Opinion
No. CV-18-9673
December 14, 2004
MEMORANDUM OF DECISION: SUMMARY PROCESS
I. NATURE AND HISTORY OF PROCEEDINGS
By writ, summons and complaint filed with this court on August 4, 2004, the plaintiff seeks, through this statutory summary process action, to evict the defendant from plaintiff's real property located at 116 Main Street, Bethlehem, Connecticut. The statutory ground that is alleged by the plaintiff is the expiration, by lapse of time, of an oral month-to-month tenancy that existed between the parties. A Notice To Quit the premises based on that ground was left at the defendant's "abode" on July 13, 2004, by a proper officer.
See General Statutes Sec. 47a-23(a)(1)(A).
Curiously, give the circumstances of this case, the marshal's return indicates "abode" service on the defendant at the real property that is the subject of this action!
On September 27, 2004, the defendant filed her answer and special defense, asserting therein that she continues to occupy the premises pursuant to a written lease, relative to which she is in full compliance. The defendant also invokes the equitable doctrine of "unclean hands."
The trial of this matter was held on October 19, 2004, during which the court heard from six witnesses. The plaintiff testified on his own behalf and called the state marshal who served the Notice To Quit. In addition to her own testimony, the defendant called two loan officers, each of whom are vice-presidents of plaintiff's commercial bank. The defendant also called her daughter. The court received into evidence three documents, each submitted by the defendant. In arriving at its decision, the court has reviewed each of the exhibits, has considered the testimony of each of the witnesses, has assessed the credibility of the witnesses and has considered the oral arguments of counsel. The court has read the post-trial memorandum of law filed by the plaintiff: the court received no such memorandum from the defendant.
II. FACTS A. The Property
The real property that is the subject of this action is a twenty-acre horse farm that has been owned by the plaintiff since 1996. Improvements on the property include several barns, as well as the plaintiff's residence. Since the summer of 2003, the plaintiff has been in the process of adding new buildings, including an outdoor sand arena (150' × 300'), a second outdoor lighted sand arena (90' × 200'), a 60' round pen and an indoor sand arena (120' × 200'). All specifications were to be approved by both the plaintiff and the defendant. Defendant's Exhibit C. The new construction was financed by an initial construction mortgage loan of $600,000 made to the plaintiff's corporation known as Stoneledge Farm, Inc, that was later supplemented by a line of credit in the amount of $237,000. The lender, the First National Bank of Litchfield, (hereinafter referred to as the "bank"), required the plaintiff to personally guarantee payment of both loans. The bank also required, as security for the loans, in addition to mortgage deeds, any and all lease agreements executed by and between the plaintiff and the defendant. The sole source of income derived from the real property that would enable the plaintiff to make the monthly loan payments was the anticipated monthly rental payments made to the plaintiff by the defendant, who operated her long-established equestrian business, known as Stoneledge Equestrian Center, on the plaintiff's property for several years. The defendant has been engaged in the business of providing for the boarding and care of horses, the teaching and training of their owners and the conduct of horse shows for over twenty years. She currently provides these services to fourteen clients who board their horses on the plaintiff's real property; the defendant also boards three horses owned by her.
B. The Exhibits
It is instructive at this point to describe in detail the relevant and material information derived from the court's review of the three documentary exhibits.
Defendant's Exhibit A is entitled "verbal agreement description." It is signed by the plaintiff and his father. The document was presented to the bank in response to the bank's demand that the plaintiff provide the bank with the written lease, signed by him and the defendant sometime prior to the initial construction loan, which, according to the bank, was provided by the plaintiff at the closing the said loan on July 14, 2003. See Defendant's Exhibit B. The document, which is undated, purports to describe the terms of a "verbal agreement" between the plaintiff and the defendant (Stoneledge Farm, Inc. and Diane Mucherino dba Stoneledge Equestrian Center). The stated purpose of the document was to secure the financing for the fall, 2003 construction projects. The alleged terms agreed to between the plaintiff and the defendant included a month-to-month lease, "automatically renewable at the end of each month," however, capable of termination by either party upon thirty days notice. The monthly rental allegedly agreed to was $3,000. The leased premises included the fourteen-stall barn, and "all the amenities."
