New Breed Logistics Inc. v. CT INDY NH TT LLC (2011)

MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT # 107, 114

FACTUAL AND PROCEDURAL BACKGROUND

The plaintiff, New Breed Logistics, Inc. (“New Breed”) has filed a verified complaint dated July 31, 2008 and thereafter an amended verified complaint dated August 18, 2008 naming as defendants CT INDY NH TT, LLC (“CT INDY”) and Bozzuto's, Inc. In July 2006, PREI, the predecessor in interest to CT INDY was the owner of property at 300 Montowese Avenue in North Haven, Connecticut.   The property contains three separate buildings, referred to as the Grocery Building, the Produce Building and the Transportation Building.   On July 6, 2006, the plaintiff, New Breed entered into a commercial lease with PREI for a portion of the Grocery Building.   The original lease agreement includes an option for lease of the grocery expansion and the produce expansion option (Sections 33 and 34), as well as the right of first offer for the grocery expansion option or the produce expansion option.  (Section 37.)   In September 2006, the plaintiff exercised its option to lease the remaining portion of the Grocery Building pursuant to Section 33 of the Lease Agreement.   The first amended lease set forth the terms in relation to the Grocery Expansion.   Section 8 of the first amendment to the lease agreement included a new provision for the option to lease the Transportation Building.   On January 5, 2007, the defendant entered into a second amendment to the lease agreement which extended the term of the lease for the Grocery Building but also extended the dates for the options related to the Produce Expansion and the Transportation Building.   Thereafter, on July 28, 2008, the parties entered into a third amendment to the lease agreement that provided for the lease of the Transportation Building.   The third amendment was initiated after the plaintiff became aware that the co-defendant, Bozzuto's, was negotiating to lease that building.   At some time thereafter, the plaintiff became aware of an agreement to lease the Produce Building to Bozzuto's.   The plaintiff filed this action as a verified complaint in response to the lease of the Produce Building contending that it has the right of first offer and that the defendant's failed to comply with the right of first offer provision contained in each of the lease agreements.

The amended verified complaint consists of six counts.   The first and second counts address the claims for a temporary and permanent injunction as well as a declaratory judgment against both CT INDY and Bozzuto's.   The remaining counts name CT INDY only and allege specific performance (third count), breach of contract (fourth count), breach of implied covenant of good faith and fair dealing (fifth count) and violations of Connecticut Unfair Trade Practices Act (sixth count).

The defendant, CT INDY, submitted a motion with supporting memorandum for summary judgment dated August 14, 2008 and a supplemental memorandum dated October 16, 2008 as to each count in the complaint.   The plaintiff filed a Memorandum in Opposition to the motion for summary judgment dated November 11, 2008.   Thereafter, the parties did not request argument or claim the motion to be heard.   On January 28, 2010 the case was assigned to the complex litigation docket.   The defendant filed a reply memorandum dated August 2, 2010.   On October 1, 2010, the defendant filed a request for adjudication of the motion for summary judgment.   The motion was assigned for argument on October 18, 2010 when the parties appeared and argued in support of their positions.

DISCUSSION

“Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party ․ The party moving for summary judgment has the burden of showing the absence of any genuine issues of material fact and that the party is, therefore, entitled to judgment as a matter of law.”  (Internal quotation marks omitted.)  Cogan v. Chase Manhattan Auto Financial Corp., 276 Conn. 1, 6, 882 A.2d 597 (2005).

A. LEASE AGREEMENTS

The defendant's motion presents “a question of contract interpretation because a lease is a contract, and therefore, it is subject to the same rules of construction as other contracts.”  (Internal quotation marks omitted.)  19 Perry Street.   LLC, v. Unionville Water Co., 294 Conn. 611, 622, 987 A.2d 1009 (2010), Bristol v. Ocean State Jobs Lot Stores of Connecticut, Inc., 284 Conn. 1, 7, 931 A.2d 837 (2007).

“[A] contract must be construed to effectuate the intent of the parties, which is determined from the language used, interpreted in the light of the situation of the parties and the circumstances connected with the transaction ․ [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and ․ the language must be afforded its common, natural and ordinary meaning and usage where it can be sensible applied to the subject matter of the contract ․ Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its term.”  (Internal quotation marks omitted.)  PSE Consulting, Inc. v. Frank Mercede and Sons, Inc., 267 Conn. 279, 290, 838 A.2d 135 (2004).

