Eichler v. Healthy Mom, LLC ( 2021 )

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APPENDIX
DAVID EICHLER v. HEALTHY MOM, LLC*
Superior Court, Judicial District of New Haven
File No. CV-XX-XXXXXXX-S
Memorandum filed November 18, 2019
Proceedings
Memorandum of decision in plaintiff’s action for
breach of contract. Judgment for the defendant.
Bruce L. Elstein, for the plaintiff.
Michael T. Cretella, for the defendant.
Opinion
HONORABLE ANTHONY V. AVALLONE, JUDGE
TRIAL REFEREE. This action arises from an alleged
breach of contract on the part of the defendant, Healthy
Mom, LLC. On April 25, 2018, the plaintiff, David Eichler,
filed a complaint against Healthy Mom, LLC, alleging
breach of contract on the ground that the defendant
failed to pay a promissory note for $50,000 when it
matured. The defendant responded to the plaintiff’s
complaint denying all allegations and asserting three
special defenses: (1) the plaintiff’s claim is barred by
waiver, (2) the plaintiff’s claim is barred by the statute
of frauds, and (3) the plaintiff has failed to state a cause
of action.1
FACTS
The parties have stipulated to the following facts. On
November 12, 2014, the plaintiff made a loan of $50,000
to the defendant, secured by a promissory note. The
plaintiff is the holder of the note entitled ‘‘Series B
Convertible Promissory Note.’’ Although the note
remains unsigned, the parties both agree to its validity.
The plaintiff’s note is one of a series of convertible
promissory notes, totaling $258,000 in the aggregate.
On December 31, 2015, the plaintiff made a written
demand for payment on the defendant, though the
defendant did not reply. The plaintiff sent two addi-
tional written demand letters on January 26, 2016, and
February 29, 2016. The plaintiff sent one final demand
letter to the defendant on September 22, 2016. After
the plaintiff’s series of demand letters were sent to the
defendant, ‘‘requisite noteholders’’ executed a series of
extension agreements that extended the maturity date
of the note to September 30, 2019.
CONTENTIONS OF PARTIES
The plaintiff contends that the defendant is in default
for the sum of $50,000 plus interest, as the defendant
did not pay the plaintiff on demand. The plaintiff argues
that this scenario was accounted for in the note, which
allows the holder of the note to demand payment on the
maturity date of the loan or on demand and default—
whichever is earlier. Therefore, the plaintiff contends
that the extension agreements have no impact on the
maturity date of its note. The plaintiff further asserts
that the defendant does not have standing to raise the
rights of the requisite noteholders and argues that only
the plaintiff and the defendant are bound to the note
at issue in this action.
The defendant argues that the maturity date of the
note has been correctly extended to September 30, 2019,
the plaintiff has waived any ‘‘event of default’’ per the
note, and the court should interpret the terms of the
note via its express language. Accordingly, the plaintiff’s
argument that demand and default occurred prior to
the extension agreements fails, as the waiver of an
occurrence of an event extinguishes contract rights
therewith.
DISCUSSION
The court first addresses the plaintiff’s argument that
the defendant lacks standing to raise rights dependent
upon the acts of the requisite holders. ‘‘Standing is the
legal right to set judicial machinery in motion. One
cannot rightfully invoke the jurisdiction of the court
unless he [or she] has, in an individual or representative
capacity, some real interest in the cause of action, or
a legal or equitable right, title or interest in the subject
matter of the controversy. . . . [When] a party is found
to lack standing, the court is consequently without sub-
ject matter jurisdiction to determine the cause.’’ (Inter-
nal quotation marks omitted.) Property Asset Manage-
ment, Inc. v. Lazarte, 163 Conn. App. 737, 745, 138
A.3d 290 (2016). Parties to a contract, generally, have
standing to enforce it. See Cottman Transmission Sys-
tems, Inc. v. Hocap Corp., 71 Conn. App. 632, 639, 803
A.2d 402 (2002) (‘‘an action upon a contract or for
breach of a contract can be brought and maintained by
one who is a party to the contract sued upon’’ (internal
quotation marks omitted)).
