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Aldin Associates Limited Partnership v. Hess Corporation

Court of Appeals of Connecticut

September 19, 2017

ALDIN ASSOCIATES LIMITED PARTNERSHIP
v.
HESS CORPORATION ET AL.

          Argued February 7, 2017

          Richard P. Weinstein, with whom, on the brief, were Dina S. Fisher and Sarah Black Lingenheld, for the appellant (plaintiff).

          Paul D. Sanson, with whom were Karen T. Staib and, on the brief, Patrick M. Fahey, for the appellee (named defendant).

          DiPentima, C. J., and Mullins and Flynn, Js.

         Syllabus

         The plaintiff, a franchisee and owner of four gasoline stations, sought to recover damages from the defendant franchisor, H Co., for violations of the Connecticut Petroleum Product Franchise Act (act) (§ 42-133j et seq.), and the Connecticut Unfair Trade Practices Act (CUTPA) (§ 42-110a et seq.), and for breach of the implied covenant of good faith and fair dealing. The plaintiff, which operated the gas stations as H Co.'s franchisee pursuant to written dealer agreements that required the plaintiff to purchase gasoline solely from H Co., alleged in its complaint that H Co. had stifled the plaintiff's ability to compete with other gasoline retail stations, causing it to incur losses in sales volumes and profits, by charging unreasonably high wholesale gasoline prices. Five months after the plaintiff filed a claim for a jury trial, H Co. objected on the ground that the dealer agreements contained express waivers of the plaintiff's right to a jury trial. Approximately one year later, the court conducted an evidentiary hearing and sustained the objection, concluding that the plaintiff had failed to meet its burden of establishing a lack of intent to be bound by the jury trial waivers. A trial to the court commenced approximately two months later, during which the plaintiff argued that it had proved damages based on a summary of operations for its gas stations that listed each station's annual sales volume, profit, and income. The trial court determined that the summary of operations reflected that the plaintiff's profit per gallon during the years in question was less than the eight cents per gallon that H Co. had guaranteed, and, consequently, the plaintiff had sustained a shortfall. The court rendered judgment in favor of H Co. on all counts of the complaint, finding that, even if the issues of liability and causation had been decided in the plaintiff's favor, the plaintiff had not proven damages as to any of its causes of action with a sufficient degree of certainty. On the plaintiff's appeal to this court, held:

         1. The plaintiff could not prevail on its claim that the trial court improperly sustained H Co.'s objection to its claim for a trial by jury: a. It was not clearly erroneous for the trial court to find that the plaintiff had failed to prove, by a preponderance of the evidence, that it did not intend to be bound by the waiver provisions, that court having properly applied the relevant factors and found that the jury trial waiver provisions, which were entered into prior to litigation, were presumptively enforceable: the waivers were not inconspicuously buried in the dealer agreements, the parties' bargaining power was substantially similar, the plaintiff's general partner, who had negotiated and executed the agreements, was a sophisticated business person who made a conscious decision not to retain counsel, and the plaintiff had an opportunity to negotiate the terms of the waiver, and the court's findings with respect to the conspicuousness of the waiver provisions and the equality of the parties' bargaining power were adequately supported by the evidence adduced at the evidentiary hearing and were not clearly erroneous; moreover, although the plaintiff claimed that there was a substantial inequality of bargaining power that weighed against enforcement of the waiver provisions, any pattern of coercive behavior by petroleum product suppliers prior to the enactment of that act had no bearing on whether H Co. engaged in any such conduct in the present case, and the court's finding that the parties enjoyed substantially similar bargaining power during the negotiations of the dealer agreements was not rendered clearly erroneous merely because the waiver provisions were negotiated as part of the franchise agreements.

         b. The jury trial waivers were not void under §§ 42-133l and 42-133n of the act, which provide that a franchise agreement cannot waive a franchisee's right to bring an action in Superior Court for a violation of the act; the waivers here did not prevent the plaintiff from bringing an action against H Co., and, by its express terms, § 42-133n (a) merely secures the right of a franchisee to bring an action for violations of the act and is silent as to the franchisee's right to have that action decided by a jury rather than by a judge.

         c. The trial court did not abuse its discretion by failing to overrule H Co.'s objection to the plaintiff's jury trial claim on the ground that the objection was not timely filed, as the plaintiff cited no appellate decision or rule of practice establishing a time limitation on the filing of an objection to a jury trial claim; furthermore, the plaintiff was not unfairly prejudiced with respect to its trial preparation by the timing of H Co.'s objection or the trial court's ruling thereon, as the plaintiff had ample opportunity to obtain an earlier, prompt evidentiary hearing and resolution of the waiver issue, far in advance of the start of trial, but failed to do so.

