Opinion
FBTCV166061241S
07-25-2019
NRT NEW ENGLAND, LLC dba Coldwell Baker Residential Brokerage v. Salvatore R. LONGO et al.
UNPUBLISHED OPINION
OPINION
Alfred J. Jennings, Jr., Judge
The court heard reargument on May 21, 2019 as to the two points raised by the defendant Salvatore R. Longo ("defendant") in his May 1, 2019 Motion to Reargue the Trial Court’s Findings That the Plaintiff was a Licensed Real Estate Broker (No.134) and supporting Memorandum of Law (No.135). The two points are: (1) that the plaintiff neither alleged nor proved that it was a licensed real estate broker in the state of Connecticut; and (2) that the listing agreement between the parties is defective in that the signer on behalf of the plaintiff was not proven to be a licensed agent or broker.
I. Licensee Status of the Plaintiff
The only plaintiff in this case is NRT New England, LLC d/b/a Coldwell Banker Residential Brokerage. The Amended Complaint dated May 10, 2017 alleges at paragraph 1 that: "At all times mentioned herein, the Plaintiff NRT New England, LLC d/b/a Coldwell Banker (hereinafter ‘Coldwell Banker’) was a corporation authorized and licensed to do business in the State of Connecticut with a Sales Office at 191 Mason Street, Greenwich, Connecticut 06830." The defendant filed no Request to Revise as to the nature of the license alleged, with the result that the plaintiff was free to offer evidence of any Connecticut license held by the plaintiff. The defendants in their Answer pleaded lack of sufficient information to form a belief as to the allegations of paragraph 1 of the Amended Complaint and left plaintiff to its proof.
The defendant raises no issue as to the apparent discrepancy between the plaintiff being alleged to be both an "LLC" and a "corporation." The distinction is of no moment in the context of this licensing issue because the real estate broker licensing statute, Conn. Gen. Stat. § 20-312(c) applies without distinction to "A corporation, limited liability company, partnership, or limited liability partnership desiring a real estate broker license ..."
Upon reconsideration and review of the trial evidence following reargument the court finds there is no evidence of a real estate brokerage license having been issued at any relevant time by the Commissioner of Consumer Protection in the name of plaintiff NRT New England, LLC using the trade name Coldwell Banker Residential Real Estate or any other trade name. To the extent that this court found in the Memorandum of Decision of April 17, 2019 that the plaintiff NRT New England, LLC was licensed as a real estate broker, that finding was in error and is revoked. The question remains, however, whether or not the plaintiff is barred from bringing this action or recovering damages consisting of a real estate sales commission because it failed to meet its burden of proving that it held a license in its limited liability company name as a real estate broker at the relevant time period.
Conn. Gen. Stat. § 20-312(b) provides, in relevant part:
The practice of, or the offer to practice real estate brokerage in this state by individual licensed real estate brokers or real estate salespersons as a corporation, limited liability company, partnership, or limited liability partnership, a material part of the business of which includes real estate brokerage, is permitted, provided: (1) the personnel of such corporation, limited liability company, partnership, or limited liability partnership who engage in the real estate brokerage business as real estate brokers or real estate salespersons, and the real estate brokers whose ownership, control, membership, or partnership interest is credited toward the requirements of subdivision (3) of this subsection, are licensed or exempt from license under the chapter; (2) the corporation, limited liability company, partnership, or limited liability partnership has been issued a real estate broker license by the commission as provided in this section and has paid the license or renewal fee required for a real estate broker’s license as set forth in section 20-314; and (3) except for a publicly traded corporation, ... [ownership or control of the applicant entity must consist of at least fifty-one percent ownership by one or more real estate brokers].Conn. Gen. Stat. § 20-312(c) provides:
A corporation, limited liability company, partnership, or limited liability partnership, desiring a real estate broker license shall file with the commissioner an application on such forms and in such manner as prescribed by the Commissioner of Consumer Protection. Each such corporation, limited liability company, partnership, or limited liability partnership, shall file with the commission a designation of at least one individual licensed or qualified to be licensed as a real estate broker in this state who shall be in charge of the real estate brokerage business of such corporation, limited liability company, partnership, or limited liability partnership in this state. Such corporation, limited liability company, partnership, or limited liability partnership shall notify the commissioner of any change in such designation not later than thirty days after such change becomes effective.
