Opinion
No. CV 02 0188007
October 21, 2004
MEMORANDUM OF DECISION
M.H. Heaven Real Estate, LLC, of Greenwich, and its principal, Marshal H. Heaven, a licensed real estate broker, are collectively referred to herein as either Heaven or the plaintiff in the singular. The plaintiff's operative complaint asserts causes of action for breach of contract and a violation of General Statutes § 42-110a, et seq., the Connecticut Unfair Trade Practices Act (CUTPA). Heaven initially filed this action against Timber Hill, LLC, (Timber Hill), Pickwick Plaza Associates, (Pickwick Plaza) and Albert E. Lawrence, III, but later withdrew as to Lawrence. The defendants filed a counterclaim seeking punitive damages and attorneys fees.
The plaintiff seeks real estate commissions from each of the two defendants based on two separate written agreements, one between Heaven and Pickwick Plaza, dated on or about June 29, 1999, and the other between Heaven and Timber Hill, entered into on or about February 14, 2000. Thus, the plaintiff's action is predicated on express written contracts alleged to comply with General Statutes § 20-325a. Subsection (b) of General Statutes § 20-325a provides, in pertinent part, that: "No person, licensed under the provisions of this chapter, shall commence or bring any action with respect to any acts done or services rendered . . . unless the acts or services were rendered pursuant to a contract or authorization from the person for whom the acts were done or services rendered."
General Statutes § 20-325a(b) requires that the listing agreement: (1) be in writing, (2) contain the names and addresses of all the parties thereto, (3) show the date on which such contract was entered into or such authorization given, (4) contain the conditions of such contract or authorization and (5) be signed by the owner and by the real estate broker or his authorized agent.
Subsection 6 relates to a broker's lien, which was waived by the broker in this case.
"The right of a real estate broker to recover a commission is dependent upon whether the listing agreement meets the requirements of § 20-325a(b) . . . Section 20-325a(b) conditions the recovery of a real estate sale commission on, inter alia, the existence of a contract or authorization for brokerage services that is in writing and signed by the real estate broker or the real estate broker's authorized agent . . . For many years after its enactment, the provisions of § 20-325a(b) were strictly construed and enforced . . . In 1994, the legislature relaxed the standard of strict compliance with § 20-325a with respect to several of its provisions. While a written agreement is still strictly required, Number 94-240 of the 1994 Public Acts amended § 20-325a such that a real estate broker may recover a sale commission if the broker has substantially complied with subdivisions (2) to (6), inclusive, of [§ 20-325a(b)] and it would be inequitable to deny recovery." (Citations omitted; internal quotation marks omitted.) Dow Condon, Inc. v. Muros North Ltd. Partnership, 69 Conn.App. 220, 226, 794 A.2d 554 (2002).
The evidence at this trial to the court established that Pickwick Plaza is an Illinois partnership which owns three large office buildings, One Pickwick Plaza, Two Pickwick Plaza and Three Pickwick Plaza, in Greenwich, consisting of more than 200,000 square feet. Timber Hill is a Connecticut company involved in the financial services business.
The written commission agreement between Heaven and Pickwick Plaza involved a lease to Timber Hill of approximately 2,290 square feet of office space on the second floor at Two Pickwick Plaza. In this lease, Pickwick Plaza recognized the plaintiff as the real estate broker and paid the plaintiff a commission. This agreement also provided that in the case of renewals, extensions, continuations, leases of additional available rental space and the exercise of any options to obtain additional space, Pickwick Plaza would pay Heaven additional broker commissions, subject to the requirement, however, that Heaven produce "a written letter from [Timber Hill] authorizing [Heaven] to negotiate the renewal, extension or lease of additional space."
The plaintiff was not able to obtain such a letter from Timber Hill despite his efforts to do so. The plaintiff therefore has not proved that he is entitled to recover a real estate commission from Pickwick Plaza because he was unable to satisfy the contingency in his agreement with that defendant. The plaintiff's contentions that Pickwick Plaza never gave him a copy of the commission agreement and that he was ill at the time he signed the agreement are not at all persuasive in the light of the plaintiff's vast experience as a real estate broker and his acumen in business.