The document also contains the plaintiff's explanation as to the lack of a "written contract" between him and the defendant relative to the operation of the defendant's equestrian business on the plaintiff's horse farm. The plaintiff explained that the parties had not reached an agreement as to the length of time and asserted that the defendant was reluctant as she did not want to be "locked into a long term contract," until the construction project was completed. The plaintiff explained further that as more equestrian facilities were added, via the construction mortgage, i.e., buildings, rings, arenas and barns, they would be "added to the agreement." The plaintiff concluded by stating:
The eventual result will be a written, long term contract for the entire property and buildings at the facility. The additional amount of rent will be determined at the time each building is completed and available to Ms. Mucherino.
Emphasis Added.
Defendant's Exhibit B is a letter dated August 11, 2004, from Mr. Ferris, senior vice president of the bank, to the plaintiff. It demanded that the plaintiff produce "the original signed leases that had been submitted to the bank in support of the July 14, 2003, commercial mortgage ($600,000) and the June 30, 2004, line of credit ($237,000). An earlier letter had been sent to the plaintiff on July 29, 2004, by Mr. Auchincloss, the vice president who handled the second loan. That officer also requested the leases. The plaintiff's response to the earlier request was to submit Exhibit A to the bank. The written explanation of the parties' alleged oral lease was unacceptable to the bank and prompted this stern letter in which Mr. Ferris demanded that the plaintiff submit an agreement signed by the defendant. It is most significant that the plaintiff submitted Exhibit A after July 29, 2004, as proof of an ongoing business relationship with a tenant, whom he had, according to plaintiff, ordered to vacate the premises in May and upon whom he had served a Notice To Quit in July. Plaintiff neglected to inform the bank of his action in this regard and his severance of the parties' business relationship. As of August 11, 2004, the bank, apparently, was completely unaware that the plaintiff had initiated this summary process action one week prior thereto.
Defendant's Exhibit C is entitled "Lease Agreement." It is dated February 12, 2001, and purports to be signed by the plaintiff as "owner" and the defendant as "Lessee." The first sentence identifies what follows as a "proposal" that was "written for Diane Mucherino for the facility at 116 Main St. North, Bethlehem." During her testimony, the defendant denied that this proposal was ever accepted by her and claimed that her signature was a forgery. During his testimony, the plaintiff denied that he ever saw the document with the signature of the defendant thereon; plaintiff insisted that this document was a proposal that he presented to the bank as he did not have a written lease signed by him and the defendant. The document provides a detailed description of the contents of the leased facility, including the barns, arenas to be completed and the amenities. All of the improvements that were to be financed by the bank loans were anticipated; the specifications were to be subject to the agreement of the plaintiff and the defendant. It was also anticipated that any use of the facility by the plaintiff would be subject to the agreement of both parties. The proposed length of the agreement was to be five years; the agreement reviewed "on a yearly basis for adjustments to the rent and to the terms of the agreement." Emphasis added. The proposal contained a provision for increases in the monthly rent as additional items were constructed and reflected the one thing that is not disputed by the parties — the current "rent" of $3,000 per month. Although the defendant was well aware of this "proposal," she testified that she first saw her purported signature on the document at her deposition on August 31, 2004.
As stated, each party denied that the defendant had signed Exhibit C, however, Ferris, the loan officer who handled the first loan identified said exhibit as the signed lease presented to him by the plaintiff as collateral for the first loan. The closing on the second loan took place in July 2004. At that closing, Auchincloss, the bank officer who handled that loan, requested and received a written lease, however, he testified that Exhibit C was not the document that he received. He also testified that sometime after the closing on that second loan, the plaintiff came to the bank in order to retrieve "the leases" from the bank file, a request that was granted by him. Surprisingly, no written lease agreement was found in the files that were maintained by a commercial bank, files that contained a record of two loan transactions totaling $837,000. This factor precipitated the letter that is Defendant's Exhibit B.
