No. CV 07 5003201 S
August 19, 2009
MEMORANDUM OF DECISION
This is a case in which there was a willing buyer and a willing, even desperate, seller. Nevertheless, due to misunderstandings, misinterpretations and a remarkable lack of communication between the parties, the transaction was never completed.
Plaintiff is Landmark Investment Group, LLC (hereinafter "Landmark"). Landmark is in the business of real estate development.
Defendant is Chung Family Realty Partnership, LLC (hereinafter "Chung, LLC"). This LLC was established by Mr. Henry Chung on December 21, 1998. Mr. Chung is now 70 years old and retired. He spent his entire life in the Chinese restaurant business. His father was in the same business, as the proprietor of Song Hays in Hartford.
Plaintiff brought this action for breach of contract, breach of the implied covenant of good faith and fair dealing, a violation of the Connecticut Unfair Trade Practices Act (hereinafter "CUTPA"), interference with contractual relations, and for a return of deposit relating to the subject real estate transaction.
Defendant answered and filed special defenses. The special defenses aver that plaintiff is limited to the remedies set forth in the contract, that all other relief sought is barred by the economic loss doctrine, and that the contract was voidable due to mutual mistake.
Defendant also counterclaimed, claiming slander of title, breach of contract, violation of the covenant of good faith and fair dealing, and violation of CUTPA.
Plaintiff seeks, in the alternative, specific performance or a return of deposit, money damages, punitive damages and attorneys fees pursuant to CUTPA, and interest and costs.
Defendant seeks money damages, title to the deposit, attorneys fees and punitive damages pursuant to CUTPA, common-law punitive damages, and allowable costs.
Mr. Chung operated a restaurant in a small strip mall/semi-industrial location at 311-349 New Britain Avenue, Plainville, Connecticut. In 1999, he purchased this property for $954,600 from Dorothy Brown and the Brown Trust. Dorothy Brown took back a mortgage for $229,048. The Brown Trust took back a mortgage for $325,952.
Mr. Chung formed the LLC at the time of the purchase, as he intended to develop the property. He was aware there were environmental issues and that the property required cleaning and remediation. Mr. Chung engaged the firm of Levy and Droney to assist him in these efforts. Mr. Chung's primary language is Mandarin Chinese, and he speaks Mandarin with his family and employees. He uses the English language only with his customers and in business transactions. It is clear to the court that Mr. Chung, perhaps in recognition of his limited facility with the language, put his entire trust in the attorneys he engaged to handle his business transactions all through his life. In fact, his original attorney in this transaction has known Mr. Chung for many years, and had previously represented his father. Testimony referenced many attorneys. For purposes of clarification, they are:
LEVY AND DRONEY
Levy and Droney represented Mr. Chung in the purchase of the subject property. Subsequently, Attorney Coleman Levy of that firm continued in his representation to assist Mr. Chung in all aspects relating to development. At the point when his fees to Levy and Droney were in excess of $100,000, Mr. Chung determined that he did not have the financial means to pursue development and put the property on the market. Currently, there are liens on the property in favor of Levy and Droney in the amount of $110,252.
ATTORNEY GARY JONES
Attorney Jones of Rome Case was the successor to Levy and Droney. He represented Mr. Chung during the pendency of the first contract and up until 2004. He is currently owed $20,000 for his services.
ATTORNEY PETER BARRY
Attorney Barry is the successor to Attorney Jones and represented Mr. Chung from about May 2005 in the negotiations for the second contract, until the time of trial, when he had to withdraw, as his testimony was required. As previously noted, Attorney Barry had a longstanding relationship with the Chung family and had represented Mr. Chung's father.
ATTORNEY WALTER TWACHTMAN
Attorney Twachtman is the successor to Attorney Barry. He represented Chung, LLC at trial.
ATTORNEY MICHAEL TANSLEY
Attorney Tansley was retained by Landmark in connection with negotiations for the second contract. He continued his representation until the time of trial, when he withdrew in order to give testimony.
ATTORNEY J. CHRISTOPHER ROONEY
Attorney Rooney is the successor to Attorney Tansley and represented Landmark at trial.
