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DOCKET # AAN-CV-18-6031256-S SUPERIOR COURT
DeFOREST W. SMITH, ET AL J.D. OF ANSONIA/MILFORD
V. AT MILFORD
H. PEARCE REAL ESTATE COMPANY, INC. OCTOBER 10, 2023
DOCKET # AAN-CV- 21- 6041913-S
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TRIAL COURT’S MEMORANDUM OF DECISION
I INTRODUCTION
This is a breach of contract action instituted by the Plaintiffs, DeForest W. Smith (Smith
or Plaintiff) a licensed real estate broker and owner of DeForest Industries, Inc. (DII or Plaintiff),
a commercial real estate brokerage in Milford, Connecticut.
In June 2012, Smith entered into an Asset Purchase Agreement (Agreement) with the
Defendant, H. Pearce Real Estate, in which he agreed to sell the assets of his business to the
Defendant, which included, but were not limited to, listings for commercial real estate sales and
leases, except for certain assets which he specifically excluded from that sale (excluded assets).
The excluded assets included identified commercial real estate sales and lease renewals. As part
of the Agreement, Smith and other real estate brokers from his company were also hired by
Pearce to perform services as independent contractors in connection with transactions involving
the purchase, sale, and leasing of commercial real estate.
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The operative Second Amended Complaint, dated October 24, 2019, originally contained
six counts. However, only the first and third counts of the Plaintiffs’ complaint remain.
In the first count of the amended complaint, Smith contends that he performed his
obligations to Pearce as an independent real estate broker, entitling him to certain bonus
compensation from the sales of real estate. Smith asserts that the defendant breached its
agreement, pursuant to the Pearce Policies & Procedures Manual (Policy Manual), by failing to
pay this bonus compensation. In the third count of the complaint, the Plaintiffs, Smith and DII,
allege that the Defendant received commissions from lease renewals that were identified as
excluded assets in the Agreement, but the Defendant failed to remit those commissions to the
Plaintiffs, in breach of the Agreement. The Plaintiffs seek compensatory damages, which are
comprised of commissions and bonuses from real estate sales and lease renewals. Plaintiffs also
seek prejudgment and postjudgment interest on any award from these claims.
The Defendant asserts a general denial in its amended answer to the Plaintiff's claims in
Count One. The Defendant asserts a special defense in Count One, and alleges that Pearce is
entitled to an $80,000 statutory setoff pursuant to General Statutes § 52-139, from any award of
monies to the Plaintiff in Count One. The basis for this setoff derives from the Defendant’s
erroneous overpayment to Smith in the amount of $80,000, arising out of the sale of a
commercial property located at 126 Boston Post Road in Milford, CT. The overpayment
payment at issue was mistakenly made to the Plaintiff, pursuant to 2.1 of the Agreement, which
will be discussed later in this decision. In Count Three, the Defendant asserts a general denial to
the claims for commissions owed to him and claims by DII from lease renewals, and asserts that
the lease renewals at issue were not excluded assets, but were included in the sale of DII’s assets
to the Defendant. Defendant further asserts a special defense to Count Three of the Amended
Complaint, a statute of limitations special defense, per General Statutes § 52-576.
The Interpleader Action filed by Milford Bank, (Milford Bank v. DeForest Industries,
Inc., Superior Court, judicial district of Ansonia-Milford, Docket No. CV-21-6041913-S), and
consolidated by the court with the instant case, alleges that both Deforest Industries and Pearce
claim that they are entitled to a $3744 real estate commission earned from a 2019 lease renewal
for the property located at 9 Depot Street in Milford, CT., in which the Milford Bank is the
owner, Pearce contends that it is owed this commission from this lease renewal, as this asset was
included in the sale of DII’s assets pursuant to the Agreement. DII claims it is due this
commission, as this 2019 lease renewal was an excluded asset, pursuant to the Agreement.
On April 26, 2021, Judge Pierson granted the Plaintiff's (Milford Bank) Motion for
Interlocutory Judgement of Interpleader. The court ordered the Defendants (Smith and Pearce) to
interplead in this action and state their claims to the funds at issue. The court further ordered
Milford Bank to deliver the funds at issue to the Clerk of the Court (Judicial District of
Ansonia/Milford), pending the court’s decision in this case. Milford Bank subsequently
delivered the aforementioned monies to the Clerk of the Court and these funds are currently
being held pending the court’s decision. All parties have stipulated that the court’s decision on
Smith’s Amended Complaint will resolve the issue in the Interpleader action. See Stipulations,
Docket Entry #137.00 (December 8, 2022), #143.00 (July 27, 2023).
The instant case was tried to the court on December 12, 2022. Both Plaintiff and
Defendant were represented by counsel. The only witness that testified at trial was the Plaintiff,
Smith. Numerous documents were entered into evidence as full exhibits. In rendering its
decision, the court has reviewed and considered the numerous trial exhibits, trial testimony,
arguments of counsel, posttrial and supplemental briefs filed by the Plaintiff and Defendant, as
well as the relevant case law.
Il. FACTS
The court finds the following facts by a fair preponderance of the credible evidence:
DeForest W. Smith (Smith) is a licensed real estate broker and owner of DeForest
Industries, Inc. (DII). DII is a commercial real estate brokerage located in Milford, Connecticut.
