GETTY PROPERTIES CORPORATION v. ATKR, LLC; NECG HOLDINGS CORPORATION v. PAMBY MOTORS, INC.; NECG HOLDINGS CORPORATION v. 331 WEST AVENUE GAS STATION, LLC; NECG HOLDINGS CORPORATION v. WEST BROAD SERVICE CENTER, LLC; NECG HOLDINGS CORPORATION v. NAVJOT ENTERPRISES, INC.; NECG HOLDINGS CORPORATION v. HSTN, LLC; NECG HOLDINGS CORPORATION v. BODAEVE, INC.; NECG HOLDINGS CORPORATION v. MICA ENTERPRISES, INC.
SC 19298, SC 19299, SC 19300, SC 19301, SC 19302
Supreme Court of Connecticut
January 27, 2015
Rogers, C. J., and Palmer, Zarella, Eveleigh, McDonald, Espinosa and Robinson, Js.
The “officially released” date that appears near the beginning of each opinion is the date the opinion will be published in the Connecticut Law Journal or the date it was released as a slip opinion. The operative date for the beginning of all time periods for filing postopinion motions and petitions for certification is the “officially released” date appearing in the opinion. In no event will any such motions be accepted before the “officially released” date.
All opinions are subject to modification and technical correction prior to official publication in the Connecticut Reports and Connecticut Appellate Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the Connecticut Law Journal and subsequently in the Connecticut Reports or Connecticut Appellate Reports, the latest print version is to be considered authoritative.
The syllabus and procedural history accompanying the opinion as it appears on the Commission on Official Legal Publications Electronic Bulletin Board Service and in the Connecticut Law Journal and bound volumes of official reports are copyrighted by the Secretary of the State, State of Connecticut, and may not be reproduced and distributed without the express written permission of the Commission on Official Legal Publications, Judicial Branch, State of Connecticut.
******************************************************
John J. Morgan, with whom, on the brief, was Albert J. Barr, for the appellants (defendant in each case).
Cort T. Malone, with whom was Heather Spaide, for the appellees (plaintiff in each case).
EVELEIGH, J. In this consolidated summary process action,1 the defendants, the owners of certain retail gasoline service stations,2 appeal from the judgments of immediate possession rendered by the trial court in favor of the plaintiffs, Getty Properties Corporation (Getty Properties) and NECG Holdings Corporation (NECG), with respect to the properties on which the defendants operate their stations. The defendants claim that the triаl court improperly: (1) determined that the plaintiffs’ notices to quit were valid; (2) admitted into evidence the lease between Getty Properties and its tenant, Getty Petroleum Marketing, Inc. (Getty Marketing), as well as the sublease between Getty Marketing and its subtenant, Green Valley Oil, LLC (Green Valley); (3) interpreted the various pleadings and orders in Getty Marketing‘s bankruptcy case as terminating the lease between Getty Properties and Getty Marketing and the sublease between Getty Marketing and Green Valley; (4) found that the plaintiffs proved a prima facie case for summary process; and (5) failed to dismiss the summary process action as premature pursuant to the Petroleum Marketing Practices Act,
The record reveals the following facts and complex procedural history.3 Getty Properties, a real estate investment trust, owns4 the properties on which the defendants operate retail gasoline service stations. On November 2, 2000, Getty Properties leased the properties to Getty Marketing by way of a mаster lease (master lease). The master lease provided, in relevant part, that Getty Marketing could sublet the properties, but that such subleases “shall be subject and subordinate to the terms and conditions of this [master] [l]ease . . . and, unless [Getty Properties] elects otherwise, shall automatically terminate upon any termination of this [master] [l]ease.”
In 2009, Getty Marketing sublet the properties to Green Valley, a gasoline distributor, by way of a sublease (Green Valley sublease). The Green Valley sublease expressly referenced the master lease and provided that it was “subject and subordinate to” the master lease. The Green Valley sublease further provided: “[Green Valley] acknowledges that [Getty Marketing] derives its interests in the [properties] pursuant to the terms of the [m]aster [l]ease . . . . If [the master lease] terminates, the [Green Valley] [s]ublease shall terminate with respect to any [properties] affected . . . .” Finally, the Green Valley sublease provided: “[Green Valley] may sublet the [properties] . . . to any person or entity for [approved uses] as long as [Green Valley] is not in default of any provision of [the Green Valley] [s]ublease and the [subsequent] sublease is subject to the terms of the [Green Valley] [s]ublease.”
