Channing Real Estate, LLC v. Gates
161 A.3d 1227
| Conn. | 2017Background
- Channing Real Estate, LLC (plaintiff) loaned funds to Brian Gates (defendant) on six occasions (total principal ~$281,273); Gates signed six virtually identical promissory notes and made no payments. Each note contained an anti-oral-modification clause.
- Gates claimed the funds were part of a proposed real estate transaction with Front Street Commons, LLC (F Co.), of which he was a member, and sought to introduce extrinsic evidence that the notes were interim documents tied to that transaction.
- Plaintiff moved in limine to exclude parol/extrinsic evidence; the trial court denied the motion, found in Gates’ favor on the complaint and awarded some relief on CUTPA-related counterclaims.
- The Appellate Court held the notes were integrated and unambiguous, reversed the trial court (finding parol evidence barred), and remanded for a new trial to allow Gates to assert any parol‑evidence exceptions and for plaintiff to prove damages.
- The Supreme Court (this opinion) agreed the parol evidence rule barred Gates’ extrinsic evidence, but held remand should have been limited: liability was established as a matter of law and the proper remedy was judgment for plaintiff on liability and a hearing on damages; Gates also lacked standing to pursue the CUTPA claim (injuries alleged belonged to F Co.).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether parol evidence could vary the terms of the notes | Notes are integrated and unambiguous; parol evidence barred | Notes were part of a larger unwritten real‑estate agreement so extrinsic evidence is admissible | Parol evidence barred; notes integrated and unambiguous under applicable law |
| Scope of remand (new trial vs. damages hearing) | Correct application of parol rule resolves liability; remand should be limited to damages hearing | Remand for new trial needed so defendant can pursue defenses/exceptions | Remand for new trial unnecessary; direct judgment for plaintiff on liability and remit for hearing on damages |
| Equitable‑estoppel/post‑contract modification defense | N/A (plaintiff opposed) | Plaintiff’s post‑note conduct (letter) modified notes; estoppel available | Claim unpreserved below; court declined to address it on appeal |
| Standing to assert CUTPA claim | CUTPA claim improper because alleged injury belongs to F Co., not Gates | Gates can pursue CUTPA for injuries from failed transaction | Gates lacks standing; CUTPA claim belongs to Front Street Commons, not its member |
Key Cases Cited
- Marine Midland Bank-Southern v. Thurlow, 53 N.Y.2d 381 (New York parol evidence principle for integrated writings)
- W.W.W. Associates, Inc. v. Giancontieri, 77 N.Y.2d 157 (extrinsic evidence cannot create ambiguity in an otherwise clear integrated agreement)
- Allstate Ins. Co. v. Palumbo, 296 Conn. 253 (when liability is established on the record, remand limited to damages)
- Wilcox v. Webster Ins., Inc., 294 Conn. 206 (distinguishing when LLC members may sue individually on contract claims)
- O’Reilly v. Valletta, 139 Conn. App. 208 (limited liability company is a separate legal entity; members may not recover for injuries to the company)