Howard–Arnold, Inc. v. T.N.T. Realty, Inc. (2012)

MEMORANDUM OF DECISION

The plaintiff seeks specific performance of an option to purchase contained in a lease agreement.   The premises in question were rented for a period of ten years commencing on April 14, 2000 and terminating April 14, 2010 (Art. 2).   The option to purchase is set forth in Article 36.   That article grants the lessee an option to purchase the leased property “during the term of the lease of the premises” under certain financial terms and conditions.   Language in the article sets forth different terms and conditions of purchase “․ in the event that Lessee and/or Guarantor elects to purchase the premises on April 14, 2010.”  (The last day of the lease.)

Another article of the lease is intrinsically related to the exercise of the option under plaintiff's theory of the case.   Article 9 of the lease is entitled “Repairs.”   In § 9.01 subsections (a) and (b) the parties agreed that:

(a) On or before October 31, 2000, LESSOR shall (i) repair the entire roof on the rear section of the Premises (i.e. the addition made to the Premises during 1969), as necessary, such that the leak in the roof will be completely fixed during the term of the Lease;  and (ii) repair the leaning walls and correct the structural deficiencies (i.e. footings, steelbeams, wall, roof, etc. as determined by a licensed engineer selected by LESSOR) in the rear addition made to the Premises during 1969;  and

(b) On or before April 30, 2001, LESSOR shall perform environmental remediation, as necessary, attributable to oil and gas leakage existing as of the Commencement Date of this Lease, including the removal of the existing underground oil storage tank, and including restoration of the Premises disturbed in connection with such environmental remediation as required by law and to substantially the same condition as existed prior to the commencement of such work.

The plaintiff brought a damage claim for the alleged failure of the defendant to comply with its obligations under Article 9. It also seeks specific performance of the option to purchase set forth in the lease.   It now argues that this failure reduces the value of its expectancy interest in exercising the option to purchase and thus the purchase price attendant on exercising the option as set forth in Article 36 should be reduced by the cost it would incur to repair the roof and leaning rear wall and perform environmental remediation.

The court will first try to analyze the nature of an option to purchase in lease agreements and then the various defenses to the plaintiff's right to exercise it in this case as raised by the defendant.

I.

The article on “Specific Performance” in 71 Am.Jur.2d sets forth the general law in this area, which Connecticut cases follow.   The Am.Jur. article at § 161, pages 168–69 states:

An option to buy or sell land, more than any other form of contract, contemplates a specific performance of its terms, and it is the right to have them specifically enforced that imparts to them their usefulness and value.   Strictly speaking, however, it is inaccurate to speak of the specific performance of an option;  an option is an agreement by which a person binds himself or herself to perform a certain act for a stipulated price within a designated time, leaving it to the discretion of the person to whom the option is given to accept it upon the terms specified, which, so long as it remains unaccepted, is a unilateral writing lacking in the mutual elements of a contract.   The remedy of specific performance can be invoked only upon the theory that the optionee has accepted the offer and the agreement has ceased to be an option and has ripened into a mutually binding and mutually enforceable contract.   It is well established that when an option which the owner of property gives to another for the purchase of such property is consummated by acceptance according to its terms within the time specified, it merges into a contract for the purchase of the property which equity will enforce by specific performance the same as any other contract wherein the requisite elements of equity jurisdiction are present.

Thus in Parkway Trailer Sales v. Woodbridge Bros., Inc., 148 Conn. 21 (1960), an attempt to enforce an option to purchase in a lease agreement was involved.   The court said “An action for specific performance of a contract to sell real estate is an equitable action and is to be determined by equitable principles,” id. page 25.  Smith v. Hevro Realty Corp., 199 Conn. 330, 336 (1986) held that “An option is a continuing offer to sell irrevocable until the expiration of the time period fixed by agreement of the parties, which creates in the option holder the power to form a binding contract by accepting the offer,” id. page 336, also see Bayer v. Showmotion, Inc., 292 Conn. 381, 414 (2009).   The binding contract is a contract to sell land.   In another option case where a lease gave the lessee an option to purchase, the court in Battalino v. Van Patten, 100 Conn.App. 155 (2007), however, said the following, quoting earlier case law:

Every complaint asking for specific performance of a contract to convey real estate is addressed to the discretion of the court, and will not be granted unless the contract is made according to the requirements of law, and is fair, equitable, reasonable, certain, mutual, on good consideration, consistent with policy and free from fraud, surprise or mistake ․ Even when a valid contract is found, however, there is no right to specific performance, but rather [t]he granting of specific performance of a contract to sell land is a remedy which rests in the broad discretion of the trial court depending on all of the facts and circumstances when viewed in light of the settled principles of equity, id. pp. 159, 160.

In this regard the court in Pack 2000, Inc. v. Cushman, 126 Conn.App. 339 (2011) said, citing Illinois case law, “because an option contract is unilateral and ‘because but one party is bound thereby and the other is not, courts will exercise their discretion with great care in determining whether such a unilateral contract has been converted into a bilateral contract,’ “ id. page 348.

How is the language in a lease giving an option to purchase to be interpreted?   Precedent does not give clear guidelines.   The court in Texaco, Inc. v. Rogow, 150 Conn. 401, 408–09 (1963) cited our law to the effect that where there is ambiguity in lease provisions the lessee is favored but then noted that “this general rule does not mean that any solution of a claimed ambiguity, if proposed by a lessee, should prevail,” id.   Rogow is cited in Powertest Corp. v. Evans, 665 F.Sup. 134 (D.Conn., 1986), apparently for the proposition “that purchase options in leases are normally inserted for the benefit of the lessee and should be interpreted in light of that purpose,” id. p. 138.   But our case law is somewhat confusing on this issue of ambiguity and interpretation of option language in a lease.   In the case of Smith v. Hevro Realty Corporation, 199 Conn. 330 (1986), the court said:  “Where there is ambiguity in the language of the agreement, option contracts are generally strictly construed against the optionee.  Pigeon v. Hathaway, 156 Conn. 175, 183 ․ (1968),” id. p. 339.

II.

(a)

The court will try to discuss specific issues raised in this case and the applicable law before turning to the facts of the case.   The question arises in these cases as to how an option to purchase is to be properly exercised.   How must an optionee, who is a lessee, notified the optioner landlord that it is exercising an option?

An excellent and lengthy discussion of options to purchase real estate is discussed in an article entitled “Enforcement of Purchase Option” in 26 COA 295.   The court will paraphrase much of the discussion in that article on the notification issue and refer to the cases the article cites.

The cases generally say the lessee's notification that it wishes to exercise the option to purchase must be unequivocal.   First, of course, the optionee must give notice of his desire to exercise the option even where the landlord had indicated the option would not be honored.   Thus in Catawba Athletics, Inc. v. Newton Car Wash, 281 S.E.2d 676 (N.C., Ct. of App.1981), the court held the option to purchase was not exercised during the time provided for in the lease.   Prior to the attempt to exercise its option but within the time for doing so under the lease the landlord indicated it would not honor the option.   The court would not grant specific performance saying:  “An optionee is not entitled to specific performance of a contract to purchase when the contract does not exist because it has not been accepted.   Thus, since, as established, plaintiff did not give proper notice of his intent to exercise the option to purchase it is immaterial whether defendant (landlord) had previously repudiated the lease and option to purchase agreement.”  Id. page 680.

But the term unequivocal also means the option must be exercised in accordance with the provisions set forth in the lease.   In Krepcik v. Tippett, 710 P.2d 606 (1985) the Idaho Court of Appeals held that acceptance of an option by the optionee must be unequivocal and a letter saying tenant wished to exercise the option and was optimistic that an “alternative plan” to that set forth in the lease to effectuate the option, could be worked out, was little more than an invitation to negotiate, id. page 611.

Similarly in Hanson v. Duffy, 435 NE.2d 1373 (App.Ct. of Ill., 1982) the court held that a tenant's claim that he properly exercised an option to purchase under a lease was not persuasive.   One reason the court found the option had not been exercised properly is that the tenant, who had obtained a loan commitment made clear he would perform the sales contract only on his conditions—payment over two years as opposed to the lease terms for payment in cash upon exercising the option.   The court held “a tender is ineffective if made on conditions which the party has no right to attach” id. page 1377—i.e. that seek to change the requirements for the exercise of the option under the lease agreement;  cf.  Joyous Holdings v. Volkswagen, 513 NYS.2d 841, 842–43 (1987).   Section 11 of the COA article states that these cases stand for the proposition that:  “By attaching new or different conditions a lessee in effect turns the purported exercise of the option into a counteroffer to purchase the leased property on the lessee's own terms,” 26 COA at page 329.

The foregoing discussion in effect says that when a lessee seeks to exercise an option to purchase provided for in a lease:  “The lessee must exercise the option in strict conformity with all conditions prescribed and not waived by the lessor,” Wolfram Partnership v. LaSalle National Bank, 765 N.E.2d 1012, 1020 (Ill.App.2001).   It should be noted, however, that the inclusion of a statement of the lessee's understanding of the existing terms of the sale does not change a valid acceptance into a counteroffer as long as the lessee does not make exercise of the option conditional on the lessor's assent to the lessee's construction of the terms (COA article, 511, page 329, cf.  Conner v. Alvarez, 328 S.E.2d 334 (S.C., 1985), a corollary of this reasoning is that an otherwise valid notification of the exercise of an option is not vitiated if the lessee calls on the lessor to perform duties he was otherwise obligated to perform, see Madison v. Marlatt, 619 P.2d 708, 715–16 (Wyo., 1980), COA article at 26 COA page 330.

But there is an added problem that is not purely linguistic in deciding whether the exercise of the option has been unequivocal—the problem of tender.   A good case to begin the discussion is Smith v. Hevro, 199 Conn. 330 (1986).   There the court said “ ‘If an option contract provides for payment of all or a portion of the purchase price in order to exercise the option, the optionee, to be entitled to a conveyance, must not only accept the offer but pay or tender the agreed amount within the prescribed time’ (Utah and Colorado law cited) ․ In such cases, a mere acceptance of the offer, even though unequivocal, is insufficient to exercise the option,” 199 Conn. at page 339.   This might be said to be an easier case since the lease explicitly provided tender must be made upon exercise of the option.

