Opinion
No. X05 CV 09-4017179S
July 20, 2010
MEMORANDUM OF DECISION ON DEFENDANT'S MOTION TO STRIKE (#105)
Introduction
This commercial lawsuit may be viewed against a tableau of a recent and precipitous financial decline. A decline both in the value of commercial real estate across the country during the relevant time frame, as well as the funding sources that helped fuel and sustain the market for closing such deals. This case arises out of a failure to close on a large, high-end commercial office building located on Steamboat Road in the town of Greenwich. A $22.5 million deposit is at issue, much of which was previously held in escrow pursuant to a contract. The total purchase price, as specified in the purchase and sale agreement, was $205 million.
This closing was derailed and the parties find themselves in Superior Court allegedly due to a `credit freeze'; more specifically, a collapse in the institutional lending/financing market during the closing period. The plaintiff, Dryland Steamboat Road, LLC (plaintiff or Dryland or Buyer) argues that this was both unforeseen and unprecedented, and it deprived Dryland of the financing it intended to employ and was relying upon to close the deal. The plaintiff argues that this relieves it of its obligation to consummate the purchase, as that deal was originally contemplated by the parties. Besides asking to be relieved of closing, the Buyer seeks the return of its deposit, along with other remedies including rescission, in light of the tumultuous conditions in the institutional lending markets. These were the markets where the appropriate financing essentially dried up for the Buyer. Significantly, there are no express stipulations addressing such a contingency to be found in the words the parties used to memorialize their understanding, such as might have allowed rescission in the face of a failure to obtain institutional financing.
In June 2008, the plaintiff entered into a contract with the defendant, GRC Realty Corp. (defendant or GRC or Seller). The contract called for the plaintiff to purchase from GRC, a property known as 600 Steamboat Road in Greenwich, which consists of 180,000 rentable square feet of commercial office space, for the sum of $205 million. The parties failed to complete this transaction, and the plaintiff brought a four-count complaint. In seeking the return of its deposit, the Buyer alleges commercial impracticability, economic duress, breach of the implied covenant of good faith and fair dealing and unjust enrichment. By way of a motion to strike, the Seller moves to strike counts (1) commercial impracticability; (2) economic duress; and (3) breach of the implied covenant of good faith and fair dealing. GRC argues that each count fails to state a claim upon which relief may be granted. The unjust enrichment count is not challenged in this motion.
Count one seeks rescission of the parties' agreement. It is based on a decline in the credit markers in the fall of 2008, a condition which rendered the Buyer's ability to obtain third-party financing, and thereby perform under the agreement "commercially impracticable." The second count seeks rescission of an amendment to the agreement, based on the doctrine of economic duress. With that amendment, the plaintiff Buyer actually increased the amount of the deposit it paid to the Seller to keep the deal alive, increasing its stake from $15 million to $22.5 million. This gave the Buyer a seven-month extension of the closing date. The third count alleges that the Seller breached the implied covenant of good faith and fair dealing, because the Seller refused to agree to an adjournment of the initial closing date set in order to allow the plaintiff Buyer additional time to locate the necessary financing.
The court will first set forth the standards applicable to motions to strike, followed by an analysis of the pleadings. This includes the arguments of the parties in light of those standards.
Motion to Strike — Legal Standard
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "It is fundamental that in determining the sufficiency of a [pleading] challenged by a [party's] motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted." (Internal quotation marks omitted.) Gazo v. Stamford, 255 Conn. 245, 260, 765 A.2d 505 (2001). "A motion to strike is the proper procedural vehicle . . . to test whether Connecticut is ready to recognize some newly emerging ground of liability." (Internal quotation marks omitted.) Ortiz v. Waterbury Hospital, judicial district of Waterbury, Docket No. CV 99 154112 (March 9, 2000, Pelligrino, J.) ( 26 Conn. L. Rptr. 547).
"A motion to strike . . . does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997). "[The court] construe[s] the complaint in the manner most favorable to sustaining its legal sufficiency . . . [I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Sullivan v. Lake Compounce Theme Park, Inc., 277 Conn. 113, 117-18, 889 A.2d 810 (2006). "A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 498. Further, our Supreme Court "will not uphold the granting of [a] motion to strike on a ground not alleged in the motion." Blancato v. Feldspar Corp., 203 Conn. 34, 44, 522 A.2d 1235 (1987).
