Opinion
FBTCV135030073S
11-17-2015
Graham A. Phillips v. Richard Cunningham et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Alfred J. Jennings, Jr. Judge Trial Referee.
Procedural/Factual Background
This action was commenced by the serving of a one-count complaint dated July 15, 2013 by the plaintiff Graham Philips against the defendants Richard Cunningham and his wife Rosina Negron. The plaintiff had sold a historical home on Old Post Road in Fairfield (the " property") to the defendants on May 31, 2013. Questions had arisen at the closing of title as to an open building permit for renovations at the property performed by the plaintiff after he had purchased the property in 2010 consisting of work on a finished room in the attic and the addition of a laundry room in the basement, and as to certain unpermitted work at the property during plaintiff's ownership consisting of renovation of the heating, ventilating and air conditioning (" HVAC") system and the addition of a new hot water heater. Although the plaintiff had commenced the process of closing the open building permit for the attic room and the basement laundry room by working with the Town of Fairfield Building Department ('FBD"), he did not have a certificate of occupancy for the work on that permit, and he had not yet applied for the electrical, plumbing, and mechanical sub-permits required by FBD for the already-completed work on the HVAC system and the replacement of the hot water heater. Since a postponement of the closing by more than a few days would have caused the defendants to lose the rate lock on their mortgage commitment, and would have caused complications with the termination of their tenancy in the rented premises they were vacating, and with their moving arrangements, the parties agreed to proceed with the closing of title, with $20,000 of the purchase price placed in escrow. The Escrow Agreement (Pl. Ex 1) signed at the closing by the plaintiff (by the authorized signing of his name by his attorney) and by the defendants provides that the $20,000 would be held in escrow by plaintiffs attorney's law firm " for the purpose of ensuring that the Seller complete, at Seller's sole cost and expense, the following work (the " Work"): 1. Close the current open permit at the Property permit number 148317, for adding laundry room in basement and finish of the attic; [and] 2. Legalize the unpermitted work previously completed at the Property for the HVAC system including the water heater." The Escrow Agreement further provided:
1. That the Seller shall, at Seller's sole cost and expense, complete all of the work, as described above.
2. That the obligation of the Seller to complete said work shall survive the delivery of the deed.
3. That the sum of $20,000 (the " Escrow Funds") shall be deposited with the Escrow Agent to secure the completion of said Work by the Seller under the terms of this Agreement. Said Escrow Funds shall not be released to Seller until the Work has been completed.
4. Upon the completion of Work Item 1, above, the Escrow Agent shall deliver proof of completion to Buyer's Attorney, and within one (1) business day of sending said proof of completion to Buyer's Attorney, Escrow Agent shall release $10,000 of the Escrow Funds to Seller.
5. Upon the completion of Work Item 2, above, the Escrow Agent shall deliver proof of completion to Buyer's Attorney, and within one (1) business day of sending said proof of completion to Buyer's Attorney, Escrow Agent shall release $10,000 of the Escrow Funds to Seller.
The main body of the Escrow Agreement is typed, as prepared by plaintiff's attorney. At the closing of May 31, 2013 the defendants' attorney added, in her handwriting, this additional language, " All work shall be completed by June 30, 2013. Should work not be completed by June 30, 2013, the escrow agent shall release the funds to the Buyer and the obligations between the parties shall cease." The plaintiff admitted that he was aware of the handwritten addition when he authorized his attorney to sign his name to the Escrow Agreement.
