Scott A. Berger et al. v. William H. Sias et al. (2013)

MEMORANDUM OF DECISION

The plaintiffs, Scott A. Berger and Stacey D. Berger, contend that a document entitled “Binder of Sale (Contract)” is an enforceable contract for the sale of real estate and seek a court order compelling the defendants, William H. Sias, Donald S. Sias, and Lucretia M. Sias, to comply with the terms of the agreement and convey to the Bergers the residential property at 14 Minute Man Hill, Westport, that is the subject of the binder agreement.   The defendants, on the other hand, claim that the parties did not intend the binder agreement to be an enforceable contract.   For the reasons state below, this court finds the issues in favor of the plaintiffs.

I. Facts

This court finds the following facts.   The Bergers for several years had been looking for a home in the Compo Beach area of Westport, a neighborhood they find to be “highly desirable.”   On April 15, 2013, they saw an advertisement for the sale of a house in the Compo Beach area at 14 Minute Man Hill, contacted the real estate broker who had listed the home for sale, and viewed the house that day with the broker.   The house is 6,000 square feet in size and is located on a cul-de-sac on a 1.45–acre site that affords occupants of the house views of Long Island Sound.   At the end of a two-hour inspection, the Bergers decided that day they wanted to purchase the home.

The three defendants acquired the property in 2008 from their parents by way of quit-claim deed.   The house is vacant.   None of the defendants have lived there.   In October of 2012, the defendants listed the property for sale with Nicholas H. Fingelly Real Estate Agency with the assistance of Roxanne Martin, who is a broker employed by Fingelly.   At the time the defendants listed the property, they decided, in conformance with their parents' wishes, that Attorney S. Antoinette Morton, a family friend, would be the “closing attorney.”   A few months before the Bergers looked at the house, the defendants discussed the sale process with Roxanne Martin and Attorney Morton.

The defendants initially listed the house for sale at $2,990,00.   They lowered the price in January of 2013 to $2,785,000.   On April 15, 2013, the defendants lowered the price to $2,495,000.   The real estate agent, Roxanne Martin, so advised the plaintiffs.

The plaintiffs told Martin on April 15, 2013, that they wanted to make a cash offer of $2.1 million, with no mortgage contingency, an inspection within five business days of acceptance of offer, and a closing within thirty days.   Martin told the plaintiffs that she needed to have a written offer of purchase to present to the sellers.   She hand wrote the plaintiffs' “offer to Purchase,” which Scott Berger signed (Exhibit 2).   Martin immediately notified the defendants of the offer.

The three defendants live out-of-state.   Each defendant holds a graduate degree.   They jointly decide what should be done with the property.   Lucretia Sias would communicate with her brothers, relay or fax information to them, and then communicate their joint decision to Martin or Attorney Morton.

Lucretia Sias told Martin that she and her brothers would not respond to the Bergers' offer until she and her brothers were presented with a formal, written offer that contained all essential terms.   They wanted a document that could be signed by all the parties.

On April 16, 2013, Martin prepared a document entitled “Binder of Sale (Contract)” that incorporated the terms of the plaintiffs' written offer.   Martin used a form approved by the Greater Fairfield Board of Realtors.   The binder that Martin prepared contains all the material terms for the purchase and sale of the property;  it sets forth a description of the property, price, closing date of May 16, 2013, deposit requirements, type of deed, and how adjustments for taxes, assessments, and water charges are to be handled.   The binder provides for delivery of the balance of a ten percent deposit within ten days of acceptance of the offer and a closing within thirty days.   Noteworthy, in light of the parties' subsequent dispute, is that the document provides for a home inspection within five business days of acceptance of offer.

After the Bergers signed the document, Martin faxed it to Lucretia Sias so that she and her brothers could consider the terms of the offer.   On the same day, Scott Berger delivered an initial deposit check in the amount of $21,000 to the Fingelly agency.   The Bergers also signed and faxed to Martin various property disclosure reports that the sellers had provided and wanted signed and returned before they responded to the plaintiffs' offer.

Lucretia Sias told Martin that she and her brothers would not agree to a $2,100,000 sale price.   After going back and forth—$2,400,000;  $2,250,000;  $2,350,000—the Siases and Bergers agreed on April 17, 2013, to a price of $2,350,000.

Plaintiff Scott Berger is an attorney engaged in a commercial real estate practice in New York. He was aware that a broker's open-house was scheduled at the property on April 18, 2013.   He did not want the written offer “shopped” at the open house and, therefore, wanted the three defendants to sign the binder agreement so that he would have a formal, binding agreement in effect before the open house.

