NOROTON PROPERTIES, LLC v. SHERIF M. LAWENDY
(AC 35827)
Alvord, Mullins and West, Js.
Argued September 24—officially released December 23, 2014
(Aрpeal from Superior Court, judicial district of Stamford-Norwalk, Hon. Kevin Tierney, judge trial referee.)
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Brenden P. Leydon, for the appellee (defendant).
ALVORD, J. The plaintiff, Noroton Properties, LLC, aрpeals from the judgment of the trial court, rendered after a trial to the court, in favor of the defendant, Sherif M. Lawendy, in this action to foreclose a commercial mortgage. The court concluded that the plaintiff failed to prove that the defendant was in default of the mortgage note and, accordingly, declined to award the plaintiff an appraisal fee, a title search fee, lаte fees, default interest, or attorney’s fees. On appeal, the plaintiff claims that the court improperly (1) found that the parties mutually agreed to extend the maturity date of the mortgage note, (2) determined that the mortgage note provided a ten day grace period for the payment of the final balloon payment, (3) concluded that the defendant satisfied his obligations by being ‘‘ready, willing and able’’ to make the final payment in April, 2011, rather than by making a ‘‘bona fide offer and tender’’ of payment as required by
The court’s memoranda of decision2 and the record reveal the following facts and procedural history. On March 20, 2009, the defendant executed a mortgage in favor of ‘‘The 1031 Exchange Experts, LLC, Qualified Intermediary (or QI) for Noroton Properties, LLC, Exchanger,’’ on commercial property he owned in Norwalk, to secure his payment of a mortgage note in the amount of $75,000. The note and mortgage were assigned to the plaintiff, and the assignment was duly recorded in the Norwalk land records.
The terms of the mortgage note provided that the defendant was to make monthly installments of principal and interest in the amount of $537.32, commencing on April 20, 2009, and continuing on the twentieth day of each succeeding calendar month. The defendant was required to make one final balloon payment of $71,409.22, which would be thе outstanding principal amount due under the note, plus all accrued interest, on the ‘‘Maturity Date’’ of March 20, 2011. The note also contained the following provision: ‘‘This Note may not be changed orally, but only by an agreement in writing, signed by the Lender and the Maker.’’
The defendant made all twenty-three monthly installment payments on time. Notwithstanding the terms of the note, however, the defendant sent the plaintiff an additional monthly installmеnt payment in the amount of $537.32 by check dated March 15, 2011. The plaintiff, by e-mail dated March 17, 2011, acknowledged the
Following a three dаy trial on the issue of liability, the court issued its memorandum of decision on January 9, 2013. The court concluded that the defendant was not in default for his failure to make the $71,409.22 balloon payment on March 20, 2011. In reaching that conclusion, the court made the following determinations: ‘‘The court finds that the parties mutually agreed to extend the March 20, 2011 maturity date to April 20, 2011 by the tender and acceptance of the March 15, 2011 $537.32 check. The court finds that the Mortgage Note had a ten day grace period. That ten day grace period gave the defendant the right to tender full payment of the principal and six (6.0%) percent interest to April 30, 2011. The defendant was ready, willing and able to tender that full payment of principal and interest on April 29, 2011. The court further finds that the plaintiff would not have accepted that payment of $70,871.80 principal plus six (6.0%) percent interest therein from March 20, 2011 to April 29, 2011, due to the plaintiff’s insistence on the ten (10.0%) percent late charge, twelve (12.0%) [percent] default interest and attorney fees.’’
For those reasons, the court concluded that the plaintiff had failed to prove that the defendant was in default of the mortgage note. In the court’s January 9, 2013 decision, it found that the principal and interest due under the nоte as of January 9, 2013 was $78,608.06, with per diem interest of $11.81. By treasurer’s check dated January 18, 2013, the defendant paid the plaintiff the sum of $78,714.35.