Smith has been a licensed real estate broker since 1964. The Defendant, H. Pearce Real Estate
Company, Inc. (Pearce), is also in the business of commercial real estate, with an office located
in North Haven, CT. On or about June 19, 2012, the Plaintiff and Defendant entered into a five-
year Asset Purchase Agreement (Agreement), where Smith sold the assets of his company, but
not the company itself, to Pearce. The assets Smith sold to Pearce included, but were not limited
to, listings for sales of commercial real estate and lease renewals, except for certain excluded
assets, which Smith kept ownership of (excluded assets). These excluded assets included listings
for real estate sales and lease renewals which were specifically identified in the Agreement as
“Excluded Agreements” pursuant to Schedule 1.1(a)(continued). Exhibit 1. The effective date of
the Agreement was July 17, 2012, and the end date of the Agreement was July 17, 2017.
As part of the Agreement, Smith and the other real estate brokers who worked for DII
were also hired by Pearce to work for the Defendant as independent real estate brokers in
connection with transactions involving the purchase, sale, and leasing of commercial real estate.
Those brokers included, but were not limited to, Smith, Carl Russell and John Bergin.
In consideration for Smith’s sale of assets to the Defendant, Pearce agreed to pay to
Smith, the sum of one dollar ($1), and 20 percent of the gross commission income produced by
Smith and his agents and received by Pearce for transactions that were completed after the
effective date of the Agreement [July 17, 2012] and prior to July 17, 2017, and transactions
pending as of July 17, 2017, and closing within twelve months thereafter. Agreement, § 2.1.
The aforementioned agents were named in § 8.1 of the Agreement and included Smith, John
Bergin and Carl Russell and any other agents working for Smith on or before July 17, 2012.
Agreement, § 8.1
The commissions earned by Smith and his brokers under their agreement with Pearce
were guided by the “Pearce Commercial Policies and Procedures Manual” (Policy Manual),
admitted as a full exhibit at trial. See Exhibit 12.
Generally, a sales associate of Pearce would work on a commission split of fifty-fifty, in
which the sales associate would receive 50 percent of the gross commission income received by
Pearce on a sale or lease of commercials real estate! Transcript, p. 31; Policy Manual, p. 42.
In some special situations, the associate could receive a larger commission on real estate
deals, and those situations were outlined in the Policy Manual.
For example, in the instance of an “In-House Deal,” which is defined as those
transactions for which the commission income received and retained by the company is equal to
or greater than 5 percent of either the sale price at closing or the aggregate commissionable value
of the non-contingent lease term, if fully paid within three months, and a minimum of $1000 is
kept by Pearce. In that instance, the commission is split is 60/40, with the salesperson receiving a
60 percent commission and Pearce receiving 40 percent of the commission. Policy Manual, p.
42. In the case of “Investment Properties,” defined as properties in which the sales associate has
an ownership interest, if the sales associate is not the sole or joint tenant owner, he/she shall
"1 The portion of the gross commission which goes to Pearce is referred to as the “Company
Income” or “Company Dollar.”
receive 50 percent of the company dollar, times the percentage owned by the sales associate.
Policy Manual, p. 45.
Sales associates are also entitled to bonuses for sales in which the company income
exceeds $40,000, pursuant to the following bonus schedule found on page 43 of the Policy
Manual:
Bonus Schedule
1 Company Incom: Bonus
$40,000.01 - $75,000.00 15%
$75,000.01 - $115,000.00 20%
$115,000.01 - $175,000.00 25%
$175,000.01 - $225,000.00 30%
$225,000.01 + 35%
The facts of each specific transaction arising out of the Plaintiff’s claims will be
discussed in section IV, infra.
Il. LAW
“The standard of proof in civil actions [is] a fair preponderance of the evidence, [which]
is properly defined as the better evidence, the evidence having the greater weight, the more
convincing force in your mind.” (Internal quotation marks omitted.) Santos v. Commissioner of
Correction, 186 Conn. App. 107, 114, 198 A.3d 698, cert. denied, 330 Conn. 955, 197 A.3d 893
(2018). “[A] plaintiff bears the burden of proof on his or her complaint . . . and the defendant
bears the burden of proof on his or her special defense(s).” (Citation omitted.) Kaye v. Housman,
184 Conn. App. 808, 817, 195 A.3d 1168 (2018). “While the plaintiffis entitled to every
favorable inference that may be legitimately drawn from the evidence; and a party has the same
right to submit a weak case as he has to submit a strong one. . . the plaintiff [must still sustain]
his burden of proof on the contested issues of his complaint, and the defendant need not present
any evidence to contradict it.” (Internal quotation marks omitted.) Santos v. Commissioner of
Correction, supra, 115. “[I]t is the exclusive province of the trier of fact to weigh . . . conflicting
evidence, determine the credibility of witnesses and determine whether to accept some, all or
none of a witness’ testimony.” Winakor v. Savalle, 198 Conn. App. 792, 816, 234 A.3d 1122
(2020), aff’d, 343 Conn. 773, 276 A.3d 407 (2022). “Proof of a material fact by inference need
not be so conclusive as to exclude every other hypothesis. It is sufficient if the evidence
produces in the mind of the trier a reasonable belief in the probability of the existence of the
material fact... . In short, the court, as fact finder, may draw whatever inferences from the
evidence or facts established by the evidence it deems to be reasonable and logical.” (Citation
omitted; internal quotation marks omitted.) Lyme Land Conservation Trust, Inc. v. Platner, 325
Conn. 737, 756, 159 A.3d 666 (2017).
