LLC v. KR LLC (2014)

MEMORANDUM OF DECISION

On January 9, 2014, in this commercial brokerage commission matter, the court heard testimony and received documentary evidence at a bench trial.   The plaintiff claims that the defendant owes commissions pursuant to an agreement between the parties.   In accordance with an agreed briefing schedule, the parties submitted memoranda of law, in lieu of oral argument, on January 31, 2014.   After consideration, the court issues this memorandum of decision.

I

Background

At trial, five witnesses testified.   In addition, the parties presented evidence through various documents.   The court finds the following facts and credits the following evidence, except as noted.

On March 4, 2010, the plaintiff, Matthews Commercial Properties LLC, and the defendant, KR Realty LLC, entered into an agreement, entitled “Exclusive Right To Sell/Lease/Exchange (the agreement).   See plaintiff's Exhibit 4. At that time, the defendant owned commercial premises located at 49 Lancaster Drive, Beacon Falls, Connecticut (the property).

The agreement provided that the plaintiff was appointed as the defendant's Exclusive Agent for a term of six months, commencing on March 10, 2010 and terminating on September 4, 2010.

The plaintiff introduced Mark Thrasher to the defendant.   Lavatec Laundry Technology, Inc. (Lavatec) entered into possession of a portion of the property, pursuant to a lease with the defendant, with an initial one-year term commencing on September 1, 2010 and ending on August 31, 2011.   See plaintiff's Exhibit 5 (lease).   Thrasher signed the lease as president of Lavatec.   Richard Stankye, a member of the defendant, signed the lease on November 20, 2010.   The defendant paid the plaintiff a commission for procuring Lavatec as a tenant.

On August 25, 2010, prior to the execution of the lease, the plaintiff sent a letter to the defendant requesting an extension of the agreement, stating that the listing period “has or is about to expire.”   See defendant's Exhibit A. The plaintiff proposed a new listing expiration date of April 4, 2011.   See defendant's Exhibit A (second page).   The defendant did not agree to the proposed extension.   Stankye testified that he was unhappy with the plaintiff's services.

On April 25, 2011, after the six-month term provided in the agreement had expired on September 4, 2010, Edward Godin of the plaintiff sent a proposal from Thrasher to Stankye, for a three-year lease of the entire property, commencing on July 1, 2011.   See plaintiff's Exhibits 8 and 9. In his proposal, Thrasher requested an option to buy the property at any time during the three-year lease, for $525,000.   See plaintiff's Exhibit 9.

On May 13, 2011, Stankye responded to Thrasher's proposal with comments and different proposed terms for a three-year lease.   As to an option to purchase, Stankye stated that the price would be open to negotiation when Thrasher exercised the option.   See plaintiff's Exhibits 10 and 11.

By letter dated May 24, 2011, Lavatec notified the defendant that it was exercising its option to extend the lease for an additional year.   See plaintiff's Exhibit 12 and lease, ¶ 2(d).

On December 21, 2011, the defendant entered into a purchase and sale agreement with Thrasher Real Estate Holdings LLC to sell and convey the property for the sum of $560,000.00.   See plaintiff's Exhibit 13.   The closing occurred on February 17, 2012.   See plaintiff's Exhibit 14 (closing statement) and 15 (warranty deed).   Additional references to the facts are set forth below.

II

DiscussionASale Of The Property

“The right of a brokerage firm to recover a commission depends upon the terms of its employment contract with the seller.”  Revere Real Estate, Inc. v. Cerato, 186 Conn. 74, 77, 438 A.2d 1202 (1982).  “The listing contract may ․ make the broker's right to a commission dependent upon specific conditions, such as the consummation of the transaction and the full performance of the sales contract.”  Id., 78.

“[I]n construing contracts, we give effect to all the language included therein, as the law of contract interpretation ․ militates against interpreting a contract in a way that renders a provision superfluous ․ [W]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law ․ It is the general rule that a contract is to be interpreted according to the intent expressed in its language and not by an intent the court may believe existed in the minds of the parties ․ When the intention conveyed by the terms of an agreement is clear and unambiguous, there is no room for construction ․ [A] court cannot import into [an] agreement a different provision nor can the construction of the agreement be changed to vary the express limitations of its terms ․ The circumstances surrounding the making of the contract, the purposes which the parties sought to accomplish and their motives cannot prove an intent contrary to the plain meaning of the language used ․ It is axiomatic that a party is entitled to rely upon its written contract as the final integration of its rights and duties.”  (Citations omitted;  internal quotation marks omitted.)  Yellow Book Sales and Distribution Co., Inc. v. Valle, 311 Conn. 112, 119 (2014).

In arguing that it is entitled to a commission based on the sale of the property, the plaintiff relies on paragraphs 2, 7, and 8 of the agreement.   See plaintiff's brief (# 110), pp. 5–6.

