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The Access Agency, Inc. v. Second Consolidated Blimpie Connecticut Realty, Inc.

Court of Appeals of Connecticut

June 27, 2017

THE ACCESS AGENCY, INC.
v.
SECOND CONSOLIDATED BLIMPIE CONNECTICUT REALTY, INC. ET AL.

          Argued January 5, 2017

         Appeal from Superior Court, judicial district of Windham, A. Santos, J.

          Lloyd L. Langhammer, for the appellant (plaintiff).

          Richard S. Cody, with whom, on the brief, was Jon B. Chase, for the appellee (defendant Richard Taras-cio, Jr.).

          Lavine, Keller and Beach, Js.

          OPINION

          BEACH, J.

         The plaintiff, The Access Agency, Inc., appeals from the judgment of the trial court rendered in favor of the defendant, [1] Richard Tarascio, Jr. The plaintiff claims the court erred in (1) finding that a guaranty signed in connection with an expired lease did not obligate the guarantor under a new lease and (2) using an exhibit for purposes beyond the limited purpose for which it was introduced. We affirm the judgment of the trial court.

         Pursuant to a lease agreement executed in August, 2000, the plaintiff leased premises at 1325 Main Street in Willimantic (premises) to Second Consolidated Blimpie Connecticut Realty, Inc., (Consolidated Blimpie) for use as a sandwich shop (2000 lease agreement). The parties introduced into evidence several documents which together define the business relationships among the several entities. The seminal document is the lease agreement between the plaintiff landlord and Consolidated Blimpie, as tenant. The lease created a tenancy of five years, from August 1, 2000 until July 31, 2005. The lease granted to Consolidated Blimpie three options to renew the lease for three additional five year periods. The lease expressly incorporated a second document, entitled ‘‘Rider to Lease'' (rider). The lease was executed in August, 2000, by representatives of the plaintiff and of Consolidated Blimpie.

         The rider specifically contemplated the use of the premises as a Blimpie's franchise, and provided for the subletting of the premises to a franchisee of Blimpie International, Inc. The subtenant was required, according to the rider, to execute a personal guaranty. In the event that the ‘‘store'' was transferred to another subtenant and the new subtenant signed a personal guaranty, the ‘‘prior subtenant shall be released from its guaranty.'' The rider also provided that Consolidated Blimpie was entitled to assign the lease, and paragraph 7 (b) provided that an assignment or sublease would not serve to extinguish the liability of the assignor or sublessor.

         The rider specifically contemplated that Consolidated Blimpie did not have assets other than the lease, but was created for the purpose of negotiating and signing the lease. The rider provided that the plaintiff could not seek damages from any party other than the tenant ‘‘and/or, if appropriate, the sublessee.'' No stockholder or member of a limited liability company, expressly including Blimpie International, Inc., could be held liable for any obligation of the tenant. The rider further provided that Consolidated Blimpie would be subletting the premises to a Blimpie's franchisee, and, in the event of any default on the part of the sublessee, the plaintiff agreed to offer the tenant a new lease, so that Consolidated Blimpie could sublet the premises to another Blimpie franchisee.

         The structure of the arrangement can be gleaned from the rider and the lease. The tenant, Consolidated Blimpie, was acting in the interest of Blimpie International, the franchisor. Consolidated Blimpie effectively insulated itself from liability by having no assets other than the lease and by requiring the plaintiff to agree that no stockholders or members, including Blimpie International, Inc., could be held liable in damages. Consolidated Blimpie could freely sublet the premises to Blimpie franchisees, who were to pay rent directly to the plaintiff and were liable to the plaintiff in the event of default. In essence, the tenant, acting in the interest of the franchisor, decided who, as a Blimpie franchisee, would be in possession of the premises and who would serve to guarantee Consolidated Blimpie's obligations to the plaintiff.

         The first relevant guaranty was executed by the defendant at approximately the same time as the first lease and rider were executed. The guaranty referenced the lease between the plaintiff and Consolidated Blim-pie. The defendant generally guaranteed payment for liabilities incurred by Consolidated Blimpie under ‘‘the lease.'' The guaranty provided that the defendant's potential liability would ‘‘remain . . . payable even though the demised term or any renewal or extension thereof shall have expired, '' and an assignment of the lease or any subletting was not to release the defendant from liability as guarantor.

         The first lease was renewed in 2005, for a five year period. In 2007, KRES-CT, LLC, (KRES-CT), became the successor, by merger, to Consolidated Blimpie. The renewed lease lapsed on July 31, 2010. A series of events took place at the end of 2010: the prior franchisee, Tri-Star Blimpie I, LLC, which was controlled by the defendant, sold its franchise, equipment and inventory to Marshall Gebhardt, who in turn entered into a new guaranty agreement with the plaintiff. The Gebhardt guaranty is identical inmaterial respects to the guaranty previously executed by the defendant, except that it guarantees the obligations of ‘‘KRES-CT, LLC, successor by merger to [Consolidated Blimpie].'' At approximately the same time, a ‘‘Renewal of Lease Agreement'' was entered into by the plaintiff and KRES-CT. The renewal recited the prior merger of Consolidated Blimpie and KRES-CT, and generally incorporated the provisions of the prior leases. KRES-CT represented that it was the successor to all duties and obligations of the lessee.[2]

         Finally, by letter dated January 6, 2011, the plaintiff was informed that Gebhardt had bought the franchise and that KRES-CT would remain liable as tenant.[3] As discussed ...


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