C. The Testimony
The plaintiff claims that in the summer of 2000, he and the defendant agreed to a lease for a monthly rental of $3,000. He recalled submitting "lease proposals" to the bank, but denied the submission to the bank of any document signed by both him and the defendant. He identified Defendant's Exhibit C as the proposed lease submitted to the bank in the summer of 2003, absent the defendant's signature. The plaintiff testified that, prior to the issuance of the Notice To Quit, he provided sixty days verbal notice to the defendant that he was terminating the month-to-month tenancy. The basis of the plaintiff summary process action, therefore, is the termination of a month-to-month oral lease by lapse of time, after due notice. On cross examination, however, the plaintiff admitted that he had a "personal relationship" with the defendant that included their living together in intimacy. The intimacy ended in 2002, however, the business relationship continued; they continued to see each other on a daily basis.
The defendant testified that the business relationship, pursuant to which she operated her equestrian business on the plaintiff's property, commenced in July 2001. She asserted that the agreed rental was initially $1,600 per month, due to the lack of full facilities on the property. She stated that she has known the plaintiff for sixteen years, but that she did not relocate her eighteen-year business to the plaintiff's property until their relationship became intimate. In October 2001, she moved into the plaintiff's residence where they shared the same bedroom until the summer of 2002, at which time the intimacy ended.
The defendant claims that she entered into a written lease agreement with the plaintiff during the summer of 2002. The document was a single page, signed by both of the parties that contained terms "similar" to those in Defendant's Exhibit C, however the rental increases were for "different" amounts. The defendant recalled that the lease was undated and was for an "indefinite term." The lease provided for increases in the monthly rent as more facilities were added so as to enable the plaintiff to make the payments to his bank on the construction mortgage that was financing the improvements. The defendant claimed that, as per the written agreement, in April 2004, the monthly rental increased to $3,000. When all of the contemplated improvements were completed, the rent was to increase to $5,000 per month. The defendant, however, could not produce either an original or a copy of the document. She claimed that she had possession of the original only and that she did not make a copy either before or after the plaintiff threatened to remove her from the premises. She was so fearful that she showed the written lease to her daughter, who testified that she saw a document signed by the plaintiff and her mother, but was unable to recall its terms. The daughter returned the document to the defendant, but did not make a copy. The defendant stated that she hid the lease in the plaintiff's house, "in her bedroom," from where it was "stolen."
The defendant testified that she and the plaintiff had an unspecified "disagreement" in May 2004, that resulted in the plaintiff's demand that she remove herself from the property within "two weeks" or that he would have her removed "in handcuffs." Since the commencement of legal procedures, the plaintiff has been approaching the defendant's clients in an alleged attempt to solicit their business on behalf of himself and a trainer hired by the defendant, with whom, defendant alleges, the plaintiff is currently having an intimate relationship.
The basis of the defendant's defense to this action, therefore, is that there was a written lease executed by the parties of indefinite duration that memorialized their mutual goal, i.e., "to build a big facility" together, while they maintained their personal, sometimes intimate, relationship. The mutual intent was for the plaintiff to develop his real property into a first class equestrian facility with the defendant's established reputation and clientele as the source of the income stream by which the desired improvements would be financed.
Ferris confirmed that the purpose of the 2003 and 2004 loans was to finance the construction of buildings and other facilities for the operation of the defendant's equestrian business and that the bank was relying on the income from the defendant's business as the sole source of the plaintiff's loan payments. Ferris testified that, while the bank was processing the second loan, neither he nor Auchincloss were informed by the plaintiff that the plaintiff terminated his business relationship with the defendant. Ferris was, justifiably, upset as he believed that "the bank should have been told," as the basis of the loan was the continuance of the plaintiff's business relationship with the defendant.
Auchincloss testified that the bank required the plaintiff to demonstrate an ability to generate income equal to, at least, one and one-half times the amount of the required loan payments. That is why the lease agreement was an essential instrument of collateral. It was his recollection that, at the July 2004 closing, the plaintiff presented a written and signed lease, however he was unable to provide this court with any of the specifics, including the printed name of the landlord and tenant, i.e., business or personal names; the term of the lease; the amount of the rent or the number of pages to the document!
