Reserve Realty, LLC v. Windemere Reserve, LLC, AC 38167

• Decision Date: 20 June 2017
• Docket Number: AC 38167
• Citation: 165 A.3d 162,174 Conn.App. 130
• Court: Connecticut Court of Appeals
• Parties: The RESERVE REALTY, LLC, et al. v. WINDEMERE RESERVE, LLC, et al.

174 Conn.App. 130

165 A.3d 162

The RESERVE REALTY, LLC, et al.

v.WINDEMERE RESERVE, LLC, et al.

AC 38167

Appellate Court of Connecticut.

Argued January 4, 2017

Officially released June 20, 2017

Daniel E. Casagrande, with whom was Lisa M. Rivas, for the appellants (plaintiffs).

Christopher Rooney, with whom was Brian A. Daley, for the appellees (named defendant et al.).

Alvord, Sheldon and Schaller, Js.

SCHALLER, J.

This appeal arises from a breach of contract action in which the plaintiffs, The Reserve Realty, LLC (Reserve Realty), and Theodore Haddad, Sr., as executor of the estate of Jeanette Haddad, sought to recover real estate brokerage fees in connection with the sale and/or lease of units in an apartment complex constructed and leased by the defendant BLT Reserve, LLC (BLT), and of commercial office space not yet constructed by the defendant Windemere Reserve, LLC (Windemere). After a trial to the court, judgment was rendered in favor of the defendants. The plaintiffs appeal from that judgment, claiming that the trial court improperly determined that (1) the purchase and sale agreements upon which they based their claims for brokerage fees constituted part of an illegal tying arrangement in violation of the Connecticut Antitrust Act, General Statutes § 35–24 et seq. (antitrust act), (2) the listing agreements entered into pursuant to such purchase and sale agreements did not comply with General Statutes § 20–325a, and (3) such listing agreements were unenforceable by the plaintiffs because they were personal to Jeanette Haddad. We affirm the judgment of the trial court.

The following facts, as found by the trial court in its memorandum of decision, are pertinent to our review. The plaintiff, Theodore Haddad, Sr., is the duly appointed executor of the estate of his wife, Jeanette Haddad. Prior to her death in January, 2013, Jeanette Haddad was a successful and highly regarded real estate broker in the Danbury real estate market, performing brokerage services under the business name, "Jeanette Haddad, Broker."¹ She employed several licensed sales-persons, including Theodore Haddad, Sr., and she engaged the services of her son, Theodore Haddad, Jr., who was a licensed real estate broker with his own broker's license and business. The plaintiff, Reserve Realty, a limited liability company organized and existing pursuant to the laws of Connecticut, was founded by Jeanette Haddad and Paul Scalzo on September 15, 2003.² The defendants, BLT and Windemere, are limited liability companies, the principals and owners of which include Carl Kuehner, Jr., and Paul Kuehner.³

In early 2002, a group of real estate developers, later known as Woodland Group II, LLC (Woodland), contacted Jeanette Haddad and Century 21 Scalzo Realty, Inc. (Scalzo Realty), a real estate franchise owned by Scalzo,⁴ to engage their brokerage services in connection with the negotiations for the purchase of a 546 acre parcel known as the Reserve. As part of the broker/ client relationship, the "Exclusive Right to Sell–Listing Agreement" (Woodland agreement) was executed by and between Jeanette Haddad and Scalzo, and two of the Woodland real estate developers. Pursuant to the Woodland agreement, Jeanette Haddad and Scalzo Realty had the exclusive right to sell and/or lease property in the Reserve, and the real estate developers were required to "make aware to the new purchaser of any part, or of individual lots, or of land, that this Agreement shall apply to that new purchaser and [Jeanette Haddad and Scalzo Realty]."

On or about June 28, 2002, Woodland purchased the Reserve. Woodland, which wished to develop the Reserve, continued to use the services of Jeanette Haddad and Scalzo thereafter to market the property.⁵ Woodland also proposed a master plan for the entire 546 acres, which the Danbury Zoning Commission approved on or about November 26, 2002. Shortly thereafter, Windemere filed an administrative appeal of the plan's approval in the Superior Court, which effectively stayed the approval of the master plan and prevented Woodland from moving forward with the development and sale of the Reserve. Thereafter, representatives of Woodland, Windemere, and BLT met to negotiate the sale of two tracts of land, later known as parcel 13 and parcel 15. Part of the negotiation resulted in Windemere's withdrawal of the administrative appeal.

