EH INVESTMENT COMPANY, LLC

v. CHAPPO LLC ET AL.

(AC 38693)

Prescott, Beach and Bishop, Js.

Syllabus

The plaintiff real estate development company sought return of a deposit

it had paid to the defendant company and its principal, claiming that

the defendant company had breached an agreement to find a lender

willing to make a commercial loan to the plaintiff for purposes of

redeeming a foreclosed commercial office property that it owned. The

plaintiff had been leasing the foreclosed property to H Co. and informed

the defendants that H Co. was considering whether to renew or extend

its lease. The plaintiff sent the defendants a memorandum containing

the specifics of the proposed lease with H Co., which was subject to

the approval of H Co.’s senior management. The defendants prepared

an engagement letter detailing that they would procure a lender that

would provide financing for the plaintiff in accordance with the loan

terms that were detailed in the engagement letter. The plaintiff agreed

to pay the defendants a placement fee of 1 percent of the principal loan

amount from the proceeds of the closing and, upon execution of the

engagement letter, the plaintiff would wire the defendants one half of

the placementfee as an engagement deposit. With respect to that deposit,

the letter stated that, in the event the defendants were unable to provide

a lender commitment, the deposit would be returned to the plaintiff,

but the defendants would retain the deposit if the plaintiff failed to

complete financing after they had provided a lender commitment. Furthermore, the letter concluded with a merger clause that provided that

the terms of the letter superseded all of the parties’ prior understandings.

The plaintiff wired the deposit to the defendants and returned the executed engagement letter. The defendants found a lender that would

supply a loan according to the terms in the engagement letter and sent

the plaintiff a loan application that would become the lender commitment letter after being returned and signed by the lender. The plaintiff,

however, failed to sign and return the loan application because it had

not secured a lease extension with H Co. After the defendants refused

to return the deposit, the plaintiff commenced its action for, inter alia,

breach of contract premised on the defendants’ alleged wrongful retention of the deposit. The trial court rendered judgment in part for the

plaintiff, concluding that the lease renewal with H Co. was a condition

precedent to the parties’ contract, and that because the condition precedent was not met, the plaintiff had no duty to perform and, therefore,

the defendants breached the parties’ contract by failing to return the

deposit. The court also found that the defendants had exercised ownership over the plaintiff’s property to the plaintiff’s detriment and, therefore, the retention of the deposit also constituted a conversion. On

appeal, the defendants claimed, inter alia, that the trial court improperly

found that they had breached the contract because the lease renewal

with H Co. was not a condition precedent, the absence of which mandated a return of the deposit, and the only obligation they undertook

pursuant to the contract’s plain and unambiguous terms was to find a

lender that was willing to fund a loan according to the terms of the

engagement letter. Held that the trial court improperly construed the

parties’ contract as including the H Co. lease extension as a condition

precedent to the parties’ obligations that required the defendants to

return the deposit: there was no indication that the trial court gave

proper deference to the language of the parties’ fully integrated contract,

which clearly and unambiguously provided that the defendants were

entitled to keep the deposit if they obtained a loan commitment in

accordance with the plaintiff’s proposed terms and the loan failed to

close; moreover, it was undisputed that, at the time the parties entered

into their agreement, the plaintiff had not yet secured a lease extension

with H Co. and, therefore, this was not a situation where the parties

failed to fully contemplate the occurrence or nonoccurrence of the lease
extension, and, if the plaintiff had viewed its lease with H Co. as an

indispensable part of its agreement with the defendants, the plaintiff

could have insisted that obtaining the lease extension be made a clear

and express condition on its duty to compensate the defendants, or that

the defendants would return the deposit in the event that the lease

extension never materialized; furthermore, because the plaintiff was the

party that had assumed the risk of engaging a loan broker before it had

obtained the necessary lease commitment from H Co. to secure the

loan, it was improperfor the trial court to shift that risk from the plaintiff

to the defendants by rewriting the parties’ contract.

Argued March 7—officially released July 4, 2017

(Appeal from Superior Court, judicial district of

Fairfield, Hon. Michael Hartmere, judge trial referee.)

Procedural History

Action to recover damages for, inter alia, breach of

contract, and for other relief, brought to the Superior

Court in the judicial district of Fairfield, where the

defendants filed a counterclaim; thereafter, the matter

was tried to the court, Hon. Michael Hartmere, judge

trial referee; judgment in part for the plaintiff on the

complaint and judgment for the plaintiff on the counterclaim; subsequently, the court denied the defendants’

motion to reargue, and the defendants appealed to this

court; thereafter, this court denied the plaintiff’s motion

to dismiss the appeal. Reversed in part; judgment

directed.

Scott D. Brenner, for the appellants (defendants).

Robert R. Lewis, for the appellee (plaintiff).
Opinion

PRESCOTT, J. The defendants, Chappo LLC and its

principal, Richard J. Chappo, appeal from the judgment

of the trial court rendered in favor of the plaintiff, EH

Investment Company, LLC, on those counts of the complaint alleging breach of contract by Chappo LLC and

conversion by both defendants.1 The court determined

that the defendants, whom the plaintiff had engaged to

find a lender willing to make a commercial loan that

the plaintiff needed in order to redeem a foreclosed

office building it had owned, improperly refused to

return the plaintiff’s deposit after the plaintiff informed

them that it would be unable to proceed with a loan

because it had not obtained a lease extension from

the building’s primary tenant, the proceeds from which

were intended to service the debt on the loan. The trial

court determined that the existence of an executed

lease with the tenant was a condition precedent to the

parties’ loan procurement contract, the nonoccurrence

of which excused the plaintiff’s performance and

required Chappo LLC to return the plaintiff’s deposit.

