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Centimark Corp. v. Village Manor Associates Ltd. Partnership
Citations: 967 A.2d 550; 113 Conn. App. 509; 2009 Conn. App. LEXIS 114Docket: AC 29012
Court: Connecticut Appellate Court; April 7, 2009; Connecticut; State Appellate Court
Centimark Corporation initiated a lawsuit against Village Manor Associates Limited Partnership to foreclose a mechanic's lien due to non-payment for roofing services. Village Manor counterclaimed, citing issues with the roof, prompting Centimark to implead M. Dzen Roofing Company, which had subcontracted for part of the roofing work. The trial court ruled in favor of Village Manor on its counterclaims and in favor of Centimark on its third-party complaint. Centimark appealed, contesting the court's findings on Village Manor's claims of negligent and fraudulent misrepresentation, breach of contract, and violations of the Connecticut Unfair Trade Practices Act (CUTPA), as well as the assessed damages on the counterclaims. Additionally, Centimark challenged the determination of indemnification damages against Dzen. Village Manor cross-appealed, arguing that it was wrongly denied recovery of expert witness fees related to the CUTPA claim. The appellate court affirmed the damages awarded to Village Manor but reversed and remanded the judgment regarding Centimark's third-party damages for a reevaluation of attorney's fees. The court disagreed with Village Manor's cross-appeal assertion regarding expert fees. Key facts highlighted include the background of the roofing project, the involvement of Village Manor Health Care, and the role of Centimark and Dzen in the bidding and installation process. Rodowicz entered an agreement with Centimark for a roofing project, where Centimark was responsible for the entire roofing job while Dzen would supply materials and install the shingled portion. The contract was valued at $99,000, with a subcontract to Dzen for $38,992. Dzen subcontracted the shingled installation to Tom Thompson of BHR Construction, whose crew lacked GAF Master Elite certification. Dzen supplied materials and branded items to BHR to project a specific image. Work commenced in August 2002 and concluded by September 12, 2002. Upon inspection, Rodowicz identified multiple issues, including improper flashing of HVAC units and defects in the roofing installation. Despite expressing these concerns, the problems remained unresolved, and Village Manor did not pay Centimark, leading Centimark to file a mechanic's lien for the full contract amount. Centimark's complaint alleged non-payment by Village Manor, which countered with claims of negligent misrepresentation and several other allegations, including breach of contract and negligence. The court found in favor of Village Manor, ruling that Centimark breached its contract by failing to secure a building permit, not utilizing Dzen as intended, and not adhering to installation specifications. Village Manor was awarded $139,670 for proper roof replacement, with a net damage award of $40,670.24 after accounting for the unpaid contract price. Village Manor's counterclaim for negligence, breach of warranty, negligent misrepresentation, and fraudulent misrepresentation resulted in the court awarding the same damages as for the breach of contract claim. Additionally, for the violation of the Connecticut Unfair Trade Practices Act (CUTPA), the court granted Village Manor $133,276.82 in attorney's fees but denied reimbursement for expert witness fees. In Centimark's third-party complaint seeking indemnification from Dzen, the court ruled in Centimark's favor, awarding $38,992. Centimark's appeal challenges the court's findings in favor of Village Manor on claims of negligent misrepresentation, fraudulent misrepresentation, breach of contract, and CUTPA violation. However, since Centimark did not contest the court's liability finding on the negligence count, the damages awarded will stand regardless of the court's decisions on the other counts. Consequently, the focus shifts to Centimark's challenge of the CUTPA violation. Regarding negligent misrepresentation, Centimark argues that the court's ruling was incorrect, but the requirements for such a claim include proving a misrepresentation of fact by the defendant, knowledge of its falsehood, reasonable reliance by the plaintiff, and resulting pecuniary harm. The court’s findings on this matter are treated as factual determinations that can only be overturned if clearly erroneous. Village Manor's claim involved Centimark's representation that Dzen, a highly rated contractor, would perform all roofing work, which was a key inducement in their agreement. Village Manor entered into an agreement with Centimark based on representations that Dzen, a highly regarded GAF Master Elite contractor, would perform all work on the shingled portion of the roof. However, Dzen subcontracted this work