Dawn O'Dell v. North Cove Outfitters (2011)

MEMORANDUM OF DECISION

I

Findings of Fact

After trial of this summary process action involving commercial premises at which both parties presented testimony and evidence, the court finds the following facts by a preponderance of the evidence:

December 6, 1991:  Plaintiff as lessor and defendant as lessee enter into a written lease regarding the premises located at 75 Main Street in Old Saybrook, Connecticut, to be used as a sporting goods store, which defendant actually began operating in 1987.   The lease provided for an initial ten-year term and defendant held over upon expiration of the lease.

May 14, 2003:  The parties enter into a Lease Modification regarding the premises with an expiration date of September 30, 2012.

March 1, 2010:  The parties enter into a Lease Modification that altered the monthly rental payments, but did not affect the September 30, 2012 expiration date.

March 2010:  The lower floor of the premises was affected by serious flooding which did not abate for several months.   This flooding caused damage to defendant's merchandise and rendered a substantial portion of the premises unusable.   The flooding prompted a dispute between the parties over their relative responsibility for the damage to merchandise and loss of use of the premises.

September 2010:  On the advice of prior counsel, defendant withheld its September 2010 rent payment.   Defendant did not make any payments to plaintiff in October or November 2010.

October 15, 2010:  Plaintiff served defendant with a Notice to Quit. October 19, 2010:  Defendant filed a civil action against plaintiff seeking damages stemming from the spring flooding.   The action remains pending.

October 29, 2010:  Plaintiff commenced this summary process action.

November 11, 2010:  Defendant filed a Motion seeking to make use and occupancy payments to the court.   This Motion is denied by Judge Holzberg on November 29, 2010.

December 2010:  Defendant paid all past due amounts to plaintiff.

January 11, 2011:  Trial was held before the court.

II

Discussion of Law

Plaintiff seeks possession of the premises on the ground that defendant breached the lease by failing to pay rent.  “In a summary process action based on breach of lease, the landlord must prove, by a fair preponderance of the evidence, all the elements of the case.   The essential elements are:  (1) on or about a certain date, the landlord and the tenant entered into an oral or written, lease/rental agreement for a weekly/monthly/yearly term for use and occupancy of a certain premises;  (2) the tenant agreed to [make payments] by a certain date;  (3) the tenant took possession of the premises pursuant to the lease;  (4) the tenant breached the lease;  (5) the landlord caused a proper notice to quit possession to be served on the tenant to vacate the premises on or before a certain termination date;  and (6) although the time given in the notice to quit possession of the premises has passed, the tenant remains in possession of the premises.   See § 47a–23(a)(l)(C).”  T.J.L., LLC v. Kelly, Docket No. HDSP–136536, Judicial District of Hartford–Housing Session (Jan. 2, 2007, Bentivegna, J.).

Plaintiff in this case have proven each and every element of her claim by a fair preponderance of the evidence:  1) A lease existed between the parties;  2) Pursuant to the lease, defendant agreed to pay rent;  3) Defendant took possession of the premises;  4) Defendant's failure to pay the rent in a timely fashion constituted a breach of the lease;  5) Plaintiff served defendant with a proper Notice to Quit;  and 6) Defendant remains in possession of the premises, the time set forth in the Notice to Quit having long since expired.

This is not the end of the court's inquiry, however, as “equitable defenses and counterclaims implicating the right to possession are available in a summary process proceeding.”  Fellows v. Martin, 217 Conn. 57, 62 (1991).   Defendant asserts three special defenses, the first of which claims that the doctrine of equitable nonforfeiture bars plaintiff from prevailing in her attempt to regain possession of the premises.  “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.”  19 Perry Street, LLC v. Unionville Water Company, 294 Conn. 611, 630 (2010) citing Cumberland Farms, Inc. v. Dairy Mart, Inc., 225 Conn. 771, 777 (1993).

As relates to the first element of defendant's equitable nonforfeiture claim, the evidence in this case supports the conclusion that defendant's failure to pay the rent was not “wilful or grossly negligent,” but rather constituted “mere neglect” as it was apparently based on the advice of prior counsel that abatement of rent was permitted under § 25 of the parties' lease.   While there is some question regarding the quality of that advice and whether the actual motive for withholding the rent was a misguided attempt to get leverage for a lease extension, clearly defendant was acting on counsel's advice, making the error “more akin to a mistake of law, rather than the type of wilfulness that would preclude equitable relief.”  19 Perry Street, LLC, supra, 631.   In a similar instance, a court found that a tenant's withholding of rent in the mistaken belief that she was entitled to do so because of a dispute with the landlord over parking was not wilful.  Fellows, supra, 68.   A thirty-one-month gap in making rental payments was found to be mere neglect where the tenant relied on an erroneous interpretation of the parties' lease.  19 Perry Street, LLC, supra, 633–34.  “[M]ere neglect does not bar the defendant from equitable relief, when the delay has been slight, the loss to the lessor small, and when not to grant relief would result in such hardship to the tenant as to make it unconscionable to enforce literally the condition precedent of the lease.”  Id., 631.   In this case, defendant's reliance on its attorney's advice, however flawed it might have been, cannot be viewed as willful or grossly negligent but is rather due to mere neglect, which will not bar defendant's equitable nonforfeiture claim as the delay was relatively slight and the loss to plaintiff small, if even measurable.

In order to prevail on the second element of its equitable nonforfeiture defense, defendant must show that its potential loss is wholly disproportionate to plaintiff's injury.   There is little to speak of regarding plaintiff's injury, as she was made whole within a matter of a few months.   While there was no evidence presented a trial regarding the actual costs that would be attendant to defendant relocating, it is logical that relocation would involve a significant outlay of capital, particularly in view of the fact that defendant has operated its retail establishment out of the premises since 1987.   As a result, the court concludes that defendants' potential loss in relocating significantly outweighs the loss, if any, that plaintiff has suffered due to defendant's breach.

The determination the court must make on final element of defendant's equitable nonforfeiture defense is whether plaintiff's injury is reparable.   In 19 Perry Street, supra, the court found that the tenant's promise that it would pay the $60,000.00 in unpaid rent served to satisfy this prong of the test.   In this case, defendant's satisfaction of this prong of the test is even clearer as defendant has already paid the sums due to plaintiff.

III

Conclusion

The court finds that permitting plaintiff to recover possession of the premises under these circumstances would constitute a forfeiture in violation of the principles of equity.   As a result, judgment shall enter in favor of defendant.

James w. Abrams, Judge

Abrams, James W., J.