Watson Real Estate, LLC v. Woodland Ridge, LLC

• Decision Date: 22 January 2019
• Docket Number: AC 40450
• Citation: 187 Conn.App. 282,202 A.3d 1033
• Court: Connecticut Court of Appeals
• Parties: WATSON REAL ESTATE, LLC v. WOODLAND RIDGE, LLC, et al.

187 Conn.App. 282

202 A.3d 1033

WATSON REAL ESTATE, LLC

v.WOODLAND RIDGE, LLC, et al.

AC 40450

Appellate Court of Connecticut.

Argued September 26, 2018

Officially released January 22, 2019

Jeffrey J. Mirman, for the appellant (plaintiff).

Frank A. Leone, East Hartford, for the appellee (named defendant).

Alvord, Moll and Bear, Js.

BEAR, J.

This action arises out of an escrow agreement entered into by the parties in conjunction with the purchase of a lot in a residential subdivision owned by the defendant Woodland Ridge, LLC.¹ The plaintiff, Watson Real Estate, LLC, appeals from the judgment of the trial court, rendered following a bench trial, in favor of the defendant on the plaintiff's breach of contract claim, as well as from the court's subsequent order denying the plaintiff's request for leave to amend its revised complaint.² The plaintiff claims on appeal that the court (1) improperly failed to find that there was a meeting of the minds between the parties as to the specifications of the common driveway that the defendant was required, under the escrow agreement, to install within the subdivision,³ (2) improperly failed to find that the defendant breached the escrow agreement by not reimbursing the plaintiff for costs it incurred in relation to certain work that the defendant was required under the agreement to complete, and (3) abused its discretion in denying the plaintiff's request for leave to amend its revised complaint to conform to the evidence adduced at trial. We affirm the judgment of the trial court.

The following facts, which either were found by the trial court or are undisputed in the record, and procedural history are relevant to this appeal. The defendant was the owner and developer of a four lot residential subdivision located on the westerly side of Woodland Street in Glastonbury. The subdivision consists of two front lots abutting Woodland Street (lots 1 and 2) and two rear lots abutting the western boundaries of the front lots (lots 3 and 4). A common driveway providing ingress and egress to the subdivision runs west from Woodland Street past the entrances to lots 1 and 2 and terminates at the entrances to the rear lots.

In May, 2006, H. Kirk Watson, a member of the plaintiff,⁴ entered into an agreement with the defendant for the purchase of lot 1. At the time of the execution of the purchase agreement, the common driveway had been paved only from Woodland Street to a point 118 feet before the entrance to lot 1; the remainder of the driveway, including the portion passing along the entrance to lot 1, remained unpaved. Consequently, Watson, in his capacity as a member of the plaintiff, entered into an agreement with the defendant and Attorney Peter J. Alter to create an escrow fund from a portion of the defendant's proceeds from the sale of lot 1 to assure the defendant's completion of the common driveway and certain other improvements and construction that remained to be completed (escrow agreement). Under the escrow agreement, the defendant was to deposit with the escrow agent, Alter, the sum of $51,000, which represented "a fair estimate of the cost of completion of the [w]ork."

The particular items that remained to be completed were set forth in a punch list that was attached to the escrow agreement as exhibit A. Pursuant to exhibit A, the defendant was required to "complete the common driveway to the point at which it becomes an individual driveway for each approved lot," but the defendant was not to "put the final course of bituminous pavement on the common driveway until construction of all four houses [was] complete (as indicated by the issuance of a certificate of occupancy), or five (5) years from the date of [the escrow agreement], whichever shall first occur." The stated rationale for this delay was to "avoid damage to the final pavement as may be caused by heavy construction vehicles using the driveway during home construction." As Watson later testified at trial, at the time he executed the escrow agreement, he believed that this language required the defendant to initially extend the existing layer of pavement along the remainder of the driveway and, then, at the appropriate time, install a second layer of pavement over the entire length of the driveway. Per exhibit A, the defendant was also required to install a common electric power service from which each lot could secure individual service.