Attorney Grasso is a member of Attorney Twachtman's law firm. Attorney Grasso represents Calco Construction (hereinafter "Calco"), another buyer secured by Mr. Chung's real estate agent Mr. Calabrese, while the contract with Landmark was still pending. Attorney Grasso was present throughout the testimony at trial, but, with a few very limited exceptions, did not participate. Testimony revealed that Calco is providing all funds for the defense of this action, and the mortgages upon which Mr. Chung was liable have been assigned to Calco.
Whether Chung, LLC, through the actions of its agents and attorneys, breached the contract of June 2005.
Whether defendant Chung, LLC's performance under the contract was excused due to mutual mistake.
In the course of their dealings, the parties have had two contracts. The first contract was dated January 4, 2005. (See Exhibit P-1.) It is the second contract, dated June 30, 2005, that is the subject of this action. (See Exhibit P-2.)
Both contracts attempted to deal with the problem of the cost of environmental remediation. The first contract established an escrow from the purchase price in the amount of $300,000 to "pay for any shortfall between the Brownfield's Funding and the actual cost . . . to address and eliminate any and all environmental issues." (See ¶ 7.3, Exhibit P-1.)
The second contract, signed on June 30, 2005, differed in many important respects from the previous agreement. These differences reflected the understanding of both parties as to the increasing uncertainties surrounding the amount of monies which would be required to remediate the site. In the second contract, the escrow was to consist of all the net proceeds of the purchase price until the property had been remediated. (See ¶ 6.3, Exhibit P-2.) A significant change was incorporated into the second contract with regard to the uncertainty as to the clean-up costs. In the first agreement, both parties had the option to withhold performance if dissatisfied with the amount of monies available for remediation. Under the second contract, only the seller had that option. (See ¶ 5.1(i) Exhibit P-2.)
It is critical to note that, under the terms of the second contract, Chung, LLC did not have the right to terminate the contract because it was dissatisfied with the amount, or even the lack of outside funding.
IMPACT OF ENVIRONMENTAL STUDIES AND ESTIMATES
On entering the second contract, the parties attempted to anticipate the cost of clean-up, unaware that dramatic changes in the estimates for clean-up were to ensue. These changes are most readily apparent in a time line:
February 2004 Remediation estimate $1,004,000
January 4, 2005 First contract executed
June 2005 Remediation estimate $1,314,006.82
CT Page 14381
June 2005 Second contract
July 2006 Remediation estimate $265,000
To review the contract, it is necessary to understand the meaning of "Brownfield's Funding."
Brownfield's Funding, or CBRA, is the name given to the provisions of General Statutes § 32-9kk et seq. Under these sections, a landowner, in conjunction with a municipality, may apply for a loan to fund environmental clean-up. In simple terms, a municipality borrows funds from CBRA and advances said funds to the landowner for any work necessary to remediate the property from environmental contamination. The municipality participates in anticipation of recovering its costs through Tax Incremental Financing (TIF), or the taxes that would be generated through the ultimate development of the property. Before agreeing to participate, the municipality will estimate revenue from the site in order to access its ability to repay the loan.
A property owner may apply for a grant, not a loan, without participation of the municipality. Typically, these funds are given as loans.
Disagreement over the meaning of the contract terms relating to Brownfield's Funding, and whether such funds were available, is the major factor leading to this lawsuit. Throughout the pendency of the contract, and at trial, defendant has insisted that the contract was not capable of performance without these funds. Plaintiff asserts that receipt of these monies did not affect performance in view of subsequent events relating to the cost of environmental remediation.
The original estimates for environmental remediation were submitted by Aegis, a company Chung, LLC had hired while trying to develop the property. Chung, LLC was aware that no funding could be obtained without securing a Remediation Action Plan or "RAP," in order to get the required approvals from the Department of Environmental Protection.
These plans are estimates made by environmental engineering firms that must secure approval from the DEP before clean-up can begin on a contaminated site.
In the second contract, Chung, LLC agreed to produce a RAP to Landmark within 20 days. This would have necessitated funds for additional testing — funds that Chung, LLC did not have. From the moment of signing, it is now clear, in retrospect, that unbeknownst to Landmark, Chung, LLC had no means by which to meet this initial requirement.
