Posts tagged with "real estate"

Non-Compete Agreement Restrictions in Connecticut Funeral Services Industry

Sagarino v. SCI State Funeral Services, Inc., 2000 Conn. Super. LEXIS 1384
Case Background

Mr. Robert Sagarino’s mother sold the entire amount of stock in Donald D. Sagarino Funeral Home, Inc. to SCI Connecticut Funeral Services, Inc. for $700,000 and an additional $375,000 for the real estate where the business was located. SCI purchased the company with the condition that Mr. Sagarino and other employees execute a five-year employment contract and a fifteen-year non-compete agreement.  Mr. Sagarino signed his agreement on June 15, 1999, wherein he agreed not to operate or work for a funeral home service company for fifteen years within a thirty-mile radius of SCI’s newly acquired Donald D. Sagarino Funeral Home.  As consideration for the restrictive covenant, SCI agreed to pay Mr. Sagarino a total of $65,000 in one hundred twenty installments of $541.67.

Mr. Sagarino was terminated however on July 29, 1999 when he admitted to consuming alcohol while on the job.  In early 2000, Mr. Sagarino opened C.R. Sagarino Funeral Home approximately two miles from SCI’s funeral home.  SCI alleged that he advertised and sought clients from the same community that Douglas D. Sagarino had traditionally served and sued him to prevent further violations of the non-compete agreement executed in connection with the acquisition of Douglas D. Sagarino Funeral Home.

The Defense

Mr. Sagarino however presented a defense that the non-compete agreement was unreasonable and its terms were therefore unenforceable.  The party that challenges the enforceability of a contract ultimately bears the burden of proving to the court that it is unreasonable and unenforceable.  The court found in favor of SCI however, concluding that Mr. Sagarino had indeed breached a valid restrictive covenant and that SCI had successfully shown it suffered irreparable harm from the contractual breach.  A major component of the court’s decision was that the parties executed the agreement at the time of the sale of a business, creating a situation where it added great value to the business.

The Court’s Decision

The court held that the restrictions in the non-compete agreement were adequate to protect the good will purchased by SCI in its acquisition of Donald D. Sagarino Funeral Home and not unreasonable so as to severely disadvantage Mr. Sagarino upon his termination with the company.  The fifteen-year duration was reasonable provided the nature of the funeral services industry.  The customer return frequency in the industry is typically nine years, a timeframe that makes the fifteen-year duration a reasonable restriction for a non-compete between the parties.  The court also held that the thirty-mile geographical restriction was reasonable in light of the funeral services industry and its business trends.

The necessity of a non-compete in this case emanates from the funeral home name having a strong reputation in the local Italian-American community to which it catered its services.  Business in the funeral home industry is highly dependent upon personal relationships and the family name connected with the business operations.  The vast majority of clients are return customers or referrals from previous clients.  The thirty-mile restriction in the non-compete covers the area where Donald D. Sagarino Funeral Home’s clients have historically been located.  The court once again referenced the nature and business trends of the funeral services industry to conclude that the thirty-mile restriction was both reasonable and enforceable.

If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

How Is Marital Property Distributed in a Divorce Proceeding in Connecticut?

Marital property is any asset – from real estate to savings accounts to home furnishings – that was purchased or obtained before or during the marriage that remains the property of either party of the marriage at the time of the divorce.  In Connecticut, courts have the authority to divide marital property and will consider a number of factors to arrive at a fair division of these assets.  In many cases, courts will divide the assets evenly, particularly where the parties have been married for a long time.  However, the court may, in its discretion, award more assets to one party.

The factors considered in making this determination are: (1) the age of the parties; (2) the health of the parties; (3) the station of the parties; (4) the parties’ respective occupations; (5) the amount and sources of the parties’ income; (6) the party’s liabilities; (7) any relevant special needs; (8) each party’s future earnings capacity and prospect for the acquisition of capital assets and income; and (9) the contribution of each of the parties in the acquisition, preservation, or appreciation of the assets.

If you have any questions related to divorce proceedings in Connecticut, please contact Joseph C. Maya, Esq. at (203) 221-3100 or e-mail him directly at JMaya@Mayalaw.com.

