Opinion
Civil 3-00-CV-107 (DJS).
March 25, 2000.
MEMORANDUM AND ORDER
This diversity case involves a land deal gone bad. The plaintiff, Alice Marquez — the disappointed, would be seller — owns valuable commercial real estate on the Berlin Turnpike in Newington, Connecticut. On April 6, 1999, she entered into a written purchase/sale agreement with Briad Development East, L.L.C., (hereafter "Briad") of New Jersey. The purchase price was $850,000. It was contemplated that a TGI Friday restaurant would be constructed on the land. Various approvals were obtained from the Town of Newington, and a civil engineer was hired to do site plans and blueprints. A short form memorandum of the purchase/sale agreement was filed on the land records, where it remains today.
Diversity of citizenship aside, whether this case satisfies the amount in controversy requirement of 28 U.S.C. § 1332 (a) is unclear. This requirement cannot be satisfied by fanciful damages claims. See,Nieves v. Stamford Hospital, 345 F. Supp. 1014, 1016-17 (D.Conn. 1972). If the $75,000 threshold is to mean anything, courts must realistically evaluate the extent of damages and the likelihood of equitable relief. "It is incumbent upon us independently to examine the jurisdictional underpinnings of an action whether or not any question of subject matter jurisdiction is raised in the district court. . . ." Givens v. W. T. Grant Co., 457 F.2d 612, 613 n. 2 (2d Cir. 1972). The plaintiff also should be aware of 28 U.S.C. § 1332 (b), which authorizes the imposition of costs on a plaintiff who ultimately recovers less than the jurisdictional amount.
The complaint names three defendants Briad Development East, L.L.C.; Briad Restaurant Group, L.L.C.; and Briad Corporation. Plaintiff contends that each of these is the alter ego of the other. Defendants respond that a motion to dismiss is coming on grounds, among others, that plaintiff has sued them wrongly. For present purposes, the court uses the name "Briad" simply as a short-hand expression.
It is not clear why, but it appears that by October of 1999, the deal was in trouble. It had been hoped at the time of signing that the entire transaction would be completed within roughly 180 days, plus an extra 45 days. To provide Briad Development East, L.L.C., an incentive to keep things moving, the April purchase agreement provided that after 90 days, the purchaser would reimburse Mrs. Marquez for her expenses (e.g., property taxes, snow removal, liability insurance, lighting). The sum of $35,000 was paid at the time of signing, the money to be held in escrow by Gregory Frost, Esquire, Mrs. Marquez's attorney.
A hint that something was wrong came in early August. Acting on Mrs. Marquez's behalf, Attorney Frost asked for reimbursement of certain expenses Mrs. Marquez had incurred. Instead of being reimbursed, Mr. Frost got a terse letter from Briad's general counsel instructing him not to invade the escrow account to reimburse Mrs. Marquez. Attorney Frost was never given an explanation of Briad's position or reasons for not reimbursing Mrs. Marquez. Attorney Frost's written request for information and updates on the progress of the deal — things Mrs. Marquez had a contractual right to inquire into — were unheeded, ignored, or unproductive.
In October, Attorney Frost discussed the transaction by phone with Ronald S. Ladell, Esquire, an attorney for Briad. Mr. Frost still hoped that the deal would go forward, but by then the situation seemed even bleaker. According to Mr. Frost, Attorney Ladell indicated during this call that the deal might not go forward. No further progress was made.
Threats of litigation followed, then came this action. Mrs. Marquez's complaint seeks specific performance, reformation, and money damages. An application for a pre-judgment attachment is before the court. An evidentiary hearing was held on that motion February 29, 2000. At the close of plaintiff's case, defendants asked that plaintiff's motion be denied due to failure of proof under Connecticut law. The court took that request under advisement, indicating that this memorandum would soon be forthcoming and that it might obviate the need for proceeding further on the pending motion.
Only a few days before the hearing, defendants filed a "motion to bifurcate hearing on application for prejudgment remedy" (dkt. #25). That motion is denied as moot.
It was developed during the day-long hearing that Mrs. Marquez still owns the land in question. It was also established that notice of the April 6, 1999, purchase/sale agreement is still on the land records, thus encumbering title. Mrs. Marquez testified that this encumbrance prevents her from selling her property, or at the very least, leaves her uncertain as to what, if anything, she can do with the land. Notably, however, no efforts have been made to find another purchaser.