The plaintiff cites to Elliott v. Bradley, Superior
Court, judicial district of Stamford-Norwalk, Docket
No. CV-XX-XXXXXXX-S (June 11, 2012) (Hon. Alfred J.
Jennings, judge trial referee), for the proposition that
‘‘one party has no standing to raise another’s rights.’’
In Elliott, the plaintiff sought to enforce a promissory
note on the defendant in the amount of $100,000. Id.The promissory note listed ‘‘Theodore H. Elliott, Jr., P/
S Plan U/A dated 12/09/1983 U/A 12/09/83 FBO Theodore
H. Elliott, Jr.,’’ as the holder of the note. Id. In that case,
the court held that there were genuine issues of material
fact ‘‘as to whether the plaintiff [was] a proper party,
in his individual capacity, to bring suit to enforce the
subject promissory note.’’ Id. Specifically, the Superior
Court noted that the parties never addressed the legal
significance of the words after the plaintiff’s name and
found it unclear whether the plaintiff had standing as
the holder of the note in his individual capacity. Id.In the present case, the plaintiff entered into a written
agreement with the defendant that expressly provides
for amendment, waiver, or modification. The note pro-
vides that ‘‘[a]ny provision of this Note may be
amended, waived or modified (a) upon the written con-
sent of the Company and the Holder, or (b) upon the
written consent of the Company and the Requisite Hold-
ers.’’ The note defines requisite holders as ‘‘the holders
of Series B Notes evidencing at least a majority of the
aggregate principal amount of all Series B Notes then
outstanding.’’ The parties agree that the aggregate prin-
cipal of the requisite holders is $138,000, more than 50
percent of the $258,000 balance. The ambiguity present
in Elliott is not present in the current action. It is clear
from the note and the extension agreements that the
defendant is a party to the contracts. Accordingly, the
defendant has standing to raise the rights contained in
the extension agreements.
Next, the court addresses the substance of the par-
ties’ arguments in light of the stipulated facts. The pres-
ent inquiry is akin to a motion for summary judgment
in the sense that no material facts are in dispute. ‘‘[T]he
genuine issue aspect of summary judgment requires the
parties to bring forward before trial evidentiary facts,
or substantial evidence outside the pleadings, from
which the material facts alleged in the pleadings can
warrantably be inferred.’’ (Internal quotation marks omit-
ted.) Buell Industries, Inc. v. Greater New York Mutual
Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002). The
parties have stipulated to the facts in this proceeding
and, accordingly, the following inquiry is simply a mat-
ter of law for the court to decide. Although the parties
agree to undisputed facts, the burdens are such that
the plaintiff has the burden to prove demand and default,
and the defendant has the burden as to the special
defense of waiver. U.S. Bank National Assn. v. Eichten,
184 Conn. App. 727, 745, 196 A.3d 328 (2018) (‘‘[t]he
party raising a special defense has the burden of proving
the facts alleged therein’’ (internal quotation marks
omitted)).
‘‘[A] promissory note is nothing more than a written
contract for the payment of money. . . . [T]he funda-
mental rules governing contract law are applicable.’’
(Citation omitted.) Appliances, Inc. v. Yost, 181 Conn.
207, 210–11, 435 A.2d 1 (1980). ‘‘It is well established
that [p]arties are bound to the terms of a contract even
though it is not signed if their assent is otherwise indi-
cated.’’ (Internal quotation marks omitted.) Ullman,
Perlmutter & Sklaver v. Byers, 96 Conn. App. 501, 505–
506, 900 A.2d 602 (2006). ‘‘[C]ontracts voluntarily and
fairly made should be held valid and enforced in the
courts.’’ (Internal quotation marks omitted.) Schwartz
v. Family Dental Group, P.C., 106 Conn. App. 765, 773,
943 A.2d 1122, cert. denied, 288 Conn. 911, 954 A.2d
184 (2008).
‘‘[W]hen interpreting a contract, [courts] must look
at the contract as a whole, consider all relevant portions
together and, if possible, give operative effect to every
provision in order to reach a reasonable overall result.’’