The licensing scheme for a real estate brokerage firm organized as a corporation, limited liability company, partnership, or limited liability partnership, such as the plaintiff NRT New England, LLC d/b/a Coldwell Banker Residential Brokerage therefore involves three layers of licensing: (1) the firm personnel who engage in the real estate brokerage business as brokers or salespersons or must be individually licensed; (2) the owner-brokers whose ownership, control, membership, or partnership interest is credited toward the 51% required broker ownership of subdivision (3) subsection (c) of § 20-312a must be individually licensed; and (3) the corporation, limited liability company, partnership, or limited liability partnership must itself have been issued a real estate broker license by the commission and have paid the required license or renewal fee. Additionally, the licensed broker in charge of the real estate brokerage business of the corporation, limited liability company, partnership, or limited liability partnership in this state must be designated by the firm with the Commissioner of Consumer Protection as the broker in charge of the firm’s Connecticut real estate brokerage business. The only step claimed to be missing in the case of the plaintiff NRT New England, LLC d/b/a Coldwell Banker Residential Brokerage is the third step- the issuance of a broker license to the limited liability company itself.
Section 20-314(c) requires each applicant for a license as a real estate broker or salesperson to successfully pass a written examination administered by the Department of Consumer Protection. Under Section 20-314(d)(1) an applicant for a real estate broker’s license, before being admitted to such examination, must prove to the satisfaction of the Commissioner of Consumer Protection, unless he or she can successfully demonstrate equivalent experience or education, that the applicant:
(A) (i) has been actively engaged for at least two years as a licensed real estate salesperson under the supervision of a licensed real estate salesperson in this state. (ii) has successfully completed a course approved by the commission or commissioner in real estate principles and practices of at least sixty classroom hours of study; (iii) has successfully completed a course approved by the commission or commissioner in real estate legal compliance consisting of al least fifteen hours; (iv) has successfully completed a course approved by the commission or commissioner in real estate in real estate brokerage principles and practices consisting of at least fifteen classroom hours; and (v) has successfully completed two elective courses, each consisting of fifteen classroom hours of study, as prescribed by the commission or the commissioner.
Under Section 20-314(d)(3) an applicant for a real estate salesperson’s license, before being admitted to such examination, prove to the satisfaction of the commission or the Commissioner of Consumer Protection, that the applicant, unless he or she can successfully demonstrate equivalent experience or education, (A) has successfully completed a course approved by the commission or commissioner in real estate principles and practices consisting of at least sixty classroom hours of study.
The only requirements for the issuance of a broker’s license directly to a real estate firm organized as a corporation, limited liability company, partnership, or limited liability partnership are that the applicant shall have submitted an application on a form approved by the Commissioner and shall have designated one licensed individual broker as the person in charge of its real estate business in Connecticut (§ 20-312(c)); that it shall have paid the license or renewal fee required for a real estate broker’s license (§ 20-312(b)(2); and that, unless publically owned, its capital ownership must consist of at least fifty-one percent real estate brokers (§ 20-312(b)(3)). There is no experience, education, or examination requirement applicable to the entity itself or the principals of a license applicant which is a corporation, association or partnership, although the commission may require such information as it deems desirable as to the honesty, truthfulness, integrity, and competence as to the officers of such applicant. (§ 20-314(b)).