The defendant has filed this summary judgment motion contending that none of the plaintiff's claims can survive.   The defendant argues that the provisions of the leases unambiguously provide that:  1) the plaintiff was not entitled to the right of first offer in respect to the produce building;  2) that the plaintiff is not entitled to the lease of the omitted transportation space;  and 3) that the landlord and Bozzuto's are entitled to entry into the area they describe as the utilities room in the transportation building.   The defendant relies upon the arguments that without a finding of a breach of contract the plaintiff cannot satisfy the legal requirements to find liability as to the remaining counts in the amended verified complaint.

The defendant contends that none of the provisions within the leases that refer to the produce building provide an option for the plaintiff to now lease the Produce Building.   The defendant further argues that the option of a right of first offer to the plaintiff in regard to the produce building set forth in Section 34 does not apply.   The defendant contends that the interpretation of Section 37 of the Lease agreement permitted the right of first offer only if there was no exercise of options in accordance with Section 33 and 34.   The defendant argues that exercising the option for the grocery building negates any provision in Section 37 for a right of first offer.   Section 37 provides:  “In the event the tenant does not exercise either the Grocery Expansion Option or the Produce Expansion Option in accordance with Sections 33 and 34 herein, as the case may be, then provided that the Tenant is not in default under the term of this Lease beyond any applicable cure period, Tenant shall have a one-time right of first offer (the “Right of First Offer”) to lease the remaining space of the Grocery Building or Produce Building, as the case may be ․” The defendant contends this language clearly demonstrates that the provision permitted the right to apply to only one building and only if the plaintiff failed to exercise any option as to the Grocery or Produce Buildings.   Because the plaintiff exercised the option as to the Grocery Building in accordance with the language of the lease agreement the defendant argues the language clearly demonstrates that the plaintiff was not entitled to a right of first offer for the Produce Building, and, as such, they rightfully leased this building to Bozzuto's.¹  The defendant essentially argues that the language is not ambiguous as to this interpretation.   Not surprisingly, the plaintiff argues that the language of the lease requires a right of first offer for the Produce Expansion Building and does not restrict this right once an option is exercised for one building, that is, the Grocery building or the Produce Building.   In support of this argument the plaintiff points to the language contained in Section 37 which states “as the case may be.”   In particular, the plaintiff contends that this language created a right of first offer for the Produce Building in the event New Breed did not exercise its option pursuant to the lease agreement for the Produce Building.   The plaintiff contends that the right of first offer was a second bite at the apple for the plaintiff in the event that it did not exercise its options under either Section 33 or 34.   In addition, the plaintiff relies upon the extension of the right of first offer to the transportation building as further support that the right was not restricted in its application in a situation where no options were exercised in accordance with Section 33, 34 and the first amendment, Section 8(i).

In construing a written lease which constitutes a written contract, three elementary principles must be kept constantly in mind:  “1) the intention of the parties is controlling and must be gathered from the language of the lease in 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 in such a manner as to give effect to every provision if reasonably possible.”  (Internal quotation marks omitted.)  Peter-Michael Inc. v. Sea Shell Associates, 244 Conn. 269, 275, 709 A.2d 558 (1998), Fiorelli v. Gorsky, 120 Conn.App. 298, 309, 991 A.2d 1105 (2010).