Beginning in August, 2011, and continuing for each of several months, Getty Marketing failed to pay rent, Getty Properties sent a notice of termination, and Getty Marketing subsequently cured the default. Pursuant to the master lease, nonpayment of rent constituted an event of ” ’ [m]aterial [m]onetary [d]efault’ ” for which Getty Properties could properly terminate the lease. In October, 2011, Getty Marketing brought an action against Getty Properties in New York state court, claiming that Getty Properties had breached the master lease and seeking an injunction to prevent Getty Properties from terminating the lease.5 The New York state court granted a series of temporary injunctions, requiring Getty Marketing to pay Getty Properties a percentage of its monthly rent and to deposit the remaining portion into escrow pending resolution of Getty Marketing‘s claims. Shortly thereafter, Getty Marketing violated these terms by failing to deposit rent into escrow. Accordingly, on November 29, 2011, Getty Properties sent yet another notice of termination to Getty Marketing—citing Getty Marketing‘s material monetary default for nonpayment of rent—that terminated the master lease effective December 12, 2011. On December 5, 2011, Getty Marketing filed for bankruptcy in the United States Bankruptcy Court for the Southern District of New York.
While in bankruptcy, Getty Marketing, now the debtor-in-possession, immediately prosecuted and defended various adversary proceedings with respect to the Green Valley sublease6 and the master lease.7 After extensive negotiations between Getty Properties, Getty Marketing, and Green Valley, Getty Properties and Getty Marketing agreed to, and thе bankruptcy court entered, a comprehensive stipulation and order dated April 2, 2012, that set forth the terms and condi-
The April 2, 2012 order of the bankruptcy court set forth the amount of rent due and unpaid by Getty Marketing, and created a payment schedule that would allow Getty Marketing to have “temporary extensions of time” to meet its rent obligations to Getty Properties. The order provided that, if and when Getty Marketing rejected the master lease pursuant to
Because it appeared that Getty Marketing would likely reject the master lease on April 30, 2012, Getty Properties, Getty Marketing, and Green Valley began to prepare for the master lease‘s rejection. On April 19, 2012, Getty Properties leased some of the properties to NECG, effective May 1, 2012. On April 18, 2012, Green Valley wrote to the defendants that their sub-subleases “will terminate on April 30, 2012.” Green Valley rеminded the defendants that the dealer sub-subleases were “subject to the terms of a [m]aster [l]ease” which would terminate on April 30, 2012, and, thus, that Green Valley would be “unable to secure continued possessory rights in and to the [properties] . . . [which] are grounds for termination under your [sub-sublease].” Green Valley‘s letters included notices pursuant to the Petroleum Marketing Practices Act. See
On April 30, 2012, on a motion by the official committee of unsecured creditors (committee) pursuant to the
Despite the fact that the April 30, 2012 order unambiguously rejected and purported to terminate the master lease, on the same day, the committee filed a motion for a separate order confirming that all subleases had indeed been rejected as of that date. It did so “[o]ut of an abundance of caution” to “erase any question regarding the rejection of the [s]ubleases . . . .”10 Although an order had not yet entered on the committee‘s motion dated April 30, 2012, on May 3, 2012, Getty Properties wrote to the defendants, demanding that they either enter into the revocable license agreements or vacate the properties. In the letters, Getty Properties indicated that the defendants, after rejecting the revocable license agreements, had sent “rent” checks to Getty Properties. Getty Properties returned the unendorsed “rent” checks to the defendants in the May 3, 2012 letters and explicitly rejected the defendants’ “proposed arrangement . . . .”
On May 15, 2012, Getty Properties and NECG served the defendants with notices to quit,11 which stated that the defendants “originally had the right or privilege to occupy [the properties] but such right оr privilege has terminated.”