After receiving the RAP, Landmark was obligated to apply for a CBRA loan. In fact, it was Chung, LLC's submission of the RAP that was to trigger Landmark's obligations under the contract. There had been an interim RAP as a result of the Aegis study. It was not complete, as further testing was required. Despite the fact that the RAP was not complete, and that Chung, LLC had not produced a final RAP within 20 days as required under the contract, Chung, LLC insisted early on that Landmark must apply for funding. Landmark, even with full knowledge that funding could not be approved without a final RAP, in good faith and "to pacify" Chung, LLC, filed. As expected, this filing did not result in what was needed to proceed. The RAP required of Chung, LLC for Landmark to complete this process was not given to Landmark in final form until September 2006 — more than a year after the contract was executed.
Landmark pressed on, despite the delay in receiving the final RAP. It marketed the property aggressively, developed several alternative site plans, and had received interest in the property, most notably from Home Depot. In view of the protection afforded it by the terms of the contract, it is not unusual that it would go ahead while Chung, LLC had not produced the final RAP. No one ever doubted that the RAP could be produced upon completion of all the testing, and, under the contract terms, Landmark was protected against the cost.
As Chung, LLC had no funds available to proceed with testing that would result in an acceptable RAP, the Town of Plainville (hereinafter "the Town"), in an attempt to further the goal of having the property developed, was instrumental in securing funding for another environmental engineering firm, Tighe and Bond, to provide a second estimate for remediation. Certain conditions at the site had changed since the Aegis assessment. Most significantly, all the buildings were now unoccupied. Aegis had not been able to enter the buildings, and had made certain assumptions based on the types of businesses being conducted. When Tighe and Bond had access to the interiors, it discovered that these assumptions were unfounded, and that any contamination was minor surface contamination, which was easily — and inexpensively — remedied. Its report, dated July 12, 2006, should, by any standard, have been good news to all parties, as its estimate for the clean-up was $265,000 — close to one million dollars less than the Aegis estimate. Instead, it sounded the death knell for the transaction. There was nothing in the evidence that would provide a legitimate explanation for this irrational result.
TOWN OF PLAINVILLE
Mr. Lee is the town manager of Plainville. He met with the parties and their representatives on several occasions as they pursued the possibility of CBRA funding. As previously noted, participation of a municipality is a prerequisite to the receipt of these funds. Since the municipality is responsible to repay the CBRA loan, it has an interest in making certain that the tax revenues generated by the development will be sufficient to cover these costs.
When it was learned that the cost of remediation was significantly less than the original estimate, Mr. Lee was very enthusiastic. His testimony indicates that he viewed this news as the removal of any potential roadblock to development. Paradoxically, it was his response to this news, communicated to the parties, that was the beginning of the end.
Upon learning that the cost of remediation was estimated at $265,000, as opposed to the prior estimate of more than one million dollars, Mr. Lee wrote a letter stating he would not recommend any CBRA funding, as it appeared that Chung, LLC would be making a substantial profit over and above its original purchase price. As the municipality had greatly improved its position vis-a-vis tax revenue and the possibility of recovering such a small amount, even if it contributed all the costs, the failure of Mr. Lee to recommend participation to the town council is as mysterious as the failure of Chung, LLC in failing to recognize and immediately seize upon the opportunity created by the windfall occasioned by the lower estimate.
In connection with plaintiff's examination of Mr. Chung at trial, Mr. Chung was presented with a chart. The court finds that the information on the chart is accurate, and based on uncontroverted evidence. To any observer, it was apparent that Mr. Chung immediately recognized the accuracy and the import of the mathematics shown on the chart. It was clear to this court that for the first time, Mr. Chung grasped the advantageous position he had held from the moment it was learned that the estimated cost of remediation had dropped from over one million dollars to $265,000.
