Opinion
Nos. CV 09 4046741 S, CV 09 4045586
January 31, 2011
RECTIFIED MEMORANDUM OF DECISION
After the court filed its original decision on November 19, 2010, Aldin Associates, L.P., along with its real estate entity holding companies, Savin Gasoline Properties LLC and Savin Gasoline Properties, II, filed a motion for rectification, pursuant to Practice Book ?66-5, dated November 30, 2010. Specifically, Aldin sought rectification of the court's finding that all of the leases in both actions are subject to a cross default provision, whereby, a breach of one lease constitutes a breach of all of the leases. The court grants the motion and clarifies that four of the leases subject to the declaratory judgment action are not governed by a cross default provision. Therefore, the default of any one of those leases does not constitute a breach of the other leases. Nevertheless, this minor clarification does not change the court's decision to deny the tenant's request for a declaration that it is not in violation of the leases subject to the declaratory judgment action, nor does it affect the denial of injunctive relief, because the court concluded that the tenant materially breached all nine leases, regardless of the existence of any cross default provision.
These consolidated actions arise out of a dispute between the lessor and the lessee of a number of gasoline station properties. In the first action, the landlord seeks a tenant's eviction from five commercial gas station properties because of various violations of the leases. In the second, the tenant seeks a declaration by the court that it has not violated the lease provisions, and an injunction prohibiting eviction from the properties. Based on the testimony and evidence presented at trial, the court concludes that the landlord is entitled to eviction.
I FACTS
The court finds the following facts. Aldin Associates, L.P., along with its real estate entity holding companies, Savin Gasoline Properties LLC and Savin Gasoline Properties, II (hereinafter, collectively referred to as "Aldin") is in the business of, inter alia, selling wholesale gasoline to independent gasoline stations. Aldin also owns a number of retail gasoline stations, with convenience stores located on the property. Prior to 2007, Aldin often sold gasoline at these stations as franchisee for Mobil or Sunoco, and operated the convenience stores under its own trademark name, Chucky's.
CCO, LLC and K Brothers, LLC (hereinafter collectively referred to as "CCO"), currently owns or leases approximately 150 convenience stores of which approximately 80-85 have gasoline stations as well. Under its business model, CCO does not directly operate any of these stores. Instead, it leases them to subtenants, who operate the stores in exchange for rental payments.
In 1992, Aldin leased some of its convenience stores to Naeem Rhalid, the principal of CCO. Under the lease agreements, Khalid, and later, CCO, became both Aldin's tenant and commissioned agent for the sale of gasoline. In essence, CCO agreed to lease and operate the convenience stores with its own employees, and retain the proceeds from the convenience store sales. Additionally, CCO agreed to sell retail gasoline for Aldin, and, in exchange, receive a commission on fuel sales. Thereafter, pursuant to its business model, CCO leased the convenience stores to subtenant operators.
Although it leased some properties to CCO, Aldin continued to manage some of its retail gasoline stations directly. By 2006, however, Aldin's operations had evolved, and it was uncertain whether the direct management of retail gasoline stations and convenience stores continued to align with its business goals. Aldin's principal, David Savin, was aware that CCO subleased the stores to third parties at higher rates. Nevertheless, he concluded that he was satisfied with CCO's performance as tenant and commissioned agent, and offered CCO the opportunity to operate six more of its convenience store businesses. CCO agreed, on the condition that it could purchase some of Aldin's properties. Accordingly, Aldin sold three real properties to CCO.
In 2007, Khalid approached Aldin and offered to purchase all the real estate upon which CCO had commission agents. Aldin agreed, on the condition that CCO assume operation of its remaining retail gasoline stations. In other words, Aldin wanted to retain ownership, but no longer wanted involvement in the daily operation of its gasoline business. Accordingly, the parties agreed that CCO would purchase approximately nineteen properties for $28 million, purchase seventeen convenience store operations for $4.915 million, and lease the properties from Aldin on which the convenience stores were operated. Hence, although this was one deal, negotiated simultaneously, three different transactions would be conducted: (1) the transfer in fee of nineteen real properties to CCO; (2) the ownership transfer of seventeen convenience store businesses, along with ownership of the Chucky's trade name; and (3) the creation of seventeen leasehold estates.
The parties executed almost identical lease agreements for all of the locations. The properties at the following nine locations are the subject of the parties' dispute: Norwich, Uncasville, Guilford, Voluntown, Lisbon, Mystic, Brooklyn, Willimantic and Branford. Under these agreements, CCO contracted to serve as both Aldin's tenant and commissioned agent. Thus, as part of the deal, the parties executed one agency agreement for all of the properties, dated July 5, 2007. Additionally, CCO executed a promissory note to Aldin in the amount of $3,915,000 for the convenience store businesses.
CCO has at least one cotenant at five of the locations. There is a donut franchise at the Voluntown, Midway, Lisbon, Willimantic, Mystic and Branford locations. In addition, Mystic also contains a pizza franchise.
The issues in both cases depend on the proper construction of the leases and the commissioned agent agreement. Accordingly, they merit a detailed discussion.
Paragraph two of the lease agreements provides that CCO shall have the right to use the premises solely for the operation of a convenience store and to fulfill its responsibilities as set forth in commission agent agreement.
Paragraph five provides that CCO is responsible for paying all utility charges.
Pursuant to paragraph 8(a), CCO, at its sole cost and expense, is responsible for taking "good care" of the interior and exterior of the leased premises. This includes making all necessary repairs. Aldin, in turn, is responsible for making any necessary replacements to structural components, but only to the extent that (1) it is no longer economically reasonable to repair the component and (2) the need for replacement was not caused by CCO's failure to satisfy its repair and maintenance obligations. Structural components include the roof and exterior walls.
Paragraph 8(c) provides that CCO must maintain each premise in a clean and sanitary condition, and free from trash. Section 8(d) provides that CCO is responsible for snow and ice removal on the property. CCO must also perform all landscaping on the property.
Paragraph nine provides that CCO shall provide Aldin with immediate notice of any damage to the building.
Paragraph sixteen allows CCO to sublet the lease to an operator without Aldin's consent, on the condition that CCO remains primarily liable.
Paragraph seventeen governs the consequences of default by CCO. Pursuant to 17(a)(ii), CCO's failure to comply with any of the covenants, agreements, terms or provisions in the lease results in a default. Similarly, 17(a)(vii) provides that a default under the commissioned agent agreement results in a default of the lease. Paragraph 17(b) states that Aldin has the right to terminate its lease with CCO in the event of a default. Moreover, under 17(c), in the event of a default, CCO is responsible for Aldin's attorney's fees, and must pay liquidated damages in the amount equal to what is payable under the lease.
