214 Conn.App. 63
Conn. App. Ct.2022Background
- Brothers Jeffrey (plaintiff/trustee) and Michael (defendant) were beneficiaries of family trusts; a 2012 settlement agreement required Jeffrey to buy out Michael’s interests in several properties after their mother’s death.
- Buyout formula in the agreement tied payment to each property’s fair market value multiplied by the defendant’s “interests,” with percentage discounts; the agreement did not expressly mention mortgages or equity.
- The parties disputed whether “interest” meant (a) the percentage share of the property’s full fair market value (ignoring mortgages) or (b) the owner’s equitable interest (fair market value minus mortgage debt).
- This court’s earlier decision in Reiner v. Reiner held the buyout provisions ambiguous as to that method-of-calculation issue and remanded for further factfinding.
- At trial the court found both parties sincerely held different meanings but applied Restatement (Second) of Contracts § 201 to adopt Jeffrey’s interpretation (equitable interest) because Michael, a veteran real-estate attorney, knew of the mortgages and therefore had reason to know Jeffrey would treat “interest” as equity; the court discounted post‑contract emails stating “value, not equity.”
- The Appellate Court affirmed: buyout payments are calculated as defendant’s percentage interest times (fair market value minus outstanding mortgage debt); §220 (usage) did not apply; emails were given no weight; the 603 Farmington mortgage claim was inadequately briefed and unsupported.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Meaning of “interest” in buyout formula | Reiner: means equitable interest (share of equity = FMV minus mortgages) | Michael: means percentage of full fair market value (ignore mortgages) | Held for plaintiff — “interest” = equitable interest (FMV minus mortgage debt) |
| Proper Restatement provision to apply | §201: adopt meaning one party attached if other had reason to know | §220: apply customary usage/industry meaning if both knew it | Held §201 applies; §220 inapplicable because no habitual/customary usage proved |
| Weight of post‑contract emails (parol evidence) | Emails do not prove plaintiff agreed; sent after negotiation and drafters unaware of mortgages | Emails show parties (copied) treated buyout as value, not equity | Held trial court permissibly gave emails no weight; not clearly erroneous |
| Claim excluding 603 Farmington mortgage from calculation | Michael: equity requires excluding that mortgage taken to fund security deposits due to plaintiff’s mismanagement | Jeffrey: no evidence parties intended different treatment; contract interpretation governs | Held defendant’s claim inadequately briefed and unsupported; mortgage included |
Key Cases Cited
- Reiner v. Reiner, 190 Conn. App. 268 (Conn. App. 2019) (prior appellate decision finding the buyout provisions ambiguous)
- Audubon Parking Associates Ltd. Partnership v. Barclay & Stubbs, Inc., 225 Conn. 804 (Conn. 1993) (standard for enforcing settlement agreements as written)
- Mortgage Electronic Registration Systems, Inc. v. White, 278 Conn. 219 (Conn. 2006) (explaining Connecticut’s title theory of mortgages)
- David M. Somers & Associates, P.C. v. Busch, 283 Conn. 396 (Conn. 2007) (when contract is ambiguous, parties’ intent is a factual question reviewed for clear error)
- Hudson City Savings Bank v. Hellman, 196 Conn. App. 836 (Conn. App. 2020) (trial court may rely on extrinsic evidence to determine intent when contract ambiguous)
- Marshall v. Marshall, 200 Conn. App. 688 (Conn. App. 2020) (law of the case principle binds trial court on remand)