Webster Bank, N.A. v. GFI Groton, LLC ( 2015 )

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WEBSTER BANK, N.A. v. GFI
GROTON, LLC, ET AL.
(AC 35575)
Sheldon, Mullins and Schaller, Js.
Argued Janaury 20—officially released May 26, 2015
(Appeal from Superior Court, judicial district of New
London, Hon. Joseph Q. Koletsky, judge trial referee.)
Jeffery O. McDonald, with whom, on the brief, was
Louis N. George, for the appellants (named defendant
et al.).
George A. Dagon, Jr., with whom was Eric B. Miller,
for the appellee (plaintiff).
Opinion
MULLINS, J. In this breach of contract action, the
defendants, GFI Groton, LLC (developer), Steven E.
Goodman, John DeLiso, GFI Investments V Groton,
LLC, and CAT Developers, LLC, appeal from the judg-
ment of the trial court, rendered after a bench trial, in
favor of the plaintiff, Webster Bank, N.A. (bank). The
defendants claim that the court improperly (1) deter-
mined that the bank had complied with its funding
obligations under an agreement to finance a building
project and (2) concluded that the bank had made rea-
sonable efforts to mitigate its damages. We affirm the
judgment of the trial court.
The following facts, which the court reasonably could
have found, and procedural history are relevant to our
resolution of this appeal. The developer undertook a
project to acquire land and develop a condominium and
townhouse complex in Groton (project). The project
entailed constructing and selling the units of three con-
dominium buildings on a parcel of land (property). The
three buildings, respectively, would consist of twelve,
sixteen and sixteen condominium units. On or about
September 27, 2004, the developer entered into an
agreement with the bank to finance the project.
Under the terms of the parties’ agreement, the bank
agreed to fund the project in the form of two loans: (1)
an acquisition and development loan totaling
$2,044,500; and (2) a revolving loan totaling $1,600,000
(loans). The acquisition and development loan would
be used to purchase the property and perform site work
outside of the building construction. The revolving loan
would be used to fund the construction of the condo-
minium units. The loans were made pursuant to corres-
ponding loan agreements that set forth the obligations
of the developer and the bank with respect to each
loan. Additionally, the loans were secured by respective
promissory notes executed by the developer (notes),
as well as four ‘‘Payment and Completion Guaranty
Agreements’’ (guaranties) that separately were exe-
cuted by Goodman, DeLiso, GFI Investments V Groton,
LLC, and CAT Developers, LLC (guarantors). The devel-
oper also executed a mortgage on the property in favor
of the bank.1
The notes provided that the developer would initially
pay only the monthly interest on the loans. The revolv-
ing loan agreement specified an ‘‘absorption rate’’ at
which the developer was required to construct and sell
a specified number of units every year.2 Pursuant to
the acquisition and development loan agreement, the
developer was to repay the bank $44,450 of that loan
upon the sale of each condominium unit and the bank,
in turn, was to issue a release of a corresponding portion
of the mortgage.
The revolving loan agreement provided a procedure
by which the developer was to draw funds for the proj-
ect as construction progressed. To receive disburse-
ments from the revolving loan, the developer was
required to submit to the bank its construction costs,
which, in turn, would determine the amount of funding
to which the developer was entitled. Specifically, to
receive funding under terms of the revolving loan
agreement, the developer was required to submit to the
bank a letter ‘‘requesting the amount of the particular
disbursement’’ along with various supporting docu-
ments. Section 4.02 (a) of the revolving loan agreement
provided that the developer was permitted to draw up
to 90 percent ‘‘of the actual vertical hard and soft costs
of construction,’’ but not more than $117,000 per condo-
minium unit.3
During the construction of the first building, the
developer submitted construction costs to the bank of
$85,000 per unit. Pursuant to the terms of the revolving
loan agreement, the bank disbursed to the developer
$76,500 per unit, which was 90 percent of the develop-
er’s submitted construction costs. By May, 2006, the
developer had completed construction on the first
building, and sold its twelve units. The developer repaid
the bank pursuant to the loan agreements for each unit
sold in the first building.
