ELLIOTT ENTERPRISES, LLC v. GEORGETTE D. GOODALE ET AL.
AC 37174
Argued November 17, 2015—officially released June 28, 2016
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ELLIOTT ENTERPRISES, LLC v. GEORGETTE D. GOODALE ET AL. (AC 37174)
Lavine, Sheldon and Flynn, Js.
Argued November 17, 2015—officially released June 28, 2016
(
Hartford, Housing Session, Woods, J.)
Walter A. Twachtman, Jr., for the appellants (defendants).
Andrew P. Barsom, with whom, on the brief, was Alena C. Gfeller, for the appellee (plaintiff).
Opinion
LAVINE, J. In this summary process action, the defendant tenants, Georgette D. Goodale and Marlborough Country Bakery & Deli, Inc.,1 appeal from the judgment of the trial court in which the court found that the defendants had violated their lease agreement (lease) and granted possession of the leased premises to the plaintiff landlord, Elliott Enterprises, LLC. The trial court rendered judgment of possession in favor of the plaintiff on the ground that the defendants had failed to pay sewer charges and late fees due under the lease. On appeal, the defendants claim that the trial court erred by failing to consider that they had overpaid the plaintiff real estate taxes, which were a component of the rent pursuant to the lease, in an amount greater than what the plaintiff claimed they owed for the sewer charges and late fees.2
The following facts and procedural history are relevant to this appeal. The plaintiff owns a shopping center in Marlborough and has rented two units of the property to the defendants since June, 2002. The defendants have operated a bakery on the premises since that time. The initial lease included an option to extend the lease term. The lease has been extended twice for five year periods, with the most recent extension due to expire in June, 2017. The lease provided that rent was due on the first of each month and that the defendants would incur a late charge of 5 percent of the amount of rent due and unpaid if they did not pay rent by the fifth of each month. Section 1 of the lease, entitled ‘‘Rent for Demised Premises,’’ states in relevant part: ‘‘RENT . . . shall consist each month of the sum of the FIXED MINIMUM MONTHLY RENTAL3 . . . together with the TENANTS’ pro-rata share of any INCREASES IN PROPERTY TAXES, together with any unpaid TENANTS’ UTILITIES as described in the SCHEDULE and this LEASE.’’4 (Emphasis added.)
Section 18 of the lease, entitled ‘‘Sewer Usage and Assessment Fees,’’ states that ‘‘[i]n the event that during the term of this LEASE city or municipal sewers are installed in a manner so as to serve the DEMISED PREMISES, TENANTS agree to pay its prorata share of any and all sewer usage charges assessed against the LANDLORD and/or the DEMISED PREMISES.’’ In December, 2011, Marlborough installed sewers that served the demised premises. As we explain in part I of this opinion, all of the charges listed in § 1 of the lease were components of the rent, but the plaintiff billed the defendants separately for each component.
The plaintiff claimed that the defendants had failed to pay the ‘‘fixed minimum monthly rental’’ component
of the rent for
In their answer, the defendants denied that they had breached the terms of the lease by failing to pay the ‘‘fixed minimum monthly rental’’ charge, sewer use charges, or late fees due under the lease. They also denied that their right or privilege to occupy the premises had expired. They filed special defenses, alleging: (1) as to count one, that the plaintiff knowingly and intentionally miscalculated the rent due under the lease, causing the defendants to overpay the amount of the rent after the second year of the lease, and that the April, 2013 base rent and escalator were paid and accepted by the plaintiff; (2) as to count two, that the plaintiff overcharged the defendants for the sewer betterment assessment and use charges due under the lease; (3) as to count three, that the plaintiff neither billed the defendants for late fees, nor were late fees due given that the defendants have paid or overpaid the rent, that the plaintiff waived any right to the late fees, and that the plaintiff did not conduct itself in good faith and fair dealing and, as a result, should not be entitled to any late fee; (4) as to count four, that the notice to quit was improper and unjustified because the defendants have not defaulted under the lease in the payment of rent, sewer charges, or late fees; and (5) as to all counts, that the defendants acted with clean hands throughout the landlord-tenant relationship, and that the defense of equitable nonforfeiture operates in the defendants’ favor to prevent an inequitable and unjustified termination of the lease.