What if the language of the lease is not so explicit as to payment but just talks in terms of exercising the option in a certain timeframe?   In the previously discussed case of Hanson v. Duffy, supra, the court also said in general terms that a tenant's claim that he properly exercised an option to purchase was not persuasive for another reason because a tender of payment must be made going beyond a mere representation of readiness, willingness, and ability to perform.   The court held “a notice that an option will be exercised is not in itself legal tender ․ A party has the burden to prove that a tender of payment, to be equivalent to actual production and tender of the money, is made by one who has the present ability to make the payment,” 435 N.E.2d at page 1377.   In this difficult area, however, there is, not surprisingly, a split of authority.   See article in 26 COA 295 at page 334.   Some courts say where the lessee has an option to purchase, only notification thereof must be given and tender of payment is not necessary, see Keene Corp. v. Chapple, 716 F.2d 475, 477 (C.A.7, 1983) applying Illinois law.  (See other cases cited in the article.)   Other courts disagree holding that “where a lease agreement refers to a ‘purchase’, an option can be exercised only by tender of the purchase price not by notification to the lessor,” 26 COA page 334, citing among other cases Odyssey Glass Corp. v. Simenaur, 425 A.2d. 249 (Md., 1981).   The COA article cites Keene Corp. and Odyssey Glass as illustrating that there is even a division of authority as to which view is the majority approach—each of these conflicting cases appears to say its view represents the majority approach.   An article in 71 ALR.3d 1201 “Option—Necessity of Payment or Tender” says the “general rule” is that payment is not necessary where an option contract does not provide for payment of the purchase price at the time of, or coincident with, an optionee's exercise or attempted exercise of the option or where such contract is silent as to the time of payment ․ id. page 1205.   No Connecticut Appellate case appears to be directly on point.   But Smith v. Hevro Realty Corp., supra, does cite the 71 ALR.3d article and agrees with and quotes a Utah case to the effect that “if an option contract provides for payment of all or a portion of the purchase price in order to exercise the option, the optionee, to be entitled to a conveyance, must not only accept the offer but must tender the agreed amount within the prescribed time,” Coombs v. Ouzounian, 465 P.2d 356, 357 (1970).  Coombs cites a Colorado case, Miller v. Carmody, 384 P.2d 77 (1963) as does Smith.   The language quoted from Coombs suggests by negative inference that if the lease agreement does not specifically provide for payment of all or a portion of the purchase price upon exercise of the option, notification of exercise of the option is sufficient presumably with payment of the purchase price within a reasonable time.   Also Miller v. Carmody, supra, cited by Coombs and Smith holds Colorado follows the general rule of no necessity of tender where lease does not explicitly provide otherwise.  Miller v. Carmody also cites what is now Section 48 of 77 Am.Jur.2d, “Vendor and Purchaser” which states as a general rule that where the terms of the option just require notice of intent to exercise it without requiring tender “the payment of the purchase price is merely an incident of performance of the bilateral contract created by the exercise of the option,” id.   77 ALR.3d at page 166.   The 71 ALR.3d article offers as a reason for acceptance of this proposition (which is set forth in Williston on Contracts and the Restatement of Contracts) “to the effect that in cases of doubt it should be presumed that an offer invites acceptance by a promise of performance rather than by actual performance (as to tender, court's observation), inasmuch as a bilateral contract formed by such a promise immediately protects both parties,” 71 ALR.3d at page 1208.

(b)

Another issue that arises in this case, which the court will briefly discuss is the situation presented where it is claimed the lessor (optioner) causes delay in or otherwise prevents the exercise of an option to purchase contained in a lease.

Where an optionee, such as a tenant, does not exercise his right to exercise an option within the time period set forth in a lease the general law is:  “If an optioner who has given the right to purchase property within a specified time period does any act, or fails to perform any duty, so as to cause the optionee to delay in exercising the option within the time stated, the optionee may be excused from exercising the right within the time stated,” 17A Am.Jur.2d, “Contracts,” § 80, page 106.   See Unatin 7–up Co. v. Solomon, 39 A.2d 835, 350, Pa. 632, 636 (Pa, 1944);  Kotcher v. Edelblute, 164 N.E. 895, 250 N.Y. 178, 184 (1928).   Thus the court has previously discussed cases to the effect that an optionee is held to strict compliance with the terms of an option in order to secure specific performance but equity, after all, is involved and it has been held that:  “An optionee will be excused from strict compliance where his conduct in failing to comply was not due to willful or gross negligence on the part of the optionee but was rather the result of an honest and justifiable mistake.   In addition equity will also excuse strict compliance where the strict compliance was prevented by some act of the optionor such as or misleading representations or conduct,” Cattle Feeders, Inc. v. Jordan, 549 S.W.2d 29, 33 (Tex.Civ.App., 1977), see 17A Am.Jur.2d, “Contracts,” § 71, page 101.

The general language in a Bankruptcy Court case is interesting in this regard.  In Re Edgewater Medical Center, 373 BR 845 (Bankr.N.D.Ill., 2007), applied Illinois law and held that an “option contract, as well as all other contracts carried with it an implied covenant of ‘good faith and fair dealing,’ “ id. page 13.   The court in effect held that the optioner-lessee breached the covenant by causing the optionee tenant to fail to exercise the option to purchase.   Critical information was concealed, as to the valuation of adjacent property and the benefit to the lessee if the option was exercised, and improperly influencing and manipulating the lessee's board.   Therefore the court held failure to exercise the option within the set time would not prevent specific performance of the option because the lessor's actions excused this failure, id. pp. 13–15.   General contract law was cited to the effect that “A party who deliberately prevents the fulfillment of a condition on which his liability under a contract depends cannot take advantage of his own conduct and claim that the failure of the fulfillment of the condition defeats his liability,” Yale Dev. Co. v. Oak Park Trust & Sav. Bank, 325 N.E.2d 418, 422 (Ill.App.1975).¹

(c)

The court will discuss another subject related to options to purpose and remedies provided in the law for alleged interference with their exercise.

As discussed, in the appropriate case a court can order specific performance to enforce an option to purchase.   The question presented is whether damages can be ordered at the same time.   The usual rubric is set forth in Calamari & Perillo On Contracts, 6th Ed, § 16.18, page 569:  “Clearly, a decree for specific performance is generally inconsistent with a judgment for damages for total breach.   If the plaintiff receives the very performance bargained for (here, right to exercise option), plaintiff should not also be compensated for the value of the defendant's promise.   There are occasions, however, where the court can properly award some damages in addition to equitable relief.”   In 26 COA 295, “Enforcement of Purchase Option” at § 38, p. 413 it notes that specific performance is the “normal remedy” for a lessee's enforcement of an option but then says:  “Damages are also available as an alternative to specific performance, or in cases in which performance of the option is insufficient to render the lessee completely whole.”

The 71 Am.Jur.2d article on “Specific Performance” sets forth the theoretical basis for the foregoing position and explains it more fully at § 235 page 252.

It is not erroneous as a matter of law to award both damages and specific performance.   Other than attorney fees, a court sitting in equity may award pecuniary compensation when a decree of specific performance does not provide full and complete relief;  a court of equity may award pecuniary compensation in addition to specific performance if necessary to restore the injured party to the position but for breach.   While this pecuniary compensation is often referred to by the courts as “damages,” it should be more properly considered as equitable compensation in the nature of an accounting between the parties rather than legal damages, since the court in awarding specific performance is confirming the contract and erasing the breach.

The court could find no Connecticut appellate cases on this issue specifically related to option to purchase cases but in Cohen v. Meola, 37 Conn.Sup. 27 (1980, Borden, J.) the plaintiff lessees had a lease giving them a right of first refusal regarding the leased premises.   In addition to a decree of specific performance for violation of this right by the landlord owner the plaintiff sought and was granted monetary damages “based on the increase in the mortgage interest rate they must now pay to finance the purchase,” id. page 34.   The court cited prior case law to the effect that whether to award damages in specific performance cases “rests to a significant extent, in the exercise of the court's discretion, ‘depending upon the equities of the case and based on reason and sound judgment’ ․” Heyman v. CBS, Inc., 178 Conn. 215, 229 (1979).

Schneidau v. Manley, 131 Conn. 285 (1944) is an interesting case.   It did not involve a request for specific performance of an option to purchase.   But it was an action for specific performance and damages under an alleged agreement to convey real estate.   The court quoted from an Am.Jur. article to the effect that the “general rule is that the vendee, if he so elects, is not only entitled to have the contract specifically performed to the extent of the vendor's ability to comply therewith by requiring him to give the best title he can or convey his defective title or estate, and, at the same time have a just abatement out of the purchase price for the deficiency of title, quantity, or quality of the estate to compensate for the vendor's failure to perform the contract in full.'  “ The vendor cannot “take advantage of his own wrong, default or misdescription,” id. page 289 (if these elements of course are established) cf.  McCowen v. Pew, 18 Cal.App. 302, 321–22 (1912) (option to purchase case.)

III.

The court will try to apply the foregoing discussion of what it has determined is the law in this area to the arguments raised and the facts of this case.   It will make further reference to the case law as it becomes necessary in the opinion.   It should also be noted that the defendant has raised defenses of laches and the statute of limitations which the court will discuss later in the opinion.

(a)

The plaintiff's position is straightforward and well articulated in its first brief.   The court will quote that argument:

Plaintiff has made numerous attempts at exercising his option to purchase the property but was prevented from doing so due to the unfulfilled obligations of the defendant, as outlined above.

Notification of plaintiff's intent is evident in oral and written communications ․ It is true that the correspondence from Mr. Capobianco does not definitively state he has the funds ready to deliver to defendant and seeks to schedule a closing date.   This is due to the fact that throughout the Lease term there remained unresolved obstacles to closing.   The notice to plaintiff would often take the form of a re-negotiation of the terms based on defendant's refusal to comply with the Lease.

It would be anything but prudent for plaintiff to simply tender payment of the purchase price to defendant prior to full compliance of these material terms of the Lease.   If he had, plaintiff would have inherited a $30,000 to $45,000 environmental remediation bill, and a $45,982.00 bill to replace the roof, install the expansion joint and repair the leaning wall (Plaintiff's Exhibit 10).   Plaintiff made certain that these costs were borne by defendant and bargained for in the Lease.   The plaintiff is entitled to the benefit of the bargain.

Moreover, a careful reading of Article 36 does not require that lessee provide lessor with any particular type of notice that he is exercising the option.

Notwithstanding the foregoing, any claim that plaintiff ineffectively exercised his option is defeated once plaintiff's council unequivocally and in no uncertain terms notified defendant's attorney, in writing (on 6/7/07), of his election to exercise the option ․

In a “Law and Argument” section the plaintiff goes on to argue that “equity will prevent a lessor from benefitting from its unexcused and material breach of its contractual obligations to a lessee,” a heading followed by citation to case law.