As to the first principle, the lease and the conduct of the parties as they executed the lease agreements for the first, second and third amendments provides illumination as to the intention of the parties.   The original agreement did not involve the instant defendant.   The original lease agreement and the first amendment to the lease were negotiated by PREI, the predecessor in interest of the defendant.   The original lease agreement clearly establishes two separate options which would enable the plaintiff to lease not only the grocery building but any grocery extension as well as the produce building.   The defendant, CT INDY, became actively involved in the property beginning with the second amendment to the lease agreement.   CT INDY negotiated both the second and third amendments to the lease agreement.   CT INDY was the party who entered into the agreements with Bozzuto's.   However, this defendant did not amend the second or third lease agreements to remove what they now basically characterize as a non-operating provision of the lease agreements.   Although the defendants argue that it is clear that exercising of the option on one building precludes completely the right of first offer for the remaining building, a complete reading of the language utilized and the conduct of the parties does not definitively support the defendant's interpretation.   Both the second amended lease agreement and the third amended lease agreement contain language that continues to recognize the right of first offer for the Produce Building although the defendant's position is that this clearly was not an option.   This is especially significant when the circumstances at the time of these amendments clearly demonstrates that of the two buildings, the only remaining building for purposes of Section 37 was the Produce Building.   The new owners, CT INDY, entered into contractual agreements which included the specific right of first offer.²  Not only was there a right of first offer for the Produce Building but New Breed entered into further amendments which included and referred to Section 37 for a right of first offer to the plaintiff for the transportation building (Section 8(i), First Amendment to the Lease Agreement) Our courts have said that:  “In construing contracts, we give effect to all the language included therein, as the law of contract interpretation ․ militates against interpreting a contract in a way that renders a provision superfluous.”  Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 14, 938 A.2d 576 (2008).

If the defendant's interpretation is to be accepted then the court must ignore the language and the intent of Section 37 which continued to be a viable provision based upon Section 12 of the first amended agreement and Section 8(b) of the second amended agreement which provide:  “Except as expressly set forth herein, the Lease is unmodified and in full force and effect.”   Even after there were questions as to the options, the parties entered into a third amendment to the lease agreement on July 28, 2008 which set forth the terms for the option to the Transportation Building.   This third amendment did not eliminate the right of first offer for the Produce Building although the option period had long passed.   Additionally, the third amendment specifically noted changes to the prior agreements in Section 7 but did not recognize the elimination of the right of first offer to the plaintiff.   Section 10 of the third amendment again stated:  “Except as amended herein, the Lease, shall remain in full force and effect and the parties hereto ratify and reconfirm the Lease.”   The continuous conduct of the defendant in renewing and recognizing the provisions for the right to the Produce Building speaks volumes as to the intent of the parties.   Despite all the changes and the continual expansion to lease each property in the complex at 300 Montowese Avenue, the defendant asks the court to interpret the provision so as to not recognize any right of first offer to the very plaintiff that continually expands its occupancy of the buildings in the complex.

Although the defendant focuses on the term either or to support its position that the right does not exist, the court is not bound to view the words in a vacuum.   The language must be given its ordinary meaning and thus the court views not just the words either or but considers the language that states “as the case may be.”   The court in construing the contract, must view the lease as a whole so as to give effect to every provision that is reasonably possible.   Peter-Michael, Inc. v. Sea Shell Associates, supra, 244 Conn. 275.   Therefore, the court views the lease agreement as a whole.   Section 37 utilizes the language “as the case may be” in conjunction with the recognition of the either or language which does not unambiguously provide only one option.   This language and the defendant's inclusion of the same provision in the agreement to lease the Transportation Building lends credence to the plaintiff's interpretation.   Lastly, the defendant's position regarding the non-applicability of this section is not consistent in viewing the document as a whole and giving effect to each provision.   The argument that the provision provides no rights is not supported by the continued inclusion of the very same provision in the amended documents or the behavior of the parties in relation to a right of first offer.

