Reserve Realty, LLC v. Windemere Reserve, LLC
165 A.3d 162
| Conn. App. Ct. | 2017Background
- Woodland owned a 546-acre parcel called the Reserve and, per an existing Woodland listing agreement, required subsequent purchasers to employ broker Jeanette Haddad / Scalzo Realty to market lots.
- Woodland sold parcel 13 to BLT and parcel 15 to Windemere; both purchase-and-sale agreements required the buyers to execute listing agreements engaging Haddad/Scalzo (tying the land sale to brokerage services).
- Haddad and Reserve Realty (formed by Haddad) performed marketing but defendants later developed parcel 13 (Abbey Woods apartments) and leased units through their own agent, refusing to pay commissions.
- Plaintiffs sued for breach of the listing agreements; defendants pleaded, inter alia, that the purchase agreements created an illegal tying arrangement under the Connecticut Antitrust Act and that the listings were personal service contracts or noncompliant with §20-325a.
- After a bench trial the court found the agreements formed an illegal tying arrangement (per State v. Hossan-Maxwell), that the listings did not meet §20-325a, and that listings were personal to Jeanette Haddad; judgment for defendants was entered and was affirmed on appeal largely on the tying issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the purchase agreements constituted an illegal tying arrangement under Conn. Gen. Stat. §35-29 | The Hossan-Maxwell test is outdated and abrogated by federal law; plaintiffs also argued defendants failed to prove a relevant market or foreclosure of competition | Woodland’s requirement that buyers retain Haddad/Scalzo tied unique real property (the Reserve) to brokerage services, giving Woodland economic power and foreclosing substantial brokerage commissions | Affirmed: applying State v. Hossan-Maxwell, the court found the Reserve sufficiently unique to infer market power and that a not-insubstantial amount of commerce was foreclosed—constituted an illegal tie |
| Whether a relevant market was required to prove market power for the tying claim | Plaintiffs: must define relevant market to show economic power | Defendants: uniqueness of the real property allows inference of market power without full market-definition inquiry | Held: market-definition not required where product (unique land development) is shown to confer market power; Hossan-Maxwell and federal precedent permit inference from uniqueness |
| Whether listing agreements were enforceable (personal service / §20-325a compliance) | Plaintiffs: listings valid and enforceable; appealed other grounds if tying fails | Defendants: listings were personal to Jeanette Haddad and failed statutory requirements | Court did not need to reach these independently on appeal because tying determination was dispositive; trial court’s alternative findings supported defendants but affirmance rests on tying ground |
Key Cases Cited
- State v. Hossan-Maxwell, Inc., 181 Conn. 655 (Conn. 1980) (establishes Connecticut test for tying under §35-29: illegal if tying party has sufficient economic power or a not-insubstantial effect on commerce)
- Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (U.S. 1984) (discusses inference of market power from product uniqueness and applicability of per se tying rules)
- Northern Pac. Ry. Co. v. United States, 356 U.S. 1 (U.S. 1958) (explains tying arrangements and circumstances for per se illegality)
- Int’l Salt Co. v. United States, 332 U.S. 392 (U.S. 1947) (ties that foreclose substantial competition are per se unlawful)
- Fortner Enters., Inc. v. United States Steel Corp., 394 U.S. 495 (U.S. 1969) (clarifies prerequisites for per se treatment: sufficient economic power or substantial foreclosure)
- United States v. Loew’s, Inc., 371 U.S. 38 (U.S. 1962) (supports inferring economic power from uniqueness; full market-definition often unnecessary in tying cases)