Lead Opinion
Opinion
In this breach of contract action, the defendant, Walter Wolczek, appeals from the judgment of the trial court rendered in favor of the plaintiff, Anthony H. Salce, Sr. The defendant claims the court erred in (1) granting the plaintiffs motion for summary judgment on the breach of contract count of the complaint, (2) awarding $1 million in damages for breach of contract and (3) awarding 8 percent postjudgment interest. We affirm the judgment of the trial court.
The parties stipulated to the following facts. Prior to April 13, 2007, the plaintiff and the defendant each owned a 50 percent interest in Anwalt, LLC (Anwait).
The buyout agreement provided, in clause 2 (b) (contingency clause), in relevant part: “Contingent Addition to Purchase Price. If within one year of the closing hereunder any ownership interest in the Premises . . . is transferred to a ‘Non-Wolczek Person’ based on a whole property value of more than $3,500,000, Buyer [defendant] shall pay to Seller [plaintiff] an additional purchase price equal to one-half the excess at the same time as the transfer. The ‘excess’ is the amount by which the whole property value for the transfer exceeds $3,500,000. The ‘whole value’ for any sale is the 100% value on which any percentage interest being transferred is based. For example, a one-quarter interest transferred for $1,000,000 would equate to a whole property value of $4,000,000. A ‘Non-Wolczek Person’ is someone other than Walter Wolczek or his immediate family member or lineal descendant.” (Emphasis added.)
The parties closed on the sale of the plaintiffs interest in Anwalt pursuant to the buyout agreement on May 31, 2007. Subsequently, Anwalt cоnveyed the premises to Corporate Drive Office Center, LLC (Corporate Drive), an entity comprising family members of the defendant.
The plaintiff brought a seven count complaint against the defendant to recover damages for the defendant’s alleged breach of the buyout agreement.
The plaintiff thеn withdrew the remaining six counts of the complaint; see footnote 2 of this opinion; and moved for final judgment on the first count, requesting damages of $1 million, prejudgment interest, attorney’s fees, offer of compromise interest, costs and postjudgment interest. The court granted the motion and rendered judgment for the plaintiff as follows: damages
I
The defendant first claims that the court improperly determined that the contingency clause was unambiguous and, therefore, that the court improperly rendered summary judgment on count one of the complaint. We do not agree.
“Where the language of the [writing] is clear and unambiguous, the [writing] is to be given effect according to its terms. A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity .... Similarly, any ambiguity in a [written instrument] must emanate from the language used in the [writing] rather than from one party’s subjective рerception of the terms. . . . If a contract is unambiguous within its four comers, the determination of what the parties intended by their contractual commitments is a question of law.” (Citation omitted; internal quotation marks omitted.) Murtha v. Hartford,
The contingency clause provided that if, within one year from May 31, 2007, “any ownership interest in the Premises ... is transferred to a ‘Non-Wolczek Person’ based on a whole property value of more than $3,500,000, Buyer [defendant] shall pay to Seller [plaintiff] an additional purchase price. ...” (Emphasis added.) By its plain terms, the buyout agreement made clear that the transfer of “any ownership interest” to a requisite person for at least a certain minimum amount triggered the contingency clause. It is uncontested that,
The Vaughn purchase agreement unambiguously accomplished a transfer of an ownership interest, despite the fact that physical passing of title was to be accomplished later. As stated by our Supreme Court in Francis T. Zappone Co. v. Mark,
Zappone resolved a factual situation in which a real estate broker, having properly brought together a buyer and a seller of real estate, sought its commission. The buyer and seller had contractually agreed to a sale and a “bond for deed” had been executed, whereby the seller would transfer to the buyer a wаrranty deed when the buyer had fully performed the terms of the agreement. Title apparently never was physically transferred. Id., 265-66. The defendant claimed that no commission was due because title had not passed; the listing agreement had stated that the commission was due “upon the sale, exchange or transfer, or upon the exercise of any option to purchase” the property. (Internal quotation marks omitted.) Id., 268. Our Supreme Court disagreed, holding that “[a] binding sales agreement such as a valid bond for deed passes equitable title, under the doctrine of equitable conversion, upon its exeсution. . . . The parties are bound from that instant and the formal transfer of ‘paper’ title can