The Siases wanted the Bergers to approve the price change before they signed the Binder of Sale (Contract).   To accomplish the parties' mutual objective, Lucretia Sias changed the price on the proposed binder agreement to the agreed upon price of $2,350,000, initialed the change, scanned and emailed the document to each brother for printing, initialing, scanning and emailing in accordance with their established protocol.   The Siases returned the initialed document to Martin who in turn presented it to the Bergers so that they could initial the price change.   After the Bergers initialed the change, the document was returned to the Siases for their signatures.   On the afternoon of April 18, after the open house, Martin gave the Bergers a fully executed Binder of Sale (Contract) (Exhibit 9).   While the printing on the fully executed document (Exhibit 9) is somewhat degraded because of the repeated scanning and copying, the parties agree that a previous version of the document (Exhibit 7) sets forth in legible form all the terms except the final price, which the parties agree is set forth in the final version (Exhibit 9) at $2,350,000.

As of the afternoon of April 18, the Bergers believe there was a binding agreement for the purchase and sale of the property.   Martin believe the parties had an agreement.   Attorney Morton believe the parties had a “meeting of the minds” at that time.   Lucretia Sias believed that she and her brothers had reached an agreement with the Bergers and were obligated to proceed in good faith with the transaction.   The additional deposit, which was required under the terms of the agreement, was delivered by the date required in the binder.

On April 21, 2013, Martin received another offer to purchase the Siases' house.   Peter and Gloria Nussbaum submitted an offer through a broker to purchase the property for $2,600,000 (Exhibits 10, 11, and 12), which was $100,000 over the asking price.   This offer provided for “formal contracts” by April 23, 2013, and proposed a closing on April 30, 2013.   This offer was not disclosed to the Bergers.

On April 23, 2013, Attorney Morton delivered to Attorney Neil Lippman, whom the Bergers had selected to represent them at the closing, a proposed sale agreement together with a cover letter.  (Exhibits 13 and 14.)   Attorney Morton prepared this agreement using a “Standard Form Agreement” approved by the Greater Bridgeport Bar Association, Inc. The terms of this agreement are consistent with the terms of the Binder of Sale (Contract) (Exhibit 9).   At the time Attorney Morton prepared this document, she was aware of the Nussbaums' offer.

On April 23 and 24, 2013, the Siases signed a Dual Agency form (Exhibit 3) that the Bergers had signed on April 15, 2013, at Martin's request.   This document allows Martin to represent the sellers and buyers in the transaction.

The Nussbaums on April 24, 2013, withdrew their offer since it had not been accepted within the time stipulated by the Nussbaums.   Their agent told Martin via email:  “If the property should free up, please let us know as they remain interested.”  (Exhibit 15.)

On April 24, 2013, the Sias's house was inspected by a person retained by Scott Berger.   This date was the earliest date that the inspector was available.   The inspection took approximately five hours.   Scott Berger was present throughout the five-hour period.   Stacey Berger and Ms. Martin were present during part of the inspection process.   The inspector pointed out numerous deficiencies that had not been apparent to the Bergers or Martin.   At the conclusion of the inspection, Scott Berger and Martin discussed the results and the possibility that the Siases might agree to some concession as a result of the newly discovered defects.   Martin told Berger that he had to “come up with a number” and needed to speak to his attorney.

During the morning of April 25, 2013, Attorney Lippman sent an email to Attorney Morton concerning the inspection results (Exhibit 18).   The attorneys spoke at noon that day over the telephone.   Attorney Lippman inquired whether the Siases would consider offering a $250,000 closing credit on account of the inspection results.   Attorney Morton said:  “You are making a counteroffer.”   Attorney Lippman replied:  “No, I am not.”

Attorney Morton notified Lucretia Sias of the request.   Lucretia Sias, after speaking with her brothers, called Attorney Morton back and said:  “No thank you.”   Attorney Morton at 12:33 p.m. on April 25 notified Attorney Lippman by email that the “counteroffer” had been rejected and that the Fingelly agency would be instructed to return the Bergers' deposit check (See Exhibit 20).   Within minutes of Attorney Lippman's receiving Attorney Morton's email, Attorney Lippman telephoned her and reiterated his position that there had not been a counteroffer.

Attorney Lippman notified Scott Berger of the Siases's position.   After learning about the attorneys' discussion, Scott Berger called Martin and told her there was a contract in place between the Siases and the Bergers and that the sellers could not just call the deal off.   Martin told him that she had been instructed to return the Berger deposit check.   Scott Berger told her not to return the deposit check.   Scott Berger asked her if the Siases had received another offer.   Martin did not answer this inquiry.

