Opinion
No. CV 03 040 81 00 S
June 1, 2007
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT
This cause of action arises out of a residential real estate closing on property at 6 Lowndes Avenue which took place in the city of Norwalk on January 23, 2002.
The plaintiff, Kathleen Turey, has filed a four-count complaint against Kenneth A. Vayda, the seller of the subject property, Anthony J. Parenti and his employer, Prudential Connecticut Realty (Prudential), the real estate brokers who listed the property for Vayda, and Attorney Anthony J. Massaro, who represented the plaintiff for the closing of the subject property.
The plaintiff's original complaint, filed on December 5, 2003, contained only a count against Vayda and one against Parenti and Prudential. In response to a request to revise, the plaintiff filed a revised complaint on May 19, 2004. After Parenti and Prudential filed an apportionment complaint, she filed an amended complaint on June 29, 2004, only asserting two counts against Massaro. On March 7, 2006, she then filed a four-count, second revised complaint, reinstating the original three defendants and including the two counts against Massaro, which is the subject of the present motion for summary judgment. The plaintiff has since filed a motion to amend and third amended complaint on April 20, 2007, with the only change being the addition of Julia Vayda, Kenneth Vayda's wife, as a defendant. Kenneth Vayda filed an objection on April 20, 2007, which has not yet been ruled upon by the court. Nevertheless, because count two was unchanged between the second revised complaint and third amended complaint, whether the plaintiff succeeds in amending her complaint is irrelevant for the purposes of the present motion.
The first count is against Kenneth Vayda and alleges that the plaintiff was induced into entering a contract to purchase the property as a result of intentional misrepresentations that the residence was a two-family house with one of the units deriving $900.00 a month in rent and the second being owner occupied. The complaint alleges that, relying on those representations, the plaintiff purchased the property for $300,000 on January 23, 2002.
The complaint continues that in August of 2002, the plaintiff was advised by the building department of the city of Norwalk that they had never approved the subject property as a two-family home, nor had it been approved by the appropriate zoning authority. In effect, Norwalk considered it to be a single-family home. The plaintiff claims that, as a result, she was required to apply to both the building department and appropriate zoning commissions for approval as a two-family home.
The second count is a claim of intentional misrepresentation against Prudential and Parenti, who advertised the subject property as a two-family house and represented that one of the units produced monthly rental income in the amount of $900.
The third and fourth counts allege legal malpractice and/or breach of contract against Massaro in failing to conform to the necessary standards of practice with respect to protecting the plaintiff's interests throughout the course of the closing.
The plaintiff claims damages including expenses that she incurred for the survey of the property, the variance application to the city of Norwalk, the coastal area management study and report, appraisal fees, construction and renovation costs as well as architect's and attorneys fees. In addition, the plaintiff claims lost income.
Parenti and Prudential have filed a motion for summary judgment as to the second count on the ground that there are no issues of material fact that the plaintiff has not suffered any damages.
Because the only motion presently before the court is Parenti and Prudential's motion for summary judgment (no. 157), all subsequent references to "the defendants" refer to them alone.
"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." (Internal quotation marks omitted.) Old Farms Associates v. Commissioner of Revenue Services, 279 Conn. 465, 479, 903 A.2d 152 (2006). "In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. . . The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact. . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent. . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the non-moving party has no obligation to submit documents establishing the existence of such an issue." (Internal quotation marks omitted.) Zielinski v. Kotsoris, 279 Conn. 312, 318-19, 901 A.2d 1207 (2006).
For the purposes of the motion, the defendants have not argued against their liability for their actions, but claim the plaintiff is not entitled to an award of damages. The basis for this claim is two appraisals of the subject property submitted by the plaintiff, the first appraising the building as a single-family residence with a value of $300,000 and the second appraising it as a two-family residence worth $299,221 (Exhs. A and B). The defendants claim that these two appraisals are the only relevant evidence relating to damages, and that, since the property is worth more as a single-family residence than as a two-family residence, the plaintiff is unable to demonstrate that she has suffered any actual damages.
The defendants have cited four cases for the proposition that comparison of the two appraisals is the only evidence admissible on the issue of damages with respect to a claim for intentional misrepresentation as an inducement to purchase real property. The first case is an 1898 decision; Gustafson v. Rustemeyer, 70 Conn. 125, 39 A. 104 (1898); in which the Supreme Court ruled that a vendee induced to purchase land by false and fraudulent representations is entitled to damages represented by the difference between the actual value of the property at the time of the plaintiff's purchase and its value had the property been as represented. The defendants argue that this rule has been applied too many times to raise any questions as to its validity. In actuality, however, the only issue presented to the Supreme Court in Gustafson was how the difference in value between the property as represented and the actual property received was to be determined. "In one class of cases the measure of damages is held to be the difference between the actual value of the property at the time of the purchase and its value if the property had been what it was represented or warranted to be; while in the other class of cases it is held to be the difference between the real value of the property retained by the plaintiff, as it was at the time of the purchase, and the value of that which he gave for it." Id., 135. The Supreme Court simply adopted the former class of cases.