Importantly, 17(a)(viii), the "cross default provision," provides that a default in connection with any of the other leased properties constitutes a default of the lease. In other words, pursuant to this provision, the default of any one lease results in the default of every other lease. The effect of this provision is that, pursuant to paragraph 17(b), Aldin may choose to terminate all of the leases in the event that CCO defaults on just one lease.
In paragraph thirty-six, the parties agree that the gasoline business is not leased to CCO. However, CCO is responsible for operating the convenience stores in a "business-like fashion so as not to interfere with the [m]otor [f]uels operation."
Paragraph thirty-nine provides that CCO shall comply with any standards imposed by any of its franchisors. At the time of the agreement, Aldin participated in Mobil's corporate image program, which establishes certain minimum standards for customer service, cleanliness and employee image.
All of the leases were for ten year terms, but were automatically renewable for four consecutive five year terms, provided that CCO was not in default of its lease provisions.
As explained above, the parties' obligations under the leases were tied to those in the commissioned agent agreement, which provided that Aldin retained ownership of the gasoline business, but gave CCO a commission on fuel sales. Basically, under the agreement, Aldin provided the gasoline and the facilities and CCO was responsible for actual sales at the prices established by Aldin. Although Aldin agreed to maintain its own equipment, CCO was responsible for taking daily inventory of gasoline volume, comparing it to the gallons sold, and providing immediate notice to Aldin of any abnormal loss or gain. CCO was also required to hold the sales proceeds in trust for Aldin, and deposit them by 3 p.m. each business day into a bank account under Aldin's control. Despite this provision, Aldin retained the right to revise the procedure for depositing the funds.
In addition, CCO was required to maintain the stations in a "clean and healthy fashion" and operate each station in a "prudent and businesslike manner" while using "its best efforts to maximize the gale of motor fuels, at retail." As in the lease agreements, CCO was responsible for utilities and snow and ice removal. Additionally, the default of any store lease constituted a default under the commissioned agent agreement. In exchange, CCO was to receive a commission of one cent for every gallon of gasoline sold, with a minimum guaranteed commission, regardless of actual sales.
As it had done previously with respect to its other stores, CCO procured subtenants to operate and manage the convenience stores in exchange for monthly rent. Some of these operators then further subleased the properties to other operators. Although CCO did not share its gasoline sales commissions, the operators were expected to assume CCO's operational responsibilities as Aldin's agents. Accordingly, CCO held an initial meeting with its subtenants to discuss the arrangements. At this meeting, CCO's director of petroleum, Tracy Lavigne, reviewed the responsibilities regarding the gasoline business, as articulated by Aldin's operations manager, Melody Barr.
Lavigne was directly responsible for CCO's eighty-five convenience store/gasoline operations.
During the meeting, CCO operators were informed, among other things, that Aldin required the following: (1) daily price surveys of competing gasoline stations, (2) daily price changes if requested by Aldin, (3) completion of environmental paperwork, (4) the reporting of any fuel spills and environmental alarms, (5) cleanliness and maintenance, (6) snow removal, (7) daily cash deposits, (8) and maintaining image standards for those stations operating under the Mobil brand. Notably, CCO's lease agreements with its subtenants did not contractually obligate them to perform any of these duties, nor did they require the suboperators to use their best efforts in gasoline sales.
The environmental alarms were sounded by the "TLS" system, an automated computer system that monitors the level of fuel in the underground storage tanks.
CCO did not immediately begin operating all of the convenience stores. Instead, the transition from Aldin occurred over a period of weeks. Barr, or her designee, conducted seventeen separate in-store trainings for CCO operators that focused on operating the gasoline business. Aldin trained CCO to complete environmental compliance paperwork, how to operate the pumps, the appropriate method of cleaning up and reporting gasoline spills, emergency procedures for handling pump damage, and the operation of the TLS system.
The TLS system is an automated computer system that monitors the level of fuel in the underground fuel storage tanks. Located near the cash registers, it is programmed to sound audible alarms, accompanied by a visual read out that informs the operator of the location of certain conditions, including when the fuel level is abnormal or when liquid is detected as overflow.
In order to assist with the transition, Aldin's former managers remained on-site for two days following the training. Additionally, Aldin staff made periodic visits to each site in order to monitor the operators' performance. CCO did not conduct any further training or implement any further protocols of any substance to ensure compliance with the procedures required by Aldin. Soon after the lease closings, it became evident to Aldin that CCO was having difficulty in ensuring that its suboperators executed its performance obligations. Nevertheless, encouraged by CCO's past performance, Aldin believed that these difficulties could be attributed to "growing pains," and would be rectified in short time.
In March 2008, Aldin and CCO entered into a series of agreements with People's United Bank ("People's Bank") in order for CCO to obtain a $3,000,000 loan and make a partial payment on its note. As a result, Aldin agreed to execute separate, but identical, commissioned agent agreements for each leased location. In addition, the leases were extended to a guaranteed thirty-year term. Ultimately, People's Bank took a leasehold mortgage on twelve of the seventeen leased locations. As a result of the negotiations, paragraph 17(a)(viii), the cross default provision, was deleted from all of the leases of these twelve locations, including Mystic, Brooklyn, Branford and Willimantic. CCO also has subsequently obtained other loans from People's Bank. The terms of those loans include cross default provisions with the leasehold mortgage on the subject properties.
In the meantime, CCO's subtenants at the nine locations continued to experience difficulty complying with CCO's contractual obligations. For example, these suboperators failed to maintain clean and attractive facilities, provided poor customer service, sold expired food products, did not wear proper uniforms and name tags as required by the Mobil image standards, sold tobacco products to minors, neglected the landscaping maintenance, failed to timely and properly remove snow and ice, sold pornography and drug paraphernalia in violation of the Mobil standards, and did not provide adequate lighting. The exhibits presented at trial depict overgrown weeds, dirty floors, excessive litter, graffiti, overflowing dumpsters, water stained ceilings, expired food products for sale, lighting problems and dirty restrooms. Even though these issues were brought to CCO's attention, many persisted and often went uncorrected for months.
In addition, suboperators in several instances failed to pay utilities. At times, this led to the discontinuation of utility services. For example, the propane service was shut off at the Mystic location. This caused CCO's cotenant at that location, a pizza franchise, to close its business until service was restored. Similarly, the operator of CCO's other cotenant, a donut franchise, testified that his staff was forced to wear additional layers of clothing and operate a space heater because the Mystic property did not have sufficient heat.
