Opinion
No. CV-02-0468937 S
August 28, 2003
MEMORANDUM OF DECISION
Plaintiff (Skolnick) brings this action seeking that the defendant (Setlow) pay him a real estate commission.
Skolnick, a duly licensed real estate broker, employed by Walmart and working also in real estate had shown Setlow property on Fountain Street in New Haven in the Westville community in May 1996. Title to the property passed to Setlow in September 1996 for which Skolnick received a commission (Exhibit 3) in the amount of $8,940. The purchase price of the property ("Property") now the subject of the claim of a commission in this case was $149,000.
Skolnick prepared the letter agreement Exhibit 1 signed by Setlow, the seller.
Letter Agreement:
September 4, 1996
Setlow Realty Company
16 Tumblebrook Road
Woodbridge, Connecticut 06525
Attention: Mr. Herbert D. Setlow
Re: B'nai B'rith Housing Project
319 Fountain Street, New Haven
Rear 43-45 West Prospect Street, New Haven
Rear 31 West Prospect Street, New Haven
Rear 17 West Prospect Street, New Haven
Portion 349 Fountain Street, New Haven
Dear Herb,
This letter shall be made a part of the agreement between Setlow Realty Company as Seller and B'nai B'rith Housing Inc. as Buyer for the above referenced property.
As stated in the attached agreement known as Exhibit 4 C1-Binding Option Agreement B'nai B'rith Housing Inc. desires an option on the above referenced parcels to develop a senior residential housing project.
The agreement states that David Skolnick of Skolnick Company, Realtors is the sole broker in this transaction. Setlow Realty Company agrees to pay David Skolnick of Skolnick Realty a commission in the amount of Ten percent (10%) of the purchased price. In the event the Buyer, B'nai B'rith Housing Inc. exercises its option to purchase the property, the Seller shall pay the commission to David Skolnick of Skolnick Company, Realtors at the time of the closing.
Please sign where indicated below. If you have any questions please contact me.
Very truly yours,
SKOLNICK COMPANY, REALTORS
David Skolnick David Skolnick
Accepted By: Seller Herbert D. Setlow
The letter agreement refers to the Binding Option Exhibit 4 C1.
EXHIBIT 4 C1 BINDING OPTION
Setlow Realty Company, of 16 Tumblebrook Road, Woodbridge, Connecticut 06525, hereafter known as the Seller, grants an option agreement dated September 4, 1996 to B'nai B'rith Housing Inc., 1640 Rhode Island Avenue N.W., Washington D.C. 20036-3278, hereafter known as the Buyer, to purchase the following property located in the City of New Haven, Connecticut (As shown in Exhibit A, Attached).
319 Fountain Street, New Haven Assessors Map Number: 419-1219-023
Rear 43-45 West Prospect Street, New Haven 419-1219-3101
Rear 31 West Prospect Street, New Haven 419-1219-2902
Rear 17 West Prospect Street, New Haven 419-1219-2901
Portion 349 Fountain Street, New Haven
The portion of land included in the option agreement known as 349 Fountain Street is the expanded driveway leading from Fountain Street to the interior properties listed above, and as shown on the plans prepared by Paul Bailey, Architect, dated September 1996 (as shown in Exhibit A, attached). The Seller shall retain a right of way by foot and vehicle across the expanded driveway referred to above for use as ingress and egress to the residence known as 349 Fountain Street (which is not included in this agreement). The Seller retains ownership of the residence at 349 Fountain Street and all other property at 349 Fountain Street with the exception of the expanded driveway.
The option agreement shall be subject to the Buyer being able to obtain approval from the Department of Housing and Urban Development (HUD) of a Section 202 application and HUD funding for all project development costs through a capital grant. The option agreement shall also be subject to HUD approval of the purchase price of this property. In the event the purchase price is lower than the sum stipulated in this agreement, the Seller shall have the option to accept the lower price or to terminate this agreement at his sole discretion.
The option agreement shall terminate on December 31, 1996, if the Buyer does not notify the Seller of their intent to purchase the subject property. The option may be extended for an additional six months beyond December 31, 1996 at the sole discretion of the Buyer. If the Buyer is advised by HUD at any time during the option period that HUD will not fund the Section 202 application with a capital grant, this agreement is terminated.
The Seller certifies that to the best of his knowledge the entire optioned property is 100% environmentally clean. If subsequent testing demonstrates that the site is not 100% environmentally clean, Buyer may terminate this transaction at their sole discretion.
The purchase price shall be $400,000, or $10,000 for each dwelling unit approved by HUD, whichever is less.
Both parties agree that the real estate broker in this transaction is David Skolnick, of Skolnick Company, Realtors. All brokerage fees and commissions are to be paid by the Seller.