Paragraph 2 of the agreement provides:  “TERM OF AGREEMENT.   This Agreement shall remain in effect for a term of six months commencing on March 4, 2010 and terminating in September 4, 2010.   You agree to notify us in writing within forty-eight (48) hours if you procure a customer ready, willing and able to buy/lease the property.   Prior to termination of this listing agreement, we will provide you with a list of all viable prospects to whom we have shown the property.   You agree that we will be the procuring agent should any of these prospects enter into an agreement to PURCHASE/LEASE/EXCHANGE the property within six (6) months after the listing termination date or any extension thereof.”  (Emphasis added.)

Paragraph 7 of the agreement provides, “THE COMMISSION.   During the term of this Agreement if the property is SOLD/LEASED/EXCHANGED or someone is found by MATTHEWS COMMERCIAL PROPERTIES LLC who is ready willing and able to BUY/LEASE/EXCHANGE it for the price shown in Number Five, (# 5) above, or on any other terms to which you have agreed, you will pay us a commission of ․” (Emphasis added.)   The parties then inserted:  “Six (6%) percent of the sale price.   Six (6%) percent of the aggregate rent for the first 5 years and three (3%) percent of the aggregate rent for the remaining term.  (If Ed Godin is the only broker/agent involved in the transaction the fee shall be reduced to five (5%) percent on a sale or lease.)”

After the inserted language, the following language appears in paragraph 7:  “of the SALE/LEASE/EXCHANGE value, or one (1) month's rent per year on leases for two (2) years or less.   Commissions are due and payable upon execution of a lease or upon occupancy, whichever is first.”

Paragraph 8 of the agreement provides:  RENEWALS.   You also will pay us commissions, when due, on any renewals, extensions, enlargements, exercise of options to purchase, or new leases for the same property at the commission rates set forth in this agreement.”

The plaintiff argues that while paragraph 2 expressly requires actual entry into an agreement within a specified period, “Provision 7 imposes no such ‘enter into an agreement’ requirement upon someone procured by Plaintiff during the term of the listing agreement.   Accordingly, there is no requirement that agreement be entered for sale during the listing agreement as applicable to Defendant.”   See plaintiff's brief, pp. 5–6.   The plaintiff asserts that the terms of paragraphs 7 and 8 apply and govern the commission due and owing on the sale, in that it found a party ready, willing, and able to act on terms to which the defendant agreed;  and that party renewed, extended and enlarged the relationship obtained by the plaintiff for the defendant.

The court is unpersuaded.   The termination date of the agreement was September 4, 2010.   Paragraph 7 must be read in its entirety, giving meaning to all the language included therein.   The agreement is not to be interpreted so as to render a provision superfluous.   See Yellow Book Sales and Distribution Co., Inc. v. Valle, supra, 311 Conn. 119.

As stated above, paragraph 7 provides that an obligation to pay a commission is incurred if, “[d]uring the term of this Agreement,” someone was found by the plaintiff who was ready, willing and able to buy the property for the price shown in paragraph 5 ($650,000.00), or on any other terms to which the defendant agreed.   The plaintiff did not prove that Thrasher or any person or entity affiliated with him offered to buy the property during the term of the agreement.¹  The plaintiff did not prove that Thrasher or any person or entity affiliated with him was ready, willing, and able to buy the property during the term of the agreement, for either the listed sum of $650,000.00 or for $560,000.00, the price for which it was later sold.   The agreement to purchase the property occurred well after the term of the agreement expired.

As to paragraph 8, it is entitled “Renewals,” and refers to an obligation to pay commissions for “renewals, extensions, enlargements, exercises of options to purchase, or new leases.”   It does not refer to sales.   The lease contained no option to purchase.²  The fact that Lavatec's occupancy of the premises continued after the expiration of the lease term does not amount to a sale.   The sale which occurred was not a renewal or extension of the lease, nor was it an enlargement, an exercise of an option to purchase, or a new lease.   The plaintiff has not proved that what occurred entitles it to a sale commission.

Similarly unavailing are plaintiff's references to Connecticut decisional law.   In contrast to the facts here, in Vincent Metro, LLC v. Ginsberg, 139 Conn.App. 632, 639–40, 57 A.3d 781 (2012), cert. denied, 308 Conn. 907, 61 A.3d 1097 (2013), it was undisputed that the plaintiff introduced “John to YAH and that he and YAH entered into a contract for the purchase and sale of unit 16 during the period of the plaintiff's exclusive listing agreement.”   Here, the plaintiff has not proved that an agreement for purchase and sale was entered into during the listing period provided in the agreement.

