274 Conn. 33 | Conn. | 2005
Lead Opinion
Opinion
The defendant, Dress Bam, Inc. (Dress Bam), and the plaintiffs, Alan M. Glazer, GLZR Acquisition Corporation (GLZR) and BFI Liquidating Limited (BFI), respectively appeal and cross appeal from the judgment of the trial court, rendered after a jury trial, in favor of the plaintiffs on claims of breach of contract, negligent misrepresentation and violations of the Con
The jury reasonably could have found the following facts. Bedford Fair Industries (Bedford Fair), a general partnership, is a private direct mail marketer of moderately priced women’s apparel through seasonal catalogs. At all relevant times, GLZR and BFI were the sole partners in Bedford Fair. Glazer was one of the founders of Bedford Fair and its president; he also was the majority shareholder of GLZR and BFI. In late 1995, Bedford Fair began to explore the possibility of selling the company to an appropriate strategic partner, while keeping Glazer and his management team to run the operation.
Dress Bam operates a chain of women’s retail apparel stores, with 726 stores nationwide as of 1997. It decided to expand its operation by entering into the catalog mail order business and determined that the most cost effective option was to buy an existing mail order company that could provide customer lists, shipping facilities and expertise in that business.
In late 1996, Glazer contacted David Jaffe, Dress Barn’s then senior vice president, about the possibility
Part of the increased profit projections was based on successful testing results Bedford Fair had achieved, on a limited scale for the two previous seasons, from a deferred billing program. Under this program, Bedford Fair offered its customers the option of receiving merchandise immediately upon ordering while deferring payment for the goods for approximately two months.
On March 28, 1997, the parties met to discuss the acquisition terms, at which time Glazer expressed general agreement with the terms set forth in the term sheet. At the March 28 meeting, Bedford Fair reported that it had exceeded its income projections for January and February, and that it anticipated exceeding its March projections as well. It also shared with Dress Bam the results from its expanded testing of the deferred billing program in its spring catalog, which had been quite successful. Bedford Fair noted that it did not think it would be able to support the deferred billing in its fall catalog because of cash flow problems in July and August. Bedford Fair explained that, although the program ultimately would increase revenues significantly, the reduced cash flow in late July and August while billing was deferred would impact its ability to pay creditors during that period. Moreover, Bedford Fair would incur higher costs from running the deferred billing program because, in anticipation of greater response rates, it would need to print and mail more catalogs and order more merchandise.
Bedford Fair inquired whether Dress Bam would be willing to provide financing so that Bedford Fair could continue and expand the deferred billing program in its fall catalog. Because the parties had set late July, 1997, as the target acquisition date, Bedford Fair explained that, if Dress Bam were to acquire Bedford Fair, the benefits of the deferred billing would accrue
On April 4, 1997, the parties met to negotiate a letter of intent for the acquisition. The parties agreed at that time that Dress Bam would determine the methodology for calculating the purchase price, but Bedford Fair would set the date on which Bedford Fair’s stock value would be determined.
At the April 4 meeting, Jaffe agreed that Dress Bam would provide financing to support the deferred billing program. He indicated that Dress Bam wanted Bedford Fair’s efforts expended toward mnning the business rather than looking for alternative sources of financing. Jaffe also noted his understanding that the financing would be necessary only if the sale did not go through. The parties then shook hands on the deal. Bedford Fair
On May 23, 1997, after the stock offering had been completed, the parties signed a letter of intent setting forth certain principal terms of Dress Barn’s acquisition of Bedford Fair consistent with the February term sheet and a closing date of “July 28,1997 or as soon as practicable thereafter.” An exhibit setting forth a formula for calculating the purchase price was attached to, and incorporated by reference in, the letter of intent. The parties agreed therein that the letter of intent was not a binding agreement, which would result only from the execution of future definitive agreements and approval of the transaction and agreements by Dress Barn’s board of directors. The parties expressly exempted from that disclaimer certain paragraphs of the agreement, which were to be legally binding upon the parties. One of those paragraphs provided that Dress Bam “anticipates being able to conduct the necessary ‘due diligence’ investigation and negotiating and executing definitive agreements by June 30, 1997. ”
On May 29 and 30, two of Dress Barn’s executives and representatives from its accounting firm toured Bedford Fair’s distribution center and inventory annex, at which time one of the executives, Reid Hackney, generated an inventory report. The report noted several problems facing Bedford Fair: a down trending market share, significantly higher back orders, and serious cash flow problems. Hackney opined therein that, “without an infusion of cash from [Dress Bam] or new bank financing [Bedford Fair] will go under.” Hackney, who had not attended the April 4 meeting, further noted: “[Bedford Fair] has asked for [a] $4 million line [of credit] from [Dress Bam] to be available [as soon as possible]. We would like to hold off until after our fiscal year-end (7/26/97). [Bedford Fair] can’t wait that long. [Dress Bam] realizes [its] negotiating position and wants [Glazer’s] personal guarantee on line.”
Before and after executing the letter of intent, on May 19 and June 3,1997, Dress Bam reassured Bedford Fair that documents to support the financing agreement would be forthcoming. At the June 3 meeting, Bedford Fair reminded Dress Bam that the catalogs offering the
In early June, Dress Bam discovered that, under the formula the parties had agreed to, its acquisition costs for the purchase of Bedford Fair would be at least $5 million higher than the $25 million Jaffe had represented to Dress Barn’s board of directors and its investors.
On June 23, 1997, Jaffe informed Glazer that Dress Bam would not support the deferred billing program. He indicated that Dress Bam perceived certain risks to the financing that it was unaware of when it had made the commitment. Specifically, Jaffe indicated that Dress Bam then realized that Bedford Fair was experiencing a credit problem rather than a cash flow problem. Therefore, even if Dress Bam had security for the loan, it still could be at risk if Bedford Fair were, under the worst case scenario, to file for bankruptcy. Glazer noted that Jaffe was aware of these risks when he had made
On June 24, after receiving information from its accounting firm that the costs of sharing tax benefits from the sale with Bedford Fair would cost Dress Bam approximately $3.2 million, Dress Bam decided to revise substantively the sale agreement so it no longer would share the tax benefits with Bedford Fair. By July 7, Dress Bam determined that it needed to devise some rationale for withdrawing that benefit.
In a conference call on July 11, 1997, Jaffe reiterated that Dress Bam was moving “with Godspeed” to complete the transaction. He also informed Bedford Fair that some issues had come up that Dress Bam was concerned about, but nothing substantial enough to affect the pending transaction. Jaffe would not elaborate on what those issues were. By this time, Bedford Fair had received a draft of the sale agreement and an employment agreement, but not a stock purchase agreement.
At a July 30 meeting to finalize the sale agreement, Jaffe stated that Dress Bam had agreed to certain terms in the letter of intent that were based on certain misunderstandings and, therefore, the parties needed to make changes to the acquisition terms. Among the changes was the withdrawal of the shared tax benefit, as well as the elimination of Glazer’s incentive compensation package, together worth more than $5 million. Glazer indicated a willingness to finalize the terms, despite these substantive changes, but Jaffe declined to do so.
Since July 1,1997, Bedford Fair had expended significant, but ultimately unsuccessful, efforts toward finding
When the parties met again on August 14, Dress Bam further reduced its initial purchase price from $25 million to approximately $13.7 million, according to Bedford Fair’s best estimate. Glazer indicated his willingness to accept the deal, in light of Bedford Fair’s precarious financial condition, but Jaffe would not finalize the terms of the sale until Dress Bam could confirm the accuracy of Bedford Fair’s projected August 24 balance sheet, on which its offer had been based. Upon Glazer’s request, Jaffe agreed that Dress Bam would keep open its offer to set the price based on the projected August 24 balance sheet until August 22.