Thus according to the argument “the court must remain cognizant that defendant imposed serious obstacles for plaintiff by its various breaches and prevented plaintiff from exercising its option.   One must operate from a presumption that plaintiff has effectively exercised the option and tendered payment.”   Thus the defendant's action deprived the plaintiff of the benefit of the bargain reflected in the lease.

(b)

Certain problems are raised for the plaintiff's position, at least in the court's opinion by simply reading the lease and trying to ascertain its meaning with regard to the option to purchase.

The court has examined the lease and the correspondence between the parties prior to the initiation of litigation.   Much time, effort, and testimony was presented by both parties regarding the lessor's obligations under Article 9 of the lease regarding repair of the rear roof and rear leaning wall and environmental remediation.   As noted, how these obligations are related to the option to purchase, whether it was exercised, and whether it had to be exercised within the timeframe set forth in the lease present, to the court at least, difficult questions given the language of the lease.

The term of the lease ran from April 14, 2000 to April 14, 2010.   The lessor's Article 9 obligations explicitly state that roof and leaning wall repairs must be completed by October 31, 2000—six and a half months after the commencement of the lease and environmental remediation is to take place by April 30, 2001 a little over a year after the lease term began.   But the option to purchase set forth in Article 36 states the option can be exercised at any time “during the term of the lease”—i.e. from the commencement of the lease on April 14, 2000—months before the repairs had to be done and over a year before environmental obligations had to be met.   Yet the purchase terms of the option take no account of and do not in any way refer to the lessor's obligations under Article 9, by for example providing for a reduced price if the option were to be exercised before one or both of the Article 9 obligations were to be performed.   An odd situation if the Article 9 obligations were central to the benefit of the bargain considerations as regards the option.   This is, after all, a thirty-two-page lease between sophisticated parties represented by able lawyers.

In this regard the Right of First Refusal set forth in Article 4 of the lease is also interesting.   In § 4.01(a) the lessor, at any time during the lease, can offer to sell to the lessee what the lessor believes is the fair market value of the property.   The lessee can then agree to accept the offer or deliver a counter proposal.

In subsection (b) it says that if neither party has accepted the other's proposal, the lessor can offer to sell the property to another for the same price the lessee rejected.   However, should the price be less than that rejected by the lessee, the lessee can match any bona fide offer upon the same terms as offered by the third party.

Vis a vis the respective parties to the lease contract, they can take into account in their offer and counter-offer whether the lessor's Article 9 obligations had yet accrued or whether, having accrued, they had not been met.   But if no agreement between lessor and lessee can be reached the right of first refusal becomes operative and if the lessor negotiates a price with a third party less than that originally rejected by the lessee, the lessee has the right to match the lesser price offered by the third party.   Any Article 9 obligations do not appear to be factored into the terms of the first refusal article and this would be consistent with the previous discussion concerning the terms of the option to purchase.

A further confusion is raised by Article 33 of the lease.  “Section 33.02 of Article 33 provides that when the lessor refinances its existing mortgage during the term of the lease it shall perform an environmental assessment.   If the assessment reveals the existence of Hazardous Substances which are determined to have existed prior to the date of the lease, lessor and lessee agree that they shall share the cost of remediation, lessor to pay sixty (60%) percent and lessee to pay forty (40%) percent of the costs associated therewith.”

What does that mean?   If hazardous substances are found to exist on the property and are due to events prior to the lease, both sides have certain obligations remediating the condition when such conditions are brought to light upon the lessor's refinancing—but if the possibility of such contamination is suggested in a letter from a bank the lessee went to for a mortgage related to a possible purchase, a benefit of the bargain agreement becomes operative.   How does that make sense in a benefit of the bargain scenario?

Query whether, if all the foregoing is accepted as established, then whether or not the defendant met his Article 9 obligations of repair and remediation are irrelevant to the option to purchase question because they are not part of any bargained for expectation with regard to that term, and/or the failure to meet Article 9 obligations will not, for example, excuse late or ineffective assertions of rights under the option.

Another way of approaching this issue is to determine whether despite the absence of explicit language tying Article 9 obligations to the option to purchase, the nature of the Article 9 obligations indicates that the parties would have felt that compliance with this contractual obligation was central to the bargained for option to purchase in the agreement making the plaintiff owner of the property.

The court found that the witnesses on both sides were honest and straightforward.   Mr. Capobianco testified that the Article 9 “repair” obligations were crucial for him because he always intended to purchase the property by exercising the option.   But the deprivation of the benefit of the bargain being advanced must be examined by looking at the language of the lease and the reasonable expectations parties would have in entering into such an agreement—expectations that both parties must be held to be aware.

As to the duty to repair the roof and leaning rear wall, this was a ten-year lease and, given the use the premises were to be put (see Article 6 of Lease), any te-year lessee would be adamant that the lessor make the contracted repairs whether or not it had any intention to exercise its right of first refusal or option to purchase under the lease.   It is also true that at the very end of Article 36 of the lease which sets forth the option to purchase it is noted that on or before October 9, 2010 the lessee shall notify the lessor if it intends to exercise its right to purchase on April 14, 2010 or whether the lessee desires to negotiate an extension of the lease.

The obligation to perform environmental remediation under Article 9 might suggest a different argument.   The existence of environmental contamination would not prevent the lessee, as a tenant from carrying on the contemplated business under the lease.   But the remediation provision of the lease could be said to be central to the option to purchase, which if it was exercised, would make the lessee the owner.

The argument would run to the effect that part and parcel of the option the plaintiff bargained for was the ability to purchase this property without contamination and thus subject to environmental regulations.   The lessor's own wrongdoing in failing to perform the necessary remediation—if it is shown—should not be allowed to prevent the lessee from asking a court to order specific performance with the necessary equitable accommodations in order to give the lessee what he bargained for.   On the other hand if this Article 9 remediation requirement was part and parcel of the option to purchase we do have a previously discussed odd circumstance—the option could be exercised from the first day of the lease yet the remediation obligations did not have to be performed by the lessor until 13 months after the lease's commencement.   Perhaps more to the point it would appear that as a ten-year lessee the defendant would have a definite interest in having the remediation done on the property by the lessor.  Section 22a–449(c) of the general statutes gives the Commissioner of Environmental Protection the power to enact regulations dealing with pollution and non residential underground storage tanks.   The commissioner has done so and Sections 22a–449(d) 101 through (d) 113 set forth technical standards and corrective action that must be taken regarding underground storage tanks, see especially § 22a–449(d)–106 dealing with remediation and removal of underground storage tanks presenting an environmental problem.   There is a definition section to these regulations § 22a–449(d)–101.   Subsection 48(b) describes petroleum as a “regulated substance.”   And the regulations talk in terms of actions an “owner” of such an underground storage tank and its immediate environs must take.   Subsection (43) of the definition section states “owner means the person or municipality in possession of or having legal ownership of an underground storage system.”   (Emphasis by court.)   Tenants would certainly seem to be subject to these regulations.   Any other interpretation would have a crippling effect on the enforcement of the environmental law and create unnecessary burdens for the Department of Environmental protection in enforcing the legislative purpose.²

As to the relationship between the repair and remediation obligations and the option to purchase another point should be made in examining the lease.   Assuming the premise is correct that there is some ambiguity in the language of the lease regarding the relationship between the option to purchase right in Article 36 of the lease and Article 9 obligations the language of Volk v. Volk Mfg. Co., Inc., 101 Conn. 594, 600–01 (1924) is of interest.   There the court said:

Since the meaning is doubtful, the law admits evidence of the practical construction of this contract by the words, acts, and conduct of the parties.   Such evidence, in cases of doubtful construction, is strong presumptive evidence of the intention of the parties that the contract should be construed in accordance with their own practical construction.

In Panaroni v. Johnson, 158 Conn. 92, 99 (1969) the court citing Volk said:  “The conduct, acts, and words of the parties, in cases where the written lease is unclear or doubtful, constitute evidence of the intention of the parties that the lease should be construed in accordance with their own practical construction.”   Mr. Capobianco told Mr. D'Alto as early as January 1, 2001 he wanted to purchase the property.   A series of letters between Mr. Capobianco and defense counsel discuss attempts to work out the terms of a purchase agreement, see correspondence between parties dated August 9, 2001, October 19, 2001, October 24, 2001, November 2, 2001, November 12, 2001, November 20, 2001, November 29, 2001, and December 11, 2001.   Capobianco contacted Citizens Bank in the fall of 2001 and on October 29, 2001 sent a proposal concerning the terms of any mortgage.

Several of the letters do discuss the roof leaks, leaning wall, and environmental issues.   It is obvious in some of them that Mr. Capobianco factors in Article 9 repair issues and problems and costs associated with their not being done in his bargaining position as to purchase of the property.   And it is clear that the plaintiff regards these issues as affecting his contemplated status as owner of the property apart from the fact that when the correspondence occurred the lease still had nine years to run.   This correspondence took place within a little over a year of the lease agreement and the commencement of the lease.

But interestingly in a letter dated October 19, 2001 and sent by Capobianco to T.N.T.'s attorney two proposals are made for purchasing the property.   The second proposal does appear to suggest that if it is accepted that at least as to roof repairs and the rear leaning wall T.N.T. would have no further responsibility.   Proposal # 1 does not even allude to Article 9 repair and remediation obligations under the lease and seems to be a straight monetary offer.

In light of the foregoing correspondence and the relevant lease language previously discussed, query whether the Article 9 obligations and the lessor's alleged failure to meet them, if proven, were not regarded as intrinsic to the exercise of any option to purchase but as a bargaining chip in renegotiating the purchase price set forth in the option to purchase section of the lease.

This does not mean that the plaintiff would be deprived of any remedy if in fact the Article 9 covenants of the lease were broken and not complied with by the lessor.

The Restatement (2d) of Contracts recognizes the availability of specific performance of a contract duty, see § 357 of Volume 3. In Comment (a) it notes that “an order of specific performance is intended to produce as nearly as is practicable the same effect that the performance due under the contract would have produced.”   Connecticut in general terms appears to accept this proposition, see Ackerman v. Sobol Family Partnership, 298 Conn. 495, 532–33 (2010).   In Columbia Air Services, Inc. v. Dept. of Transportation, 293 Conn. 342 (2009) the court quoted from a Second Circuit Case:  “In one sense;  of course, every enforceable contract right can be said to be an entitlement.   As long as a state provides judicial remedies for the enforcement of contracts, either specific performance or damages for breach, every person holds a legitimate expectation that his contractually conferred rights are secure.”   Id. page 360.

