FCM GROUP, INC. v. JEFFREY T. MILLER et al., SC 18074

Judicial District of Stamford-Norwalk

 

      Contracts; Corporations; Mechanic's Liens; Scope of Attorney's Fees for Foreclosure Pursuant to General Statutes § 52-249; Whether Nonparty to Contract for Construction of Residence can be Liable for Breach as a Beneficial Owner of Property.  FCM Group, Inc. (FCM), by its president and sole employee, Frank Mercede, III, contracted with Jeffrey Miller to build a house for Miller and his wife, Cheryl Miller.  After the construction was mostly completed, the Millers informed FCM that they would not make any more payments.  Subsequently, FCM initiated this action against the Millers, alleging wrongful termination of the contract and seeking to foreclose on two mechanic's liens that it had filed on the property to secure $343,351 for damages due to delay and $30,761 for the contract balance.  The defendants filed counterclaims against FCM, and, after citing in Frank Mercede, III, they also asserted several claims against him.  They alleged that Cheryl Miller, who did not sign the contract and was not a record owner of the property, was not liable under the contract, that the mechanic's liens were invalid and that FCM breached the contract.  The matter was tried before an attorney trial referee who found, among other things, that Cheryl Miller was a beneficial and equitable owner of the property due to her intimate involvement in the project; that the Millers ordered numerous changes to the contract, which they were obligated to pay for pursuant to the contract; and that the Millers wrongfully terminated the contract.  The referee determined that FCM was entitled to recover $3660 for loss of profits and $232,425 for delay damages.  He also found that the mechanic's lien for the contract balance was valid but that the lien for delay damages was invalid under General Statutes § 49-36 because the amount of the lien exceeded the contract price. Having found the lien invalid, the referee pierced the corporate veil and found Mercede liable for damages in the form of a setoff of $5000 under General Statutes § 49-8, which allows damages for an ineffective attachment.  Thereafter, the court rendered judgment in accordance with the referee's report, referred the matter to the foreclosure calendar and rendered a judgment of strict foreclosure of the lien for the contract balance.  It also awarded attorney's fees of $64,405 to the plaintiff under General Statutes § 52-249, which permits attorney's fee awards in foreclosure actions.  The Millers appeal, claiming that they did not owe a contract balance and, consequently, the foreclosure of the contract balance lien and the ancillary attorney's fees award were improper.  They further allege that, even if the foreclosure judgment was valid, the court improperly awarded attorney's fees for all the work performed on the case, instead of limiting the award to the work related to the foreclosure of the contract balance lien.  The Millers also claim that the court employed an incorrect measure of damages as to the delay damages and improperly found Cheryl Miller, a nonparty to the contract, liable for breaching that contract.  FCM and Mercede cross appeal, contending that the court improperly invalidated the mechanic's lien for delay damages and improperly pierced the corporate veil as to Mercede.