On August 20, vendors began to stop shipping goods to Bedford Fair after hearing rumors in the market that Bedford Fair had filed for bankruptcy. On August 21, because David Jaffe was out of the country, Glazer called Elliott Jaffe, David Jaffe’s father and Dress Barn’s then chief executive officer, to inform him of this turn of events. Glazer indicated that Bedford Fair would accept the terms set forth at the August 14 meeting. Elliott Jaffe indicated that this offer was “last week’s deal” and now “off the table.” Upon confirming Glazer’s claim, however, that David Jaffe had agreed to hold the offer open until August 22, Elliott Jaffe agreed to the
Despite Elliott Jaffe’s statement, on August 22, Dress Bam contacted Bedford Fair to inform it that there would be further changes to the sale terms in revised documents that would be forthcoming. Upon receiving the revised documents, which contained terms further affecting the purchase price, Bedford Fair became concerned that these changes might not leave any money to be distributed to its shareholders upon the sale of the company. On August 25, Armand Correia, Dress Barn’s chief financial officer, called Mackey regarding the pending agreements and indicated that Dress Bam was adamant that the substantive elements of the agreement needed to be finalized essentially as written in the revised documents.
Rather than accept these terms, on September 2, 1997, Bedford Fair filed for bankruptcy protection. Dress Bam thereafter attempted to buy Bedford Fair’s assets out of bankruptcy, but ultimately all of Bedford Fair’s assets were sold to another direct marketing company. After the proceeds of the sale were used to pay Bedford Fair’s creditors and the bankruptcy expenses, Bedford Fair’s estate was left with approximately $899,000 to be distributed to its shareholders.
The record reveals the following additional facts and procedural history. In May, 2000, the plaintiffs initiated this action. In the operative complaint, the plaintiffs asserted seven counts: (1) a CUTPA violation for the totality of Dress Barn’s conduct causing Bedford Fair’s bankruptcy; (2) failure to negotiate the acquisition agreement in good faith under New York law;
Thereafter, Dress Bam filed a motion for summary judgment on all counts. The trial court granted the motion only with respect to count two, failure to negotiate in good faith, and denied the motion as to the other counts. After the plaintiffs presented their case-in-chief at trial, Dress Bam moved for a directed verdict. The trial court granted the motion in part and denied the motion in part, directing a verdict in favor of Dress Bam on count six, negligent misrepresentation with respect to the financing agreement, and on count seven, promissory estoppel.
In its appeal, Dress Bam claims that there was insufficient evidence to support the jury’s verdict and that the trial court improperly: (1) charged the jury on the statute of frauds and damages; (2) modified its decision on postjudgment interest; and (3) sanctioned Dress Bam for a discovery violation by striking certain testimony. In their cross appeal, the plaintiffs claim that the trial court improperly denied their request for prejudgment interest.
“We apply this familiar and deferential scope of review, however, in light of the equally familiar principle that the plaintiff[s] must produce sufficient evidence to remove the jury’s function of examining inferences and finding facts from the realm of speculation. . . . If the jury, without conjecture, could not have found a required element of the cause of action, it cannot withstand a motion to set aside the verdict.” (Citations omitted; internal quotation marks omitted.) Carrol v. Allstate Ins. Co., supra, 262 Conn. 442.
I
The linchpin of the plaintiffs’ case is their claim that Dress Bam breached its contract to provide financing for Bedford Fair’s deferred billing program.
We begin with the fundamental principles that guide our inquiry. “Under established principles of contract law, an agreement must be definite and certain as to its terms and requirements. Presidential Capital Corp. v. Reale, [supra, 231 Conn. 506]; 1 Restatement (Second), Contracts § 33, comment (e), p. 94 (1981). . . . [W]here the memorandum appears [to be] no more than a statement of some of the essential features of a proposed contract and not a complete statement of all the essential terms, the plaintiff has failed to prove the existence of an agreement.” (Citation omitted; internal quotation marks omitted.) Suffield Development Associates Ltd. Partnership v. Society for Savings, 243 Conn. 832, 843, 708 A.2d 1361 (1998).
The evidence adduced at trial, read in the light most favorable to sustaining the verdict, supports the following additional facts necessary to the resolution of this claim. At the April 4,1997 meeting, the parties discussed certain terms of the financing. Specifically, under the agreement, Dress Bam would provide $2 to $3 million in financing in the form of a line of credit. Bedford Fair would be entitled to draw an amount equal to 90 percent
In early June, Glazer contacted David Jaffe to let him know that the bank had suggested an alternative financing scheme that would be easier to implement. Instead of Dress Bam loaning the money (scenario 1), the bank would loan the money to Bedford Fair and Dress Bam would guarantee the loan to the bank up to $4 million (scenario 2). David Jaffe’s response, according to Glazer’s testimony, was, “if it’s less paper intensive and we don’t need an intercreditor’s agreement . . . that’s fine, we’ll do it that way” and “sure, if it’s easier, we’re certainly open to that.” On June 23, David Jaffe informed Glazer that Dress Bam would not support the deferred financing because Jaffe
In our view, the jury reasonably could have found on the basis of the aforementioned facts that the parties had agreed on the essential terms of an agreement with respect to scenario one, under which Dress Bam would be the lender. To the extent that Dress Bam contests that the parties had not agreed on the mechanics of how its secured interest in the deferred receivables was to be implemented, we agree with the plaintiffs that these were details of the transactions, not essential terms that would preclude formation of a contract. See Willow Funding Co., L.P. v. Grencom Associates, 63 Conn. App. 832, 843-44, 779 A.2d 174 (2001) (“[t]he fact that parties engage in further negotiations to clarify the essential terms of their mutual undertakings does not establish the time at which their undertakings ripen into an enforceable agreement”); id., 844 (“[ujnder the modem law of contract, if the parties so intend, they may reach a binding agreement even if some of the terms of that agreement are still indefinite”).
We further conclude that, although Glazer’s proposal under scenario two was too indefinite as to its essential terms to provide the basis for an enforceable contract,
“As in many jury trials, the jury in this case was required to sort out, from evidence that was in considerable conflict, those facts that would form the basis for its verdict. It was for the jury to decide whether there was a binding contractual relationship between the par
In light of our conclusion that the terms of scenario one were sufficiently definite and that the parties agreed
In the absence of a written agreement or other unequivocal evidence establishing that delivery of inter-creditor agreements was a condition precedent to the financing agreement, the jury was not compelled to reach such a conclusion. The jury could have concluded that this requirement was merely a term, perhaps even an essential term, of the contract. See Christophersen v. Blount, 216 Conn. 509, 512, 582 A.2d 460 (1990) (noting that whether performance of act is condition precedent depends on intent of parties as expressed in instrument and circumstances surrounding execution). Although Mackey’s letters to Bedford Fair’s principal creditors indicated that intercreditor agreements would be needed, he indicated that Bedford Fair’s counsel, not Dress Bam, had advised him that such agreements would be needed. Notably, according to Glazer’s notes of the June 23, 1997 conversation in which David Jaffe repudiated Dress Barn’s commitment to provide financing, Jaffe did not cite the plaintiffs’ inability to meet that condition as a reason for the action. To the contrary, Jaffe indicated that Dress Bam was unwilling to provide the financing even if the commitment had been secured.
