Edwards v. CBD & Sons Ltd et al
Filing
83
ORDER denying 63 MOTION to Amend/Correct; granting in part and denying in part 64 MOTION for Summary Judgment. The Clerk shall enter judgment for the defendants on their second counterclaim in the amount of $636,718.15, and close the case. Signed by Judge Stefan R. Underhill on 05/21/2018. (Jamieson, K)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
PAUL EDWARDS,
Plaintiff,
No. 3:17-cv-00466 (SRU)
v.
CBD & SONS, and
TWERSKY PLLC,
Defendants.
RULING ON MOTION FOR SUMMARY JUDGMENT
Paul Edwards sued CBD & Sons (“CBD”) and its attorney, Twersky PLLC (“Twersky”),
in connection with a loan issued to Edwards by CBD and secured by a mortgage on two
properties in Meriden, Connecticut. The defendants have moved for summary judgment against
all of Edwards’s claims and in favor of their two counterclaims. Edwards has moved to amend
his complaint. I grant the defendants’ motion with respect to all of Edwards’s claims and CBD’s
counterclaim for breach of contract. I deny the defendants’ motion with respect to Twersky’s
counterclaim for indemnification, and I deny Edwards’s motion to amend his complaint.
I.
Standard of Review
Summary judgment is appropriate when the record demonstrates that “there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). When ruling on a summary judgment motion, the court must “view the evidence in
the light most favorable to the non-moving party and draw all reasonable inferences in its favor.”
Sologub v. City of New York, 202 F.3d 175, 178 (2d Cir. 2000); Aldrich v. Randolph Ctrl. Sch.
Dist., 963 F.2d 520, 523 (2d Cir. 1992) (court is required to “resolve all ambiguities and draw all
inferences in favor of the nonmoving party”). “The burden of showing that no genuine factual
dispute exists rests upon the moving party.” Carlton v. Mystic Transp., 202 F.3d 129, 133 (2d
Cir. 2000). When a motion for summary judgment is properly supported by documentary and
testimonial evidence, however, the nonmoving party may not rest upon the mere allegations or
denials of the pleadings, but must present sufficient evidence supporting its position “to require a
jury or judge to resolve the parties’ differing versions of the truth at trial.” Anderson v. Liberty
Lobby, 477 U.S. 242, 249 (1986); Colon v. Coughlin, 58 F.3d 865, 872 (2d Cir. 1995).
“The trial court’s function at this stage is to identify issues to be tried, not decide them,”
Graham v. Long Island R.R. Co., 230 F.3d 34, 38 (2d Cir. 2000), and so “[o]nly when no
reasonable trier of fact could find in favor of the non-moving party should summary judgment be
granted.” White v. ABCO Eng’g Corp., 221 F.3d 293, 300 (2d Cir. 2000). Summary judgment
therefore is improper “[w]hen reasonable persons, applying the proper legal standards, could
differ . . . on the basis of the evidence presented.” Sologub, 202 F.3d at 178. Nevertheless,
the mere existence of some alleged factual dispute between the parties will
not defeat an otherwise properly supported motion for summary judgment;
the requirement is that there be no genuine issue of material fact. . . . Only
disputes over facts that might affect the outcome of the suit under the
governing law will properly preclude the entry of summary judgment.
Anderson, 477 U.S. at 247–48.
“[A] complete failure of proof concerning an essential element of the nonmoving party’s
case necessarily renders all other facts immaterial,” and in such circumstances, there is “no
genuine issue as to any material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986);
accord Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995)
(movant’s burden satisfied if it can point to an absence of evidence to support an essential
element of nonmoving party’s claim). To present a “genuine” issue of material fact and avoid
summary judgment, the record must contain contradictory evidence “such that a reasonable jury
could return a verdict for the non-moving party.” Anderson, 477 U.S. at 248.
2
II.
Background1
On June 6, 2012, Edwards obtained a commercial promissory note from CBD in the
amount of $750,000, due and payable June 1, 2013. The note was secured by an open-end
commercial mortgage deed on two properties located on Colony Street in Meriden, Connecticut.
On May 31, 2013, Edwards and CBD entered into a modification agreement that
extended the maturity date of the June 6, 2012 note and mortgage from June 1, 2013 to May 31,
2014. On April 4, 2014, Edwards and CBD entered into a forbearance agreement with respect to
interest payments. Edwards has been in default of the note since May 31, 2014.
In May 2016, Edwards and CBD received notice of a City of Meriden tax sale to be
conducted on August 3, 2016. They also were informed that following the tax sale, Edwards had
a six-month right of redemption and could void the tax sale by paying his property tax
delinquency by February 3, 2017.
Edwards applied for financing with Riverdale Funding (“Riverdale”) in December 2016.
On January 4, 2017, Edwards informed CBD that Riverdale had approved his loan request, and
asked that CBD accept a discounted payoff of the amounts due on its note. CBD agreed to accept
the discounted payoff. As a condition of accepting the discounted payoff, CBD required Edwards
to enter into an Escrow Agreement that required Edwards to place the deed to the properties in
escrow.2 The agreement also provided that if either (a) the Riverdale loan was not made, or (b)
the loan was not made in an amount sufficient to satisfy the discounted payoff amount of
1
Except where indicated, the facts are taken from the defendants’ Local Rule 56(a)1 Statement,
Doc. No. 64-1, insofar as admitted by Edwards’ Local Rule 56(a)2 Statement, Doc. No. 74-1.
2
Edwards alleges that CBD did not tell him about the escrow condition when it initially agreed
to accept the discounted payoff. See Local Rule 56(a)2 Statement, Doc. No. 74-1, at 7–8.
3
$180,000 and the $92,751.07 tax lien on the properties, then CBD would have the right to record
the deed and take the properties.
On February 2, 2017, Edwards and CBD entered into an Escrow Agreement in
accordance with the above terms. See id. In relevant part, the agreement provides as follows:
WHEREAS, Mortgagor and Mortgagee executed and entered into
an Open End Commercial Mortgage Deed (the “Mortgage”) and
Commercial Promissory Note (the “Note”) on or about June 6, 2012, in
the principal amount of Seven Hundred and Fifty Thousand Dollars
($750,000.00), which after Mortgagor’s default, has accrued interest and
fees that now totals over One Million Dollars ($1,000,000.00);
***
WHEREAS, Mortgagor has not made any payments towards the
Note and has completely defaulted;
***
WHEREAS, Mortgagee was forced to pay off a tax lien on the
Properties in the amount of approximately Ninety Two Thousand, Seven
Hundred and Fifty One Dollars and Seven Cents ($92,751.07) because
Mortgagor did not pay any taxes on the Properties;
WHEREAS, Mortgagor has sought refinancing to satisfy the Note,
albeit at a steep discount, and has received a soft-offer from Riverdale
Funding, LLC (“Riverdale”) in the amount of One Hundred and Eighty
Thousand Dollars ($180,000.00), plus reimbursement for the delinquent
taxes Mortgagee paid, in the amount of approximately Ninety Two
Thousand, Seven Hundred and Fifty One Dollars and Seven Cents
($92,751.07), totaling a refinance amount of approximately Two Hundred
and Seventy Two Thousand, Seven Hundred and Fifty One Dollars and
Seven Cents ($272,751.7) (the “Riverdale Refinance”);
WHEREAS, the Riverdale Refinance has not yet closed or
materialized yet but Mortgagor anticipates it will close imminently;
WHEREAS, in order to facilitate Mortgagor in having additional
time to close the Riverdale Refinance, and to provide additional security to
Mortgagee relating to the Properties, and the Note and Mortgage they
secure, the Parties have caused or will cause a certain deed to the
Properties to be deposited in escrow with AARON TWERSKY, ESQ.
(“Twersky”) in accordance with the terms and provisions of this Escrow
Agreement.
4
NOW THEREFORE, in consideration of the mutual covenants and
promises contained herein, and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged,
the undersigned agree as follows:
***
2. Escrow Terms:
a. This Escrow Agreement provides for Mortgagor to execute
and sign a deed to the properties, conveying full and ownership
of the noted Properties from Mortgagor to Mortgagee (the
“Deed”).
b. Aaron Twersky, Esq., of Twersky PLLC, agrees to be the
Escrow Agent.
c. The Deed shall be held in Escrow by Twersky pursuant to
the following terms:
i. Mortgagor has until March 22, 2017, time being of the
essence, to secure, finalize and close on the Riverdale
Refinance, subject to Mortgagee’s exclusive and complete
consent and approval to its terms and conditions.
ii. If by March 22, 2017, the Riverdale Refinance has not
yet closed, completely, or the terms of the Riverdale
Refinance are not satisfactory to Mortgagee in its sole
discretion, Twersky, as Escrow Agent for Mortgagee, has
the full right and authority to release the Deed being held in
Escrow for filing and recording with the city of Meriden,
Connecticut’s property Register and/or Clerk’s office.
iii. Mortgagor is hereby prohibited from conveying or
changing the individual or entity that retains title to the
noted Properties during the term of this Agreement in any
way.
