Opinion
No. CV 10-6009489-S
August 5, 2011
MEMORANDUM OF DECISION DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
The plaintiff Hale Farms Condominium Association, Inc., filed a two-count complaint alleging breach of contract (count one), and violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a, et. seq., (count two), against the defendant, BG Laundry, LLC. The relevant facts are as follows: On October 1, 2001, the plaintiff entered into a written lease agreement with the defendant, whereby the defendant agreed to install and maintain coin-operated laundry machines in the plaintiff's condominium complex in exchange for paying the plaintiff 50% of the net revenues from the machines on a monthly basis. While the plaintiff has met its obligations under the agreement, the defendant has failed to pay 50% of the net revenue from the machines since February 2009. The plaintiff further alleges that when the plaintiff demanded payment from the defendant in accordance with the lease agreement, the "Defendant fabricated alleged breaches . . . by Plaintiff, falsely claimed additional terms existed. And/or falsely claimed Plaintiff had violated its bylaws, all in an attempt to avoid its financial obligations under the Agreement." The plaintiff also alleges that this conduct, coupled with the defendant's wrongful withholding of sums due, unless the plaintiff acquiesced to certain terms, are material, false and likely to mislead consumers or other businessmen acting reasonably, and therefore constitute unfair and/or deceptive acts or practices in violation of C.G.S. § 42-110b(a)," all of which have caused the plaintiff to suffer "financial injury."
The defendant's motion for summary judgment is directed to the; second amended complaint, filed January 24, 2011, which is now the operative complaint.
In its answer to the plaintiff's amended complaint (No. 141), the defendant admits that the parties entered into the lease agreement but denies that it breached the lease or engaged in conduct that violated CUTPA. The answer also includes a two-count counterclaim which, in turn, alleges breach of contract and violation of CUTPA. In count one of the counterclaim, the only one at issue, the defendant alleges that the plaintiff breached the lease agreement because it granted permission to the owners of individual condominium units to install laundry equipment in their units, attempted to evict the defendant from the premises and contracted with "another person to lease the same or similar right in and to the premises leased by" the defendant. In its answer to the counterclaim, the plaintiff denies that it breached the lease, or engaged in conduct that violated CUTPA.
On April 4, 2011, the defendant filed this motion for summary judgment addressed to count one of its counterclaim (liability only) and both counts of the plaintiff's second amended complaint (liability and damages). In support of their arguments, both parties have submitted memoranda and numerous exhibits including a copy of the lease agreement, excerpts from depositions, copies of letters, an affidavit and discovery responses. Oral argument was held on May 2, 2011.
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Sherman v. Ronco, 294 Conn. 548, 553-54, 985 A.2d 1042 (2010). "[T]he `genuine issue' aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred . . . A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case." (Citation omitted; internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).
"In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17-45]." (Internal quotation marks omitted.) Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10-11, 938 A.2d 576 (2008).
I BREACH OF CONTRACT
"The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages." (Internal quotation marks omitted.) American Express Centurion Bank v. Head, 115 Conn.App. 10, 15-16, 971 A.2d 90 (2009). The issue of "[w]hether there was a breach of contract is ordinarily a question of fact." (Internal quotation marks omitted.) Wyatt Energy, Inc. v. Motiva Enterprises, LLC, 128 Conn.App. 666, 682, 19 A.3d 181 (2011).
The determination of whether a party breached a contract is governed by the following legal principles. "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 . . . [T]he intent of the parties [to a contract] is to be ascertained by a fair and reasonable construction of the written words and . . . 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 . . . Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms. A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity . . . [C]ourts do not unmake bargains unwisely made. Absent other infirmities, bargains moved on calculated considerations, and whether provident or improvident, are entitled nevertheless to sanctions of the law . . . Although parties might prefer to have the court decide the plain effect of their contract contrary to the agreement, it is not within its power to make a new and different agreement . . . As stated by our Supreme Court, a presumption that the language used is definitive arises when . . . the contract at issue is between sophisticated parties and is commercial in nature." (Internal quotation marks omitted.) Id.
A Defendant's Counterclaim for Breach of Contract
The defendant argues that summary judgment should be granted in its favor as to the plaintiff's liability on the defendant's counterclaim for breach of contract because the evidence shows that the plaintiff breached the lease agreement by: (1) granting permission to individual condominium units to install laundry equipment within their units during the term of the lease agreement; (2) seeking to evict the defendant from the leased premises during the term of the lease agreement; and, (3) contracting with another person "to lease the same or similar right in and to the premises leased by the defendant" during the term of the lease agreement. In response, the plaintiff argues that it did not breach the lease as the evidence shows that: (1) it did not grant permission to individual condominium units to install laundry equipment, but rather merely announced that nothing in its bylaws prohibited installation of laundry equipment; (2) the eviction proceeding was an attempt by the plaintiff to enforce the lease agreement, and therefore, cannot constitute a breach of that same lease; and, (3) there was no intention of the plaintiff to enter into a lease agreement with a substitute laundry vendor until the defendant had been lawfully evicted.
