VERTEFEUILLE, J.
The defendant TD Banknorth, N.A. (bank), held mortgage and security interests in real and personal property located in Wallingford and Meriden and owned by the defendants Groth Family Limited Partnership, the Mountainside Corporation and/or James A. Groth (collectively, debtors). The real property was operated as a commercial special events facility and the personal property consisted of items used to operate the facility. The named plaintiff, Frederick C. Ulbrich, was the successful bidder at a combined foreclosure sale of the real estate and secured party auction of the personal property conducted pursuant to article 9 of the Connecticut Uniform Commercial Code (UCC), General Statutes § 42a-9-101 et seq. (article 9). The plaintiff Ulbrich Properties, LLC (Ulbrich Properties), is the current owner of the real and personal property.
The jury reasonably could have found the following facts. The bank made a loan to the debtors that was secured by certain real and personal property that they owned in Meriden, including the special events facility and the personal property used to operate the facility. When the debtors defaulted on the loan, the bank initiated a foreclosure action against them in which it sought to foreclose both the real and personal property. Thereafter, the bank sought the trial court's permission to sell the real and personal property together, "as a whole ... so as to achieve the highest total price at the auction sale," which the court ordered.
The trial court in the foreclosure action also authorized Bruno Morasutti, who had been appointed as the committee of sale, to hire an auctioneer to conduct the auction sale of the real and personal property. Ultimately, Tranzon was retained to conduct the auction.
Before the auction, the defendants learned that the debtors did not own many of the items of personal property that were used to operate the special events facility, but had leased them, and, therefore, it was possible that the items were not subject to the bank's security interest.
Also before the auction, Ulbrich walked through the property with James A. Groth, whom he had known for many years. Ulbrich had reached an informal agreement with Groth and the other debtors that they would continue to operate the special events facility if he was the successful bidder at the auction. Groth led Ulbrich to believe that virtually all of the personal property at the site was included in the auction sale.
The auction took place on November 9, 2006. Before the bids were placed, the auctioneer informed the bidders verbally that the personal property list "is for informational purpose[s] to give you some sense [of] what has been used in the operation of this business and again we are not making representations as to any one item or the quality and quantity of any one item." Ulbrich successfully bid $1.65 million for the real and personal property.
After the auction, the plaintiffs discovered that much of the personal property at the site was not included in the sale because it was not owned by the debtors. As a result, the plaintiffs were required to engage in extensive litigation to determine who was entitled to possession and ownership of the items of personal property.
In December, 2007, the plaintiffs commenced this action alleging, among other claims, negligence and negligent misrepresentation against the bank and Tranzon, breach of the warranty of title against the bank, and violation of CUTPA against the bank. In addition, the plaintiffs raised a breach of contract claim against the bank for its alleged failure to pay the plaintiffs the proceeds from a life insurance policy belonging to the debtors that the plaintiffs claimed was included in the sale. During the trial, the trial court rendered a directed verdict for the defendants on the breach of contract claim. The court denied the defendants' motion for a directed verdict on the negligence and negligent misrepresentation claims and the CUTPA claim against the bank based on the economic loss doctrine. Thereafter, the jury returned a verdict in favor of the plaintiffs on the negligence and negligent misrepresentation claims against both the bank and Tranzon and the breach of warranty and CUTPA claims against the bank, and awarded $462,000 in compensatory damages. The trial court subsequently denied the defendants' motion for judgment notwithstanding the verdict and their motion to set aside the verdict. The court also denied the defendants' motion for remittitur in part, but granted a $45,000 remittitur to reflect payments that the plaintiffs' had received from settling parties, resulting in a compensatory damages award of $417,000.
The defendants claim that the trial court improperly: (1) determined that the economic loss doctrine did not bar the plaintiffs' tort and CUTPA claims; (2) determined that a secured party seller and an auctioneer at a secured party sale owe a common-law duty of care to the buyer; (3) upheld the jury verdict in favor of the plaintiffs on the breach of the warranty of title claim when the bank had disclaimed any warranty of title; (4) determined that the written warranty disclaimers did not bar the plaintiffs' negligent misrepresentations claims; (5) upheld the jury verdict in favor of the plaintiffs on the CUTPA claim when it was not supported by sufficient evidence; (6) upheld the jury's compensatory damages award when it was not supported by sufficient evidence; (7) awarded punitive damages to the plaintiffs pursuant to CUTPA; and (8) awarded postjudgment interest to the plaintiffs. On cross appeal, Ulbrich claims that the trial court improperly rendered a directed verdict for the defendants on the breach of contract claim and denied the plaintiffs' request for nontaxable costs pursuant to CUTPA.
The defendants claim that the trial court improperly determined that: (1) a secured party seller and an auctioneer at a secured party sale pursuant to article 9 of the UCC owe a common-law duty of care to the buyer;
The following additional procedural history is relevant to our resolution of this claim. Before trial, the defendants filed a motion for summary judgment in which they argued that the plaintiffs' claims were governed exclusively by article 9 and, therefore, their negligence and negligent misrepresentation claims were barred under the economic loss doctrine. The trial court denied the motion. After trial, the defendants filed a motion to set aside the jury verdict in which they argued that the trial court improperly instructed the jury that a secured party seller at an article 9 sale owes a common-law duty of care to the buyer of the goods.
As a preliminary matter, we set forth the applicable standard of review. Although we generally review a trial court's denial of a motion to set aside a verdict for an abuse of discretion; Hall v. Bergman, 296 Conn. 169, 179, 994 A.2d 666 (2010); whether a secured party and auctioneer owe a common-law duty of care to the buyer at a secured party sale is a question of law over which our review is plenary. See Patino v. Birken Mfg. Co., 304 Conn. 679, 687-88, 41 A.3d 1013 (2012); see also Pelletier v. Sordoni/Skanska Construction Co., 286 Conn. 563, 593, 945 A.2d 388 (2008) ("[t]he existence of a duty is a question of law" [internal quotation marks omitted]).
The plaintiffs contend that the trial court's determination that the defendants owed them a common-law duty of care to identify accurately the personal property that was subject to the article 9 secured party sale is supported by Lombard v. Edward J. Peters, Jr., P.C., supra, 252 Conn. at 634, 749 A.2d 630 (committee of sale has duty not to misidentify property that was subject to foreclosure sale),
The plaintiffs have cited no cases, however, in which a court addressing a claim involving an article 9 secured party sale has made the distinction between warranty of title claims and authority to sell claims that courts have made in the context of real estate sales. Indeed, in the only case that we have been able to discover that addresses a claim that a secured party had
Indeed, the trial court in the present case instructed the jury that the rule of caveat emptor, the rule that a secured party seller has a duty to potential buyers "to properly identify the property being sold and not to misidentify property as being part of a sale when it is not," and the rule under article 9 that a secured party seller impliedly warrants title to the sold property all applied to all of the personal property that the plaintiffs believed
Although we recognize that the fact that article 9 of the UCC applies to the defendants' conduct does not necessarily mean that the plaintiffs are barred from raising common-law claims; see Flagg Energy Development Corp. v. General Motors Corp., 244 Conn. 126, 154, 709 A.2d 1075 (1998) ("[General Statutes §] 42a-1-103 [b]
"Section 42a-1-103 preserves a broad range of common-law actions, including actions for fraud and misrepresentation, unless such actions are displaced by the particular provisions of this title. One such particular provision is [General Statutes] § 42a-2-721. Section 42a-2-721 provides that, in some circumstances, a claim for a remedy for material misrepresentation or fraud may be consistent with other claims arising under article 2 of the [UCC]. Such consistency may be found in the event of rescission or a claim for rescission of the contract for sale [or] rejection or return of the goods.... General Statutes § 42a-2-721. The official comment to that section emphasizes that, even in such cases, the circumstances may make the remedies inconsistent. [Conn. Gen.Stat. Ann. § 42a-2-721 (West 2009), commission comment]. By implication, the intent of § 42a-2-721 is to make actions for fraud or misrepresentation presumptively inconsistent with postacceptance claims for breach of warranty." (Emphasis in original; footnotes altered; internal quotation marks omitted.) Flagg Energy Development Corp. v. General Motors Corp., supra, 244 Conn. at 153-55, 709 A.2d 1075.
In the present case, the trial court concluded that the economic loss doctrine, as set forth in Flagg Energy Development Corp., did not bar the plaintiffs' negligence and negligent misrepresentation claims because, unlike the transaction at issue in that case, the transaction between the bank and the plaintiffs here was not controlled by the provisions of article 2 of the UCC, governing sales of goods, but by the provisions of article 9. The court reasoned that, "when parties to a contract are free to negotiate the terms of their bargain and allocate the risks, the law of contracts should be applied, rather than the law of torts, in order to determine the parties' respective responsibility for economic losses." In contrast, "[i]n an auction sale of collateral, there is no real bargaining opportunity for the parties to negotiate the terms of the contract or an adjustment of the sale price in order to allocate any risks for potential losses. A buyer at an auction sale must submit his bids based on the terms of the sale and the condition of the property as offered."
The fact that a buyer at an article 9 secured party sale may be unable to negotiate the timing of the sale, the place of the sale, the place of delivery, or the quality, condition or quantity of the goods, will be known by the buyer, however, before the sale. Accordingly, a buyer at such a sale can adjust his offer price to reflect the risks attendant to such a sale. In addition, as we discuss more fully in part II of this opinion, like article 2, article 9 expressly provides for an implied warranty of title for collateral that is sold at a secured party sale.
The plaintiffs contend that this conclusion is inconsistent with this court's decision in Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 579, 657 A.2d 212 (1995), in which this court concluded that the plaintiffs "were not barred from pursuing a negligence claim solely because they also might have had a breach of contract claim." The plaintiffs in Williams Ford, Inc., were certain automobile dealerships that had entered into advertising contracts with the defendant, The Hartford Courant Company (Courant). Id., at 560-61, 657 A.2d 212. The dealerships claimed that the Courant had negligently misrepresented to them that there were no less expensive advertising contracts available when, in fact, there were. Id., at 565-67, 657 A.2d 212. The Courant contended that the negligent misrepresentation claim was barred because, "where the controversy concerns purely economic losses allegedly caused by statements made during the course of a contractual relationship between businesses, it is contract law, rather than tort law, that should apply." Id., at 579, 657 A.2d 212. This court observed that it previously had held that, "[i]f the plaintiff's complaint otherwise contains the necessary elements of negligent
The plaintiffs in the present case contend that Flagg Energy Development Corp. applies only to the delivery of defective goods that have been sold pursuant to the UCC, while Williams Ford, Inc., applies when, as in the present case, the defendants' conduct "undermined the ability of the plaintiffs to consider and approve the terms of the commercial arrangement free from misrepresentation." They further contend that the defendants' misrepresentations, "as in [Williams Ford, Inc.] were of a kind that undermined the ability of [the] plaintiffs to consider and enter into the commercial arrangement contemplated by the auction free from misrepresentation regarding the preliminary question of whether the defendants even had the authority to sell what they were purporting to sell. The economic loss doctrine does not apply where the asserted negligent conduct is independent of the claimed breach of contract."
To the extent that the plaintiffs contend that Flagg Energy Development Corp. applies only to sales covered by article 2 of the UCC, we disagree for the reasons that we have explained. To the extent, however, that they claim that the distinction between Flagg Energy Development Corp. and Williams Ford, Inc., is that the former case applies to tort claims that arise out of and are dependent on the contractual relationship between the parties; Flagg Energy Development Corp. v. General Motors Corp., supra, 244 Conn. at 153, 709 A.2d 1075 (economic loss doctrine bars negligent misrepresentation claim for "commercial losses arising out of the defective performance of contracts" [emphasis added]); while the latter case applies to tort claims that are "independent" of the plaintiff's contract claim, and that can survive even if the contract claim fails, we agree. See Williams Ford, Inc. v. Hartford Courant Co., supra, 232 Conn. at 579, 657 A.2d 212. The plaintiffs' negligence and negligent misrepresentation claims in the present case are not "independent," how ever, from their article 9 breach of the implied warranty of title claim.
