No. CV 01-0811412 S
March 23, 2005
MEMORANDUM OF DECISION
This case arises from negotiations in the spring of 2001 between plaintiff Building Traditions, LLC, a Connecticut limited liability company, and defendants Richard and Gina Panek, a married couple residing in Wethersfield, Connecticut, concerning the plaintiff's possible purchase of four residential building lots then owned by defendant Gina Panek on Secret Mountain Trail in Canton, Connecticut. In the First Count of its two-count Amended Complaint dated October 2, 2002, the plaintiff seeks money damages from the defendants for alleged breach of contract. The basis for that claim is the defendants' alleged failure to honor their commitment under a written contract allegedly "entered into . . . via facsimile" on May 8, 2000 to sell the lots in question to the plaintiff for "the sum of $145,000 with a $10,000.00 payment at closing and the remaining amount to be paid when the plaintiff sold the individual lots." Id., Count I, ¶ 7. The plaintiff claims that as a result of the defendants' refusal to sell the lots to it, as agreed to, it has suffered damages. Id., Count I, ¶¶ 8-9.
In the Second Count of its Amended Complaint, the plaintiff seeks to recover damages from the defendants on the theory of misrepresentation. The basis for this claim is that, while negotiating the above-described contract, the defendants allegedly made false representations to a member of the plaintiff, Mr. David Somers, that they would sell the lots to the plaintiff and that the plaintiff, by relying on those false representations, suffered compensable harm. Id. Count II, ¶¶ 7-9.
The defendants answered the Amended Complaint by denying all of the plaintiff's allegations of wrongdoing against them and pleading as a special defense that the alleged contract on which the plaintiff bases its claims was unsigned, and thus is unenforceable under General Statutes § 52-550(a)(4), Connecticut's Statute of Frauds. Answer to Amended Complaint (5/12/03), pp. 1-2. In addition, the defendants filed, amended and later refiled a counterclaim against the plaintiff based on allegations that, under false claim of legal and/or equitable right to purchase some or all of the lots here at issue, it intentionally and deliberately hindered, delayed and interfered with the defendants' efforts to market and sell those lots to other prospective purchasers. Id., p. 3. The plaintiff, in turn, has denied the defendants' special defense; Reply to Special Defenses (5/27/03); and denied all allegations of wrongdoing made against it in the defendants' refiled Counterclaim. Answer to Counterclaim (5/27/03).
With the issues so joined between them, the parties tried this case before the Court on March 3 and March 4, 2004. Thereafter, upon filing comprehensive briefs addressing the factual and legal issues that divide them, they submitted the case on the papers for the Court's decision. Based on the submissions of counsel and the credible evidence presented at trial, the Court respectfully makes the following findings of fact and conclusions of law.
At the start of trial, the parties informed the Court that the defendants' Set Off, Special Defenses and Counterclaim were no longer before the Court. Hence, the scope of trial was limited to the contested allegations of the plaintiff's operative Complaint.
I. FINDINGS OF FACT A. The Parties
1. Plaintiff Building Traditions, LLC is a Connecticut limited liability company which at all times relevant to this case was a licensed new home contractor engaged in the business of building luxury residential homes. Mr. David Somers, who described himself at trial as the managing member of the company, is a former Connecticut attorney who has been involved in the home building business in Connecticut since the mid-1970s.
2. Defendants Richard and Gina Panek are a married couple who at all times relevant to this case resided in Wethersfield, Connecticut. Mr. Panek worked as a middle school vice principal in Middlebury, Connecticut. Neither he nor his wife had ever been involved in any aspect of the real estate business.
B. The Property
3. In the spring of 2001, Mrs. Panek was the record owner of a parcel of undeveloped, residentially zoned land accessed by two unpaved private roads, Secret Mountain Trail and Hidden Valley Trail, off of Andrew Drive in Canton, Connecticut. Although the property had been approved for subdivision into five separate residential building lots known as Lots 1, 2, 3, 4 and 5, it was still listed on Town of Canton land records and taxed by the Town as a single parcel, and remained subject, as it had been since Mrs. Panek purchased it in the mid-1990s, to a single, wrap-around mortgage in favor of First Union National Bank.
4. The Paneks had purchased the parcel with the intention of building a home for themselves on the 14-acre portion of it adjacent to Hidden Valley Trail, which came ultimately to be known as Lot 5. As for the other four lots in the subdivision, all of which were located along Secret Mountain Trail, the Paneks intended to sell them to a real estate developer.
C. The Parties' Negotiations
5. Mr. Panek first met Mr. Somers in mid-March of 2001, when Mr. Panek visited a Building Traditions open house. At that time Mr. Panek, who was empowered to act as his wife's agent with regard to the property, described the property to Mr. Somers and informed him that he and his wife wished to sell four of the five residential building lots into which it had been subdivided. As customer interest in building in the area where the property was located was very high at that time, and Mr. Somers had several clients who then had such an interest, he immediately became interested in purchasing the property.
6. On or about March 16, 2001, shortly after his initial meeting with Mr. Panek, Mr. Somers made an oral offer to the Paneks on behalf of two clients, Marcie Gumbel and Randy Kane, to purchase Lot 5. This offer was promptly rejected by Mr. Panek with the explanation that Lot 5 was the portion of the property on which the Paneks wished to build their own home.
7. Approximately one month later, on or about April 15, 2001, Mr. Panek recontacted Mr. Somers by telephone to ask him if he had any interest in further discussing the possible purchase of the other four lots in his subdivision. The following day, Mr. Somers called Mr. Panek back with an offer to purchase the entire property, including Lot 5, for the combined price of $350,000. Mr. Somers claimed in his testimony that this offer was made "on behalf of Marcie Gumbel, Randy Kane and myself where Ms. Gumbel and Mr. Kane would purchase Lot 5 and Building Traditions would purchase lots one through four[.]" Trial Transcript (3/3/04), p. 14. Whether or not that was his intention when he communicated the offer to Mr. Panek, the Court does not believe that Mr. Somers ever told Mr. Panek that anyone other than he would be the purchaser of the property if his offer was accepted.