IV. APPLICABLE LAW
As noted, the action that the plaintiff has brought is a statutory summary process action. The statutes relating to a summary process action are to be "narrowly construed and strictly followed." HUD/Willow Street Apartments v. Gonzalez, 68 Conn.App. 638, 643 (2002). The Notice To Quit is the basis upon which a summary process action is commenced and is the unequivocal act in terminating the lease. Danparasso v. Fallcha, 37 Conn.Sup. 820, 824 (1981). The Notice To Quit issued by the plaintiff gives as the sole reason for the termination of the alleged tenancy as "lapse of time." The existence of a definitive lease agreement between a landlord and tenant is a prerequisite for an eviction action based on lapse of time. Burke v. Schand, Superior Court, Judicial District of Hartford/New Britain, DN SFH 8811-4757 (March 29, 1989, Susco, J.) The lease agreement may be oral, as the plaintiff alleges, or written, as the defendant claims, however there must be an agreement between the parties. Since a summary process action is a special statutory proceeding, the relationship of landlord and tenant must have existed in order for the action to be maintained. Logan v. Carrington Publishing Co., 47 (1948). A summary process action is aimed at deciding the simple question of who is entitled to possession. Yarborough v. Demirjian, 17 Conn.App. 1, 3 (1988); cert. den'd. 209 Conn. 828 (1988). Emphasis added. The action is a limited statutory procedure to be employed "where the issue of the expiration of the lease presents itself as a simple issue of fact, not complicated by questions as to the proper legal construction of the lease." Fortuna Inc. v. Lyons, 23 Conn.Sup. 389, 391 (1962).
It has been held and is "now well established that a commercial lease imposes a duty of good faith and fair dealing on the landlord and the tenant." Elliott v. Staron, 46 Conn.Sup. 38, 47 (1997). "Good faith performance or enforcement of a [lease] contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party. Id. Emphasis added. "By definition, good faith and fair dealing exclude fraud and deceit, and depending on the circumstances, may also exclude the recapturing of opportunities that have been legally foregone." Id.
V. FINDINGS
From a review of the documentary and testimonial evidence, it is apparent to this court that in 2001, both parties embarked upon a mutually beneficial joint venture that was spawned by their personal relationship and fueled by the intimacy of that relationship. Both parties intended a long-term personal and business relationship. When the personal relationship cooled in the summer of 2002, the business relationship continued until the plaintiff, in May 2004, having secured his bank financing, unilaterally terminated it. The plaintiff owned the real property upon which some facilities existed to board horses and to potentially support an equestrian business, however, the property was in need of substantial improvement by adding additional facilities. The defendant had operated a successful equestrian business for nearly two decades and, by virtue thereof, offered the reputation and clientele that would generate sufficient income to sustain the payment of the loans essential in order for the plaintiff to complete the improvements. Plaintiff utilized and exploited the defendant's reputation and her ability to produce the income to convince his bank to lend him substantial sums to complete the improvements. The plaintiff represented to the bank officers that a long-term relationship with the plaintiff was his intended goal and that of the defendant. The plaintiff continued to maintain that posture with the bank even though he had unilaterally terminated his business relationship with the defendant. So that he would, despite that termination, obtain the bank's approval for the supplemental line of credit, he perpetrated a fraud on the bank, as he knew that if he had informed the bank of his severance of his relationship with the defendant, the additional funds would not have been provided. In this court's view, the plaintiff's credibility is, virtually, non-existent. At the time of trial, the plaintiff was continuing his harassment of the defendant's clients, thereby seriously undermining her business.