The one-count complaint seeks an order that the Escrow Funds be released to the Plaintiff, alleging that the Seller completed the Work as described in the Escrow Agreement at the Seller's cost and expense, and subsequently obtained a Certificate of Occupancy from the FBD about July 29, 2013; that the Escrow Agent and the Seller delivered proof of completion of the Work to the Buyer's Attorney; and that the Buyers have refused to authorize the Escrow Agent to release the Escrow Funds to the Seller. The Defendants in their Revised Answer admit the allegations of the complaint except insofar as it states that the Plaintiff satisfied his obligations under the Escrow Agreement, and pleads by way of Special Defense: First, Breach of Escrow Agreement by failing to satisfy the terms of the Escrow Agreement within the designated time, and falsely represented the nature and number of outstanding permits at the time of closing; Second Fraud, in that plaintiff falsely advertised and represented to defendants that the property was a four-bedroom residence when the property is not a lawful four-bedroom residence but rather only a three-bedroom residence, and, in that the plaintiff also misrepresented the square footage of the property as larger than its actual size; and Third, Illegality Not Apparent on the Face of the Pleadings, in that the plaintiff committed numerous unlawful acts in connection with the sale of the property to defendants, specifically that he advertised and represented the property as a four-bedroom residence when it was only a lawful three-bedroom residence, overstated the square footage of the property, misrepresented the status of required permits, misrepresented the work performed by plaintiff when in fact such work was dated and had been performed prior to plaintiff's acquisition of the property, and failed to secure required permits. The defendant's Revised Answer also includes four counts of counterclaim: First Counterclaim, Fraud, in that the plaintiff falsely advertised and represented to defendants that the property was a four-bedroom residence when it is not a lawful four-bedroom residence, in that the plaintiff misrepresented the status of required permits, in that the plaintiff misrepresented work performed by plaintiff, specifically installation of toilets when in fact such work was dated and had been performed prior to plaintiff's acquisition of the property; and in that plaintiff intentionally made the above misrepresentations in an effort to induce the plaintiffs to pay an inflated price for the property; Second Counterclaim, Negligent Misrepresentation, which repeats the allegations of the First Counterclaim apparently intending to characterize them as negligent misrepresentations rather than fraudulent; Third Counterclaim, Violation of the Connecticut Unfair Trade Practices Act (" CUTPA') repeating the allegations of the First Counterclaim and additionally alleging that " the plaintiff is engaged in the business of buying and selling renovated properties"; and, Fourth Counterclaim, Breach of Escrow Agreement, in that the plaintiff breached the Escrow Agreement by failing to satisfy the terms of the Escrow Agreement within the designated time, thereby entitling the defendants to the Escrow Funds. The Plaintiff then filed a Reply to Special Defenses and Answer and Special Defense to the Counterclaims, denying or professing lack of knowledge to the special defenses and the counterclaims, and pleading by way of Special Defense to the Fourth Counterclaim that " Any delay in the Plaintiff's Compliance with the Escrow Agreement was excused because it was caused, at least in part, by the acts of the Defendants." The Defendants replied by denying the Special Defense to the Fourth Counterclaim.
The case was tried before the undersigned as a bench trial on May 14, and May 20, 2015. Plaintiff and defendants have each submitted a pretrial Memorandum of Law and a Post-Trial Brief. Findings of fact and conclusions of law will be included in the following Discussion.
Discussion
The Second and Third Special Defenses are not validly pleaded as special defenses to the complaint. It is true that fraud and illegality not apparent in the face of the pleadings are mentioned in Practice Book § 10-50 as examples of valid special defenses, but, in the context of this case they do not allege " [f]acts which are consistent with [the facts alleged in the complaint] but show, notwithstanding, that the plaintiff has no cause of action." Id. The complaint alleges a very simple claim--that the plaintiff pursuant to the Escrow Agreement between the parties placed money in escrow contingent on his completion of two items of " Work"; that he completed the Work and sent proof thereof to the Escrow Agent, but that the defendants refuse to authorize the Escrow Agent to release the Escrow Funds to him. The entire complaint is within the framework of the Escrow Agreement. The Second and Third Special Defenses do not claim fraud or misrepresentation or illegality in the formation of the Escrow Agreement, but widen the scope to alleged misrepresentations in the negotiation and formation of the February 10, 2013 Residential Real Estate Sales Agreement between the parties.
" One cannot recover upon a contract unless he has fully performed his own obligation under it, has tendered performance, or has some legal excuse for not performing." (Citations omitted. Emphasis added.) Automobile Ins. Co. v. Model Family Laundries, Inc., 133 Conn. 433, 437-8, 52 A.2d 137) 1947. The " it" in that holding clearly refers to the same contract that the plaintiff is claiming under. Here the Second and Third Special Defenses do not go to the Escrow Agreement under which the plaintiff claims, but relate instead to the underlying Purchase and Sale Agreement.
