Reiner v. Reiner

190 Conn.App. 268

210 A.3d 668

Michael D. REINER et al.

v.Jeffrey A. REINER et al.

AC 41010

Appellate Court of Connecticut.

Argued February 14, 2019

Officially released May 28, 2019

Richard P. Weinstein, West Hartford, with whom, on the brief, was Sarah Black Lingenheld, Farmington, for the appellant (named defendant).

Gary J. Greene, Avon, for the appellee (named plaintiff).

DiPentima, C.J., and Prescott and Bright, Js.

BRIGHT, J.

The present appeal stems from a dispute over the interpretation of a settlement agreement between, among others, the plaintiff Michael D. Reiner¹ and the defendant Jeffrey A. Reiner.² The defendant appeals from the judgment of the trial court, rendered after a hearing pursuant to Audubon Parking Associates Ltd. Partnership v. Barclay & Stubbs, Inc. , 225 Conn. 804, 811–12, 626 A.2d 729 (1993) ( Audubon ),³ denying his motion to enforce the agreement. On appeal, the defendant claims that the court improperly concluded that the settlement agreement is clear and unambiguous, as construed by the plaintiff.⁴ We conclude that the contested sections of the agreement are not clear and unambiguous and, accordingly, we affirm the judgment of the trial court denying the defendant's motion to enforce the agreement on the alternative ground that a settlement agreement that is not clear and unambiguous cannot be enforced through an Audubon hearing.⁵

The following procedural history and undisputed facts are relevant to this appeal. The plaintiff and the defendant are brothers who were two of the three primary beneficiaries of four irrevocable trusts (Reiner Trusts) that were established by their parents, Eleanore Reiner and Leo P. Reiner.⁶ The defendant was the sole trustee of the Reiner Trusts. The Reiner Trusts owned several parcels of real property (Reiner Trusts properties) that had a substantial value; however, a majority of the properties were encumbered by mortgages. Eleanore Reiner also was the sole member of 711 Farmington, LLC, and Canton Gateway, LLC. 711 Farmington, LLC, and Canton Gateway, LLC, each owned a single parcel of real property, both of which were encumbered by a mortgage. After a dispute arose regarding the Reiner Trusts properties, the plaintiff, in 2011, commenced the present action and several other parallel actions against the defendant alleging that he tortiously had mismanaged the Reiner Trusts properties. On July 5, 2012, the plaintiff, the defendant, and several other individuals and entities associated with the Reiner Trusts executed a settlement agreement to resolve the present action, the parallel actions, and other disputes. In the agreement, the plaintiff agreed to withdraw with prejudice the then pending actions, and all parties to the agreement agreed to a comprehensive mutual release. The agreement contained several provisions in which the defendant agreed to buy out the plaintiff's interests in certain properties after the death of Eleanore Reiner. The following buyout provisions are directly at issue in this appeal.

Section 1 (a) of the agreement provides: "[The defendant] shall buyout [the plaintiff's] interests in the Reiner Trusts and the Reiner Trusts Properties by paying cash to [the plaintiff] in proportion to his interests therein no later than 280 days following Eleanore Reiner's death. The buy-out amount payable to [the plaintiff] for his interests in the Reiner Trusts will be based on the fair market value of each of the Reiner Trusts Properties at the time of Eleanore Reiner's death, multiplied by [the plaintiff's] interests in each Trust Property with a deduction of ten (10%) percent to compensate for a minority discount and for the fact that there is no real estate brokerage commission." Section 1 (b) of the agreement detailed the manner in which the fair market value for each of the Reiner Trusts properties was to be determined. The parties also agreed that the parties' "interests" in the Reiner Trusts properties accurately were set forth in the " ‘Trust Property Schedule,’ " which was attached to the agreement. That attachment, prepared on June 27, 2012, individually detailed the percentage of the Reiner Trusts properties owned by each party, but not the then-existing value of the properties or the amount of any equity in the properties in light of any mortgages on them.

Section 2 of the agreement provides in relevant part: "In connection with the execution and delivery of this Agreement, Eleanore Reiner will immediately transfer, by Warranty Deeds (i) her interests (as sole member of 711 Farmington, LLC) in 711 Farmington as follows: two thirds (2/3) to [the defendant] and one-third (1/3) to [the plaintiff] in the form of warranty deed attached to this Agreement ... and (ii) her interests (as sole member of Canton Gateway, LLC) in Canton Gateway as follows: three fourths (3/4) to [the defendant] and one-fourth (1/4) to [the plaintiff] in the form of warranty deed attached to this Agreement .... Such transfers are being made upon the following conditions ....

