Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

R.S. Silver Enterprises, Inc. v. Pascarella

Appellate Court of Connecticut

February 9, 2016

R.S. SILVER ENTERPRISES, INC.
v.
HENRY PASCARELLA ET AL

         Argued October 13, 2015.

          Action to recover damages for, inter alia, breach of contract, and for other relief, brought to the Superior Court in the judicial district of Stamford-Norwalk, where the named defendant et al. filed a counterclaim; thereafter, the court, J. Downey, J., granted in part the plaintiff's motion to strike the special defenses filed by the named defendant et al.; subsequently, the matter was tried to the court, Hon. Alfred J. Jennings, Jr., judge trial referee; judgment dismissing the counterclaim and judgment in part for the plaintiff as to liability on the breach of contract count; thereafter, following a hearing in damages, the court, Hon. Alfred J. Jennings, Jr., judge trial referee, rendered judgment in part for the plaintiff, from which the named defendant et al. appealed and the plaintiff cross appealed to this court; subsequently, the plaintiff withdrew its cross appeal; thereafter, this court remanded the case for further proceedings to determine the jurisdictional issue raised in a special defense filed by the named defendant et al. and retained jurisdiction over the matter; subsequently, the matter was tried to the court, Lee, J.; judgment for the plaintiff, and the named defendant et al. filed an amended appeal.

          SYLLABUS

         The plaintiff sought to recover damages from the defendants P and R Co. for breach of contract. The trial court rendered judgment in part for the plaintiff on the breach of contract claim, and the defendants appealed to this court. The defendants claimed, inter alia, that the trial court erred in granting the plaintiff's motion to strike certain of their special defenses, including a special defense alleging that prior to the commencement of this action, the plaintiff had assigned to a nonparty its rights under the contract at issue. In granting the plaintiff's motion to strike, the trial court simply noted that the special defenses it was striking either were not recognized under state law or were not properly drafted such that they would survive a motion to strike. This court remanded the case to the trial court for further proceedings to determine, inter alia, the jurisdictional issue raised in the defendants' special defense, which alleged that the trial court lacked jurisdiction to hear the case because the plaintiff lacked standing to bring this action as a result of its having assigned its rights under the contract to a nonparty. On remand, the trial court rejected, inter alia, the defendants' jurisdictional claim, finding that the plaintiff had never assigned its rights and interests under the contract, and rendered judgment for the plaintiff. The defendants then filed an amended appeal, challenging that ruling and several previous rulings by the trial court. They claimed that the trial court erred in determining, inter alia, that a certain formation agreement the parties had entered into for the purpose of engaging in commercial real estate brokerage was clear and unambiguous, and that the plaintiff did not thereby assign its contract rights to any other party.

          Held :

         1. The defendants could not prevail on their claims that the plaintiff did not have standing to bring the action, and thus that the trial court did not have subject matter jurisdiction to hear it:

         a. Contrary to the defendants' special defense alleging that certain language in the parties' formation agreement was ambiguous and could reasonably be read to support their claim that the plaintiff lacked standing as a result of having assigned its rights under the contract to a nonparty before it commenced this action, the language in the formation agreement, read in the broader context of the entire agreement, and the entire agreement itself, did not explicitly state that the plaintiff had assigned its contract rights to a third party, but instead made clear that the formation agreement was strictly a real estate brokerage agreement that made no mention of a certain participation agreement the parties had entered into that gave the plaintiff the contractual rights at issue.

         b. The defendants lacked standing to assert their special defense alleging that the plaintiff lacked the legal capacity to bring this action because it should not have been reinstated as a Connecticut corporation by the secretary of the state, this court having previously determined that the defendants were not aggrieved by the reinstatement of the plaintiff after it had been administratively dissolved as a corporation.

         2. Contrary to the defendants' claim, the trial court properly struck their special defenses alleging that the plaintiff was barred from bringing this action as a matter of public policy because its reinstatement as a Connecticut corporation resulted from its having defrauded the Commissioner of Revenue Services and because it had engaged in bankruptcy fraud; this court previously determined that the defendants lacked standing to challenge the plaintiff's reinstatement, and the defendants never mentioned the doctrine of unclean hands in their special defense that alleged bankruptcy fraud or made any connection between that doctrine and the plaintiff's breach of contract claim.