In 71 Am.Jur.2d there is an article on “Specific Performance” at Section 168, pages 177–78 it discusses “Covenants Contained in Leases.”   The court could not find any Connecticut cases strictly on point but the article cites several cases for the proposition that:  “A lessee under a lease unobjectionable to a court of equity is as much entitled to specific performance of such lease as to damages for its breach.   Accordingly, equity will, in a proper case, exercise its jurisdiction to enforce specific performance in a lease, the violation of which is not adequately remediable by an action at law.”   An older Massachusetts case is cited, Jones v. Parker et al., 40 N.E. 1044 (1895), where the court granted specific performance of a covenant in a lease requiring the lessor to “reasonably” heat and light the leased premises.

At any time during this lease the plaintiff could have sought specific performance of the duty to repair the roof, the leaning wall, and to perform environmental remediation.   An adequacy of damages argument would not be a convincing rejoinder to the right of specific performance—we have a ten-year lease, should the plaintiff have had to wait until the last day thereof to recoup a claim of ongoing damages which according to its claim accrued throughout the entire existence of the lease.   How does one calculate the remediation and leaning wall damage component—Should the lessee have had to advance a damage claim sufficient to satisfy Article 9 requirements when the lease imposed that obligation on the lessor?

The foregoing discussion in this section underlines, for the court at least, a difficulty in ordering specific performance of the option to purchase.   But it will return to the problems this portion of the decision presents after addressing the issue of whether the option to purchase was even effectively exercised by the plaintiff and the separate but related question of whether failure to exercise the option was caused by or excused by the defendant's failure to comply with the requirements of Article 9 of the lease.

IV

(a)

Was the option to purchase exercised in this case?   Earlier the court reviewed communications, mainly through letters in which Mr. Capobianco expressed a desire to purchase the property.   That discussion was aimed at trying to ascertain the intentions of the plaintiff to purchase the property and how Article 9 obligations to repair and remediate were related to Article 36 and the option to purchase set forth in the lease.

The review of that desire to exercise the option as expressed in the letters referred to is, however, a purely legal inquiry as to the sufficiency of notice to exercise the option under the lease.   The court has previously discussed the law on how an option to purchase is to be properly exercised.   The cases hold the exercise of this right must be unequivocal and in strict conformity with the language of the lease.

The court has reviewed several letters in Exhibit 11 written by Mr. Capobianco to Mr. D'Alto or his lawyer regarding purchase of the property.   The letters of August 9, 2001 and October 19, November 2, November 20, and December 11 of 2001 cannot be considered as appropriate exercises of the option to purchase, under the lease;  they simply represent proposals altering the terms of purchase set forth in the lease, sometimes factoring Capobianco's ongoing complaints that Article 9 provisions, especially regarding ongoing leaks, have not been complied with.   Article 36 setting forth the terms of the option to purchase is not even alluded to in these letters and they do not purport to be an exercise of any option to purchase set forth in the lease.

The June 7, 2007 letter from plaintiff's counsel to counsel for the defendant, however, is offered as proof positive that the option to purchase was effectively exercised in this case.   In relevant part that letter says:

Pursuant to Article 36 of the lease entered into by the parties, my clients hereby provides notice to Howard Arnold, Incorporated that they have elected to exercise their option to purchase the premises.   At your earliest convenience please provide a written copy of your client's outstanding balance on his mortgage.

The letter goes on to say:

Please note however that before my clients can close, two issues must be resolved by your client, namely his failure to satisfy his obligations under Article 9, subparagraphs 9.01(a) and (b).

The next two paragraphs then set forth why the plaintiff takes the position that the 9.01(a) and (b) obligations have not been met.   The letter ends:  “Please speak to your client to determine when he will fulfill his obligations as called for by the lease so we can prepare to close the transaction.”

To determine whether exercise of the option was unequivocal and in conformity with the language of the lease setting forth the option, we must examine the language of the lease.

Article 36 has two timeframes within which the option to purchase is to be exercised.   The second refers to an election to purchase the premises on April 14, 2010, the last day of the lease.   To effectuate this option the lessee “shall notify lessor” before October 14, 2009 whether in fact he wishes to exercise the option on April 14, 2010.   The first exercise of the option can be made at any time “during the term of the lease.”   The June 7, 2007 letter obviously can only be advanced as an exercise of the option under this first mode of exercising the option—it has nothing to do with the exercise of an option on the last day of the lease with its concurrent notice requirement.

As to exercise of the option during the term of the lease the language of the lease reads as follows:  “During the term of the lease of the premises, Lessee and/or Guarantor shall each have the right to purchase the premises (the ‘Option’) upon the payment of two hundred twenty-three thousand, five hundred dollars ($223,500) plus the then unpaid balance of the mortgage which lessor may then have on the premises provided that such balance shall not exceed three hundred fifty thousand dollars ($350,000) and, in determining the unpaid balance of such mortgage on the premises, no additional borrowing or increase in the principal amount of the unpaid balance of the mortgage subsequent to April 14, 2010 shall be taken into account in determining the amount of the unpaid balance of such debt” (emphasis by court).

Query whether, given the language of the lease, the letter of June 7, 2007 was not unequivocal in that it was not exercised in accordance with the lease provisions.   The court previously discussed this matter and would cite Smith v. Hevro, supra, which states that where the option provides for payment of the purchase price the optionee must not only accept the option offer but “pay or tender the agreed amount,” 199 Conn. at 339.   The June 7, 2007 letter, as indeed all previous communications by the plaintiff expressing a desire to exercise the option were made “during the term of the lease” and not on the last day.   Article 36 explicitly requires if the option is exercised during the term of the lease it is effective “upon the payment” of the amounts set forth in that article.   As Smith v. Hevro said and as the court has discussed mere acceptance of the offer of the option is not enough there must be payment or tender.   Obviously no payment was made.   Tender has a specific meaning in the law.   In an article entitled, appropriately enough “Tender” in 74 ALR.2d 527 at Section 1, page 530 it defines the concept:

In its most general sense, “tender” means an “offer,” and as herein used, the word “tender” is defined as an unconditional offer of payment consisting in the actual production, in current coin of the realm, of a sum not less than the amount due on a specific debt or obligation.   Tender of payment is an offer to perform, often by paying money, coupled with a present ability of immediate performance, which, were it not for the refusal of cooperation by the party to whom tender is made, would immediately satisfy the condition or obligation for which tender is made.   The requirement of a present ability to make good the offer is indispensable to give the offer the legal effect of a tender, and one does not satisfy that requirement by simply stating in a writing or otherwise that he has tendered full performance when in fact he has not.

The word “tender,” as used in connection with mutual and concurrent promises, does not mean the same kind of offer as when it is used in reference to the payment or offer to pay an ordinary debt due in money, where the money is offered to a creditor who is entitled to receive it, and nothing further remains to be done, and the transaction is completed and ended;  it means only a readiness and willingness, accompanied with an ability on the part of one of the parties, to do the acts that the agreement requires him to perform, provided the other will concurrently do the things which he is required by it to do, and a notice by the one to the other of such readiness.

The discussion in Hanson v. Duffy which the court previously referred to supports this discussion where the court said that “a notice that an option will be exercised is not in itself legal tender ․ A party has the burden to prove that a tender of payment, to be equivalent to actual production and tender of the money, is made by one who has the present ability to pay,” 435 N.E.2d page 1377.   If read closely, State v. Lex Associates, 248 Conn. 612 (1999) supports this view of tender.   Footnotes 8 and 9 of the opinion set out the terms of the lease and the option to purchase given to the state which the lesser refused to honor;  it is clear under the lease that if title is found to be satisfactory, upon tender of the purchase price by the lessee, the premises shall be conveyed to the optionee.   Footnote 9 distinguishes a federal district court opinion where it says the district court “noted expressly that the party exercising its option had not parted with the purchase price.   Because the state not only exercised its option but also kept its tender of payment good throughout the six year litigation of this case, it would be manifestly unjust not to deem the state's tender to be the functional equivalent of payment of the purchase price,” footnotes 8 and 9 are at 248 Conn. page 623.   At page 616 the court confirmed the general definition of “tender” by saying that “throughout these proceedings, the state has continued to be ready, willing and able to purchase the property in accordance with its exercise of the option to purchase.”

As noted the lease here required payment upon exercise of the option during the term of the lease.   The court has previously discussed the concept of tender;  in addition to the cases previously discussed the court would finally cite Graff v. Burnett, 414 NW.2d 271, 276 (Neb.1987) which sets forth the clearest statement of the law on tender for purposes of this case.   The court said:

[a] mere offer to pay does not constitute a valid tender, the law requires that the tenderer have the money present and ready, and produce and actually offer it to the other party.   Tender implies the physical act of offering the money or thing to be tendered, but this cannot rest in implication alone.   The law requires an actual, present, physical offer;  it is not satisfied by a mere spoken offer to pay, which although indicative of present possession of the money and intention to produce it, is unaccompanied by any visible manifestation of intention to make the offer good.

Accordingly, although a tender of payment does not have to be in cash unless so demanded by the creditor, the tender must demonstrate an ability to carry out the terms of the contract ․

While the record does not reflect that Burnett actually wrote his check for payment and then delivered or offered to deliver that check to the Graffs, existence of such check is not necessary for resolution of the basic issue involved in this case.   An additional absence in the record is more important and crucial in Burnett's appeal, namely, the absence of any evidence that Burnett, when he offered to pay by check, had sufficient funds on deposit at the bank on which such check would have been drawn.   Although Burnett acknowledged that he would have to “run home and stop payment” of a check given to pay for the entire account at Graffs' farm, Burnett offered no evidence that he had sufficient funds deposited in his checking account to cover the check he would have delivered to Graffs.   As a consequence of such absent evidence, Burnett failed in his burden to show that he had the present ability of immediate performance, an element required for an effective tender, when the claimed tender was made.3

The June 7, 2007 letter merely states that the plaintiffs have elected to exercise the option to purchase the subject premises and asks the lessor to provide a written copy of the outstanding balance on the mortgage.   Under the lease the purchase price of the option exercised during the term of the lease was $235,500 plus the unpaid balance of the mortgage the lessor has on the property so to make tender the lessee needed the mortgage's outstanding balance.   Counsel for the lessee sent the balance sheet but this did not prompt a tender of payment.   All the letter said in this regard is make reference to Article 9 obligations which it was claimed the lessor had not met and as noted asks that the lessee's lawyer speak to the lessee “to determine when he will fulfill his obligations as called for by the lease so we can be prepared to close the transaction.”

The June 7th letter and previous communications between the plaintiff and the lessee to the effect that he wanted to exercise the option to purchase do not meet the payment or tender requirements of the just discussed case law.

