Opinion
No. CVH-7849
September 29, 2010
MEMORANDUM OF DECISION
The plaintiff, Gateway Lauren, Inc., has commenced this breach of contract action for unpaid rent and other damages from the defendants, Michael Thibodeau d/b/a Tacorral Restaurant and Michael Thibodeau, individually. The action arises out of a written lease (the "Lease") of approximately 3,025 square feet of commercial space known as 1141 Tolland Turnpike, also known as Store 13 and Space 167-550 (the "Premises") situated in the shopping center commonly known as The Plaza at Burr-Corners in Manchester, Connecticut. The defendant Michael Thibodeau formerly operated a restaurant in the Premises. The plaintiff's one count amended complaint dated March 25, 2009 alleges, in paragraph 19 of the complaint, breach of the lease contract by the defendants and claims "Plaintiff is entitled to all sums due and owing under the Lease as of the date of termination." The defendants answered the complaint and asserted four special defenses. The court conducted a trial on March 19, 2010. The plaintiff and defendants were represented by counsel. The parties were ordered to submit post trial proposed findings of fact and conclusions of law.
BACKGROUND
The Lease was entered into on August 4, 1997 by Burr Plaza I Limited Partnership, as landlord, and Joseph Patrick Collin and Susan Mitchell Collin as tenants for the purpose of operating a full service restaurant. The initial term of the lease ended November 30, 2000. The Lease was amended by a "First Amendment to Lease" dated October 2, 2000, which extended the term of the Lease through November 30, 2005 in addition to amending the minimum rent payable. By an "Assignment and Second Amendment of Lease" instrument dated September 22, 2005, executed by KOP BURR CORNERS, LLC, as landlord, Joseph Patrick Collin and Susan Mitchell Collin, d/b/a "Chowder Town," as "assignor" and Michael Thibodeau as "assignee," the Lease was further amended and assigned to Michael Thibodeau with the consent of the landlord. Pursuant to the Assignment and Second Amendment of Lease, the term of the Lease was extended through February 28, 2007 and the minimum rent for the period of December 1, 2005 through February 28, 2007 was agreed to be $3,940.06 per month. On March 1, 2007, a "Third Amendment of Lease" was executed by Gateway Lauren, Inc., as landlord, and Michael Thibodeau, as tenant. Pursuant to the Third Amendment of Lease, the term of the Lease was extended through February 29, 2012 and the minimum rent was amended to $4,033.34 per month for the period March 1, 2007 through February 28, 2008, $4,285.42 per month for the period March 1, 2008 through February 28, 2010 and $4,537.50 for the period March 1, 2010 through February 29, 2012. In addition to minimum rent, the defendants were obligated under the terms of the Lease to pay a pro rata portion of certain expenses including, real estate taxes, insurance, common area maintenance, water and sewer charges as additional rent.
The defendants failed to pay the minimum rent due for the months of January, February and March of 2008. The plaintiff served the defendants with a notice to quit on or about April 3, 2008 and commenced a summary process action by a writ summons and complaint dated June 3, 2008. On August 5, 2008, the court entered a stipulated judgment for possession of the premises in favor of the plaintiff with a stay of execution in favor of the defendants through August 16, 2009. (Plaintiff's Exhibit 9). The stipulated judgment also provided that if the defendants' property was not removed from the premises by August 16, 2008, the defendants agreed to pay all costs and fees incurred by the plaintiff to remove the property.
THE PLAINTIFF'S CLAIMS
The plaintiff seeks money damages for unpaid minimum rent, additional rent as defined in the Lease, use and occupancy, future rental payments due under the Lease and reimbursement for costs and expenses. As noted, the court entered a stipulated judgment for possession of the premises in favor of the plaintiff on August 5, 2008 with a stay of execution in favor of the defendants through August 16, 2009. (Plaintiff's Exhibit 9).
