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CHANNING REAL ESTATE, LLC v. BRIAN GATES

(AC 35786)

Sheldon, Keller and Bear, Js.

Argued February 6—officially released August 4, 2015

(Appeal from Superior Court, judicial district of

Windham, Vacchelli, J. [motion to open judgment]; A.

Santos, J. [motion in limine; judgment].)

Linda L. Morkan, with whom were Stuart D. Rosen

and, on the brief, Susan Kim and Sara R. Simeonidis,

for the appellant (plaintiff).

Frank J. Liberty, for the appellee (defendant).
Opinion

BEAR, J. This is an action on six promissory notes in

which the plaintiff, Channing Real Estate, LLC, appeals

from the judgment of the trial court, after a bench trial,

in favor of the defendant, Brian Gates, on the plaintiff’s

complaint, sustaining the defendant’s special defenses

of misrepresentation and promissory estoppel, and, on

the second and third counts of the defendant’s counterclaim, alleging negligent misrepresentation and a violation of the Connecticut Unfair Trade Practices Act

(CUTPA), General Statutes § 42-110a et seq. On appeal,

the plaintiff claims that the court improperly (1) granted

the defendant’s motion to open the default judgment

previously rendered against him due to his negligence,

and (2) denied it recovery on the notes after opening

the default judgment by admitting parol evidence to

vary or contradict the integrated and unambiguous

terms of the notes.1 We agree that the court improperly

admitted parol evidence to vary or contradict the unambiguous terms of the notes and, accordingly, we reverse

the judgment and remand the case for a new trial.

The following facts and procedural history, as found

by the court in its June 4, 2013 memorandum of decision

and as apparent in the record, are relevant to our disposition of this appeal. At all relevant times, the plaintiff

was a limited liability company organized under New

York law with an office in the state of New York. Douglas Chan (Chan), a New York resident, was a member

and principal of the plaintiff. Chan’s wife, Sharon Chan,

was also a member of the plaintiff.

The defendant was a resident of Connecticut. He and

his wife, Ulrika Gates, were each 50 percent owners

and members of Front Street Commons, LLC (Front

Street Commons), a Connecticut limited liability company.2 Front Street Commons was the owner of two

parcels of commercial real estate located in Putnam

(properties). The properties were encumbered by mortgages with Putnam Bank. One of the properties was

operated formerly as a dry cleaning establishment and,

accordingly, was subject to the Hazardous Waste Transfer Act, General Statutes § 22a-134 et seq., upon transfer

of the property.

In September, 2007, the defendant and the plaintiff,

through Chan, met at the properties and commenced

negotiations. Chan was interested in developing a

mixed use shopping mall on the properties and on adjacent parcels. In October, 2007, Chan proposed initially

that the plaintiff purchase the defendant’s 50 percent

equity interest in Front Street Commons for $373,640.3

Under his proposal, a new entity, Front Street Associates, LLC (Front Street Associates), would be created,

which would own and develop the properties. Profits

and losses were to be divided equally between the owners. The plaintiff, the defendant and Front Street Com-
mons would participate as members of Front Street

Associates. During these and subsequent discussions

and negotiations, both parties were represented by

counsel.

As of December 14, 2007, the parties had entered into

an option agreement in principle for the plaintiff to

purchase ‘‘one half of the subject premises’’ for $250,000

by January 7, 2008. The closing, as contemplated, did

not occur by February 8, 2008. Despite the delays in

closing, the parties worked together from August, 2008,

until December, 2008. Although the parties exchanged

several versions of the proposed operating agreements,

they did not execute a contract establishing the joint

ownership of the entity that was Front Street Associates. Nor did the parties sign the proposed operating

agreements or the option agreement.

On six separate occasions, the defendant asked the

plaintiff for varying sums of money, and the plaintiff,

in response to each request, agreed to provide the funds

requested. The plaintiff and the defendant followed the

same routine with respect to each separate transaction.

On each occasion, prior to the disbursement of any

funds, the plaintiff required that the defendant sign a

promissory note. The plaintiff transmitted a promissory

note from its office in New York to the defendant in

Connecticut. The defendant signed the note in Connecticut and then mailed it to the plaintiff in New York.

Thereafter, the plaintiff wired the funds from an

account in New York to the defendant’s Front Street

Commons account at Putnam Bank in Connecticut.

The six promissory notes varied in principal amounts.

The first note, dated January 8, 2008, was in the amount

of $38,939.50. The second note, dated February 8, 2008,4

was in the amount of $28,000. The third note, dated

March 12, 2008, was in the amount of $50,000. The

fourth note, dated January 7, 2009, was in the amount

of $17,333.24. The fifth note, dated February 13, 2009,

was in the amount of $30,000. The sixth note, dated

February 17, 2009, was in the amount of $117,000. The

total principal on the notes was $281,272.74.

The plaintiff provided a total of $117,000 to the defendant, as reflected in the sixth note, to complete his

purchase of a new residence in Stonington. On February

18, 2009, the defendant sent an e-mail to Sharon Chan,

in which he requested a ‘‘simple letter . . . to see

where all the monies [came] from and [to demonstrate

to his bank that the plaintiff] bought out half [of the

defendant’s] equity [in Front Street Commons].’’