A. As To Plaintiff's Claim
This court finds that the plaintiff has failed to meet his burden; he has failed to prove, by a fair preponderance of the credible evidence, that the parties agreed to a month-to-month tenancy. There is no doubt that both parties envisioned a landlord-tenant relationship as a formal part of their joint venture, however the specifics were to be deferred until the improvements were completed or until that both executed a written lease. They clearly discussed the lease. They mutually agreed on the kind of improvements that were needed. As per their discussions, the monthly payments to be made by the defendant to the plaintiff were to increase in amount, as more facilities were added. When the plaintiff ordered the defendant to vacate the premises in May of 2004, what had been intended as a long-term joint business venture suddenly, in the plaintiff's mind, became merely a month-to-month tenancy. All that remained was to terminate the tenancy via the Notice To Quit followed by this simple summary process action. In this court's view, it would be a great injustice to the defendant to find that the parties agreed to a month-to-month tenancy. In this summary process proceeding, this court will not adopt the simplistic course urged by the plaintiff. To do so would be contrary to the evidence and would reward the plaintiff for his mischievous and fraudulent conduct. The plaintiff's request for a judgment of immediate possession of the premises on the ground of a lapsed month-to-month tenancy is, therefore denied.
B. As To The Defendant's Claim
At the time of trial, despite the plaintiff's attempts to frustrate the defendant's clients and to undermine her business, the defendant continued to operate her business on the plaintiff's real property. As noted, she claims the right to do so pursuant to the terms of a written lease agreement that no one has been able to produce. The one document that would establish a long-term landlord-tenant relationship is Defendant's Exhibit C, however the defendant claims that her signature was forged. Thus no writing signed by both of the parties that would constitute a lease agreement has been offered to the court.
General Statutes Sec. 52-550 is Connecticut's Statute of Frauds. Paragraph (b) provides that: "This section shall not apply to parol agreements for hiring or leasing real property, or any interest therein, for one year or less, in pursuance of which the leased premises have been or are actually occupied by the lessee, or any person claiming under him, during any part of the term." Thus, an oral lease agreement for a term of one year or less is enforceable. Moreover, it has been held that if a tenant takes possession of the premises pursuant to an oral lease that is for a term that is for more than one year, the tenancy will be viewed "by implication" as one running from year to year. Amwax Corporation v. Chadwick, 28 Conn.App., 739, 743 (1992).
Defendant, however, claims that the agreement reached and, allegedly, signed by both parties was f6r a perpetual term. In his memorandum, the plaintiff argues that the defendant's claim that the term of the lease was "indefinite" invokes General Statutes Sec. 47a-3b, that provides that any rental agreement that fails to fix a definite term is treated as a month-to-month tenancy. The plaintiff, therefore, asserts that this statute supports his claim and should mandate a judgment in his favor. It has been held, however, that the cited statute applies to residential tenancies only; it does not apply to commercial leases. Larson v. Timothy's Ice Cream, Inc., Superior Court, Judicial District of Fairfield, Housing Session at Bridgeport, DN SPB 1295-05-29502 (Oct. 12, 1995, Tierney, J.); 15 Conn. L. Rptr. 411. In this district, Judge Picket ruled that General Statutes Secs. 47a-1 through 47a-22 apply to residential leases only. Curnan v. Newton, Judicial District of Litchfield, DN CV97-185916 (Aug. 15, 1997); 20 Conn. L. Rptr. 317. Although courts do not favor perpetual leases, for such a lease to be enforceable, the language must be clear and precise and must leave no doubt as to the intent of the parties. Lonergan v. Connecticut Food Store, Inc., 168 Conn. 122, 125 (1975). No language can be considered by this court on the issue of perpetuity, as there is no written lease for the court to review.
C. Conclusion
From the evidence presented, this court is unable to find that the parties agreed to either an oral or a written lease. What is clear is that the plaintiff's conduct has severely disrupted the parties' multi-faceted relationship and has, most probably, adversely affected the defendant's successful and long-standing equestrian business. Whatever legal or equitable remedies that the defendant might pursue and whatever decisions might, as a result thereof, be rendered, are beyond the purpose and the scope of this simple statutory proceeding. Judgment may enter in favor of the defendant.
BY THE COURT
WILSON J. TROMBLEY, JUDGE