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Windham Realty, LLC v. Pond View Apartments, Ltd.

Superior Court of Connecticut, Judicial District of Fairfield, Bridgeport

September 24, 2015

Windham Realty, LLC
v.
Pond View Apartments, Ltd

MEMORANDUM OF DECISION

Richard P. Gilardi, Judge Trial Referee.

In its four-count revised complaint dated April 23, 2015, the plaintiff, Windham Realty, alleges the following facts. Windham Realty is a Connecticut limited liability company with a principal office in Canterbury, Connecticut, whose agents and members include Stephen St. Germain and Robert Chapin. The defendant, Pond View, is a Connecticut corporation with a principal office in Bridgeport, Connecticut, whose agent and president is Voll. On April 20, 2011, Windham Realty and Pond View entered into a written contract (sales contract) for the sale to Windham Realty of certain property located at 125-143 Cemetery Road in Plainfield (Plainfield property) for a purchase price of $1.6 million. After the sales contract was signed, both parties negotiated a $125, 000 reduction in the sale price of the property to $1, 475, 000, as set forth in a fully executed addendum to the sales contract in May of 2011. On August 12, 2011, a closing of title was scheduled for the transaction, which was attended by St. Germain, Chapin, Voll, and their respective legal counsel and real estate agents.

Immediately prior to the closing, the plaintiff alleges a final inspection revealed extensive damage to the property due to a burglary that had previously occurred approximately a week before, on or about August 2 or August 3, 2011; [1] as a result of the burglary, the property sustained water damage, structural damages to the interior walls and apartments, and damage due to the removal of copper piping. Voll, individually and as an agent for Pond View, then orally represented to the agents for Windham Realty that an insurance claim would be made to Pond View's property insurance carrier and that one-half of any claim proceeds resulting thereafter would be delivered to Windham Realty. Per the express terms contained in the " risk of loss provision" on page three of the sales contract, [2] Windham Realty, in reliance upon Voll's aforementioned representations, elected to proceed with the closing of the title in consideration for an assignment of the insurance proceeds. Thereafter, Windham Realty closed title and tendered the purchase price of $1, 475, 000 to Pond View. After the closing, Pond View and Voll received a settlement from their insurance carrier, but refused and neglected to pay or assign any of the proceeds to Windham Realty, despite repeated requests and demands to do so. As a result, Windham Realty allegedly incurred damages.

CREDIBILITY

" [T]he trier of fact's assessment of the credibility of the witnesses . . . is made on the basis of its firsthand observation of their conduct, demeanor and attitude . . . The weight to be given to the evidence and to the credibility of witnesses is solely within the determination of the trier of fact." (Internal quotation marks omitted.) Machado v. Statewide Grievance Committee, 93 Conn.App. 832, 839, 890 A.2d 622 (2006). " It is well established that the [t]rier of fact may accept or reject the testimony of any witness . . . The trier can, as well, decide what--all, none, or some--of a witness' testimony to accept or reject." (Citation omitted; internal quotation marks omitted.) Wilson v. Hryniewicz, 51 Conn.App. 627, 633, 724 A.2d 531, cert. denied, 248 Conn. 904, 731 A.2d 310 (1999).

The court heard testimony from eight witnesses in this matter: St. Germain; Chapin; Tara Laliberte, a property manager for Pond View; Nicholas Scola, an attorney who represented Windham Realty in the purchase of the Plainfield property; Robert Josovitz, an attorney who represented Pond View in the sale of the Plainfield property; Anthony McKinney, an employee of Voll; Robin Pruzinsky, a public insurance adjuster who was retained by Voll to adjust the insurance claim for the Plainfield property and submit it to Pond View's insurance carrier, Farmers Insurance Group (Farmers); and Voll.