Despite the absence of an executed operating

agreement or option agreement as anticipated by the

parties, Sharon Chan, on behalf of the plaintiff, signed

a letter in which she affirmed that the defendant had

received $250,000 for the purchase of a 50 percent interest in Front Street Commons. In the letter, the plaintiff

indicated that it ‘‘[would] be responsible for one half
of the bills and operating expenses,’’ and would receive

50 percent of the profit and income of Front Street

Commons.

The defendant did not repay any sums on the notes.

On December 15, 2009, the plaintiff demanded repayment of principal, interest, and attorney’s fees pursuant

to the terms of each of the notes. Thereafter, by way

of summons and complaint filed on March 3, 2010, the

plaintiff brought suit against the defendant on the basis

of his default under each of the notes.

The defendant filed a revised answer, in which he

alleged multiple special defenses and a counterclaim

against the plaintiff. The defendant asserted as special

defenses fraud in the inducement, unjust enrichment,

innocent or negligent misrepresentation, and promissory estoppel. The defendant also filed a three count

counterclaim alleging fraud, negligent misrepresentation, and a violation of CUTPA.

On April 26, 2010, the plaintiff filed a motion for

default for failure to appear pursuant to Practice Book

§ 17-23. On May 6, 2010, the court, Riley, J., granted

the motion and rendered judgment in favor of the plaintiff. On June 22, 2010, the defendant filed a motion to

open the judgment pursuant to General Statutes § 52-

212 and Practice Book § 17-4 (a).5 The defendant

requested that the court open the default judgment

because he had not received notice of the proceedings

due to a change of residence. In his motion, the defendant further indicated that he had a valid defense to

the complaint and was in the process of hiring an attorney to represent him. On September 21, 2010, the court,

Vacchelli, J., granted the motion to open. The court

concluded that the ‘‘defendant has demonstrated reasonable cause and [the] existence of a good defense

justifying the opening of the judgment in this case.’’

On July 25, 2012, the plaintiff filed a pretrial motion

in limine to preclude ‘‘any evidence of an alleged condition or purpose to [the] defendant’s payment obligation

under the six promissory notes . . . .’’ The plaintiff

argued this motion at the commencement of trial, contending that the parol evidence rule barred the court

from considering any evidence that would vary the

terms of the notes. Specifically, the plaintiff argued that

the defendant sought to vary the terms of the notes by

offering evidence that the plaintiff told the defendant

that the promissory notes were solely to protect the

plaintiff if the defendant backed out of the real

estate deal.

A trial to the court, A. Santos, J., was held over four

days on July 26, July 27, September 6, and October 11,

2012. As of the first day of trial, the total amount due

under the notes was $454,366.45, consisting of

$281,272.74 in principal and $173,093.71 in prejudgment

interest. The plaintiff also requested that the court
award it attorney’s fees and related litigation expenses

in the amount of $56,411.47.

On June 4, 2013, the court issued a memorandum of

decision in which it (1) denied the plaintiff’s motion in

limine, (2) rendered judgment in favor of the defendant

on the plaintiff’s complaint, and on the second and third

counts of his counterclaim alleging negligent misrepresentation and a CUTPA violation, and (3)rendered judgment in favor of the plaintiff on the first count of the

defendant’s counterclaim alleging fraudulent inducement. The court awarded the defendant $28,000 in reasonable attorney’s fees under CUTPA. See General

Statutes § 42-110g (d).6 Thereafter, on July 31, 2013, the

court sustained in part the plaintiff’s objection to the

award of attorney’s fees and entered an order awarding

the defendant the lesser sum of $25,575. This appeal

followed.

I

The plaintiff first claims that the court abused its

discretion in granting the defendant’s motion to open

the default judgment previously rendered against him

because of his negligence. Specifically, the plaintiff

argues that the defendant failed to establish, as required

by § 52-212,7

that he had a good defense at the time

judgment was rendered and that he was prevented from

raising that defense ‘‘because of mistake, accident or

other reasonable cause.’’ (Internal quotation marks

omitted.) We do not agree.

We begin by setting forth the standard of review

governing motions to open default judgments. ‘‘It is well

established that the action of the trial court, in either

granting or denying a motion to open a default judgment, lies within its sound discretion. A trial court’s

conclusions are not erroneous unless they violate law,

logic, orreason or are inconsistent with the subordinate

facts in the finding. . . . Once the trial court has

refused to open a judgment, the action of the court

will not be disturbed on appeal unless it has acted

unreasonably and in clear abuse of its discretion. . . .

‘‘Because opening a judgment is a matter of discretion

. . . [t]he exercise of equitable authority is vested in

the discretion of the trial court and is subject only to

limited review on appeal. . . . We do not undertake a

plenary review of the merits of a decision of the trial

court to grant or to deny a motion to open a judgment.

The only issue on appeal is whether the trial court has

acted unreasonably and in clear abuse of its discretion.

. . . In determining whether the trial court abused its

discretion, this court must make every reasonable presumption in favor of its action.’’ (Citations omitted;

internal quotation marks omitted.) Priest v. Edmonds,

295 Conn. 132, 137–38, 989 A.2d 588 (2010).

As our Supreme Court has explained, ‘‘[i]t is incumbent upon the [appellant] to take the necessary steps
to sustain [its] burden of providing an adequate record

for appellate review. . . . Our role is not to guess at

possibilities . . . but to review claims based on a complete factual record developed by a trial court. . . .