"In ruling on a motion to strike, the court is limited to the facts alleged in the [challenged pleading]." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., supra, 240 Conn. 580. "Where the legal grounds for such a motion [to strike] are dependent upon underlying facts not alleged in the . . . pleadings, the [party that filed the motion] must await the evidence which may be adduced at trial, and the motion should be denied." (Citations omitted; internal quotation marks omitted.) Liljedahl Bros., Inc. v. Grigsby, 215 Conn. 345, 348, 576 A.2d 149 (1990).
The Seller asks this court to consider the agreements and the amendments. However, the documents themselves are not part of the complaint, and thus, cannot be properly considered by the court on a motion to strike. "Complaints routinely reference written agreements or other documentation in support of allegations but do not attach the referenced material as exhibits. If not attached, they simply are not part of the complaint and may not be considered for purposes of a motion to strike." Southridge Capital Management, LLC v. Twin City Fire Ins. Co., Superior Court, complex litigation docket at Middletown, Docket No. X04 02 1035275 (June 3, 2005, Quinn, J.) ( 39 Conn. L. Rptr. 635).
"It is of no moment that the defendants might prove facts which operate to bar the plaintiff's claim, the sole inquiry at this stage of the pleadings is whether the plaintiff's allegations, if proved, would state a basis for standing . . . [An] argument [that] would require the court to consider facts outside the face of the pleadings . . . would be improper on a motion to strike . . ." (Citations omitted.) Miller v. Insilco Corp., Superior Court, judicial district of New Haven, Docket No. 27 92 67 (May 22, 1990, Schimelman, J.) ( 1 Conn. L. Rptr. 651); Edward J. Smith Co. v. Palmieri, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 075003216 (March 14, 2008, Moran, J.) (denying motion to strike because contract was not attached as an exhibit to the original complaint, thereby making the grounds for the motion to strike dependent on facts not in the complaint); R.I. Pools, Inc. v. Lillien, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 04 4000871 (February 8, 2005, Wilson, J.) (concluding that the defendants' introduction of the contract that was not part of the complaint made the defendants' motion to strike a "speaking motion to strike" and stated that the defendant was trying to accomplish, through a motion to strike, what is more appropriately accomplished through a motion for summary judgment).
As previously stated, for the purposes of a motion to strike, the court must restrict itself to the allegations contained in the Second Amended Complaint, and must accept those allegations as true.
Recognition of this principle of law avoids the repeated characterization of the allegations as allegations in this memorandum of decision.
Facts
The parties executed a purchase and sale agreement dated June 3, 2008 (original agreement). The defendant agreed to sell and the plaintiff agreed to buy the property known as 600 Steamboat Road, Greenwich, Connecticut (the Property), for $205 million. This original agreement was subsequently amended by the parties on three different occasions. The first amendment is dated July 2, 2008; a second amendment dated July 30, 2008; and finally a third amendment is dated November 14, 2008. Pursuant to subsection (a) of Section 2.1 of the original agreement, the plaintiff transferred the sum of $15 million to the escrow agent. This sum constituted a "deposit," as the term is defined in the original agreement. The deposit was held by the escrow agent in an interest bearing account, and all accrued interest thereon was to be treated as part of the deposit for all purposes.
A liquidated damages clause is found at Article 13, Section 13.1, of the original agreement. There, the parties acknowledge that the deposit represented an estimate of damages that the defendant might suffer in the event that the plaintiff defaulted in its obligation; i.e., if the closing fell through. The deposit represented the defendant's liquidated damages, and its retention would be the defendant's exclusive remedy in the event of a default. The complaint states that both parties agreed that the plaintiff Buyer would contribute approximately $30 million of its own funds to the transaction. The bone of contention, however, is the third party financing. This was to be first mortgage financing in the approximate amount of $160 million that would have to be obtained by the plaintiff in order to close the deal.
By way of the first amendment, the expiration date of the due diligence period was extended to July 31, 2008. In accordance with the terms of the original agreement and the first amendment, the plaintiff's unilateral right to terminate the original agreement expired on that date. After this date, Dryland began negotiations with institutional lenders in order to obtain third-party financing. The complaint states that the "sudden, unforeseeable collapse of Lehman Brothers sent shock waves through the financial markets, effectively freezing those markets and rendering it impossible for [the plaintiff] to obtain third party, first mortgage financing from any source, in a reasonable amount and under any reasonably terms. Effectively, the commercial financing markets were frozen in place." (Emphasis added.) On September 22, 2008, notwithstanding the "credit market freeze," of which the defendant was aware, the defendant set the closing date for November 14, 2008, and asserted that it was a "time of the essence" closing date.