TRANSPORTATION BUILDING

The defendant also argues in its memorandum for summary judgment that there is no issue as to the actual Transportation Building space which should be leased to New Breed in accordance with the Third Amendment to the Lease.   The defendant contends that the plaintiff is simply looking for better terms after they agreed to lease terms.   The defendant continues to argue that the lease agreement clearly defines the parameters of the leased facilities.   The plaintiff denies this contention.   The plaintiff contends that the space to be leased should have included what is now termed as the omitted transportation space.   The plaintiff argues that in accordance with the provision that gives it the right of first offer it is entitled to receive the same terms for lease of the Transportation Building as was offered to the co-defendant in this action.   This includes not only the space to be leased but also the same terms for rent and any other rental terms.   In particular, the right of first offer provides that the “Tenant shall have a one-time right of first offer (the “Transportation Building Right of First Offer”) to lease the Transportation Building Expansion Space in accordance with the terms, conditions and requirements applicable to the Right of First Offer set forth in paragraph 37 of the Lease.”   Paragraph 37 provides in relevant part:  “In the event that Landlord anticipates that all or any portion of the First Offer Space may become available during the Term, Landlord shall give Tenant written notice of the availability of all or such portion of the First Offer Space, as the case may be (the “Offered Space”), setting forth the terms and conditions (including without limitation, the rental rate and the duration of the proposed term, etc.) upon which Landlord would be willing to lease the Offered Space ․” The parties have completely different interpretations of this provision.   As to the Transportation Building, the plaintiff argues that in accordance with the right of first offer they are not only entitled to the option to lease the complete transportation building but the terms should be the same as those offered to the codefendant, Bozzuto.   In this regard, the plaintiff contends that it is not solely the monetary provisions of the lease but it is also entitled to the same space that was to be part of the lease.   In other words if the agreement with Bozzuto's included the omitted transportation space then that too should have been offered to them as part of the lease they entered into.   The defendant states that this is contrary to the law, and that the lease agreement with New Breed controls the specific option they are entitled to.   The court does not agree with the defendants that the right of first offer does not obligate them to offer the same terms.   In Briggs v. Silvestri, 49 Conn.App. 297, 714 A.2d 56 (1998), the court addressed this issue.   The court stated that case law holds that “a right of first refusal ․ [is] conditioned on the occurrence of two events:  [the property owner's desire to sell the property, and [his] receipt of an acceptable offer from a bona fide purchaser.”  Smith v. Hevro Realty Corp., 199 Conn. 330, 335, 507 A.2d 980 (1986).   This right merely requires the property owner, ‘before it [sells] the [property] to some third party, to offer it to [the holder of the right] on the same terms it [is] willing to accept from the third party.”  Id., 336, Briggs v. Silvestri, supra.  49 Conn.App. 302.   The court went on to recognize that what is required is that property owner must provide a letter of notice to the holder not just that there is an offer but that sets out the terms of the proposed transaction and tender the property to the holder on the same terms.   Therefore, the defendant had an obligation not only to offer the plaintiff the right of first offer but to do so with whatever terms were offered to Bozzuto's, if there were terms.   The evidence before this court leaves at issue what offer was made to the co-defendant and whether there were different terms that creates a genuine issue.

Putting aside the consistency with the offer to Bozzuto's, the lease agreement that was entered into with the defendant for the Transportation Building provides insufficient information to specifically delineate the area considered the Transportation Building.   In particular, the defendant argues that the leased area does not include an additional area they refer to as the omitted transportation area.   The documents submitted with the various lease agreements refer to the Transportation Building.   The lease agreements contain exhibits which consist of a variety of drawings of the Transportation Building and referred to in the specific agreement.   The court has reviewed the written description of the transportation area, as well as the various descriptions in the leases.   A review of the various discussions of the Transportation Building makes it anything but clear as to what property is subjected to the lease agreements.   The exhibit attached to the First Amendment to the Lease Agreement presents the same parcel with different notations but no specific delineation as to what is the leased area.³  The description of the Transportation Building in the First Amendment to the Lease Agreement states:  “The term “Transportation Building” as used in the First Amendment shall mean the building located at 300 Montowese Avenue, North Haven, Connecticut, and commonly known as the “Transportation Building” at the North Haven Distribution Center.”   It further refers to Exhibit A and Exhibit B attached as the Transportation Building.   The attachment referred to as Exhibit A circles two areas in a drawing which offers nothing to define with any particularity what is included within Exhibit A. There are no dimensions, no description of the building other than an approximate square feet, and no designation of the building location within the parcel where it is located.   Further Exhibit B does not denote any building dimensions and creates further confusion as to what is included with the Transportation Building.   There are no dimensions and no indication that the building includes even a utility area.   Additionally, it is unclear as to whether the lease space offered to the plaintiff was the same area that was offered to Bozzuto's.   With the questions as to the building and the terms, there is a genuine issue of fact which precludes a summary judgment.