The same day, April 25, 2013, Attorney Morton was notified by the Nussbaums' broker that they had submitted a new offer (Exhibit 16).   Their offer-price remained at $2,600,000 with no mortgage or inspection contingencies, “Formal Contracts” to be signed “ASAP,” balance of deposit to be paid on execution of “Formal Contracts,” and a closing to be held on or before May 14, 2013.   That afternoon Attorney Morton sent the Siases an unsigned real estate contract that set forth the terms of a proposed sale to the Nussbaums and asked them to sign the document.

On the morning of April 26, 2013, Attorney Lippman sent an email to Attorney Morton stating in part that “I understand ․ that your clients do not wish to make any reduction in the price due to the inspection issues ․ [W]e continue to view the binder/contract as binding on the parties ․” (Exhibit 22).   On the afternoon of April 26, Attorney Lippman sent Attorney Morton by hand and email “two counterparts of the long form contract you presented which have been executed by the buyers in the form you prepared for the purchase of the ․ property and a check payable to you as trustee in the amount of $214,000.   The initial $21,000 deposit is still held in the account of Nicholas Fingelly and any check attempting to disburse those funds back to the buyers will be returned to the broker.”  (Exhibits 23, 24, and 25.)

On Monday, April 29, 2013, Scott Berger received by mail from Fingelly Real Estate Agency a check for $21,000.   Scott Berger immediately mailed the check back to Fingelly.   The agency still holds the funds in a bank account.

On Monday, April 29, 2013, Attorney Morton forwarded to the Nussbaums' attorney a contract for the sale of the property to Peter and Gloria Nussbaum.   The document had been signed by the Nussbaums over the weekend.

Later on Monday, April 29, 2013, the Bergers initiated this litigation.   Neither the Bergers nor Attorney Lippman were aware of the Nussbaums' offers but had decided litigation was necessary to enforce the Berger's agreement to purchase the property.   Attorney Lippman notified Attorney Morton by email of the litigation and his position that his “clients have a valid and enforceable contract and are ready, willing and able to close the transaction” and “intend to enforce their rights.”  (Exhibit 30.)

On May 13, 2013, Attorney Lippman sent an email (Exhibit 34) to Attorney Morton notifying her “we are moving towards an anticipated closing on May 16, 2013.”   On May 15, 2013, Attorney Lippman sent another email to Attorney Morton together with closing documents.   On May 16, 2013, Attorney Lippman and Scott Berger appeared at Attorney Morton's office prepared for the closing.   Stacey Berger was nearby on telephone notice.   Attorney Lippman presented a bank check to Attorney Morton for the balance due the sellers (Exhibit 36).   Attorney Morton refused to accept the check.   The next day, May 17, 2013, Attorney Morton returned to Attorney Lippman the Bergers' additional deposit check for $214,000, which she had been holding since Scott Berger delivered it to her on April 26, 2013 (Exhibit 37).

The Bergers have proven that they, at all relevant times, have been ready, able and willing to purchase the property for $2,350,000.   They have had sufficient liquid funds available in an investment account (Exhibit 38) since the day the Binder of Sale (Contract) was fully executed.

II. Discussion

The plaintiffs and defendants first dispute whether the Binder of Sale (Contract) is an enforceable agreement to sell the real property at 14 Minute Man Hill. The plaintiffs claim the parties intended the binder to be a contract and that they intended it to exist “unless or until” a superseding contract is signed.   The defendants, on the other hand, claim the parties intended the binder to be merely an agreement to execute a superseding contract.   All agree that the applicable law to be applied by the court is set forth by the Appellate Court in Fowler v. Weiss, 15 Conn.App. 690, 546 A.2d 321 (1988).

The decisive question in the Fowler case was whether a binder of sale was a binding contract or merely an informal writing documenting an intention to create a binding contract.   The pertinent legal principles were summarized by the court in Fowler as follows:  “Whether the parties intended legally to bind themselves prior to the execution of a formal contract is to be determined from (1) the language used, (2) the circumstances surrounding the transaction, and (3) the purpose that they sought to accomplish ․ A consideration of these factors enables a court to determine if the informal contract, in this case the binder, is enforceable or merely an intention to negotiate a contract in the future ․” Fowler v. Weiss, 15 Conn.App. at 693.   The Bergers and Siases in post-trial memoranda have cited and discussed two trial court decisions that have applied the Fowler factors.   Srager v. Koenig, CV93–0305625–S (Conn.Super.Bridgeport, July 15, 1997) (Stevens, J.) [20 Conn. L. Rptr. 85];  Lombardo v. Purcell, CV 11–6021389S (Conn.Super.Bridgeport, Oct. 17, 2011) (Radcliffe, J.).

