Silvio Benedetto Associate, Inc. v. Joseph Porricelli et al. (2014)

MEMORANDUM OF DECISION RE APPLICATION FOR PREJUDGMENT REMEDY

I. Background

The plaintiff, Silvio Benedetto Associates, Inc. (“SBA”) a licensed real estate broker, has made application for a prejudgment remedy (PJR) to attach assets of the defendants in the amount of $1,938,000.¹  The claim is based on broker commissions allegedly earned by SBA and owed by the defendants arising from a real estate listing agreement.

The proposed complaint accompanying the PJR application alleges seven counts:  two breaches of the real estate listing agreement, two breaches of a covenant of good faith, two violations of the Connecticut Unfair Trade Practices Act, General Statutes § 42–110a et seq.  (CUTPA), and a claim to foreclose a broker's lien.   The plaintiff alleges the listing agreement and covenants were breached and CUTPA violated by the defendants' failure to pay a commission when SBA produced a ready, willing and able buyer, Mitchell Holdings, to purchase all the properties identified in the listing agreement for $43 million, and by failing to pay commissions when certain of the properties were leased during the purported term of the agreement.

A hearing on the application took place on December 2, 2013.   Post-hearing memoranda were filed in January 2014.

I. Scope of Review

The court is authorized to issue a PJR when it determines there is “probable cause” that a judgment in the amount of the prejudgment remedy sought or greater, taking into account any defenses counterclaims or set-offs, will be rendered in the case in favor of the plaintiff.  General Statutes § 52–278d(a).  “Probable cause” has been regularly defined by Connecticut courts as “a bona fide belief in the existence of the facts essential under the law for the action, and such as would warrant a man or ordinary caution prudence and judgment, under the circumstances in entertaining it.”   See e.g. TES Franchising, LLC v. Feldman, 286 Conn. 132, 137 (2008);  Ledge Brook Condominium Association, Inc., v. Lusk Corporation, 172 Conn. 577, 584 (1977);  Wall v. Toomey, 52 Conn. 35, 36 (1884).   This rather distended definition has been held to mean that the burden of proof required to establish probable cause is less than proof by a preponderance of the evidence, and it does not demand that belief be correct or more likely true than false.   Probable cause must be established both as to the merits of the case, and as to the amount of the PJR. TES Franchising, supra, 286 Conn. 137;  Cromwell Ltd. Partnership v. Adames, 125 Conn.App. 191, 194, 196 (2010).

II. Discussion

The essence of this case is founded on the issue of whether the defendant, Joseph Porricelli and the business entities identified above in n.1, had the authority to retain SBA as an exclusive real estate broker entitled to a broker's commission for obtaining a letter of intent from a prospective purchaser to purchase five separate properties and one business in Greenwich, Connecticut.

At the hearing SBA submitted as Exhibit A, an exclusive listing agreement dated July 27, 2010 signed by Silvio Benedetto as principal of SBA and Joseph M. Porricelli as vice-president of the two corporate defendants and “managing member” of the three limited liability company defendants.   The agreement entitled “Exclusive Right to Sell, Lease or Exchange” had a stated term of one year.   Exhibit B is a purported one-year extension of the agreement dated July 29, 2011;  Exhibit C is another purported extension of the agreement extending the exclusive listing to July 1, 2013.   Exhibits B and C were signed by Benedetto and Joseph Porricelli in the same capacities as noted on the original agreement, except Joseph Porricelli also signed Exhibit C in his individual capacity.

In 2009 and 2010 Joseph Porricelli commenced numerous litigations against his brother Gerald Porricelli and certain business entities in which the brothers had ownership interests, including J. Porricelli & Sons, Inc. LLC, Marmah, Inc., and Old Greenwich Food Mart, Inc., three of the defendants in this case.   Those cases were settled by means of a stipulation entered in open court on July 22, 2011, on which date withdrawals of the claims and counterclaims were filed.

About six months later Gerald and the business entities brought motions for contempt against Joseph who countered with his own cross motion for contempt.   This dispute was settled on May 15, 2012 by another stipulation and orders of the court.   See e.g. Porricelli v. Porricelli, Superior Court, judicial district of Stamford–Norwalk at Stamford, CV 09 5013230, Dkt. Entry 197.00.   The settlement terms relevant to this case is that the earlier settlement reached on July 22, 2011 “remains in full force and effect.”  Id., ¶ 5.

Exhibit 1 submitted by the defendants is the July 22, 2011 stipulation.   The elements of the agreement between Joseph and Gerald critical to this case include Paragraph 5 thereof calling for the parties, during a 60–day period beginning July 22, 2011, to either negotiate a “transaction” whereby Gerald would purchase, or cause to be purchased, Joseph's interests in those entities, or Joseph would purchase, or cause to be purchased, Gerald's interest.   Paragraph 6 states that during the 60–day period, Gerald would “continue” to operate the business.   In the event no such “transaction” is consummated during the 60–day period, Paragraph 12 states the bylaws and operating agreements of the business entities “shall be amended to provide that Gerald shall be the managing member or shareholder” of the entities with “exclusive authority to make decisions regarding the operation, leasing, sale or other disposition of the [businesses].”

