Opinion
No. CV 09-5027657 S
June 25, 2010
MEMORANDUM OF DECISION
Introduction
This case involves a claim by the plaintiff for a commission pursuant to an exclusive right to sell/lease/exchange agreement regarding a property located at 72 Berlin Road in Cromwell.
In its four-count complaint dated February 12, 2009, the plaintiff, Sunset Gold Realty, LLC, seeks the payment of a commission under the agreement as well as damages for the defendants' default on their obligations, and damages pursuant to the Connecticut Unfair Trade Practices Act. The defendant, Premier Building Development, Inc., filed an answer, special defenses and counterclaim. In its special defenses, Premier claims that, at no time prior to the commencement of this suit, did the plaintiff identify a buyer ready, willing and able to purchase the property or a tenant ready, willing and able to lease any portion of the property. In its counterclaim, Premier claims that the plaintiff brought a previous action asserting essentially the same claims which Premier claims was vexatious. The defendant, Cobblestone Associates, LLC, filed an answer and special defense in which it claims that the plaintiff did not comply with the conditions of the listing agreement.
Trial on this matter was held before the court on March 23, 2010. At that time the court heard testimony from Stephen Zacchio, a real estate broker for Sunset Realty; Mel Eisen, a member of Cobblestone; and Patrick Snow, the sole shareholder of Premier Building and also a member of Cobblestone. The court also received numerous exhibits. Post-trial briefs were filed on April 16, 2010.
Admissions from the Pleadings
The following facts are alleged in the complaint and admitted by the defendants: At all times, Premier Building Development, Inc. was a Connecticut Corporation with a principal place of business located at 110 Court Street, Cromwell, Connecticut. Complaint, First Count, Paragraph 2. "The Defendant Premier executed an exclusive right to sell/lease/exchange agreement on or about August 5, 2005 with the Plaintiff." Complaint, First Count, Paragraph 3. "The listing agreement concerned real property located at 72 Berlin Road, Cromwell Connecticut . . ." Complaint, First Count, Paragraph 4. At all times, the defendant, Cobblestone Associates, LLC, was a Connecticut limited liability company with a principal place of business located at 110 Court Street, Cromwell, Connecticut. Complaint, Second Count, Paragraph 5. On or about May 4, 2006 the defendant, Premier Building and Development, Inc., conveyed its interest in 72 Berlin Road, Cromwell, Connecticut to Cobblestone Associates, LLC. Complaint, Second Count, Paragraph 7. "On August 3, 2006, the Plaintiff furnished the Defendants with a list of potential tenants with interest in leasing [certain] properties [in Cromwell] which interest was generated through the Plaintiff's efforts." Complaint, Third Count, Paragraph 5. The following facts are alleged by the defendant, Premier Building, in the counterclaim, and admitted by the plaintiff: "On or about August 10, 2006, the Plaintiff, through its current counsel, caused a summons and complaint to be issued and served on the Defendant, Premier Building Development, Inc. (`Premier') returnable to the Superior Court, Judicial District of Middlesex at Middletown September 5, 2006." Counterclaim, paragraph 1. "After significant proceedings before the Court, on July 21, 2008, the day before Plaintiff's original action was scheduled for trial, the Plaintiff withdrew the original cause of action as to all defendants." Counterclaim, paragraph 4.