The second case cited by the defendants is a 1954 case, Clark v. Haggard, 141 Conn. 668, 109 A.2d 358 (1954), where the only issue involved a sale of property alleged to be 83 acres but ultimately determined to be 52 acres. The court simply allowed an appraisal as to the value of each acre and awarded the plaintiff the difference between the value of 52 and 83 acres.
In Crowther v. Guidone, 183 Conn. 464, 469, 441 A.2d 11 (1981), the court stated, "the proper measure of damages [in a fraud action regarding real property] is the difference in value between the property actually conveyed and the value of the property as it would have been if there had been no false representation. . . together with any consequential damages resulting directly from the fraud." (Emphasis added; internal quotation marks omitted.) This expressly contemplates consequential damages and does not support the defendants' position.
Finally, the defendants' reliance on the Supreme Court's decision in Johnson v. Healy, 176 Conn. 97, 405 A.2d 54 (1978), is misplaced. While the court in Johnson set aside the trial court's award of damages based on the cost of repairs, it did so only because the lower court did not distinguish between expenditures constituting repairs and those constituting improvements. The court remanded the case on the issue of damages, recognizing that "[r]easonable costs of repair may. . . sometimes furnish a reasonable approximation of diminished value. . . Reliance expenses often serve as a surrogate for damages otherwise inaccessible to proof." (Citations omitted.) Id., 106.
Upon remand, the trial court altered the damage award to reflect only the diminution in value between the property as represented and as actually sold. The parties again appealed, and the Supreme Court found no error. Johnson v. Healy, 183 Conn. 514, 516-17, 440 A.2d 765 (1981). This does not, however, undermine the plaintiff's potential to recover consequential damages; the Supreme Court was reviewing the trial court's decision on a clearly erroneous standard of review, and simply found their calculation of damages to be not clearly erroneous under the terms of its remand. In its earlier decision, the court allowed for the possibility of consequential damages in the form of costs of repair; Johnson v. Healy, supra, 176 Conn. 106; as does the precedent the court cited in reaching such conclusion; see Levesque v. D M Builders, Inc., 170 Conn. 177, 181-82, 365 A.2d 1216 (1976).
Connecticut courts have repeatedly allowed recovery of consequential damages for actions in fraud. "A plaintiff in a fraud action is entitled to recover any consequential damages resulting directly from the fraud. . . The damages to be recovered in an action of this character are such as are the natural and proximate consequence of the fraudulent representation complained of; and those results are proximate which must be presumed to have been within the contemplation of the defendant as the probable consequences of his fraudulent representations." (Citations omitted; internal quotation marks omitted.) Kilduff v. Adams, 219 Conn. 314, 323-24, 593 A.2d 478 (1991). While the defendant is correct that diminution in value is the standard measure of damages in real estate disputes, "[t]here is. . . a well established exception to [the diminution in value] formula; such diminution in value may be determined by the cost of repairing the damage, provided, of course, that that cost does not exceed the former value of the property and provided also that the repairs do not enhance the value of the property over what it was before it was damaged." Willow Springs Condominium Ass'n., Inc. v. Seventh BRT Development Corp., 245 Conn. 1, 59, 717 A.2d 77 (1998). In Willow Springs, the court sustained a verdict of $156,600 for the repairs of a defective sewage treatment plant, $280,100 for repairs of defective chimneys, decks, roofs and vents, and $95,683 for fraudulent concealment. "The selection of the repair measure rests within the sound discretion of the trial court, and since "[they] are, in effect, alternative measures of damages, the plaintiff need not introduce evidence of both diminution in value and cost of repairs." Id., 59-60. Using the actual cost of repairs is particularly appropriate where fraud is involved. Id., 62. See also Belanger v. Maffucci, Superior Court, judicial district of Hartford, Docket No. CV 05 4013296 (January 26, 2007, Elgo, J.) (court awarded plaintiff costs of refurbishing basement, which leaked water and had mold problems, in action in contract and fraud incident to purchase of home from defendant); Ryan v. Tursi, Superior Court, judicial district of Fairfield, Docket No. CV 01 0380132 (October 15, 2002, Gallagher, J.) (defendant's failure to inform plaintiff of defective septic system could allow recovery of consequential damages for damage to property). Indeed, the defendant's argument ignores an even more fundamental rule of contract damages that "the award of damages is designed to place the injured party, so far as can be done by money, in the same position as that which he would have been in had the contract been performed." Ambrogio v. Beaver Road Associates, 267 Conn. 148, 155, 836 A.2d 1183 (2003). This includes consequential damages; that is, "any loss that may fairly and reasonably be considered [as] arising naturally, i.e., according to the usual course of things, from such breach of contract itself." Id.
In the present case, while the market value of the property is less as a two-family home than a single-family home, the plaintiff has stated that she wished to rent out a portion of the house for $900 per month. The only way for her to get the benefit of her bargain — a two-family home — was to apply to the zoning board for a variance, which required various expenditures on her part. These expenditures can reasonably be seen as the "cost of repairing" the property in order to make it conform to her expectations. Accordingly, they may be recoverable as consequential damages because the defendants are alleged to have known of her intent to rent one of the units out. Whether the plaintiff has in fact suffered consequential damages, and the amount of such damages, if any, present questions of fact that cannot be determined on the present motion. Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988) ("In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist"). Therefore, the defendant's motion for summary judgment is denied.