Opinion
No. BRSP-064105
February 28, 2008
MEMORANDUM OF DECISION
In this summary process action, based on lapse of time, the plaintiff, Brennan Associates, seeks to evict the defendant, Newtown Savings Bank, from 956 White Plains Road in Trumbull on the ground that the lease expired on December 31, 2005.
It is undisputed that on August 23, 2000, the plaintiff and defendant entered into a valid, written lease agreement. (Complaint, ¶ 1; Answer ¶ 1.) Under the agreement, the plaintiff leased space to the defendant for a five-year period. (Defendant's Exhibit 3.) The rent for that period was a base amount of $78,025 annually, with additional rent paid relative to the branch's overall success. (Defendant's Exhibit 3.) The lease contained a renewal provision, which stated that the lease could be extended up to four times, for five years each time. (Defendant's Exhibit 3.)
When the lease expired, the defendant's chairman sent a letter to the plaintiff to begin discussing a new annual rent. (Plaintiff's Exhibit O.) The plaintiff originally offered a seven (7%) percent increase, to which the defendant, in July 2005, made a counteroffer of an increase of two (2% to 3%) percent. (Plaintiff's Exhibits G and J.) Negotiations continued during August and September of 2005. (Plaintiff's Exhibit R.) In September of 2005, the plaintiff sent a letter, drafted by his attorney, withdrawing its outstanding offer of five (5%) percent. (Plaintiff's Exhibit O.) The defendant then formally accepted what it called a "counter proposal" for a five (5%) percent increase in a letter dated October 20, 2005. (Plaintiff's Exhibit Q.) An addendum to the lease was never drafted to reflect that the parties agreed on a new rent. Instead, in January of 2006, the president of the defendant sent a memorandum to the file, recounting the conversation between the parties, discussing the five (5%) percent increase. (Plaintiff's Exhibit I.) In March of 2006, the last of the negotiations took place. At that time, the plaintiff offered a five (5%) percent increase with a different starting base. (Plaintiff's Exhibit Y.) The defendant did not accept those terms. Through 2006 and 2007, the defendant paid the same rent paid under the first lease, indicating that once they received an addendum, they would begin to pay the new amount.
On August 8, 2007, the plaintiff served a notice to quit effective September 1, 2007, due to lapse of time. (Plaintiff's Exhibit A.) The plaintiff filed a summary process complaint, which was served on the defendant on September 4, 2007. (Marshal's Return.) On September 13, 2007, the defendant filed an answer with special defenses, claiming that the lease was renewed automatically and by agreement. (Defendant's Special Defenses, ¶¶ 3-4.) The plaintiff and the defendant each filed a post-trial brief on November 13, 2007. The defendant filed a reply to the plaintiff's brief on November 28, 2007. Hearings on the matter were held on October 17, 2007, October 23, 2007, December 10, 2007 and December 24, 2007.
"The notice [to quit] is a condition precedent to the bringing of the [summary process] action." Sandrew v. Pequot Drug, Inc., 4 Conn.App. 627, 632, 495 A.2d 1127 (1985).
In an eviction action based on lapse of time, the plaintiff must prove, by a fair preponderance of the evidence, all the elements of the case. The essential elements are: (1) On or about a certain date, the landlord and the tenant entered into an oral or written, lease/rental agreement for a weekly/monthly/yearly term for use and occupancy of a certain premises; (2) The tenant agreed to pay an agreed-upon rent by a certain date; (3) The tenant took possession of the premises pursuant to the lease; (4) The rental agreement has terminated by lapse of time; (5) The landlord caused a proper [n]otice to [q]uit [p]ossession to be served on the tenant to vacate the premises on or before a certain termination date, as required by law; and (6) Although the time given in the Notice to Quit Possession of the premises has passed, the tenant remains in possession of the premises. § 47a-23(a)(1)(A).
Queriqi v. Slep, Superior Court, Judicial District of Hartford, Docket No. HDSP 141726 (November 23, 2007, Peck, J.).