3. Tenancy Rights Release: If the Riverdale Refinance does not
materialize for any reason and the Deed relating to the
Properties is filed and recorded, Mortgagor agrees to fully give
up, disclaim and release any tenancy rights he, or any of his
agents, may have to the Properties and agrees to vacate the
Properties within Fifteen (15) days after notice to the
Mortgagor by Mortgagee. Notice to Mortgagor may be effected
in oral or written form. If Mortgagor does not vacate the
Properties within the noted Fifteen (15) days, Mortgagor
hereby consents and authorizes Mortgagee to physically
5
remove Mortgagor’s property and personal belongings from
the Properties and to dispose of [them] as it wishes. Mortgagor
hereby further consents and authorizes Mortgagee to seek the
assistance of the Marshal or Sheriff to evict Mortgagor
immediately from the Properties, at the full cost and
reimbursement of Mortgagor.
4. Bankruptcy Court Restriction: Mortgagor is hereby prohibited
and restricted from filing any action in Bankruptcy Court or
any other Court that would delay or stay the terms of this
Agreement, whether intended on or not. Mortgagor consents
and acknowledges that any filing of any kind by Mortgagor, or
any agent, shall be treated as an immediate unwaivable breach
of this Agreement and Mortgagor authorizes Twersky to
release, record and file the Deed accordingly.
***
6. No Duress: The undersigned state and acknowledge that the
Parties are signing this Agreement freely, willfully, not under
duress and not under any undue influence, by any other party,
person, or for any other reason, when signing and executing
this Agreement.
***
9. Representation by Counsel: The Parties hereby acknowledge
and state that they have read this Agreement in its entirety, that
they understand the contents thereof, that their execution of this
Agreement is voluntary, that this Agreement is intended to
resolve disputed claims and the consideration provided herein
is fair and reasonable, and that the Parties have relied upon
and/or had the opportunity to seek the legal advice of the
attorneys of their own choice and such other persons as they
may have deemed appropriate, prior to executing this
Agreement.
10. Governing Law and Interpretation: This Agreement shall be
governed and conformed in accordance with the laws of the
State of New York without regard to its conflict of laws
provision. In the event of a breach of any provision of this
Agreement, either Party may institute an action specifically to
enforce any term or terms of this Agreement and/or to seek any
damages for breach in the State or Federal courts of the State of
New York.
Escrow Agreement, Ex. B to Local Rule 56(a)1 Statement, Doc. No. 64-6, at 2–5.
6
Edwards also signed a Quitclaim Deed that “d[id] remise, release and forever
QUITCLAIM . . . all the right, title, interest, claim and demand” to the Colony Street properties
to CBD. Quitclaim Deed, Ex. A to Am. Mot. for TRO, Doc. No. 16-1, at 10. CBD placed the
Quitclaim Deed in escrow pending the deadline in the Escrow Agreement. After the agreement
was executed, CBD redeemed the properties from the tax sale by paying the $92,751.07 tax lien.
Edwards never obtained financing from Riverdale. Instead, on March 13, 2017, he
commenced this lawsuit against CBD and Twersky in Connecticut Superior Court. Edwards
alleged that both defendants (1) violated the Connecticut Unfair Trade Practices Act
(“CUTPA”); (2) breached a contract with Edwards; (3) intentionally inflicted emotional distress;
(4) negligently inflicted emotional distress; (5) were negligent; (6) fraudulently misrepresented;
(7) fraudulently concealed; and (8) breached the implied covenant of good faith and fair dealing.
The defendants served on March 20, 2017, and—considering the filing of the lawsuit an
immediate breach of the Escrow Agreement—CBD filed the deed to the properties in the
Meriden Land Records on March 21, 2017. That same day, the defendants removed the case
from Superior Court to this court.
III.
Discussion
In response to the defendants’ motion for summary judgment, Edwards filed a 225-page
opposition memorandum accompanied by an additional 129 pages of supporting documents.
Noting that “Local Rule 7(a)(5) provides that . . . ‘memoranda . . . shall be no more than forty
(40) . . . pages,’” see Order, Doc. No. 76, at 1 (quoting D. Conn. Local R. Civ. P. 7(a)(5)), I
concluded that Edwards’s opposition brief was “excessive” and “threaten[ed] to impose
significant burdens on the defendants and the court.” Id. Therefore, I ordered Edwards to file a
corrected opposition within two weeks. Bearing in mind that “pro se plaintiffs should be granted
7
special leniency regarding procedural matters,” LeSane v. Hall’s Sec. Analyst, 239 F.3d 206, 209
(2d Cir. 2001), I granted Edwards leave to file “a maximum of ten excess pages, for a
memorandum of no more than 50 double-spaced pages.” Order, Doc. No. 76, at 1.
Edwards responded with a 64-page document that includes nine single-spaced pages of
legal arguments and block quotes (characterized as a “table of authorities”) as well as a fourpage introduction. See generally Corr’d Mem. Opp’n Mot. Summ. J., Doc. No. 77. In addition,
Edwards’s corrected brief further attempts to evade the 50-page limit by liberally crossreferencing other documents in the record.3 The result is that I (and the defendants) continue to
be faced with an unnecessarily prolix memorandum that “grossly exceeds” the length permitted
under the Local Rules. See Order, Doc. No. 76.
“[A]ll litigants, including pro ses, have an obligation to comply with court orders,”
McDonald v. Head Crim. Ct. Supervisor Officer, 850 F.2d 121, 124 (2d Cir. 1988), and “the
indulgence afforded to a pro se litigant should not extend to the disregard of a judge’s plain
directives.” Lucas, 84 F.3d at 538. Edwards arguably has not complied with the letter of my
earlier order and certainly has not complied with its spirit. Because “courts are . . . to construe a
pro se litigant’s pleadings and motions liberally,” In re Sims, 534 F.3d 117, 133 (2d Cir. 2008), I
will do my best to reconstruct Edwards’s arguments. But I cannot litigate his case for him, and
when all that Edwards offers in opposition to summary judgment is a paragraph-long string cite,
I will not scour the record in search of any hint of a coherent argument.
3
See, e.g., Corr’d Mem. Opp’n Mot. Summ. J., Doc. No. 77, at 34 (“The Plaintiff alleged the
following, in his Claim of (Breach of Contract) in his [34] Amended Complaint and his [63]
Motion for Leave to Amend Complaint, which includes the Plaintiff[’s] proposed 2nd Amended
Complaint. See Pg. 13,17,18 at t ¶ B xiii, B xv of this Memorandum of Law in Opposition to
[64] Motion for Summary Judgment. See [63] Motion for Leave to Amend Complaint, which
includes the Plaintiff[’s] proposed 2nd Amended Complaint (facts) p.78-79 ¶ 144-158. p. 94-97
¶1. 1-24. See [34] Amended Complaint (facts) pg. 24 ¶ 165-169. pg. 37 ¶ 22, 23, 24.”).
8
The defendants’ motion for summary judgment is directed at Edwards’s Amended
Complaint, which Edwards moved to amend on October 2, 2017. Doc. No. 63. I first consider
whether the defendants’ arguments establish the legal insufficiency of the claims in Amended
Complaint.4 Because I conclude that all of Edwards’s claims in the Amended Complaint fail as a
matter of law, I then consider Edwards’s motion to amend. Finally, I address the defendants’ two
counterclaims, for indemnification and for breach of contract.
A. Edwards’s Claims
Edwards’s Amended Complaint raises eight claims: violation of CUTPA, breach of
contract, fraudulent misrepresentation, fraudulent non-disclosure, and breach of the implied
covenant of good faith and fair dealing (against both defendants); as well as intentional infliction
of emotional distress, negligent infliction of emotional distress, and negligence (against CBD
alone). I conclude that all of Edwards’s claims fail as a matter of law. Accordingly, I grant the
defendants’ motion for summary judgment with respect to all of the claims.