The court awarded the plaintiff total damages of

$47,500, the amount of the deposit.

The defendants claim on appeal that the trial court

improperly determined that the existence of a lease

extension was a condition precedent to the parties’

contract. According to the defendants, the terms of

the parties’ contract were memorialized in a written

engagement letter drafted by Chappo, and Chappo LLC

successfully performed its only duty under the parties’

contract by successfully finding a lender willing to make

a loan on the terms sought by the plaintiff as set forth

in the engagement letter. Further, they contend that

because the engagement letter unambiguously set forth

express terms governing the disposition of the engagement deposit, which did not include any provision

requiring Chappo LLC to return the deposit if the plaintiff was unable to obtain a lease after Chappo LLC

procured a commitment from a lender, they were entitled to keep the plaintiff’s deposit. For the reasons that

follow, we agree with the defendants. Accordingly, we

reverse in part the judgment of the trial court and

remand the case to that court with direction to render

judgment in favor of the defendants on the breach of

contract and conversion counts. The remainder of the

judgment is affirmed.

The relevant facts underlying this appeal are set forth

by the court in its memorandum of decision and, generally, are not disputed.2 The plaintiff is a real estate

development company. Its principal, Fred Gordon, is a

real estate investor and developer who holds a master’s

degree in business administration, in addition to being

a practicing attorney. Gordon conducts his business

from Bloomfield Hills, Michigan. Chappo also has an

master’s degree in business administration and has
worked for more than thirty years in financing and

real estate. His business, Chappo LLC, is located in

Connecticut and specializes in arranging financing for

corporate properties. Priorto entering into the business

transaction now at issue, Gordon and Chappo were

familiar with each other from Chappo’s earlier experiences in investment banking, and the two men had

communicated on several occasions over a twelve year

period about financing opportunities for various properties.

In November, 2012, Gordon spoke with Chappo by

phone regarding a 94,000 square foot commercial office

building located on a twelve acre property in Auburn

Hills, Michigan. The plaintiff previously owned that

property, but recently had lost title to a bank in foreclosure proceedings after having defaulted on a loan obligation. The plaintiff had leased the building to

Huntsman Corporation (Huntsman), which remained

the building’s primary tenant. Two years remained on

the original lease. Gordon informed Chappo that Huntsman was considering whether to renew or extend the

lease. Gordon wished to obtain financing in order to

redeem the property from the bank,3 but indicated to

Chappo that, due to the distressed state of Michigan’s

economy, many lenders would not consider financing

property there, especially foreclosed property.

Overthe next few weeks, Gordon and Chappo continued to discuss by phone or by e-mail details of a potential financing deal for the property, which included

details of the plaintiff’s efforts to negotiate a lease

extension with Huntsman as well as general information

about the property market in Auburn Hills. In an e-mail

dated November 15, 2012, Gordon sent Chappo a memorandum that contained specifics of the proposed Huntsman lease. The proposed lease was to run for a period

of fifteen years and have an annual lease rental value

of $1,220,000. Around the same time, Gordon also sent

a memorandum to the executives at Huntsman who

were handling lease negotiations with the plaintiff, in

which he indicated that the plaintiff hoped to obtain a

commitment to a lease extension, subject to Huntsman

senior management approval, by early January, 2013,

in order to permit the plaintiff to obtain a refinancing

commitment from a lender. Gordon informed Chappo

that any lease with Huntsman would need the approval

of Huntsman senior management. As succinctly

explained by the trial court, ‘‘Gordon’s plan was to

finance the [redemption] price of the property after [the

plaintiff] had defaulted on the existing loan at enough

savings that, if he could get [Huntsman] to agree to

extend the lease under terms similar to those then in

existence, the plaintiff would gain a windfall profit of

approximately $5 million.’’

The defendants subsequently began working on

obtaining the financing sought by the plaintiff. To that
end, Chappo prepared an engagement letter dated

November 20, 2012, that ‘‘included all the terms of the

loan and indicated that [Chappo LLC] had an exclusive

engagement to procure a lender which would then provide financing for a single tenant property occupied by

[Huntsman] in accordance with the terms outlined in

the engagement letter.’’ Those terms, as the trial court

indicated, included ‘‘that the tenant would be [Huntsman] and that the lender would be an institutional

lender, that the term of the loan would be ten years,

that the principal amount would be $9,500,000 at an

interestrate of 5.25 percent, and that debt service would

be based on a twenty year amortization.’’ Lease payments would be made by Huntsman directly to the

lender to service the debt, with any excess returned to

the plaintiff. The engagement letter also contained a

detailed description of the property, set forth basic

terms of the as yet unrealized Huntsman lease extension,4 and indicated that the lender would receive a first

mortgage security interest in the property. The closing

and funding of the loan were to occur approximately

thirty days from the date of the lender commitment.

