RANA AUTO MASTERS, LLC v. TERDJANIAN, No. CV 084018336 (Mar. 17, 2011)

RANA AUTO MASTERS, LLC v. HARRY TERDJANIAN.

2011 Ct. Sup. 7263
No. CV 084018336Connecticut Superior Court Judicial District of New Britain at New Britain
March 17, 2011

[EDITOR’S NOTE: This case is unpublished as indicated by the issuing court.]

MEMORANDUM OF DECISION
JOSEPH M. SHORTALL, Judge Trial Referee.

This case began in March 2008 as a small claims matter. It is just the kind of action for which the small claims docket is intended: a dispute between the principals of two small businesses in which the total amount in controversy was just over $5,000.00. The defendant, however, transferred the matter to the regular civil docket in July 2008. The small claims complaint had simply prayed for the return of funds which it alleged had been mistakenly deposited in the bank account of the defendant’s LLC. Once the case was transferred to the regular docket, however, the plaintiff[1] retained counsel, who filed a four-count complaint sounding in conversion, statutory theft, unjust enrichment and unfair trade practice and claiming not only the return of the money erroneously deposited but treble damages, punitive damages and attorneys fees. The defendant filed a counterclaim for invasion of privacy and unfair trade practices.[2]

The case was tried to this court on portions of three days in 2010, October 6 12 and November 9. This memorandum of decision sets out the court’s findings of the material facts, based on its assessment of the credibility of the witnesses and the weight to be accorded their testimony and the exhibits that were introduced, as well as the court’s conclusions of law on the issues argued by the parties at trial and in their post-trial submissions.

In 2001 the defendant operated two businesses with the same name: “Automaster Service Center,” one in Wethersfield (Wethersfield business) and one in Southington (Southington business). At both businesses he was authorized by American Express (Amex) to accept payments for auto repairs via an Amex credit card. Each location had its own unique “establishment number” assigned by Amex. The plaintiff purchased the Wethersfield business in July 2001. The plaintiff, too, was authorized by Amex to accept payments via an Amex credit card and was given its own unique “establishment number.” The defendant, however, neglected to advise Amex to close out his Wethersfield “establishment number” when he sold the CT Page 7264 Wethersfield business to the plaintiff. As a result, Amex statements bearing that now defunct establishment number continued to be sent to the Wethersfield business.

Nevertheless, all went well because the company which processed the plaintiff’s Amex business had his correct establishment number and bank account number. In August 2006, however, the plaintiff changed processing companies. In filling out the application required by its new processor, Mr. Rana, who operated the Wethersfield business, mistakenly gave the processor the defunct “establishment number” that had been assigned to the Wethersfield business when the defendant operated it. He did so because, in his haste to complete the application, he referred to one of the statements bearing that establishment number, which he had continued to receive as a result of the defendant’s failure to close out his establishment number when he sold the Wethersfield business to the plaintiff.[3]

From August 4, 2006 through July 3, 2007 payments for work done by the plaintiff at the Wethersfield business were deposited in the bank account of the Southington business. Mr. Rana first realized this error in May 2007 and contacted Amex. After an investigation, Amex affirmed that the payments had been deposited erroneously in the defendant’s Webster bank account and transferred $961.31 from that account to the plaintiff’s Bank of America account. This represented a deposit erroneously made to the defendant’s account for business done by the plaintiff on June 14, 2007. Amex advised Mr. Rana that, based on its standard agreement with authorized Amex dealers, it was not authorized to make any additional transfers.

Mr. Rana now turned to the defendant for repayment of the other Amex payments erroneously deposited to the defendant’s account for work done by the Wethersfield business during the months of August 2006 to July 2007, which totaled $5,133.95. He met with the defendant and provided him with documentation of the erroneous deposits in the form of monthly Amex statements showing deposits into the Southington business’ Webster Bank account.[4] When the defendant failed to contact him, Mr. Rana returned and pressed him for payment. On this occasion they telephoned Amex together, but that call failed to result in the defendant’s repaying the plaintiff for the erroneous deposits. On the third occasion when Mr. Rana went to see the defendant, he still failed to make payment. This action followed.

