Opinion
CV176012910S
07-10-2018
Adam ZIMMERMAN et al. v. Brett CIVETTE
UNPUBLISHED OPINION
OPINION
Sferrazza, J.
The plaintiffs, Adam and Amy Zimmerman, sue the defendant, Brett Civette, for breach of a contract to convey title to a parcel of land, known as 35 Stony Lane, in Stafford, Connecticut. They seek specific performance and related remedies, as well as monetary damages and attorneys fees. The court tried this matter on June 8, 2018, and makes the following findings of fact and rulings of law.
The court takes judicial notice that on October 18, 2016, the defendant’s former spouse filed for dissolution of their marriage, Civette v. Civette, Superior Court, Tolland Judicial District, d.n. FA 16-5007006. The parties to that litigation filed a pendente lite agreement that Judge Farley effectuated on November 7, 2016. His order reflected that the defendant agreed to list the marital residence at 35 Stony Lane for sale forthwith.
Unfortunately, the dissolution action became contentious, which necessitated supplemental orders detailing the method by which a realtor would be chosen and that the litigants had to accept the realtor’s recommendations as to listing price.
On July 3, 2017, the plaintiffs, siblings, entered into a contract with the defendant to purchase the residence for $299,000, and they deposited $1,500 at that time. The parties selected a closing date of August 17, 2017. Section 5 of the purchase agreement contained a mortgage contingency clause requiring the plaintiffs to "make prompt and diligent efforts to obtain a written commitment for a mortgage loan ... on or before July 28, 2017," and to provide the defendant and the realtor with copy of the commitment documents by that same date. The agreement set the mortgage loan amount at $288,535 with a minimum repayment term of thirty years.
The plaintiffs fully abided by these terms and, in conjunction to their efforts, received a prequalification notice that exceeded the amount needed to close from First World Mortgage Corp. (First World); formally applied for a mortgage loan; paid for and engaged in a successful home inspection; paid for and obtained an appraisal; had the septic tank cleaned; and underwent credit checks by the prospective lender, all in a timely manner. On July 28, 2017, First World approved the loan and issued a mortgage commitment to the plaintiffs for $293,584, contingent on certain events occurring in the future, such as the plaintiffs demonstrating possession of monetary assets of not less than $10,366 by the closing date (inclusive of the $1,500 deposit held in escrow by the defendant’s realtor).
The plaintiffs also had a realtor, Suzanne Moulton, and she transmitted a copy of the mortgage loan approval to the defendant’s, court-ordered realtor, Susan Lussier, on that day, July 28, 2017. Lussier forwarded copies of the documents to the defendant.
On that date, the defendant had a phone conversation with Lussier, and he told her that he was departing for vacation and that he was unwilling to sell the property. He directed Lussier not to attempt to contact him, his former wife, or his attorney in the domestic relations case, and to remove the "for sale" sign from the property.
July 28, 2017, was a Friday, and on the following Monday, July 31, 2017, Moulton, the buyer’s realtor, received a voice-mail message from the defendant terminating the purchase agreement. Neither the defendant nor Lussier ever sent to Moulton a written notice of the defendant’s intent to terminate. Lussier testified at the trial, and she confirmed that she, also, never received such notice from the defendant.
The court determines that the plaintiffs satisfied their obligations under the purchase agreement, had sufficient cash to receive the mortgage loan, and these combined funds were adequate to complete the purchase of 35 Stony Lane on the specified date of August 17, 2017 for the contract price. Parenthetically, the court points out that nothing in the purchase agreement indicates that the August 17, 2017, closing date was of the essence. "[A] day fixed in a contract for closing title, without more, is merely formal," Bethlehem Christian Fellowship, Inc. v. Planning and Zoning Commission, 58 Conn.App. 441, 446 (2000). "[T]he fact that a contract sets a date for the closing of a transaction does not of itself make time of the essence of the contract," Id. Contractual "obligations are not necessarily extinguished after the specified closing date passes," Id. In any event, the plaintiffs were prepared to close on the contract date.
The defendant contends that because the loan approval amount of $293,584 exceeded that expressed in the purchase agreement, $288,535, the plaintiffs breached the contract, entitling him to terminate the agreement and refuse to sell. He also argues that contained within the mortgage loan approval documents First World provided to the plaintiffs is the sentence, "This is not a commitment to lend." Therefore, the defendant insists that the plaintiffs never secured the mortgage commitment by July 28, 2017. The court rejects both contentions.
First, the fact that First World found the plaintiffs qualified to receive a loan greater than that called for in the purchase agreement is no breach of that contract. Had the commitment amount been significantly less than the contract figure, that shortfall might reasonably trigger a seller’s wariness. But a lender’s willingness to advance more than the mortgage contingency clause required cannot comprise a breach of that contract provision.
