Thames River Recycling, Inc. v. Gallo

• Decision Date: 03 November 1998
• Docket Number: (AC 16742)
• Citation: 50 Conn. App. 767,720 A.2d 242
• Parties: THAMES RIVER RECYCLING, INC., ET AL. v. ANTHONY J. GALLO ET AL.
• Court: Connecticut Court of Appeals

50 Conn. App. 767

720 A.2d 242

THAMES RIVER RECYCLING, INC., ET AL. v. ANTHONY J. GALLO ET AL.

(AC 16742)

Appellate Court of Connecticut.

Argued April 1, 1998.

Officially released November 3, 1998.

Lavery, Landau and Daly, Js. Ira B. Grudberg, with whom were Alinor C. Sterling and, on the brief, David L. Belt, for the appellants-appellees (defendants).

James A. Wade, with whom were Bradford S. Babbitt and, on the brief, Janet C. Hall, for the appellees-appellants (plaintiffs).

Opinion

LANDAU, J.

The defendants, Anthony J. Gallo (Gallo), Star Distributors, Inc., (Star) and A. Gallo Company of Litchfield (Gallo of Litchfield), appeal from the trial court's judgment rendered in favor of the plaintiffs, following a jury trial, on the plaintiffs' amended complaint alleging breach of contract, breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, conversion, misrepresentation and violation of the Connecticut Unfair Trade Practices Act (CUTPA).¹ The plaintiffs, Thames River Recycling, Inc. (Thames River), Peter Holmes, Paul Novak and John F. McCarthy, filed a cross appeal challenging the trial court's award of attorney's fees and its failure to order an additur. We affirm the judgment of the trial court.

The jury reasonably could have found the following facts. On January 1, 1980, legislation known in Connecticut as the "bottle bill"² became law. The bottle bill requires consumers to pay a five cent deposit on certain glass, plastic and aluminum beverage containers at the time of purchase. Consumers may return the empty containers (returns) to obtain a refund of the five cent deposit. The beverage distributor is also required to pay a one and one-half cent handling fee for each return redeemed in the distributor's territory. After paying the deposit and the handling fee, the distributor owns the returns, which are recyclable materials, and may dispose of them as it chooses. See General Statutes §§ 22a-244 and 22a-245.

Originally, consumers returned cans and bottles to retailers who sold the beverages. In the mid-1980s, reverse vendors or third party recyclers developed another method of returning recyclable containers. Reverse vendors typically place machines in supermarkets. The machine accepts a return by reading the bar code on its side to determine the distributor responsible for it and then issues a nickel or equivalent store credit. The reverse vendor then charges the beverage distributor for the nickel refund paid to the consumer and the one and one-half cent handling fee. In return, the beverage distributor owns the returns. The reverse vendor either gives the distributor a credit for the scrap value of the returns or disposes of the recyclable materials as directed by the distributor.

In response to the bottle bill, Holmes, Novak and McCarthy, who are each beverage distributors, founded Thames River in 1979, and were its corporate stockholders and directors. Thames River accepts and processes all forms of returns. At the time Thames River was formed, each of the shareholders agreed to send all of the returns they owned by virtue of their being beverage distributors to Thames River. Each of Thames River's shareholders directed that the returns handled by reverse vendors be sent to Thames River, which in turn sold the recyclable materials and divided any profit among the shareholders. New England Recycling Company (New England Recycling) and Environmental Products Corporation (Environmental Products) are two reverse vendors with whom Thames River, Star and Gallo of Litchfield do business.

In 1992, Holmes, McCarthy and Novak wanted to increase the volume of recyclable materials handled by Thames River and approached Gallo, a beverage distributor who does business as Star and Gallo of Litchfield, to invite him to become a shareholder and principal in Thames River. During the parties' negotiations, representatives from Thames River asked Gallo how many returns they could expect from Star and Gallo of Litchfield. Gallo told them he was unable to provide that information.³ Thames River representatives, who knew that approximately 90 to 95 percent of beverage containers sold are returned, then asked Gallo for the number of cases of beverages Gallo's businesses sold annually. Gallo responded that his annual volume of sales was approximately three million cases. Gallo did not, however, tell the representatives of Thames River that he did not intend to send 25 percent of the returns to Thames River because Star and Gallo of Litchfield had prior agreements with New England Recycling and Environmental Products whereby the reverse vendors sold the returns and paid Star and Gallo of Litchfield the scrap value of the recyclables.