Subsequently, the court held an additional two day evidentiary hearing to consider the remaining issues raised by the parties. The hearing concluded on March 14, 2013. No posthearing briefs were filed. By memorandum of decision issued June 17, 2013, the court confirmed its finding that the plaintiff had failed to prove that the dеfendant was in default of the mortgage note. For that reason, the court concluded that the plaintiff was not entitled to late fees, default interest, an appraisal fee, a title search fee, or attorney’s fees under the provisions of either the note or mortgage. The court rendered judgment in favor of the defendant. This
We now consider the dispositive issue on appeal, which is whether the court improperly determined that the parties had mutually agreed to extend the maturity date by the tender and acceptance of the defendant’s March 15, 2011 check for $537.32. The March 15, 2011 check, having been sent by the defendant to the plaintiff and having been retained by the plaintiff, was the sole basis provided by the court for its finding of a mutual agreement to extend the maturity date of the mortgage note. No cаse law or other legal authority was cited by the court to support this determination.
‘‘A promissory note is nothing more than a written contract for the payment of money, and, as such, contract law applies. . . . The rules governing contract formation are well settled. . . . [A]n offer imposes no obligation upon either party, until it is accepted by the offeree, according to the terms in which the offer was made.’’ (Citation omitted; internal quotation marks omitted.) TD Bank, N.A. v. M.J. Holdings, LLC, 143 Conn. App. 322, 331, 71 A.3d 541 (2013). ‘‘Likewise, [f]or a valid modification to exist, there must be mutual assent to the meaning and conditions of the modification and the parties must assent to the same thing in the same sense. . . . Modification of a contract may be inferred from the attendant circumstances and conduct of the parties. . . . A modification of an agreement must be supported by valid consideration and requires a party to do, or promise to do, something further than, or different from, that which he is already bound to do.’’ (Internal quotation marks omitted.) Id., 332.
‘‘Whether the parties to a contract intended to modify the contract is a question of fact. . . . The resolution of conflicting factual claims falls within the province of the trial court. . . . The trial court’s findings are binding upon this court unless they are clearly errоneous in light of the evidence and the pleadings in the record as a whole. . . . We cannot retry the facts or pass on the credibility of the witness. . . . A finding of fact is clearly erroneous when there is no evidence in the record to support it . . . or when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.’’ (Citation omitted; internal quotation marks omitted.) Torgerson v. Kenny, 97 Conn. App. 609, 616, 905 A.2d 715 (2006), cert. denied, 281 Conn. 913, 916 A.2d 54 (2007).
The following additional facts are necessary for our resolution of the plaintiff’s claim. When the plaintiff received the defendant’s March 15, 2011 check in the amount of $537.32, the plaintiff made the following inquiries of the defendant by an e-mail sent on March 17, 2011: ‘‘We are in receipt of your usual monthly mortgage payment. Thank you.
‘‘Do you prefer that I deposit the check or return it to you at payoff?’’
In response to the plaintiff’s inquiries, the defendant e-mailed the following message on March 19, 2011: ‘‘I just got back into town and saw your e-mail. I have been working with a bank to convert the remainder of the note into a term lоan. I thought I had a while longer to get this done, as my first payment was made April, 2009. The documents do, however, say March 20, 2011. I apologize for being unprepared to close the note on 3/20/2011. This was an oversight on my part. If you would be so kind to give me a 30 day extension in order to arrange my finances, I will be able to close the note no later than May 1, 2011. My banker is back from vacation this Tuesday, and I have a phone сall in to him to expedite the process. In the meantime, please deposit the most recent check. If you are amenable to this, I will send another check for the month of April and close the note no later than May 1, 2011. My attorney will be happy to draft any paperwork you may need regarding this matter.’’ (Emphasis added.)
Within one hour, the plaintiff responded: ‘‘We cannot accept your request to extend the loan. We are obligated to repay our lender . . . with these monies. I cannot allow your poor planning to damage my credit. . . . Please arrange for payment on Monday.’’ Approximately twenty minutes later, the defendant replied: ‘‘I cannot close on Mon[day].’’ The plaintiff’s responding e-mail, sent fifteen minutes later, stated: ‘‘We will start foreclosure proceedings Monday.’’ The plaintiff’s finаl e-mail to the defendant that day, sent at approximately 3:30 p.m., extended the following offer: ‘‘If you wish the forty day extension that you have requested we will require an immediate fee of $5,000 to offset [the] additional costs and processes to try to rearrange the financing on our end.’’ The defendant did not make the final balloon payment on March 20, 2011, nor did he pay the plaintiff $5000 for an extension of time to make the final payment.
