Squillante v. Capital Region Development Authority

Connecticut Appellate Court·Decided November 9, 2021·No. AC43291 Appendix·Published

Opinion

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All opinions are subject to modification and technical correction prior to official publication in the Connecticut Reports and Connecticut Appellate Reports. In the event of discrepancies between the advance release version of an opinion and the latest version appearing in the Connecticut Law Journal and subsequently in the Connecticut Reports or Connecticut Appellate Reports, the latest version is to be considered authoritative.

The syllabus and procedural history accompanying the opinion as it appears in the Connecticut Law Journal and bound volumes of official reports are copyrighted by the Secretary of the State, State of Connecticut, and may not be reproduced and distributed without the express written permission of the Commission on Official Legal Publica- tions, Judicial Branch, State of Connecticut. *********************************************** APPENDIX DAVID SQUILLANTE ET AL. v. CAPITAL REGION DEVELOPMENT AUTHORITY* Superior Court, Judicial District of Hartford File No. CV-XX-XXXXXXX-S

Memorandum filed July 18, 2018

Proceedings

Memorandum of decision on defendant’s motion for summary judgment. Motion granted. Matthew S. Carlone, for the plaintiffs. Benjamin C. Jensen, for the defendant. Opinion

NOBLE, J. The question presented by the motion for summary judgment of the defendant, the Capital Region Develop- ment Authority (CRDA), is whether, in the absence of disputed material facts, CRDA is entitled to judgment as a matter of law on the breach of contract, promissory estoppel, and negligent misrepresentation claims asserted by the plaintiffs, David Squillante (Squillante) and DJS45, LLC (DJS45). The court finds that no enforceable agreement was created between the parties and holds that judgment should enter on all three claims in favor of CRDA. FACTS The following facts and procedural history are rele- vant to this decision. This action was commenced by service of process on CRDA on July 26, 2016. The opera- tive complaint is the amended complaint dated Novem- ber 14, 2017 (complaint), which asserts in three counts, respectively, claims of breach of contract, promissory estoppel, and negligent misrepresentation. Squillante is the sole member of DJS45, a limited liability company. CRDA is a quasi-municipal corporation created by stat- ute,1 whose purpose is to ‘‘stimulate new investment within the capital region’’ and ‘‘encourage residential housing development.’’ General Statutes § 32-602 (a) (1) and (3). Squillante formed DJS45, which thereafter purchased a five-story commercial building located at 283-291 Asylum Street in Hartford (property). Squillante opened a restaurant in the ground floor of the property and sought financing for the renovation and conversion of the upper four floors into residential apartments. Beginning in early 2013, Squillante engaged in conversa- tions with representatives of CRDA about potential financing that resulted in the execution of a letter dated May 10, 2013 (letter). CRDA ultimately withdrew the offer to provide financing. The plaintiffs assert that the letter constitutes a binding contract, evinces a promise to provide financing upon which the plaintiffs reason- ably relied, and contains misrepresentations upon which the plaintiffs relied to their detriment. In particular, the letter provides that CRDA was ‘‘pleased to provide you with the terms and conditions under which CRDA will extend financial assistance for the conversion of 283-91 Asylum Street (the ‘Project’) into a mixed use residential project. The terms set forth below are intended to be a preliminary outline of gen- eral business terms of the potential project and are expressly subject to the completion of CRDA due dili- gence investigation including the provisions of neces- sary documents as outlined below and the securing of complete financing for the Project. This letter is not intended to create any legal liability for CRDA and is to serve as an explanation of assistance to be provided by CRDA.’’ (Emphasis added.) The letter was signed by Squillante, on behalf of DJS45, and Michael Freimuth, executive director of the CRDA, on its behalf. The letter proposed a construction loan for an unspecified amount not more than $575,000 and then a permanent loan of an also unspecified amount, but no more than $518,000 for a twenty year term at 1.5 percent. Several terms and various contingencies remained unresolved. Because CRDA was only funding a portion of the project, the amount that it would actually lend depended upon (a) the amount of funding DJS45 was able to secure from private lenders, and (b) the amount of state historic tax credits to be awarded.2 The letter specified that DJS45 ‘‘must present a final development budget and project application that will be incorporated into a formal Assistance Agreement between CRDA and Sponsor. Sponsor shall be responsible for the payment of all necessary and appropriate costs associated with this transaction, whether or not a closing takes place . . . .’’ The formal assistance agreement was never exe- cuted. Other terms were not identified by the letter, including dates for completion of any obligations. The letter provided that DJS45 ‘‘shall be responsible for any costs above the budget outlined in this letter to complete the Project in accordance with the plans and specifications finally approved by CRDA. [DJS45] will provide a guaranty or payment and performance bonds to the benefit of CRDA by a credit worthy entity approved by CRDA for the completion of the Project in a lien free state.’’ While CRDA’s board of directors had approved the terms and conditions of the letter, ‘‘such approval [was] contingent on the approval of the State of Connecticut Bond Commission. In the event that such approval is [not] obtained or any time CRDA determines in its discretion that such approval is not likely to be obtained with a reasonable period of time, CRDA may terminate this proposal.’’ Finally, the letter informed DJS45 that, ‘‘[a]lthough not an exhaustive list, CRDA may request and [DJS45] shall provide the follow- ing: appraisals, title searches, covenants, insurance cer- tificates, plans and specifications, evidence of financ- ing, permits and approvals, contractor agreements, surveys, environmental clearance, final budget and final application.’’ On June 21, 2013, the state of Connecticut bond com- mission (commission) voted to approve the allocation of up to $575,000 for the CRDA’s proposed loan to DJS45. On September 17, 2013, CRDA sent DJS45 a template of the formal assistance agreement identified in the letter. Section 3.9 of the assistance agreement, titled ‘‘Payment and Performance Bond,’’ provided that ‘‘[DJS45] shall provide CRDA with Payment and Perfor- mance Bonds with respect to each Contractor that enters into a Major Contract with [DJS45] . . . .’’ On December 4, 1993, CRDA sent DJS45 a ‘‘closing check- list’’ identifying various items that needed to be pro- vided. Item 33 included bonds from the general contrac- tor and the subcontractors. Although the plaintiffs now assert that the require- ment of performance and payment bonds, rather than simply a personal guarantee, was a material breach of the contract embodied in the letter, this claim is negated by communications between Freimuth and Squillante. On January 7, 2014, Freimuth wrote to Squillante in an e-mail that there were ‘‘a variety of issues outstanding.

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