132 Conn. App. 736
Conn. App. Ct.2011Background
- NSS Restaurant Services, Inc. purchased the restaurant from Kaleodis in May 2004 for $205,000, with a note of $155,000 to West Main Pizza.
- In April 2005, NSS sold the business to Badal, who assumed the $134,000 note; NSS received a $55,491.25 note and cash $15,570.23.
- The parties executed an inter-creditor agreement to clarify rights regarding Badal's assets securing the notes and their distribution upon liquidation.
- Paragraph 3(b) provided priority to the defendants for the $134,000 note, then to NSS for any remaining proceeds, with the $55,491.25 note to be assumed by the defendants, subject to intent and documentation.
- The court later found no consideration was given to the defendants for the benefits described in the agreement, and thus held the agreement unenforceable for lack of consideration.
- NSS appealed, contending the agreement was supported by consideration, while the trial court and appellate court affirmed the judgment for the defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was there consideration supporting the inter-creditor agreement? | NSS contends the agreement benefited West Main Pizza by allowing reentry, seizure, and operation rights. | West Main Pizza argues there was no tangible consideration or value exchanged for the agreement. | No; the court found no consideration supporting the agreement. |
| Did the trial court clearly err in its finding of lack of consideration? | NSS argues the trial court misread the evidence and relied on insufficient findings. | Defendants contend the findings were supported by the record and credibility determinations. | No; the court’s factual findings were not clearly erroneous. |
| Did the agreement’s alleged right to reclaim premises constitute consideration? | NSS asserts the ability to reclaim and operate the business was valuable consideration. | Defendants contend there is no express factual finding that such reentry rights existed as consideration. | The court did not find such rights as consideration; it relied on a lack of credible evidence of any value conferred. |
| Did credibility and weight of testimony support the defense’s position? | NSS relies on trial testimony suggesting benefits to the defendants. | Defendants emphasize the trial court’s credibility determinations. | Yes; the appellate court gave deference to the trial court’s credibility findings and affirmed. |
Key Cases Cited
- Martin Printing, Inc. v. Sone, 89 Conn.App. 336 (2005) (consideration is a factual inquiry; exchange not strictly equal)
- Viera v. Cohen, 283 Conn. 412 (2007) (consideration requires a bargained-for exchange and value)
- Thibodeau v. American Baptist Churches of Connecticut, 120 Conn.App. 666 (2010) (promises are not enforceable without consideration)
- Weyel v. Catania, 52 Conn.App. 292 (1999) (trial court credibility determinations reviewed for reasonableness)