"[The defendant] shall buy out [the plaintiff's] interests in each [of] 711 Farmington and Canton Gateway by paying cash to [the plaintiff] no later than 280 days following Eleanore Reiner's death. The determination of the fair market value of 711 Farmington and Canton Gateway will be based on the same formula and terms used to determine the fair market value of the Reiner Trust Properties provided for in [§] 1 (a) of this Agreement above except that the valuation shall be subject only to a four percent (4%) discount, not ten percent (10%). [The defendant] will have 280 days from the date of Eleanore Reiner's death, to obtain financing and consummate the buyout."

On July 11 and 13, 2012, the plaintiff withdrew the present action with prejudice in accordance with the agreement. Nevertheless, on July 25, 2012, the defendant filed a motion in which he requested that the court set aside the withdrawal and reinstate the action on the ground that the plaintiff had violated the agreement by soliciting a "side deal" with Eleanore Reiner to permit him to lease a property owned by her in Florida, which property was governed by § 10 of the agreement. On July 27, 2012, the plaintiff also filed a motion to restore the case to the docket. On September 10, 2012, the court restored the case to the docket. Over the course of the next four and one-half years, the parties engaged in litigation concerning the Florida property and other collateral issues stemming from the agreement. None of those issues are the subject of this appeal.

On April 7, 2017, the defendant filed the motion to enforce the agreement that is the subject of this appeal. Therein, he argued that certain buyout provisions of the agreement had been triggered as a result of the recent death of Eleanore Reiner, and that a dispute existed between himself and the plaintiff as to the interpretation of those provisions. In particular, Eleanore Reiner's death triggered the defendant's obligation, under § 2 of the agreement, to buy out the plaintiff's one-third interest in 711 Farmington and his one-quarter interest in Canton Gateway. Her death also triggered the defendant's obligation, under § 1 of the agreement, to buy out the plaintiff's interest in the Reiner Trusts properties, including 603 Farmington Avenue in Hartford.⁷ The plaintiff and the defendant were unable to reach an agreement on how to determine the price that the defendant was to pay the plaintiff for his interests in the properties. The defendant claimed that the buyout price of the plaintiff's interests is intended to be calculated as the plaintiff's proportionate interest in the equity in the properties, after deducting the debt secured by any mortgages, less the percentage discounts. The defendant requested that the court adjudicate the dispute by enforcing the agreement in accordance with his interpretation.

On April 17, 2017, the plaintiff filed an objection to the defendant's motion to enforce the agreement.⁸ Therein, the plaintiff disagreed with the defendant's interpretation and advanced his own contrary interpretation of the agreement. The plaintiff maintained that the settlement agreement clearly and unambiguously provides that the buyout amount is to be " ‘based on the fair market value’ of each of the properties," which amount did not include consideration of the existing mortgages on the properties.

On August 10, 2017, the defendant filed a supplemental memorandum in support of his motion to enforce the agreement. In his supplemental memorandum, the defendant argued that the agreement clearly and unambiguously provides that the amount of the buyout must take into consideration the mortgages on the properties. The defendant argued that a contrary interpretation would be in conflict with Connecticut mortgage jurisprudence, and would result in an absurd result in the form of a substantial unintended windfall for the plaintiff.⁹

On October 23, 2017, following an Audubon hearing, the court issued a memorandum of decision in which it denied the defendant's motion to enforce the agreement and concluded that the agreement was clear and unambiguous in conformance with the plaintiff's interpretation.¹⁰ In particular, even though it heard extrinsic evidence regarding what the parties intended by the buyout provisions, the court expressly constrained its analysis to the four corners of the agreement and reasoned that "the terms of the agreement are clear and unambiguous and that the parties did enter into a valid agreement. The agreement, negotiated extensively by and between sophisticated parties, does not refer to ‘equity’ as a basis for valuation. The agreement clearly and unambiguously states that the buyout amount will be based on the fair market value of each property and the proportionate interests of the parties being taken into consideration refer to the agreed upon percentage interests [as] listed in the Trust Property Schedule. ...

"The contract provision as to...