Acceptance of this option agreement is evidenced by the signatures which appear below.
Seller: Setlow Realty Company
Buyer: B'nai B'rith Housing Inc.
Herbert D. Setlow By:
Date: September 5, 1996
Harold Miller By:
Title: Trustee Title:
Date:
The agreement provides that Skolnick is the sole broker and that Setlow agrees to pay Skolnick 10% of the purchase price in the event that B'nai B'rith Housing purchases the property to develop for senior residential housing project.
Skolnick testified that he was as was Setlow a member of a committee of B'nai B'rith who were investigating property for senior housing. They had gone to a site on Whalley Avenue in New Haven that was too large a site. Negotiations for the larger site on Whalley Avenue did not work out and Skolnick took them to the Fountain Street site (Setlow property) to see if the site would fit the needs to build a 40-unit senior housing project. B'nai B'rith had hired a HUD consultant, John Gottlieb (Gottlieb) and an architect to assist B'nai B'rith in obtaining necessary HUD funding for the project of senior citizen housing.
The defendant argues that Skolnick is trying to get a commission on a sale that never took place — and that Setlow, the grantor and B'nai B'rith as grantee never intended there to be a sale. Skolnick learned that the title to the property was transferred to B'nai B'rith December 31, 1997 because HUD agreed to fund three projects in the state and that B'nai B'rith was one of the projects going to be funded. Skolnick testified he had a Buyer ready, willing and able to purchase the property; that he was to receive a commission of 10% on the sales price of $400,000. When Skolnick discussed his commission with Setlow, Setlow took the position that he donated the property and therefore did not receive compensation for the property and therefore Skolnick was not entitled to a commission. Skolnick testified that it was not until the middle of 1997 that he learned that Setlow donated the property to B'nai B'rith and that it was after he completed his work on the option. The option recites that the agreement shall terminate on December 1996 but may be extended six months beyond December 31, 1996 at the sole discretion of the Buyer. Further if the Buyer is advised by HUD at any time during the option period that HUD will not fund the Section 202 application with a capital grant, the option is terminated.
Setlow argues that Skolnick is seeking the 10% commission upon a sale never consummated under the unexercised and expired "option agreement." Setlow called Harold Miller (Miller), an independent third party whose signature is affixed to the option as the purported ready buyer, President of B'nai B'rith Housing of New Haven Inc., who testified that he formed the senior housing corporation of B'nai B'rith involved in the Fountain Street property. Miller was asked if he would consider funding a place and build a building under HUD similar to what was being done around the country. Miller gave the backgrounds of both Setlow and Skolnick. Setlow was at one point running for international president of B'nai B'rith, president of their district and very active for a long period of time. Skolnick had been active in Horeb Lodge of B'nai B'rith. Miller testified that they had formed a B'nai B'rith Housing of New Haven, Inc. and that he was president. Miller testified the signature on the option did not look like his signature. More unfortunately Miller testified B'nai B'rith Housing of New Haven, Inc. did not have an intention to purchase the Fountain Street property and never had the dollars in hand to purchase the property.
Miller stated that they examined the Whalley Avenue Site with a committee. One member of the committee was Skolnick. Miller became aware of the Fountain Street property because he knew Setlow had purchased it. Miller was in constant conversation with Setlow and said to Setlow "why don't you donate it, and, you know, obviously then, I mean, it makes our job with HUD much easier, submitting our application, and so that's really how it started." Miller further stated from the get go I talked to Setlow about donating it, and one of the primary factors in there was advising him of the tax benefits of doing so. Miller is a CPA. Miller also pointed out that by donating the property rather than a purchase would obviously make more money available to them to build the project.
Miller asserted he had friendly relations with both Setlow and Skolnick. Miller testified they would have no funds to buy the property and the conversations he had with Setlow always focused on a contribution of the property. Upon being asked by the court if he signed the instrument he testified affirmatively.
Miller engaged Gottlieb on the application for HUD funds. Skolnick was working with Gottlieb to assist B'nai B'rith to obtain the funding. (See Exhibit 2.)
Miller testified that if they did not get the HUD funds the property would not have been purchased. (Transcript, page. 47.)
Gottlieb was engaged in the summer of 1996 before Exhibit 1 was written. B'nai B'rith obtained an appraisal of the property which coincided with the value of $400,000 recited in the agreement and/or $10,000 per unit for 40-unit proposals which HUD customarily allowed for developing the land for senior housing.
Miller testified that the option (Exhibit 1) also recited that a commission was due on the sale. The appraisal also went with the submission of the application.
