Remington Investments, Inc. v. National Properties, Inc.

• Decision Date: 18 August 1998
• Docket Number: No. 16552,16552
• Citation: 716 A.2d 141,49 Conn.App. 789
• Parties: REMINGTON INVESTMENTS, INC. v. NATIONAL PROPERTIES, INC.
• Court: Connecticut Court of Appeals

Page 141

716 A.2d 141

49 Conn.App. 789

REMINGTON INVESTMENTS, INC. v. NATIONAL PROPERTIES, INC.

No. 16552.

Appellate Court of Connecticut.

Argued Feb. 24, 1998.

Decided Aug. 18, 1998.

Bernard Green, with whom was Marni Smith Katz, Bridgeport, for appellant (defendant).

Robert M. Barrack, with whom, on the brief, was John B. Farley, Hartford, for appellee (plaintiff).

Before EDWARD Y. O'CONNELL, C.J., and LANDAU and SCHALLER, JJ.

SCHALLER, Judge.

The defendant, National Properties, Inc., appeals from the judgment of the trial court rendered in favor of the plaintiff as to all claims raised in the complaint. On appeal, the defendant claims that the trial court improperly (1) quieted title to the personal property at issue in favor of the plaintiff, (2) admitted into evidence an escrow agreement that provided for the holding of the funds realized from the sale of the personal property, (3) ordered relief not sought by the plaintiff and (4) allowed the plaintiff to amend its complaint. We affirm the judgment of the trial court.

The following facts and procedural history are relevant to this appeal. The defendant conducted business in Connecticut as a corporation involved in real estate development and property management from approximately 1982 to 1994. Peter Penczer, as the secretary and treasurer, Martin Ryan, Jr., as the president, and John Jarvis, Jr., and Robert Rowan, as vice presidents, were all shareholders and directors of the defendant corporation. The defendant acted as the record keeper and property manager for six commercial properties in Wallingford. Each parcel was owned by a separate general partnership that consisted of the principals of the defendant, which were designated as Fairfield Associates and Fairfield Associates II through VI.

One of the properties managed by the defendant was known as 6 Fairfield Boulevard. This property was originally purchased by Fairfield Associates, subject to a mortgage from Bank Mart in 1986. ¹ Fairfield Associates later conveyed 6 Fairfield Boulevard to Fairfield Associates III, subject to Bank Mart's mortgage. The other Fairfield Associates partnerships owned parcels or buildings that were either contiguous to or located near the building owned by Fairfield Associates III.

Among the tenants of Fairfield Associates III at 6 Fairfield Boulevard was Corporate Physique Training Center, Inc. (Corporate Physique), a health club. In 1989, Corporate Physique was delinquent in its rent and common area maintenance payments. On October 13, 1989, Fairfield Associates III and Corporate Physique entered into an agreement entitled "Lease Termination Agreement." The agreement provided in relevant part that Corporate Physique would turn over possession of the premises to Fairfield Associates III and, in addition, transfer "all of its right, title and interest in all of the personal property belonging to the Tenant and located in the Premises...." In consideration for this transfer, Fairfield Associates III agreed to release Corporate Physique from all of its obligations under the lease, including its past due and future rental and common area maintenance payments and, in addition, agreed to pay to Corporate Physique the sum of $15,000. Attached to the lease termination agreement was a "Bill of Sale" that acknowledged the conveyance by Corporate Physique to Fairfield Associates III of all of Corporate Physique's "assets of every kind and description located on the Premises at 6 Fairfield Boulevard ... including without limitation those assets on exhibit A hereto...." The bill of sale was signed by the secretary and the president of Corporate Physique, and by Ryan for Fairfield Associates III. ² When placed in evidence as the plaintiff's exhibit F, however, neither the lease termination agreement nor the bill of sale had attached an exhibit A or any other enumeration of the personal property.

Penczer, however, identified a list of exercise equipment under the title "Corporate Physique Training Center Equipment List" dated October 9, 1989. This document was admitted into evidence as plaintiff's exhibit H, and represented a list of all the exercise equipment purchased from Corporate Physique by Fairfield Associates III.

A photocopy of the front of a check of Fairfield Associates V dated October 13, 1989, for $15,000 payable to Corporate Physique, with a notation thereon that it was "per Lease Termination Agreement," was admitted as defendant's exhibit two. The check was signed by Ryan, president of the defendant and general partner in all of the entities owned by the six general partnerships.

