Opinion
CV145034810S
07-25-2017
Winston Li et al. v. Valerie Yaggi et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Robin L. Wilson, J.
I
STATEMENT OF CASE AND PROCEDURAL HISTORY
" The plaintiffs commenced this action on March 6, 2014. In a three-count complaint, [filed on March 6, 2014] count one allege[d] breach of a Purchase and Sale Agreement, count two allege[d] a common-law breach of contract, and count three allege[d] a violation of the Connecticut Unfair Trade Practices Act ('CUTPA'). This agreement involved the sale of the defendants' residential property located in Madison, Connecticut and was executed by the parties in October 2012. In the third count of the complaint, the plaintiffs allege[d] that the defendants violated CUTPA by intentionally breaching the terms of the Purchase and Sale Agreement. The plaintiffs allege[d] that the defendants . . . breached the agreement by falsely accusing them of defaulting on the agreement, retaining the plaintiffs' deposit after the agreement was terminated, and by entering into a simultaneous agreement with a third party for the sale of the same real property.
" The defendants, Henry K. Yaggi, III and Valerie M. Yaggi . . . moved to strike the Third Count on two grounds [that]: (1) the transaction that forms the basis for the alleged CUTPA violation was an isolated, noncommercial act and, therefore, outside the scope of the act. The plaintiffs filed an objection and memorandum in opposition to the defendants' motion to strike. The plaintiffs argue[d] that the defendants and their former attorneys, 'as a whole entity involve real estate transactions [on a] daily basis' and therefore their conduct constitute[d] a violation of CUTPA." Li v. Yaggi, Superior Court, judicial district of New Haven, Docket No. CV145034810, (July 10, 2014, Wilson, J.). The court granted the defendants' motion to strike count three. Id. On July 23, 2014, the plaintiffs filed a motion for leave to amend the complaint and substitution of pleading and addition of defendants. On August 1, 2014, the plaintiffs filed a withdrawal of their request for leave to amend. Accordingly, the operative complaint is the complaint filed March 6, 2014, in which the CUTPA count was stricken, leaving the breach of purchase and sale agreement and breach of contract counts. On June 27, 2016, the plaintiffs filed a motion for summary judgment which the court denied on November 21, 2016.
While this lawsuit was pending, the defendant Henry Yaggi died and a motion to substitute Valerie Yaggi as administrator of Henry Yaggi's estate was granted by court on March 4, 2016.
The case was tried to the court on March 9, 2017. The court ordered that the parties submit simultaneous proposed findings of fact and briefs on or before April 10, 2017.
II
STANDARD OF REVIEW
" It is an abiding principle of our jurisprudence that [t]he sifting and weighing of evidence is peculiarly the function of the trier [of fact]. [N]othing in our law is more elementary than that the trier [of fact] is the final judge of the credibility of witnesses and of the weight to be accorded to their testimony . . . The trier has the witnesses before it and is in the position to analyze all the evidence. The trier is free to accept or reject, in whole or in part, the testimony offered by either party." (Citations omitted; internal quotation marks omitted.) Welsch v. Groat, 95 Conn.App. 658, 664, 897 A.2d 710 (2006).
" It is well established that in cases tried before courts, trial judges are the sole arbiters of the credibility of witnesses and it is they who determine the weight to be given specific testimony . . . It is the quintessential function of the fact finder to reject or accept certain evidence . . ." (Citations omitted; internal quotation marks omitted.) In re Antonio M., 56 Conn.App. 534, 540, 744 A.2d 915 (2000). The trier of fact must evaluate the credibility of both testimonial and documentary evidence. Coombs v. Phillips, 5 Conn.App. 626, 627, 501 A.2d 395 (1985) (per curiam). " The fact-finding function is vested in the trial court with its unique opportunity to view the evidence presented in a totality of the circumstances, i.e., including its observations of the demeanor and conduct of the witnesses and parties." (Internal quotation marks omitted.) Cavolick v. DeSimone, 88 Conn.App. 638, 646, 870 A.2d 1147, cert. denied, 274 Conn. 906, 876 A.2d 1198 (2005).
