Opinion
No. CV 04-0834966
October 3, 2006
MEMORANDUM OF DECISION
In her ten-count second amended complaint dated September 16, 2005, plaintiff Alyssa Peterson seeks to recover from defendant Hannah Woldeyohannes damages allegedly sustained when she was deprived of the right to jointly purchase with the defendant six condominium units at Laurelhart Condominiums, 230-32 Farmington Avenue in Hartford in violation of a claimed oral partnership agreement between plaintiff and defendant. The units were purchased by A to Z, LLC of which the defendant was sole owner.
Count one seeks a declaratory judgment that an oral partnership existed between plaintiff and defendant; count two seeks damages for the deprivation of the benefit of jointly acquiring the six units; count three alleges breach of a fiduciary duty; count four, intentional interference with a contract; count five seeks a constructive trust of the units; count six claims unjust enrichment; count seven alleges bad faith; count eight alleges fraud; count nine seeks to pierce the corporate veil of A to Z, LLC; count ten alleges conversion and civil theft.
Defendant claims there was never an oral partnership and filed several special defenses related to documents involved in this case and the statute of frauds.
Trial took place on September 21, 22, 29, October 27, and or November 7, 8, 2005. The parties were invited to file post-0trial memorandums of law and proposed findings of fact and plaintiff filed a memorandum on March 2, 2006.
I.
This case came to the trial court on September 21, 2005 on the Hearings in Damages calendar, a default having entered against the defendant one week earlier for failure to comply with discovery relating to certain telephone records of the defendant. The case had been earlier scheduled to commence trial on September 21.
On September 21, this court denied defendant's motion to open the default, since there was no compliance with the outstanding discovery relating to telephone records. It then appeared that Hannah Woldeyohannes, the defendant, was in Eritrea where she had been visiting her ill father, that she was experiencing difficulties in returning to the United States both because of her father's condition and the unsettled political situation and her attorney had filed a motion on September 9, 2005 to continue the trial, which motion had been denied and her unavailability was a factor in counsel's failure to obtain the telephone records. It was also represented by Attorney Hume that he had become involved in the case late because the attorney in his firm representing the defendant had become medically depressed and unable to attend court.
On the second day of trial September 22, 2005, the court, permitted defendant's attorney to file a notice of defense pursuant to Sec. 17-34ff of the Practice Book (which was later amended on September 28, 2005) and the case was continued to October 27, 2005. The late filing of notice of defense was permitted under Practice Book § 17-38 because it was obvious from the pleadings at the onset that defendant denied the existence of any partnership; that this was the decisive issue in the case from its beginning and in an earlier injunction hearing and there was no prejudice in terms of notice to the plaintiff, as well as in consideration of the other circumstances resulting in the case being placed on the Hearing in Damages docket. Nevertheless, this court began hearing evidence presented by plaintiff while the defendant herself was still absent, although representations were made to the court that the defendant was making every effort to return to this country. Subsequently, for reasons relating to defendant's continued difficulty in returning to this country, the trial was continued to November 7, 2005. The notice of defense, as amended, was accepted by this court, over the objection of plaintiff and the trial continued.
At the commencement of trial plaintiff withdrew the ninth count involving A to Z, LLC, an entity created by defendant.
II. Of the ten counts in her complaint, plaintiff did not pursue the counts claiming fraud or constructive trust but concentrated her efforts in pursuing counts one and two, which allege the creation of an oral partnership between her and the defendant and the recovery of damages suffered by plaintiff by virtue of defendants breach of the partnership agreement. In any event, all the other counts depend on the prior finding of an oral partnership. The essence of plaintiff's case is that in February 2004, the plaintiff Alyssa Peterson, and defendant Hannah Woldeyohannes, orally formed a partnership to purchase six units in Laurelhart Condominiums (designated as B-2, C-9, B-C, E-3, E-7 and G-4); that an attorney prepared a purchase agreement for them, that defendant took the agreement and subsequently obtained a separate purchase agreement which the owner of the units signed and he subsequently conveyed the units to former defendant, A to Z, LLC. Plaintiff seeks equitable relief by recovery and conveyance to her of three of the six units or an accounting for the profits she could have realized had the alleged terms of the partnership been carried out.III.