Conn. Gen. Stat. § 20-325a, subsection (a) provides:
No person who is not licensed under the provisions of this chapter, and who was not so licensed at the time the person performed the acts or rendered the services for which recovery is sought, shall commence or bring any action in any court of this state, after October 1, 1971, to recover any commission, compensation, or other payment with respect to any act done, or service rendered by the person, the doing or rendering of which is prohibited under the provisions except by persons duly licensed under this chapter.
The defendant argues that the plaintiff limited liability company, having failed to prove that it held a real estate broker’s license at the time in question, lacks standing under § 20-325a(a) to bring or maintain this action. The argument must be analyzed, however, not only under subsection (a) of § 20-325a, but under judicial interpretation and later amendments to the statute.
Section 20-325a(b) provides:
No person, licensed under the provisions of this chapter, shall commence or bring any action with respect to any acts done or services rendered after October 1, 1995 as set forth in subsection (a), 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. To satisfy the requirements of this subsection any contract or authorization shall: (1) Be in writing; (2) contain the names and addresses of the real estate broker performing the services and the name of the person or persons for whom the acts were done or services rendered; (3) show the date on which such contract was entered into or such authorization was given; (4) contain the conditions of such contract or authorization; (5) be signed by such real estate broker or the real estate broker’s authorized agent; (6) if such contract or authorization pertain to any real property, include the following statement: "THE REAL ESTATE BROKER MAY BE ENTITLED TO CERTAIN LIEN RIGHTS PURSUANT TO SECTION 20-325a OF THE CONNECTICUT GENERAL STATUTES; and (7) be signed by the person or persons for whom the acts were done or services rendered or by an agent authorized to act on behalf of such person or persons pursuant to a written document executed in the manner provided for conveyances in section 47-5, except if the acts to be done or services rendered involve a listing contract for the sale of land containing any building or structure occupied or intended to be occupied by more than four families, the listing contract shall be signed by the owner of the real estate or by the agent authorized to act on behalf of such owner pursuant to a written document executed in the manner provided for conveyances in section 47-5.
The statute was amended again effective October 1, 2000 by § 20-325a(c), providing:
Notwithstanding the provisions of subsection (b) of this section, no person licensed under the provisions of this chapter shall commence or bring any action with respect to any acts done or services rendered after October 1, 2000, in a commercial real estate transaction, unless the acts or services were rendered pursuant to (1) a contract or authorization meeting the requirements of subsection (b) of this section, or (2) a memorandum, letter or other writing stating for whom the licensee will act or has acted, signed by the party for whom the licensee will act or has acted, in the commercial real estate transaction, the duration of the authorization and the amount of any compensation payable to the licensee, provided (A) the licensee provides written notice to the party, substantially similar to the following: "THE REAL ESTATE BROKER MAY BE ENTITLED TO CERTAIN LIEN RIGHTS PURSUANT TO SECTION 20-325a OF THE CONNECTICUT GENERAL STATUTES," AND (B) the notice is provided at or before the execution of the contract, authorization, memorandum, letter or other writing, and may be made part of the contract, authorization, memorandum, letter or other writing, organized as a corporation, limited liability company, partnership, or limited liability partnership.
Plaintiff also cites Section 20-325(a)(d) which provides,
Nothing in subsection (a) of this section, subdivisions (2) to (7), inclusive, of subsection (b) of this section or subsection (c) of this section shall prevent any licensee from recovering any commission, compensation, or other payment with respect to any acts done or service rendered, if it would be inequitable to deny such recovery and the licensee (1) has substantially complied with subdivisions (2) to (7), inclusive of subsection (b) of this section, or (2) with respect to a commercial real estate transaction, has substantially complied with subdivisions (2) to (6), inclusive, of subsection (b) of this section or subdivision (2) of subsection (c) of this section.
Defendant Longo’s argument that the plaintiff limited liability company’s failure to hold a real estate broker’s license in its company name deprives it of standing to maintain this action under Conn. Gen. § 20-325a, subsection (a), quoted above at page 5, depends on a literal and strict interpretation of subsection (a). The Supreme Court has directly addressed the intersection of § § 20-312 and 20-325a subsections (a) and (c) in the context of strict literal interpretation of subsection (a) in light of subsequent legislation. The result disfavors the strict and literal interpretation advanced by the defendant.