No documentation was introduced into evidence of any transfers between Fairfield Associates III and Fairfield Associates V, or from Fairfield Associates V to the defendant. The exercise equipment, however, appears on the Wallingford grand list of October 1, 1990, in the name of "National Properties, Inc., 4 Fairfield Boulevard," as commercial furniture with an assessment of $9450. ³

On October 26, 1989, less than two weeks after Fairfield Associates III executed the lease termination agreement with Corporate Physique and purchased the exercise equipment listed in exhibit H, Fairfield Associates III executed a new lease for the same space previously occupied by Corporate Physique with a new health club, Healthworks, Ltd. (Healthworks). Attached to the lease as "Schedule B," was an "Equipment Rental" agreement pursuant to which Fairfield Associates III agreed to lease the exercise equipment it had purchased from Corporate Physique to Healthworks. In addition, the equipment rental agreement provided, inter alia, that "the equipment shall at all times be the sole and exclusive property of the Lessor." The lessor was identified as Fairfield Associates III. Ryan signed the lease and the equipment rental agreement on behalf of Fairfield Associates III.

Fairfield Associates III became delinquent in its mortgage payments to Bank Mart for 6 Fairfield Boulevard and defaulted. As a result of the default, Fairfield Associates III and Bank Mart entered into negotiations that culminated in an agreement to execute a deed in lieu of foreclosure agreement on April 23, 1991. In addition to agreeing to convey the real property located at 6 Fairfield Boulevard in exchange for a forgiveness of its debt of over $4,000,000, pursuant to the deed in lieu of foreclosure agreement, Fairfield Associates III agreed to convey to Bank Mart's nominee, F.A. Wallingford, III, Inc. (F.A.Wallingford), "[t]itle in and to all personal property of Borrower or Guarantors acquired for installation or use in connection with the Property...."

The deed in lieu of foreclosure agreement required that at the closing, "a warranty Bill of Sale duly executed and acknowledged by Borrower, conveying to Nominee title to the Personal Property, free and clear of any encumbrances," would be provided to F.A. Wallingford. This agreement, plaintiff's exhibit I, differed from the other written documents in that it contained an express integration clause. ⁴

The bill of sale for the personal property, referred to in the deed in lieu of foreclosure agreement, was admitted into evidence as exhibit J. ⁵ When the plaintiff's exhibit J was introduced, schedule A was not attached. Penczer testified that, at the time the deed in lieu of foreclosure agreement was executed, Fairfield Associates III did not own any personal property, so there was no need for a bill of sale; he, therefore, offered to give a bill of sale with a blank schedule attached. Penczer said that, ultimately, he signed the plaintiff's exhibit J, the bill of sale, with no schedule attached.

In a letter dated April 29, 1991, Frederick Fallon, executive director of Healthworks, informed Penczer that the facility at 6 Fairfield Boulevard would close on October 31, 1991, and offered to purchase the exercise equipment for $30,000 payable in three annual installments of $10,000. Penczer later confirmed that a sale of the exercise equipment to Healthworks had taken place by way of a letter sent to Fallon dated July 31, 1991. ⁶ Healthworks had already begun to remove the exercise equipment from its leased premises at 6 Fairfield Boulevard prior to this letter. Bank Mart did not become aware of this situation until Healthworks had nearly completed the removal of the exercise equipment from the premises. On October 7, 1991, F.A. Wallingford, as a subsidiary of Bank Mart, began this action against the defendant to determine ownership of the fixtures.

In December, 1991, Bank Mart was found to be insolvent and the Federal Deposit Insurance Corporation (FDIC) was appointed receiver of Bank Mart. The FDIC was substituted as party plaintiff for F.A. Wallingford on February 6, 1992. Subsequently, on January 27, 1993, the J.E. Company of New England, acting under a power of attorney from the FDIC, entered into an escrow agreement with the defendant. The escrow agreement provided that the sale of the exercise equipment by the defendant to Healthworks was approved, and the res, ownership of which was to be determined, was placed in escrow for the benefit of the prevailing party in this litigation. This escrow agreement was admitted as the plaintiff's exhibit M. ⁷

The FDIC through its attorney-in-fact, J.E. Roberts, executed a bulk sale of the assets of the former Bank Mart to Remington Investments, Inc. (Remington). That bulk sale included the rights and claims of the FDIC in the present lawsuit. On December 11, 1995, Remington was substituted as party plaintiff and remains the plaintiff in this action.

This matter was tried before the trial court, which rendered judgment in favor of the plaintiff, on October 16, 1996, awarding cash proceeds of the exercise equipment to the plaintiff, conditioned on the plaintiff's filing an amended complaint. The court required that the amended complaint conform to the proof at trial, which indicated that the parties had entered into the escrow...