(Internal quotation marks omitted.) Connecticut National
Bank v. Rehab Associates, 300 Conn. 314, 322, 12 A.3d
995 (2011). ‘‘[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 lan-
guage is unambiguous, we must give the contract effect
according to its terms. . . . [If] the language is ambigu-
ous, however, we must construe those ambiguities
against the drafter.’’ (Internal quotation marks omitted.)
EH Investment Co., LLC v. Chappo, LLC, 174 Conn.
App. 344, 358, 166 A.3d 800 (2017). ‘‘Although ordinarily
the question of contract interpretation, being a question
of the parties’ intent, is a question of fact . . . [w]here
there is definitive contract language, the determination
of what the parties intended by their contractual com-
mitments is a question of law.’’ (Internal quotation marks
omitted.) Rund v. Melillo, 63 Conn. App. 216, 220, 772
A.2d 774 (2001). Nevertheless, ‘‘[w]aiver is a question
of fact.’’ Frantz v. Romaine, 93 Conn. App. 385, 400,
889 A.2d 865, cert. denied, 277 Conn. 932, 896 A.2d
100 (2006).
The note at issue provides: ‘‘All unpaid principal,
together with the balance of unpaid and accrued inter-
est and other amounts payable hereunder, if not con-
verted pursuant to the provisions of Section 4 or 5
below, shall be due and payable on demand at any time
after the earlier of (i) December 31, 2015 (the ‘Maturity
Date’), or (ii) when such amounts are declared due and
payable by the Holder upon or after the occurrence of
an Event of Default . . . .’’ An event of default under
the note includes the company’s failure to pay ‘‘(i) when
due any principal payment on the due date hereunder,
or (ii) any interest or other payment required under the
terms of this Note on the date due and such payment
shall not have been made within fifteen (15) days of
the Company’s receipt of Holder’s written notice to the
Company of such failure to pay . . . .’’
The parties stipulated to the fact that the plaintiff
made demand for payment on December 31, 2015, Janu-
ary 26, 2016, February 29, 2016, and September 22, 2016.
The parties also agree that the defendant and requisite
holders executed a series of extension agreements
which extended the maturity date of the note. The first
extension agreement, dated December 30, 2015,
extended the maturity date from December 31, 2015, to
September 30, 2016. The second extension agreement,
dated September 1, 2016, extended the maturity date
from September 30, 2016, to September 30, 2017. The
last extension agreement, dated August 1, 2018,
extended the maturity date from September 30, 2017,
to September 30, 2019.
The third extension agreement provides that ‘‘[t]his
amendment shall constitute a waiver of any Event of
Default under Section 2.1 of the Series B Notes
occurring prior to September 30, 2018 and a waiver of
any rights of any Holder under Section 3 of the Series
B Notes with respect to same.’’ The parties agreed in
the original iteration of the contract that any provision
of the contract could be waived, amended, or modified
upon the consent of the company and requisite holders.
See supra.
‘‘Courts must always be mindful that parties are enti-
tled to the benefit of their bargain, and the mere fact
[that] it turns out to have been a bad bargain for one
of the parties does not justify, through artful interpreta-
tion, changing the clear meaning of the parties’ words.’’
(Internal quotation marks omitted.) EH Investment Co.,
LLC v. Chappo, LLC, supra, 174 Conn. App. 360. The
plain language and ordinary meaning of the promissory
note clearly shows that the parties agreed to allow
amendment, modification, and waiver, by the consent
of only the company and the requisite noteholders.
Although the plaintiff may not have fully appreciated
the impact of this provision at the time the contract
was entered into, this does not change its present appli-
cation. The information contained in the stipulation,
along with the parties’ attached exhibits, clearly shows
that the facts in the present action are undisputed. The
stipulated facts show that the defendant has established
its special defense of waiver. Although the plaintiff, too,
met its burden of proof by showing demand and default,
the plaintiff’s valid assent to waiver supplants that
inquiry per the terms of the last extension agreement.
CONCLUSION
Taking the contract as a whole and determining all
provisions together, the maturity date was properly
extended to September 30, 2019, and demand and
default were properly waived under the terms of the
note.
* Affirmed. Eichler v. Healthy Mom, LLC, 204 Conn. App. , A.3d
(2021).
1
The parties’ briefs only address the first special defense—waiver.