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Boccanfuso v. Daghoghi

Court of Appeals of Connecticut

October 1, 2019

DOMINICK BOCCANFUSO ET AL.
v.
NADER DAGHOGHI ET AL.

          Argued February 11, 2019

         Procedural History

         Summary process action brought to the Superior Court in the judicial district of Stamford-Norwalk, Nor-walk Housing Session, and tried to the court, Rodriguez, J.; judgment for the plaintiffs, from which the defendants appealed to this court; thereafter, the court, Rodriguez, J., denied the defendants’ motion for articulation; subsequently, this court granted in part the defendants’ motion for review and the court, Rodriguez, J., issued an articulation; thereafter, this court granted in part the defendants’ motion for review, and the court, Rodriguez, J., issued an articulation. Affirmed.

          Eugene E. Cederbaum, with whom was Ryan Dris-coll, for the appellants (defendants).

          Matthew B. Woods, for the appellees (plaintiffs).

          Keller, Prescott and Pellegrino, Js.

          OPINION

          KELLER, J.

         This summary process action involves a lease of commercial premises located at 936-940 Post Road East in Westport (property). The defendants, Nader Daghoghi (Nader), Sassoon Daghoghi (Sassoon) and 940 Post Road East, LLC, doing business as Savoy Rug Gallery (defendant LLC), appeal from a judgment of possession rendered in favor of the plaintiffs, Dominick Boccanfuso (Dominick), Crescienzo Boccanfuso (Crescienzo), and Boccanfuso Bros., Inc. (plaintiff corporation). The defendants claim that the trial court (1) applied an incorrect legal standard in determining that they failed to prove their special defense of equitable nonforfeiture; (2) erred in finding that the plaintiffs were unaware of environmental contamination at the property until after July1, 2014; (3) abused its discretion in finding that the defendants had failed to prove their special defenses of unjust enrichment and violation of the implied covenant of good faith and fair dealing; and (4) abused its discretion by not granting the defendants a continuance so that a witness could testify. We affirm the judgment of the trial court.

         The following facts, as stipulated to by the parties or as found by the court in its original decision or subsequent articulations, and procedural history are relevant to this appeal.

         The property was owned by the plaintiff corporation, and, at all times relevant to this litigation, Dominick was a shareholder, director and officer of the plaintiff corporation. Since at least 1970 and through the date of Dominick’s retirement at the end of 2013, the property was used as an automobile repair facility. In or about 1989, the plaintiffs installed a 2000 gallon gasoline underground storage tank under the front parking lot of the property. Sometime thereafter, they also installed a 330 gallon waste oil underground storage tank in the rear of the property. Both underground storage tanks were removed in 2013 for reuse elsewhere, but the plaintiffs failed to follow proper procedures and protocols for the removals.

         Dominick received a letter from Absolute Tank Testing, Inc. (Absolute), dated October 31, 2011, advising him that soil samples taken from the area around the perimeter of the 2000 gallon gasoline underground storage tank contained ‘‘detectable concentrations of [Extractable Total Petroleum Hydrocarbons] 540 parts per million, ’’ and that Absolute had notified the Department of Energy and Environmental Protection (department). (Internal quotation marks omitted.)

         In March, 2013, Dominick’s nephew, Giuseppe Boccanfuso (Giuseppe), who was not licensed to remove underground storage tanks, removed the 2000 gallon gasoline underground storage tank. In March or April, 2014, Giuseppe removed the 300 gallon waste oil under- ground storage tank. The department was not notified of the removal of either of the tanks. Additionally, no test of the soil surrounding the waste oil underground storage tank was conducted.

         On November 22, 2013, the parties entered into a lease of the property. The five-year lease, with an option of extending the term for five additional five-year terms, provided that the defendants were to convert the property from an automobile repair facility to spaces in which they would operate their two businesses, the Savoy Rug Gallery and a Subway sandwich shop. The defendants intended to use a portion of the space to sell handmade oriental rugs and the remainder to house their Subway franchise.

         Richard H. Girouard, Sr., was the leasing agent for the property and also the property manager for the Boccanfuso family. Girouard negotiated the terms and conditions of the lease and drafted it on behalf of the plaintiffs.[1] The monthly base rent for the property was $16, 338.

         Prior to the signing of the lease, on October 29, 2013, Girouard, on behalf of Klein New England, [2] sent a letter to the defendants regarding the renovation of the retail space. In this letter, Girouard offered to provide the defendants consulting and design services for the demolition and renovation of the property. Two of Klein New England’s undertakings were to obtain the building permits and certificates of occupancy for the retail space. The defendants paid Klein New England the $22, 500 fee set forth in Girouard’s letter.

         On July 1, 2014, over seven months after the lease was signed, the department, after finding evidence of environmental contamination, issued an enforcement order directed to the plaintiff corporation. The department later commenced a civil action against the plaintiff corporation in the Superior Court for the Judicial District of Hartford at Hartford, alleging a violation of the enforcement order. On August 15, 2016, the court, Hon. Susan A. Peck, judge trial referee, rendered a judgment upon the stipulation of the parties to that action.