While there is some evidence that the land's value for use as a restaurant may have declined, there is also some evidence its value for other commercial uses may have increased. The value depends on its use. There is no dispute, however, that it is valuable land. The area has enjoyed a commercial renaissance over the last several years, and has been described in testimony as "burgeoning." The $35,000 paid at the time of signing remains in the custody of Attorney Frost as escrow agent. At the hearing, Mrs. Marquez credibly testified that so far she has incurred expenses of about $11,636.
The court further learned that no one has even requested that the encumbrance on Mrs. Marquez's land be removed, nor has anyone volunteered to file the paperwork to withdraw it from the land records. Finally, it was revealed at the hearing that no one objects to removing the encumbrance. In the circumstances, it seems clear that the encumbrance should be immediately withdrawn or removed as provided by law.
This will allow Mrs. Marquez to do as she wishes with her land. Since the defendants have no objection, and have even expressed willingness to cooperate in this endeavor, there is no need for the court to issue an injunction, even if one were requested. It should be enough for the court simply to point out this important step that must be taken. There is no need for further proceedings on this motion.
Parenthetically, however, the court notes that specific performance is rarely given to a seller in a land transaction case. For obvious reasons, courts are hesitant about ordering individuals or entities to purchase anything, much less real property. Thus, cases holding that courts can force the sale of land on the theory that real estate is unique are not necessarily authority for the court's ordering a reluctant purchaser to buy land. In short, even were the plaintiff to prevail at trial, her chances of obtaining from Judge Squatrito an equitable decree ordering the defendants to consummate the deal are negligible.
If plaintiff proceeds to trial and proves her contractual and extra-contractual claims, she may be entitled to money damages. There is simply no merit to the contention that Mrs. Marquez's damages are "unquantifiable." They are not unquantifiable. They are not even particularly difficult to quantify. Nor can the court say that she probably will prevail or her claims. The most one can say is that Mrs. Marquez may have a breach of contract case, but even that is arguable.
It is understandable that Mrs. Marquez would like assurances of pot of gold at the end of the litigative rainbow. She does not want to waste her time and money with a lawsuit only to wind up with a "hollow" judgment. Thus, she asks the court to order defendants to deposit with the court $850,000 to guarantee the collectibility of her damages and, of course, her attorney's fees. Plaintiff adds that such a large amount of security is also "necessary" because an award of punitive damages under CUTPA is a possibility.
The Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110(b), et seq.
Plaintiff may be correct that this is a possibility, but the evidence does not show that it is a probability or even reasonably likely. In reality, this is an unremarkable dispute between intelligent, sophisticated real estate developers and investors. If plaintiff wins after trial, her measure of damages is likely to be the difference between the contract price and the value of the property (as later determined by an arm's length sale or otherwise) Arguably, she also would be entitled to reimbursement of at least some expenses, which now total less than $12,000. If she is able to prove the existence of a fee shifting vehicle, she may even have some basis for asking Judge Squatrito to award her attorney's fees, which should not be significant in the circumstances. The plaintiff may not unnecessarily multiply the proceedings or costs in this case.
Title 28 U.S.C. § 1927 authorizes the court to impose attorney's fees and costs upon any attorney "who multiplies the peoceedings in any case unreasonably and vexatiously. . . ."
The plaintiff is free, of course, to disagree with the foregoing analysis. But plaintiff must be put on notice that she has a duty to mitigate damages and that, normally, each side to a lawsuit pays its own counsel fees. When attorney's fees are awarded, they cannot be disporportionate, but must bear some relationship to the complexity of the case. One is not free to exacerbate one's own position, then claim attorney's fees for doing so.
The parties should immediately remove the existing encumbrance from the real estate, said removal being without prejudice to whatever legal rights they have and in accord with their representations on the record; plaintiff should mitigate her damages; Attorney Gregory Frost should retain the $35,000 in escrow until ordered otherwise by the court; no other remedy is appropriate on this record. The motion for a pre-judgment remedy must be denied. Any party may timely seek review of this recommendation; failure to do so may bar further review. 28 U.S.C. § 636 (b)(1)(B); Small v. Secretary of Health and Human Services, 892 F.2d 15, 16 (2d Cir. 1989).
Dated at Hartford, Connecticut, this 2nd day of March, 2000.