In 2005, the developer commenced construction on
the second building and increased the construction
costs that it submitted to the bank to $113,750 per
unit. As a result, the bank disbursed to the developer
$102,375 per unit, or 90 percent of its budgeted cost.
In August, 2006, when construction on the second
building was underway, the developer and the bank
agreed to modify the revolving loan agreement and note
because of concerns that the developer was not comply-
ing with its required absorption rate. The parties
entered into a loan modification agreement and
amended the revolving loan agreement (2006
agreement). Under the 2006 agreement, the parties
agreed to increase the principal balance of the revolving
loan from $1,600,000 to $2,250,000. The 2006 agreement
also eliminated the revolving loan’s maximum draw
restriction of $117,000 per unit. Nonetheless, under the
2006 agreement, the developer still was obligated to
submit draw requests to the bank to receive funds, and
still was only entitled to draw up to 90 percent ‘‘of the
actual vertical hard and soft construction costs of each
unit . . . .’’
After the parties executed the 2006 agreement, the
developer continued to submit draw requests for the
second building based on construction costs of $113,750
per unit; the bank continued to disburse to the devel-
oper $102,375 per unit. When the developer started to
construct the third building, it again submitted to the
bank construction costs of $113,750 per unit for that
building. The bank, thus, continued to disburse funds
to the developer for the third building at the rate 90
percent of the submitted construction costs, or $102,375
per unit.
As the September 30, 2007 maturity date on the notes
approached, the developer was performing the framing
work on the third building. On September 23, 2007, the
developer submitted to the bank a draw request from
the revolving loan in the amount of $62,400 for labor
to install drywall.4 The bank fully funded that request.
After the notes matured, however, the developer was
not permitted under the loan agreements to draw funds
until the bank agreed to new maturity dates on the
loans.
On November 30, 2007, the bank and the developer
executed a second modification agreement (2007
agreement), pursuant to which the maturity date of the
acquisition and development loan was extended until
September 30, 2009, and the maturity date on the revolv-
ing loan was extended until September 30, 2010. In
conjunction with the 2007 agreement, the guarantors
executed a ‘‘Reaffirmation of Guaranty, Consent and
Waiver’’ (reaffirmation). Under the terms of the 2007
agreement and reaffirmation, the parties waived all
claims and defenses arising prior to November 30, 2007.
The parties agreed that additional funding would be
available to the developer under the 2007 agreement
after the developer completed the work for which the
bank already had disbursed funds. As a result, the devel-
oper recognized that the bank would not fund additional
draw requests until after the developer completed the
drywall installation.
After receiving the September, 2007 disbursement
from the bank for drywall labor, however, the developer
never completed installing the drywall in the third build-
ing. A representative from the bank visited the third
building on a regular basis to monitor progress, and
observed that the drywall never was installed.
Additionally, the bank received no further draw
requests from the developer. In its oral ruling, the court
stated: ‘‘The court does not have enough evidence to
make a specific finding, but . . . the clear inference
that the court draws [is] that no draw request was made
because no draw request would have been honored
since the work for which the developers had already
been paid had not been done.’’
The developer completed construction on the second
building and sold all sixteen of its units. For each of
the first fifteen units sold in the second building, the
developer repaid the bank $44,450 toward the principal
balance on the acquisition and development loan. When
the final unit of the second building was sold in April,
2008, however, the bank relinquished its right to receive
the final $44,450 payment in order to provide the devel-
oper more liquidity. Nonetheless, that same month, the
developer ceased making interest payments to the bank
on the loans.
On June 5, 2008, the bank notified the defendants by
certified letter that the loans were in default. Afterward,
the parties entered into negotiations to save the project.
The defendants made proposals to the bank, under
which the bank would advance additional funds to the
developer for construction. The bank rejected these
proposals.