8. On April 17, 2001, Mr. Panek rejected Mr. Somers' $350,000 offer for the entire property by sending him a two-page fax addressed as follows:
To: David Somers From: Rich Panek
Fax: 860-677-7441 Pages: 2
Phone: 860-590-1350 Date: 4/17/01
Re: Offer CC:
Plaintiff's Exhibit #1 (Fax from R. Panek to D. Somers (4/17/01)), p. 1. The substance of his response to Mr. Somers' offer, as set forth on the second page of the fax, was as follows:
To: David Somers
From: Rich Panek /RP/
Re: Land Offer
Gina and I discussed your offer last night and again this morning. We have decided that we want to keep our 15-acre lot 5. We are still unable to find a comparable lot anywhere in the area. Perhaps you might know of a 12-20 acre parcel that may be for sale at a reasonable price that won't require a mile-long driveway or consist mostly of wetlands.
In any case, although we are rejecting the offer, I would like to extend an offer to you on the remaining four lots. The offer would include options for you to essentially build each house and then pay us for each lot as you sell each house. We would ask you for $10,000 up front and then $37,500 each time a house is sold. It would be your responsibility to construct the road. In reviewing the road construction with my engineer, we do not believe there will be a need for blasting, as the plans call for minimum drainage for any type of private road. Estimates have come in between 40K and 50K.
We ask that you respond quickly only because I must file my mylars by May 6, the same day our real estate contract responsibilities end. If we allow the deadline to pass, then I will be reapplying for only two lots.
Id., p. 2.
9. Apart from mentioning two brief telephone conversations with Mr. Panek on April 19 and April 21, 2001, in which he only recalled asking why Mr. Panek and his wife wished to retain Lot 5, Mr. Somers did not describe any substantive response he may have made to Mr. Panek's April 17 fax before the May 6 deadline suggested therein. Instead, he claims that he simply waited for another offer from Mr. Panek with respect to Lots 1-4.
10. Even so, acting without notice to or any encouragement from the Paneks, Mr. Somers took several steps in that time frame to prepare himself and/or his company for the eventual purchase, development and sale of Lots 1-4. Among those steps were: speaking with Town of Canton officials, including Town Engineer Ken Wassell, to learn what zoning requirements must be met before the subdivision's private roads could be approved; speaking with and obtaining estimates from private contractors for logging, excavating, driveway paving and road construction work that would be required to complete the subdivision; generally referencing the properties' impending availability, albeit without specifically identifying or describing them, in his company's advertisements in The Hartford Courant; and showing the properties to at least five groups of existing clients, two of whom purportedly made verbal offers to purchase individual lots within the subdivision, Lots 2 and 4, if Building Traditions should acquire them. Notwithstanding such putative offers, Mr. Somers never entered into any conditional contract for the future sale of any of Mrs. Panek's lots.
11. On May 7, 2001, Mr. Somers received another two-page fax from Mr. Panek. The first page of this fax was the very same cover sheet which Mr. Panek had used to address his initial fax to Mr. Somers on April 17, 2001. The substance of Mr. Panek's message, as set forth on the second page of the fax, was as follows:
To: David Somers
From: Richard and Gina Panek
Re: Response to Your Offer
As per my message yesterday, Gina and I have reviewed your proposal and wish once again to offer a counter proposal. Hopefully we can come to agreement.
In review, we offered at 160K with 20K down and you offered 140K with 5k down. We also discussed a lower purchase price in exchange for more money down. In discussions with Gina, we have decided to offer you what we feel is a reasonable compromise that obviously must not involve any realtors. Our basic offer is: 145K with 10K down. The payment to us can remain the same at 32,250K (sic) per lot, and the last 5K can be tacked onto the last lot you sell. This offer also assumes that we can either transfer our existing mortgage or get a new one on Lot 5. Our offer also would need to involve a small concession on your profit in building our house so that we could make up about 5K which represents bringing us to the 150K price that is our absolute bottom line. However, if we do not ask you to build our house, you will not owe us the 5K, so there will be protection for both of us. We would also need to have some agreement on a timeline for road construction, although it appears that may not really be an issue if you plan to start right away.
Plaintiff's Exhibit #2 (Fax from R. Panek to D. Somers (5/7/01)), p. 2. Although this fax expressly referenced certain prior communications between the Paneks and Mr. Somers concerning the possible purchase and sale of Lots ##1-4, no testimony or other evidence concerning such discussions was adduced at trial. The Court thus has no basis for knowing which, if any, other matters of material significance to the parties — apart from the payment terms referred to in the Paneks' "basic offer" — was even touched on in those earlier discussions.
12. On May 8, 2001, Mr. Somers faxed a two-page letter to Mr. and Mrs. Panek in which he purported to accept, in his capacity of the Managing Member of Building Traditions, LLC, "your May 7, 2001 offer to sell Building Traditions LLC the land known as Lots 1, 2, 3 and 4 on a private road called `Secret Mountain Trail' off of Andrew Drive in Canton, Connecticut." Plaintiff's Exhibit #3 (Fax from D. Somers to R. Panek (5/8/01)), p. 1. "I understand," the fax continued, on Building Traditions, LLC stationery,
that the mylars for Lots 1, 2, 3 and 4 will be filed with the Town of Canton on or before May 21, 2001 at your expense.