The plaintiff claims the following damages:
1. The balance of unpaid rent in the amount of $18,869.66 as of May 31, 2008.
2. Fixed Rent for the period of June 1, 2008 through February 28, 2010 at the rate of $4,285.42 per month pursuant to the terms of the Third Amendment of Lease for a total of $89,993.82.
3. Fixed Rent for the period of March 1, 2010 through March 31, 2010 at the rate of $4,537.50 pursuant to the terms of the Third Amendment of Lease.
4. "Holdover" Fixed Rent from April 1, 2008 through August 16, 2008 at the rate of $4,285.42 per month (which sums are claimed in addition to the Fixed Rent in No. 2 above as a result of a provision in paragraph 22.01 of the original lease which required payment of two (2) times the rent during any holdover period) for a total of $19,353.51.
5. "Additional" Rent for common area maintenance for the period June 1, 2008 through March 19, 2010 at the rate of $683.86 per month for a total of $15, 045.14.
6. A common area maintenance reconciliation charge for the 2008 calendar year in the amount of $2,925.00.
7. A common area maintenance reconciliation charge for the 2009 calendar year in the amount of $4,132.00.
8. Real estate taxes for the period June 1, 2008 through August 31, 2008 at the rate of $402.17 per month for a total of $1,206.51.
9. Real estate taxes for the period September 1, 2008 through August 31, 2009 at the rate of $464.09 per month for a total of $5,569.08.
10. Real estate taxes for the period September 1, 2009 through March 19, 2010 at the rate of $517.58. per month for a total of $3,402.41.
11. "Tenant Charges" in the amount of $3,402.41 pursuant to paragraph 11.01 of the original lease and as set forth in Plaintiff's Exhibit 16.
The plaintiff also seeks attorneys' fees in the amount of $33,576.22 and future contract rent at the rate of $4,537.50 per month through the end of the Lease together with common area maintenance charges of $683.87 per month and real estate taxes of $517.58 per month also through the end of the Lease.
THE DEFENDANTS' FIRST SPECIAL DEFENSE
The defendants' first special defense was stricken.
THE DEFENDANTS' SECOND SPECIAL DEFENSE
The defendants' second special defense asserts that the plaintiff "has failed to mitigate its damages by failing to take reasonable steps to re-let the premises."
Our law is clear. "When the lessee breaches a lease for commercial property, the lessor has two options: (1) to terminate the tenancy; or (2) to refuse to accept the surrender . . . Where the landlord elects to continue the tenancy, he may sue to recover the rent due under the terms of the lease. Under this course of action, the landlord is under no duty to mitigate damages." (Citations omitted.) Rokalor, Inc. v. Connecticut Eating Enterprises, Inc., 18 Conn. App. 384, 388, 558 A.2d 265 (1989). "When the landlord elects to terminate the tenancy . . . the action is one for breach of contract . . . and, when the tenancy is terminated, the landlord is obliged to mitigate his damages. When the tenancy ends, the tenant is released from his obligations under the lease and is, therefore, no longer obliged to pay rent." (Citations omitted). CT Page 17317 Rokalor, Inc. v. Connecticut Eating Enterprises, Inc., supra, 388-89. "[T]he unpaid rent, while not recoverable as such, may be used by the court in computing the losses suffered by the plaintiff by reason of the defendant's breach of contract of lease. The plaintiff would be entitled to recover the damages which would naturally follow from such a breach . . . [I]n an action for breach of a lease, the amount of rent agreed to by the parties is a proper measure of damages." (Citations omitted; internal quotation marks omitted.) Id., 389-90.
Moreover, General Statutes § 47a-11c provides: "If a landlord terminates a residential or commercial tenancy on the grounds that the tenant committed a breach of the rental agreement and the landlord brings an action for damages for the breach, such damages shall include the amount of rent agreed to by the parties but unpaid by the tenant. The landlord shall be obligated to mitigate damages. This section shall not limit either party's rights to assert other legal or equitable claims, counterclaims, defenses or setoffs." In this case, the plaintiff elected to terminate the defendants' lease by bringing the summary process action. Accordingly, the plaintiff was under a duty to make reasonable efforts to mitigate its damages.