The written agreement with Timber Hill recognized that it was presently a tenant on the second floor of Two Pickwick Plaza with a lease that was about to expire. The plaintiff was hired by Timber Hill to assist in obtaining "a new lease of all the rentable space on the second floor," and the plaintiff, if successful, would be entitled to a fee of $200,000. This agreement was in substantial compliance with the requirements of General Statutes § 20-325a(b).
In late 1999, without Heaven's authorization, Lawrence, the agent for Pickwick Plaza, communicated directly with Timber Hill's principal, Thomas Peterffy, about additional space, or renewing existing leases in Pickwick Plaza. In response to Heaven notifying Lawrence that this communication interfered with his relationship with his client, Timber Hill, Lawrence, on behalf of Pickwick Plaza, requested that Heaven obtain a letter from Timber Hill recognizing him as its broker in accordance with the requirement of Section F of Schedule A of the lease between Pickwick Plaza as lessor and Timber Hill as lessee. As noted previously, Heaven attempted to obtain such a letter from Timber Hill but was unsuccessful, which is why he is not entitled to a commission from Pickwick Plaza.
On or about June 26, 2000, an amendment was added to an existing lease between Pickwick Plaza and Timber Hill, thereby securing for Timber Hill all of the rentable space on the second floor of Two Pickwick Plaza except the property manager's space, plus an option to secure more space if it became available in the future.
Heaven alleges that pursuant to his separate agreement with Timber Hill, and as compensation for assisting in the negotiations between Pickwick Plaza and Timber Hill to obtain additional space, Timber Hill owes Heaven a commission in the amount of $200,000. Reference in that agreement was to "assist [Timber Hill] in negotiating with [Pickwick Plaza] for a new lease of all the rentable space of the second floor and related support space of Two Pickwick Plaza, Greenwich, Connecticut."
For purposes of clarification, it should be noted that the plaintiff's suit against Timber Hill for a brokerage commission pertains to the second floor of Two Pickwick Plaza, whereas the suit against Pickwick Plaza involved space leased by Timber Hill other than on that floor.
Timber Hill argues that it is not obligated to pay Heaven a commission because it did not get "all the rental space" on the second floor of Two Pickwick Plaza, referring to the fact that it was unable to lease the building manager's office, although it was given an option to do so, if the space became available.
The plaintiff has proved he is entitled to recover $200,000 from the defendant, Timber Hill, as this defendant did obtain all the second floor at Two Pickwick Plaza. The property manager's office is not deemed "rental space" because it was not offered for rent and it was used by the building manager to supervise the building. Moreover, the plaintiff's agreement with Timber Hill did not specify that the property managers space had to be included. Heaven's testimony that obtaining the manager's office was not a part of the understanding between himself and Timber Hill is more credible than some testimony to the contrary.
The plaintiff also seeks from Timber Hill prejudgment interest pursuant to General Statutes § 37-3a for money "wrongfully withheld." This statute provides, in relevant part, that "interest at the rate of ten percent a year, and no more, may be recovered and allowed in civil actions . . . as damages for the detention of money after it becomes payable." "[T]he 10 percent interest rate set forth in § 37-3a is not a fixed rate, but rather the maximum rate of interest that a trial court, in its discretion, can award." Gianetti v. Meszoros, 268 Conn. 424, 426, 842 A.2d 1124 (2004).
"Prejudgment interest pursuant to § 37-3a has been applied to breach of contract claims for liquidated damages, namely, where a party claims that a specified sum under the terms of a contract, or a sum to be determined by the terms of the contract, owed to that party has been detained by another party." Foley v. Huntington Co., 42 Conn.App. 712, 740, 682 A.2d 1026, cert. denied, 239 Conn. 931, 683 A.2d 397 (1996).
"To award § 37-3a interest, two components must be present. First, the claim to which the prejudgment interest attaches must be a claim for a liquidated sum of money wrongfully withheld and, second, the trier of fact must find, in its discretion, that equitable considerations warrant the payment of interest." Ceci Brothers, Inc. v. Five Twenty-One Corporation, 81 Conn.App. 419, 428, 840 A.2d 578, cert. denied, 268 Conn. 922 (2004); see also Northrup v. Allstate Insurance Co., 247 Conn. 242, 254-55, 720 A.2d 879 (1998).
