Pack 2000, Inc. v. Cushman

• Decision Date: 30 June 2020
• Docket Number: AC 41350, (AC 41351)
• Citation: 198 Conn.App. 428,234 A.3d 49
• Court: Connecticut Court of Appeals
• Parties: PACK 2000, INC. v. Eugene C. CUSHMAN

198 Conn.App. 428

234 A.3d 49

PACK 2000, INC.

v.Eugene C. CUSHMAN

AC 41350, (AC 41351)

Appellate Court of Connecticut.

Argued October 23, 2019

Officially released June 30, 2020

Eric W. Callahan, New London, for the appellant-cross appellee in AC 41350 and AC 41351 (plaintiff).

Ralph J. Monaco, with whom, on the brief, was Eric J. Garofano, New London, for the appellee-cross appellant in AC 41350 and AC 41351 (defendant).

DiPentima, C. J., and Keller and Bright, Js.

BRIGHT, J.

In these consolidated appeals, the plaintiff, Pack 2000, Inc., appeals from the judgments of the trial court, which determined the amount due the defendant, Eugene C. Cushman, for two properties he had contracted to sell to the plaintiff.¹ The plaintiff claims that the trial court erred in concluding that (1) the purchase prices for the properties, located in Groton and New London, should be based on their current appraised values, rather than their appraised values in 2003, (2) the plaintiff was required to pay use and occupancy for its continued use of the Groton property retroactive to June 1, 2014, until the closing of the sale of the property to the plaintiff, and (3) the plaintiff was not entitled to credits toward the purchase price of each property for moneys paid as rent or use and occupancy after it exercised its options to purchase the properties. The defendant filed cross appeals, claiming that the trial court abused its discretion by failing to use the current appraised value set by his appraiser as the purchase price for the Groton property. We agree with the plaintiff on all of its claims and disagree with the defendant as to his cross appeals. Accordingly, we reverse the judgments of the trial court and remand the cases with direction to determine the purchase prices of the properties pursuant to the plaintiff's exercise of its options to purchase the properties in 2003, that the court credit against those purchase prices any payments made by the plaintiff to the defendant for use of the properties after its exercise of its purchase options, and, to the extent that the payments to the defendant on each property, after the option became effective, exceeded the purchase price of that property, that the court order any overpayment be refunded to the plaintiff.

This case returns to us after our Supreme Court's decision in Pack 2000, Inc. v. Cushman , 311 Conn. 662, 89 A.3d 869 (2014), in which the court reversed the decision of this court; see Pack 2000, Inc. v. Cushman , 126 Conn. App. 339, 11 A.3d 181 (2011) ; and remanded the case to us with direction to affirm the judgments of the trial court.² Following our affirmance of the trial court's judgments, additional proceedings occurred in the trial court. We will address those proceedings and the judgments that followed, which are the subject of the present appeal, after setting forth the relevant facts.

The opinion of our Supreme Court sets forth the following relevant facts and procedural history, as supplemented by the record. "In July, 2002, the plaintiff, the defendant and ARCO Corporation (ARCO),³ a corporation controlled by the defendant, entered into a business transaction in which two Midas ... muffler shops⁴ (shops) were to be transferred from ARCO to the plaintiff. As part of the transaction, the parties executed a number of agreements, including [1] two lease agreements, under which the defendant leased [to the plaintiff] the [real property on which] the shops are located ... [2] a management agreement, under which the plaintiff assumed responsibility for the management and operation of the shops ... [3] a letter of intent ... and [4] two promissory notes ....

"Each lease agreement contains a clause ... that provide[d] the plaintiff with an option to purchase the leased [property] subject to certain terms and conditions. The language of the two clauses is essentially identical. Each clause provides in relevant part: So long as [the plaintiff] has been in compliance with the terms and conditions of this [l]ease, the [l]etter of [i]ntent, and [m]anagement [a]greement ... and is in compliance with such instruments when the option is exercised, [the plaintiff] shall have the option to purchase the real estate subject to this lease. ...