1 Defendant's First Ground for Breach of Contract
As to the defendant's first argument, the plain language of the contract defeats the defendant's contention that the undisputed facts establish that the plaintiff breached the contract by allowing owners to install laundry machines in their units. In fact, the pertinent provision of the contract does not prohibit the plaintiff from so doing. Paragraph four of the document entitled "Terms and Conditions of Lease" (Terms Conditions), which is incorporated into the lease and made a part thereof, states: "If at any time during the Term, Lessor grants permission to individual units to install laundry equipment or provides laundry hookups required for the installation of laundry equipment, or laundry equipment to the individual units, Lessee shall be entitled to reduce the Rent by a proportionate amount and receive the same proportionate amount of all the initial expenses incurred by it, in excess of the capital cost of the Equipment. This amount shall be directly related to the percentage of units affected." Based on this language, even if the plaintiff could be said to have granted permission to one or more unit owners, such action would not constitute a breach of Paragraph four of the Terms and Conditions of the lease agreement. Rather, it would entitle the defendant to reduce the amount of the rent owed in accordance with the formula set forth therein. Further, there does not appear to be a dispute between the parties that the condominium bylaws do not specifically prohibit the installation of laundry equipment by individual unit owners. For these reasons, the court cannot find as a matter of law that defendant's interpretation of the facts underlying its first ground of breach of contract in count one of its counterclaim establishes that the plaintiff is in breach of the lease agreement.
2 Defendant's Second Ground for Breach of Contract
The defendant's second argument is that the plaintiff breached the lease by instituting an action to evict the defendant during the lease term in violation of paragraph ten of the Terms Conditions. Paragraph ten provides: "Lessor warrants that Lessor shall grant Lessee peaceable and quiet enjoyment of the Leased Premises free from any eviction or interference provided Lessee pays the Rent, and otherwise performs its obligations." Based on this lease language, it is clear that the warranty of peaceable and quiet enjoyment is premised on the defendant's payment of rent. According to the plaintiff, it brought the eviction action because the defendant reduced its monthly rental payments by an amount that was not in accordance with Paragraph four of the Terms Conditions. Thus, a central issue before the court as to this ground is the amount of the rent that was due under the lease and whether the defendant was in breach of the lease by failing to pay the rent in accordance with the lease terms.
As previously discussed, the defendant was obligated to pay the plaintiff "from the income received from the Equipment a monthly rental amount equal to 50% of all monies collected." Pursuant to paragraph four of the Terms Conditions, the defendant was entitled to a rent reduction if the plaintiff "at any time during the Term [of the lease] . . . grants permission to individual units to install laundry equipment or provides laundry hookups required for the installation of laundry equipment, or laundry equipment to the individual units . . ." Thus, in order to resolve the issue of whether the plaintiff was entitled to initiate an eviction action for nonpayment of rent against the defendant, the court would have to determine whether and to what extent the plaintiff was owed rent. As discussed below, because there are material issues of fact in dispute concerning this issue, the court cannot determine whether and to what extent the plaintiff was owed rent by the defendant, and therefore, cannot find as a matter of law that the plaintiff breached paragraph ten of the lease by initiating an eviction action.
The parties' dispute on this issue centers on each party's construction of the phrase "at any time during the Term, [the plaintiff] grants permission to individual units to install laundry equipment." At best, this language is ambiguous. According to the evidence before the court, the dispute concerning the meaning of this language arose when Robert Gambino, who owns both BG Laundry and several units in plaintiff's condominium complex, notified the board that an owner had laundry equipment in her unit. The plaintiff's board reviewed the condominium documents and determined that nothing it found therein specifically prohibited unit owners from installing the type of equipment in question. According to the plaintiff, this does not mean, and certainly does not establish as a matter of fact, that during the term of the lease, it granted unit owners permission to own laundry equipment. In contrast, in the face of the same evidence, the defendant reaches the opposite conclusion.
In support of its position that the plaintiff did grant such permission, the defendant submits Exhibit J. In this exhibit, which is an excerpt from the deposition of Tamara Gloster, a board member of the plaintiff, Gloster agreed that she previously testified that, at one of the plaintiff's board meetings, held in "open forum with the community," the board determined "that a person should be able to have a washer [and] dryer within their unit." In response, the plaintiff offers a quotation taken from its exhibit 2, a fax from Robert Gambino, the owner of BG Laundry, to the plaintiff. The quotation reads: " THE BOARD CONCLUDED THAT THE CONDOMINIUM DOCUMENTS DO NOT PRECLUDE THE INSTALLATION AND OPERATION OF LAUNDRY EQUIPMENT WITHIN EACH DWELLING UNIT; THEREBY ALLOWING SUCH ACTIVITY." (Emphasis in the original.)