         2. The trial court's finding that the plaintiff had failed to present sufficient evidence to establish its damages with reasonable certainty was clearly erroneous and not supported by the record: for purposes of the counts of the complaint alleging violations of the act and breach of the implied covenant of good faith and fair dealing, the trial court's finding that the plaintiff had not provided the court with the evidence it would need to compute damages was clearly erroneous, as it was inconsistent with the court's prior statement that the plaintiff's summary of operations reflected a certain amount of lost profits, which obligated the court to find that the plaintiff had proven some damages with reasonable certainty, and the court improperly conflated the question of damages with the question of causation, as the reasoning it used plainly hinged on whether the plaintiff's lost profits and sales volumes were caused by H Co.'s allegedly improper conduct, which was an improper basis for concluding that the plaintiff failed to prove damages with reasonable certainty; moreover, the court's finding that the plaintiff's claim under CUTPA failed because it had not presented sufficient evidence of the amount of ascertainable loss was also clearly erroneous, as a loss of customers, even in the absence of an accompanying monetary value of that loss, constitutes an ascertainable loss for purposes of CUTPA, under which the plaintiff was also entitled to claim punitive damages and attorneys' fees, and to have the court exercise its discretion to award such damages.

         Procedural History

         Action to recover damages for, inter alia, the named defendant's alleged violation of the Connecticut Petroleum Product Franchise Act, and for other relief, brought to the Superior Court in the judicial district of Hartford, Complex Litigation Docket, where the complaint was withdrawn as to the defendant A. F. Forbes, Inc.; thereafter, the court, Miller, J., sustained the named defendant's objection to the plaintiff's claim for a jury trial; subsequently, the matter was tried to the court, Miller, J.; judgment for the named defendant, from which the plaintiff appealed to this court; thereafter, the court, Miller J., issued an articulation of its decision. Reversed; further proceedings.

          OPINION

          FLYNN, J.

         The plaintiff franchisee, Aldin Associates Limited Partnership, commenced this three count action against the defendant franchisor, Hess Corporation, [1] alleging that the defendant stifled the plaintiff's ability to compete with other gasoline retail stations, causing it to incur losses in sales volumes and profits, by charging unreasonably high wholesale gasoline prices in violation of the Connecticut Petroleum Product Franchise Act, General Statutes § 42-133j et seq., the implied covenant of good faith and fair dealing, and the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq. After denying the plaintiff's claim for a trial by jury on the ground that the plaintiff had executed valid written waivers of its right to a jury trial, the trial court conducted a bench trial and rendered judgment for the defendant on all three counts, finding that the plaintiff failed to prove its damages with a sufficient degree of certainty. The plaintiff appeals, claiming that the court (1) improperly denied its claim for a trial by jury, and (2) erroneously found that the plaintiff failed to prove damages as to any of its causes of action with a sufficient degree of certainty. We disagree with the plaintiff's claim with regard to the jury trial waivers, but agree that the court's finding that the plaintiff failed to prove damages with the requisite degree of certainty was clearly erroneous. Accordingly, we reverse the judgment of the trial court and remand the case for further proceedings.

         The following facts, which are either undisputed or were found by the trial court in its memorandum of decision, and procedural history are relevant to this appeal. The plaintiff acquired three gas stations in August, 2000, and a fourth in December, 2002.[2] The plaintiff operated them as the defendant's franchisee pursuant to written agreements entitled ‘‘Dealer Agreement Gasoline Station'' (dealer agreements). Each dealer agreement[3] required the plaintiff to purchase gasoline and other products exclusively from the defendant, to be resold by the plaintiff at retail prices. With respect to the defendant's pricing of wholesale gasoline-a hotly contested issue throughout this case-the dealer agreements required the defendant to sell gasoline to the plaintiff at ‘‘dealer tankwagon prices, '' which were to be determined by the defendant on the basis of the prices of competitors in the marketing area of each station at the time of delivery. Each of the dealer agreements also contained a clause providing that the parties ‘‘waive any right they may have to a jury trial in any disputes hereunder.''

         The plaintiff commenced this lawsuit in December, 2010, alleging that, around 2005, the defendant began charging dealer tankwagon prices that were arbitrary, unreasonable, and substantially more expensive than the wholesale gasoline prices it was charging to the plaintiff's competitors. The plaintiff asserted that the increases to dealer tankwagon prices put each of its four stations at a substantial competitive disadvantage because, with higher wholesale prices, the stations could no longer profitably charge retail prices that were cheap enough relative to their competitors' prices to attract customers. The improper pricing, the plaintiff asserted, caused it to incur losses in sales volumes and profits. The plaintiff's three count amended complaint alleged that the defendant's conduct violated several provisions of the Connecticut Petroleum Product Franchise Act, specifically, General Statutes § 42-133l (f) (5), (6), and (7), [4] the implied covenant of good faith and fair dealing, and CUTPA.

         On April 11, 2011, the plaintiff filed a claim for a trial by jury. The defendant objected on the ground that the dealer agreements contained express waivers of the plaintiff's right to a jury trial and that, pursuant to L & R Realty v. Connecticut National Bank, 246 Conn. 1, 16, 715 A.2d 748 (1998), such waivers are presumptively valid. The court held an evidentiary hearing on October 16, 2012, and found that the plaintiff had failed to carry its burden of proving that the waivers were unenforceable. Accordingly, the court sustained the defendant's objection to the plaintiff's request for a trial by jury and denied the plaintiff's subsequent motion for reconsideration.