“[{T]he key elements of a breach of contract action considered by the court are the
formation of an agreement, performance by one party, breach of the agreement by the other party
and damages.” Bouchard v. Sundberg, 80 Conn. App. 180, 189, 834 A.2d 744 (2003).
“[ Whether there was a breach of contract is ordinarily a question of fact.” (Internal quotation
marks omitted.) Smithfield Associates, LLC v. Tolland Bank, 86 Conn. App. 14, 21, 860 A.2d
738 (2004), cert. denied, 273 Conn. 901, 867 A.2d 839 (2005).
“[T]he question of contract interpretation isa question of the parties’ intent... .
Ordinarily, that is a question of fact. . . . If, however, the language of the contract is clear and
unambiguous, the court’s determination of what the parties intended in using such language is a
conclusion of law.” (Citations omitted.) CAS Construction Co. v. East Hartford, 82 Conn. App.
543, 552, 845 A.2d 466 (2004). “A contract is ambiguous if the intent of the parties is not clear
and certain from the language of the contract itself.” (Internal quotation marks omitted.)
Johnson v. Vita Built, LLC, 217 Conn. App. 71, 84, 287 A.3d 197 (2022). “Moreover, in
construing contracts, [the courts] give effect to all the language included therein, as the law of
contract interpretation . . . militates against interpreting a contract in a way that renders a
provision superfluous.” (Internal quotation marks omitted.) Id., 85.
IV. COUNT ONE: PLAINTIFF’S CLAIMS FOR COMMISSIONS
RE: SALES OF REAL PROPERTY
In the first count, Smith claims he is owed bonus compensation for the sale of three
properties. It should be noted that at trial, both Smith and Defendant stipulated that the
arithmetic calculations for the claims made by the Plaintiff would be agreed to, unless otherwise
noted herein. The Defendant did not stipulate to any liability for the Plaintiff’s claims.
1 Sale of 126 Boston Post Road, Milford, CT.
Smith’s first claim involves the sale of a commercial parcel known as 126 Boston Post
Road in Milford, CT. This property was one of the listing agreements that the Plaintiff sold to
the Defendant. Smith received a sixty percent commission ($240,000) for the sale of this
property. The gross commission earned was $400,000. Smith was also paid an additional
$80,000 in compensation, representing the override commission in consideration for the sale of
this asset to the Defendant, pursuant to 2.1 of the Agreement. The Plaintiff credibly testified that
this 20 percent consideration payment, known as an “override commission,” was an “entirely
separate matter” and had nothing to do with the sales commissions due to him as a broker. These
sales commissions were guided by Policy Manual.
Smith now claims that he is due an additional $24,500 as bonus compensation, pursuant
to the Policy Manual, which awards an additional bonus for any transaction in which the
“company income” exceeds $40,000. Policy Manual, p. 43. In this case, the property at 126
Boston Post Road sold for $7,500,000, and the total commission from that sale was $400,000.
Since this commission was over 5 percent, it was qualified as an “In-House Deal,” pursuant to
the Policy Manual. The commission split was 60/40, with 60 percent commission going to
Smith and 40 percent to Pearce. Exhibit 12. Thus, the additional bonus would be calculated
from the income received by Pearce (company income), equaling $160,000, pursuant to the
bonus schedule set forth in the Policy Manual on page 43. The parties have stipulated that the
calculation of $24,500 for this bonus compensation is accurate. The court finds that Smith has
met his burden of proving that he is entitled to this additional $24,500 bonus. The court further
finds that the Defendant is entitled to a $767.50 credit for a payment it already made to Smith in
connection with the sale of 126 Boston Post Road. Smith conceded at trial that this payment was
received by him, and his claim should be reduced in the amount of $767.50. Transcript, p. 108.
Therefore, the court finds that the adjusted bonus compensation due to Smith should be
$23,732.50 for the sale of this property.
2. Sale of 323 Cromwell Avenue Rocky Hill, CT.
Smith claims that he was owed an additional $6250 bonus for the sale of 323 Cromwell
Avenue in Rocky Hill, CT. The Plaintiff claims he is owed this bonus compensation as he had a
25 percent ownership in this property, qualifying this sale as an “Investment Property,” pursuant
to the Policy Manual. The provision of the Policy Manual pertaining to compensation for
“Investment Properties” states in relevant part: “Associates will receive 50% of Company dollar
after all expenses. If a property is listed by one office and sold by another, the Agent will receive
50% of the Company dollar of each office. If an Associate is not the sole or joint tenant owner,
he/she shall receive 50% of Company dollar times the percentage owned.” Policy Manual.
The calculation of the commissions and monies already received by Smith are not in
dispute. Specifically, this property sold for $5,500,000 and the agreed-on commission from this
sale was $100,000. Exhibit 2. Smith and Pearce both received a $50,000 commission.
Therefore, the company dollar received by Pearce was $50,000. Smith did not present any deed
to establish his ownership in this property, nor did he disclose that he had a 25 percent ownership
in the property on the disbursement form he submitted to the Defendant. The court does find
Smith’s testimony credible, in which he stated that he was a 25 percent partial owner of the
Broad Street Three, LLC, which owned 323 Cromwell Avenue, and as such, he was a 25 percent
owner of this property.
