Skip to content Skip to navigation


Photo of

November 4, 2013

Welcome to our Supreme and Appellate Court summaries webpage.  On this page, I provide abbreviated summaries of decisions from the Connecticut appellate courts which highlight important issues and developments in Connecticut law, and provide practical practice pointers to litigants.  I have been summarizing these court decisions internally for our firm for more than 10 years, and providing relevant highlights to my municipal and insurance practice clients for almost as long.  It was suggested that a wider audience might appreciate brief summaries of recent rulings that condense often long and confusing decisions down to their basic elements.  These summaries are limited to the civil litigation decisions based on my own particular field of practice, so you will not find distillations of the many criminal and matrimonial law decisions on this page.  I may from time to time add commentary, and may even criticize a decision’s reasoning. Such commentary is solely my opinion . . . and when mistakes of trial counsel are highlighted because they triggered a particular outcome, I will try to be mindful of the adage . . . “There but for the grace of God . . ..”  I hope the reader finds these summaries helpful. – Edward P. McCreery

Posted November 4, 2013

[For any of you who may have attempted to foreclose both a mortgage and a UCC lien at the same time in court (which this author has done), this case is a cautionary tale that you must remember to treat the UCC lien foreclosure differently than the real property foreclosure.  It is not just a tag-a-long. UCC lien foreclosures have their own rules and requirements.  Also - watch out for the new Disclaimer of UCC Title rules.]

In this matter, the plaintiff Bank attempted to use the court system to jointly foreclose its mortgage and UCC liens on real and personal property of a large picnic and day camp facility in the Town of Wallingford.  The Bank obtained a judgment of foreclosure by sale and a committee was appointed.  The committee hired an auctioneer to assist him and the auctioneer prepared fancy brochures describing the complex to be sold.  Before the scheduled auction date, the Bank’s attorney was informed that a large amount of the restaurant equipment was leased and thus was not subject to the Bank’s lien.  Rather than tell the committee to alert potential bidders of that fact, the Bank’s attorney e-mailed the committee and informed him that he felt most of the property was in fact owned by the debtor and thus subject to the bank’s lien, but in any event the bidders would be responsible to undertake their own due diligence.  (As Attorney Atkins so often says:  The “E” in email really stands for “EXHIBIT A”.)  On the day of the auction, the committee made a vague announcement that the brochure and equipment list was for informational purposes only.  The plaintiff was the successful bidder for $1.6M, and after the auction also received a bill of sale for the personalty from the Bank that included an “as is” disclaimer of representations or warranties.  (But note, had the judicial foreclosure been done properly, it would have conveyed title to the personalty and no bill of sale need be used.)  Thereafter, a dispute arose whether the kitchen equipment in the restaurant had been part of the auction.  Without this equipment, the high bidder could not run the catering portion of the facility.  The plaintiff/bidder sued the bank and the auctioneer (and the court-appointed committee -- who was defended by our very own Dave Atkins -- and who wisely settled out early for a nominal sum) alleging negligence, breach of warranty and CUTPA.  The plaintiff obtained a jury verdict and was awarded $400,000 in damages, $200,000 in attorney’s fees, and $1,200,000 in punitive damages.

On appeal, the Supremes held that a person who sells property owes a duty of reasonable care to properly describe the property being sold.  While there is an exception for land title issues in a foreclosure (as land records can be searched), there is no reason why this general rule shouldn’t apply equally to warranty of title claims under Article 9 as to authority to sell.  Subjecting the sales of personal property by a creditor made sense to the court because only the seller has the ability to determine if it has the authority to sell the property of the debtor.  This is precisely the type of claim that UCC Article 9 warranty of title envisions.  Thus a secured party seller of a debtor’s property has a duty to potential buyers to properly identify the property being sold and to not misidentify the property as being part of the sale when it is not.  [But see the ability to disclaim title below.]

The court went on to review whether the application of Article 9 as the proper cause of action would then bar the plaintiff from pursuing alternate common law remedies notwithstanding the preservation of common law claims under 42a-1-103 (fraud, misrepresentation, etc.), because of the economic loss doctrine.  Commercial losses arising out of the defective performance of contracts for the sale of goods cannot be combined with a claim for negligent misrepresentation, especially when the parties are sophisticated commercial entities and are otherwise free to allocate the risks of the transaction.  42a-1-103 is trumped by 42a-2-721 which makes actions for fraud and misrepresentation inconsistent with a claim for breach of warranty of title.  Thus the trial court was wrong to conclude that the economic loss doctrine in this case did not bar the plaintiff’s negligent misrepresentation claims.  The proper claim here was the alternate claim of breach of warranty of title. Absent an appropriate disclaimer, this should be an auction buyer’s sole remedy because they know they will be compensated in the event the secured party doesn’t own what it is selling and thus breaches its warranty of title.  There is no need for additional remedies to be afforded to the successful bidder. 