These facts and the reasonable and logical inferences that the court may, and does, draw from them establish that the defendant converted money rightfully belonging to the plaintiff, i.e., without CT Page 7265 authorization, he took possession of funds which should have been paid to the plaintiff for work done at the Wethersfield business and deprived the plaintiff of those funds permanently. The defendant’s original possession of the funds may not have been wrongful and was partly due to the plaintiff’s own error in providing the wrong establishment number to its new Amex processor. When the plaintiff demanded the return of the money, however, and provided the defendant with proof that the payments were for work done at the Wethersfield business long after the defendant had sold that business to the plaintiff, the defendant’s continued possession was unauthorized and amounted to a conversion. See Label Systems Corp. v. Aghamohammadi, 270 Conn. 291, 331 (2004)

Furthermore, the documentation provided to the defendant demonstrated beyond a doubt that the funds had been deposited to the bank account of the limited liability company through which he operated the Southington business. On the monthly Amex statements given to the defendant the number of the Webster Bank account to which the funds had been deposited is the same as the account number provided by the defendant to Amex when he originally received the establishment number for the Wethersfield business.[5] And, the defendant admitted, when questioned by the court at trial, that the bank account to which the funds were deposited was that of his LLC. Finally, he testified under cross examination that he had unfettered access to that account and paid himself from it. From this evidence the court concludes that the defendant has committed civil theft of the plaintiff’s funds. The elements of civil theft are the same as those of conversion, plus the intent on the defendant’s part to deprive the plaintiff of his property. See Sullivan v. Delisa, 101 Conn.App. 605, 620, cert. denied, 283 Conn. 908 (2007). Given the knowledge the defendant had as to the source and disposition of the funds, his continued failure to return them to the plaintiff constituted an intentional decision to deprive it of their use.

Finally, count four alleges a violation of the Connecticut Unfair Trade Practices Act [CUTPA]. CUTPA proscribes both “unfair” and “deceptive” acts or practices in the conduct of trade or commerce in Connecticut. Conn. General Statutes § 42-110b(a); 42-110a(4). An act or practice is “unfair” if it “offends public policy as it has been established by statutes, the common law or otherwise” or if it is “immoral, unethical, oppressive, or unscrupulous” or if it “causes substantial injury to consumers.” (Internal quotation marks and citations omitted.) Cheshire Mortgage Service, Inc. v. Nontes, 223 Conn. 80, 105-06 (1992). The defendant’s theft of the plaintiff’s funds violates the statutes proscribing conversion and theft and, by any standard, qualifies as “immoral, unethical, oppressive [and] unscrupulous.” Therefore, the plaintiff has proven a CUTPA violation. CT Page 7266

Because he carried on his business activities through a limited liability company, Automaster of Southington, LLC, the defendant argues that he cannot be personally liable to the plaintiff. “It is well established that `an officer of a corporation does not incur personal liability for its torts merely because of his official position. Where, however, an agent or officer commits or participates in the commission of a tort, whether or not he acts on behalf of his principal or corporation, he is liable to third persons injured thereby.” Ventres v. Goodspeed Airport, LLC, 275 Conn. 105, 141-42 (2005), cert. denied, 547 U.S. 1111 (2006). “It is black letter law that an officer of a corporation who commits a tort is personally liable to the victim regardless of whether the corporation itself is liable.” Kilduff v. Adams, Inc., 219 Conn. 314, 331-32 (1991). The defendant is not shielded by the existence of his LLC; he is personally liable to the plaintiff for the torts which he committed.[6]

The plaintiff has proven by a preponderance of the evidence the elements of conversion (count one), statutory theft (count two) and unfair trade practice (count four). The court finds that the defendant has wrongfully withheld from the plaintiff the sum of $5,133.95, with the intent to deprive him permanently of its use and in so doing has committed a violation of CUTPA. The plaintiff is entitled to treble damages under count two. Therefore, the court will award damages in the amount of $15,401.85.

