Rader v. Valeri

308 A.3d 66

223 Conn.App. 243

Martin A. RADER, Jr.

v.Paul J. VALERI et al.

(AC 45407)

Appellate Court of Connecticut.

Argued September 18, 2023

Officially Released January 9, 2024

Alexander Copp, Danbury, for the appellant (named defendant).

Brandon B. Fontaine, for the appellee (defendant MSPD Downs Street, LLC).

Bright, C. J., and Alvord and Clark, Js.

BRIGHT, C. J.

₂₄₅This interpleader action arises from a real estate transaction in which the defendant claimant, MSPD Downs Street, LLC (MSPD), purchased two properties located in Danbury from the defendant claimant, Paul J. Valeri.¹ The plaintiff stakeholder, Martin A. Rader, Jr., sought an order determining the rights of Valeri and MSPD to funds held in escrow until Valeri obtained certain zoning approvals for the properties.² Valeri appeals from the judgment of the trial court, rendered after a court trial, awarding MSPD the escrow funds and attorney’s fees. On appeal, Valeri claims that the court (1) made clearly erroneous factual findings and (2) improperly concluded that he failed to satisfy one of the zoning contingencies set forth in the escrow agreement. We affirm the judgment of the trial court.

The following facts, either as found by the trial court or undisputed by the parties, and procedural history are relevant to Valeri’s claims. "In 2019, MSPD sought to purchase from Valeri two properties located at 10 Downs Street [also referred to as 10 Downs] and 12 ₂₄₆Downs Street [also referred to as 12 Downs] [in] Danbury …. The two properties are adjacent to each other. 12 Downs is a comer lot, also bordering Smith Street, with parking in the rear of the building that is accessed from Smith Street. On that lot is a large house with 2838 square feet of living area. … While zoned as a commercial property for offices, it also houses a residential apartment. … The adjacent property at 10 Downs is a small residential ranch home. … Unlike 12 Downs, its use is limited to a one-family residential property." (Citations omitted.) 10 Downs Street has a front driveway that leads to a garage, and there is a parking area behind the building. In order to access the parking area behind 10 Downs Street, vehicles must enter from Smith Street and travel across the parking area behind 12 Downs Street.

"Valeri marketed the properties as being in a federal opportunity zone. Such designated zones are an economic development tool that encourages investment in distressed communities by providing the opportunity for tax deferment. In expressing its interest in the propert[ies] to Valeri, MSPD made clear that it desired to continue the mixed commercial and residential use of 12 Downs but also to convert 10 Downs from a single-family residence to a two-family rental property. To qualify for the tax benefits under the requirements of the opportunity zone, the parties had to close on the transaction within a six month window.

"In order to ensure that the closing could timely take place to obtain the tax deferment benefit, the parties entered into a contract for sale of 10 Downs and 12 Downs that was fully executed on September 23, 2019…. That contract called for a purchase price of $625,000. Nevertheless, knowing that a zoning variance and other approvals would be needed to meet the goals of MSPD as to the use of the properties, the parties ₂₄₇added a rider to the contract [that] called for the creation of an escrow agreement to hold $75,000 of the purchase price in escrow contingent upon the receipt of specified zoning and use approvals from the city of Danbury on or before February 1, 2020.

"To this end, paragraph 14 of the contract specifically states: ‘Seller [Valeri] due diligence through 9/27/19 [initialed] w/City of Danbury regards escrow contingencies. Escrow agreement to be finalized by attorneys: contingent upon [Valeri] delivering 2 family status for #10 Downs [and] zoning use letter confirming #12 Downs for [apartment] over professional offices, both by 1/81/20.’ … The parties also added a rider to the contract that … states: ‘Supplementing paragraph 14, the sum of $75,000 shall be held in escrow until the zoning and use contingencies are satisfied. Seller [Valeri] and Purchaser [MSPD] shall execute a mutually agreeable form of escrow agreement at closing.’ …

"[A]t the time of the closing on October 2, 2019, the parties entered into an escrow agreement as called for by the contract. The relevant portion of that agreement states:

"‘2. The Escrow Agent shall hold said funds until satisfaction of the following conditions: a. The Seller obtains a zoning use letter from the Zoning Enforcement Officer of the City of Danbury, CT to the effect that under current zoning regulations the property known as #12 Downs Street may be used for professional office and residential use with one residential unit over the professional office space, and

"‘b. The Seller obtains a Use Variance for the property known as #10 Downs Street, Danbury, CT which variance permits the use of the property for two residential units, with the addition of a second floor to the existing building to accommodate the second residential unit.