We recognize that this court stated broadly in Williams Ford, Inc. v. Hartford Courant Co., supra, 232 Conn. at 579, 657 A.2d 212, "that a remedy on the contract is independent of a remedy for negligent misrepresentation." As the trial court in the present case observed, this broad statement "[has] caused much division and dispute among the trial courts." Specifically, the trial courts have been confused as to whether this statement was overruled by our decision in Flagg Energy Development Corp. v. General Motors Corp., supra, 244 Conn. at 126, 709 A.2d 1075, or whether, instead, the court in that case adopted a narrow exception to Williams Ford, Inc., for cases arising from the sale of goods pursuant to article 2. It is relatively clear, however, that what this court intended to say in Williams Ford, Inc., was that a remedy on the contract and a remedy for negligent misrepresentation may be independent remedies. Specifically, as this court recognized in Flagg Energy Development Corp. v. General Motors Corp., supra, at 154-55, 709 A.2d 1075, a plaintiff that has a contractual relationship with the defendant can bring a negligent misrepresentation claim against the defendant when the negligent misrepresentations induced the plaintiff to enter into a contract. As this court also indicated in that case, when the contract involves a sale of goods covered by the UCC, the exclusive remedy for such a claim would be to reject the goods and to rescind the contract, a remedy that the plaintiffs in the present case do not seek. Id. Such a claim would not "arise out of" the breach of any contractual obligation because it would implicate contract formation. See Budgetel Inns, Inc. v. Micros Systems, Inc., 8 F.Supp.2d 1137, 1147 (E.D.Wis.1998) ("fraud in the inducement by definition occurs prior to the formation of the contract itself, thus, it never constitutes a breach of contract"); Abi-Najm v. Concord Condominium, LLC, 280 Va. 350, 363, 699 S.E.2d 483 (2010) (economic loss doctrine does not bar fraudulent inducement claim because fraud "was perpetrated by [the defendant] before a contract between the two parties came into existence [and] therefore it cannot logically follow that the duty [that the defendant] allegedly breached was one that finds its source in the [c]ontracts" [emphasis in original]). Under this reading, Flagg Energy Development Corp. and Williams Ford, Inc., are entirely consistent. More over, although this court stated in Williams Ford, Inc., that "[t]he dealerships were not barred from pursuing a negligence claim solely because they also might have had a breach of contract claim"; Williams Ford, Inc. v. Hartford Courant Co., supra, at 579, 657 A.2d 212; there was no indication as to what the breach of contract claim might have been. Thus, the dealerships' negligent misrepresentation claim was not barred because the Courant simply had failed to identify any contract claim that would entirely subsume the tort claim. We conclude, therefore, that our decision in Williams Ford, Inc.,
We next address the defendants' claim that the plaintiffs' CUTPA claim was barred by the economic loss doctrine. We disagree.
In support of their claim, the defendants again rely on Flagg Energy Development Corp. v. General Motors Corp., supra, 244 Conn. at 126, 709 A.2d 1075. In that case, this court concluded that the economic loss doctrine barred the plaintiffs' CUTPA claim because, like the plaintiffs' negligence claims, the claim "depend[ed] upon allegations of fact that are identical to those asserted in their [breach of contract] claims." Id., at 154, 709 A.2d 1075. This court also concluded that, under the UCC, "actions for fraud or misrepresentation," which formed the basis for the plaintiffs' CUTPA claim, "[are] presumptively inconsistent with postacceptance claims for breach of warranty." (Emphasis in original.) Id., at 155, 709 A.2d 1075; see also Werwinski v. Ford Motor Co., 286 F.3d 661, 681 (3d Cir.2002) ("exempting [statutory fraud]
At the outset, we set forth the legal standard that governs CUTPA claims.
As we explained in part I of this opinion, the economic loss doctrine bars negligence claims that arise out of and are dependent on breach of contract claims that result only in economic loss. This court and the Appellate Court repeatedly have held, however, that a breach of contract may form the basis for a CUTPA claim. See Naples v. Keystone Building & Development Corp., 295 Conn. 214, 229-30, 990 A.2d 326 (2010) (citing cases). With the exception of our decision in Flagg Energy Development Corp., we never have suggested that such CUTPA claims are barred if the plaintiff suffered only an economic loss and the loss arose solely from the breach of the contract. Rather, our focus in such cases has been on whether the defendant's breach of contract was merely negligent or incompetent, in which case the CUTPA claim was barred, or whether the defendant's actions would support a finding of intentional, reckless, unethical or unscrupulous conduct, in which case the contractual breach will support a CUTPA claim under the second prong of
In the present case, the plaintiffs alleged that the bank's conduct "offended public policy; [and] was immoral, oppressive, unethical and unscrupulous...." Accordingly, we conclude that the trial court properly concluded that the economic loss doctrine did not bar the plaintiffs' CUTPA claims and that the court did not abuse its discretion when it denied the defendants' motions for judgment notwithstanding the verdict and for a directed verdict on that ground.
We next address the defendants' claim that the trial court improperly rendered judgment for the plaintiffs on their breach of the warranty of title claim against the bank under article 9. The defendants contend that the trial court improperly denied their motions for judgment notwithstanding the verdict and to set aside the verdict on this claim because no reasonable juror could have found that the disclaimers set forth in the bills of sale
At the outset, we set forth the standard of review. "The proper appellate standard of review when considering the action of a trial court in granting or denying a motion to set aside a verdict is the abuse of discretion standard.... In determining whether there has been an abuse of discretion, every reasonable presumption should be given in favor of the correctness of the court's ruling.... Reversal is required only [when] an abuse of discretion is manifest or [when] injustice appears to have been done.... [T]he role of the trial court on a motion to set aside the jury's verdict is not to sit as [an added] juror ... but, rather, to decide whether, viewing the evidence in the light most favorable to the prevailing party, the jury could reasonably have reached the verdict that it did.... In reviewing the action of the trial court in denying [or granting a motion] ... to set aside the verdict, our primary concern is to determine whether the court abused its discretion.... The trial court's decision is significant because the trial judge has had the same opportunity as the jury to view the witnesses, to assess their credibility and to determine the weight that should be given to [the] evidence. Moreover, the trial judge can gauge the tenor of the trial, as [this court], on the written record, cannot, and can detect those factors, if any, that could improperly have influenced the jury." (Citations omitted; internal quotation marks omitted.) Hall v. Bergman, supra, 296 Conn. at 179, 994 A.2d 666. "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." (Internal quotation marks omitted.) Coughlin v. Anderson, 270 Conn. 487, 498, 853 A.2d 460 (2004).
We next review the substantive law governing warranties of title at secured party sales. Section 42a-9-610 (d) provides: "A contract for sale, lease, license or other disposition includes the warranties relating to title, possession, quiet enjoyment and the like which by operation of law accompany a voluntary disposition of property of the kind subject to the contract."
Section 42a-9-610 (e) provides: "A secured party may disclaim or modify warranties under subsection (d): (1) In a manner that would be effective to disclaim or modify the warranties in a voluntary disposition of property of the kind subject to the contract of disposition; or (2) By communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties." Thus, pursuant to § 42a-9-610 (e)(1), the provisions of General Statutes § 42a-2-312, governing the sale of goods, apply to goods sold at a secured party sale. Subsection (1) of § 42a-2-312 provides in relevant part: "Subject to subsection (2) there is in a contract for sale a warranty by the seller that (a) the title conveyed shall be good, and its transfer rightful...." Subsection (2) of § 42a-2-312 provides: "A warranty under subsection (1) will be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have." Finally, with respect to the "record" authorized by § 42-9-610(e)(2), § 42a-9-610 (f) provides: "A record is sufficient to disclaim warranties under subsection (e) if it indicates `There is no warranty relating to title, possession, quiet enjoyment or the like in this disposition' or uses words of similar import." "When the language of a contract is ambiguous ... the determination of the parties' intent is a question of fact...."
As we previously have set forth in this opinion, the bills of sale in the present case provided that the bank "hereby sells and transfers to [Ulbrich] ... all of the [bank's] right, title and interest, as such [bank] has or may have in and to the personal property described on Exhibit `A' attached hereto...." They also provided that "THE SECURED PARTY MAKES NO WARRANTIES OR REPRESENTATIONS OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE COLLATERAL. THE ASSETS ARE SOLD `AS IS' AND `WHERE IS' AND THE SECURED PARTY SPECIFICALLY DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE WHATSOEVER."
We conclude that this language was inadequate to disclaim the implied warranty of title as a matter of law. With respect to the first disclaimer, a number of courts have concluded that, under statutory provisions analogous to § 42a-2-312 (2), disclaimer language must be specific, and quitclaim type language stating that the seller is selling only what interest the seller has in the property is not sufficient. See Rockdale Cable T.V. Co. v. Spadora, 97 Ill.App.3d 754, 756-57, 53 Ill.Dec. 171, 423 N.E.2d 555 (1981) (under statutory provision analogous to § 42a-2-312, language in bill of sale transferring "only such `right, title and interest' as [the seller] may possess" was not sufficiently specific to disclaim warranty of title); Sunseri v. RKO-Stanley Warner Theatres, Inc., 248 Pa.Super. 111, 115, 374 A.2d 1342 (1977) (under statutory provision analogous to § 42a-2-312, bill of sale provision stating that seller was selling only "`any right, title and interest [s]eller may have' [in property] ... is clearly not a positive warning or exclusion in regard to the status of title, and would be unlikely to offend or even catch the eye of an unsophisticated buyer"); see also Jones v. Linebaugh, 34 Mich.App. 305, 308-309, 191 N.W.2d 142 (1971) (under statutory provision analogous to § 42a-2-312, language in bill of sale that seller was assigning seller's right, title and interest in property and knew of no existing title to property was insufficiently specific to disclaim warranty of title). In addition, the authors of one treatise have stated that, although some cases from the nineteenth century had found quitclaim type language to be sufficient under the common law, they preferred "the approach taken in [Jones v. Linebaugh, supra, at 308-10, 191 N.W.2d 142], over the older view, which apparently was influenced by real property law." 1 J. White et al., Uniform Commercial Code (6th Ed.2012) § 10:44, p. 949. Because there is no more important and fundamental warranty in any sale than the warranty of title, "very precise and unambiguous language must be used to exclude" that warranty.
With respect to the second disclaimer, although the first sentence communicated to the plaintiffs that the bank was making no warranties of any kind, a number of courts have held that a general statement that property is being sold as is and that the seller is making no warranties of any kind is insufficient to disclaim an implied warranty of title. See Brokke v. Williams, 235 Mont. 305, 307-308, 766 P.2d 1311 (1989) (sign stating that property was being sold "as is" was not sufficient to disclaim implied warranty of title); Moore v. Pro Team Corvette Sales, Inc., 152 Ohio App.3d 71, 75, 786 N.E.2d 903 (provision of sales contract stating that "`[a]ll warranties... are hereby excluded from this transaction'" was insufficiently specific to disclaim warranty of title), appeal denied, 97 Ohio St.3d 1485, 780 N.E.2d 288 (2002); Sunseri v. RKO-Stanley Warner Theatres, Inc., supra, 248 Pa.Super. at 116, 374 A.2d 1342 (provision in bill of sale that "[s]eller shall in nowise be deemed or held to be obligated ... under any guarant[ees] or warranties" was not sufficiently specific to disclaim warranty of title [internal quotation marks omitted]). Moreover, the second sentence reasonably can be read to be a clarification of the first sentence. Because the second sentence clearly relates to the location and quality of the personal property, not to title, the jury reasonably could have concluded that the disclaimer in the first sentence related solely to those matters.