The plaintiff is entitled to reasonable attorneys fees in connection with the verdicts on counts one, two and four. In addition, pursuant to General Statutes § 52-251a, the court may allow the plaintiff his legal costs, including reasonable attorneys fees, because it has prevailed in a case the defendant had moved from the small claims docket to the regular docket. “The very purpose of § 52-251a is to deter . . . defendants from transferring a case from the small claims session and turning a relatively clear-cut case into a pitched legal battle.” Krack v. Action Motors, 87 Conn.App. 687, 697 (2005).

The court will award attorneys fees[7] but only after a hearing at which the defendant will have an opportunity to be heard and to examine plaintiff’s counsel on his affidavit of counsel fees filed as exhibit B to his post-trial brief. See Ottaviani v. Pechi, 16 Conn.App. 705, 709
(1988). That hearing will be conducted at 2:00 PM on Monday, April 4, 2011.

The court has examined the file and determined that the plaintiff made an offer of compromise on April 21, 2010 in the amount of $5,000.00, CT Page 7267 which the defendant failed to accept. See #110. Since the plaintiff has recovered an amount in excess of the offer of compromise, the court will add 8% interest to the amount of the recovery. See Practice Book § 17-18. Since the offer of compromise was filed later than eighteen months from the date the complaint was filed, the interest will be computed from the date of filing the offer of compromise, April 21, 2010. See General Statutes § 52-192a. At the hearing on April 4, 2011 the plaintiff shall present the court and the defendant with its computation of the interest due and payable.

Judgment enters for the plaintiff on count one for $5,133.95, count two for $15,401.85 and on count four for $5,133.95. The amounts of the judgments on counts one and four are included in the amount of the judgment on count two so that the total amount payable by the defendant to the plaintiff will be $15,401.85 plus interest and attorneys fees as determined by the court at the hearing on April 4, 2011.

Judgment enters for the defendant on count three.

[1] The action was commenced in the small claims court by Anees Rana pro se, and he named himself as the plaintiff. During trial it became apparent that the presence of Rana Automasters, LLC was necessary for the “determination of the real matter in dispute”; General Statutes § 52-109; and Mr. Rana’s motion to substitute that entity as the plaintiff was granted. See #130. In this decision “the plaintiff” refers to Rana Automasters, LLC.

[2] After the defendant had introduced evidence in support of his counterclaim on November 9, 2010, the court entered judgment for the plaintiff on count one, alleging an invasion of the defendant’s privacy. The court found that the defendant had failed to prove that the plaintiff engaged in conduct that violated the defendant’s privacy in any of the four ways recognized by the Connecticut Supreme Court in Goodrich v. Waterbury Republican-American, Inc., 188 Conn. 107 (1982). Since count two, the unfair trade practice count, was based on the alleged invasion of the defendant’s privacy, the court entered judgment for the plaintiff on that count as well.

[3] Mr. Rana testified that he kept these Amex statements in his desk, many of them unopened, because not many of his customers paid for repairs with Amex cards.

[4] These statements were introduced at trial as exhibits 1a through 1g, 1i and 1j. They were authenticated, and their contents described in detail by a representative of Amex.

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[5] Exhibit 2 was identified by the Amex representative at trial as a record of the information provided by the defendant when he first established his Amex account. The form indicates that the defendant’s bank was Webster bank and his bank account number was 0009036781. The monthly Amex statements, exhibits 1a-1k, show that the funds were deposited to a Webster bank account number ending in 6781.

[6] This case is distinguishable from cases like Ararat Miracle, LLC v. R/T Speed, Inc. et al., Superior Court, judicial district of New Britain, Docket No. CV 08 5010250 (May 14, 2010) [49 Conn. L. Rptr. 818], in which the court declined to pierce the corporate veil, because this case involves tortious conduct on the individual defendant’s part, and that case sought only damages for breach of a leasehold contract.

[7] Although the plaintiff is entitled to punitive damages in addition to attorney’s fees in connection with the verdict on count four, the court will not award additional punitive damages in view of its award of treble damages on count two.

CT Page 7269