Shoreline Communications, Inc. v. Norwich Taxi, LLC

797 A.2d 1165, 70 Conn. App. 60, 2002 Conn. App. LEXIS 287
CourtConnecticut Appellate Court
DecidedMay 28, 2002
DocketAC 21896
StatusPublished
Cited by15 cases

This text of 797 A.2d 1165 (Shoreline Communications, Inc. v. Norwich Taxi, LLC) is published on Counsel Stack Legal Research, covering Connecticut Appellate Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shoreline Communications, Inc. v. Norwich Taxi, LLC, 797 A.2d 1165, 70 Conn. App. 60, 2002 Conn. App. LEXIS 287 (Colo. Ct. App. 2002).

Opinion

Opinion

PETERS, J.

This appeal concerns the rights of an assignee to terminate a license agreement when it discovers, after the assignment, that it had been mistaken in its assumption that the licensed property would suit its commercial needs. The trial court held that the assignee had assumed the risk of its unilateral mistake because it had failed to inspect the licensor’s premises before assuming the license agreement. Having assumed the risk, the assignee was obligated to pay license fees during the unexpired term of the license agreement. We agree and affirm the judgment of the trial court.

The plaintiff, Shoreline Communications, Inc., the owner of a radio communications tower, sued the defendant, Norwich Taxi, LLC, to recover unpaid license fees due under a license agreement with the defendant’s assignor, Eagle Cab Corporation (Eagle). Eagle had assigned its contractual rights to use space on the tower to the defendant, which unconditionally assumed Eagle’s obligations to the plaintiff. The defendant declined to pay the license fees once it became evident that, contrary to its expectations, its equipment could not make profitable use of the tower space. Characterizing the defendant’s disappointment as a unilat[62]*62eral mistake, the court held that the defendant’s mistake did not authorize its unilateral rescission of the license agreement.1 Accordingly, the court rendered judgment in favor of the plaintiff, awarding it damages in the amount of $12,600 for the unpaid license fees, as well as interest of $273.92 and costs. The defendant has appealed.

The trial court’s memorandum of decision recites the relevant facts, which are undisputed. On October 30, 1997, the plaintiff and Eagle entered into a five year license agreement that enabled Eagle to use its radio equipment at a designated space on the plaintiffs radio transmission tower in order to pursue its taxicab business. The license agreement granted Eagle the right to use the space without restriction to any particular usage. In return, Eagle undertook to pay stipulated monthly payments to the plaintiff. Eagle encountered no problems in its use of the transmission tower and promptly made license payments as they became due.

On May 20, 1999, Eagle assigned the license agreement to the defendant. Without reserving any additional rights, the defendant informed the plaintiff that it had assumed the rights and obligations stated in the [63]*63license agreement. As assignee, it made payments to the plaintiff until the end of October of that year.

Between May, 1999, and October, 1999, the defendant made a good faith effort to install its radio equipment on the plaintiffs tower. Because Eagle’s installation had encountered no difficulties, the defendant had not anticipated that its own installation would be problematic.

At the time of the assignment, the defendant did not know whether it could use Eagle’s equipment but it did know that its own taxicab service differed from Eagle’s because its service area was wider and its business was conducted at a location further away from the plaintiffs tower. Despite this uncertainty, the defendant unconditionally assumed the rights and duties set out in the license agreement. From May to October, 1999, the defendant attempted, unsuccessfully, to use the tower space. It discovered that its use of the plaintiffs tower space would have required the services of two different telephone companies, with unacceptable uncertainties about prompt detection and remediation of transmission failures.

When these facts came to light, the defendant informed the plaintiff that the licensing agreement was terminated. The plaintiff promptly replied that the defendant had no right to terminate the agreement unilaterally. The plaintiff reminded the defendant of the provision of the agreement that required the payment of license fees until the expiration of the agreement on October 31, 2002. It demanded prompt payment of the fees already overdue. Nevertheless, the defendant stopped making payments as of November 1, 1999.

At the time when the defendant assumed liability under the licensing agreement, it had taken no steps to ascertain whether installation of its equipment would be feasible. The defendant assumed that Eagle’s favor[64]*64able experience with Eagle’s equipment would carry over to the defendant’s own operations. Despite known differences between its business operations and that of Eagle, the defendant did not avail itself of the opportunity to arrange for a preassignment inspection of the tower space.2

On the basis of these findings of fact, the court concluded that, as a matter of law, the defendant had failed to establish that its mistaken assumptions entitled it to terminate the license agreement without the assent of the plaintiff. Relying on 1 Restatement (Second), Contracts §§ 153 and 154, pp. 394, 402 (1981),3 the court held that the defendant had assumed the risk of a misfit between the plaintiffs tower space and the defendant’s equipment. It had assumed that risk, the court held, because prior to becoming Eagle’s assignee, it had relied on Eagle’s experience without ascertaining whether its own greater needs might encounter difficulties that Eagle had not experienced.

The defendant challenges the court’s conclusion on three grounds. Conceding that it made a unilateral mistake, the defendant maintains that the mistake termi[65]*65nated the licensing agreement because (1) it did not bear the risk of that mistake, (2) enforcement of an agreement that is of no benefit to the defendant is unconscionable and (3) prompt repudiation of the agreement did not injure the plaintiff because it could be restored to the rights it had before the assignment.

Because the claims that the defendant has raised challenge the trial court’s conclusions of law, our review is plenary. See Pequonnock Yacht Club, Inc. v. Bridgeport, 259 Conn. 592, 598, 790 A.2d 1178 (2002); Olson v. Accessory Controls & Equipment Corp., 254 Conn. 145, 156, 757 A.2d 14 (2000); Hunnicutt v. Commissioner of Correction, 67 Conn. App. 65, 68, 787 A.2d 22 (2001). We conclude that none of these claims is persuasive.

I

THE RISK OF UNILATERAL MISTAKE

The defendant argues that it falls within various exceptions to the general rule that a unilateral mistake is not a viable basis for rescission of a bilateral contract. The defendant maintains that it did not assume the risk of incompatibility between its equipment and the plaintiffs tower because it had no reason to expect any such incompatibility and, therefore, was acting in good faith when it delayed its inquiry into such matters to a time subsequent to the assignment. We do not agree that, under the circumstances of this case, the defendant was entitled unilaterally to set aside its contract obligation to pay license fees.

As the trial court noted, the principles governing the law of mistake are set out in 1 Restatement (Second), supra, §§ 153 and 154. Under § 153, a unilateral mistake may make a contract voidable if the mistaken party “does not bear the risk of the mistake under the rule stated in § 154 . ...” 1 Restatement (Second), supra,

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Bluebook (online)
797 A.2d 1165, 70 Conn. App. 60, 2002 Conn. App. LEXIS 287, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shoreline-communications-inc-v-norwich-taxi-llc-connappct-2002.