The defendant Seller, knowing that Dryland could not obtain the financing necessary to close the transaction by the date originally set, made two demands of the plaintiff in order to keep the deal alive. The first was to increase the deposit amount. It went from $15 million to $22.5 million. A second condition was that the Buyer had to agree to a release of all the escrowed funds as a condition to adjourning the November 14, 2008 closing date. Dryland was faced with both the impossibility of obtaining the required financing, and the forfeiture of its $15 million deposit. The Buyer claims it was therefore wrongfully coerced into signing yet a third amendment to the contract on November 14, 2008. This was the same day as the "time of the essence" closing date that had been noticed by the defendant. Once the plaintiff Buyer had made these concessions, the Seller in turn extended the date of the closing, but in any event to occur no later than June 30, 2009.
During the period between November 14, 2008 and June 30, 2009, the plaintiff continued to make all good faith efforts to obtain third-party, first mortgage acquisition financing as called for by the terms of the agreement. The credit markets, however, remained frozen during that period, rendering the plaintiff's efforts unavailing. The plaintiff, realizing that its efforts to obtain financing were still futile, made numerous proposals to the defendant in an attempt to again restructure the transaction. Specifically, the plaintiff proposed that GRC provide short-term purchase money financing in the amount of $170 million. The plaintiff would contribute $35 million of its own funds at closing, and would deposit an additional $30 million to insure its completion of substantial capital improvements to the property. Each of the plaintiff's proposals were rejected by GRC and by notice dated June 23, 2009, GRC insisted that the closing take place.
By letter dated July 1, 2009, GRC as Seller asserted that it was prepared to close on June 30, 2009, and that the Buyer Dryland was in default of the agreement as amended. Therefore, the Seller announced that it would retain the full deposit amount which had already been released from escrow, in accordance with the terms of the third amendment.
The Allegations in the Complaint Count One — Impracticability
In the first count, the plaintiff Buyer claims that at the time of entering into the original agreement, and each of the three amendments, the parties made several justifiable assumptions. Most importantly, that such third party, first mortgage financing would be obtainable in the necessary amounts from a variety of lending institutions. The plaintiff fully expected to obtain such financing for the purpose of completing the transaction. Dryland negotiated with multiple institutional lenders in an attempt to obtain third party financing. However, the complaint states that the "sudden, unforeseeable collapse of Lehman Brothers sent shock waves through the financial markets, effectively freezing those markets and rendering it impossible for [the plaintiff] to obtain third party, first mortgage financing from any source, in a reasonable amount and under any reasonable terms. Effectively, the commercial financing markets were frozen in place."
Based on these allegations, the plaintiff invokes the doctrine of commercial impracticability. The Buyer seeks both rescission of the parties' agreement, and the return of the Buyer's entire deposit. This was a deposit made in two installments, all pursuant to the agreement as amended. The defendant moves to strike the first count of the complaint. The Seller argues that even if the doctrine of commercial impracticability could be applied to excuse a failure to close a real estate transaction as here, the complaint as drafted fails to allege facts constituting the exceptional circumstances that are necessary to support applying the doctrine to excuse the plaintiff's non-performance.
"A modern statement of the impossibility doctrine appears in a leading case . . . It is now recognized that `[a] thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost.' . . . The doctrine ultimately represents the ever-shifting line, drawn by courts hopefully responsive to commercial practices and mores, at which the community's interest in having contracts enforced according to their terms is outweighed by the commercial senselessness of requiring performance. When the issue is raised, the court is asked to construct a condition of performance based on changed circumstances, a process which involves at least three reasonably definable steps. First, a contingency — something unexpected — must have occurred. Second, the risk of the unexpected occurrence must not have been allocated either by agreement or by custom. Finally, occurrence of the contingency must have rendered performance commercially impracticable.' J. Calamari J. Perillo, Contracts (3d Ed.) 13-1, p. 537, quoting Transatlantic Financing Corp. v. United States, 363 F.2d 312, 315 (D.C. Cir. 1966); see also Hess v. Dumouchel Paper Co., 154 Conn. 343, 349-52, 225 A.2d 797 (1966)." Roy v. Stephen Pontiac-Cadillac, Inc., 15 Conn.App. 101, 103-04, 543 A.2d 775 (1988).