Without the necessary factual and legal conclusions

furnished by the trial court . . . any decision made by

us respecting [the appellant’s claim] would be entirely

speculative.’’ (Internal quotation marks omitted.) Id.,

138.

On appeal, the plaintiff argues that the defendant did

not have a good defense to its complaint at the time

judgment was rendered, and that the defendant’s failure

to appear was due solely to his inattention rather than

to a ‘‘mistake, accident or other reasonable cause

. . . .’’ General Statutes § 52-212 (a). The defendant

counters that the letter sent by the plaintiff provided

him with a strong defense because it ‘‘completely contradicted the plaintiff’s position that the defendant

owed any money as the result of the execution of the

promissory notes.’’ The defendant further argues that

he demonstrated reasonable cause for opening the judgment because: (1) the plaintiff addressed the summons

and first motion for default to a residence that it knew

the defendant had not resided at since September, 2009;

(2) he believed that his counsel in a different proceeding

had filed a pro se appearance on his behalf in the present

case; (3) he filed an appearance immediately upon

learning that his bank account had been levied against

to execute the default judgment; and (4) he had compelling familial and professional obligations during this

time.

In the present case, the court found that the ‘‘defendant has demonstrated reasonable cause and [the] existence of a good defense justifying the opening of the

judgment in this case.’’ The record does not contain

any specific or detailed reasons underlying the trial

court’s ruling. Making every presumption in favor of

the court’s action, as we must; Priest v. Edmonds,

supra, 295 Conn. 138; the plaintiff has not persuaded

us that the court abused its discretion in granting the

motion to open the default judgment.

II

The plaintiff next claims that the court improperly

denied it recovery on the notes by admitting parol evidence to vary or contradict the integrated and unambiguous terms of the notes. Specifically, the plaintiff argues

that the court improperly concluded that the defendant

had proven by ‘‘clear and unequivocal evidence’’ that

the funds advanced by the plaintiff were in payment

for an interest in Front Street Commons and were not

loans to be repaid. We agree and, accordingly, reverse

the judgment of the court and remand the case for a

new trial.

Each promissory note was admitted as a full exhibit
at the trial, and each provided that, for value received,

the defendant was to pay the plaintiff, or order, the

principal amount by the maturity date. In addition, interest was to be paid annually at the rate of 16 percent.

The notes also provided that, in the event of default,

the applicable interest rate would be governed by New

York law. Specifically, if the defendant did not pay the

sums due in full on or before the maturity date specified

in each note, interest ‘‘at the higher of [a] the rate of

[16] percent per annum, or[b] the highestrate permitted

by New York State law, shall be due on the unpaid

principal balance, calculated from the date hereof

through the date of payment.’’ The notes further provided that the defendant would pay all reasonable costs

of collection, including reasonable attorney’s fees and

expenses, incurred in any action brought by the plaintiff

to collect on the sums due on the notes. Another provision in each note prohibited any oral modification of

the terms of the note, and required that any amendment

be in writing and ‘‘signed by the party against whom

enforcement of any such change, modification, discharge or waiver [was] sought.’’8

As a preliminary matter, the court addressed the

plaintiff’s motion in limine. The court concluded that

the introduction of extrinsic evidence was not precluded by the parol evidence rule in the present case

because ‘‘the contract was not fully integrated, and the

parties’ full true agreement was not reduced to a

signed writing.’’

The court rendered judgment in favor of the defendant on the plaintiff’s complaint. The court concluded

that the defendant had proven, by clear and unequivocal

evidence, that the funds provided to the defendant were

not loans to be repaid. The court further concluded

that the plaintiff had failed to prove that the defendant

was unwilling to perform on the promise to sell his 50

percent interest in Front Street Commons.

The court sustained the defendant’s innocent or negligent misrepresentation special defense and the second

count of his counterclaim. Considering the lower standard for proving negligent or innocent misrepresentation as opposed to fraudulent misrepresentation, the

court concluded that the defendant had established that

the plaintiff had negligently and innocently misrepresented the purpose of each note. The court determined

that the defendant had relied on the plaintiff’s misrepresentations and incurred damages by not pursuing tenants for available space and declining to enter into longterm leases.

In sustaining the defendant’s special defense of promissory estoppel, the court concluded that the plaintiff

was estopped from claiming that the notes were not

advancements toward the purchase of a 50 percent

interest in Front Street Commons. The court determined that the defendant had acted in reliance on the
plaintiff’s representations by evicting tenants and using

the money provided to him for the expenses and losses

of Front Street Commons and for his personal needs.

The court denied the defendant’s special defense and

the first count of his counterclaim alleging fraud in the

inducement. The defendant could not prevail, the court

reasoned, because he did not produce evidence showing that the statements made by the plaintiff were

untrue and were known to be untrue by the plaintiff.

See Sturm v. Harb Development, LLC, 298 Conn. 124,

142, 2 A.3d 859 (2010).