Chung, LLC seized upon the lack of CBRA funding to terminate the contract. This alarmed Landmark, and it had further contact with Mr. Lee to attempt to get some amount of funding to placate Chung, LLC. Mr. Lee, having been shocked at the reaction to his letter, ("I didn't realize it was going to `queer the deal'") (Transcript, p. 63) was, himself, alarmed at the thought that the Town would have to start from the beginning to get the property developed. Mr. Lee testified that he attempted to play the role of peacemaker and began to explore ways to get the transaction back on track, including the offer of a token amount of funding, or even all funding, if secured by the property. Throughout, Chung, LLC was telling Mr. Lee that Landmark was not serious, and did not want to proceed. Chung, LLC also told Mr. Lee "they would like to get out from underneath where they were right now because they didn't think they [Landmark] were serious about going forward and [Chung, LLC] have the ability to sell the property to somebody else." (Transcript, p. 50, testimony of Robert Lee.) There is nothing in the record to indicate to the court that Landmark was not serious about acquiring the property. The delays in the process were attributable to Chung, LLC, not to Landmark, as defendant has claimed.
DEFENSE OF MUTUAL MISTAKE
Defendant seeks to excuse its conduct through the defense of mutual mistake. At the outset, it is important to note that the term "mutual mistake" in the context of contract law is a term of art. It is to be distinguished from a situation where parties are simply mistaken about a non-material fact. In this case, the parties were mutually mistaken within the meaning of contract law in executing the first contract. Both parties had the mistaken belief that the cost of the environmental clean-up would be far less than the first estimate received from Aegis. In recognition of this fact, the second contract was drafted. As defendant notes, there are many references to Brownfield's Funding in the second contract. Defendant bases his claim of mutual mistake on this fact, and concludes that the unavailability of this funding at the time the contract was terminated is dispositive. This is a narrow view of the intent of both parties in executing the second contract.
The intent of that contract was to address the uncertainty as to the cost of clean-up. This is reflected by the fact that all proceeds were to be escrowed until the actual costs were ascertained. This is an acknowledgment on the part of Chung, LLC, that a shortfall was a foreseeable possibility. Thus, the availability of Brownfield's Funding could not be the centerpiece of the contract, as the contract terms do not anticipate any dollar amount as to this funding. Moreover, the mortgage contingency clause of the contract states "due to the uncertainty as to the scope of the contamination of the property, the required remediation and costs thereof and the amount of funding if any available through the CBRA . . ." (Emphasis added.) Contract, § 5.1(n). Defendant seeks to minimize the impact of this language because it appears only in the mortgage contingency clause. This is without significance.
In William Raveis Real Estate, Inc. v. Newtown Group Properties Ltd. Partnership, 95 Conn.App. 772, 778, 898 A.2d 265 (2006), the court notes that it cannot "read the provisions of the agreement in isolation from one another . . . as we are bound to read the agreement as a whole." (Internal quotation marks omitted.)
The plaintiff asks us to read the provisions of the agreement in isolation from one another by interpreting the clause "[c]ommissions for renewal of a lease or a lease of additional space" as creating an additional right to a commission for subsequent leases for renewal and additional space beyond that of the "first renewal." That we cannot do, as we are bound to read the agreement as a whole. See Levine v. Advest, Inc., 244 Conn. 732, 753, 714 A.2d 649 (1998). A firmly established principle of contract construction is that "[t]he individual clauses of a contract . . . cannot be construed by taking them out of context and giving them an interpretation apart from the contract of which they are a part . . . A contract should be construed so as to give full meaning and effect to all of its provisions . . ." (Citations omitted; emphasis in original.)
The contract provisions permitting Landmark to accelerate the time line would also allow for a situation where no application for funds is made, and no funding actually received.
It is clear that the second contract was not "founded on the mutual expectation of Brownfield's Funding . . ." as plaintiff urges. Rather, it was founded upon the uncertainty as to the cost of the environmental clean-up, with or without any significant contribution from CBRA. "The factual predicate necessary for a finding of mutual mistake is that both parties relied on the same mistaken information in entering into a contract." BRJM, LLC v. Output Systems, Inc., 100 Conn.App. 143, 150, 917 A.2d 605 [cert. denied, 282 Conn. 917, 925 A.2d 1099] (2007), citing HLO Land Ownership Associates Ltd. Partnership v. Hartford, 248 Conn. 350, 359 n. 10, 727 A.2d 1260 (1999). The parties in this case were not under a mistaken belief as to the amount or availability of Brownfield's Funding. The plain language of the contract reflects the fact that the amount is not only uncertain, but may be non-existent.
Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms. A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity . . . Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms. (Internal quotation marks omitted.) Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P., 252 Conn. 479, 498, 746 A.2d 1277 (2000); HLO Land Ownership Associates Ltd. Partnership v. Hartford, 248 Conn. 350, 357, 727 A.2d 1260 (1999); John M. Glover Agency v. RDG Building, LLC, 60 Conn.App. 640, 644-45; 760 A.2d 980 (2000).
A mutual mistake is one that is "common to both parties [and] effects a result which neither intended." Lopinto v. Haines, 185 Conn. 527, 532, CT Page 14386 441 A.2d 151 (1981). The only result sought by the parties in this case was, in defendant's words, "the arithmetic of the contemplated transaction." (Defendant's Brief, p. 32.) Result is central to a claim of mutual mistake. The right to relief against the consequence of a mutual mistake is an equitable right. In cases involving a claimed mistake of law, it is only when one person has obtained an unconscionable advantage over another that equity will grant relief. See Richey v. First National Bank Trust Co., 123 Conn. 360, 195 A. 732; Monroe National Bank v. Catlin, 82 Conn. 227, 231, 73 A.3." Texas Co. v. Crown Petroleum Corporation, 137 Conn. 217, 226, 75 A.2d 499 (1950).
Mr. Chung conceded at trial that he had never expected any monies that may have been contributed by Brownfield's Funding to cover all costs of remediation. Under the plain language of the first contract, Mr. Chung agreed to contribute up to $300,000 of his own funds towards remediation. Under the second contract, his exposure increased to at least $770,000. When the final estimate came in at $265,000 with a 30 percent margin of error, the figure was well below the figure anticipated in the contract, and did not give either Chung, LLC or Landmark an "unconscionable advantage" within the meaning of Texas Co. v. Crown. To the contrary, both parties benefitted.
Defendant's defense of mutual mistake is unavailing under the facts of this case.
TERMINATION OF CONTRACT AND THE CALCO OFFER
Plaintiff claims that defendant unlawfully terminated the contract because Chung, LLC had secured a more favorable offer from Calco.
Mr. Calabrese is the real estate agent for Chung, LLC. He has been involved since the negotiations with Landmark to the present. For purposes of discussing his role in the matter, the court finds that, within the meaning of applicable agency law, he is the agent of Chung, LLC.
Mr. Calabrese testified that Calco first expressed interest in purchasing the property in January 2006. At this time, Calco made an offer that was less than what Chung, LLC would realize under the contract with Landmark.
Calco's interest was ongoing. Sometime in late summer of 2006, Calco and Mr. Calabrese discussed the possibility of a second offer. Mr. Calabrese testified that he had discussed with Calco the elements necessary to an offer which would be attractive to Chung, LLC. On September 21, 2006, Calco submitted a letter of intent containing the terms Mr. Calabrese had suggested. Calco submitted a check for $250,000 to be escrowed until a final agreement was reached. Mr. Chung testified that this offer was something in which he was interested, as it was superior to the Landmark contract in that Calco was willing to take the property in "as is" condition. Particularly attractive to the financially desperate Mr. Chung was that closing under the Calco offer was to take place within 30 days of an executed agreement.
On September 7, 2006, between Calco's discussions concerning a second offer and its deposit and letter of interest, the parties herein had a meeting in the law offices of Attorney Barry. Mr. Calabrese was also present.
On this date, Landmark had not yet received confirmation of a final RAP suitable for submission to DEP. It was received on September 28, 2006.
Plaintiff sets forth the events of the meeting as follows:
[R]epresentatives of Landmark met with the Chung Family, LLC representatives at Attorney Barry's office on September 7, 2006 for a meeting which turned out to be short and contentious . . . At the September 7th meeting, Attorney Barry stated that the `money for a remediation is lower than expected and the Town of Plainville is not willing to participate in Brownfields and that the contract is null and void and can't be performed.' (P-53.) He was of the view that they needed a new contract to continue. Attorney Tansley replied that the contract was still in force and could be performed. Attorney Tansley expressed the view that Mr. Chung now had to pay for the remediation in the absence of the CBRA obtaining funding. At that time, Mr. Calabrese became angry and said `No way the contract is over! Landmark has to pay.' Mr. Russo stated that the money to remediate was less than expected which means that Mr. Chung gets more money and he can't say now that he is getting more money that he thought the contract was over. A general disagreement followed and the meeting ended after Landmark departed. ( Id.) By all accounts, the meeting was short, 10-15 minutes.