The application was submitted to HUD in the late summer and it was ultimately approved. Gottlieb was in charge of the submission to HUD. The award for the project initially was 3.4 million dollars and it was completed on July 1, 2000 when the first tenant moved in.
There was nothing in the option agreement that the property was going to be donated.
Miller advised Setlow that the property had to be held for twelve months to be able to get the tax benefits for a donation of the property at the fair market value. Less than twelve months a credit for a charitable donation is at the cost of the property to the donor.
There were other properties on the land not included in the transfer to B'nai B'rith. The property was obtained by Setlow on June 12, 1996. Title to the property passed on December 31, 1997. Miller had advised Setlow that he had to at least hold the property for 12 months before he donated it to get full value of IRS purposes. (TR. 59.)
Miller admitted that the land value would be part of the submission to HUD.
This court concludes from all the evidence that the agreement, Exhibit 1, is an exclusive right to Skolnick to market the property to B'nai B'rith and that if that was occasioned he would be entitled to a 10% commission on the sales price of $400,000. The court further concludes that the funding of 3.4 million dollars included the land value of $400,000. The agreement at no place either in the letter or the option revealed that B'nai B'rith was going to be the recipient of a charitable gift of the property valued at $400,000. The letter agreement signed by Setlow recites a 10% commission.
Skolnick had an exclusive right only upon a sale to B'nai B'rith. The letter agreement does not recite any time limitation for the exclusive agreement other than if the buyer B'nai B'rith Housing, Inc. exercises its option to purchase the property then Skolnick would be entitled to his commission. The purchase price shall be $400,000 or $10,000 for each dwelling. That price was submitted to HUD who awarded the funds. No evidence was presented to demonstrate that the amount allocated for the land was less than $400,000.
The claim of Setlow that his signature was a copy based upon his test is without merit. Hodes testified Setlow did not deny it was his signature when Exhibit 1 was delivered to Setlow and the court heard no independent credible evidence that the agreement was not signed by Setlow. The agreement together with the option was prepared and used by Setlow and B'nai B'rith who later obtained funds for development of the housing. Essentially Skolnick had an exclusive sales contract which notwithstanding the arrangements made by Setlow and B'nai B'rith was to be a charitable donation from the word go was to be a contribution both Setlow and B'nai B'rith benefitted by the transaction.
This court in the decision of Levy, Miller, Maretz LLC v. John Vuoso (CV 96-0391971) ruled that the holder of an exclusive right contract is entitled to a commission during the term of the agreement whether the owner sells the property himself and not controlled by the holding of John F. Epina Realty v. Space Realty Inc., 194 Conn. 71, 480 A.2d 499 (1984). The court in Levy, Miller, Maretz LLC v. Vuoso affirmed the decision of the trial court holding:
Further, if the court's finding in that regard is sustainable, then our Supreme Court's decision in Covino v. Pfiffer, 160 Conn. 212, 276 A.2d 895 (1970), controls this case.
Our Supreme Court held in Covino that "[d]uring 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." Id., 215. "[I]f an owner, during the life of an exclusive sale contract, sells the subject property, the exclusive broker is entitled to his commission." Id., 217. Further, our Supreme Court rejected the owner's claim that an "owner shall not be deemed to have sold the property which is the subject of an exclusive sale contract unless and until negotiations with the prospective purchaser have been consummated into a binding and enforceable contract for sale." Id. The same rule of law established in Covino for exclusive right contracts for the sale of property necessarily applies by analogy to exclusive right contracts involving the leasing of property. Also in this case the entitlement to a commission is not defeated by the property being donated.
We now set forth our standard of review concerning a trial court's findings of fact. "If the factual basis of the court's decision is challenged, our review includes determining whether the facts set out in the memorandum of decision are supported by the record or whether, in light of the evidence and the pleadings in the whole record, those facts are clearly erroneous." (Internal quotation marks omitted.) Maloney v. PCRE, LLC, 68 Conn. App. 727, 734 (2002). Further, a court's inference of fact is not reversible unless the inference was arrived at unreasonably. See John F. Epina Realty, Inc. v. Space Realty, Inc., supra, 194 Conn. 78. We note as well that [t]riers of fact must often rely on circumstantial evidence and draw inferences from it."
(See Levy, Miller, Maretz LLC v. John Vuoso, 70 Conn. App. 124, 130.)
The charitableness of Setlow, notwithstanding, the property was transferred to the B'nai B'rith Housing. The agreement signed by Setlow agrees to pay a commission. (Exhibit 1.) Time restraints in the option are unenforcable because extended by owner for his own purposes.
Accordingly, the court finds in favor of the plaintiff in this case and awards the sum of $40,000 plus costs.
Frank S. Meadow, J.T.R.