4
The defendants also assert that Edwards released all of the claims brought in this action by
signing the Forbearance Agreement on April 4, 2014, which provides in pertinent part that
Edwards “release[d] and forever discharge[d] [CBD] and its . . . attorneys . . . from any and all
claims . . . , known and unknown, . . . whether or not related to the subject matter of this
Agreement, the Loan Documents and/or any of the obligations under the Loan Documents,
which Borrower and/or Guarantor now has or at any time may hold, by reason of any matter,
cause or thing occurred, done, omitted or suffered to be done prior to the date of this
Agreement.” See Forbearance Agreement, Ex. G to Local Rule 56(a)1 Statement, Doc. No. 6411, at 8. But “[e]xcept in very rare instances, . . . [the] release of a claim does not cover claims
based on events that have not yet occurred.” Muldoon v. Homestead Insulation Co., 231 Conn.
469, 481 (1994). Even “language covering ‘future claims’ and ‘unknown claims’ in releases is
ordinarily construed to cover only inchoate claims that are in being at the time of release.” Id. at
481–82. Here, the release in the Forbearance Agreement plainly applies to claims deriving from
“any matter, cause or thing occurred, done, omitted or suffered to be done prior to the date of
this Agreement.” See Forbearance Agreement, Doc. No. 64-11, at 8 (emphasis added). Because
most of Edwards’s claims derive from alleged conduct done after the date of the Forbearance
Agreement, I will not award the defendants summary judgment on the basis of the release.
9
1. CUTPA
CUTPA provides in pertinent part: “No person shall engage in unfair methods of
competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”
Conn. Gen. Stat. § 42-110b(a). In order to determine what constitutes an “unfair or deceptive
act[] or practice[],” Connecticut has adopted the Federal Trade Commission’s “cigarette rule.”
see Fink v. Golenbeck, 238 Conn. 183, 215 (1996). That test inquires:
1. whether the practice, without necessarily having been previously
considered unlawful, offends public policy as it has been established by
statutes, the common law, or otherwise—whether, in other words, it is
within at least the penumbra of some common-law, statutory, or other
established concept of unfairness;
2. whether it is immoral, unethical, oppressive, or unscrupulous;
3. whether it causes substantial injury to consumers (or competitors or
other businessmen).
See FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 244 n.5 (1972).
Edwards alleges three bases for his CUTPA claims against CBD and Twersky. First, he
attacks certain actions by CBD’s former vice president, Gary Escandon, who was terminated by
CBD for gross misconduct. Most of those actions occurred in July and August 2012, well outside
CUTPA’s three-year statute of limitations. Am. Compl., Doc. No. 34, at 25–26; see Avon
Meadow Condo. Ass’n v. Bank of Bos. Conn., 50 Conn. App. 688, 699–700 (1998). Edwards also
asserts, however, that within the limitations period, he discovered that Escandon “took a $23,000
commission for brokering the loan on behalf of [CBD], never disclosing that he . . . took this
commission.” Am. Compl., Doc. No. 34, at 27. Edwards alleges that CBD violated CUTPA by
“[f]raudulently [c]onceal[ing] . . . Escandon’s $23,000 commission.” Id. at 31.
The defendants persuasively respond that Escandon’s purported failure to disclose “does
not . . . form a legally cognizable claim against CBD,” because “one does not have a legal duty
10
to disclose a commission taken for brokering a private loan.” Mem. Supp. Mot. Summ. J., Doc.
No. 64-2, at 9; see Glazer v. Dress Barn, 274 Conn. 33, 84 (2005) (“A failure to disclose can be
deceptive only if, in light of all the circumstances, there is a duty to disclose.”). Edwards has not
identified “any statute, regulation, or special relationship” that would have given rise to a duty to
disclose Escandon’s commission. See Mem. Supp. Mot. Summ. J., Doc. No. 64-2, at 10. Nor has
he indicated how the commission—“[a] fee paid” by CBD to Escandon “as a percentage of the
money received from the transaction,” see Black’s Law Dictionary (10th ed. 2014)—caused
Edwards to “suffer[] an ascertainable loss.” See Marinos v. Poirot, 308 Conn. 706, 713–14
(2013). Thus, the undisclosed commission cannot support Edwards’s CUTPA claim.
In addition, Edwards alleges that CBD and Twersky “engaged in unfair methods of
competition and unfair or deceptive acts or practices in the context of the lender[-]borrower
relationship,” specifically, by “put[ting] [Edwards] under [d]uress” and “forc[ing] [him] . . . to
sign [the Escrow Agreement] or else lose his properties.” Am. Compl., Doc. No. 34, at 27, 29. I
already held in ruling on Edwards’s motion for a temporary restraining order that “duress does
not exist where consent to an agreement is secured because of hard bargaining or the pressure of
financial circumstances.”5 See Am. Mot. TRO Hr’g Tr., Doc. No. 36, at 5; cf. Warnaco, Inc. v.
Farkas, 872 F.2d 539, 546 (2d Cir. 1989) (under the law of New York—consistent with that of
Connecticut—“hard bargaining positions . . . d[o] not constitute illegal duress”). Here, the terms
5
In order to demonstrate duress sufficient to void an agreement, the defendant in a breach of
contract action “must prove [1] a wrongful act or threat [2] that left the victim no reasonable
alternative, and [3] to which the victim in fact acceded, and that [4] the resulting transaction was
unfair to the victim.” Ace Equip. Sales v. H.O. Penn Machinery Co., 88 Conn. App. 687, 696
(2005). “The wrongful conduct . . . must induce a fearful state of mind in the other party, which
makes it impossible for [the party] to exercise his own free will.” Id. “[D]uress does not exist,’”
however, merely because “consent to an agreement is secured . . . [by] hard bargaining or the
pressure of financial circumstances.” United Rentals v. Bastanzi, 2005 WL 5543590, at *5 (D.
Conn. Dec. 22, 2005) (internal quotation marks omitted).
11
of the Escrow Agreement may have been “harsh,” but they “d[id] not violate public policy,” and
conditioning the refinancing on Edwards entering into the Escrow Agreement “legally d[id] not
constitute duress.” Am. Mot. TRO Hr’g Tr., Doc. No. 36, at 4. Thus, the purported duress to
which Edwards was subjected cannot support Edwards’s CUTPA claim, either.6
As a matter of law, Edwards has not pointed to evidence sufficient to persuade a
reasonable trier of fact that the defendants violated CUTPA. Therefore, I grant the defendants’
motion for summary judgment with respect to Edwards’s CUTPA claims.
2. Breach of contract
The essence of Edwards’s breach of contract claim is that the defendants “breached the
January 25, 2017 oral agreement . . . which was reduced to writing . . . in the form of the payoff
letter dated January 25, 2017.” Am. Compl., Doc. No. 34, at 33. According to Edwards, the
defendants “agreed to accept . . . $180,000 to satisfy the note and release the mortgage plus
$92,380.09 as reimbursement for the . . . tax payment, if paid by February 22, 2017.” Id.
Edwards alleges that the defendants “breach[ed] [the] agreement,” however, by “requiring that
[Edwards] sign an escrow agreement and sign a new deed conveying the properties to the
Defendant[s].” Id. Edwards asserts that he acted “under severe duress” and “felt that he had no
choice but to execute the escrow agreement and deed” lest he “lose his properties as a result of
the Defendant[s’] failure to perform.” Id. at 33–34.
6
Even if the defendants subsequently violated the terms of the agreement with Edwards—as
Edwards suggests—that also would not support Edwards’s CUTPA claim, because “a simple
breach of contract does not amount to a violation of CUTPA in the absence of substantial
aggravating circumstances.” IN Energy Sols. v. Realgy, LLC, 114 Conn. App. 262, 274 (2009);
see Naples v. Keystone Bldg. & Dev. Corp., 295 Conn. 214, 228 (2010) (“[N]ot every contractual
breach rises to the level of a CUTPA violation.”); Emlee Equip. Leasing Corp. v. Waterbury
Transmission, 41 Conn. Supp. 575, 580 (1991) (“[A] simple breach of contract, even if
intentional, does not amount to a violation of [CUTPA].”).
12
In order to establish a prima facie case of breach of contract, Edwards must introduce
evidence sufficient to persuade a reasonable trier of fact that there was (1) an agreement, (2)
performance by one party, (3) breach by the other party, and (4) damages suffered or incurred as
a direct result of that breach.7 See FCM Grp. v. Miller, 300 Conn. 774, 798 (2011). The
“agreement must be definite and certain as to its terms and requirements,” Perricone v.