(Plaintiff's Brief, pp. 49-51.)
The court finds this narrative to be factually correct. The parties involved admitted that this is what transpired at the meeting. It is noted, however, that the meeting was far more contentious than plaintiff's characterization of a "general disagreement" would suggest. It is also noted that it was Mr. Calabrese who said the contract was "over." Obviously, as a non-party, this was not his decision. Moreover, he was entitled to a substantial commission at the conclusion of the contract with Landmark. The clear inference to be drawn from his behavior is that he preferred the "quick deal" with Calco to waiting for Chung, LLC to move forward with Landmark. Indeed, haste was always an issue for defendant and its agents. At the time of both contracts, the unexpectedly large cost of clean-up had rendered the property unattractive, it had been on the market for a long period of time prior to Landmark's interest, and Chung, LLC had no other prospects for sale. In addition, Mr. Chung was desperate for cash and owed large amounts of money as reflected in the liens placed on the property. Having no other options, Chung, LLC entered a contract, which, even if everything proceeded with no problems, had a very long time line. Plaintiff suggests that this may explain why as early as August 11, 2005, a mere eight weeks after execution of the second contract, Mr. Calabrese wrote to Attorney Barry confirming that at a meeting on August 31, 2005, they had agreed that Attorney Barry would:
1. Confirm that the $100,000 has been placed with the lawyer's title insurance company — Administrator, John P. Ford at 860-635-5566.
2. Review the contract to determine if Henry has any way out of it if he so chooses.
3. You were going to respond to Mike Tansley's letter dated August 25, 2005 regarding the completion of the R.A.P. and also put him on notice that under Article 16, § 16.1c, they are currently in default of the contract.
(See Exhibit D-45.)
Mr. Calabrese also noted that, "[a]s discussed, I will continue my discussions with Dick Corliss and eventually Town Manager, Robert Lee requesting their help in putting pressure on Landmark to begin their wetlands and site plan applications."
None of the points raised in this letter are legitimate. The issue of the $100,000 was, in the vernacular, a red herring. In fact, Landmark had immediately notified the escrow agent upon signing the second contract that the $100,000 was now to be assigned to the new contract.
It was not legitimate for Mr. Calabrese to inquire about getting out of a new contract, as Landmark was not in default at that time as he claims. Landmark had no contractual obligation to begin site plan and wetlands applications. If any party were in default at that time, it was Chung, LLC for failure to provide a RAP in 20 days as required by the contract.
At the time of trial:
1. Calco's attorney appeared at trial.
2. The $250,000 that accompanied Calco's offer had not been returned.
3. Calco was funding the cost of trial.
4. The original mortgages which were obligations of Mr. Chung had been assigned to Calco.
Aside from all these facts, as they relate to the termination of the contract, perhaps the most significant contract term as it relates to termination is the requirement that any termination required 20 days notice. In the letter terminating the contract, this provision was ignored. Compliance with the notice provision would have given Landmark, and even more significantly, the Town, time to salvage the transaction. It is clear from the testimony of Mr. Lee that the Town was anxious to have the property developed and producing tax revenue. Mr. Lee had indicated that the Town was willing to reconsider to save the deal. Had this occurred, Landmark could have closed immediately, as it was protected from the cost of remediation by the contract escrow.
The evidence addressed at trial leaves no doubt that Chung, LLC wrongfully breached the contract with Landmark.