The defendant in the present case argues that the language is ambiguous because, inter alia, a “transfer” of an ownership interest might ordinarily be associated with the passing of title at a closing and the additional funds may not ordinarily be available until the time of closing. But the Vaughn purchase agreement necessarily transferred an ownership interest independent of physical title; see id.; see siso New England Yacht Sales, Inc. v. Commissioner of Revenue Services,
II
The defendant next claims that the court erred in awarding $1 million in damages. The court arrived at the $1 million award by “taking [50 percent] of the difference between the [$3.5 million] and the re-sale price to Brian Vaughn, [$5.5 million].” The defendant does not contest the formula for calculating damages as found in the contingency clause of the buyout agreement, which provided that if any ownership interest was transferred to a non-Wolczek person within one
Although the defendant’s argument is phrased in terms of damages, it is, essentially, an argument that he did not breach the buyout agreement and trigger the contingency clausе. As we held previously in this opinion, an ownership interest was transferred to Vaughn on March 19, 2008. The court applied the language of the contingency clause properly to calculate damages at $1 million. Although the full $5.5 million did not transfer hands on March 19, 2008, the defendant and Vaughn signed an agreement on that date thereby entering into a commitment to perform the sale for the price of $5.5 million. The court properly held that an additional $1 million, one-half of the amount of the purchase price exceeding $3.5 million, was owed to the plaintiff at that time.
m
The defendant finally claims that the court errеd in awarding 8 percent postjudgment interest. We disagree.
In his motion for judgment, the plaintiff requested, inter alia, postjudgment interest at a rate of 10 percent per annum. In its memorandum of decision on the motion for judgment, the corut determined that it had no evidence before it that the defendant withheld the
A trial court’s decision to award postjudgment interest is subject to review for an abuse of discretion. Bower v. D’Onfro,
The defendant argues that the award of postjudgment interest was improper because the court declined to award prejudgment interest based on the same considerations and it had determined that the defendant pursued his defense in good faith. First, the defendant points to no Connecticut case law, and we are аware of none, that provides that a court cannot both award postjudgment interest and deny prejudgment interest. Second, although the court found that defendant pursued his defense in good faith, that is not inconsistent
The judgment is affirmed.
Notes
The plaintiff does not claim that this transfer was to a “Non-Wolczek Person” or that it triggered the contingency clause.
Although the plaintiffs complaint was in seven counts, only the first count alleging breach of contract is at issue in this appeal. Furthermore, although the defendant filed a counterclaim, that also is not at issue in this appeal.
The court did not awаrd prejudgment interest attributable to the period of time between the breach and the judgment.
The defendant also argues that 8 percent was excessive, and references lower interest rates. The court was not bound to apply these lower interest rates, and was within its discretion in awarding 8 percent, which was lower than the statutory maximum of ten percent. See General Statutes § 37-3a.
Dissenting Opinion
dissenting. I disagree with the majority that the contractual clause in question is unambiguous. I conclude, to the contrary, that it is ambiguous. I would, therefore, reverse the summary judgment of the trial court in the plaintiff’s favor.
As the majority indicates, the parties stipulated to the following facts. Prior to April 13, 2007, the plaintiff, Anthony H. Salce, Sr., and the defendant, Walter Wolc-zek, each owned a 50 percent interest in Anwalt, LLC (Anwalt). As of May 30, 2007, Anwalt owned real property located at 2 Corporate Drive in Trumbull (premises). On or about April 13, 2007, the plaintiff and the defendant entered into a written buyout agreement pursuant to which the plaintiff agreed to sell his 50 percent
The contingency clause, clause 2 (b) of the buyout agreement, provided in relevant part: “Contingent Addition to Purchase Price. If within onе year of the closing hereunder any ownership interest in the Premises . . . is transferred to a ‘Non-Wolczek Person’ based on a whole property value of more than $3,500,000, Buyer [defendant] shall pay to Seller [plaintiff] an additional pinchase price equal to one-half the excess at the same time as the transfer. The ‘excess’ is the amount by which the whole property value for the transfer exceeds $3,500,000. The ‘whole value’ for any sale is the 100% value on which any percentage interest being transferred is based. For example, a one-quarter interest transferred for $ 1,000,000 would equate to a whole property value of $4,000,000. A ‘Non-Wolczek Person’ is someone other than Walter Wolczek or his immediate family member or lineal descendant.” (Emphasis added.)