Because the parties recognized that the work needed to be completed before the plaintiff could secure a building permit and a certificate of occupancy, the escrow agreement provided for a procedure by which the plaintiff could contract with a third party to complete the work and seek reimbursement from Alter out of the escrow funds if the defendant failed to complete the work in a timely manner. Pursuant to this procedure, the plaintiff was to give written notice to the defendant that the plaintiff's construction project required that the work be completed within a reasonable time. If the defendant subsequently failed to complete the work within thirty days, the plaintiff was then authorized to contract for the completion of the work, and, "upon submission of an invoice or contract for performance from a third party contractor, [Alter] shall advance the funds from the escrow agreement to satisfy the invoice or contract provisions."

Upon the closing of the transaction, Watson took title to the property in the name of the plaintiff and began developing the property. Between the time of closing and the completion of the plaintiff's house, no additional paving of the common driveway was done. Watson was told by the town, however, that in order to obtain a certificate of occupancy, the paved portion of the common driveway needed to be extended to the entrance of the plaintiff's property. Consequently, in 2008, Watson contracted with a third party to pave this portion of the common driveway at a cost of $4914, which Watson paid. The remainder of the driveway, however, remained a dirt road. Watson also paid $530.70 to Megson & Heagle Civil Engineers & Land Surveyors, LLC (Megson & Heagle), to satisfy an unpaid bill incurred by Daniel Zak, an agent for the defendant, in connection with the preparation of a Connecticut Light and Power Company easement map (easement map) for the common driveway.⁵

Between 2008 and 2011, no additional paving was done on any portion of the common driveway. In September, 2011, Zak notified Alter that the defendant intended to complete all of the remaining work required under the escrow agreement. The defendant, thereafter, engaged R & J Paving, LLC (R & J Paving), to pave the final portion of the common driveway, from the entrance of the plaintiff's property to the entrances to lots 3 and 4. The defendant did not, however, have a second, final layer of pavement installed, which Watson believed was required under the escrow agreement. Upon receipt from Zak of the paving invoice, Alter released $9000 to R & J Paving and divided the remainder of the escrow funds between Zak and Leonard Bourbeau, a member of the defendant. The plaintiff was never reimbursed for the costs it expended in extending the common driveway to the entrance to its property and settling the invoice for the easement map. The plaintiff, however, had not submitted invoices for these expenditures to Alter as required under the escrow agreement.

The plaintiff commenced the present action in March, 2013. In count two of the operative, revised complaint—the only count at issue in this appeal⁶ —the plaintiff alleged, inter alia, that the defendant breached the escrow agreement by improperly seeking the release of escrow funds.⁷ The plaintiff further alleged that, as a result, it sustained damages, including the costs to complete the work that the defendant had failed to perform.⁸ The matter was tried to the court on September 20 and 22, 2016.

At trial, the plaintiff appeared to abandon its claim that the defendant improperly sought the release of the escrow funds. The plaintiff, instead, proceeded under a theory that the defendant breached the escrow agreement by failing to install a second, final layer of pavement over the common driveway.⁹ The principal issue at trial was whether the defendant's obligation under the agreement to install a "final course of bituminous pavement" was intended to require the defendant to apply two layers of pavement. On this issue the parties presented contradictory evidence.

In its case-in-chief, the plaintiff presented parol evidence that, according to the plaintiff, tended to show that the parties had intended that the defendant be required to install two layers of pavement. Specifically, the plaintiff elicited the testimony of Watson, who testified that, prior to entering into the purchase agreement for lot 1, he and Zak had discussed the issue of the completion of the common driveway, and Zak had represented that there would be a "first paving and a second paving." Watson testified that he understood Zak's comments to mean that there would first be an "initial layer" of pavement sufficient for use during the construction of houses in the subdivision and that this would eventually be followed by a "final layer" of pavement. According to Watson, the escrow agreement was meant to memorialize this understanding.

As additional support for its position, the plaintiff elicited the testimony of Kevin Burton, the owner of one of the other lots in the subdivision, as well as the testimony of Roger Tabshey, the co-owner of the paving company with which the plaintiff had contracted to extend the common driveway. Burton testified that he purchased lot 2 from the defendant in late 2007 or early 2008 and that he likewise spoke with Zak prior to the purchase. According to Burton, Zak had represented that the entire common driveway would be completed as part of the development and that the "finish point" would be the second coat of the driveway. Tabshey testified that, in building a common...