FRACKER CONSTRUCTION v. FENYES, No. CV04 041 04 38 (Jul. 7, 2006)

EDDIE RODRIGUEZ, JUDGE.

On January 18, 2005, the court, Richards, J., granted the motion to consolidate Fracker Construction v. Fenyes, Superior Court, judicial district of Fairfield, Docket No. CV 04 0410438 and FCCC Holding Co. v. Fracker Construction, Superior Court Judicial district of Fairfield, Docket No. CV 044000369. These matters were tried to the court on January 12, January 18, January 19, February 6, February 21, February 23 and March 17, 2006. The court has reviewed the trial testimony, the exhibits introduced into evidence and the parties' post-trial briefs. The court has also evaluated the credibility of the witnesses.

The court has found the defendant in both cases, Mary Fenyes, to be incompetent. When she first testified at trial, the court found that her testimony lacked lucidity and was unresponsive. She later testified before the court and her testimony was more lucid and responsive, but the court was not satisfied with her competency and informed counsel for all parties that her testimony would be stricken from the record because the court was unable to determine her credibility. The court then offered all counsel the opportunity to present evidence of Fenyes' competency, but they declined to do so. The court suggested that counsel submit written stipulations as to certain facts in the case, but no stipulations were submitted. On the record, Fenyes' attorney informed the court that he did not believe that Fenyes' competency is relevant to the matters presently before the court. Therefore, Fenyes' testimony will not be considered by the court in determining the issues in this case.

The following facts are pertinent to the resolution of these matters. On July 2, 2003. James Fracker Construction, LLC (Fracker Construction), a real estate development company, through its manager, James Fracker, entered into a written agreement with the defendant, Mary Fenyes, to purchase 4.7 acres of property located at 642 Booth Hill Road in Trumbull, Connecticut. Fenyes owns approximately twenty acres of property in Trumbull, which extends into Shelton. Under the agreement, Fracker Construction's purchase of the property was conditioned upon obtaining a four-lot conventional residential subdivision of the property. Also under the agreement, Fenyes was to cooperate and assist Fracker with requesting approval of the four-lot subdivision to the Trumbull planning and zoning commission and other regulatory agencies.

In its complaint, Fracker Construction claims that Fenyes breached the agreement by refusing to execute a revised application to the Trumbull zoning commission and that without Fenyes' cooperation, it is unable to submit a revised application for zoning approval. Fracker Construction also claims that CT Page 12476 Fenyes' failure to execute the revised application is a repudiation of the agreement, which has blocked the sale of the property. Fracker Construction seeks specific performance of the agreement.

Under the agreement, the purchase price of the property is $600,000, payable as follows: (1) $1000 at the signing of the contract; (2) $509,000 for the benefit of the seller within fifteen days of the signing of the contract; and (3) $90,000 in a certified or bank check due upon delivery of the deed. The parties agreed that in order to secure the funds to pay the additional deposit of $509,000, James Fracker would borrow approximately $560,000 from a third-party lender and Fenyes would execute a mortgage of the property in favor of the third-party lender. The parties further agreed that the proceeds of the additional deposit would be used to satisfy, in full, a judgment of foreclosure against all of Fenyes' property, which was brought by Lord Chamberlain, Inc. against Fenyes for nursing home care. In accordance with the terms of the contract, on July 21, 2003, Fracker Construction and Fenyes executed a promissory note secured by a mortgage and borrowed $665,000 from FCCC Holding Company, LLC (FCCC). The property covered by the mortgage deed includes Fenyes' property located at 642 Booth Hill Road and also includes Fracker Construction's property located at 604 Booth Hill Road, which it previously purchased from Fenyes prior to the present lawsuit.

This property was subsequently released from the mortgage debt.

FCCC, the plaintiff in the matter entitled FCCC Holding Company, LLC v. Fracker Construction, LLC, Docket No. CV 04 4000369, claims that it is the owner and holder of the promissory note and mortgage, which was executed by Fracker Construction and Fenyes. FCCC also claims that Fracker Construction and Fenyes have failed to make the interest payments on the loan, which were due on May 1, 2004 and thereafter. It seeks to foreclose Fenyes' property in order to retrieve the whole balance of the mortgage, accrued interest, costs of collection, reasonable attorneys fees and money for taxes and insurance.

The evidence at trial indicates that FCCC Holding Company, LLC was created in March 2003, and acquired the entire loan CT Page 12484 business of The First Connecticut Capital Corporation.