In this regard the plaintiff seems to take two contrary positions.   On the one hand, for example, in its post-trial supplemental brief it says the June 7, 2007 letter was an “unequivocal exercise of the option to purchase, page 1 of September 7, 2011 brief.   But in the post-trial brief of June 8, 2011 although making the same claim, page 16, a different approach is suggested on page 18.   The heading of the section beginning on that page states that:  “By being prevented from consummating the purchase by defendant's breach after attempting to exercise its option, plaintiff should be deemed to be the equitable owner.”  (Emphasis by court.)

What the plaintiff's position comes down to is really set forth on page 17 of its June 2011 brief, which in effect appears to admit lack of tender thus defeating the notion of exercise of the option under the case law, but advances what in effect is another argument.   There it says:

The few cases that do address a lessor's breach are exemplified in State v. Lex Associates, 248 Conn. 612, 730 A.2d 38 (Conn.1999) and Bayer v. Showmotion, Inc., 292 Conn. 381, 973 A.2d 1229 (Conn.2009) which dealt with a lessor's refusal to convey real property to lessees pursuant to a right of first refusal and an option, respectively.   In both cases the lessee notified the lessor that they were exercising their rights to purchase, but unlike the case at bar, the lessee tendered full payment to the lessor.   One should not place importance on the fact that payment was not tendered in the instant matter because tender of payment would cause a serious injustice to plaintiff for the reasons discussed above.   To hold otherwise would encourage a lessor to breach a lease agreement whenever a lessor determines that a conveyance under the terms of the option would not be in its best interest, thereby depriving a lessee of its bargain through no fault of its own.

What is the injustice?   It is set forth on page 15 of the brief where it says:

It be anything but prudent to plaintiff to simply tender payment of the purchase price to defendant prior to full compliance of these material terms of the lease (referencing Article 9 obligations.)   If he had, plaintiff would have inherited a $30,000 to $45,000 remediation bill and a $45,982.00 bill to replace the roof, install the expansion joint and repair the leaning wall ․ Plaintiff made certain that these costs were born by defendant and bargained for in the lease.   The plaintiff is entitled to the benefit of the bargain.

The dilemma is not as stark as would first appear.   As a middle ground between competing legal issues—the need for tender and what is meant thereby and a claim the lessor did not comply with obligations under the lease—any letter informing the defendant lessor that the plaintiff lessee wished to exercise the option could have been accompanied by a representation that the monies necessary to comply with the purchase provisions of the lease were to be held in an account pending resolution of the dispute regarding Article 9 repair and remediation obligations and the financial fall out that would result if the plaintiff prevailed on his arguments with regard thereto.

The plaintiff could have offered to enter into an escrow agreement regarding any funds that would be offered to exercise the option, see Alfred Chuilli & Sons, Inc. v. Hanover Ins. Co., 294 Conn. 689, 691 (2010), Solomon v. Keiser, 22 Conn.App. 424, 425 (1990), (dispute regarding purchase of real estate), cf.  Erin Realty Co. et al v. 688 Properties, 395 A.2d 515, 516 (N.H., 1978) (option to purchase case, dispute over required price), “the disputed sums were placed in an escrow account and this action (declaratory judgment suit) was instituted.”  Id. The case of Plank v. Arban, 241 SO.2d 198 (Fla.App., 1970) is an interesting case in this regard.   It concerned in one respect whether there was a proper tender of funds to buy stock in a corporation.   The plaintiff optionee claimed the ownership rights the stock was intended to give had been watered down.   The plaintiff delivered a written notice of his intent to exercise the option and a $25,000 check (purchase price of the stock per the agreement).   The notice given of the exercise of the option and the letter accompanying the delivery of the check “stated the option was exercised and the payment tendered upon certain conditions.   The essence of these conditions was simply an allegation that the 500 shares of stock called for by the option, when issued to the plaintiff would represent a one-half ownership of the corporation, and that thereafter plaintiff and defendant Arban would have equal ownership interest in and control over the corporation and its business.   The corporate defendant refused to accept the notice and tender as a valid exercise of the option,” id. page 199.   The court held “a tender made subject to a condition upon which the party has the right to insist is a valid tender.   Whether the allegations can be sustained by proof remains to be determined,” id.—n.b. there was tender, but the plaintiff's position was protected by the conditions added thereto.

But even apart from the just mentioned consideration another problem arises from an examination of the June 7, 2007 letter itself.   It purports to be an exercise of the option to purchase but is it really (1) an extension of earlier attempts to negotiate a purchase or (2) an unrealistic and somewhat confusing exercise of the option.   The letter states “please provide a written copy of your client's outstanding balance on his mortgage” and then ends by saying speak to your client as to “when he will fulfill his obligations as called for by the lease so we can prepare to close the transaction.”   The letter represents that before the plaintiff can close the Article 9 issues must be addressed.

The June 7th letter requests that the plaintiff be provided with a written copy of the outstanding balance on the defendant's mortgage, asking this be done “at your earliest convenience.”   As noted it also ends with a suggestion of immediate readiness to close the transaction asking the defendant to fulfill his Article 9 obligations.   But Dr. Binkhorst of ALTA Environmental Corporation, who testified at trial, was not retained by the plaintiff until early 2010, did his own testing in the summer of that year and in his report stated that around 300 cubic yards of soil warrants remediation which then must be disposed of off site.   The work of remediation would cost between $35,000 and $40,000.   The plaintiff, even before receiving the ALTA report, stated he had reason to believe remediation was required because of the Maguire report and Citizens Banks denial of a mortgage application.   He could have surmised remediation would have required a expenditure of money and time to accomplish.

As to the leaking problem and the rear wall, Mr. Aschettino, a structural engineer testified for the plaintiff.   He said that to repair the leaking problem expansion joints had to be installed at the juncture of the old building and the new rear building.   As to the leaning rear wall issue, Aschettino acknowledged someone hired by the defendant did work which stabilized the movement of the wall.   But he said the rear wall was unstable and it must be properly tied back—clips had to at least be put on every four feet of the wall.   Mr. Aschettino did his inspection of the property in May of 2007 a month before the June 7, 2007 letter was written, his letter is dated May 2, 2007 indicating he may have done the inspection somewhat earlier than May. The estimated cost to install the expansion joints between the two buildings and stabilize the rear wall was claimed to be around $45,000.   The plaintiff was aware that extensive work had to be done to correct any leaking problems or issues with the rear wall.   Given these circumstances it is difficult to view the June 7th letter as a serious attempt to exercise the option in any immediate sense even leaving aside the tender of payment issue.

V.

There is another aspect to the plaintiff's position that should be explored.   In the first post-trial memorandum the plaintiff refers to the six letters from 8/1/01 to 12/6/04 in which he expressed an intent to exercise the option to purchase.   He concedes as to these letters that he does not definitively state he has the funds ready to deliver to the defendant and seeking a closing date.⁴  The argument goes on to say it would not have been prudent “to simply tender payment of the purchase price to defendant prior to full compliance” with “material terms of the lease”—Article 9 repair and remediation obligations.   The plaintiff “made certain” that “the costs of any repair and remediation were born by defendant and bargained for in the lease”—i.e. the plaintiff is entitled to the benefit of the bargain.

The argument would also serve to rebut any observation that the June 7, 2007 letter is an ineffective exercise of the option even if it were found that no tender was made pursuant to the June 7, 2007 letter.   In other words the plaintiff could claim that as a result of the defendant's failure to meet its Article 9 obligations the plaintiff could not fairly be put in a position that required the making of tender;  in fact it would be an injustice if this were to be the predicate for exercising the option.   The court has previously discussed why it concludes this is a false premise since tender with conditions could still have been made.   The plaintiff had Mr. Aschettino's report a month before the June 7, 2007 letter and there is no reason why a report similar to the Alta report on remediation setting forth the cost thereof could not have been procured in early 2007 so that repair and remediation costs could have been calculated concomitant with any tender and conditions attached to it.

But let us leave the last mentioned considerations aside.   What does the case law indicate as to the viability of the position that a prevention of tender by the lessor occurred here which an equity court can resolve by ordering specific performance.   The court has previously discussed cases that support a general proposition, to this effect.   See Unatin 7Up Co. v. Solomon, supra, Kotcher v. Edelblute, supra, In re:  Edgewater Medical Center, supra, discussion in 17 Am.Jur.2d “Contracts” at page 101 supra.

The plaintiff cited a 1912 case which is the only case with a similar fact pattern to the one now before the court that it could find and which could be said to address the issue now being discussed.   The case is McCowen v. Pew, 18 Cal.App. 302, 123, p. 191 (Ct. of App).   The plaintiffs brought a quiet title action as to certain lands and moved the court to have declared null and void a written instrument relied on by the defendant to claim, pursuant to an option to purchase, the right to purchase these lands owned by the plaintiff.   The court set forth the facts of the litigation by quoting from a recital of those facts by the trial court:

“The plaintiffs were the owners of a tract of land containing about eleven hundred and sixty acres, and on October 16, 1899, they and the defendant Pew executed an agreement whereby they granted to Pew the option, during the ensuing twelve months, to acquire from the plaintiffs the land in question, for the sum of $15 per acre ․ Between the date of the making of the agreement and October 11, 1900, the plaintiffs cut and removed from about ten acres of the land in question a large quantity of redwood, pine and oak timber, the value of which and the particular time at which its value is to be determined is the principal issue in this case.   On October 11, 1900, Pew, having received information of the cutting of the timber in question, gave notice in writing to the plaintiffs that he elected to exercise the right to acquire the land covered by the agreement, and offered, upon receiving a good title to the land, to pay for the same at the rate of $15 per acre, less the loss in value of the land occasioned by the removal of the timber by the plaintiffs.   There were certain encumbrances on the title, which constituted defects in the title, which were not removed until sometime in December following, or about the 1st of January 1901.   The parties could not agree upon the amount to be deducted from the price on account of the removal of the timber, but, subject to the settlement of that question, the plaintiffs were ready to perform their agreement and convey a good title on the 6th of December 1900.   Not being able to agree upon the amount of compensation to be allowed for the timber removed, the plaintiffs claimed that the agreement had been forfeited, and in March 1901, brought the present action against the defendant to quiet title.   Pew filed a cross-complaint, setting out the agreement aforesaid, averring the election to acquire title thereunder by himself and those associated with him, and their purpose in acquiring the lands as aforesaid, and asking that the court enforce specific performance of the contract according to its terms, and allow a deduction from the price as compensation for the loss to him by reason of the timber removed by the plaintiffs prior to the time he gave notice of his election to exercise the option.,” id.   18 Cal.App. 306–07.

