In Plato Associates LLC v Environmental Compliance Services, 2010 Conn. LEXIS 400 (11/9/10), the plaintiff retained the defendant in 2000 to perform a phase 1and phase 2 in connection with a financing for an acquisiiton of a property and construction loan. One of the conclusions of the defendant's report was that the property did not contain an "establishment", the existence of which would have triggered compliance with the Connecticut Transfer Act (CTA).
The plaintiff closed on the construction loan and received the first advancement under the loan. During the proces of refinancing the loan in 2007, the plaintiff discovered documentation showing that a former tenant of the property had generated thousands of hazardous wastes at the site, thereby causing the property to be considered an "establishment" and triggering compliance with the CTA.
Plaintiff filed a breach of contract and malpractice claim shortly thereafter. Defendant moved for summary judgment on grounds that the breach of contract claim was barred by the six-year statute of limitations (SOL) and the malpractice claim by the applicable two-and three-year SOLs. The plaintiff argued that the seven-year SOL for professional engineering services rendered in connection with an improvement to real property applied (Conn. Gen. Stat. 52-584(a)). The trial court granted the defendant's motion and plaintiff appealed.
On appeal, the defendant's argued that (1) they had not provided "professional engineering services", (2) that any services were not provided in connection with any real estate improvements but in connection with a bank loan and (3) that the monitoring wells did not qualify as "improvements" because they added no value to the property. The Connecticut Supreme Court rejected these arguments and reversed the lower court.
On the first issue, the court found there was a genuine issue of material fact whether the services performed constituted "professional engineering services". The court noted the defendant identified itself as a professional engineer and licensed environmental professional and that the definition of "professional engineer" was broad enough to encompass the services provided by the defendant.
On the issue of the purposes of the services, the court found there was a genuine issue of material fact if the services were rendered in connection with the "planning" for improvements since the report was key to obtaining the financing to construct the improvements. The court noted that the report expressly stated that it purpose was to identify conditions that might impose environmental liability or restrict the use of the property, and did not mention that it was one to facilitate a bank loan.
Finally, the court rejected the notion that the monitoring wells could not be an "improvement" because they did not add value and were simply to to assist the plaintiff in obtaining a loan. The court said the term has been defined to include any alteration or development of property to enhance or promotes its use for a particular purposes. The court noted the construction of the wells and testimony of the plaintiff that without the wells it would not have been able to secure its financing. According, the court said it could not rule as a matter of law that the wells were not an improvement to property for purposes of the seven-year SOL.
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