Property Conveyance May Satisfy the Statute of Frauds Requirement to Create a Trust

In a recent case before the Connecticut Superior Court, two daughters sought a declaratory judgment as to the validity of an unsigned document purporting to be their deceased mother’s trust agreement and quiet title to a contested piece of real estate.  The daughters contended that the trustees held the contested property in fee simple; therefore, the real estate was not part of the mother’s estate to be distributed in accordance with her will.  The trial court concluded that the trust was validly created and the contested real property was a trust asset.

The original executed copy of the mother’s 2004 trust agreement could not be found after her death.  Two of her daughters sought a court judgment declaring that an unsigned copy of their mother’s trust agreement created a valid and enforceable inter vivos trust, They contended that an irrevocable trust had been created in August 2004 when their mother executed and recorded the warranty deed that conveyed the contested property to the trust because the conveyance and circumstances surrounding it manifested their mother’s clear intent to create that trust.  The remaining heirs denied these allegations and raised several special defenses, including that the unsigned trust agreement did not comply with the Statute of Frauds, that the deed was invalid, that one or both of the daughters exerted undue influence over their mother and that their mother lacked capacity when she created the trust.

The requisite elements of a valid and enforceable trust are: (1) a trustee, who holds the trust property and is subject to duties to deal with it for the benefit of one or more others; (2) one or more beneficiaries, to whom and for whose benefit the trustee owes the duties with respect to the trust property; and (3) trust property, which is held by the trustee for the beneficiaries.  Goytizolo v. Moore, 27 Conn.App. 22, 25, 604 A.2d 362 (1992).  According to the Restatement of Trusts, if the owner of property declares himself to be the trustee of the property or transfers it “in trust” for a named person, such writing sufficiently demonstrates the purpose of the trust to satisfy the writing requirement of the Statute of Frauds.  Restatement (Second) of Trusts § 46 cmt. (a) (1959).

The daughters alleged that the August 2004 warranty deed conveying the contested property to their mother’s inter vivos trust satisfied the Statute of Frauds because it set forth the trust property, the beneficiaries and the purpose of the trust with reasonable definiteness. Because the warranty deed transferred the property from the mother individually to the inter vivos trust, it was as if the property was transferred “in trust” for a named person and the warranty deed was a declaration of a passive trust.  They also contended that because the mother signed the warranty deed as trustee, she was declaring herself to be the trustee of the property for the beneficiaries of the inter vivos trust.   Although the court concluded that the execution of the warranty deed by itself funded rather than created the inter vivos trust, the court also concluded that the warranty deed was sufficient evidence to satisfy the Statute of Frauds.  The deed was a writing signed by the mother demonstrating that she manifested an intent to create the trust and impose the duty of a trustee upon herself.  Additional testimony from witnesses at the trial supported the court’s conclusion that the mother executed the trust agreement, along with her will and the warranty deed, in August 2004 as part of her overall testamentary plan and that unsigned copy of the trust agreement submitted by the two daughters was a true copy of the agreement which established the terms of the agreement.

The heirs contesting the trust alleged that the August 2004 warranty deed conveying the contested property to the mother’s inter vivos trust was invalid because the deed named the trust rather than the trustee as the grantee of the property.  According to the Connecticut Standards of Title, a grantee of real property must be in existence and have capacity to take and hold legal title to land at the time of the conveyance.  A trust does not have such capacity:  the trustee, or other fiduciary of the trust, is the appropriate grantee.  See Connecticut Bar Association, Connecticut Standards of Title (1999), standard 7.1, comments 1 and 4.  Connecticut law, however, provides that deeds with certain defects are considered to be valid unless an action challenging the deed and a lis pendens are recorded in the town land records within two years of recording the defective instrument.  Conn. Gen. Stat.  § 47-36aa(a).  This statute covers defective deeds made to grantees that are not recognized by law as having the capacity to take or hold an interest in real property.  Conn. Gen. Stat.  § 47-36aa(a)(4).  Because the heirs contesting the trust did not file an action challenging the validity of the deed within two years of its recording, the trial court concluded that the August 2004 warranty deed had been validated by the operation of the statute, which confirmed the conveyance to the grantee and any subsequent transfers of the interest by the grantee to any subsequent transferees.

