151 Conn.App. 372
Conn. App. Ct.2014Background
- In 2006–2007 Michael and Marci Moreau formed Sauce, LLC to open a restaurant; Michael negotiated purchase of equipment and sought financing from Sullo-related companies.
- Sullo Investments, LLC (plaintiff) agreed to finance $255,000 for restaurant equipment; Aurelien Moreau (Michael’s father) executed a promissory note (Sept. 20, 2007) and mortgage (Sept. 27, 2007); Marci (defendant) executed a guaranty (Sept. 26, 2007).
- The plaintiff advanced funds to Classic Restaurant Supply on behalf of Sauce, LLC; Aurelien did not personally receive any loan proceeds (stipulated). Sauce, LLC made payments on the note until late 2008; equipment later sold for ~ $46,000.
- Plaintiff sued defendant as guarantor; defendant pleaded two special defenses, including lack of consideration because no funds were paid to Aurelien.
- Trial court found the note was for commercial purposes, that the loan proceeds were for Sauce, LLC, that Aurelien understood the transaction, and that there was consideration; judgment for plaintiff for $295,010.38. Defendant appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the trial court violate the parol evidence rule by relying on extrinsic evidence to find the parties intended Sauce, LLC to receive loan proceeds? | Court may consider extrinsic evidence where writing does not contradict such evidence; note language supports commercial purpose. | The written note/guarantee show only Aurelien as recipient; extrinsic evidence cannot vary written terms. | Court did not err: writing does not expressly limit proceeds to Aurelien; extrinsic evidence was admissible and court’s factual finding was reasonable. |
| Was there consideration for the note (and thus for the guaranty)? | Consideration can be nonfinancial and include the benefit Aurelien conferred by helping his son obtain financing; court properly found consideration. | No consideration because plaintiff did not pay proceeds to Aurelien; the bargained-for benefit was the funds to him. | Held that consideration existed: Aurelien’s act of enabling the equipment purchase was a bargained-for benefit; court’s conclusion stands. |
| Did plaintiff’s failure to timely reply admit defendant’s special defense of lack of consideration? | The defendant’s pleading asserts a legal conclusion; Practice Book rule on deemed admissions applies to factual allegations, not legal conclusions; also facts were stipulated. | Failure to reply should have deemed the special defense factual allegations admitted, precluding trial on consideration. | Held that the rule does not operate on legal conclusions; moreover, the relevant facts were stipulated and considered at trial. |
| Was the trial court’s finding that Aurelien understood the transaction supported by evidence? | Testimony and colloquy showed Aurelien understood he would not receive money and that Sauce would benefit. | Aurelien was unaware of the transaction’s true terms, so court’s intent finding was unsupported. | Held that the court reasonably could find Aurelien understood the bona fide terms; factual finding not clearly erroneous. |
Key Cases Cited
- TIE Communications, Inc. v. Kopp, 218 Conn. 281 (1991) (parol evidence rule and its exceptions)
- Conn. Acoustics, Inc. v. Xhema Construction, Inc., 88 Conn. App. 741 (2005) (standard of review for parol evidence questions)
- Bead Chain Mfg. Co. v. Saxton Products, Inc., 183 Conn. 266 (1981) (intent as question of fact; review standard)
- Martin Printing, Inc. v. Sone, 89 Conn. App. 336 (2005) (definition and factual nature of consideration)
- Milford Bank v. Phoenix Contracting Group, Inc., 143 Conn. App. 519 (2013) (review of consideration as legal conclusion from facts)
- Deutsch Bank Nat'l Trust Co. v. DelMastro, 133 Conn. App. 669 (2012) (nonfinancial bargained-for benefits can constitute consideration)
- Middlebury v. Steinmann, 189 Conn. 710 (1983) (sufficiency of consideration is a question of law)
- Birchard v. New Britain, 103 Conn. App. 79 (2007) (judicial admissions and their effect)
- Zirinsky v. Zirinsky, 87 Conn. App. 257 (2005) (interpretation of Practice Book rules is plenary review)
- Stuart v. Freiberg, 142 Conn. App. 684 (2013) (appellate courts may take judicial notice of trial court files)