James Peterson v. Monica McAndrew et al. (2013)

MEMORANDUM OF DECISION RE DEFENDANT'S MOTION TO REARGUE/RECONSIDER AND SUPPLEMENTAL MOTION TO REARGUE/RECONSIDER (# 149 AND # 150)

I. BACKGROUND

This action was brought by the plaintiff seeking, inter alia, return of a $255,000 contract deposit made pursuant to a purchase and sale agreement concerning a parcel of real estate entered into between the plaintiff as buyer and the defendants as sellers.   The case was tried to the court over several days and the court rendered a Memorandum of Decision dated September 30, 2013 in which it held for the defendants on all seven counts of the plaintiff's complaint.   The plaintiff's motion to reargue and for reconsideration can be divided into two categories.   First the plaintiff asks the court to reconsider its conclusion that the defendant did not breach its contract, its conclusion denying the plaintiff's request to reform the contract and its conclusion denying the plaintiff's request to interpret the sales contract in a certain manner.   The second category of request asks the court to reconsider its conclusions regarding the effect of the liquidated damages clause on the plaintiff's cause of action for unjust enrichment.

“[T]he purpose of a reargument is ․ to demonstrate to the court that there is some decision or some principle of law which would have a controlling effect, and which has been overlooked, or that there has been a misapprehension of facts ․ It also may be used to address alleged inconsistencies in the trial court's memorandum of decision as well as claims of law that the [movant] claimed were not addressed by the court.”  Opoku v. Grant, 63 Conn.App. 686, 692–93 (2001) (internal citations and quotation marks omitted).   In deciding a motion to reargue or to reconsider “[t]he court is not precluded from reexamining its own decision, within a reasonable time after its rendition, if it appears that otherwise injustice may result.”   Northwestern Mutual Life Insurance Co. v. Great House, Superior Court, judicial district of Stamford/Norwalk at Stamford docket number CV 98 0164835 (June 27, 2000, D'Andrea, J.) (internal quotation marks omitted.)  “If a court is not convinced that its initial ruling is correct, then in the interest of justice it should reconsider the order, provided it retains jurisdiction over the subject matter and the parties.”  Tiber Holding Corp. v. Greenberg, 36 Conn.App. 670, 671 n.1 (internal quotation marks omitted) (1995).

II. BREACH OF CONTRACT AND REFORMATION OF CONTRACT

The court has reviewed the authorities cited by the plaintiff and the defendants as well as its own memorandum of decision regarding the first category of request.   The arguments of the plaintiff in this regard are misplaced.   The plaintiff did not prove that the defendants breached the contract, the plaintiff did not prove that his interpretation of the contract was more reasonable or should have been adopted by the court, and the plaintiff did not prove the necessary elements to establish a right to reformation based upon mutual mistake.   The court will not repeat or reiterate its findings, rationale and authorities set forth in its original Memorandum of Decision.

The plaintiff, in making this first request, places great weight on the court's statement that “it was the intent of the parties to contract for the sale of all of the property to the mean high waterline.”   Memorandum of Decision 19–20.   In relying upon this finding, the plaintiff ignores the remaining aspect of the court's analysis which concludes that the plaintiff failed to prove that the plaintiff was not able to convey all of the property to the mean high waterline.   As the court stated in its Memorandum of Decision “the intent of all parties would have been effectuated had the plaintiff been willing to consummate the contract consistent with its terms ․ at a minimum there is no evidence before the court from which the court could conclude otherwise.”   Memorandum of Decision at 20.   The plaintiff seeks to twist the finding of the court into a finding that it was the intent of the parties to contract for the conveyance of marketable title to all the property to the mean high waterline.   The court made no such finding and in fact the better evidence is that the parties in their discussions prior to execution to the contract did not consider the nature of the title to be conveyed.   However, the contract, reviewed by all counsel, set forth in unambiguous terms the specific boundary of the property to which the defendants were obligated to convey marketable title.   Accordingly the court affirms its judgment for the defendants on counts one, three, four, five, six and seven.

III. LIQUIDATED DAMAGES AND UNJUST ENRICHMENT

The plaintiff asks the court to reconsider its conclusion and holding with regard to its claim in count two asserting a cause of action for unjust enrichment.   In its original decision regarding the second count of the complaint, which asserted that the defendants would be unjustly enriched if allowed to keep the $255,000 contract deposit, the court analyzed the liquidated damages clause of the contract and determined that the liquidated damages clause had been specifically addressed and negotiated by the parties and their counsel prior to the execution of the contract.   For a variety of reasons set forth in the original Memorandum of Decision, the court found the liquidated damages clause to be valid and enforceable.   The court concluded that since the liquidated damages clause was valid and enforceable the plaintiff's case for unjust enrichment must fail.   The court was wrong to end its analysis at that point.   The court had overlooked the holding in Vines v. Orchard Hills, Inc., 181 Conn. 501 (1980).   The Vines court concluded “that a purchaser whose breach is not willful has a restitutionary claim to recover monies paid that unjustly enrich his seller,” notwithstanding the existence of a valid liquidated damages clause.  Vines at 509.   See also Norwalk Door Closer Co. v. Eagle Lock and Screw Co., 153 Conn. 681 (1966).