Findings of Fact
Based upon a preponderance of the evidence the court finds the following additional facts: After discussions between Stephen Zacchio, a real estate broker for Sunset Realty, and Patrick Snow, the sole shareholder of Premier Building, on August 5, 2005, Premier executed an exclusive right to sell/lease/exchange with Sunset Gold Realty regarding the property at 72 Berlin Road. At that time Premier did not own the property but had an option to purchase it. The listing was for the period of time August 5, 2005 through August 5, 2006. Subsequently, Zacchio approached several prospective tenants including CVS. He contacted CVS's preferred developer, Gershwin Brown, through David Morello, and showed the property to them. G.B. New England 2, LLC, through David Morello and by a letter of intent dated October 31, 2005, notified Snow that they intended to enter into negotiations toward a ground lease for 72 Berlin Road and indicated that a CVS store would be constructed and operated on the property. The letter listed the landlord as Premier Building and Development, Inc. or Cobblestone Associates, LLC. Patrick Snow signed it as agreed to by the landlord on behalf Cobblestone Associates, LLC as its managing member. On May 4, 2006, Premier acquired title to the property and, on that same day, Premier, acting through its president, Snow, conveyed the property to Cobblestone Associates, LLC. Eventually CVS approved the site and a ground lease for a portion of 72 Berlin Road was executed effective October 2, 2006 between Cobblestone Associates, LLC and Connecticut CVS Pharmacy, LLC. The plaintiff subsequently requested that he be paid his commission of $137,500, which the defendants refused. The amount of the commission, if due, is not disputed by the defendants.
Discussion The Complaint
The agreement between Premier and the plaintiff provides that the plaintiff "earn[s] [its] commission if and when (a) during the term of this Agreement a prospective purchaser or tenant is ready, willing and able to purchase, lease or exchange the Property for the price(s) shown in Paragraph 4, or at any other price or terms acceptable to [Premier]; or (b) [Premier] breach[s] a legally binding agreement for the sale, lease or exchange of the Property or [Premier] and a prospective purchaser or tenant mutually rescind such an agreement; or (c) within 12 months after the expiration of the term of this Agreement, [Premier] sell[s], lease[s] or exchange[s] the Property to someone who is introduced to the Property during the term of their Agreement and whose name is included in a written list of prospects that [Sunset Realty] give[s] [Premier] 15 days after the termination of this Agreement." Exhibit 1.
The plaintiff claims that it is entitled to a commission under the agreement because it procured a tenant which was ready, willing and able to lease the premises on terms acceptable to Premier. Premier does not dispute that the plaintiff procured the eventual tenant, CVS, but argues that the plaintiff did not procure a tenant ready, willing and able to lease the premises during the term of the agreement since there was no lease executed during that time. The plaintiff argues that the contract does not require that a lease be executed during the term of the agreement as long as the broker has brought a willing and able tenant to the owner during that term. "The parties may provide, in the listing contract, that the broker will have earned his commission, in advance of the execution of a sales contract, by procuring a purchaser who is ready, willing, and able to buy upon terms and conditions acceptable to the owner." (Citations omitted.) William Pitt, Inc. v. Taylor, 186 Conn. 82, 84-5 (1982). The agreement here clearly provides that a commission is "earned," during the term of the agreement and prior to the execution of an actual lease, when a prospective purchaser or tenant is ready, willing and able to purchase, lease or exchange the property for the price(s) shown in the agreement, or at any other price or terms acceptable to Premier. The actual payment of the commission, pursuant to the agreement, was to be made at the time of the execution of the lease document. Paragraph 7 of the agreement provides that "[Premier] will pay [Sunset Gold] . . . lease commissions at the execution of the lease document and as set forth in Paragraph 5F." Exhibit 1. Here it is clear that the actions of the plaintiff brought a tenant to the defendant that was ready, willing and able to lease the property. The eventual execution of the lease by CVS is evidence of the procurement by the plaintiff of a ready, willing, and able tenant on terms acceptable to the landlord. Revere Real Estate, Inc. v. Cerato, 186 Conn. 74, 78 (1982).