The language used in the Berger/Sias binder of sale expresses an intent to establish an agreement with legally enforceable obligations.   The following provision appears in capital letters immediately above the parties' signatures:  “THIS AGREEMENT TO REMAIN IN FORCE AND EFFECT AND CONSTITUTE A CONTRACT BETWEEN PARTIES HERETO UNLESS OR UNTIL SUPERSEDED BY FURTHER CONTRACT BETWEEN PARTIES INCORPORATING DETAILED DESCRIPTION HEREINABOVE PROVIDED.”   This “unless or until” clause must be read and construed in light of the other terms and provisions of the binder.

The language of the agreement indicates that the parties intended to be bound to the terms of the sale upon their signing the binder.   A closing date was specified.   The balance of the ten percent deposit was due within ten days of the defendants' execution of the agreement.   No contingencies, other than a building inspection, were expressed.   The parties did not express an intent that the execution of a formal contract was an essential term of the agreement.   A superseding contract is not necessary for a sale to take place.

The circumstances surrounding the transaction indicate that all parties intended to be bound.   The Siases refused to respond to the Berger's initial offer that was prepared by Martin, which had been signed only by Scott Berger.   Instead, the Siases instructed Martin to prepare and submit a formal, written binder, signed by Scott and Stacey Berger, with all the important provisions of the proposed transaction.   After the Siases received the binder, they initialed the price change that was negotiated and insisted that the Bergers do likewise before the Siases would sign.   The parties did not contemplate further negotiations.   They had agreed upon and clearly expressed all of the essential terms of the transaction.   All believed they had reached an agreement and were obligated to proceed with the sale.

The purposes the parties sought to accomplish were to bring finality to the Sias's efforts to sell the property and to have a binding contract in effect on the day of the broker's open house.   The binder was prepared by a broker, as opposed to a lawyer.   Nevertheless, all the parties are knowledgeable persons.   All viewed the binder as a “meeting of the minds” that expressed enforceable obligations.   This court should not now import ambiguity where the ordinary meaning of the document, as shown by the language used, the circumstances surrounding the transaction, and the purpose the parties sought to accomplish, leaves no room for ambiguity.   See Fowler v. Weiss, 15 Conn.App. at 692.

II. The Inspection Clause

The plaintiffs and defendants next dispute the effect of the plaintiffs' inquiry about a price reduction in light of the substantial defects discovered by the house inspector.   Neither side has specifically discussed the legal import of the provision in the binder allowing the buyers to arrange for a building inspection.   This provision is as follows:  “This agreement is further subject to termite and building inspection satisfactory to and at the expense of the buyer ․” Because the agreement does not specify the rights and duties of the parties should defects be found, the law imports a duty or implied covenant of good faith.

In light of the substantial cost to remedy the defects, the plaintiffs were acting in good faith when they followed the broker's suggestion and inquired whether the defendants would consider a price reduction.   The plaintiffs inquired about a reduction but did not demand a reduction.   When the plaintiffs were told that the defendants would not reduce the price in light of their having recently lowered the price, the plaintiffs thereupon expressed an intent to proceed with the transaction.   The plaintiffs' conduct was not, contrary to the defendants' claim, a counter offer that cancelled the binder contract.

B. Specific Performance

“[I]t is well settled that a buyer seeking specific performance has the burden of proving that he or she is ready, willing and able to purchase the premises ․” Howard–Arnold, Inc. v. TNT Realty, Inc., 145 Conn.App. 696, 710 (2013).   The Bergers took all appropriate steps to effectuate the purchase.   They paid the required deposit and, since then, have maintained sufficient liquid funds on deposit to pay the entire purchase price.   They have proven that they are ready, willing and able to purchase the property.

“[A]n action for specific performance of a contract to sell real estate is an equitable action and is to be determined by equitable principles ․” Webster Trust v. Rory, 261 Conn. 278, 284, 802 A.2d 795 (2002).   All real property is unique.   This property, which is unoccupied, is in a highly desirable neighborhood on a cul-de-sac with views of Long Island Sound.   The court finds, contrary to the defendants' assertion, that the plaintiffs have not acted in a manner that would make it inequitable for them to have the relief that they seek.

III. Conclusion

It is ordered that the defendants convey the property at 14 Minute Man Hill, Westport, to the plaintiffs in accordance with the provisions of the “Binder of Sale (Contract)” within forty-five days of the filing of this memorandum of decision.

THIM, J.T.R.

Thim, George N., J.