ACCESS TO THE “UTILITY ROOM”

The last argument of the defendant is that it is entitled to enter what it describes as a “utility room” within the Transportation Building to access communications material.   The defendant contends that this room which is no larger than nine feet by seven feet should be available to them and they in turn could allow Bozzuto's access to systems within the space.   The defendant contends that in accordance with the lease Sections 2 and 24 they have the right of access to this space as a common area.   The plaintiff makes two arguments, first that the space is not a common area, as argued by the defendant, for the Produce Building in accordance with the lease and secondly, the defendant has no contractual basis which permits it to give access to this area to third parties solely because the landlord will be accompanying the third party.   The defendant has been unable to specify the location of the “utility room” nor provide the specific use(s) of the room other than the broad affidavit of Mr. Berger.   The affidavit states:  “It is my understanding that New Breed claims that CT INDY has no right to access the Utility Room, which is located in the Transportation Building.   The Utility Room serves a vital role in maintaining common area on the Property.   It is a room measuring approximately 9 feet by 7 feet.   In addition to serving a guard shack located on the Property and the Transportation Building, the equipment in the Utility Room serves the Produce Building.   This equipment consists of termination points for Produce Building telephone lines and fiber optic cables.   Any servicing of the Produce Building communications system would by necessity require access to the “Utility Room.” This affidavit does not change the terms of the any of the lease agreements.   In fact, the affidavit is based upon a false premise that the plaintiff contends CT INDY has no right of access.   The argument of the plaintiff is that Bozzuto's a tenant in another building who wants access to the “utilities” room has no right to enter.   Section 24 of the Lease Agreement provides a reservation of landlord rights that states in part:  “(e) to exclusively utilize the roofs, telephone, electrical and janitorial closets, equipment rooms, building risers and similar areas that are used by Landlord for the provision of the Building services.”   This provision gives the Landlord, CT INDY the right to enter equipment rooms for provision of Building services.   There is nothing in the agreement that permits tenants of other buildings even if accompanied by the Landlord to gain access to a building for the purpose of utilizing equipment for services to another building.   The lease agreement clearly allows the defendant to enter under the provisions of the agreement but there is no right to use their access to serve a party who is not a tenant in that building.   The defendant has not pointed to a provision that requires the plaintiff to give access to anyone other than the defendant CT INDY. Therefore, the defendant is not entitled to summary judgment as to this claim.

CONCLUSION

The motion for summary judgment is denied.   The court does not find that the lease agreements clearly permit the defendant to lease the Produce Building without a right of first offer to the plaintiff.   The language of the agreements as a whole provide a different interpretation of the provisions than the interpretation offered by the defendant in support of the motion for summary judgment.   Additionally, the claims as to the Transportation Building and the utility access leave genuine issues of fact and as such the motion is denied.   As to the remaining claims, the defendants have relied upon the argument that there is not breach of contract to support the motion for summary judgment as to these claims.   Based upon the court's denial of the summary judgment on this claim, the summary judgment is denied on all remaining claims.

THE COURT

Brazzel-Massaro, J.

FOOTNOTES

FN1. The July 7, 2006 Lease Agreement contained two separate provisions that provided options to lease the Grocery Building and the Produce Building.   Section 33 of the Lease Agreement provided the tenant could exercise the option to lease the remaining portion of the grocery building and Section 34 provided the option to lease the produce building..  FN1. The July 7, 2006 Lease Agreement contained two separate provisions that provided options to lease the Grocery Building and the Produce Building.   Section 33 of the Lease Agreement provided the tenant could exercise the option to lease the remaining portion of the grocery building and Section 34 provided the option to lease the produce building.

FN2. The plaintiff alleged in the verified amended complaint that the defendant did attempt to change the terms by proposing in the Second Amendment that the right of first offer to lease the Produce Building and Transportation Building “shall not apply to the first lease of such space entered into by Landlord named herein.”.  FN2. The plaintiff alleged in the verified amended complaint that the defendant did attempt to change the terms by proposing in the Second Amendment that the right of first offer to lease the Produce Building and Transportation Building “shall not apply to the first lease of such space entered into by Landlord named herein.”

FN3. Exhibit A appears to circle two buildings but offers no explanation.   Exhibit B is the same map with notations as to Phase I and Phase II but again offers no specific building dimensions or description..  FN3. Exhibit A appears to circle two buildings but offers no explanation.   Exhibit B is the same map with notations as to Phase I and Phase II but again offers no specific building dimensions or description.

Brazzel-Massaro, Barbara, J.