The heirs contesting the trust alleged that the trust was void because one or both of the two daughters seeking to enforce the trust exerted undue influence over their mother during its making.  Undue influence is the exercise of sufficient control over a person in an attempt to destroy his free agency and constrain him to do something other than what he would do under normal circumstances. Connecticut case law sets out four elements necessary for a finding of undue influence:  (1) a person who is subject to influence, (2) an opportunity to exert undue influence, (3) a disposition to exert undue influence, and (4) a result indicating undue influence. Gengaro v. New Haven, 118 Conn.App. 642, 649–50, 984 A.2d 1133 (2009) (internal quotations omitted); see also Dinan v. Marchand, 279 Conn. 558, 560, fn.1 (2006).  The heirs contesting the trust argued that their mother was susceptible to undue influence because of her medical condition and fear of being placed in a nursing home.  They also alleged that one or both of the daughters who were seeking to enforce the trust were in a position to influence her because they had medical and financial control over their mother.  At least one of the two daughters, who was the oldest female in a family of eleven, had the disposition to exert such influence. Finally, they argued that the terms of the trust revealed the extent of that influence because the terms benefitted the daughters seeking to enforce the trust.  However, based on the testimony of witnesses at trial, the court concluded that the mother was not under any undue influence when she executed the trust and other testamentary documents in August 2004.

Finally, the heirs contesting the trust argued that the trust agreement was void due to their mother’s lack of capacity.  Specifically, they argued that there was evidence that their mother did not understand the terms of the trust agreement because when she later wanted to sell the contested property, she discovered that she could not. The mother had medical and neurological conditions, including a stroke in 2003 and terminal cancer in 2006; therefore, she was preoccupied with her health and was concerned about being placed in a nursing home. Furthermore, she loved all of her children and wanted them to be treated equally and fairly, but the terms of the trust are unfair to some of the beneficiaries.

Capacity to make a trust is the same as the capacity to make a will or other testamentary instrument. Connecticut statutory law generally requires that at testator be “any person eighteen years of age or older, and of sound mind.” Conn. Gen. Stat. § 45a-250.  Case law establishes the test for testamentary capacity as “whether the testator had mind and memory sound enough to know and understand the business upon which he was engaged at the time of execution.”  City National Bank and Trust Co.’s Appeal, 145 Conn. 518, 521, 144 A.2d 338 (1958).  Testamentary capacity is assessed at the time the instrument is executed, and not on the testator’s ability years later to remember the contents of the instrument.  Therefore, based on testimony from several witness at trial, the court concluded that the mother had sufficient testamentary capacity to create an enforceable inter vivos trust at the same time she created her other testamentary documents.  Furthermore, the mother’s expressed wishes were to preserve her property for her children and grandchildren; the court concluded that the trust was the most plausible legal means to carry out these wishes.

The trial court concluded that the trust was validly created and the contested real property was a trust asset.  Therefore, the unsigned copy of the trust was an expression of the intent of the mother, in her capacity as grantor, and was a valid and enforceable trust instrument.

Should you have any questions relating to trusts, estates and other personal asset protection issues, please do not hesitate to contact Attorney Susan Maya, at SMaya@Mayalaw.com or 203-221-3100, and Attorney Russell Sweeting, at RSweeting@Mayalaw.com or 203-221-3100, in the Maya Murphy office in Westport, Fairfield County, Connecticut.

Ciccaglione v. Stewart, CV074008040, 2012 WL 671933 (Conn. Super. Ct. Feb. 8, 2012)

After a Lease Has Expired and Turned into a Month-to-Month Lease, Is the Landlord Entitled to Double the Rent?

The answer to this question depends on the facts and language of the lease signed by the renter.  The landlord is probably entitled to adjust the terms of the month-to-month lease to increase the rent.  To double the rent, the landlord must give adequate notice to the renter in order to give the renter an opportunity to leave if they choose to do so.  The terms of the lease dictate the renter’s rights and protection in this situation.  It would be best to obtain a copy of the lease and to consult with an experienced attorney who can review the facts of your case and educate you on your best course of action.

If you have any further questions regarding real estate law in Connecticut, please contact Joseph C. Maya, Esq. at (203) 221-3100 or e-mail him directly at JMaya@Mayalaw.com.