Perricone, 292 Conn. 187, 223 (2009), for “[s]o long as any essential matters are left open for
further consideration, the contract is not complete.” L&R Realty v. Conn. Nat’l Bank, 53 Conn.
App. 524, 535 (1999). Finally, the parties’ “offer and acceptance . . . must be found to have been
based on an identical understanding” of the contract. L&R Realty, 53 Conn. App. at 534. “If the
minds of the parties have not truly met, no enforceable contract exists.” Id. at 535.
As I previously held during the hearing on Edwards’s amended motion for a temporary
restraining order, “as a matter of law, . . . Edwards does not have an enforceable contractual
claim” against either defendant. See Am. Mot. TRO Hr’g Tr., Doc. No. 36, at 3. First, the
January 25, 2017 payoff letter does not constitute an enforceable contract between Edwards and
CBD. Although a “payoff letter” may provide “documentary evidence of [an] agreement,” see
Credit Mgmt. Corp. v. Henderson, 2007 WL 155178, at *2 (Conn. Super. Ct. Jan. 4, 2007), none
of the elements of a binding contract is present here.8
7
I note that the Escrow Agreement expressly provides that it “shall be governed and conformed
in accordance with the laws of the State of New York without regard to its conflict of laws
provision.” Doc. No. 64-6, at 5. Notwithstanding that provision, however, both sides’ briefs cite
to Connecticut cases, and that “implied consent is . . . sufficient to establish” that Connecticut
law controls. See Golden Pac. Bancorp v. FDIC, 273 F.3d 509, 514 (2d Cir. 2001).
8
The payoff letter represents an attempt to resolve Edwards’s debt by means of “[a]ccord and
satisfaction,” which is “a method of discharging a claim whereby the parties agree to give and
accept something other than that which is due in settlement of the claim and to perform the
agreement.” Strang v. Witkowski, 138 Conn. 94, 99 (1951). Because “[a]n accord is contractual
in nature . . . , the essentials to a valid contract must be present, including proper subject matter,
13
Most notably, no consideration from Edwards is evident in the payoff letter. In the letter,
Twersky agrees to “deliver a satisfaction of the Mortgage” for nearly $500,000 less than the
principal of the original loan, and to pay “the delinquent taxes on the Propert[ies].” See Payoff
Letter, Ex. H to Local Rule 56(a)1 Statement, Doc. No. 64-12, at 2. Edwards agreed to pay the
amount, but he already was obligated to pay under the original loan agreement, and “a promise to
do that which one is already bound by his contract to do is not sufficient consideration to support
an additional promise by the other party to the contract.” New Eng. Rock Servs. v. Empire
Paving, 53 Conn. App. 771, 776 (1999). Even though Edwards may be construed to have
additionally agreed to pay the amount of the delinquent taxes in the payoff letter, the total
amount—approximately $270,000—was well below the $1,000,000 he owed CBD in interest
and principal, and did not “require[] [Edwards] to do . . . something further than, or different
from, that which he [was] already bound to do.” Thermoglaze, Inc. v. Morningside Gardens Co.,
23 Conn. App. 741, 745 (1991); see Payoff Letter, Doc. No. 64-12, at 2. “[I]n the absence of
consideration an executory promise is unenforceable,” and so Edwards has not shown that the
payoff letter entailed a binding contract.9 Conn. Nat’l Bank v. Voog, 233 Conn. 352, 366 (1995).
Second, even if the January 25, 2017 letter were a binding contract, Edwards has not
shown that CBD breached it. The letter purports to bind CBD to “deliver[ing] a satisfaction of
the Mortgage provided” that Edwards paid $270,000 on or before February 22, 2017, and also
competent parties, a meeting of the minds of the parties, and consideration.” Troj v. Lane, 1998
WL 175947, at *1 (Conn. Super. Ct. Apr. 3, 1998) (quoting 1 Am. Jur. 2d, Accord & Satisfaction
§ 5); see W.H. McCune, Inc. v. Revzon, 151 Conn. 107 (1963).
9
Edwards also suggests that he entered into an oral agreement with CBD that constitutes a
binding contract. But any such oral agreement would not be enforceable, not only because there
was no consideration, but also because “[a] modification of a written agreement [for a loan
exceeding $50,000] must be in writing to satisfy the statute of frauds.” See Deutsche Bank Tr.
Co. Ams. v. DeGennaro, 149 Conn. App. 784, 788 (2014).
14
stated that CBD “will be paying” Edwards’s delinquent taxes. See Payoff Letter, Doc. No. 64-12,
at 2. CBD did, in fact, redeem the Colony Street properties. But Edwards did not provide
$270,000 by February 22, 2017, which—by the agreement’s own terms—rendered the “letter . . .
null and void.” See Payoff Letter, Doc. No. 64-12, at 2. Therefore, Edwards has not shown that
CBD breached the terms of the January 25, 2017 payoff letter.10
Edwards did have until March 22, 2017 to refinance under the terms of the Escrow
Agreement, see Doc. No. 64-6, at 3, but that agreement did not purport to extend the deadline of
the January 25, 2017 payoff letter. Furthermore, CBD persuasively asserts that it did not breach
the Escrow Agreement, either. Although CBD filed the deed one day before the March 22, 2017
deadline, Local Rule 56(a)1 Statement, Doc. No. 64-1, at 5, the Escrow Agreement allowed CBD
to do so if Edwards breached his promise not to “fil[e] any action in Bankruptcy Court or any
other Court that would delay or stay the terms of this Agreement, whether intended on or not.”
Escrow Agreement, Doc. No. 64-6, at 5. Edwards filed the present lawsuit on March 13, 2017
and sought a temporary restraining order directing the defendants to “un-record the deed.” See
Am. Mot. TRO, Doc. No. 18, at 6. That filing constituted an attempt to “delay or stay the terms
of th[e] [Escrow] Agreement.” See Escrow Agreement, Doc. No. 64-6, at 5. Thus, CBD did not
breach the agreement by filing it one day before the March 22, 2017 deadline.
As indicated above, Edwards has suggested that the Escrow Agreement is unenforceable
because he only executed it “under extreme duress” while “fe[eling] that he had no choice.” See
Am. Compl., Doc. No. 34, at 19. Again, though, “conduct . . . must be manifestly tainted with
10
Edwards invokes the “doctrine of prevention,” which imposes a duty “to refrain from actions
that would prevent or hinder the performance of another party to the contract.” Blumberg Assocs.
Worldwide v. Brown & Brown of Conn., 132 Conn. App. 85, 95 (2011). That doctrine has no
application here because Edwards has not shown that the escrow agreement at all impeded his
ability to refinance the properties during the period set by the January 25, 2017 payoff letter.
15
some degree of fraud or wrongdoing in order to invalidate an agreement on the basis of duress.”
Capuno v. Brown, 1998 WL 437350, at *3 (Conn. Super. Ct. July 22, 1998) (quoting Carlile v.
Snap-On Tools, 271 Ill. App. 3d 833, 648 N.E.2d 317, 322 (1995)). “[H]ard bargaining
positions” are not enough. See Farkas, 872 F.2d at 546. Here, the defendants’ insistence on harsh
terms in the Escrow Agreement “may have presented [Edwards] with difficult choices,” but that
conduct “hardly r[o]se to the level of duress.” See FDIC v. Menendez, 1992 WL 394461, at *2
(Conn. Super. Ct. Dec. 17, 1992); accord Warnaco, Inc., 872 F.2d at 546 (“The threat of
economic losses . . . hardly deprived [the defendant] of his free will, and he therefore cannot
prevail on a duress defense.”); Ace Equip. Sales, 88 Conn. App. at 696 (no duress because “[t]he
plaintiff did not have to enter into the agreement, but chose to do so for economic reasons”).
As a matter of law, I hold that the defendants did not breach any enforceable contract
with Edwards. Therefore, I grant the defendants’ motion for summary judgment with respect to
Edwards’s breach of contract claim.
3. Fraudulent misrepresentation
Edwards claims that CBD and Twersky “made a written misstatement of fact” when they
wrote the January 25, 2017 payoff letter to Riverdale, saying that CBD “would pay the
arrears/delinquent taxes” without “condition[ing] [that payment] on [Edwards] signing an escrow
agreement.” Am. Compl., Doc. No. 34, at 52. Edwards asserts that the misstatement was “made .