For similar reasons, we conclude that the statements in the auction brochure were not sufficiently specific to disclaim the implied warranty of title under either § 42a-2-312 (2) or § 42a-9-610 (f). The brochure provided that "[n]o representations or warranties of any kind are made with respect to the property to be sold. All property will be sold `as is, where is,' and `with all defects.'" In addition, it stated that, "[w]hile descriptions of personal property listed [in the brochure] are believed to be accurate, no warranties or guarantees are being made, expressed or implied, regarding the quality, quantity, or usefulness for any purpose of those items." Thus, the brochure focused the potential buyers' attention primarily on the location and condition of the property and did not specifically refer to the warranty of title.
Under the Kentucky law that applied in Landmark Motors, Inc., however, a "sale by a foreclosing lienor ... is out of the course of ordinary commercial [sales] and the [sale's] peculiar character is [deemed to be] immediately apparent to a [prospective] buyer...." (Internal quotation marks omitted.) Id., at 974. Thus, it would appear that, even without an express disclaimer, the presumption under Kentucky law was that "[t]he buyer [at a secured party sale] knew or should have known that the person selling did not claim title in himself and was selling only such a right as [the seller] may have had." (Internal quotation marks omitted.) Id. As we have indicated, that is not the law in Connecticut. See footnote 34 of this opinion. Rather, under § 42a-9-610 (d), the default rule in this state is that a secured party seller impliedly warrants that it is conveying good title to the property to a buyer at a secured party sale. Accordingly, we conclude that the defendants' reliance on Landmark Motors, Inc., is misplaced. We conclude, therefore, that the trial court did not abuse its discretion when it denied the defendants' motion to set aside the verdict on the plaintiffs' breach of warranty claim against the bank and their motion for judgment notwithstanding the verdict.
We next address the defendants' claims that: (1) the trial court improperly instructed the jury that the "cigarette rule" provided the proper legal standard for the plaintiffs' CUTPA claim when the federal courts have abandoned that rule in favor of a different rule; and (2) even if the instruction was proper, the trial court improperly denied the defendants' motions for a directed verdict and for judgment notwithstanding the verdict because no reasonable jury could have found that the bank had engaged in an unfair trade practice. We conclude that the first claim was not preserved and we disagree with the second claim.
We first address the defendants' instructional claim. The defendants point out that this court previously has stated that, "[a]lthough we consistently have followed the cigarette rule in CUTPA cases, we also note that, when interpreting `unfairness' under CUTPA, our decisions are to be guided by the interpretations of the Federal Trade Act by the Federal Trade Commission and the federal courts. See General Statutes § 42-110b [b].
The following procedural history is relevant to our resolution of this claim. The defendants submitted a request to charge in which they asked the court to instruct the jury in accordance with the cigarette rule. They also requested that
"It is well settled ... that a party may preserve for appeal a claim that an instruction ... was ... defective either by: (1) submitting a written request to charge covering the matter; or (2) taking an exception to the charge as given. State v. Ramos, 261 Conn. 156, 170, 801 A.2d 788 (2002); see also Practice Book § 16-20. [T]he purpose of the [preservation requirement] is to alert the court to any claims of error while there is still an opportunity for correction in order to avoid the economic waste and increased court congestion caused by unnecessary retrials.... State v. Ramos, supra, at 170, 801 A.2d 788; see also Henderson v. Kibbe, 431 U.S. 145, 154, 97 S.Ct. 1730, 52 L.Ed.2d 203 (1977) ([o]rderly procedure requires that the respective adversaries' views as to how the jury should be instructed be presented to the trial judge in time to enable him to deliver an accurate charge and to minimize the risk of committing reversible error). Thus, the essence of the preservation requirement is that fair notice be given to the trial court of the party's view of the governing law and of any disagreement that the party may have had with the charge actually given." (Emphasis in original; footnote omitted; internal quotation marks omitted.) State v. Ross, 269 Conn. 213, 335-36, 849 A.2d 648 (2004).
In the present case, the defendants neither requested that the trial court instruct the jury in accordance with current federal law applicable to unfair trade practices instead of the cigarette rule, nor excepted to the instruction given by the trial court on that ground. Although the defendants requested that, in addition to the instruction on the cigarette rule, the trial court instruct the jury that, under federal law, "[w]hether the [d]efendants caused substantial unjustified injury to consumers, competitors or other business persons, is the most important of the three criteria" set forth in the cigarette rule, they did not contend that the "Federal Trade Commission ... has replaced the cigarette rule with the substantial injury to consumers test" or that the trial court "should expressly reject the cigarette
In the present case, we see no exceptional circumstances that would militate in favor of reviewing the defendants' unpreserved claim that the cigarette rule should be abandoned in favor of the substantial unjustified injury test. Accordingly, we conclude that the claim is not reviewable.
We next address the defendants' claim that the trial court improperly determined that the evidence was sufficient to support the jury's finding that the defendants had violated CUTPA.
The following additional facts are relevant to our resolution of this claim. In an October 4, 2006 e-mail from Tranzon to the bank and to Thomas Farrell, the attorney representing the bank in the foreclosure action, Tranzon indicated that the assessed value of the personal property was low because much of the property was leased. See footnote 8 of this opinion. Tranzon also indicated that it hoped to obtain a list of the personal property that would be included in the sale from the debtors. In his responding e-mail, Farrell indicated that the bank was entitled to sell personal property owned by the debtors and that the debtors would be providing "a list of personal property on site." On October 10, 2006, Robert C. Reichert, the attorney representing the debtors in the foreclosure action, sent a letter to Morasutti stating that "there are nuances relating to the property that an auction buyer may be unlikely to discover given the usual due diligence in foreclosure sales" and that "[p]otential bidders ... should understand that not everything on site will be conveyed by bill of sale at the foreclosure." Copies of Reichert's letter were sent to, inter alios, Lakeside Advisors Group, LLC (Lakeside), an entity that had been assisting the debtors in their attempt to obtain financing to continue to operate the special events facility, and to Farrell. On October 24, 2006, Lakeside sent an e-mail to Reichert stating that it hoped that Morasutti had been shown a copy of the October 10, 2006 letter to Tranzon. In his e-mail response, Reichert stated that Lakeside could provide a copy of the October 10, 2006 letter to Tranzon and that Lakeside should "[t]hen ask what their plan is with regard to disclosure of both positive and negative features of the property." On October 25, 2006, Tranzon sent an e-mail to Lakeside stating that "to date we have not received a comprehensive list of personal property and most definitely have not received a copy of what property is currently leased.... We would expect that list by this afternoon or at the latest before the preview tomorrow." A copy of the e-mail was sent to Farrell. Lakeside forwarded the e-mail to Reichert, who responded that he did not have such a list, but believed that James A. Groth's daughter, Kelly Groth, did. Reichert also stated that he was "surprised that Tranzon hasn't requested or obtained such a list until now." On the same date that Reichert sent the e-mail to Lakeside, he sent a letter to Morasutti stating that his clients had "pointed out certain errors or omissions in the property information packet prepared by Tranzon," including the fact that the packet contained "no mention of the fact that a substantial portion of the personal property is subject to leases." Reichert also suggested that Morasutti announce to potential bidders that he was making "no representation as to ownership of the assets, which assets
Farrell testified at trial that, if he had known what specific items of property were not subject to the bank's security interest because the debtors had leased them, he "would have insisted that the committee [inform the bidders] at the auction and if the committee did not [inform them], [he] would have made that announcement...." Farrell also testified that he had practiced commercial law for twenty-five years and that he had handled "a fair amount of complex commercial foreclosures."
As we previously have indicated in this opinion, it is well established that a breach of contract may, but does not necessarily, rise to the level of a CUTPA violation. See Naples v. Keystone Building & Development Corp., supra, 295 Conn. at 228, 990 A.2d 326 ("not every contractual breach rises to the level of a CUTPA violation" [internal quotation marks omitted]). In addition, "[i]n the absence of aggravating unscrupulous conduct, mere incompetence [in performing a contract] does not by itself mandate a trial court to find a CUTPA violation." Id., at 229, 990 A.2d 326; see also id., at 228, 990 A.2d 326 (citing cases where breach of contract was found not to have violated CUTPA because it was not unlawful, unethical, unscrupulous, wilful or reckless); id., at 229, 990 A.2d 326 (citing cases where breach of contract was found to support CUTPA violation).
We conclude that the evidence in the present case, viewed in the light most favorable to upholding the verdict, was sufficient to support a finding that the bank was not merely negligent or incompetent, but had engaged in unethical or unscrupulous conduct. Specifically, the evidence would support a finding that all parties involved in the auction of the personal property, including the bank, knew that some, perhaps much, of the personal property at the special events facility was not owned by the debtors, but was leased, and reasonably believed that the seller had an obligation to warn potential buyers of that fact. Indeed, Farrell, the attorney for the bank, testified that, if he had known what specific items of property were not subject to the sale because the debtors had leased them, he "would have insisted that the committee [inform the bidders] at the auction and if the committee did not [inform them], [he] would have made that announcement...." In addition, he wrote to Reichert and Morasutti that, once the property that the debtors did not own was identified, "[t]he committee would then have to alert buyers of the property that is not included in the auction." (Emphasis added.) Although the bank might not have known which specific items of personal property were subject to leases, it knew that some of the items of property on the special events facility site did not belong to the debtors and would not be conveyed to the plaintiffs. We cannot perceive why, if Farrell believed that the bank would have had an obligation to inform potential buyers about specific leases that it was aware of, he would have believed that the bank was not required to advise buyers generally that it knew that some items of property were leased, but that it did not know which items.
We next address the defendants' claim that the trial court improperly allowed the plaintiffs to argue to the jury that their evidence provided a sufficient basis to support their claim for compensatory damages and improperly denied the defendants' motion to set aside the damages award. We disagree.
The following additional facts that the jury reasonably could have found and procedural history are relevant to our resolution of this claim. At trial, Joseph Vrabely testified that he was a friend and business associate of Ulbrich. In 2005 and 2006, Vrabely and Ulbrich had discussions with members of the Groth family about the financial difficulties that the special events facility was experiencing and about the possibility that Ulbrich would invest in it. In October of 2006, Vrabely learned about the foreclosure sale of the facility and auction of the personal property, and talked with Ulbrich about the possibility that Ulbrich would purchase the facility and Vrabely would help him run it. At some point during those discussions, Ulbrich provided Vrabely with a copy of a "confidential financing memorandum" dated April, 2006, that, according to its preface, had "been prepared for use on a confidential basis to persons contemplating business or financing transactions with Mountainside...." The financing memorandum contained a list of machinery and equipment located at the facility.
Prior to the auction, Vrabely and Ulbrich discussed the amount that Ulbrich would bid for the facility and the personal property. Vrabely understood that Ulbrich would be bidding on "everything" located at the facility. Both Vrabely and Ulbrich attended the auction, and Vrabely actually placed the winning bid on behalf of Ulbrich.
Kelly Groth testified that the confidential financing memorandum had been prepared by Lakeside in an attempt to assist the debtors to find an investor or a bank to refinance their debt. She also testified that all of the categories of machinery and equipment listed on the memorandum were used on the site of the special events facility. She did not know, however, what specific items of machinery and equipment were included in each category on the list, or "where this list came from ... or who created it."