On July 17, 2004, Woodland entered into the purchase and sale agreement with BLT for the purchase of parcel 13 and the purchase and sale agreement with Windemere for the purchase of parcel 15 (purchase and sale agreements). Paragraph eight of the purchase and sale agreement for parcel 13 obligated BLT to enter into a listing agreement with Jeanette Haddad and Scalzo Realty, pursuant to which Jeanette Haddad and Scalzo Realty would receive a 3 percent commission on any subsequent sale and/or lease of parcel 13, either as a whole or as individual lots. Similarly, paragraph eight of the purchase and sale agreement for parcel 15 obligated Windemere to enter into a listing agreement with Jeanette Haddad and Scalzo Realty, pursuant to which Jeanette Haddad and Scalzo Realty would receive a $1 million commission for their efforts in the leasing of office space that Windemere intended to develop on the parcel.⁶

Woodland, BLT, and Windemere also executed an escrow agreement, pursuant to which the purchase and sale agreements would be held in escrow by Woodland's counsel for ninety days until several conditions were met. One of the conditions was the execution of listing agreements and consent to sell the property agreements, to be executed by Jeanette Haddad and Scalzo Realty. This condition was included to satisfy the requirement in the Woodland agreement between Woodland, Jeanette Haddad, and Scalzo Realty that Woodland "make aware to the new purchaser of any part, or of individual lots, or of land, that this Agreement shall apply to that new purchaser and [Jeanette Haddad and Scalzo Realty]."

Between July 17 and September 10, 2003, representatives of Woodland, BLT, Windemere, and Jeanette Haddad⁷ negotiated the terms of the listing agreements. On September 10, 2003, a meeting was held, at which several documents were executed,⁸ including the exclusive right to represent buyer/tenant (buyer's agreement);⁹ the consent agreements;¹⁰ and the exclusive right to sell–listing agreement for parcel 13,¹¹ the exclusive right to sell/lease–listing agreement for parcel 13,¹² the exclusive right to sell/lease–listing agreement for parcel 15,¹³ and the exclusive right to sell–listing agreement for parcel 15¹⁴ (listing agreements).

Despite having executed the listing agreements, the defendants at no time desired to retain Jeanette Haddad as the broker for the sale and/or lease of units to be built on parcel 13 and parcel 15. Rather, the defendants entered into the listing agreements only to satisfy the requirements of paragraph eight of the purchase and sale agreements, and the only reason that the parties included paragraph eight in the purchase and sale agreements was to allow Woodland to comply with its contractual obligation under the Woodland agreement to require subsequent purchasers of the Reserve to retain Jeanette Haddad and Scalzo Realty as their brokers.

Beginning in early 2006, representatives of Jeanette Haddad and Scalzo Realty, including Theodore Haddad, Sr., and Theodore Haddad, Jr., diligently marketed and contacted possible buyers and lessees for the Reserve. At some point, however, the defendants decided that the listing agreements were a " ‘bad marriage,’ " and, in January, 2007, Paul Kuehner and Theodore Haddad, Jr., met to discuss terminating the broker/client relationship. A buy-out figure was offered to Jeanette Haddad and Scalzo, which they both refused. From early to mid–2007, Jeanette Haddad and Scalzo Realty continued to make best efforts to find prospective buyers or lessees for parcel 13 and parcel 15, but ultimately were unsuccessful. The defendants began to explore other available options, including the development of parcel 13 into a luxury apartment rental complex.

On or about April 18, 2011, the Danbury Planning and Zoning Department issued a site plan approval to BLT for the construction of a rental apartment complex on parcel 13, which would later be known as Abbey Woods. Shortly thereafter, the defendants began construction. BLT subsequently leased the apartment units in Abbey Woods through its own on-site leasing agent, with the first lease being entered into in March, 2013. Theodore Haddad, Jr., upon learning about Abbey Woods, contacted Carl Kuehner, Jr., and asked him if the defendants intended to honor the listing agreements by allowing Reserve Realty to act as broker and by paying commissions on those units already leased. Carl Kuehner, Jr., refused to discuss the issue with Theodore Haddad, Jr., claiming that the listing agreements for parcel 13 were personal service agreements between BLT and Jeanette Haddad.

In July, 2013, the plaintiffs brought this action against the defendants, claiming compensatory damages for breach of the listing agreements.¹⁵ Specifically, the plaintiffs sought the commissions for the leasing of apartments in the Abbey Woods complex built on parcel 13 and for the lease and/or sale of a commercial office building not yet constructed on parcel 15. The defendants raised five special defenses: (1) the listing agreements were entered into pursuant to an illegal tying arrangement; (2) there was a lack of consideration in that the plaintiffs had failed to perform brokerage services entitling them to compensation; (3) the listing agreements were personal service contracts; (4) the listing agreements, by their express terms, expired on September 10, 2010; and (5) the listing agreements were unenforceable because the necessary conditions precedent had not been satisfied. After hearing twelve days of evidence, the trial court rendered judgment in favor of the defendants, concluding that the...