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Legal Memorandum: Discharge by Breach in CT

Issue: Under the laws of Connecticut, does the breach of one party to a mortgage excuse the breach of another?

Area of Law: Business Organizations & Contracts, Litigation & Procedure
Keywords: Breach of contract claim; Doctrine of prevention; Material failure of performance by one party
Jurisdiction: Connecticut, Federal
Cited Cases: 907 A.2d 1220; 435 P.2d 669; 950 A.2d 522; 570 A.2d 164
Cited Statutes: None
Date: 04/01/2009

The general rule, in Connecticut as elsewhere, is that an earlier breach by one party excuses the other party from further performing the contract.  See O&G Indus., Inc. v. Nat’l R.R. Passenger Corp., 537 F.3d 153, 163 (2d Cir. 2008) (“Under Connecticut law, an uncured, material failure of performance by one contracting party discharges the other party from further performance under the contract, which is rendered unenforceable in toto.”); Bernstein v. Nemeyer, 213 Conn. 665, 570 A.2d 164, 168 (1970) (same).

However, a debtor may be able to argue that a bank ought to be precluded from recovering interest and penalties by three other doctrines, noted below:

·                     First, under Connecticut law, an essential element of any breach of contract claim is that the plaintiff allege and prove that the damages he seeks is limited to those “resulting from the breach.”  Guillory v. Allstate Ins. Co., 476 F. Supp. 2d 171, 175 n.9 (D. Conn. 2007); see Gerrity v. R.J. Reynolds Tobacco Co., 399 F. Supp. 2d 87, 90 (D. Conn. 2005) (to be recoverable, damages for breach of warranty must be “proximately caused by the breach”).

·                     In other words, to prevail on a contract claim, the claimant must establish that the damages it seeks would not have occurred but for the wrongful acts or omissions of defendant.  “Damages are limited to those losses and pecuniary disappointments that are ’caused by’ the breach.”  […]

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