"[S]ummary process is a special statutory procedure designed to provide an expeditious remedy . . . It enable[s] landlords to obtain possession of leased premises without suffering the delay, loss and expense to which, under the common-law actions, they might be subjected by tenants wrongfully holding over their terms . . . Therefore, the statutes relating to summary process must be narrowly construed and strictly followed." (Citations omitted; internal quotation marks omitted.) Bristol v. Ocean State Job Lot Stores of Connecticut, 284 Conn. 1, 5-6, 931 A.2d 837 (2007). "The ultimate issue in a summary process action is the right to possession." Tinaco Plaza v. Freebobs, Inc., 74 Conn.App. 760, 766-67, 814 A.2d 403, cert. denied on other grounds, 263 Conn. 904, 819 A.2d 840 (2003).
"General Statutes § 47a-23(a), which governs summary process actions, provides in relevant part: When the owner or lessor . . . desires to obtain possession or occupancy of any land or building, any apartment in any building, [or] any dwelling unit . . . and (1) when a rental agreement or lease of such property, whether in writing or by parol, terminates for any of the following reasons: (A) By lapse of time; (B) by reason of any expressed stipulation therein . . . (E) nonpayment of rent when due for commercial property . . . or (3) when one originally had the right or privilege to occupy such premises but such right or privilege has terminated . . . such owner or lessor . . . shall give notice to each lessee or occupant to quit possession or occupancy of such land, building, apartment or dwelling unit . . . General Statutes § 47a-23(b) also directs that a notice to quit shall include the reasons that the lessee or occupant must quit the premises, using the statutory language or words of similar import." (Internal quotation marks omitted.) Bristol v. Ocean State Job Lot Stores of Connecticut, supra, 284 Conn. 6.
The plaintiffs cause of action for summary process raises issues of contract law. "A lease is a contract. In its construction, three elementary principles must be kept constantly in mind: (1) intention of the parties is controlling . . . in light of the circumstances surrounding the parties at the execution of the instrument; (2) the language must be given its ordinary meaning unless a technical or special meaning is clearly intended; (3) the lease must be construed as a whole and in such a manner as to give effect to every provision, if reasonably possible . . . In determining the meaning and effect of the controverted language in the lease, the inquiry must focus on the intention expressed in the lease and not on what intention existed in the minds of the parties." Tinaco Plaza v. Freebob's, Inc., supra, 74 Conn.App. 767.
It is undisputed that a lease was created in August of 2000. The central issue is whether the lease was properly renewed or extended in October of 2005. It is the plaintiff's position that the lease expired, and that because there was no meeting of the minds relating to a renewal, the lease was never properly renewed. Specifically, the plaintiff alleges that the lease requires the defendant to notify the plaintiff one year before the end of the lease of its intention to renew, which the defendant never did. Consequently, the plaintiff contends that the defendant is a holdover tenant. The defendant argues that the lease was renewed when the parties agreed on a 5 percent increase in rent. In the alternative, the defendant contends that if it is disputed that the parties reached an agreement, the lease nevertheless was renewed when the plaintiff waived the notice requirements of the original lease. Furthermore, the defendant contends that it relied on conversations it had with a member of the plaintiff, Tom Brennan, and that through negotiations with him regarding rent, the lease was renewed.
"Whether an option in a lease to renew has been exercised is a question of fact for the trial court, which looks to the intent of the parties as expressed in their words and deeds." United Social Mental Health Services, Inc. v. Rodowicz, 96 Conn.App. 34, 39, 899 A.2d 85, cert. denied, 280 Conn. 920,908 A.2d 546 (2006).
The language of the lease provides, in relevant part: "This lease shall be for a term of five (5) years, commencing on the 1st day of January 2001 and shall be terminated on the 31st day of December 2005, provided however, that the Lessee, at his option shall have the right to renew and extend this lease, subject to all its terms and conditions except as to the amount of the primary rent reserved herein for four further periods of five (5) year(s). PROVIDED HOWEVER, that the right to renew the lease for such reserved periods shall become effective unless the Lessee shall give to the Lessor notice in writing . . . of his intention to renew this Lease for each such five (5) year(s) period, at least (1) year prior to the expiration of the Lease or the then current renewal term."