Pursuant to the engagement letter, the plaintiff

agreed to pay Chappo LLC a ‘‘[p]lacement [f]ee’’ equal

to $95,000, 1 percent of the principal amount of the

note, to be paid out of the proceeds when the loan

closed. The plaintiff also agreed that, upon executing

the engagement letter, it would wire Chappo LLC an

‘‘[e]ngagement [d]eposit’’ equal to one half of 1 percent

of the principal amount of the proposed $9,500,000 note,

or $47,500. The engagement letter contained the following language directly pertaining to the return or retention of the engagement deposit: ‘‘In the event Chappo

LLC is unable to provide a [l]ender commitment as

stipulated above and such time frame is not extended,

the [e]ngagement [d]eposit will be returned to the [b]orrower. Chappo LLC will retain the deposit if the [b]orrower fails to provide requested information in a timely

manner or fails to complete the financing after Chappo

LLC had provided a [l]ender commitment.’’ Importantly,

the penultimate paragraph of the engagement letter provided as follows: ‘‘It is understood and agreed that the

terms of this [e]ngagement shall supersede any and all

prior [e]ngagements, arrangements or understandings

among the parties with respect to the subject matter

discussed above.’’

On January 4, 2013, the plaintiff executed the engagement letter and delivered it to the defendants. Attached

to the executed engagement letter was a memorandum

from Gordon that stated as follows: ‘‘Enclosed is an

executed copy of the engagement letter for the Huntsman property. The deposit of $47,500 will be wire transferred. The deposit will be returned within five days of

the time at which it appears a loan pursuant to the

application is not probable of funding by February 28,

2013, or an agreed later funding date. Looking forward
to the expedited loan closing.’’

Gordon later wire transferred $47,500 to Chappo

LLC.5 As previously noted, Gordon also made changes

directly on the engagement letter because he was still

in the process of negotiating the exact terms of the

lease extension with Huntsman. See footnote 4 of this

opinion. The defendants did notrespond or object to the

changes made by Gordon on the executed engagement

letter or to the language in the accompanying memorandum.

On January 10, 2013, the defendants e-mailed the

plaintiff portions of a loan application from a lender,

American National Insurance Company (American

National). Gordon, finding the terms acceptable, completed the relevant pages and returned them to the

defendants within hours. After receiving the returned

pages of the application, an investment officer from

American National ‘‘circulated the complete application/commitment letter to [the] investment committee

and the senior vice president with authority to commit

to the loan. The final version of the mortgage loan

application was e-mailed to Gordon on January 22, 2015,

with a hard copy [sent] direct from American National

. . . the following morning. On the formal application

was a signature block for Gordon and for the senior

vice president of American National, Scott F. Brast. As

soon as Gordon signed and returned the original, Brast

would countersign, and the document would become

the commitment letter. The application/commitment

letter included all the terms specified by Gordon’s

engagement letter as well as an agreement by American

National to fund by February 28, 2013, the date needed

by Gordon.’’

Section 4.4 of the application/commitment letter provides: ‘‘At the time of closing, Applicant will have

entered into a lease or leases and/or lease guarantees,

the terms and conditions of which are to be approved

by Lender, with a tenant ortenants and lease guarantors

approved by Lender, to occupy 94,000 square feet with

an annual rental from such lease or leases to produce

no less than $1,183,000.’’ The document also provided

that American National approved Huntsman for occupancy and as lease guarantors.

The plaintiff, however, would not execute the application/commitment letter because it did not have an executed lease agreement with Huntsman, and it surmised

that American National would never approve and fund

the loan without the extended Huntsman lease as security. From late January, 2013, through mid-February,

2013, there was ‘‘a paucity of communication’’ between

the parties. Although American National expressed

some concern to the defendants that it might no longer

be able to fund the transaction within the requisite time

frame, Gordon continued to tell the defendants that he

was waiting to hear from Huntsman about executing
the lease extension, although he actually was still negotiating with Huntsman about the terms of the lease.

As set forth by the trial court, ‘‘Huntsman had

retained . . . a real estate services organization to represent it in negotiations regarding the proposed lease

renewal. Gordon informed Chappo that the lease advisor informed Huntsman that the terms which Gordon

was seeking were too generous to the [plaintiff] and

that Huntsman was not offering [the plaintiff] the terms

which Gordon had outlined to Chappo. Gordon then

informed Chappo that he was working with the original

lender . . . to extend the redemption date deadline of

the foreclosure by consent. On March 1, 2013, Gordon

sent a memorandum to [the original lender] stating that

a tentative lease agreement had been concluded with

Huntsman satisfactory to the lender of the redemption

funding and that all of the redemption loan documentation had been completely negotiated and prepared. Gordon had been negotiating a separate transaction with

a separate lease extension involving a separate lender.’’

The defendants continued to believe that they could

broker successfully the deal between American

National and the plaintiff. Chappo contacted the investment officer from American National, who presented

the transaction to its investment committee. The committee subsequently voted to go forward with the loan.

Nevertheless, on March 3, 2013, the plaintiff advised

the defendants that ‘‘based on current circumstances

we are withdrawing the [a]pplication.’’6 The plaintiff

requested that the defendants return the engagement

deposit. The defendants refused, citing the engagement

letter’s exclusivity clause, which the defendants posited

the plaintiff had breached by negotiating directly with

another lender.

On December 29, 2013, the plaintiff commenced the

underlying action. The complaint contained five counts,

all premised upon the defendants’ alleged wrongful

retention of the engagement deposit. Count one alleged

breach of contract by Chappo LLC, count two alleged

statutory theft against both defendants,7 count three

alleged that the defendants were liable for conversion,

count four alleged that the defendants breached the

implied covenant of good faith and fair dealing, and

count five alleged that the defendants’ actions

amounted to a violation of the Connecticut Unfair Trade

Practices Act (CUTPA). See footnote 1 of this opinion.