Whether an oral partnership agreement has been entered is a question of fact. Jacobs v. Thomas, 18 Conn.App. 218, 222, 557 A.2d 145, cert. denied, 212 Conn. 806, 563 A.2d 1355 (1989); Kaspar v. Anderson, 5 Conn.App. 358, 361, cert. denied, 197 Conn. 818 (1985). The existence of a partnership is determined from all of the facts and circumstances of the case and ordinarily the party asserting the partnership has the burden of proving the existence of the partnership she alleges. A court will not make or impose a partnership agreement where the parties have failed to do so themselves. Gilman v. Abo, Superior Court, judicial district of Hartford, Docket No. CV 01-0805880 (October 9, 2003, Hennessey, J.). In order to prevail on her claim of breach of an oral agreement this court must find that the defendant agreed to participate in a joint venture and agreed to terms definite enough to permit enforcement." Patel v. Barot, Superior Court, complex litigation docket at Waterbury, Docket No. X01 CV 960158463 (November 30, 2001, Hodgson, J.). In this case because of the default rendered against her, the defendant had the burden of disproving the partnership.
Defendants claim that any partnership dealing with real estate must be in writing is without merit. Our Supreme Court has noted that "the overwhelming weight of authority . . . is that an agreement for a joint enterprise in the nature of a copartnership which has for its purpose the purchase, improvement, and sale of real estate for profit is not within the statute of frauds." Maguire v. Kiesel, 86 Conn. 453, 85 A. 689 (1913); Jacobs v. Thomas, 26 Conn.App. 305, 600 A.2d 1378, 221 Conn. 914, 603 A.2d 404 (1991). Thus, an oral partnership agreement, with the primary purpose of real estate investment will not fail for want of a writing as a matter of law.
In Patel v. Barot, supra, Superior Court, Docket No. X01 CV 960158463, the issue was whether the minds of the parties had met on sufficient terms so as to constitute an enforceable partnership agreement. The plaintiff in that case argued that an agreement had arisen between him and the defendant for the purpose of developing public housing. The court found, however, that the plaintiff failed to present "credible evidence of any agreement concerning essential terms, notably the percentage of the division of the profits to be received by each and the assets and labor to be contributed by each participant." Considering "[There is] no doubt that [the] plaintiff . . . firmly believes that he is entitled to half of any profits that the [defendant] may ultimately receive from the . . . project. The firmness of his belief does not, however, establish that there was ever any actual meeting of the minds on the essential issues of [the plaintiff's] share . . . The [plaintiff has] failed to prove by a preponderance of the credible evidence that agreement was ever reached on the essential terms of any joint venture or other agreement, and [his] claim therefore fails."
IV.
Plaintiff called six witnesses in her behalf and testified at length in attempting to prove the existence of an oral partnership to purchase the six Laurelhart Condominium units. Defendants produced no witnesses other than herself but testified in direct contradiction to the claims of the plaintiff to the effect that no partnership was ever formed and when plaintiff attempted to discuss the subject, she was rejected. To a large extent, this trial became an issue of credibility between the plaintiff and the defendant.
The plaintiff and defendant were casual friends. In February 2004 defendant approached plaintiff, who sat on the Board of Laurelhart Condominiums and who previously helped her to buy the unit she occupied, to help her buy two other units in the development, nos. E-7 and G-4 for investment purposes. These units were part of a group owned by entities controlled by John Forrest, an attorney. To facilitate this purpose she gave plaintiff a check for $9,500. In ensuing discussions, it appeared that because of the blanket mortgage involving other units as well as the desired two units, and the consequent difficulty in clearing title on the two units, that it would be easier to buy all the units covered by the blanket mortgage, consisting of an addition of three or four units if the price could be agreed upon. The parties after some discussions, went to the office of Attorney Gene Cohen who prepared a purchase agreement for the first five units, which later become six units in the name of "Hannah Woldeyohannes, et al." and said she would present it to the attorney for the owners, two LLC's controlled by John Forrest, an attorney. At some point defendant took the purchase agreement to her own attorney and succeeded in first reaching a sales agreement and then purchasing the six units from Forrest in the name of A to Zee, LLC, an entity owned by defendant. Plaintiff produced witnesses projecting the anticipated profits to be earned from these units in seeking damages to recover her claimed share of such unrealized profits from the appreciated value of the six units.
V.
Plaintiff testified that she had several discussions with defendant concerning the proposed joint purchase of the six units; that she had prepared "spread sheets" detailing the projected purchase price of units, the projected expenses and mortgage payments and the projected income. She called one witness William Van Sicklus who testified that he witnessed plaintiff and defendant discussing what he thought were real estate matters on a table near his office covered with papers. Plaintiff testified that she and defendant were to be equal partners and were to share expenses for the six units. She first learned that the six units were already under a sales contract when she was contacted by her subsequent attorney Alan Berman, who obtained this information from John Forrest.