The plaintiff maintains that the word "not" belongs after shall, so as to read "shall not become effective." The word "not" was handwritten into a copy of the lease, but it is not clear when the word was added and by whom. The defendant contends that the word "not" should be included after the word "intention, such that the clause reads "unless the Lessee shall give to the Lessor notice in writing . . . of his intention not to renew the lease . . ." The defendant contends that the omission of this words renders the provision "ambiguous and should be interpreted against the drafter." (Defendant's Reply to Plaintiff's Post-trial Brief, page 3).
In arguing that the lease was not renewed, the plaintiff emphasizes that to create a binding lease, a proper renewal, a meeting of the minds and a definite rental amount were needed. "Our case law recognizes a technical distinction between a covenant to renew a lease and a covenant to extend a lease . . . A covenant to renew a lease requires a new written instrument, whereas a new written instrument is not required by a covenant to extend because the original lease operates as a continuous one . . . This distinction is particularly important if a question of satisfaction of the statute of frauds is involved." (Citations omitted; internal quotation marks omitted.) David A. Altschuler Trust v. Blanchette, 33 Conn.App. 570, 572-73, 636 A.2d 1381, cert. denied, 229 Conn. 906, 640 A.2d 117 (1994). Because the language of the lease, as cited above, provides for renewal periods, a written instrument was necessary to effectuate the option in this lease. Moreover, the renewal clause also explicitly calls for the parties to negotiate a new "primary rent" amount, thereby necessitating a separate written agreement to that term.
To provide credence for its contention that the lease was automatically extended, the defendant asserts that once the plaintiff agreed to negotiate rental terms, the notice requirement was waived and that the continued negotiations between the parties supports this claim. Nevertheless, despite efforts to agree on a rental amount, the parties were unable to agree, which is equally fatal to the lease. The lease does not specifically contemplate how to address a new rental amount, but it does include an addendum. That addendum provides spaces for a new rental amount as well as signatory lines for both parties. As such, the Court concludes that a renewal does not become effective until an addendum has been created and signed.
An agreement, reflecting a meeting of the minds, is a required component of a contract. "[I]n order for an enforceable contract to exist, the court must find that the parties' minds had truly met . . . If there had been a misunderstanding between the parties, or a misapprehension by one or both so that their minds have never met, no contract has been entered into by them and the court will not make for them a contract which they themselves did not make." United Social Mental Health Services, Inc. v. Rodowicz, 96 Conn.App. 34, 40, 899 A.2d 85, cert. denied, 280 Conn. 920, 908 A.2d 546 (2006). In the present case, there is no evidence that the defendant and the plaintiff came to a consensus about the amount of rent due. Both parties agree that negotiations continued for over a year. They disagree, however, about whether a firm rental price was agreed upon. Finally, only one partner engaged in any kind of firm discussions with the defendant, and one partner's consent is insufficient to bind the partnership.
"The defendant was aware of the voting requirements of the partnership, explaining to the plaintiff in a letter that it had a copy of the partnership agreement. (Plaintiff's Exhibit L.)
The plaintiff argues that the absence of an explicit price term is fatal to a contract. The plaintiff contends that for close to sixteen months, the parties discussed a new price term. During that time, revocations and acceptances were exchanged, but offers by the parties never matched. Under established principles of contract law, an agreement must be definite and certain as to its terms and requirements . . . [W]here the memorandum appears [to be] no more than a statement of some of the essential features of a proposed contract and not a complete statement of all the essential terms, the plaintiff has failed to prove the existence of an agreement." (Citations omitted; internal quotation marks omitted.) Glazer v. Dress Barn, Inc., 274 Conn. 33, 51, 873 A.2d 929 (2005). "The identification of the essential elements of a contract depends on the particular circumstances of each case." (Internal quotation marks omitted) Coalition to Save Horsebarn Hill v. FOIC, 73 Conn.App. 89, 98, 806 A.2d 1130 (2002), cert. denied, 262 Conn. 932, 815 A.2d 132 (2003). Looking at the particular facts of this case, it is evident that the lease did not include all of the necessary terms of the agreement because the parties never agreed to a new rental amount.
