Here’s the story of what happened that led to the legal dispute.
Mr. Blackwell (Buyer) and Mr. Mahmood (Seller) entered into a contract for the purchase and sale of real estate in Windsor. The sales price was $1,800,000.00. Mr. Blackwell gave a deposit of $40,000.00. Mr. Blackwell’s obligations under the contract were contingent on his ability to obtain a mortgage in the amount of $1,440,000.00. If Mr. Blackwell was unable to obtain a mortgage commitment in that amount within 30 days, he had an option to cancel the contract and get back his deposit. A provision such as this is typical in Connecticut real estate contracts.
To everyone’s surprise, the appraisal ordered by the Bank to which Mr. Blackwell applied for a mortgage set a value for the real estate of $1,220,000.00, considerably less than the contract price. In those circumstances, of course, the Bank would not approve a mortgage for $1,440,000.00.
Mr. Blackwell and Mr. Mahmood wanted to keep the deal together, if possible. Several written extensions and one oral extension of the mortgage commitment date were granted. Although the original contract was dated as of September 20, at the end of December the Buyer and Seller still were discussing ways of making the deal work. Mr. Mahmood was leaving for a trip out of the country and he and Mr. Blackwell agreed they would continue discussions at the end of January when Mr. Mahmood returned from his trip.
It was not until after Mr. Mahmood returned from his trip that the Buyer and Seller finally concluded the deal could not work. In early February, Mr. Blackwell formally notified Mr. Mahmood of this, in writing, and requested the return of his deposit. Mr. Mahmood refused to return the deposit. The reason he gave was that the written notice was sent later than 30 days after Mr. Blackwell had learned of his inability to obtain a mortgage. Mr. Mahmood maintained, therefore, that the deposit was forfeited as liquidated damages, all as specified in the contract.
Here’s what Mr. Blackwell did next.
Since Mr. Mahmood refused to return his deposit, Mr. Blackwell brought suit to recover his deposit. His Complaint alleged that the course of conduct between them estopped (legally prevented) Mr. Mahmood form insisting on strict compliance with the contract. After all, Mr. Blackwell said, we were continuing to talk about how to keep the deal together and I was waiting for Mr. Mahmood to return from his overseas trip, and he had encouraged me to wait. But, Mr. Blackwell did even more than that. In addition to that, however, Mr. Blackwell alleged that Mr. Mahmood’s failure to return the deposit constituted statutory theft pursuant to Section 52-564 of the Connecticut General Statutes. This significantly upped the ante because proof of statutory theft allows the trial court to award triple damages. Finally, Mr. Blackwell alleged that Mr. Mahmood’s failure to return the deposit violated the Connecticut Unfair Trade Practices Act, commonly referred to by the acronym CUTPA. This also significantly upped the ante because a violation of CUTPA allows the trial court to award the plaintiff attorney’s fees and punitive damages as well as monetary damages.
Here’s what happened at the trial.
The trial was to a single Judge, not to a jury. The Judge found in favor of Mr. Blackwell on all counts of his Complaint and awarded him a total amount of $136,930.41. That’s quite an award. Imagine this all could have been avoided if Mr. Mahmood simply had returned the deposit when requested.
Here’s what the Appellate Court said.
Not surprisingly, Mr. Mahmood was unhappy with the result at trial. He asked Connecticut’s Appellate Court to review the decision of the trial Judge. The Appellate Court did so and the Court’s decision was released on April 27, 2010. It can be found at 120 Conn. App. 690. The Court unanimously affirmed the trial Judge’s decision. In doing so, the Appellate Court followed a well established legal doctrine which says the decision of a trial court is to be set aside on appeal only if the decision “is clearly erroneous” either because it is legally incorrect or not supported by the evidence. The job of an Appellate Court is not to retry the case; rather, the job of the Appellate Court is to determine if the trial Judge’s decision is based on evidence presented at trial and is legally correct. Applying that standard, the decision of the trial judge was affirmed.
Analysis.
The result for Mr. Mahmood appears particularly harsh. As often is the case in legal disputes, the party who tells the more credible story usually wins. A corollary of that statement is that a party who appears not credible often pays a price. In this case the trial Judge said “Mahmood was not credible during this trial and in various documents that are either part of the file or are exhibits in this case.” It appears that this type of finding played a significant role in the trial Judge’s conclusion that Mr. Mahmood was liable for triple damages, attorney’s fees, and punitive damages, all in addition to the basic monetary damages of $40,000.00 (the amount of the deposit). Once he lost at trial, Mr. Mahmood faced an uphill battle at the Appellate Court. Since the trial Judge’s decision was based on the evidence and legally correct, the Appellate Court, following well established precedent, had no choice but to affirm the decision.