Plaintiff has attempted to portray Mr. Chung as an experienced and sophisticated real estate entrepreneur. This characterization is not in accordance with the facts revealed by testimony at trial. As noted herein, Mr. Chung has spent his entire life in the restaurant business. His only forays into the real estate arena prior to the purchase of the property that is the subject of this lawsuit was the purchase of residential properties. These properties were not purchased for investment, but for his own use, or that of his family or employees. Moreover, his disastrous attempt at developing the present property indicates that he was not familiar with the complexity and expense which could result from such a venture. However, Mr. Chung is not the defendant. The defendant is Chung, LLC, an entity with the express purpose "to acquire, manage, lease and develop real property and related assets . . ." According to testimony, the present property was the only asset ever acquired by the LLC. "Violations of CUTPA are limited to transgressions pertaining to a company's main commercial endeavor. McCann Real Equities Services XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn.App. 486, 523, [cert. denied, 277 Conn. 928, 895 A.2d 798] (2006)." Ruschmeyer v. Lydall, Inc., Superior Court, judicial district of Tolland, Docket No. CV08 5002515 (February 19, 2009, Sferrazza, J.). There is no question that this property is the "main commercial endeavor" of Chung, LLC, despite defendant's attempt to distinguish the present transaction because the word "sale" is not included in the purpose of the LLC.
A single act of misconduct may constitute a violation of CUTPA. See Johnson Electric Co. v. Salce Contracting Associates, Inc., 72 Conn.App. 342, 351, 805 A.2d 735, cert. denied, 262 Conn. 922, 812 A.2d 864 (2002). In order to come within the ambit of CUTPA protection, a person must have been engaged in trade or commerce. Trade and commerce are defined in the statute as "the advertising, the sale or rent or lease . . . or the distribution of any services and any property, tangible or intangible, real personal or mixed . . ." (Emphasis added.) General Statutes § 42-110a(4). "Person" is defined as "a natural person, corporation, limited liability company . . ." General Statutes § 42-110a(3). Thus, this transaction falls within the protection afforded by CUTPA. Having determined that CUTPA is applicable, the remaining question is whether the conduct of Chung, LLC and its agents should afford damages pursuant to CUTPA.
For the following reasons, it is found that the breach of good faith and the covenant of fair dealing falls within the protection of CUTPA:
1. Chung, LLC agreed at the signing of the second contract to produce a RAP within 20 days. This would have required further testing, which Chung, LLC knew it could not afford. Plaintiff had no knowledge Chung, LLC could not meet this requirement.
2. A mere two months into the contract, Mr. Calabrese wrote to Attorney Barry seeking advice as to whether Chung, LLC had a way out of the contract.
3. The fact that Calco had an interest in the property and that Chung, LLC had taken a deposit from Calco was never communicated to Landmark, who was aggressively and expensively pursuing tenants and development. Initially, even Attorney Barry was unaware of this fact.
4. Mr. Calabrese's outburst at the meeting of September 7, 2006, that the "contract was over," and "Landmark had to pay" for the clean-up was inappropriate and not in accordance with the terms of the contract. At the time of this meeting, Mr. Calabrese knew that Calco was willing to purchase the property on terms that Mr. Chung found more desirable — terms Mr. Calabrese had suggested to Calco.
5. Attorney Barry's letter to Attorney Tansley dated July 25, 2006, stating that the contract could not be performed is both factually and legally incorrect. The letter states that Chung, LLC always believed that CBRA funding would cover all the costs of clean-up. This was not in accordance with the plain language of the contract, nor with the testimony at trial. Mr. Chung conceded at trial that he always understood CBRA might provide only some of the cost of clean-up. The letter also states that the contract cannot be performed because the Town would not participate. It is not at all clear that the Town was not going to reconsider, and even if it did not, the reduced estimate as to clean-up made the contract eminently capable of performance, and would have resulted in a greater profit to Chung, LLC than originally anticipated. The letter also indicates that Landmark is in breach vis-a-vis mortgage and regulatory approvals. This is not true under the contact terms, as Chung, LLC had not completed the steps necessary to trigger these requirements under the contract time line.
6. When the town manager of Plainville realized development was in jeopardy because he had indicated the Town would not participate in CBRA funding, he indicated that the town would reconsider. The fact that the Town never made another offer was influenced by Chung, LLC's attorney telling Mr. Lee that Landmark was in breach, leading the Town to conclude the contract was over.
