WILLIAM B. RUSH, J.T.R.
The plaintiffs, Thomas C. Janson, Jr. and Joanne G. Janson, purchased a home to be constructed by the defendant builder, Century Development Corp., for the purchase price of $1,685,000.00. The amended compliant filed by the plaintiffs assert claims for breach of contract, breaches of statutory warranties, failure to give proper credits, failure to release escrow funds, and violations of Connecticut Unfair Trade Practices Act (CUTPA) Gen. Stat. 42-110b et seq. The plaintiffs also set forth a claim against the defendant John A. Braca, Jr. to "pierce the corporate veil" so as to make the defendant Braca responsible for the obligations of the defendant corporation.
The plaintiffs set forth various claims of deficiency, hereafter discussed, all of which occurred within one year of the date of the closing. The Court finds the following claims, totaling $49,846.35, to be justified:
1. Certain exterior areas of the home experienced peeling.
The areas constituted a defect because they were not originally painted properly. The plaintiffs paid the sum of $7,803.00 to rectify the problem. ($3,060.00, $3,825.00 and $918.00)
2. Exterior panels deteriorating.
Certain exterior panels were defective and deteriorating because the wrong material was used, they were improperly painted, and were installed so that water could get behind the panels. The plaintiffs paid the sum of $3,637.50 to remedy the problem. ($1,450.00, $1,400.00, $787.50)
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3. Large columns were deteriorating — pieces were coming apart. The columns were defective because they were not installed in accordance with the manufacturer's instructions which required sealing and venting. The plaintiffs have paid $1,725 to repaint the columns, however, the columns cannot be repaired and need to be replaced and the Court finds that it would cost $7,019.32 to replace the columns.
4. Remounting of shutters.
The shutters installed by the defendant were not attached to the house and would swing in the wind and bang against the home. The shutters were remounted at a cost of $441.00 which solved the problem.
5. Air conditioning defects.
A rider to the contract provided that the air conditioning would be sufficient to produce 75° inside the premises with an outside temperature of 95°. However in the spring or summer the air conditioning was not sufficient to produce anywhere near a comfortable temperature inside the house. Defendant Braca indicated that's the way the system was designed. The plaintiffs however hired someone to repair the air conditioning including hose and the duct work which were leaking. The plaintiffs paid for the repairs in the amount of $5,832.16.
6. Frozen pipes in the bathroom.
The bathroom involved was always cold and on occasion the pipes would freeze. Another contractor was called in in an attempt to remedy the problem and believed it might be a matter of insulation. Accordingly various insulation was placed on the pipes. However, at a later date a removable panel inside the home was blown off its CT Page 3532 hinges and the pipes were again frozen. The contractor was recalled and opened up the roof of the adjacent porch and found that a piece of plywood was not placed on the building which was not visible from the outside because of the porch. Apparently the air, when windy, came in through a vent on the porch toward the bathroom causing the freezing of the pipes because of the lack of plywood which should have been there. Defendant paid the sum of $3,294.27 for the initial and subsequent investigation and repair of the situation. The problem no longer exists.
7. Chimney Leak.
Water came down from the chimney into the basement and also from a light socket adjacent to the chimney in one room and also in the fireplace in another room. The problem was caused by improper flashing, allowing the water to enter the home as described. The chimney was not reconstructed but the plaintiffs paid the sum of $5,025.00 in attempt to solve the problem. The problem has not existed since the repair work was completed.
8. Downstairs Roof Leak.
A valley in the roof design brought water directly into the wall which was not flashed properly thereby allowing water to come out of the recessed lights in the ceiling. Another contractor was hired to tear off the sheeting and roofing, reroute the valley and properly installed flashing in the area. The problem no longer exists and the plaintiffs paid the sum of $2,039.00 for the repair work.
9. Gutter Replacement.
When it rained the gutters became overwhelmed and water comes over the gutters. The gutters used were four inches in size and might be acceptable for a normal small residential house. However, CT Page 3533 the plaintiffs' house has roofs which are described as massive and therefore requires larger gutters and more leaders to accept the runoff from the roofs. Sums have not been paid for the repair of the problem but the court finds that an estimate of $6,000 for the repair work is fair and appropriate.
