Salce v. Wolczek

314 Conn. 675

104 A.3d 694

Anthony H. SALCE, Sr.

v.Walter WOLCZEK.

No. 19144.

Supreme Court of Connecticut.

Argued May 20, 2014.

Decided Dec. 9, 2014.

Robert M. Shields, Jr., with whom was Wesley W. Horton, Hartford, for the appellant (defendant).

Jeffrey J. White, with whom was Benjamin C. Jensen, Hartford, for the appellee (plaintiff).

PALMER, ZARELLA, EVELEIGH, McDONALD, ESPINOSA, ROBINSON and VERTEFEUILLE, Js.

Opinion

ESPINOSA, J.

The principal issue in this certified appeal is whether a contract between the parties is ambiguous, requiring a trial to determine the parties' intent. The trial court found that the contract at issue unambiguously entitled the plaintiff, Anthony H. Salce, Sr., to judgment as a matter of law, rendered summary judgment in his favor, and awarded, among other relief, postjudgment interest. The Appellate Court affirmed the trial court's judgment. Salce v. Wolczek, 141 Conn.App. 528, 530, 61 A.3d 1177 (2013). On appeal to this court, the defendant claims that the Appellate Court's decision was improper because (1) the contract at issue was ambiguous, precluding summary judgment, and (2) the trial court could not award postjudgment interest after declining to award prejudgment interest. Because we conclude that the contract language is unambiguous and that the trial court properly awarded postjudgment interest, we affirm the Appellate Court's judgment.

The parties stipulated to the facts relevant to this appeal. The plaintiff and the defendant each owned 50 percent of Anwalt, LLC (Anwalt). Anwalt owned commercial real estate, an office park, in Trumbull (premises). In April, 2007, the plaintiff agreed to sell his 50 percent interest in Anwalt to the defendant. On April 13, 2007, the parties executed a buyout agreement that provided for a purchase price, due at closing, of $1.75 million. The agreement also contained a provision that required the defendant to pay the plaintiff an addition to the purchase price if specified conditions were met (contingency clause).

The contingency clause, in essence, required the defendant to pay to the plaintiff a contingent addition to the purchase price if, at any point within one year from the closing of the buyout agreement, the defendant transferred any ownership interest in the premises to a third party, for more than a certain amount of money. The clause provides as follows: “Contingent Addition to Purchase Price. If within one year of the closing hereunder any ownership interest in the [p]remises ... is transferred to a ‘Non–Wolczek Person’ based on a whole property value of more than [$3.5 million], [the defendant] shall pay [the 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 [$3.5 million]. The ‘whole value’ for any sale is the 100 [percent] value on which any percentage interest being transferred is based. For example, a one quarter interest transferred for [$1 million] would equate to a whole property value of [$4 million]. A ‘Non–Wolczek Person’ is someone other than [the defendant] or his immediate family member or lineal descendant.”

The parties closed on the sale under the buyout agreement on May 31, 2007, starting the clock on the one year period in the contingency clause.¹ Less than one year later, on March 29, 2008, the defendant entered into a contract to sell the entire premises to a third party, Brian Vaughn, who is a “ ‘[n]on-Wolczek [p]erson’ ” as defined in the contingency clause. The sales price under the defendant's contract with Vaughn (Vaughn contract) was $5.5 million—$2 million more than the minimum amount required to trigger the contingency clause. The defendant and Vaughn closed on the sale of the premises on July 1, 2008—approximately one month after the one year period specified in the contingency clause expired.²

Following the closing between the defendant and Vaughn, the plaintiff filed an action against the defendant alleging, among other claims, that the defendant breached the buyout agreement by not paying the plaintiff a contingent addition to the purchase price as required by the contingency clause.

The plaintiff later moved for summary judgment on his breach of contract claim. He argued that the contingency clause unambiguously required the defendant to pay an addition to the purchase price because the Vaughn contract constituted a transfer of an ownership interest within the meaning of the contingency clause. The plaintiff argued that (1) the contingency clause required the defendant to pay an addition to the purchase price “[i]f within one year of [May 31, 2007] any ownership interest in the [p]remises ... is transferred to a ‘[n]on-Wolczek [p]erson’ ” for more than a specified amount; (2) the defendant executed a contract with Vaughn for the sale of the premises during the one year period prescribed in the contingency clause; (3) the value of the sale exceeded the amount specified in the contingency clause; (4) the defendant's execution of the contract with Vaughn transferred equitable ownership of the premises to Vaughn; and (5) the transfer of equitable ownership qualifies as a transfer of “any ownership interest” under the contingency clause.

