Opinion
FSTCV166027455S
02-05-2019
Darren DINNEEN et al. v. David GWOZDZ et al.
UNPUBLISHED OPINION
OPINION
Hon. Charles T. Lee, Judge
This case arises out of the defendants’ refusal to return plaintiffs’ down payment deposit after plaintiffs claimed they were unable to obtain a suitable mortgage to permit them to purchase defendants’ home in Riverside, Connecticut. The plaintiffs prevailed at trial and were awarded the return of their deposit, as well as their reasonable attorneys fees after a separate hearing.
On December 5, 2018, this court issued its memorandum of decision on plaintiffs’ motion for prejudgment, postjudgment and offer of compromise interest (# 236.01). The court found that plaintiffs had demonstrated that they would have earned approximately eleven percent interest if the deposit money had been returned and invested in Mr. Dinneen’s investment account. Accordingly, the court granted prejudgment and postjudgment interest at the statutory maximum rate of ten percent.
The court denied offer of compromise interest pursuant to General Statues Section 52-192a, having determined that plaintiffs’ separate offers of judgment of $ 575, 000 to Mrs. Gwozdz and Mr. Gwozdz were unreasonable because acceptance by one spouse and payment of the entire amount of damages claimed at the time would not terminate the litigation as to the other spouse. The court further noted that plaintiffs’ total recovery against the defendants after trial and post-trial proceedings equaled § 1, 018, 527.64, which was less than the sum of both offers of trial proceedings equaled § 1, 018, 527.64, which was less than the sum of both offers of compromise interest in the amount of § 1, 150, 000. As a result, the court held that the offers were improper, and that the recovery did not satisfy the preconditions of Section 52-192a, i.e., the tender of a timely offer, its refusal and recovery in excess of the offer.
In their motion to reargue/reconsider, plaintiffs argued that the court’s decision was incorrect because 1) individual offers of compromise interest cannot be aggregated and then compared to the trial judgment, and 2) the court is without discretion to evaluate the equities based on the record, and its function is strictly ministerial in determining a motion for offer of compromise interest. Because these issues had not been raised prior to the court’s decision, the court granted reargument to allow the parties an opportunity to be heard, which hearing took place on February 1, 2019.
As more fully discussed below, the court agrees with plaintiffs, vacates its prior decision in part, and grants offer of compromise interest at the statutory rate of eight percent. However, in order to prevent an inequitable result, the court revises its award of prejudgment interest to three percent, so that the aggregate interest awarded prior to judgment is eleven percent, which is the amount of which plaintiffs demonstrated they had been deprived. The court’s award of postjudgment interest of ten percent remains unchanged.
Discussion
As set forth in the court’s previous memorandum, our Supreme Court described the purpose of Section 52-192a as follows: "In construing § 52-192a, we first note that its purpose is to encourage pretrial settlements and, consequently, to conserve judicial resources ... [T]he strong public policy favoring the pretrial resolution of disputes ... is substantially furthered by encouraging defendants to accept reasonable offers of judgment ... Section 52-192a encourages fair and reasonable compromise between litigants by penalizing a party that fails to accept a reasonable offer of settlement. In other words, interest awarded under § 52-192a is solely related to a defendant’s rejection of an advantageous offer to settle before trial and his subsequent waste of judicial resources." (Citations and internal quotation marks omitted.) Blakeslee Arpaia Chapman, Inc. v. EI Constructors, Inc., 239 Conn. 708, 742-43 (1997) ("Blakeslee ").