"Well established principles guide our analysis in determining whether the language of a contract is ambiguous. [A] contract is ambiguous if the intent of the parties is not clear and certain from the language of the contract itself. [A]ny ambiguity in a contract must emanate from the language used by the parties . . . A word is ambiguous when it is capable of being interpreted by reasonably well informed persons in either of two or more senses . . . Ambiguous can be defined as unclear or uncertain, or that which is susceptible of more than one interpretation, or understood in more ways than one . . . If the language of the contract is susceptible to more than one reasonable interpretation, the contract is ambiguous." Ocsai v. Exit 88 Hotel, LLC, 127 Conn.App. 731, 736-37, 17 A.3d 83 (2011). Here, the contract does not define the phrase "grants permission," and both parties' constructions of that phrase are reasonable. As the Appellate Court has stated, when "[contract language] is susceptible to more than one reasonable interpretation the contract is ambiguous . . . As a result of this ambiguity, the meaning of the term . . . involves a genuine issue of material fact. The parties are therefore entitled to present evidence in support of their interpretation to a fact finder, and the fact finder will be required to determine, as a factual matter, the meaning of the provision. Without a factual determination of [the contract language] it is unclear whether the [contract] provision is triggered . . . Accordingly, we conclude that the trial court improperly rendered summary judgment in favor of the [movant]." Id., 738-39.
In addition to the ambiguity of the language used in Paragraph four, viewing the evidence in the light most favorable to the nonmoving party, whether the board granted permission to the individual condominium units to install laundry equipment is an issue of material fact upon which the defendant's counterclaim for breach of contract turns. Even assuming it did, there is evidence of only one unit owner doing so. In any event, without a determination of this issue, the court has no way to ascertain the amount of rent owed to the plaintiff under the lease. Without the ability to assess the amount of rent due, the court cannot determine if the defendant improperly failed to pay rent due to the plaintiff and if the plaintiff breached paragraph ten of the Terms Conditions by seeking to evict the defendant for nonpayment of rent. Accordingly, there are several open issues of material fact that preclude granting summary judgment as to the defendant's counterclaim for breach of contract.
3 Defendant's Third Ground for Breach of Contract
Viewing the evidence in the light most favorable to the plaintiff, as the court must, there is a disputed issue of fact as to whether the plaintiff contracted with a third party to lease "the same or similar right in and to the premises" as that leased to the defendant during the term of its contract with the plaintiff precludes summary judgment on this ground.
B Plaintiff's Claim for Breach of Contract
The plaintiff's breach of contract claim is premised on its contention that the defendant breached the lease by not paying the plaintiff the full amount it was due according to the terms of the lease. The defendant contends that it is entitled to summary judgment on this claim because the evidence shows that it did not breach the lease, but rather, reduced its rental payments by an appropriate amount as provided for in paragraph four of the Terms Conditions. The plaintiff counters that questions of material fact exist as to this issue.
This issue is subject to the same considerations that are discussed elsewhere herein as to whether the plaintiff, during the term of the lease, granted individual unit owners permission to install laundry equipment in their units, thereby allowing the defendant to reduce its rental payments. Because genuine issues of material fact are unresolved on this fundamental issue, the defendant's motion for summary judgment as to count one of the plaintiff's complaint must also be denied.
II CUTPA
In moving for summary judgment on count two of the plaintiff's second amended complaint, the defendant argues that the plaintiff's CUTPA claim is legally insufficient because that claim "amounts to nothing more than a genuine disagreement about the terms of the Contract, and nothing more than settlement resolutions proposed by Defendant before the filing of this lawsuit and before Defendant had retained an attorney in this litigation." Furthermore, the defendant contends that the plaintiff has not submitted any evidence that supports its allegations that the defendant violated CUTPA. In reply, the plaintiff argues that the defendant's actions in withholding rent, making the false claim that the plaintiff breached the leased agreement, making the false claim of an impacted revenue stream and the attempt to extort the plaintiff constitute clear examples of "immoral, unethical, oppressive or unscrupulous" actions that support a viable claim under CUTPA.
The plaintiff asserts that the defendant allegedly attempted to extort the plaintiff by agreeing to pay the owed rent only if the plaintiff bought the defendant's laundry equipment, extended the lease term or misinformed the condominium association members about the content of the bylaws.