to Thompson, who hired inexperienced independent contractors, none of whom were GAF Master Elite certified. The court found that Village Manor proved its claim of negligent misrepresentation, as Centimark's representatives, Westbrook and Rzempoluch, failed to disclose that Dzen would subcontract the work, leading Village Manor to rely on these false assurances. As a result, Village Manor suffered damages, for which the court awarded compensation equivalent to that of its breach of contract claim. On appeal, Centimark contested the court's findings regarding reliance, arguing that they misapplied the precedent set in O'Donnell v. Rindfleisch. Centimark contended that the principles established in O'Donnell indicated no requirement for the subcontractor's crew to be certified as GAF Master Elite contractors, as Dzen held that certification and supervised the crew. However, the court found Centimark's reliance on O'Donnell to be misplaced, emphasizing that the circumstances in O'Donnell demonstrated unreasonable reliance on representations made by the contractor, which did not apply to this case. Reliance on Centimark's representations was deemed reasonable, particularly due to the contract stipulating that both Centimark and Dzen would complete the work, leading Village Manor to logically assume Dzen would perform the tasks rather than less qualified workers. Testimonies confirmed that Dzen was expected to handle the shingled roof work, despite Rzempoluch's knowledge of subcontracting that was not disclosed to Village Manor. The court upheld Centimark's liability for negligent misrepresentation, finding no clear error in its reliance determination. Regarding fraudulent misrepresentation, Centimark's arguments mirrored those presented for negligent misrepresentation, but the court found sufficient evidence to support its ruling against Centimark. The essential elements for fraudulent misrepresentation were satisfied, including a false statement made to induce reliance, which resulted in harm. Evidence included BHR's crew wearing Dzen-branded shirts and Thompson's use of Dzen's name on his vehicle to mislead customers. Finally, in relation to the Connecticut Unfair Trade Practices Act (CUTPA), the court found in favor of Village Manor, rejecting Centimark's claims. CUTPA prohibits unfair methods of competition and deceptive practices. The court applied criteria from the Federal Trade Commission's cigarette rule to assess whether Centimark's actions were unfair, including considerations of public policy, ethical standards, and consumer harm. A practice may be deemed unfair under CUTPA even if not all three criteria are met; a finding can be based on the extent to which one criterion is satisfied or all three to a lesser degree. Determining if acts are deceptive or unfair is a factual matter for the trier of fact, with appellate courts deferring to the trial court's factual determinations unless clearly erroneous. The court found that Centimark misrepresented to Village Manor that Dzen would perform roofing work, while in reality, Dzen planned to subcontract it. This constituted a deceptive act under CUTPA, and the court's finding was supported by the record. In terms of damages, the court awarded Village Manor $40,670.24 after assessing the replacement cost of the roofing work at $139,670 and deducting the unpaid contract price of $98,999.76. Centimark contested the use of replacement cost and sought a $12,000 reduction based on improper inclusion of flashing costs, but these claims were rejected, and the award was affirmed. On the issue of mootness, Village Manor argued that Centimark's appeal regarding damages only addressed the breach of contract count, while the damages were also awarded under the negligence count. Thus, even if the court agreed with Centimark, practical relief could not be granted as the negligence award would still stand. The court clarified that mootness affects subject matter jurisdiction and must be considered, as it requires the court to dismiss cases where no practical relief can be provided. An actual controversy is necessary for appellate jurisdiction, and it is not within the court's role to address moot issues. The legal standard for measuring damages for injury to real property is consistent under both tort and breach of contract claims, aimed at compensating the landowner. The court's approach in assessing damages for Village Manor's claims—breach of contract, negligence, breach of warranty, negligent misrepresentation, and fraudulent misrepresentation—was uniform, as it awarded the same damages for each claim. The court treated the breach of contract claim as the primary reference point for damages pertaining to the other counts. If the damages awarded for the breach of contract claim were deemed inappropriate, the same would apply to the other related claims. The court emphasized that practical relief could still