Lawrence W. Goichman, Trustee et al. v. Kenneth Green et al. (2013)

MEMORANDUM OF DECISION

This is an action for breach of two separate lease agreements.   Counts 1 through 3 of the complaint (dated May 11, 2012) relate to a lease identified in the complaint as the “Postal Creations Lease.”   The plaintiffs claim that the defendants Kenneth Green and Susan Green (the “Greens”) are liable under the Postal Creations Lease.   Counts 4 through 6 relate to a lease referred to by the plaintiffs as the “Bagel Lease.”   The defendant S & K Bagels, LLC is the responsible party under said lease.   The defendants do not intend to defend Count 4 through 6 of the complaint relative to the Bagel lease.  (Reference is made to the Joint Trial Management Report.)   The plaintiffs originally claimed the Greens were liable based on Count 7, which was based on the Greens' personal guarantees of the Bagel lease, but plaintiffs withdrew Count 7 of the complaint.

The parties filed a Joint Trial Management Report which serves as a basis for some of the findings herein made.

The essential facts regarding the Postal Creations Lease are as follows:  On or about November 15, 2007, the plaintiff, Lawrence Goichman, as trustee on behalf of the SCG Capital Corporation Profit Sharing Trust f/k/a Stamford Computer Group, Inc. Profit Sharing Trust (hereinafter referred to as the “Trust”), as landlord, and the Greens, as tenants, entered into the Postal Creations Lease.   The lease term ran from November 15, 2009 to February 28, 2011.

At some point in 2009, the Greens fell behind in the payments due under the Postal Creations Lease.   In July 2009 discussions occurred between an authorized representative of the Trust and the Greens to address the past due payments.   The Trust contends that the Greens failed to make the payments due under the agreement.   The Greens contend that an accord was reached, but that it was subsequently breached by the Trust.   On or about August 3, 2009, the Trust sent a Notice to Quit to the Greens demanding that they quit possession of the premises.   The Greens did not vacate the premises by the date in the Notice to Quit, but did vacate the premises on or about September 1, 2009 and they executed a document entitled “Surrender of Premises” (Exhibit F).

The Trust was the owner of the premises until June 2010 at which time Tolland Meetinghouse Commons, LLC became the owner of the premises and it has owned the property since that time.

The plaintiffs seek damages for breach of contract, as well as the alternative damage claims for use and occupancy and/or unjust enrichment.   The defendants have filed a special defense claiming that the plaintiffs have failed to mitigate damages and have also filed a counterclaim seeking to specifically enforce the accord referenced above, and they also contend that an issue of standing exists for the present plaintiff LLC.

Legal and Factual issues in dispute are as follows:

A. Factual Issues:

1.  Whether the Trust acted to mitigate damages.

2. If the plaintiffs prove any of their claims, the amount of damages owned by the Greens, including attorney fees.

3. Whether the Greens owe prejudgment interest pursuant to Connecticut General Statutes § 37–3a.

4. Whether the parties reached a valid accord regarding the arrearage due under the Postal Creations Lease and the terms of any such accord.

5. Whether the defendants commenced performance under said accord.

B. Legal Issues:

1.  Whether plaintiff Tolland Meetinghouse Commons, LLC has standing to prosecute this action.

2. Whether the Trust and/or Tolland Meeting House Commons is entitled to damages for payments that would have been due under the lease after June 2010.

3. Whether the terms of the Postal Creations lease permit the Trust to collect payments due under the lease for the entire lease term upon alleged default.

4. Whether the Trust mitigated damages.

5. Whether there was a legally valid accord.   If so, whether the defendants are entitled to specific performance of the accord and if so, the amount of damages the Greens owe the Trust to specifically enforce the accord.

The parties have also filed a Joint Stipulation of Facts, as follows:

BAGEL LEASE

1. On or about March 17, 1998, SCG, as landlord and Bagels and More, LLC, as tenant, entered into a lease for the operation of a bagel restaurant (the “Bagel Store”) located at Tolland Meetinghouse Commons, 200 Merrow Road, Tolland Connecticut (the “Bagel Lease”).

2. On September 30, 2004, SCG, S & K's Bagels, LLC and Bagels and More, LLC entered into an Assignment and Assumption Agreement whereby the Bagel Lease was assigned from Bagels and More, LLC to S & K's Bagels, LLC (the “Assignment”).

3. On or about September 23, 2004, SCG and S & K's Bagels, LLC entered into a First Amendment of Lease whereby the Bagel Lease was modified and extended (the “Bagel Lease, as Amended”).

4. The Bagel Lease, as Amended provided for a new lease term ending on September 30, 2009.

5. Paragraph 50 of the Bagel Lease, as Amended, contains a “Holding Over” clause that provides:  “[a]ny holding over after the expiration of this term or any renewal term shall be construed to be a tenancy at will at double the minimum and percentage rents herein specified ․”

6. Defendants did not vacate the Bagel Store on or before September 30, 2009.

7. Defendants vacated the premises in June 2010.

8. Defendants had exclusive possession of the Bagel Store premises from September 30, 2004 until June 2010.

9. As of September 2009, the Bagel Lease, as Amended provided for monthly rent of $1,126.67 per month and CAM charges of $463.20 per month, for total monthly charges of $1,589.87

10. Defendants did not make any payments for the Bagel Store from October 1, 2009 through June 2010, other than a single payment of $5,564.55 in January 2010.