We note, however, that, even if the delivery of inter-creditor agreements were a condition precedent to the contract, Dress Bam waived its right to interpose that
II
It is undisputed that, because the subject of the oral contract was a loan well in excess of $50,000, the statute of frauds
A
We begin with the juiy charge on the statute of frauds exception. The trial court’s instruction to the jury provided in relevant part: “The plaintiff[s] [rely] on two exceptions to the statute of frauds. The first exception is known as the part performance exception. ... In order for the part performance exception to apply, two criteria must be met. First, the acts of part performance must be of such a character that they can be naturally and reasonably accounted for in no other way than by the existence of some contract in relation to the subject matter in dispute. Second, the [plaintiffs’] part performance must have taken place with the continuing
In reviewing the foregoing instruction, we “adhere to the well settled rale that a charge to the jury is to be considered in its entirety, read as a whole, and judged by its total effect rather than by its individual component parts. . . . [T]he test of a court’s charge is not whether it is as accurate upon legal principles as the opinions of a court of last resort but whether it fairly presents the case to the jury in such a way that injustice is not done to either party under the established rules of law. ... As long as [the instructions] are correct in law, adapted to the issues and sufficient for the guidance of the jury ... we will not view the instructions as improper.” (Internal quotation marks omitted.) PSE Consulting, Inc. v. Frank Mercede & Sons, Inc., 267 Conn. 279, 289-90, 838 A.2d 135 (2004).
As an initial matter, we note that our jurisprudence in this area has not been a model of clarity. Thus, we take this opportunity to both clarify and explain the circumstances in which a contract may be enforced despite noncompliance with the statute of frauds.
When estoppel is applied to bar a party from asserting the statute of frauds, however, we also require that the party seeking to avoid the statute must demonstrate acts that constitute “part performance” of the contract. See Galvin v. Simons, 128 Conn. 616, 619, 25 A.2d 64 (1942) (“[t]he doctrine of part performance as related
Thus, in sum, the elements required for part performance are: (1) statements, acts or omissions that lead a party to act to his detriment in reliance on the contract; (2) knowledge or assent to the party’s actions in reliance on the contract; and (3) acts that unmistakably point to the contract. See Baliles v. Cities Services Co., 578 S.W.2d 621, 624 (Term. 1979) (“[e]quitable estoppel, in the modem sense, arises from the conduct of the party, using that word in its broadest meaning, as including his spoken or written words, his positive acts, and his silence or negative omission to do anything” [internal quotation marks omitted]). Under this test, two separate but related criteria are met that warrant precluding a party from asserting the statute of frauds. H. Pearce Real Estate Co. v. Kaiser, 176 Conn. 442, 443, 408 A.2d 230 (1979). First, part performance satisfies the evidentiary function of the statute of frauds by providing proof
Therefore, although this court on occasion has used the terms interchangeably, we never have intended that the doctrine of equitable estoppel and the doctrine of part performance operate as independent exceptions to the statute of frauds.
In the present case, the trial court improperly instructed the jury that it could find that an exception to the statute of frauds applied if it found that the plaintiffs had proved either part performance of the contract or detrimental reliance induced by Dress Bam. The principle defect here is that this instruction permitted the jury to conclude that acts of detrimental reliance other than those that would establish part performance were sufficient. By so doing, the trial court allowed the jury to find Dress Bam liable for breach of contract without necessarily finding the elements of the part performance doctrine evidencing the existence of the contract. Thus, the trial court improperly instructed the jury on the statute of frauds.
B
Having concluded that there was an improper jury instruction, we typically would consider whether the error was harmful and thus whether a new trial is warranted. See Pagano v. Ippoliti, supra, 245 Conn. 651-52. In this case, however, Dress Barn claims that there is insufficient evidence of part performance. In response, the plaintiffs contend that, consistent with the evidence adduced at trial, they proved part performance. If we were to agree with Dress Barn, then the plaintiffs would not be entitled to a new trial.
This court has rejected the more stringent approach taken by many other jurisdictions that the acts of part performance actually must consist of those bargained for acts constituting the basis of the agreement. See Cohen v. Paine, Webber & Co., 113 Conn. 295, 301, 155 A. 71 (1931) (Noting two possible mies of what constitutes part performance of an oral contract sufficient to remove it from the requirements of the statute of frauds: “One of these is that the claimed acts of part
Although not a completely apt analogy, because almost all of our part performance cases have arisen in the context of contracts relating to interests in land, we look for guidance to the acts that we previously have considered in that context as sufficient acts of part performance. Substantial improvements to the property by the alleged grantee ar e considered part performance.
Turning to the case at hand, we consider whether a jury reasonably could conclude that the only reasonable explanation for the plaintiffs having offered the deferred billing in the fall 1997 catalog was that Dress Barn had agreed to finance the undertaking. Weighing against a finding of part performance is undisputed evidence that the plaintiffs offered deferred billing in the four catalogs that preceded the fall 1997 catalog— winter 1996, holiday 1996, spring 1997 and summer 1997—without financing from Dress Bam or any other source. Although the plaintiffs initially offered the deferred billing on a test basis, their financial reports indicate that they offered deferred billing at essentially the same levels in the summer and fall 1997 catalogs. Of particular significance is the fact that, in July, 1997, the plaintiffs offered deferred billing in their winter 1997 catalog, even after the plaintiffs knew that Dress Barn was not going to provide financing for the fall catalog.
The plaintiffs, however, point to evidence demonstrating that Bedford Fair was particularly vulnerable in terms of cash flow problems in July and August of 1997, when they offered the deferred billing. They emphasize testimony by Glazer, Mackey and others that the plaintiffs would not have offered the deferred billing in the fall 1997 catalog unless they secured financing from Dress Bam or a third party. We disagree that this testimony provides competent proof that the acts are “explainable upon no other theory” than that there was a financing contract. Santoro v. Mack, supra, 108 Conn. 692.
This court previously has explained that, “if we are to give any effect to the Statute of Frauds, it cannot be permitted that a plaintiff may show by parol evidence a verbal agreement . . . and then a part performance by himself of that agreement, and thus alone lay the foundation for specific performance on the part of the defendant. Pomeroy well says of such a proceeding, that it would amount ‘to a virtual repeal of the statute.’ [J. Pomeroy, Specific Performance of Contracts (2d Ed. 1897) § 108, p. 154.]
“In a situation such as we have under review, there are two entirely distinguishable matters to be established by proof, to wit: (1) that there was some
Consistent with the foregoing, we have found no cases, nor have the plaintiffs pointed us to any, in which testimonial evidence as to intent, rather than actions, was probative evidence of part performance. Indeed, if we were to accept as dispositive testimony that a party would not have undertaken the action “but for” the other party’s promise, this limited exception to the statute of frauds would swallow the rule. Thus, we conclude that the jury could not have concluded reasonably on the evidence presented that the plaintiffs established entitlement to the doctrine of part performance to excuse compliance with the statute of frauds. Such a conclusion is not inconsistent with the jury’s verdict in that the charge would have permitted the jury to find that an exception to the statute of frauds had been met without finding part performance. Accordingly, the
Ill
We next turn to Dress Barn’s claim that there was insufficient evidence to establish negligent misrepresentation. The plaintiffs asserted at trial that Dress Bam negligently had misrepresented that it would complete due diligence and finalize documents for the purchase of Bedford Fair by June 30, 1997, and thereafter complete the acquisition by July 28, 1997. The plaintiffs claimed that they relied on these misrepresentations to their detriment by dedicating their resources to completing the transaction and by agreeing to the restriction in the letter of intent that precluded them from negotiating with other parties until after June 30, 1997.
Dress Bam contends that the dates it set forth in the letter of intent cannot provide a basis for negligent misrepresentation as a matter of law because the letter of intent was nonbinding with respect to its obligation to complete the sale and set forth only an “anticipated” date for the completion of due diligence. It further contends that the evidence does not demonstrate that the plaintiffs would have conducted themselves differently in the absence of such representations.