In January, 2009, the developer sent documents to
the bank that indicated that the developer owed its
subcontractors hundreds of thousands of dollars for
unpaid work, as a result of which it was facing numer-
ous lawsuits. After receiving this notification, the bank
informed the defendants, by way of a second default
letter dated March 17, 2009, that the notes were in
default and that it was exercising its right to accelerate
payment. After the bank sent the second default letter,
the defendants made several offers to the bank to pur-
chase the notes for amounts less than the total debt
owed. The bank refused those offers. The developer
never completed the third building.
On July 21, 2009, the town of Groton (town) filed
an action against the developer seeking, inter alia, to
foreclose tax liens on the property for unpaid property
taxes. On August 24, 2009, the bank filed the present
action, in which it initially sought to foreclose its mort-
gage ‘‘in case the town was not working in a timely
fashion.’’ The town’s tax lien had a higher priority than
the bank’s mortgage; the bank, thus, was named as a
subsequent encumbrancer in the town’s foreclosure
action.
In October, 2010, the bank’s subsidiary, Birch Bark
Properties, Inc., purchased the property for $750,000
through a tax foreclosure sale. After the sale, the bank
considered the remaining principal on the acquisition
and development loan satisfied and forgave a portion of
the revolving loan principal. Nonetheless, the revolving
loan still had an outstanding principal balance, and the
interest on both loans remained unpaid.
Thereafter, the bank amended its complaint to assert
that the defendants had breached the terms and condi-
tions of the notes and guaranties. The defendants filed
a revised answer denying many of the bank’s claims
against them, asserting multiple special defenses, and
filing their own counterclaims against the bank.5
On March 27, 2013, after a seven day trial, the court,
Hon. Joseph Q. Koletsky, judge trial referee, rendered
judgment in favor of the bank on all of its breach of
contract and guaranty claims, and rejected the defen-
dants’ counterclaims. The court awarded to the bank
the outstanding principal on the revolving loan, unpaid
interest on both loans, reimbursement for property
taxes, and attorneys’ fees and costs. This appeal fol-
lowed.6 Additional facts and procedural history will be
set forth as necessary.
On appeal, the defendants challenge the propriety of
the trial court’s adverse factual findings. Specifically,
the defendants maintain that the court improperly (1)
determined that the bank complied with its funding
obligations required by the loan agreements and (2)
concluded that the bank adequately had mitigated its
damages. We are not persuaded.
We begin by setting forth the relevant law and applica-
ble standard of review. ‘‘The elements of a breach of
contract action are the formation of an agreement, per-
formance by one party, breach of the agreement by the
other party and damages.’’ (Internal quotation marks
omitted.) Hawley Avenue Associates, LLC v. Robert D.
Russo, M.D. & Associates Radiology, P.C., 130 Conn.
App. 823, 832, 25 A.3d 707 (2011). ‘‘Whether a contract
has been breached ordinarily is a question of fact, sub-
ject to the clearly erroneous standard of review.’’ De
La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269
Conn. 424, 431 n.5, 849 A.2d 382 (2004). ‘‘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 convic-
tion that a mistake has been committed. . . . In making
this determination, every reasonable presumption must
be given in favor of the trial court’s ruling.’’ (Internal
quotation marks omitted.) Gordon v. Tobias, 262 Conn.
844, 849, 817 A.2d 683 (2003).
I
The defendants claim that the court improperly con-
cluded that the bank complied with its funding obliga-
tions under the loan agreements. The defendants
specifically argue that the bank failed to provide them
sufficient funding to install the drywall in the third
building because the developer’s actual construction
costs were higher than the funding that the bank dis-
bursed to it. The defendants contend that the bank
‘‘misinterpreted the maximum amounts allowable
under the loan documents,’’ and argue that ‘‘[h]ad the
trial court properly determined that the [developer]
[was] entitled to funding of at least $117,000 per unit,
there would have been adequate funding available to
complete the sheetrock.’’ We are not persuaded.