In evaluating the credibility of the witnesses, the court considered " their appearance and demeanor on the witness stand, the consistency or inconsistency of their testimony, their memory or lack thereof of certain events, their manner in responding to questions and whether they were candid and forthright or evasive and incomplete, their interest or lack of interest in the case, and the consistency or inconsistency of their testimony in relation to the other evidence, including exhibits in the case." KRP & Sons Enterprises, LLC v. Frenette, Superior Court, judicial district of New Britain, Docket No. CV-12-5015569-S, 2015 Conn. Super. LEXIS 826 (April 10, 2015, Gleeson, J.). Although the court did not find either party's testimony to be entirely credible as to all claims, the court finds St. Germain's and Chapin's testimony to be the more credible and accepts their testimony with respect to their characterization of the relevant facts regarding the breach of written contract claim.

BREACH OF CONTRACT

" The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages." (Internal quotation marks omitted.) Treglia v. Santa Fuel, Inc., 148 Conn.App. 39, 45, 83 A.3d 1222 (2014). " [I]n order to form a binding and enforceable contract, there must exist an offer and an acceptance based on a mutual understanding by the parties . . . The mutual understanding must manifest itself by a mutual assent between the parties." (Internal quotation marks omitted.) Housing Authority v. DeRoche, 112 Conn.App. 355, 370, 962 A.2d 904 (2009). " [A]n agreement must be definite and certain as to its terms and requirements." (Internal quotation marks omitted.) Electrical Wholesalers, Inc. v. M.J.B. Corp., 99 Conn.App. 294, 302, 912 A.2d 1117 (2007). " The existence of a contract is a question of fact to be determined by the trier on the basis of all of the evidence." (Internal quotation marks omitted.) Harley v. Indian Spring Land Co., 123 Conn.App. 800, 813, 3 A.3d 992 (2010). Furthermore, " [w]hether there was a breach of contract is ordinarily a question of fact . . . [W]here a breach of contract is alleged, [t]he amount, if any, of the [plaintiff's] actual damages is a question of fact." (Citations omitted; internal quotation marks omitted.) Ridgefield v. Eppoliti Realty Co., 71 Conn.App. 321, 338, 801 A.2d 902, cert. denied, 261 Conn. 933, 806 A.2d 1070 (2002).

Breach of Written Contract

Windham Realty first argues that the defendants breached the sales contract when they did not assign the insurance proceeds to Windham Realty in accordance with the risk of loss provision. In contrast, the defendants argue that they did not breach the risk of loss provision because a condition precedent to the buyer having the option to remedy the loss or damage is that the seller does not repair or replace such damage prior to the closing. Because Pond View completed the repair of the missing copper pipe before the closing, they argue, Windham Realty does not have the option of either receiving an assignment of insurance proceeds or cancelling the sales contract, as outlined in the risk of loss provision.

Neither party disputes that there was a valid written agreement between Windham Realty and Pond View for the purchase of the Plainfield property, and that the sales contract was later modified by means of an addendum. The defendants admit in their posttrial brief that pursuant to the risk of loss provision, " Pond View bore the risk of loss during the time leading up to the closing on the [Plainfield property]; that same party also was charged with the responsibility that in the event of a loss, any damage would be repaired or replaced." At the same time, however, the defendants argue that any damage caused by the August 2 burglary had been repaired at the time of the closing in accordance with the risk of loss provision, citing specifically to the lack of photographic evidence of any " catastrophic damages" presented by Windham Realty; the testimony of Voll, Pruzinsky, and McKinney that the basement was dry, a replacement pipe had been installed, and no leaks were apparent; and the fact that Windham Realty closed title on the property without documenting any repairs remaining to be done.

The court disagrees and finds that the evidence presented at trial actually contradicts the defendants' position. Specifically, on the day of the closing, Voll signed a " public adjuster employment contract" with Pruzinsky's insurance adjustment company, Roxanne Pruzinsky and Associates (Associates), retaining Associates to advise and assist in the adjustment and settlement of Pond View's " vandalism and water damage loss" that the employment contract states occurred on or about August 2, 2011. See Plaintiff's Exhibit 15. Moreover, in Associates' prepared claim estimate for Pond View, which outlines the replacement cost of specific items in the Plainfield property per room, item 346 under " basement" attributes a cost of $1, 710.60 to replace the copper on the water supply line that was the issue of the alleged burglary. See Plaintiff's Exhibit 4. If the defendants had satisfactorily repaired the basement pipe and resultant water damage conditions, as they claim they did, then it would not have been necessary for Voll and Associates to submit an insurance claim to repair those same conditions, explicitly referencing the August 2, 2011 burglary in the process.

