LLC v. James Dwy et al. (2011)

MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT # 120

The issue before the court is whether to grant the defendant's motion for summary judgment on the ground that there is no genuine issue of material fact in that the plaintiff failed to properly exercise its right of first refusal over the subject real property.

I

FACTS

This is an action brought in three counts by the plaintiff, Noto Brothers Construction, LLC, by amended complaint filed on February 10, 2011, against the defendants, James Dwy, Brandon Lacoff ¹ and 21 Candlewood Shore, LLC (Candlewood).   In count one, the plaintiff seeks specific performance against Dwy, to acquire Lot 115R, Pruchnik Estates, New Milford, Connecticut (lot), based on a contract for sale between Dwy and Candlewood.   The plaintiff seeks specific performance based upon a right of first refusal it holds with respect to the lot.   Count two asserts a claim against Candlewood and Lacoff for tortuous interference with the plaintiff's right to acquire the lot based upon its right of first refusal.   Count three asserts a claim against Candlewood and Lacoff for violations of the Connecticut Unfair Trade Practices Act (CUTPA) with regard to their conduct in attempting to purchase the lot and attempting to frustrate the plaintiff's exercise of its right of first refusal.

The complaint alleges the following facts.   On February 11, 2010, Dwy entered into a contract for the sale of the lot to Candlewood.   The plaintiff, however, holds a right of first refusal over the lot as set forth in certain restrictive covenants recorded in the New Milford land records and the plaintiff claims that it exercised that right.   Thereafter, Dwy provided the plaintiff with a contract of sale that included, as part consideration for the sale of the lot, (1) a baseball signed by two former major league baseball players;  and (2) a release of an alleged claim by Lacoff against Dwy that had no basis in law or fact, and that was ultimately judicially determined to be without merit.   According to the plaintiff, Lacoff demanded a payment of $48,022 from the plaintiff in lieu of the release required by the contract.   The plaintiff alleges that this contract differed substantially and fundamentally from the contract of sale that Dwy had offered to Candlewood.   The plaintiff alleges that it was at all times and is still ready, willing and able to purchase the lot, to pay Dwy the sums due and to perform all conditions under the terms of the original agreement between Dwy and Candlewood.   Dwy has refused to convey the lot to the plaintiff in accordance with those terms.

Candlewood filed a counterclaim against the plaintiff on January 3, 2011, seeking a judgment determining the rights of the parties and settling title to the lot on the basis that the plaintiff failed to properly and adequately exercise its right of first refusal.   On February 17, 2011, Candlewood filed the present motion for summary judgment along with a supporting memorandum of law and evidentiary support on its counterclaim against the plaintiff.   Candlewood seeks an entry of summary judgment in its favor on the ground that there is no genuine issue of material fact that the plaintiff failed to properly and adequately exercise its right of first refusal over the lot.   On March 16, 2011, the plaintiff filed a memorandum in opposition to Candlewood's motion for summary judgment along with evidentiary support.

The matter was heard on the March 21, 2011 short calendar.   Additional facts will be presented as necessary.

II

DISCUSSIONASummary Judgment Standard

“Practice Book § 17–49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.”  (Internal quotation marks omitted.)  Sherman v. Ronco, 294 Conn. 548, 553–54, 985 A.2d 1042 (2010).  “[T]he ‘genuine issue’ aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred ․ A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case.”  (Citation omitted;  internal quotation marks omitted.)  Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).

“In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact.   The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law.   The courts hold the movant to a strict standard.   To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ․ As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent ․ When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue ․ Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue ․ It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue.   Mere assertions of fact ․ are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17–45].”  (Internal quotation marks omitted.)  Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10–11, 938 A.2d 576 (2008).

B

Analysis

Candlewood moves for summary judgment on the ground that there is no genuine issue of material fact that the plaintiff has failed to properly and adequately exercise its right of first refusal because it has not paid a deposit of $7,500 to Dwy as required by the original contract of sale.   In support of its argument, Candlewood submits an unauthenticated ² copy of the February 11, 2010 contract between Dwy and Candlewood, and various letters and emails between Dwy and the plaintiff.