In this partial decision on the merits, the court will only address the validity of the contract of sale between Fracker Construction and Fenyes and the validity of the promissory note and mortgage deed between FCCC, Fracker Construction and Fenyes. The court will hold a hearing on other pertinent issues that need to be addressed as discussed in this decision. CT Page 12477

I THE VALIDITY OF THE CONTRACT OF SALE BETWEEN FRACKER CONSTRUCTION AND FENYES

In her post-trial brief, Fenyes contends that the description of the property in the agreement with Fracker Construction is uncertain and indefinite and does not satisfy the statute of frauds. Fenyes relies on Montanaro Bros. Builders, Inc. v. Snow, 190 Conn. 481, 460 A.2d 1297(1983) and Pigeon v. Hatheway, 156 Conn. 175, 239 A.2d 523 (1968), for the proposition that in order to satisfy the statute of frauds, a contract for the sale of land must contain a certain and definite description. She further contends, in her post-trial brief and in her counterclaim, that the agreement, which consists of the contract of sale, schedules A, B and C and an addendum, are vague and legally insufficient to create a valid and binding agreement. Fenyes also argues that a fair reading of the agreement only obligates her to be involved with the initial application to the Trumbull regulatory authorities and not with subsequent applications, amendments or revisions.

In its post-trial brief, Fracker Construction counters that it is entitled to specific performance because Fenyes breached the agreement. It further argues that the description of the property to be conveyed is adequate to satisfy the statute of frauds, and even if it were not, its part performance removes the agreement from the statute.

General Statutes § 52-550(a) provides in relevant part: "No civil action may be maintained in the following cases unless the agreement, or a memorandum of the agreement, is made in writing and signed by the party, or the agent of the party, to be charged . . . (4) upon any agreement for the sale of real property or any interest in or concerning real property . . ." It is established that "[t]he description of land contained in a contract of sale . . . is sufficiently definite to satisfy the requirements of the Statute of Frauds whenever it is reasonably certain from the contract itself, or can be made certain through reference to record, contract, map or fact, by resort to extraneous evidence thereof, whether oral or written." (Emphasis in original; internal quotation marks omitted.) Levesque Builders, Inc. v. Hoerle, 49 Conn.App. 751, 757, 717 A.2d 252 (1998).

"The existence of a contract is a question of fact to be CT Page 12478 determined by the trier on the basis of all the evidence . . . To form a valid and binding contract in Connecticut, there must be a mutual understanding of the terms that are definite and certain between the parties . . . To constitute an offer and acceptance sufficient to create an enforceable contract, each must be found to have been based on an identical understanding by the parties." (Internal quotation marks omitted.) Lussier v. Spinnato, 69 Conn.App. 136, 140, 794 A.2d 1008, cert. denied, 261 Conn. 910, 806 A.2d 49 (2002).

The contract of sale dated July 2, 2003, which is signed by James Fracker, in his capacity as the manager of Fracker Construction, and by Fenyes, in her individual capacity, states "that the [s]eller agrees to sell and convey, and the [b]uyer agrees to purchase the real property described in `[s]chedule A' annexed hereto ('the premises'), subject to the additional terms and conditions and the contingencies set forth in both `[s]chedule B' and the `ADDENDUM' annexed hereto and made a part hereof." Schedule A describes the 4.7 acres, plus or minus, of the property that is to be conveyed to Fracker Construction, and paragraph seven of schedule B provides that the seller agrees to modify the legal description of the property in schedule A so that the buyers' submission to the Trumbull regulatory authorities support a four-lot conventional residential subdivision. In addition, the addendum to the contract of sale provides that "[a]ny modifications to the boundaries of the property description in [s]chedule A as required by [p]aragraph [seven] of [s]chedule B of the [c]ontract of [s]ale shall not extend [n]orth toward the existing house by more than [ninety] feet, and no boundary of the property as described in [s]chedule A shall be set within [fifty] feet of the house."

Fenyes contends that there is a discrepancy of 14.82 feet between the property described in schedule A and Fracker Constructions' exhibit 3, a record subdivision map. She contends that Fracker's exhibit 3 shows that the point of beginning of the property to be conveyed to Fracker as 370.18 feet, but the point of beginning in schedule A as 385 feet. Schedule A describes the property to be conveyed to Fracker Construction as follows: "[c]ommencing at a point at the southwest corner of the property of Mary Fenyes, #642 Booth Hill Road, thence northerly along the east side of Booth Hill Road, 385 feet, more or less, to the point of beginning, being the centerline of a stream, approximately opposite Stroble Road, thence; [n]ortherly, along the east side of Booth Hill Road, 600 feet more or less . . ." CT Page 12479

The discrepancy of 14.82 feet between schedule A and exhibit 3, however, does not violate the statute of frauds. As previously stated, to satisfy the statute of frauds, "[t]he identity of the property must be reasonably certain from the document itself or must be capable of being made certain through reference to record, contract, map or by resort to other evidence . . . but if addition of a term to the description is required, that is not permitted." (Citation omitted.) Lee v. Duncan, Superior Court Judicial district of Stamford-Norwalk at Stamford, Docket No. CV 99 0171435 (October 31, 2003, Hiller, J.). In the present case, the identity of the property is certain through reference to exhibit 3, schedules A and B and the addendum and no addition of a term to the description of the property is required.