The purchase price for these four (4) separate building lots shall be $145,000. Building Traditions LLC will be responsible for the private road construction, utilities and related expenses for Lots 1, 2, 3 and 4 on Secret Mountain Trail. The terms also include a $10,000 payment to you at closing when the lots are individually deeded by Warranty Deed to Building Traditions LLC. Building Traditions LLC will execute a promissory note and blanket first mortgage of $135,000 (no interest) on all four lots. I understand that you will have your current blanket mortgage transferred to your Lot 5 on Hidden Valley Trail, Canton, CT or otherwise removed from Lots 1, 2, 3 and 4 prior to sale.
As the first three (3) lots are sold, Building Traditions LLC will pay down its outstanding blanket mortgage balance in the amount of $32,250 per lot in exchange for a partial release on each lot sold. When the fourth lot is sold, Building Traditions LLC will pay you the balance of the outstanding blanket mortgage, $38,250.
Although I intend to begin road construction soon, I would like a one-year period to complete the blacktop of the common private road area. Additionally, in the event that Building Traditions LLC decides to build a speculation home on any of these lots, I will need you to sign a subordination agreement so that Building Traditions LLC can obtain a construction loan to build the home. However, my intention is to sell each of the lots as soon as possible and then to construct homes using buyers' construction loan funds.
As discussed, Building Traditions LLC will credit you the sum of $5,000 off of its builder's fee in the event that you employ it to construct your personal home on Lot 5 described above. Otherwise, this credit shall be forfeited.
I would like to meet jointly with David Whitney and you this week regarding the lot layouts and cul de sac location. Please let me know when you are available. Also, please have Mr. Whitney provide Daco Construction (Dave Sottile) and myself with copies of the relevant maps. I also request that you have Mr. Whitney stake/pin Lots 1, 2, 3 and 4 and both sides of the private driveway every fifty feet as part of this deal.
I understand that you will have your attorney draft the purchase and sale agreement, promissory note, first (blanket) mortgage, subordination agreement form and partial release form in connection with this transaction.
I also need you to indemnify Building Traditions LLC in our purchase and sale agreement from any realtor's fees in connection with Prudential Connecticut Realty related to Lots 1, 2, 3 and 4. Finally, I need a copy of the private road association agreement for Secret Mountain Trail which addresses contributions and maintenance, etc.
I look forward to working with you in this matter.
Very truly yours,
David M. Somers
Id., pp 1-2.
13. In his testimony at trial, Mr. Somers characterized his May 8 fax to the Paneks as an "unconditional acceptance" of their offer, as allegedly made to him in Mr. Panek's fax of the day before. Trial Transcript (3/3/04), p. 18. That acceptance, he asserted, was "not contingent on anything[;]" id.; including the Paneks' agreement to anything he concededly "requested . . . toward the end of the letter." Id.
14. As Mr. Somers recalled them at trial, the non-essential concessions he assertedly requested from the Paneks toward the end of his May 8 letter, but did not insist upon as preconditions to the plaintiff's agreement to purchase the lots, included the following:
a one-year [period] to complete the blacktop on the common drive and on the Secret Mountain Trail. But that's what the town would require anyway of Mr. Panek. And I believe he did so in his agreement with the town. I requested in the event I would later decide to build a speculation home that he subordinate to a construction loan, although at that point in time I had customers who I met with eliminate the need to have [a] subordination agreement. And I asked to meet with David Whitney, his site engineer, to approve the Mylars, M-y-l-a-r-s. They're the final official drawings filed and approved by the town. I asked that I could see those `cause I was — I wanted to see how they were going to have driveways come in off this private road. And the final thing was Richard Panek had told me that he had a blanket mortgage on lots one through five for $55,000 and that he would want to transfer that off lots one through four and leave it on Lot 5 only and then pay it off as I paid him down and that he would have to have his attorney draft papers for the mortgage company.
Trial Transcript (3/3/04), pp. 18-19. Some of these items — notably, the one-year period for the completion of the road and the meeting with Mr. Whitney to approve the Mylars — were in fact requested, not demanded or insisted upon, in the text of Mr. Somers' May 8 fax. As for a subordination agreement to ensure that adequate funds were available to build a speculation home, however, Mr. Somers' testimony is completely inconsistent with the language of the May 8 fax, which states, to reiterate, that, " in the event that Building Traditions LLC decides to build a speculation home on any of these lots, I will need you to sign a subordination agreement so that Building Traditions LLC can obtain a construction loan to build a new home." Plaintiff's Exhibit #3 (Fax from D. Somers to R. Panek (5/8/01)), pp. 1-2 (emphasis added). The import of these words is unambiguous: without a subordination agreement, which the plaintiff "need[ed]" there would be no deal.
15. Omitted, moreover, from Mr. Somers' list of "requests" for assertedly non-essential concessions by the Paneks, all of which were made for the first time in his May 8 fax, were the following: first, that the actual purchaser of the lots in question would be Building Traditions, LLC, not Mr. Somers personally; Plaintiff's Exhibit #3 (Fax from D. Somers to R. Panek (5/8/01)), p. 1; second, that the Paneks' interest in the properties would be secured by a no-interest promissory note and blanket first mortgage; id.; third, that the Paneks would have their site engineer, "Mr. Whitney[,] stake/pin Lots 1, 2, 3 and 4 and both sides of the private driveway every fifty feet as part of this deal;" id., p. 2 (emphasis added); and fourth, that Mr. Somers would " need [the Paneks] to indemnify Building Traditions LLC in [its] purchase and sale agreement from any realtor's fees in connection with [their] prior listing agreement with Prudential Connecticut Realty related to Lots 1, 2, 3 and 4." Id. On each of these matters, the fax clearly described and established them pre-conditions to an agreement, either by stating them as established features of the agreement or by declaring that they would be "need[ed]" or required "as part of this deal" if an agreement was to be reached.