A. Entitlement to the Escrow Funds.
Both parties are claiming entitlement to the Escrow Funds--the plaintiff by his complaint; the defendants by their First Special Defense and by their Fourth Counterclaim. There is no dispute over the fact that the plaintiff did not complete the " Work" as defined in the Escrow Agreement by the June 30, 2013 deadline specified in the addendum to the Escrow Agreement. The " Work" was more than the physical labor of plaintiff's tradespeople to inspect the property, write their required letters regarding the unpermitted work, and correct the deficiencies noted on the June 20, 2013 first inspection by FBD. It is undisputed that that physical work was completed by June 30, 2013, the day of deadline. The deadline was missed because the Escrow Agreement defined Item 1 of the " Work" more broadly as " Close the current open permit at the Property, permit number 148317 . . ." As testified to by Mr. Thomas Conley, Chief Building Official of the Town of Fairfield, a permit is not " closed" until the work has been completed and has passed inspection. Here, the work was completed on June 30, but plaintiff was not able to schedule the inspection with FBD until July 11, 2013, eleven days after the deadline.
The Escrow Agreement defined Item 2 of the " Work" as " Legalize the unpermitted work previously completed at the Property for the HVAC system including the water heater." Since the Correction Notice (Pl. Ex. 13) following the first inspection on June 20, 2013 lists deficiencies in the unpermitted work on the HVAC system and replacing the water heater, that work would require reinspection after corrective measures so it, also, would not be completed until successfully reinspected.
The situation, then, is that plaintiff was eleven days late in completing the two items of Work specified in Escrow Agreement. Plaintiff claims that, because the escrow agreement fails to state that " time is of the essence" with regard to the June 30 deadline in the handwritten addendum, the normal rule of contract performance applies, namely that substantial performance within a reasonable time of the deadline will satisfy the contract. The court agrees with that position.
The defendants as the new owners of the property rescheduled the July 11 inspection for July 23, 2015 because they were on vacation on July 11, but that delay cannot be attributed to the plaintiff. He would have satisfied the conditions of the Escrow Agreement at the July 11 inspection if it had occurred. The property passed inspection on July 23 and the plaintiff walked the paperwork through the various town agencies for signatures, and the Certificate of Occupancy issued on July 29, 2013. (Pl. Ex. 14.)
When the parties to a real estate contract want to fix a specific date for performance, we generally have required them to express specifically in the contract that time is of the essence, otherwise, performance within a reasonable time will satisfy the contract. See Bethlehem Christian Fellowship, Inc. v. Planning and Zoning Commission, 58 Conn.App. 441, 446, 755 A.2d 249 (2000). 'Where the agreement does not specifically state that time is of the essence, it is presumed not to be unless the parties have expressed a contrary intent.' Mihalyak v. Mihalyak, 11 Conn.App. 610, 616, 529 A.2d 213 (1987).Tulisano v. Schonberger, 74 Conn.App. 101, 105-6, 810 A.2d 806 (2002).
'The general rule with respect to compliance with contract terms . . . is not one of strict compliance, but substantial compliance.' (Internal quotation marks omitted.) Pack 2000, Inc. v. Cushman, 126 Conn.App. 339, 348-49, 11 A.3d 181, Cert granted on other grounds, 301 Conn. 907, 19 A.3d 177 (2011).Ed Construction, Inc. v. CNA Insurance Co., 130 Conn.App. 391, 410, 24 A.3d 1, (2011).