"The fact that this dispute is `hotly contested' does not impact on the trial court's determination that the defendant wrongfully detained the [plaintiffs'] money." Solomon v. Hall-Brooke Foundation, Inc., 30 Conn.App. 136, 147, 619 A.2d 866 (1993). "[P]rejudgment interest is awarded in the discretion of the trial court to compensate the prevailing party for a delay in obtaining money that rightfully belongs to him." (Internal quotation marks omitted.) Northrop v. Allstate Insurance Co., supra, 247 Conn. 254-55. Prejudgment interest is justified in this case because it involves liquidated damages and a wrongful withholding of money that the plaintiff earned by his efforts in procuring additional space for Timber Hill on the second floor of Two Pickwick Plaza. Equitable considerations weigh in favor of the plaintiff because this defendant refuses to pay the plaintiff in accordance with their written agreement on the basis that it was not able to rent the property manager's offices which Timber Hill did not seek in the first place.
The plaintiff also alleges a violation of CUTPA. "Our Unfair Trade Practices Act, General Statutes § 42-110a et seq. (CUTPA), provides a remedy for a person who has sustained an ascertainable loss as a result of conduct that is immoral, unethical, oppressive or unscrupulous." Johnson Electric Co., Inc. v. Salce Contracting Associates, Inc., 72 Conn.App. 342, 343, 805 A.2d 735, cert. denied, 262 Conn. 922, 812 A.2d 864 (2002). Heaven alleges, among other things, that the defendants "met behind his back" in an effort to deceive him, that Lawrence's direct communications with Timber Hill interfered with his relationship with Timber Hill and that Timber Hill is refusing to pay him "under the guise of not getting all the rentable square feet on the second floor." Heaven claims an ascertainable loss as a result of the defendant's nonpayment of his commission.
"[I]n determining whether a practice violates CUTPA we have adopted the criteria set out in the cigarette rule by the federal trade commission for determining when a practice is unfair: (1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers, [competitors or other business persons] . . . All three criteria do not need to be satisfied to support a finding of [a violation of CUTPA]." (Internal quotation marks omitted.) Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 644, 804 A.2d 180 (2002).
When the superior courts have permitted a CUTPA cause of action based on a breach of contract, there generally has been some type of fraudulent behavior accompanying the breach or aggravating circumstances. See CNF Constructors, Inc. v. Culligan Water Conditioning Co., Superior Court, judicial district of New Haven at Meriden, Docket No. CV92-0242302 (September 9, 1993, Blue, J.) ( 8 CSCR 1057, 1058) (permitting the plaintiff to pursue a CUTPA cause of action based on breach of contract because the misrepresentations "induced the contract"). "The question therefore becomes whether the plaintiff has demonstrated substantial aggravating circumstances attending the breach of contract necessary to establish a CUTPA violation." Tork v. Best Restaurant Equipment Co., Superior Court, judicial district of New Haven at New Haven, Docket No. CV99-0430310 (October 21, 1999, Alander, J.). "A CUTPA claim may not be premised on a simple breach of contract, that is, one in which there are no aggravating factors under parts two or three of the cigarette rule." Rizzo Construction Pool Co. v. Riefler, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 391537 (December 3, 2003, Levin, J.).
Thus, this statute requires some unfairness, deception, immorality, unethical behavior or unscrupulous conduct. The evidence in this case supports a breach of contract by Timber Hill, but not a CUTPA claim.
Judgment enters in favor of the plaintiff to recover $200,000 from Timber Hill, plus prejudgment interest at 10% from July 27, 2000, the date of the invoice sent by the plaintiff to Timber Hill, to the date of this judgment, which amounts to $84,722, for a total judgment of $284,722, plus costs as taxed by the office of the chief clerk pursuant to General Statutes § 52-257 and Practice Book § 18-5. The defendants' counterclaims are dismissed for lack of proof.
William B. Lewis, Judge