In its oral ruling, the court stated that ‘‘[t]here is no
doubt that when the loan matured in September of 2007,
the loan was indeed turned off, but that loan was turned
back on in November or early December of 2007 [pursu-
ant to the 2007 agreement], and funds were available
when work [that] had already been paid for by the
bank was completed so that additional funds would
be forthcoming.’’ The court further determined that,
despite the bank having provided funding to install dry-
wall in the third building, the developer never com-
pleted its installation. According to the court, after the
2007 agreement was implemented, there was ‘‘a clear
inference . . . that no draw request was made because
no draw request would have been honored since the
work for which the developers had already been paid
had not been done.’’ The record supports the court’s
conclusions.7
Here, the language of the revolving loan agreement
provided that the funding to which the developer was
entitled was to be determined by the construction costs
that the developer submitted to the bank. The 2006
agreement, which was operative when the developer
made its September 23, 2007 draw request in the amount
of $62,400 for drywall installation, removed the revolv-
ing loan’s funding maximum of $117,000 per unit, but
still provided that the ‘‘[the bank] will advance [to the
developer] . . . 90 percent of the actual vertical hard
and soft construction costs, of each unit . . . .’’ Even
so, the 2006 agreement did not alter the requirement
that ‘‘[r]equests for disbursements shall be submitted
by [the developer] on forms satisfactory to [the bank]
. . . .’’ (Emphasis added.) Indeed, to disburse funding
to the developer, the bank still required ‘‘[a] letter from
[the developer] requesting the amount of the particular
disbursement . . . .’’
The record reflects that, after the 2006 agreement
went into effect, the developer never increased the con-
struction costs that it submitted to the bank. The evi-
dence in the record demonstrates that, during
construction on the third building, the developer sub-
mitted to the bank construction costs in the amount of
$113,750 per unit, which was the same level of funding
that the developer had requested for the second build-
ing, prior to the 2006 amendment. Thus, notwithstand-
ing the parties’ agreement to remove the $117,000
maximum funding limit, the bank had no reason or basis
to fund the developer’s construction costs in excess of
the amount the developer actually requested. Accord-
ingly, because the developer continued to submit
requests for construction costs in the amount of
$113,750 per unit, the bank fulfilled those requests by
disbursing to the developer funding at the rate of
$102,375 per unit, which was 90 percent of the develop-
er’s submitted construction costs.
With respect to drywall installation in the third build-
ing specifically, the developer submitted to the bank
costs of $6000 per unit.8 As a result, the bank was
required to disburse $5400 per unit, which was 90 per-
cent of the developer’s $6000 submitted cost. At the time
the developer made the September, 2007 disbursement
request, however, the developer already had received
draws in the amount of $1500 per unit for drywall instal-
lation. Thus, the developer requested and received the
remaining $3900 per unit, or a total of $62,400, for dry-
wall installation for the sixteen units in the third
building.
The record thus demonstrates that the bank complied
with its contractual obligations by fulfilling the develop-
er’s requests for funding based on the construction
costs that the developer submitted. As a result, the bank
never breached any of its obligations to fund properly
submitted draw requests for the developer’s construc-
tion costs.
Despite the bank’s financial disbursement in compli-
ance with the construction costs submitted by the devel-
oper, the defendants argue that the bank nonetheless
should have been aware that the developer’s actual
construction costs were higher than what was reflected
in its construction budget. Specifically, the defendants
contend that, because the 2006 agreement provided that
the developer was entitled to ‘‘90 percent of the actual
vertical hard and soft construction costs,’’ the bank
breached the terms of the revolving loan by not advanc-
ing to the developer further sums, in addition to the
costs the developer submitted, to cover the actual con-
struction costs. (Emphasis added.) Thus, the defen-
dants argue that, because the court should have found
that the bank failed to advance to it further sums, the
developer’s failure to continue making interest pay-
ments did not constitute a breach of the loan docu-
ments. To support this argument, the defendants rely
on the principle that ‘‘a total breach of the contract by
one party relieves the injured party of any further duty
to perform further obligations under the contract.’’
