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Li v. Yaggi

Court of Appeals of Connecticut

October 30, 2018

WINSTON Y. LI ET AL.
v.
HENRY K. YAGGI III ET AL.

          Argued May 24, 2018

         Procedural History

         Action to recover damages for, inter alia, breach of contract, and for other relief, brought to the Superior Court in the judicial district of New Haven and tried to the court Wilson, J.; judgment for the defendants, from which the plaintiffs appealed to this court; thereafter, the court, Wilson, J., denied the plaintiffs' motion for articulation and granted the plaintiffs' motion for rectification. Reversed; new trial.

          Winston Y. Li, self-represented, and Liping Wang, self-represented, the appellants (plaintiffs).

          Philip G. Kent, with whom, on the brief, was Adam D. Miller, for the appellees (defendants).

          Alvord, Sheldon and Norcott, Js.

          OPINION

          ALVORD, J.

         The self-represented plaintiffs, Winston Y. Li and Liping Wang, appeal from the judgment of the trial court, rendered after a trial to the court, in favor of the defendant, Valerie M. Yaggi, individually and as administratrix of the estate of Henry Yaggi, on the plaintiffs' two count complaint alleging breach of the parties' purchase and sale agreement and breach of contract.[1]On appeal, the plaintiffs claim that the court (1) erroneously found that the plaintiffs failed to diligently pursue a written mortgage commitment, (2) erroneously found that the plaintiffs failed to give notice of their inability to obtain financing for the real estate purchase by the agreed upon commitment date, [2] and (3) erred in awarding the defendant attorney's fees. The defendant raises the doctrine of equitable estoppel as an alternative ground for affirmance of the court's decision. We reverse the judgment of the trial court.

         The record reveals the following facts and procedural history. On October 26, 2012, the defendant entered into a purchase and sale agreement (agreement) with the plaintiffs with respect to a parcel of real property located at 45 Wickford Place in the town of Madison (property). The purchase price of the property was $810, 000, and the plaintiffs submitted deposits totaling $25, 000.

         The agreement contained a mortgage contingency clause in paragraph 6, which stated: ‘‘Buyer's obligation is contingent upon Buyer obtaining financing as specified in this paragraph. Buyer agrees to apply for such financing immediately and diligently pursue a written mortgage commitment on or before the Commitment Date. . . . If Buyer is unable to obtain a written commitment and notifies Seller in writing by 5:00 p.m. on said Commitment Date, this Agreement shall be null and void and any Deposits shall be immediately returned to Buyer. Otherwise, the Financing Contingency shall be deemed satisfied and this Agreement shall continue in full force and effect.'' The agreement specified that the commitment date was thirty days from the date of the October 26 agreement, which was November 25. Because November 25 was a Sunday, the commitment date was November 26. The closing date was set for December 3.

         Paragraph 14 of the agreement provided: ‘‘If Buyer fails to comply with any Terms of this Agreement by the time set forth for compliance and Seller is not in default, Seller shall be entitled to all initial and additional deposit funds provided for in section 4, whether or not Buyer has paid the same, as liquidated damages and both parties shall be relieved of further liability under this Agreement. If legal action is brought to enforce any provision of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees.'' On November 24, 2012, the plaintiffs sent an e-mail to the defendant, stating: ‘‘Attached is a request of mortgage extension. Due to the Hurricane Sandy and Thanksgiving holiday. We won't be able to obtain a mortgage commitment by 5 [p.m.] today. We request your approval of extension. We expect a commitment from a bank next week. Please sign and return to us ASAP.'' (November 24 e-mail) The plaintiffs attached to their e-mail a change form, which proposed an amended commitment date of December 3, 2012, and an amended closing date of December 14, 2012. The change form was signed by the plaintiffs.

         The defendant forwarded the e-mail to her realtor, Lorey Walz, on November 24. The same day, Walz e-mailed Blake Ruchti, the plaintiffs' realtor, stating: ‘‘We have received the request to extend the mortgage commitment date and closing date. The sellers, Hank and Val Yaggi, are willing to do so after receiving verification from the bank that you have a mortgage approval contingent upon a bank appraisal. . . . Hank and Valerie Yaggi would like to see you purchase the home but have to be confident that a bank commitment will be given.'' The defendant did not sign the change form.