16. On the day after the May 8 fax was transmitted, Mr. Somers was called out of town to deal with the sudden illness of his brother. On the following Sunday, May 13, 2001, after his return, he claims that Mr. and Mrs. Panek visited another Building Traditions open house. While they were at the open house, Mr. Panek assertedly asked Mr. Somers to attend a meeting with his lawyer, Attorney Legenza, on May 15, 2001. Thereafter, the two briefly drove over to the Paneks' property to discuss the anticipated positioning of the driveways. Then as well, Mr. Somers assertedly secured Mr. Panek's permission to show the properties to his clients, although he had already been doing so without such permission for several weeks.
17. On May 15, 2001, the parties met at the office of Attorney Legenza in Kensington, CT. Mr. Somers, who claims to have thought that the only purpose of the meeting was to sign certain papers that Attorney Legenza had prepared for his signature, including a purchase and sales agreement, a subordination agreement, a promissory note and a mortgage, brought along two $5,000 checks for the stated purpose of making the $10,000 down payment allegedly required of Building Traditions, LLC under the terms of his May 8, 2001 "unconditional acceptance" letter, and thus of the parties' putative contract. Curiously, the two checks, which were both made payable to defendant Gina Panek, had both been drawn on the Charlotte State Bank of Punta Gorda, Florida on April 30, 2001, a full week before the Paneks' putative "offer" of May 7, 2001 was ever communicated. When asked by the Court to explain this anomaly at trial, Mr. Somers testified that the $10,000 down payment figure had "remained a constant in negotiations with Mr. Panek. So I had them and was prepared to tender them." Trial Transcript (3/4/04), p. 113. This explanation, however, is completely inconsistent with the text of Mr. Panek's May 7 fax, which recounted that in the course of the parties' negotiations, the amount of the proposed down payment had been actively discussed but never agreed to, with possible amounts ranging from $5,000, as proposed by Mr. Somers, to $20,000, as proposed by the Paneks, until the Paneks finally proposed the compromise figure of $10,000 in that very fax. Against this background, the Court finds Mr. Somers' testimony to be incredible.
18. In fact, Mr. Panek had many questions upon receiving Mr. Somers' May 8 fax. To answer these questions, he turned to his attorney, Lawrence J. Legenza of Kensington, Connecticut, for guidance and assistance.
19. Upon examining a copy of the May 8 fax, which Mr. Panek had given to him, Attorney Legenza immediately noted several items which caused him great concern. They included:
a. That the contract was to be performed by Building Traditions, LLC, a corporation, not by David Somers, an individual. Under those circumstances, Attorney Legenza advised Mr. Panek that he should not proceed with the transaction unless he knew that the corporation had the financial wherewithal to complete the project and that Mr. Somers, as its Managing Member, was both willing and financially able to personally guarantee that it would be completed.
b. That the May 8 fax did not establish a closing date for the proposed purchase and sale, although substantial time was needed to determine if the defendants could lawfully convey the property due both to the status of their existing mortgage, which would have to be restructured or refinanced because it was secured by all five of the lots into which the property had been subdivided, not just Lot 1-4, and to their responsibilities under the existing, Town-approved bond for road construction, which applied to both Secret Mountain Trail and Hidden Valley Trail.
c. That the May 8 fax did not mention any final date by which all work on the project was to be completed, all lots built on were to be sold, and all monies due and owing to the Paneks were to be paid. The openendedness of the proposal, as he saw it, was exacerbated both by the plaintiff's specification of a 0% interest rate on the promissory note and mortgage it proposed to give for the lots and by its demand for a subordination agreement to ensure that it had enough money to finance construction of a speculation home on any of the lots if it decided to build one. The combination of these provisions suggested to Attorney Legenza that important matters needed to be discussed before the contract could be finalized to ensure that his clients would ultimately be paid for their property.
d. That the May 8 fax called for substantial additional engineering work by the Paneks' site engineer before the property could be sold. The work in question included, especially, staking of Lots 1-4 and of the boundaries of the proposed roadway, which the Paneks had never offered to do and to which they had not previously agreed.
e. That the May 8 fax called for the first time for the Paneks to indemnify the plaintiff against claims for commissions that might be made against it by their former realtor, Prudential Connecticut Realty, with which they had earlier listed the property.
20. Attorney Legenza entered the meeting with Mr. Somers prepared to have a constructive discussion with him, on behalf of the Paneks, in order to facilitate a mutually satisfactory agreement for the purchase and sale of the Lots 1-4. To that end, he had prepared, with Mr. Panek's assistance, a list of issues to be discussed at the meeting, and he gave copies of that list to Mr. Somers and Mr. Panek at the outset of the meeting. See Defendants' Exhibit #28 (May 9, 2001 Memo from Atty L. Legenza/R. and G. Panek to D. Somers/Building Traditions LLC). Attorney Legenza testified that the tone of the meeting was professional, not acrimonious, and that Mr. Somers discussed with him the matters he had identified on his list. After about forty minutes, however, he recalls that Mr. Somers left his office before any of the issues he raised could be resolved. Mr. Somers, by contrast, testified that he was surprised when he was given a copy of Attorney Legenza's list, that he promptly expressed such surprise, and immediately stated that there was nothing left to negotiate because he and the Paneks already had a deal. He testified, however, that although he viewed the meeting as an attempt to repudiate the contract he had just negotiated with Mr. Panek, he listened, as a courtesy, to Attorney Legenza for about thirty minutes, taking notes as he did so but not negotiating, before the meeting ended. Mr. Somers claims that his plan, developed during the meeting, was to wait until the meeting was over, then speak privately with Mr. Panek in the hope of persuading him to honor his contractual commitment. At no time during the meeting did he tender the two $5,000 checks to Mr. Panek or Attorney Legenza, because their intent to repudiate the contract was apparent. The Court accepts and believes Mr. Legenza's description of the meeting, finding it more consistent with Mr. Somers' admitted plan to circumvent Attorney Legenza by making a direct approach to Mr. Panek once the meeting was over.