The defendant argues that since CVS was not listed on the written list of prospects that the plaintiff is not due a commission for a lease executed with Cobblestone after the termination of the agreement. The agreement provides that the plaintiff has earned a commission if within 12 months after the expiration of the term of the agreement Premier leases the property to someone who was introduced to the property during the term of the Agreement and whose name was included in a written list of prospects that the plaintiff gave Premier 15 days after the termination of the Agreement. Here, however, over nine months prior to the expiration of the agreement, a letter of intent had been signed by Premier or Cobblestone as landlord with a tenant which indicated that it would be developing the property for occupation by CVS. The letter of intent also stated that "[i]t was intended to impose upon the parties an obligation to negotiate, in good faith, a Ground Lease." Exhibit 9. As indicated above, the fact that such a lease was later entered into is evidence that Sunset Realty had brought to Premier, during the term of the agreement, a tenant who was ready, willing and able to lease the premises. Therefore the plaintiff's right to a commission arises out of the provisions of paragraph 6(a) and the fact that CVS was not listed on the list of prospects which would allow for recovery under the provisions of subdivision (c) of that paragraph is of no effect. In any event, as the Appellate Session of the Superior Court stated in DeForest Industries, Inc. v. Gaetano, 38 Conn.Sup. 703, 706-7 (1983): "The purpose of a notice requirement such as that contained in the extension clause of this listing agreement is to make an owner of property aware of the parties with whom the real estate broker has been dealing. Being aware of this, an owner of property will not unknowingly enter into a transaction wherein an unexpected claim for a commission will be asserted by a real estate broker. Normally, in order to claim the benefit of such an extension clause, a broker is required to adhere strictly to the notice provisions of the clause. In cases where an owner of property has actual knowledge that the party with whom he is dealing was actively solicited by the broker, however, the courts have generally held that a broker is entitled to a commission even though the broker did not adhere to the formal requirements of the notice provisions in an extension clause. See note, 51 A.L.R.3d 1149. This case falls into the latter category." Similarly, this case so falls.
The defendants argue that even if the court finds that the plaintiff is due a commission it would be due only from the party to the listing agreement, Premier, and not the defendant Cobblestone because there was no writing signed by Cobblestone authorizing the plaintiff to broker the property. In this regard the following facts are pertinent: Premier did not own the property at the time it entered into the agreement with the plaintiff, but had an option to purchase the property. When G.B. New England 2, LLC, provided its letter of intent in October of 2005, that letter was amended to indicate that the landlord would be either Premier or Cobblestone. Snow established Cobblestone in order to secure financing for the project since Premier did not have the funds to finance the project. The defendants admit that Snow is the sole shareholder of Premier and one of four equal members of Cobblestone. Answer of the Defendant, Cobblestone Associates, LLC, Second Count, paragraph 8. When Premier acquired title to the property on May 4, 2006, that same day, Premier, acting through its president, Snow, conveyed the property to Cobblestone Associates, LLC. The listing agreement provides that it will "be binding upon the parties and their heirs, successors, assigns, and personal representatives." Exhibit 1. Snow acknowledged that CVS was first introduced to him as a possible tenant of the property by Zacchio of Sunset Realty. The evidence establishes that the principal involved in this matter, Snow, orchestrated the conveyance of the property to another entity in order to be able to carry out the project and then entered into a lease with CVS. Thus "Cobblestone," when it entered into the lease with CVS, was indeed the corporate "successor" to the owner of the property, "Premier," as stated in the listing agreement, and became obligated to the terms of that agreement. Lastly, Eisen, one of the other three members of Cobblestone admitted to Zacchio in September of 2006 that "[I]f and when a deal occurs with CVS, you will get paid what you are entitled to . . ." Exhibit 13.
Cobblestone cites Location Realty, Inc. v. Colaccino, 287 Conn. 706 (2008), as support for its claim that it is not liable under the listing agreement to pay the commission because it was not a signatory to the agreement. In Colaccino the plaintiff real estate broker entered into a listing agreement with a party who had an option to purchase and develop certain property in which the broker would receive commissions for obtaining tenants for the property. That party subsequently decided not to pursue the project and his option to purchase expired. The defendants then entered into a purchase and sale agreement with the owner of the property, and later entered into leases with tenants that the plaintiff had brought to the property under the listing agreement with the original option holder. The plaintiff then demanded that the defendants pay its commission which they refused because there was no agreement between them. The Supreme Court held that the plaintiff could not recover because there was no agreement which substantially complied with the requirements of General Statutes § 20-235a, regarding listing agreements for commercial real estate transactions. The decision in Colaccino is distinguishable from the situation here because there was no indication in that case that the entity that bought the property was related in any way to the party with whom the plaintiff had entered into the initial listing agreement. Although the Court noted that the listing agreement there was binding on "assigns," the Court found that there was nothing designating the defendants as "assigns." Id., p. 722, n. 14. As noted above, the evidence here supports the conclusion that Cobblestone was a "successor" to Premier and those bound by the listing agreement.