On May 18, 2012, the bankruptcy court issued an order on the committee‘s April 30, 2012 motion, confirming that any subleases of the master lease were “deemed rejected, nunc pro tunc, to April 30, 2012, immediately following the rejection of the [m]aster [l]ease.”12
After the defendants refused to vacate the properties, the plaintiffs commenced summary process actions against the defendants. The cases were consolidated and presented before the Complex Litigation Docket. Prior to trial, the defendants moved to dismiss the actions, claiming that the plaintiffs’ notices to quit were invalid, thus depriving the trial court of subject matter jurisdiction. The defendants also claimed that the trial court should dismiss the actions because of the defen-
After a bench trial and in a series of oрinions beginning on May 3, 2013, the trial court rendered judgment of immediate possession for the plaintiff in each case. The defendants appealed from the judgments of the trial court, claiming that the trial court improperly: (1) determined that the plaintiffs’ notices to quit were valid; (2) admitted the master lease and the Green Valley sublease into evidence; (3) interpreted the various pleadings and orders in Getty Marketing‘s bankruptcy case as terminating the master lease and the Green Valley sublease; (4) found that the plaintiffs proved a prima facie case for summary process; and (5) failed to dismiss the summary process action as premature pursuant to the Petroleum Marketing Practices Act. We transferred the appeal to this court pursuant to
I
NOTICES TO QUIT
The defendants first claim that the trial court had no subject matter jurisdiction over the summary process actions because it improperly determinеd that the notices to quit were valid. Specifically, the defendants claim that: (1) the notices to quit did not comply with the signature requirement of
We exercise plenary review over challenges to subject matter jurisdiction in a summary process action on the basis of defects in notices to quit. See Bayer v. Showmotion, Inc., 292 Conn. 381, 388, 973 A.2d 1229 (2009). We address each of the defendants’ claims in turn, with additional facts set forth as needed.
A
The defendants first claim that the notices to quit did not comply with the signature requirement of
Section
In Boyles v. Preston, 68 Conn. App. 596, 614, 792 A.2d 878, cert. denied, 261 Conn. 901, 802 A.2d 853 (2002), the court rejected the claim that an offer of judgment was defective because it had been signed on behalf of the attorney of record by the attorney‘s law partner, who “had been authorized by [the attorney of record] to sign [the attorney‘s] name to the document,” and because “the defendant was in no way disadvantaged by the mere circumstantial defect in the filing of the offer of judgment. The document filed with the court afforded the defendant actual notice as to the existence and terms of the offer, and any irregularity with the signature could not possibly have misled or prejudiced him.” See also Bayer v. Showmotion, Inc., supra, 292 Conn. 390-91 (concluding that trial court properly retained jurisdiction despitе scrivener‘s error on notice to quit with respect to quit date because error was circumstantial, defendant had actual notice of correct quit date, and defendant failed to raise defect for more than one year, demonstrating lack of prejudice).
The defendants’ claim lacks merit. In the present case, the associate who signed the notices to quit had the plaintiffs’ attorney‘s explicit authority to do so. See Boyles v. Preston, supra, 68 Conn. App. 615. This fact, when paired with the lack of prejudice and the defendants’ delay in asserting this claim; see Bayer v. Showmotion, Inc., supra, 292 Conn. 392; leads us to conclude that the trial court was not deprived of subject matter jurisdiction over the plaintiffs’ summary process actions.
B
The defendants next claim that the notices to quit
C
Finally, the defendants claim that, as of the dates the plaintiffs issued the notices to quit, the plaintiffs had no present rights to possess the properties and, thus, their notices to quit were void ab initio. The defendants reason that the plaintiffs issued the notices to quit on May 15, 2012, before the bankruptcy court issued its May 18, 2012 “Order Rejecting Certain Subleases” and, thus, that the properties remained assets of the bankruptcy estate until May 18, 2012, rendering the plaintiffs’ notices to quit invalid. The plaintiffs respond by pointing to the express language of the May 18, 2012 order, which stated that the subleases were “deemed rejected, nunc pro tunc, to April 30, 2012 . . . .” The plaintiffs also point to the bankruptcy court‘s April 30, 2012 “Order Rejecting Master Lease with Getty Properties,” which explicitly rejected the master lease effective April 30, 2012. The defendants’ claim is wholly without merit. The express terms of the April 30, 2012 order unambiguously rejected the master lease as of that date, vested the plaintiffs with the present rights to possess the properties, and, thus, empowered the plaintiffs to issue valid notices to quit.