A common law negligence claim is not barred by the economic loss doctrine however when it arises independently from the defective performance of the contract.  That is not the case here which involves the same conduct, the same personal property and the same evidence for both counts of the plaintiff’s complaint.  Prior statements by this court suggesting that the remedy of contract is independent from the remedy of negligent misrepresentation were overly broad.  What the court meant to say is that the remedies may at times be independent.

With that said however, the plaintiff’s CUTPA (tort) claim was deemed not barred by the economic loss doctrine.  To reach this result the Court had to overrule prior precedent that held a remedy under the UCC bars a CUTPA claim.  The court held it would be inappropriate to suggest that a CUTPA claim cannot flow from a breach of contract.  CUTPA was intended to provide a remedy that is separate and distinct from the remedies provided by contract law when the contract breach is accompanied by aggravating circumstances.  Thus you can now combine a breach of the UCC (or any contract) with a CUTPA claim.  The jury found that the bank’s conduct offended public policy and was immoral and unethical by hiding the true title of the property from the bidders. 

Turning to the Bank’s post auction Bill of Sale which attempted to disclaim any warranties, the Court refused to set aside the verdict holding those provisions were insufficient to disclaim any representation of title.  Reviewing 42a-9-610e and 42a-2-312, the Court said the suggested language for disclaiming title was not used.  Merely stating that there are “no warranties or representations of any kind whatsoever with respect to the collateral and that the assets are being sold "as is” were insufficient as a matter of law to disclaim the warranty of title.  A disclaimer of warranty of title must be specific.  It must be enough to catch the eye of an unsophisticated buyer.  Merely stating that the property is being sold “as is, where is” is not enough.  Similar language in the auction brochure prepared by the auctioneer were likewise insufficient to disclaim the warranty of title. [A footnote notes some states would deem such (quit claim) language sufficient!]

Next the Bank challenged the use of the jury charge of the “Cigarette Rule” as the proper standard for determining CUTPA claims.  Plaintiff claimed that the rule has been abandoned by the federal courts, but the Court refused to consider the issue because the attorneys for the bank did not request a jury charge contrary to the Cigarette Rule, nor excepted to the instruction given by the trial court on that topic.  This they should have done even though the plaintiff claims it would have been a futile attempt to get the trial court to overrule existing precedent of the Connecticut Supreme Court.  The futility of asking the trial court to overrule a decision shall not be deemed an automatic excuse for failure to preserve a claim for appeal.  (So watch out for that new rule!  You must raise futile claims as well to preserve them on appeal.) 

Next the court upheld the principal damage award as being justified by the evidence consisting principally of what was the “missing equipment” worth and the amount of the attorney’s fees fighting over the property.  Next the court upheld the award of punitive damages under CUTPA.  Here the award was set at three times the compensatory damages which was within the discretion of the trial court.  The jury could have reasonably concluded that there was a recklessness disregard of the plaintiff’s rights due to a conscious decision to disregard the acknowledged business norms.  In reviewing the evidence, the Court noted that while not every contract breach arises to the level of a CUTPA violation, it will usually be a question of fact for the jury and here the e-mails of the attorney supported a finding that we were not dealing with merely negligent or incompetent conduct but rather unethical conduct where obligations to warn the potential bidders of a defect in title were ignored.  The Bank tried to claim it was under a good faith mistaken belief that bidders had to do their own due diligence but the Court swept that aside noting their attorney testified he had been practicing commercial law for 25 years… he should have known this.

The Court noted that punitive damages under CUTPA are not limited to the expense of bringing the legal action.  They are in addition to attorney’s fees.  When asked to limit the damage award consistent with the U.S. Supreme Court’s limitation on the constitutionality of punitive damages (with anything more than one to one being suspect), our Supremes refused, holding that the U.S. Supreme Court placed limits on common law punitive damage awards and this is not a common law punitive damage award. Connecticut statutes going back hundreds of years often impose double or treble damages. The Court did acknowledge that the Exxon case might include factors to review the excessiveness of a punitive award…… but while the punitive damage award of the present case was undoubtedly large, especially in light of the large compensatory damages already awarded, the Court refused to consider it an abuse of discretion because the Bank’s conduct was undertaken recklessly and to increase the profitability of the auction to the bank which had a very high net worth.  The Court had to reluctantly acknowledge in a footnote that an award four times the actual damages might be excessive.  