On the basis of the representations made by Gallo and in consideration of a promise of all Star's and Gallo of Litchfield's returns, Thames River, Holmes, McCarthy and Novak entered into an agreement with Gallo, Star and Gallo of Litchfield as set forth in a series of documents.⁴ In return, Gallo received shares of stock in Thames River at no cost to him.⁵ As part of the agreement, Star and Gallo of Litchfield were to send all of their recyclable materials to Thames River, and Gallo was made a director of Thames River. Thames River agreed to purchase recycling equipment owned by Star Container Recycling and Processing Company and City Leasing, two companies controlled by Gallo that handled returns for both Star and Gallo of Litchfield. In addition, Thames River agreed to handle containers called "bar bottles," which had to be sorted and returned to breweries; Thames River did not provide this service for anyone other than the defendants.

From the inception of the contract, Star and Gallo of Litchfield failed to send all of their returns to Thames River. Gallo never directed New England Recycling and Environmental Products to deliver the recyclable materials owned by Star and Gallo of Litchfield to Thames River, and he kept the scrap credits issued to Star and Gallo of Litchfield by New England Recycling and Environmental Products. In 1994, when he was confronted with his failure to supply all of his recyclable materials to Thames River, Gallo replied that third party recyclables were not part of the agreement and repudiated his obligation to send them to Thames River. The plaintiffs commenced suit against the defendants in July, 1994. In August, 1994, Gallo attempted to tender his shares of stock in Thames River. He also resigned his position as a director of the corporation. Thames River rejected Gallo's tender of his shares of stock.

The jury answered a number of interrogatories⁶ and rendered a verdict in favor of the plaintiffs, assessing $400,465.43 in damages against Star and $133,488.47 in damages against Gallo of Litchfield, but nothing against Gallo. The trial court awarded the plaintiffs $120,000 in attorney's fees and costs from Gallo pursuant to the plaintiffs' CUTPA claim. The defendants appealed and the plaintiffs cross appealed. Additional facts will be mentioned as necessary.

I

On appeal, the defendants claim (1) that the trial court improperly instructed the jury, (2) that the trial court should have set aside the verdict and (3) that there was insufficient evidence for the jury to find that there was a meeting of the minds among the parties. We disagree.

A

The defendants claim that the trial court improperly instructed the jury (1) as to how to determine whether the parties had a meeting of the minds, (2) as to how to determine whether there was a breach of fiduciary duty and (3) as to whether there were CUTPA violations. The defendants also claim (4) that the trial court improperly refused to instruct the jury that Gallo's tender of his shares terminated the contract.

"Our standard of review concerning claims of instructional error is well settled. [J]ury instructions must be read as a whole and ... are not to be judged in artificial isolation from the overall charge.... The whole charge must be considered from the standpoint of its effect on the jurors in guiding them to a proper verdict... and not critically dissected in a microscopic search for possible error.... The instruction must be adapted to the issues and may not mislead the jury but should reasonably guide it in reaching a verdict.... We must review the charge as a whole to determine whether it was correct in law and [whether it] sufficiently guided the jury on the issues presented at trial." (Citations omitted; internal quotation marks omitted.) State v. Elijah, 42 Conn. App. 687, 691, 682 A.2d 506, cert. denied, 239 Conn. 936, 684 A.2d 709 (1996).

Our standard of review on this claim is whether it is reasonably probable that the jury was misled. See McSwiggan v. Kaminsky, 35 Conn. App. 673, 681, 647 A.2d 5, cert. denied, 231 Conn. 934, 649 A.2d 256 (1994). "The test of a court's charge is not whether it is as accurate upon legal principles as the opinions of a court of last resort but whether it fairly presents the case to the jury in such a way that injustice is not done to either party under the established rules of law.... Therefore, jury instructions need not be exhaustive, perfect, or technically accurate. Nonetheless, the trial court must correctly adapt the law to the case in question and must provide the jury with sufficient guidance in reaching a correct verdict." (Citations omitted; internal quotation marks omitted.) Stewart v. Federated Dept. Stores, Inc., 234 Conn. 597, 603, 662 A.2d 753 (1995).

The defendants' first claim as to the jury charge is that the trial court's instruction with respect to whether there was a meeting of the minds among the parties was misleading and inconsistent. The following additional facts are necessary for our review.

The parties agreed that they never discussed New England Recycling and Environmental Products during their negotiations. Prior to the execution of the agreements at issue, the plaintiffs and the...