Similarly, concerning Covino v. Pfeffer, 160 Conn. 212, 276 A.2d 895 (1970), also cited by the plaintiff, as the Appellate Court stated in Vincent Metro, LLC v. Ginsberg, supra, 139 Conn.App. 643, in contrast to the facts here, in that matter “the court concluded that the plaintiff broker was entitled to a commission based upon sales of listed properties which, although not consummated until after the expiration of the subject listing agreement, were fully negotiated and agreed to within the period of the agreement. ”  (Emphasis added.)   See Covino v. Pfeffer, supra, 160 Conn. 215 (“During the life of an exclusive sale contract, an agreement between the owner and the ultimate purchaser to sell and buy, whether or not specifically enforceable, gives rise to a cause of action on the part of an exclusive broker who uses reasonable efforts to sell the property”).

Also, Zaniewski v. Mancinone, 37 Conn.Sup. 698, 435 A.2d 50 (App.Sess.1981), cited by the plaintiff, did not concern interpretation of a listing agreement's period of duration.   Rather, in that matter, there was “an open listing agreement,” and “[t]here [was] no dispute that had the [lease renewal] options been exercised, the plaintiff would be entitled to a commission in the amount claimed.”  Id., 698–99.   Under those circumstances, the reviewing court determined that the owner's conduct in accepting an untimely exercise of an option amounted to waiver and that the broker was entitled to a commission.   See id., 701–03.   Therein, the court cited Ranney v. Rock, 135 Conn. 479, 482, 66 A.2d 111 (1949).   In that matter, no listing agreement was cited;  rather, it appears that the real estate broker had an oral agreement with the owner.   See id., 480.

The plaintiff also cites Pena v. Pestano, 124 Conn.App. 752, 759, 6 A.3d 159, cert. denied, 299 Conn. 922, 10 A.3d 1053 (2010).   There, based on General Statutes § 20–325a(d), the court concluded that it would be inequitable to deny recovery.   See id., 758–59.   Compliance with § 20–325a is not at issue here.

B

Renewal of Lease

As discussed above, in paragraph 8, the agreement provided that a commission would be owed if the lease were renewed.   The evidence shows that Lavatec exercised its renewal option.   See lease, paragraph 2(d).  Lavatec continued to occupy the premises after the expiration of the initial lease term on August 31, 2011.

Although the lease provided that the amount of rent for a lease extension would be determined by agreement when the renewal option was exercised, Lavatec continued to pay the same monthly rent, $2,850.00.   The defendant's brief, page 10, states that “Lavatec and the defendant appeared to treat the renewal as a month-to-month tenancy because the rental amount was never agreed upon and there was no meeting of the minds.”

Paragraph 7 of the agreement provides for a commission of one month's rent per year on leases for two years or less.   Since, after the initial term ended, Lavatec's occupancy continued, in effect by agreement, at the same rent, the plaintiff has proved that it is entitled to a commission of $2,850.00, equal to one month's rent.   See lease, par. 3(a).

CONCLUSION

1. For the reasons stated above, judgment may enter for the plaintiff and against the defendant in the amount of $2,850.00.

2. Paragraph 11 of the agreement provides for an award of costs and reasonable attorneys fees if liability is found in favor of the plaintiff.   As agreed at trial, the plaintiff may file a motion for an award of attorneys fees, with an affidavit of attorneys fees.   The plaintiff's motion shall be filed by March 26, 2014.   By April 8, 2014, the defendant may file a response thereto.   Thereafter, counsel are directed to contact the Caseflow Office in order to schedule a hearing before this court to consider the motion.

It is so ordered.

BY THE COURT

ROBERT B. SHAPIRO

JUDGE OF THE SUPERIOR COURT

FOOTNOTES

FN1. Thrasher's April 2011 lease proposal was presented long after the expiration of the term of the agreement, and included a request for an option to purchase the property for $525,000.00.   It was not an offer to purchase..  FN1. Thrasher's April 2011 lease proposal was presented long after the expiration of the term of the agreement, and included a request for an option to purchase the property for $525,000.00.   It was not an offer to purchase.

FN2. Plaintiff's Exhibit 16, a pre-lease email message from Stankye to Godin, dated August 10, 2010, page 2, stated only that Stankye told Thrasher that he would give Thrasher “first option on purchasing the building if I have any other interested parties.”   No sales amount was mentioned.   The lease contains an integration clause, paragraph 29, which provides that “no oral statements or representations or prior written matter not contained in this instrument shall have any force or effect.”.  FN2. Plaintiff's Exhibit 16, a pre-lease email message from Stankye to Godin, dated August 10, 2010, page 2, stated only that Stankye told Thrasher that he would give Thrasher “first option on purchasing the building if I have any other interested parties.”   No sales amount was mentioned.   The lease contains an integration clause, paragraph 29, which provides that “no oral statements or representations or prior written matter not contained in this instrument shall have any force or effect.”

Shapiro, Robert B., J.