The defendants filed an answer that denied the material allegations of the complaint, raised a special

defense of fraud, and alleged two counterclaims against

the plaintiff sounding in fraud and breach of contract.

The plaintiff filed a response in which it denied the

allegations in the special defense and counterclaims.

The matter was tried to the court, Hon. Michael Hartmere, judge trial referee, on May 13 and May 14, 2015.
Gordon and Chappo were the only witnesses to testify.

The parties each submitted posttrial memoranda.

The plaintiff argued in relevant part that the defendants had no legitimate basis for retaining the engagement deposit because Chappo knew from the outset

that the entire transaction at issue was predicated on

Huntsman executing a lease renewal with the plaintiff,

and Chappo acknowledged at trial that no lender would

commit to funding a loan without the lease as security.

The plaintiff further argued that obtaining the lease was

not a promissory obligation undertaken by the plaintiff

as suggested by the defendants. Rather, the existence

of a lease was a condition precedent, the failure of

which voided the contractual obligations of the parties

and, thus, obligated the return of the deposit.

In their posttrial briefs, the defendants invoked the

doctrine of prevention in defense of the breach of contract allegations, arguing that the plaintiff was not entitled to a return of the deposit because, despite Chappo

LLC’s having found a lender who was willing to provide

a loan to the plaintiff in accordance with all the terms

specified in the engagement letter, the plaintiff refused

to sign and return the application/commitment, thus

preventing the execution of a formal commitment letter.

Further, the defendants argued that the lease extension

with Huntsman was never a condition of the agreement

to secure a lender’s commitment, but only a condition

of ultimately funding the loan. The loan could have

proceeded if a lease with terms more favorable to

Huntsman could have been negotiated.

On October 29, 2015, the court issued a memorandum

of decision. The court found in favor of the plaintiff on

the breach of contract and conversion counts, but in

favor of the defendants on the remainder of the complaint. The court reasoned that the Huntsman lease

renewal was a condition precedent to the parties’ contract and that, because that condition was never met,

the plaintiff had no duty to perform and was entitled

to the return of its deposit. The court found that the

defendants’ failure to return the deposit constituted a

breach of contract by Chappo LLC, and, because the

defendants exercised ‘‘ownership over the plaintiff’s

property to the plaintiff’s harm,’’ the defendants’ retention of the deposit also amounted to a conversion.

The court nevertheless found that the plaintiff had

failed to establish the necessary larcenous intent on

the part of the defendants to establish the elements

of a statutory theft. Further, the court found that the

plaintiff failed to demonstrate that the defendants’

actions were done in bad faith or were immoral, unethical, and unscrupulous so as to support, respectively,

the plaintiff’s counts alleging breach of the implied covenant of good faith and fair dealing or a CUTPA violation. Because the defendants failed to brief their special

defense and counterclaims, the court deemed them
abandoned.8

The defendants filed a motion to reargue and for

reconsideration on November 18, 2015. The court

denied that motion on December 2, 2015. This appeal

followed.9

The defendants claim on appeal that the trial court

improperly determined that Chappo LLC breached its

contract with the plaintiff by failing to return the

engagement deposit.10 The defendants argue that,

although obtaining a lease extension from Huntsman

might have been integral to the plaintiff’s ability to close

on the loan commitment secured by Chappo LLC, the

existence of a lease was not, under the express terms of

the parties’ contract, a condition the absence of which

mandated a return of the engagement deposit. The

plaintiff agreed to compensate Chappo LLC from the

proceeds realized at the closing of a loan, assuming

Chappo LLC was able to secure a loan commitment.

The deposit requirement reasonably can be viewed as

a means to protect the defendants in the event that

they secured a commitment but the loan failed to close

through no fault of their own. In other words, the

deposit signaled the parties’ intent to allocate a large

portion of the risk that a lease extension or alternative

security for the loan would never materialize to the

party that was in control of the lease negotiations: the

plaintiff. The defendants assert that because Chappo

LLC found a lender that was willing to commit to fund

a loan on the terms agreed upon, which was the only

obligation it undertook pursuant to the plain and unambiguous terms of the parties’ contract, the defendants

had a right to retain the deposit in accordance with the

express terms of the engagement letter despite the fact

that a loan never actually closed. We agree and conclude

that the court improperly construed the parties’ contract as requiring a return of the deposit.

Because the defendants’ claim challenges the court’s

interpretation of the parties’ contract, particularly its

having construed the contract as containing a condition

precedent, we begin our analysis by setting forth the

applicable standard of review and general principles of

law relevant to the construction of contracts. ‘‘The law

governing the construction of contracts is well settled.

When a party asserts a claim that challenges the trial

court’s construction of a contract, we must first ascertain whether the relevant language in the agreement is

ambiguous.’’(Internal quotation marks omitted.) Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1,

13, 938 A.2d 576 (2008). ‘‘If a contract is unambiguous

within its four corners, intent of the parties is a question

of law requiring plenary review. . . . [If] the language

of a contract is ambiguous, the determination of the

parties’ intent is a question of fact, and the trial court’s

interpretation is subject to reversal on appeal only if it is

clearly erroneous.’’ (Internal quotation marks omitted.)
Assn. Resources, Inc. v. Wall, 298 Conn. 145, 183, 2 A.3d

873 (2010). ‘‘A contract is ambiguous if the intent of

the parties is not clear and certain from the language

of the contract itself. . . . Accordingly, any ambiguity

in a contract must emanate from the language used in

the contract rather than from one party’s subjective

perception of the terms. . . .