The summary process action was tried over eight days between October 7, 2013 and February 24, 2014. On September 8, 2014, the court issued its memorandum of decision. As to count one, the court found that the notice to quit for failure to pay the fixed monthly rental charge for April, 2013, had been served prematurely. The court thus concluded that it lacked subject matter jurisdiction over count one. As to counts two and three, the court found that the defendants had violated the lease by failing to pay the sewer use charges and late rent fees. The court concluded, as to count four, that the plaintiff had failed to establish by a preponderance of the evidence that the defendants’ right to occupy the premises should be extinguished. The court rejected
all of the defendants’ special defenses, concluding that the plaintiff had properly applied the escalator clause to the yearly increase of the fixed minimum monthly rental. It also rejected the defendants’ defense of equitable nonforfeiture. Although the court found that the defendants had overpaid the real estate taxes due under the lease, it stated that it lacked jurisdiction over any monetary claims. The court concluded that the defendants had wilfully failed to pay the sewer use charges and late fees, and, thus, failed to
The defendants filed a motion asking the court to articulate: (1) its interpretation of the escalator clause; (2) why it did not apply the overcharge of the real estate taxes against the amount owed for the sewer charges and late fees; (3) why it did not address the defendants’ claim that the lease provided for rent abatement pursuant to the force majeure clause; and (4) which of their specific actions constituted wilful and grossly negligent conduct in failing to pay the claimed rent. In its articulation, the court stated that it had applied the escalator clause correctly and denied the request for further articulation. The court denied the request for articulation regarding the overpayment of real estate taxes, stating that the defendants ‘‘never pleaded said defense of setoff in their answer or special defenses.’’ The court also denied the request for articulation as to the force majeure clause and the court’s finding that the defendants’ actions were wilful and grossly negligent. This appeal followed.
After oral argument in this court, we ordered the trial court to articulate its factual findings as to: (1) the total amount of additional rent found due and unpaid from the defendants to the plaintiff, pursuant to § 18 of the lease, as additional rent for the defendants’ aliquot portion of sewer use and sewer assessment charges; (2) the total amount of any late charges found due and unpaid from the defendants to the plaintiff; and (3) the total amount that the defendants overpaid the plaintiff as additional rent for the defendants’ pro rata share of the real estate taxes. The trial court articulated that the defendants had failed to pay the sewer fees and found ‘‘the amount of $2999.60 as the total amount of additional rent found due and unpaid, as additional rent for the defendants’ aliquot portion of sewer use and sewer assessment charges.’’ The court also articulated that
the defendants had failed to pay $942.43 in late fees. Notably, the court determined that the defendants had overpaid the real estate taxes by $15,329.53.6
I
Prior to addressing the defendants’ claim that the court erred in failing to consider that they had overpaid the real estate taxes as rent, we set forth the applicable standard of review and legal principles. Whether the trial court properly found that the defendants breached the lease by failing to tender rent is a question of fact. ‘‘Factual findings are subject to a clearly erroneous standard of review. . . .
‘‘In construing a written lease . . . three elementary principles must be [considered]: (1) The intention of the parties is controlling and must be gathered from the language of the lease in the light of the circumstances surrounding the parties at the execution of the instrument; (2) the language must be given its ordinary meaning unless a technical or special meaning is clearly intended; [and] (3) the lease must be construed as a whole and in such a manner as to give effect to every provision, if reasonably possible. . . . Where the language of a written lease is unambiguous, our review of the trial court’s interpretation of the lease agreement involves a question of law subject to plenary review.’’ (Citation omitted; footnote omitted; internal quotation marks omitted.) Firstlight Hydro Generating Co. v. First Black Ink, LLC, 143 Conn. App. 635, 640, 70 A.3d 174, cert. denied, 310 Conn. 913, 76 A.3d 639 (2013).
Our resolution of this issue turns on the definition of rent under the terms of the lease. The plaintiff and the trial court treated rent as the ‘‘fixed minimum monthly rental’’ pursuant to § 1a of the lease. Under the plain language of the lease, however, rent consists of multiple components, including the ‘‘fixed minimum monthly rental,’’ the defendants’ pro rata share of real estate taxes, and the applicable utility charges. This definition of rent, as comprised of multiple components, comports with the statutory definition of rent in General Statutes § 47a-1 (h), which provides that rent encompasses ‘‘all periodic payments to be made to the landlord under the rental agreement.’’