Furthermore, the description of the 4.7 acres, plus or minus, under schedule A, has been made sufficiently definite through reference to the modification provision in schedule B and the addendum. Taken as a whole, these documents constitute the contract of sale and describe with certainty that the property to be conveyed to Fracker Construction is 4.7 acres. Also, the contract is signed by both parties, identifies the buyer and seller, the subject property, the purchase price and the terms of payment. Therefore, the court finds that the contract of sale between Fracker Construction and Fenyes satisfies the statute of frauds and is a valid and enforceable contract. The court, however, orders the parties to return to court for a hearing to resolve the discrepancy of the dimensions of the property that is to be conveyed to Fracker Construction.

Fenyes also argues that under the contract of sale, she is only obligated to assist and cooperate with Fracker with the initial application to the Trumbull regulatory authorities. Provision six of schedule B provides as follows: "The [s]eller shall cooperate with and assist the [b]uyer as necessary and shall join in or consent to, as the case may be, the applications to be submitted to the appropriate Trumbull regulatory authorities and shall permit the [b]uyer and its representatives to go upon the premises described in [s]chedule A for percolation testing, engineering work and survey work required in connection with the application(s)." Because the word "application" is written in the plural form, a fair reading of provision six is that the seller shall assist the buyer, not just with the initial application, but with any necessary applications. Therefore, the court orders Fenyes to assist and cooperate with Fracker Construction with CT Page 12480 submitting the necessary applications to the Trumbull regulatory authorities.

II THE VALIDITY OF THE PROMISSORY NOTE AND MORTGAGE DEED BETWEEN FCCC, FRACKER CONSTRUCTION AND FENYES

In her post-trial brief, Fenyes essentially contends that the mortgage between herself, FCCC and Fracker Construction is void because Fenyes never borrowed from or owed money to The First Connecticut Capital Corporation, the grantee designated in the mortgage document. FCCC counters that it is entitled to a judgment of foreclosure because the promissory note is a negotiable instrument under General Statutes § 42a-3-104 and as the holder of the note, it may enforce payment of the note in its own name. It further argues that Fracker Construction and Fenyes failed to make the payments on the promissory note and that the entire debt is due and payable. FCCC also argues that a default under the promissory note is a default under the mortgage, which entitles it to foreclosure, and that it has standing to maintain the foreclosure action, despite the fact that "The First Connecticut Capital Corporation" was mistakenly named in the mortgage. It finally contends that the court should reform the mortgage in order to correct the name of the new mortgagee, FCCC.

"Section 42a-3-104 provides that any writing may be a negotiable instrument if it (1) is payable to order or to bearer (2) is payable on demand or at a definite time and (3) contains an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges, and no other promise, order, obligation or power is given by the maker or drawer except as otherwise authorized." Florian v. Lenge, 91 Conn.App. 268, 277, 880 A.2d 985 (2005). In the present case, the promissory note is made payable "to the order of FCCC Holding Company, LLC." It is also payable at a definite time by providing that "[t]he entire balance of principal and all unpaid interest shall be due and payable on August 1, 2004 (the `[m]aturity [d]ate'), or immediately and without notice at the option of the [h]older at any time after a sale or conveyance of any premises mortgaged to secure this [n]ote." The promissory note also contains an unconditional promise to pay the principal sum of $665,000 and outlines a schedule for the interest payments, which were to commence on September 1, 2003. It contains no further conditions for payment. Therefore, under § 42a-3-104, the promissory note is CT Page 12481 a negotiable instrument and is enforceable by the holder, FCCC. General Statutes § 42a-3-301.

General Statutes § 42a-3-301 provides in relevant part: "`Person entitled to enforce' an instrument means (I) the holder of the instrument . . ."

The next issue the court must address is whether FCCC is able to enforce the promissory note even though the mortgagee on the mortgage deed was mistakenly named as "The First Connecticut Capital Corporation." "Construction of a mortgage deed is governed by the same rules of interpretation that apply to written instruments or contracts generally, and to deeds particularly. The primary rule of construction is to ascertain the intention of the parties. This is done not only from the face of the instrument, but also from the situation of the parties and the nature and object of their transactions . . . A promissory note and a mortgage deed are deemed parts of one transaction and must be construed together as such." (Internal quotation marks omitted.) Webster Bank v. Oakley, 265 Conn. 539, 547, 830 A.2d 139 (2003), cert. denied, 541 U.S. 903, 124 S.Ct. 1603, 158 L.Ed.2d 244 (2004).