In Location Realty, Inc. v. General Financial Services, Inc., 273 Conn. 766 (2005) the plaintiff corporation suing for its commission was a licensed real estate broker at the time of rendering the brokerage services at issue, but its president Michael C. O’Brien who had actively participated in the plaintiff’s real estate business and had been instrumental in securing the listing agreement in question held a license as a real estate salesperson at the relevant time and did not hold a broker’s license as required by Section 20-312(b)(1). Over the vigorous dissent of Chief Justice Sullivan, the Court reversed the summary judgment which the trial court had entered for the defendant customer, holding that, although the corporate real estate firm was "not duly licensed" and its license was in fact "invalid" because its president was not personally licensed, "that fact alone is not sufficient to deny the plaintiff the right to recover the commission it claims." (273 Conn. at 773.) After reviewing the more demanding experience and education requirements for a broker’s license as compared to the requirements of the salesperson’s license held by O’Brein, and the legislative purpose of the licensing requirements to protect the public and to ensure that the public is dealing with honest, truthful, and competent real estate brokers and salespersons, the Court concluded that "but for the possible application of General Statutes (Rev. to 1997) § 20-325a(c), the plaintiff would be barred from bringing this action. The ‘but for’ however, significantly alters the analysis of this case." Id. The court reviewed the language of § 20-325a(c) (quoted, supra, at p. 6) and the legislative history of that 1994 enactment as proposed by a task force comprised of representatives of the Department of Consumer Protection, the Real Estate Commission, and the Connecticut Association of Realtors, which proposal was brought forth in response to certain decisions of the Supreme Court that had strictly construed the requirements of § 20-325a(b) (quoted, supra, at pp. 5-6), namely the formal requirements of a listing agreement, and had denied brokers the right to recover for failure of strict compliance therewith. See, e.g., M.R. Wachob Co. v. MBM Partnership, 232 Conn. 645, 658-62 (1995). The Court noted that the history indicated that the task force that drafted the legislation considered that the strict construction of subsection(b) of § 20-325a had resulted in some cases of unjust enrichment.
The Location Realty court concluded:
This history, in turn, also suggests that the question of recovery, despite a failure to comply strictly with subsection (a) of § 20-535a, must be determined on the basis of all the facts and circumstances of the case ...
One of those facts and circumstances is, of course, that the licensee may not have been duly licensed, but that fact alone is not sufficient to deny recovery. (Emphasis added. Citation omitted.) 273 Conn. at 780-81.
The argument relied upon by the defendant Longo is based exactly on plaintiff’s" failure to comply strictly with subsection (a) of § 20-325a" in that the plaintiff NRT New England, LLC d/b/a Coldwell Banker Residential Brokerage did not prove that it held a license as a real estate broker while rendering brokerage services to the defendant. That alone is insufficient to set aside or vacate the judgment entered for the plaintiff in this case. The issue is now governed by subsection (d) of § 20-325a, quoted in full at page 7 which commences with an admonition that "Nothing in subsection (a) of this section ..." shall prevent any licensee from recovering a commission if it would be inequitable to deny such recovery (prong 1) and if there has been substantial compliance with subdivisions (2) to (7), inclusive, of subsection (b) of § 20-325a or, with respect to a commercial real estate transaction (such as the court finds the transaction involved in this case to be) substantial compliance with subsections (2) to (6), inclusive, of subsection (b) or subdivision (2) of subsection (c) of § 20-325a (prong 2). And, Location Realty has established that a failure to be duly licensed is not a disqualifying factor but rather is only one of the facts and circumstances to be considered in determining if it would be inequitable to deny recovery of the claimed commission.