II
ADMISSION OF THE MASTER LEASE AND GREEN VALLEY SUBLEASE
The defendants next claim that the trial court improperly admitted the master lease and the Green Valley sublease into evidence. “It is well established that [t]he trial court‘s ruling on evidentiary matters will be overturned only upon a showing of a clear abuse of the court‘s discretion. . . . When reviewing a decision to
The defendants claim that the master lease should not have been admitted because it was facially incomplete—missing an attachment that specifically listed the defendants’ properties—and that a facially incomplete document raises, as a matter of law, “a genuine question . . . as to . . . the accuracy of the copy” of a document. Conn. Code Evid. § 10-2 (A). They also claim that the trial court should have sustained the defendants’ additional objections on the bases of imрroper foundation, hearsay, best evidence, and authentication. We disagree.
In its memorandum of decision, the trial court explained why it had overruled the defendants’ objections to admission of the master lease during the bench trial. After crediting the testimony of the plaintiffs’ witnesses, the trial court pointed to the fact that the defendants, in their second amended complaint for their pending action against Green Valley in the United States District Court for the District of Connecticut, admitted that they derived their possessory interests in the properties from the master lease, in essence admitting to the authenticity of the document. See footnote 13 of this opinion. The trial court also credited the plaintiffs’ other evidence, which included the certified copies of deeds to the properties, as well as the Green Valley sublease and the dealer sub-subleases, all of which contained specific references to the properties. After a detailed review of the record in the present case, and after making every reasonable presumption in favor of upholding the trial court‘s ruling, we conclude that the trial court did not abuse its discretion in admitting the master lease into evidence.
The defendants next claim that the trial court improperly admitted the Green Valley sublease into evidence over the defendants’ objections on the bases of improper foundation, competency, hearsay, best evidence, and authentication. We disagree. The plaintiffs entered the Green Valley sublease into evidence through the testimony of Kevin Shea, the executive vice president of Getty Realty Corporation, Getty Properties’ parent company. Shea testified to his familiarity with the Green Valley sublease, explaining that Green Valley had supplied it to him during negotiations and discussions that took place during Getty Marketing‘s bankruptcy proceeding. The plaintiffs аlso presented the testimony of David Driscoll, the president and chief executive officer of Getty Realty Corporation, who testi-
III
TERMINATION OF THE MASTER LEASE
The defendants next claim that the trial court improperly interpreted the various pleadings and orders in Getty Marketing‘s bankruptcy case as terminating the master lease and the Green Valley sublease. Specifically, the defendants claim that the trial court should have interpreted the rejection of the master lease as a voluntary surrender, thus preserving the rights of any subtenants pursuant to Bargain Mart, Inc. v. Lipkis, 212 Conn. 120, 561 A.2d 1365 (1989). The plaintiffs respond that, instead of preserving the rights of any subtenants, Bargain Mart, Inc., instead supports the trial court‘s finding that the master lease and subleases had terminated, which thereby terminated the rights of any subtenants.15 We agree with the plaintiffs.
We begin with the standard of review. “Summary process is a special statutory procedure designed to provide an expeditious remedy. . . . It enable[s] landlords to obtain possession of leased premises without suffering the delay, loss and expense to which, under the common-law actions, they might be subjected by tenants wrongfully holding over their terms. . . . Summary process statutes secure a prompt hearing and final determination. . . . Therefore, the statutes relating to summary process must be narrowly construed and strictly followed.” (Internal quotation marks omitted.) Waterbury Twin, LLC v. Renal Treatment Centers-Northeast, Inc., 292 Conn. 459, 466, 974 A.2d 626 (2009).
In reviewing the trial court‘s decision that the master lease and the Green Valley sublease had terminated, “[o]n appeal, it is the function of this court to determine whether the decision of the trial court is clearly erroneous. . . . This involves a two part function: where the legal conclusions of the court are challenged, we must determine whether they are legally and logically correct and whether they find support in the facts set out in the memorandum of decision; where the factual basis of the court‘s decision is challenged we must determine whether the facts set out in the memorandum of decision are supported by the evidence or whether, in light
The defendants’ claim that they retain their rights as sub-subtenants fails if any of the leases—the master lease, the Green Vallеy sublease, or the dealer sub-subleases—has terminated. The trial court found that the dealer sub-subleases had terminated, in accordance with their terms,16 upon rejection of the master lease in bankruptcy, or upon termination of the master lease and the Green Valley sublease due to the nonpayment of rent by Getty Marketing and Green Valley.
