Total Recycling of Ct., Inc. v. Ct. Oil Recycling Serv., LLC

• Decision Date: 02 June 2009
• Docket Number: No. 29721.,29721.
• Citation: 114 Conn.App. 671,970 A.2d 807
• Court: Connecticut Court of Appeals
• Parties: TOTAL RECYCLING SERVICES OF CONNECTICUT, INC., et al. v. CONNECTICUT OIL RECYCLING SERVICES, LLC.

970 A.2d 807

114 Conn.App. 671

TOTAL RECYCLING SERVICES OF CONNECTICUT, INC., et al. v. CONNECTICUT OIL RECYCLING SERVICES, LLC.

No. 29721.

Appellate Court of Connecticut.

Argued November 17, 2008.

Decided June 2, 2009.

William J. Sweeney, Jr., New Britain, for the appellant (defendant).

Jonathan J. Klein, Bridgeport, for the appellees (plaintiffs).

GRUENDEL, ROBINSON and PETERS, Js.

PETERS, J.

The law of contracts has long recognized that "[u]njust enrichment applies wherever justice requires compensation to be given for property or services rendered under a contract, and no remedy is available by an action on the contract." (Internal quotation marks omitted.) Vertex, Inc. v. Waterbury, 278 Conn. 557, 573, 898 A.2d 178 (2006). In this case, a purchaser of goods and intangibles challenges the validity of a jury verdict holding it liable for damages for unjust enrichment despite a concurrent jury finding of breach of contract by the vendors. The purchaser also challenges the trial court's denial of its motion for attorney's fees. We affirm the court's acceptance of the jury verdict, but reverse its ruling with respect to attorney's fees.

In a four count complaint filed on October 19, 2006, the plaintiffs, Total Recycling Services of Connecticut, Inc. (Total Recycling), and Whitewing Environmental Corp. (Whitewing), brought an action to enforce their alleged rights under three contracts relating to the sale of an oil recycling business to the defendant, Connecticut Oil Recycling Services, LLC.¹ The plaintiffs sought damages either for breach of contract by the defendant or for unjust enrichment of the defendant, claiming nonpayment of amounts due. The defendant denied any liability to the plaintiffs and filed a five part counterclaim for damages resulting from the plaintiffs' alleged failure to honor their contractual and statutory obligations to the defendant.² The defendant also sought attorney's fees in accordance with the provisions of two of the contracts between the parties.

In special interrogatories submitted to the jury, the court asked the jury to make specific findings about the plaintiffs' right to recover damages either for breach of contract or for unjust enrichment. The court also asked the jury to make findings on the defendant's right to recover damages as alleged in the various counts of its counterclaim. None of the parties objected to the submission of these interrogatories to the jury.

In the responses to the interrogatories that are relevant to this appeal, the jury found:

(1) Although neither Total Recycling nor the defendant fully performed its obligations under the two contracts between the parties, Total Recycling's partial performance resulted in the unjust enrichment of the defendant and entitled Total Recycling to recover damages of $63,130.70 and interest of $6313.07;³

(2) Although Whitewing did not fully perform its obligations under its contract with the defendant, Whitewing's partial performance resulted in the unjust enrichment of the defendant and entitled Whitewing to recover damages of $63,130.70 and interest of $6313.07;⁴ and (3) Although the plaintiffs' breach of the express terms of one of their agreements with the defendant did not entitle the defendant to recover damages, their breach of the implied covenant of good faith and fair dealing in the contracts between Total Recycling and the defendant entitled the defendant to recover damages of $39,015.00 and interest of $3901.50.⁵

The trial court accepted the verdict of the jury and denied the defendant's motion to set aside the award of damages to the plaintiffs. The court also denied the defendant's motion for an award of attorney's fees. The defendant's appeal challenges both of these rulings.⁶

I THE JURY VERDICT

The trial court's memorandum of decision denying the defendant's motion to set aside the verdict describes the relevant facts that the jury reasonably might have found in support of its answers to the interrogatories. These facts are largely undisputed.

The plaintiffs entered into three agreements for the sale of a waste oil recycling business to the defendant. In two asset purchase agreements, Total Recycling conveyed equipment to the defendant for an immediate payment of $100,000⁷ and transferred its customer list to the defendant in return for four years of future payments tied to the defendant's waste oil business.⁸ At the same time, in a separate agreement with the defendant, for similar future payments, Whitewing promised to refrain from soliciting the defendant's customers and from competing with the defendant.

