Sullo Invs., LLC v. Moreau

• Decision Date: 01 July 2014
• Docket Number: No. 35866.,35866.
• Citation: 151 Conn.App. 372,95 A.3d 1144
• Court: Connecticut Court of Appeals
• Parties: SULLO INVESTMENTS, LLC v. Marci MOREAU.

151 Conn.App. 372

95 A.3d 1144

SULLO INVESTMENTS, LLC

v.Marci MOREAU.

No. 35866.

Appellate Court of Connecticut.

Submitted on Briefs March 14, 2014.

Decided July 1, 2014.

Patrick W. Boatman, East Hartford, filed a brief for the appellant (defendant).

Mario R. Borelli filed a brief for the appellee (plaintiff).

DiPENTIMA, C.J., and BEACH and BEAR, Js.^*

BEAR, J.

The defendant, Marci Moreau, appeals from the judgment of the trial court rendered in favor of the plaintiff, Sullo Investments, LLC, regarding the defendant's liability as guarantor on a promissory note that her father-in-law, Aurelien Moreau, executed in favor of the plaintiff. On appeal, the defendant claims that the court erred because (1) it determined the intent of the parties to the note and guarantee on the basis of extrinsic evidence and not the language of those documents, in violation of the parol evidence rule; (2) the note was not supported by consideration; and (3) her special defense of lack of consideration was admitted due to the plaintiff's failure to reply to it in timely fashion.¹ We affirm the judgment of the trial court.

The following facts and procedural history are relevant to our resolution of the present appeal. In 2006, the defendant and her husband, Michael Moreau, formed a limited liability company, Sauce, LLC, as part of their plan to open a restaurant called Sauce. Michael Moreau “took the steps to actually start the restaurant.” Sauce, LLC, decided in November, 2006, to lease property located at 124 Hebron Avenue in Glastonbury as the premises for the restaurant. Shortly thereafter, in late 2006 or early 2007, Michael Moreau began to talk to Joseph Sullo about purchasing restaurant equipment from one of Sullo's companies, Classic Restaurant Supply, LLC (Classic). After Michael Moreau made an unsuccessful attempt to finance the purchase with a loan from Sovereign Bank, Sullo agreed to finance the purchase through a loan from the plaintiff, another one of Sullo's companies.

The plaintiff sought to put a second mortgage on the Moreaus' residence in order to secure the loan. A title search conducted by the plaintiff's attorney at the time revealed that there was little to no equity in the residence, however, and it decided against proceeding with the loan. By that time, in approximately August, 2007, the Moreaus were “well into the project.” Michael Moreau conveyed to Sullo that he was “desperate” to secure the loan because the restaurant was “supposed to open in ... two months....” He and Sullo then began to talk about the possibility of securing the loan instead with a mortgage on the residence of Aurelien Moreau, Michael Moreau's father.

Michael Moreau subsequently approached Aurelien Moreau and asked him to cosign a loan for the purchase of restaurant equipment. Aurelien Moreau agreed to do so, and he executed a note in favor of the plaintiff on September 20, 2007, and an open-ended mortgage deed in favor of the plaintiff on September 27, 2007. These two documents were part of a set of documents e-mailed from the plaintiff's attorney at the time to Michael Moreau on September 20, 2007. Also included in the set of documents was a guarantee, which the defendant and Michael Moreau executed on September 26, 2007.

The note was in the amount of $255,000. The parties stipulated before trial that “Aurelien Moreau did not personally receive payment of any part of the principal amount of the Note.” Instead, the plaintiff “advanced [the amount] to Classic ... on behalf of Sauce, LLC ... for the purchase of restaurant equipment and supplies for a restaurant owned and operated by Sauce, LLC.” All of the payments on the note that the plaintiff received were made by Sauce, LLC, with checks signed by both Michael Moreau and the defendant. According to Sullo, these payments amounted to “the first ten [thousand dollars] ... [and] then after ... little dribs and drabs.” Sauce, LLC, eventually stopped making payments in late 2008, portending the restaurant's closure in late September, 2009. After the closure, the plaintiff sold the restaurant equipment for approximately $46,000 to the owners of the next restaurant to occupy the premises at 124 Hebron Avenue.