. . [to] induce [Edwards] to rely upon . . . the Defendant[s] . . . mak[ing] the aforementioned
payment,” and that he suffered harm from the defendants’ failure to fulfill their promise. Id. The
defendants respond that they “did not make any false statement to induce [Edwards] to do
anything and . . . did in fact pay the arrears tax.” Mem. Supp. Mot. Summ. J., Doc. No. 64-2, at
21–22. Rather, they assert that, after Edwards “did not follow through with many repeated
16
promises of refinancing his loan,” they “changed [their] mind[s] and felt [they] had to protect
[themselves] before paying the arrears tax.” Id. at 21.
A cause of fraudulent misrepresentation requires Edwards to show that:
(1) a false representation was made as a statement of fact;
(2) it was untrue and known to be untrue by the party making it;
(3) it was made to induce the other party to act upon it; and
(4) the other party did so act upon that false representation to his injury.
Anastasia v. Beautiful You Hair Designs, 61 Conn. App. 471, 477 (2001). “[T]he absence of any
one of th[ose] [elements] is fatal to a recovery.” Id. Moreover, the first three elements must be
proved by “clear, precise[,] and unequivocal” evidence. Id.
Edwards clearly has not satisfied the requirements of a cause of action for fraudulent
misrepresentation, particularly not by the “higher standard” of “clear, precise[,] and
unequivocal” evidence. See id. For one thing, the January 25, 2017 payoff letter does not contain
any false representations of fact: Twersky wrote that CBD “w[ould] be paying” the “delinquent
taxes on the [p]roperty,” which it proceeded to do. See Payoff Letter, Doc. No. 64-12, at 2. The
letter expressly “reserves all rights [CBD] may have against” Edwards, and does not make any
representations with regard to the deed to the properties. See id. For another thing, the payoff
letter was addressed to Riverdale, not to Edwards, see Payoff Letter, Doc. No. 64-12, at 2 and
Edwards does not allege that Riverdale was “induce[d]” to do anything. Cf Anastasia, 61 Conn.
App. at 477. Nor, obviously, would Edwards have standing to bring any fraudulent
misrepresentation claim on Riverdale’s behalf.
Finally, Edwards cannot show (even by the lower standard of a preponderance of the
evidence) that he “act[ed] upon [Twersky’s] false representation to his injury.” See id. Edwards’s
theory appears to be that he was injured because he “stopped seeking sources to pay the arrears
17
tax before the end of the redemption period because the Defendant[s] agreed to pay the arrears
taxes before the end of the redemption period.” See Am. Compl., Doc. No. 34, at 53. But
Edwards has offered no evidence whatsoever that had any other viable “sources to pay the
arrears tax.” Cf. id. So far as appears from the record, before Twersky agreed to pay the
delinquency, Edwards was sure to lose the properties to the tax sale. Even assuming, arguendo,
that Twersky misled Edwards, no reasonable jury could find that Edwards was “injured” when
he received an extra month to attempt to repay his debt.
As a matter of law, Edwards has not made a prima facie case of fraudulent
misrepresentation. Therefore, I grant the defendants’ motion with respect to that claim.
4. Fraudulent non-disclosure
Edwards also brings an entirely meritless claim for fraudulent non-disclosure (which he
incorrectly calls “fraudulent concealment”). “Usually, mere non-disclosure does not amount to
fraud. Non-disclosure may, however, amount to fraud when there is a failure to disclose known
facts under circumstances that impose a duty to speak.” Dockter v. Slowik, 91 Conn. App. 448,
458 (2005). I already have held that CBD was not under a duty to tell Edwards either that
Escandon took a commission on Edwards’s loan or that CBD later filed a lawsuit against
Escandon. Edwards also was not harmed in any way by Escandon’s actions. Although Edwards
seems to imagine that CBD’s uncollected judgment against Escandon should be applied to
satisfy Edwards’s loan, Edwards is the one who owes the debt. CBD’s apparent (and correct)
prediction that “foreclosure on [Edwards’s] properties . . . would be costly [and] unfulfilling,” cf.
Am. Compl., Doc. No. 34, at 57, does not free Edwards of the obligation to pay his debt.
Edwards’s fraudulent non-disclosure claim fails as a matter of law. I grant the
defendants’ motion for summary judgment with respect to that claim.
18
5. Breach of the implied covenant of good faith and fair dealing
Edwards further alleges that the defendants’ conduct breached the implied covenant of
good faith and fair dealing. “Every contract imposes upon each party a duty of good faith and
fair dealing in its performance and its enforcement.” Warner v. Konover, 210 Conn. 150, 154
(1989). In order to prove a breach of the implied covenant of good faith and fair dealing, a
plaintiff must show that the defendant “act[ed] . . . in bad faith” to “impede[] the plaintiff’s right
to receive benefits . . . under the contract.” De La Concha of Hartford v. Aetna Life Ins. Co., 269
Conn. 424, 433 (2004)). “[B]ecause the covenant of good faith and fair dealing only requires that
neither party to a contract do anything that will injure the right of the other to receive the benefits
of the agreement, it is not implicated by conduct that does not impair contractual rights.”
Capstone Bldg. Corp. v. Am. Motorists Ins. Co., 308 Conn. 760, 795 (2013) (internal quotation
marks and alterations omitted). “Whether a party has acted in bad faith is a question of fact . . . .”
Renaissance Mgmt. Co. v. Conn. Hous. Fin. Auth., 281 Conn. 227, 240 (2007).
I already have concluded that the defendants have not breached any contract with
Edwards or “impair[ed] [Edwards’s] contractual rights.” See Capstone Bldg. Corp., 308 Conn. at
795. Edwards has not identified any way in which the defendants impaired his ability to receive
the benefits of the parties’ agreement. Therefore, Edwards’s bad faith claim fails as a matter of
law. I grant the defendants’ motion for summary judgment with respect to that claim.
6. Intentional infliction of emotional distress
Edwards claims that CBD is liable for intentional infliction of emotional distress because
it committed “extreme and outrageous conduct . . . exceed[ing] all bounds tolerated by decent
society,” as a result of which Edwards has “ha[d] trouble sleeping, and is very stressed.” Am.
Compl., Doc. No. 34, at 38–39. Specifically, Edwards asserts that CBD “forced [him] under
19
duress to sign an escrow agreement and a deed to his properties,” and then “breach[ed] . . . [the]
agreement,” causing Edwards to “los[e] title to his properties.” Id. at 39. Edwards also complains
that CBD “failed to notify [Edwards] of th[e] law suit” filed against its former vice president,
Gary Escandon, and reiterates that CBD “failed to make [Edwards] aware that Gary Escandon
took a $23,000 commission on [Edwards’s] $750,000 loan. Id. at 41–42.
In order to prevail on his claim of intentional infliction of emotional distress, Edwards
must show:
(1) that the actor intended to inflict emotional distress or that he knew or
should have known that emotional distress was the likely result of his
conduct;
(2) that the conduct was extreme and outrageous;
(3) that the defendant’s conduct was the cause of the plaintiff’s distress;
and
(4) that the emotional distress sustained by the plaintiff was severe.
Carrol v. Allstate Ins. Co., 262 Conn. 433, 442–43 (2003). The conduct at issue must be “so
outrageous in character, and so extreme in degree, as to go beyond all possible bounds of
decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.” Id. at
443. “Conduct . . . that is merely insulting or displays bad manners or results in hurt feelings is
insufficient” to establish a claim for intentional infliction of emotional distress. Id.
I already held that Edwards was not subject to duress in signing the Escrow Agreement
and that CBD did not breach the agreement. Thus, neither the purported duress nor the claimed
breach can support Edwards’s claim for intentional infliction of emotional distress. As for CBD’s
failure to inform Edwards about the lawsuit against Escandon or Escandon’s commission,
Edwards has not shown that CBD was under a legal obligation to disclose any such information.
Hence, the failure to disclose cannot support Edwards’s claim, either.
20
Moreover, CBD’s alleged conduct does not remotely approach behavior “so outrageous
in character, and so extreme in degree, as to . . . be regarded as . . . utterly intolerable in a
civilized community.” Carrol, 262 Conn. at 443. Edwards has alleged nothing more than hard
bargaining and—at the absolute most—impatience on the part of CBD’s agents. That cannot be
considered conduct “of a nature which is especially calculated to cause, and does cause, mental
distress of a very serious kind.” Muniz v. Kravis, 59 Conn. App. 704, 708 (2000).
As a matter of law, I hold that Edwards cannot prove the elements of intentional infliction
of emotional distress. Therefore, I grant CBD’s motion for summary judgment on that claim.