The significant portion of the opinion, at least to the court, for the purposes of this case, is set forth at pages 322–23 of the opinion.   The court upheld the judgment of the trial court granting the defendant specific performance along with compensation for the value of the timber.   The court said at the indicated pages:

First, it is to be observed, as we have shown, that there was here no conditional acceptance of the offer.   The defendant, in other words, did not accept the offer upon the condition that the price stipulated in the option be reduced, but accepted the offer for the precise price at which the plaintiffs therein offered to sell the lands.   The demand for an allowance for the inability of plaintiffs to fully complete the contract to convey arising upon the acceptance of the offer was not, manifestly, a proposition to reduce the price for which they offered the lands, but for compensation for the loss which would accrue to the defendant because it became impossible for plaintiffs to convey to the defendant all that they had offered to convey for the stipulated price.   Secondly, the plaintiffs expressly acquiesced in the acceptance, and treated and recognized said acceptance as of the precise option which they had granted to the defendant, and thus they waived any objection to the acceptance upon the ground that it varied from the terms of the option.   Thirdly, and, indeed, the most important of the considerations distinctly differentiating this case from those cited and referred to, the changed condition of the property, as we have seen, was due entirely and solely to the deliberate and unauthorized acts of the plaintiffs themselves during the life of the option, and it is a familiar principle that no one will be permitted to take advantage of his own wrong.

The third consideration cannot be emphasized at the expense of the first two.   In other words the premise the court arrived at to make the general observation that no one should be allowed to profit from his or her own wrong is based explicitly on a finding that there was no conditional acceptance of the offer as to the purchase price of the land and just as importantly the plaintiff optioner in McCowan expressly acquiesced in the acceptance (of the option) by the defendant optionee.

Here there was a conditional acceptance of the offer and either in lieu of or as a reflection of tender the plaintiff optioner acquiesced in the acceptance.

On a final note during the redirect examination of Mr. Capobianco the following occurred at pages 107–09.

Q I'm showing you the letter that's part of Exhibit 11, dated June 7, 2007.   Do you recognize that letter?

A. Yes.

Q Take your time.   Could you describe the contents of the letter?

A This is far (sic) as the purchase of the building.

Q It's your expression to purchase the property?

A Yes.

Q Does it say that you simply want to purchase the property?

A No, it says other—with the contingency of the other issues that are ongoing.

Q What are those?

A You know, the same three that were in the lease that had to be fixed, roof, the wall ․

* * * *

(Interruption by court as to how much further redirect was going to be required.)

Q So you weren't able to come to an agreement with Mr. D'Albo—

A No.

Q—with regard to the purchase, and that was why?

A Just the same existing conditions that started in '01, and at that point, you know, I knew 10 years wasn't around the corner so.

Here the June 7th letter requested the mortgage statement which might suggest an offer was to be made reflecting the price set forth in the lease.   As noted the statement was sent but no tender followed, let alone an indication, a la McCowen, that the price was being offered and certainly the defendant did not acquiesce in the “acceptance,” even if June 7th letter can be characterized as such.   The option was not exercised.

* * * *

For all of the foregoing reasons as set forth in sections I through V of this decision the court will not grant specific performance of the option contained in the lease.

VI

The court believes, however, that it is necessary to cover all the issues raised in this case so that the need to have a retrial can possibly be avoided, if an appellate court concludes the court committed error in denying the request for specific performance and decides that based on the following discussion it can make orders at the appellate level resolving the case.

The crux of the plaintiff's position is that the defendant's failure to comply with its Article 9 obligations to repair the roof on the new addition and the rear leaning wall and to “perform environmental remediation, as necessary, oil and gas leakage existing as of the commencement of the lease.”   This was to include removal of an underground storage tank and restoration of the premises “disturbed because of the environmental remediation.”

(a)

Repairing of Roof

Did the defendant meet its contractural obligations under § 9.01(a)(i) regarding repairing of the roof.   The language of this provision of the lease must be examined closely.

To repeat, it says on or before October 31, 2000 the defendant lessor “shall (i) repair the entire roof on the rear section of the premises (i.e. the addition made to the premises during 1969), as necessary, such that the leak in the roof will be completely fixed during the term of the lease.”  (Emphasis by this court.)

First it should be noted that a lease is a type of contract and ordinary rules of contract interpretation and general rules of contract law apply to leases, Warner Associates v. Logan, 50 Conn.App. 90, 94–95 (1998), cf.  Hatch v. Della Pietra, 195 Conn. 18, 20 (1985).

An ordinary question of contract interpretation is presented, words cannot be taken out of context and a contract must be read to give effect to all its various parts.   As said in Tallmadge Bros., Inc. v. Iroquois Gas Transmission, 252 Conn. 479, 498 (2000):  “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 ․ the intent of the parties is to be ascertained by a fair and reasonable construction of the written words ․ the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract ․”

Both parties were aware of the leaking problem in the rear or new building where the plaintiff operated its business.   This subsection regarding the roof was created in light of that situation.   Given the fact that a ten-year lease was being signed by the plaintiff, who intended to operate his business from the location upon commencement of the lease, the plaintiff had an interest in preventing leaks whether or not the option was to be exercised.

To state the obvious, the roof was not to be repaired for aesthetic reasons.   The purpose of the roof repair requirement was limited to that one purpose—that the leak in the roof would be fixed.   Why?—so the plaintiff's business operations and property would not be deleteriously affected by a leaking roof.

To support its claim that the defendant had not complied with its obligations under Section 9.01(a)(i) of the lease regarding roof repairs the plaintiff called Mr. Aschettino to testify, a licensed structural engineer.   Mr. Aschettino testified Mr. Capobianco hired him to inspect the roof of the new addition and the rear wall.   He did his inspection in May 2007.   This witness testified that he was asked to look into the problem of leaking into the rear building.   He said the problem arose because the rear addition was not connected to the other building.   There was no continuous roofing and buildings move in summer and winter.   They move toward their center apart from each other and this causes the roofing membrane to rip.   The solution is to put expansion joints at the juncture of the new building.   In his professional opinion expansion joints would have to be installed.   Movement of the buildings creates tension in the roof membrane and this tension would extend a few feet on either side of where the buildings meet.   Aschettino said the leaking was reported to have occurred at the point where the buildings met and along the rear wall.   He also said there was evidence of leaking along the rear wall.   But when he inspected the rear, “leaning” wall he said it appeared someone had done some work which stabilized the movement of the wall.   But he added the roof should be tied back “so it doesn't fall over under a hurricane.”

On cross Aschettino said roof over the addition or new building was not the problem, the problem is located at the point between the two buildings.

He also said fasteners or clips should be installed along the rear wall.   There are no building code requirements he is aware of that mandate this but most building officials would require fasteners to be put along the rear wall.   It is the ethical thing to do.   In addition to hurricanes posing a problem, if there was an earthquake the roof could fall over.   On redirect as to the leaking problem Aschettino said there was nothing wrong with the roof surface itself, where the two buildings meet is the problem.

The plaintiff also called a general contractor named Daniel Alvandian who prepared an estimate for the costs necessary to repair the roof and the leaning rear wall.   Interestingly he spoke to Aschettino in December 2010 before he went to the property to prepare an estimate and states the repairs that were necessary were based on Mr. Aschettino's 2007 inspection.

However, his testimony could be said to contradict Aschettino's as to the state of the rear roof, Alvandian said it had to be replaced.   The point is what did Alvandian's observations have to do with the leaking problem?   Mr. Capobianco testified the leaking goes down 80% to 90% of the length of the new building but the roof of this section pitches to the rear and despite one comment by Aschettino that it was hard to determine where the leaks came from, he was repetitiously adamant that the leaking problem was due to the movement of the two buildings, allowing water to come in at that point—that was the whole point of recommending the installation of expansion joints.

Mr. Meena was called by the defendant, he is a home improvement contractor and has done roofing work for over forty years.   Mr. Meena testified most of the water came in where there was an opening, between the two buildings.   He further testified even if expansion joints were put in place there would still be leaking unless roofing an old building was replaced.   He did concede water was coming in at the juncture of the two buildings and stated the addition's roof pitched toward the parking lot, or the rear of the buildings.   The court found it difficult to accept Meena's testimony in the sense that if expansion joints were put in at the juncture between the two buildings, that would prevent ripping of the new addition roofing at the juncture point so even if water was running down the old roof which also pitched to the rear, how could it get into the new addition?   But he also testified that the roof on the new addition was “fine.”

Even if the court does not accept Mr. Meena's conjectures about problems with the old roof as contributing to leaking even if expansion joints were put in at the juncture of the two buildings, it still has difficulty in accepting the plaintiff's position that the roof repair obligations set forth in the lease were not complied with by the defendant.

The language of § 9.01(a) must be read closely.   The repair of the roof it says must be carried out “as necessary such that the leak in the roof will be completely fixed.”   The problem is that even if the roof of the new or rear building were repaired or replaced, and this was done every year and even more periodically the testimony was that there would still be leaking into a good portion of the addition.   That is the condition of the roofing material does not cause the leaking as such—the leaking is caused because the movement of the two buildings rips the roof membrane of the new building causing water to enter from whatever source.

There is a doctrine known as “Impossibility of Performance.”   A concise statement of it is set forth in 17 Am.Jur.2d, “Contracts” at § 655, pages 612–13.   There it says:  “Impossibility of performance may be classified as original impossibility or supervening impossibility.   Original impossibility is impossibility of performance existing at the time the contract was made, so that the contract was to do something, that was impossible from the outset, while supervening impossibility exists when the subject matter of the contract for which the parties bargained is no longer in existence or is no longer capable of being performed due to an unforeseen supervening act, for which the promisor is not responsible.”   Original impossibility is recognized in Restatement (2d) Contracts at § 266 (Vol.2), also see Section 5 of the annotation in 84 ALR.2d. 12 entitled “Modern status of the rules regarding impossibility of performance as defense in action for breach of contract.”   Our state recognizes the doctrine as noted in several cases, Straus v. Kazankas, 100 Conn. 581 (1924);  Fagerhoen v. Nielson, 93 Conn. 380 (1919);  Automobile Ins. Co. v. Model Family Laundries, 133 Conn. 433 (1947);  Hess v. Dumochel, 154 Conn. 343 (1956);  Roy v. Stephen Pontiac–Cadillac, Inc., 15 Conn.App. 101 (1988).

Here the repairing of the entire roof so as to stop any leaking is intrinsically connected to the doctrine of original impossibility in that at the time of contract formation any roof repair could not have stopped leaking since the condition of the roof as such did not cause leaking.   Under ordinary English usage installation of expansion joints has nothing to do with the need for roof repair and does not equate with the contract languages admonition that “the roof will completely be fixed during the term of the lease.”