21. After the May 15 meeting, Mr. Panek never had another meeting with Attorney Legenza to discuss the proposed sale of Lots ##1-4. Instead, Attorney Legenza testified that at the end of May 2001, he received a call from Mr. Panek, who stated that they should "put a hold on it."
22. In the mean time, Mr. Somers suspended his preparations for developing and marketing the lots but made repeated efforts to make direct contact with Mr. Panek to discuss their alleged agreement. All such efforts were unsuccessful, however, since Mr. Panek refused to return any of his telephone calls or to respond to any of his other communications.D. Eventual Sale of Lots 1-4 to Archer Development, LLC After the Commencement of this Action and the Filing and Later Discharge of the Plaintiff's Lis Pendens
23. On April 2, 2002, Lots 1-4 were finally sold to Archer Development, LLC ("Archer"), a building and development company of which Mr. James Pennington was the sole member. Trial Transcript (3/03/04), p. 73. Though the Paneks and Mr. Pennington had first discussed Archer's possible purchase of the four lots in the year 2000, they did not agree to do so or give or receive money for that purpose until June of 2001, after the Paneks' above-described negotiations with Mr. Somers had broken down. Initially, after the purchase and sale agreement was signed, Archer was unable to close on the four lots because a title search revealed that all five of the defendants' lots were still listed on the Town's land records as a single parcel. The closing was thus delayed from July until September of 2001, after the property had been properly subdivided and recorded. At that later time, however, the closing was delayed again when it was discovered that on or about September 13, 2001, plaintiff Building Traditions, LLC, which had recently commenced this action, had filed a lis pendens on the property.
24. Upon being sued in this action and learning of the filing of the lis pendens, the defendants retained Attorney Legenza to represent it. So engaged, Attorney Legenza took immediate steps both to defend the Paneks in this action and to pursue the prompt discharge of the lis pendens so that they could proceed with the planned sale of Lots 1-4. Attorney Legenza recalled at trial that in defending the defendants in this action, he performed each of the following tasks: prepared an answer, special defense and counterclaim; assisted his clients in responding to the plaintiff's written discovery requests; attended at least three pretrial conferences; and filed at least one motion for default. In pursuing the discharge of the lis pendens through December of 2001, Attorney Legenza testified that he performed the following tasks: prepared their Application for Discharge of Lis Pendens dated September 24, 2001; represented them before Judge David Fineberg at the successful hearing on their Application for Discharge on October 19, 2001; prepared their Memorandum in Opposition to Motion for Stay of Order Discharging Lis Pendens; represented them before Judge Robert Beach at the successful hearing on the plaintiff's Motion to Stay on December 10, 2001; represented them with respect to the Motion for Review and Appeal filed by plaintiff Building Traditions, LLC after its Motion for Stay was denied; and, ultimately, filed the Court's Order of Discharge of Lis Pendens on the Town of Canton land records. Trial Transcript (3/4/04), pp. 99-100. A solo practitioner, Attorney Legenza did not keep detailed records of his hourly billings for the above-described services. He estimated, however, that of the thirty-nine (39) hours he spent rendering those services to the Paneks, not less than 85% of his time, or a total of at least thirty-three (33) hours, all billed at the rate of $150 per hour, was devoted to pursuing and later defending the discharge of the lis pendens.
25. By the end of December 2001, the lis pendens had been successfully discharged but Mr. Pennington had lost interest in closing immediately on Lots 1-4. Thus it was that the closing was further delayed until April 1, 2002.
E. The Defendant-Counterclaimants' Claim for Damages Based on the Filing of the Plaintiff's Lis Pendens
26. The defendants claim that as a result of the delay in closing on Lots 1-4 which resulted from the plaintiff's filing and later efforts to maintain its lis pendens, they were forced to incur the following expenses in addition to the related portion of Attorney Legenza's fees: real estate taxes on the four lots from the scheduled date of the September closing until April 1, 2002; the cost of interest accumulating in that time frame on monies they owed to Kare Construction for site work performed on the property prior to January 10, 2002; and monies paid by them to refinance the property so as not to damage their credit while they waited for the closing to occur.
II. CONCLUSIONS OF LAW A. Plaintiff's Claim of Breach of Contract
In Connecticut, the basic requirements for the formation of a contract are well settled. Thus, as our Supreme Court observed in Bridgeport Pipe Engineering Co. v. DeMatteo Construction Co., 159 Conn. 242, 246, 268 A.2d 391 (1970)
It is elementary that to create a contract there must be an unequivocal acceptance of an offer. In the case of a bilateral contract, the acceptance of the offer need not be express but may be shown by any words or acts which indicate the offeree's assent to the proposed bargain. W.G. Maltby, Inc. v. Associated Realty Co., 114 Conn. 283, 288, 158 A. 548 [19xx]; Frederick Raff Co. v. Murphy, 110 Conn. 234, 239, 147 A. 709 [19xx]. The acceptance of the offer must, however, be explicit, full and unconditional. Woodbridge Ice Co. v. Semon Ice Cream Corporation, 81 Conn. 479, 487, 71 A. 577 [19xx]. And the burden rested on the plaintiff to prove a meeting of the minds to establish its version of the claimed contract. Lucier v. Norfolk, 99 Conn. 686, 699, 122 A. 711 [19xx].
