Janina Capellan et al. v. Bethany R. Sullivan et al. (2011)

MEMORANDUM OF DECISION ON MOTION FOR SUMMARY JUDGMENT

This is a four-count complaint that alleges breach of contract, unjust enrichment, negligent misrepresentation and intentional misrepresentation against the defendants, Bethany Sullivan and Robert Burbank arising from a real estate transaction.   The plaintiffs Janina and Lelina Capellan allege the following facts.   On or about February 5, 2007, the plaintiffs entered into a contract to purchase real estate with the defendants for the property at 276–278 Oxford Street in Hartford, Connecticut.   At some point, the property was represented to be a three-family house by the defendants' realtor, and the property was listed as a three-family house.   The plaintiffs conducted customary due diligence, which included an appraisal, title search and verification of the property's use as a three-family house with the city of Hartford assessor's office.   The appraisal, by Michael Hamilton, estimated the value of the property, as a three-family house, at $388,000.   On March 26, 2007, the plaintiffs obtained the property through warranty deed.   On February 6, 2008, the city's department of housing and zoning department contacted the plaintiffs and informed them that under the zoning regulations the property was a two-family house.   A second appraisal, by Budofsky Appraisal Company on March 27, 2007, estimated the property's value, as a two-family house, at $335,000.

Count One alleges breach of contract;  Count Two alleges unjust enrichment;  Count Three alleges negligent misrepresentation;  Count Four alleges intentional misrepresentation.

On March 23, 2010, the defendants filed an answer and special defenses, including (1) merger doctrine, (2) the statutes of frauds, (3) contributory negligence, and (4) estoppel for failure to mitigate damages.

On April 19, 2010, the defendants filed this motion for summary judgment, claiming the absence of any material question of fact and that the merger doctrine applies to bar the plaintiffs' claims.

I

The defendants argue that the merger doctrine bars the plaintiffs' claims, pointing to paragraph ten of the contract, which specifies that the plaintiffs agreed to purchase the property subject to any municipal or zoning regulations, and paragraph thirteen of the contract, which specifies that the contract is the entire agreement and supercedes any oral or written agreements made prior to the contract.   The defendants also point to the deed itself, which states that the conveyance of the property is subject to municipal regulations, including zoning and planning regulations.

The plaintiffs argue that there is a genuine issue of material facts as to whether false representations were made by the defendants.   They cite Matyas v. Mink, 37 Conn.App. 321, 655 A.2d 1155 (1995), and Richard v. A. Waldman and Sons, Inc., 155 Conn. 343, 232 A.2d 307 (1967), for the proposition that the doctrine of merger does not apply when a contract is entered into because of misrepresentations.   The plaintiffs attached a certified copy of Janina Capellan's affidavit, which states that (1) the defendants' real estate agent represented that the property was a three-family house, (2) the realtor listed the property as a three-family house in the multiple services listing, (3) the defendants represented that the property was a three-family house, and (4) the plaintiffs relied on these representations in entering the purchase agreement.

Our Appellate Court recognizes the doctrine of merger by deed.   See Knight v. Breckheimer, 3 Conn.App. 487, 490, 489 A.2d 1066 (1985).   The general rule is that acceptance of a deed in pursuance of articles of agreement for the conveyance of land is prima facie evidence of the completion of the contract;  and all stipulations contained therein are merged in the deed.   Under this principle, the terms of the deed would automatically replace and supersede the terms of the underlying contract, absent a reservation of rights.  Mongillo v. Commissioner, 214 Conn. 225, 231, 571 A.2d 112 (1990).   However, a party seeking to avoid the merger doctrine may defeat the presumption by producing evidence of intent that certain stipulations and representations in the contract of conveyance were meant to survive the deed.   Russell v. Ambassador Property Group, LLC, Superior Court, judicial district of New Haven, Docket No., CV 07–5012598 (August 12, 2008, BeIlis, J.) [46 Conn. L. Rptr. 157].

II

As to the breach of contract claim, it.is undisputed that the closing took place and that the plaintiffs received and took possession of the deed;  that the deed states that the conveyance and acceptance of the property is “subject to any and all provisions of any ordinance, municipal regulation or public or private law, including planning and zoning regulations of the [t]own of Hartford, State of Connecticut”;  that the terms of the contract state that “Seller will transfer fee simple title to the [p]roperty to [b]uyer by a Connecticut form of [w]arranty [d]eed ․ subject to (a) any and all provisions of any ordinance, municipal regulation, or public or private law;  declarations, restrictions, covenants, and easements of record;  any state of facts an accurate survey or personal inspection of the [p]roperty might reveal;  provided that none of the above interfere with the present location of any building now located on the [p]roperty unmarketable ․”;  and finally that paragraph thirteen of the contract specifies that the contract is the entire agreement and supercedes any oral or written agreements made prior to the contract.

In Schink v. Baker, Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No., CV 99–0172704 (July 12, 2000, Karazin, J.), the plaintiffs alleged that the defendants made material misrepresentations to induce them into purchasing the property.   Notably, the misrepresentations allegations were in the first count.   In denying the defendants' motion to strike, the court noted that “since the plaintiffs incorporate all preceding allegations into all successive counts, paragraph seven of Count One of the complaint is paramount when it states that the defendants' representations were made prior to signing the contract of sale ․ Accordingly, the doctrine of merger does not apply in this context of misrepresentation.”