Defendants argue that they have " expressed a contrary intent" in the Escrow Agreement because the agreement clearly called for all the required work to be completed and that open permit be closed by June 30, 2013, citing Mihalyak v. Mihalyak supra . But Mihalyak does not support that argument. The separation agreement between Mr. and Mrs. Mihalyak called for the wife to obtain a mortgage commitment in her own name and pay to the husband the sum of $30,000 in return for a quitclaim deed of his interest in the marital home by April 15, 1985. If payment was not made by that date the home was to be sold and the husband paid his $30,000 out of the proceeds of sale to a third party. The wife was not able to get her mortgage which enabled her to pay the $30,000 until April 26, 1985--eleven days after the April 15 deadline. Since the agreement had no " time of the essence" provision, the Superior Court ordered the husband to quitclaim the house to the wife despite her failure to meet the deadline. The Appellate Court agreed:
The [trial] Court considered and found credible the testimony of the plaintiff's counsel that April 15, 1989 was selected as an adequate amount of time for the plaintiff to secure her mortgage. The defendant does not rebut the plaintiff's assertion, but rather relies upon the language of the agreement which provides for consequences if the plaintiff fails to tender payment to the defendant by April 15, 1985. Such proviso does not compel the factual conclusion that time was of the essence. This is especially true in a case such as this where the agreement contemplated the plaintiff's refinance of the marital home . . . Delays in such transactions are frequent and, if reasonable in duration, are generally tolerated. (Emphasis added, citation omitted.) 11 Conn.App. at 617.
Defendants also argue that insertion of the deadline by a handwritten addition to the Escrow Agreement which had no time deadline for plaintiff to complete the work, shows an intent to make time of the essence with regard to completion of the " Work" by that deadline. The court disagrees, noting that the handwritten addition was placed on the Escrow Agreement by defendant's attorney, presumed to know the importance of an express " time of the essence" provision. A similar situation existed in Kakalik v. Bernardo, 184 Conn. 386, 439 A.2d 1016 (1981) where a time limit provision had been inserted by hand into a mortgage contingency clause of a real property purchase and sale agreement, which addendum had no statement saying that time was of the essence. The court declined to enforce the deadline, saying " The rule that time is not ordinarily of the essence in transactions involving real property applies to the occurrence of a contractual condition as well as to the performance of a contractual duty." Id., 393.
Mihalyak, supra, provides that the court, in deciding whether or not the parties intended that compliance with a deadline would be of the essence of the agreement, can consider the reason for the deadline, and other extrinsic factors. Here the court finds that defendants' reason for setting the June 30 deadline was that they were leaving or about that date for a family vacation in Puerto Rico and wanted the matter of the building permit and the unpermitted work at the property off their minds while on vacation. The court finds that reason to be a matter of personal convenience, but not necessarily compelling. Especially with them being out of the country, they suffered no prejudice by the eleven-day delay in getting the already completed Work inspected by FBD on their return. The court also does that, like the mortgage deadline in Mihalyak v. Mihalyak and the mortgage contingency deadline in Kakalik v. Bernardo, the transaction in this case--getting a home inspection to close out a building permit or legalize unpermitted work--is known to be fraught with delays. Mr. Conley testified that, especially in June and July, it could take between two days and two and a half weeks from the time of requesting an inspection until an inspector could go out to the property to do the inspection. Finally the court notes that any delay by the plaintiff in clearing the permit for the attic room and the laundry room or in legalizing the unpermitted work that occurred before the closing of May 30, 2013 when the Escrow Agreement was signed is irrelevant to the complaint. The Escrow Agreement was entered into on that day to deal with the situation as it existed then and there, so as to avoid any continuance of the closing but still preserve defendants' rights to have the open permit closed and to have the unpermitted work legalized.
The court concludes that the defendants have failed to rebut the presumption that time was not of the essence with regard to the June 30, 2013 deadline, and that plaintiff's duty was to substantially comply with that deadline by completing the Work within a reasonable time after June 30, 2013. And the court further concludes based on all the evidence that the plaintiff did comply within a reasonable time after the deadline when he completed on June 30, 2013 all the physical work necessary for a successful final inspection, and obtained an appointment for the final inspection of the property by FBD for July 11, 2013. The plaintiff is therefore entitled to return of the full $20,000 Escrow Fund from the Escrow Agent.
The court finds for the plaintiff on the Complaint and on the First Special Defenses thereto. The Second and Third Special Defenses have been rejected. The Court also finds for the plaintiff on the Fourth Counterclaim.