To have a meeting of the minds sufficient to support a valid and binding contract, the parties must have a mutual understanding of the terms of their agreement that is definite and certain. Ubysz v. DiPietro, 185 Conn. 47, 51, 440 A.2d 830 (1981). Otherwise stated, they must have an "identical understanding" of the matters to which they have mutually agreed in their offer and acceptance. Bridgeport Pipe Engineering Co. v. DeMatteo Construction Co., supra, 159 Conn. at 249; Shulman v. Hartford Public Library, 119 Conn. 428, 433, 177 A. 269 (19xx) ("If, after the plaintiff's offer was made and after the discussions which followed it, there was ambiguity in the meaning to be attached to the defendant's action in directing the plaintiff to proceed with the work, in allowing it to continue after the offer was confirmed in writing, and in partially paying for the work, such action could not amount to an acceptance of the plaintiff's offer"). If the minds of the parties have not truly met, no enforceable contract exists. Fortier v. Newington Group, Inc., 30 Conn.App. 505, 510, 620 A.2d 1321 (1993). "So long as any essential matters are left open for further consideration, the contract is not complete." 17A Am.Jur.2d, Contracts § 32 (1991).
In the present case, the parties' exchange of faxes on May 7 and 8, 2001 did not result in the formation of an enforceable contract between them. Instead, they were merely two pieces of correspondence in a dangling conversation between two parties who were actively considering the possibility of entering into a binding contract. There are several reasons for this conclusion.
Looking first at Mr. Panek's May 7 fax to Mr. Somers, it is immediately apparent that that document did not purport to state all the terms of a proposed contract for the sale of Lots 1-4. Instead, although its author, Mr. Panek, unquestionably denominated his unsigned note an "offer," at least on the fax cover sheet appended to it, he further specified, in the text of the note, that it was meant only to communicate the defendants' "basic offer," to wit: a bottom-line description of the least favorable financial terms on which they would agree to sell their four lots on Secret Mountain Trail. Although such terms would indeed be essential to the formation of any valid contract for the purchase and sale of the lots, they alone would not have been sufficient to form such a contract in this case even if the plaintiff had unconditionally agreed to them.
The reason for this conclusion is not only that the words "basic offer" are words of limitation, suggesting that they did not purport to convey or communicate the defendants' entire offer for the lots, but because other language in the document expressly identified other important matters upon which the Paneks' willingness to sell the lots was made to depend. In particular, Mr. Panek expressly stated that "[t]his offer assumes that we can either transfer our existing mortgage or get a new one on Lot 5[;]" Plaintiff's Exhibit #2 (Fax from R. Panek to D. Somers (5/7/01)), p. 2; and added that "[w]e would also need to have some agreement on a timeline for road construction." Id. The first of these conditions was obviously essential, because at the time the fax was transmitted, the defendants had a $55,000 wrap-around mortgage on all five of their lots, including Lot 5, which they wished to keep for themselves. Without an alternative financing arrangement acceptable to their bank, they could not go forward with the sale without impairing the bank's collateral, thereby risking the acceleration of the payment obligation under their note and mortgage, and quite possibly losing their property through foreclosure. Hence, they could not proceed with the sale until this important matter was taken attended to.
The second condition was also of great importance to the defendants, for completion of the roadway was not only required of them under their bond, but blacktopping of the common private road surfaces — a significant expense which the buyer was expected to bear — would obviously enhance the marketability of the lots, and thus the likelihood that they would soon be paid. That Mr. Panek, in his fax, did not specify a particular schedule for starting or completing road construction did not mean that the Paneks were indifferent on that subject. To the contrary, he thereby expressly reserved for himself and his wife the ultimate power not to proceed with any sale until a suitable schedule for road construction, which was still open to discussion, was agreed to. Obviously, then, this was not yet an offer that Mr. Somers had the power to accept, for it clearly contemplated the need for further discussion and agreement before it could be finalized.
In his May 8 response to Mr. Panek's May 7 fax, moreover, Mr. Somers created several new obstacles to the formation of a valid contract between them on the basis of those documents. First, of course, it was in that document that he first identified himself not as an individual real estate developer and home builder, but as the Managing Member of a limited liability company known as Building Traditions, LLC. In their prior discussions and communications, he had always identified himself as David Somers, and Mr. Panek had addressed him accordingly. Plainly, the identify of the contracting parties is a material term in any contract, especially when they commit themselves to future performances on each other's behalf. Ubysz v. DiPietro, supra, 185 Conn. at 51 ("[I]in order to form a contract, generally there must be a bargain in which there is a manifestation of mutual assent to the exchange between two or more parties; see Restatement (Second), Contracts 1(c), 15, 19 (Tent Dr. 1964); 1 Williston, Contracts (1957) 18, 22; . . .; and the identities of the contracting parties must be reasonably certain.") Thus, a third party's putative acceptance of an offer made only to another person or entity cannot result in the formation of a valid contract between the offeror and the third party, for the offeror, at the time of his offer, obviously would not have intended or understood that the third party would be rendering or receiving the performance called for under the contract. Here, however, that is exactly what happened when Mr. Somers, by his May 8 fax, purported to accept, on behalf of his company, what at most might be claimed to have been an offer made personally to him. As Attorney Legenza correctly noted when he first reviewed the May 8 fax, the fact that the contract was to be performed by a limited liability company instead of an individual raised obvious questions as to whether or not the company had the financial wherewithal to complete the project, and whether Mr. Somers, as its Managing Member, was willing and able to personally guaranty its contractual obligations. Until the Paneks, upon performing their due diligence, expressed a willingness to contract with Mr. Somers' company to do the work and make the payments described in his May 8 fax, all that fax could have conceivably have constituted was a counteroffer by Mr. Somers, which they were free to reject.
