TOWN OF NEW HARTFORD et al. v. CONNECTICUT RESOURCES RECOVERY AUTHORITY et al., SC 17879/17880/17946/18109/18110

Judicial District of Waterbury

 

      Contracts; Unjust Enrichment; Whether Gag Order Was Unconstitutional; Whether Contempt Order Violated Defendant's Due Process Rights to Fair Notice and Meaningful Opportunity to Prepare Defense; Whether Defendant Breached Contracts By Increasing Service Charges; Whether Contracts Barred Unjust Enrichment Claim; Whether Court Properly Ordered Defendant to Reduce Service Fees in 2008 Budget and Properly Awarded Attorney's Fees.  The Connecticut Resources Recovery Authority (CRRA), which was created to provide solid waste management services to Connecticut municipalities, contracted with seventy municipalities in the greater Hartford area to convert their solid waste into energy in exchange for a service charge or "tip fee" per ton until the year 2012.  In 2004, the town of New Hartford, individually and on behalf of the seventy greater Hartford municipalities, commenced this class action against CRRA, alleging breach of contract and unjust enrichment, among other things.  The plaintiffs asserted that CRRA had breached its contractual obligations by improperly retaining yearly surpluses and improperly entering into an illegal and ill-fated loan transaction with Enron Corporation, which has caused them to pay increased tipping fees.  They also alleged that CRRA was unjustly enriched because it had retained certain settlement proceeds that it recovered as a result of lawsuits brought against a number of financial institutions and law firms that were involved in the Enron transaction.  The trial court issued a gag order precluding CRRA from communicating with the plaintiffs regarding the lawsuit.  Shortly thereafter, the plaintiffs applied for a prejudgment remedy.  While that application was pending, CRRA posted a letter on its website regarding the lawsuit.  The plaintiffs then filed a motion for contempt, arguing that CRRA violated the gag order.  At the hearing on the plaintiffs' application for a prejudgment remedy, the court also entertained the motion for contempt.  It ultimately granted the motion for contempt and the application for a prejudgment remedy, attaching $69.8 million worth of property held by CRRA.  As to its contempt finding, the court determined that CRRA made misleading statements in violation of the gag order in an effort to dissuade the plaintiffs from participating in the action.  The court then issued a second gag order barring the parties from having any communication concerning the lawsuit.  In response to the prejudgment attachment order, CRRA's board of directors adopted a revised 2008 budget.  The matter then proceeded to trial, but before the court rendered its judgment, the plaintiffs moved to enjoin the revised 2008 budget on the ground that it improperly increased certain expenses and decreased revenues.  The parties subsequently agreed to defer a hearing on this motion until the court rendered a judgment on the plaintiffs' claims, and the court allowed the plaintiffs to amend their complaint in order to challenge the 2008 budget.  In June of 2007, the court rendered a judgment for the plaintiffs on their breach of contract and unjust enrichment claims.  The court determined that the Enron transaction was illegal, ultra vires, and outside CRRA's statutory authority.  Hence, it concluded that CRRA breached its contractual obligations in consummating the Enron transaction and in retaining year-end surpluses.  In addition, it found that CRRA was unjustly enriched because it had retained the settlement proceeds from its Enron-related lawsuits rather than using the proceeds to compensate the plaintiffs for their losses.  The court therefore imposed a constructive trust on the settlement proceeds and on various funds that CRRA had wrongly retained.  It further ordered that the trust forward $35,873,732 to the plaintiffs immediately as restitution for the increased tipping fees and for CRRA's wrongful retention of their money.  Moreover, it enjoined CRRA from imposing any further costs of the Enron transaction on the plaintiffs.  Thereafter, the court entertained the plaintiffs' motion to enjoin the 2008 budget, and it ordered CRRA to adjust the budget by $6,710,000, and to reduce its tipping fees accordingly.  The court next awarded the plaintiffs approximately $9 million in attorney's fees.  In these appeals, the Supreme Court will determine whether the trial court properly (1) found CRRA in contempt of the gag order, (2) granted the plaintiffs' application for a prejudgment remedy, (3) found in favor of the plaintiffs on the breach of contract and unjust enrichment claims, (4) ordered CRRA to reduce its tipping fees in the 2008 budget and (5) awarded the plaintiffs attorney's fees.