Kelly Groth further testified about a business plan that the debtors had prepared to obtain assistance from the state of Connecticut to find financing for the special events facility. The business plan stated that the debtors owned "100 [percent] of the facility and all equipment which includes ... all food service and kitchen equipment, tables, chairs, umbrellas, tents, china, [flatware], desks, computers, the telephone systems, office equipment, vehicles and machinery." Kelly Groth testified that all of these items were used in operating the facility. She
After the conclusion of evidence, the defendants orally requested the trial court to preclude the plaintiffs from relying on the confidential financing memorandum to support their claim for damages. They argued that, because the document did not identify the specific items of personal property that were included in the listed categories of property, and because no one was able to testify as to that fact, any inference that all of the property included in the list was on the special events facility site on the day of the auction was purely speculative. The plaintiffs contended that, although it was "impossible" for them to refer the trial court to specific testimony that would allow the jury to conclude that all of the items of personal property included in the categories of property listed in the document were on the site at the time of the auction, the trial court should deny the defendants' motion because "counsel [for the defendants] can always make a motion to the court to have that portion of the award ... deleted or removed or otherwise reduced" and to limit the award to damages that "are rather well-defined, [such as attorney's] fees...." The trial court agreed with the defendants that the document was "weak" evidence, but noted that nothing in the document indicated that the listed property belonged to any entity other than the debtors. The court concluded that the defendants' claim went to the weight and credibility of the document, not its admissibility, and denied the defendants' request for a limiting instruction.
Counsel for the plaintiffs argued to the jury that, on the basis of the evidence presented at trial, the jury could find that the plaintiffs did not receive: twelve out of forty-two, or approximately one quarter, of the tents valued at $300,000 as listed in the confidential financing memorandum; any of the office equipment valued at $76,000; one quarter of the chairs valued at $98,000;
As we have indicated, the jury rendered a damages award of $462,000, which presumably was comprised of an award of
We begin our analysis of the defendants' claim with the standard of review. As we have indicated, "[t]he role of the trial court on a motion to set aside the jury's verdict is not to sit as [an added] juror ... but, rather, to decide whether, viewing the evidence in the light most favorable to the prevailing party, the jury could reasonably have reached the verdict that it did." (Internal quotation marks omitted.) Hall v. Bergman, supra, 296 Conn. at 179, 994 A.2d 666. "It is axiomatic that the burden of proving damages is on the party claiming them.... When damages are claimed they are an essential element of the plaintiff's proof and must be proved with reasonable certainty.... Damages are recoverable only to the extent that the evidence affords a sufficient basis for estimating their amount in money with reasonable certainty....
"Although damages often are not susceptible of exact pecuniary computation and must be left largely to the sound judgment of the trier ... this situation does not invalidate a damage award as long as the evidence afforded a basis for a reasonable estimate by the [trier] of that amount.... Mathematical exactitude in the proof of damages is often impossible, but the plaintiff must nevertheless provide sufficient evidence for the trier to make a fair and reasonable estimate." (Citations omitted; internal quotation marks omitted.) 24 Leggett Street Ltd. Partnership v. Beacon Industries, Inc., 239 Conn. 284, 308-309, 685 A.2d 305 (1996).
"Evidence admitted without objection remains evidence in the case subject to any infirmities due to any inherent weaknesses.... The trier may not, however, rely only on hearsay evidence which is lacking in rational probative force.... If the evidence has no probative force, or insufficient probative value to sustain the proposition for which it is offered, the want of objection adds nothing to its worth and it will not support a finding." (Citations omitted; internal quotation marks omitted.) Marshall v. Kleinman, 186 Conn. 67, 72, 438 A.2d 1199 (1982).
The defendants claim on appeal that the trial court improperly concluded that the confidential financing memorandum supported the plaintiffs' claim for damages related to the items of personal property that they did not receive because the plaintiffs presented no evidence regarding the basis for the valuation of the personal property contained in the document. Specifically, they claim that the only evidence regarding the document was Kelly Groth's testimony that she did not know what specific items of personal property were included in the list of machines and equipment or who "created" the list, although the document itself had been prepared by Lakeside. The defendants further contend that the plaintiffs' damages calculation was based on the unsupported assumption that each item in each category of personal property had the same value when the evidence showed, for example, that the tents varied in size, the chairs were of
We are not persuaded. On the basis of the evidence presented at trial, the jury reasonably could have concluded that, in April of 2006, the special events facility was fully functioning and, therefore, was fully equipped with the necessary machinery and equipment. In addition, the jury reasonably could have concluded that, because the facility was still fully functioning in November, 2006, when the auction took place, all the machinery and equipment, or at least a substantial portion of it, was still on the property. The defendants do not dispute that the jury reasonably could have found that machinery and equipment on the property at the time of the auction included forty-two tents, equipment sufficient to run a fully functional office, 3121 chairs, six inflatables and four motor vehicles, including a garbage truck. Although we agree with the defendants that the confidential financing memorandum was, as the trial court acknowledged, "weak" evidence of the value of that machinery and equipment, we conclude that it was sufficient to afford the "basis for a reasonable estimate by the [trier] of that amount." (Internal quotation marks omitted.) 24 Leggett Street Ltd. Partnership v. Beacon Industries, Inc., supra, 239 Conn. at 309, 685 A.2d 305. For example, the jury could have concluded on the basis of the evidence presented that, if there were forty-two tents on the site, and if the tents were worth $300,000, as indicated in the confidential financing memorandum, each tent was, on average, worth slightly more than $7000. The jury also could have concluded on the basis of its common knowledge and experience that $7000 was not outside the range of reasonable values for a commercial tent. State v. Ceballos, 266 Conn. 364, 402, 832 A.2d 14 (2003) ("[i]n deciding cases ... [j]urors are not expected to lay aside matters of common knowledge or their own observations and experiences, but rather, to apply them to the facts as presented to arrive at an intelligent and correct conclusion" [internal quotation marks omitted]). Similarly, the jury could have concluded that, if the confidential financing memorandum was accurate, the chairs on the property were worth, on average, approximately $31 each ($98,000 divided by 3121); see footnote 54 of this opinion; and that this value was within the range of reasonable values for such items. Moreover, although there was evidence that the tents varied in size and that there were a variety of types of chairs, we conclude that it was not unreasonable
We next address the defendants' claims that: (1) the trial court improperly concluded that an award of punitive damages against the bank was justified under CUTPA; and (2) even if punitive damages were justified, the trial court improperly determined the amount of punitive damages. We disagree.
The following additional procedural history is relevant to our resolution of these claims. On October 8, 2006, and January 28, 2011, after the jury had returned its verdict in favor of the plaintiffs on their CUTPA claim, the trial court conducted evidentiary hearings on their claims for attorney's fees and punitive damages. The court concluded that the plaintiffs had proved that the bank's decision not to disclose the conflicting claims to the personal property to the plaintiffs was "consciously or deliberately deceptive and unscrupulous" and was in reckless disregard of their rights. In addition, the court concluded that for the bank to have warned potential bidders that there were unresolved issues regarding the ownership of the personal property would have "involved relatively minuscule rather than insurmountable endeavors"; that the bank's conduct threatened "public confidence in the auction process," particularly because the bank had requested and obtained permission from the trial court in the foreclosure action to conduct the auction in conjunction with the foreclosure sale, without advising the court about the conflicting claims to the personal property; and that the bank was "a very large and profitable banking corporation...."
We begin our analysis with the standard of review. "Awarding punitive damages and attorney's fees under CUTPA is discretionary; General Statutes § 42-110g (a) and (d)
The defendants in the present case claim that the trial court improperly concluded that this standard was met because there was no evidence that the bank had acted in reckless disregard of the plaintiffs' rights and negligence cannot form the basis of a punitive damages award. We have concluded, however, that the jury reasonably could have found that the bank's failure to inform the plaintiffs that much of the personal property located at the special events facility at the time of the auction was not included in the sale was not merely negligent, but involved a conscious decision to disregard acknowledged business norms. We further conclude that the trial court reasonably could have concluded that the bank knew that this decision would give rise to a substantial and unjustifiable risk that the plaintiffs would purchase the special events facility and personal property in the belief that the sale included all of the machinery and equipment required to run the facility when, in fact, much of the personal property on the site was not included in the sale because it was leased. Accordingly, the trial court reasonably could have found that the bank's conduct was reckless. State v. Jones, 289 Conn. 742, 756, 961 A.2d 322 (2008) ("[a] person acts recklessly with respect to a result ... when he is aware of and consciously disregards a substantial and unjustifiable risk that such result will occur" [internal quotation marks omitted]). We therefore reject the defendants' claim that the trial court abused its discretion when it concluded that punitive damages were justified.
We next address the defendants' claim that the amount of punitive damages was unjustified. The defendants contend that, although this court and the Appellate Court have repeatedly upheld punitive damages awards under CUTPA that were based on multiples of the compensatory damages award (referred to hereinafter as multiple damages),
Whether a punitive damages award pursuant to § 42-110g (d) is limited to common-law punitive damages is a question of statutory interpretation over which our review is plenary. See, e.g., State ex rel. Gregan v. Koczur, 287 Conn. 145, 152, 947 A.2d 282 (2008). "In making such determinations, we are guided by fundamental principles of statutory construction." In re Matthew F., 297 Conn. 673, 688, 4 A.3d 248 (2010); see General Statutes § 1-2z.
We conclude that the legislature did not intend to limit punitive damages awards pursuant to § 42-110g (d) to "the expenses of bringing the legal action, including attorney's fees, less taxable costs." Larsen Chelsey Realty Co. v. Larsen, supra, 232 Conn. at 517 n. 38, 656 A.2d 1009. Section 42-110g (a) expressly authorizes the trial court to award punitive damages in addition to the award of attorney's fees authorized by § 42-110g (d). Nothing in the language of the statute suggests that punitive damages are the same as attorney's fees, consistent with the common-law rule. If the legislature had intended to impose such a limitation, it presumably would have done so either by authorizing the trial court to award double attorney's fees or by authorizing it to award double punitive damages. The fact that the legislature enacted two distinct provisions indicates that it contemplated two distinct types of awards.
We also are not persuaded by the defendants' arguments that punitive damages under CUTPA must be limited to attorney's fees to avoid the "injustice which may result from the exercise of unfettered discretion by a jury"; Waterbury Petroleum Products, Inc. v. Canaan Oil & Fuel Co., supra, 193 Conn. at 238, 477 A.2d 988; because we conclude that the award of punitive damages under CUTPA is reserved to the discretion of the trial court, not the jury.
The defendants also claim that, even if multiple damages are authorized by § 42-110g (a), the trial court's award in the present case was excessive. In support of this claim, the defendants rely on the United States Supreme Court's decision in Exxon Shipping Co. v. Baker, 554 U.S. 471, 128 S.Ct. 2605, 171 L.Ed.2d 570 (2008). In that case, the defendant challenged the size of a punitive damages award that the jury had rendered against it under maritime law. Id., at 489, 128 S.Ct. 2605. The court concluded that the limits on such awards fell "within a federal court's jurisdiction to decide in the manner of a common law court...." Id., at 489-90, 128 S.Ct. 2605. After reviewing the history of punitive damages under the common law and the standards and limitations that various jurisdictions have applied to them, the court in Exxon Shipping Co. observed that several studies had been done to determine "the median ratio of punitive to compensatory verdicts, reflecting what juries and judges have considered reasonable across many hundreds of punitive awards." Id., at 512, 128 S.Ct. 2605. "These studies cover cases of the most as well as the least blameworthy conduct triggering punitive liability, from malice and avarice, down to recklessness, and even gross negligence in some jurisdictions. The data put the median ratio for the entire gamut of circumstances at less than 1:1 ... meaning that the compensatory award exceeds the punitive award in most cases. In a well-functioning system, we would expect that awards at the median or lower would roughly express jurors' sense of reasonable penalties in cases with no earmarks of exceptional blameworthiness within the punishable spectrum (cases like this one, without intentional or malicious conduct, and without behavior driven primarily by desire for gain, for example) and cases (again like this one) without the modest economic harm or odds of detection that have opened the door to higher awards. It also seems fair to suppose that most of the unpredictable outlier cases that call the fairness of the system into question are above the median.... On these assumptions, a median ratio of punitive to compensatory damages of about 0.65:1 probably marks the line near which cases like this one largely should be grouped. Accordingly, given the need to protect against the possibility (and the disruptive cost to the legal system) of awards that are unpredictable and unnecessary, either for deterrence or for measured retribution, we consider that a 1:1 ratio, which is above the median award, is a fair upper limit in such maritime cases." (Citations omitted; footnote omitted.) Id., at 512-13, 128 S.Ct. 2605.