"Under the terms of the two lease agreements, the management agreement and the promissory notes, the plaintiff was required to make a number of periodic payments both to the defendant and to certain third parties in order to exercise the options.⁵ Specifically, the plaintiff was required to pay rent to the defendant ... to make payments on both promissory notes ... until the notes were fully paid and to pay all accounts, including, but not limited to, utilities, telephone service, real estate taxes, and hazard and liability insurance as well as an equipment lease. ...⁶

"On August 22, 2003, the plaintiff's vice president, M. Paulina Anderson, faxed a letter to the defendant in which she stated that she wanted to finalize the purchase of the shops and exercise the option[s] to purchase the real estate by the end of 2003." (Footnotes added and omitted; internal quotation marks omitted.) Pack 2000, Inc. v. Cushman , supra, 311 Conn. at 660–68, 89 A.3d 869. Anderson further stated: "I have talked to our bank and they can finance the deal for us. The option in the leases indicates we need to agree on an appraiser, to come up with a price on the real estate. I want to use Arnold (Grant) whom I have used before. Please let me know if you agree to us using him, so I can order the appraisals." "On August 29, 2003, Anderson sent a second letter to the defendant in which she ... indicated that Banterra Bank (bank) could not commit to financing the purchase until it had ascertained the value of the defendant's realty. [Anderson added: I have not heard from you on the appraisals. In order to get a price so we can close this year, I went ahead and (ordered) them. As I indicated on my fax to you last Friday, I worked with Arnold (Grant) before .... Please let me know your thoughts on this. If you elect to proceed with your own appraisals please do so ASAP so we can still close this year.]

"On September 2, 2003, the defendant, on behalf of ARCO, sent a letter to Anderson in which he stated that the plaintiff was not in compliance with the terms and conditions of the management agreement. Specifically, the letter stated: The installment payment regarding the ... [m]anagement [a]greement which was due September 1, 2003 has not been received. ... Timely payment of the note was and is a material condition of the agreement. ... You are hereby put on notice that this late payment, and all of the prior late payments, and any future late payments [put] you out of compliance with the terms and conditions of the Management Agreement. Subsequent acceptance of the September, 2003 payment (or any future payment tendered after the date due) will not cure the non-compliance, nor does ARCO ... waive any rights or consequences which flow from your non-compliance. There is no record of the plaintiff having specifically responded to this letter. [It is apparent, however, that the parties treated this letter as the defendant's repudiation of the plaintiff's right to exercise the purchase options due to its late payments.] ...

"On July 17, 2006, the plaintiff commenced these actions against the defendant claiming that it was entitled to specific performance of the options to purchase the defendant's realty. In its disclosure of defense, filed on August 4, 2006, the defendant argued that the plaintiff's claim was without merit because, among other things, the plaintiff had not complied with the terms of one of the promissory notes and the conditions of the lease at the time of its attempt to exercise the options, and, therefore, the options had been forfeited or terminated by the plaintiff's fault or noncompliance. ...

* * *

"On August 11, 2008, the trial court rendered judgments in favor of the plaintiff. The court determined that the plaintiff had retained the right to exercise the options because it had substantially complied with the terms and conditions of the [parties’ agreements]. ... The court also determined that the plaintiff had effectively exercised the options on August 22, 2003, and was entitled to specific performance. ...

"The defendant appealed to the Appellate Court from the judgements of the trial court, claiming, inter alia, that the trial court was required to apply a strict rather than a substantial compliance standard in determining whether the plaintiff had satisfied the terms of the lease and management agreements and, in addition, that the trial court incorrectly concluded that the plaintiff had retained the right to exercise the options notwithstanding its late payments to the defendant. ... The Appellate Court agreed with the defendant. ... In accordance with these conclusions, the Appellate Court reversed the judgments of the trial court and remanded the case to that court with direction to render judgments for the defendant." (Citations omitted; footnotes added and omitted; internal quotation marks omitted.) Pack 2000, Inc. v. Cushman , supra, 311 Conn. at 668–73, 89 A.3d 869. Our Supreme Court subsequently reversed this court's decision and remanded the case back to this court with direction to affirm the judgments of the trial court.⁷ Id., at 694, 89 A.3d 869.

On July 14, 2014, after we affirmed the judgments of the trial court, the plaintiff filed a motion for postjudgment orders. In its motion, the plaintiff requested that the trial court issue (1) an order setting the purchase prices of the Groton and New London properties to reflect the 2003 appraisal values rendered by Grant,⁸ (2) an order confirming that, since August, 2003, the plaintiff—by way of monthly rent payments—has paid the entire purchase price for the Groton and New London properties, and, therefore, the defendant immediately must transfer the properties to the plaintiff free and...