“{I]t is the exclusive province of the trier of fact to weigh . . . conflicting evidence,
determine the credibility of witnesses and determine whether to accept some, all or none of a
witness’ testimony.” (Internal quotation marks omitted.) Winakor v. Savalle, supra, 198 Conn.
App. 816. Because Smith had a 25 percent ownership in this property, the court finds that the
Plaintiff is owed an additional commission as an “Investment Property” pursuant to the Policy
Manual and awards the Plaintiff an additional bonus commission of $6250, which is equal to 25
percent of 50 percent of the company dollar received by Pearce.
3 1947 Center Groton Road, Ledyard, CT.
Smith claims that he is due an additional bonus commission of $1600 for the sale of 1947
Center Groton Road in Ledyard, CT, as he was a one-third owner of this property, thereby
qualifying this sale as an “investment property” Pursuant to the Policy Manual. See Policy
Manual, p. 45.
Although Smith did not present a deed or any other document confirming his ownership
in 1947 Center Groton Road, Ledyard, CT, the court finds that Smith’s trial testimony, that he
was a one-third owner of this property, credible. Smith’s testimony is also corroborated by the
disbursement form he submitted to Pearce for the commission due to him from this sale of real
estate, in which he noted he was a one-third owner of the property. Exhibit 3. The parties
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stipulated that the property sold for $240,000 and the gross commission for this property sale
was $24,000. The company dollar received by the Defendant was $9600, and one-third of 50
percent of the company dollar is $1600. Therefore, the Court finds that Smith was a one-third
owner of the property, and as such, is awarded a bonus commission of $1600.
4. Defendant’s special defense of setoff
Although the Court finds that the Plaintiff has proven and is awarded a total of
$31,582.50 in additional bonus compensation for the real estate sales of 126 Boston Post Road,
Milford, CT; 1947 Center Groton Road, Groton, CT; and 323 Cromwell Avenue, Cromwell, CT; .>
the Court also finds, for the reasons articulated below, that the defendant has proven its special
defense of setoff in the amount of $80,000. This setoff amount should be applied to all the
Plaintiff’s claims in Count One.
In making its decision regarding the setoff, the Court has also reviewed Exhibit A,
Pearce’s Commercial Property Summary form for the sale of 126 Boston Post Road, Milford,
CT, as well as the Commercial Division Disbursement form, prepared by Smith. Exhibit A. The
Court has also reviewed the Agreement, and specifically the applicable section of that Agreement
(§ 2.1), pertaining to this issue. Section 2.1 of the Agreement provides in relevant part:
“Consideration. As consideration for the Seller’s sale of the Assets to the Buyer, the Buyer
agrees to pay the Seller (a) the sum of One Dollar ($1.00), and (b) Twenty Percent (20%) of the
gross commission income produced by the Agents, including without limitation commissions due
from lease renewals, for transactions completed after the Effective Date and prior to July 1,
2017, and transactions pending as of July 17, 2017 and closing within twelve (12) months
thereafter (collectively, the “Purchase Price”). For the purposes of this Agreement, “Agents”
shall be Seller’s agents named in Section 8.1 below who are engaged as independent contractors
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of the Buyer after the Effective Date. Commissions, bonuses or any other consideration to be
paid to Agents by Buyer pursuant to the independent contractor agreements described in Section
8.1 below shall not be deducted from “gross commissions” for purposes calculating amounts due
to Seller under this Section 2.1.”
The court importantly notes that the date listed on the summary form for the sale of 126
Boston Post Road is July 26, 2017. The offer date listed on the Disbursement Form prepared by
Smith is July 25, 2017. The closing date listed on the summary sheet for the sale of this property
is December 29, 2017. Exhibit A, p. 1. The closing date that listed on the Disbursement form
for the sale of this property is September 30, 2017. Exhibit A, p. 3. The court finds that the sale
of this property was not completed after the effective date of the Agreement and prior to July 1,
2017. The court also finds that this transaction was not pending as of July 17, 2017. This was a
condition required by § 2.1 of the Agreement for the Plaintiff to receive the $80,000
consideration payment. The court further finds that the Defendant erroneously paid the Plaintiff
the $80,000 consideration payment for the sale of this property, even though this sale did not
qualify for an override commission.
Vv. LAW: SPECIAL DEFENSE OF SETOFF
General Statutes § 52-139 provides in relevant part: “(a) In any action brought for the
recovery of a debt, if there are mutual debts between the plaintiff .. . and the defendant . . . one
debt may be set off against the other. . . . (c) If it appears upon the trial that the plaintiff is
indebted to the defendant, the court shall give judgment for the defendant to recover the balance
due of the plaintiff with his costs ....”
“A setoff is made where the defendant has a debt against the plaintiff. . . and desires to
avail himself of that debt, in the existing suit, either to reduce the plaintiff’s recovery, or to defeat
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it altogether, and, as the case may be, to recover a judgment in his own favor for a balance.”
(Internal quotation marks omitted.) Hope s Architectural Products, Inc. v. Fox Steel Co., 44
Conn. App. 759, 762, 692 A.2d 829, cert, denied, 241 Conn. 915, 696 A.2d 985 (1997). A setoff
(unlike a counterclaim which arises from the same transaction subject of the complaint) is a debt
independent of the transaction alleged in the complaint. Savings Bank of New London v.