The foregoing observations do not deal with the separate problem of the leaking along the rear wall.   Mr. Aschettino conjectured that when the rear wall pushed out (so as to lean) it could have caused failure in the flashing—materials which were draped over the rear wall.   But Mr. Aschettino said that when he inspected the rear wall in 2007 work done on it had stabilized the wall—i.e. it no longer moved.   And the better testimony is that the roof in the rear addition which would run to the rear wall was in good shape.   Mr. Aschettino even speculated that the lack of expansion joints, because it created tension on the whole roof membrane, could potentially have caused the leaking along the rear wall.   He admitted that it's hard to know where leaks come from.   No further investigation or explanation was offered as to how the leakage occurred in the rear wall area.

Furthermore the installing of clips along the rear wall to forestall its collapsing in an earthquake or hurricane has nothing to do with the repairing or replacement of the roof to avoid leaking.   These matters will be discussed in the next section but suffice it to say that the builder Ferri who worked on the rear wall to stabilize it said after doing so he put flashing (roof membrane) from the existing roof to the wall.   The wall rises above the roof and does not support it and is an independent standing wall.   Given the language of subsection a(1) any further work on the wall cannot be considered as an attempt to forestall leaking by work on the roof.

* * * *

In any event based on the foregoing, if the court had been inclined to order specific performance of the option it would not have, concurrent with that order compensated the plaintiff by reducing the alleged costs for complying with § 9.01(a)(i) of the lease having to do with roof repairs related to leak prevention and work on the rear leaning wall.

(b)

Leaning Wall

The lease language in § 9.01(a)(ii) talks about repairing the leaning walls and correcting structural deficiencies such as footings, steelbeams, wall roof, etc. as determined by a licensed engineer selected by lessor.   The lease did not provide that the wall had to be replaced.   Work was done on the wall by Mr. D'Alto who hired a builder, Mr. Ferri.   As noted Mr. Aschettino, the plaintiff's witness testified that when he inspected the wall in 2007 it was in fact stabilized.   But he also said that clips should have been placed on it so it would not fall over during a hurricane or earthquake.   He defined the failure to put clips as a structural deficiency.   However, he did say that there was no building code requirement that the clips be put in 2000 or 2001—the lease was signed in April 2000.   But Aschettino did say the “ethical” thing to do would be to put in the clips.   He added if building inspectors came to the property most would say that the clips should be put in—it was unclear when he envisaged them coming, in 2000 or at a later point.   In this regard Mr. Giordano, a registered professional engineer testified for the defendant.   He inspected the rear wall in 1989 and 1999 at Mr. Capobianco's request.   He testified that the clip angles Aschettino referred to were only required in 2005 under the building code.   Mr. Ferri, a builder, did the work of stabilizing the rear wall and described it in detail.   He said he did the work some ten or eleven years before trial which would be in 2000 or 2001.   Ferri said Mr. Giordano was involved in his work and he proceeded according to the letter written by Giordano upon his last inspection of the property.   Ferri said he took a 28–foot section of the rear wall out and dug under the footing to prevent the new portion of the wall from leaning, then he poured concrete before installing a block wall.   Despite Mr. Capobianco's testimony, both Giordano and Ferri testified only a portion of the rear wall was leaning (the 28 feet) and Aschettino testified the work done by Ferri stabilized the vertical movement of the wall.

As previously discussed the lease in Article 9 gave the defendant until October 31, 2000 to repair the rear leaning wall.   The defendant hired Mr. Giordano, as per the lease, to ascertain any structural deficiencies;  he works with Mr. Altieri who is a draftsman and drew up the plans from which Ferri worked.   Ferri did the work, sans clips in 2000 prior to October 31, 2000 as the plaintiff conceded at trial.   A building inspector did come out to the job but apparently the records were lost.

The point is that the defendant appears to have complied with its obligations under Article 9 regarding the rear wall—the work done complied with the building code at the time it was done.

The general law appears to be set forth in 13 Am.Jur.2d “Building and Construction Contracts,” Section 12, page 21:

“In the absence of express plans and specifications, a building contractor's performance must be judged, for the purposes of determining whether the contractor breached an agreement by failing to construct the project in a workmanlike manner, in accordance with the standard of workmanship prevailing in the area and the conformity of the contractor's work to the applicable codes.”

See Carter v. Krueger, 916 S.W.2d 932, 935 (Tenn.Ct.App., 1995).   How can the court find a structural deficiency based on some notion that despite the building code some notion of ethical responsibility required the installation of clips along the rear wall.

In other words failure to comply with industry standards can be a basis to find work was done in an unworkmanlike manner, see 17A Am.Jur.2d, “Contracts,” § 612 but Aschettino never said anything beyond a reference to “ethical” considerations and did not say installing such clips given the job at hand would be a standard required in the industry.   Can the court make such a finding based on the fact that if there was an earthquake or strong hurricane the wall might fall?   Such an after the fact analysis is not appropriate.   If the parties were concerned specifically with such events they could have put it into their agreement—i.e. repair the wall so that it can withstand earthquakes and hurricanes despite lack of such requirements in the building code.   The court cannot, on its own, rewrite the lease agreement to comport with its own notions of what is fair and ethical when the lease agreement as signed is a contractural document not violating local, state, or federal law or regulations and no public policy argument has been advanced.

(C)

Remediation

Section 9.01(b) of the lease provides that on or before April 30, 2001 the lessor shall perform environmental remediation on the property “as necessary” which was attributable to oil and gas leakage as it existed on the commencement date of the lease.   The remediation was to also include removal of a 2000 gallon underground storage tank and (2) restoration of the premises to the extent that they were disturbed by remediation efforts.

The language of subsection (b) imposes a mandatory obligation to remediate that cannot be satisfied by a good faith belief that there was no contamination or that remediation was unnecessary.   The defendant certainly acted as if he understood that he had an obligation to investigate the existence of contamination and any ensuing duty to remediate.   The parties knew of the possibility of contamination on the property.   A Maguire report prepared in 1989 indicated this and they put in the lease obligations to remediate “as necessary.”   Article 33.02 of the lease mandated, for example, that the defendant lessor agrees to refinance its existing mortgage and in connection therewith agreed to perform an environmental assessment—if hazardous substances were found to exist the cost of remediation was to be split 60%–40% between lessor and plaintiff lessee.   The defendant hired Environmental Consulting and Contracting, LLC (ENCO) in the fall of 2000, it must be presumed to, to comply with its contractual obligations under subsection (b).  Under that subsection remediation had to be completed by April 30, 2001.   Mr. Capobianco also testified that he had nothing to do with the hiring of Mr. Montanari who is licensed to remove oil tanks and removed the oil tank on this property in October 2000—again six months before the April 30, 2001 deadline.

The ENCO report gave the property a clean bill of health in finding that concerning the 3 soil samples taken from the “grave bottom” where the tank had been located were within acceptable limits for the absence of contamination that had to be remediated.

ENCO was the agent of the defendant for the purposes of doing the testing and thus fulfilling its contractural obligations under the lease.   Trial testimony satisfied the court that the purported letter from ENCO was either bogus or unreliable.   Mr. Robbischaud is a member of ENCO, LLC and its manager.   His brother issued the report and he was not authorized to do so.   ENCO, in fact, does not do this type of soil testing, that is for petroleum contamination and remediation for oil, grease, and gas.   ENCO not only does not do the referenced testing but it does not send samples to other companies to do so.   Mr. Robbischaud had no idea who took samples, his brother or someone else.   The brother no longer works for ENCO.

Jeffrey Brown is licensed by the state and has been an environmental consultant since 1986.   He was hired by Citizens Bank to determine if there could be contamination when Capobianco applied for a mortgage.   He concluded ENCO used inappropriate testing methods.   He also noted ENCO did no investigation into the extent of the leakage.

Gordon Birkhorst was also called to testify.   He is a ground water hydrologist and is a licensed environmental professional.   He noted the ENCO letter gave a “certificate of completion”—Binkhorst never heard of this term.   It appeared odd to him that the samples were collected October 18, 2000 and not received by lab until December 4, 2000.   There is no chain of custody for this six-week passage of time and besides, the longer a sample sits petroleum hydrocarbons degrade.   Dr. Binkhorst went on to say that ENCO used the wrong testing modalities.   The ENCO report also does not indicate the location depth, and depth intervals of samples.

The defendant in his correspondence with Mr. Capobianco relied upon the ENCO report in professing that he had complied with his subsection (b) remediation obligations.   Based on the foregoing, however, the court concludes the reliance was, despite no fault on the defendant's part, unfounded.

There were other indications that contamination subject to remediation was present on this property.   The Citizens Bank to which Mr. Capobianco went to apply for a mortgage notified him that the firm hired to do testing, Environmental Compliance Services (ECS), concluded, after a Phase I review (historical review relying on past reports), that a Phase II testing must be done (soil samples taken).   The defendant apparently took the position that it would not pay for such testing, it was unnecessary because of the ENCO findings.

Mr. Montanari said when he took out the tank the tank showed no signs of leaking and was in good shape.   The dark soil noted at the time the tank was removed is often taken as a sign of petroleum contamination by people but it is not, there can be organic material in the soil.   But the fire marshall who was present said the tank was leaking.   Besides if no leaking at all occurred why was there even the law readings in the ENCO report from Brooks laboratory to which Montanari sent samples at the time he removed the tank.   As to the Brooks lab reports Montanari said he did not retain its report, he does not keep them over five years.   Does Brooks Laboratory still exist?   If so was an attempt made to see if they had a copy of the report they prepared?

In any event in 2010 the plaintiff hired Dr. Binkhorst who is employed by ALTA Environmental Corporation to do testing in preparation for trial.   He was hired fairly soon before trial, after the lease expired, and three years after the plaintiff's “unequivocal” June 7, 2007 letter of his exercise of the option.   But the court would respectfully suggest this is irrelevant to the matter now under discussions.   He did extensive sampling of the soil.   He found that the vast majority of samples exceeded the 500 ppm standard.   There is a higher standard for commercial and industrial property.   The defendant pointed out that the property lies in an area of West Haven zoned for commercial use where the standard is 2500 ppm.   The plaintiff counters the determining factor is whether an industrial land use restriction has been placed on the property and filed with the DEP. It is a deed restriction.   Dr. Binkhorst could not find any deed restriction to this effect filed with the DEP. On this issue the court agrees with the defendant.   Can one seriously contend that environmental regulations and criteria designed to protect public health and the earth and all its inhabitants depend on whether parties decide to place it in their deeds and send it to the DEP? One hopes not.   All the evidence is that the property in question lies in a commercial/industrial area.