The operators also neglected their responsibilities in operating the gasoline business. As part of its initial training, Aldin instructed the operators to survey the competitors' gasoline prices and report them by 9 a.m. so that Aldin could calculate its daily rate. On various occasions, CCO's subtenants did not make the requisite surveys on a timely basis. They also delayed in posting the price changes and failed to deposit the gasoline sales proceeds by 3 p.m., as directed by Aldin.
Additionally, CCO's subtenants did not follow the environmental procedures required by Aldin. For example, many of the subtenants did not maintain the environmental records on a daily basis, thus, there was no evidence that they were actually monitoring the fuel levels. Furthermore, some of the operators failed to report fuel spills and eight locations failed to report a TLS alarm at least once. Indeed, in one incident, an operator at the Voluntown location attempted to clean up a fuel spill with rock salt instead of the approved absorbent material. As a result, the station was closed for approximately four hours while a fire marshal and the Department of Environmental Protection responded. Aldin personnel contacted Lavigne so that she could locate an appropriately trained employee to staff the service station. However, although Lavigne responded that she would call back, she failed to do so, leaving Aldin to manage the situation.
As outlined above, CCO had certain repair and maintenance obligations. It was required to take good care of, and maintain, the interior and exterior of the leased properties, assume the costs of repairs, and immediately report structural damage. CCO also violated these provisions. For instance, CCO failed to report roof leaks and damage to the gasoline pumps, air hoses and Mystic's retaining wall and fence. CCO also failed to adequately and promptly repair the roofs at some of the locations. Even though it represented to Aldin that certain roofs were repaired, it failed to provide any documentation that the work was performed by a qualified professional. In fact, at the Norwich location, Aldin's contractor noted that the work commissioned by CCO was of substandard quality and, as a result, contributed to the roof's deteriorated condition.
In short, it became apparent to Aldin that what it once considered "growing pains" was, in reality, CCO's inability, or unwillingness, to comply with the lease and commissioned agent agreements. Although Aldin regularly inspected the stations and frequently communicated its dissatisfaction with the subtenants' performance and CCO's supervision, the problems persisted. Concerned about its gasoline operations and the fate of its properties, Aldin began documenting all lease violations. In addition, believing that it was futile to communicate with CCO, Aldin adopted a policy whereby it reported code and regulatory violations directly to the relevant authorities, rather than bringing them first to CCO's attention.
Additionally, Aldin argued that, CCO breached the terms of the lease because it (1) refused to institute a new deposit procedure whereby CCO's operators would deposit their sales proceeds into a single CCO-owned bank account that Aldin would sweep each day unless Aldin agreed to pay the bank fees, and (2) that it failed to obtain permits for certain electrical work performed at Guilford and Midway. With regard to the first argument, although the lease requires CCO to comply with procedures requested by Aldin with respect to the gasoline proceeds, the court is not convinced that CCO's refusal to pay the bank fees breached the lease agreements. Moreover, with respect to the second issue, Aldin did not establish that a permit was required for the electrical work completed at those locations.
On June 4, 2009, Aldin sent CCO a notice of default and termination with respect to the five leased properties located in Guilford, Voluntown, Norwich, Uncasville and Lisbon. These properties are not subject to People's Bank leasehold mortgages. Aldin advised CCO that the lease termination would be effective June 30, 2009.
On June 17, 2009, Aldin informed CCO that it intended to issue notices of default on the Branford, Mystic, Willimantic and Brooklyn sites. Because these sites are part of the leasehold mortgage properties, Savin also informed People's Bank of its intent to terminate the agreements on those properties. On July 2, 2009, Aldin sent CCO and People's Bank formal notices of default for these properties.
On July 15, 2009, Aldin served CCO with Notices to Quit the Guilford, Voluntown, Norwich, Uncasville and Lisbon (non-People's Bank) locations.
On July 23, 2009, CCO commenced a declaratory and injunctive action against Aldin. The action seeks a ruling that CCO is not in default of the commissioned agent or lease agreements because any alleged violations do not constitute material breaches of those agreements.
On August 20, 2009, Aldin filed a summary process complaint seeking immediate possession of the non-People's Bank sites on the ground that CCO defaulted on the leases and the agency agreements. The summary process action was then transferred from housing court to the regular civil docket, and consolidated with CCO's injunction action on September 29, 2009. Thereafter, the court held a trial on both matters over eight days. Further factual findings are set forth below when necessary to resolve the parties' specific claims.
In addition to CCO, Aldin named the subtenants and operators at the leased properties as defendants.
II. LEGAL STANDARDS
A. Summary Process
General Statutes § 47a-23 allows a landlord to proceed with a summary process action when the tenant has violated the terms of the lease. Section 47a-23(a)(1)(C) provides inrelevant part: "When the owner or lessor . . . desires to obtain possession or occupancy of any land or building . . . and when a rental agreement or lease of such property . . . terminates for [the] violation of the rental agreement or lease . . . such owner or lessor . . . shall give notice to each lessee or occupant to quit possession or occupancy of such land [or] building . . ." Consequently, "[t]he necessary and only basis of a summary process proceeding is that the lease has terminated." Webb v. Ambler, 125 Conn. 543, 550, 7 A.2d 228 (1939). Accordingly, in order to prevail in its summary process action, Aldin must establish that it served CCO with a proper notice to quit and that the lease has validly terminated. See Bridgeport v. Barbour-Daniel Electronics, Inc. 16 Conn.App. 574, 584-85, 548 A.2d 744 (1988).
"[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 . . . Summary process statutes secure a prompt hearing and final determination." (Internal quotation marks omitted.) Bristol v. Ocean State Job Lot Stores of Connecticut, Inc., 284 Conn. 1, 5, 931 A.2d 837 (2007).
B. Declaratory Relief
CCO brings its declaratory action pursuant to Practice Book § 17-54, which provides that "[t]he judicial authority will . . . render declaratory judgments as to the existence or nonexistence (1) of any right, power, privilege or immunity; or (2) of any fact upon which the existence or nonexistence of such right, power, privilege or immunity does or may depend, whether such right, power, privilege or Immunity now exists or will arise in the future."
