Waterbury Petroleum Products, Inc. v. Canaan Oil and Fuel Co., Inc.

• Decision Date: 22 May 1984
• Court: Connecticut Supreme Court
• Parties: WATERBURY PETROLEUM PRODUCTS, INC. v. CANAAN OIL AND FUEL COMPANY, INC., et al.

Page 988

477 A.2d 988

193 Conn. 208

WATERBURY PETROLEUM PRODUCTS, INC. v. CANAAN OIL AND FUEL COMPANY, INC., et al.

Supreme Court of Connecticut.

Argued Nov. 10, 1983.

Decided May 22, 1984.

David S. Golub, Stamford, with whom was Stanley A. Twardy, Jr., Stamford, for appellants-cross appellees (defendant C.A. Lindell & Son, Inc., et al.).

Michael F. Dowley, Middletown, with whom, on the brief, was Michael Feldman, Hartford, for appellee-cross appellant (plaintiff).

Joseph I. Lieberman, Atty. Gen., John M. Looney, Jr., and Robert M. Langer, Asst. Atty. Gen., filed an amicus curiae brief.

Before PETERS, ARTHUR H. HEALEY, PARSKEY, SHEA and SPONZO, JJ.

ARTHUR H. HEALEY, Associate Justice.

The plaintiff, Waterbury Petroleum Products, Inc., hereinafter WPP, brought this action against Canaan Oil & Fuel Co., Inc., ¹ C.A. Lindell & Sons, Inc., and Russell J. Riva, Jr., hereinafter referred to as Canaan Fuel, Lindell, and Riva, respectively, seeking damages under the law of conversion and the Connecticut Unfair Trade Practices Act, hereinafter CUTPA, as well as restraining and mandatory injunctive relief. After a trial before Lexton, J., the court rendered judgments ² which granted the requested injunctive relief and found the defendants liable for money damages under both the law of conversion and CUTPA. Lindell and Riva have appealed and WPP has cross appealed.

On their appeal, the defendants claim that the trial court erred: (1) in concluding that certain fuel oil storage tanks were personal property belonging to the plaintiff; (2) in awarding damages, other than the monetary value of the storage tanks, where such damages are not included within the proper measure of damages for conversion and were not pleaded by the plaintiff; (3) in concluding that the alleged acts of the plaintiff, which were not pleaded and which occurred in a time frame unrelated to the period at issue in the plaintiff's complaint, could form a basis for recovery under CUTPA as that statute was in effect in 1977; and (4) in denying the defendants' motions to "reopen" and set aside judgment. ³

On its cross appeal, the plaintiff claims that this court should replace our current punitive damages rule, which limits such damages to the expense of litigation less taxable costs, with a rule which would permit a measure of damages which would effectively deter and punish wanton, wilful and reckless conduct. The plaintiff also claims on its cross appeal that the trial court erred: (1) in not finding that the defendants' conversion of the storage tanks was a violation of CUTPA thus entitling the plaintiff to further punitive damages; (2) in refusing to accept evidence on the defendants' wealth and sales income as factors in measuring punitive damages; and (3) in failing to award punitive damages under CUTPA for the defendants' purchase of the realty on which the storage tanks at issue are located. The plaintiff also asks this court to award it additional counsel fees either under CUTPA or under our common law rule for the expenses incurred in this appeal.

I

The Canaan Oil Company, Inc., hereinafter Canaan Oil, was a wholly owned subsidiary of Canaan Fuel. The corporations, which were solely owned by Geoffrey S. Smith, Jr., operated a retail, commercial, and wholesale fuel oil and gasoline business in North Canaan. WPP operated a similar business in Waterbury and had become interested in extending its business to the North Canaan area. On August 14, 1975, a purchase and sale agreement was executed by both Smith, acting individually and as officer and director of both Canaan Fuel and Canaan Oil (sellers), and Ralph J. Devino, acting as the duly authorized vice president of WPP (buyer). The agreement provided that the sellers would "sell, assign, transfer and convey" to the buyer: (1) all customer accounts; (2) all accounts receivable; and (3) all rights, title and interest they have in or to "all Personal Property of said Sellers that pertain to the retail and commercial sale and delivery of fuel oil and gasoline, including trucks, tanks, pumps, parts inventory, and any customer loaned equipment." ⁴ WPP did not, however, negotiate or enter into any agreement concerning the purchase of the parcel of land owned by Canaan Fuel in North Canaan on which the business was conducted; rather, WPP used the premises to conduct its business pursuant to a use and occupancy agreement which had been negotiated with Smith. ⁵ Located on the premises are three 20,000 gallon storage tanks which Canaan Oil had used in conducting its business. These tanks rest by the force of gravity in cradles which in turn are cemented into the ground. These storage tanks had been placed on the property some years ago by Rodney Coombes, the previous owner of Canaan Oil and of the realty upon which the tanks are situated.