According to the Restatement (Second) of Contracts § 261 (1981), a party's performance must be "made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made," unless the language or circumstances indicate otherwise. As to just what is meant by the non-occurrence of an event which was a basic contract assumption, there is helpful precedent. Connecticut courts have adopted this standard, and have identified four factors that a party must demonstrate in order for the doctrine of impracticability to be applicable:
A party claiming that a supervening event or contingency has prevented, and thus excused, a promised performance must demonstrate that: (1) the event made the performance impracticable; (2) the nonoccurrence of the event was a basic assumption on which the contract was made; (3) the impracticability resulted without the fault of the party seeking to be excused; and (4) the party has not assumed a greater obligation than the law imposes.
See O'Hara v. State, 218 Conn. 628, 637 (1991); Dills v. Town of Enfield, 210 Conn. 705, 717 (1989). To satisfy the first requirement, an event must actually render performance impracticable, and the courts have only discharged a duty where additional financial burdens make performance less practical than initially contemplated in "the most exceptional circumstances." Dills v. Town of Enfield, supra, 210 Conn. 717.
With respect to the second requirement, that the non-occurrence of an event was a basic assumption on which the contract was made, a determination of "which party assumed the risk of [the] occurrence" is necessary. Decarlo Doll, Inc. v. Dilozer, 45 Conn.App. 633, 643 (1997) (quoting Restatement (Second) of Contracts, c. 11). In making such a determination, a court must look at all of the circumstances, including the terms of the contract. Id. Where a particular event was unforeseeable at the time of contracting, it is suggested that the non-occurrence of the event was a basic assumption of the contract. Restatement (Second) of Contracts, c. 11). Conversely, if "an event [was] foreseeable, a party who makes an unqualified promise to perform necessarily assumes an obligation to perform, even if the occurrence of the event makes performance impracticable." Id., 651.
"[O]nly in the most exceptional circumstances have courts concluded that a duty is discharged because additional financial burdens make performance less practical than initially contemplated. See, e.g., Neal-Cooper Grain Co. v. Texas Gulf Sulphur Co., 508 F.2d 283, 294 (7th Cir. 1974) (party not allowed `to escape a bad bargain merely because it is burdensome'); American Trading Production Corp. v. Shell International Marine, Ltd., 453 F.2d 939, 942 (2d Cir. 1972) (closing of Suez Canal requiring charterer to sail nearly twice as many miles at a cost of nearly one-third more than the contract price does not excuse performance); United States v. Wegematic Corp., 360 F.2d 674, 676-77 (2d Cir. 1966) (duty of manufacturer to produce revolutionary computer system not excused because of `engineering difficulties' requiring two years and $1.5 million to correct); Peerless Casualty Co. v. Weymouth Gardens, 215 F.2d 362, 364 (1st Cir. 1954) (increased costs caused by the unexpected outbreak of war does not constitute superior force ending obligation of contract); Matter of Westinghouse Electric Corp., 517 F.Sup. 440, 452-53 (E.D. Va. 1981) (duty to remove spent fuel not excused merely because reprocessing of the fuel became unprofitable); see also Connecticut General Statutes Annotated 42a-2-614, comment 4; E. Farnsworth, supra, p. 680; 6 A. Corbin, Contracts (1962) 1333; 16 S. Williston, Contracts (3d Ed. Jaeger 1978) 1968; J. White R. Summers, Uniform Commercial Code (2d Ed. 1980) 3-9, pp. 131-32." Dills v. Town of Enfield, supra, 210 Conn. 717-18.
"Determining whether the non-occurrence of a particular event was or was not a basic assumption involves a judgment as to which party assumed the risk of its occurrence . . . In making such determinations, a court will look at all circumstances, including the terms of the contract." 2 Restatement (Second), Contracts, c. 11, introductory note. "Since impossibility and related doctrines are devices for shifting risk in accordance with the parties' presumed intentions, which are to minimize the costs of contract performance, one of which is the disutility created by risk, they have no place when the contract explicitly assigns a particular risk to one party or the other." Northern Indiana Public Service Co. v. Carbon County Coal Co., 799 F.2d 265, 278 (7th Cir. 1986); see also Wasserman Theatrical Enterprise, Inc. v. Harris, 137 Conn. 371, 374-75, 77 A.2d 329 (1950).
