This appeal arises from an action in which the plaintiff, Dow and Condon, Inc., doing business as Colliers, Dow and Condon, sought to recover a real estate broker's commission in connection
The following facts and procedural history guide our resolution of the plaintiff's claims on appeal. In July, 1996, Stein and Company (Stein), a real estate brokerage company located in Chicago, Illinois, and the plaintiff entered into a cobrokerage agreement. At the time
In January, 1997,
On July 29, 1997, the defendant, as landlord, and Federal Express, as tenant, entered into a build-to-suit lease (lease) for the land located in Windsor. The lease was negotiated by an employee of Stein and not by the plaintiff. Pursuant to the terms of the lease, the defendant was to construct and lease to Federal Express a facility in Windsor on land, which was identified
The defendant ultimately was unable to acquire financing for the project and, therefore, was unable to purchase the Windsor property that was the subject of the lease. The proposal to develop the Federal Express facility on that particular property in Windsor therefore eventually was abandoned.
The defendant subsequently entered into discussions with Federal Express regarding an alternative site that was located in the town of Windsor Locks. The property was owned by Old County Road LP I, a Connecticut limited partnership. In order to facilitate the purchase, development and leasing of the property to Federal Express, a new entity, Brookfield Windsor Locks Limited Partnership (limited partnership), was formed.
On October 23, 1997, at Stein's request, a representative of the plaintiff sent a letter to Frank A. Fitzgerald,
The lease between Federal Express and the defendant subsequently was amended on or about February 20, 1998. The amendment changed the identity of the landlord by substituting the limited partnership for the defendant, and also changed the site that was the subject of the lease to the new location in Windsor Locks.
In July, 1998, the limited partnership sent a check to Stein in the amount of $204,000 for the first half of the commission due under the terms of the lease. A letter accompanying the check provided that the balance of the commission would be paid in accordance with the commission agreement that had been signed by the defendant. Stein shared the commission payment with the plaintiff in accordance with the cobrokerage agreement. The $204,000 balance of the commission, however, never was paid.
The plaintiff then brought this action against the defendant, seeking a judgment for the remaining balance of the commission. The case was tried to the court, which rendered judgment for the defendant. In its memorandum of decision, the trial court determined that: (1) there was a binding contract between the plaintiff and the defendant; (2) the plaintiff was the proper party to bring this action; and (3) the plaintiff had earned the commission. The trial court nevertheless concluded that the plaintiff was not entitled to recover the balance of the commission because it had violated both § 20-325a (a) and § 20-328-8a (e) of the regulations by agreeing to share a real estate commission with Stein, an unlicensed broker that illegally had engaged
The plaintiff claims on appeal that the trial court improperly: (1) allowed the defendant to amend its answer and special defenses on the day that trial was scheduled to begin; and (2) determined that the plaintiff had violated § 20-325a (a) and § 20-328-8a (e) of the regulations.
We conclude that the plaintiff had standing to bring this action. We further conclude that the trial court properly granted the defendant's request to amend its answer to the plaintiff's complaint. Lastly, we conclude that the trial court properly determined that the plaintiff's agreement to share the commission with Stein violated § 20-328-8a (e) of the regulations and, therefore, it would violate the public policy underlying the entire statutory scheme to allow the plaintiff to recover a commission from the defendant. Accordingly, we affirm the judgment of the trial court.
Ordinarily, we would consider the defendant's alternate grounds for affirmance only after finding merit in
"It is a basic principle of law that a plaintiff must have standing for the court to have jurisdiction. Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy." (Internal quotation marks omitted.) Ganim v. Smith & Wesson Corp., 258 Conn. 313, 347, 780 A.2d 98 (2001). "[W]hen standing is put in issue, the question is whether the person whose standing is challenged is a proper party to request an adjudication of the issue and not whether the controversy is otherwise justiciable, or whether, on the merits, the [party] has a legally protected interest [that may be remedied]." (Internal quotation marks omitted.) In re Jonathan M., 255 Conn. 208, 219, 764 A.2d 739 (2001). "It is well settled that one who [is] neither a party to a contract nor a contemplated beneficiary thereof cannot sue to enforce the promises of the contract . . . ." (Internal quotation marks omitted.) Tomlinson v. Board of Education, 226 Conn. 704, 718, 629 A.2d 333 (1993). "[W]hether a party has standing, based upon a given set of facts, is a question of law for the court . . . and in this respect the label placed on the allegations by the
The defendant claims that the plaintiff lacks standing to bring this action because it was not a party to the commission agreement between Stein and the defendant. The plaintiff counters that it has standing because the various transactional documents entered into by the parties, considered in their entirety, created a consistent and enforceable agreement between the plaintiff and the defendant. We need not consider at this point in our analysis whether those documents, considered together, created an enforceable contract because we conclude that the plaintiff was an intended third party beneficiary under the commission agreement and therefore had rights under the agreement sufficient to confer standing to bring this action.
