Hartford Nat. Bank and Trust Co. v. DiFazio

• Decision Date: 06 March 1979
• Citation: Hartford Nat. Bank and Trust Co. v. DiFazio, 411 A.2d 8, 177 Conn. 34 (Conn. 1979)
• Court: Connecticut Supreme Court
• Parties: HARTFORD NATIONAL BANK AND TRUST COMPANY v. Paul T. DiFAZIO et al.

Page 8

411 A.2d 8

177 Conn. 34

HARTFORD NATIONAL BANK AND TRUST COMPANY v. Paul T. DiFAZIO et al.

Supreme Court of Connecticut.

Argued Jan. 3, 1979.

Decided March 6, 1979.

Wesley W. Horton, Hartford, at oral argument; on the brief were Paul T. DiFazio and Edith A. DiFazio, pro se, appellants (defendants).

David T. Ryan, Hartford, with whom was John H. Lawrence, Jr., Hartford, for appellee (plaintiff).

Before LOISELLE, BOGDANSKI, LONGO, PETERS and PARSKEY, JJ.

BOGDANSKI, Associate Justice.

Prior to March 15, 1977, the defendants Paul and Edith DiFazio were the owners of a five-building apartment complex located in the city of Hartford and known as Broadview Gardens. Money for the construction of these apartments was made possible through a mortgage loan which the DiFazios obtained from the plaintiff Hartford National Bank and Trust Company. Within a short time after the apartments were completed in 1968, the rising costs of utilities and taxes, combined with a ceiling on rents, caused the Broadview Gardens to operate at a loss. In 1971 the defendants conceived the idea of converting the apartments into condominiums, but did not pursue the idea because of the tight market then existing for mortgage money.

In 1973, however, as part of a "home ownership" program sponsored by the state of Connecticut, the defendants embarked upon a project designed to convert the apartment complex into a condominium association. Had the conversion gone through as planned, mortgage money for purchasers of the individual condominium units would have been available from the Connecticut Housing Finance Authority (CHFA), with the mortgages being insured by the Federal Department of Housing and Urban Development (HUD). The major condition imposed by HUD was that 80 percent of the value of the units had to be presold to qualified buyers before the condominium association would be recognized by HUD. Upon application by the defendants, that requirement was subsequently reduced by HUD to 65 percent. In October of 1973 news releases concerning the condominium plan appeared in the Hartford papers and sometime thereafter the defendants employed Invest Management Group, Inc., as sales agent for the condominiums.

Sometime in the spring of 1974, the plaintiff bank agreed to handle the processing of condominium purchase applications, for an origination fee of 1 percent. Thomas Kelly, a mortgage official of the plaintiff, was assigned to this project. While Kelly continually assured the defendants that the applications were being duly processed, he, in fact, did little or no work, on the applications, as he was then involved in embezzling large sums of money from the plaintiff, for which he has since been convicted and sentenced. When Kelly absconded at the end of August, 1974, he took with him the mortgage applications which had been submitted to him by the sales agent of the defendants. Twenty-six applications were later found in the parking garage at Constitution Plaza. The plaintiff subsequently assigned William McCue, another of its officers, to take over the task of processing of the condominium applications.

In January of 1975 the condominium conversion project was abandoned and in August of 1975, the plaintiff instituted foreclosure proceedings against the defendants. The defendants responded by filing a counterclaim in which they alleged that the plaintiff had been negligent in processing the applications for the condominiums; that the negligence of the plaintiff caused the failure of the condominium project; and that the failure of the condominium project resulted in considerable damage to them, including their inability to make payments as due on the mortgage held by the plaintiff.

After a trial to the court which consumed ten full court days and which resulted in almost 1000 pages of transcript, the court ordered judgment in favor of the plaintiff upon the foreclosure and also upon the counterclaim. No appeal was taken as to the judgment of foreclosure. The defendants have, however, appealed from the judgment upon their counterclaim.

On appeal the defendants claim that the trial court erred in finding that the defendants failed to prove they had presold either 80 percent or 65 percent of the units to qualified buyers, and in concluding therefrom that the negligence of the plaintiff in processing the applications submitted to it by the defendants was not the cause of the failure of the conversion project. ¹

Examination of the finding in this case reveals that the trial court found as facts that "(t)he defendants did not demonstrate that 80 percent of the value of the units or 65 percent of the units had been sold to qualified purchasers"; that "McCue had a total of forty-one applications and he did an analysis of each one"; that "none of the applicants who submitted applications after McCue took over was qualified for a mortgage"; that "of all the applications received by McCue, eleven at most would have been approved, and many of those depended upon someone to pick up the closing costs"; and that "an applicant would need somewhere between $700 and $2000 to close." From the facts found, as set forth above, the court reached the conclusion that "the defendants never met the presale requirement that 80 percent . . . or 65 percent of each type of units be presold to qualified buyers," and that "nothing that the plaintiff did or failed to do was a cause of the abandonment of the attempted condominium conversion."

In their assignment of errors, the defendants specifically attacked the validity of the particular findings of fact set forth above, arguing...