RIPLEY, JUDGE TRIAL REFEREE.
The plaintiffs in this matter seek to recover damages from the defendants by way of an eight-count complaint. The various claims of the plaintiffs generally arise out of the defendant's actions and procedure in foreclosing on a warehouseman's lien as provided under Connecticut General Statutes. The plaintiffs utilized the defendant's warehouse space over a period of time and after nonpayment of storage charges the defendant proceeded under the provisions of Article 7, Part 2 General Statutes § 42a-7-209-210 (creation of warehouseman's lien and enforcement thereof) to recover the claimed unpaid storage charges by enforcing its lien rights as provided by statute.
The plaintiffs in their multi-count complaint generally allege as follows:
Count One; that the defendant Pace Motor Lines (Pace) rented warehouse space to a corporation owned by the plaintiffs as sole shareholders who later became the sole owners of the corporation and during the course of the rental the defendant sold the plaintiffs' inventory in the defendants' custody without notice and at a price substantially lower than market value.
Count Two; alleges by the conduct set out in count one the defendant Pace Motor Lines converted the inventory to its own use and thereafter sold it resulting in a loss to the plaintiffs.
Count Three; that the defendant Pace Motor Lines violated the provisions of the warehouseman's lien statute in several particulars and converted the inventory to its own use to the damage of the plaintiffs. CT Page 12658
Count Four; that the defendant Pace Motor Lines engaged in unfair and deceptive acts by violating several provisions of the warehouseman's lien statute in failing to notify the plaintiffs of its intent to sell the inventory and thereafter that the defendants failed to sell the inventory in a commercially reasonable manner as well as other claims of immoral and unethical conduct which, in total, constituted a breach of Connecticut Unfair Trade Practices Act ("CUTPA"), General Statutes § 42-110b.
The Fifth through Eighth Counts essentially repeat the allegations of the First through Fourth Counts and substitute New England Warehousing Group (NEWG) as the defendant.
The plaintiff claims money damages, punitive damages, attorneys fees and such damages as allowed by the commercial code.
The defendants by their answer of November 25, 2002 generally deny the plaintiff's allegations and pled several special defenses including failure to state claims on which relief may be granted, waiver and a lack of standing to obtain the relief requested.
The court heard the matter over a number of days commencing on December 23, 2002 and with several extended recesses concluded on March 10, 2003.
The plaintiffs William Evans, Daniel DiMenna and Raymond Bastarache in 1992 joined together to form Active Marketing International, Inc. (Active). This was an enterprise intended to produce and market "trading cards" not unlike the baseball trading cards sold in connection with chewing gum known to generations of children. These cards however had a more adult-oriented direction as they were photographs taken from Hustler Magazine. The witnesses explained at length how these cards were produced and prepared for sale. The outlets utilized for the sale of the merchandise were largely if not solely through "Mom and Pop" stores which retailed less specific cards sold to children and interested card collectors. The plaintiffs also attempted to produce other types of cards for a more general clientele but the cards produced under license from Hustler Magazine appear to have been the main constituents of the inventory. "Active" was run by the three partners; DiMenna was a vice president and "ran the business," Evans, who knew the trading card business, generally attended to the marketing and Bastarache took care of the financial matters and paid the bills, filed the returns and while he later became inactive and resigned in 1997 he continued to take care of CT Page 12659 the finances as he was the major if not the only individual of the three who put any significant money into the business. At the outset the product prepared for distribution and sale was stored in facilities owned or leased by "Active" or furnished by one of the three shareholders but this later became inadequate as business developed. DiMenna had at some time in the past become acquainted with one William Pacelli, one of the principal owners of Pace Motor Lines, Inc. and when the need arose for more storage space for the trading cards he contacted Pacelli who he knew also had a company that ran a warehouse storage facility. Pacelli then met with DiMenna and Pacelli's manager of the warehouse, Al Bruno, and arrangements were made for NEWG to receive the trading cards as they came from the manufacturer, store them and to ship them under Active's direction. The relationship between the plaintiffs and defendant NEWG began with the acceptance of NEWG's proposal as set out in Plaintiff's Exhibit 10 dated August 26, 1992. At this time Active asked for and got evidence of insurance coverage for such goods as might be put in the warehouse. (See Plaintiff's Ex. 9, a certificate of insurance in the name of Pace Motor Lines.) The plaintiffs claim this as evidence that Pace Motor Lines ran the warehouse operation under the name of NEWG. The court will comment upon this claim later in this memorandum. The movement of goods in and out of the warehouse continued until 1995 when, according to DiMenna, a strike occurred in major league baseball which "stalled the sales." Also about at this time the three plaintiffs were not getting along together and they decided to temporarily stop their operations, intending to resume in 2 years or so if conditions improved. They closed their office and went their separate ways. The last sale of merchandise from the warehouse was late 1996.
