Opinion
No. CV03-0475220-S
June 5, 2006
MEMORANDUM OF DECISION
The plaintiff (D'Auria) made claim against the defendants (Solomine) in a two-count complaint alleging Breach of Contract in the First Count and quantum meruit in the Second Count dated February 26, 2003.
On June 13, 2003, Default Judgment was entered in favor of D'Auria who in her affidavit stated she was ready, willing and able to close and that the defendants, Solomine have been unable to or have refused to close on the subject property. (See Exhibit 5.)
On September 9, 2002 Solomine filed a Motion to Reopen with their Answer which was granted. No special defenses or counterclaim was made. Accordingly, the operative pleadings in this case at trial was the original complaint and the answer of September 9, 2002 which was never amended.
FACTS
On October 19, 2002 Solomine offered to purchase property owned by D'Auria at 66-70 Hemingway Avenue, East Haven, Connecticut (Exhibit A). The closing date was set for December 15, 2002. D'Auria was ready, willing and able to convey title on the property and appeared at the closing. The Solomines have been unable to or refused to close because they were unable to obtain financing (Exhibit 1). There is a financing contingency clause with a time limit of 25 days from acceptance in the contract. The listing real estate broker is Cyr Real Estate. The agent for Cyr was Gena Lockery who was deceased at the time of trial. The initial deposit submitted with the contract was $1000 with an additional deposit within three days from Seller acceptance of $8000. The balance due at the closing by cash, certified or bank check is $291,000 for the total purchase price of $300,000. The contract further provided for a physical inspection period of 10 days from acceptance and notification after inspection period of 3 days.
No evidence was produced at trial concerning the physical inspection or were any claims made as to the physical condition of the property.
The court finds that from all the evidence that the time limit for notice of compliance with the financing contingency clause is 25 days from the time Solomine submitted his additional deposit of $8000 on October 28, 2002. Therefore the time to have notified D'Auria of Solomine's failure to obtain appropriate financing is November 24, 2002. Not until December 3, 2002 did Attorney Thomas Richardson (Richardson) notify the seller Solomine was unable to obtain sufficient financing to make the deal work. (See Exhibit 1.)
At no time was an extension of the time limit of the mortgage ever requested or given to Solomine.
Richardson knew at the time that Solomine engaged his services for the closing that Solomine had a time limit for the financing contingency. Richardson testified that when he received the contract on November 19, 2002 he understood the mortgage contingency had already expired and he wanted Solomine to concentrate on obtaining financing. Richardson conceded he was never told that the mortgage contingency time limit was extended in the agreement. Richardson asked for the return of the funds held in escrow. (Exhibit 1.)
On February 9, 2005 the defendants Solomine filed a Third-Party Complaint against Cyr Real Estate alleging essentially improper disbursement of funds held in escrow. The liquidated damage clause provided that the deposits would constitute liquidated damages. Broker agreed to hold such deposits until a court order or agreement of the parties.
E. DEFAULT, LIQUIDATED DAMAGES: If there is a default by BUYER under this Agreement and SELLER is not in default, all initial and additional deposit funds provided in #4, shall be paid over to and retained by SELLER as liquidated damages, and both parties shall be relieved of further liability under this Agreement. Broker shall hold such deposits until rights to it are determined by written agreement of all parties or by court order.
On August 7, 2003 counsel for D'Auria forwarded a copy of the judgment entered by the court requesting the deposit money in accordance with the liquidated damage clause.
The transaction involved the sale of property for $300,000. The amounts of the deposit totaled $9000 which the parties agreed would be liquidated damages. The court finds that the liquidated damages agreed to by the parties is reasonable being only 3 percent of the total purchase price.
The plaintiff did not present any evidence as to the Second Count.
THIRD-PARTY DEFENDANT
The court finds that Solomine breached the contract and that D'Auria is entitled to the liquidated damages in the amount of $9000 which was turned over to them.
Solomine essentially argue that if the court finds in their favor that the court order restitution to them.
The purchaser's right to recover in restitution requires the purchaser to establish that the seller had been unjustly enriched. The purchaser must show more than that the contract has come to an end and that the seller retains moneys paid pursuant to the contract. To prove unjust enrichment, in the ordinary case, the purchaser, because he is the party in breach, must prove that the damages suffered by his seller are less than the moneys received from the purchaser. Schwasnick v. Blandin, 65 F.2d 354, 358 (2d Cir. 1933); Kitchin v. Mori, 437 P.2d 865, 866 (Nev. 1968). It may not be easy for the purchaser to prove the extent of the seller's damages, it may even be strategically advantageous for the seller to come forward with relevant evidence of the losses he has incurred and may expect to incur on account of the buyer's breach. Nonetheless, only if the breaching party satisfies his burden of proof that the innocent party has sustained a net gain may a claim for unjust enrichment be sustained. Dobbs, Remedies § 12.14 (1973); 1 Palmer, Restitution § 5.4 (1978).
Vines v. Orchard Hills, Inc., 181 Conn. 501, 510.
In this case Solomine did not make such a claim of unjust enrichment but brought a Third-Party suit against Cyr Real Estate.
In the post-trial brief of the Third-Party defendant at page 4 "Under Connecticut law, not only are brokers permitted to release escrow funds pursuant to notice from counsel, they are expected to do so. See, Hayber v. Department of Consumer Protection, 49 Conn.Sup. 192, ( 36 Conn. L. Rptr. 603), aff'd, 87 Conn.App. 625 (2005). Indeed, if Cyr had refused to disburse the funds in accordance with plaintiff's counsel's instruction, Cyr's wrongful refusal might be actionable as a breach of fiduciary duty. Hayber, id. at 198-99 (ordering disbursement of escrowed funds with interest and assessing a civil penalty against a real estate broker who failed to disburse the escrowed funds pursuant to a written request from counsel for one of the parties to release the funds)."
The Third Party also asserts that no claim was made by Solomine of any violations in the Third-Party Complaint which they now rely upon in their argument.
The purpose of a complaint is to limit the issues at trial and is calculated to prevent surprise. The court rejects the argument of the Third-Party plaintiff in this case.
The court finds in favor of the Third-Party defendant for the reasons set forth.
Accordingly, judgment may enter for the plaintiffs on the First Count of the complaint in the amount of $9000 plus costs and judgment in favor of the Third-Party defendant plus court costs.