7. Negligent infliction of emotional distress
Edwards also claims that CBD is liable for negligent infliction of emotional distress.
Edwards’s allegations with respect to that claim are essentially identical to those made with
respect to his claim of intentional infliction of emotional distress.
“[I]n order to prevail on a claim of negligent infliction of emotional distress, the plaintiff
must prove that the defendant should have realized that its conduct involved an unreasonable risk
of causing emotional distress and that that distress, if it were caused, might result in illness or
bodily harm.” Scanlon v. Conn. Light & Power Co., 258 Conn. 436, 446 (2001) (internal
quotation marks omitted). As the Connecticut Supreme Court has held, that test:
essentially requires that the fear or distress experienced by the plaintiffs be
reasonable in light of the conduct of the defendants. If such a fear were
reasonable in light of the defendants’ conduct, the defendants should have
realized that their conduct created an unreasonable risk of causing distress,
and they, therefore, properly would be held liable. Conversely, if the fear
were unreasonable in light of the defendants’ conduct, the defendants
would not have recognized that their conduct could cause this distress and,
therefore, they would not be liable.
Carrol, 262 Conn. at 447 (emphasis added).
21
Here, CBD’s conduct was “like that of any regular business.” Mem. Supp. Mot. Summ.
J., Doc. No. 64-2, at 18. Notwithstanding CBD’s hard bargaining, it would not have been
“reasonable” or foreseeable for Edwards to suffer distress sufficient to cause “illness or bodily
harm” as a result of the negotiations. See Scanlon, 258 Conn. at 446. The facts in this case do not
even come close to those in which courts have held that a plaintiff reasonably suffered severe
emotional distress. See, e.g., Carrol, 262 Conn. at 447–48 (plaintiff “could not sleep, had
frequent nightmares, had a loss of appetite, and experienced depression and a sense of isolation
from his community” after defendant conducted a “shoddy” arson investigation “influenced by
racial stereotypes”).
As a matter of law I hold that Edwards has not established the elements of a claim for
negligent infliction of emotional distress, and therefore, I grant CBD’s motion for summary
judgment with respect to that claim.
8. Negligence
Finally, Edwards alleges that CBD was “[n]egligen[t] in its contractual relationship]”
with Edwards. Am. Compl., Doc. No. 34, at 46. In order to prove negligence, Edwards must
show that (i) CBD owed him a duty; (ii) CBD breached that duty; (iii) CBD’s breach caused
Edwards injury; and (iv) Edwards suffered an actual injury. See Jagger v. Mohawk Mountain Ski
Area, 269 Conn. 672, 687 n.13 (2004). “Duty is a legal conclusion about relationships between
individuals, made after the fact . . . . The nature of the duty, and the specific persons to whom it
is owed, are determined by the circumstances surrounding the conduct of the individual.”
Jaworski v. Kiernan, 241 Conn. 399, 405 (1997). The “threshold inquiry . . . [is] whether the
specific harm alleged by the plaintiff was foreseeable to the defendant,” i.e., “whether a
22
reasonable person in the defendant’s position, knowing what [it] knew or should have known,
would have anticipated the harm that resulted from [its] actions.” Id.
Edwards claims that CBD breached its duty by “fail[ing] to use reasonable care and issue
the satisfaction of the note, and the releases for the note [and] mortgage, . . . pursuant to the
escrow agreement.” See Corr’d Mem. Opp’n Mot. Summ. J., Doc. No. 77, at 36. But CBD was
not under any duty to issue a satisfaction and release under the Escrow Agreement because
Edwards did not fulfill the terms of the agreement. Furthermore, under Connecticut law, the
lender “is not bound to . . . offer a release of the mortgage until the debt is satisfied,” which
occurs “when the mortgagee has appropriated to it the property mortgaged, and the value of that
property exceeds the mortgage debt.” Hartford Fed. Savs. & Loan Ass’n v. Tucker, 196 Conn.
172, 181 (1985); Desiderio v. Iadonisi, 115 Conn. 652, 652 (1932) (emphasis added). After
Edwards failed to fulfill the conditions for CBD’s acceptance of the discounted payoff, CBD did
not breach any duty to Edwards by “fail[ing] to release [his] mortgage for substantially less than
it was owed.” See Lind-Larsen v. Fleet Nat’l Bank of Conn., 84 Conn. App. 1, 13 (2004).
Because I conclude that CBD did not owe Edwards a duty as a matter of law, I need not
consider whether CBD violated any such duty. See Jawoski, 241 Conn. at 404. Therefore, I grant
the defendants’ motion for summary judgment with respect to Edwards’s negligence claim.
B. Edwards’ Motion to Amend
On September 25, 2017, Edwards moved to amend the Amended Complaint. Doc. No.
63. The defendants opposed on October 16, 2017. Doc. No. 67.
Federal Rule of Civil Procedure 15(a)(2) provides that “a party may amend its pleading
only with the opposing party’s written consent or the court’s leave.” Although the rule adds that
“[t]he court should freely give leave when justice so requires,” id., “it is within the sound
23
discretion of the district court to grant or deny leave to amend.” McCarthy v. Dun & Bradstreet
Corp., 482 F.3d 184, 200 (2d Cir. 2007). “A district court has discretion to deny leave for good
reason, including futility, bad faith, undue delay, or undue prejudice to the opposing party.” Id.
(citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Leave to amend also “should generally be
denied” when a party has “repeated[ly] fail[ed] to cure deficiencies by amendments previously
allowed.” United States ex rel. Ladas v. Exelis, Inc., 824 F.3d 16, 28 (2d Cir. 2016) (quoting
Foman, 371 U.S. at 182). “If the party opposing amendment demonstrates the presence of one or
more of the negative factors listed in Foman,” then “the amendment will not be allowed.”
Nwachukwu v. Liberty Bank, 257 F. Supp. 3d 280, 285 (D. Conn. 2017).
Edwards argues that he should be permitted to amend his complaint again “in order to
facilitate a proper decisions on the merits.” Second Mot. Am. Compl., Doc. No. 63, at 1.
Edwards asserts that “[t]he proposed amendment would . . . properly state legal[ly] cognizable
claims or causes of action” and would “clarify [Edward]’s underlying claims and circumstances
alleged against the Defendants.” Id. The defendants respond that “the proposed Second Amended
Complaint does not add anything substantive” and is “entirely futile.” Mem. Opp’n Second Mot.
Am. Compl., Doc. No. 67, at 1–2. They therefore ask that I deny Edwards’s motion to amend.
“[L]eave to amend need not be granted . . . where the proposed amendment would be
futile,” Williams v. Citigrp., 659 F.3d 208, 214 (2d Cir. 2011), such as when “the amended
pleading fails to state a claim.” Faryniarz v. Ramirez, 62 F. Supp. 3d 240, 249 (D. Conn. 2014).
In particular, “[w]hen [a] proposed amended complaint is in response to an otherwise meritorious
motion for summary judgment, . . . leave to amend may be denied as futile if ‘the factual
foundations of [the] new allegations are insufficient, as a matter of law, to withstand the motion
24
for summary judgment.’” Simmons v. Charter Commc’ns, 222 F. Supp. 3d 121, 133 (D. Conn.
2016) (quoting Milanese v. Rust-Oleum Corp., 244 F.3d 104, 110 (2d Cir. 2001)).
Having examined the proposed Second Amended Complaint, I agree with the defendants
that “the facts as plead[ed] in the proposed Second Amended Complaint contain the same
infirmities as [those] in the Amended Complaint.” See Mem. Opp’n Second Mot. Am. Compl.,
Doc. No. 67, at 6. The proposed amendment would not cure the fatal legal deficiencies that I
have identified in all of Edwards’s claims. Furthermore, amendment at this late stage of the
litigation undoubtedly would prejudice the defendants. See Simmons, 222 F. Supp. 3d at 133 n.7
(holding that “permitting [plaintiff] to amend his complaint” after a motion for summary
judgment “would be prejudicial to [defendant],” because plaintiff “already amended his
complaint once and the parties have conducted extensive discovery”).
This case has been pending for more than a year, and the parties have had ample
opportunity for discovery (which apparently did not produce any evidentiary support for
Edwards’s claims). Edwards’s proposed amendments are non-substantive and would not give
rise to viable claims. Hence, I exercise my discretion to deny Edwards’s motion to amend his
complaint.
