Landmark Inv. Group v. Chung Family Realty P'ship Llc.

• Decision Date: 28 December 2010
• Docket Number: No. 31449.,31449.
• Citation: Landmark Inv. Group v. Chung Family Realty P'ship Llc., 10 A.3d 61, 125 Conn.App. 678 (Conn. App. 2010)
• Court: Connecticut Court of Appeals
• Parties: LANDMARK INVESTMENT GROUP, LLC v. CHUNG FAMILY REALTY PARTNERSHIP, LLC.

10 A.3d 61

125 Conn.App. 678

LANDMARK INVESTMENT GROUP, LLC

v.CHUNG FAMILY REALTY PARTNERSHIP, LLC.

No. 31449.

Appellate Court of Connecticut.

Argued Sept. 22, 2010.

Decided Dec. 28, 2010.

Walter A. Twachtman, Jr., with whom, on the brief, was John H. Grasso, Glastonbury, for the appellant(defendant).

Christopher Rooney, with whom, on the brief, were Anne D. Peterson and Kurtis Z. Piantek, New Haven, for the appellee(plaintiff).

BISHOP, HARPER and WEST, Js.

BISHOP, J.

The defendant, Chung Family Realty Partnership, LLC, appeals from the judgment of the trial court in favor of the plaintiff, Landmark Investment Group, LLC(Landmark), on its complaint alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq.¹On appeal, the defendant claims that the court incorrectly (1) found that there was no mutual mistake of fact rendering the parties' contract voidable; (2) found that the defendant breached the contract by terminating the agreement (a) without giving Landmark thirty days notice, and (b) for the purpose of taking advantage of an offer by a third party; (3) awarded specific performance of the agreement toLandmark; and (4) found that the defendant's actions violated CUTPA.We affirm the judgment of the trial court.

The following facts and procedural history set the context for our discussion of the issues on appeal.On June 28, 1999, the defendant purchased a small strip mall/semi-industrial parcel of property (property)at 311-349 New Britain Avenue in Plainville, executing purchase money mortgages of $229,048 and $325,952.The defendant's owner, Henry Chung, who operated a restaurant on the property, had formed Chung Family Realty Partnership, LLC, in December, 1998, with the intention of developing the property.He was aware at the time of purchase that it required environmental cleanup and remediation.Being unfamiliar with the complexity and expense of such a venture, however, the defendant's attempts to develop the property, which was its sole asset, were unsuccessful.The cost of environmental remediation alone was estimated in February, 2004, to be $1,004,000, and the defendant also owed attorney's fees of over $100,000 incurred in the purchase and development of the property.Consequently, the defendant put the property on the market.

Through its real estate agent, Ralph Calabrese, the defendant negotiated a purchase and sale agreement (first contract) for the property with Landmark, which was executed on January 4, 2005, and included provisions to deal with the cost of environmental remediation.Attorney Peter Barry began to represent the defendant in this transaction in May, 2005.In June, 2005, the estimated cost of remediation was revised to $1,314,006.82.

Given the uncertainties surrounding the prospective cost of remediation, a second agreement (agreement) was executed on June 30, 2005, superseding the firstcontract.As increased protection forthe buyer, it provided for the entire net proceeds of the purchase price to be placed in escrow until the remediation was completed.Additionally, Landmark retained the unilateral right to withhold performance if it determined, in its sole discretion, that the full cost of remediation would not be covered.²To aid in covering the cost, the agreement provided that the parties would apply to the Connecticut brownfields ³ redevelopment authority (redevelopment authority) for environmental cleanup funding (brownfields funding) pursuant to General Statutes § 32-9kk.⁴

To start the brownfields application process, the defendant was obligated to produce a remediation action plan (action plan) to be provided to Landmark within twenty days of the execution of the contract.Upon receipt of an approved action plan, Landmark wasobligated to submit the loan application.The defendant, however, failed to produce a timely action plan because it could not afford to pay an environmental engineering firm to assess the site.After a long delay, the town of Plainville(town) intervened to secure funding for the assessment.During the assessment process, the environmental engineers were able to examine areas that previously had been inaccessible, and, as a result, they found that the required remediation and attendant costs had been drastically overestimated.Their report of July 12, 2006, gave a new remediation estimate of $265,000, over $1 million less than the prior estimate.Because of this substantial reduction, the town concluded that its participation in the brownfields application was not necessary.