Sometime after the 1975 sale to WPP, Smith entered into negotiations regarding the sale of Canaan Fuel's North Canaan realty with Russell J. Riva, Jr., the president and "principal or sole owner" of Lindell, a corporation also engaged in the oil and gasoline business in the North Canaan area. Smith and Riva then made an oral agreement for the transfer of the real property. Smith, who resided in North Carolina at this time, engaged Attorney Charles Rice to handle the transaction. Rice drew a quitclaim deed which described Canaan Oil & Fuel as the grantor and Lindell as the grantee. Smith executed the deed in behalf of Canaan Fuel in North Carolina and then returned it to Rice. The executed deed was then brought by Rice to the defendants' attorney, Hugh Robinson.

Initially, the terms of the agreement made by Smith and Riva included the payment of $1000 by Riva and Riva's obligation to secure releases of the encumbrances on the property except for a personal obligation which Smith owed to Atlantic Richfield. Upon presenting the deed to Robinson, however, Rice requested the payment of an additional $1000. ⁶ Robinson sent Rice to speak directly with Riva, who agreed to pay the additional $1000 and was then given the deed by Rice. Subsequently, Riva examined the deed and he realized that Lindell was the named grantee; Riva had previously notified his attorney, Robinson, that he (Riva) was to be the named grantee. Riva then informed Robinson of this problem, and Robinson then contacted Rice. Rice had no objection to making Riva the named grantee and he offered to draw a new deed conforming to Riva's request which would then be sent to Smith for execution. Robinson declined this offer because a delay of two weeks was contemplated. Robinson thereafter retyped the first page of the deed substituting Riva for Lindell as the named grantee. ⁷

WPP was then informed by counsel for Riva and Lindell that Canaan Fuel had sold the realty to Lindell, that Lindell claimed the storage tanks as fixtures to the realty purchased, and that WPP would be locked out of the premises although it would have an opportunity to remove its inventory. As a result, WPP removed its inventory from the storage tanks and yielded possession of the property.

WPP then filed this action. WPP claimed the storage tanks as personal property, to which it had taken title as a result of the 1975 purchase and sale agreement with Smith described above, and sought injunctive relief and money damages for conversion. The trial court found that the storage tanks were not fixtures, but were personal property, and as such, title to them had passed to WPP pursuant to its 1975 purchase-sale agreement with Smith. It therefore found the defendants, because of their lockout of WPP, liable under the law of conversion with reference to the three storage tanks. ⁸ The court awarded consequential damages for the harm to WPP's business and common law punitive damages, the latter of which was limited in amount to the expense of litigation, less taxable costs. ⁹

The defendants claim that the facts found by the trial court, when viewed in light of the applicable law, compel the conclusion that the storage tanks are fixtures. Specifically, they point to: the circumstance that the tanks were placed on the property by its owner for the use of his business; the ponderous nature of the storage tanks; the circumstance that these tanks rest on cradles which have footings cemented into the ground and that they are set on a part of the property that is specially raised to permit a gravity flow of the stored fuel; the fact that the tanks were transferred by Coombes in 1967 when he sold the land upon which they are located; their claim that prior to the sale of the property by Coombes, the municipal tax records of North Canaan included the three storage tanks in the description and assessment of the land; and their claim that Canaan Fuel considered the tanks to be fixtures when it purchased the property from Coombes and that it did not intend to sell these tanks to WPP in 1975 when it sold its personal property.

On the other hand, the plaintiff maintains that the trial court properly focused on: the "intent of the parties" regarding the sale by Canaan Fuel of its personal property to WPP; the evidence of the custom in the industry to treat such tanks as personalty; the evidence which indicated that Coombes listed these tanks as personalty on his personal property field sheets; Riva's efforts to rent the tanks from WPP; and the evidence that storage tanks are easily removable from the land. Moreover, the plaintiff claims that even if the tanks were originally considered fixtures by Coombes at the time of annexation, they were constructively severed by the subsequent agreements of the interested parties.

"To constitute a fixture, it is essential 'that an article should not only be annexed to the freehold, but that it should clearly appear from an inspection of the property itself, taking into consideration the character of the annexation, the nature and the adaptation of the article annexed to the uses and purposes to which ...