The defendant argues that the amended complaint is devoid of any allegations that support a finding of the exceptional circumstances necessary to excuse the plaintiff's performance. The court disagrees, finding that the facts as pleaded in the amended complaint sufficiently set forth a claim of commercial impracticability. While the defendant Seller may raise valid arguments in its opposition to this motion, those arguments rely on facts, or the finding of facts, that lie outside of the amended complaint.
Count Two — Economic Duress
In count two, the plaintiff Buyer alleges that it was coerced into complying with the defendant's unlawful and improper demands when it agreed to the third amendment to the contract on November 14, 2008. Specifically, Dryland contends that it had no reasonable alternative but to accede to the defendant's demands, as failing to do so would result in serious financial hardship. Thus, the plaintiff claims that its execution of the third amendment was involuntary and was the result of economic duress, and the apprehension of a looming serious loss. This would be the forfeiture of the $15 million deposit which was on the line. It was paid by the plaintiff pursuant to the original agreement. The third amendment to the contract increased the deposit amount by $7.5 million, and also released the entire aggregate deposit from escrow. The plaintiff asserts that the defendant had no legal right to demand and receive an additional $7.5 million deposit from the Buyer.
The defendant moves to strike count two on the grounds that: (1) because this was a business transaction, in order to properly allege duress, the plaintiff was required to plead threats of actual bodily harm, which it has failed to do; (2) the plaintiff failed to adequately allege any wrongful act or threat, that the plaintiff had no reasonable alternative other than to enter into the third amendment, or that the third amendment was unfair to the plaintiff; and finally that, (3) the plaintiff waived its right to claim duress by waiting more than seven months to repudiate the third amendment, during which time it obtained the benefits of the bargain that it negotiated under that amendment.
The defendant notes that the plaintiff relies solely on its allegation that the defendant set November 14, 2008 as a "time of the essence closing date," which means that the plaintiff would forfeit its deposit if it failed to close by that date. The Seller argues that by setting November 14, 2008 as the closing date, it was merely insisting on compliance with the terms of the agreement. As support for its position, the defendant directs the court to section 8.1 of the agreement. However, as previously stated, the terms of the agreement, and its subsequent modifications are not attached to or form a part of the amended complaint. Thus, the court cannot accept the defendant's invitation in the context of a motion to strike without running afoul of the applicable Practice Book provisions.
"For a party to demonstrate duress, it must prove [1] a wrongful act or threat [2] that left the victim no reasonable alternative, and [3] to which the victim in fact acceded, and that [4] the resulting transaction was unfair to the victim . . . The wrongful conduct at issue could take virtually any form, but must induce a fearful state of mind in the other party, which makes it impossible for [the party] to exercise his own free will . . . Where a party insists on a contractual provision or a payment that he honestly believes he is entitled to receive, unless that belief is without any reasonable basis, his conduct is not wrongful and does not constitute duress or coercion under Connecticut law . . ." (Internal quotation marks omitted.) Traystman, Coric Keramidas v. Daigle, 84 Conn.App. 843, 846, 855 A.2d 996 (2004).
Based on the facts as pleaded in the amended complaint, the plaintiff has sufficiently pleaded the elements of an economic duress cause of action. Again, many of the defendant's arguments rely on facts, or the finding of facts, that lie outside of the amended complaint.
Count Three — Breach of Duty of Good Faith Fair Dealing
In count three, the plaintiff alleges that they entered into valid and enforceable contracts for the sale of the property. They point to the implied covenant of good faith and fair dealing, which required the Seller to deal fairly with the Buyer in the exercise of good faith during the course of their contractual dealings. The plaintiff further alleges that defendant engaged in conduct that injured the plaintiff's right to receive its contractual benefits, and by engaging in such conduct, the Seller acted with dishonest purpose and in bad faith.
The plaintiff Buyer claims that the defendant Seller acted in bad faith and breached its duty of good faith and fair dealing by upping the ante on the Buyer. The defendant told the plaintiff that it would not consent to any adjournment of the improperly noticed closing date unless and until the plaintiff increased its deposit. The new amount represented an additional $7.5 million the plaintiff would have to forfeit in the event that the plaintiff was still unable to close. The Sellers further insisted upon an immediate release of the increased deposit from escrow. However, the conditions for such a release had not yet been met under the terms of the original agreement. The plaintiff claims that the defendant exacted these conditions "for the sole and dishonest purpose of maliciously injuring the plaintiff," and breached the covenant of good faith and fair dealing by advising the plaintiff that it would not consent to an adjournment of the "improperly noticed" closing date unless the plaintiff increased the deposit amount by $7.5 million and released the entire deposit from escrow.