“This court has long recognized liability for negligent misrepresentation. We have held that even an innocent misrepresentation of fact may be actionable if the declarant has the means of knowing, ought to know, or
We begin with the relevant statements in the letter of intent. After setting forth certain terms of the sale in paragraphs one and two, paragraph three of the letter of intent provides in relevant part: “The transaction is expected to close on July 28,1997 or as soon as practicable thereafter. ...” Paragraph eight of the letter of intent provides in relevant part: “[Dress Bam] anticipates being able to conduct the necessary ‘due diligence’ investigation and negotiating and executing definitive agreements by June 30,1997. . . .’’Paragraph twelve provides in relevant part: “This letter is subject to . . . completion of a due diligence review of the business and operations of Bedford Fair [GLZR and BFI], and tax, accounting and other aspects of the Transaction, by [Dress Bam], and [Dress Barn’s] satisfaction with the results of such review in its sole discre
In addition, Glazer testified that David Jaffe made the following statements about closing the sales transaction subsequent to signing the letter of intent. In the June 23, 1997 conversation in which Jaffe informed Glazer that Dress Bam would not provide financing for the deferred billing, Jaffe said that Dress Bam would seek to close as close to July 28 as possible. On July 11, Jaffe stated that “we are still moving with Godspeed.” On July 21, Jaffe told Glazer that he was trying to get the deal done as quickly as possible.
We first consider whether Dress Bam knew or should have known that these statements were false at the time they were made.
The evidence also supports the conclusion that the plaintiffs were induced by these statements to expend considerable effort in complying with the due diligence investigation and, more significantly, to forebear from negotiating with third parties regarding selling Bedford Fair or pledging its assets as security for other financing. With respect to whether the plaintiffs reasonably could have relied on the fact that due diligence and draft agreements would be completed by June 30 and that the acquisition would be completed by July 28, Dress Barn’s express reservation of its right for due diligence to be completed to its satisfaction, in its own discretion, and not to be bound to complete the acquisition would preclude the plaintiffs from relying on the fact that the parties’ intentions necessarily would come to fruition.
In the end, however, the plaintiffs cannot prevail on this claim because they have failed to prove that they
IV
Dress Bam next challenges the sufficiency of the evidence on the plaintiffs’ two CUTPA claims—count one, which was predicated on the negotiations and the circumstances surrounding the repudiation, and count four, which was predicated on the actual breach of contract. The plaintiffs claimed at trial that Dress Barn engaged in an unfair trade practice by inducing them to believe that Dress Bam either would provide financing for the deferred billing or would close the acquisition. They further claim that Dress Barn’s breach of the financing agreement, in conjunction with Dress Barn’s intentional delay in conducting due diligence, allowed Dress Bam to demand unreasonable concessions regarding the acquisition, which led to Bedford Fair’s inability to pay its vendors and, ultimately, its filing for bankruptcy.
Dress Bam contends that its conduct did not constitute an unfair and deceptive trade practice because it
We begin by noting that our review of the plaintiffs’ CUTPA claims is constrained by virtue of two factors. First, the trial court instructed the jury, and the plaintiffs have conceded in their briefs to this court, that liability on count four is dependent on Dress Barn’s liability on count five, the breach of contract claim. In light of our conclusion that there was insufficient evidence of part performance to overcome the statute of frauds in count five, our review, therefore, is restricted to count one. Thus, we note that, although there is some authority for the proposition that a tort claim based on a contract may be asserted when the contract is otherwise valid but unenforceable for failure to comply with the statute of frauds, the plaintiffs have not asserted such a claim. Compare 10 S. Williston, supra, §§27:3 and 27:5 (discussing distinction between enforceability and validity with respect to contract that does not comply with statute of frauds and effects of unenforceability) with Alan E. Silver, P. C. v. Jacobs, 43 Conn. App. 184, 188-91, 193-94, 682 A.2d 551 (concluding that CUTPA claim could not be stated for lack of ascertainable loss element of such claim when based on breach of oral contingency fee agreement that was unenforceable because it was not in writing as required by statute), cert. denied, 239 Conn. 938, 684 A.2d 708 (1996), overruled in part
Second, our review is constrained by the fact that the trial court directed a verdict in Dress Barn’s favor on the plaintiffs’ negligent misrepresentation claim with respect to Dress Barn’s assurances that it would provide financing for the deferred billing. The trial court concluded that such promises could not provide a basis for misrepresentation in the absence of fraud, which the plaintiffs had not alleged. Because the plaintiffs do not contest that ruling on appeal, we review the plaintiffs’ CUTPA claim without considering whether Dress Bam intentionally stated that it would provide the financing, knowing that it did not intend to do so. See Willow Springs Condominium Assn., Inc. v. Seventh BRT Development Corp., 245 Conn. 1, 41, 717 A.2d 77 (1998) (“[bjecause the wilful and wanton misrepresentation count was charged out of the case, the only remaining bases for the CUTPA allegation are acts amounting to fraudulent concealment and fraudulent misrepresentation”). Indeed, the plaintiffs’ theory at trial and in this court appears to be that, although Dress Barn initially intended to provide the financing, it changed its mind in early June, before the catalogs were printed and mailed, when it estimated that the acquisition of Bedford Fair would cost more than its original projection and determined that it could exert leverage on the purchase negotiations by withdrawing its commitment to provide financing. We conclude that the plaintiffs have failed to prove a CUTPA violation under these facts.
The trial court concluded that the plaintiffs were not entitled to an instruction on the first criterion as a matter of law. We therefore consider whether there was sufficient evidence for the jury to find that Dress Barn’s conduct was immoral, unethical, oppressive, or unscrupulous and that, as a result, the plaintiffs suffered substantial injury.
We begin by noting that the plaintiffs understandably have focused on Dress Barn’s breach of the financing agreement as that is the essential causal link to Bedford Fair’s bankruptcy and the $30 million compensatory damages awarded by the jury. Indeed, as we previously have explained in addressing the plaintiffs’ negligent misrepresentation claim, Dress Barn’s conduct related to due diligence, even if it intentionally delayed those efforts in violation of its duty of good faith and fair dealing, did not cause Bedford Fair’s bankruptcy. It is clear that Dress Bam retained the right, under the letter of intent, to complete due diligence to its satisfaction, in its sole discretion. It further expressly retained the right not to proceed with the acquisition. Thus, “[although the plaintiffs hoped and even expected that [Dress Bam] would [complete the acquisition], [Dress Bam] was under no statutory or contractual obligation
With respect to the financing agreement, although Dress Bam cannot be held liable simply for repudiating an unenforceable agreement, CUTPA’s reach extends beyond those acts prescribed under the common law. Willow Springs Condominium Assn., Inc. v. Seventh BRT Development Corp., supra, 245 Conn. 43 (“CUTPA reflects a public policy that favors remedying wrongs that may not be actionable under other bodies of law”). We consider, therefore, whether Dress Bam engaged in a deceptive practice prohibited under CUTPA by intentionally failing to disclose until after the catalogs were printed and mailed that it did not intend to provide the financing.