"The law regarding the creation of contract rights in third parties in Connecticut is . . . well settled. In Knapp v. New Haven Road Construction Co., 150 Conn. 321, 325, 189 A.2d 386 (1963), we quoted Colonial Discount Co. v. Avon Motors, Inc., 137 Conn. 196, 201, 75 A.2d 507 (1950), and reaffirmed that [t]he ultimate test to be applied [in determining whether a person has a right of action as a third party beneficiary] is whether the intent of the parties to the contract was that the promisor should assume a direct obligation to the third party [beneficiary] and . . . that intent is to be determined from the terms of the contract read in the light of the circumstances attending its making, including the motives and purposes of the parties. . . . Although we explained that it is not in all instances necessary that there be express language in the contract creating a direct obligation to the claimed third party beneficiary; Knapp v. New Haven Road Construction Co., supra, 326; we emphasized that the only way a contract could create a direct obligation between a promisor and a third party beneficiary would have to be, under our
"The requirement that both contracting parties must intend to confer enforceable rights in a third party rests, in part at least, on the policy of certainty in enforcing contracts. That is, each party to a contract is entitled to know the scope of his or her obligations thereunder. That necessarily includes the range of potential third persons who may enforce the terms of the contract. Rooting the range of potential third parties in the intention of both parties, rather than in the intent of just one of the parties, is a sensible way of minimizing the risk that a contracting party will be held liable to one whom he neither knew, nor legitimately could be held to know, would ultimately be his contract obligee." (Citations omitted; internal quotation marks omitted.) Grigerik v. Sharpe, 247 Conn. 293, 311-12, 721 A.2d 526 (1998).
In the present case, the intent of the parties could not be clearer. The commission agreement between the defendant and Stein expressly stated that "[c]ommissions are payable in certified funds or by wire transfer to [Stein's] co-broker, [the plaintiff]." Thus, the defendant clearly intended to assume a direct obligation to pay the commission to the plaintiff. To establish standing, the plaintiff does not need to show that the commission agreement was enforceable under the governing regulatory law or that it was consistent with and not superseded by the other contract documents. See In re Jonathan M., supra, 255 Conn. 219 (in determining question of standing, court does not consider merits of claim). Rather, the plaintiff needs to show only that it is a proper party to bring an action against the defendant. We conclude that, as a third party beneficiary of
The defendant's reliance on Dow & Condon, Inc. v. Anderson, 203 Conn. 475, 481, 525 A.2d 935 (1987), in support of its argument to the contrary is misplaced. In that case, the plaintiff, a licensed real estate broker, brought an action against, inter alia, the defendant property owner seeking a commission on the ground that it had procured a ready, willing and able buyer for the defendant's property. The plaintiff had an oral cobrokerage agreement with another party, the principal of a licensed brokerage firm that, in turn, had a written commission agreement with the defendant property owner. Id., 477, 480. After determining that the plaintiff had no contract with the defendant property owner, the trial court concluded that there was no probable cause to sustain the plaintiff's claims and granted the defendant property owner's motion to dissolve an ex parte attachment that had been placed on its property by the plaintiff. Id., 480. Dow & Condon, Inc., is distinguishable from the present case, however, because the defendant property owner in that case was not a party to any contract that clearly indicated that the property owner had intended to assume a direct obligation to the plaintiff. Moreover, the claim in that case was not that the plaintiff lacked standing to bring an action
We next consider the plaintiff's claim that the trial court abused its discretion by granting the defendant's last minute request to amend its answer to assert the special defense that the plaintiff had violated § 20-328-8a (e) of the regulations. We disagree.
The following additional facts are necessary to our resolution of this issue. The defendant filed its answer and special defenses on October 25, 2000. On November 20, 2000, the plaintiff filed its reply and the case was placed on the trial list. On October 25, 2001, the day that trial was scheduled to begin, the defendant filed an amended answer and special defenses in which it raised a new special defense that the cobrokerage agreement violated § 20-328-8a (e) of the regulations. After hearing oral arguments on whether to allow the amendment, the court decided to permit it. On that same day, and continuing into the next, the case was tried to the court.