The рarties closed on the sale of the plaintiffs interest in Anwalt on May 31, 2007. Subsequently, Anwalt conveyed the premises to Corporate Drive Office Center, LLC (Corporate Drive), an entity comprised of family members of the defendant.
On March 19, 2008, within one year of the closing of the buyout agreement, Corporate Drive entered into a real property purchase agreement with Brian Vaughn (Vaughn purchase agreement) to sell the premises for $5.5 million to Vaughn or an entity designated by him. The Vaughn purchase agreement was executed by the defendant in his capacity as a member of Corporate Drivе. Vaughn organized and designated an entity known as Corporate Drive, LLC, to take title to the
In addition to these stipulated facts, the defendant asserts, and the plaintiff does not dispute, that the contract language in question was drawn by the plaintiff. Furthermore, the plaintiff asserts, and the defendant does not disрute, that both parties are commercially sophisticated and were represented by counsel.
Thus, the issue on appeal centers on the language of the contingency clause providing that if, within one year from May 31, 2007, “any ownership interest in the Premises ... is transferred to a ‘Non-Wolczek Person’ based on a whole property value of more than $3,500,000, Buyer [defendant] shall pay to Seller [plaintiff] an additional purchase price equal to one-half the excess at the same time as the transfer. The ‘excess’ is the amount by which the whole property value for the transfer exceeds $3,500,000. The ‘whole value’ for any sale is the 100% value on which any percentage interest being transferred is based. For example, a one-quarter interest transferred for $1,000,000 would equate to a whole property value of $4,000,000.” (Emphasis added.) If, as the plaintiff contends and the majority concludes, that language unambiguously includes the entry by the defendant into the Vaughn purchase agreement on March 19, 2008 — less than one year from the date of the closing of the buyout agreement — the plaintiff was entitled to summary judgment. If, however, as the defendant contends and I conclude, that language is susceptible to an alternative reasonable interpretation, namely, that the language in question refers to the actual closing of the Vaughn purchase agreement on July 1, 2008 — more than one
The majority concludes that, on the basis of the doctrine of equitable conversion; see Francis T. Zappone Co. v. Mark,
The question of contract interpretation involves a question of the intent of the parties, which ordinarily presents a question of fact for the ultimate fact-finder. Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P.,
“In contrast, a contract is ambiguous if the intent of the parties is not clear and certain from the language of the contract itself. . . . [A]ny ambiguity in a contract must emanate from the language used by the parties. . . . The contract must be viewed in its entirety, with each provision read in light of the other provisions . . . and every provision must be given effect if it is possible to do so. . . . If the language of the сontract is susceptible to more than one reasonable interpretation, the contract is ambiguous.” (Citations omitted; internal quotation marks omitted.) Id., 670-71. In addition, “[a] contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction.” (Internal quotation marks omitted.) Alstom Power, Inc. v. Balcke-Durr, Inc.,
Thus, our task is not to determine which party’s interpretation of the contract is the correct — or even the stronger — one. Our sole task is to determine, applying all of these guidelinеs, whether, on one hand, the language of the contract is clear and conveys a definite and precise intent, or, on the other hand, the language of the contract is susceptible to more than one reasonable interpretation. I conclude that, applying these guidelines, the language of the contractual clause is susceptible to more than one reasonable interpretation, namely, that the time of the transfer of an ownership interest in the premises contemplated by the contingency clause was at the time of the closing of the Vaughn purchase agreement.