Although the plaintiff had a duty to mitigate its damages, K K Realty Associates v. Gagnon, 33 Conn. App. 815, 819, 639 A.2d 524 (1994), the burden of proving failure to exercise reasonable care to mitigate damages is on the defendants, Lynch v. Granby Holdings, Inc., 37 Conn. App. 846, 850, 658 A.2d 592 (1995).
A party who is damaged has a duty to make reasonable efforts to mitigate damages. Vespoli v. Pagliarulo, 212 Conn. 1, 3 (1989). "Factors taken into consideration in determining if a landlord has acted reasonably include, but are not limited to: the rental rate at which the landlord attempted to re-let the premises; the marketing efforts used; and the market rental rate for similar such units." Powell on Real Property, Vol. 2, Ch. 17, § 17.05[2]. A tenant is liable only for damages that accrue during the period of time when the landlord was exercising reasonable efforts to mitigate damages. Barone v. O'Connell, SNBR-450, 1995, Ct. Sup. 14666 (1995), affirmed, 43 Conn. App. 913 (1996). Mitigation requires reasonable efforts to re-let the leased premises which may depend on the unique circumstances of the case. Krevit v. A La Carte Foods, NH-509 (1990).
The term reasonable is neither defined in the lease, nor is it self-defining.
Black's Law Dictionary defines "reasonable" as "[f]air, proper, just, moderate, suitable under the circumstances." Black's Law Dictionary (6th Ed. 1990). "Fair" is defined in The American Heritage Dictionary of the English Language 622, 655, 979 (3d ed. 1992) as "[j]ust to all parties; equitable." "Reasonable effort means doing everything reasonable, not everything possible." (Internal quotation marks omitted; citation omitted.) In re Ryan R., 102 Conn. App. 608, 619 (2007); In re Mariah S., 61 Conn. App. 248, 255, 763 A.2d 71 (2000).
Mindful of the forgoing principles, the court makes the following findings.
The plaintiff presented testimony from Benjamin Starr, a principal in Atlantic Retail Properties. Starr's testimony was offered to support the plaintiff's claim that reasonable efforts were made to mitigate damages and to establish the fair market rental value of the Premises. Starr testified that he is a licensed real estate broker and that Atlantic Retail Properties is the leasing agent for the plaintiff.
Although the plaintiff offered testimony from Starr that the entire Plaza at Burr Corners Shopping Center was marketed by bringing brochures to national conventions attended by "thousands," the plaintiff offered no copies or other evidence of such brochures. The only documentary evidence offered to support the plaintiff's marketing efforts consisted of a one page flyer containing a photograph of the shopping center the image of which is smaller than the almost empty parking lot (Plaintiff's Exhibit 13 A) and a one page flyer which included an aerial photograph showing a small image of the shopping center in the midst of a sea of other regional retail shopping centers and highways. (Plaintiff's Exhibit 13B). There is no reference on the flyers to the Premises or any reference to any restaurant space available at the shopping center. The defendants argue that since the Premises are equipped with exhaust vents and grease traps the Premises would be attractive to a potential restaurant user who was under time constraints.
The plaintiff offered no evidence that the Premises were actually shown to any prospective tenant. Starr merely testified that there was one interested party who inquired about renting the Premises and one party who failed to keep an appointment to view the Premises. Starr offered no testimony of any efforts to reschedule the appointment. The plaintiff also offered no evidence of any bills or expenses for advertising in real estate trade journals or newspapers.
Starr testified that the shopping center property was posted on his firm's website, along with others, and that a phone number was listed to receive calls from interested parties. Starr testified that the phone number was linked to a voice mail box which was reviewed by an assistant who was instructed to provide the messages received to Starr or his "colleague."