"Our standard of review of the plaintiff's claim is well settled. While our courts have been liberal in permitting amendments . . . this liberality has limitations. Amendments should be made seasonably. Factors to be considered in passing on a motion to amend are the length of the delay, fairness to the opposing parties and the negligence, if any, of the party offering the amendment. . . . The motion to amend is addressed to the trial court's discretion which may be exercised to restrain the amendment of pleadings so far as necessary to prevent unreasonable delay of the trial. . . . Whether to allow an amendment is a matter left to the sound discretion of the trial court. This court will not
The plaintiff argues that it was prejudiced by the trial court's granting of the defendant's request to amend its pleadings to include the special defense alleging a violation of § 20-328-8a (e) of the regulations on the day that trial was scheduled to begin because the amendment prevented the plaintiff from presenting a well researched rebuttal of that defense. We note first, however, that the plaintiff did not seek a continuance in order to prepare its response to the newly raised defense. Moreover, the new affirmative defense did not inject any new factual issues into the case, but instead raised a purely legal issue. The plaintiff had the opportunity to address that issue fully in its posttrial brief to the court, which was filed nearly one month after trial. Finally, we note that the trial court would have been obligated to consider the effect of the regulation on the enforceability of the cobrokerage agreement even if it had not been raised as a special defense. See Genovese
We do not condone the practice of waiting until the day of trial to raise an important legal issue for the first time. Under the circumstances of the present case, however, we conclude that it was well within the trial court's discretion to grant the defendant's request to amend its answer.
The plaintiff's second claim is that the trial court improperly determined that it had violated § 20-325a (a) and § 20-328-8a (e) of the regulations by agreeing to share a commission with Stein, a broker that was not licensed in Connecticut. We conclude that the plaintiff violated § 20-328-8a (e) of the regulations and, therefore, its contract is unenforceable because it violates the public policy underlying the licensing scheme for real estate brokers.
The facts relevant to this claim are undisputed. The plaintiff is a real estate broker licensed in this state. Stein, who is not licensed to engage in the real estate business in this state, engaged in the real estate business in this state by, inter alia, negotiating the lease with the defendant.
"The process of statutory interpretation involves a reasoned search for the intention of the legislature.. . . In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply. In seeking to determine that meaning, we look to the words of the statute itself, to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter.. . . Thus, this process requires us to consider all relevant sources of the meaning of the language at issue, without having to cross any threshold or thresholds of ambiguity." (Citations omitted; internal quotation
We begin our analysis with the language of the applicable statute, which provides: "No person who is not licensed under the provisions of this chapter, and who was not so licensed at the time he performed the acts or rendered the services for which recovery is sought, shall commence or bring any action in any court of this state, after October 1, 1971, to recover any commission, compensation or other payment in respect of any act done or service rendered by him, the doing or rendering of which is prohibited under the provisions of this chapter except by persons duly licensed under this chapter." General Statutes (Rev. to 1997) § 20-325a (a). The plaintiff argues that, under its plain terms, § 20-325a (a) merely prohibits a person who is not licensed as a real estate broker in this state from bringing an action to recover a commission. The plaintiff claims that because there is no dispute that it is a licensed broker, the statute does not prohibit the plaintiff from bringing this action.
We conclude, however, that, although § 20-325a (a) sets forth a necessary condition for filing an action to recover a commission, namely, that the person filing the action be licensed under the provisions of the chapter, compliance with that condition is not, in and of itself, sufficient to permit recovery.
This court previously has not considered whether a licensed broker may prevail in an action to recover a commission when the evidence establishes that an unlicensed person illegally participated in the transaction. Our research reveals, however, that, in other jurisdictions that have statutory schemes similar to Connecticut's, almost every court that has considered the issue before us has concluded that recovery will not be allowed under these circumstances.
The sellers appealed and the Maryland Court of Appeals reversed the judgment of the trial court. The court stated that "[w]e are now of the firm view that [the broker] cannot recover on the illegal contract entered into to split commissions with [the unlicensed individual] and that a court will not lend its aid to [the broker] in his effort to do so." Id. The court indicated that the fact that the sellers, rather than the broker, had agreed to pay a portion of the commission to an unlicensed individual did not affect the court's determination, because the agreement had the same effect. Id., 528. The court noted that "[w]here the statute involved is (a) one for the protection of the public against incompetence and dishonesty, as is the Maryland statute, and (b) there is a single contract for the payment of real estate commissions in part to an unlicensed person and in part to a licensed person and the licensed person's suit for part of the commission necessarily reveals the statutorily forbidden participation in the deal of an unlicensed person with the consent of the licensee, almost all courts have held that because the contract is illegal the licensed obligee will not be permitted to recover." Id., 530.