In January 1997 NEWG sent a storage bill to Active at the address known to NEWG as plaintiffs' office address. (See Plaintiff's Exhibit 11.) Plaintiff's Exhibit 12 reflects invoices from Pace over the period 1995-96 noting a number as "past due" with the accompanying inventory sheets listing the goods remaining in storage at the NEWG warehouse. This was offered in part by the plaintiffs to show the claimed "Pace connection" as alleged in the plaintiffs' first four counts. Again, the court will refer to this claim later. The goods owned by Active, and later by the three plaintiffs after "Active" became inactive, remained in storage at the warehouse and by December 16, 1996, NEWG was owed $8184.55 in storage charges. (Plaintiff's Exhibit 18.) In that letter setting out the balance owed, NEWG advised that unless the bill was paid NEWG would proceed to sell the goods at auction. This letter was received by Active at its regular office address as evidenced by the return receipt attached to the exhibit. DiMenna, according to his testimony, indicated that he and his partners intended to leave the stock in the warehouse and he knew they weren't paying for the storage. CT Page 12660
Defendant's Exhibit 6 indicates that the plaintiffs were aware of the delinquent account and they were attempting to get funds to pay it up. A payment on the account was made by the plaintiff Bastarache (See Defendant's Ex. 7 dated March 18, 1997 indicating a past payment of $600.) Bastarache also made an earlier payment on the account of $1500 on December 30, 1996. (Plaintiff's Ex. 19.) This may have been in response to NEWG's billing of December 16, 1996 which indicated a balance due of $8184.55. As previously noted, the balance owed after crediting the $1500 payment was then reduced to $7846.55 with the advice by NEWG that if payment in full was not made by March 15, 1997 the merchandise in storage would be sold at auction. Again, this was received by Active Marketing. (Plaintiff's Ex. 20, Invoice dated February 24, 1997.) This produced the part payment from Bastarache of $600 on March 10, 1997. (Plaintiff's Ex. 21.)
On March 21, 1997 by receipted registered mail Al Bruno, NEWG manager, advised Active that if the account was not brought current by some sort of payment program the goods in storage could be sold at auction pursuant to General Statutes § 42(a)-7-209. (Plaintiff's Ex. 22.) On July 31, 1997 Bruno advised Active that if its payment was not forthcoming the goods would be disposed of on August 21, 1997 at 8 a.m. at the warehouse facility. (Plaintiff's Exhibit 23.) Advertising was placed in the New Haven Register appearing August 5 and 12 noting the time and place of the auction. (Plaintiff's Ex. 24.) According to the testimony of William Pacelli, no one appeared on the premises on August 21 interested in the goods and at the close of business on that date Pacelli sold the goods to an individual from Florida who previously had indicated an interest. Pacelli had before the sale tried to cultivate buyers for the stored goods but had had no success except for the individual from Florida who called in a bid during the day of the sale. Between 5 and 6 p.m. Pacelli spoke to this individual, one John Quitoni who after negotiation agreed to pay $12,000 for the inventory. This was accepted and Pacelli advised Active by letter of September 2, 1997 (Plaintiff's Ex. 25) that Active's account was credited with the sale proceeds and the balance due which occasioned the sale was satisfied. However, this letter although sent to the usual address by certified mail was unclaimed. This then was the paper trail of the progress of the business relationship between the parties from inception to conclusion. According to the testimony of DiMenna, Bastarache took care of all the money matters involved in the enterprise. When the account became delinquent, DiMenna told Bruno he would contact Bastarache but never got back to Bruno. When he got a certified letter from NEWG regarding the balance due he simply turned it over to Bastarache. Pacelli, when the account started to become delinquent, called Bastarache but Bastarache wouldn't return his calls. CT Page 12661 Pacelli spoke to Bastarache around August 1, 1997 after the date for the sale was set and told him that he, Pacelli, had run out of patience. "Bastarache told me to do what you gotta do. I got problems with my partners." In addition to Pacelli's calls to Active or to Bastarache Bruno, when Evans was contacted by Bruno several times concerning the past due account, Evans' response was that he would speak to Bastarache. "I wasn't too concerned about the bill," Bastarache testified, and that when he got a letter asking for payment he didn't respond. While he said he was trying to take title to the inventory prior to the sale (Plaintiff's Ex. 35) he made no further effort regarding this and no further information was communicated to NEWG prior to the public auction date. Bastarache testified that he made a conscious decision not to pay NEWG warehouse charges.