Secondly, although Mr. Somers ostensibly agreed, in his May 8 fax, that the plaintiff would make all the payments called for in Mr. Panek's "basic offer," as described in his May 7 fax, he unilaterally imposed several new conditions which clearly changed, and thereby rejected the terms of that "basic offer," materially lessening its financial benefits for the Paneks. To begin with, he expressly stated that he would "need" to have the defendants sign a subordination agreement so that the plaintiff could obtain a construction loan for the building of a speculation home on any of the four lots if it decided to do so. Under such an agreement, the defendants would not have been paid any monies due them under the purchase and sales agreement until all of the plaintiff's construction lenders had been repaid. Depending upon the size of any construction loan to which their right of payment might be subordinated — and there could have been more than one of them — the existence of a subordination agreement could have prolonged indefinitely, and perhaps at great length, the time the defendants would have had to wait to receive their money. With no interest accumulating on the unpaid principal while they waited to receive it, such an agreement could have been used to deny the defendants one of the major financial benefits of their openended bargain.
Another additional financial burden that Mr. Somers unilaterally imposed upon the defendants by the putative acceptance in his May 8 fax was the new requirement, mentioned for the first time in that document, that the defendants sign an indemnification agreement to protect it from any claims for commissions that might be made against it by Prudential Connecticut Realty, the defendants' original listing agent for the property. Mr. Somers' language on this subject left no room for doubt that the plaintiff's agreement to accept the defendants' "basic offer" would depend upon their signing of such an agreement, for here, once again, as with the subordination agreement discussed above, he expressly stated that he "will need" them to sign such an agreement.
In addition to the foregoing, Mr. Somers specifically "requested" that the defendants have their site engineer, Mr. Whitney, "stake [or] pin Lots 1, 2, 3 and 4 and both sides of the private driveway every fifty feet as part of this deal." By expressly requesting that the defendants bear this additional expense "as part of this deal," Mr. Somers was clearly not accepting the defendants' "basic offer," as Mr. Panek had presented it, but was continuing to negotiate by proposing agreement as to a new and important contractual term. In fact, the new term would have had a substantial adverse impact on the profitability of the contemplated sale from the defendants' perspective, for it would have cost them substantial additional money for site engineering services, and thus would have reduced the amount they received for Lots 1-4 to a sum well below their bottom-line minimum of $150,000. "[A] contract is not made so long as, in the contemplation of both parties thereto, something remains to be done to establish contract relations. The law does not make a contract when the parties intend none, nor does it regard an arrangement as completed which the parties thereto regard as incomplete." JB Weston Auto Park Associates v. Hartford Redevelopment Agency, 24 Conn.App. 36, 41 (1991). Here there was no contract because, among other things, there was as yet no mutual agreement that the defendants should assume this new payment obligation as "part of this deal."
What was clearly suggested by the language of the parties' faxes as to the lack of complete agreement between them on several important issues was unmistakably confirmed by their conduct thereafter. Mr. Panek promptly wrote a note to Mr. Somers for the purpose of identifying, and as necessary discussing, some of those open issues. However, instead of sending the note to Mr. Somers, he prudently showed it to his lawyer, Attorney Legenza, along with the May 8th fax to which it was responsive. Then, upon receiving Attorney Legenza's critical input, he asked for help both in editing and adding to his list of questions for Mr. Somers and in meeting with Mr. Somers in the coming week. Neither Mr. Panek nor Mr. Legenza wished to bring the parties' negotiations to a halt. Instead, they both sought only to ensure that as negotiations continued, as it seemed certain that they would in light of all the open issues that remained to be discussed between the parties, that the Paneks' rights and interests be protected in a reasonable fashion.
For Mr. Somers, by contrast, the sudden appearance of Attorney Legenza at the negotiating table meant that the very favorable, no interest deal he was attempting to forge with the Paneks was very much in jeopardy. A former member of the Connecticut Bar, as well as a developer and builder for nearly twenty-five years, Mr. Somers had had a considerable advantage over Mr. Panek in the early dealings between them. Mr. Panek had no prior experience in negotiating a land deal, and thus he was at great risk of not noticing or understanding how particular aspects of a proposed agreement might affect his interests. With Attorney Legenza at his side, however, not merely as a scrivener of documents but as a professional advisor, that advantage would soon disappear.
When Mr. Somers prepared his May 8th fax in response to Mr. Panek's "basic offer" of the preceding day, he no doubt recognized that he had been presented with the kernel of a very favorable agreement, which he wished to transform into a binding contract. However, he knew there was more he might get Mr. Panek to agree to — particularly, the specification of a 0% interest rate until all payments were made, the signing of subordination and indemnification agreements in favor of the plaintiff, and the staking of the lots and driveway at the defendants' expense — and so, although he characterized his responsive fax as an acceptance of Mr. Panek's May 7 offer, he fairly studded it with such additional, potentially onerous new terms. In short, his May 8 fax was a cleverly mislabeled, highly self-interested counteroffer designed to induce Mr. Panek to agree, or to believe that he had already agreed, to an even more unfavorable deal.
Mr. Somers' conduct during the meeting at Attorney Legenza's office — taking notes and listening with apparent courtesy while quietly planning his next move — was completely consistent with his understanding that, as yet, he and Mr. Panek had no deal. Indeed, his testimony at trial, in a burst of partial candor, confirmed his true plan, which was to approach Mr. Panek sometime after the meeting, in the absence of his lawyer, to persuade him to honor his supposed contractual commitment. All of this goes to prove, and this Court hereby finds, that Mr. Somers' conduct after the exchange of faxes was animated only by a desire to take advantage of Mr. Panek by inducing him to complete a transaction he had no legal duty to perform.