The defendants' witness, Anthony Garafolo, testified that he owned a restaurant in Bolton, Connecticut and in September 2009, he was interested in opening a restaurant in Manchester, Connecticut. Garafolo testified that he saw a sign posted at the shopping center listing a phone number to call concerning rentals. Garafolo testified that he called the phone number listed and left a message in a voice mail box expressing his interest but he received no return call. Garafolo further testified that, having received no response, he left a second message but still received no return call and decided to look "elsewhere."
On cross-examination, the plaintiff elicited that the defendant, Michael Thibodeau, has been Garafolo's accountant for many years. The plaintiff argues that Garafolo's testimony should be given little or no weight since his credibility is questionable. The plaintiff also challenged Garafolo to produce evidence or records that would prove that he did not get a response to his messages. Although there was no evidentiary offer of the list of calls expressing interest in the shopping center, testimony was received that the assistant's notes reflected a call or call from a person leaving the name "Tony." In light of the entire testimony, the court fails to see why Garafolo would be required to produce any records or additional corroboration of his telephone calls.
"[I]t is the trier's exclusive province to weigh the conflicting evidence, determine the credibility of witnesses and determine whether to accept some, all or none of a witness's testimony." (Internal quotation marks omitted.) Hoffer v. Swan Lake Ass'n., Inc., 66 Conn. App., 858, 861, 786 A.2d 436 (2001). The court, having heard and evaluated the testimony and witnessed the demeanor of Anthony Garafolo, find his testimony to be fully credible.
As noted above, a party who is damaged has a duty to make reasonable efforts to mitigate damages. Vespoli v. Pagliarulo, 212 Conn. 1, 3 (1989). What constitutes a reasonable effort under the circumstances of a particular case is a question of fact for the trier. Id. On the basis of the testimonial evidence and the facts found, the court finds that the defendants have met the burden to prove that the plaintiff failed to make reasonable efforts to mitigate its damages in the present case.
Since the court has found that the defendants have met their burden of proof, there is no need to consider whether the affirmative obligation of the landlord to mitigate damages specifically required by General Statutes § 47a-11c, enacted in 1997, was intended to impose the burden to prove mitigation of damages on the landlord.
Having found that the plaintiff terminated the tenancy by the summary process action and failed to use reasonable efforts to mitigate its damages, the court awards damages in accordance with the following. For convenience of reference, the damages awarded correspond to the numerical listing of the plaintiff's claims set forth above.
No. 1. Damages for back rent are awarded in the amount of $18,869.66.
No. 2. Damages at the rate of $4,285.42 per month for the months of June, July and August 2008 for use and occupancy in the amount of $12,856.26.
No. 3. No award.
No. 4. The plaintiff seeks damages equal to two (2) times the Fixed Rent for the months of April 2008 through August 2008 pursuant to the holdover rent provision in the original Lease. Paragraph 22.01 of the original Lease reads: "Any holding over after the expiration of the Term, without the consent of the Landlord, shall be construed to be a tenancy from month to month at two (2) times the rent and additional charges payable hereunder immediately prior to the expiration of the Term prorated on a monthly basis, and shall otherwise be on the terms and conditions herein specified so far as applicable."
It is well settled that a contract provision which imposes a penalty for breach of contract is invalid, but a provision which allows liquidated damages for breach of contract is enforceable if certain conditions are satisfied. Norwalk Door Closer Co. v. Eagle Lock Screw Co., 153 Conn. 681, 686 (1966). "[i]f the parties honestly but mistakenly suppose that a breach will cause harm that will be incapable or very difficult of accurate estimation, when in fact the breach causes no harm at all or none that is incapable of accurate estimation without difficulty, their advance agreement fixing the amount to be paid as damages for the breach . . . is not enforceable." (Citations omitted; emphasis added.) Norwalk Door Closer Co. v. Eagle Lock Screw Co., supra, 153 Conn. 688. "This is so whether the contract provided for liquidated damages or for a penalty." Id., 690.