The court was similarly not persuaded by the defendant’s special defense of unjust enrichment. Specifically, the court determined that (1) the defendant

‘‘received [money] advances from the plaintiff toward

the purchase of a 50 percent [interest] in Front Street

Commons,’’ (2) the defendant had not made any payments on the notes, and (3)the plaintiff had notretained

any other benefit outside of the parties’ agreement.

Finally, the court agreed with the defendant that the

plaintiff engaged in an unfair or deceptive act or practice in misrepresenting the purpose of the promissory

notes and, accordingly, rendered judgment in favor of

the defendant on the third count of his counterclaim

alleging a CUTPA violation. The court, in a modified

ruling, ordered the plaintiff to pay the defendant $25,575

in reasonable attorney’s fees under CUTPA.

We turn next to our standard of review. ‘‘Ordinarily,

[o]n appeal, the trial court’s rulings on the admissibility

of evidence are accorded great deference. . . . Rulings

on such matters will be disturbed only upon a showing

of clear abuse of discretion. . . . Because the parol

evidence rule is not an exclusionary rule of evidence,

however, but a rule of substantive contract law . . .

the [plaintiff’s] claim involves a question of law to which

we afford plenary review.’’ (Internal quotation marks

omitted.) Alstom Power, Inc. v. Balcke-Durr, Inc., 269

Conn. 599, 609, 849 A.2d 804 (2004).

‘‘A promissory note is a written contract for the payment of money, and, as such, contract law applies.’’

Antonino v. Johnson, 113 Conn. App. 72, 75, 966 A.2d

261 (2009). ‘‘The standard of review for the issue of

contract interpretation is well established. When, as

here, there is definitive contract language, the determination of what the parties intended by their contractual

commitments is a question of law. . . . Accordingly,

our review is plenary. . . . The reviewing court must

decide whether[the trial court’s] conclusions are legally

and logically correct and find support in the facts that

appear in the record.’’ (Citation omitted; internal quotation marks omitted.) Genua v. Logan, 118 Conn. App.

270, 273–74, 982 A.2d 1125 (2009).

Having set forth the applicable standard of review,

we now consider whether our analysis is guided by the
substantive contract law of New York or Connecticut.9

The plaintiff argues that the validity and enforcement

of a promissory note generally depends on the law of

the state where it is payable.10 The plaintiff urges this

court to apply the substantive contract law of New York

because the notes required payment in that state. With

respect to the application of the parol evidence rule, the

plaintiff recognizes correctly that there are no material

differences between New York and Connecticut law as

applied to the facts of the present case. The defendant

did not reply to these arguments in his appellate brief

or during oral argument before this court.

We conclude that the substantive contract law of

New York governs our interpretation and construction

of the notes. The notes at issue in this case do not

contain choice of law clauses. In the absence of an

effective choice of law by the parties to govern our

interpretation of the notes, it is appropriate for us to

apply the local law of the state where the contracts

require that repayment be made. See 1 Restatement

(Second), Conflict of Laws § 195 (1971).11 Our examination of the notes reveals that each agreement required

that the defendant repay the funds by mailing payment

to the plaintiff in New York. Each note stated explicitly

that payment ‘‘shall be mailed [by the defendant] to 131

West 35th Street, New York, New York 10001, or at

such other place as designated by [the plaintiff] . . . .’’

We, accordingly, will apply the substantive contract law

of New York in the present case.

As noted previously, the Connecticut and New York

approaches to parol evidence are substantially similar.

The New York parol evidence rule has been explained in

the following terms: ‘‘A familiar and eminently sensible

proposition of law is that, when parties set down their

agreement in a clear, complete document, their writing

should as a rule be enforced according to its terms.

Evidence outside the four corners of the document as

to what was really intended but unstated or misstated

is generally inadmissible to add to or vary the writing.

That rule imparts stability to commercial transactions

by safeguarding against fraudulent claims, perjury,

death of witnesses[,] infirmity of memory and the fear

that the jury will improperly evaluate the extrinsic evidence. . . .

‘‘Thus, the parol evidence rule bars the consideration

of extrinsic evidence of the meaning of a complete

written agreement if the terms of the agreement, considered in isolation, are clear and unambiguous. . . . If

the terms are ambiguous or contradictory, however,

the rule permits the consideration of such evidence

not to alter the terms but solely to ascertain the true

meaning of the terms. . . . Moreover, the parol evidence rule is a rule of substantive law rather than one

of procedure or evidence. . . .

‘‘Application of the parol evidence rule requires a
three-step inquiry: first, whether the written contract

is an integrated agreement; if it is, then, second, whether

the language of the written contract is clear or is ambiguous; and, if the language is clear, then third, applying

that clear language, whether [the plaintiff] has alleged

a breach of the contract.’’ (Citations omitted; internal

quotation marks omitted.) Wayland Investment Fund,

LLC v. Millenium Seacarriers, Inc., 111 F. Supp. 2d

450, 453–54 (S.D.N.Y. 2000).

The first step in applying the parol evidence rule is

to assess whether the written contract is integrated.

‘‘[An] integrated contract is one which represents the

entire understanding of the parties to the transaction.