(Emphasis omitted; internal quotation marks omitted.)
Shah v. Cover-It, Inc., 86 Conn. App. 71, 75, 859 A.2d
959 (2004). This claim borders on the frivolous.
First, and most significantly, the insuperable obstacle
for the defendants is the language of the loan docu-
ments. In particular, the loan documents provided that
the amount of funding to which the developer was enti-
tled was to be determined by the construction costs
that the developer submitted to the bank. Therefore,
the bank was obligated to fund the construction costs
based on only the submission of such costs by the
developer. There is no dispute that this is precisely
what the bank did. There is no provision in the loan
documents, nor any other sound legal basis, for requir-
ing the bank to fund construction costs that were not
properly submitted to it.
Second, and relatedly, the record demonstrates that
the developer never once increased the construction
costs that it submitted to the bank for the third building,
despite its ability to do so.9 Thus, even if additional
funds were available for the drywall installation, the
developer never submitted a draw request to obtain
those additional funds. It is beyond our comprehension
to understand how the bank was supposed to divine
the developer’s actual construction costs and advance
to it additional funds without the developer submitting
those costs. Absent any request for additional funds, the
bank clearly did not breach any contract. Consequently,
the evidence in the record supports the court’s finding
that the bank complied with its contractual obligations
by disbursing funds to the developer at the rate of
$102,375 per unit for the third building, which was 90
percent of the construction costs submitted by the
developer.
II
The defendants also claim that the court improperly
concluded that the bank made reasonable efforts to
mitigate its damages following the default on the notes.
Specifically, the defendants argue that the court should
have found that the bank failed to mitigate its damages
because (1) it ‘‘refused to provide additional funding
to complete the units, which would have resulted in
sales proceeds,’’ and (2) ‘‘it refused to convey the note
for a reasonable sum.’’ The defendants’ claim has no
merit.
We begin by setting forth the standard of review. ‘‘We
have often said in the contracts and torts contexts that
the party receiving a damage award has a duty to make
reasonable efforts to mitigate damages. . . . What con-
stitutes a reasonable effort under the circumstances of
a particular case is a question of fact for the trier. . . .
Furthermore, we have concluded that the breaching
party bears the burden of proving that the nonbreaching
party has failed to mitigate damages. . . . The defen-
dant thus bears the burden of proving that the plaintiff
failed to make reasonable efforts to mitigate the amount
of damages.’’ (Citation omitted; internal quotation
marks omitted.) Vanliner Ins. Co. v. Fay, 98 Conn. App.
125, 145, 907 A.2d 1220 (2006).
‘‘To claim successfully that the plaintiff failed to miti-
gate damages, the defendant must show that the injured
party failed to take reasonable action to lessen the
damages; that the damages were in fact enhanced by
such failure; and that the damages which could have
been avoided can be measured with reasonable cer-
tainty.’’ (Internal quotation marks omitted.) Preston v.
Keith, 217 Conn. 12, 22, 584 A.2d 439 (1991). Neverthe-
less, ‘‘[t]he duty to mitigate damages does not require
a party to sacrifice a substantial right of his own in
order to minimize a loss.’’ Camp v. Cohn, 151 Conn.
623, 627, 201 A.2d 187 (1964).
The following additional facts, which the court rea-
sonably could have found, and procedural history are
relevant to this claim. In the summer of 2008, after the
loans were in default, the defendants and the bank
entered into negotiations to save the project. The defen-
dants made an offer to the bank under which the bank
would loan them an additional $583,000 that they would
use to complete construction on the third building. As
part of this offer, the defendants additionally promised
that, within three months of receiving funding from the
bank, they would repay the sum of $791,000. The bank
refused that offer.