At trial, the defendant testified that the plaintiff never returned his March 15, 2011 check in the amount of $537.32, nor did the plaintiff deposit that check into an account. The defendant also testified that he wrote that check because ‘‘it was an amount I thought that I still owed.’’ He later clarified that testimony: ‘‘I thought I was making an additional installment payment. I had no idea that the—I didn’t realize that the term of the loan wаs that month, my first payment was in April, 2009. I thought I had until April, 2011. It was an error on my part.’’
On appeal, the plaintiff claims that the court improperly found that the parties mutually agreed to extend the maturity date of the mortgage note. The plaintiff argues that the basis for the court’s determination was ‘‘inadequate to support the finding of any such agreement when faced with the terms of the note3 and the statute of frauds.’’ The plaintiff further argues that ‘‘[t]he finding of an agreement is cleаrly erroneous, and it is not supported by the evidence.’’ The defendant counters that the court’s factual determination that the maturity date of the mortgage note had been modified by the parties was supported by the plaintiff’s acceptance of the March 15, 2011 payment. Citing Borst v. Ruff, 137 Conn. 359, 362, 77 A.2d 343 (1950), he argues that the plaintiff’s retention of that check extended the maturity date because ‘‘[a] long, unexplained retentiоn of a check tends to show its acceptance for the purpose for which it was given.’’ The defendant also claims that we should not consider the plaintiff’s argument regarding the statute of frauds because there is nothing in the record that indicates the plaintiff raised that issue before the trial court.
We agree with the defendant that the record before this court is inadequate to consider the plaintiff’s statute of frauds claim. The partial trial transcripts provided by the plaintiff for this appeal include only the testimony of the witnesses. Counsel’s arguments before the trial court are not part of the record. Further, the court’s memoranda of decision do not mention the statute of frauds. Additionally, no posthearing briefs were filed by the parties. In the absence of a more complete
With respect to the terms of the mortgage note, the plaintiff is correct that the express terms of the contract preclude an oral modification of the maturity date. Nonetheless, as argued by the defendant, it is well settled that the conduct of the parties may establish a modification under cеrtain circumstances. ‘‘Because the conduct of the parties was sufficient to establish a modification of the contract extending its performance date, the fact that there was no explicit agreement to extend the time for performance is of no import. . . . [W]e reject the [plaintiff’s] claim that there could be no modification because the contract specifically рrovided for modifications to be in writing. . . . [D]espite the presence of such a clause in a contract, a modification by subsequent parol agreement will be given effect. . . . We see no reason why this principle should not also apply to a modification implied in fact from the conduct of the parties.’’ (Citation omitted.) McKenna v. Woods, 21 Conn. App. 528, 533, 574 A.2d 836 (1990).
Nevertheless, on the basis of our review of the record, we conclude thаt the evidence does not support the court’s finding that the parties mutually agreed to the extension of the maturity date of the mortgage note. Although the court correctly found that the defendant tendered the March 15, 2011 check in the amount of $537.32 and that the plaintiff neither returned it to the defendant nor deposited it into an account, that fact alone does not automatically extend the maturity date. There is no case law to support such a conclusion under the circumstances of this case.
The defendant admittedly sent the March 15, 2011 installment payment in error. He thought the final balloon payment was due the following month. Accordingly, the check was not sent with a request to extend the maturity date. The question of an extension of that date arose only after the plaintiff reminded the defendant that the final bаlloon payment was due on March 20, 2011, and the defendant indicated that he did not have available funds to make the payment on the stated maturity date. Consequently, the court could not have reasonably found from the evidence that the installment payment represented a request for an extension, which the plaintiff assented to by failing to return the check.5
Further, the e-mail correspondence clеarly shows that the plaintiff did not agree to an extension when it acknowledged receipt of the March 15, 2011 check. After thanking the defendant for the check, the plaintiff reminded him that the final balloon payment was due on March 20, 2011, and inquired whether the defendant wanted the check deposited or returned to the defendant ‘‘at payoff.’’ These e-mails do not demonstrate ‘‘mutual assent to the meaning and cоnditions of the
The judgment is reversed and the case is remanded for a new trial.
In this opinion the other judges concurred.