The first filing in the present action was the plaintiff's application for a prejudgment remedy on May 23, 2012, to which the plaintiff attached a proposed complaint. The operative complaint, filed on August 15, 2012, is identical to the proposed complaint and alleges that the defendant ² is liable under the guarantee for the amount of the note, as well as for interest, costs, and fees incurred by the plaintiff in both the present action and the plaintiff's simultaneously commenced foreclosure action against Aurelien Moreau. We note with respect to the foreclosure action that the parties agreed to consolidate it with the present action on July 18, 2012, and that the court rendered a judgment by stipulation in favor of the plaintiff on June 10, 2013. Sullo Investments, LLC v. Moreau, Superior Court, judicial district of Hartford, Docket No. CV–11–6026789–S (June 10, 2013).³

The defendant filed her answer and two special defenses on August 30, 2012. Her first special defense is that the note and therefore her obligation as guarantor are unenforceable for want of consideration because the plaintiff has never lent money to Aurelien Moreau. The defendant's second special defense is that the plaintiff must adjust any obligation that she may have as guarantor to reflect the sale of the restaurant equipment to the new tenants of the premises formerly occupied by Sauce, LLC. The plaintiff did not file a reply to the defendant's answer and special defenses, but denied them orally during closing argument at trial.

The parties tried the matter to the court on May 29 and June 6, 2013. On June 6, 2013, the court orally rendered its decision in favor of the plaintiff. It subsequently issued an order on July 1, 2013, in which it referenced its June 6, 2013 oral decision, noted the parties' agreement concerning the amount of damages, attorney's fees and costs, and rendered judgment in favor of the plaintiff and against the defendant in the amount of $295,010.38. This appeal followed. Additional facts and procedural history will be set forth as necessary.

I

The defendant first claims that the court's holding that she is liable as guarantor is contingent upon its erroneous finding that the parties to the note and guarantee intended for Sauce, LLC, to receive the loan proceeds in order to purchase restaurant equipment, even though the language in both documents clearly states that the parties intended for only Aurelien Moreau to receive the loan proceeds. There are two prongs to the defendant's claim. First, the defendant argues that the court could not have made its finding on the basis of the language in the note or guarantee, and, therefore, the court violated the parol evidence rule by considering extrinsic evidence that contradicted or varied such language. Even if we determine that the parol evidence rule does not apply, the defendant further argues that the court nonetheless erred with respect to its finding of intent because the evidence at trial demonstrated that Aurelien Moreau was unaware of the transaction's bona fide terms. We are not persuaded.

A

Because the parol evidence rule is a rule of substantive contract law the defendant's claim involves a question of law to which we afford plenary review. See Conn Acoustics, Inc. v. Xhema Construction, Inc., 88 Conn.App. 741, 745, 870 A.2d 1178 (2005). “The rule is premised upon the idea that when the parties have deliberately put their engagements into writing, in such terms as import a legal obligation, without any uncertainty as to the object or extent of such engagement, it is conclusively presumed, that the whole engagement of the parties, and the extent and manner of their understanding, was reduced to writing. After this, to permit oral testimony, or prior or contemporaneous conversations, or circumstances, or usages [etc.], in order to learn what was intended, or to contradict what is written, would be dangerous and unjust in the extreme....

“The parol evidence rule does not of itself, therefore, forbid the presentation of parol evidence, that is, evidence outside the four corners of the contract concerning matters governed by an integrated contract, but forbids only the use of such evidence to vary or contradict the terms of such a contract. Parol evidence offered solely to vary or contradict the written terms of an integrated contract is, therefore, legally irrelevant. When offered for that purpose, it is inadmissible not because it is parol evidence, but because it is irrelevant. By implication, such evidence may still be admissible if relevant (1) to explain an ambiguity appearing in the instrument; (2) to prove a collateral oral agreement which does not vary the terms of the writing; (3) to add a missing term in a writing which indicates on its face that it does not set forth the complete agreement; or (4) to show mistake or fraud.... These recognized exceptions are, of course, only examples of situations where the evidence (1) does not vary or contradict the contract's terms, or (2) may be considered because the contract has been shown not to be integrated, or (3) tends to show that the contract should be defeated or altered on the equitable ground that relief can be had against any deed or contract in writing founded in mistake or fraud.” (Citations omitted; emphasis in original; internal quotation marks omitted.) TIE Communications, Inc. v. Kopp, 218 Conn. 281, 288–89, 589 A.2d 329 (1991).

The court held with respect to the issue of intent the following: “The note specifically states that ... ‘[t]he mortgage is part of a commercial transaction’ ... [a]nd that ... ‘[t]he monies are not to be used for personal, family or household purposes'.... There is nothing misleading about this language. If [the parties] did not...