         The plaintiffs submitted a second change form, signed by the plaintiffs and dated November 30, 2012, to the defendant. The second change form proposed an amended commitment date of December 14, 2012, and an amended closing date of December 21, 2012. The defendant hand wrote, next to the amended commitment and closing dates, ‘‘[t]ime is of the essence, '' and initialed next to those handwritten additions. The defendant signed the second change form on December 4, 2012. The plaintiffs did not initial next to those handwritten additions, but they subsequently executed a third and a fourth change form, requesting further extensions of the commitment and closing dates. Neither form was signed by the defendant. The fourth change form proposed an amended commitment date of January 18, 2013, and an amended closing date of January 25, 2013.

         On February 17, 2013, the plaintiffs e-mailed the defendant's counsel, James Segaloff, following up on a conversation from February 6, 2013, in which they told Segaloff that the first bank to which they applied for a mortgage had denied their loan application, the second such bank had requested an affidavit of repair for the roof before issuing a commitment, and the third such bank had not yet responded. In their e-mail, the plaintiffs stated: ‘‘We have requested for contract termination but no response from your clients. . . . Please advise the status and their consideration of the termination of the contract.'' The plaintiffs requested return of their deposits and attached a notice of loan denial from the first bank, United Wholesale Mortgage, dated December 13, 2012, and a suspense notice from the second bank, Mortgages Services III, LLC, dated December 6, 2012.[3]

         On February 27, 2014, the plaintiffs commenced this action, alleging in relevant part that the defendant had breached the purchase and sale agreement by ‘‘not timely releas[ing] the deposit[s] . . . .'' Both parties moved for summary judgment, those motions were denied, and the matter was tried to the court on March 9, 2017. The parties submitted proposed findings of fact and conclusions of law. On July 25, 2017, the court issued a memorandum of decision, finding that the plaintiffs had breached the purchase and sale agreement by failing (1) to timely terminate the contract, and (2) to diligently pursue financing as required under the agreement. Specifically, the court concluded that the November 24 e-mail sent by the plaintiffs did not constitute written notice of termination of the agreement, but rather served as a request for an extension of the commitment and closing dates. The court further found that none of the change forms submitted by the plaintiffs had been agreed upon by the parties and, thus, that the original commitment date remained operative. Because the plaintiffs did not provide written notice of termination by 5 p.m. on the commitment date, the court concluded that the defendant was entitled to retain the deposits.

         Regarding the requirement to diligently pursue financing, the court relied on the two December, 2012 ‘‘mortgage denial notifications, '' provided by the plaintiffs to the defendant on February 17, 2013. The court found that the notifications ‘‘indicated that the plaintiffs did not fully complete their loan applications, and were thus denied financing.'' The court noted that the plaintiffs had submitted the third and fourth change forms requesting extensions of the commitment date after the issuance of the December denial notifications, at which time they were ‘‘fully aware that they had been denied a mortgage by two banks.'' Thus, the court concluded that the plaintiffs had breached the agreement by failing to pursue financing in a diligent manner.

         Finally, the court concluded that the plaintiffs had defaulted on the agreement, triggering the liquidated damages clause set forth in paragraph 14 of the agreement. The court found that the amount of the deposits, $25, 000, was a reasonable amount for the defendant to retain as liquidated damages because that sum represented only three percent of the $810, 000 purchase price of the property and the defendant had testified that the delay occasioned by the plaintiffs had ultimately caused the defendant to sell the property for $135, 000 less than the contract price to which the parties had agreed. With respect to the defendant's request for attorney's fees, the court ordered the defendant to file a motion, together with a supporting affidavit, and indicated that it would ‘‘determine whether reasonable attorney's fees shall be awarded'' after a hearing on the motion.

         The plaintiffs filed this appeal on July 28, 2017. On January 29, 2018, the court awarded the defendant attorney's fees in the amount of $38, 000 and costs, after which the plaintiffs filed an amended appeal. Additional facts shall be set ...


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