To the extent that the defendants in the present case contend that Exxon Shipping Co. requires this court to adopt as an upper limit for punitive damages under CUTPA a one to one ratio of punitive damages to compensatory damages, we are
We are persuaded, however, that, in determining whether a punitive damages award pursuant to § 42-110g (a) is so excessive as to constitute an abuse of discretion, the court should consider the factors that the court in Exxon Shipping Co. discussed. These include the "degrees of relative blameworthiness," i.e., whether the defendant's conduct was reckless, intentional or malicious; Exxon Shipping Co. v. Baker, supra, 554 U.S. at 493, 128 S.Ct. 2605; whether the defendant's "[a]ction [was] taken or omitted in order to augment profit"; id., at 494, 128 S.Ct. 2605; see also id., at 503, 128 S.Ct. 2605 (some courts consider whether wrongful conduct was profitable to defendant); whether the wrongdoing was hard to detect; id., at 494, 128 S.Ct. 2605; whether the injury and compensatory damages were small, providing a low incentive to bring the action; id.; and whether the award will deter the defendant and others from similar conduct, without financially destroying the defendant.
In the present case, the trial court concluded that "the best characterization of the bank's conduct ... is that it proceeded with reckless or wilful ignorance and indifference" to the risks that its conduct posed to prospective bidders; that its conduct was "inherently deceptive to bidders"; that its "effort to maximize the bids by including the business property as part of the auction was beneficial to the bank's interests"; and that the bank had a high net worth. On the other hand, the court also recognized that the jury's compensatory damages award was not small, that the bank's conduct was not of a criminal nature and that the punitive damages award should not constitute a windfall to the plaintiffs. In addition, we note that there was no evidence that the bank's conduct constituted anything other than an isolated incident. See State Farm Mutual Automobile Ins. Co. v. Campbell, supra, 538 U.S. at 419, 123 S.Ct. 1513.
Although the trial court's punitive damages award in the present case undoubtedly was a large one, especially in light of the large size of the compensatory damages award, we cannot conclude that the award constituted a manifest abuse of discretion or that an injustice was done. See Gargano v. Heyman, supra, 203 Conn. at 622, 525 A.2d 1343. Rather, we conclude that the trial court reasonably could have concluded that the bank's reckless and deceptive conduct, together with the fact that the motive for the conduct was to increase the profitability of the auction to the bank, the fact that the bank has a very high net worth and the fact that there is an established practice in this state of awarding multiple damages for CUTPA violations, warranted the amount of the award.
We next address the defendants' claim that the trial court improperly awarded postjudgment interest to the plaintiffs pursuant to § 37-3a.
The following procedural history is relevant to our resolution of this claim. After the trial court rendered judgment in accordance with the jury verdict, the defendants filed a motion for postjudgment interest pursuant to § 37-3a at the rate of 10 percent. The defendants objected to the motion on the ground that they had a good faith basis for their appeals and the judgment already included an award of attorney's fees and punitive damages. The trial court observed that "this case presents legitimate and novel issues worthy of appellate review," but concluded that "the recovery of postjudgment interest is appropriate under the circumstances of this
"[T]he decision of whether to grant interest under § 37-3a is primarily an equitable determination and a matter lying within the discretion of the trial court.... In determining whether the trial court has abused its discretion, we must make every reasonable presumption in favor of the correctness of its action." (Internal quotation marks omitted.) Sosin v. Sosin, 300 Conn. 205, 227, 14 A.3d 307 (2011).
"[T]he court's determination [as to whether interest should be awarded under § 37-3a] should be made in view of the demands of justice rather than through the application of any arbitrary rule.... Whether interest may be awarded depends on whether the money involved is payable ... and whether the detention of the money is or is not wrongful under the circumstances." (Internal quotation marks omitted.) Id., at 229, 14 A.3d 307. The detention of money may be wrongful even "if the liable party had a good faith basis for nonpayment." Id.; see also id., at 230, 14 A.3d 307 ("[W]rongful is not synonymous with bad faith conduct. Rather, wrongful means simply that the act is performed without the legal right to do so." [Internal quotation marks omitted.]). This is because "the primary purpose of § 37-3a ... is not to punish persons who have detained money owed to others in bad faith, but, rather, to compensate parties that have been deprived of the use of their money." Id., at 230, 14 A.3d 307. An award of interest pursuant to § 37-3a "is limited to cases in which the damage is of a sort [that] could reasonably be ascertained by due inquiry and investigation on the date from which the interest is awarded." (Internal quotation marks omitted.) Id., at 235, 14 A.3d 307. "In addition, when the money is not within the control of the party disputing the debt and that party has not benefited from possession of the money, an award of interest pursuant to § 37-3a is beyond the trial court's discretion." Id.
In the present case, the defendants contend that the trial court's award of postjudgment interest pursuant to § 37-3a was an abuse of discretion because the trial court recognized that this appeal "presents legitimate and novel issues worthy of appellate review" and the detention of money damages during the pendency of a good faith appeal is not wrongful. See MedValUSA Health Programs, Inc. v. MemberWorks, Inc., supra, 273 Conn. at 666, 872 A.2d 423 (trial court's denial of interest was not abuse of discretion when defendant's opposition to application to confirm arbitration award was not frivolous); Carrano v. Yale-New Haven Hospital, 112 Conn.App. 767, 774, 963 A.2d 1117 (2009) (trial court's denial of postjudgment interest was not abuse of discretion when defendant's appeal was filed in good faith). The defendants further contend that postjudgment interest on a punitive damages award is an unjustified windfall to the plaintiffs and is inconsistent with the principle that interest pursuant to § 37-3a is intended to compensate parties who have been deprived of the use of their money, not to punish defendants. Sosin v. Sosin, supra, 300 Conn. at 230, 14 A.3d 307. We are not persuaded.
Although it may not be an abuse of discretion for the trial court to deny a request for postjudgment interest pursuant to § 37-3a when the defendant has filed a good faith appeal; see MedValUSA
We next address Ulbrich's claim on cross appeal that the trial court improperly concluded that it had no authority to grant the plaintiffs' request for an award of "nontaxable" costs pursuant to § 42-110g (d). We conclude that we need not address the question of whether nontaxable costs may be awarded pursuant to § 42-110g (d) because they may be awarded as punitive damages under § 42-110g (a).
The following additional procedural history is relevant to our resolution of this claim. After trial, the plaintiffs filed a request for costs of $36,320.11 pursuant to § 42-110g (d), which included $5705.19 for trial equipment, $21,142.08 for transcripts, $839.45 for third party copying, $4170.10 for Westlaw research, $466.04 for delivery costs, $2672.25 for marshal fees, $350 for the jury fee and $975 for court fees. Relying on the Appellate Court's decision in Miller v. Guimaraes, 78 Conn.App. 760, 782-83, 829 A.2d 422 (2003), which held that § 42-110g (d) does not authorize an award of costs that are not taxable under General Statutes § 52-260, the trial court denied the plaintiffs' request. The court observed that numerous trial courts have questioned the reasoning of Miller and its progeny because nontaxable costs are recoverable as punitive damages under the
As we have indicated herein, it is well established that nontaxable costs may be awarded as punitive damages under the common law. Larsen Chelsey Realty Co. v. Larsen, supra, 232 Conn. at 517 n. 38, 656 A.2d 1009 (common-law punitive damages are comprised of "the expenses of bringing the legal action, including attorney's fees, less taxable costs"). Although we have concluded that a punitive damages award pursuant to § 42-110g (a) is not limited by the measure of punitive damages under the common law, we can perceive no reason why the legislature would have wanted to exclude nontaxable costs from the scope of such damages. Indeed, a trial court could conclude in a particular case that an award of nontaxable costs is sufficient to serve the punitive and deterrent function of the punitive damages provision of § 42-110g (a), and that multiple damages are unwarranted. We conclude, therefore, that we need not decide whether the holding of Miller that § 42-110g (d) does not authorize the trial court to award costs that are not authorized by § 52-260 should be overruled, because we conclude that the award of such costs is authorized by § 42-110g (a). Accordingly, the case must be remanded to the trial court so that the court may exercise its discretion to determine whether it should grant the plaintiffs' request for nontaxable costs pursuant to § 42-110g (a).
Finally, we address Ulbrich's claim on cross appeal that the trial court improperly directed a verdict for the bank on the plaintiffs' claim that the bank breached the terms of one of the bills of sale when it refused to pay over certain life insurance proceeds to the plaintiffs. We disagree.
The following undisputed facts and procedural history are relevant to our resolution of this claim. As security for the loan that the bank made to the debtors, the debtors collaterally assigned to the bank certain life insurance polices that they owned on the life of James A. Groth. The assignments provided that the bank had "[t]he sole right to collect from the [i]nsurer the net proceeds of the [p]olicy when it becomes a claim by death or maturity. . . ." They also provided that "any balance of sums received from the [i]nsurer remaining after payment of the then existing liabilities, matured or unmatured shall be paid by the [a]ssignee to the persons entitled thereto under the terms of the [p]olicy had this assignment not been executed.. . ."
The property description attached as exhibit A to one of the bills of sale provided by the bank to the plaintiffs included "all general intangibles, as that term is defined in [a]rticle 9 of the UCC, now owned or hereafter acquired, and in any event, shall include all right, title and interest which the [d]ebtor may now or hereafter have in or under any contract [and] all . . . claims in or under insurance policies," and "all proceeds, as that term is defined in [a]rticle 9 of the UCC, now owned or hereafter acquired, and, in any event, shall include. . . proceeds payable to the [d]ebtor from time-to-time in respect of any of the foregoing collateral security [and] any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the [d]ebtor from time-to-time with respect to any of the collateral security. . . ." After the foreclosure sale and auction, the bank acquired a deficiency judgment against the
In their complaint, the plaintiffs alleged that the bank had breached its obligation under the bill of sale transferring the intangible property to cause the proceeds from the life insurance policies to be transferred to the plaintiffs. At trial, the defendants filed a motion for a directed verdict on the claim, which the trial court granted. The plaintiffs then filed a motion to set aside the directed verdict, which the trial court denied. In its memorandum of decision denying the motion to set aside the verdict, the court assumed, without deciding, that the language of the bill of sale was broad enough to cover the collateral assignments of the life insurance policies as security for the bank's loan to the debtors.
"The standards for appellate review of a directed verdict are well settled. Directed verdicts are not favored. . . . A trial court should direct a verdict only when a jury could not reasonably and legally have reached any other conclusion. . . . In reviewing the trial court's decision to direct a verdict in favor of a defendant we must consider the evidence in the light most favorable to the plaintiff. . . . 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." (Citations omitted; internal quotation marks omitted.) Janusauskas v. Fichman, 264 Conn. 796, 803-804, 826 A.2d 1066 (2003).
As the defendants point out, the collateral assignments of the life insurance policies were not, in and of themselves, collateral for the bank's loan to the debtor. Rather, they were instruments that created a security interest in certain property, namely, the insurance proceeds, to the extent of the debt owed to the bank. Thus, they were analogous to mortgages. Cf. Waterbury Trust Co. v. Weisman, 94 Conn. 210, 218, 108 A. 550 (1919) ("[t]he analogy between notes secured by conditional bills of sale and notes secured by chattel mortgages, or notes secured by mortgages, is marked"). In support of its conclusion that the bill of sale for the intangible property did not confer the right to the insurance proceeds to the plaintiffs, the trial court relied on the principle that "[a]n assignment of the note carries the mortgage with it, while an assignment
Ulbrich contends that, contrary to these cases, a mortgage can be transferred separately from the obligation secured by the mortgage when the parties to the transfer expressly agree to do so. See Restatement (Third), Property, Mortgages § 5.4, comment (c), p. 384 (1996) ("[i]t is possible for a mortgagee to assign the mortgage while retaining full ownership of the obligation, but only if the parties so agree").