" The trier of fact must observe the demeanor of witnesses and draw inferences as to the motives underlying their testimony and conduct." Christie v. Eager, 129 Conn. 62, 64-65, 26 A.2d 352 (1942). " [T]he trier of fact's assessment of the credibility of . . . 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 [t]he trier 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).
III
BURDEN OF PROOF/STANDARD OF PROOF
The burden of proof is on the plaintiffs to prove all of the essential allegations of their complaint. See Lukas v. New Haven, 184 Conn. 205, 211, 439 A.2d 949 (1981). " While the plaintiff[s] [are] entitled to every favorable inference that may be legitimately drawn from the evidence, and has the same right to submit a weak case as a strong one, the plaintiff[s] must still sustain the burden of proof on the contested issues in the complaint and the defendant[s] need not present any evidence to contradict it . . . The general burden of proof in civil actions is on the plaintiff[s], who must prove all the essential elements of [their] cause of action by a fair preponderance of the evidence." Gulycz v. Stop and Shop, 29 Conn.App. 519, 523, 615 A.2d 1087, cert. denied, 224 Conn. 923, 618 A.2d 529 (1992). Failure to do so results in judgment for the defendant. Id.
IV
FINDINGS OF FACT
From the credible testimony and evidence presented, the court finds the following facts to have been proven by a fair preponderance of the evidence. On October 26, 2012, the plaintiffs and defendants entered into a real estate purchase and sale agreement (agreement) for the purchase and sale of the defendants' home, located at 45 Wickford Place, Madison, Connecticut (the " property"). The agreed-upon purchase price was $810,000. In conjunction with the agreement, the plaintiffs provided three separate deposit checks totaling $25,000.
Paragraph 6 of the agreement contained a financing contingency clause that stated the plaintiffs' obligation to purchase the property was subject to obtaining a mortgage/financing commitment. Financing for the purchase of the property was to be obtained within thirty (30) days from October 26, 2012, which set the deadline as November 25, 2012. Because November 25, 2012 was a Sunday, plaintiffs had until November 26, 2012, to meet the financing deadline.
Paragraph 6 of the agreement is the financing contingency clause which provides in relevant part: " 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." Pl. Ex. 1. Paragraph 6(f) further provides: " [i]f Buyer is unable to obtain a written commitment and notifies the 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 the Buyer. Otherwise, the Financing Contingency shall be deemed satisfied and this Agreement shall continue in full force and effect." Id. Pursuant to the agreement, the closing date was set for December 3, 2012.
Paragraph 14 of the agreement provides that " [i]f 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 . . . 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 attorneys fees." Id. On November 24, 2012, the plaintiffs sent an email to the defendants which specifically states: " Mr./Ms. Yaggi, 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 . . ." Pl. Ex. 7. The plaintiffs' November 24, 2012 email does not state anything about termination of the contract. To the contrary, the plaintiffs were clearly seeking an extension of the financing deadline. The court therefore finds that the email of November 24, 2012 was not a termination of the purchase and sale agreement, but rather a request to extend the closing date to December 14, 2012, and the mortgage contingency date/commitment date to December 3, 2012 as reflected in the change form submitted by the plaintiffs to the defendants. The change form which was submitted with the plaintiffs' November 24, 2012 email, is dated November 19, 2012 and is signed by the plaintiffs. The change form is not signed by the defendants.
On November 24, 2012, the defendants forwarded the November 24, 2012 email to their realtor, Lorey Walz. On November 24, 2012, Walz sent an email to the plaintiffs' realtor, Blake Ruchti which advised Ruchti that " [w]e 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 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." (Emphasis added.) Pl. Ex. 8. No evidence was presented demonstrating that the plaintiffs received and provided verification from the bank that they received a mortgage approval contingent upon bank appraisal.