In the present case, the promissory note indicates that it is secured by an open-end mortgage deed "of even date herewith covering real property located in the municipalities of Trumbull . . ." It also indicates the lender as FCCC, but the mortgage deed references the lender as The First Connecticut Capital Corporation. Both documents, however, indicate the business address of the lenders as 1000 Bridgeport Avenue, Shelton and were signed on July 21, 2003. In addition, attached to Fenyes' motion to strike, which was filed on August 26, 2004, is an Assignment of Mortgage, which was filed with the Trumbull town clerk on June 30, 2004. The assignment indicates that The First Connecticut Capital Corporation assigns to FCCC "that certain mortgage from James Fracker Construction, LLC and Mary Fenyes in favor of The First Connecticut Capital Corporation, dated July 21, 2003, and recorded in [v]olume 1227 at page 57 in the Trumbull [l]and [r]ecords."

At trial, Lawrence Yurdin, the President and Chief Executive Officer (CEO) of FCCC, testified that he was the President and CEO of The First Connecticut Capital Corporation and that FCCC purchased the entire assets and assumed all liabilities of The First Connecticut Capital Corporation. He also testified that he issued a commitment letter on behalf of FCCC to Fracker Construction that would enable the mortgage to close. Michael Goldman, the attorney that represented The First Connecticut Capital Corporation during the mortgage closing and who prepared CT Page 12482 the mortgage documents, testified that FCCC was formed in March 2003, to purchase all of the assets from The First Connecticut Capital Corporation. He further testified that he made a clerical error in the mortgage document by typing "The First Connecticut Capital Corporation" instead of FCCC. Goldman also testified that the mortgage documents were in the possession of all of the attorneys in attendance at the closing, but none of the attorneys noticed the error.

Although the promissory note and the mortgage deed designate different lenders, this does not invalidate the mortgage and the promise to repay the debt. Based on the testimony at trial, which the court has found to be credible, and the assignment attached to Fenyes' motion to strike, the designation of "The First Connecticut Capital Corporation" in the mortgage was nothing more than a scrivener's error. Therefore, both the promissory note and the mortgage that secures it are valid and enforceable by FCCC.

The court need not address FCCC's argument that it should reform the mortgage to correct the name of the mortgagee since it already found the mortgage to be valid and enforceable.

Finally, the court must address whether FCCC is entitled to foreclose the property that was mortgaged. "As a general matter, [courts] note that it is well established in our jurisprudence that [f]oreclosure is peculiarly an equitable action, and the court may entertain such questions as are necessary to be determined in order that complete justice may be done . . . [B]ecause a mortgage foreclosure action is an equitable proceeding, the trial court may consider all relevant circumstances to ensure that complete justice is done . . . Foreclosure may be withheld by the court on the grounds of equitable considerations and principles." (Citations omitted; emphasis added in original; internal quotation marks omitted.) Monetary Funding Group, Inc. v. Pluchino, 87 Conn.App. 401, 405, 867 A.2d 841 (2005).

The mortgage indicates that 642 Booth Hill Road, owned by Fenyes, and 604 Booth Hill Road, owned by Fracker Construction, are to secure the debt owed to "The First Connecticut Capital Corporation." The mortgage was signed by James Fracker, in his capacity as manager of Fracker Construction and was also signed by Fenyes in her individual capacity on July 21, 2003. The mortgage was also signed in the presence of two witnesses and was notarized. At trial, Richard Fenyes, the son of Mary Fenyes, testified that in July 2003, his mother was fully aware of her surroundings and that he discussed with his mother how the loan would stop the Lord Chamberlain foreclosure. At trial, James CT Page 12483 Fracker testified that he told Richard Fenyes that his mother's property would have to be collateral for the loan. He also testified that he saw Fenyes sign several documents given to her by Attorney Musto, the attorney that represented her during the mortgage closing, and that he observed her acknowledge that it was her free act and deed.

Based on the mortgage itself and the above trial testimony, the court finds that the promissory note and mortgage deed are valid, and therefore, to ensure that complete justice is done, FCCC is entitled to foreclosure. In addition, the court finds that all parties acted in good faith during the transactions. Also, at trial, Gregory Lane, a full-time state certified appraiser appraised the mortgaged property at $1,875,000. Since the property value is more than adequate to pay the mortgage, the court intends to order that the property, excluding the 4.7 acres conveyed to Fracker Construction, be sold. Therefore, the parties are ordered to return to court for a hearing to determine: (1) the dimensions of the property located at 642 Booth Hill Road to be conveyed to Fracker Construction; and (2) further action to be taken to effectuate the foreclosure.