As Ulbrich recognizes, however, "[t]he practical effect of [an assignment of a mortgage without the note] is to make it impossible to foreclose the mortgage. . . ." Id. The reason is that the assignee can never suffer a default because he does not own the debt; id., comment (e), p. 385; while the assignor cannot foreclose the mortgage upon default of the note because he no longer owns the mortgage.
Ulbrich also claims, somewhat inconsistently, that these principles govern only the enforceability of a mortgage against the mortgagor and do not apply to the situation in the present case, in which the plaintiffs are seeking to recover, not from
We are not persuaded. The Restatement (Third) of Property indicates that there may be situations in which the assignee of a mortgage can enforce the mortgage even though the note has not been assigned. For example, when the assignee is the trustee or the agent of the assignor who holds the note, it may be able to enforce the mortgage on the assignor's behalf. Id.; cf. Second National Bank of New Haven v. Dyer, supra, 121 Conn. at 269, 184 A. 386 ("an assignment of the security apart from the debt transfers the bare title, the beneficial interest in which remains with the owner of the debt"); Pettus v. Gault, supra, 81 Conn. at 422, 71 A. 509 (assignee of mortgage without note holds it "at the will and disposal of the creditor" who holds note). There is no suggestion in the Restatement (Third) of Property, however, or in any other authority cited by Ulbrich, that the assignor of a mortgage who has retained the note is obligated to enforce the mortgage on the assignee's behalf. Indeed, if it is assumed that the mortgage may be assigned without the note, it would be conceptually impossible for the assignor to retain the right, much less the obligation, to take possession of the collateral secured by the note, because that is the very right that the mortgage confers. Consequently, an assignor of a mortgage who retained that right would have transferred nothing to the assignee. Conversely, when an assignor has transferred the right to take possession of the secured collateral, it can enforce the loan obligation only by bringing a legal action on the note, in which the assignee has no interest.
We have concluded that the collateral assignments of the life insurance policies were not transferred to the plaintiffs under the bill of sale for the intangible property, and Ulbrich has not identified any other theory under which the plaintiffs are entitled to recover the life insurance proceeds from the bank. We conclude, therefore, that the trial court properly granted the defendants' motion for a directed verdict on this claim.
The judgment is reversed only with respect to the trial court's ruling denying the defendants' motions to set aside the verdict and for judgment notwithstanding the verdict on the plaintiffs' negligence and negligent misrepresentation claims, and the court's ruling that it lacked authority to award nontaxable costs under CUTPA, and the case is remanded to the trial court with direction to grant the defendants' motion to set aside the verdict on the negligence and negligent misrepresentation claims and to render judgment for the defendants on those counts, and for further proceedings on the plaintiffs' claim for nontaxable costs under CUTPA. The judgment is affirmed in all other respects.
In this opinion ROGERS, C.J., and NORCOTT, EVELEIGH and HARPER, Js., concurred.
ZARELLA, J., with whom PALMER, J., joins, concurring in part and dissenting in part.
I dissent from part IV of the majority opinion, and part II to the extent that it incorporates the analysis in part IV, because I disagree with the majority's conclusion that the defendants did not properly preserve the issue of whether the cigarette rule
As an initial matter, I disagree with the
By way of background, CUTPA, in prohibiting unfair trade practices, provides that "[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." General Statutes § 42-110b (a). Our legislature, in enacting CUTPA, did not attempt to define unfairness. Rather, as the statute provides, "[i]t is the intent of the legislature that in construing subsection (a) of [§ 42-110b], the [C]ommissioner [of Consumer Protection] and the courts of this state shall be guided by interpretations given by the Federal Trade Commission and the federal courts to [15 U.S.C. § 45(a)(1)], as from time to time amended." (Emphasis added.) General Statutes § 42-110b (b). Accordingly, I begin by briefly surveying the commission's and the federal courts' constructions of "unfairness" under the act.
In 1964, more than two decades after Congress amended the act to expressly empower the commission to prevent "unfair or deceptive acts or practices in commerce'% & D; Act of March 21, 1938, c. 49, § 3, 52 Stat. 111, 112, codified as amended at 15 U.S.C. § 45(a) (1940); the commission, pursuant to its rule-making authority, attempted to clarify its unfairness enforcement authority in the context of unfair or deceptive advertising and labeling of cigarettes. Unfair or Deceptive Advertising and Labeling of Cigarettes in Relation to the Health Hazards of Smoking, 29 Fed.Reg. 8324 (July 2, 1964) (Cigarette Rule). After cautioning that "[n]o enumeration of examples can define the outer limits of the [c]ommission's authority to proscribe unfair acts or practices," the commission relied on its enforcement
In 1980, in response to a congressional inquiry and amid growing concerns about the breadth of the commission's enforcement authority; see M. Denger, "The Unfairness Standard and FTC Rulemaking: The Controversy Over the Scope of the Commission's Authority," 49 Antitrust L.J. 53, 60 (1980); the commission issued a policy statement on unfairness and attempted to better "[delineate] the [c]ommission's views [on] the boundaries of its consumer unfairness jurisdiction. . . ." Letter from Federal Trade Commission to Senators Wendell H. Ford and John C. Danforth (December 17, 1980) (1980 unfairness statement), available at http:// www.ftc.gov/bcp/policystmt/ad-unfair.htm (last visited October 25, 2013). In the 1980 unfairness statement, the commission first noted that "[t]he present understanding of the unfairness standard is the result of an evolutionary process." Id. After reciting the cigarette rule criteria and the "apparent
Most notably, in the 1980 unfairness statement, the commission emphasized that "[u]njustified consumer injury is the primary focus of the . . . [a]ct, and the most important of the three [cigarette rule] criteria. By itself it can be sufficient to warrant a finding of unfairness. The [c]ommission's ability to rely on an independent criterion of consumer injury is consistent with the intent of the [federal] statute, which was to `[make] the consumer who may be injured by an unfair trade practice of equal concern before the law with the merchant injured by the unfair methods of a dishonest competitor.'" Id. The commission further clarified that "a finding of unfairness . . . must satisfy three tests" to be considered "legally `unfair'. . . ." Id. "It must be substantial; it must not be outweighed by any countervailing benefits to consumers or competition that the practice produces; and it must be an injury that consumers themselves could not reasonably have avoided." Id.
The commission then considered the next cigarette rule factor, namely, "whether the conduct violates public policy as it has been established by statute, common law, industry practice, or otherwise. This criterion may be applied in two different ways. It may be used to test the validity and strength of the evidence of consumer injury, or, less often, it may be cited for a dispositive legislative or judicial determination that such injury is present." Id. Finally, with respect to the remaining cigarette rule factor, which addressed "immoral, unethical, oppressive, or unscrupulous" conduct, the commission announced that the test had proven to be "largely duplicative" in view of the fact that "[c]onduct that is truly unethical or unscrupulous will almost always injure consumers or violate public policy. . . . The [c]omission has therefore never relied on [this cigarette rule factor] as an independent basis for a finding of unfairness, and it will act in the future only on the basis of the [other] two [factors]." Id.
Despite this apparent repudiation of the cigarette rule, courts and commentators have not uniformly described the 1980 unfairness statement as a wholesale break from pre-1980 policy, with some instead describing this as an evolution of the commission's unfairness enforcement authority. For instance, in 1984, this court acknowledged the commission's 1980 unfairness statement, characterizing it as an elaboration on—rather than an abrogation of—the cigarette rule. See McLaughlin Ford, Inc. v. Ford Motor Co., 192 Conn. 558, 568 n. 12, 473 A.2d 1185 (1984). Specifically, this court observed that "[t]he criteria announced in the cigarette rule have been the subject of several scholarly articles . . . [and that] the commission was called [on] to elaborate on these three criteria." (Citations omitted; emphasis added.) Id. The District of Columbia Circuit Court of Appeals similarly explained that the 1980 unfairness statement "was basically a refinement of an earlier three-part standard of unfairness [that] it had set out in 1964," i.e., the cigarette rule. (Emphasis added.) American Financial Services Assn. v. Federal Trade Commission, 767 F.2d 957, 971 (D.C.Cir.1985), cert. denied, 475 U.S. 1011, 106 S.Ct. 1185, 89 L.Ed.2d 301 (1986). Commentators tended to be less sanguine about the continued vitality of the cigarette rule factors after the 1980 unfairness statement, viewing
In 1994, Congress effectively codified the limitations on the commission's authority as set forth in the 1980 unfairness statement. Title 15 of the United States Code, § 45(n), was amended to provide that "[t]he Commission shall have no authority under this section or section 18 [of this public law] to declare unlawful an act or practice on the grounds that such act or practice is unfair unless the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition. In determining whether an act or practice is unfair, the Commission may consider established public policies as evidence to be considered with all other evidence. Such public policy considerations may not serve as a primary basis for such determination." (Emphasis added.) Federal Trade Commission Act Amendments of 1994, Pub.L. No. 103-312, § 9, 108 Stat. 1691, 1695, codified as amended at 15 U.S.C. § 45(n) (1994).
Despite these changes at the federal level and our statutory directive to "be guided" thereby; General Statutes § 42-110b (b); our case law construing the commission's interpretations of unfairness— which has not been a model of clarity—has not kept pace with the commission and the Congress. In fact, when this court first applied the cigarette rule in 1983, it already was obsolete at the federal level in the wake of the 1980 unfairness statement. See Conaway v. Prestia, 191 Conn. 484, 492-93, 464 A.2d 847 (1983) (applying cigarette rule to find CUTPA violation on basis of public policy violation), quoting Federal Trade Commission v. Sperry & Hutchinson Co., supra, 405 U.S. at 244-45 n. 5, 92 S.Ct. 898. As I noted previously, however, this court did acknowledge the commission's evolving stance on unfairness and described the 1980 unfairness statement as an "elabora[tion]" on the cigarette rule. McLaughlin Ford, Inc. v. Ford Motor Co., supra, 192 Conn. at 568 n. 12, 473 A.2d 1185. In addition, in cases such as A-G Foods, Inc. v. Pepperidge Farm, Inc., 216 Conn. 200, 579 A.2d 69 (1990), we explained that, "in 1980 the commission reviewed [the cigarette rule] factors and concluded that [u]njustified consumer injury is the primary focus of the . . . [a]ct, and the most important of the three . . . criteria.. . . [T]he [c]ommission explained that regulation is permissible only if a practice causes [unjustified] injury that is substantial. . . ." (Citation omitted; emphasis added; internal quotation marks omitted.) Id., at 215-16, 579 A.2d 69. Thus, even after acknowledging and discussing the commission's 1980 policy changes, this court still considered all of the prongs of the cigarette rule as independent justifications for a finding of unfairness, even though the commission had determined in 1980 that the consumer injury prong was necessary to support a finding of unfairness, a requirement that was codified in subsequent revisions to the act itself. See Federal Trade Commission Act Amendments of 1994, supra, 108 Stat. at 1695.
This tension has become particularly apparent in our recent decisions addressing unfairness under CUTPA. Indeed,
With this background in mind, I turn to the defendants' instructional claim. At trial, the defendants requested the court to charge the jury that "[w]hether the defendants caused substantial unjustified injury to consumers, competitors or other business persons, is the most important of the three [cigarette rule] criteria. Proof of an unjustified consumer injury to consumers, competitors, or other business people is a necessary predicate for recovery under [CUTPA]."