C. The Defendants’ Counterclaims
The defendants also have moved for summary judgment on two counterclaims. The first
counterclaim (pertaining to Twersky) seeks indemnification pursuant to the Escrow Agreement.
See Am. Answer & Counterclaims, Doc. No. 56, at 40. The second counterclaim (pertaining to
CBD) seeks to hold Edwards liable for breach of the promissory note. Id. I deny the defendants’
motion for summary judgment with respect to the first counterclaim, and grant the motion with
respect to the second.
25
1. Indemnification
The Escrow Agreement provides in pertinent part:
Indemnification of Escrow Agent: The Parties to this Escrow Agreement
(other than the Escrow Agent) hereby jointly and severally agree to
indemnify and hold Escrow Agent, Twersky, his affiliates and his officers,
employees, successors, assigns, attorneys and agents (each an
‘Indemnified Party’) harmless from all losses, costs, claims, demands,
expenses, damages, penalties and attorney’s fees suffered or incurred
because of any Indemnified Party or Escrow Agent, or by any Indemnified
Party or Escrow Agent, as a result of anything which it may do or refrain
from doing in connection with this Escrow Agreement or any litigation or
cause of action arising from or in conjunction with this Escrow Agreement
or involving the subject matter hereof or the Deed held hereunder . . . .11
Escrow Agreement, Doc. No. 64-6, at 4.
Twersky claims that, “pursuant to the doctrine of contractual indemnification,” the
Escrow Agreement entitles him to “attorneys’ fees, costs, expenses[,] and disbursements incurred
in the defense of this action.” Mem. Supp. Mot. Summ. J., Doc. No. 64-2, at 30. Twersky also
asserts that Edwards “is bound to fully indemnify and hold Twersky . . . harmless.” See Mot.
Summ. J., Doc. No. 64-2, at 30. Twersky need not be indemnified for any damages, however,
because I have granted summary judgment against Edwards’s claims. Therefore, the only issue
to be decided is whether Twersky is entitled to an award of attorneys’ fees and costs.
“[A]n action for indemnification is one in which one party seeks reimbursement from
another party for losses,” most commonly those “incurred in connection with the first party’s
11
By its terms, the Escrow Agreement requires indemnification from both Edwards and CBD.
The Forbearance Agreement, however, separately provides that Edwards shall “indemnify
[CBD] . . . [for] any and all losses, debts, damages, obligations, claims, demands, actions, causes
of action, lawsuits, penalties, judgments, costs and expenses (including, without limitation,
attorneys’ fees), of every nature and description, which [CBD] may sustain or incur, based upon,
arising out of, or in any way relating to this Agreement and/or any of the Loan Documents.” See
Forbearance Agreement, Doc. No. 64-11, at 8. Thus, CBD would itself be entitled to
indemnification from Edwards for any attorneys’ fees expended by CBD. In any event, Twersky
has sought indemnification only from Edwards, not from CBD.
26
liability to a third party.” Amoco Oil Co. v. Liberty Auto & Elec. Co., 262 Conn. 142, 148 (2002).
“[T]he concept of indemnity usually involves an indemnitor, A, and an indemnitee, B, who enter
into a contract whereby A agrees to indemnify B for any money B becomes legally obligated to
pay to a third party.” Amoco Oil Co., 262 Conn. at 149. To be sure, “the term ‘indemnity’ . . . is
not limited to reimbursement of a third party claim,” and parties may contract to “use the term
‘indemnity’ to include direct liability as well as third party liability.” 41 Am. Jur. 2d, Indemnity §
1; cf. Black’s Law Dictionary (10th ed. 2014) (defining “indemnify” as the act of “reimburs[ing]
(another) for a loss suffered because of a third party’s or one’s own act or default”). But in the
absence of evidence to the contrary, courts presume that an indemnification agreement only
“protect[s] the indemnitee against claims asserted by third parties against the indemnitee.”
Amoco Oil Co., 262 Conn. at 148.
In order to prevail on a contractual indemnification claim, the indemnitee “must show
either an express or implied contractual right to indemnification.” Fifield v. S. Hill Ltd. P’ship,
20 F. Supp. 2d 366, 370 (D. Conn. 1998). The claim “must be supported by the terms of the
contract,” Danbury Bldgs. v. Union Carbide Corp., 963 F. Supp. 2d 96, 103 (D. Conn. 2013)
(quoting DeCarlo & Doll v. Town of Chester, 2008 WL 4416073, at *2 (Conn. Super. Ct. Sept.
17, 2008)), as interpreted “in light of the situation of the parties and the circumstances connected
with the transaction.” Conn. Light & Power Co. v. Lighthouse Landings, 279 Conn. 90, 109
(2006). “The unambiguous language of an indemnity clause should be given effect as expressing
the parties’ intention,” Laudano v. Gen. Motors Corp., 34 Conn. Supp. 684, 686 (1977), and
should “be construed to cover such losses which appear to have been intended by the parties.”
Leonard Concrete Pipe Co. v. C.W. Blakeslee & Sons, 178 Conn. 594, 599 (1979).
27
Here, the indemnification clause on which Twersky relies does not expressly state
whether it “include[s] direct liability as well as third party liability.” Cf. 41 Am. Jur. 2d,
Indemnity § 1. “[L]ooking at the contract as a whole,” C&H Elec. v. Town of Bethel, 312 Conn.
843, 853 (2014), I see persuasive evidence that direct liability was not contemplated. The Escrow
Agreement provides that it “shall be governed and conformed in accordance with the laws of the
State of New York.”12 Doc. No. 64-6, at 5. New York courts consistently have “refused to read
an attorney’s fees provision as including claims between the parties themselves, as opposed to
third-party claims, where the provision did not ‘exclusively or unequivocally’ refer to such
claims or otherwise ‘support an inference’” that such claims were included. Mid-Hudson Catskill
Rural Migrant Ministry v. Fine Host Corp., 418 F.3d 168, 177 (2d Cir. 2005) (Sotomayor, J.)
(quoting Hooper Assocs. v. AGS Computers, 74 N.Y.2d 487, 492 (1989)). “Where a general
indemnification provision does not explicitly provide for indemnification for suits between the
parties to the contract,” New York courts have held that “a claim for such indemnification must
fail.” See Abakan, Inc. v. Uptick Capital, 943 F. Supp. 2d 410, 415 (S.D.N.Y. 2013).
Twersky is based in New York and all of its attorneys are admitted to practice in that
state. I presume that the lawyers would have been aware of the aforementioned line of cases and
that, by failing to “clearly” and “unmistakably” provide that suits between the parties were
included, Twersky intended to indicate that the parties did not “contract to indemnify [each]
other for attorney[s’] fees incurred in litigation between them.” Cf. Hooper, 74 N.Y.2d at 492.
Therefore, Twersky is not entitled to indemnification of its attorneys’ fees under the Escrow
12
I consider the Escrow Agreement’s choice of law provision as evidence of the parties’ intent at
the time of contracting, even though in this litigation the defendants have consented by their
conduct to the choice of Connecticut law. Cf. supra note 7.
28
Agreement. I deny the defendants’ motion for summary judgment on the indemnification
counterclaim, and sua sponte dismiss that counterclaim for failure to state a claim.13
2. Breach of the promissory note
CBD moves for summary judgment on its counterclaim that Edwards breached the
promissory note. Edwards responds that CBD’s breach of contract counterclaim is barred under
the doctrine of “unclean hands” because CBD’s former vice president, Gary Escandon, “hindered
[Edwards’s] ability to perform under . . . the note.” Corr’d Mem. Opp’n Mot. Summ. J., Doc. No.
77, at 57. He also argues that “the note is already satisfied in full” because CBD now holds legal
title to the properties. See id. Finally, Edwards contends that CBD is barred from seeking
damages for breach of contract under the doctrine of equitable estoppel. See id. at 77.
Edwards does not meaningfully contest that CBD has made a prima facie showing of
breach of contract, namely, that Edwards and CBD formed an agreement (the promissory note);
CBD performed by loaning Edwards $750,000; Edwards breached by failing to repay the loan;
and CBD suffered damages from Edwards’s default. See FCM Grp., 300 Conn. at 798.
Accordingly, I will focus on Edwards’s three affirmative defenses.
First, Edwards argues that CBD’s breach of contract counterclaim is barred because CBD
had unclean hands. “[T]he equitable defense of unclean hands bars only equitable relief.” Weiss
v. Smulders, 313 Conn. 227, 265 n.19 (2014). Although “foreclosure is an equitable action,”
13
I also note that Twersky’s motion could be denied on the separate ground that it has not shown
that it “has suffered a loss, i.e., made a payment.” See Sompo Japan Ins. Co. of Am. v. Norfolk S.