Both of the plaintiffs substantially performed their obligations under their contracts with the defendant. Total Recycling's sale of equipment to the defendant was, however, defective in part because three of the eleven vehicles transferred to the defendant were subject to liens held by the department of environmental protection.⁹ During the time that these vehicles were unusable, the defendant incurred the cost of $39,015 for the rental of other equipment. Furthermore, although Total Recycling allegedly attempted to sell its customer list to a third party, the defendant introduced no evidence to show that the attempted sale caused it a loss of business or profits.

The defendant never made any of the payments related to the volume of its sales that were required by its agreements with the plaintiffs. There was evidence that the payments due from the defendant amounted to approximately $195,000.

In light of this factual record, the trial court denied the defendant's motion to set aside the jury verdict. It concluded that the evidence of the plaintiffs' substantial performance of their contractual obligations supported the jury's findings that the defendant had been unjustly enriched by the benefits conferred upon it by the assets, customer list and noncompete agreement it had received.¹⁰

In an appeal from a trial court's refusal of a motion to set aside a jury verdict, we "consider the evidence in the light most favorable to the prevailing party, according particular weight to the congruence of the judgment of the trial judge and the jury, who saw the witnesses and heard their testimony.... The decision to set aside a verdict is a matter within the broad legal discretion of the trial court and it will not be disturbed unless there has been a clear abuse of that discretion." (Internal quotation marks omitted.) Sutcliffe v. FleetBoston Financial Corp., 108 Conn. App. 799, 811, 950 A.2d 544 (2008).

In this appeal, the defendant does not challenge the accuracy of the trial court's recital of the facts that the jury reasonably might have found in support of its answers to the interrogatories. It maintains instead that the court improperly failed, as a matter of law, to grant its motion to set aside the jury verdict. In its view, because both plaintiffs had the right to pursue legal remedies for breach of contract, and because the jury found that both plaintiffs had breached the contract, they were barred from recovering under any claim for unjust enrichment. We disagree.

We note at the outset that it is late in the day for the defendant to argue that there is a fundamental legal inconsistency between the jury's finding that the plaintiff had breached the contract and its award of damages for unjust enrichment. At trial, the defendant did not object to the court's instructions to the jury expressly authorizing a verdict for the plaintiffs either on their claims of breach of contract or on their claims of unjust enrichment. Similarly, at trial, the defendant did not object to the submission of jury interrogatories that expressly authorized the jury to consider both sets of claims by both plaintiffs.¹¹

Even if the defendant's argument were properly before us, however, it is unpersuasive on its merits. The defendant argues that the present case is governed by Meaney v. Connecticut Hospital Assn., Inc., 250 Conn. 500, 735 A.2d 813 (1999), in which our Supreme Court held that the terms of an express contract may preclude recognition of a claim of an implied contract. Id., at 517. Meaney acknowledged the general principle that a "right of recovery under the doctrine of unjust enrichment is essentially equitable, its basis being that in a given situation it is contrary to equity and good conscience for one to retain a benefit which has come to him at the expense of another." (Internal quotation marks omitted.) Id., at 511, 735 A.2d 813. The court nonetheless concluded that a former employee did not have a cognizable claim of unjust enrichment to recover incentive pay for his past services because of uncontested evidence that he had been unsuccessful in persuading his employer to include such compensation in his employment contract. Id., at 522, 735 A.2d 813. As Professor E. Allan Farnsworth has observed, "a party that has made a contract with another cannot simply disregard the contract and claim restitution from the other party for performance rendered under the contract." 1 E. Farnsworth, Contracts (3d Ed. 2004) § 2.20, pp. 191-92. The facts of this case, however, bear no resemblance to those at issue in Meaney.

The defendant's reliance on Vertex, Inc. v. Waterbury, supra, 278 Conn. at 557, 898 A.2d 178, is equally misplaced. One of the issues in Vertex, Inc., was whether the trial court had abused its discretion in dismissing two counts of the plaintiff's complaint in the absence of a motion to strike or a motion for summary judgment. Id., at 566-70, 898 A.2d 178. In that context, the court, in a footnote, cited Meaney for the proposition that "proof of an operative contract would have been incompatible with recovery on an unjust enrichment theory." Id., at 570 n. 12, 898 A.2d 178. We do not read this footnote to expand the holding of Meaney beyond its facts.

We conclude, therefore, that the trial court properly denied the defendant's motion to set aside the verdict of the jury...