In Yeager v. Alvarez, 302 Conn. 772, 782 (2011), the court stated, "The plaintiff is correct that, after trial, the statute directs the trial court to examine the record and, if the record reveals that the statutory conditions for offer of compromise interest are met, to award interest. See General Statutes § 52-192a(c) (‘After trial the court shall examine the record to determine whether the plaintiff made an offer of compromise which the defendant failed to accept. If the court ascertains from the record that the plaintiff has recovered an amount equal to or greater than the sum certain specified in the plaintiff’s offer of compromise, the court shall add to the amount so recovered eight per cent annual interest on said amount ...’). The trial court’s function in this process is nondiscretionary. As we previously have noted, ‘[t]he statutory requirement of an examination of "the record" makes it clear that the legislature intended to give the court a ministerial task’; Connecticut Light & Power Co. v. Gilmore, 289 Conn. 88, 135, 956 A.2d 1145 (2008); rather than an adjudicative one. DiLieto v. County Obstetrics & Gynecology Group, P.C., 297 Conn. 105, 153, 998 A.2d 730 (2010) ([T]he application of § 52-192a does not depend on an analysis of the underlying circumstances of the case or a determination of the facts [internal quotation marks omitted]). The trial court’s role is ‘ministerial, ’ however, only with respect to the limited task of considering a motion for interest pursuant to § 52-192a." Accord, Shriver v. Wal-Mart Stores, Inc., Superior Court, judicial district-of New London Docket No. CV 08 6000756, at *2, 2012 WL 6786907 (December 12, 2012, Martin, J.) ("General Statutes § 52-192a provides for mandatory imposition of interest at a set rate ... and affords no allowance for the discretion of the court").
Pursuant to this statutory construction, the court’s review is limited to whether the conditions precedent of Section 52-192a have been satisfied. As a result, the court is compelled to conclude that the plaintiffs are entitled to offer of compromise interest in this case. The plaintiffs filed individual offers of judgment on Mrs. and Mr. Gwozdz on July 19, 2016 for § 575, 000. The defendants did not accept them. The plaintiffs have been awarded judgment in excess of those amounts against each defendant.
The court has found no authority to aggregate the offers to the defendants for purposes of comparison to the judgment obtained. However, in Birkhamshaw v. Socha, 156 Conn.App. 453, 510-15 (2015), the court authorized aggregating separate recoveries against a husband and wife of § 2, 008, 132 and § 1, 875, 000, respectively, to find that they exceeded a unified offer of judgment of § 2, 700, 000, where the wife’s recovery for loss of consortium was derivative of the recovery against her husband.
As the Appellate Court stated in Lutynski v. B.B. & J. Trucking, Inc., 31 Conn.App. 806, 812-13 (1993), aff’d, 229 Conn. 525 (1994), "The statute is admittedly punitive in nature ... It is the punitive aspect of the statute that effectuates the underlying purpose of the statute and provides the impetus to settle cases." (Citations omitted.) Accord, Lomas v. Partner Wealth Mgmt., LLC, Superior Court, complex litigation docket in Stamford, Docket No. X08 FST CV 155014808S, at *10 (April 23, 2018, Genuario, J.) ("§ 52-192a is mandatory, and the application of § 52-192a does not depend on an analysis of the underlying circumstances of the case or a determination of the facts. The statute is admittedly punitive in nature. It is the punitive aspect of the statute that effectuates the underlying purpose of the statute and provides the impetus to settle cases ... [quoting Accettullo v. Worcester Insurance Company, 256 Conn. 667, 672 (2001) ]").
However, the court’s analysis does not end there. In Flynn v. Kaumeyer, the Appellate Court considered whether it was necessary to award both prejudgment interest and offer of compromise interest in a case where the defendants had refused to return the plaintiffs’ deposit towards the purchase of their home. Id., 67 Conn.App. 100 (2001). The court held, "An award of § 37-3a interest is discretionary, and a trial court need not award any interest if it concludes that such interest is inequitable in view of the mandatory award of § 52-192a interest. Loomis Institute v. Windsor, 234 Conn. 169, 181-82, 661 A.2d 1001 (1995); Munroe v. Emhart Corp., 46 Conn.App. 37, 45, 699 A.2d 213, cert. denied, 243 Conn. 926, 701 A.2d 658 (1997). Frequently, however, prejudgment interest as provided in § 37-3a and the statutory interest provided by § 52-192a have both been awarded. (Citations omitted.) The court in this case made no determination that the award of both types of interest would make the award of § 37-3a interest inequitable." Id., at 105-06.