be granted on the basis of Centimark's challenge, indicating the issue was not moot. The standard of review for damages determinations allows for broad discretion by the trial court, which will not be overturned unless found to be clearly erroneous. The appellate review involves assessing whether the legal conclusions are correct and supported by the factual basis in the decision memorandum. The trial judge holds the exclusive authority to evaluate witness credibility and determine the weight of their testimonies. A factual determination can only be overturned on appeal if it is clearly erroneous, meaning the reviewing court is convinced that a mistake has occurred despite existing supporting evidence. Centimark contends that the court incorrectly calculated damages using replacement costs, arguing that Village Manor did not prove the repairs exceeded the property's former value or that they did not enhance it. The court found the testimony of Village Manor's expert, Michael Pascale, credible. Pascale, a project manager at H.B. Fishman, recommended total shingle replacement after assessing significant damage risks associated with repairs. He provided estimates for the repair costs ranging from $205,600 to $324,831, while estimating replacement costs at $127,670. The court ruled that total replacement was necessary and awarded Village Manor $139,670, which was later reduced by the unpaid contract amount of $98,999.76, resulting in a net award of $40,670. Centimark further argued against using the cost of repairs as the damage measure, favoring diminution in value instead. However, the court clarified that while the basic measure of damages for property injury is indeed diminution in value, repair costs can serve as an alternative measure, provided they do not exceed the property's former value or enhance its value post-repair. The court emphasized its discretion in selecting the appropriate measure of damages, affirming that the plaintiff is not required to present evidence for both diminution in value and repair costs. The trial court has the discretion to select repair measures, constrained only by two specific conditions not applicable in this case. There was no evidence presented that the cost of replacing the roof exceeded the property's value or that the repairs enhanced its value beyond pre-damage levels. The court appropriately determined the measure of damages based on the cost to repair, specifically the replacement of shingles. Centimark's argument that the replacement cost was improper due to the lack of evidence on repair costs relative to property value was rejected. The court found that the cost of the roof replacement, at $139,670, was significantly less than the property's value exceeding $2 million as of 2004. No evidence suggested that the repairs would enhance the property's value. The court referenced precedents indicating that repair costs can serve as an alternative measure for determining value diminution, provided they do not exceed the property's former value and do not enhance its value. Expert testimony highlighted that removing an existing shingle roof for a new installation is preferable to overlaying a second roof, as it aids in leak detection and overall quality. Despite the added work, such removal does not inherently improve the roof beyond a standard new installation. Village Manor demonstrated that the repairs were necessary to comply with building code requirements, which do not permit roofs with three layers, and the testimony confirmed that restoring the roof was essential to meet contractual obligations. In Willow Springs Condominium Assn. Inc. v. Seventh BRT Development Corp., the court established that when property can be repaired to its warranted condition, the cost of such repairs typically serves as proof of loss. In the case involving Village Manor, the court awarded $40,670.24 in damages, which included $12,000 for proper flashing around HVAC units. Centimark contested this $12,000 award, claiming it was improper since the court concluded that flashing was not a contractual requirement. However, the court's decision was not entirely clear regarding the nature of the $12,000 award—whether it was independent or part of the roof replacement. The court referenced an estimate by Pascale for roof replacement costs totaling $127,670, which included additional flashing costs for eight HVAC curbs. Centimark failed to file a motion for clarification regarding this ambiguity, and thus, the court's judgment was supported rather than undermined. Ultimately, while Centimark argued the $12,000 award conflicted with the court's findings, the court had indicated that the contract did require such flashing, despite not finding Centimark negligent in that regard. Centimark was not found to be exempt from the contract requirement to flash HVAC units, but the court ruled there was inadequate evidence of a breach regarding