Even if that circumstance were to be construed as a literal departure from the contract language, it would be an insubstantial deviation. "There is no reason why one who has substantially performed a contract, but unintentionally failed of strict performance in the matter of minor details ... should be deprived of all benefit of the contract which he has substantially performed," Pettit v. Hampton and Beech, Inc., 101 Conn.App. 502, 508 (2007). The principle of substantial performance applies even in the context of a claim for specific performance, Pack 2000, Inc. v. Cushman, 311 Conn. 662, 664-65 (2014). The court cannot discern in what way the defendant, as the seller, could sustain harm from the buyers’ ability to secure a mortgage commitment exceeding that specified in the purchase agreement.
Concerning the issue of whether the loan approval notification was a satisfactory mortgage commitment, it should be noted that the text quoted above appeared on an attachment to the loan approval notice which seems to be a preprinted stock disclaimer that was inapplicable to the plaintiffs’ situation. The sentence that follows, "This is not a commitment to lend," indicates that the disclaimer was aimed at circumstances where a potential applicant had not yet submitted a formal loan application, obtained an appraisal, or undergone a credit check. The plaintiffs had already fulfilled all these requirements as well as having procured favorable septic, structural, and pest inspection reports.
The attachment page preceding the stock disclaimer boldly states, "Loan Is Approved." That notice is addressed to the plaintiffs’ realtor and offers congratulations because the underwriter approved the loan for 35 Stony Lane. This was a bona fide mortgage commitment. "The fact that the commitment contained ... customary contingencies does not affect its validity," Romaniello v. Pensiero, 21 Conn.App. 57, 62 (1990), (emphasis added).
The plaintiffs have proved, by a preponderance of the evidence, that they satisfied or could satisfy all contingencies before the closing date, including the self-financing requirement in the amount of $10,366, a sum that includes the $1,500 deposit previously transferred to the defendant’s realtor. A plaintiff desiring specific performance "need not make a formal tender of the purchase price" once the seller reneges, Romaniello v. Pensiero, supra, 61. The plaintiffs need only establish that they could have tendered that sum, Id.
The mortgage contingency clause appears predominately designed to release a buyer from the obligation to purchase where the buyer is unable to obtain sufficient financing. Section 5 of the agreement supports this conclusion. It provides:
If Buyer cannot obtain a written commitment for the Mortgage, Buyer may terminate this Contract.
If Buyer obtains a written commitment but such commitment contains any of the following conditions and such condition(s) has/have not been satisfied on or before the Mortgage Contingency Date: appraisal, lender verification of employment, lender verification that Buyer has sufficient funds to close, lender approval of Buyer’s credit worthiness ... then Buyer may terminate the Contract.
If Buyer does not elect to so terminate, then this Contract will remain in full force and effect free of this mortgage contingency, unless Seller within seven (7) days from the Mortgage Contingency Date, gives written notice to Buyer and Broker that Seller has elected to terminate this Contract as a result of Buyer’s inability to obtain such commitment. (Emphases added.)
Clearly, the seller’s opportunity to terminate the contract, because the buyers lack a mortgage commitment, arises within seven days after the mortgage contingency date of July 28, 2017. If it were otherwise, the buyers would lose the benefit of the full time period to secure financing. The defendant did send a written notice that he was exercising his "right" to terminate the contract, however, it was sent on July 26, 2017, two days before the mortgage commitment acquisition period expired.
"Where one party says that he will no longer perform or be bound by the terms of a contract, the contract is of course not thereby terminated ," Landmark Inv. Group, LLC v. CALCO Construction and Development Co., 318 Conn. 847, 866-67 (2015), (emphasis in cited case). "He has no right to, and cannot, terminate the contract; the wronged party may refuse to consider the contract terminated and may sue to compel the wrongdoer to perform its term," Id., (emphases deleted).
The person requesting specific performance must still demonstrate the financial wherewithal to purchase the property, even if the seller has unjustifiably repudiated the agreement, Pack 2000, Inc. v. Cushman, supra, 689. The plaintiffs have proven, by a preponderance of the evidence, that they were ready, willing, and able to purchase the property by the closing date according to the terms of the agreement. The defendant’s repudiation of the agreement was legally unwarranted. The defendant acknowledged that he never wanted to sell the property and that it was placed on the market because of orders issued during the dissolution action. He has not placed the property on the market since.
The court orders that the defendant specifically perform the contract by transferring title of 35 Stony Lane to the plaintiffs in exchange for payment of the purchase price of $299,000. "[I]n awarding specific performance the court ordinarily should follow and give effect to the terms of the contract," Landmark Inv. Group, LLC. v. CALCO Construction and Development Co., supra, 878.
Judgment enters in favor of the plaintiffs against the defendant. The closing date shall be on or before forty-five days after this judgment becomes final. The new mortgage contingency date shall be twenty-five days after the judgment becomes final. These time periods reflect those set in the contract. The court awards no monetary damages because no evidence was adduced as to what additional expenses, fees, interest rates, and the like will be incurred to consummate the conveyance. The court also enjoins the defendant from transferring or encumbering title to the property.
Section 12 of the purchase agreement authorizes an award of reasonable attorneys fees, and the court will hold a hearing in the future to determine the amount of such fees to be awarded.