7. After Attorney Tansley responded to Attorney Barry's letter insisting that the second contract remained valid and that Landmark would proceed, Attorney Barry responded on August 23, 2006, and stated the contract was "impossible" to perform, and stated that a new agreement was necessary. As noted herein, this was not legally correct.
8. At the meeting of September 7, 2006, Attorney Barry stated the "contract is null and void." This was not true, for even had there been mutual mistake, as defendant now claims, the contract would have been voidable, not void. Upon Attorney Tansley's insistence that the contract could be performed, and that under its terms Chung, LLC had to fund the remediation without CBRA funding, Mr. Calabrese became very angry and shouted "no," "the contract is over," and "Landmark has to pay." Attorney Tansley's client, Mr. Russo of Landmark, attempted to explain that the reduced costs of clean-up were a benefit to Chung, LLC to no avail.
9. Chung, LLC and its agents and representatives wrongfully terminated the contract and failed to give 20 days notice of the termination as required under the contract.
This conduct is clearly the nature of that for which CUTPA will afford relief.
REMEDIES 1. Specific Performance
Plaintiff seeks specific performance.
A buyer seeking specific performance must prove that he was `ready, willing and able' to purchase the property. DiBella v. Widlitz, 207 Conn. 194, 200, 541 A.2d 91 (1988); Allen v. Nissley, 184 Conn. 539, 542, 440 A.2d 231 (1981). "A buyer must prove his financial ability to go forward even when a seller entirely refuses to participate in a closing." DiBella v. Widlitz, supra; Frumento v. Mezzanotte, 192 Conn. 606, 616 473 A.2d 193 (1984). Whether a buyer has the requisite financial ability is a question of fact. Parkway Trailer Sales, Inc. v. Wooldridge Bros., Inc., 148 Conn. 21, 26, 166 A.2d 710 (1960); Romaniello v. Pensiero, 21 Conn.App. 57, 60, 571 A.2d 145 (1990).
The court finds that at all times, Landmark was ready, willing, and financially able to complete this transaction. The evidence shows that it had the cash on hand to meet the contract price, and Landmark had completed developments far in excess of the cost to develop this site. There was no evidence presented to show it could not meet the financial terms of the contract. While the court believes that Landmark was "ready" within the meaning of the law, any conditions of the contract that had as yet not been performed by Landmark are excused by Chung, LLC's repudiation of the contract. See Steiner v. Bran Park Associates, supra, 216 Conn. 425. Plaintiff is entitled to specific performance.
In Appendix B of the plaintiff's brief, plaintiff sets out a proposed order for specific performance. While this proposal is not unreasonable, the court declines to adopt its terms. Landmark has been significantly prejudiced by the delay occasioned by the termination of the contract. It should not be foreclosed from the opportunity to take advantage of the contract terms and give a 20-day termination notice. In view of the findings herein, Landmark would be justified in so doing. Should this option be elected, it is the order of this court that its deposit be returned. Nor does this court wish to foreclose Landmark from simply closing immediately, with or without any additional funding. This is permitted by the acceleration clause of the contract.
Testimony revealed that CBRA funding can be obtained through a grant without participation by the Town. Moreover, the Town never had an opportunity to make a new agreement, as it thought it futile, under the belief that the contract would not go forward. Landmark remains protected by the escrow provisions of the contract. In summary, Landmark is entitled to proceed under the terms of the original contract or terminate at any point, pursuant to the termination clause of the contract.
Under § 11.2 of the contract, there is a provision which would limit damages under certain conditions. This section is not applicable to the facts of this case, and, in any event, could not have been operative absent thirty days notice. No notice was ever given under this section of the contract.
2. CUTPA Damages
At oral argument, plaintiff abandoned its claim for any damages relating to delay or lost profits. Plaintiff indicated orally that it seeks damages under CUTPA only for attorneys fees — the fees incurred to try the case. Plaintiff is entitled to these fees in view of the CUTPA violation established by the evidence and applicable law upon producing appropriate documentation.
On a final note, the court would be remiss were it to fail to mention the high degree of professionalism and outstanding civility of both counsel.
Judgment is hereby entered for plaintiff in accordance with the findings enumerated herein.