Because the defendants did not fulfill the condition precedent contained in the risk of loss provision to repair or replace the damage, Windham Realty was within its rights to either " take an assignment from the Seller of any amounts that may become due under the Seller's insurance policy" or " cancel this Contract in which event the Seller shall return to the Buyer all sums previously paid to the Seller without interest." The court credits St. Germain's testimony that Windham Realty elected the former option and that Voll agreed, on the day of the closing, to split the insurance proceeds from the claim, but that Windham Realty never received an assignment of such proceeds from the defendants. Accordingly, Pond View breached the risk of loss provision contained in the sales contract. As a result, Windham Realty was required to expend funds to remedy the property damage; see Defendant's Exhibit G; and, therefore, suffered damages.

The court must next address the defendants' special defense of merger, which they have pleaded with regard to count one of the revised complaint. " [A] special defense is not an independent action; rather, it is an attempt to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action." (Internal quotation marks omitted.) Valentine v. LaBow, 95 Conn.App. 436, 447 n.10, 897 A.2d 624, cert. denied, 280 Conn. 933, 909 A.2d 963 (2006). " The general rule [of the doctrine of merger] is that acceptance of a deed in pursuance of articles of agreement for the conveyance of land is prima facie the completion of the contract; and all stipulations contained therein . . . are merged in the deed although omitted therefrom." (Internal quotation marks omitted.) Knight v. Breckheimer, 3 Conn.App. 487, 490, 489 A.2d 1066 (1985). Specifically, " the terms of the deed . . . automatically replace and supersede the terms of the underlying contract, absent a reservation of collateral rights." (Internal quotation marks omitted.) Biro v. Matz, 132 Conn.App. 272, 280, 33 A.3d 742 (2011). " Although acceptance of the deed is prima facie, that is not dispositive of the issue . . . [M]istakes and misrepresentations that can be viewed as tantamount to fraud can be relied upon to obviate the rule." (Emphasis added; internal quotation marks omitted.) Shiff v. Van Wyk, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV-08-5008214-S, 2009 Conn. Super. LEXIS 1888 (July 6, 2009, Pavia, J.)

" Usually, mere nondisclosure does not amount to fraud . . . Nondisclosure may, however, amount to fraud when there is a failure to disclose known facts under circumstances that impose a duty to speak . . . In addition, once a vendor undertakes to speak on a subject, the vendor must then make a full and fair disclosure as to that subject." (Internal quotation marks omitted.) Dockter v. Slowik, 91 Conn.App. 448, 458, 881 A.2d 479, cert. denied, 276 Conn. 919, 888 A.2d 87 (2005). " At least until title [passes] and the purchase price [is] paid, the plaintiff [has] the right to refuse to accept a deed and to recover any provable damages . . . An action will lie for a fraudulent nondisclosure that causes one to continue in a course of action." (Citation omitted.) Bernard v. Gershman, 18 Conn.App. 652, 656-57, 559 A.2d 1171 (1989).

While each side in the present case disputes the exact value of the insurance proceeds that Voll agreed to assign to Windham Realty, each agrees that a conversation concerning the August 2 burglary and a to-be-filed insurance claim took place on the day of the closing, prior to title passing to Windham Realty. Voll admitted in his testimony that he discussed the matter of the burglary with St. Germain when St. Germain approached him about it. The following exchange regarding this conversation took place between Voll and the defendants' counsel at trial:

Q: . . . And when [St. Germain] raised the issue of the burglary, did you respond to him?
A: Yes.
Q: And how did you ...

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