The plaintiff's key witness to support of the oral partnership was Attorney Gene Cohen who drew the projected purchase agreement for the six units at a purchase price of $147,500. She knew both plaintiff and defendant, having known plaintiff a year longer. In February 2004, both came to her office to discuss the purchase of the six units at Laurelhart, following a previous discussion she had with plaintiff concerning the purchase of five units. She testified that she drew the contract in the name of "Hannah Woldeyohannes, et al." without identifying the et al because the parties believed that putting two names on the contract would invite a higher sales price. She testified that she was acting for both parties jointly and that they were forming a partnership but conceded that they did not tell her so and that no terms or conditions of such a partnership were discussed with her. She testified that she contacted Attorney Convicer who she believed was representing John Forrest who verbally indicated that the offered price for the six units was acceptable, but thereafter there was no further contact between her and the defendant.
VII.
Defendant finally appeared on October 27, 2005 and testified that she was a native of Eritrea, schooled in Italy and other European countries, and has six siblings in the United States, two of whom live in Connecticut. After she had been in contact with John Forrest for the purchase of units E-7 and G-4, she approached plaintiff to help her to purchase them, as she had helped her to purchase Unit B-7, now occupied by her. She felt that plaintiff was more fluent than she in English and had more experience in such matters. She advanced a $9,500 check for this transaction. They discussed the difficulty of obtaining a partial release on the two units, the better prospects of clearing the mortgage on the purchase of five or six units and the prices and financial aspects for the units. Defendant vigorously denies that she ever contemplated a joint venture or partnership with the plaintiff; that when Attorney Cohen prepared the purchase agreement following their conference at her office, she believed it was solely for her benefit, particularly since it had her name on it; when plaintiff subsequently approached her with discussion of a partnership agreement, she rejected it, became wary of both plaintiff and Attorney Cohen, asked for her $9,500 back, claiming this was "family" money; that she hired Attorney Gary Greene to complete a signed purchase agreement for her to buy the six units; that after plaintiff failed to enjoin her from actually purchasing the units following a hearing in this court in July 2004, she engaged an attorney to represent her in the closing of the units in October 2004 for a purchase price of $164,000; she further testified that one of the units was being occupied by her brother and the others needed extensive repairs and remodeling. Although defendant was hazy about some details she was clear and convincing as to her denials of any joint venture or oral partnership agreement with plaintiff.
On or about March 18, 2004, plaintiff wrote to defendant asking her to return the signed contract to Attorney Cohen by the next day "otherwise she will assume the deal is off and I will make other arrangements with her." In that same letter plaintiff returned the $9,500 defendant had given her by a post-dated check "as you demanded."
Attorney Gary Greene, who obtained the signed purchase agreements from John Forrest dated June 7, 2004 testified that he knew nothing of any partnership and attached no significance to the "et al."
John Forrest testified that defendant had been in touch with him first in regard to two units, and then six units; that he never heard from Attorney Convicer, that he saw the draft agreement prepared by Attorney Cohen with defendant's name on it and thought nothing of the "et al" and subsequently sold the six units to defendant's designated LLC in October 2004. He never knew or was told that plaintiff was involved in any partnership with defendant. Attorney Convicer did not appear as a witness.
VIII.
The court finds no oral partnership was formed between plaintiff and defendant to purchase the six units at Laurelhart and defendant has sustained her burden in proving that such a partnership did not exist.
While a partnership agreement does not have to be in writing, some written evidence is ordinarily available to substantiate the existence of such a partnership or at least a meeting of the minds on some essential points. The written evidence introduced tends to prove the contrary. The only money passing hands, is evidenced by defendant's check for $9,500 and its eventual return by plaintiff. The draft contract prepared by Attorney Cohen, which plaintiff claims defendant converted, contained only the name of defendant plus a speculative "et al." The reliance by plaintiff on the "et al" to prove the partnership is misplaced. The letter from defendant to plaintiff (Exhibit C) indicates that if there was ever any involvement between plaintiff and defendant, it was terminated when defendant failed to return the draft agreement to Attorney Cohen.
Plaintiff claims that her primary contribution to the partnership would be to obtain the financing, which defendant would otherwise have a problem in obtaining. But subsequent uncontradicted testimony by defendant indicated that with the help of her extensive family she had no difficulty in completing the purchase of the six units by herself without the benefit of a mortgage. Plaintiff undoubtedly spent some time and real estate expertise in preparing financial prospects for the condominium units, but she had helped defendant before and failed to make or obtain any notation of a partnership agreement. Defendant characterized plaintiff as being her volunteer manager.
Likewise, the evidence in the case indicates that once it appeared that there was in fact no partnership, plaintiffs' claims of breach of fiduciary duty, interference with a contract, unjust enrichment, bad faith or fraud failed or were not substantiated, the testimony of the defendant being credible and sufficient together with the testimony of John Forrest, to rebut these various claims by a preponderance of the evidence.
Judgment may enter for the defendant based on the defense noted.