Opinion
No. 566501
October 13, 2006
MEMORANDUM OF DECISION
The plaintiff and defendants had an open listing agreement dated February 1996. (Plaintiff's Exhibit 1.) Plaintiff procured a tenant, Proto-Power Corporation, and the defendants entered a lease with Proto-Power in a 1997 lease for five years with an option to renew. (Plaintiff's Exhibit 2.) The option to renew was not exercised and the lease expired at the end of its term. Plaintiff received its commission for the five-year lease.
Between 1997 and 2002, Proto-Power's corporate parent, Utility Engineering, obtained a lease with the defendants, Nineteen Thames Street. (Plaintiff's Exhibit 3.) The plaintiff did not obtain this lease nor was it the procuring cause. The lease allowed Proto-Power to continue to occupy the space it occupied under the 1997 lease and lease separate and additional space to Utility Engineering.
The plaintiff claims that since Proto-Power still occupies the same space it did under the 1997 lease, that it is entitled to a commission because Proto-Power, in effect, simply renewed its 1997 lease. Defendant, Nineteen Thames Street, argues that the new lease to Utility Engineering for its own space and space for Proto-Power is an entirely new lease not procured by the plaintiff. Therefore, the plaintiff is not entitled to a commission to a space listed to Proto-Power under the 2002 lease.
Discussion
In count one, the plaintiff claims a commission. However, the statutory restrictions that a broker may not collect the commission unless there is a valid listing agreement prior to rendering the services in question. The agreement must be "(1) in writing, (2) contain the names and addresses of all the parties, (3) show the date on which such contract was entered into, (4) contain the conditions of such contract, and (5) be signed by the owner for an agent authorized to act on behalf of the owner . . . and by the real estate broker or his authorized agent." C.G.S. § 20-325a(b). Jay Realty, Inc. v. Ahearn Development Corporation, 189 Conn. 52, 55 (1983); Boline v. Albert, 23 Conn.App. 688, 691 (1991).
As to count one, the defendant claims that the plaintiff has failed to meet the requirements of the statute. The defendant argues that the plaintiff is alleging that there is a new tenant. Yet, the plaintiff has not provided sufficient facts to support a claim of renewal. The signing of a new lease by a different tenant demonstrates the opposite of renewal. Joseph Freiheit v. William Broch, 98 Conn. 166 (1992), "a covenant of renewal cannot become effective until a new lease is delivered." The present tenant is utility Engineering, Inc., which is a separate legal entity from Proto-Power. Case law is clear, that a parent corporation is a distinct legal entity from its subsidiary. "It is a fundamental principal of corporate law, that the parent corporation and its subsidiary are treated as separate and distinct persons, even though the parent corporation owns all the shares of the subsidiary and the two enterprises have identical directors and officers. Such control is no more than the normal consequence of controlling share ownership." SFA Folio Collections, Inc. v. Bannon, 217 Conn. 220, 232 (1991). The court, therefore, finds that the plaintiff is not entitled to a commission under count one.
As to count two of the complaint, Connecticut does recognize the doctrine of good faith and fair dealing in the performing of contractual obligations. Magnan v. Anaconda Industries, Inc., 193 Conn. 538, 567 (1984). However, no authority was cited by the parties which supports the contention that non-renewing of the lease constitutes bad faith or unfair dealings, especially where a completely new lease has been signed by a new tenant.
Accordingly, the court finds that Utility Engineering was acting in the interest of its subsidiary, Bendix. The plaintiff's claims are not supported by the facts or the law and judgment hereby enters for the defendant on counts one and two.