“We have held that [a] failure to disclose can be deceptive only if, in light of all the circumstances, there is a duty to disclose.” (Internal quotation marks omitted.) Macomber v. Travelers Property & Casualty Corp., 261 Conn. 620, 635-36, 804 A.2d 180 (2002). Whether such a duty exists presents a question of law. See Biller Associates v. Peterken, 269 Conn. 716, 721, 849 A.2d 847 (2004). “Regarding the duty to disclose, the general rale is that . . . silence . . . cannot give rise to an action ... to set aside the transaction as fraudulent. Certainly this is tme as to all facts which are open to discovery upon reasonable inquiry. ... A duty to disclose will be imposed, however, on a party insofar as he voluntarily makes disclosure. A party who
A duty to disclose may be imposed by statute or regulation; see Willow Springs Condominium Assn., Inc. v. Seventh BRT Development Corp., supra, 245 Conn. 44; or such a duty may arise under common law. Southington Savings Bank v. Rodgers, 40 Conn. App. 23, 29, 668 A.2d 733 (1995), cert. denied, 236 Conn. 908, 670 A.2d 1307 (1996). In the present case, there is no statutory, regulatory or contractual duty that may be imposed. Although the letter of intent imposed certain binding obligations on Dress Bam—not to disclose confidential information, not to negotiate with third parties and to use its best efforts to complete its due diligence investigation by June 30—none of these obligations give rise to a duty to repudiate timely its commitment to provide financing for the deferred billing.
V
In light of these conclusions, we need not consider Dress Barn’s remaining claims or the plaintiffs’ claim, asserted in their cross appeal, regarding the denial of prejudgment interest. Because we are reversing the judgment of the trial court, however, we turn to the plaintiffs’ claim that the trial court improperly granted Dress Barn’s motion for a directed verdict on their promissory estoppel claim.
We conclude that the trial court improperly granted the motion for a directed verdict on the plaintiffs’ promissory estoppel claim, but that the impropriety was harmless. Promissory estoppel is asserted when there is an absence of consideration to support a contract. See Torringford Farms Assn., Inc. v. Torrington, 75 Conn. App. 570, 576, 816 A.2d 736 (“[t]he doctrine of promissory estoppel serves as an alternative basis to enforce a contract in the absence of competing common-law considerations”), cert. denied, 263 Conn. 924, 823 A.2d 1217 (2003), citing D’Ulisse-Cupo v. Board of Directors of Notre Dame High School, 202 Conn. 206, 213, 520 A.2d 217 (1987); see also Stewart v. Cendant Mobility Services Corp., 267 Conn. 96, 110, 837 A.2d 736 (2003) (concluding that jury reasonably could find that there was no offer for purposes of breach of contract claim but that there was promise for purposes of plaintiffs promissory estoppel claim). We have permitted a jury to consider in the alternative claims for breach of contract and for promissory estoppel when there is
In the present case, Dress Bam was contesting whether the financing agreement was sufficiently definite to form a contract. Thus, the jury should have been allowed to consider promissory estoppel as an alternative to the breach of contract claim. See Southington v. Commercial Union Ins. Co., 254 Conn. 348, 355-56, 757 A.2d 549 (2000). The jury necessarily must have found, however, that the parties had agreed on all the essential terms to allow for contract formation, and we have determined that the evidence reasonably supported that conclusion. Accordingly, the jury could not have found, consistent with its verdict on the breach of contract claim, that the plaintiffs also were entitled to prevail on their promissory estoppel claim.
In this opinion NORCOTT, VERTEFEUILLE and ZAR-ELLA, Js., concurred.
Glazer had entered into negotiations earlier that year with Dress Bam regarding an acquisition, but the parties could not agree on terms at that time.
Glazer testified that Bedford Fair had operating losses of approximately $4 million in 1995 and $4.9 million in 1996.
The catalog set a fixed billing date; therefore, the length of the deferral period depended on when the customer placed the order. For example, Bedford Fair’s fall catalog, which it mailed initially in late June, set a billing date of October 10, 1997, for all purchases made by August 30, 1997. Later mailings had billing dates of November 4 and December 4, 1997.
Glazer already had executed a personal guarantee for $5.7 million of Bedford Fair’s obligations.
Jaffe testified that he understood the term “due diligence” to encompass three elements. First, “business due diligence” examines whether the business at issue provides a good product or service and what the business’ position is in the marketplace. Second, “financial due diligence” examines the financial soundness of the business and the reliability of the financial data they have been given. Third, “legal due diligence” examines whether the business has been created and run in compliance with the legal requirements of such a business.
Donnelly was the printer for Bedford Fair’s catalogs. As of May 27,1997, Bedford Fair had an outstanding loan of $10 million with Donnelly.
In his deposition, Jaffe conceded that, during conversations in May, Glazer had alerted Jaffe to the fact that Bedford Fair would be printing the deferred billing catalogs in June and that Bedford Fair needed to be sure of Dress Barn’s commitment to provide financing, because Bedford Fair could not change its plan to provide deferred billing after the catalogs had been printed. Jaffe also confirmed in his testimony that Glazer called him just before Bedford Fair mailed the catalogs, to insist on a firm commitment so Bedford Fair could decide whether to go forward with the deferred billing. Jaffe, however, denied making any commitment.
The plaintiffs contend that Dress Barn’s revised estimate was $33 million. The evidence they cite, however, reflects an estimate of $30.5 million.
Glazer testified that Bedford Fair did receive a tentative offer of financing from one company on August 20, 1997. Bedford Fair did not accept that offer because the transaction could not be completed in time to address the immediate problem of vendors demanding payment.
The parties had provided in the letter of intent that it shall be construed in accordance with the laws of New York.
The trial court concluded, with respect to count six, that the plaintiffs had not adduced evidence of a misrepresentation of an existing or past fact, a necessary element in the absence of a claim of fraud, with respect to Dress Barn’s promise to provide financing for the deferred billing. The trial court granted the motion for a directed verdict with respect to count seven, promissory estoppel, on the ground that the cause of action is predicated on the absence of consideration, and Dress Bam was not claiming that the plaintiffs offered nothing in exchange for its willingness to make a loan.
On the verdict form, the jury entered $30 million as damages to be awarded on count one, entered no damage amount on the other counts and indicated in a note above that figure: “This amount to be awarded on all counts totaled.” In light of the trial court’s instructions on damages, we construe the jury’s statement to mean that they determined that the plaintiffs suffered the same loss on each count and thus entered the amount only once, rather than that the $30 million was a cumulative figure from varied damages on each count. Therefore, we must consider whether any of the four counts could support the jury’s verdict.
The plaintiffs also requested, in the event that this court reverses the trial court’s judgment, that we consider whether the trial court improperly granted Dress Barn’s motion for summary judgment as to the failure to negotiate in good faith claim and its motion for a directed verdict on the promissory estoppel claim.
We underscore that the “contract” at issue throughout this opinion is the agreement to provide financing, not an agreement to purchase Bedford Fair.
A conclusion that the parties had reached an agreement on all of the aforementioned terms is supported not only by the testimony of four witnesses for the plaintiffs, all of whom attended the April 4 meeting, but also by two drafts of a “Loan and Security Agreement” written by Dress Barn’s counsel dated May 30, 1997, and June 5, 1997.
We agree with Dress Barn that scenario two was too indefinite for several reasons. Scenario two was a three party agreement, requiring that Dress Bam execute both a guarantee agreement with the bank under terms mutually agreeable to those two parties, as well as a loan agreement with Bedford Fair for repayment of funds Dress Bam provided to the bank pursuant to the guarantee. With respect to the guarantee agreement, the plaintiffs presented no evidence as to what terms the bank intended to impose on Dress Barn, such as, inter alia, interest rates and terms of payment. There was no evidence that the bank and Dress Bam ultimately agreed on any terms of the guarantee. With respect to the loan agreement with Bedford Fair for repayment of funds, at least one essential term was not agreed on
Roger Feldman, Bedford Fair’s counsel, testified that it was his understanding that the bank had agreed to proceed under scenario one, requiring that it waive its negative pledge on the assets at issue. Indeed, the bank’s rationale for suggesting the alternative arrangement—it would require fewer documents to be executed and the bank preferred to earn the interest off the loan—does not suggest that it would not make the necessary arrangements to proceed under scenario one, just that it preferred to proceed under scenario two. Although there was testimony that Bedford Fair had negotiated with the bank to obtain the intercreditor agreements required under scenario one and had not yet obtained them by the time Glazer proposed scenario two, there was no testimony that the bank had refused or would refuse to provide those agreements.