The defendants' failure to pay Fixed Rent for the months of April 2008 through August 2008 caused no harm that was incapable of accurate estimation. Accordingly, the court finds the imposition of additional damages at the rate of two (2) times the Fixed Rent to be unenforceable as a penalty.
No. 5. "Additional" rent for common area maintenance for the months of June, July and August 2008 at the rate of $683.86 for a total of $2,051.58.
No. 6. Common area "reconciliation charge" for 2008 for the period January through August 2008 at the rate of $243.75 per month for a total of $1,950.00.
No. 7. No award of damages.
No. 8. Real estate taxes for the months of June, July and August 2008 at the rate of $464.09 for a total of $1,392.27.
Nos. 9 and 10. No award of damages.
No. 11. "Tenant Charges" as set forth on Exhibit 17 in the amount of $3,402.41.
The plaintiff also seeks attorneys' fees of $33,576.22 pursuant to paragraph 18.04 of the Lease. The plaintiff's claim is supported by an Affidavit of the plaintiff's counsel. The defendants have not objected to any of the time entries on the affidavit nor claim that plaintiff's counsel's fees are excessive. The court finds the hourly rates and total fees to be reasonable and awards attorneys' fees in the amount of $33,576.22. Accordingly, the court finds the plaintiff suffered damages in the total amount of $74,098.40 including attorneys' fees. .
As noted above, the plaintiff's one count amended complaint alleges, in paragraph 19 of the complaint, breach of the lease contract by the defendants and claims "Plaintiff is entitled to all sums due and owing under the Lease as of the date of termination."
"It is fundamental in our law that "the right of a plaintiff to recover is limited by the allegations of the complaint . . . and any judgment should conform to the pleadings, the issues and the prayers for relief." (Internal quotation marks omitted.) Journal Publishing Co. v. Hartford Courant Co., 261 Conn. 673, 686, 804 A.2d 823 (2002). In view of the court's finding that the defendants have sustained their burden to prove that the plaintiff has failed to make reasonable efforts to mitigate its damages, the court finds it unnecessary to rule on whether the plaintiff's claim for damages is limited by its complaint.
THE DEFENDANTS' THIRD SPECIAL DEFENSE
The defendants' third special defense alleges that "The Plaintiff is attempting to charge the Defendant improper items under the lease." The defendants offered no persuasive evidence in support of this defense. Accordingly, the court finds for the plaintiff on this claim.
THE DEFENDANTS' FOURTH SPECIAL DEFENSE
The defendants' fourth special defense claims "The Defendant is entitled to set off against any sums due the Plaintiff the reasonable value of the personal property which the Defendant was unable to remove from the Premises." The defendants' claim suffers from a number of infirmities.
First, the summary process stipulation provided the defendants with the right to remove all personal property from the Premises by August 16, 2008. The stipulation further provided that if the defendants failed to remove the property by August 16, 2008, the defendants would be liable for the plaintiff's expenses to remove it. Michael Thibodeau testified that he was unable to remove the property because he had difficulty arranging for a plumber and other parties to assist him with the removal. Thibodeau said that he believed that he had no right to enter the Premises after August 16, 2008. Thibodeau acknowledged that he never requested additional time to remove the personal property nor any further attempt to recover it.
An owner may testify as to the value of his property. Moore v. Sergi, 38 Conn. App. 829, 840, 664 A.2d 795 (1995). Although an owner may testify as to the value of his property, a party seeking damages must provide evidence that the property actually existed. In this case, the defendants submitted no evidence of the personal property claimed to have been located on the Premises when the defendants vacated. The defendants offered no photographs, invoices, personal property tax declarations or other authentication or corroboration of the type or condition of any such equipment. The court finds for the plaintiff on the defendants' fourth special defense.
CONCLUSION
In accordance with the above, judgment shall enter in favor of the plaintiff against the defendants in the sum of $74,098.40 plus taxable costs upon submission of a proper bill of costs. The Court makes no award of interest.
SO ORDERED.