‘‘[W]e accord the language employed in the contract

a rational construction based on its common, natural

and ordinary meaning and usage as applied to the subject matter of the contract. . . . [If] the language is

unambiguous, we must give the contract effect

according to its terms. . . . [If] the language is ambiguous, however, we must construe those ambiguities

against the drafter. . . . Moreover, in construing contracts, we give effect to all the language included

therein, as the law of contract interpretation . . . militates against interpreting a contract in a way that renders a provision superfluous.’’ (Citations omitted;

internal quotation marks omitted.) Ramirez v. Health

Net of the Northeast, Inc., supra, 285 Conn. 13–14.

In ascertaining the intent of contracting parties, we

are also mindful that a court’s interpretation of a contract must also be informed by whether the terms of

the contract are contained in a fully integrated writing.

This is important because ‘‘[t]he parol evidence rule

prohibits the use of extrinsic evidence to vary or contradict the terms of an integrated written contract. . . .

The parol evidence rule does not apply, however, if the

written contract is not completely integrated.’’(Citation

omitted; internal quotation marks omitted.) Benvenuti

Oil Co. v. Foss Consultants, Inc., 64 Conn. App. 723,

727, 781 A.2d 435 (2001).

An integrated contract is one that the parties have

reduced to written form and which represents the full

and final statement of the agreement between the parties. See id., 728–29. Accordingly, an integrated contract

must be interpreted solely according to the terms contained therein. Whether a contract is deemed integrated

oftentimes will turn on whether a merger clause exists

in the contract. Id., 728. The presence of a merger clause

in a written agreement establishes conclusive proof of

the parties’ intent to create a completely integrated

contract and, unless there was unequal bargaining

power between the parties,the use of extrinsic evidence

in construing the contract is prohibited. See Tallmadge

Bros., Inc. v. Iroquois Gas Transmission System, L.P.,

252 Conn. 479, 502–504, 746 A.2d 1277 (2000).

‘‘We long have held that when the parties have deliberately put their engagements into writing, in such

terms as import a legal obligation, without any uncertainty as to the object or extent of such engagement,

it is conclusively presumed, that the whole engagement

of the parties, and the extent and manner of their understanding, was reduced to writing. After this, to permit
oral testimony, or prior or contemporaneous conversations, or circumstances, or usages [etc.], in order to

learn what was intended, or to contradict what is written, would be dangerous and unjust in the extreme.

. . . Although there are exceptions to this rule, we continue to adhere to the general principle that the unambiguous terms of a written contract containing a merger

clause may not be varied or contradicted by extrinsic

evidence.’’ (Citation omitted; footnote omitted; internal

quotation marks omitted.) Id., 502–503; see also 2

Restatement (Second), Contracts § 204, comment (e),

p. 98 (1981) (‘‘[w]here there is complete integration and

interpretation of the writing discloses a failure to agree

on an essential term, evidence of prior negotiations

or agreements is not admissible to supply the omitted

term’’). Courts must always be mindful that ‘‘parties

are entitled to the benefit of their bargain, and the mere

fact it turns out to have been a bad bargain for one of the

parties does not justify, through artful interpretation,

changing the clear meaning of the parties’ words.’’ 13

R. Lord, Williston on Contracts (4th Ed. 2000) § 38:13,

p. 427.

Because the court interpreted the parties’ contract

as containing an unmet condition precedent, a brief

discussion of the legal parameters of contractual conditions is necessary. ‘‘A condition precedent is a fact or

event which the parties intend must exist or take place

before there is a right to performance. . . . A condition

is distinguished from a promise in that it creates no

right or duty in and of itself but is merely a limiting or

modifying factor. . . . If the condition is not fulfilled,

the right to enforce the contract does not come into

existence. . . . Whether a provision in a contract is a

condition the nonfulfillment of which excuses performance depends upon the intent of the parties, to be

ascertained from a fair and reasonable construction of

the language used in the light of all the surrounding

circumstances when they executed the contract.’’ (Citations omitted.) Lach v. Cahill, 138 Conn. 418, 421, 85

A.2d 481 (1951); see also 2Restatement(Second), supra,

§ 224, p. 160 (‘‘[a] condition is an event, not certain to

occur, which must occur, unless its non-occurrence is

excused, before performance under a contract

becomes due’’).

Conditions precedent can be either express or

implied. 8 C. McCaulif, Corbin on Contracts (J. Perillo

ed., Rev. Ed. 1999) § 30.10, p. 19. An express condition

precedent is one that springs from language in the contract and qualifies one or both parties’ rights or duties

of performance. Id., § 30.7, o. 14, § 30.10, p. 19. Although

not strictly required, parties often signal their

agreement to create an express condition precedent by

using words such as ‘‘on [the] condition that,’’ ‘‘provided

that,’’ unless and until, or‘‘if.’’(Internal quotation marks

omitted.) 2 Restatement (Second), supra, § 226, comment(a), p. 170. In addition to express conditions prece-
dent, a condition precedent may be implied or‘‘supplied

by the court,’’ often in circumstances in which the court

determines that the contracting parties have failed to

foresee or recognize the significance of an event or its

potential effect on the parties’ rights. See id., § 204,

comments (b) and (d), pp. 97–98.