Upon learning of the town's revised position, Barry wrote to Landmark on July 25, 2006, asserting that certain elements of the agreement were contingent upon the approval of brownfields funding and that, without the funding, it would have to be renegotiated.This was not the defendant's first effort to avoid the agreement.Previously, on August 31, 2005, eight weeks after the agreement was executed, Calabrese had instructed Barry to "[r]eview the contract to determine if [Chung] has any way out of it if he so chooses."Also, on March 21, 2006, the defendant had written to Landmark's attorney to request a meeting, citing concerns that Landmark would not be able to procure the mortgage on which the agreement was contingentand that Landmark had not completed a site plan of development to file with the brownfields application.⁵

Upon receipt of Barry's letter of July 25, 2006, Landmark replied on August 3, 2006, that the agreement could still be performed.Nevertheless, in a letter onAugust 23, 2006, Barry maintained that the agreement was impossible to perform and that a new agreement was needed.The parties held a meeting on September 7, 2006, which was short and contentious, at which Barry and Calabrese insisted that the agreement was "null and void" and "over," while Landmark's representatives insisted that it remained in force.⁶In a subsequent letter on September 12, 2006, Barry asserted again that the defendant would honor the agreement only if brownfields funding was approved.He also alleged that Landmark had failed to deposit $100,000 as required at the execution of the agreement and had not retained the environmental consultant listed in the agreement.Landmark replied on September 25, 2006, denying the allegations and requesting a final version of the action plan.⁷On September 28, 2006, Landmark wrote to the redevelopment authority, indicating that it was sending the final application materials, including the action plan and its own site plan.

While this relationship was unraveling, the defendant was in conversation with a third party, Calco Construction& Development Company(Calco), which submitted a purchase offer for the property on January 25, 2006.Although the defendant did not act on that offer, Calco's interest was ongoing.Late in the summer of 2006, Calco and Calabrese discussed the elements necessary to an offer that would be attractive to the defendant.Shortly thereafter, on September 7, 2006, Calabrese and Barry declared at the meeting with Landmark that their agreement was "over."Then on September 21, 2006, Calco submitted a purchase offer containing the new terms suggested by Calabrese and a check for $250,000 to be escrowed until a final agreement was reached.⁸

On October 27, 2006, Barry sent a letter to notify Landmark that the defendant was terminating the agreement.⁹The defendant subsequently executed a contract to sell the property to Calco on March 6, 2007, and assigned the original mortgages, which were obligations of Chung, to Calco under that contract.

On December 13, 2006, Landmark filed a complaint in six counts, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, a violation of CUTPA and interference with contractual relations.It sought either specific performance or areturn of deposit, money damages, punitive damages and attorney's fees pursuant to CUTPA, and interest and costs.The defendant answered on September 13, 2007, and filed special defenses averring that Landmark was limited to remedies set forth in the agreement, that all other relief sought was barred by the economic loss doctrine and that the agreement was voidable due to mutual mistake.The defendant also counterclaimed in four counts, alleging slander of title, breach of contract, violation of the covenant of good faith and fair dealing, and violation of CUTPA.At trial, Calco provided the defendant with an attorney and funded the trial costs.

On August 19, 2009, the court rendered judgment in favor of Landmark, rejecting the defendant's special defense of mutual mistake and finding breach of contract and violation of CUTPA.The court awarded Landmark specific performance on the contract claim, including a return of its deposit should it elect under the contract to terminate its obligations, and attorney's fees on the CUTPA claim.¹⁰On December 21, 2009, the court rendered judgment in favor of Landmark for attorney's fees and costs of $171,813.54.This appeal followed.Additional facts will be set forth as necessary.

I

The defendant first claims that the court incorrectly found that the parties to the agreement were not mutually mistaken in regard to the availability of brownfields funding.¹¹It contends that the agreement was incapableof being performed without the funding, and, therefore,the lack of funding rendered it voidable.We are not persuaded.

"[A] mutual mistake requires a mutual misunderstanding between the parties as to a material fact."BRJM, LLC v. Output Systems, Inc.,100 Conn.App. 143, 148, 917 A.2d 605, cert. denied, 282 Conn. 917, 925 A.2d 1099(2007).A mutual mistake is material when it "effects a result that neither [party] intended."(Internal quotation marks omitted.)McBurney v. Cirillo,276 Conn. 782, 815, 889 A.2d 759(2006), overruled in part on other grounds by...