         Paragraph 33 of the lease provides in pertinent part: ‘‘Lessor will be responsible for any environmental issues which may arise with the [d]emised [p]remises.’’ The plaintiffs addressed the contamination issues at their expense, and the property has been remediated in accordance with the stipulation between the plaintiffs and department.

         On June 11, 2014, the defendants obtained a building permit to renovate a portion of the property into the retail rug gallery, and a certificate of occupancy for that renovated space was issued on February 26, 2015.

         At the direction of the plaintiffs, on June 27, 2014, Girouard informed the defendants by letter that the rent commencement date pursuant to paragraph 10 of the lease would be July 1, 2014, and to commence payment of all water and electric charges.[3] In the letter, Girouard also informed the defendants that the plaintiffs had instructed him to handle all lease and building matters exclusively and that the plaintiffs did not want to be called or visited by the defendants about lease or building matters.

         On August 1, 2014, Girouard, on behalf of Klein New England, sent a letter to the defendants regarding the renovation of the Subway space. The defendants paid Klein New England a $9000 consultation fee regarding the renovation of this space.

         On September 15, 2014, the defendants obtained a building permit for the renovation of the Subway space and a certificate of occupancy was issued for that renovated space on June 5, 2015.

         The defendants did not pay rent for the month of December, 2014, or make any other rent payments thereafter.[4] On January 7, 2015, the plaintiffs served the defendants with a notice to quit for nonpayment of rent when due for commercial property, thereby terminating the lease. The defendants remained in possession of the property beyond the date specified in the notice to quit. On January 17, 2015, the plaintiffs commenced this summary process action.

         In their answer to the complaint, the defendants raised six special defenses. All but the first special defense, which alleged a lack of standing on the part of the plaintiff corporation, are the subjects of this appeal.

         In their second special defense, the defendants alleged that the plaintiffs had violated paragraphs 14 and 33 of the lease by failing to remediate environmental contamination they caused and were aware of prior to the execution of the lease.[5] In their third special defense, the defendants alleged that the plaintiffs, by failing to remediate the environmental contamination, had violated the implied covenant of good faith and fair dealing.

         The defendants’ fourth special defense alleged unjust enrichment as a result of the failure of the plaintiff’s property manager, Girouard, to properly oversee the extensive renovations to the property pursuant to ‘‘an agreement’’ he had with the defendants.[6] The defendants asserted that Girouard failed to obtain a certificate of occupancy until fourteen months after the lease was signed, which caused the defendants to pay basic and additional rent to the plaintiffs, unjustly enriching them, for a period when the defendants were unable to physically occupy any portion of the leased premises.

         In their fifth special defense, the defendants alleged that, despite the failure of the plaintiffs’ property manager and agent, Girouard, to properly oversee the progress of their renovations, the plaintiffs required them to pay basic and additional rent. The plaintiffs’ demand of these payments prior to the defendants’ ability to physically occupy any portion of the property, they allege, was a violation of the implied covenant of good faith and fair dealing owed to them by the plaintiffs.

         The sixth special defense alleged that the plaintiffs’ claim for possession of the leased premises was barred by the equitable doctrine against forfeitures. This special defense, however, failed to allege or incorporate any facts. In the defendants’ posttrial brief, the defendants argued to the court that their justifiable reasons for withholding of rent were due to (1) being unaware of long existent on-site contamination of the property until the fall of 2014, nine months after the lease was signed, and their concern that the Subway would not be permitted to open due to the contamination, which had not yet been remediated in breach of the plaintiffs’ obligations under paragraph 33 of the lease; (2) the plaintiffs’ failure to extend the rent abatement period despite Girouard’s failure to obtain expediently certificates of occupancy for either the retail or food service uses; and (3) counsel’s advice to hold the rent in escrow.

         In their reply, the plaintiffs essentially denied the allegations contained in the defendants’ special defenses.

         A trial was held before the court over three days: February 2, 2016, May 19, 2016, and April 4, 2017. At the court’s request, during trial on February 2, 2016, counsel for the parties acknowledged that the court, in deciding the issues, could rely on a joint stipulation that the parties had prepared and filed with the court on May 19, 2015.

         On February 2 and May 19, 2016, the court chose only to hear evidence and rule on the viability of the defendants’ fourth special defense, unjust enrichment. This special defense was based on the fact that the plaintiffs required the defendants to make rental payments despite the fact that Girouard, who allegedly had been acting as an agent of and on behalf of the plaintiffs, had failed to obtain necessary permits and approvals in a timely fashion. The court found that the defendants had failed to prove this special defense.[7] The court stated, ‘‘[a]ny agreement entered into between [Girouard] and the defendants . . . was entered into separate from and independent of the agreement between the plaintiffs . . . and the defendants . . . . [T]here was no control by [the plaintiffs] over the actions of [Girouard], nor was there any form of supervision, nor was there any benefit to the [plaintiffs] from the agreement between Girouard and [the defendants]. Simply put, the agreement was separate from and independent of the agreement between [the plaintiffs] and [the defendants]. The defendants . . . are free to seek, from [Girouard], any claim for damages allegedly resulting from the fit-up delays and any delay in not timely producing a certificate of occupancy. This is not the fault or responsibility of [the plaintiffs]. The court finds that [Girouard] was acting for and solely on behalf of the defendant tenants in all of his undertakings to fit-up the property and in obtaining any certificate of occupancy.’’