"The purpose of a declaratory judgment action . . . is to secure an adjudication of rights where there is a substantial question in dispute or a substantial uncertainty of legal relations between the parties . . . and to make certain that the declaration will conclusively settle the whole controversy." (Citations omitted; internal quotation marks omitted.) Mannweiler v. LaFlamme, 232 Conn. 27, 33, 653 A.2d 168 (1995). See also General Statutes § 52-29(a). "[T]he trial court may, in determining the rights of the parties, properly consider equitable principles in rendering its judgment . . . This conclusion not only harmonizes the rule that actions in law and equity may be combined in this state . . . it is also in accord with our position favoring liberal construction of the declaratory judgment statute in order to effectuate its sound social purpose." Middlebury v. Steinmann, 189 Conn. 710, 715-16, 458 A.2d 393 (1983).
C. Injunctive Relief
To prevail on an application for a permanent injunction, the movant must show (1) lack of an adequate remedy at law; (2) success on the merits; (3) irreparable injury; and (4) that a balancing of the equities favors the injunction. Waterbury Teachers Ass'n. v. Freedom of Information Commission, 230 Conn. 441, 446, 645 A.2d 978 (1994). See also Rhode Island Hospital Trust National Bank v. Trust, 25 Conn.App. 28, 39, 592 A.2d 417, cert granted in part, 220 Conn. 904, 593 A.2d 970 (1991). An injunction is an extraordinary remedy; Anderson v. Latimer Point Management Corp., 208 Conn. 256, 262, 545 A.2d 525 (1988); and is left to the court's sound discretion even if there is a proper showing of irreparable harm. Gorra Realty, Inc. v. Jetmore, 200 Conn. 151, 165, 510 A.2d 440 (1986).
III. DISCUSSION
Aldin argues that it is entitled to regain possession of the non-People's Bank properties because CCO violated the terms of the leases. Specifically, it points to paragraph seventeen of the lease agreements and argues that a finding of materiality is not necessary for eviction, because the court must strictly construe the termination language found in the clause. In the alternative, it argues that it has established that CCO's defaults were material breaches and, therefore, Aldin may properly terminate the leases.
CCO responds that Aldin must prove a material breach of the leases in order to prevail in its summary process action. Accordingly, CCO asks the court to find that its actions did not constitute material breaches or defaults with respect to the nine leased properties. Alternatively, CCO argues that, even if the court finds that it has materially breached the leases, the doctrine of equitable nonforfeiture prevents eviction from the properties. Moreover, it argues that the court should enjoin Aldin's eviction attempts because Aldin has acted in bad faith, and is therefore, not entitled to gain possession of the premises.
A. Whether Aldin Must Prove a Material Breach of the Leases
The facts found herein plainly demonstrate that CCO breached the lease and agency agreements. Nevertheless, the first question is whether Aldin must prove that these defaults constituted "material breaches" of the leases in order to evict CCO from the subject properties. "A lease is a contract . . . and its construction presents a question of law for the court . . . In construing a lease the controlling factor is the intent expressed in the lease, not the intent which the parties may have had or which the court believes they ought to have had . . . [T]he lease must be construed as a whole and in such a manner as to give effect to every provision, if reasonably possible." (Citations omitted; internal quotation marks omitted.) Robinson v. Weitz, 171 Conn. 545, 551, 370 A.2d 1066 (1976).
CCO cites a number of cases for the proposition that Aldin must prove a material breach of the leases in order to terminate the leases. See, e.g., United Air Lines, Inc. v. Austin Travel Corp., 867 F.2d 737, 741 (2d Cir. 1989) (under New York law, contract must explicitly state that non-material breach allows party to abrogate contract); St. John Urban Development Corp. v. Chisholm, 111 Conn.App. 649, 652-53, 960 A.2d 1080 (2008) (analyzing a breach of a lease under General Statutes § 47a-23c, which explicitly protected disabled and elder tenants from eviction unless breach was material); Gallogly v. Kurrus, 97 Conn.App. 662, 668, 905 A.2d 1245 (2006) (tenant could not have breached lease agreement because it was ambiguous); State v. Lex Associates, 248 Conn. 612, 625, 730 A.2d 38 (1999) (stating that failure to accept plaintiff's payment in its exercise of a purchase option for leased real property was a material breach, but not discussing whether materiality was necessary); and One Hundred Norwalk, LLC v. Trilegiant Corp., United States District Court, Docket No. 0012 (D.Conn. May 11, 2009) (summary judgment inappropriate when there was a question of fact regarding whether breach was material). Those cases are not on point and do not address the precise issue to be decided.
It is true that, because a lease is a contract, the "rules applying to contracts generally with respect to breach, the right to damages for breach, and the measure of damages, apply to leases as well as contracts." Rokalor Inc. v. Conn. Eating Enterprise, 18 Conn.App. 384, 391, 558 A.2d 265 (1989). Nevertheless, if the parties specifically include an unambiguous provision that any default or breach terminates the contract, the court must give effect to that provision. For instance, in Robinson v. Weith, supra, 171 Conn. 552, the parties entered into a lease that contained an express condition that the landlord could terminate the tenancy if the tenant defaulted on any of the terms, conditions or covenants contained in the lease. Thereafter, the tenant assigned the lease without obtaining the landlord's consent, in violation of the lease agreement. The trial court declared the assignment invalid, but found that the lease should not be terminated. Id., 549.
The Supreme Court disagreed. It concluded that, pursuant to the express term of the agreement, the landlord was entitled to terminate the lease because the tenant had defaulted on one of the conditions. Id., 552-53.
As in Robinson, the subject leases contain an express and unambiguous provision that allows Aldin to terminate the tenancy upon any default by CCO. "[I]t has long been [t]he common method in drafting leases . . . to gather some or all of the covenants, by reference, into a condition subsequent, an agreement by the parties, that a breach by the tenant of any or all of the covenants on his part shall give the landlord the right to terminate the tenancy by means and in a manner usually indicated." Id., 552. Paragraph 17(b) employs this method of termination because it states that "[i]n the event of a default . . . the Landlord may, in its sole discretion, terminate this Lease, whereupon all rights of Tenant under this Lease shall immediately terminate. Upon any such termination of this Lease, the Landlord may at any time thereafter re-enter the Demised Premises and the same have and possess as of its former estate . . ." Moreover, as discussed above, pursuant to paragraph 17(viii), CCO's default of any one lease constitutes a default of all of the subject leases. Accordingly, Aldin does not need to prove materiality to prevail in its summary process action because it has demonstrated that CCO has defaulted on the leases. Consequently, in order to terminate the leases, and to be entitled to summary-process, Aldin only needs to demonstrate that CCO is in default.