B. First and Second Counterclaims for Intentional/Negligent False Representations
At or about the time the property was listed for sale with the William Raveis Agency in the fall of 2012, the plaintiff's broker, Pam Foarde, representing him as seller's broker, went through the home and made detailed notes as to the condition of the property and the renovations the plaintiff had performed since he purchased the home in about June of 2010. Ms. Foarde had represented Mr. Philips in that transaction as well, as buyer's broker. From those notes (Plaintiff's Ex. L) Ms. Foarde prepared some marketing materials (plaintiff's Exhibits A-E). The written materials (Exhibits, A, B, & C) were left in the butler's pantry of the home where they were available to brokers and prospective purchasers. Exhibit D is a screen shot of an online blog Ms. Foarde created concerning the property. Exhibit E. is a screen shot from an " address website" entitled " 952 Old Post Road, Fairfield, CT 06824, Andrew Roland Home" prepared by Ms. Foarde's colleagues. These materials were prepared by Ms. Foarde and her colleagues as the agents of the plaintiff in an effort to market the property on his behalf. They are binding on the plaintiff who admitted that he reviewed these materials at least cursorily and approved them before they were made available to prospective purchasers. There are some admitted inaccuracies in the materials. The property is described in several places in these materials as having four bedrooms, the fourth being the attic room, which is described in Exhibits C, D, and E as having been " converted to a 4th Bedroom/Office." The attic bedroom, however, is not a legal bedroom and cannot lawfully be occupied as such. The room is not a legal bedroom because it lacks several requirements of the Connecticut Building Code for a lawful bedroom, such as a privacy door and an adequate escape window. As Mr. Conley testified, once the building permit No. 148317 referenced in the Escrow Agreement was closed by the successful reinspection of July 23, 2013 which resulted in the issuance of a Certificate of Occupancy on July 20, the attic room could be lawfully occupied for any other purpose, but not as a bedroom without further modifications to comply with the Building Code requirements for a lawful bedroom. The materials in several places also state that the bathrooms had recently been equipped with " new toilets." That is an error. Although renovations were made to the bathrooms in the house, the pre-existing toilets were left in place. Plaintiff testified that he missed that error when he reviewed the marketing materials.
Defendants allege in their First Counterclaim that the representations in the marketing materials as to the fourth bedroom and the toilets were false, as was a representation in the Agreement of Sale as to the status of permits required by the Fairfield Building Department. That representation was made in paragraph 21 of the Residential Real Estate Sales Agreement (Plaintiff's Exhibit 15) which states: " The Seller represents that during Seller's Period of ownership no work has been performed on the premises for which a building permit has been required other than that for which building permits were obtained and for which Certificates of Occupancy have been obtained." which, they claim, was not true when the Agreement was signed on April 10, 2013. Defendants allege that those claimed misrepresentations were made intentionally by the plaintiff " in an effort to induce Defendants/Counterclaim Plaintiffs to pay an inflated price for the Property" and that defendants did, to their damage pay a price higher than the Property's fair market value. The Second Counterclaim, by title and implication, alleges alternatively that those same misrepresentations were made negligently.
The Plaintiff responds that those claims of misrepresentation are barred and have been waived by the Defendants under the clear provisions of the April 10, 2013 Standard Form Residential Real Estate Sales Agreement Between the Parties. The Sales Agreement provides:
CONDITION OF PREMISES [THIS AGREEMENT IS NOT SUBJECT TO ANY INSPECTION CONTINGENCIES] The Buyer agrees that he has inspected said premises, is satisfied with the physical* condition thereof and agrees to accept at closing the Premises in their present condition on an 'as is' basis, reasonable wear and tear excepted, subject to the provision of Paragraph 11 hereof [dealing with risk of loss by fire or other casualty] . . . Neither SELLER nor SELLER's AGENTS have made any representations or warranties as to said Premises upon which BUYER has relied other than as expressly set forth in this Agreement. *As of the time of Buyer's Building inspection. (P8)
ACCEPTANCE OF DEED: The delivery and acceptance of the deed herein described shall be deemed to constitute full compliance with all the terms, conditions, covenants and representations contained herein or made in connection with this transaction, except as may herein be expressly provided and except for the warranties of title. (P34)
REPRESENTATIONS. Unless otherwise specified in writing to the contrary, none of the representations made in this agreement or any addenda attached hereto shall survive delivery of the deed and all representations by seller are made to the best of Seller's knowledge and belief. (P35)
The foregoing REPRESENTATIONS clause has been partially " otherwise specified in writing to the contrary" by the second paragraph of the Rider to the agreement which provides:
All representations made by either party hereunder shall be deemed made only to the extent of the best knowledge and belief of that party. Said representations are expressly agreed not to survive the Closing of Title hereunder, except in the event of an intentional misrepresentation of a material circumstance or fact by the Seller, or except in those instances where a representation expressly states that it shall so survive.