. . . [U]nder New York law a contract which appears

complete on its face is an integrated agreement as a

matter of law. . . . Therefore, if the written document

appears to contain the engagements of the parties, and

to define the object and measure the extent of such

[engagements, then] it constitutes the contract between

them, and is presumed to contain the whole of that

contract. . . . Where . . . a party points to another

agreement beyond the four corners of the contract, and

the contract itself lacks a merger clause, the court must

determine whether or not there is an integration by

reading the writing in the light of surrounding circumstances, and by determining whether or not the [other]

agreement was one which the parties would ordinarily

be expected to embody in the writing.’’ (Citations omitted; internal quotation marks omitted.) Id., 454.

The second step in applying the parol evidence rule

requires us to ‘‘determine whether the language of the

written instrument is clear or whether it is ambiguous.

. . . Whether or not a writing is ambiguous is a question

of law to be resolved by the courts. . . . An ambiguity

arises if the terms of a contract could suggest more than

one meaning when viewed objectively by a reasonably

intelligent person who has examined the context of the

entire integrated agreement and who is cognizant of the

customs, practices, usages and terminology as generally

understood in the particular trade or business. . . . It

is well settled that extrinsic and parol evidence is not

admissible to create an ambiguity where none exists.’’

(Citations omitted; internal quotation marks omitted.)

Id., 455. The third and final step is to determine

‘‘whether, applying the clear contractual terms, [the

plaintiff] has alleged a breach of the written contract.’’

Id., 456.

Having set forth our standard of review and the applicable law, we now consider the specific arguments

raised by the parties on appeal. The plaintiff contends

that the court’s finding that ‘‘the contract was not fully

integrated, and the parties’ full true agreement was not

reduced to a signed writing’’ was improper. The plaintiff

argues that the court should have declined to admit

parol evidence to vary the clear and unambiguous
repayment terms of the notes. The plaintiff further

argues that each note was an integrated agreement that

was separate and distinct from the parties’ unsuccessful

negotiations relating to Front Street Commons in the

broader transactional context found by the court to be

determinative. The defendant counters that the court

found correctly that the notes were not fully integrated,

and that the introduction of extrinsic evidence of an

alleged oral condition to his payment obligation under

the notes was not precluded by the parol evidence rule.

We agree with the plaintiff.

We find further guidance with respect to the application of the first step of the parol evidence rule in Miller

v. Steloff, 686 F. Supp. 91, 93–94 (S.D.N.Y. 1988). The

court in Miller found, applying New York law, that

despite the defendants’ claim that a January, 1984 note

and a March, 1985 note were actually part of a continuing transaction, the March note was ‘‘an agreement unto

itself.’’ Id., 94. In concluding that the March note was

an integrated agreement, the terms of which could not

be contradicted by reference to prior or contemporaneous agreements, the court reasoned: ‘‘The amount borrowed, the rate of interest, the terms of repayment, and

the events of default are set forth in full detail. When

the parties wished to refer to a collateral document to

incorporate its terms, they did so explicitly. [W]here a

note appears on its face to be a completely integrated,

unconditional promise to pay, and where the evidence

of [the extraneous] agreement sought to be introduced

is at variance with the terms of the obligation, the parol

evidence rule applies.’’ (Internal quotation marks omitted.) Id. The court in Miller thus concluded that the

March note was an integrated agreement, and that its

terms could not be contradicted by reference to prior

or contemporaneous agreements. Id.

Turning to the present case, we conclude that the

court improperly determined that the notes were not

fully integrated and considered extrinsic evidence to

vary or contradict the explicit terms of the notes. The

evidence before the court demonstrated that the defendant was aware that an agreement had not been finalized for the sale of his 50 percent interest in Front

Street Commons and that an agreement might not be

reached in the future. The evidence further demonstrated that the defendant, nevertheless, almost immediately sought a series of personal loans from the

plaintiff, for each of which he executed a written note.

The defendant, who was represented by counsel, executed six notes over the course of thirteen months that

were payable to the plaintiff. The defendant received

a total sum of $281,272.74 that he used for various

purposes, including his personal needs.

Here, the parties failed in their subsequent efforts to

achieve a comprehensive written agreement separate

from the notes. The defendant did not prove a modifica-
tion of the terms of any of the notes that was agreed

to by the plaintiff after the notes were executed, in

accordance with the provisions in the notes governing

modification. It is undisputed that the parties intended

for their agreements concerning Front Street Commons

to be in writing and, as noted by the court, they

attempted assiduously to prepare those agreements

without success from September, 2007, through 2009,

when discussions and negotiations ceased. The overarching business agreement that the parties sought to

reach was never achieved, and the notes were never

modified in writing as required by theirterms and conditions as a prerequisite to any modification.

Each of the six notes represented and reflected a

specific transaction between the parties. Standing

alone, each note constituted an integrated agreement,

supported by new and different consideration, and was

enforceable separately according to its unambiguous

terms. Each note provided thatit could not be ‘‘changed,

modified or discharged, nor [could] any provision [be]

waived, orally, but only in writing, signed by the party

against whom enforcement of any such change, modification, discharge or waiver [was] sought.’’ The defendant cannot point to any such document signed

subsequently by the plaintiff.