Glazer testified: “I informed my attorneys how the transaction had evolved from Dress Bam, making the guarantee to Dress Barn—Dress Bam making [the] deferred billing loan to their guaranteeing the loan”; “[o]riginally, I told Dress Bam that it would be easier, less document intensive if we merely changed the deal from their loaning us the money to their guaranteeing a loan which would be provided by the [bank]”; and “I didn’t anticipate or reasonably expect that Dress Bam would have a heightened level of risk because it morphed from a direct loan to a guarantee of a loan.”
Indeed, when Glazer was asked on redirect examination what he would have done if David Jaffe had indicated that his concerns about the financing risks were limited to scenario two, Glazer responded, “I would have suggested that we return to scenario one where they felt they would be secured. I thought they would be secured under either scenario, but if they felt they would be more secure under scenario one, I would have suggested that, suggested that they reach for the [bank] and we would have reached for the [bank] as well.” These comments suggest that Glazer thought that scenario one still was on the table, and perhaps that he would have elicited Dress Barn’s assistance in getting the bank to expedite the intercreditor agreements.
General Statutes § 52-550 (a) provides in relevant part: “No civil action may be maintained in the following cases unless the agreement, or a memorandum of the agreement, is made in writing and signed by the party, or the agent of the party, to be charged ... (6) upon any agreement for a loan in an amount which exceeds fifty thousand dollars.”
The statute of frauds issue was brought to the foreground through the following exchange between Elliott Jaffe and the plaintiffs’ counsel on cross-examination, which both sides later highlighted in their closing arguments:
“Q. If [people] were dealing with [David Jaffe] about a business matter, you don’t think people would be well within their rights to rely on him, is that what you’re saying?
“A. I am saying that, if it ain’t writ, it ain’t said, counselor.
“Q. If it ain’t writ, it ain’t said. Is that because if something is not written, you could then deny that it was said, Mr. Jaffe?
“A. No. But you can’t count on it as being a legal document unless you have something in your hand.” (Emphasis added.)
The plaintiffs also contend that we cannot review Dress Barn’s claim regarding the jury charge because it failed to preserve its objection to the charge. We disagree. “A party may preserve for appeal a claim that a jury instruction was improper either by submitting a written request to charge or by taking an exception to the charge as given.” Pestey v. Cushman, 259 Conn. 345, 372-73, 788 A.2d 496 (2002); accord State v. Ramos, 261 Conn. 156, 169-70, 801 A.2d 788 (2002). Dress Bam submitted a request to charge on this issue that is consistent with its claim. Additionally, Dress Bam joined the plaintiffs’ blanket exception to the charge. The plaintiffs cannot seek to preserve their objections to a jury charge by asserting a joint blanket exception and then use that blanket exception as a basis to preclude review of Dress Barn’s claim. Thus, Dress Barn’s claim is preserved.
Dress Barn’s request to charge properly reflected this statement of the applicable law. The proposed request to charge on this issue provided: “The plaintiffs have not introduced any evidence that the alleged agreement for a $4,000,000 loan was in writing and signed by Dress Bam. There is, however, a limited exception to the strict requirements of the [sjtatute of [fjrauds, known as the doctrine of part performance or estoppel. This doctrine provides that in those cases where one party, in reliance upon the contract, has partly performed it to such an extent that a repudiation of the contract by the other party would amount to the perpetration of a fraud, equity looks upon the contract as removed from the operation of the statute of frauds. . . .
“To constitute part performance, the acts must be of such a character that they can be reasonably accounted for in no other way than by the existence of some contract in relation to the subject matter in dispute .... Slated another way, the acts done in part performance must be of such weight or significance as to compel the inference that there was in fact an agreement by which the acts in question were required of the party performing them and therefore explainable by no other theory but that such agreement did in fact exist. . . . Acts which are merely done in anticipation of an agreement are insufficient to satisfy the [sjtatute of [fjrauds and are therefore distinguishable from acts which are done in pursuance of an agreement. . . .
“In addition to having to compel the inference of an agreement, the acts of part performance must be performed with the assent, express or implied, of knowledge of [Dress Bam]. . . .
“You must also find that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement.” (Citations omitted; internal quotation marks omitted.)
Some of the confusion between the labels we have attached to these doctrines may be explained by the fact that this court previously had held that the doctrine of part performance only may be applied to contracts relating to interests in land. See Burkle v. Superflow Mfg. Co., 137 Conn. 488, 497, 78 A.2d 698 (1951) (“The doctrine of part performance applies only to agreements for the sale of real estate or any interest in or concerning it. It does not operate to render enforceable contracts not to be performed within a year.”). Since Burkle, however, this court has applied part performance, outside that context. See Dunham v. Dunham, 204 Conn. 303, 314, 528 A.2d 1123 (1987) (concluding part performance doctrine had not been satisfied in contract not to be performed in one year), overruled in part on other grounds, Santopietro v. New Haven, 239 Conn. 207, 213, 682 A.2d 106 (1996); see also Union Trust Co. v. Jackson, 42 Conn. App. 413, 419, 679 A.2d 421 (1996) (applying doctrine to contract for loan in excess of $50,000). The parties in the present case have not questioned the applicability of the part performance doctrine to this case, nor have they questioned the type or scope of relief available should it apply. See footnote 25 of this opinion.
In Wolfe v. Wallingford Bank & Trust Co., supra, 124 Conn. 513-16, this court differentiated the doctrines on the basis of the type of relief sought— part performance entitled a party to equitable relief and equitable estoppel entitled a party to damages at law. Many, but not all, jurisdictions continue to adhere to this distinction. See 10 S. Williston, Contracts (4th Ed. 1999) § 28:4, pp. 290-94. Indeed, the doctrine of part performance principally has been used to obtain specific performance of land contracts. In our view, however, this distinction is no longer warranted with the merger of actions in law and equity. Notably, in Wolfe v. Wallingford Bank & Trust Co., supra, 516, this court recognized that the plaintiff would have been entitled to the same relief under either doctrine and required part performance as a necessary element when applying equitable estoppel.
The plaintiffs cite O’Sullivan v. Bergenty, 214 Conn. 641, 573 A.2d 729 (1990), for the contrary proposition. That case is distinguishable on its facts, however, and consistent with the foregoing legal principles. In O’SuUivan, the defendant contended that a written contract was unenforceable as not in accordance with the statute of frauds. Id., 643-47. The trial court determined that the defendant was barred from asserting the defense under the doctrine of equitable estoppel and did not reach a separate claim that the doctrine of part performance applied. Id., 647. In reviewing the trial court’s equitable estoppel holding, we determined that the trial court had made extensive factual findings that supported the judgment. Id., 651. Although this court made no express reference to part performance, thus admittedly muddying the water, among those findings we cited were clear evidence of conduct that we have recognized as sufficient to establish part performance of land contracts—improvements to the property plus possession. See id., 649-51; see also Botticello v. Stefanovicz, supra, 177 Conn. 32 (substantial improvements constitute part performance); Galvin v. Simons, supra, 128 Conn. 620 (possession, acceptance of rent and alterations and improvements made in premises constituted part performance). It is also notable that there was ample evidence of a contract, thus satisfying the evidentiary function of the statute of frauds—the written agreement and the defendant’s admission that he was obligated under the contract for a certain period of time— thereby obviating the need for evidence of a contract through part performance. The Restatement (Second) of Contracts § 139 (2) (c) (1981) indicates that either acts of part performance or clear and convincing evidence of the making and terms of a contract may provide a basis for relief from the statute of frauds. See also Consolidation Services, Inc. v. Keybank National Assn., 185 F.3d 817, 820 (7th Cir. 1999) (“admission by the party to be charged that a contract exists can taire the place of the signed memorandum ordinarily required to comply with the statute of frauds”). We need not, however, under the facts of this case, decide whether to adopt the Restatement (Second) position andpermit evidence of the written agreement in lieu of part performance.