ENTIRE AGREEMENT: All prior understandings, agreements, representations, and warranties, oral and written, between Seller and Purchaser are merged into this Agreement. This Agreement completely expresses the agreement of the parties, and has been entered into by the parties after discussion with their respective attorneys and after full investigation, neither party relying upon any statement made by anyone else that is not set forth in this Agreement. Neither this Agreement or any provision hereof may be waived, changed, or cancelled except by a written instrument signed by both parties. (P38)
BUYER'S REMEDY FOR FALSE REPRESENTATIONS: In the event that any of the foregoing representations are found to be untrue prior to the closing of title, the Seller, at Buyer's Option, shall have thirty days to correct such defect, and if Seller is unable to correct such defect within the time prescribed, the Buyer shall have the option of either accepting title subject to the defect or terminating this transaction, in which case all sums paid hereunder shall be refunded to Buyer. (Rider, P12)
Defendants have not addressed the above quoted provisions of the Purchase and Sale Agreement in either of their briefs.
The Court concludes that the allegations of misrepresentation are barred, and have been waived by delivery and acceptance of a deed to the property, except to the extent that they are found, under the second paragraph of the Rider, to be an " intentional misrepresentation of a material circumstance or fact." In other words, the claims are barred unless the Defendants have met their burden of proof on the allegations of the First (Fraud) Counterclaim that " Plaintiff intentionally made the above misrepresentations in an effort to induce Defendants/Counterclaim Plaintiffs to pay an inflated price for the Property."
The court finds that the representation in the September 2012 marketing materials as to a fourth bedroom in the home was not an intentional misrepresentation of a material fact. Mr. Philips testified, and the court credits his testimony, that he believed at that point in time that the attic room was a legal bedroom. When he bought the home in 2010 the MLS listing placed by the previous owners (Ex.22) described the home as having four bedrooms. When he decided to list the home for sale in September 2012 his professional realtor Pam Foarde listed it with MLS as a four-bedroom home. The Town of Fairfield Tax Assessor Field Card (Plaintiff's Ex 18) lists the home as having four bedrooms. An Appraisal Report (Plaintiff's Exhibit 17) prepared by Michael Reimecke as of April 8, 2013 in conjunction with the Defendant's mortgage application describes the property as a four-bedroom home. The plaintiff and his wife, after renovating the walls and flooring of the room, had furnished it as a bedroom for guests. Plaintiff's first knowledge of any issue as to the legality of the fourth bedroom occurred after the Sales Agreement had been signed in April 2013 when Defendant's Attorney started to ask questions about the bedroom in the attic. That misrepresentation was unintentional.
Likewise the court finds that the misrepresentation as to the toilets was unintentional. It was a mistake made by Pam Foarde when she prepared the marketing materials which Mr. Philips missed when he was reviewing those materials.
The statement Plaintiff made in P21 of the Sales Agreement signed on April 10, 2013 has also been alleged as a misrepresentation. The statement, to a large extent, was true. " The Seller represents that during Seller's Period of ownership no work has been performed on the premises for which a building permit has been required other than that for which building permits were obtained . . ." was in fact true. Work had been performed without a required permit, but the Plaintiff had obtained an after-the-fact permit for that work (Plaintiff's Exhibit 10) in the fall of 2012 and Plaintiff was in the process of trying to close out that permit. But, the last part of the statement " . . . and for which Certificates of Occupancy have been obtained" was not true as of April 10, 2013, and plaintiff admitted as much. The court finds that to be a deliberate misrepresentation, but, under the terms of the Rider provision, the next inquiry would be whether or not it was a misrepresentation " of a material fact." For purposes of summary judgment, our courts have defined a " material fact" as a fact that will make a difference in the result of the case. Buell Industries, Inc. v. Greater New York Mutual Insurance Company, 259 Conn. 527, 556, 791 A.2d 489 (2002). Here, the presence or absence of Certificate of Occupancy for the premises under contract to be sold could in some situations determine whether or not the contract could be enforced. But, in this case, the misrepresentation was harmless and could not be the determinative factor because the defendants had already learned through the public record that no Certificate of Occupancy had been obtained. On April 8, 2013 the defendants or their attorney had obtained a Municipal Records Search (Plaintiff's Ex. 16) showing that Permit No. 148317 was still open and no Certificate of Occupancy had been issued. Since the misrepresentation was not material in that defendants already knew what a truthful representation would have stated, the exception of the Rider provision to application of the non-survival of material misrepresentations clause of the Agreement does not apply.