As noted previously, the court concluded that ‘‘the

contract was not fully integrated and the parties’ full

true agreement was not reduced to a signed writing’’

and, therefore, ‘‘the introduction of extrinsic evidence

[was] not precluded by the parol evidence rule in the

present case.’’In referencing ‘‘the contract’’ in its memorandum of decision, the court was not referring to each

note but instead, to an arduously negotiated—but never

completely agreed to and consummated—written contract concerning the sale of the defendant’s 50 percent

interest in Front Street Commons, or to some other

transaction concerning the properties that also was

never completely agreed to and committed to writing

by the parties. The court did not analyze whether each

of the notes was an integrated obligation and whether

each could be enforced separately according to its

terms, which were voluntarily entered into by the commercially sophisticated defendant, subject to any

proper defenses that he could prove.12 The court therefore erred as a matter of law in concluding that each

note was not fully integrated.

We now turn to the exceptions to the application of

the parol evidence rule under New York law.13 In

Adler & Shaykin v. Wachner, 721 F. Supp. 472, 478

(S.D.N.Y. 1988), the United States District Court,

applying New York law, set forth three circumstances

in which parol evidence may be admitted even if an

agreement is integrated. ‘‘First, parol evidence may

come in if the alleged agreement is collateral, that is,

one which is separate, independent and complete . . .
although relating to the same object. . . . Only where

three conditions are met will the Court allow evidence

in support of an allegedly collateral agreement. . . .

‘‘[B]efore such an . . . agreement as the present is

received to vary the written contract at least three conditions must exist, (1) the agreement must in form be

a collateral one; (2) it must not contradict express or

implied provisions of the written contract; (3) it must

be one that parties would not ordinarily be expected

to embody in the writing. . . . [The . . . agreement]

must not be so clearly connected with the principal

transaction as to be part and parcel of it.’’ (Citations

omitted; internal quotation marks omitted.) Id.

Second, parol evidence may be admitted if the underlying contract is ambiguous. ‘‘Where the language

employed in a contract is ambiguous or equivocal, the

parties may submit parol evidence concerning the facts

and surrounding the making of the agreement in order

to demonstrate the intent of the parties . . . .’’ (Citation omitted; internal quotation marks omitted.) Id.,

479; see also Ralli v. Tavern on the Green, 566 F. Supp.

329, 331 (S.D.N.Y. 1983). ‘‘[Where] contract language is

susceptible of at least two fairly reasonable meanings,

the parties have a right to present extrinsic evidence

of their intent at the time of contracting.’’ Schering

Corp. v. Home Ins. Co., 712 F.2d 4, 9 (2d Cir. 1983).

Finally, the parol evidence rule has no application

‘‘in a suit brought to rescind a contract on the ground of

fraud.’’ (Emphasis in original; internal quotation marks

omitted.) Adler & Shaykin v. Wachner, supra, 721 F.

Supp. 479. ‘‘Under New York law, to plead a prima facie

case of fraud the plaintiff must allege representation

of a material existing fact, falsity, scienter, deception

and injury. . . . In short, a contractual promise made

with the undisclosed intention not to perform it constitutes fraud and, despite the so-called merger clause,

the plaintiff is free to prove that he was induced by

false and fraudulent misrepresentations . . . .’’ (Citations omitted; internal quotation marks omitted.) Id.,

479–80.

After our review of the court’s memorandum of decision and the record, we have determined that the court

could not reasonably find or conclude that the defendant proved the existence of any completed written

collateral agreements that modified the terms of any

of the notes. In addition, the evidence before the court

does not show that either party sought to rescind any of

the contracts on the ground of fraud.14 When considered

facially, the terms of the notes are clear and unambiguous.

In summary, because of the court’s erroneous conclusion that each of the notes was not integrated, it improperly allowed the defendant to offer evidence that

violated the parol evidence rule without first applying
the law pertaining to the recognized exceptions thereto

under New York law.15 The court improperly based its

findings and conclusions on the parties’ ultimately

unsuccessful negotiations regarding a comprehensive

written contract separate from the notes. Accordingly,

the court did not separately analyze and apply to each

note the New York parol evidence rule, and each of the

recognized exceptions thereto. On remand, the plaintiff

is, therefore, entitled to the opportunity to prove its

damages with respect to each of the notes, the existence

and written terms of which the defendant does not

dispute. The defendant is entitled on remand to allege

and prove any of the defenses it may have to each of

the notes in accordance with the recognized exceptions

under New York law to the parol evidence rule.

As set forth previously, the application of the parol

evidence rule requires a three step inquiry. In this case,

each note is a separate integrated agreement supported

by consideration, the language of which is clear and

unambiguous, and in its complaint the plaintiff has

alleged a breach of each note. The only exceptions to

the parol evidence rule that the defendant has pleaded

as a special defense or counterclaim are mistake, fraud,

and a violation of CUTPA. On remand, the trier of fact

should analyze separately each of the defendant’s valid

defenses under New York law with respect to each of

the notes, and the counterclaim alleged by the defendant, at least one of which, the CUTPA count, is subject

to Connecticut law, in accordance with this opinion.