The defendant objected, arguing that the contingency clause was ambiguous, making its interpretation a question of fact and requiring a trial. The defendant argued that the contingency clause was unclear as to whether it applied to a transfer of equitable ownership upon signing a contract for sale, or to only a transfer of legal title at closing. The defendant claimed that if the contingency clause applied only to the transfer of legal title at closing, then he did not owe an addition to the purchase price because he did not close on his contract with Vaughn until after the one year period in the contingency clause had expired.

The trial court granted the plaintiff's motion. The trial court determined that the expansive phrase “ ‘any ownership interest’ ” used in the contingency clause included a transfer of equitable ownership through the doctrine of equitable conversion. Under that doctrine, equitable ownership passes to the purchaser of real estate at the time a contract for sale is executed; legal title is held in trust by the seller for the benefit of the buyer and legal title passes at the closing on the sale. See, e.g., Francis T. Zappone Co. v. Mark, 197 Conn. 264, 267, 497 A.2d 32 (1985). Relying on this doctrine, the trial court determined that the execution of the Vaughn contract, which occurred within the one year period of the contingency clause, conveyed equitable ownership to Vaughn, and thus qualified as a transfer of an ownership interest, triggering the contingency clause. The court rejected the defendant's argument that the contingency clause was ambiguous and could refer, instead, to only the closing of a sale. The trial court determined that the defendant's interpretation was “more restrictive” than the language used by the parties and thus was not a reasonable alternative interpretation.

The plaintiff withdrew the remaining counts of his complaint and moved for final judgment on the breach of contract count. The trial court granted the motion, rendered judgment for the plaintiff, and awarded the plaintiff his requested damages, attorney's fees, offer of compromise interest, costs, and postjudgment interest. The trial court declined to award prejudgment interest.

A divided Appellate Court panel affirmed the trial court's judgment. Salce v. Wolczek, supra, 141 Conn.App. at 530, 61 A.3d 1177. The defendant principally claimed on appeal that the trial court improperly found the contingency clause unambiguous, and that it improperly awarded postjudgment interest after declining to award prejudgment interest.³ Id. The Appellate Court majority agreed with the trial court, however, and concluded that the contingency clause unambiguously required the defendant to pay to the plaintiff an addition to the purchase price under the buyout agreement. Id., at 533–35, 61 A.3d 1177. The Appellate Court majority also rejected the defendant's challenge to the postjudgment interest award. Id., at 536–38, 61 A.3d 1177. The dissenting judge disagreed, concluding, instead, that the contingency clause was ambiguous because it was not clear that the parties intended the contingency clause to apply to the transfer of an equitable ownership interest. Id., at 544–46, 61 A.3d 1177 (Borden, J., dissenting).

The defendant then petitioned this court for certification. We granted the petition for certification, limited to the following questions: “(1) Did the Appellate Court properly determine that the contract language unambiguously established that the mere execution of a contract for sale, and not the actual closing on the sale, was intended to trigger the defendant's payment obligation? (2) If the answer to the first question is in the [affirmative], did the Appellate Court properly affirm the trial court's postjudgment interest award?”⁴ Salce v. Wolczek, 308 Conn. 944, 66 A.3d 885 (2013).

I

The defendant chiefly claims that the language of the contract is ambiguous. Consequently, he contends that the trial court improperly concluded that the contingency clause unambiguously required the defendant to pay the plaintiff an addition to the purchase price. We disagree.

At the outset, we note that the scope of our review under the first certified question in this case is narrow and requires us to determine only whether the language of the contingency clause is ambiguous. We do not decide which party has the better interpretation, only whether there is more than one reasonable interpretation of the contract language at issue. If we conclude that the language allows for more than one reasonable interpretation, the contract is ambiguous and the trial court's decision to render summary judgment, based on the conclusion that the contract is unambiguous, must be...