"Our Supreme Court has previously explained that to prevail on a CUTPA claim, the plaintiff must prove, pursuant to General Statutes § 42-110b(a), that the defendant engaged in `unfair or deceptive acts or practices in the conduct of any trade or commerce' and that as a result of the use of the act or practice prohibited by § 42-110b(a), the plaintiff suffered an `ascertainable loss of money or property.' Neighborhood Builders v. Madison, 294 Conn. 651, 657, 986 A.2d 278 (2010)." D'Angelo Development Construction Corp. v. Cordovano, 121 Conn.App. 165, 181, 995 A.2d 79, cert. denied, 297 Conn. 923, 998 A.2d 167 (2010).
"It is well settled that in determining whether a practice violates CUTPA we have adopted the criteria set out in the cigarette rule by the [F]ederal [T]rade [C]ommission for determining when a practice is unfair: (1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers, [competitors or other business persons] . . . All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three." (Internal quotation marks omitted.) Naples v. Keystone Building Development Corp., 295 Conn. 214, 227-28, 990 A.2d 326 (2010).
The plaintiff relies on the second criteria. Specifically, the plaintiff contends that the defendant engaged in the following conduct, which it describes as immoral, unethical, oppressive or unscrupulous: the defendant withheld rent, made a false claim that the plaintiff breached the leased agreement, made a false claim that the plaintiff's conduct had an impact on its revenue stream knowing that it suffered no revenue loss whatsoever and then attempted to extort the plaintiff.
"[N]ot every contractual breach rises to the level of a CUTPA violation . . . In the absence of aggravating unscrupulous conduct, mere incompetence does not by itself mandate a trial court to find a CUTPA violation." (Citations omitted; internal quotation marks omitted.) Landmark Investment Group, LLC v. Chung Family Realty Partnership, LLC, 125 Conn.App. 678, 704-05, 10 A.3d 61 (2010), cert. denied, 300 Conn. 914, 13 A.3d 1100 (2011). "There must be some nexus with a public interest, some violation of a concept of what is fair, some immoral, unethical, oppressive or unscrupulous business practice or some practice that offends public policy." (Internal quotation marks omitted.) Szekeres v. Szekeres, 126 Conn.App. 829, 843, 16 A.3d 713, cert. denied, 300 Conn. 940, 17 A.3d 475 (2011). In Landmark Investment Group, LLC, the Appellate Court noted that the trial court found that the defendant engaged in aggravating conduct which violated CUTPA by engaging in "a pattern of bad faith conduct, seeking to escape its contractual obligations unfairly while negotiating a more favorable offer with . . . a third party." Landmark Investment Group, LLC v. Chung Family Realty Partnership, LLC, supra, 125 Conn.App. 708. Specific instances of aggravating conduct by the defendant included: agreeing to produce an environment remediation action plan that it could not afford to produce, making factual misrepresentations, making legal misrepresentations and wrongfully terminating the contract. Id., 705-06. The Appellate Court concluded that the aggravating circumstances provided "ample support for the trial court's conclusion that the defendant's actions violated CUTPA." Id., 708.
In the present case, the plaintiff has alleged that the defendant fabricated breaches of contract by the plaintiff, falsely claimed additional contract terms, falsely claimed bylaw violations and lost revenue, wrongfully withheld money due under the lease agreement and attempted to extort the plaintiff. This is similar enough to the conduct that the Appellate Court found sufficiently aggravating to support a CUTPA claim in Landmark Investment Group, LLC to persuade the court to deny summary judgment in favor of the defendant as to count two of the plaintiff's second amended complaint.
Further, in arguing that it is entitled to summary judgment on the plaintiff's CUTPA claim due to the plaintiff's failure to provide evidence in support of its allegations set forth in count two, the defendant misapprehends the burdens that apply to summary judgment proceedings. "An important exception exists, however, to the general rule that a party opposing summary judgment must provide evidentiary support for its opposition, and that exception has been articulated in our jurisprudence with less frequency than has the general rule. On a motion by [the] defendant for summary judgment the burden is on [the] defendant to negate each claim as framed by the complaint . . . It necessarily follows that it is only [o]nce [the] defendant's burden in establishing his entitlement to summary judgment is met [that] the burden shifts to [the] plaintiff to show that a genuine issue of fact exists justifying a trial . . . Accordingly, [w]hen documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue." Gianetti v. United Healthcare, 99 Conn.App. 136, 141-42, 912 A.2d 1093 (2007).
Moreover, to the extent that the defendant challenges the legal sufficiency of the plaintiff's allegations, the court notes that: "[T]he use of a motion for summary judgment to challenge the legal sufficiency of a complaint is appropriate when the complaint fails to set forth a cause of action and the defendant can establish that the defect could not be cured by repleading." Larobina v. McDonald, 274 Conn. 394, 401, 876 A.2d 522 (2005). The defendant has not established that the plaintiff would be unable to do so in this case.
CONCLUSION
For all the foregoing reasons, the defendant's motion for summary judgment as to liability on count one of its counterclaim, as well as to liability and damages on counts one and two of the plaintiff's second amended complaint, is hereby denied.