Interpreting a contract as containing an implied condition precedent, however, is disfavored if the result

will be a forfeiture of compensation or other benefit,

especially if that forfeiture falls on a party who had

no control over whether the condition or event would

occur. This principle is aptly reflected in § 227 of the

Restatement (Second), supra, p. 174, which provides in

relevant part: ‘‘In resolving doubts as to whether an

event is made a condition of an obligor’s duty, and as

to the nature of such an event, an interpretation is

preferred that willreduce the obligee’s risk of forfeiture,

unless the event is within the obligee’s control or the

circumstances indicate that he has assumed the risk.’’

As explained in the commentary of the rule, ‘‘[if] the

nature of [a] condition is such that the uncertainty as

to [an] event will be resolved before either party has

relied on its anticipated occurrence, both parties can

be entirely relieved of their duties, and the obligee risks

only the loss of his expectations. [If], however, the

nature of the condition is such that the uncertainty is

not likely to be resolved until afterthe obligee has relied

by preparing to perform or by performing at least in

part, he risks forfeiture. If the event is within his control,

he will often assume this risk. If it is not within his

control, it is sufficiently unusual for him to assume the

risk that, in case of doubt, an interpretation is preferred

under which the event is not a condition.’’ 2

Restatement (Second), supra, § 227, comment (b), pp.

175–76. Thus, whereas the policy favoring freedom of

contract would require that an express condition precedent be honored even though a forfeiture would result,

if ‘‘it is doubtful whether or not the agreement makes

an event a condition of an obligor’s duty, an interpretation is preferred that will reduce the risk of forfeiture.’’

Id., p. 175. The Restatement (Second) further posits

that even in those cases in which the court finds a

condition precedent exists, ‘‘[t]o the extent that the

non-occurrence of a condition would cause disproportionate forfeiture, a court may excuse the non-occurrence of that condition unless its occurrence was a

material part of the agreed exchange.’’ 2 Restatement

(Second), supra, § 229, p. 185.

Turning to the defendants’ claim, we first conclude

that the language of the engagement letter is unambiguous and, therefore, the intent of the parties is a question

of law. We agree with the defendants that the court

improperly construed the parties’ contractual

agreement as intending the occurrence of a Huntsman

lease extension as a condition precedent of the parties’

contractual obligations such that the nonoccurrence of
the lease extension completely excused the plaintiff’s

performance and required the defendants to return the

plaintiff’s engagement deposit. In particular, as we will

discusse further, the court in this case did not determine

whether the parties’ contract was a fully integrated

writing between commercial entities with equal bargaining power and, thus, entitled to stricter adherence

to its express terms; did not state as part of its analysis

whether the express contractual provisions regarding

the retention or return of the deposit were ambiguous,

inapplicable, or insufficient to resolve the parties’ dispute; did not identify what contractual language, provision, or extrinsic evidence the court relied upon in

determining that obtaining a lease extension was a condition precedent of the contract; and, perhaps most

importantly, did not address whether its construction

of the contract would result in a forfeiture of compensation by Chappo LLC, despite the fact that Chappo LLC

had no involvement in or control over the lease negotiations. After considering these factors, we conclude that

the courtimproperly construed the parties’ contract and

incorrectly determined that Chappo LLC had breached

that contract and wrongfully retained the plaintiff’s

deposit.

We note at the outset that there is no indication that

the court gave proper deference to the language of the

parties’ contract, which was a fully integrated writing.

The court determined, and we agree, that a valid contract was formed between the parties as memorialized

in the engagement letter. Likewise, there is no disagreement that the terms of that contract also included the

modifications that Gordon made at the time he signed

the engagement letter on behalf of the plaintiff, both

the changes he made to the executed engagement letter

as well as the additional language in his accompanying

memorandum. Pursuant to the contract, Chappo LLC

promised to obtain a commitment from a lender willing

to fund a loan on the terms supplied by the plaintiff in

the contract, and, in exchange for that promise, the

plaintiff agreed to pay Chappo LLC a commission equal

to 1 percent of the loan from the proceeds at closing.

The plaintiff also agreed to provide Chappo LLC with

a deposit equal to roughly one half of the expected commission.

In its analysis of the breach of contract claim, the

court makes no mention of the paragraph in the engagement letter that, in legal effect, amounted to a merger

clause. That paragraph provided that ‘‘the terms of this

[e]ngagement shall supersede any and all prior[e]ngagements, arrangements or understandings among the

parties with respect to the subject matter discussed

above.’’ (Emphasis added.) The inclusion of this merger

clause was prima facie evidence that the parties

intended their written agreement to encompass ‘‘the

whole engagement of the parties, and the extent and

manner of their understanding, was reduced to writing.’’
(Internal quotation marks omitted.) Tallmadge Bros.,

Inc. v. Iroquois Gas Transmission System, L.P., supra,

252 Conn. 502. Although the court notes that Chappo

drafted the engagement letter ‘‘with full knowledge that

the lease extension had not been executed,’’ the court

did not find nor does the record disclose any imbalance

in the parties’ bargaining power. Both Gordon and

Chappo are highly educated and familiar with these

types of financial transactions, and, as evidenced by

the changes that Gordon made to the engagement letter

at the time he executed the contract, Gordon fully was

capable of protecting the interests of the plaintiff.

Rather than construe the language used by the parties,

the court appears to have looked beyond the plain language of the agreement in deciding that the Huntsman

lease was a condition precedent to any and all performance under the contract.