II. Whether CCO has Materially Breached the Leases
Notwithstanding the conclusion that materiality is not a factor in Aldin's summary process action, the court also finds that CCO's defaults did, in fact, constitute material breaches of the lease. "[O]ur Supreme Court endorse[s] the use of the multifactor test set forth in the Restatement (Second) of Contracts . . . [to] determin[e] whether a breach is material. Section 241 of the Restatement (Second) of Contracts provides: `In determining whether a failure to render or to offer performance is material, the following circumstances are significant: (a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; (b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived; (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; [and] (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing . . . The standards of materiality [are] to be applied in the light of the facts of each case in such a way as to further the purpose of securing for each party his expectation of an exchange of performances. [Section 241] therefore states circumstances, not rules, which are to be considered in determining whether a particular failure is material." (Citations omitted; internal quotation marks omitted.) Shah v. Cover-It, Inc., 86 Conn.App. 71, 75-76, 859 A.2d 959 (2004).
Therefore, in determining whether a breach is material, the court does not necessarily consider isolated breaches. Instead, it may look at whether certain acts, considered together, demonstrate a material breach. See, e.g., Id., 73. "The question is one of degree, to be answered, if there is doubt, by the triers of the facts . . . and, if the inferences are certain, by the judges of the law . . ." (Internal quotation marks omitted). Aetna Casualty Surety Co. v. Murphy, 206 Conn. 409, 415, 538 A.2d 219 (1988).
With regard to the first factor, CCO maintains that Aldin has received the benefit of the bargain because it obtained a large payment for the convenience store businesses, CCO is selling gasoline as Aldin's commissioned agent, and CCO does not owe Aldin any money. CCO asserts that the defaults have not interfered with Aldin's ability to receive the benefit of its bargain because they are minor operational issues, common to all retail gasoline establishments. In support of its position, CCO stresses that Aldin has not offered any specific evidence of monetary loss.
CCO misses the point. There is no dispute that at the time the parties entered into the lease agreements, Aldin specifically contracted with CCO to manage its retail gasoline stations because it no longer wished to directly operate them. Hence, the benefit of the bargain for Aldin was that CCO would run Aldin's gasoline business according to its directives, and yet, Aldin would not have to be involved with the mechanics of the daily operations. In exchange, CCO was promised a guaranteed minimum commission on the gasoline sales as compensation for providing this benefit.
Nevertheless, Aldin did not receive the benefit of its bargain with respect to these nine properties. For instance, the parties agree that the failure to properly maintain gas station/convenience store premises can drive customers away, and consequently, affect gasoline sales. Accordingly, in order to maximize its sales, Aldin wanted the gasoline businesses and the convenience stores to be operated in a particular manner. Thus it negotiated for specific provisions in the lease agreement, and compensated CCO accordingly. It was CCO's responsibility to ensure that its operators followed those provisions. Instead of being relieved from the risks and burdens of direct operations, Aldin was forced to become engaged in a constant struggle to obtain CCO's compliance. In fact, Lavigne admits that in the short course of two years, the parties exchanged endless correspondence regarding performance issues.
Another anticipated benefit of the bargain was that CCO would use its best efforts to sell gasoline. The parties agree that there are various factors that affect gasoline sales, such as price, location, market forces, clean facilities, and customer service. Obviously, the only factor that CCO could directly control was the quality of its daily operations. Thus, CCO's requirement to use its best efforts was inevitably linked to this particular factor.
Nevertheless, CCO did not implement any mechanisms to effectively ensure that its subtenants were performing in a manner that would maximize gasoline sales. For instance, CCO did not contractually obligate its subtenants to comply with the terms of the agency agreements. Moreover, CCO did not share its gasoline sales commissions with its subtenants. Thus, with respect to the gasoline business, CCO did not provide the subtenants with any incentives to use their best efforts, nor any consequences if they failed.
CCO unsuccessfully attempts to use as evidence of its best efforts the fact that it hired personnel charged with supervising its subtenants. This, however, was not sufficient. First, the management staff that CCO hired lacked experience or formal training in the gasoline industry. Moreover, key CCO personnel never read the leases or the commissioned agent agreements and were unaware of CCO's specific obligations. Thus, they could not have effectively supervised the subtenants in the performance of their duties because they did not know what those obligations were, and had little or no knowledge of, or experience in, the gasoline industry.
With respect to the second factor in the materiality analysis, the extent to which Aldin can be adequately compensated, CCO makes much of the fact that Aldin did not present any expert testimony or other evidence to indicate that its gasoline sales were negatively affected by CCO's conduct. Even if that evidence had been presented, it would be unnecessary to the court's analysis. Aldin has been harmed because, as described above, its business was not being operated in the manner it bargained for with CCO.
Furthermore, Aldin has been injured because it has been exposed to the risk of environmental liability caused by CCO's failure to meet its environmental obligations under the agreements. Staff in the gasoline industry must be adequately trained to monitor and respond to any potential environmental emergencies. Yet, CCO never instituted any training protocols and failed to ensure that the employees at all of the stores were adequately trained. Instead, it merely assumed, but never confirmed, that the subtenants were training their own employees. The fact that the majority of the sites have, on at least one occasion, failed to report a TLS alarm reflects this lack of training and a disregard for possibly devastating environmental consequences.
Aldin has also been harmed because CCO's conduct threatened its relationship with its other tenants. As an illustration, the operator of one of CCO's cotenants, a donut franchisee, credibly testified that he was not satisfied with CCO's maintenance and was unsure he would renew his lease with Aldin.
Moreover, given CCO's inability, or unwillingness, to make timely repairs and promptly report damage, Aldin's property is at risk of deterioration. For instance, in September 2008, CCO was informed by a roofing contractor that the Norwich roof needed a relatively simple repair. Upon re-inspection in March 2009, the contractor reported that the roof had not been adequately repaired and the problem had spread to other areas. As a result, the roof would require extensive work. In addition, despite Aldin's requests, CCO has never provided documentation that it contracted a qualified professional to repair any of the roofs. Likewise, CCO failed to report that the retaining wall at the Mystic location was struck and needed repair. Aldin only learned of it upon an unrelated visit to the site some time later.
The third factor, the extent to which CCO will suffer forfeiture, further supports Aldin's argument. This factor is based on the policy that "[e]quity abhors . . . a forfeiture." Fellows v. Martin, 217 Conn. 57, 65, 584 A.2d 458 (1991). Nevertheless, the policy against forfeiture is only available to a tenant when "the conscience is shocked or the forfeiture unconscionable." Housing Authority v. Lamothe, 27 Conn.App. 755, 762, 610 A.2d 695 (1992), rev'd on other grounds, 225 Conn. 757, 627 A.2d 367 (1993).