This court has held previously that where a substantive error permeates the court’s findings and undermines its judgment, reversal of the entire judgment and

further proceedings may be required. See, e.g., Milford

Paintball, LLC v. Wampus Milford Associates, LLC,

117 Conn. App. 86, 92, 978 A.2d 118 (2009) (remanding

for new trial and declining to reach further claims on

appeal where court’s findings and judgment were based

on substantive error); see also Milford Paintball, LLC

v. Wampus Milford Associates, LLC, 137 Conn. App.

842, 853–54, 49 A.3d 1072 (2012) (same). Here, the court

sustained the defendant’s special defenses of misrepresentation and promissory estoppel, and rendered judgment in his favor on the second and third counts of his

counterclaim alleging negligent misrepresentation and

a violation of CUTPA. The court denied the defendant’s

claim for damages for lost rents under CUTPA, but

granted the defendant an award of reasonable attorney’s fees. We conclude that the court’s legal determination that the parol evidence rule did not preclude the

introduction of extrinsic evidence to avoid the enforcement of each of the notes is an error that permeates

the court’s findings and undermines its entire judgment.

A new trial before a different judge is necessary so that

the court may review all of the claims raised by the

parties in this case viewing the notes as separate integrated agreements subject to interpretation and con-
struction under New York law. See General Statutes

§ 51-183c.16 To the extent that the tort counts of the

counterclaim are pursued by the defendant, it is likely

that those claims, on the basis of the alleged place of

injury, will be subject to Connecticut law.

The judgment is reversed and the case is remanded

for a new trial in accordance with this opinion.

In this opinion the other judges concurred.

1 The plaintiff also claims that the court improperly (1) rendered judgment

in favor of the defendant because he lacked standing to assert his counterclaim, (2) rendered judgment in favor of the defendant on his CUTPA counterclaim because it was based solely on intrabusiness conflicts rather than

‘‘competitive acts or practices,’’ and (3) awarded attorney’s fees to the

defendant on his CUTPA counterclaim. The defendant counters that (1) he

had standing to bring his counterclaim and special defenses because he

proved substantial injuries, (2) the court properly rendered judgment in his

favor on his CUTPA counterclaim because the plaintiff engaged in a deceptive practice by claiming that the purchase price for the defendant’s interest

in Front Street Commons was a loan, and (3) the court’s award of attorney’s

fees to litigate the CUTPA action and, specifically, to prove that the plaintiff

lied as to the true purpose ofthe notes, was reasonable. Because we conclude

that the plaintiff’s claim regarding the parol evidence rule is dispositive, we

do not address these arguments in this opinion.

2 Ulrika Gates, Douglas Chan, Sharon Chan, and Front Street Commons

are not defendants in this case.

3 Subsequently, upon completion of environmental surveys on the properties, the purchase price to be paid by the plaintiff for the defendant’s 50

percent interest in Front Street Commons was reduced from $373,640 to

$250,000.

4 We note that the trial court, in its memorandum of decision, indicated

that the second note was dated February 6, 2008. Our review of the record

reveals that the note was dated February 8, 2008.

5 Practice Book § 17-4 (a) provides: ‘‘Unless otherwise provided by law

and except in such cases in which the court has continuing jurisdiction,

any civil judgment or decree rendered in the superior court may not be

opened or set aside unless a motion to open or set aside is filed within four

months succeeding the date on which notice was sent. The parties may waive

the provisions of this subsection or otherwise submit to the jurisdiction of

the court.’’

6 General Statutes § 42-110g (d) provides in relevant part that a party

prevailing under a CUTPA claim may be awarded ‘‘costs and reasonable

attorneys’ fees . . . .’’

7 General Statutes § 52-212 provides: ‘‘(a) Any judgmentrendered or decree

passed upon a default or nonsuit in the Superior Court may be set aside,

within four months following the date on which it was rendered or passed,

and the case reinstated on the docket, on such terms in respect to costs as

the court deems reasonable, upon the complaint or written motion of any

party or person prejudiced thereby, showing reasonable cause, or that a

good cause of action or defense in whole or in part existed at the time of

the rendition of the judgment or the passage of the decree, and that the

plaintiff or defendant was prevented by mistake, accident or other reasonable cause from prosecuting the action or making the defense.

‘‘(b) The complaint or written motion shall be verified by the oath of the

complainant or his attorney, shall state in general terms the nature of the

claim or defense and shall particularly set forth the reason why the plaintiff

or defendant failed to appear.

‘‘(c) The court shall order reasonable notice of the pendency of the complaint or written motion to be given to the adverse party, and may enjoin

him against enforcing the judgment or decree until the decision upon the

complaint or written motion.’’

8 The notes dated January 8, 2008, and February 8, 2008, included additional language providing that the note was negotiable. The notes dated

March 12, 2008, January 7, 2009, February 13, 2009, and February 17, 2009,

included the following additional language for identification: ‘‘Reference:

Brian Gates Loan.’’