In my view, the majority's conclusion, like the plaintiff's argument, misses the larger context of the commission's evolving jurisdiction in this arena and our own tortured jurisprudence regarding unfairness and the cigarette rule. Specifically, it fails to recognize that the commission's 1980 unfairness statement, which provided that "[u]njustified consumer injury is the primary focus of the . . . [a]ct, and the most important of the three [cigarette rule] criteria"; 1980 Unfairness Statement, supra; expressly articulated the standard that the defendants requested in their proposed jury instruction but couched the policy's language such that certain courts, including this one, conceived of it as a modification, rather than a rejection, of the cigarette rule. See, e.g., American Financial Services Assn. v. Federal Trade Commission, supra, 767 F.2d at 971; McLaughlin Ford, Inc. v. Ford Motor Co., supra, 192 Conn. at 568 n. 12, 473 A.2d 1185; see also D. Rice, "Consumer Unfairness at the FTC: Misadventures in Law and Economics," 52 Geo. Wash. L.Rev. 1, 19 (1983) (describing cigarette rule as "the ostensible lodestar of the [c]ommission's 1980 [unfairness] [s]tatement").
Thus, I am persuaded that it is inappropriate and unnecessarily formalistic to decline to review the defendants' claim simply because they phrased their proposed jury instruction as a modification, rather than a wholesale abrogation, of the cigarette rule, particularly in light of our own inconsistent pronouncements on this issue. In my view, such a request in this context easily satisfies the dictates of Practice Book § 60-5 that the claim be "distinctly raised at the trial," and I find it perplexing that, after nearly one decade of this court's expression of concerns with the cigarette rule in light of the evolving federal approach to unfairness, the majority declines the opportunity to reconsider the rule for hyper-technical reasons when it has finally been squarely addressed by the parties. I therefore would conclude that the defendants, in requesting that the jury be charged in accordance with the 1980 unfairness statement, properly had preserved their claim that the trial court's refusal to provide such an instruction was inconsistent with federal interpretations of the act and, by extension, our statutory scheme.
Finally, I disagree with the majority to the extent it concludes that the language in the bills of sale in the present case "was inadequate to disclaim the implied warranty of title as a matter of law. . . ." I acknowledge, and the majority notes, that other states have interpreted the disclaimer provisions of § 2-312 of the UCC in a manner favorable to the majority's analysis. Nevertheless, I strongly believe that we should not rely on the judicial gloss of other state courts in cases such as Jones v. Linebaugh, 34 Mich.App. 305, 308-309, 191 N.W.2d 142 (1971), and Sunseri v. RKO-Stanley Warner Theatres, Inc., 248 Pa.Super. 111, 115, 374 A.2d 1342 (1977), which required something more than "quitclaim type language" to constitute a valid disclaimer under their statutes,
"It is well established that, [w]hen construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature. . . . In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply. . . . In seeking to determine that meaning, General Statutes § 1-2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield
Section 42a-2-312(2) provides: "A warranty under subsection (1) will be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have." (Emphasis added.) Not only is such language unambiguous, but the language employed in the secured party bills of sale in the present case, i.e., that the defendant TD Banknorth, N.A., purported to sell "all of the [s]ecured [p]arty's right, title and interest, as such [s]ecured [p]arty has or may have in and to the personal property"; (emphasis added); tracks the language of § 42a-2-312 (2).
"In support of the motion, [the bank] respectfully submits that there are three parcels subject to the mortgages being foreclosed herein, as well as personal property, fixtures and equipment to be sold as part of the foreclosure sale.... General Statutes [§ 49-25] provides that the court shall `direct whether the property shall be sold as a whole or in parcels, and how the sale shall be made.'"
The trial court's order granting the motion provided in relevant part: "Property to be auctioned as follows: First, all [three] parcels in their entirety plus personal property; deposit amount $100,000. Second, the [two] commercial parcels plus personal property; deposit amount $100,000. Third, the residence; deposit $25,000."
"Any terms relating to the sale are subject to change prior to or on the day of auction. Prior to the auction prospective bidders should make such investigation as they deem appropriate and shall rely entirely on their own information, judgment and inspection of the property.
"No representations or warranties of any kind are made with respect to the property to be sold. All property will be sold `as is, where is,' and `with all defects.'
"Auctioneer is acting solely as agent for the seller/mortgagee in marketing and negotiations of sale of this property, and as such has a fiduciary duty to disclose to the seller/mortgagee information, which is material to the sale, acquired from the buyer or any other source. The purchaser(s) agree that [the] seller/mortgagee and auctioneer have made no warranties of any kind regarding the value, condition, habitability, merchantability and fitness of the property for any purpose.
"Potential purchasers are encouraged to seek information from professionals regarding any specific issue or concern. ..."
"Schedule A," which was attached to the second bill of sale, described the personal property in part as "all equipment, as that term is defined in [a]rticle 9 of the UCC, and, in any event, shall include, without limitation, all machinery, tools, dyes, equipment, furnishings, fixtures, leasehold improvements, vehicles, (other than motor vehicles) and computers and other electronic data processing and other office equipment, now owned or hereafter acquired, including ... any and all additions, substitutions and replacements of any of the foregoing, wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto, and all contracts, contract rights and chattel paper arising out of any lease of any of the foregoing...." In addition, "Schedule A" attached to the second bill of sale included "all accounts," "all chattel paper," "all documents," "all general intangibles," "all instruments," "all inventory," and "all proceeds" belonging to the debtors, among other items.
Alice Paxson, the vice president of the bank's workout division, testified at trial that the committee of sale refused to provide the bills of sale and "made the bank" issue them, even though, in her opinion, the committee was actually the seller of the personal property.
The jury apportioned liability on the negligence and negligent misrepresentation claim against Tranzon as follows: 70 percent to Tranzon; 10 percent to Morasutti; 10 percent to the Groth entities; see footnote 1 of this opinion; and 10 percent to the plaintiffs. Accordingly, the trial court rendered judgment against Tranzon in the amount of $291,900, or 70 percent of $417,000, on this claim.
The jury apportioned liability on the negligence and negligent misrepresentation claim against the bank as follows: 80 percent to the bank; 10 percent to Morasutti; and 10 percent to the Groth entities. Accordingly, the trial court rendered judgment against the bank in the amount of $333,600, or 80 percent of $417,000, on this claim.
The trial court instructed the jury that the bank, as principal, could be held vicariously liable for the wrongful acts of Tranzon, as agent, if Tranzon was acting within the scope of its authority. It also instructed the jury that Tranzon could be held liable for its own wrongful conduct, regardless of whether its actions were in the scope of its authority as the bank's agent. Despite these instructions, the jury was not asked to render separate damages awards against Tranzon and against the bank, but only to find the total amount of damages. After trial, the trial court applied the jury's apportionment of liability to the full amount of damages for both Tranzon and the bank. Because the court instructed the jury on no theory under which Tranzon could be held liable for the bank's wrongful conduct, however, it is unclear to us under what theory the jury could have found that both Tranzon and the bank were liable for the full amount of damages (less apportionment to other wrongdoers), unless the jury found that, as between Tranzon and the bank, the plaintiffs' damages were entirely the result of Tranzon's wrongful conduct within the scope of its authority as the bank's agent. Such a finding, however, seems inconsistent both with the evidence and with the fact that the jury apportioned a smaller percentage of overall liability to Tranzon than it did to the bank. We take note of these issues only because the damages award seems inconsistent on its face. Because these issues were not raised on appeal, and because we conclude that the plaintiffs' tort claims were barred under the economic loss doctrine, we need not resolve them.
The plaintiffs also claim that "there was no contractual relationship between the plaintiffs and Tranzon, and [therefore] no basis on which the plaintiffs could assert contractual (or UCC) rights or remedies against Tranzon, the negligent misrepresentation claim against Tranzon ... falls outside the reach of the economic loss rule." The trial court declined to address this question in its ruling on the defendants' motion for summary judgment, however, because it concluded that it had been inadequately addressed by the parties. The plaintiffs also have not briefed the issue on appeal. Accordingly, we conclude that it is not reviewable. We note, however, that, although we conclude in this opinion that the economic loss doctrine does not always bar negligent misrepresentation claims against a party to a contract, we also conclude that, when the contract involves a sale of goods under the UCC, the exclusive remedy for that tort is rescission of the contract. Because the plaintiffs did not seek this remedy, their tort claims against the bank are barred. It is not facially unreasonable to conclude that these principles would also bar the tort claims against Tranzon, as the bank's authorized agent.
"Additionally, foreclosure sales are also governed by the rule that they are to be conducted with reasonable care. A person who conducts a foreclosure sale of property has a duty to identify . . . properly the property that is being sold."
In addition, the trial court instructed the jury that "[t]he law imposes legal duties on a person to exercise reasonable care for the safety of another person or to another person's property. Thus, negligence is defined generally as the violation of a legal duty that one person owes to another to exercise reasonable care for the safety of that other person or for the safety of that other person's property.
"Consequently, negligence may be defined as the failure to use reasonable care under the circumstances. Reasonable care, or as it is sometimes called, due care, is the care that a reasonably prudent person would use in the same or similar circumstances. Thus, the use of proper care in a given situation is the care that an ordinary prudent person would use in light of all the surrounding circumstances."
The trial court further instructed the jury that, "in regard to negligent misrepresentation, in order to prevail on a claim of negligent misrepresentation, a plaintiff must prove the following four elements by a preponderance of the evidence: One, that a defendant made a misrepresentation of fact; two, that the defendant knew or should have known that the representation was false; three, that the plaintiff reasonably relied on the misrepresentation; and four, that the plaintiff suffered pecuniary harm or financial harm as a result.
"As a general rule, a person who sells property has a duty to properly identify the property being sold and not to misidentify property as being part of a sale when it is not. Furthermore, one who, in the course of his business or profession or employment, supplies false information for the guidance of others in their business transactions is subject to liability for pecuniary loss caused to them by their justifiable reliance upon information if he fails to exercise reasonable care or competence in obtaining or communicating the information.
"Liability for negligent misrepresentation may be placed on a defendant when there has been a failure to disclose known facts and, in addition, a request or an occasion or circumstance which imposes a duty to speak. Such a duty is imposed on a defendant insofar as he voluntarily makes disclosure. A party who assumes to speak must make full and fair disclosure as to the matters about which he assumes to speak.
"Additionally, a seller of property may not do anything to conceal from a buyer a material fact affecting the sale or say or do anything to divert or forestall an intended inquiry by the buyer or deliberately hide defects, for in doing so, he is not merely remaining silent, but is taking active steps to mislead.
"Thus, if a person makes representations as to title, he is to speak the truth or if he places himself in a position where his silence will convey a false impression of the truth, there may be as much fraud as in a false statement.. . .
"[T]he plaintiffs allege that the [bank] was negligent as follows.... The ... bank was negligent and careless not to ascertain the true status of the ownership of personal property and failed to properly investigate same. Further, the bank was negligent in causing personal property to be sold, although not part of its security. The bank knew that buyers would rely on the description of property being sold at public auction and [the] plaintiffs did so rely, all to the special loss and damage of the plaintiffs herein.
"Still further, the [bank] and its agents, representatives and employees knew of conflicting claims to said personal property and, in fact, knew that it lacked a definite list of personal property, yet caused an auction to be held knowing [the] plaintiffs would rely and did so rely and failed to disclose the conflicting claims of personal property all to the plaintiffs' special loss and damages....
"It is not necessary for the plaintiffs to prove all of the specific claims of negligence against [the bank] as alleged in the complaint. Negligence may be found against [the bank] if the plaintiffs prove by a preponderance of the evidence any one of the specific claims of negligence as have been alleged that I've just read to you....
"[T]he plaintiffs allege ... Tranzon was negligent as follows.... [Tranzon] acted as the auctioneer and prepared the auction marketing memorandum which was utilized by bidders in regard to the auction. . . . Tranzon was negligent and careless in preparing the auction marketing memorandum and conducting said auction by failing to identify the owners of said personal property, what personal property was included in the auction and misleading the prospective bidders, including the plaintiffs, who were damaged as a result of [Tranzon's] negligence and carelessness.