         3. The trial court's determination that the defendants had waived the statutory (§ 51-183b) requirement that imposes a 120 day time limit on the power of a trial judge to render judgment in a civil case was not clearly erroneous, the defendants having consented to an extension of that time limit without setting forth any conditions or limitations on the agreed upon extension.

         Wesley W. Horton, with whom were Kenneth J. Bartschi and, on the brief, Brendan J. O'Rourke and Daniel W. Moger, Jr., for the appellants (named defendant et al.).

         Hugh D. Hughes, for the appellee (plaintiff).

         Sheldon, Keller and Flynn, Js. SHELDON, J. In this opinion the other judges concurred.

          OPINION

          [163 Conn.App. 3] SHELDON, J.

          This breach of contract action, filed by the plaintiff, R.S. Silver Enterprises, Inc., against the defendants, Henry Pascarella and Riversedge Partners, returns to this court following our remand to the trial court for resolution of a jurisdictional challenge to the plaintiff's standing to prosecute this action, as pleaded in the defendants' twenty-first special defense. R.S. Silver Enterprises, Inc. v. Pascarella, 148 Conn.App. 359, 366, 86 A.3d 471 (2014). Pending resolution of that challenge, which was based upon the plaintiff's alleged assignment to a nonparty of its rights and interests [163 Conn.App. 4] under the contract it here claims that the defendants breached, we retained jurisdiction over and stayed further proceedings as to the defendants' remaining claims in their prior appeal. Id. On remand, the trial court, Radcliffe, J., rejected the defendants' jurisdictional challenge, finding that the plaintiff never assigned away its rights and interests under the contract here at issue. The defendants now challenge that determination, along with several earlier rulings by the trial court, J. Downey, J., and Hon. Alfred J. Jennings, Jr., judge trial referee, over which we retained jurisdiction pending the remand hearing. Because we agree with the trial court's rejection of the jurisdictional challenge presented in the defendants' twenty-first special defense, we must now reach and address those other challenged rulings on this appeal.

         The other challenged rulings over which we retained jurisdiction involve alleged errors of two types. The first are alleged errors by the pretrial motions judge, J. Downey, J., in striking certain of the defendants' special defenses. Specifically, the defendants challenge the trial court's orders striking: their second special defense, in which they alleged that the plaintiff is barred from pursuing this action as a matter of public policy because reinstatement of the plaintiff as a corporation by the Secretary of the State in order to pursue this case was made possible only by the plaintiff's defrauding of the Commissioner of Revenue Services; their fourth special defense, in which they alleged that the plaintiff is barred from pursuing this action as a matter of public policy because it engaged in bankruptcy fraud by entering into the contract here at issue; and their sixth special defense, in which they challenged the plaintiff's legal capacity to bring the instant action in 2006 on the ground that it was barred from obtaining reinstatement as a Connecticut corporation after 1994 pursuant to General Statutes § 33-995. Secondly, the defendants [163 Conn.App. 5] claim that the " judgment of the trial court is ineffective [because the court, Hon. Alfred J. Jennings, Jr., judge trial referee, did not issue its final decision until] 966 days after the completion of trial in violation of General Statutes § 51-183b." We conclude that the trial court did not err in striking any of the challenged special defenses. We also conclude that the defendants waived the time limitation set forth in § 51-183b, and thus that the date of issuance of the trial court's final decision does not make its judgment ineffective. Accordingly, we affirm the judgment of the trial court.

         This court recited the following relevant factual and procedural history in deciding the defendants' prior appeal. " On April 28, 1997, the plaintiff entered into a 'participation agreement' with the defendants, under which the plaintiff invested $1,250,000 in a partnership formerly known as SPD Associates (SPD), and now known as Riversedge Partners, involving owning and managing a commercial building in Greenwich. Pursuant to that agreement, the plaintiff, in exchange for its investment, was given the contractual right to participate 'in any increase in the economic value' and 'future economic enhancement' of the building. More specifically, the agreement entitled the plaintiff to split equally all amounts received by the defendants in connection with the building after the making of certain priority payments.