Sometime after November 30, 2012, the plaintiffs sent to the defendants a second change form. This change form was signed by the plaintiffs on November 30, 2012. The second change form requested an extension of the financing deadline and closing dates to December 14, 2012, and December 21, 2012, respectively. The second change form stated nothing about termination of the agreement. The defendants signed the second change form on December 4, 2012, but added the words " time is of the essence" with their initials next to them as an additional condition. The plaintiffs never acknowledged nor agreed to these added terms, as evidenced by the lack of their initials next to the terms. Indeed, the plaintiff Li confirmed in his testimony and in his post-trial brief that the second change form was not operative because the plaintiffs never accepted the defendants' additional terms of " time is of the essence." The court therefore finds that there was no agreement as to the terms of the second change form. Nothing in the second change form indicates that the plaintiffs were terminating the contract. In fact, subsequent to the submission of the second change form, sometime after December 14, 2012, the plaintiffs executed a third change form and again requested an extension of the financing deadlines. Specifically, the plaintiffs sought to extend the mortgage contingency/commitment date to December 21, 2012 and the closing date to January 11, 2013. There is no evidence that the defendants signed or agreed to the third change form. Moreover, nothing in the change form indicates that the plaintiffs intended to terminate the contract.
Sometime after December 21, 2012, the plaintiffs executed a fourth change form, and again requested an extension of the financing deadline and closing dates to January 18, 2013, and January 25, 2013, respectively. Again, nothing in the change form indicates that the plaintiffs intended to terminate the contract, nor is the change form signed by the defendants.
On or about January 11, 2013, the plaintiffs executed a Termination of Purchase and Sale Agreement form. The form requested the return of the plaintiffs' deposit. The form is not signed by the defendants. The reason stated in the termination form for termination of the agreement is that, " the sellers did not sign or reject for extension of mortgage contingency." Pl. Ex. 13.
Paragraph 25 of the agreement provides: " Notice. Any notice required or permitted under the Terms of this Agreement by Buyer or Seller shall be in writing addressed to the party concerned using the address stated in Paragraph 1 of this Agreement or to such party's attorney or to the party's Listing Broker or Cooperating Broker designated in Paragraph 17 hereof." Pl. Ex. 1. There is no evidence establishing that the plaintiffs provided notice of termination to the defendants in accordance with paragraph 25 of the agreement.
Plaintiff, Li sent an email to defendants' counsel on Sunday, February 17, 2013, in which he states that during a conversation he had with counsel on February 6, 2013, he informed him of the status of the loan for the subject property, and that the first bank denied the loan application, the second requested an affidavit of repair of the roof, and the third had not responded as of the date of the email. Li further stated in the email to attorney Segaloff that " we have requested for contract termination but no response from your clients . . . As we indicated in the termination letter, we did not think we would be able to get a loan for the purchase of the property. Per the mortgage contingency we wanted to terminate the contract and requested return of the deposits." Pl. Ex. 14. It is not clear from this email whether Li is referring to the termination form, which if so, there was no evidence establishing that the form was sent to the defendants, and the reason given in the termination form for the termination does not state that the plaintiffs did not think they would be able to obtain a loan, but rather the reason given was that the sellers did not sign or reject for an extension of the mortgage contingency. In addition, as previously noted, the termination form is not signed by the defendants. Moreover, as just noted, there is no evidence establishing that the plaintiffs provided written notice of their intent to terminate the agreement in accordance with paragraph 25 of the agreement. Thus, the court finds that the plaintiffs have not established that notice of termination of the contract was given in accordance with paragraphs 6 and 25 of the agreement.
The plaintiffs also claim that their email of November 24, 2012, constitutes notice of termination of the contract. The plaintiffs therefore contend that they gave proper notice of their intent to terminate the agreement, prior to the November 26, 2012 deadline, as required by the agreement's financing contingency clause. Paragraph 6 provides that " 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 Commitment Date." Paragraph 6(f) provides that " [i]f 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." Pl. Ex. 1. Pursuant to the agreement, the plaintiffs could terminate the agreement if there was an inability to obtain a mortgage loan. If the plaintiffs elected to terminate, they were obligated under the contract to provide notice of their inability to obtain a mortgage. Nowhere in the email of November 24, 2012, do the plaintiffs state that they intend to terminate the agreement due to their inability to obtain financing. The plaintiffs requested a " mortgage extension" because they could not get a mortgage from a bank that day, and that they " expect[ed] a commitment from a bank next week." Pl. Ex. 7. As previously noted, attached to this email was the first change form, which expressly requested mortgage commitment and closing date extensions. The court therefore finds that the plaintiffs' November 24, 2012 email does not constitute a written notice of termination of the agreement.