In summary, then, the claims for marketing misrepresentations as to the fourth bedroom in the attic and age of the toilets and the Sales Agreement misrepresentation as to the status of Certificates of Occupancy are barred, and defendants have waived those claims under the terms of the Sales Agreement and its Rider by accepting the deed to the property on May 31, 2013.
Since the misrepresentations were pleaded alternatively as fraudulent (First Counterclaim) or Negligent (Second Counterclaim) this ruling applies to both the First and Second Counterclaims.
C. Third Counterclaim (" CUTPA")
The Third Counterclaim repeats and incorporates the misrepresentation allegations of the Connecticut Unfair Trade Practices Act (" CUTPA") alleging that those misrepresentations are an unfair or deceptive trade practice under Section 42-110b of CUTPA (Conn. Gen. Stat. § 42-110b) which provides: " No person shall engage in unfair methods of competition and unfair or deceptive practices in the conduct of any trade or commerce." CUTPA defines " Trade" and " Commerce" as " the advertising, the sale or rent or lease, the offering for sale or rent or lease, or distribution of any services, any property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value in this state." Conn. Gen. Stat. § 42-110a(4).
The Appellate Court has held in McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn.App. 486, 890 A.2d 140 (2006) that the terms trade and commerce as used in CUTPA apply only to a defendant's primary trade or business and not to an incidental matter. The plaintiff had alleged in that case an unfair trade practice under CUTPA against the defendant, an automobile dealership, arising out of a contract of sale of the dealership building to the plaintiff. The Appellate Court affirmed a directed verdict in favor of the defendant, saying:
Because the defendants in this case were not in business of selling real property, and the purchase and sale agreement was merely incidental to the defendant's sale and servicing of automobiles, we conclude that the court properly directed a verdict as to the plaintiff's CUTPA count. Id., 523.
See, also, Biro v. Matz, 132 Conn.App. 272, 289-90, 33 A.3d 742 (2011) (A CUTPA violation may not be alleged for activities that are incidental to the entity's primary trade or commerce) and Li v. Yaggi, Superior Court, Judicial District of New Haven, Docket No. CV14-5034810 (July 10, 2014, Wilson, J.), 2014 Ct.Sup. 1940, 2014 WL 4056885 (Conn.Super.) (The defendant's single transaction of selling property, which they owned, to the plaintiff's does not bring this conduct within the scope of § 42-110a et seq. (CUTPA))
The defendants attempt to bring this case under the CUTPA umbrella by alleging in the Third Counterclaim, P6, that " Plaintiff/Counterclaim Defendant is engaged in the business of buying and selling real properties." The evidence fails to support that allegation. This was the first house Mr. Phillips had ever owned. When he sold it to the defendants, it was the first and only house he has ever sold. Following his college years he has worked for years in various advertising agencies in New York and San Francisco. He bought this house to live in with his family--not to " flip" it as Defendants argue. He owned this house for about two years and lived in it with his wife except while it was being renovated. During his ownership he commuted to New York by train. He and his wife enjoyed the nearby Fairfield Library and patronizing local businesses within walking distance, and other Fairfield activities. See " Top Ten Reasons Why We Love Living at 062 Old Post Road." (Defendant's Ex. F.) Selling real estate was not plaintiff's primary business. It was not his business at all. The case cannot be brought under CUTPA.
Judgment
The Court enters judgment for the Plaintiff on the Complaint in the amount of $20,000. The Court enters judgment for the Plaintiff on the First, Second, Third and Fourth Counterclaims.