“Service of a valid notice to quit, which terminates the lease and creates a tenancy at sufferance . . . is a condition precedent to a summary process action . . . .” (Citation omitted; internal quotation marks omitted.) Waterbury Twin, LLC v. Renal Treatment Centers-Northeast, Inc., supra, 292 Conn. 466. “It is well settled that breach of a covenant to pay rent does not automatically result in the termination of a lease . . . rather, it gives the lessor a right to terminate the lease which he may or may not exercise. . . . In order to effect a termination, the lessor must perform some unequivocal act which clearly demonstrates his intent to terminate the lease. . . . [T]here is almost no limit to the possible words or deeds which might constitute the unequivocal act necessary to terminate the lease . . . .” (Citation omitted; internal quotation marks omitted.) Id., 472 n.17. Whether there has been a termination or voluntary surrender of a lease ” ‘is to be determined by the intention of the parties, and thus, it is usually a question of fact for the [trier].’ ” Bargain Mart, Inc. v. Lipkis, supra, 212 Conn. 129, quoting 49 Am. Jur. 2d 1052, Landlord and Tenant § 1095 (1970).
In Bargain Mart, Inc., this court discussed the rights of subtenants under applicable landlord-tenant law: ” ‘A voluntary surrender by a principal lessee to a principal lessor, effected in a manner contrary to the provision of termination in the lease, does not affect the rights of a tenant acquired under a sublease which the lessor had authority to make. . . . Every surrender by a principal lessee is voluntary, unless the lessor enforces the right of termination in accordance with the reservation of his lease.’ ” (Citation omitted.) Bargain Mart, Inc. v. Lipkis, supra, 212 Conn. 126-27, quoting Golde Clothes Shop, Inc. v. Silver, 95 Conn. 678, 685-86, 112 A. 264 (1921). “[T]he determination of whether a rejection of a lease in bankruptcy operates as a ‘termination’ or ‘voluntary surrender’ will be tied to the particular circumstances of each case.” Bargain Mart, Inc. v. Lipkis, supra, 133.
Although we noted in Bargain Mart, Inc., that a voluntary surrender of a lease would not affect the rights of a subtenant, we also noted that “unless the
Bargain Mart, Inc. involved a series of leases and subleases similar to the leases in the present case.17 In Bargain Mart, Inc., the primary lessor leased the premises to the primary tenant, who then sublet the premises to the subtenant. Bargain Mart, Inc. v. Lipkis, supra, 212 Conn. 121. The subtenant sub-sublet the premises to the sub-subtenant. Id., 121-22. Soon thereafter, the subtenant filed for bankruptcy and rejected its sublease with the primary tenant. Id., 122. After rejection of the sublease in bankruptcy, the primary lessor issued various notices to quit to the primary tenant, who contested the validity of the notices to quit in the subsequent summary process action. Id. Before the trial court could adjudicate the validity of the notices to quit, the primary lessor and the primary tenant settled the summary process action by stipulated judgment. Id., 123. The primary lessor then attempted to evict the sub-subtenant, claiming that it had no right to possession of the premises because the primary lease and the sublease had terminated. Id., 125. The sub-subtenant claimed rights to the premises under its sub-sublease, despite alleged terminations of the sublease in the subtenant‘s bankruptcy and the рrimary lease in the summary process action. Id.