₂₄₈"Notwithstanding the above, Seller may alternatively satisfy the zoning conditions by obtaining a zone change to B-3 residential plus such variances from the [zoning board] as would be required to add a second residential unit over the existing building at #10 Downs Street and permit the use of #12 Downs Street for professional office space with one residential unit over the professional office space or three residential units.

"‘3. In the event that the conditions set forth above are not met before February 1, 2020 (Termination Date), then in that event the Escrow Funds shall be returned to the Buyer.’…

"Hence, the escrow agreement set forth two [conditions] that needed to be met in order to release the $75,000 to Valeri as the seller and set a deadline of February 1, 2020, for doing so. Because of his experience in the field of real estate as a broker for over forty years, MSPD agreed to designate Valeri as its agent relative to any application for a variance brought to the city of Danbury relative to 10 Downs. … There was no provision regarding any action by Valeri as MSPD’s agent relative to 12 Downs.

"Following the execution of the contract and escrow agreement, the parties proceeded to close the transaction and Valeri commenced work on meeting the [conditions]. As to paragraph 2a of the agreement, Valeri obtained a letter from the zoning enforcement officer of the city of Danbury dated October 10, 2019, that confirmed that 12 Downs could continue to be used for professional office and residential use with one residential unit over the professional office space. … Therefore, that condition of the escrow agreement was timely met.

"As to paragraph 2b of the agreement, Valeri began his effort under the authority granted to him to act as agent for MSPD to obtain a use variance for 10 Downs. ₂₄₉Although already addressed in paragraph 7 of the escrow agreement, the parties subsequently executed a separate agency designation dated October 8, 2019. That designation states: ‘The undersigned owner of #10 Downs Street, Danbury, CT [MSPD] does hereby authorize Paul J. Valeri to act as its agent to pursue a use variance from the [Danbury zoning board of appeals (zoning board)], which variance would allow the addition of a second story to the existing building and the use of the two-story building as a two-family residence, and to do all things reasonably necessary to achieve that purpose.’ … Like paragraph 7 of the escrow agreement, this designation also made no mention of any authority relative to 12 Downs.

"On or about October 21, 2019, Valeri submitted an application to the Danbury zoning board … for a use variance on 10 Downs consistent with the intent of the parties as expressed in the contract for sale and the escrow agreement. … After consideration by the zoning board … on or about December 12, 2019, the application was denied without prejudice to the submission of a new application. … Thereafter, Valeri submitted a new application dated December 13, 2019, which proposed eliminating the driveway in front of 10 Downs and obtaining an easement over 12 Downs to allow access to parking behind 10 Downs. … This was based on Valeri’s belief from comments by the zoning board during the hearing that these conditions would be required for an approval. As part of the process, Valeri submitted a survey map dated December 18, 2019, entitled ‘Proposed Parking Layout & Easement Map.’ That map showed an easement over 12 Downs in favor of 10 Downs. … The application also included an unsigned Declaration of Easement which Valeri indicated to the zoning board would be signed and recorded upon the granting of the variance. The ₂₅₀second application was assigned for a hearing in January, 2020, but [it] was continued until February 13, 2020, due to the lack of a quorum.

"Prior to the hearing, Valeri contacted MSPD to make them aware of [his] belief that both the removal of the driveway from 10 Downs and an easement over 12 Downs would be needed to obtain the variance. There was communication between the parties and their counsel on the subject and MSPD expressly made clear that it would not support the plan to remove the driveway and grant an easement. In an email exchange between Attorney Rader representing Valeri and Attorney Michael Wood on behalf of MSPD, just hours before the February 13, 2020 hearing before the zoning board, Rader wrote in part: ‘Word was passed to Paul [Valeri] last night that we will have to give up access to Downs Street forever to get variance. They will want to hear us agree to that tonight before they vote. I also believe [the zoning board] will want a commitment that [the] owner will sign and record [the] easement and map.’ In response, Wood wrote, ‘Marty, [I] will give you a call but Joe, Michele and Peter [i.e., MSPD] are not willing to unconditionally make these...