JOHN COUTO et al. v. LANDEL REALTY, LLC, et al., SC 19209

Judicial District of New London


†††† †Contracts; Corporations; Whether Owner of Construction Company Could be Held Individually Liable for the Breach of a Construction Contract Between the Homeowners and the Construction Company and for a Violation of CUTPA.† John and Jane Couto entered into a contract with Joseph General Contracting, Inc. (Joseph General), for the construction of a home and carriage house on a lot in Stonington.† The contract provided that, if the Coutos were not satisfied with the home and carriage house upon their completion, they would not be obligated to buy the lot or the completed buildings.† The Coutos also negotiated additional oral agreements with the owner of Joseph General, Anthony Silvestri, which supplemented the terms of the written agreement.† Pursuant to one of the oral agreements, the Coutos gave up their contractual right to reject the construction development in its entirety if it was not completed to their satisfaction.† Thereafter, a dispute arose concerning the construction project, and the Coutos refused to make a progress payment until the issue was resolved.† Consequently, Silvestri ceased construction of the dwellings and obtained a mechanicís lien on the premises.† Joseph General then sued the Coutos, claiming breach of contract and seeking to foreclose the mechanicís lien.† The Coutos filed a separate action against Silvestri, claiming breach of contract and a violation of the Connecticut Unfair Trade Practices Act (CUTPA).† The matters were consolidated, and the trial court found that Silvestri was personally liable to the Coutos for breach of contract and a violation of CUTPA.† On appeal, Silvestri argued that the trial court improperly held him personally liable because, in dealing with the Coutos, he was always acting as an authorized corporate officer of Joseph General.† The Appellate Court (144 Conn. App. 241) disagreed, determining that the evidence supported the trial courtís conclusion that although the original construction contract was between the Coutos and Joseph General, Silvestri subsequently engaged in conduct that made it seem as though he was dealing with the Coutos in his individual capacity.† It explained that Silvestri, in his individual capacity, pressured the Coutos to change the written contract by agreeing to pay for the development up front.† It also pointed out that Silvestri obtained a permit for the property in his own name and individually signed both an escrow agreement and an agreement concerning a construction loan.† It concluded that, in light of the foregoing facts, the Coutos were entitled to infer from Silvestriís conduct that he had personally become a party to the construction contract.† The Appellate Court further determined that the trial court reasonably found that Silvestri personally violated CUTPA based upon the evidence that he (1) failed to obtain financing for the project and placed responsibility for financing on the Coutos, (2) exerted pressure on the Coutos to accept contract modifications, (3) demanded payments beyond what had been earned, and (4) improperly buried a large quantity of construction debris under the property.† In this appeal, the Supreme Court will decide whether the Appellate Court properly determined that Silvestri had incurred contractual obligations to the Cuotos in his individual capacity and that he could be held individually liable for the alleged CUTPA violations.