In 2009, after the bank sent the second default letter,
the defendants made four separate offers to the bank
to purchase the notes for sums ranging from $1,000,000
to $1,250,000. The bank also refused those offers.
Indeed, at the time of trial, the bank represented that
the payoff of the outstanding balance on the loans was
nearly $2,000,000 in principal, interest and late charges,
in addition to more than $100,000 for its payment of
property taxes to the town.
In its oral decision, the court stated that ‘‘[t]he failure
of the bank to take less than fifty cents on the dollar
was hardly . . . a violation of any covenant of fair deal-
ing . . . .’’ The defendants then brought the present
appeal, and filed a motion for articulation on the ground
that ‘‘the [trial] court’s . . . order was unclear as to
whether the court considered the defendants’ claim that
the [bank] did not adequately mitigate its damages.’’
The trial court issued an articulation, in which it
stated the following: ‘‘The defendants argued [at trial]
that among the myriad defalcations [they] claimed . . .
the bank to have been guilty of, the foreclosing bank
failed to mitigate damages. Largely, this was a claim
that by not continuing to fund the defendants’ troubled
project by infusing additional monies, the bank caused
the project to fail, thus increasing damages. Basically,
the defendants’ claim was that if additional funding had
been provided the project would have been successful
so there would have been no damages. The defendants
also claimed that by not accepting settlement offers
made by the defendants, the bank suffered larger dam-
ages than would have been the case had the . . . bank
taken what the court referred to in its original decision
as less than 50 cents on the dollar. Unfortunately for
the defendants’ position, the evidence . . . does not
justify such a conclusion. As the court thought it had
said in its decision, there was no failure to mitigate
damages by the [bank].’’ The record supports the con-
clusions of the court.
First, the defendants claim that the bank’s refusal to
provide the developer with additional funds after the
notes were in default constituted a failure on the part
of the bank to mitigate its damages. We disagree.
Under the defendants’ proposal, the bank would have
been required to expend more than $500,000 on what
the court characterized as ‘‘the defendants’ troubled
project.’’ Indeed, by the time that the proposal was
made, the developer already had defaulted on the notes
and was facing multiple pending lawsuits as the result
of failing to pay its subcontractors. The defendants’
mere promise to repay the bank hardly guaranteed that
the bank would minimize its losses. See 16 Restatement
(Second), Contracts § 350, comment (g), p. 132 (1981)
(it is not ‘‘reasonable to expect [nonbreaching party]
to take steps to avoid loss if those steps may cause
other serious loss’’); see also 22 Am. Jur. 2d 345, Dam-
ages § 368 (2013) (‘‘[a] party to a contract who is not
in breach need not make substantial expenditures to
avoid damages from breach because compelling an
innocent party to spend money to mitigate damages
might entail risks beyond those assumed in the con-
tract’’ [footnote omitted]).
Second, the defendants claim that the court should
have found that the bank failed to mitigate its damages
because the bank did not accept their offers to purchase
the notes. We are not persuaded.
After the bank sent to the defendants the second
default letter, the defendants made four offers to buy
the note for sums ranging from $1,000,000 to $1,250,000.
The record supports the court’s finding, however, that
the value of the notes far exceeded those offers. Indeed,
the court awarded to the bank more than $2,000,000 in
principal, interest, attorney’s fees and taxes arising from
the defendants’ default. Thus, as the court noted, the
defendants did not demonstrate that the bank failed to
mitigate damages by not accepting ‘‘less than 50 cents
on the dollar.’’
The defendants’ claim ignores the fact that the devel-
oper defaulted on the notes in April, 2008. At that point,
the bank had the legal right to accelerate payment on
the notes and collect on the developer’s outstanding
debt. Additionally, the guarantors all had executed guar-
anties, whereby they had made absolute promises to
pay the outstanding debt on the notes upon the develop-
er’s default. Therefore, once the notes went into default,
the bank was authorized to collect on the debt by bring-
ing the present action, and it was under no obligation
to forgo its right to recover its losses by selling the
notes at a discount.