The first element required in the analysis dictated by Vines and its progeny is a determination as to whether or not the plaintiff's breach was “willful.”   The leading cases such as Vines and Stabenau v. Cairelli, 22 Conn.App. 578 (1990) involve situations in which the purchasers breached their contract for reasons that were arguably not contemplated at the time the parties entered into the contract for the sale of residential property.   In Vines the purchaser's employer transferred his employment to a distant location subsequent to the signing of the contract but before the closing.   In Stabenau the purchaser was informed by his employer that he might be fired prior to closing.   Within this context the Stabenau court stated “ ‘[w]illful’ as a term of art requires more than a finding of deliberate action.   The contemporary view is that the court must consider not only the deliberateness of the breach, but also other factors in determining whether to apply the court's equitable jurisdiction.   See Vincenzi v. Cerro, 186 Conn. 612, 616, 442 A.2nd 1352 (1982).   These factors include, among others, the degree of innocence of the breach, the amount of detriment to the breaching party and the amount of the benefit conferred upon the nonbreaching party.   5A A. Corbin, Contracts Section 1123.”  Stabenau, supra at 581–82.

The court believes, based on the record and the cited authorities, that a finding that the plaintiff's breach was not willful is justified, and the court so finds.   Interestingly, in the Stabenau case there was no evidence that the plaintiff/purchaser actually lost his job or could not close but only that his breach was prompted by a fear that he would lose his job and be unable to make the payments required for the purchase of the property.   Similarly, while it is clear that the plaintiff herein was able to close and refused to do so, the plaintiff's breach was prompted by a fear that he would not acquire ownership of the property west of the 591 line.   While the plaintiff failed to prove that this concern was accurate or based upon sound legal analysis, the court nonetheless believes that the plaintiff's fear, though subjective, was genuine.   Moreover, the other factors listed by the Stabenau court and Professor Corbin (the amount of the detriment to the breaching party and the amount of the benefit conferred upon the nonbreaching party) justify a finding in the instant case that the breach was not willful.

It is however the plaintiff's burden to prove “that the damages suffered by his seller are less than the monies received from the purchaser ․ It may not be easy for the purchaser to prove the extent of the seller's damages, it may even be strategically advantageous for the seller to come forward with relevant evidence of the losses he has incurred and may expect to incur on account to the buyer's breach.   Nonetheless, only if the breaching party satisfies his burden of proof that the innocent party has sustained a net gain may a claim of unjust enrichment be sustained.   Dobbs, Remedies 12.14 (1973);  1 Palmer, Restitution 5.4 (1978).”  Vines at 510.   The Vines court further noted

It is not unreasonable in these circumstances to presume that a liquidated damages clause that is appropriately limited in amount bears a reasonable relationship to the damages that the seller has actually suffered ․ The seller's damages ․ include not only his expectation damages suffered through loss of his bargain, and his incidental damages such broker's commissions, but also less qualifiable costs arising out of retention of real property beyond the time of the originally contemplated sale ․ A liquidated damages clause allowing the seller to retain 10% of the contract price as earnest money is presumptively a reasonable allocation of the risks associated with default.

Vines at 512 (internal citations omitted).

During the trial of the case at bar there was substantial evidence that the defendants had sustained significant actual damages.

While the court, in its original Memorandum of Decision, made reference to certain actual damages that the evidence demonstrated that the defendants had incurred as a result of the plaintiff's breach, the Vines analysis now requires the' court to make certain additional findings.   Accordingly the court makes the following additional findings based upon the evidence introduced at trial:  (1) after the plaintiff's default the defendants sold the property to different purchasers, Thomas and Laura–Keller in an arms length transaction (2) the sale of the property to the Kellers closed on August 31, 2011;  (3) the Kellers accepted a warranty deed from the defendants with the same property description that the defendants were prepared to give to the plaintiff;  the defendants also provided a quit claim deed to the Kellers for the property west of the 591 line as they were willing to provide to the plaintiff;  (4) the sales price paid by the Kellers were $2,525,000, i.e. $25,000 less than the plaintiff's contract price;  (5) the defendants had to pay higher expenses in conjunction with the sale to the Kellers than they would have paid if the plaintiff had brought the property pursuant to the terms of the contract.   Such higher expenses included a higher broker commission in the amount of $12,500 and a higher conveyance tax (due to an intervening change in the law) in the amount of $6,313;  (6) the defendants had to pay carrying costs with respect to the property due to the delay in closing that they would not have incurred if the plaintiff brought the property consistent with the terms of the contract.   Such extra carrying costs included mortgage interest ($23,450) property taxes ($8,836) insurance ($748) and Rowayton Beach Association dues ($72);  (7) the defendants lost rental income in the amount of $22,500;  (8) the defendants incurred additional legal fees as a result of the plaintiff's breach and termination of the contract (apart from legal fees incurred in the instant action) in the amount of $5,039;  the defendants incurred additional attorneys fees related to opinion letters concerning title to the property in the amount of $18,454;  (9) the defendants also incurred additional dock permit application expenses contemplated by the contract in the amount of $1,554;  (10) the defendants lost a reasonable return on their equity in the property of $5,268 based upon an interest rate of 2.25%.

Based upon the evidence at trial the court finds that the defendants incurred actual damages as a result of the breach of contract by the plaintiff in the amount of $130,734 (or at least the plaintiff has failed to prove that they didn't).

Because the actual damages incurred by the defendants are so disparate, from the amount that they seek to retain pursuant to the liquidated damages clause the court finds that the plaintiff has sustained its burden of proof with regard to count two that the defendants have been unjustly enriched in the amount of $124,266.

With regard to the finding of actual damages the court notes that the evidence of the difference in the purchase price between plaintiff's contract and the Keller transaction was evidenced by joint exhibits.   The balance of the damages that the court has found was based upon the credible testimony of the defendant Chute.   The plaintiff offered no additional credible evidence relative to the defendants' damages.

IV. CONCLUSION

The court having reconsidered its earlier decision reaffirms its decision as to counts one, three, four, five, six and seven of the plaintiff's complaint.   Judgment may enter for the defendants with regard to those counts.   The court has revised its decision with regard to count two and judgment may enter for the plaintiff on count two in the amount of $124,266.

GENUARIO, J.

Genuario, Robert L., J.