the evidence was contrary to the verdict, (3) admitted evidence of dealer terminations and collateral misconduct, (4) instructed the jury on the burden of proof regarding the fraud claim, (5) instructed the jury on the CUTPA claim, (6) failed to set aside the jury's verdict on the CUTPA claim as contrary to the evidence, and (7) denied the defendants' motion for a mistrial based on jury misconduct. The plaintiffs appeal from the trial court's denial of their motion to open the judgment and for reconsideration, claiming that even if they did not have a right to a jury trial on the CUTPA claim, the trial court improperly refused to consider the evidence and to make its own factual determination as to the CUTPA claim. We affirm the judgment of the trial court.

The jury reasonably could have found the following facts. Cornwell Quality Tools, Inc. (Cornwell), manufactures tools and recruits dealers to buy its tools. Cornwell assigns the dealers particular territories where the dealers sell the tools they have purchased from Cornwell. In the spring of 1989, Ray Phelan was a district manager for Cornwell and had met with the plaintiffs about William D. Meyers' (Meyers) ⁵ becoming a Cornwell dealer. ⁶

Phelan initially told the plaintiffs that an investment of $40,000 was required to become a dealer, and Phelan showed the plaintiffs the Cornwell recruiting manual, which suggested a $50,000 investment. Phelan stated that Cornwell would provide Meyers with training and support. Phelan also told the plaintiffs that Cornwell would buy back any tools, minus a 10 percent restocking fee, if Meyers left the business.

Phelan presented the plaintiffs with Cornwell's projected income statement of dealers who had completed a two year initial period. The statement, which was included in Cornwell's recruiting manual, projected the income of Cornwell tool dealers as $65,279 per year. The statement, to which added his own representations, also indicated that a dealer's net annual sales would be $200,000 with a gross profit of 42.5 percent. The actual average annual sales of Cornwell dealers who had completed the initial two year period was about $90,000 rather than the $200,000 indicated in Cornwell's projected income statement. In addition, a more accurate figure for a dealer's estimated gross profit was 30 to 35 percent. ⁷

The plaintiffs obtained a second mortgage on their home to finance their investment in the dealership, providing Meyers with $22,000 of investment capital. On the basis of his experience with many recruits, Phelan told the plaintiffs that $22,000 would be a sufficient investment because Meyers was buying a used truck and was going into a developed territory. Meyers started in June, 1989, and Phelan traveled with him for the first two weeks, introducing him to customers and showing him how to take and record orders.

Within a short time, Meyers began to have difficulty with the business, including problems with restocking inventory, operating computer software that Phelan had recommended, and acquiring a customer base. Phelan maintained contact with Meyers by means of weekly or biweekly telephone calls or visits. After Phelan emphasized that dealer inventory must be kept at $25,000, Meyers requested, in order to keep his business operating, that Cornwell exchange some of the tools in the initial inventory for tools that were selling better. Phelan advised Meyers not to do this because Meyers would have to pay the 10 percent restocking fee.

By August, 1989, Meyers became unable to keep current his bill payments to Cornwell. In October, 1989, bill collectors hired by Cornwell contacted the plaintiffs. Phelan accused Meyers of not working hard enough and not keeping up his inventory. After Meyers explained that he was trying to allocate his finances in the best possible way, Phelan suggested that the plaintiffs try to borrow more money. Meyers made numerous attempts to obtain additional small business loans, but was unable to do so.

In November, 1989, Cornwell placed a hold on Meyers' credit, instructing him that he could not buy any more tools until he paid his bill. A few months later, by letter dated February 23, 1990, Cornwell terminated Meyers' dealership. Meyers then contacted Phelan who told him to contact Cornwell. When Meyers contacted Cornwell, he was told that the termination had been made at the urging of Phelan. When he called Phelan to inquire why he was being terminated, a heated discussion ensued, and Phelan hung up on him. Meyers then shipped his remaining inventory to Cornwell. Cornwell refused to accept a portion of the tools, worth $3200, and returned those tools at Meyers' expense. Cornwell credited Meyers' account for the tools that it did accept. Additional facts will be set out in the opinion where necessary.

