Murphy v. Borges

Steven A.R. Murphy, M.D. v. James Borges, M.D. dba Suite Two Associates

No. FSTCV166027375S

Superior Court of Connecticut, Judicial District of Stamford-Norwalk, Stamford

April 5, 2017

UNPUBLISHED OPINION

MEMORANDUM OF DECISION AFTER TRIAL

TAGGART D. ADAMS, JUDGE TRIAL REFEREE.

I. Background

The plaintiff Murphy is a medical doctor licensed to practice in Connecticut and New York State who maintains three offices in Greenwich, one of which is located in a building at 49 Lake Avenue. The defendant Borges is a retired medical doctor who maintained a practice for forty years at the medical offices at 49 Lake Avenue that are now occupied by the plaintiff. These 49 Lake Avenue offices are the subject of the dispute in this case and are described as consisting of two exam rooms, an office for consultation and a reception waiting area shared with other doctors.

The plaintiff and defendant entered into a written " Asset Purchase Agreement" dated October 31, 2014 with respect to the sale by the defendant and the purchase by the plaintiff of the defendant's " medical practice" and the premises where the practice took place referred to as " Unit 2A" ^[1] of a condominium association located at 49 Lake Avenue (Unit). There is evidence that Unit 2A was part of a condominium unit operating under the name of Suite Two Associates. Dr. Borges was apparently one of four doctors who owned Suite Two Associates. Exhs. 2 and 5.

Exhibit 1 at trial was the Asset Purchase Agreement executed by both parties. It called for the defendant to sell his medical practice and the unit where the practice was located, Unit 2A at 49 Lane Avenue, for a purchase price set forth in Section 2 of the Agreement of $380, 000 payable by $300, 000 cash or certified check at the closing; Section 2(a); and $80, 000 in the form of purchase money note and mortgage; Section 2(b). The closing of the transaction was to take place on August 1 2015 Ex. 1, § § 1-3. Section 11 of the Agreement stated as follows:

11. Financing Contingency . This Agreement is contingent upon Purchaser obtaining a written commitment for a loan to purchase the Practice and the Condominium Unit without any condition(s) beyond Purchaser's reasonable ability to satisfy, to be secured by a Security Agreement and UCC-1 Financing Statement against the Practice and a first mortgage on the Condominium Unit, in the amount of $300, 000. If Purchaser is unable to obtain a written commitment for such a loan on or before May 28, 2015, and if Purchaser so notifies Seller or Seller's attorney, in writing, at or before 5:00 p.m. on said date, then this Agreement shall be null and void and the Purchaser shall be entitled to the immediate return by Seller of all sums paid by the Purchaser on account of this Agreement, unless Purchaser elects to pay the balance of the Purchase Price in the form of a promissory note on the terms set forth in Paragraph 2(b).

The closing of the transaction never took place, although Dr. Murphy moved into the offices during the summer of 2015 paying " rent" to Dr. Borges who had retired in June and certain condominium charges. In November 2015 Dr. Borges, having not received the consideration called for in the contract, declared the contract void.

In December 2015 Murphy commenced this lawsuit based on a one-count complaint seeking (1) specific performance of the Asset Purchase Agreement and (2) and enjoining Borges from conveying the property to anyone else. A lis pendens was filed on the Greenwich land records. In his answer and counterclaim, Borges denied the allegations seeking specific performance and alleged that Murphy had failed to pay reasonable rent, or use and occupancy charges for the Unit. In turn, answering Borges' special defense, Murphy admitted he was occupying the office, asserted he was paying rent, part of which was consideration to " keep open the purchase option in the contract." Shortly before trial, Murphy, as defendant on Borges' counterclaim filed an amended answer and set-off alleging that he has paid approximately $17, 500 in condominium common charges payments which purportedly only benefit Borges' ownership interest in the condominium, and should be set-off against any amount recovered by Borges for unpaid rent. Dkt. Entry 116.00. Immediately before the trial of this case, the parties and counsel agreed that the amended answer and set-off were included in the operative pleadings. Tr. 2.^[2]

The trial of this case was efficiently managed by counsel for both parties and was complete in less than one day on January 25, 2017. Post-trial memoranda were filed on February 21. The court has carefully read the memoranda and trial transcript and examined the exhibits admitted into evidence. The trial and post-trial papers appear to leave some unresolved factual questions, but the court has sufficient information to render a decision that is fair and legally correct.

