2004 Ct. Sup. 6012
No. CV 02-0173908-SConnecticut Superior Court, Judicial District of Waterbury at Waterbury
April 8, 2004
MEMORANDUM OF DECISION
SCHUMAN, JUDGE.
I
The court finds that the plaintiffs breached the real estate contract by recording it on the Prospect land records on October 16, 2000, in direct violation of the language in paragraph twenty-four of the contract. Contrary to the plaintiff’s arguments, the contract had not been terminated at that time. Indeed, it would have served no purpose for the plaintiff to have recorded the contract on October 16, 2000, if the contract had first been terminated. The plaintiffs, moreover, disclaim any argument that the defendant had first breached. Given that disclaimer, and the plaintiffs’ denial of their own breach, it is difficult to understand how the contract had terminated by October 16. Although the defendant alleges in paragraph six of its counterclaim that it terminated the contract on September 1, 2000, the evidence is clear that the defendant did not in fact terminate the contract until January 24, 2002. The plaintiffs themselves allege in paragraph six of the complaint, in somewhat unusual terms, that it was not until August 1, 2002 that Judge Scheinblum, in a prior specific performance case filed by the plaintiffs, “granted a Motion in Limine . . . terminating the . . . contract between the plaintiffs and the defendant.” Thus, on October 16, 2000, the plaintiffs breached an existing contract.
A breaching party can nonetheless recover in unjust enrichment upon showing that the breach was not wilful and that the nonbreaching party sustained no damage or damage substantially less than the amount stipulated in a liquidated damages clause. See Stabenau v. Cairelli, 22 Conn. App. 578, 581, 577 A.2d 1130
(1990). The breaching party bears the burden of proof. See Vines v. Orchard Hills, Inc., 181 Conn. 501, 510-13, 435 A.2d 1022
(1980). The plaintiffs here did not meet their burden. The filing of the contract on the land records was not the product of an CT Page 6013 accident or an inability to perform. As stated, there was no basis to file the contract at all if the plaintiffs truly believed that the contract had been terminated. If they did not believe that the contract had been terminated, then filing it on the land records was a deliberate violation of the contract’s terms. Thus, the plaintiffs’ actions were wilful. See Stabenau v. Cairelli, supra, 581-82. Moreover, the plaintiffs did not introduce any evidence at all concerning the defendant’s damages. The plaintiffs certainly did not meet their burden of proving that the defendant sustained no damage or damage substantially less than the amount stipulated in the liquidated damages clause in addendum B to the contract.
The liquidated damages clause, though poorly drafted and confusingly situated in the contract, apparently allows the defendant to retain all deposit money. Our Supreme Court has observed that a liquidated damages clause allowing the seller to retain ten percent of the contract price as earnest money is presumptively a reasonable allocation of the risks associated with default. See Vines v. Orchard Hills, Inc., supra, 181 Conn. 512-13. Here, the effect of the liquidated damages clause was that the defendants retained just slightly more than ten percent of the contract price. Thus, the plaintiffs failed in all respects to prove unjust enrichment by the defendant.
II
The plaintiffs’ default entitled the seller, under paragraph fourteen of the contract, to terminate the contract and sue for consequential damages. The defendants have clearly elected this option. The plaintiffs allege, and the defendant admits, that Judge Scheinblum, in the prior case, “dismissed the defendant’s counterclaim alleging a breach of contract and claiming damages.” (Complaint, ¶ 7.) Although the parties inexcusably did not introduce any transcripts or decisions from the prior trial, it appears from the plaintiff’s allegations that judgment has already entered on the defendant’s claims for damages in this matter. The doctrine of res judicata makes that judgment a bar “with respect to any claims relating to the cause of action which were actually made or which might have been made.” (Internal quotation marks omitted.) Richards v. Richards, 67 Conn. App. 381, 383, 786 A.2d 1247 (2001). Accordingly, res judicata bars the defendant’s latest counterclaim for damages.
In any event, the defendants failed to prove actual damages in CT Page 6014 this case. They did establish as much as $110,755.21 in consequential damages. However, they retained the $32,243.06 deposited by the plaintiffs. In addition, the defendant eventually sold the subject property for $339,900, which was $83,000 more than the original selling price of $256,900. Combining the amounts of $32,243.06 and $83,000 yields a total gain of $115,243.06. This benefit more than offsets the defendant’s loss of $110,755.21. Accordingly, the defendant has failed to prove any actual damages.
III
In paragraph twenty-two of the contract, the parties agreed that, before bringing suit they would submit any controversy arising out of the real estate contract to arbitration. The plaintiffs have now twice dishonored this provision and the defendant has twice failed to seek its enforcement. The parties’ failure to keep their word is an obvious violation of contract law. The parties’ insincerity also has the effect of burdening the court system with unnecessary litigation. It is thus fully appropriate that neither party recover anything from this lawsuit.
IV
Judgment shall enter for the defendant on the complaint and the plaintiffs on the counterclaim. It is so ordered.
CARL J. SCHUMAN JUDGE, SUPERIOR COURT
CT Page 6015