During the hearing on the PJR application it was plain to the court that Silvio Benedetto and SBA knew full well, or should have known full well, that Joseph did not have actual or even apparent authority to bind the business entities to an exclusive listing agreement claimed to be in effect when Mitchell Holdings made its offer of $43 million.   See Ex. F.

At the very outset, when the first listing agreement was signed by Joseph, Silvio Benedetto testified he was “concerned about” Joseph's authority.   Tr., 20.²  But he testified repeatedly the only assurances he ever received came from Joseph himself or Joseph's attorney, Stephen Curley.  Id., 20, 44, 60.   He further testified he did not speak to Gerald at any time about the listing agreement as he knew Gerald would not sign the agreement, and the two had not been speaking since 2006.  Id., 44–48, 72.

The 2010 listing agreement (Ex. A) expired in July 2011.   There was no testimony as to who, if anyone, SBA talked to about the one-year extension to July 2012 (Ex. B) or the further extension to July 2013 (Ex. C).  Whereas, Attorney Curley might have had some basis for informing SBA that Joseph had authority to execute the listing agreement, in late July 2010 there was no basis for such advice, and Joseph clearly did not have the authority to extend the listing agreement for one additional year in either 2011 or 2012.   See Ex. 1, ¶ 12.

Furthermore, as Silvio Benedetto testified and the documentary evidence established, SBA was on clear notice from 2011 onward from Gerald's and the business entities' attorney that they rejected any claim it might make to be their exclusive broker.   Tr., 21, Exhs. 2, 3 and 4. SBA was also aware, and even Joseph expressed to it, that there had to be Gerald's approval before any real estate transaction would go forward.   Tr., 21, 23.

As the expiration of the second purported extension of the listing agreement neared, SBA forwarded to Joseph a letter of intent signed by Mitchell Holdings to purchase certain of the properties identified in Exhibit A for $43 million in cash.   Neither Joseph nor Gerald signed this letter of intent, and Gerald specifically rejected it in writing.   Tr. 59, Ex. G.

Upon review of the testimony and other evidence presented, the court finds there is not probable cause that SBA will succeed on its claims against the business entity defendants, namely Joseph Porricelli & Sons, LLC, JP–Cos Cob, LLC, JP–Soundbeach Ave., LLC, Marmah, Inc., and Old Greenwich Food Mart, Inc. because there did not exist an enforceable listing agreement in June 2013 when Mitchell Holdings sent its letter of intent, and there was no evidence presented whatsoever (other than Ex. F) that Mitchell Holdings was a ready, willing and able buyer.   Further, the court does not find probable cause that either of the three purported agreements presented were ever enforceable against the business entities.

There was some, rather disjointed, testimony about leases of the properties identified in the initial listing agreement.   However, there was no evidence as to when the leases were executed or as to the terms of the leases.   Mr. Benedetto testified he sent commission bills and emails to Joseph about these leases, but none of these were entered into the record.   It is conceivable that Joseph might have been able to bind the business entities during the one-year term of the initial listing agreement, but without the information concerning date, duration and amounts, the court has no basis to support the granting of a PJR based on leasing activity.

Joseph, a defendant in this case and represented by counsel separate from the counsel representing the business entities, is in an anomalous position.   In this PJR preceding he has ridden the coat tails of the business entities and opposed the application.   See Dkt. Entries 106.00, 110.00.   He did not personally appear at the December 2, 2013 hearing, although it seemed to the court that SBA's counsel expected to call him as a witness.   Tr. 77.   Because of the paucity of evidence of what real estate transactions occurred in during the existence of the initial listing agreement when it was possible that Joseph might have had a modicum of actual or apparent authority to bind the business entities, and the lack of any evidence that Joseph could bind them after July 2011, the court finds no basis to enter a PJR against Joseph.

The seventh count of SBA's complaint alleges the existence of a broker's lien and seeks foreclosure of that lien.   As defendants point out, SBA has already started a foreclosure action on the same property based on the same lien.   Silvio Benedetto Associates, Inc. v. Marmah, Inc., judicial district of Stamford–Norwalk at Stamford, CV 13 6019880.   The seventh count is likely to be dismissed pursuant to the prior pending action doctrine, and no PJR relief is warranted on that count.

IV. Conclusion

The PJR application is denied.

TAGGART D. ADAMS

JUDGE TRIAL REFEREE

FOOTNOTES

FN1. The defendants are Joseph Porricelli;  J. Porricelli & Sons, LLC;  JP–Cos Cob, LLC;  JP–Soundbeach Ave., LLC;  Marmah, Inc., and Old Greenwich Food Mart, Inc..  FN1. The defendants are Joseph Porricelli;  J. Porricelli & Sons, LLC;  JP–Cos Cob, LLC;  JP–Soundbeach Ave., LLC;  Marmah, Inc., and Old Greenwich Food Mart, Inc.

FN2. References to “Tr.” followed by a number are to pages of the transcript of the December 2, 2013 hearing..  FN2. References to “Tr.” followed by a number are to pages of the transcript of the December 2, 2013 hearing.

Adams, Taggart D., J.T.R.