II. Discussion

A. Pertinent Facts . In addition to the above facts, the court makes the following findings of fact relevant to this case. Murphy testified without contradiction that he took occupancy of the Unit in June 2015 after Borges retired from medical practice. Tr. 21-22. He necessarily conceded the closing scheduled for August 1 did not take place on that date, seemingly putting the onus on the attorneys.

[T]here were multiple issues between attorneys at that time. There were vacations. There were requests for further documentation . . . there were some issues. There was another title search that, were (sic) needed to be done. And obviously it was in the summer months and so I think there was also scheduling conflicts with the attorneys as well.

Id., 22. In fact, after Borges' attorney, Whelan, provided Priolet, Murphy's attorney, with necessary documents, Priolet replied on July 28, 2015 that there was a need to adjourn the closing date for a week or two because of " vacation schedules." Ex. 5. Indeed, it was Priolet's vacation that interfered with the closing as well as the fact that Priolet had apparently not done a title search as of July 29. Ex. C. Murphy even described Priolet as " AWOL" and the situation as " madness" when Priolet was away on Block Island in early September. Tr., 26; Ex. E. On September 25 Borges, certainly sarcastically, but noting his agitation at the delay, questioned whether " Claude" [Priolet] even existed. Ex. 7. On the other hand, the court finds no evidence that Attorney Whelan was the cause of any delay in the transaction.

On October 1, Whelan sent a long email to Priolet detailing recent events which include references by Murphy " for a while now" that a loan being sought by Murphy for the full amount of the purchase price was ready to close. Whelan notes that Priolet had told her the delay would be even longer because Murphy did not " even have a commitment letter yet." Ex. 9. Borges kept pushing in October to have the closing as soon as possible stating the rental agreement could not last longer than October-November, otherwise Murphy would have to vacate. Ex. 13.

On October 12, almost two and a half months after his promise to pay Borges $300, 000 by certified check had passed, Murphy wrote Borges

I met with the lender last week. This is an SBA backed loan. The amount requested and the change required additional paperwork which we have submitted. This is a normal course.

Ex. 11. Murphy provided no explanation for the delay except to blame Priolet. Id. Borges' response was patient, but equivocal about how long he would wait. Id. In the early afternoon of October 23 Borges emailed Murphy, commenting that time continued to pass and that he had deadlines, " I cannot wait forever before exploring other options." Murphy responded after the weekend " the lender is awaiting review of my current year's taxes . . . this delay is due to requesting the lump sum payout." Ex. 14.

At the trial Murphy testified several times that Borges represented he was still willing to close the transaction after the contract closing date. Tr., 23, 24-25, 25-26. In response to a leading question he testified to his understanding that rent payments he was proposing to make of $2, 000 per month would assuage the " headache" of the delayed closing. Tr., 44-45; Ex. 11. As noted, Borges was " amenable" to this approach on October 12 " for a defined period of time." Ex. 11. However, Borges testified he did not share the view that so-called rent payments by Murphy would keep the right to purchase open indefinitely. Tr., 83.

Other critical facts emerged at trial. Murphy testified that he never received a bank commitment for the $300, 000 down payment and never tendered that amount to Borges. Tr., 60-61, 65. Further, except for the $2, 000 " rent" payment made in October 2015 Murphy testified he has paid nothing in rent to Borges despite occupying the Unit to this day since June 2015. Id., 67-68.^[3] Borges testified credibly that while he was willing to close the sale after August 1, 2015, he was under the impression that Murphy had financing for the transaction. Id., 77, 99. He also was credible in testifying he turned down another offer for the Unit in September 2015 because of the contract with Murphy. Id., 86-87, 98; see Ex. 7. Justifiably, Borges felt deceived. Id., 77, 99.

On November 6, 2015 Borges emailed Murphy advising the latter that Borges' attorney deemed the Asset Purchase Agreement terminated. Borges said he would consider a new contract with an assurance of a speedy closing. Otherwise, if Murphy wished to continue using the Unit he would have to lease it at $3 000 per month, plus condominium expenses. Ex. J. In response, Murphy asserted the validity of the Asset Purchase Agreement, and that he was fully prepared to defend the contract " in court." Id. Borges' position was...