For some time prior to entering into the purchase and sale agreement with the plaintiffs, and for the duration of the events which led up to the filing of this lawsuit, defendant Henry Yaggi was very ill and the defendants were experiencing dire financial hardship. As a result, the defendants sold their home in March 2013, for $675,000, which was $135,000 less than the agreed-upon purchase price in the agreement with the plaintiffs. The court will make additional findings of fact as necessary regarding the merits.
V
BREACH OF CONTRACT
A
Mortgage Contingency Clause and Notice to Terminate Agreement
" The required elements necessary to sustain an action for breach of contract are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages . . . The existence of a contract is a question of fact to be determined by the trier on the basis of all the evidence." (Citation omitted; footnote added; internal quotation marks omitted.) Coppola Construction Co. v. Hoffman Enterprises Ltd. Partnership, 157 Conn.App. 139, 159, 117 A.3d 876, cert. denied, 318 Conn. 902, 122 A.3d 631 (2015). " The rules governing contract formation are well settled. To form a valid and binding contract in Connecticut, there must be a mutual understanding of the terms that are definite and certain between the parties . . . To constitute an offer and acceptance sufficient to create an enforceable contract, each must be found to have been based on an identical understanding by the parties . . . If the minds of the parties have not truly met, no enforceable contract exists." (Internal quotation marks omitted.) Geary v. Wentworth Laboratories, Inc., 60 Conn.App. 622, 627, 760 A.2d 969 (2000); see also Auto Glass Express, Inc. v. Hanover Ins. Co., 293 Conn. 218, 225, 975 A.2d 1266 (2009) (" It is a fundamental principle of contract law that the existence and terms of a contract are to be determined by the intent of the parties . . . The parties' intentions manifested by their acts and words are essential to the court's determination of whether a contract was entered into and what its terms were" [internal quotation marks omitted]).
In the present case, the defendants assert that they were ready, willing, and able to perform.
It is clear from the agreement that the plaintiffs and defendants entered into an agreement for the purchase and sale of the defendants' home located at 45 Wickford Place, Madison, Connecticut. In addition, the agreement contained a mortgage contingency provision which provides that the " Buyer's obligation is contingent upon Buyer obtaining financing" and that the " [b]uyer agrees to apply for such financing immediately and diligently pursue a written mortgage commitment on or before the Commitment Date." Pl. Ex. 1. The agreement further provides that " [i]f 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." Id. The agreement further provides for a liquidated damages clause which states that " [i]f 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 attorneys fees." Id.
In the present case, the question for the court to determine is whether the plaintiffs complied with the terms of the agreement by providing the defendants with notice of termination of the agreement in accordance with the terms of the agreement, which would therefore entitle them to a return of their deposit. The court concludes that they did not, and therefore they breached the agreement. As the court previously found, none of the change forms submitted by the plaintiffs, requesting an extension of the financing/commitment and closing dates were agreed upon by the parties. Additionally, the November 24, 2012 email submitted by the plaintiffs to the defendants is not written notice of termination of the agreement. The first change form submitted with the November 24, 2012 email reaffirms that the plaintiffs were not seeking to terminate the agreement, but were requesting an extension of the financing/commitment and closing dates. Moreover, the defendants forwarded the plaintiffs' November 24, 2012 email to their realtor, Lorey Walz, who, on November 24, 2012, sent an email to the plaintiffs' realtor advising that the defendants would only agree to an extension of the financing deadline and closing dates if the plaintiffs provided " verification from the bank that [they] have a mortgage approval contingent upon a bank appraisal." Pl. Ex. 8. No such verification was provided.
As to the second change form, the plaintiffs did not assent to the defendants' addition of " time is of the essence" and the plaintiff Li in his testimony, and in his post-trial brief acknowledges this and concedes that the second change form was not operative. As to the third and fourth change forms, none of them were signed by the defendants and there is no evidence that the parties agreed to the requested extensions. There is no evidence that either of the parties agreed to an extension of the financing and closing deadlines set forth in the purchase and sale agreement. Thus, the court finds the operative mortgage contingency date and closing date are the original purchase and sale agreement dates of November 26, 2012, and December 3, 2012, respectively, and that the plaintiffs failed to provide written notice of termination of the agreement " by 5:00 p.m. on said Commitment Date."