A factually similar case is Warner Associates v. Logan, 50 Conn.App. 90, 96, 718 A.2d 48 (1998), which addressed the three salient contractual elements in dispute in the present case. The Warner Associates lease contained a renewal provision, and while the parties discussed the terms of an extension, the landlord's offers were never accepted. The trial court found that the parties did not enter into a valid renewal lease, and therefore the defendant-tenant was not liable for rent. The landlord appealed, asserting that although there was no written instrument and there was no agreed upon rental amount, there was a lease by implication. The Appellate Court upheld the trial court's determination that a lease did not exist, finding that the tenant did not follow all the proper procedures for renewing the lease. The Appellate Court stated: "Further, the negotiated renewal lease was to be in writing, and if the defendants remained in the premises after the expiration of the term of the lease without having executed a new written lease, such holdover would not constitute a renewal or extension of the lease, but in fact create a month-to-month tenancy. Thus, to renew the lease effectively, the parties were required to negotiate the rental amount and create a new written document. In this case, that never happened. Although the defendants paid an increased amount of rent equal to the maximum amount permitted by the lease, the plaintiff refused to accept the extension, attempted to add additional terms, and sent the defendants a different lease to which they did not agree." CT Page 3324 Warner Associates v. Logan, supra, 50 Conn.App. 96.
Although the lease and the facts of Warner Associates are not identical, the interpretation of the agreement in that case provides some guidance here. As in Warner Associates, in the absence of clearly agreed upon terms and a written instrument, the defendant in this case is a holdover tenant. In accordance with well established precedent, the intent of the parties, as expressed in the lease, is controlling. In the present case, the language of the original lease and the actions of the parties do not indicate that the parties agreed on a central provision of the renewal lease. Specifically, the evidence shows that the parties could not reach an agreement as to the rental amount. Furthermore, the lease requires the defendant, to exercise its option to renew the lease, to provide written notice one year before the lease's expiration.
"In construing a written lease, which constitutes a written contract, three elementary principles must be kept constantly in mind: (1) The intention of the parties is controlling and must be gathered from the language of the lease in the light of the circumstances surrounding the parties at the execution of the instrument; (2) the language must be given its ordinary meaning unless a technical or special meaning is clearly intended; [and] (3) the lease must be construed as a whole and in such a manner as to give effect to every provision, if reasonably possible." Middlesex Mutual Assurance Co, v. Vaszil, 279 Conn. 28, 35-36, 900 A.2d 513 (2006).
"[W]hen the language of the [lease] is clear and unambiguous, [it] is to be given effect according to its terms." (Internal quotation marks omitted.) Bristol v. Ocean State Job Lot Stores of Connecticut, supra, 284 Conn. 8.
The status of the defendant as a holdover tenant does not automatically create a new lease. "Under certain conditions, which were present in Corthouts v. Connecticut Fire Safety Services Corp., 2 Conn. Cir.Ct. 39, 193 A.2d 909 (1963), a lessee's mere holding over was sufficient to exercise its option." Tinaco v. Freebob's, Inc., supra, 74 Conn.App. 772. Nevertheless, the court in Corthouts provided a rationale for finding that the renewal was automatic in that case: "The court noted that the lease at issue provided the amount of rent to be paid and distinguished the case from Welk v. Bidwell, 136 Conn. 603, 73 A.2d 295 (1950), in which the dispute centered on the amount of rent to be paid." Tinaco v. Freebob's, Inc., supra, 74 Conn.App. 772. The present case is distinguishable from Corthous because there was no agreed upon rental amount in this case. As such, the lease could not have been renewed automatically.
See also W.G. Maltby, Inc. v. Associated Realty Co., 114 Conn. 283, 288, 158 A.2d 548 (1932), in which our Supreme Court concluded that "[t]he contract is definite as to the premises to be let, the time when the term was to commence, the duration of the term, the rent to be paid, and was, as between the parties, a valid lease of the premises."
The defendant further contends that it reasonably relied on the representations made by a member of the plaintiff, Tom Brennan, that he had the authority to bind the corporation once the parties agreed on a rental amount. These claims raise relevant issues of partnership and estoppel. While it is apparent from the above analysis that a new renewal lease was not properly executed, this court must address whether a contract arose from reasonable reliance on the part of either party. To that end, the defendant's estoppel claim is grounded in its alleged reliance on the option for extension provided for by the lease. The defendant contends that in reliance upon that option provision, and on the representation made by Brennan, a new lease had been created, causing the defendant to commercially invest itself in the property. Consequently, eviction would cause severe economic ramifications to the defendant.