         The court conducted a bench trial that commenced on December 11, 2012, and concluded on December 10, 2013. Following the parties' submissions of post trial briefs and proposed findings of fact, the court issued a memorandum of decision on July 20, 2015, finding for the defendant on all counts of the complaint. Specifically, the court found that the plaintiff failed to prove damages with a sufficient degree of certainty. The court rendered a judgment in accordance with that decision, and this appeal followed. Additional facts and procedural history will be set forth where necessary.

         I

         We first address the plaintiff's claim that the court improperly sustained the defendant's objection to its claim for a jury trial. In support of this claim, the plaintiff argues that (1) the court erroneously concluded, on the basis of the evidence adduced at the October 16, 2012 evidentiary hearing, that the plaintiff failed to demonstrate that it did not intend to waive its jury trial rights, (2) the express jury trial waivers in the dealer agreements were void as a matter of law under § 42-133l (j), [5] and (3) the court abused its discretion by failing to deny the defendant's objection to the jury trial claim on grounds of untimeliness. We address these arguments in turn.

         A

         The plaintiff first argues that the court erred in finding that it failed to carry its burden of demonstrating that it did not intend to be bound by the jury trial waiver provisions. We disagree.

         Section 31of each dealer agreement, entitled ‘‘Venue'' and located on the last page just the parties' signature lines, provides as follows: ‘‘The rights of the parties under this Agreement will be governed by the federal law of the district in which the Station is located. All disputes will be heard in the U.S. District Court and the prevailing party will be entitled to recover its attorneys' fees from the other party. Both parties waive any right they may have to a jury trial in any disputes hereunder.''[6] (Emphasis added.)

         On April 11, 2011, the plaintiff filed a claim for a trial by jury. The defendant filed an objection asserting that, on the basis of § 31 of the dealer agreements, the plaintiff waived its right to a trial by jury. In a ‘‘supplemental reply'' dated October 3, 2012, the plaintiff argued that, on the basis of the factors set forth in L & R Realty v. Connecticut National Bank, supra, 246 Conn. 15, the jury trial waivers were unenforceable because they were not executed knowingly and voluntarily. In support oft his argument, the plaintiff submitted an affidavit from David Savin, the plaintiff's general partner who negotiated and executed the dealer agreements, wherein Savin averred that he ‘‘did not review the so-called venue paragraph and was not aware of the jury trial waiver, '' that the plaintiff ‘‘was not represented by an attorney to review the agreements, '' that the plaintiff ‘‘did not negotiate any terms of the agreements, ''[7] and that he ‘‘executed the agreements as they were presented . . . without changes and without any discussion as to the language in the agreements.'' The plaintiff asserted that an evidentiary hearing was necessary to resolve the issue of whether the waivers were executed knowingly and voluntarily.

         The court conducted an evidentiary hearing on October 16, 2012, at which Savin testified for the plaintiff and Michael McAfee, the defendant's manager of retail administration, testified for the defendant. Ruling from the bench, the court sustained the defendant's objection to the jury trial claim. Relying on the L & R Realty factors, the court concluded that express contractual jury trial waivers like the ones at issue in the present case are ‘‘presumptively enforceable, '' and that ‘‘[t]he evidence . . . has not established any reason why th[e] waiver[s] should not be enforced.'' In support of this conclusion, the court found: ‘‘The waiver[s] . . . [were] not buried in the [dealer] agreement[s]. [They weren't] as conspicuous as everyone might like, but [they are] not buried. [They weren't] designed to be hidden. In any event, it is important to remember that [these were] commercial contract[s] between two parties. I'm not going to say [that the parties] were of exactly equal bargaining power, but they were in substantially similar bargaining power. Neither one was in a position to claim that it could be disadvantaged by the other.

         ‘‘It's clear that . . . Savin didn't have counsel to review the agreement[s], but that was his choice. . . . I think that [Savin has] more experience reading contracts than most attorneys do in all probability. But there was a conscious decision made by a sophisticated business person not to have counsel review the document[s].

         ‘‘There is no other evidence which indicates a lack of intent by either party to be bound by this waiver. The evidence that there [were] negotiations between the parties to the dealer agreement[s] . . . supports the defendant, not the plaintiff. If the plaintiff had a problem with the jury trial waiver[s], [they] might well have been negotiated. In any event, other things in the contract were negotiated. [The waivers] could have been negotiated.'' Accordingly, the court sustained the defendant's objection to the plaintiff's claim for a trial by jury and ordered the case to be tried before the court.

         The plaintiff claims that the court erred in concluding that it failed to meet its burden of establishing its lack of intent to be bound by the jury trial waiver provisions. Specifically, the plaintiff argues that the waivers are inconspicuous because they are located within paragraphs misleadingly entitled ‘‘Venue, '' are not in bold lettering or a different typeface, and generally fail to ‘‘call attention to the fact that the paragraph contains a waiver of a constitutional right.'' The plaintiff also appears to assert that, because the Connecticut Petroleum Product Franchise Act was enacted for the purpose of preventing franchisees from being ...


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