The decision also upheld the award of post-judgment interest under 37-3a despite the trial court’s observation that this case presents legitimate and novel issues worthy of appellate review.  Defendant’s cited no authority for the proposition that granting interest even when the defendant has a good faith appeal is an abuse of discretion, even when a portion of the damage awards are already punitive.

The majority also set aside the trial court’s refusal to award non-taxable costs as part of the CUTPA damages in the amount of $36,000 for such things as transcripts, copying, Westlaw research, marshal fees, jury fees, trial equipment fees, etc.  Even though such costs may not be taxable in the normal course, they may be a component of punitive damages because these are part of the “expenses of bringing the action”, which is a component of CUTPA damages.

Finally, the majority upheld the trial court’s directed verdict on a claim that the bank also breached an obligation to turn over life insurance proceeds that were subject to the UCC lien to the high bidder.  The collateral assignment of life insurance policies were not in and of themselves collateral to the bank’s loan but rather were instruments creating security interests in the life insurance proceeds.  But just like a mortgage cannot normally be assigned without the note, the assignments of the life insurance policies could not have been transferred anything here without the underlying debt obligation. 

An interesting footnote states that the trial court, not the jury, decides the amount of any punitive damage award.  Although the financial analysis of TD Bank was included in the footnote to support the large punitive damage claim, another footnote notes that the financial standing of a party becomes relevant only when the focus of CUTPA is deterrent rather than compensation and that with respect to common law punitive damages in Connecticut, compensation alone is the exclusive purpose of the punitive damages. 

Justices Zarella and Palmer joined concurring in part and dissenting in part.  They felt that the issue of the Cigarette Rule had been property preserved and the Court should review whether it is still the appropriate test of unfairness under CUTPA.  Concluding that it is no longer the proper test, the dissent felt it was time to correct a ten-year mistake that has infected the CUTPA decisions ever since that rule was adopted.  The dissent also concluded that the language in the bill of sale should have been adequate to disclaim any warranty of title under the UCC.

[Commentary.  I won’t say anything more about the punitives other than they seem grossly excessive.  The decision seems to read a lot of innuendo into the facts to justify the outcome….the jury could have concluded….etc. etc.  One thing that seems to be missing here is any discussion of the juxtaposition of the judicial foreclosure of a UCC lien and the Bill of Sale.  There never should have been a Bill of Sale!  It’s the judicial foreclosure that conveys the title.  Both the majority and the minority blur the lines as to when a representation of title is being made and when disclosures are require in a judicial sale vs a private sale.  Maybe they felt it did not matter because under either scenario….a judicial auction….or a self-help UCC sale….the creditor would owe the same duty to the bidders?  A common law one for a judicial proceeding and an Article 9 one for a UCC sale?   I will state that prior to this decision, while I may not have been so cavalier about the information as the Bank’s attorney and required more of a disclosure to avoid any claim of misrepresentation, I too would have thought that at a judicial auction, the bidders have an obligation to undertake their own due diligence.]

  • AC34822 - Petrucelli v. Travelers Property Casualty Ins. Co.

This case held an arbitration award was timely rendered within the 30 days of the close of the proceedings as provided for in the arbitration agreement when the email correspondence from the attorneys with the arbitrators evidenced an agreement that the proceedings would continue to remain open after the evidence was concluded until the three arbitrators could meet and discuss their conclusions.  Thus the 30 days ran from that conference - not from the close of evidence.  

  • AC35014 - Banco Popular North America v. du’Glace, LLC

Trial Court (Holzberg, J.) could allow the introduction into evidence of a Limited Use Restricted Appraisal tendered by plaintiff bank in a deficiency hearing over the objections of the guarantor that it did not comply with USPAP standards to be admissible.  The trial court may give whatever weight it deems appropriate to an expert’s opinion of value and may reach its own opinion of value taking into account the totality of the evidence and is not bound by the experts’ opinions.  Appraisals are not scientific evidence so no analogy may be made to the Daubert - Porter principles.  A trial court has wide discretion to admit expert testimony and just as the appraiser does not have to be licensed, there is no authority requiring the report to comply with any particular USPAP guidelines.  Here the appraiser appeared in court and testified as to his knowledge and qualifications and was subject to cross examination on those issues.  A footnote also noted that just because it was a “drive-by” appraisal, with no interior inspection, that did not render it inadmissible.  (Our Bob is always right.  Don’t they know that yet?)


The facts and holdings of any case may be redacted, paraphrased or condensed for ease of reading.  No summary can be an exact rendering of any decision, however, so interested readers are referred to the full decisions.  The docket number of each case is a hyperlink to the Connecticut Judicial Department online slip opinion.  ©2013 Pullman & Comley, LLC. All Rights Reserved.

Back to Top