General Statutes § 42a-7-210(2) provides as follows:
(2) A warehouseman's lien on goods other than goods by a merchant in the course of his business may be enforced only as follows: (a) All persons known to claim an interest in the goods must be notified. (b) The notification must be delivered in person or sent by registered letter or by certified mail receipted for on mailing to the last-known address of any person to be notified. (c) The notification must include an itemized statement of the claim, a description of the goods subject to the lien, a demand for payment within a specified time not less than ten days after receipt of the notification, and a conspicuous statement that unless the claim is paid within that time the goods will be advertised for sale and sold by auction at a specified time and place. (d) The sale must conform to the terms of the notification. (e) The sale must be held at the nearest suitable place to that where the goods are held or stored. (f) After the expiration of the time given in the notification, an advertisement of the sale must be published once a week for two weeks consecutively in a newspaper of general circulation where the sale is to be held. The advertisement must include a description of the goods, the name of the person on whose account they are being held, and the time and place of the sale. The sale must take place at least fifteen days after the first publication. If there is no newspaper of general circulation where the sale is to be held, the advertisement must be CT Page 12662 posted at least ten days before the sale in not less than six conspicuous places in the neighborhood of the proposed sale.
The first four counts of the plaintiff's amended complaint of September 25 are brought against the defendant Pace Motor Lines. It generally alleges that Pace owned and operated a warehousing facility which was utilized by the plaintiffs at an agreed rate for storing and handling plaintiff's merchandise. The remaining counts allege an improper sale of the plaintiff's inventory to satisfy storage charges by the defendants' failure to comply with statutory requirements. As noted previously, the same allegations are repeated in the counts against New England Warehousing Group.
The testimony supports the claim of the defendants that New England Warehousing Group at the time of the events complained of by the plaintiff was a separate entity from Pace Motor Lines, Inc. DiMenna testified that when he began to look for more space for his merchandise as business developed that he thought of William Pacelli. He knew that Pacelli was connected with Pace Motor Lines and he believed that the transport company stored customer's products for later delivery. He later learned that Pace Motor Lines had another company that ran a warehouse. He then met with Al Bruno who ran the warehouse and following that conversation received a proposal from Bruno, Plaintiff's Exhibit 10, on the letterhead of New England Warehousing Group. DiMenna apparently also requested and received evidence of insurance coverage, Plaintiff's Exhibit 9, which listed New England Warehousing Group as an additional insured under a policy insuring Pace Motor Lines. The plaintiffs also claim that certain billings of "Past due" notices were issued under the bill head of "Pace." The monthly billings which accompanied the dunning notices however carried the letterhead of New England Warehousing Group. See Plaintiffs' Exhibit 12. William Pacelli testified that New England Warehousing Group is and was an independent corporation run as an adjunct to the trucking company business. He and his two brothers are the only shareholders of the two businesses and one of his roles in the operation was to run the warehouse from his office at Pace Motor Lines. At the point in time that DiMenna engaged New England Warehousing, NEWG did not have onsite business office equipment for billing at the warehousing facility so Pacelli used Pace computers for billing purposes only. Bruno would furnish Pacelli with manually-produced bills and Pacelli's employees would put them on a computer and mail out the bills. NEWG had no mechanics to send out "past due" bills so Pacelli employed the Pace Transport computers.
Pace Motor Lines, according to Pacelli, filed independent tax returns CT Page 12663 and NEWG paid nothing to Pace Motor Lines for anything according to Pacelli.
From the court's review of the evidence there is nothing further of significance offered by the plaintiffs for the court to conclude that any belief of the plaintiffs that Pace Motor Transport ran the warehousing operation was warranted. Neither Evans nor Bastarache testified as to any significant connection between NEWG and Pace Motor Transport. It appears from documents in evidence that the vast bulk of the correspondence between the parties carried NEWG as the operating owner of the warehouse.