I

The defendants first claim that the trial court improperly submitted the CUTPA claim to the jury. They rely on Associated Investment Co. Ltd. Partnership v. Williams Associates IV, 230 Conn. 148, 161-62, 645 A.2d 505 (1994), for the proposition that a plaintiff has no right to a jury trial of a CUTPA claim. The defendants argue, therefore, that we should order a new trial in which the court would make the necessary factual findings on the CUTPA claim. We disagree.

The following procedural history is relevant to our resolution of this issue. On November 26, 1990, the plaintiffs filed a complaint against the defendants. On February 11, 1991, the defendants filed an answer, a counterclaim and a general claim for a jury trial. The plaintiffs responded on February 20, 1991, with their answer and special defenses to the counterclaim, as well as their own general claim for a jury trial. On November 10, 1993, the plaintiffs began presenting evidence to the jury.

The defendants first objected to the submission of the CUTPA claim to the jury on December 1, 1993, ⁸ arguing that the CUTPA claim was a statutory issue that must be decided by the court. The trial court did not indicate at that time whether it would submit the CUTPA claim to the jury. The trial court heard further argument concerning the issue on December 8 and 9, 1993. ⁹ Evidence concluded on December 9. On December 20, 1993, the court placed on the record its decision to allow the jury to deliberate on the CUTPA claim. ¹⁰

In Associated Investment Co. Ltd. Partnership v. Williams Associates IV, supra, 230 Conn. at 159, 645 A.2d 505, our Supreme Court rejected a claim by the defendants that they were entitled to a jury trial on their counterclaim alleging a CUTPA violation. The defendants asserted that article first, § 19, of the Connecticut constitution, which guarantees the right to a jury trial in all cases for which such a right existed at the time of the adoption of the constitutional provision in 1818, applied to their counterclaim. Id. The court determined that "CUTPA creates an essentially equitable cause of action not substantially similar to common law claims triable to a jury prior to 1818, [and, therefore, that] a jury trial is not constitutionally required for actions brought under CUTPA." Id., at 155, 645 A.2d 505. Consequently, the court held that "[t]he trial court ... properly granted the plaintiff's motion to strike the defendant's counterclaim from the jury docket." Id., at 162, 645 A.2d 505.

Contrary to the defendants' assertions, however, Associated Investment does not stand for the proposition that because a party is not entitled to a jury trial on a CUTPA issue, a jury trial is not permissible. See Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 590 n. 23, 657 A.2d 212 (1995). Practice Book § 307 provides that: "No equitable issues shall be tried to the jury except upon order of the court. Upon the application of either party, the court may order any issue or issues of fact in any action demanding equitable relief to be tried by a jury, and such application shall be deemed to be a request for a jury of six." ¹¹ (Emphasis added.) Moreover, General Statutes § 52-218 provides: "Upon the application of either party, the court may order any issue or issues of fact in any action demanding equitable relief to be tried by a jury of six."

In this case, the defendants were the first to claim the case for the jury list. After several days of evidence, however, they objected to the submission of the CUTPA claim to the jury. Once a party has requested the trial court to submit issues of fact to a jury on an equitable claim, the court has the power under § 52-218 to submit such issues to the jury. Klar Crest Realty, Inc. v. Rajon Realty Corp., 190 Conn. 163, 170, 459 A.2d 1021 (1983); ¹² see also Gaudio v. Gaudio, 23 Conn.App. 287, 303, 580 A.2d 1212, cert. denied, 217 Conn. 803, 584 A.2d 471 (1990). "The statute is discretionary...." Gaudio v. Gaudio, supra. "The jury forms no part of our equity system, though its use is permitted by statute upon issues of fact in equitable actions." Doris v. McFarland, 113 Conn. 594, 608, 156...