9 This court has set forth previously the generalrules of contract formation

in Connecticut. ‘‘A contract is an agreement between parties . . . . Con-
tracts may be express or implied. . . . If the agreement is shown by the

direct words of the parties, spoken or written, the contract is said to be an

express one. But if such agreement can only be shown by the acts and

conduct of the parties, interpreted in the light of the subject matter and of the

surrounding circumstances, then the contract is an implied one.’’ (Internal

quotation marks omitted.) Boland v. Catalano, 202 Conn. 333, 336, 521 A.2d

142 (1987). ‘‘To form a valid and binding contract in Connecticut, there must

be a mutual understanding of the terms that are definite and certain between

the parties. . . . To constitute an offer and acceptance sufficient to create

an enforceable contract, each must be found to have been based on an

identical understanding by the parties. . . . If the minds of the parties have

not truly met, no enforceable contract exists. . . . [A]n agreement must be

definite and certain as to its terms and requirements. . . . So long as any

essential matters are left open for further consideration, the contract is not

complete.’’(Internal quotation marks omitted.) Duplissie v. Devino, 96Conn.

App. 673, 688, 902 A.2d 30, cert. denied, 280 Conn. 916, 908 A.2d 536 (2006).

10 The plaintiff relies on Santoro v. Osman, 149 Conn. 9, 174 A.2d 800

(1961), in support of its argument. The note in Santoro both had been made

and was payable in New York. Id., 11. The issue in Santoro was whether

the usury law of New York or Connecticut was to be applied on behalf of

the defendant, aConnecticutresident.Id., 12. Our SupremeCourt determined

that the rule as to choice of law in cases where usury is claimed depends

upon the law of the place where the note is payable. Id.; see also Heating

Acceptance Corp. v. Patterson, 152 Conn. 467, 474 n.3, 208 A.2d 341 (1965);

Pioneer Credit Corp. v. Radding, 149 Conn. 157, 159, 176 A.2d 560 (1961).

As in Santoro, the notes in this case were payable in New York.

11 Section 195 of 1 Restatement (Second) of Conflict of Laws provides:

‘‘The validity of a contract for the repayment of money lent and the rights

created thereby are determined, in the absence of an effective choice of

law by the parties, by the local law of the state where the contract requires

that repayment be made, unless, with respect to the particular issue, some

other state has a more significant relationship under the principles stated

in § 6 to the transaction and the parties, in which event the local law of the

other state will be applied.’’

12 Our Supreme Court has explained the proper analysis of negotiable

notes, as exist in this case. ‘‘[General Statutes §] 42a-3-104 provides that

any writing may be a negotiable instrument if it (1) is payable to order or

to bearer, (2) is payable on demand or at a definite time and (3) contains

an unconditional promise or order to pay a fixed amount of money, with

or without interest or other charges, and no other promise, order, obligation

or power is given by the maker or drawer except as otherwise authorized.’’

Florian v. Lenge, 91 Conn. App. 268, 277, 880 A.2d 985 (2005). ‘‘To prevail

in an action to enforce a negotiable instrument, the plaintiff must be a holder

of the instrument or a nonholder with the rights of a holder. . . . Only a

holder in due course may enforce a negotiable instrument. . . . Pursuant

to General Statutes § 42a-3-301, a [p]erson entitled to enforce an instrument

[such as a promissory note] means . . . the holder of the instrument . . . .

Moreover, General Statutes § 42a-1-201 (20) defines the term holder, with

respect to a negotiable instrument, as meaning the person in possession if

the instrument is payable to bearer or, in the case of an instrument payable

to an identified person, if the identified person is in possession.’’ (Emphasis

in original; internal quotation marks omitted.) Id., 278. Upon this showing

by the plaintiff, it was incumbent upon the defendant to allege and prove

a valid defense. See Connecticut Bank & Trust Co. v. Dadi, 182 Conn. 530,

531, 438 A.2d 733 (1980). The New York law is substantively similar. See,

e.g., First International Bank of Israel, Ltd. v. L. Blankstein & Son, Inc.,

59 N.Y.2d 436, 444, 452 N.E.2d 1216, 465 N.Y.S.2d 88 (1983) (noting that,

under UCC § 3-307 (2), when holder of promissory note produces properly

signed instrument, it is entitled to recover on note unless defendant establishes genuine defense).

13 As stated previously, our Supreme Court has recognized exceptions to

the parol evidence rule that are substantially similarto those under New York

law. See Alstom Power, Inc. v. Balcke-Durr, Inc., supra, 269 Conn. 609–10.

14 Although the defendant alleged fraud in the inducement as a special

defense and in the first count of his counterclaim, he does not seek to

rescind any of the contracts. ‘‘The effect of rescission is to declare [a]

contract void from its inception and to put or restore the parties to status

quo . . . . As a general rule, rescission of a contract is permitted where

there is a breach of contract that is material and willful, or, if not willful,

so substantial and fundamental as to strongly tend to defeat the object of
the parties in making the contract . . . .’’ (Citations omitted; internal quotation marks omitted.) Lenel Systems International, Inc. v. Smith, 106 App.

Div. 3d 1536, 1537–38, 966 N.Y.S.2d 618 (2013). Here, the defendant has not

tendered to the plaintiff any of the funds provided to him as a result of the

execution of the notes.

15 In its memorandum of decision, the court did not state that it applied

New York law in its legal analysis of each of the notes.

16 General Statutes § 51-183c provides in relevant part: ‘‘No judge of any

court who tried a case without a jury in which a new trial is granted, or in

which the judgment is reversed by the Supreme Court, may again try the

case. . . .’’