         " On October 11, 2006, the plaintiff commenced this action, alleging that the defendants had failed to split with it any amounts they had received in connection with the building, and, in fact, had never paid the plaintiff anything pursuant to the agreement. The plaintiff also sought an accounting of the business and affairs of SPD and alleged breach of fiduciary duty. In response, the defendants filed an answer and twenty-two special defenses. On August 19, 2008, the plaintiff filed a motion to strike all but two of the defendants' [163 Conn.App. 6] special defenses, in response to which the defendants filed an objection. On September 26, 2008, the plaintiff responded to the defendants' objection by filing a reply memorandum of law. On September 29, 2008, Judge Downey orally granted the plaintiff's motion to strike several of the defendants' special defenses, including the defendants' second, fourth, sixth and twenty-first special defenses, which are the subject of the defendants' appeal. In so doing, the court noted simply, without further explanation, that the special defenses it was striking 'are either not recognized under Connecticut law or are not appropriately drafted such that they would survive a motion to strike.' The court then stated: 'I adopt the foundation for my decision all the arguments advanced in [the plaintiff's] brief of August 19, [2008] and September 26, [2008]. . . .

         " The case was then tried before Judge Jennings on various dates in early 2009. At the conclusion of trial, the defendants sought to withdraw their counterclaims, but the court, having determined that no good cause existed to permit the withdrawal, instead dismissed the counterclaims. The court ultimately rendered judgment in favor of the plaintiff on its breach of contract claim, awarding it damages in the amount of $1,782,848, plus prejudgment interest in the amount of $819,475, for a total award of $2,602,323. The court ruled in favor of the defendants on the plaintiff's claims for an accounting and for breach of fiduciary duty. The defendants appealed and the plaintiff filed a cross appeal from the court's judgment on its breach of fiduciary duty claim. On April 17, 2013, the plaintiff withdrew its cross appeal, leaving only the defendants' appeal from the trial court's judgment on the plaintiff's breach of contract claim for our consideration." (Footnotes omitted.) R.S. Silver Enterprises, Inc. v. Pascarella, supra, 148 Conn.App. 363-64.

          [163 Conn.App. 7] As previously noted, this court remanded this case for adjudication of the jurisdictional challenge asserted in the defendants' twenty-first special defense. On remand, the trial court held hearings over several days, during which testimony and exhibits were presented, and the parties submitted posthearing memoranda. The court issued a memorandum of decision dated January 26, 2015, in which it concluded that the " plaintiff did not assign its right to payment under the [p]articipation [a]greement to Silver LLC, did not lack standing to sue, and accordingly, that the court has subject matter jurisdiction over this controversy." The defendants have appealed from that determination. Additional facts will be set forth as necessary.

         I

         We begin, as we must, with an examination of the defendants' claims that the plaintiff did not have standing to bring this action, and thus that the trial court did not have subject matter jurisdiction to hear it. See New Hartford v. Connecticut Resources Recovery Authority, 291 Conn. 511, 518-19, 970 A.2d 583 (2009) ( when issue affecting court's subject matter jurisdiction raised, court is obliged to decide that issue before taking one step further to adjudicate other matters pending before it in the action). They have challenged the plaintiff's standing in two of their special defenses, the twenty-first and the sixth, which we will address in turn.

         We begin by setting forth the applicable standard of review. " If a party is found to lack standing, the court is without subject matter jurisdiction to hear the case. Because standing implicates the court's subject matter jurisdiction, the plaintiff ultimately bears the burden of establishing standing. A trial court's determination of whether a plaintiff lacks standing is a conclusion of law that is subject to plenary review on appeal. We conduct that plenary review, however, in light of the [163 Conn.App. 8] trial court's findings of fact, which we will not overturn unless they are clearly erroneous. . . . In undertaking this review, we are mindful of the well established notion that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged. . . . This involves a two part function: where the legal conclusions of the court are challenged, we must determine whether they are legally and logically correct and whether they find support in the facts set out in the memorandum of decision; where the factual basis of the court's decision is challenged we must determine whether the facts set out in the memorandum of decision are supported by the evidence or whether, in light of the evidence and the pleadings in the whole record, those facts are clearly erroneous. . . . A court's determination is clearly erroneous only in cases in which the record contains no evidence to support it, or in cases in which there is evidence, but the reviewing court is left with the definite and firm conviction that a mistake has been made." (Citations omitted; internal quotation marks omitted.). Success, Inc. v. Curcio, 160 Conn.App. 153, 162, 124 A.3d 563, cert. denied, 319 Conn. 952, 125 A.3d 531 (2015).