Ry. Co., 762 F.3d 165, 188 (2d Cir. 2014). “A party is not entitled to recover costs when no costs
have been incurred,” Schneider v. Nat’l R.R. Passenger Corp., 987 F.2d 132, 139 (2d Cir. 1993)
and Twersky has not introduced any evidence that it—as opposed to its insurer—has actually
paid attorneys’ fees and costs in the course of defending against Edwards’s claims. Cf. id. at 138
(holding that defendant could not recover attorneys’ fees “because its insurer had paid those
expenses,” and “[a] party must sustain a loss in order to assert an indemnification claim”) (citing
First New Haven Nat’l Bank v. Rosenberg, 33 Conn. Supp. 1, 4 (1975)).
29
Monetary Funding Grp. v. Pluchino, 87 Conn. App. 401, 407 (2005), “money damages for . . .
breach of contract” is a “legal remedy.” Weiss, 313 Conn. at 265 n.19. Thus, Edwards’s unclean
hands defense has no applicability to CBD’s breach of contract claim.
Second, Edwards asserts that the note has been satisfied because CBD has the deed to the
properties, which I interpret as an attempt to invoke the defense of accord and satisfaction. “An
accord is a contract between creditor and debtor for the settlement of a claim by some
performance other than that which is due. Satisfaction takes place when the accord is executed.”
Herbert S. Newman & Partners v. CFC Constr. Ltd. P’ship, 236 Conn. 750, 764 (1996). The
Escrow Agreement does constitute a contract to settle Edwards’s debt “by some performance
other than that which [was] due.” See id. But the debt was never satisfied because Edwards never
performed: he did not pay CBD $180,000 (plus the amount of the tax delinquency) by March 22,
2017, as promised under the agreement. Upon Edwards’s breach of the Escrow Agreement, he
resumed his existing obligations under the loan documents. Because the value of the properties is
indisputably less than the amount of Edwards’s debt, CBD’s possession of the deed to the
properties did not satisfy the note. Edwards’s defense fails.14
Third, Edwards attempts to rely on the doctrine of equitable estoppel. The doctrine of
equitable estoppel holds that “where one, by his words or actions, intentionally causes another to
believe in the existence of a certain state of things, and thereby induces him to act on that belief,
so as injuriously to affect his previous position, he is [precluded] from averring a different state
of things as existing at the time.” TD Bank v. M.J. Holdings, 143 Conn. App. 322, 338 (2013).
Equitable estoppel requires (i) that the party to be estopped “d[id] or sa[id] something” that was
14
Edwards also could be construed to argue that CBD has not suffered any damages, an essential
element of the breach of contract counterclaim. That argument would fail for the same reason:
CBD suffered damages because the properties are worth less than the amount Edwards owes.
30
“intended or calculated to induce another to believe in the existence of certain facts and to act
upon that belief,” and (ii) that “the other party, influenced thereby, . . . actually change[d] his
position or d[id] something to his injury which he otherwise would not have done.” Id. The
conduct that Edwards claims should give rise to equitable estoppel is the same as formed the
basis for his claim of fraudulent misrepresentation, and fails for the same reasons.
Most notably Edwards has not shown how he was remotely “prejudice[d]” by CBD’s
conduct. See id. CBD gave Edwards an opportunity to satisfy the note for far less than CBD was
owed; Edwards failed to fulfill the conditions of the agreement. Edwards did not suffer any
prejudice merely because CBD “fail[ed] to release [his] mortgage for substantially less than it
was owed.” See Lind-Larsen, 84 Conn. App. at 13.
Edwards’s defenses to CBD’s breach of contract counterclaim fail, and under the
undisputed facts, CBD is entitled to judgment as a matter of law. Therefore, I grant the
defendants’ motion for summary judgment on the breach of contract counterclaim.
D. Damages
The defendants seek damages in the amount of $1,301,769.22, which represents “the
principal loan of $750,000.00, plus 15 [percent] annual interest totaling $454,818.15, plus the tax
delinquency payment of $92,751.07, plus the Forbearance Fee of $4,200.00.” Under the various
loan documents—the promissory note, the modification agreement, and the forbearance
agreement—CBD is entitled to damages to account for the $750,000 principal, interest at the 15
percent rate contractual rate (totaling $454,818.15), and the unpaid forbearance fee of $4,200.
The defendants have not shown, however, that they are entitled to contract damages to
account for the tax payment of $92,751.07, for none of the agreements requires Edwards to pay
CBD that amount. CBD likely has a basis in unjust enrichment to recoup the amount of the tax
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payment, but the defendants did not bring a counterclaim for unjust enrichment. Therefore, I will
deduct the amount of the tax payment, $92,751.07, from the defendants’ damages claim.
In addition, the defendants already hold the deed to Edwards’s properties, and the value
of those properties should be deducted from the amount of the judgment. Cf. Webster Bank v.
Casella, 2009 WL 1958740, at *1 (Conn. Super. Ct. June 2, 2009) (“Under [the foreclosure
delinquency judgment] statute, the court is required to establish a value for the claim, a value for
the mortgaged property, and render a judgment for the plaintiff for the difference, if any.”)
(citing Conn. Gen. Stat. § 49-14(a)). In a foreclosure proceeding, the value of the properties is
measured as their “fair market value . . . as of the date title vests in the foreclosing plaintiff.”
United of Omaha Life Ins. Co. v. Conn. Student Loan Found., 718 F. Supp. 2d 277, 289 (D.
Conn. 2010) (citing Eichman v. J&J Bldg. Co., 216 Conn. 443, 445 (1990)). This case is not
exactly a foreclosure proceeding, but the same method of valuation appears appropriate.
The only “credible evidence” in the record concerning the value of the properties is the
City of Meriden’s 2016 tax appraisal. See Eichman, 216 Conn. at 451; cf. Stamford Apartments
Co. v. City of Stamford, 203 Conn. 586, 589 (1987) (noting that “proper deference must be given
to the judgment and experience of [tax] assessors”) (emphasis omitted). For tax purposes, the
City of Meriden assigned the building and land at 9-11 Colony Street a total fair market value of
$324,800, and the building and land at 13-17 Colony Street a total fair market value of $347,500,
for a combined total fair market value of $672,300.15 See City of Meriden GIS Servs.,
http://gis.meridenct.gov/meriden/PropertySearch.aspx; cf. Ex. L to Mem. Opp’n Mot. Summ. J.,
15
Connecticut requires municipalities to “assess all property for purposes of the local property
tax at a uniform rate of seventy per cent of present true and actual value.” Conn. Gen. Stat. § 1262a(b). “Present true and actual value” is defined by statute as “fair market value.” Id. at § 1263(a). Accordingly, the City of Meriden’s tax appraisal identifies both the properties’ “Total”
value (i.e., fair market value) and their “Assessed” value (i.e., 70 percent of fair market value).
32
Doc. No. 74-3, at 28–31 (printouts from City of Meriden GIS Services website). Edwards
acknowledges that the properties were encumbered by a second mortgage of $100,000, see
Corr’d Mem. Opp’n Mot. Summ. J., Doc. No. 77, at 62, which should be deducted from the
value of the properties. See Noggle v. Noggle, 2001 WL 1231906, at *5 (Conn. Super. Ct. Sept.
25, 2001) (deducting amount of second mortgage from fair market value of residence). Thus, in
the absence of any objection from the defendants or other evidence of the properties’ value, I
conclude that the properties’ net value is $572,300. The defendants’ award should be reduced by
that amount to account for the perfection of their security interest in the properties.
Subtracting the net value of the properties and the tax payment, the defendants are
entitled to judgment on the breach of contract counterclaim in the amount of $636,718.15.
IV.
Conclusion
I grant in part the defendants’ motion for summary judgment, Doc. No. 64, with respect
to all of Edwards’s claims and CBD’s breach of contract counterclaim. I deny in part the motion
with respect to Twersky’s indemnification counterclaim, which I dismiss sua sponte for failure to
state a claim. I also deny Edwards’s motion to amend his complaint, Doc. No. 63.
The Clerk shall enter judgment for the defendants in the amount of $636,718.15, and
close the case.
So ordered.
Dated at Bridgeport, Connecticut, this 21st day of May 2018.
/s/ STEFAN R. UNDERHILL
Stefan R. Underhill
United States District Judge
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