The plaintiffs also rely on McNeil v. Riccio, supra, 45 Conn. App. 466, for the proposition that there are two separate exceptions to the statute of frauds. In McNeil, however, the Appellate Court applied both the part performance and reliance prongs of the estoppel exception in its discussion of the statute of frauds, and then applied the general doctrine of equitable estoppel only in its disposition of a separate issue regarding the statute of limitations. Id., 470-72.
The plaintiffs suggest that we should look at the evidence as a whole, rather than individual acts. The only other act we could surmise was evidence of part performance was the plaintiffs’ forbearance in seeking other sources of financing. The plaintiffs already were precluded, however, under the terms of the letter of intent, at least as they interpreted it, from pledging their assets to a third party, and thus this act could not have constituted part performance of the financing agreement. See Unitas v. Temple, 314 Md. 689, 703, 552 A.2d 1285 (1989) (“the part performance itself must furnish evidence of the identity of the contract; and it is not enough that it is evidence of some agreement, but it must relate to and be unequivocal evidence of the particular agreement” [emphasis in original; internal quotation marks omitted]). We also note that, for the same reasons we reject the offering of the catalogs as acts of part performance, the plaintiffs’ forbearance in seeking financing from another source could not have constituted part performance.
Indeed, whereas partial or full payment of the purchase price for the sale of land under an oral contract would constitute actual performance of a term of the contract, this court has held that such conduct “does not take the case out of the statute of frauds. . . . The reason usually given for this rule is that the purchaser normally may have restitution of the consideration paid so that his predicament does not warrant the application of an equitable doctrine designed to prevent the statute of frauds itself from becoming an ‘engine of fraud.’ ” (Citations omitted.) Breen v. Phelps, supra, 186 Conn. 94-95; see also Eaton v. Whitaker, supra, 18 Conn. 229 (noting that courts had abandoned position that payment of money was act of part performance because of difficulty in determining what was meant by act and availability of other means of recovering money paid). Consistent with this rationale, this court also long has recognized that recovery may be had for money paid or services performed even in the absence of a contract that complies with the statute of frauds on a theory of implied contract. See Wolfe v. Wallingford Bank & Trust Co., 122 Conn. 507, 511, 191 A. 88 (1937).
Indeed, the fact that the plaintiffs offered the deferred billing in the winter 1997 catalog, at a time when they knew they already were at financial risk, suggests that they might have made a similarly risky decision to offer deferred billing in the fall 1997 catalog without a financing agreement in place. Clearly, there were benefits that accmed to the plaintiffs by offering the deferred billing in that it increased Bedford Fair’s sales and its attractiveness to a potential buyer.
Dress Bam also contends that the plaintiffs’ failure to disclose the fact that Bedford Fair’s loan was “in workout”—meaning that the bank was exercising special oversight of the loan because Bedford Fair periodically had not met its loan conditions—and their failure to produce audited financial statements from Bedford Fair’s accounting firm without a “ ‘going concern’ qualification” precluded Dress Barn’s adherence to the anticipated deadlines. In light of our conclusion, we need not reach this argument.
The parties qualified their obligation to complete the sales transaction, beyond Dress Barn’s satisfaction with the due diligence investigation, by requiring the approval of Dress Barn’s board of directors of the transaction and of certain definitive agreements to be negotiated and executed. Paragraph thirteen of the letter of intent further provided: “It is understood that this letter merely constitutes a statement of mutual current intentions with respect to the transactions contemplated herein, does not contain a resolution of all matters upon which agreement must be reached for the consummation of those transactions, and does not constitute a binding agreement with respect thereto. A binding agreement with respect to the Transaction will result only from the execution of the definitive agreements referred to in [paragraph four] above.” The plaintiffs concede that Dress Bam was not obligated to complete the acquisition.
Dress Bam questions whether the statements in the letter of intent can be considered statements of fact because it couched them in terms of what it anticipated or expected and because completion of the events were conditioned on its satisfaction with the due diligence investigation. See Paiva v. Vanech Heights Construction Co., 159 Conn. 512, 515, 271 A.2d 69 (1970) (noting general rule that misrepresentation must relate to existing or past fact; when fraud or intentional misrepresentation is alleged, however, “a promise to do an act in the future, when coupled with a present intent not to fulfil the promise, is a false representation”). We have not yet addressed whether statements of judgment or statements conditioned on future events can support a claim for misrepresentation, although many other jurisdictions
It is important in this context to recognize the meaning generally ascribed to a letter of intent. “Generally, letter of intent refers to a writing documenting the preliminary understandings of parties who intend in the future to enter into a contract. . . . [T]he purpose and function of a preliminary letter of intent is not to bind the parties to their ultimate contractual
“Commonly a letter of intent is used so that people negotiating toward an agreement, who do not yet have one, can get their preliminary inclinations down on paper without committing themselves. This avoids a misunderstanding that a commitment has been made. It also has value in preserving a common understanding of what has been talked about in earlier negotiations, before spending the time and money on later negotiations, and justifies further expenditures on attorneys and others. . . .
“All these purposes are defeated if what was meant to be a nonbinding letter of intent is allowed to form the basis for a damages award. Letting a nonbinding letter of intent go to a jury as a possible basis for compensatory and perhaps punitive damages makes it too risky to sign one, so negotiators are deprived of this useful intermediate device between vague feelers and a binding contract. This is not to say that a letter of intent cannot be a contract. Regardless of the title, if the content shows that the parties intended to be bound, and the other requisites of a contract have been satisfied, it may be a contract.” (Citations omitted; internal quotation marks omitted.) Rennick v. O.P.T.I.O.N. Care, Inc., 77 F.3d 309, 315 (9th Cir.), cert. denied, 519 U.S. 865, 117 S. Ct. 174, 136 L. Ed. 2d 115 (1996); see DSE, Inc. v. United States, 169 F.3d 21, 29 (D.C. Cir. 1999) (letter of intent not binding when completion of due diligence was contingency, among other conditions to be met, and letter expressly stated that parties were not bound); Rennick v. O.P.T.I.O.N. Care, Inc., supra, 315-16 (letter of intent not binding when it expressly so stated and future agreement required approval of board of directors).
Although 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 (c). Review of those authorities indicates that a serious question exists as to whether the cigarette rule remains the guiding rule utilized under federal law. See American Financial Services Assn. v. Federal Trade Commission, 767 F.2d 957, 969-70 (D.C. Cir. 1985), cert. denied, 475 U.S. 1011, 106 S. Ct. 1185, 89 L. Ed. 2d 301 (1986); see also P. Sobel, “Unfair Acts or Practices Under CUTPA,” 77 Conn. B.J. 105 (2003). Because, in the present case, neither party has raised or briefed this issue, and both have briefed the issue applying the cigarette rule, we decline to address the issue of the viability of the cigarette rule until it squarely has been presented to us. See American Car Rental, Inc. v. Commissioner of Consumer Protection, 273 Conn. 296, 305 n.6, 869 A.2d 1198 (2005).