POSTAL LEASE

11. On November 15, 2007, SCG and the Greens entered into a lease for the operation of a postal store (the “Postal Store”) located at Meeting House Commons, 200 Merrow Road, Tolland, Connecticut (the “Postal Lease”).

12. The Postal Lease provided for a term from November 15, 2007 through February 28, 2011.

13. In April 2009, the Greens failed to timely make any payment for base rent, CAM charges, and administrative charges for the Postal Store, and incurred a late fee.

14. On April 22, 2009, SCG waived the base rent and late fee for April 2009.

15. In May 2009, the Greens failed to timely pay the full amount of CAM charges and administrative charges due, and incurred a late fee.

16. In June 2009, the Greens failed to timely pay the full amount of CAM charges and administrative charges due, and incurred a late fee.

17. In July 2009, the Greens failed to timely make any payment for base rent, CAM charges, and administrative charges for the Postal Store, and incurred a late fee.

18. In July 2009, SCG and the Greens discussed the arrearages.

19. On or about July 29, 2009 the Greens tendered the sum of $2,050 by check and SCG negotiated said check on August 3, 2009.

20. On August 4, 2009 SCG issued a Notice to Quit to the Greens regarding the Postal Store premises.

21. On September 1, 2009 the Greens vacated the Postal Store premises and executed a document entitled Surrender of Premises.

22. The Greens had exclusive possession of the Postal Store premises from November 15, 2007 through September 1, 2009.

23. As provided for in the Postal Lease, the stated monthly rent from September 2009 through February 2010 was $2,370.75 per month.

24. As provided for in the Postal Lease, the stated monthly rent from March 2010 through February 28, 2011 (the end of the lease term) was $2,441.87 per month.

25. As of September 2009, the stated monthly CAM charges were $864.34 per month.

26. As of September 2009, the stated monthly administrative charges were $129.65 per month.

27. From September 2009 through February 2010, the calculated total monthly charge stated for the Postal Store (including base rent, CAM charges, and administrative charges) was $3,364.74 per month.

28. From March 2010 through February 2011, the calculated total monthly charge stated for the Postal Store (including base rent, CAM charges, and administrative charges) was $3,435.86 per month.

Two days prior to the scheduled trial date, the defendant filed a Motion to Dismiss the complaint, claiming the Court lacks jurisdiction, and arguing there was never a lease agreement with the named plaintiffs.   The issue was raised when the plaintiffs came to trial.   Neither party wanted to continue the trial and accordingly, they stipulated that the Court could decide the issue based on the evidence presented and the court's findings on the issues.   In effect they waived their right to have the issue determined prior to trial.

The Court denies said Motion to Dismiss for the following reasons, the initial lease ran from Lawrence Goichman, Trustee to the Greens, this lease was known as the Postal Creations Lease.

In June 2010, the Trust transferred the premises to an entity known as Tolland Meeting House Commons (TMC).  Lawrence Goichman was trustee for both entities (Postal Creations and TMC).

The terms of the lease were not changed and the parties' rights and obligations remained unchanged.   The facts of this case are strikingly similar to those reported in Ararat Miracle, LLC v. R/T Speed Inc. et al., Superior Court, New Britain, J.D., Shortall, J.T.R., May 14, 2010 [49 Conn. L. Rptr. 818].  “Both the tenant's and the landlord's interests are transferable.”

The plaintiff has established, primarily through its key witness, Lana Gargano, that the Greens entered into a lease agreement with the owner of the property.   Ms. Gargano was, at all relevant times, the property manager for the commercial properties which are the subject of the dispute.  “See, Bagel Leases,” Joint Stipulation of facts and “Postal Lease” Joint Stipulation of facts.

The Greens were finding it difficult to keep up with the rental payments.   Ms. Gargano called Mrs. Green to discuss a payment plan and they agreed that the Greens would pay the sum of $2,050. per month for three months for a total payment of $6,150.   That partial payment of $2,050. led to the issuance of a Notice to Quit. On or about August 31, 2009 the Greens delivered a “Surrender of Premises” to the plaintiff.

The Court believes that the plaintiff was cooperative in attempting to find a reasonable solution to the arrears in the lease payments, which were continuing to go in the wrong direction.

Further, the evidence established that the plaintiff took reasonable steps to mitigate its damages, they had listed the property with a licensed realtor who showed the property “dozens of times.”

Judgment shall enter for the plaintiff in the amount of $71,498.63 and for the Counterclaim defendant.

This matter will be scheduled for a hearing by civil caseflow to determine the award of counsel fees.

Klaczak, J.T.R.

Klaczak, Lawrence C., J.T.R.