In Bargain Mart, Inc., with respect to termination of the sublease, the record revealed no evidence, other than the fact that the subtenant had rejected the sublease in bankruptcy, that the subtenant had defaulted or that the primary tenant had attempted to terminate the sublease pursuant to the terms of the sublease. Id., 131-33. After rejection of the sublease in the subtenant‘s bankruptcy, and for a period of five years, the sub-subtenant paid rent to the primary tenant and, later, paid rent directly to the primary lessor. Id., 124. The trial court concluded that the subtenant had voluntarily surrendered the sublease, which this court affirmed as not clearly erroneous on the basis of two operative facts: (1) there was no evidence that the subtenant had defaulted on the obligations imposed by the sublease and, therefore, the primary tenant could not have terminated the sublease pursuant to the terms of that lease; and (2) the pоstrejection conduct of the primary lessor and the primary tenant—in particular, their acceptance
Turning to the facts in the present case, we first look to whether rejection of the master lease in Getty Marketing‘s bаnkruptcy effected its termination. Unlike in Bargain Mart, Inc., in which there was no evidence of the subtenant‘s default prior to the subtenant‘s rejection of the sublease in bankruptcy, the record in the present case is replete with evidence of Getty Marketing‘s material monetary defaults under the terms of the master lease prior to its rejection of the master lease in bankruptcy. Accordingly, Getty Properties was well within its rights to terminate the master lease pursuant to the master lease‘s express terms, which it attempted to do multiple times with multiple notices to quit. Though Getty Properties was unsuccessful in terminating the master lease, at first, because Getty Marketing obtained injunctive relief from the New York state court and, later, because Getty Marketing filed for bankruptcy, the trial court‘s finding that the bankruptcy court‘s order dated April 2, 2012 effected a termination of the master lease pursuant to the master lease‘s terms and on the basis of Getty Marketing‘s material monetary defaults was not clearly erroneous.
Moreover, unlike in Bargain Mart, Inc., the plaintiffs’ and Getty Marketing‘s postrejection conduct did not evince an intent to treat rejection of the master lease as a voluntary surrender. In Bargain Mart, Inc., the primary tenant, and later the primary lessor, accepted rent from the sub-subtenant for years after rejection of the sublease in bankruptcy. Id., 124. In the present case, postrejection, the plaintiffs immediately rejected the defendants’ “rent” checks and explicitly eschewed the defendants’ “proposed arrangement” to remain sub-subtenants.
Given the parties’ prerejection defaults and postrejection conduct,18 and because “the determination of whether a rejection of a lease in bankruptcy operates as a ‘termination’ or ‘voluntary surrender’ will be tied to the particular circumstances of each case“; Bargain Mart, Inc. v. Lipkis, supra, 212 Conn. 133; we conclude that the trial court‘s finding that the rejection of the master lease in bankruptcy had been a termination was
IV
PRIMA FACIE SUMMARY PROCESS
The defendants next claim that the plaintiffs did not satisfy their burden of persuasion in proving a prima facie case for summary process. Specifically, the defendants claim that the plaintiffs failed to prove: (1) each link in the properties’ chain of possession from the plaintiffs to the defendants; and (2) termination of the master lease. We disagree and address each of these claims in turn, having already set forth the standard of review in part III of this opinion. See id., 129-30.
The defendants first claim that the master lease and the Green Valley sublease should not have been admitted into evidence and that, even if the leases had been properly admitted, the trial court should not have given them any weight. The defendants claim that, without these leases, the plaintiffs cannot prove each link in the properties’ chain of possession from the plaintiffs to the defendants. We disagree. In light of our conclusion with respect to the defendants’ evidentiary claims, as set forth in part II of this opinion, and after careful review of the record, the trial court properly concluded that the plaintiffs satisfied their burden of proof that they are the owners and lessors of the properties.
The defendants next claim that the plaintiffs failed to prove termination of the master lease—and thus that the defendants were not entitled to possess the properties—because: (1) there was no proof of an underlying default by Getty Marketing; (2) there was no proof that Getty Properties issued a notice of default to Getty Marketing; and (3) there was no proof that the plaintiffs successfully litigated, to conclusion, the many lawsuits that could have caused termination of the master lease. We disagree. As discussed previously in part III of this opinion, the record is replete with evidence of Getty Marketing‘s various defaults, as well as evidence sufficient to support the trial court‘s finding that the master lease had terminated. See footnote 3 of this opinion. Accordingly, we agree with the trial court‘s conclusion that the plaintiffs established a prima facie case for summary process.
V
PETROLEUM MARKETING PRACTICES ACT
The judgments are affirmed.
In this opinion the other justices concurred.