The plaintiff also makes an argument for estoppel. It claims that because the defendant admitted, during the trial of Tom Brennan, that there was no lease and that it was a holdover tenant, the plaintiff relied to its detriment and irrevocably signed a lease with a new tenant. (Plaintiff's Exhibit V, Addendum D.) As the evidence reflects that the defendant was a holdover tenant and that the lease had expired, this court will not assess the relevance of an estoppel argument made by the plaintiff.
"The doctrine of equitable estoppel is well established. [W]here one, by his words or actions, intentionally causes another to believe in the existence of a certain state of things, and thereby induces him to act on that belief, so as injuriously to affect his previous position, he is concluded from averring a different state of things as existing at the time . . . Our Supreme Court . . . stated, in the context of an equitable estoppel claim, that [t]here are two essential elements to an estoppel: the party must do or say something which is intended or calculated to induce another to believe in the existence of certain facts and to act upon that belief; and the other party, influenced thereby, must actually change his position or do something to his injury which he otherwise would not have done. Estoppel rests on the misleading conduct of one party to the prejudice of the other." (Citations omitted; internal quotation marks omitted.) Johnnycake Mountain Associates v. Ochs, 104 Conn.App. 194, 208, 932 A.2d 472 (2007).
The defendant contends that, during rent negotiations, it believed Brennan to have the power and authority to bind the plaintiff. Furthermore, the defendant did not believe that other individuals, affiliated with the plaintiff, had any authority to negotiate, and therefore the defendant did not recognize the September 2005 letter as a revocation. (Plaintiff's Exhibit O.) The defendant argues that it had worked exclusively with a partner, Richard Aiello, who died shortly before the original lease term ended. It maintains that upon Aiello's death, Brennan became the primary negotiator for the plaintiff in matters concerning the defendant.
The defendant specifically argues that Brennan represented to the defendant that he was an agent of the plaintiff, and therefore competent to discuss and secure the lease. The plaintiff disagrees. "[A]gency is defined as the fiduciary relationship which results from manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act . . . Thus, the three elements required to show the existence of an agency relationship include: (1) a manifestation by the principal that the agent will act for him; (2) acceptance by the agent of the undertaking; and (3) an understanding between the parties that the principal will be in control of the undertaking." (Emphasis added.) Gordon v. Tobias, 262 Conn. 844, 849, 817 A.2d 683 (2003). Here, the concept of agency is controlled by the partnership arrangement. It is explicit in the bylaws, and admittedly understood by the parties, that one partner alone cannot bind the partnership. The partnership agreement requires seventy partnership votes to pass any measure, including approval of leases. Despite Brennan's role as an original and named partner, he only holds thirty-two votes, and his acquiescence is not enough to bind the partnership.
In a defendant's memorandum to the file, dated January 9, 2006 and entered into evidence as Exhibit 1, the defendant explains that Brennan led it to believe that the absence of an addendum was not an issue.
The defendant admitted, during the hearing on October 17, 2007, that it was aware of the partnership arrangement, had reviewed the bylaws, and, in a letter entered into evidence dated May 25, 2005, the defendant explicitly demonstrated an understanding that the other partners needed to approve the lease. (Plaintiff's Exhibit L.)
Moreover, the defendant, for its part, is under a duty to act in good faith. "[T]he party dealing with the agent must have, acting in good faith, reasonably believed, under all the circumstances, that the agent had the necessary authority to bind the principal to the agent's action." Gordon v. Tobias, supra, 262 Conn. 851. The plaintiff argues that the defendant knew that there was discord among the partners and therefore the defendant could not have thought that Brennan's approval alone would suffice. The known discord is evinced by the defendant's participation in a trial for a case brought by Brennan against his partners on May 3, 2006. (Plaintiff's Exhibit V, Addendum D.) As such, the plaintiff alleges that the defendant lacks the requisite good faith. Relying on the evidence, this court agrees with the plaintiff that Brennan did not have the authority to extend the contract and that the defendant was aware of this. Consequently, the defendant's estoppel argument fails.
For the foregoing reasons, the Court concludes the defendant failed to renew the lease. Accordingly, judgment for possession shall enter in favor of the plaintiff.