The case of New England Health Affiliates, Inc. v. Talar, Superior Court, judicial district of Hartford-New Britain, Docket No. CV 90-0382560 (February 9, 1993, Parker, J.), is instructive. In that case, the plaintiff buyer sought the return of a $150,000 deposit it had made pursuant to a purchase and sale agreement with the defendant seller to purchase three nursing homes. The key issue was whether the parties had agreed to abrogate a mortgage contingency deadline. The court determined that " [n]either [the plaintiff] or anyone else ever memorialized by any writing the alleged agreement made on October 30, 1989 to postpone the November 14 mortgage contingency deadline . . . It was the plaintiff's prerogative under the Purchase and Sale Agreement . . . to go forward with the transaction in the absence of . . . financing. If the plaintiff elected (chose) not to proceed with the agreement, it had to give notice of the inability to get the . . . financing by November 14, 1989. On the other hand, plaintiff could elect to proceed without the financing commitment and not give the notice . . ."
Similarly, in the present case, the plaintiffs have not proven that there was an agreement to extend the mortgage contingency date beyond the November 26, 2012 date. Additionally, paragraph 6(f) of the agreement states that if notice is not given to the Seller by 5:00 p.m. on the commitment date, " the Financing Contingency shall be deemed satisfied and this agreement shall continue in full force and effect." Pl. Ex. 1. It was therefore the plaintiffs' duty to give notice of their inability to obtain financing by November 26, 2012, which they did not do. The failure to do so resulted in a default by the plaintiffs which entitled the sellers to retain the deposit.
B
Requirement to Diligently Pursue Financing
The purchase and sale agreement in the present case further required the plaintiff to diligently pursue financing in a timely manner. " Contracts for the sale of real property often contain mortgage contingency clauses." McCoy v. Brown, 130 Conn.App. 702, 703, 24 A.3d 597, cert. denied, 302 Conn. 941, 29 A.3d 467 (2011). " A mortgage contingency clause is a condition precedent. That is, it is a fact or event which the parties intend must exist or take place, before there is a right of performance. Luttinger v. Rosen, 164 Conn. 45, 47, 316 A.2d 757 (1972). If the condition precedent is not fulfilled, then the contract is not enforceable. Lach v. Cahill, [138 Conn. 418, 421, 85 A.2d 481 (1951)]. The standard to be applied is not whether the prospective mortgagee attempted to satisfy an outstanding condition in good faith. Phillipe v. Thomas, 3 Conn.App. 471, 473, 489 A.2d 1056 (1985). Although good faith may have some relevance in determining the reasonableness of the prospective mortgagee's conduct, the standard to which a purchaser is held, is whether he exerted reasonable efforts to obtain the mortgage commitment. Luttinger v. Rosen, [ supra, 46]. Whether a person acted reasonably, is measured against conduct of a person of ordinary prudence, given all of the circumstances. Murphy v. Soracco, 174 Conn. 165, 168, 383 A.2d 1350 (1978) . . ." (Citation omitted.) Khazanchi v. Carlson, Superior Court, judicial district of Ansonia-Milford, Docket No. CV-09-5008215-S (September 10, 2010, Radcliffe, J.).
" A mortgage contingency clause implies a promise that the prospective purchaser will make reasonable efforts to secure a suitable mortgage." (Internal quotation marks omitted.) Riccio v. Billingsgate Associates, LLC, Superior Court, judicial district of Hartford, Docket No. CV-04-4002882-S (February 7, 2006, Hale, J.T.R.) (40 Conn.L.Rptr. 721, 722, ), citing Lach v. Cahill, supra, 138 Conn. 418, 422. " The standard is an objective one, involving an analysis of what a person with ordinary prudence would do given the circumstances . . . What constitutes reasonable efforts is a question of fact for the trier." (Citation omitted; internal quotation marks omitted.) Bhargava v. Arnould, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-08-5007068-S (September 16, 2010, Brazzel-Massaro, J.).