I therefore focus on the language of the contingency clause, that, if within the one year period, “any ownership interest in the Premises ... is transferred to a ‘Non-Wolczek Person’ based on a whole property value of more than $3,500,000, Buyer [Wolczek] shall pay to Seller [Salce] an additional purchase price equal to one-half of the excess at the same time of the transfer. The ‘excess’ is the amount by which the whole property value for the transfer exceeds $3,500,000. The ‘whole value’ for any sale is the 100% value on which any percentage interest being transferred is basеd. For example, a one-quarter interest transferred for $1,000,000 would equate to a whole property value of $4,000,000.” Viewed in the context of the entire transaction between the parties, it is a reasonable interpretation of this language that its general purpose was to ensure that, if the defendant sold the premises at a profit (measured by the parties’ valuation when the defendant bought out the plaintiff) within one year of his purchase of the plaintiffs interest, the plaintiff would share proportionally in that profit.
A close examination of the language of the contingency clause, read in the context of the entire buyout agreement and in the context of the transaction as a whole, discloses an alternative reasonable interpretation of the phrase “[i]f . . . any ownership interest ... is transferred,” namely, if a 100 percent ownership of the property or any fractional interest therein is transferred. That alternative reasonable interpretation is as follows.
To explain further, under the language of the contingency clause, the only significance of the transfer of an ownership interest by the defendant is if the transfer is for more than the parties valued it. The consequence of such a transfer to a “Non-Wolczek Person” is that, if the transfer is for morе than the “whole property value” of $3.5 million, the defendant must pay the plaintiff an amount equal to “one-half the excess at the time of the transfer,” the “excess” being defined explicitly as “the amount by which the whole property value for the transfer exceeds $3,500,000.” (Emphasis added.) Further, the “whole value” is defined specifically as “the 100% value on which any percentage interest being transferred is based.” (Emphasis added.) This language is then illustrated by the single example chosen by the parties: “For example, a one-quarter interest transferred for $1,000,000 would equate to a whole property value of $4,000,000.” This linkage — a transfer of an ownership interest, linked to the whole propеrty value, linked to the 100 percent value or any fractional value — lends itself to the reasonable interpretation that, in using the language, “if any ownership interest ... is transferred,” the parties were referring to a 100 percent ownership interest or any fractional interest being transferred, rather than referring to an equitable interest being transferred, which is not easily equated to
My point here is not that the majority is necessarily incorrect in its assertion that the doctrine of equitable conversion triggered the additional purchasе price. My point is solely that it is not unambiguously so that the parties intended to refer to the doctrine of equitable conversion when they used the phrase “any ownership interest ... is transferred.”
Furthermore, the language of the clause, “Buyer [defendant] shall pay to Seller [plaintiff] an additional purchase price equal to one-half the excess at the same time as the transfer,” further renders the contingency clause ambiguous, because it supports the reasonable interpretation that such an obligation arises at the time of the closing on the Vaughn purchase agreement, rather than at the time of the entry into the Vaughn рurchase agreement. It is a reasonable interpretation of this language that the parties intended the phrases “ownership interest ... is transferred” and “at the same time as the transfer” to refer to the actual transfer of legal title — either the full legal title or some fractional interest thereof — at the closing, because that would, under ordinary expectations of real estate transactions, be the time when the defendant would have the funds available to satisfy that obligation. Indeed, the plaintiff acknowledged at oral argument before this court that his interpretation would obligate the defendant to pay the required excess at the time the defendant entered into the Vaughn purchase agreement, even if that agreement never closed through no fault of the defendant and, therefore, the defendant never realized the profit that the parties’ buyout agreement contemplated he would share with the plaintiff. The somewhat unlikelihood of this scenario being what the parties intended by their language lends further support to the alternative reasonable interpretation that I propose.
I would, therefore, reverse the judgment of the trial court and remand the case for further proceedings according to law.
The plaintiff does not claim that this transfer was to a “Non-Wolczek Person” or that it triggered the contingency clause.
Because the summary judgment was litigated and based solely on the language of the contract in question, it did not involve, and this appeal does not involve, the legal consequences, if any, of any claim by the plaintiff that the defendant intentionally structured the timing of the closing of the Vaughn purchase agreement to avoid the one year deadline.