Cramer & Anderson Partner Dan Casagrande has won a major antitrust case in the Connecticut Supreme Court.
The March 24 decision overturns a decades-old precedent that tying agreements for real estate brokerage fees violate the Connecticut Antitrust Act.
The court essentially ruled that antitrust law had evolved through federal actions in ways that invalidated the Connecticut precedent established in a 1981 decision.
“This important decision provides a critical validation of the sanctity of contracts freely negotiated between sophisticated parties, and provides updated guidance to developers and real estate brokers in Connecticut,” said Attorney Casagrande, who argued the case in September 2018.
“I’m proud to deliver the right outcome for my clients,” he said. “It was a long, hard fought battle and we were turned back at every step—until we got to the state’s highest court.”
“The fact that this is a landmark decision is gratifying and also reflects the benefits of our team approach at Cramer & Anderson and the outstanding work done on this case by my colleague, Partner Lisa Rivas,” he said.
Attorney Casagrande represents Reserve Realty, LLC, which filed a breach of contract claim against Windemere Reserve LLC and BLT Reserve LLC in the summer of 2013.
At the center of the case were two large and then-vacant parcels formerly part of the Union Carbide corporate complex in western Danbury, called the Reserve.
In 2002, real estate developer Woodland Group, which purchased the Reserve properties, engaged the services of primary brokers Jeanette Haddad, who died in 2013, and Paul P. Scalzo, according to the Supreme Court’s case summary.
Reserve Realty, LLC, was created by Haddad and Scalzo to market and sell the Reserve as it became subdivided. (In addition to Reserve Realty, Attorney Casagrande represents Haddad’s husband, Theodore Haddad, Sr., as executor of his wife’s estate, and Scalzo.)
As part of the broker-client relationship, Haddad, Scalzo, and Woodland executed an ‘‘Exclusive Right to Sell—Listing Agreement,” which gave Haddad and Scalzo the exclusive right to sell and/or lease property in the Reserve, according to the case summary.
A 1991 aerial view of the former Union Carbide corporate headquarters in Danbury.
The agreement also contained the following provision: ‘‘[Woodland] shall make aware to the new purchaser of any part, or of individual lots, or of land, that this [a]greement shall apply to that new purchaser and [Haddad and Scalzo].’’
While Woodland’s master plan for the 546-acre parcel was approved by Danbury zoning officials, the project was effectively blocked by Windemere, which was in the process of developing a neighboring parcel of land.
To resolve the zoning dispute, the case summary explained, Woodland agreed to sell one portion of the Reserve to BLT for a luxury apartment complex, and another parcel to Windemere for commercial development.Read Full Article
Windemere and BLT purchased the parcels and initially honored the requirements of the Woodland agreement on brokerage rights. However, the real estate market softened after the 2008 financial crisis.
BLT proceeded and built the luxury apartment complex on its parcel, but marketed units through its own on-site leasing agent instead of through the services of Haddad, Reserve, and Scalzo, according to the case summary.
The plaintiffs then filed the legal action alleging breach of contract and anticipatory breach.
Attorney Casagrande argued in Superior Court and Appellate Court that Windemere and BLT committed breach of contract because exclusive brokerage rights for the properties had permanently been granted to Reserve Realty.
The lower court decisions were both based on a 1981 Connecticut Supreme Court decision in State v. Hossan-Maxwell, Inc., which set the precedent for an antitrust special defense in Connecticut.
Attorney Casagrande sought and won the right to take the case to the Connecticut Supreme Court on the issue of antitrust and the question of whether State v. Hossan-Maxwell, Inc. remains valid in light of subsequent federal court antitrust decisions Connecticut courts are required to follow.
“Specifically, we must decide whether, in light of recent antitrust scholarship and developments in federal tying law, Hossan-Maxwell, Inc., should be overruled. We answer that question in the affirmative,” Chief Justice Richard A. Robinson wrote in the March 24 opinion.
“In the four decades since this court decided Hossan-Maxwell, Inc., the [modern antitrust] scholarship has prompted the United States Supreme Court to rethink its approach to tying claims,” Chief Justice Robinson wrote, adding elsewhere, “[i]n light of what we perceive to be the clear trajectory of federal tying law, as informed by modern antitrust scholarship, we overrule Hossan-Maxwell, Inc., to the extent that it held that real estate list-back agreements affecting a not insubstantial volume of commerce are per se illegal.”
The Connecticut Supreme Court reversed the judgments of the trial court and the Appellate Court, remanding the case to the Appellate Court with a direction to consider the plaintiffs’ remaining claims.