Like the Maryland statute at issue in Thorpe, our statutory scheme is "one for the protection of the public
In its brief, the plaintiff argues, however, that, even if a violation of § 20-328-8a (e) of the regulations would bar its recovery of a commission, there was no such violation in this case because the regulation was "meant to protect against licensed brokers employing or representing as licensed brokers or salesmen unlicensed persons," and not to prohibit a "nationally recognized real estate brokerage corporation" that is licensed elsewhere, such as Stein, from representing a large corporate client, such as Federal Express, in this state when it also has contracted for the services of a broker licensed in this state. We disagree. Although we previously have recognized that the requirements for an enforceable written contract set forth in § 20-325a (b) were "aimed primarily at private residential transactions because the kind of sophisticated people who are dealing with commercial and in commercial properties would not need that kind of protection"; (internal quotation marks omitted) M.R. Wachob Co. v. MBM Partnership, 232 Conn. 645, 659, 656 A.2d 1036 (1995); we never have suggested that the requirement for a license is limited to brokers who deal with unsophisticated individuals, and we see nothing in the language of the relevant statutes or their legislative history to support such a claim. We note that the relevant regulatory language refers to "any person who is engaging in the real estate business and who was not licensed as a real estate broker or real estate salesman"; (emphasis added) Regs., Conn. State Agencies § 20-328-8a (e); not just
If the licensing statutes did not apply to a foreign broker engaging in the real estate business in this state on behalf of a foreign party, any misconduct by the foreign entity would be beyond the reach of any disciplinary action by the real estate commission and in some cases could even be beyond the reach of Connecticut courts.
The plaintiff also argues that its agreement with Stein did not violate § 20-328-8a (e) of the regulations because the agreement was within the scope of a policy statement issued by the real estate commission on March 5, 1998, allowing a licensed broker to pay a "referral fee" to an unlicensed person engaging in the real estate business if the person is licensed in another state.
We conclude that a violation of § 20-328-8a (e) of the regulations bars recovery of a commission by a licensed real estate broker who has violated the regulation by agreeing to share its commission with an unlicensed party. We further conclude specifically that the plaintiff in this case violated that regulation by agreeing to share its commission with Stein. Accordingly, we conclude that the trial court properly determined that the plaintiff is barred from recovering a commission from the defendant.
Having rejected the plaintiff's claims on appeal, we need not consider the remaining alternate grounds for affirmance raised by the defendant.
In this opinion SULLIVAN, C. J., and NORCOTT and KATZ, Js., concurred.
ZARELLA, J., concurring.
I agree with the majority's conclusion in this case but write separately only to reaffirm my continuing belief in the plain meaning rule as expressed in my dissenting opinion in State v. Courchesne, 262 Conn. 537, 597, 618-19, 816 A.2d 562 (2003) (Zarella, J., dissenting).
The plaintiff concedes that "[t]here is no dispute that Stein was acting on behalf of Federal Express," that "Stein's involvement has continued with Federal Express," that "Stein is a real estate broker licensed in Illinois," and that "Stein . . . was to oversee the progress and assure the quality of [the plaintiff's] representation, as well as, act as the liaison between [the plaintiff] and Federal Express" with respect to the negotiation of the lease. Moreover, Richard Abo, a licensed real estate broker employed by the plaintiff who worked on the lease on behalf of the plaintiff, testified at trial that "David Kaman, who was [Abo's] counterpart at Stein, once we had selected the location was doing the direct [lease] negotiations [with the defendant], not [Abo]." Finally, the plaintiff does not dispute that Stein was to receive a fee for these services. Accordingly, the plaintiff does not appear to dispute that Stein's activities fall within the broad definition of "engaging in the real estate business" set forth in § 20-311(3). Nevertheless, the plaintiff claims that "Stein was not engaging in the real estate business in Connecticut as contemplated under [§ 20-328-8a (e) of the regulations]." The apparent contradiction in these positions may be explained by the plaintiff's argument that § 20-328-8a (e) was intended "to protect [buyers and sellers of real estate] against licensed brokers employing or representing as licensed brokers or salesmen unlicensed persons," and not to prohibit brokerage firms licensed elsewhere from engaging in the type of transaction at issue here. Whatever the explanation for this apparent discrepancy, however, we conclude for reasons set forth more fully later in this opinion that Stein's conduct constituted "[e]ngaging in the real estate business" as that term is defined in § 20-311 (3) and used in § 20-328-8a (e) of the regulations.