Based on the trial record, the court finds that it would be inequitable to deny the plaintiff recovery of the commission it claims in this case. It did substantially comply with the Section 20-312 licensing requirements. All of the plaintiff’s representatives involved in the transaction there was undisputed evidence that Brendan Grady, a licensed broker, had been designated with the State of Connecticut as plaintiff’s "designated broker" of record for its real estate brokerage business in Connecticut. As licensed professionals it can be presumed that they met the experience and educational requirements of the statute and passed the required written examinations. The only license not proved was the license of the limited liability company itself as required by § 20-312(b)(2) which carries no experience or educational qualifications and no requirement of anyone passing a written examination, and therefore contributes marginally if at all to the legislative purpose of the licensing requirements to protect the public and to ensure that the public is dealing with honest, truthful, and competent real estate brokers and salespersons. It would be inequitable to deny recovery of a commission on the mere formality of the brokerage firm itself not proving that it had such a license, when it and its personnel have otherwise complied with all applicable and more stringent licensing requirements.
The court also finds that it would be inequitable to deny plaintiff recovery of the commission it seeks because, as found in the Memorandum of Decision dated April 17, 2019 at pp. 24-25, the plaintiff’s licensed salesperson Joseph Poricelli was during the month of September 2014 heavily involved on behalf of defendant Longo in negotiations with the ultimate purchaser Empire Residential, LLC ("Empire") to settle disputes which had arisen between buyer and seller. At about the end of September 2014, with a full month remaining on plaintiff’s Exclusive Right to Sell Listing Agreement, defendant Longo instructed Empire to not to speak any further with Coldwell Banker or Joseph Poricelli but to deal only directly with himself, defendant Longo, which took plaintiff out of the crucial negotiations during the last full month of its Exclusive Right to Sell Listing Agreement. This egregious conduct amounts to further inequitable conduct figuring in plaintiff’s entitlement to its claimed commission.
Prong (1) of § 25-325a(d) has been satisfied.
The court also finds based on the trial record that prong (2) of § 20-325a(d) has also been satisfied. The listing agreements between the parties were admitted in evidence at trial as Plaintiff’s Exhibit 4, Exhibit 8, and Exhibit 9. The court has reviewed those listing agreements and finds as required by subsection (d) that they substantially comply with subdivisions (2) to (6), inclusive of subsection (b) of § 25-325a and with subdivision (2) of subsection (c) of § 25-325a. Prong (2) of § 25-325a(d) has also been satisfied The plaintiff is therefore not barred from recovering its claimed commission by the alleged bar of Section 25-325a(a) as claimed by the defendant.
II. Validity of Coldwell Banker Signature on the Listing Agreements
Defendant Longo argues that the Coldwell Banker signature on the Listing Agreements between the parties is defective in that the signer on behalf of the plaintiff was not proven to be a licensed agent or broker.
The court finds on undisputed evidence that the Exclusive Right to Sell Agreements (Plaintiff’s Exhibits 4, 8, and 9) are signed on behalf of the plaintiff by Patricia Brandrup as Assistant Manager of the Coldwell Banker Greenwich office. (Memorandum of Decision, April 17, 2019, page 9.) There is no evidence that Ms. Brandup is or was at the time of execution a licensed real estate broker or salesperson. Defendant Longo argues that the Agreements are invalid because there is no proof that the plaintiff’s signatory was licensed, but the defendant has cited no authority for that proposition and the court is unaware of any such requirement. Conn. Gen. Stat. § 20-325a, subsection (b) requires that the listing contract "(5) be signed by the real estate broker or the broker’s authorized agent." As Assistant Manager of the Coldwell Banker Greenwich office Particia Brandrup would have presumptive authority to sign listing agreements entered into by licensed salespersons working out of that office. Defendant has offered no evidence to the contrary. This claim lacks validity.
III. Order Following Reargument
For the foregoing reasons the Judgment entered by this court on April 17, 2019, and the Order entered at that time as to Disbursement of the Escrow Fund shall remain in full force and effect.