Brett Stone Painting & Maintenance, LLC v. New England Bank
72 A.3d 1121
Conn. App. Ct.2013Background
- Villar obtained a construction loan from Apple Valley Bank (Apple Bank) to complete a house; plaintiff Brett Stone Painting provided a written construction contract/proposal for $374,810 dated August 2, 2007.
- Loan documents included an "Assignment of Construction Contracts" assigning Villar’s rights under the construction contract to lender and giving lender the option, upon Villar’s default, to exercise Villar’s rights and perform his obligations.
- The loan required completion by February 28, 2008; Villar did not complete work by that date and thus defaulted under the loan.
- Apple Bank’s loan officer, N. Robert Young, after the default, urged Stone to continue work, requested invoices, and Apple Bank issued partial payments by check; Stone relied on those assurances and continued performing.
- Plaintiff finished work in May 2008 but was not fully paid and sued New England Bank (successor to Apple Bank) for breach of contract, unjust enrichment and fraud; trial court rejected fraud, found bank had stepped into Villar’s shoes and breached the construction contract, and awarded damages, interest and fees.
- On appeal the bank argued (inter alia) that it never had a right to assume obligations because there was no default, the parol evidence rule barred evidence of the bank’s post-assignment conduct, and the assignment was void under the Home Improvement Act; the trial court’s findings and judgment were affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Villar default so lender could exercise assignment option? | Villar defaulted by failing to complete improvements by Feb 28, 2008; trial court may infer default from record. | No default occurred, so lender could not bind itself to assignor’s obligations. | Court presumed implicit finding of default (supported by testimony and loan terms); finding not clearly erroneous. |
| Did lender exercise option to "step into the shoes" and assume rights/obligations? | Bank, through Young’s assurances and partial payments, elected to exercise the option; plaintiff relied and performed. | No evidence supports that the bank assumed assignor’s obligations. | Crediting witness testimony, court reasonably found the bank exercised the option; finding upheld. |
| Did parol evidence rule bar testimony about lender’s conduct after assignment? | Parol evidence was admissible to prove that the bank exercised its contractual option; testimony did not vary the written assignment. | Parol evidence cannot be used to alter or contradict the written assignment. | Parol evidence was admissible to show exercise of the option (a factual act), not to vary contract terms. |
| Was the assignment void under the Home Improvement Act? | N/A at trial (defense not specially pleaded); bank argues noncompliance makes assignment void. | Assignment void because construction contract allegedly fails Home Improvement Act formalities. | Trial court properly rejected the defense because it was not pleaded as a special defense and evidence was not admitted without objection. |
Key Cases Cited
- Plante v. Charlotte Hungerford Hospital, 300 Conn. 33 (Conn. 2011) (reply-brief issues may be unreviewable)
- DiLieto v. County Obstetrics & Gynecology Group, P.C., 297 Conn. 105 (Conn. 2010) (standards for raising issues on appeal)
- Alstom Power, Inc. v. Balcke-Durr, Inc., 269 Conn. 699 (Conn. 2004) (parol evidence rule principles)
- Murtha v. Hartford, 303 Conn. 1 (Conn. 2011) (standard of review for factual findings)
- Hartford v. McKeever, 139 Conn. App. 277 (Conn. App. 2012) (assignee liability when obligations are assumed)
- Connecticut Savings Bank v. Central Builders’ Supply Co., 4 Conn. App. 332 (Conn. App. 1985) (parol evidence permitted to prove exercise of contractual option)
- Jay v. A & A Ventures, LLC, 118 Conn. App. 506 (Conn. App. 2009) (trial court’s credibility determinations entitled to deference)