The plaintiff objects arguing that summary judgment is not proper because there are genuine issues of material fact regarding whether the plaintiff's tender of the deposit would have been futile and whether the underlying contract was the product of bad faith by Candlewood and Lacoff.   Additionally, the plaintiff objects arguing that summary judgment is not an appropriate vehicle upon which to decide a claim for specific performance.   In support of its argument, the plaintiff submits an uncertified copy of portions of Lacoff's deposition transcript.³

“[A] right of first refusal is known more technically as a preemptive option, as a right of preemption, or simply as a preemption.   A right of pre-emption is a right to buy before or ahead of others;  thus, a pre-emptive right contract is an agreement containing all the essential elements of a contract, the provisions of which give to the prospective purchaser the right to buy upon specified terms, but, and this is the important point, only if the seller decides to sell.   It does not give the pre-emptioner the power to compel an unwilling owner to sell, and therefore is distinguishable from an ordinary option ․ Thus, the purpose of a right of first refusal is not to allow the holder to compel the property owner to sell the property at a designated price, as may be the case with the existence of an option ․ Rather, the purpose is to allow the holder of the right to be notified when the owner intends to sell, or has accepted an offer, which, in most cases, will be presumptively the fair market value of the property, and to allow the holder to purchase the property under identical terms.”  (Citations omitted;  emphasis in original;  internal quotation marks omitted.)  Tadros v. Middlebury Medical Center, Inc., 263 Conn. 235, 240–41, 820 A.2d 230 (2003).

“An option is a continuing offer to sell, irrevocable until the expiration of the time period fixed by agreement of the parties, which creates in the option holder the power to form a binding contract by accepting the offer.”  Smith v. Hevro Realty Corp., 199 Conn. 330, 336, 507 A.2d 980 (1986).  “The principles that govern the interpretation of an option contract are well settled.   To be effective, an acceptance of an offer under an option contract must be unequivocal, unconditional, and in exact accord with the terms of the option ․ If an option contract provides for payment of all or a portion of the purchase price in order to exercise the option, the optionee, to be entitled to a conveyance, must not only accept the offer but pay or tender the agreed amount within the prescribed time ․ In such cases, a mere acceptance of the offer, even though unequivocal, is insufficient to exercise the option.”  (Citations omitted;  internal quotation marks omitted.)  Id., 339.   Nonetheless, “[t]ender may be excused where it would be a mere futility ․” (Citation omitted;  internal quotation marks omitted.)  Id., 342;  see Vachon v. Tomascak, 155 Conn. 52, 57, 230 A.2d 5 (1967) (“[A] party is not required to go through the idle ceremony of making a physical tender.   The law does not require an act which would be a mere futility” (internal quotation marks omitted)).

“In considering whether [a party] exercised effectively its right of first refusal, there are several countervailing interests to be considered.   On one hand, there is a significant interest in promoting the free alienability and marketability of land.   A person or entity generally should have primary control over the disposition of property he, she, or it owns ․ On the other hand, [the court] must consider the fact that [when a party is initially granted a right of first refusal, it acquires] an equitable property interest in the Property ․ [T]he preemptive right was the product of a bargained-for exchange voluntarily entered ․ As such, one who enters into a contract must cooperate in good faith to carry out the intention the parties had in mind when it was made;  and that he should not be permitted to engage in any subterfuge or devious means to prevent the other party from performing, and then use that as an excuse for failing to keep his own commitment ․ With that in mind, even jurisdictions which require a preemptioner to match exactly the terms of a triggering offer ․ recognize the following three exceptions to that rule:  (1) the property owner may waive exact matching, either through actions or express waiver;  (2) proper names need not be matched because to hold otherwise would require the preemptioner to change its name in order to exercise the first option of purchase;  and (3) the property owner, for the purpose of discouraging the holder of the preemptive right from exercising its right of first refusal, may not insert into the triggering offer terms which its knows will be repugnant to the holder ․ In other words, the property owner, and possibly the third-party purchaser, must not be allowed to add in bad faith terms to the triggering offer which are intended to nullify the right of first refusal.”  (Citations omitted.)  David A. Bramble, Inc. v. Thomas, 396 Md. 443, 460–62, 914 A.2d 136 (2007);  see Matson v. Emory, 36 Wash.Ct.App. 681, 683, 676 P.2d 1029 (1984) (“The right [of first refusal] is a valuable contract right which should not be rendered illusory by imposing requirements that are impossible to meet”);  Brownies Creek Collieries, Inc. v. Asher, 417 S.W.2d 249, 252 (Ky.1967) (“[D]efeat of the right of first refusal should not be allowed by use of special, peculiar terms or conditions not made in good faith.”).   Moreover, “even in states which require positive, unconditional, and unequivocal acceptance, there is an implied covenant that a party will act in good faith not to defeat improperly a bargained-for preemptive right.”   David A. Bramble, Inc. v. Thomas, supra, 463.