CCO asserts that it will suffer great forfeiture if the court finds that it has defaulted on the leases. For instance, CCO argues that the sale of the convenience stores and the lease agreements are inextricable. It paid millions to purchase the convenience store properties specifically because it believed it could remain on the leased properties for at least ten years. Thus it contends that any defaults are not sufficiently egregious to warrant an eviction in light of the fact that little time has elapsed in the leasehold term, and it has invested a great sum. Furthermore, it asserts that its losses upon eviction would be grossly disproportionate to Aldin's injury because it would still have to pay rent until the properties were relet. CCO also claims that it would suffer great harm because an eviction would cause it to lose the collateral that is securing its $3 million loan from People's Bank, thereby increasing the chance that the bank will declare the entire loan in default. Finally, CCO argues that the eviction would be unconscionable because it would terminate CCO's contracts with its suboperators.
There is no doubt that as a result of the cross default provisions, if CCO is declared in default of any one non-People's lease, it could lose possession of the five properties subject to the summary process action. In addition, if the court finds that CCO has defaulted on the People's Bank locations, Aldin may seek eviction in the future. Consequently, CCO could also lose the right to operate its convemence stores on all of the properties. Additionally, as CCO points out, there is a chance that its loan with People's Bank will be declared in default if the court does not grant its declaratory request. Nevertheless, by definition, every eviction creates forfeiture. Thus, the mere fact that CCO will be evicted is not sufficient to determine that it has not materially breached the leases because "[t]he doctrine against forfeiture cannot be dilatorily invoked to eviscerate the statutory mandate of our summary process laws." (Internal quotation marks omitted.) Housing Authority v. Lamothe, supra, 27 Conn.App. 755, 759. When it opted to operate the convenience store businesses on Aldin's property, CCO bargained for the risk that at any point during the terms of the leases, it could be evicted if it did not comply with its contractual obligations. Therefore, CCO was aware of the possible consequences when it failed to properly supervise its subtenants.
"There is a strong public policy in Connecticut favoring freedom of contract: It is established well beyond the need for citation that parties are free to contract for whatever terms on which they may agree. This freedom includes the right to contract for the assumption of known or unknown hazards and risks that may arise as a consequence of the execution of the contract. Accordingly, in private disputes, a court must enforce the contract as drafted by the parties and may not relieve a contracting party from anticipated or actual difficulties undertaken pursuant to the contract, unless the contract is voidable on grounds such as mistake, fraud or unconscionability . . . If a contract violates public policy, this would be a ground to not enforce the contract . . . A contract . . . however, does not violate public policy just because the contract was made unwisely . . . [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; contracts voluntarily and fairly made should be held valid and enforced in the courts." (Citations omitted; internal quotation marks omitted.) Schwartz v. Family Dental Group, P.C., 106 Conn.App. 765, 772-73, 943 A.2d 1122, cert. denied, 288 Conn. 911, 954 A.2d-184 (2008).
Paragraph seventeen of the leases does not violate public policy and is enforceable. Without a doubt, the cross default provisions exposed CCO to a high risk of losing its leasehold estates. However, that was the risk it bargained for voluntarily. These leases were made by sophisticated commercial parties with presumptively equal bargaining power, and with the advice of counsel. Accordingly, CCO cannot ask this court to rewrite them merely because it now faces eviction and a possible default on its People's Bank loans. See, e.g., Tallmadge Brothers, Inc. v. Iroquois Gas Transmission System, L.P., 252 Conn. 479, 496, 746 A.2d 1277 (2000) (court would not rewrite lease because "disputed agreement was a commercial contract between sophisticated commercial parties with relatively equal bargaining power").
The court is also not convinced that CCO's loss upon eviction would be greatly disproportional to Aldin's injuries. In 19 Perry Street, LLC v. The Unionville Water Co., 294 Conn. 611, 630, 636, 987 A.2d 1009 (2010), a case upon which CCO relies, the landlord sought to evict its tenant, a company that supplied water to the town of Unionville, for, essentially, failure to pay rent on a timely basis. The court held that the tenant was entitled to retain possession of the leased premises. It reasoned that the tenant's losses would be greater if evicted because the landlord would be able to recoup its past due rent. On the other hand, the court concluded that the tenant would have to find another source to replace the millions of gallons that it pumped from the leased properties. Id., 635-36. In making its determination, the court considered the possibility that Unionville's water supply would be jeopardized pursuant to the eviction. Id.
Based on the court's factual findings set forth above, the present case is quite distinguishable from 19 Perry Street, LLC. CCO has other properties and other sources of income. Moreover, if the breaches had been limited to one location, the court could have, perhaps, concluded that, as in 19 Perry Street, LLC, the loss of all of the non-People's leases was disproportional to Aldin's harm. However, the court finds that CCO breached its agreements at all nine of the subject properties. Accordingly, the court cannot find that CCO's losses will be greatly disproportional if evicted.
Similarly, the court cannot conclude that CCO will suffer a forfeiture simply because People's Bank has a right to declare a loan default if CCO is evicted. CCO voluntary entered into this arrangement with People's Bank, and assumed the risks that flowed from this eviction. Again, CCO cannot ask this court to restructure the risk it voluntarily accepted. See, e.g., Connecticut Light and Power, Co. v. Lighthouse Landings, Inc., 279 Conn. 90, 98, 900 A.2d. 1242 (2006) (declining to grant equitable relief even though "forfeiture of the lease would destroy [the tenant's] . . . operation at that site and substantially affect [the tenant's] large capital investment in that operation" [internal quotation marks omitted]).
In addition, in order to find invoke the policy against forfeiture as a shield, the tenant must show that, notwithstanding its breach, there was a good faith attempt to comply with the lease, or that the breach was a result of a good faith dispute over the meaning of the lease. 19 Perry Street, LLC v. The Unionville Water Co., supra, 294 Conn. 630. Here, CCO has not shown either.