Consistent with the reasoning in Flynn, supra, the court in Jalbert v. Mulligan, Superior Court, judicial district of Waterbury, Docket No. UWY CV 086001044S, at *2-3, 2013 WL 5394146 (August 29, 2013, Shapiro, J.), aff’d on other grounds, 153 Conn.App. 124 (2014) held, "Where the court has awarded mandatory offer of judgment interest pursuant to § 52-192a, the court may decline to award interest under § 37-3a if it concludes that ‘a further award of interest pursuant to § 37-3a would not [be] equitable.’ Loomis Institute v. Windsor, 234 Conn. 169, 182, 661 A.2d 1001 (1995). See Flynn v. Kaumeyer, 67 Conn.App. 100, 105, 787 A.2d 37 (2001) (same) ... ‘The determination of what equity requires in a particular case, the balancing of the equities, is a matter for the discretion of the trial court.’ (Internal quotation marks omitted.) Wasko v. Manella, 269 Conn. 527, 542, 849 A.2d 777 (2004). In determining whether a result is equitable ‘a windfall should be avoided if possible.’ Farmers & Mechanics Savings Bank v. Sullivan, 216 Conn. 341, 354, 579 A.2d 1054 (1990). In making such an assessment, ‘a trial court may consider all relevant circumstances to ensure that complete justice is done.’ Gulack v. Gulack, 30 Conn.App. 305, 317, 620 A.2d 181 (1993)."
In the present case, the court considers an award of both prejudgment interest in the amount of ten percent and offer of compromise interest of eight percent for a total of eighteen percent to be inequitable for the following reasons: First, the defendants do not deserve to be punished. As mentioned in this court’s decision on the merits, the plaintiffs’ inability to proceed with the purchase of defendants’ home was determined by events transpiring behind the scenes within plaintiffs’ lender bank, which were not discovered until well after the closing date. As a result of this and some other findings, the court described the defendants’ suspicion of plaintiffs’ refusal to close as "understandable." 5/15/18 Memorandum of Decision after Trial (# 228.01), at *34, 2018 WL 2423606. Second, the defendants placed the deposit of § 492, 500 into escrow voluntarily. Third, the plaintiffs did not file a unified offer of compromise in the amount of § 575, 000 against the defendants, but rather filed two offers each in the amount of § 575, 000. This put Mrs. and Mr. Gwozdz in the extremely difficult position of accepting one offer and leaving the other spouse exposed to continued litigation, or accepting and paying both offers in an amount double what plaintiffs had calculated their damages to be at the time. Finally, there appears no justification for awarding the plaintiffs a windfall of interest in excess of what they would have earned had their deposit been returned promptly.
The Supreme Court in Blakeslee, supra, noted that the Connecticut Defense Lawyers Association in an amicus brief had proposed an exception to the prevailing interpretation of Section 52-192a, "where the relationship among plaintiffs or among defendants is so strong that they should not be considered ‘multiple parties, ’ but instead a single party, for purposes of the offer of judgment procedure." The court did not adopt the suggestion, considering it a matter for legislative consideration. 239 Conn. 746-48. Here, the relationship of husband and wife might well be a sufficiently strong relationship to be considered a single party for offer of compromise purposes, which would have eliminated the defendants’ dilemma.
As a result of the foregoing, the court holds that equity requires that, in light of the mandatory award of eight percent offer of compromise interest, the award of prejudgment should be reduced to three percent. In this way, the plaintiffs will receive the amount of interest, i.e., eleven percent, which they demonstrated they would have earned but for defendants’ refusal to return the deposit, but the defendants are not penalized unjustly.
Conclusion
In summary, the court does not alter its previous award of postjudgment interest in the amount of ten percent. The court now awards offer of compromise interest in the amount of eight percent running from the filing of the complaint on January 20, 2016 to entry of judgment. The court awards prejudgment interest in the amount of three percent from January 5, 2016, when the deposit should have been returned, to June 29, 2018, when the deposit was returned to the plaintiffs, also taking into account the payments already made by the defendants as specified in note 1 of the 12/5/18 memorandum of decision.