The defendant moves to strike the third count. The Seller argues that both the terms of the agreement and Connecticut law gave GRC the right to refuse to agree to an adjournment of the closing. GRC contends that the implied covenant of good faith and fair dealing cannot be used to alter the express terms of an agreement. The defendant argues that the plaintiff, by this count, is impermissibly attempting to use the covenant of good faith and fair dealing to alter the express terms of the parties' agreement. According to the defendant, the plaintiff is "attempting to achieve a result contrary to the clearly expressed terms of [the agreement]." Thus, the defendant contends that it was under no obligation to adjourn the November 14, 2008 closing date because: (1) the agreement explicitly provided to the contrary; and (2) irrespective of the terms of the agreement, Connecticut law allows the defendant to declare that time was of the essence with respect to the closing. "[I]t is axiomatic that the . . . duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship . . . In other words, every contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement . . . The covenant of good faith and fair dealing presupposes that the terms and purpose of the contract are agreed upon by the parties and that what is in dispute is a party's discretionary application or interpretation of a contract term." (Citation omitted; internal quotation marks omitted.) Renaissance Management Co. v. Connecticut Housing Finance Authority, 281 Conn. 227, 240, 915 A.2d 290 (2007). "Essentially, it is a rule of construction designed to fulfill the reasonable expectations of the contracting parties as they presumably intended. The principle, therefore, cannot be applied to achieve a result contrary to the clearly expressed terms of a contract, unless, possibly, those terms are contrary to public policy." (Citation omitted; internal quotation marks omitted.) LaSalle National Bank v. Freshfield Meadows, LLC, 69 Conn.App. 824, 834, 798 A.2d 445 (2002).
Similar to the arguments raised by the defendant with respect to the other counts addressed by this motion to strike, the defendant's argument with respect to the present count also rely on facts, or the finding of facts, that lie outside of the amended complaint. They are more appropriately raised in other Practice Book motions.
Conclusion
Having chosen a motion to strike as the vehicle with which to attack the validity of the allegations, the defendant must abide by the limited parameters of such a motion. It is elementary, but bears repeating, that the court's ability to decide the merits of this motion at the pleading stage is not the same as when the court rules on the pleadings on a later, more dispositive motion. That includes such matters as summary judgment or a motion to dismiss, because the criteria for judging are different here. It has to do with certain presumptions the court must adhere to in favor of the non-moving party in its ruling. It is not that the allegations are true. It is first and foremost that all of the allegations that the Buyer is making must be taken as true for purposes of this — or any other — motion to strike.
The defendant by way of this motion to strike asks for too much. Therefore, the merits of the plaintiff's complaint and its case must await the completion of discovery. It is premature to hold otherwise. To the concept of commercial impracticability in the context of this real estate deal, the defendant interposes numerous objections. To paraphrase the Brownings, the defendant is in effect saying, "How can I disprove thee? Let me count the ways." The Seller cites to the Restatement (Second) of Contracts, and at oral argument on the motion to strike, counsel for the Seller argued that the real reason the Buyer seeks to back out of this deal is because the appraised value of the property it agreed to buy had substantially declined. This decline mirrored overall conditions in commercial real estate and prime office space around the country. That decline in the value of the Greenwich building at the heart of this deal (after the agreement was signed and before the closing, which never occurred) can be measured in the tens of millions of dollars. This loss in value had occurred between the time the Buyer had signed the initial real estate contract and the amendments. The Buyer also put down and forfeited the two deposits totaling $22.5 million, when the two benchmark closing dates came and went with no action, which were some months later.
This suit is an attempt to rescind an agreement as it was expressed, and seeks the return of monies that changed hands, because an extraneous event has upset a fundamental assumption on which it rested. There are reasons both for and against this proposition. They are for another time. The defendant cannot import its arguments more readily applicable to a later Practice Book motion, into this motion to strike. They either do not meet the necessary burden of proof, or are beyond the scope of permissible review on such a motion. While no doubt highly relevant on the merits, if ultimately proven to be true, many such arguments can be given little, if any, weight at this juncture.
Accordingly, the defendant's motion to strike is denied.