Alarmax Distributors, Inc. v. New Canaan Alarm Co.
141 Conn. App. 319
| Conn. App. Ct. | 2013Background
- Defendant New Canaan Alarm Co., Inc. purchased goods from plaintiff Alarmax Distributors, Inc. on open account credit terms beginning in 1999.
- Credit terms stated payment due net 30 days FOB shipping point, but plaintiff regularly allowed exceeding the term for lump-sum payments.
- Over 15 years, the defendant’s account carried a balance; last purchase occurred May 5, 2005, and the defendant made limited post-delivery payments.
- In 2005-2006, embezzlement by defendant’s bookkeeper impacted defendant’s ability to pay; demand for payment followed in November 2005.
- Defendant made no payments after February 14, 2006; plaintiff filed suit on September 15, 2009, asserting breach of contract and related counts; trial court found an open account/account stated and tolling of the statute, and awarded finance charges under the original agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 42a-2-725 is tolled despite its four-year term. | Plaintiff argues tolling applies to the four-year period. | Defendant argues tolling does not apply to a statute of repose. | Yes, tolling applies to § 42a-2-725. |
| Whether the parties modified the contract to an open account/account stated. | Plaintiff asserts a modification occurred through conduct. | Defendant argues no valid modification occurred. | Yes, a valid modification to an open account existed. |
| Whether the February 14, 2006 payment tolled the statute by constituting an acknowledgment. | Payment acknowledged debt triggering tolling. | Payment did not constitute acknowledgment of the entire debt. | Yes, the payment acknowledged the debt and tolled the statute. |
| Whether the court could award finance charges under the original agreement after novation. | Finance charges were permissible under the contract. | Original finance-charge provision should not apply after modification. | Finance charges were improper; remand for prejudgment interest under § 37-3a. |
| Whether prejudgment interest should be awarded and how. | Plaintiff seeks prejudgment interest under § 37-3a. | Arguments regarding prejudgment interest were not properly resolved. | Remand for adjudication of prejudgment interest under § 37-3a. |
Key Cases Cited
- Bushnell Plaza Development Corp. v. Fazzano, 38 Conn. Sup. 683 (1983) (novation/substitute contract analysis in contract modification)
- Flagg Energy Development Corp. v. General Motors Corp., 244 Conn. 126 (1998) (novation and contract modification principles)
- Willamette Management Associates, Inc. v. Palczynski, 134 Conn. App. 58 (2012) (substitute contract and tolling implications)
- Zatakia v. Ecoair Corp., 128 Conn. App. 362 (2011) (acknowledgment tolling and effect on statute of limitations)
- Citibank (South Dakota), N.A. v. Manger, 105 Conn. App. 764 (2008) (account stated concepts and open account)
- Greer Limestone Co. v. Nestor, 175 W. Va. 289 (1985) (partial payment tolling of UCC 2-725)