A different conclusion is not supported, moreover, by Mr. Somers' presumptuous act of bringing two $5,000 checks to Mr. Legenza's office to make a down payment on the supposed contract. As this Court noted in its Findings of Fact, supra at ¶ 17, the two checks, both payable to Gina Panek, had both been drawn on the Charlotte State Bank of Punta Gorda, Florida on April 30, 2001, a full week before the Paneks' fax of May 7, 2001 was transmitted. When asked by the Court to explain this anomaly at trial, Mr. Somers testified that the $10,000 down payment figure had "remained a constant in negotiations with Mr. Panek. So I had them and was prepared to tender them." Trial Transcript (3/4/04), p. 113. This explanation, however, as the Court has found, is completely incredible, for the May 7 fax clearly states that the $10,000 down payment figure was not even proposed until that fax was sent. Against this background, the Court found Mr. Somers' testimony to be incredible, and further concludes that his true purpose for bringing them to the May 15 meeting was to give the false impression that an agreement had actually been reached.
For all of the foregoing reasons, the Court renders judgment for the defendants on the plaintiff's claim of breach of contract.
B. Plaintiff's Claim of Misrepresentation
The plaintiff has provided this Court with no factual or legal basis whatsoever for rendering judgment in its favor on its claim of misrepresentation, as presented in the Second Count of its Amended Complaint. To begin with, there is no evidence that the defendants owed the plaintiff any duty not to make misrepresentations to it when they negotiated with it for the possible sale of Lots 1-4. Secondly, there is no evidence that they made any false statement to it during the course of those negotiations or that the plaintiff relied to its detriment upon any such false statement. Moreover, the only kind of false statement allegedly made in this case was a promise to enter into a contract for the sale of land. Although there is no evidence that any such promise was ever made, it would not be enforceable even if it was, for a promise to promise or an agreement to agree in the future is neither an enforceable contract nor an actionable misrepresentation of a present fact.
For all of the foregoing reasons, the Court hereby renders judgment for the defendants on the plaintiff's claim of misrepresentation.
C. Defendants' Counterclaim of Tortious Interference
With respect to their claim of tortious interference, the defendants have attempted to prove that the plaintiff caused them actionable harm by filing and later opposing their efforts to discharge the lis pendens on Lots 1-4, and thereby intentionally and deliberately hindering, delaying and interfering with their efforts to market and sell those lots to other prospective purchasers. To that end, they have attempted to prove that the filing of the lis pendens resulted in a delay of their planned closing on the lots with Archer Development, LLC from an unspecified date in September of 2001 until April 1, 2002, and to prove that they suffered damages in the form of attorneys fees for the services of Attorney Legenza as well as certain carrying costs for the lots in that period. For the following reasons, the Court concludes that the defendants have failed to carry their burden of proof on this claim.
First, on a claim of tortious interference, unlike a claim of vexatious suit, the party accused of wrongdoing must be shown to have had a specific intent to interfere with a particular business relationship. It is simply not enough that the alleged wrongdoer engaged in conduct which it knew or should have known to carry with it a special risk of the harm of the same general type that it is claimed to have caused. The hallmark of tortious interference is intentionally harmful, malicious conduct, not mere recklessness or negligence.
In this case, however, the defendants have failed to prove that when the plaintiff filed its lis pendens it had any awareness that, by so doing, it was frustrating, hindering, delaying or otherwise interfering with the consummation of any particular deal for the sale of Lots 1-4, much less that that was its intent. The burden of establishing such facts belonged exclusively to the defendants, who may in fact be aware of evidence supporting their existence. On the record before this Court, however, there is simply no such evidence, of any kind from any source, including Mr. Somers, Mr. Panek, or Archer's sole member, Mr. Pennington, all of whom testified at trial. For this reason alone, the Court must render judgment for the plaintiff on the sole count of the defendants' Counterclaim.
In addition, the Court must note that the defendants' proof of damages was extremely weak. As for the attorneys fees incurred by the defendants for Mr. Legenza's services, the Court had no reliable, non-speculative basis for determining which part of the 39 hours billed by Mr. Legenza at the rate of $150 per hour actually went to the defense of this action as opposed to the attempted discharge of the lis pendens. The most it would have considered awarding on this record, which afforded it no basis for assessing the substantiality of his efforts to discharge the lis pendens, was $1,000.
As for the defendants' other claims of damages, moreover, the Court would have rejected or severely limited each of them for the following reasons. As for their claim that they were forced to pay taxes to carry the property from the date of the September closing until April 1, 2002, the Court was provided no basis for knowing when the defendants' September closing with Archer was to have occurred or when, in December, the lis pendens was finally discharged. Because Archer's decision not to close until April was not a product of the lis pendens but of its own business judgment, the Court could hardly award damages for any post-discharge delay after December. Hence, the most the Court could have considered awarding as damages for unnecessary taxes was the amount due and owing for October and November 2001.
As for the defendants' payments to refinance their mortgage, it is by no means apparent to the Court how any such cost could properly be attributed to the filing of the lis pendens. The Court would not have awarded any damages for such a loss. Finally, as for the defendants' claim for interest for site work performed by Kare Construction, the Court has no basis for understanding how or why the defendants were entitled to wait until they closed on the lots to make that payment. Hence, the Court would not have awarded any damages for that claimed loss.
For all of the foregoing reasons, the Court hereby enters judgment for the defendants on the First and Second Counts of the plaintiff's Amended Complaint and enters judgment for the plaintiff on the defendants' Amended Counterclaim
IT IS SO ORDERED.
Michael R. Sheldon, J.