"Further . . . Tranzon knew it lacked sufficient information regarding the ownership of the personal property and conducted said auction without disclosing the full and complete information to bidders, all to the plaintiffs' special loss and damages....
"Again, it's not necessary for the plaintiffs to prove all the specific claims of negligence against Tranzon as alleged in the complaint. Negligence may be found against Tranzon if the plaintiffs proved by a preponderance of the evidence any one of the specific claims of negligence as alleged in the complaint."
We recognize that this court in Williams Ford, Inc. v. Hartford Courant Co., supra, 232 Conn. at 591 n. 25, 657 A.2d 212, stated that, because the plaintiffs' CUTPA claim in that case was barred because they had been contributorily negligent, it "need not decide whether negligence of the defendant alone, unaccompanied by contributory negligence of the plaintiff, will establish a CUTPA violation" under the second prong of the cigarette rule. The plaintiffs in the present case concede, and we agree, however, that this court in Naples v. Keystone Building & Development Corp., supra, 295 Conn. at 228-29, 990 A.2d 326, recognized that mere negligence or incompetence in performing a contract will not support a CUTPA claim under the second prong of the cigarette rule in the absence of proof of "immoral, unethical, oppressive, or unscrupulous" conduct. (Emphasis added; internal quotation marks omitted.) Id., at 227, 990 A.2d 326; see also A-G Foods, Inc. v. Pepperidge Farm, Inc., 216 Conn. 200, 217, 579 A.2d 69 (1990) (plaintiff's CUTPA claim failed because defendant's "negligence did not constitute an `immoral, unethical, oppressive, or unscrupulous' practice" under second prong of cigarette rule and "the first prong [of the cigarette rule], standing alone, is insufficient to support a CUTPA violation, at least when the underlying claim is grounded solely in negligence").
Although the plaintiffs have not asked this court to overrule Flagg Energy Development Corp., they contend that the case should be "limited to its facts, which involved a loss arising from a defective product in which the claimed `unfairness' arose from a mere failure to deliver goods of the quality that was promised." As we have explained, however, the failure to deliver goods of the quality that was promised may form the basis for a CUTPA claim if the failure was accompanied by aggravating circumstances. Because our analysis of the economic loss doctrine in Flagg Energy Development Corp. did not address the precise allegations of the plaintiffs' CUTPA claim, but focused primarily on the plaintiffs' separate negligence claim, the decision in that case can be read as implying that any CUTPA claim that arises out of a contractual claim that the defendant had failed to deliver goods of the promised quality is barred by the economic loss doctrine. Accordingly, to the extent that our decision suggested that the economic loss doctrine bars a CUTPA claim arising from the breach of a promise to deliver goods even when the breach was accompanied by aggravating circumstances, we conclude that we must overrule it.
"If you find that [the bank] has met its burden of proof as to its special defenses and if you find that ... the [plaintiffs have] failed to meet [their] burden of proof regarding [their] claim of breach of warranty of title, then you should render a verdict in favor of [the bank]...." The court did not instruct the jury on the provisions of § 42a-2-312 or § 42a-9-610. Because the defendants did not challenge this instruction, it would appear that their claim that the jury reasonably could not have found that the disclaimers were insufficient under those statutes was not preserved for review. Because the plaintiffs do not object to our review of the defendants' claim, which essentially is a claim that the disclaimers were sufficient under the governing statutes as a matter of law, and because the claim has been adequately briefed, the record is adequate for review and the defendants cannot prevail on the claim, we review it.
"`§ 2-312-FORM 1
"`Disclaimer of Warranty of Title
"`Disclaimer of Warranty of Title. Seller, as Trustee in bankruptcy of XYZ Solvents Company, transfers only his right, title and interest to the goods herein described. Since he is without knowledge as to what claims may or may not exist with respect to ownership of the goods, SELLER MAKES NO WARRANTY WHATEVER WITH RESPECT TO TITLE.'" Jones v. Linebaugh, supra, 34 Mich.App. at 310 n. 3, 191 N.W.2d 142.
"In this particular case, [the plaintiffs base their] CUTPA claim on [their] other claims against the bank, particularly the bank's conduct involving its sale of personal property as part of the auction. In order to prove a violation of CUTPA, the [plaintiffs] need only prove a single act in the conduct of trade or business that is an unfair method of competition or an unfair or deceptive practice.
"As the first step in deciding whether a defendant violated CUTPA under the statute, you must determine whether the plaintiff has proved by a preponderance of the evidence that [the bank's] actions were carried out in the course of its trade or commerce. An action is carried out in the defendant's trade or commerce if it's part of any sale of any property whether the property is either tangible or intangible or real or personal. The conduct at issue must occur in the defendant's primary trade or business. It must not be merely incidental to the defendant's trade or business. The evidence here indicates this case involves the sale of personal property and that [the bank's] business includes transactions involving the loaning of money.
"In regards to what is an unfair trade practice, certain guidelines have been established as to what constitutes an unfair trade practice. The plaintiff must establish by a preponderance of the evidence that a defendant's conduct meets at least one of the following three criteria in order to meet its burden of proof under its CUTPA claim: One, that an act offends public policy as it's been established by applicable common law, statute or some other established concept of fairness; [two] that the act is immoral, unethical or unscrupulous; or [three] that the act causes an injury to consumers or other businesses that is substantial, not outweighed by any countervailing benefits to consumers or competition and for which consumers or other businesses could not reasonably have avoided. All three of these criteria do not need to be satisfied to support a CUTPA violation. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.
"Specifically in regards to the first criteria involving an act that violates public policy, this particular criterion alone cannot be satisfied by mere negligence, but may be satisfied by negligent acts coupled with additional conduct that is aggravating or offensive.
"Next, I should discuss the issue of ascertainable loss. Even if the plaintiff proves that the defendant committed an unfair trade practice or engaged in unfair competition that violates CUTPA, the plaintiff cannot recover unless it sustained what is called an ascertainable loss. The plaintiff has the burden of proving that this ascertainable loss occurred as a result of the defendant's use of a method, act or practice prohibited by CUTPA. A loss is a deprivation, detriment or injury. A loss is ascertainable if it is capable of being discovered, observed or established, but need not be measured by any dollar amount. On its face, the loss of property having value is an ascertainable loss.
"Lastly, if the plaintiff proved it sustained an ascertainable loss as a result of a defendant's violation of CUTPA, it must further prove the amount of the actual damages, if any, that were proximately caused by such violation."
"First, the injury caused must have been substantial;
"Second, the injury caused must not have been outweighed by any countervailing benefits to consumers or competition that the practice produces; and
"Third, the injury caused must have been an injury that the consumer, competitor or other business person could not have reasonably avoided."
The defendants also claim that the trial court improperly failed to instruct the jury that the plaintiffs were required to prove that they could not reasonably have avoided any injury from the bank's unscrupulous conduct. See Williams Ford, Inc. v. Hartford Courant Co., supra, 232 Conn. at 592, 657 A.2d 212 (to establish substantial injury requirement of CUTPA, plaintiff must prove "an injury that consumers themselves could not reasonably have avoided" [internal quotation marks omitted]; id., at 593, 657 A.2d 212 (plaintiffs failed to prove that they could not reasonably have avoided injury when jury found that plaintiffs were 10 percent contributorily negligent)). In addition, they contend that, because the jury concluded that the plaintiffs had been contributorily negligent with respect to the tort claims against Tranzon; see footnote 11 of this opinion; and because Tranzon was the bank's agent for purposes of the sale, the court's failure to give the instruction was harmful. As we have indicated, however, the import of the jury's allocation of liability is entirely unclear to us. See footnote 11 of this opinion. In any event, we have concluded that the tort claims against both Tranzon and the bank were barred, and apportionment of liability is not an available remedy for a breach of the implied warranty of title claim, which forms the basis of the plaintiffs' CUTPA claim. In other words, a buyer has no duty under § 42a-9-610 to avoid injury by investigating the title to goods sold at a secured party sale in the absence of "very precise and unambiguous language" disclaiming the implied warranty of title. Jones v. Linebaugh, supra, 34 Mich.App. at 309, 191 N.W.2d 142. We have concluded that the defendants in the present case provided no such language. Accordingly, we conclude that the trial court's failure to give this instruction was harmless, even if we were to assume that it was improper.
The dissenting and concurring justices contend that, because the defendants "phrased their proposed jury instruction as a modification, rather than a wholesale abrogation, of the cigarette rule," and because the language of the requested charge finds some support in our case law, the defendants' claim on appeal was preserved. We first note that the dissent fails to acknowledge that the defendants specifically requested that the trial court charge the jury consistently with the cigarette rule, but with an additional proviso. In addition, the dissent misses the point that the defendants do not claim on appeal that the substantial injury to consumers test has modified the cigarette rule. Instead, despite the fact that they asked the trial court to instruct the jury on the cigarette rule, the defendants now claim that the substantial injury to consumers test has replaced the cigarette rule. Moreover, the fact that the jury instruction that the defendants requested finds some support in our case law is irrelevant to the question of whether the claim that they raise on appeal was preserved. In any event, even if we were to assume that the defendants are claiming on appeal that the trial court should have instructed the jury that the substantial injury to consumers test modified the cigarette rule, the dissenting and concurring justices have not explained how the defendants were prejudiced by the trial court's refusal to give the charge that they requested. As we have explained, because the jury necessarily would have found that the bank's conduct satisfied the cigarette rule as modified by the substantial injury rule, the failure to give the instruction was harmless.
Section 42-110g (d) provides in relevant part: "In any action brought by a person under this section, the court may award, to the plaintiff, in addition to the relief provided in this section, costs and reasonable attorneys' fees based on the work reasonably performed by an attorney and not on the amount of recovery...."
The court in Fabri also took note of the disparity between the $500,000 punitive damages award in that case and the "civil penalty of $5,000 for each willful CUTPA violation" pursuant to General Statutes § 42-110o (b). Fabri v. United Technologies International, Inc., supra, 387 F.3d at 126; see also State Farm Mutual Automobile Ins. Co. v. Campbell, supra, 538 U.S. at 418, 123 S.Ct. 1513 (when determining whether punitive damages award comports with constitutional due process principles, courts may consider "the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases"). We conclude, however, that this factor should be given relatively little weight in comparison with other factors that the trial court should consider in determining punitive damages under § 42-110g (a), such as the reprehensibility of the defendant's conduct and the size of the compensatory damages award. This court and the Appellate Court repeatedly have affirmed awards of punitive damages pursuant to § 42-110g (a) that greatly exceed the $5000 civil fine authorized by § 42-110o (b); see footnote 60 of this opinion; and the legislature has never expressed its disagreement with these cases by amending the statute.
Although they make no such claim expressly, it seems implicit in the plaintiffs' claim that they are entitled to the insurance proceeds that, if the bank transferred the collateral assignments to them, the bank would not have been entitled to execute the deficiency judgment because doing so would have interfered with their right to take possession of the proceeds under the collateral assignments. As we have explained, however, if the bank had transferred the collateral assignments to the plaintiffs, the plaintiffs would have had no enforceable rights with which the bank could have interfered. In short, there simply is no theory under which the bank would be entitled to take possession of the insurance proceeds and then be obligated to pay them over to the plaintiffs. Although we agree with the plaintiffs' contention that this conclusion would tend to render "wholly illusory" a transfer of the collateral assignments without the transfer of the underlying debt, at least from the plaintiffs' standpoint, parties are not without recourse if they want to transfer an enforceable security interest. Specifically, the parties can agree to the transfer of the underlying debt.
In the present case, the bills of sale provide that the defendant T.D. Banknorth, N.A., "hereby sells and transfers . . . all of [its] right, title and interest, as [it] has or may have in and to the personal property. . . ." (Emphasis added.) Considering the construction that this court gives to identical language in a quitclaim deed in the real estate context, I fail to discern a basis for treating such language differently in the present case.