Certainly, at the time the parties entered into their

agreement, it is undisputed that the plaintiff had not

yet secured a lease extension from Huntsman and that

all parties were aware of that fact. Negotiation of the

lease was ongoing at that time. Accordingly, this is not

a situation where the parties failed to fully contemplate

the occurrence or nonoccurrence of a particular event.

Despite the uncertainty surrounding the lease, and

likely because the window of time for redeeming the

property was quickly closing, the plaintiff decided to

enter into the agreement with Chappo LLC to find a

lender that would be willing to commit to financing

the plaintiff’s redemption of the property under the

assumption that a lease renewal would be executed

prior to closing. The defendants had no part in negotiating that lease, which was entirely the responsibility

of the plaintiff. The plaintiff had all the information

necessary to gauge the likelihood ofretaining Huntsman

as a lessee or whether some alternative contingency

for servicing the loan debt was possible, such as modifying the terms of the proposed lease or securing a

different tenant altogether. Because Chappo LLC had

no actual control over whether the plaintiff would be

able to negotiate a new lease with Huntsman, the plaintiff was the party best situated to evaluate the risk that

Chappo LLC would expend resources in obtaining a

lender only to have the loan unable to close.

To that end, if the plaintiff viewed the Huntsman

lease as an indispensable part of its agreement with

Chappo LLC, the plaintiff could have insisted that

obtaining the lease be made a clear and express condition on its duty to compensate Chappo LLC for its

efforts in obtaining a loan commitment. Alternatively,

the plaintiff could have insisted that the engagement

letter provide that Chappo LLC would return the deposit

in the event that a lease never materialized. Instead,

there is nothing in the parties’ agreement that shifts

any potential risk of the failure to obtain a lease from

the plaintiff to Chappo LLC.11
Rather, the contract is clear and unambiguous that if

Chappo LLCobtained a loan commitmentin accordance

with the plaintiff’s proposed terms, and the loan failed

to close, Chappo LLC was entitled to keep the deposit.

Although, by agreement, the loan had to close in order

for Chappo LLC to earn its full commission, and the loan

almost certainly would not close without the intended

lease with Huntsman, a notion that the defendants

readily admit, nothing in the language of the parties’

agreement expressly made obtaining the lease a condition precedent to the retention of the deposit. Chappo

LLC simply had to secure the required loan commitment, which it did.12

Certainly, if it is clear from the facts and circumstances surrounding the making of a contract that the

parties had failed to set forth expressly some condition

that needed to exist before the parties’ duty to perform

under the contract ripened, a court has the authority

to recognize and give effect to such an implied condition. In construing a fully integrated written contract,

however, drafted and executed by sophisticated commercial parties, the court should be particularly wary

before construing the contract to include an implied

condition precedent, especially when supplying such a

term will result in one of the parties forfeiting the benefits of his performance.

It is true that, pursuant to the engagement letter,

Chappo LLC agreed to be compensated from the proceeds generated by the loan’s closing, and, thus, Chappo

LLC accepted some risk that, should the loan fail to

close, it would not be entitled to the full benefit of the

bargain. Nevertheless, Chappo LLC also ensured that

that risk was partially set off by requiring the plaintiff

to provide a deposit. Pursuant to the engagement letter,

Chappo LLC was required to return the deposit only if

it failed to secure a loan commitment, which we have

concluded did not occur here. Here, if we were to accept

the court’s construction of the parties’ contract as containing an unmet condition precedent, this would result

in a forfeiture of compensation to Chappo LLC, which

had substantially performed its duties under the

contract.

The fact that the loan was unlikely to close due to

circumstances outside the control of the defendants

did not change the nature of the business arrangement

between the plaintiff and Chappo LLC. Chappo LLC

kept its promise to find the plaintiff a lender willing to

finance on the agreed upon terms. The plaintiff was the

party that, hoping to net approximately $5 million, had

assumed the risk of engaging a loan broker before it

had obtained the necessary lease commitment from

Huntsman to secure a loan. It was incorrect for the

court to rewrite the parties’ contract in such a way as

to shift that risk from the plaintiff to Chappo LLC.
The judgment is reversed in part and the case

remanded with direction to render judgment in favor

of the defendants on the breach of contract and conversion counts. The judgment is affirmed in all other

respects.

In this opinion the other judges concurred.

1 The trial court rendered judgment in favor of the defendants on the

remaining counts of the complaint. Those counts, directed at both defendants, alleged statutory theft pursuant to General Statutes § 52-564, breach of

the covenant of good faith and fair dealing, and a violation of the Connecticut

Unfair Trade Practices Act, General Statutes § 42-110 et seq. The plaintiff has

not appealed or cross appealed from those aspects of the court’s judgment.

2

In their appellate brief, the defendants assert that, for purposes of this

appeal, they do ‘‘not dispute or seek to reverse the trial court’s findings . . .

with regard to the facts, and focus this appeal instead on the conclusions of

law and judgment entered . . . .’’

3 Under Michigan law, real property owners whose interest have been

foreclosed have between six and twelve months in which to exercise their

right of redemption. See Mich. Comp. Laws §§ 600.3140 (1) and 600.3240.

4 As noted by the court, ‘‘[t]he lease originally was to commence in November, 2012, but Gordon changed that [term on the executed engagement

letter] to [March, 2013], with a term ending October 31, 2024. The lease was

a triple net lease in which there are no landlord responsibilities. The lease

payments Gordon [also] had corrected to be $1,183,000 for the first sixtytwo months and $1,130,000 for the remaining term.’’