Based upon the foregoing, the court concludes that the plaintiff has failed to demonstrate by a preponderance of the evidence that Pace Motor Transport had any significant involvement with the handling or disposition of the plaintiffs' stored merchandise as claimed in the first four counts of the complaint and judgment may enter for the defendant Pace Motor Lines on the complaint.
As to the remaining four counts of the complaint as directed against New England Warehousing Group the court concludes that this defendant owes no liability to the plaintiffs.
The statute pertaining to warehouseman's liens and satisfaction of the underlying debt by sale of the owner's property is spelled out in §§ 42a-7-210(1) and (2). There can be no question that the plaintiffs were on many occasions both orally and in writing made aware that storage charges due and owing to NEWG were unpaid. The evidence offered by testimony and documents mailed in evidence demonstrate that the plaintiffs were fully aware of the outstanding debt owed NEWG and in fact decided to ignore it.
There appears no question from the documentary evidence that NEWG received goods from Active Marketing over a period of time (see Plaintiff's Exhibit 12) and furnished Active with receipts for goods stored and periodic listings of the materials stored and warehouse charges due. It appears to the court had the defendant NEWG thereby obtained lien rights pursuant to § 42a-7-209. It also appears that the storage charges remained unpaid despite demand for payment and that NEWG appropriately proceeded to enforce its lien rights by proceeding under General Statutes § 42a-7-210. This statute provides that such a lien may be enforced by public or private sale at any time or place and on any terms that are commercially reasonable. The notice to all parties claiming an interest in the goods must include a statement of the amount due, the nature of the proposed sale and the time and place of any public CT Page 12664 sale. The court finds that NEWG on many occasions noticed Active through its managing agents both orally and in writing of the balance due and in particular by letter to Raymond Bastarache, its president that the goods in storage would be sold on August 21, 1997 at 8 a.m. at the warehouse where the merchandise was stored. Public notice of the sale was given through newspaper notice which ran for two weeks prior to the sale. See Plaintiff's Exhibit 24. The notice provided that the sale would be by public auction. According to the testimony of William Pacelli and Al Bruno, the sale day arrived and sign-up sheet was provided. No one appeared to bid during the regular business hours and obviously no bid was received by the close of the day. William Pacelli received the phone call from "Johnny Q" as previously noted and arrangements proceeded which resulted in a sale of the goods to that individual and Pacelli considered the storage charges owed by Active to be satisfied. Plaintiff's Ex. 25.
It appears to the court that the obligations imposed upon NEWG by statute to effect a sale of goods subject to a warehouseman's lien were satisfied. It is clear that Pacelli was aware of the applicable statutes in advising Active and its three principals of the procedure he intended to and did pursue to obtain satisfaction of Active's obligation for unpaid storage charges. Substantial compliance with a statute or regulation is such compliance sufficient to assure its objectives. Deangelis v. Waterbury Inlands and Watercourses Commissions, 1997 WL 275587. The court finds that NEWG substantially complied with the essential statutory requirements. It is also clear to the court and the court so finds that the price that Pacelli obtained was the best he could get under circumstances where no one was sufficiently interested in the goods to appear and bid and further that prior to the sale Pacelli tried to interest a number of parties to no avail. The court concludes that Pacelli's sale to "Johnny Q" was under all the circumstances commercially reasonable.
The plaintiffs claim a conversion bf the stored goods by the defendant NEWG and damages under paragraph 9 of § 42a-7-210 based upon a failure of the defendant to comply with the requirements for sale under the section. The court has already concluded that there was substantial if not complete compliance with the statute. The plaintiffs also claim a violation of CUTPA by the defendants' sale of plaintiffs' goods not in compliance with the applicable statutes. The court has concluded that the procedures followed by Pacelli were in compliance with the statutes regarding a warehouseman's lien and in any event, CUTPA does not apply to a claimed breach of contract, Paulus v. Lasala, 56 Conn. App. 134, 153, unless substantial aggravating circumstances are established demonstrating immoral, unethical conduct, offensive to public policy which the court concludes has neither been alleged or demonstrated by the CT Page 12665 plaintiffs.
Accordingly, the court enters judgment for the defendants.
GEORGE W. RIPLEY II, JUDGE TRIAL REFEREE CT Page 12666