Recognizing that under the subject lease, rent con-
sisted of multiple components, we conclude that the trial court inaccurately calculated the amount the plaintiff was due and the amount the defendants paid as rent. The trial court failed to recognize that the defendants had overpaid the rent. The trial court rendered judgment of possession in favor of the plaintiff because it found that the defendants wilfully had failed to pay the sewer charges, which are a component of the rent under the lease. This led to the conclusion that the defendants had failed to pay rent due under the lease. Looking at nonpayment of each component of the rent in this piecemeal manner, however, fails to take into account the fact that, under the lease, the real estate taxes are also a component of the rent. The net result is that the court found that the defendants violated the lease by failing to pay the sewer charges as a component of the rent, despite the defendants having actually overpaid the rent by $12,329.93.7
II
We next consider the defendants’ claim that the trial court erroneously rejected their special defense of equitable nonforfeiture, which was based on their overpayment of the real estate taxes. The trial court rejected the defense of equitable nonforfeiture because it found that the defendants were wilful and grossly negligent by failing to pay the late fees and sewer charges.
The following additional facts are relevant to this claim. The trial court found that the defendants had violated the lease by wilfully failing to pay the late fees and rendered judgment of possession in favor of the plaintiff. The late fees, however, are not rent under the lease but, rather, were a charge for the defendants’ failure to tender rent prior to the fifth of the month. The trial court found that the defendants had paid rent late and incurred late fees for the months of March, April, and July, 2012, and March, 2013. The late fees assessed on the basis of the rent due at the time of the late payments totaled $942.43.
The following standard of review and legal principles are applicable to this claim. ‘‘The doctrine of equitable nonforfeiture is a defense implicating the right of possession that may be raised in a summary process proceeding, and is based on the principle that [e]quity abhors . . . a forfeiture.’’ (Internal quotation marks omitted.) Connecticut Light & Power Co. v. Lighthouse Landings, Inc., 279 Conn. 90, 106 n.15, 900 A.2d 1242 (2006). ‘‘Equitable principles barring forfeitures may apply to summary process actions for nonpayment of
rent if: (1) the tenant’s breach was not [wilful] or grossly negligent; (2) upon eviction the tenant will suffer a loss wholly disproportionate to the injury to the landlord; and (3) the landlord’s injury is reparable. . . . Moreover, [t]he doctrine against forfeitures applies to a failure to pay rent in full when that failure is accompanied by a good faith intent to comply with the lease or a good faith dispute over the meaning of a lease.’’ (Citation omitted; emphasis added; internal quotation marks omitted.) 19 Perry Street, LLC v. Unionville Water Co., supra, 294 Conn. 630.
In the present case, the defendants raised the defense of equitable nonforfeiture in the trial court and specifically asserted that they had overpaid portions of the rent as a defense to the plaintiff’s three counts of nonpayment of charges due under the lease. The special defense of equitable nonforfeiture was thus properly raised. In regard to the court’s finding that the defendants were wilful and grossly negligent, the defendants raised as special defenses that they did not owe money for the charges alleged in counts two and three because they had overpaid all amounts due under the lease. The court erred in its determination that the defendants failed to prove the first prong of equitable nonforfeiture, that is, that the defendants’ breach of the lease was not wilful or grossly negligent. The record shows that the defendants had a good faith dispute about the terms of the lease and payments due, as the defendants have overpaid the plaintiff by $11,387.50 due to the plaintiff’s erroneous calculation of the pro rata share of the real estate taxes that it billed them. We therefore disagree that the defendants failed to prove that their breach was not wilful or grossly negligent. The trial court failed to consider the second and third prongs of equitable nonforfeiture, whether the tenant will suffer a loss wholly disproportionate to the injury to the landlord, and whether the landlord’s injury is reparable. Pursuant to the court’s factual finding that the defendants overpaid the plaintiff by $11,387.50, it is clear that the final
two prongs are satisfied as well. Under the present circumstances, we conclude that the eviction of the defendants is wholly disproportionate to the plaintiff’s injury and that any injury the plaintiff suffered from the defendants’ failure to pay the late fees and sewer charges was remedied by their substantial overpayment of the real estate taxes. We thus conclude that the trial court abused its discretion by rejecting the special defense of equitable nonforfeiture.
The judgment is reversed and the case is remanded with direction to render judgment for the defendants.
In this opinion the other judges concurred.
defendants’ failure to tender rent by the date specified in the lease. See Grunsell v. Saaf, Superior Court, judicial district of Fairfield, Docket No. CV-00-0338514-S (January 29, 2002) (defendant entitled to recover late fees under terms of parties’ lease). We consider the trial court’s conclusion that the defendants violated the terms of the lease because they failed to pay the late fees in part II of this opinion.