Santaniello, 130 Conn. 206, 210, 33 A.2d 126 (1943). “Setoffs can be based either in law or in
equity.” Godiksen v. Miller, 6 Conn. App. 106, 109, 503 A.2d 617 (1986).
“A condition precedent to the application of § 52-139 is that the defendant’s
claim arise from a debt due by the plaintiff.” Hope's Architectural Prod., Inc. v. Fox Steel
Co., supra, 44 Conn. App. 762. In other words, that the debts to be set off are mutual.
See General Statutes § 52-139. “A debt is defined as an ‘unconditional and legally
enforceable obligation for the payment of money.” Petti v. Balance Rock Associates, 12
Conn. App. 353, 362, 530 A.2d 1083 (1987). "[The debts] must exist between the parties
in their own right, and be of the same kind and quality, clearly ascertained and
liquidated.” General Consolidated, Ltd. v. Rudnick & Sons, Inc., 4 Conn. Cir. Ct. 581,
586, 237 A.2d 386 (1967). See also Bridgeport—City Trust Co, v. Niles-Bermeni—Pond
Co., 127 Conn. 4, 20 A.2d 91 (1941); Hartford National Bank & Trust Co. v. Riverside
Trust Co., 117 Conn. 276, 280 A. 811 (1933).
The Plaintiff raises several arguments challenging the Defendant’s special defense of
setoff, which the court addresses below.
The Plaintiff first asserts that Defendant’s Special Defense of setoff is not properly pled
and does not qualify as a setoff pursuant to General Statutes § 52-139. Smith contends that the
Defendant’s claim for setoff does not arise out of a separate transaction independent of the
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contract on which the Plaintiff sues. The essence of the Plaintiff’s argument is that the bonus
compensation, which is the basis for the Plaintiff’s claims in Count One, and the overpayment of
$80,000 that the Defendant claims he made to Smith and which is the basis of the setoff, arise
out of the same transaction, to wit, the sale of 126 Boston Post Road, Milford, CT. Therefore,
the Defendant should have raised this as a counterclaim and not a setoff. “Traditionally, the
distinction between a setoff and a counterclaim centers around whether the claim arises from the
same transaction as described in the complaint. If the claim involves a debt which is mutual and
liquidated, even though it arises from separate transactions, it is characterized as a setoff. . . . If
the claim arises out of the same transaction described in the complaint, it is characterized as a
counterclaim.” (Citation omitted; internal quotation marks omitted.) 225 Associates v.
Connecticut Housing Finance Authority, 65 Conn. App. 112, 121, 782 A.2d 189 (2001). In the
instant case, the Court finds that the Defendant has properly pled his special defense as a setoff.
The Plaintiff’s claim for bonus compensation for the sale of this property is guided by the Policy
Manual, and occurred while Smith was working as an independent contractor for the Defendant.
Pearce’s erroneous overpayment to Smith is guided by § 2.1 of the Agreement and is a separate
transaction. This is also supported by Smith’s own trial testimony, in which he stated that his
claims for bonus commissions earned from real estate sales, and the override commission paid to
him in consideration for the sale of assets from his business, were “entirely separate matters” and
they had nothing to do with each other. Transcript, p. 38.
There is functionally no difference between counterclaims and setoffs with respect to
their ultimate effect: “The courts use the terms setoff and counterclaim interchangeably as
regards the ultimate nature of the relief sought.” First Union National Bank v. Grills, Superior
Court, judicial district of New London, Docket No. CV-97-543720-S (August 16, 2001,
14
Corradino, J.) (30 Conn. L. Rptr. 304). The court further finds that aforementioned real estate
commissions claimed by the plaintiff in Count One, and the $80,000 erroneous override
commission paid to the Plaintiff, are mutual and liquidated debts, as these debts are owed
between the same two legal entities, Smith and Pearce, and the debt amounts are specified by
each party. Based on the foregoing reasons, the court finds that the Defendant has properly pled
his special defense of setoff in Count One.
The Plaintiff next contends that the Defendant did not meet its burden of proving its
$80,000 setoff, as it mislabeled this mistaken payment as an $80,000 commission, and not as a
consideration payment for the Plaintiff’s sale of this real estate listing (126 Boston Post Road) to
the Defendant. The court, however, does not see a legally significant distinction between the two
terms, as the Plaintiff himself characterized this consideration payment as an “override
commission.” Furthermore, Pearce has always contended in its special defense of setoff that it
mistakenly overpaid Smith $80,000 for the sale of this property and Smith was not entitled to
this additional payment. Therefore, the court finds that the Plaintiff received sufficient notice of
the Defendant’s special defense of setoff.
The Plaintiff also contends that the Defendant has failed to independently meet its burden
of proving its special defense of setoff, as it did not introduce sufficient evidence that this
payment was erroneously paid to the Plaintiff. Plaintiff further asserts that the Defendant failed
to establish that the $80,000 payment was not owed as a consideration payment for the sale to the
Defendant of the real estate listing of 126 Boston Post Road, Milford, CT. In finding for the
Defendant on this issue, the court has considered the Agreement, the Commercial Property
Summary, and the Disbursement Form prepared by the Plaintiff. Exhibit 1, Exhibit A. The court
finds that these documents establish that the sale of this property was not completed prior to July
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17, 2017, and the sale was not pending as of that date, as required by the terms of the agreement.