Dress Bam contends that, because the plaintiffs could have avoided any harm by not mailing the deferred billing catalogs when they did not have a written financing agreement in hand, they cannot satisfy the third CUTPA criterion of substantial harm. See Williams Ford, Inc. v. Hartford Courant Co., supra, 232 Conn. 592 (In order for an injury to be legally unfair, “the injury must satisfy three tests. 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 [the injured parties] themselves could not reasonably have avoided.” [Internal quotation marks omitted.]). In light of our conclusion that the plaintiffs have not satisfied the second CUTPA criterion, we need not address this claim.
At trial, the plaintiffs asserted a claim independent of their CUTPA claim that Dress Barn had breached its duty to negotiate the acquisition in good faith, predicated on the letter of intent. Although on appeal the plaintiffs challenge the summary judgment rendered in Dress Barn’s favor on the duty to negotiate claim, they never have asserted that this duty gives rise to duties under CUTPA. In light of the plaintiffs’ failure to raise this argument, as it relates to CUTPA, and our conclusion that they inadequately briefed their claim that the trial court improperly granted summary judgment on the duty to negotiate claim, we do not consider whether, if Dress Bam had a duty to negotiate an acquisition agreement in good faith under New York law, that duty would have given rise to the duty to disclose timely that it
The plaintiffs also claim that the trial court improperly rendered summary judgment on their claim that Dress Bam failed to negotiate in good faith to complete the sales transaction in accordance with the letter of intent. Dress Bam does not address the merits of either this claim or the plaintiffs’ promissory estoppel claim, but instead contends that we should not review either claim because the plaintiffs abandoned them by raising them only in a footnote in their brief. We eschew such a formal distinction when a party adequately has briefed an issue. See State v. Johnson, 253
We agree, however, that the plaintiffs have failed to brief adequately their claim that the trial court improperly rendered summary judgment on their claim that Dress Bam violated its duty to negotiate in good faith under New York law. The plaintiffs state in a single sentence the broad proposition that, under New York law, such a duty may arise even if a preliminary agreement does not bind the parties to enter into a final agreement. In support of this statement, the plaintiffs cite one case, Goodstein Construction Corp. v. New York, 111 App. Div. 2d 49, 489 N.Y.S.2d 175 (1985), aff'd, 67 N.Y.2d 990, 494 N.E.2d 99, 502 N.Y.S.2d 994 (1986). The statement by the plaintiffs is not an entirely correct statement of the law, and the case they cite does not stand for the proposition for which it is offered. Although a duty to negotiate may arise under New York law with respect to a preliminary agreement, it must be found to be a “binding" preliminary agreement, not merely an unenforceable agreement to agree. See Spencer Trask Software & Information Systems, L.L.C. v. Rpost International, Ltd., United States District Court, Docket No. 02CV1276, 2003 WL 169801 (S.D.N.Y. January 24, 2003); Teachers Ins. & Annuity Assn. of America v. Tribune Co., 670 F. Sup. 491, 496-503 (S.D.N.Y. 1987). The plaintiffs do not address why the trial court’s conclusion was improper that, in this case, “the letter [of intent] nowhere obligates the parties either to enter into an acquisition agreement or even to negotiate an acquisition agreement,” (emphasis added) and they do not cite or apply the multipart test prescribed under New York law to determine whether a preliminary agreement is binding. See Spencer Trask Software & Information Systems, LLC v. Rpost International, Ltd., supra (citing as factors to be considered as evidence of intent to be bound: language of agreement, context of negotiations, existence of open terms, any partial performance and necessity of putting agreement into final form, according to custom of similar transactions); Teachers Ins. & Annuity Assn. of America v. Tribune Co., supra, 496-503 (seminal case setting forth relevant considerations in determining whether preliminary agreement is binding). In Goodstein Construction Corp. v. New York, supra, 176, the plaintiff had asserted claims for breach of contract and breach of the duty of good faith and fair dealing, not the duty to negotiate in good faith, and the only tentative agreement at issue was one set forth in an enforceable contract. See also Rooney v. Slomowitz, 11 App. Div. 3d 864, 867, 784 N.Y.S.2d 189 (2004) (rejecting claim for breach of duty of good faith and fair dealing in absence
Even if the jury properly could have found for the plaintiffs on both their breach of contract claim and their promissory estoppel claim, such a conclusion would give rise to a possible conflict with the statute ol' frauds if the promise otherwise would have been required to be in writing. Compare Torringford Farms Assn., Inc. v. Torrington, supra, 75 Conn. App. 570 (applying statute of limitations applicable to breach of contract to promissory estoppel claim predicated on breach of contract). This court previously has not addressed whether promises that otherwise would be subject to the requirements of the statute of frauds may be enforced on promissory estoppel grounds in the absence of compliance with the statute of frauds; see 1 Restatement (Second), supra, § 139; or whether a separate promise to put the agreement in writing may provide a basis to avoid the statute of frauds. See 10 S. Williston, supra, § 27:14, pp. 128-33; annot., 56 A.L.R.3d
Concurrence Opinion
concurring. I agree with and join the majority opinion except insofar as the majority concludes therein that the plaintiffs
The plaintiffs’ claim of a breach of the duty to negotiate in good faith is predicated primarily on paragraph eight of the parties’ letter of intent, which provides: “[Dress Bam] anticipates being able to conduct the necessary ‘due diligence’ investigation and negotiating and executing definitive agreements by June 30, 1997. During this period, Bedford Fair [Industries (Bedford Fair)] shall provide [Dress Bam] and its accounting, legal and other representatives, with reasonable access to Bedford Fair’s and the [c]ompanies’ books and records, and other information regarding their business and their properties, facilities, accountants and management level employees.” In granting Dress Barn’s motion for summary judgment on the plaintiffs’ claim that Dress Bam had violated the duty to negotiate in good faith, the trial court concluded that “[t]his paragraph reveals that the parties anticipated that [Dress Bam] would negotiate, but it does not obligate [Dress Bam] to do so.” The trial court further concluded that the only provisions of the letter of intent, including paragraph eight, that were legally binding on the parties, “deal primarily with obligations imposed on the plaintiffs to cooperate with [Dress Bam] during the latter’s due diligence investigation of the former, and do not address the claimed duty to negotiate an acquisition agreement. In fact, the letter nowhere obligates the parties either to enter an acquisition agreement or even to negotiate an acquisition agreement.”
I agree generally with the trial court’s analysis of paragraph eight of the letter of intent. I note further that the first sentence of paragraph eight—the language relied on by the plaintiffs in support of their claim of a breach of the duty to negotiate in good faith—merely was prefatory language to the only duty actually
The plaintiffs include Alan M. Glazer, GLZR Acquisition Corporation and BET Liquidating Limited.
In particular, I do not agree with the majority that the plaintiffs inadequately briefed that claim merely because they failed to cite or to apply in their brief the multipart test prescribed under New York law for determining whether a preliminary agreement is legally binding. That test is not necessarily implicated when, as in the present case, the parties’ preliminary agreement expressly provides that it is binding on the parties. See, e.g., Arcadian Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69, 72 (2d Cir. 1989) (when parties expressly agree to be bound by terms of preliminary agreement, court need look no farther than language of agreement). In the present case, the plaintiffs rely on paragraph eight of the parties’ letter of intent in support of their claim of a binding agreement. That letter provides in relevant part: “It is understood that this letter merely constitutes a statement of mutual current intentions with respect to the transactions contemplated herein, does not contain a resolution of all matters upon which agreement must be reached for the consummation of those transactions, and does not constitute a binding agreement with respect thereto. A binding agreement with respect to the [transaction will result only from the execution of the definitive agreements referred to in Section 4 [of this letter]. Notwithstanding the two preceding sentences, upon execution and delivery of this letter by both parties, Sections 5, 6, 8, 9, 10 and 11 of this letter shall be legally binding upon and enforceable against the parties. . . .” (Emphasis added.)