To illustrate, in 19 Perry Street, LLC the court found that the tenant had evinced a good faith attempt to comply with the provisions of the lease, and, therefore, could use the policy against forfeiture as a defense to its eviction. Id., 638. In that case, the plaintiff landlord failed to provide its tenant with notice that it acquired the mortgage on the leasehold property, although it had filed its foreclosure certificate on the land records. Id., 618-19. As a result, the tenant did not know the identity of its new landlord. Id. Moreover, the tenant's correspondence to the old landlord was returned as undeliverable. Id., 618. Thereafter, the tenant began to set aside funds to cover rental payments. Id., 619. The court concluded that the landlord had provided record notice of its identity and that the tenant had breached the lease by failing to tender rental payments. Id., 627-29. Nevertheless, the court found that the tenant had attempted to comply with its contractual obligations in good faith because it had set aside the funds and promptly approached the owner to discuss rental payments once it learned of the new owner's identity. Id., 638. Therefore, the court found that it would be unconscionable to enforce the lease provisions and evict the tenant. Id., 631. See also, Cumberland Farms, Inc. v. Dairy Mart, Inc., 225 Conn. 771, 627 A.2d 386 (1993) (tenant entitled to relief from forfeiture because "[a]lthough [it] was negligent is not paying the rent, [tenant's] personnel acted diligently to attempt to obtain the information needed to correct the nonpayment situation").
The court also found that there was a good faith dispute regarding the method of rental payments. Id., 638.
On the other hand, in Elliot v. South Isle Food Corp., 6 Conn.App. 373, 379, 506 A.2d 147 (1986), the Appellate Court concluded that the tenant was not entitled to apply equitable principles barring forfeiture. There, the tenant had violated the lease because it, inter alia, failed to remove mechanic's liens that it caused to be filed against the leased property. Id., 378. The court agreed that such failure was "borderline willful or gross negligence" because the tenant permitted the liens to remain for a significant amount of time, even though it did not experience any financial difficulties and the landlord had sent notice of default. Id., 379. The court found that, despite having notice and the means, the tenant had not made a good faith attempt at remedying the default. Id., 378-79.
Here, CCO argues that there is ample evidence of its good faith attempts to comply with the lease agreements. It asserts that it had "systems and procedures in place to maximize compliance with the Aldin agreements." For example, it points out that it has dedicated maintenance and office staff that regularly visits the Aldin properties to reinforce training. It also argues that the director of petroleum, Lavigne, "personally ensures that the job is done."
The flaw in CCO's argument, however, is that it had ample notice that its "systems and procedures" were insufficient to achieve compliance with its contractual obligations. Aldin constantly relayed to CCO that it was dissatisfied with the operations at the subject locations. Thus, in order to ensure compliance, CCO had a duty to institute more effective policies and increase its oversight. Instead, it only focused on maximizing its profitability. As in Elliot, CCO did not make a good faith attempt to comply with its contractual duties. Accordingly, the court does not find that the extent to which CCO will suffer forfeiture is sufficiently unconscionable to prohibit the court from enforcing the lease provisions.
The last two factors, whether it is likely that CCO can cure its defaults and whether it has comported to the standards of good faith and fair dealing are intertwined. It is evident that CCO trivializes its behavior, dismissing its breaches as common operational issues. Certainly, if CCO cannot comprehend that the substandard operation of the gasoline and convenience stores negatively impacts Aldin, then, it cannot effectively address the issue. Consequently, it does not appear likely that CCO will remedy its defaults. Indeed, CCO continued to breach the lease agreements even after this litigation was commenced. Given the nature of Aldin's allegations, CCO should have henceforth complied with each and every provision of the lease contracts, as any failure on its part to do so would further jeopardize the continuation of its tenancy.
Additionally, CCO's failure to use its best efforts demonstrates a lack of good faith in performing the contracts. "A duty of good faith and fair dealing is implied into every contractual relationship, and it requires that neither party do anything to injure the other's right to receive the benefits of the contract." Landry v. Spitz, 102 Conn.App. 34, 46, 925 A.2d 334 (2007). "Good faith performance or enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party; it excludes a variety of types of conduct characterized as involving `bad faith' because they violate community standards of decency, fairness or reasonableness." (Internal quotation marks omitted.) Warner v. Konover, 210 Conn. 150, 155, 553 A.2d 1138 (1989).
Here, CCO acted in a manner inconsistent with Aldin's justified expectations. In its attempt to maximize its own profits, CCO sacrificed the quality of its operations at these nine locations. For instance, it never made any significant attempts to appropriately train and supervise its operators. As explained above, it provided its operators with little incentive to use their "best efforts" to maximize gasoline sales. It hired inexperienced management staff who never read any of the lease agreements nor the Mobil rider which outlined its responsibilities as a franchisee. As further evidence of its lack of good faith, CCO repeatedly ignored Aldin's request to replace poorly performing subtenants, only doing so when the tenants defaulted on their rent payments. Lastly, even though Aldin repeatedly demanded compliance, CCO could not, or would not remedy its conduct.
In summary, and as noted above, this court concludes that CCO has materially breached the leases and agency agreements. It consistently failed to maintain both the interior and exterior of the convenience stores in a clean and sanitary condition. Furthermore, it breached its obligation to make adequate repairs and immediately report structural damage. CCO also failed to maintain the landscaping and remove snow and ice, as needed. On various occasions, it did not pay its utility service and negatively affected the operations of its cotenants. In addition, it failed to comply with the Mobil corporate image program. For instance, it provided unsatisfactory customer service and sold prohibited merchandise, such as drug paraphernalia, pornography and tobacco products to underage minors. CCO also did not supervise its subtenants' compliance with environmental protocols. As a result, most locations failed to report a TLS alarm at least once. Equally important, it failed to exercise best efforts in selling gasoline as Aldin's agent.
Obviously, no single incident in this case rises to the level of a material breach. However, considering all of the circumstances together, the court finds that CCO has materially breached the lease agreements.
C. Whether the Doctrine of Nonforfeiture Prevents Eviction
The next issue is whether, notwithstanding its material breaches, the doctrine of nonforfeiture prevents CCO's eviction. "The doctrine of equitable nonforfeiture is a defense implicating the right of possession that may be raised in a summary process proceeding, and is based on the principle that [e]quity abhors . . . a forfeiture . . . In deciding whether to grant equitable relief, the court first considers the nature of the lease violation involved. [I]n cases of wilful or gross negligence in failing to fulfill a condition precedent of a lease, equity will never relieve. But in [a] case of mere neglect in fulfilling a condition precedent of a lease, which does not fall within accident or mistake, equity will relieve when the delay has been slight, the loss to the lessor small, and when not to grant relief would result in such hardship to the tenant as to make it unconscionable to enforce literally the condition precedent of the lease." Connecticut Light Power Co. v. Lighthouse Landings, Inc., supra, 279 Conn. 106 n. 15.