In the present case, the plaintiffs do not refer to a specific paragraph within the contract that has been breached;  rather, they allege breach of representations made to them prior to entering into the written contract.   Further, the plaintiffs do not properly allege a misrepresentation in their breach of contract claim to avoid the merger doctrine.   As the contract states that it is the final document and includes all terms, parol evidence of prior promises would be excluded.   Because the plaintiffs fail to allege fraud in the inducement or a misrepresentation in Count One, there is no genuine issue of material fact that the merger doctrine applies and supercedes any oral representation that are not present in the contract.   It is concluded that the breach of contract claim is barred by the merger doctrine.

III

In Count Two of the complaint, the plaintiffs allege that the defendants were unjustly enriched because the defendants received the property at a price appropriate for a three-family house, even though the defendants knew that the property was a two-family house.

Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were [benefitted], (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiffs' detriment.  Hartford Whalers Hockey Club v. Uniroyal Goodrich Tire Co., 231 Conn. 276, 283, 649 A.2d 518 (1994).   It is necessary that the plaintiff show that “the defendant was benefitted;  that is, he has received something of value.”  Providence Electric Co., v. Sutton Place, Inc., 161 Conn. 242, 246, 287 A.2d 379 (1971).  “With no other test than what, under a given set of circumstances, is just or unjust, equitable or inequitable, conscionable or unconscionable, it becomes necessary in any case where the benefit of the doctrine is claimed, to examine the circumstances and the conduct of the parties and apply this standard ․ Furthermore, the determinations of whether a particular failure to pay was unjust and whether the defendant was [benefitted] are essentially factual findings for the trial court ․” Hartford Whalers Hockey Club v. Uniroyal Goodrich Tire Co., supra, 231 Conn. 282–83.

This count presents a genuine issue of material fact.

IV

Count Three of the plaintiffs' complaint alleges that the defendants knew or should have known that the property was a two-family house that the plaintiffs relied on the defendants' representations that it was a three-family house, and that the plaintiffs suffered monetary damages as a result of the reliance on the misrepresentations.   Janina Capellan's affidavit supports these allegations.

Traditionally, an action for negligent misrepresentation requires the plaintiff to establish (1) that the defendant made a misrepresentation of fact;  (2) that the defendant knew or should have known was false;  and (3) that the plaintiff reasonably relied on the misrepresentation;  and (4) suffered pecuniary harm as a result.  Nazami v. Patrons Mutual Ins. Co., 280 Conn. 619, 626, 910 A.2d 209 (2006).   Liability for negligent misrepresentation may be placed on an individual when there has been a failure to disclose known facts and, in addition thereto, a request or an occasion or a circumstance which imposes a duty to speak.  “A party who assumes to speak must make full and fair disclosure as to the matters about which he assumes to speak.”   Johnnycake Mountain Associates v. Ochs, supra, 104 Conn.App. 206.

It has been held that a claim that a seller's intentional, reckless or negligent misrepresentations caused a buyer to enter into a contract for the sale of property is a valid cause of action, even if the contract that the parties entered into constituted the entire agreement between the parties and the contract included a clause disclaiming any representations by the seller as to the condition of the property.  Martinez v. Zovich, 87 Conn.App. 766, 778, 867 A.2d 149, cert. denied, 274 Conn. 908, 876 A.2d 1202 (2005).   Allegations such as misrepresentation and fraud present issues of fact.   Jaser v. Fischer, 65 Conn.App.349, 358, 783 A.2d 28 (2001).

In the present case, the complaint states that the Hartford assessor's office verified that the property may be used as a three-family house.   By affidavit the plaintiff claims that several representations were made to them regarding the property's classification as a three-family house by the defendants and that the plaintiffs relied on those representations in signing the contract to purchase the property.   A claim for negligent misrepresentation survives the merger doctrine.  Martinez v. Zovich, supra, 87 Conn.App. 778.   There appears to be a genuine issue of material fact as to whether the defendants exercised the care or competence of a reasonable person in obtaining the correct information with regard to the classification of the property.

V

A claim of intentional misrepresentation is equivalent to a claim for fraudulent misrepresentation.   Oddo v. Warren, Superior Court, judicial district of New Britain, Docket No., CV 07–5003533 (January 3, 2008, Trombly, J.).   The essential elements of a cause of action in fraudulent misrepresentation are:  (1) a false representation was made as a statement of fact;  (2) it was untrue and known to be untrue by the party making it;  (3) it was made to induce the other party to act upon it;  and (4) the other party did so act upon the false representation to his injury.  Phillips v. Phillips, 101 Conn.App. 65, 71, 922 A.2d 1100 (2007).   Fraud and misrepresentation cannot be easily defined but they present, however, issues of fact.

CONCLUSION

Defendants' motion for summary judgment is granted as to Count One and denied as to the remaining counts.

Wagner, J., JTR (

Wagner, Jerry, J.T.R.