         On June 13, 2017, after hearing evidence on the plaintiff’s complaint and the remainder of the defendants’ special defenses, the court rendered a judgment of possession in favor of the plaintiffs. The court found that the defendants had breached the lease agreement by nonpayment of rent, and had failed to sustain their burden of proof as to their ‘‘special defense, ’’ referring only to the sixth special defense of equitable nonforfeiture. The court cited to Cumberland Farms, Inc. v. Dairy Mart, Inc., 255 Conn. 771, 627 A.2d 386 (1993), as illustrative of the ‘‘guidance needed to resolve a claim regarding equitable nonforfeiture.’’ The defendants filed the present appeal.

         On July 20, 2017, the defendants filed a motion for articulation, which the court denied without comment. On September 29, 2017, the defendants filed a motion for review of this denial of articulation with this court. This court ordered that the trial court articulate ‘‘(1) whether it considered the defendants’ good faith intent to comply with the lease and their good faith dispute over the meaning of the lease in reaching its decision on the special defense of equitable nonforfeiture and, if so, how its consideration of these matters impacted its decision on the special defense of equitable nonforfeiture; and (2) whether it decided the defendants’ second and third special defenses, and, if so, to articulate any findings it made in connection therewith regarding whether the plaintiffs knew of the existing environmental contamination on the property prior to the signing of the subject lease, whether the plaintiffs were responsible for that contamination and whether they disclosed the existence of the contamination to the defendants prior to the signing of the subject lease.’’

         The trial court complied with this court’s order. In an articulation dated November 21, 2017, it stated that it had ‘‘considered and rejected the defendants’ claimed good faith intent to comply with the lease and also rejected the defendants’ alleged good faith dispute over the meanings of the lease.’’ The court found that the defendants were ‘‘well advised of the property and were ill advised by their counsel to withhold rent and breach their obligation to pay rent to the plaintiff[s].’’ With respect to the second and third special defenses, the court stated only that the defendants had ‘‘failed to sustain [their] burden of proof as to all the special defenses.’’

         Dissatisfied with the court’s articulation, on November 30, 2017, the defendants filed a second motion for review with this court, given the first articulation of the trial court. On March 20, 2018, this court issued a second order for articulation that was substantially similar to the first order. On April 24, 2018, the trial court issued a supplemental articulation, which it corrected on April 26, 2018. The court articulated that the second and third special defenses were not proven by a preponderance of the evidence submitted at trial. The court found that ‘‘[u]ntil July 1, 2014, the plaintiffs and the defendants were unaware that the tank graves contained gasoline type contaminants above action levels. Accordingly, on November 23, 2013, the date when the lease was signed, neither party knew of the existence . . . of the contamination. . . . The plaintiffs have addressed the contamination issues at their expense and the property has been remediated in accordance with a [department] stipulation. . . . Neither the contamination itself nor the remediation thereof affected the renovation timelines of the retail space or the Subway space, nor did the contamination and remediation affect the operation of either business. . . . Not only did the property have a long history of use as an automotive repair shop, but the defendants knew this, not only because of the proximity of their businesses before moving into the property, but also because they were longtime customers of the plaintiffs. The lease obligated the plaintiffs to clean up any contamination on the property and they did so. The [defendants’] alleged concerns about the contamination are pretextual, since neither the contamination nor the remediation had any effect on the critical path of the defendants’ renovations to the property. The [defendants’] real issue centers on the delays in renovation, and therefore in openings of business operations, beyond the rental grace period, thereby obligating them to pay rent under the lease and to their existing landlords. The plaintiffs were not responsible for the delays because of the following provisions of the lease, paragraphs 31 and 32. . . .[8] The defendants failed to prove that they were justified in withholding the rent because of the contamination issues affecting the [property].’’

         The court, in finding that the defendants had failed to prove their second and third special defenses, stated that the plaintiffs had not breached the lease in failing to remediate the contamination, as alleged by the defendants. It found that the plaintiffs promptly addressed the environmental issues affecting the exterior of the property, as required by paragraph 33 of the lease, and did not breach the implied covenant of good faith and fair dealing. The court further concluded that the defendants suffered no detriment as a result of the contamination and remediation. ‘‘They failed to offer any evidence that they ever even complained about the contamination and remediation until they filed their answer in this case on March 24, 2015.’’ Additional facts will be set forth as necessary.

         I

         The defendants’ first claim is that the court applied an incorrect legal standard in determining that they failed to prove their special defense of equitable nonforfeiture. We disagree.

         The plenary standard of review applies to the preliminary issue of whether the court applied the correct legal standard in evaluating this special defense. ‘‘[I]t is well established that [t]he . . . determination of the proper legal standard in any given case is a question of law subject to our plenary review . . . .’’ (Internal ...


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