Essentially, under this standard, the defendant is required to prove that the breaches are slight compared to the hardship that it will suffer if evicted. This standard, however, supports Aldin's position that materiality is not a factor in a case involving the contractual language used here. Indeed, if the court finds the breaches to be material, then it would seem incongruous to require the defendant to prove that, notwithstanding the court's holding, the breach does not rise to the magnitude to warrant eviction. CCO argues that there is no incongruency because, in determining whether to grant equitable relief, the court is balancing the harm occasioned by the breach with the consequences of terminating the lease. The court is not convinced because both are factors in determining the extent of the tenant's forfeiture.
Here, the court denies CCO's request for relief under the doctrine of nonforfeiture. As outlined above, the court does not find that CCO's forfeiture will "result in such hardship to the tenant as to make it unconscionable to enforce literally the condition precedent of the lease."
D. Whether Aldin has Breached its Duty of Good Faith and Fair Dealing
Finally, CCO contends that Aldin should be enjoined from seeking eviction because it has acted in bad faith. The essence of its argument is that Aldin devised a plan to release or resell the properties once it realized that it sold to CCO at too low a price. CCO alleges that Aldin planned to regain its properties so that it could capture the "exorbitant rents" that CCO charged, but not until it could extract all possible upfront payments. It maintains that Aldin, therefore, sought to create problems and actively compiled lists of violations solely to thwart CCO's success. As evidence, CCO points to Savin's admission that he engaged in negotitions to sell the seventeen leased properties even before he served the default notices. CCO also contends that the court should infer bad faith from Aldin's agreement to extend the terms of the leases from a ten-year term with four consecutive renewal options to a fixed thirty-year term. CCO essentially claims that Aldin restructured the leases so that it would be easier to initiate eviction proceedings and compel the removal of CCO from the leased premises. Finally, it asserts that, bad faith can be inferred from that fact that, even though Aldin claims that CCO was in default from the beginning of the leasehold term, it did not authorize the issuance of a default letter until after the last of the real property closings, where Aldin received over $20 million.
Aldin responds that a landlord's conduct and motivation in terminating a lease are irrelevant in determining whether a tenant is entitled to equitable relief from forfeiture. It also argues that even if it were relevant, there is no evidence of bad faith. First, Aldin admits that it discussed the sale of the gasoline businesses with a third party after it served the notices to quit. However, it points out that it had a right to sell the gasoline businesses, subject to the commissioned agent agreement, and the real estate, subject to the leases, because they did not belong to CCO. Furthermore, Aldin maintains that the court cannot infer bad faith merely because it issued the default letters approximately two weeks after the last closing on the real properties that CCO purchased from Aldin. It asserts that these closings were part of a separate contract that governed the sale of these properties, and, were not related to the lease agreements. Therefore, it maintains that, pursuant to that contract, CCO had an obligation to purchase those properties, regardless of the status of the leases. Finally, Aldin argues that CCO's claims that Aldin only seeks to reclaim all of the properties in order to collect more revenue are illogical in light of the fact that Aldin has not attempted to evict CCO from all seventeen leased properties, merely from the ones that have been found in default.
"If a commercial lease imposes a duty of good faith and fair dealing upon a tenant, there is no reason not to impose a similar duty upon a landlord." Warner v. Konover, supra, 210 Conn. 154. In addition, contrary to Aldin's arguments, a landlord's conduct is relevant in determining whether to grant equitable relief. 19 Perry Street, LLC, v. The Unionville Water Co., supra, 294 Conn. 632 ("[i]n assessing whether the nature of a [tenant's] breach was willful or grossly negligent, this court has found significant evidence of a landlord's own conduct contributing to a tenant's breach").
There is no question that the relationship between Aldin's and CCO's management teams has deteriorated since its inception in 1992. For instance, Barr candidly admitted that she hated Lavigne, while Savin referred to CCO as the worst convenience store operator he had ever seen.
In any event, there is not sufficient credible evidence to conclude Aldin breached its duty of good faith and fair dealing. A landlord who has breached this duty acts in bad faith, which implies some sinister motive, dishonest purpose, ill will or furtive design. Buckman v. People Express, Inc., 205 Conn. 166, 171, 530 A.2d 596 (1987). At best, the evidence suggests that Aldin's staff became more vigilant of CCO's performance and increased its efforts to document defaults. The court is not persuaded that Aldin acted in bad faith because Aldin attempted to negotiate the sale of the gasoline businesses with another entity. It had a legal right to do so. CCO has not presented any evidence that Aldin negotiated its leases to any other party. Also, the argument that Aldin is actively seeking an eviction in order to collect the "exorbitant rents" is unavailing in light of the fact that Aldin was already aware when it signed the lease agreements that CCO would subsequently sublet the properties at a higher rate. As a final point, the court declines to infer bad faith merely because Aldin issued the default letters two weeks after the last real estate closings. Pursuant to a separate sales contract, Aldin had a duty to convey these properties, even if CCO was in default of the lease agreements.
In short, CCO has materially breached the provisions of the subject leases. Consequently, upon finding that CCO was in default, Aldin had the right to terminate the leases. Accordingly, there is no merit to the argument that Aldin's summary process action was brought in bad faith.
CONCLUSION
For the foregoing reasons, this court concludes that there has been a material breach of the lease agreements at each one of the following locations: Norwich, Uncasville, Guilford, Voluntown, Lisbon, Mystic, Brooklyn, Branford and Willimantic. Pursuant to paragraph 17(a)(ii) of the leases, CCO's material breaches at each location have resulted in a default of each lease. Therefore, the court denies CCO's request for a declaration that it has not defaulted on any of the leases. Moreover, because CCO has not made a showing that it will succeed on the merits, the court denies CCO's request for injunctive relief.
In addition, the default at any one of the non-People's Bank locations (Guilford, Voluntown, Norwich, Uncasville and Lisbon) constitutes a default of any one of those leases. Therefore, CCO is also in default of these five locations as a result of the cross default provisions.
The court also finds, by a fair preponderance of the evidence, that Aldin has proved all the elements of its summary process action. The subject leases have been terminated because, as indicated above, CCO has breached each of the lease agreements. Moreover, pursuant to paragraph 17(a)(viii), CCO has cross defaulted on each of the five leases subject to this summary process action. Accordingly, having considered the law and equity, the court enters judgment for Aldin for the immediate possession of the following properties: 489 New London Turnpike, Norwich, Connecticut; 568 Norwich Turnpike, Uncasville, Connecticut; 500 Boston Post Road, Guilford, Connecticut; 251 Main Street, Voluntown, Connecticut; and 107 River Road, Lisbon, Connecticut.