The Counterclaim
In its counterclaim Premier seeks damages for vexatious litigation based on the action brought by the plaintiff against Premier in August 2006 seeking commissions under a listing agreement regarding certain properties. "Vexatious litigation requires a plaintiff to establish that: (1) the previous lawsuit or action was initiated or procured by the defendant against the plaintiff; (2) the defendant acted with malice, primarily for a purpose other than that of bringing an offender to justice; (3) the defendant acted without probable cause; and (4) the proceeding terminated in the plaintiff's favor." (Citations omitted.) Rioux v. Barry, 283 Conn. 338, 347 (2007). The plaintiff argues that the defendant has not established the last criteria, that is, that the previous litigation terminated in the defendant's favor. Although it is admitted that that action was withdrawn, the plaintiff claims that it was withdrawn pursuant to the agreement of the parties to substitute this action. By letter dated July 21, 2008, Cobblestone's counsel indicated that the withdrawal was by consent and listed certain terms of "[o]ur agreement," including that the plaintiff would prepare a new summons and complaint with regard to the claim of the plaintiff in connection with the ground lease between Cobblestone and CVS; that Cobblestone would not contest venue, would request court annexed mediation of the issues and would not assert any statute of limitations arising from the withdrawal and later filing of the new lawsuit. Exhibit 11. This court agrees that, in light of the conditions set forth in this letter, the withdrawal of the lawsuit was not without consideration and therefore the criteria of a vexatious litigation claim have not been met.
"Courts have taken three approaches to the `termination' requirement. The first, and most rigid, requires that the action have gone to judgment resulting in a verdict of acquittal, in the criminal context, or no liability, in the civil context . . . the second permits a vexatious suit action even if the underlying action was merely withdrawn so long as the plaintiff can demonstrate that the withdrawal took place under circumstances creating an inference that the plaintiff was innocent, in the criminal context, or not liable, in the civil context . . . The third approach, while nominally adhering to the `favorable termination' requirement, in the sense that any outcome other than a finding of guilt or liability is favorable to the accused party, permits a malicious prosecution or vexatious suit action whenever the underlying proceeding was abandoned or withdrawn without consideration, that is, withdrawn without either a plea bargain or a settlement favoring the party originating the action . . . Notwithstanding our recitation of the term `favorable termination' (emphasis added) in Vandersluis and a few other cases . . . we have never required a plaintiff in a vexatious suit action to prove a favorable termination either by pointing to an adjudication on the merits in his favor or by showing affirmatively that the circumstances of the termination indicated his innocence or nonliability, so long as the proceeding has terminated without consideration." (Footnotes and citations omitted.) DeLaurentis v. New Haven, 220 Conn. 225, 250-1 (1991). Here the previous lawsuit was terminated by a withdrawal but with consideration.
Therefore the defendant, Premier, cannot prevail on its counterclaim.
Conclusion
The court finds that the plaintiff is entitled to judgment in the amount of $137,500 plus attorneys fees and costs, as provided in the listing agreement, against both defendants. The clerk shall set this matter for further proceedings upon the submission by the plaintiff of affidavits regarding its claims for attorneys fees and costs. Judgment shall also enter for the plaintiff, Sunset Gold, on the defendant, Premier's, counterclaim.
The listing agreement provides that: "[Premier] agree[s] to pay [Sunset Gold's] costs and expenses, including court costs and reasonable attorneys fees, in any successful action by [Sunset Gold] to collect [its] commission from [Premier]." Exhibit 1.