Opinion
No. CV 09 4016364
October 29, 2010
MEMORANDUM OF DECISION AND ORDER RE MOTION FOR SUMMARY JUDGMENT (106.00)
I. BACKGROUND
On November 24, 2008 the plaintiff Summit Showcase, LLC (Summit) contracted with the defendant National Amusements, Inc. (National) to purchase from National three commercial properties in Connecticut where National operated movie theaters. The contract provided that the properties could not be used as a movie theater, or a theater of any kind, or for parking for any theater.
The aggregate purchase price for the three properties was $25,730,062, with the transaction closing to occur on or before April 30, 2009. Summit deposited two sums totaling $1,953,938 in escrow with the interpleader defendant, First American Title Insurance Company. Summit notified National, in writing that it elected to rescind the contract because National had offered for sale a number of other movie theater properties located in the northeast United States and the New England area. National rejected Summit's claim that it had a right to rescind. Both Summit and National have claimed the funds in escrow.
Summit commenced an action returnable to this court June 2, 2009 seeking interpleader, a declaratory judgment that the contract is null and void, and damages. National answered denying the material allegations of the complaint, and counterclaimed seeking a declaratory judgment that Summit breached the contract and seeking money damages as a result of the breach. In response to National's counterclaims, Summit has asserted special defenses of estoppel, unclean hands, impracticability of performance, and frustration of purpose, all of which have been denied by National.
National has moved for summary judgment. Summit opposes the motion on the grounds that the announced sale of a "flood" of additional properties by National made the subject contract impractical to perform and frustrated its purpose. Summit also contends there are material unresolved facts concerning its claims and defenses.
II. SCOPE OF REVIEW
Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. "In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." Appleton v. Board of Education, 254 Conn. 205, 209 (2000). Summary judgment "is appropriate only if a fair and reasonable person could conclude only one way." Miller v. United Technologies Corp., 233 Conn. 732, 751 (1985). "The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to judgment as a matter of law." Appleton v. Board of Education, supra, 254 Conn. 209. "A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case." (Internal quotation marks omitted.) United Oil Co. v. Urban Development Commission, 158 Conn. 364, 379 (1969). The trial court, in the context of summary judgment motion, may not decide issues of material fact, but only determine whether such genuine issues exist. Nolan v. Borkowski, 206 Conn. 495, 500 (1988).
"Although the party seeking summary judgment has the burden of showing the nonexistence of any material fact [question] . . . a party opposing summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact together with the evidence disclosing the existence of such an issue. It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue." Maffucci v. Royal Park Ltd. Partnership, 243 Conn. 552, 554 (1998). "[T]he party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact." Appleton v. Board of Education, supra, 254 Conn. 209.
III. DISCUSSION
The crux of this summary judgment motion is the assertion by National that Summit cannot sustain either its claim that it is entitled to rescind the contract because National's actions in putting properties up for sale made the contract impractible to perform or its two-level contention that both parties had the same basic assumption (i.e. there would not be substantial additional sales of theater properties) and if National did not have that same basic assumption then it had a duty to disclose to Summit its intention to sell additional properties.
The Connecticut Supreme Court has noted that the doctrine of impracticability is an exception to the general rule of enforceability of contracts and has stated that a party claiming such an exception to excuse performance of a contract must prove: (1) an event made the performance impracticable; (2) the nonoccurrence of the event was a basic assumption on which the contract was made; (3) the claimed impracticability occurred without the fault of the party seeking to be excused; and (4) the party has not assumed a greater obligation than imposed by law. Dills v. Town of Enfield, 210 Conn 705, 717 (1989); O'Hara v. State of Connecticut, 218 Conn. 628, 637 (1991). In Dills the Connecticut Supreme Court pointed out that the doctrine of impractability includes the concepts of "impossibility" and "frustration of purpose" and that "only in the most exceptional circumstances" is a contractual duty to perform excused because additional financial burdens "make performance less practical than initially contemplated." Dills, supra, 210 Conn. 717 and Conn. and n. 16.
The court determines that there are at least three questions of material fact that are unresolved precluding summary judgment. First is the bevy of facts pertinent to the issue of whether the putting up for sale of other theater properties by National made such a difference in the bargain struck in November 24, 2008 contract as to make performance by Summit impractical. Second, there is a material fact in question as to whether there was "basic assumption" by both parties underlying the contract that did not occur. Summit argues it had a basic assumption that National would not "flood" the market with theater properties. National contends it did not hold this basic assumption. National points to the provision in the contract that prohibits the use of properties under contract as theaters and contends the prospective new sales would not compete with the three properties under contract and further argues that there was considerable publicity in business journals prior to November 24, 2008 about the pressures on National to sell some, if not all, its theater properties, information which should have disabused Summit of any assumptions it held that there would not be such future property sales. However, the managing member of Summit, Felix Charney, has submitted an affidavit stating that prior to signing the contract he "had not see or read any news reports about a possible sale of [National's] inventory of movie theater properties"
This is a hard row for Summit to hoe. See cases cited at Pl. Brief (Oct. 29, 2009) at pp. 9-10. Summit claims it needs extensive discovery over what has already been provided. The issue of discovery is dealt with in another decision issued today.
Summit claims there is a "core issue of disputed fact" whether Summit and National both assumed that National would not sell a number of similar properties into the market, but its position is not necessarily that National did hold that assumption but is rather an "either or" position; i.e. if National held that assumption then the impracticability doctrine applies or if not National breached a duty to disclose its intention to sell properties.
Charney's affidavits are the basis for Summit's contention as to what its basic assumption was. There is no such similar affidavit from National. The court determines there is room for fact finder not to credit the Charney affidavit as it does not state that he did not know about the news stories concerning possible sales of National's theater properties, just that he did not see or read them. Further, one could possibly question that a person steeped in real estate transactions and in the middle of buying three theater properties from National would not at least be aware of National's purported financial straits and speculation of further theater sales. Further, with no evidentiary basis to ascertain National's state of mind about other theater property sales, that material fact needs to be resolved in order to determine the applicability of the impracticality doctrine as well as Summit's claim of a duty to disclose.
Finally, as to Summit's alternative argument contending that National had a duty to disclose its intention sell other properties there is a dearth of facts about the National-Summit negotiating history leaving the court unable to determine on the present record whether National had a duty to disclose. Certainly, the language of the contract does not appear to give rise to such a duty. Nevertheless there may be other facts to be considered.
For the foregoing reasons the motion for summary judgment is denied.