5 There was no requirement in the agreement that the deposit be held in

escrow or in a segregated account, and, accordingly, it was deposited into

Chappo LLC’s general operating account.

6 The record reflects that after title to the property fully vested in the

foreclosing bank itreached a new lease agreement with Huntsman. The bank

then later sold the property to a third party subject to the Huntsman lease.

7 The complaint contains a typographical error, referring to General Statutes § 52-54, rather than General Statutes § 52-564. Section 52-564 provides:

‘‘Any person who steals any property of another, or knowingly receives and

conceals stolen property, shall pay the owner treble his damages.’’

8 The defendants have not challenged that portion of the court’s judgment

in the present appeal.

9 The plaintiff filed a motion to dismiss the appeal as untimely on the

basis of a handwritten notation on the court’s memorandum of decision

indicating that notice of the court’s decision had issued on October 28, 2015.

The plaintiff argued that if the initial appeal period began to run on October

28, 2015, the defendants’ November 18, 2015 motion for reconsideration

was filed one day after the appeal period had expired and, as a result, the

present appeal was untimely. See Practice Book § 63-1. The date stamp on

the memorandum of decision, however, as well as the electronic docket,

indicate that the court’s memorandum was not filed with the court until

October 29, 2015. We denied the plaintiff’s motion to dismiss.

10 As noted, the court also ruled in favor of the plaintiff on its conversion

count on the basis of its determination that the defendants wrongfully

retained and exercised control over the deposit after the plaintiff asked the

defendants to return those funds. The defendants also challenge that aspect

of the court’s judgment. Our resolution of the appeal in favor of Chappo

LLC on the breach of contract count, however, logically also requires a

reversal on the conversion count against the defendants. ‘‘Conversion is an

unauthorized assumption and exercise of the right of ownership over goods

belonging to another, to the exclusion of the owner’s rights.’’ Discover

Leasing, Inc. v. Murphy, 33 Conn. App. 303, 309, 635 A.2d 843 (1993). If

the defendants were entitled to retain the deposit, they did not exercise

unauthorized control over the plaintiff’s funds. Accordingly, we limit our

discussion to the breach of contract count.

11 The plaintiff argues that the Gordon memorandum is a part of the parties’

contract, and that the following language was intended to further condition

Chappo LLC’s duty to return the deposit in the event that a loan could not

close: ‘‘The deposit will be returned within five days of the time at which

it appears a loan pursuant to the application is not probable of funding by

February 28, 2013, or an agreed later funding date.’’ The defendants do not

contest that the parties’ contract includes the Gordon memorandum. They

argue, however, that the provision in question should be construed as clarify-
ing the last date on which a loan could fund in order to allow the plaintiff

time to redeem the property and, accordingly, provides a specific time frame

for the return of the engagement deposit should Chappo LLC be unable to

obtain a commitment to fund by that date. In other words, the Gordon

memorandum did not contain any new condition with respect to the return

of the deposit but, as with the other changes Gordon made to the engagement

letter, merely clarified an existing term in light of the state of events at the

time he executed the engagement letter. In this case, it clarified the existing

provision requiring Chappo LLC to return the deposit ‘‘[i]n the event Chappo

LLC is unable to provide a [l]ender commitment as stipulated above and

such time frame is not extended . . . .’’ To the extent that the language in

the Gordon memorandum is susceptible of two meanings, it should be read

in conjunction with the contract as a whole and consistent with other terms.

See C & H Electric, Inc. v. Bethel, 312 Conn. 843, 853, 96 A.3d 477 (2014).

We are simply unpersuaded that any language in the Gordon memorandum

supports in any way the court’s determination that a Huntsman lease extension was a condition precedent of the parties’ agreement orthat the failure of

the lease negotiations mandated that the defendants return the engagement

deposit, the only compensation the defendants received for their work.

12 The record before us shows that Chappo LLC found a lender, American

National, that was fully committed to providing a loan to the plaintiff on

the terms specified in the engagement letter including the as yet unattained

Huntsman lease. The plaintiff suggests that Chappo LLC nevertheless failed

to fully perform because it never obtained a duly executed commitment

letter. The defendants counter that the only hindrance in obtaining the

formal commitment letter from American National was Gordon’s refusal to

sign the application, and the doctrine of prevention prohibits a party from

taking advantage of any failure in performance that the party acted to hinder.

We find it unnecessary to engage in such analysis, however, for two reasons.

First, the language of the contract required only ‘‘a [l]ender commitment’’

not a formal commitment letter from a lender. Second, even if a formal

letter was necessary, because Chappo LLC had found a willing lender and

all that remained to secure a formal commitment was the signing of the

application, there was substantial performance.

‘‘The doctrine of substantial performance shields contracting parties from

the harsh effects of being held to the letter of their agreements. Pursuant

to the doctrine of substantial performance, a technical breach of the terms

of a contractis excused, not because compliance with the terms is objectively

impossible, but because actual performance is so similar to the required

performance that any breach that may have been committed is immaterial.’’

(Internal quotation marks omitted.) Mastroianni v. Fairfield County Paving, LLC, 106 Conn. App. 330, 340–41, 942 A.2d 418 (2008). Accordingly,

Chappo LLC substantially performed all of the obligations it undertook to

perform pursuant to the parties’ contract.