The evidence also demonstrates that the plaintiffs were in further breach of the purchase and sale agreement because they failed to " diligently pursue a written mortgage commitment on or before the Commitment date." Pl. Ex. 1. In the February 17, 2013 email the plaintiffs sent to defendants' attorney requesting the return of their deposit, the plaintiffs attached to that email two mortgage denial notifications, dated in December 2012. Both denials indicated that the plaintiffs did not fully complete their loan applications, and were thus denied financing. Specifically, the denials indicated that the plaintiffs: 1) provided insufficient credit history and credit file with the lender to qualify for financing; 2) had not provided the lender with applicable RESPA documents or had them cleared; 3) had not provided 1003 and 1008 forms; 4) had not signed an undisclosed debt disclosure; 5) had not provided IRS documentation verifying tax returns; 6) had not disclosed an auto loan; 7) had not documented the funds used to pay off the auto loan or provided a credit report showing payment of said debt; 8) had not provided 2010 W-2 forms for either plaintiff Li or his co-borrower; 9) had not provided 2010 tax returns; 10) had not provided documentation of the deposit paid for the purchase of the defendants' home; 11) provided only an incomplete copy of the purchase and sale agreement; and 12) did not provide evidence that the roof of the Yaggis' home was inspected. Furthermore, there is no evidence that the plaintiffs provided the defendants with these notices of loan denials prior to the February 17, 2013 email. Interestingly, both notices of denial are dated December 6, 2012, and December 13, 2012, and the plaintiffs submitted the third and fourth change forms in December 2012, both of which are dated December 14, 2012, and December 21, 2012, respectively, requesting an extension of the financing deadlines, when they were fully aware that they had been denied a mortgage by two banks. Accordingly, based upon this evidence, the court finds that the plaintiffs failed to diligently pursue financing in a timely manner as required by the agreement and therefore breached the purchase and sale agreement.
The plaintiffs have asserted in their post-trial brief that they were denied a mortgage commitment, not because they failed to provide the requisite supporting documents to their lenders, but because the defendants would not repair their roof. The evidence submitted at trial does not support the plaintiffs' assertion and the loan denials state that the lenders were not provided documentation that the roof was inspected, not that it was repaired. The addendum to the purchase and sale agreement submitted at trial indicates that not only was the roof inspected, but that " [b]uyers are aware of pre-existing roof conditions" and that the " conditions will not be negotiated in the inspection resolution. The roof needs to be replaced and will be the buyers cost . . ." Pl. Ex. 1. Addendum.
Since there is no evidence to establish that the parties had an agreement to extend the financing dates agreed to in the purchase and sale agreement, the plaintiffs were therefore obligated under the agreement, if they wished to terminate the agreement, to notify the defendants by 5:00 p.m. on November 26, 2012, which this court finds that they failed to do. Additionally, as the court further noted, the plaintiffs further breached the agreement by failing to diligently pursue financing. Accordingly, the court finds that the plaintiffs defaulted on the agreement and were thus subject to the liquidated damages clause set forth in paragraph 14 of the agreement.
VI
LIQUIDATED DAMAGES
" [T]he law is well established in this jurisdiction, as well as elsewhere, that a term in a contract calling for the imposition of a penalty for the breach of the contract is contrary to public policy and invalid, but a contractual provision fixing the amount of damages to be paid in the event of a breach is enforceable if it satisfies certain conditions . . . A contractual provision for a penalty is one the prime purpose of which is to prevent a breach of the contract by holding over the head of a contracting party the threat of punishment for a breach . . . A provision for liquidated damages, on the other hand, is one the real purpose of which is to fix fair compensation to the injured party for a breach of the contract. In determining whether any particular provision is for liquidated damages or for a penalty, the courts are not controlled by the fact that the phrase 'liquidated damages' or the word 'penalty' is used. Rather, that which is determinative of the question is the intention of the parties to the contract." American Car Rental, Inc. v. Commissioner of Consumer Protection, 273 Conn. 296, 306, 869 A.2d 1198 (2005).