Our Supreme Court has long abided by the principle
that ‘‘[t]he duty of the plaintiff to keep the damages
from the breach of the contract as low as reasonably
possible does not require of it that it disregard its own
interests or exalt above them those of the defaulting
defendants. . . . [The plaintiff is] not under an obliga-
tion to sacrifice any substantial right of its own in order
to minimize the loss of the defendants.’’ (Citation omit-
ted.) Raff Co. v. Murphy, 110 Conn. 234, 243, 147 A.
709 (1929). The evidence in the record supports the
court’s conclusion that the bank’s refusal of the defen-
dants’ offers to buy the notes did not constitute a failure
to mitigate its damages. The bank had the legal right
to collect on the defaulted notes, and it was not under
any obligation to accept any of the defendants’ offers
for settlement.
In sum, the defendants have not met their burden to
prove that the bank failed to mitigate damages. After
a careful review of the record, we conclude that the
evidence before the court demonstrated that the bank’s
conduct was reasonable under the circumstances, and,
thus, that the court’s factual findings were not
clearly erroneous.
The judgment is affirmed.
In this opinion the other judges concurred.
1
In this opinion, the loan agreements, notes, guaranties and mortgage are
referred to collectively as the ‘‘loan documents.’’
2
The terms of the revolving loan agreement required the developer to
‘‘maintain a minimum unit absorption rate of (i) 12 units in year one (ii) 24
units in year two and (iii) 25 units in year three.’’
3
Section 4.02 (a) of the revolving loan agreement provided in relevant
part: ‘‘The maximum amount [the developer] shall be entitled to draw down
on the [p]rincipal [a]mount with respect to each unit shall not exceed the
lesser of (i) ninety (90%) percent of the actual vertical hard and soft costs
of construction, including interest but not to include marketing . . . [or] (iv)
[o]ne [h]undred [s]eventeen [t]housand and 00/100 [d]ollars ($117,000.00) per
unit.’’
4
The terms ‘‘drywall,’’ ‘‘Sheetrock,’’ and ‘‘rock’’ were used interchangeably
at trial.
5
The defendants asserted as special defenses: unclean hands; payment;
fraud; waiver; estoppel; laches; breach of the implied covenant of good
faith and fair dealing; and frustration of purpose. The defendants filed the
following counterclaims: breach of contract; breach of the implied covenant
of good faith and fair dealing; breach of fiduciary duty; promissory estoppel;
violation of the Connecticut Unfair Trade Practices Act, General Statutes
§ 42-110a et seq.; fraudulent misrepresentation; negligent misrepresentation;
and tortious interference with a business relationship. The defendants do
not raise any issues on appeal regarding the court’s rejection of its special
defenses or counterclaims.
6
During the pendency of this appeal, in response to the defendants’ motion
for articulation filed with this court, the trial court clarified that it had
concluded that the bank adequately had mitigated its damages.
7
The defendants do not challenge the court’s implicit conclusion that,
after the bank had paid for the drywall installation and the 2007 agreement
was implemented, the developer never submitted another draw request.
Indeed, at oral argument before this court, the defendants’ counsel conceded
that, after the developer’s September, 2007 request for drywall labor costs
had been submitted, the developer made no further draw requests of the
bank.
8
In its draw requests, the developer submitted to the bank itemized con-
struction costs, which specified the costs of constructing different elements
of the condominium units. Then, pursuant to the terms of the revolving
loan agreement, the bank disbursed to the developer 90 percent of the
itemized costs.
9
Indeed, the developer increased the construction costs that it submitted
to the bank from $85,000 per unit for the first building to $113,750 for the
second building. The developer, thus, was aware that, to receive increased
funding from the revolving loan, it could increase the construction costs
that it submitted to the bank, and had already done so.