Exhibit 1, § 2.1. Therefore, the Plaintiff would not be entitled to receive the aforementioned
consideration payment of $80,000.
In a further attempt to discredit the Defendant’s claim of setoff, Plaintiff cites the case of
Stratford y. Winterbottom, 151 Conn. App. 60, 78, 95 A.3d 538, cert. denied, 314 Conn. 911, 100
A.3d 403 (2014), to support his argument that the Defendant would need to bring an action for
“Indebitatus Assumpsit” to recover its mistaken $80,000 overpayment to the Plaintiff. “[W]hen
money is paid by one on the basis of a mistake as to his rights and duties and the recipient has no
right in good conscience to retain the money, an action of indebitatus assumpsit may be
maintained to recover the money ... .” (Internal quotation marks omitted.) Id., 78. After a
review of this case, the court finds that the Defendant is not limited to bringing an action of
“Indebitatus Assumpsit” to recover the a mistakenly paid to Smith. Pearce can also seek to
recover its erroneous overpayment to the plaintiff in this action, through its special defense of
setoff. Lastly, the Plaintiff cites General Statutes § 52-141 (c) (2), to support its claim that
defendant’s right of setoff cannot be applied to the plaintiff’s claim in Count One. Upon review
of this statute, the court finds that General Statutes § 52-141 (c) (2) only applies to setoffs in civil
actions for tort or trespass. Since the instant case is an action for breach of contract, the
Defendant’s special defense of setoff, is governed by § 52-139, and which allows the Defendant
to seek a setoff in the instant case.
For all the foregoing reasons, the court finds that the defendant has satisfied its burden of
proving a setoff in the amount of $80,000, and this amount should be applied to reduce the
commissions awarded to the Plaintiff in Count One, resulting in a debt owed to the Defendant in
the amount of $48,417.50.
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V. COUNT THREE: PLAINTIFFS’ CLAIMS FOR COMMISSIONS DUE FROM LEASE
RENEWALS THAT WERE EXCLUDED ASSETS
In Count Three of the Plaintiffs’ complaint, Smith and DII claim that DII is owed
commissions from certain lease renewals that were specifically excluded from its sale of assets to
the Defendant in the Agreement. Plaintiffs assert that these lease renewals were identified as
excluded assets in Schedule 1.1(a)(continued). The list of “excluded assets” specifically
identifies the excluded lease renewals by property address, tenant name, and the approximate
lease renewal date. The Defendant contends that the lease renewals at issue were not excluded
assets and, in fact, were included in the sale of the Plaintiff’s business to the Defendant. To
support its position, Pearce contends that DII was paid an override commission for the majority
of these lease renewals, pursuant to § 2.1 of the Agreement, representing payment in
consideration for the sale of these lease renewals to the Defendant. Pearce also asserts that the
dates for the lease renewals listed on the excluded asset schedule do not match the dates of the
lease renewals which are the basis for the plaintiff’s claims and, therefore, cannot be the same
lease renewals which are listed on the excluded asset schedule.
The Plaintiffs contend that the lease renewals listed on the excluded asset schedule are
not limited by the expected lease renewal dates listed on said schedule. Plaintiffs further assert,
that the lease renewals at issue are identified by the property address and the tenant, regardless of
the date in which the lease renewed. To support its position, the Plaintiffs assert that the lease
renewals at issue fall under the definition of “Accounts Receivable,” which is defined in the
Agreement as follows: “Accounts receivable shall include, without limitation, commissions due
to [Smith and/or DII] on lease renewals for leases executed prior to the Closing Date.” Exhibit
1, p. 17.
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“[I]n construing contracts, [the courts] give effect to all the language included therein, as
the law of contract interpretation . . . militates against interpreting a contract in a way that
renders a provision superfluous.” (Internal quotation marks omitted.) Johnson v. Vita Built,
LLC, supra, 217 Conn. App. 85. Additionally, the principle that “the expression of one thing is
the exclusion of another” suggests that the parties did not intend for any lease renewals, other
than those occurring on the dates listed on the schedule, to be excluded assets. See Biro v. Matz,
132 Conn. App. 272, 282, 33 A.3d 742 (2011).
In interpreting this Agreement and the excluded asset schedule, the court finds that the
date listed next to each lease renewal on the excluded asset schedule is the expected renewal date
for that lease. This date identifies those lease renewals, which the Plaintiffs intended to be
excluded from the Agreement. The court further finds that if a lease renewal listed on the
excluded asset schedule closed within a reasonable ’period of time of the date listed, it should be
considered an excluded asset. However, if any claimed lease renewal did not close within a
reasonable period of time of the date listed on the excluded asset schedule, it should not be
considered as an excluded asset. Therefore, no additional commission would be due to the
Plaintiff for such lease renewal.
1 408 Woodmont Road, Milford, CT, 2016 Lease Renewal: Crown Linen Services
(Tenant).