Our courts do not enforce provisions which call for a greater benefit than what is appropriate for the failure to perform a contract. Thus, " liquidated damages are appropriate and construed as such if three conditions are satisfied: (1) the damage which was to be expected as a result of a breach of contract was uncertain in an amount or difficult to prove; (2) there was an intent on the part of the parties to liquidate damages in advance; and (3) the amount stipulated was reasonable in the sense that it was not greatly disproportionate to the amount of the damages which as the parties looked forward seemed to be a presumable loss which would be sustained by the contract in the event of a breach of contract." Bellemare v. Wachovia Mortgage Corporation, 284 Conn. 193, 203, 931 A.2d 916 (2007), American Car Rental, Inc. v. Commissioner of Consumer Protection, supra, at 306-07, 869 A.2d 1198, Dougan v. Dougan, 114 Conn.App. 379, 970 A.2d 131 (2009).
" With regard to the breach of a contract for the sale of real property, a seller's damages . . . include not only his expectation damages suffered through loss of his bargain, and his incidental damages such as broker's commissions, but also less quantifiable costs arising out of retention of real property beyond the time of the originally contemplated sale . . . It is not unreasonable . . . to presume that a liquidated damages clause that is appropriately limited in amount bears a reasonable relationship to the damages the seller has actually suffered . . . A liquidated damages clause allowing the seller to retain 10 percent of the contract price as earnest money is presumptively a reasonable allocation of the risks associated with default." (Citations omitted; internal quotation marks omitted.) Tsiropoulos v. Radigan, 163 Conn.App. 122, 129-30, 133 A.3d 898 (2016).
As to the first element, superior courts have held that an action " which involves a real estate contract where the seller is faced with the re-listing of a property after default has been found to satisfy the criteria of uncertainty . . . [T]here are many variables that will be affected by the failure to satisfy the terms of a real estate purchase . . . Costs of carrying, maintaining, insuring and protecting the property; loss of interest income on the proceeds, loss of optimum market time, value and additional commissions, fees, taxes and borrowing expenses to meet obligations entered into in anticipation of performance . .., " and the difficulties re-listing the property and the cyclical nature of the real estate market. Parker v. Knauf, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV085007670 (March 3, 2010, Brazzel-Massaro, J.). " These uncertain impacts are precisely the impacts that satisfy the first element." Id. As to the first element, the court concludes that given the nature of a real estate purchase and sale agreement, and the difficulties associated with the re-listing of a property after default, the amount of damages resulting from the plaintiffs' breach was difficult to anticipate.
As to the second element, the evidence establishes that the parties agreed to the terms and conditions of the purchase and sale agreement, including the liquidated damages clause which the plaintiffs do not dispute.
Regarding the third element, as previously discussed, Connecticut courts have established that a liquidated damages clause which allows for 10% of the purchase price to be retained by the seller in the event of a buyer's breach is presumptively reasonable. In this case, the liquidated damages clause in the agreement permitted the seller to keep only the $25,000 deposit paid by the buyer in the event of the buyer's breach. See Pl. Ex. 1, par. 14. Based upon the $810,000 purchase price agreed to by the parties, the liquidated damages award equates to only 3% of the purchase price. The defendant, Valerie Yaggi testified that the delay caused by the plaintiffs and the subsequent rush to sell to another buyer after the plaintiffs' breach caused the defendants to sell at a price $135,000 less than the agreed-upon price with the plaintiffs. Accordingly, the court therefore finds that the amount of the deposit withheld by the defendants, $25,000, is reasonable as liquidated damages.
VII
CONCLUSION
For the aforementioned reasons, the court finds that the plaintiffs breached the purchase and sale agreement by failing to timely terminate the contract, and by failing to diligently pursue financing as required under the agreement. The court therefore finds in favor of the defendants on counts one and two of the complaint. The defendants are entitled to retain the $25,000 deposit as liquidated damages, with all interest accrued therein. With respect to the defendants' request for reasonable attorneys fees, within thirty days of the issuance of this decision, the defendants shall file a motion for reasonable attorneys fees, with a supporting affidavit, and after a hearing on the motion, the court will determine whether reasonable attorneys fees shall be awarded. It is so ordered.