Opinion
No. CV 07 5003985 S
July 2, 2007
MEMORANDUM OF DECISION RE APPLICATION FOR PREJUDGMENT REMEDY
In this case the real estate broker plaintiffs (Benedetto) seek a commission on a proposed sale of the defendants' (Porricelli) two grocery store businesses and five pieces of real estate. The exclusive right to sell agreement between the plaintiffs and defendants (Exhibit B) set the commission at 3.5% and stated at Paragraph 6 thereof "Said commission shall [sic] is only due upon the Closing of a property, and that Seller [the defendants] has the right at any time, for any reason whatsoever, in its sole and absolute discretion to accept or decline a potential purchaser for all (or less than all) of the properties, without incurring any liabilities under this agreement." The agreement was extended through July 1, 2006. (Exhibit C.)
Through the efforts of Benedetto, Porricelli negotiated with George Comfort and Sons, Inc. (Comfort) and Porricelli and Comfort signed a letter of intent on February 14, and 27, 2006 respectively. (Exhibit D.) The letter of intent stated:
This letter agreement summarizes only some of the business points [and] . . . other material terms of the proposed transaction are not yet agreed upon and must still be agreed upon to the mutual satisfaction of the parties, and, except as expressly set forth herein, no party shall have any obligation to the other.
(Emphasis in original.) By its terms, the letter of intent terminated in 30 days if there was not a definite purchase and sale agreement unless one party sought a ten-day extension. There was no purchase and sale agreement and no evidence of a request for extension.
According to Silvio Benedetto the deal between Porricelli and Comfort was agreed upon by March 31, 2006 when Comfort and Walter D'Agostino met and agreed that D'Agostino would operate the two food stores and later in the day when Porricelli, Comfort and Benedetto met and Benedetto concluded that all that needed to be done was to have the parties' lawyers "clean up" the purchase and sale contract and complete the due diligence procedures in 45 days. For a few days after March 31 Mr. Benedetto was not aware of any problems arising with the proposed transaction but suddenly in early April he was informed by Comfort's president, Peter Duncan, that Jerry Porricelli had cancelled the transaction.
A different perspective was offered by Jerry Porricelli. Faced with difficulties often encountered in a family business where various siblings and other family members have different expectations, and abilities, there was an impetus to sell the two food markets, although there was concern about the employees. However, Jerry Porricelli described himself as an unmotivated seller, particularly reluctant to sell the real estate. He also testified consistent with the language of the letter of intent that although the total price was pretty much agreed upon, several important issues remained unresolved in March 2006 in connection with the transaction with Comfort, including the structure of the purchase and sale for tax purposes, and the tax consequences. According to Jerry Porricelli, he communicated to Peter Duncan serious concerns about going ahead with the transaction a week before the March 31 meeting. These concerns were not resolved, and a few days after March 31 Porricelli e-mailed a message to Duncan that the deal was off.
A significant portion of the assets were in the name of Jerry Porricelli's mother who was elderly and infirm, and these assets would get a stepped up basis upon her death.
Concerns may have been heightened when Porricelli learned that D'Agostino was willing to buy the two grocery store businesses and lease the underlying real estate, an outcome preferable to Jerry Porricelli. There is a dispute between Jerry Porricelli and Silvio Benedetto as to when Porricelli learned this.
Benedetto has commenced this action seeking payment of a commission. It is the plaintiff's contention that he brought Porricelli and Comfort together and that the latter was a ready, willing and able buyer. Benedetto seeks a prejudgment remedy of $2 million in the form of an attachment on real property of the defendants. The underlying complaint alleges claims of breach of contract, interference with contract, a violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq. (CUTPA) bad faith, promissory estoppel and negligent misrepresentation.
Discussion
The right of a broker to recover a commission depends upon the terms of the contract with the seller. Revere Real Estate, Inc. v. Cerato, 186 Conn. 74, 77 (1982). It is well within the rights of the contracting parties to make a broker's right to a commission dependent on the consummation of the transaction and the full performance of a sales contract. Id., 78; Storm Associates v. Bumgold, 186 Conn. 237, 241 (1982); Stagg v. Lawton, 133 Conn. 203, 210-11 (1946).
In this case, the parties contracted in writing that a commission was only due upon the closing of the transaction, and the defendants had the right in their absolute discretion to decline a potential purchaser without incurring any obligation to pay a commission. Benedetto's testimony that he did not believe the language of the contract took away his right to a commission when he produced a ready, willing and able buyer evinces a serious misunderstanding of the import of Paragraph 6. This court concludes that the language of Paragraph 6, a bargained for provision, see Exhibit 1, does not mandate a commission where the transaction was not completed.
The cases cited by the plaintiff are not to the contrary. In William Raveis Real Estate, Inc. v. Stawski, 31 Conn.App. 608 (1993) the Appellate Court construed the listing agreement at issue to entitle the broker to a commission if either a buyer was produced who was ready, willing, and able to purchase the property, or the property was sold. Id., 610-11. Second, the Appellate Court found that the defendant "wrongfully" prevented the sale and should not benefit from such conduct, citing Burns v. Gould, 172 Conn. 210 (1977). Id., 612-13. Neither of those factors is present in this case. The exclusive right to sell agreement explicitly omitted the ready, willing and able basis for payment of a commission, and this court does not find Porricelli's conduct in not going through with the transaction wrongful.
In Finch v. Donella, 136 Conn. 621 (1950) the Connecticut Supreme Court held a commission to be payable when the broker produced a ready, willing, and able buyer who signed a contract to purchase the subject property. In that case, the seller obtained the prospective purchaser's subsequent relinquishment of any claims to the property, and then sold the property to another party. The case appears to stand for the unexceptional proposition that, absent other contractual provisions, a broker has earned a commission upon producing a ready, willing and able buyer, and this court concludes that Finch is not relevant to this case in which the written contract excludes the production of a ready, willing and able buyer as a basis for paying a commission.
The standard for determining a prejudgment remedy application is whether there is probable cause that a judgment in the amount sought or greater than that amount, taking into account any defenses, set-offs or counterclaims will be rendered for the plaintiff. General Statutes § 52-278d(a)(1). Probable cause is a bona fide belief in the existence of facts essential under the law for the action such as would warrant a reasonable person to entertain it. Probable cause does not require proof by a preponderance of the evidence. Three S. Development Co. v. Santore, 193 Conn. 174, 175 (1984). Although this is not a rigorous standard, the plaintiffs do not meet it on the record as it stands. Given the language of the listing agreement there is not probable cause for a breach of contract action nor for an interference with contract claim. The court also does not find any basis for a bad faith claim or CUTPA action. In fact, the entire action, including the negligent misrepresentation and promissory estoppel claims, is premised on the purported right to a commission upon the production of a ready, willing and able buyer. See Fifth Count, ¶ 18, Sixth Count, ¶¶ 18, 20. As noted above, that basis for payment of a commission was explicitly disavowed by the parties in Paragraph 6.
The application is denied.