         With these principles in mind, we turn to the merits of the defendants' two challenges to the plaintiff's standing, and thus to the trial court's jurisdiction.

         A

         We first address the defendants' challenge to the trial court's rejection of their twenty-first special defense, in which they alleged that before this action was commenced, the plaintiff had assigned to a nonparty its rights under the participation agreement, the contract which it claims in this action that the defendants breached. The defendants claim that the trial court erred in determining that the formation agreement, [163 Conn.App. 9] under which the plaintiff allegedly assigned its rights under the participation agreement to a nonparty, was clear and unambiguous, and that the plaintiff did not thereby assign its rights under the participation agreement to any other party. We are not persuaded by the defendants' arguments.

         The following additional facts are relevant to this claim. In the defendants' prior appeal, this court decided that the trial court, J. Downey, J., had improperly stricken the defendants' twenty-first special defense. In so concluding, we reasoned as follows: " In their twenty-first special defense, the defendants alleged the occurrence of a transaction that purportedly resulted in the transfer of all of the plaintiff's rights under the participation agreement to a third party. . . . A valid assignment transfers to the assignee exclusive ownership of all of the assignor's rights to the subject assigned and extinguishes all of those rights in the assignor. . . . If proven, the facts set forth in the defendants' twenty-first special defense would establish that the plaintiff had no right to sue the defendants for breach of the participation agreement. Because such allegations were not inconsistent with the allegations of the plaintiff's complaint, but, nevertheless, if proven, would have defeated the plaintiff's claims against them, the trial court improperly struck that special defense." (Citation omitted; internal quotation marks omitted.) R.S. Silver Enterprises, Inc. v. Pascarella, supra, 148 Conn.App. 365-66.

         On remand, the trial court made the following findings of fact.[1] " In late 1996 or early 1997, Robert Silver or an entity controlled by him accepted a real estate [163 Conn.App. 10] broker's commission of $2.5 million in settlement of a dispute relating to the real estate commission arising out of a project involving a company named 9 West in Stamford. . . . Henry Pascarella, who had represented Silver in the dispute as his attorney, introduced Silver [to] a $1,250,000 investment opportunity related to an office building at 200 Pemberwick Road in Greenwich, which Robert Silver had developed in the mid-1980s. Silver used half of the commission money received from the 9 West transaction to fund the Pemberwick investment. . . .

         " On or about April 28, 1997, the investment was documented in a handwritten draft of the [p]articipation [a]greement, which recites that in return for the $1,250,000 investment, R.S. Silver & Company was assigned an economic interest in the anticipated restructured SPD Associates partnership (which owned the Pemberwick property), to be called the 'Silver Participation.' The Silver Participation required that certain preference or priority payments be paid first to Pascarella, who was a principal in SPD Associates. Thereafter, cash distributions from SPD were to be paid one-half to Pascarella and one-half to R.S. Silver and Company. . . . Section 3 of the [p]articipation [a]greement prohibits any sale, transfer or encumbrance of the Silver Participation without Pascarella's written consent, which he may give or withhold 'with or without any reason.' . . . Silver never requested or obtained permission from Pascarella to assign his interest in the [p]articipation [a]greement to anyone. . . . Silver provided some assistance with marketing the Pemberwick property to potential tenants, which he characterized as working for himself and Pascarella as owners. Pascarella did not pay him a commission for this work. . . .

         " In 2001, Silver Co. needed an infusion of money to continue operating. Silver was introduced by Nick [163 Conn.App. 11] DeLuca, who had worked for Silver's company for fifteen years, to Robert Gillon, a successful, retired businessman, who was interested in investing and participating in a commercial real estate brokerage firm. . . . After several rounds of discussions, Silver, Silver Co. (referred to as 'Silvercorp'), Gillon and DeLuca entered into a [f]ormation and [c]ontribution [a]greement as of September 28, 2001 (the '[f]ormation [a]greement'). Pursuant to the [formation] agreement, the parties formed a limited liability company to be known as R.S. Silver & Co. LLC ('Silver LLC') to engage in the business of commercial real estate brokerage. Silver Co. was to change its name and to discontinue the conduct of real estate brokerage 'except as may be necessary to wind up its affairs.' . . . Silver's capital contribution was described in Paragraph 2 and on Schedule A as customer ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.