In its first claim, the Plaintiffs assert that an additional commission is owed to DII for the
lease renewal of 408 Woodmont Road, Milford, CT, which renewed on March 4, 2016. The
excluded asset schedule lists Crown Uniform as the tenant, and an expected lease renewal date of
December 2015. Agreement, Schedule 1.1(a)(continued). The total commission claimed by the
Plaintiffs is $513.06, which is equal to 50 percent of the total gross commission received by the
brokers in the amount of $1026.12. Exhibit 7. The Defendant asserts that there are no monies
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owed to DII, as the instant lease renewal was not an excluded asset. Furthermore, Pearce asserts
that it already paid an override commission to DII (consideration payment) in the amount of
$205.23, for the sale of this lease renewal to the Defendant. This override commission was paid
on or about September 24, 2019. Exhibit 7.
As noted earlier, the expected lease renewal date listed for this property was December
2015. The actual closing date for this lease renewal was three months later, March 4, 2016.
Because the lease for 408 Woodmont Road renewed only a few months after the expected lease
renewal date, listed on the excluded asset schedule, the court finds that the instant lease renewal
is reasonably related to the lease renewal listed on that schedule. Therefore, this lease renewal
was an excluded asset and Smith is due the commission of $513.06. The court also finds that the
Defendant should receive a credit for the payment it made to DII, in the amount of $205.23.
Therefore, the commission awarded to the Plaintiffs should be reduced by this payment, leaving
a balance owed to the Plaintiffs in the amount of $307.83.
2 408 Woodmont Road, Milford, CT, 2017 Lease Renewal: Crown Linen Services
(Tenant),
Plaintiffs claim that DII is owed a commission for a second and subsequent lease renewal
of 408 Woodmont Road, Milford, CT, in the amount of $652.61. Exhibit 7. The Court finds that
the expected date of this lease renewal is listed on the excluded asset schedule as December
2015, and the actual closing date of this lease renewal was June 19, 2017. Since the expected
closing date of this lease renewal is eighteen months earlier than the date of the actual lease
renewal at issue, the court finds that it is not reasonably related to the lease renewal on the
excluded asset schedule and, therefore, is not an excluded asset. To support its finding, the court
also finds credible, a check stub in the amount of $435.08 which was Pearce’s payment to DII,
representing the consideration payment for the sale of this lease renewal to the Defendant.
19
Exhibit 7. Therefore, the court finds that no additional commission is due to the Plaintiffs for
this lease renewal.
3 408 Woodmont Road, Milford, CT, 2019 Lease Renewal: Crown Linen Services
(Tenant).
Smith claims that DII is owed an additional commission for a third and subsequent lease
renewal of 408 Woodmont Road in the amount of $1231.35. This third lease renewal finalized
on March 13, 2019. As previously noted in this section, the expected lease renewal date for this
property is listed on the excluded asset schedule as December 2015. The actual closing date for
this third lease renewal involving tenant, Crown Services, occurred on March 13, 2019, more
than three years after the lease renewal date listed on the excluded asset schedule. Exhibit 7.
The court finds this third lease renewal is not reasonably related to the lease renewal listed on the
excluded asset schedule, and therefore, it is not an excluded asset. The court also finds that this
third lease renewal is outside the scope of the Agreement, which ended in July 2017, and it
would not be reasonable to conclude that the Plaintiffs intended a 2019 lease renewal to be an
excluded asset when the Agreement was signed on June 19, 2012. For these reasons, the court
finds that the third lease renewal for the 408 Woodmont Road, was not an excluded asset, and
there would be no commission owed to Smith and DII for this lease renewal.
4 9 Depot Street, 2016 Lease Renewal: Dey, Smith, Steele, LLC. (Tenant).
The Plaintiffs claim that an additional commission of $1036.80 is owed to DII for the
October 2016 lease renewal of 9 Depot Street, Milford, CT. The basis for the Plaintiffs’ claim is
that DII did not receive the full commission it was owed from the Defendant, as this lease
renewal was an excluded asset. The Defendant paid the Plaintiffs a commission of $691.20 and
it asserts this payment represented the 20 percent consideration payment for the sale of this asset
(total commission was $3456). Exhibit 8. In reviewing this claim, the court finds that the
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excluded asset schedule lists an expected lease renewal date for this property as May 2013. The
instant lease renewal actually finalized on October 25, 2016, which is more than three years after
the expected lease renewal date. Exhibit 5. The court further finds that the Defendant’s payment
of $691.20 to the Plaintiffs does in fact represent a 20 percent consideration payment for the sale
of this asset to the Defendant. For these reasons, the court finds that the third lease renewal of 9
Depot Street, which closed on October 25, 2016, is not reasonably related to the lease renewal
listed on the excluded asset schedule and is not an excluded asset. Therefore, the Plaintiffs are
not due any additional commission for this lease renewal.
5. 9 Depot Street, Milford, CT, 2019 Lease Renewal: Dey, Smith, Steele, LLC. (Tenant).
The Plaintiffs claim that DII is owed a commission of $1872 for a 2019 lease renewal of
9 Depot Street, Milford, CT, as this lease renewal was an excluded asset. The claimed
commission of $1872 represents 50 percent of the total $3744 commission earned from this lease
renewal. Exhibit 8. This lease renewed on August 29, 2019 (Exhibit 6) and is also the subject of
the Interpleader Action. Milford Bank v. DeForest Industries, Inc., Superior Court, judicial
district of Ansonia-Milford, Docket No. CV-21-6041913-S. As noted earlier, the parties have
stipulated that the court’s decision concerning this lease renewal will also resolve the issue raised
in the Interpleader action, specifically addressing whether Smith and DII or Pearce is entitled to
this commission.