10. Stairway Tread.
The area of the rear stairway flexes and appears loose when walked upon. The problem was caused by shrinking of oak which was glued together. The oak shrunk and cracked and was filled in with putty. The court finds such condition is not free from defects from material or workmanship. The problem is not regarded as a safety issue and has not been repaired. However the court finds that the sum of $1,430 would be appropriate cost to repair the defective condition.
26. A shower in one of the bedrooms was installed so that the showerhead faces the opening of the door where one enters the shower. In other words, if a person turned on the shower to adjust the temperature, the water would not only hit the person but also go on the floor. Appropriate recommendation is to rebuild the shower at an estimated cost of $5000.00 which the court finds to be reasonable.
29. Install backsplash.
There is a backsplash required and not finished in the butler's pantry with an estimated cost of $600.00 which the court finds to be reasonable.
There was also an escrow fund set up with respect to water in the basement caused by the lack of flashing on the chimney. That item was not repaired by the defendant and accordingly the $2,000.00 should be released to the plaintiffs.
The remaining claims as to the other breaches were either withdrawn, not asserted, or the evidence was insufficient to make an award of damages in view the conflicting evidence. Plaintiffs are also entitled CT Page 3534 to admitted credits in the amount of $3,800.00 (see Exhibit 14).
The plaintiffs are therefore entitled to a judgment in the amount of $55,726.25 ($49,846.25, $3,880.00 and $2,000.00). The Court views the case as involving claimed deficiencies in the construction of a house. Accordingly, relief claimed under the Connecticut Unfair Practice Act is denied. The issue remains, however as to whether the judgment is to be entered against the corporate defendant only or judgment against it and the individual defendant.
The New Century Development Corporation was established in 1993 with the individual defendant, Braca, as its sole share-holder, president, and individual who made all decisions regarding the corporation. Braca was also a director but does not recall if there were other directors. His wife is secretary. Business decisions would, informally, be discussed between husband and wife.
Braca took no salary while president of the defendant corporation. The company was his sole source of income. When the company needed money, the individual defendant would put money into the corporation and when the corporation had money, funds would be withdrawn. The checkbook was coded so that the accountant would utilize it to prepare appropriate tax returns. Corporate resolutions would be prepared because they were needed to borrow money. There is no evidence that there was only a single bank account where personal and business funds were used interchangeably.
"A court may pierce the corporate veil only under exceptional circumstances . . . In such unusual circumstances, courts will disregard the fiction of separate legal entity when a corporation is a mere instrumentality or agent of another corporation or individual owning all or most of its stock . . . Under such circumstances the general rule, which recognizes the individuality of corporate entities and the independent character of each in respect to their corporate transactions, and the obligations incurred by each in the course of such transactions, will be disregarded, where . . . the interests of justice and righteous dealing so demand. The issue of whether the corporate veil [should be] pierced presents a question of fact . . .
"When determining whether piercing the corporate veil is proper, our Supreme Court has endorsed two tests: the instrumentality test and the identity test. The instrumentality rule requires, in an case but an express agency, proof of three elements: (1) control, not mere majority or complete stock control, but complete domination, not only of finances CT Page 3535 but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) that such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of plaintiff's legal rights; and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.
"The identity rule has been stated as follows: If a plaintiff can show that there was such a unity of interest and ownership that the independence of the corporations had in effect ceased or had never begun, an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise . . . The concept of piercing the corporate veil is equitable in nature and courts should pierce the corporate veil only under exceptional circumstances." KLM Industries, Inc., v. Tylutki, 75 Conn.App. 27, 31, 33 (2003).
While there was money put into the company and money taken out of the company, the Court cannot find that the distinction between the individual and the company was disregarded. "Piercing the corporate veil" is utilized only in exceptional circumstances and sole stock ownership and sole decision-making authority are in themselves insufficient.
Accordingly, judgment may enter in favor of the plaintiff against the New Century Development Corporation in the amount of $55,726.25 and in favor of the defendant Braca.
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