this requirement. Centimark's appeal did not reverse the $12,000 award. Regarding Centimark's third-party complaint against Dzen, the court mistakenly calculated indemnification damages under their subcontract. The review process involves determining if contract language is ambiguous, with clear language leading to legal conclusions that are subject to plenary review. The court determined Dzen was liable to indemnify Centimark for damages stemming from Dzen's work, awarding Centimark $38,992 for payments made to Dzen. However, Centimark argued for additional attorney's fees, which the court agreed should be included. The indemnification clause obligates Dzen to cover all claims and expenses arising from its work but does not limit indemnification to the contract price. The court's interpretation of the indemnification clause was deemed incorrect. The indemnification clause obligates Dzen to indemnify Centimark for all claims, damages, losses, liabilities, and expenses resulting from the performance of the subcontract, which included supplying materials and installing the defective shingled roof. The court awarded Village Manor $139,670, the replacement cost of the roof, and determined that Centimark was entitled to indemnification from Dzen for that amount, less a credit of $98,999.76 that Village Manor owed Centimark. Consequently, Dzen was liable to indemnify Centimark for the defective installation. The court affirmed that the proper measure of damages was the amount Centimark had to pay due to Dzen's non-performance. Furthermore, Centimark should have been awarded attorney's fees under the indemnification clause, as Connecticut follows the American rule allowing recovery only when specified by contract or statute. The clause in question explicitly permits the recovery of attorney's fees, thus Centimark is entitled to these fees in addition to the indemnified amount. In Village Manor's cross-appeal, the court found it could not recover expert witness fees under CUTPA, adhering to the principle that parties bear their own litigation expenses unless a statute provides otherwise, as supported by the precedent set in Miller v. Guimaraes. The trial court's award of $1000 in expert witness fees to homeowners was deemed improper under the Connecticut Unfair Trade Practices Act (CUTPA), as there is no statutory authority in General Statutes § 52-260 to support such an award for attorneys acting as experts. § 52-260 outlines the categories of experts eligible for discretionary fee awards, and roofing consulting firms are not included. Consequently, the court correctly denied Village Manor expert witness fees related to its CUTPA claim. The judgment is reversed regarding the damages awarded to Centimark in its third-party complaint against Dzen, directing that $139,670 be awarded in damages, with further proceedings for attorney's fees. The judgment is affirmed in all other respects. Additional notes indicate that Centimark did not contest liability for negligence, and the court's measurement of damages based on replacement cost was upheld. The court found Centimark's actions to be deceptive and unfair, satisfying the CUTPA requirements, and since this finding was not clearly erroneous, further examination of the unfairness claim was unnecessary. Centimark's assertion of economic waste in replacing the roof, positing that diminished property value should be the damage measure, was noted but not directly addressed in this context. For breaches of construction contracts involving defects or incomplete work, damages are assessed based on either: (i) the reasonable cost to complete the construction as per the contract, provided this does not result in unreasonable economic waste; or (ii) the difference in value between what was contracted for and what was actually delivered if completing the work per the contract would cause unreasonable economic waste. The court chose to assess damages based on repair costs rather than a valuation decrease, as there was no evidence presented of economic waste, such as repair costs significantly exceeding the property’s value. The absence of evidence on value differences limited the potential for reducing damages. In a third-party complaint, Centimark sought indemnification based on a subcontract breach, but the court found no breach occurred due to Centimark preventing Dzen from fixing defects post-construction. Centimark's appeal regarding this finding was deemed unnecessary since it succeeded on another count, receiving indemnification damages. Dzen's argument that indemnification was improperly analyzed under the subcontract clause was not considered due to its failure to file a cross-appeal. The court clarified that it could address claims not explicitly pleaded if they were litigated. Centimark claimed indemnification of $139,670 linked to the affirmed damage award but cannot transfer liability for CUTPA damages to Dzen.