The court finds that the lease renewal date reflected on the excluded asset schedule was
May 2013. Exhibit 1, Schedule 1.1(a)(continued). The fourth lease renewal was signed on
August 29, 2019, and actually commenced on October 1, 2019. Exhibit 6. Since the closing of
this lease renewal took place more than six years after the original lease renewal date listed on
the excluded asset schedule, the court finds that this fourth lease renewal is not reasonably
21
related to the lease renewal documented on the excluded asset schedule. Therefore, it is not an
excluded asset.
With respect to the Interpleader Action, Milford Bank v. DeForest Industries, Inc,, supra,
Superior Court, Docket No. CV-21-6041913-S, the court holds that judgment should enter for the
Defendant as to this $3744 commission. The court notes that Milford Bank withdrew its original
claim for attorney’s fees and costs as to this Interpleader Action. See Stipulation, Docket Entry
#143.00 (July 27, 2023).
6 78 Rebeschi Drive, North Haven, CT, 2019 Lease Renewal: Connecticut Fitness
Warehouse (Tenant).
Plaintiffs claim that DII is owed $1115.52 for the lease renewal of the property located at
78 Rebeschi Drive in North Haven, CT. The expected lease renewal date for this property, as
listed on the excluded asset schedule, is October 2015. Exhibit 1, Schedule 1.1 (a)(continued).
The court finds that the instant lease renewal actually closed on May 20, 2019. Exhibit 9. The
court also finds that the tenant listed on the fourth lease renewal and the tenant listed for this
property on the excluded asset schedule do not match. The lease renewal document, admitted as
a full exhibit, is dated December 30, 2019 and lists Connecticut Fitness Company as the tenant
and Amarr Garage as the Landlord. Exhibit 9. The lease renewal referenced on the excluded
asset schedule lists Amarr Garage as the tenant. Schedule 1.1(a)(continued). Even if the court
were to find that both lease renewals arise out of the same lease, it is significant to note that the
renewal date listed on the excluded asset schedule is October 1, 2015, and the instant lease
renewal closed on May 20, 2019, more than three years after the expected lease renewal date.
For these reasons, the court finds that the instant lease renewal is not reasonably related to the
lease renewal listed on the excluded asset schedule and no commission is due to the Plaintiffs.
22
7 70-76 Robinson Boulevard, Orange; CT, 2013 Lease Renewal: Luxo Corp.
(Tenant).
Plaintiffs claim that DII is owed an additional commission of $1865.75, for the 2013
lease renewal of the property located at 70-76 Robinson Boulevard in Orange, CT. The total
commission paid to the Defendant for this lease renewal was $3109.59. Exhibit 11. Although
the Plaintiff claims this lease renewal was an excluded asset and the entire commission is due,
Smith concedes that DII already received a twenty percent partial payment for this lease renewal
in the amount of $1243.84. The Defendant contends that this lease renewal was not an excluded
asset, and the Plaintiffs have received a payment from Pearce in the amount of $1243.84,
representing the consideration payment for the sale of this asset.
The court finds that the expected lease renewal date for this property, as listed on the
excluded asset schedule, is March 2, 2014. A review of the actual lease renewal document for
70-76 Robinson Boulevard documents that this lease renewal closed on December 31, 2013.
Exhibit 11. The court finds, that because the lease renewal for this property closed
approximately two months earlier than the expected lease renewal date, it is reasonably related to
the lease renewal on the excluded asset schedule, and therefore, is an excluded asset. Therefore,
the Plaintiff is entitled to the additional commission of $1865.75, which reflects the balance of
the commission owed to the Plaintiffs for this lease renewal.
The Defendant further asserts a special defense to the Plaintiff’s claim contending that the
Plaintiff's claim is barred by the six-year statute of limitations. Specifically, Pearce asserts that
the Plaintiffs did not make a claim for this additional commission until it disclosed this claim in
the supplemental interrogatories filed on March 4, 2022.
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General Statutes § 52-576 (a) states in relevant part that: “[nJo action for an account, or
on any simple or implied contract, or on any contract in writing, shall be brought but within six
years after the right of action accrues ....” The Court finds that the Plaintiff’s claim is not
barred by the statute of limitations, as it fell within the scope of the Plaintiff's claims for
commissions due for lease renewals in the Plaintiff’s Amended Complaint filed in October 2019.
“Qur relation back doctrine provides that an amendment relates back when the original
complaint has given the party fair notice that a claim is being asserted stemming from a
particular transaction or occurrence, thereby serving the objectives of our statute of limitations,
namely, to protect parties from having to defend against stale claims... . [I]n the cases in which
we have determined that an amendment does not relate back to an earlier pleading, the
amendment presented different issues or depended on different factual circumstances rather than
merely amplifying or expanding upon previous allegations.” (Citations omitted; internal
quotation marks omitted.) Briere v. Greater Hartford Orthopedic Group, P.C., 325 Conn. 198,
207-208, 157 A.3d 70 (2017). “[I]n order to provide fair notice to the opposing party, the
proposed new or changed allegation . . . must fall within the scope of the original cause of action,
which is the transaction or occurrence underpinning the plaintiff’s legal claim against the
defendant.” (Emphasis in original; footnote omitted.) Id., 210. “Relevant factors for this
inquiry include, but are not limited to, whether the origina