“[S]ummary judgment is ordinarily inappropriate where an individual's intent and state of mind are implicated ․ The summary judgment rule would be rendered sterile, however, if the mere incantation of intent or state of mind would operate as a talisman to defeat an otherwise valid motion.”  (Internal quotation marks omitted.)  Chadha v. Charlotte Hungerford Hospital, 97 Conn.App. 527, 539, 906 A.2d 14 (2006).  “[E]ven with respect to questions of motive, intent and good faith, the party opposing summary judgment must present a factual predicate for his argument in order to raise a genuine issue of fact.”  Wadia Enterprises, Inc. v. Hirschfeld, 224 Conn. 240, 250, 618 A.2d 506 (1992).

In the present case, there is no dispute that the plaintiff did not tender the deposit.   The plaintiff's evidence, however, demonstrates that there are genuine issues of material fact concerning whether the plaintiff's tender of the deposit would have been futile and whether the contract terms were inserted into the contract in bad faith.   Specifically, Lacoff's deposition testimony demonstrates that there is a dispute over whether Candlewood and Dwy intended to make it more difficult or impossible for the plaintiff to exercise its right of first refusal by drafting the contract to include the signed baseball and the release of the claim.   Notably, Lacoff testifies that he agrees that the release provision in the contract made it legally impossible for the plaintiff to exercise its right of first refusal.   Consequently, genuine issues of material fact exist concerning whether the plaintiff was required to tender the deposit to properly exercise its right of first refusal.

Accordingly, Candlewood's motion for summary judgment is hereby denied.

BY THE COURT,

Roche, J.

FOOTNOTES

FN1. Lacoff is the controlling member of 21 Candlewood Shore, LLC..  FN1. Lacoff is the controlling member of 21 Candlewood Shore, LLC.

FN2. “Only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment.”  Great Country Bank v. Pastore, 241 Conn. 423, 436, 696 A.2d 1254 (1997).  “[B]efore a document may be considered by the court in support of a motion for summary judgment, there must be a preliminary showing of [the document's] genuineness, i.e., that the proffered item of evidence is what its proponent claims it to be.”  New Haven v. Pantani, 89 Conn.App. 675, 679, 874 A.2d 849 (2005).   A court has discretion, however, to consider unauthenticated documentary evidence when no objection has been raised by the opposing party.   Barlow v. Palmer, 96 Conn.App. 88, 92, 898 A.2d 835 (2006).   Since the plaintiff has not objected to the unauthenticated documentary evidence, the court may consider all of Candlewood's evidence in ruling on the motion for summary judgment..  FN2. “Only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment.”  Great Country Bank v. Pastore, 241 Conn. 423, 436, 696 A.2d 1254 (1997).  “[B]efore a document may be considered by the court in support of a motion for summary judgment, there must be a preliminary showing of [the document's] genuineness, i.e., that the proffered item of evidence is what its proponent claims it to be.”  New Haven v. Pantani, 89 Conn.App. 675, 679, 874 A.2d 849 (2005).   A court has discretion, however, to consider unauthenticated documentary evidence when no objection has been raised by the opposing party.   Barlow v. Palmer, 96 Conn.App. 88, 92, 898 A.2d 835 (2006).   Since the plaintiff has not objected to the unauthenticated documentary evidence, the court may consider all of Candlewood's evidence in ruling on the motion for summary judgment.

FN3. “While [a party's] deposition testimony is not conclusive as a judicial admission;  General Statutes § 52–200;  it is sufficient to support entry of summary judgment in the absence of contradictory competent affidavits that establish a genuine issue as to a material fact.”   Collum v. Chapin, 40 Conn.App. 449, 450 n.2, 671 A.2d 1329 (1996).   Where uncertified deposition transcripts are submitted without objection in support of or in opposition to a motion for summary judgment, the court may, in its discretion, choose to consider or exclude them.  Barlow v. Palmer, supra, 96 Conn.App. 92.   Since Candlewood has not objected to the submission of the uncertified deposition transcript, the court may consider it in ruling on the motion for summary judgment..  FN3. “While [a party's] deposition testimony is not conclusive as a judicial admission;  General Statutes § 52–200;  it is sufficient to support entry of summary judgment in the absence of contradictory competent affidavits that establish a genuine issue as to a material fact.”   Collum v. Chapin, 40 Conn.App. 449, 450 n.2, 671 A.2d 1329 (1996).   Where uncertified deposition transcripts are submitted without objection in support of or in opposition to a motion for summary judgment, the court may, in its discretion, choose to consider or exclude them.  Barlow v. Palmer, supra, 96 Conn.App. 92.   Since Candlewood has not objected to the submission of the uncertified deposition transcript, the court may consider it in ruling on the motion for summary judgment.

Roche, Vincent E., J.