But the point is that despite the foregoing ALTA found six samples over even the industrial standard.   No expert testimony was presented to dispute ALTA's findings, no continuance was filed to retain such an expert and the only testimony presented at trial was that contamination such as the type noted on this property can remain in the soil for years.   No evidence was presented that any contamination occurred after the lease commenced let alone after June 7, 2007.   The defendant had a contractual duty to remediate;  common sense would seem to indicate that to ascertain whether remediation was necessary it had to hire an entity capable of making findings in this regard.   It did, it hired ENCO who was its agent—it cannot rely on a faulty report to argue it met its contractual obligations.

If the court had ordered specific performance it would have considered compensating the plaintiff for failure to remediate by lowering the contractual purchase price.   ALTA's report estimated the cost of remediation as between $30,000 and $45,000.

However, as noted, perhaps too many times this conclusion is not operative for the purposes of the court's decision in that it has denied specific performance.

VII

Statute of Limitations and Laches

The defendant has argued that the plaintiff is precluded from bringing its claims by the applicable statute of limitations, Section 47–33a, and the doctrine of laches.   The court wishes to make clear that in reaching its decision to deny specific performance it did not rely on the foregoing defenses raised by the defendant.

(i)

The court should note that despite the broad damage claims in the complaint and amended compliant, the only claim for relief is an order of specific performance, see page 18 through 22 of the post-trial brief and the conclusion to the supplemental trial brief.   This position was also reflected in the post-trial oral arguments.   There is a request that because of the defendant's failure to perform its Article 9 obligations the lease purchase price should be adjusted for the costs the plaintiff will have to bear to correct this failing.   Or to be more concise in the conclusion to the September 7, 2011 brief it says “the plaintiff respectfully requests the court to order the defendant to specifically perform the Lease by conveying the Premises to the plaintiff for the purchase price of $102,051.33.”

The applicable statute of limitations is therefore Section 47–33a of the general statutes which provides that there is an 18–month statute of limitations for suit regarding the exercise of an option to purchase.   It is true that the Amended Complaint in the Fourth Count at paragraphs 7 and 8 stated the plaintiff exercised its option and in furtherance thereof the plaintiff applied for a mortgage to Citizens Bank. It then says the plaintiff then learned through the bank's environmental assessment that the site was still contaminated.   The bank denied financing and the application for it was made October 29, 2001.   Suit was not filed until 2007, therefore, according to the defendant, pursuant to § 47–33a, the request for specific performance of the option is barred.   But paragraph 11 states the plaintiff has and continues to be ready, willing and able to purchase the property pursuant to the agreement.

The problem with the defendant's position, at least to the court, is that in acting on the request for specific performance it acts as a court of equity.   Several letters to the defendant were relied on by the plaintiff to indicate it was exercising its option;  particularly the June 7, 2007 letter explicitly so states.   None of these letters were objected to when offered as exhibits;  Mr. Capobianco at trial specifically referred to the June 7th letter as an exercise of the option.   Suit was brought in 2007 after the June 7, 2007 letter, well within the 18–month period dictated in § 47–33a.   In effect the plaintiff has further amended its complaint without specifically requesting the court to do so if paragraph 11 cannot be considered as reference to continued attempts to exercise the option.   It appears, however, that the plaintiff misspoke when referring to its mortgage application as an exercise of its option.   How could it be, since, by definition, it did not constitute tender of the purchase price, it was an application so that tender could be made and in any event in its December 13, 2001 letter to the plaintiff the bank it acknowledged the mortgage application was being withdrawn.

On the other hand to say that in a lease like this when an option is intended to be exercised, § 47–33a kicks in to limit the right to exercise it in the future in a case where the option is withdrawn or held not to be an effective exercise thereof defeats the whole purpose of the lease which gave the lessee the right to exercise the option at any time during the ten-year lease and even on its last day.

An interesting question is whether the plaintiff's request to reduce the purchase price of the property for exercise of the option to reflect the defendant's failure to fulfill its Article 9 obligations, as a result of which it would have to expend funds, is really a request for damages.   If so the statute of limitation would apply to bar the claim given the dates by which the lessor had to perform its Article 9 obligations.   But the plaintiff's claim is that the injuries arising out of the Article 9 failures are ongoing.   In any event to adopt a position that says, in effect, the request for compensation for failure to comply with Article 9 obligations when the option is exercised or the optionee is prevented from exercising would run counter to the whole purpose of giving the lessee the right to exercise the option during the whole term of the lease—in effect the defendant would be able to rely on its own contractual breaches to render the option less attractive or even completely undesirable.

(ii)

The defendant also raised the doctrine of laches.

In David v. Frank, 91 Conn.App. 268, 281 (2005), quoting an earlier case the court said:

The defense of laches, if proven, bars a plaintiff from seeking equitable relief in a case which there has been an inexcusable delay that has prejudiced the defendant.

The court went on to say that “the equitable doctrine of laches is an affirmative defense that serves as a bar to a claim for equitable relief,” id. page 288 and that “laches is not available in an action at law,” id. page 283.

In Camnis v. Troy, 112 Conn.App. 546 (2009), again quoting an earlier case said:  “The mere lapse of time does not constitute laches ․ unless it results in prejudice to the (opposing party) ․ as where, for example the (opposing party) is led to change his position with respect to the matter in question.”   Id. page 552.

But again, the lease gave the lessee the option to purchase the property during the entire term of the lease.   Certainly the doctrine cannot be applied in such a situation to defeat the right to specific performance.   As to the issue of the request for compensation for failure to comply with Article 9 obligations upon an order of specific performance, the plaintiff from very early on after the Article 9 times for compliance had passed informed very able lawyers of its assertions of noncompliance.   During all of this time the defendant could have secured documents, done investigation, and brought suit against responsible third parties of the matters.

VII

Counterclaims(i)

For the reasons stated in its post-trial brief the court awards the rental and use and occupancy demands that it claims.   No defenses have been explicitly raised to this demand.

(ii)

The defendant, pursuant to Article 9.01 of the lease makes a demand for judgment.   Article 9 states that the “Lessee will make all necessary structural and non-structural repairs and replacements to the interior and exterior of the property during the term of this lease (including but not limited to performing all repairs, maintenance and all replacements of the heating, ventilating, and air conditioning systems as necessary) and will at the expiration or termination of this Lease, return the property to lessor in good condition, ordinary, wear and tear excepted.”

From this the defendant argues that “if the court finds that the property is damaged and that damage is outside of TNT's obligations judgment should enter against H–A pursuant to § 9.01 of the lease.”   The defendant notes TNT did not present evidence of damages, however, H–A did.

The language of the lease does not apply to remediation obligations, also in Section VI the court found that the lessor did make the necessary repairs to the rear wall pursuant to § 9.01(b) of the lease.   Also the court does not regard “repair” to reasonably refer to, for example, the installation of expansion joints, the absence of which was a pre-existing condition of the property.   Interestingly the defendant uses the phrase “if the court finds that the property is damaged ” then judgment should lie in its favor—the plaintiff should not be required to compensate the defendant for what is basically an improvement to the originally leased premises.

(iii)

There is a request for attorneys fees by the defendant and exhibit was filed setting forth these expenses, however, the issue was not briefed and it was not argued.   Also in Section VI the court concluded the defendant did not comply with its § 9.01(b) obligations, a sizable portion of this case including briefing and argument revolved around that issue.   There is no provision for attorneys fees such as those claimed in the lease.   The court does not award attorneys fees.

Conclusion

It is the judgment of the court that specific performance should not be ordered.   On the defendant's counterclaim only rent and use and occupancy are awarded.

Thomas J. Corradino

Judge Trial Referee

FOOTNOTES

FN1. The court could find no Connecticut cases directly on point involving the lessor's interference with the right to exercise an option to purchase.   But it certainly accepts the parallel rule, which would dictate acceptance of the foregoing case law, in that cases have held a tenant with an option cannot exercise it if the tenant fails to meet conditions of the lease, Brauer v. Freccia, 159 Conn. 289, 294 (1970), Pack 2000, Inc. v. Cushman, 126 Conn.App. 339, 347 (2011)..  FN1. The court could find no Connecticut cases directly on point involving the lessor's interference with the right to exercise an option to purchase.   But it certainly accepts the parallel rule, which would dictate acceptance of the foregoing case law, in that cases have held a tenant with an option cannot exercise it if the tenant fails to meet conditions of the lease, Brauer v. Freccia, 159 Conn. 289, 294 (1970), Pack 2000, Inc. v. Cushman, 126 Conn.App. 339, 347 (2011).

FN2. Any burden on tenants, innocent of causing the condition required to be mediated is allayed by §§ 22a–449a through 22a–449 in which creates an underground storage account petroleum cleanup account which reimburses parties for clean up and remediation costs..  FN2. Any burden on tenants, innocent of causing the condition required to be mediated is allayed by §§ 22a–449a through 22a–449 in which creates an underground storage account petroleum cleanup account which reimburses parties for clean up and remediation costs.

FN3. What this court is not saying by reference to a case like Graff v. Burnett is that a tender is ineffective because not absolute and unconditional.   As said in Decorah State Bank v. Zidlicky, 426 NW.2d 388 (Iowa Sup.Court., 1988):  “A tender is not made conditional, however merely by a demand that the other party fulfill its obligations under the contract.   Where a condition in a tender is one in which a debtor has a right to insist on, the tender made subject to the condition is valid,” id. page 391.   The problem here is that no tender was made..  FN3. What this court is not saying by reference to a case like Graff v. Burnett is that a tender is ineffective because not absolute and unconditional.   As said in Decorah State Bank v. Zidlicky, 426 NW.2d 388 (Iowa Sup.Court., 1988):  “A tender is not made conditional, however merely by a demand that the other party fulfill its obligations under the contract.   Where a condition in a tender is one in which a debtor has a right to insist on, the tender made subject to the condition is valid,” id. page 391.   The problem here is that no tender was made.

FN4. An interesting observation since the June 7, 2007 letter does not state the contract funds are available or that any funds are being tendered (contract funds minus alleged cost of repairs and remediation for example) and only refers to a closing if Article 9 obligations are met..  FN4. An interesting observation since the June 7, 2007 letter does not state the contract funds are available or that any funds are being tendered (contract funds minus alleged cost of repairs and remediation for example) and only refers to a closing if Article 9 obligations are met.

Corradino, Thomas J., J.T.R.